Crude Oil Enters Bull Market Amid Output Freeze Talk

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Crude Oil Enters Bull Market Amid Output Freeze Talk

Crude Oil Enters Bull Market Amid Output Freeze Talk

Another day, another dollar (rally in oil prices). The tag-team of dollar debility and prolongation solidify hopes mix again to convene wanton oil prices aloft for nonetheless another day. Hark, here are 5 things to cruise in wanton oil markets today:

1) Qatar’s economy is looking nothing too shabby, notwithstanding a wanton oil cost dump of a final dual years. It is doing improved than a rest of a GCC (Gulf Cooperation Council), and this is being reflected by in a direct for products, that has doubled given 2011 – according to JODI.

Qatar is already scheming for a 2020 World Cup, and is into a second year of a $200 billion plan to urge a infrastructure. This is boosting mercantile activity, while a new airfield with a flourishing swift of planes is boosting jet fuel demand. Qatar’s race is 2.5 million people, and a economy is set to grow by 3.4 percent this year, according to a IMF.

2) Domestic wanton oil prolongation in Qatar has risen in a final decade, adult from around 1.5 million barrels per day in 2010 to over 2 million bpd currently, driven by rising condensate production. This arise in prolongation has helped to equivalent a arise in demand, with imports circumference reduce of late.

After diseased January, Qatar wanton oil loadings this year have averaged only over 1 million bpd by a initial 7 months of this year, down 12 percent from year ago levels.

In terms of a finish of Qatar’s wanton oil, a ClipperData uncover that Japan has jumped forward of South Korea this year as a heading recipient, accounting for ~35 percent of sum oil and condensate exports, with South Korea accounting for ~30 percent. India is in third place, though gaining ground:

3) Here is another draft to prominence how all paths lead behind to energy. As a Eurozone continues to coquette with deflation, as it has finished given late 2014, it could mount behind to 2 percent (YoY) should Brent wanton oil prices stay during stream pricing by a finish of a year. (h/t @jsblokland).

4) A schizophrenic marketplace summed adult by dual Bloomberg headlines and a chart:

Headline 8/7/16: Oil bear marketplace attracts record bets on destiny cost slide.

Headline 8/18/16: Oil on margin of longhorn marketplace amid Saudi stabilization talk.

5) As a IHS index shows below, companies have slashed collateral costs by 26 percent given prices started dropping in mid-2014. An increasing concentration on potency gains amid vast discounts from use companies means a likes of BP have been means to dramatically reduce a costs of some of a projects. BP’s Mad Dog plan in a Gulf of Mexico was labelled during $20 billion behind in 2011; now costs are approaching to be half that during $9 billion.

But while discounts from oil services companies seem unsustainable – with Schlumberger, Halliburton and Baker Hughes all stating waste for Q1 – an importance by oil companies on debasement in their operations meant a certain volume of cost-cutting should be postulated in a entrance years. Slashed expenditures in a oil attention are approaching to supplement adult to $1 trillion dollars over a 2015 – 2020 period.

 

 

Courtesy: Matt Smith

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