Can Crude Oil Prices Continue To Rally Like This?
On this final Friday in August, a wanton formidable is looking reduce into a weekend after yesterday’s eccentric 10% rally. The rollercoaster float opposite financial markets continues apace, with Chinese equities rallying scarcely 5% amid serve marketplace involvement from Chinese authorities to column it up.
Overnight we have had a series of mercantile information releases, with soft acceleration information from Germany, and UK GDP information that was inline with expectations (at +0.7% QoQ). There were some glimpses of good news out of Japan, with a stagnation rate ticking reduce to 3.3%, while sell sales increasing by 1.6% YoY, extremely improved than expected.
That said, Japanese acceleration information mirrored that of Germany, and was prosaic MoM, with YoY acceleration dropping to +0.2%. In terms of inflation, a US is in a identical position to both Germany and Japan, in that should oil prices stay around stream levels, it will too see acceleration information entrance in as prosaic as a beaver’s tail by year-end:
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Adding a diminutive shower of bullishness to yesterday’s prevalent convene in wanton oil prices was word that Shell had announced a force majeure on Bonny Light oil exports due to a trickle on a Trans Niger Pipeline during Oloma in Rivers State, and also due to harm on a Nembe Creek Trunkline. As #ClipperData illustrates below, Nigerian waterborne wanton exports have been holding comparatively solid in new months, and have averaged 1.8 million barrels per day by a initial 8 months of a year.
Once again we’ve got Venezuela perplexing to inveigle an puncture OPEC meeting. We listened identical tongue from President Maduro behind on Aug 11th, as a Latin American republic seeks to move both Russia and OPEC together to residence descending oil prices. In response, a Gulf OPEC central has been quoted as observant “If Venezuela or others like Algeria can get Russia to dedicate to an movement afterwards we could have a reason to meet, though during a impulse there is zero that warrants an action”. Hence, an puncture OPEC assembly during this connection seems unlikely.
As we quick proceed a rise of whirly deteriorate on Sep 12, and as Tropical Storm Erika barrels by Puerto Rico and a Dominican Republic and towards a Florida peninsula, a EIA provides us with a timely sign of how a impact of whirly deteriorate on a oil and gas attention has been marginalized by a onshore shale bang in a final half a decade.
While ~1.5mn bpd of oil continues to be constructed from a Gulf of Mexico (GoM) – a turn identical to a decade ago – this share of sum US prolongation has forsaken from 27% to 15% final year, as onshore shale plays have ramped up.
A somewhat opposite unfolding has played out for healthy gas; not usually has prolongation in a GoM been marginalized in commission terms, though comprehensive prolongation has forsaken considerably, from ~10 Bcf/d a decade ago to ~3 Bcf/d now, as reduce cost prolongation from onshore shale plays has driven oil prices down, withdrawal it a GoM both increasingly costly and irrelevant.
Courtesy: Matt Smith
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