More Crude Increases Cause Analysts to Declare that a Rebalance is Nigh
However, recent events cast doubt on whether healthier demand/supply is truly in the offing.
Recent events cast doubt on whether healthier demand/supply is truly in the offing.
The final week of July is turning out to be a modest winning streak for oil, with West Texas Intermediate yet again climbing on Thursday, this time by 29 cents to $49.04, and Brent rising 56 cents to $51.53 per barrel.
The gains were the result of Wednesday's news from the Energy Information Agency of a 7.2 million barrel decline in U.S. crude inventories in the week ending July 21, well above the 2.6 million barrel forecast, and the fourth consecutive week that inventories have fallen during a time of year when they normally increase.
Adam Wise, senior managing director at John Hancock Financial Services Inc.,summarized the reasons for trader optimism: he said the market is digesting "very strong draws in inventories across the board; we've also seen comments out of Saudi Arabia supporting prices in the form of export reduction.
Sentiment is finally being forced to pay attention to the fundamentals
Adam Wise, John Hancock Financial Services Inc.
"Sentiment is finally being forced to pay attention to the fundamentals."
Even the notoriously downbeat John Kilduff, founding partner at Again Capital, conceded that crude was enjoying an unusually strong week after a long decline: "It's been a bullish week certainly, data-wise; this market really has a lot going for it at the moment.
"There is an impression that we're coming into balance finally and it's driven by this pretty steep decline in U.S. crude oil inventories."
Only Stephen Brennock, oil analyst at PVM, voiced a note of caution: "As encouraging as this may seem, the price recovery won't begin in earnest until evidence of U.S. oil rebalancing is mirrored on a global scale."
Kilduff's optimism may strike some as puzzling, considering that less than a week ago he was predicting dire consequences if the Organization of the Petroleum Exporting Countries (OPEC) did not get tough on members defying the cartel's production cutback agreement; and indeed, although Nigeria said it would abide by a cap, subsequent analysis has showed the country will still be able to pump in excess.
Moreover, OPEC made no move during its meeting in St. Petersburg earlier this week to impose a cap on troublesome Libya.
In short, at least with regards to OPEC, it's business as usual, with Saudi Arabia scrambling unsuccessfully to make up for the huge crude surpluses created by cheating members - and a far cry from the rebalancing that Kilduff suggests is taking place.
Skangas duel fuel LNG carrier Coral Energy (image credit/Skangas)
Liquified natural gas (LNG) bunker tanker Coralius has made its first trip loading and delivering LNG to and from Norwegian ports, according to trade press reports.
The 5,800 cubic meter capacity tanker, which is owned by Norwegian gas company Skangas, was delivered to the company in June. Skangas also operates LNG carrier Coral Energy.
OPEC Cutback Extension to be Discussed in November, But Developments Could Render Any Deal Meaningless
Analysts say everything from Saudi exploration to rising tensions with North Korea could radically alter the dynamics of the international market. File Image / Pixabay
Ever since the Organization of the Petroleum Exporting Countries (OPEC) extended the duration of its production cuts earlier this year to March of 2018, speculation has been rampant that the meager cutback volume coupled with the large number of members