Oil commentary - 27 August 2019
Morning all, and to those returning from UK bank holiday - I hope the last of the Summer BBQ's was enjoyable. Brent closed down 0.64 last night to settle at $58.70 and WTi closed at $53.64 down 0.53. OK, what is it they have in the water in Biarritz? Or did someone slip Trump something on Air Force One on the way over? Suddenly he is willing to meet everyone, and things globally have calmed down. Yesterday morning the bulls received a significant boost when Trump said that China and the US will resume talks and look for a solution ASAP. Then 6 hours later he said he had no problem meeting Rouhani and agreeing a new deal. Wow. He's either in the serious doghouse with Melania and has been told to be nicer or, he has listened to gloomy forecasts and decided he needs to do something about it all. Crude was caught though; on one hand it is good for demand if China and the US are buddies again but if Iranian crude is allowed to flow again then that just means we are back in the same position. To be perfectly honest, I can't see either dispute arriving at a happy conclusion for a while yet, but the market will take on this news and play around with it for a while before the next anxiety attack kicks in. August has proved, as it usually does, to be stuck in a range, $55 - $62 more or less on Brent but there is a lot more going behind the scenes than the market would have you believe. WTi is certainly one to keep an eye on and here's a fact for you - In the week ended November 16, 2018, the oil rig count was at a multiyear high. Since that day, the oil rig count fell by 134. In this period, the VanEck Vectors Oil Services ETF (OIH) declined by 43.2%. OIH tracks oilfield services stocks. Nov 18 US production was 11.6mnbpd. Aug 19 US production is 12.3mnbpd. Some would call that "efficient", wouldn’t they? Good day.