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’This crude old eurozone crisis
Bank of America Merrill Lynch’s commodities analysts have picked up that Brent crude — when priced in euros — is uncomfortably close to its July 2008 peak.
And they’ve added some interesting points:
How will the world live with $100 oil?
For the long haul, that is.
So, Saudi Arabia is now effectively targeting $100/barrel crude oil, instead of the $70 – $80 price range of the past several years. This is significant because Saudi Arabia is the only country that can (in theory at least) ramp up its oil production quickly if prices spike (say,
A drachma-tic moment in Greek oil trading
European geopolitical FAIL:
LONDON, Nov 11 (Reuters) – Greece is relying on Iran for most of its oil as traders pull the plug on supplies and banks refuse to provide financing for fear that Athens will default on its debt…
Is fuel oil changing everything?
Fuel oil: a byproduct of the petroleum distillation process, usually considered either a distillate or a residue.
Or as Wikipedia explains:
The term fuel oil is also used in a stricter sense to refer only to the heaviest commercial fuel that can be obtained from crude oil,
Goldman on who’s really wagging the oil market
If you’re wondering what Goldman Sach’s view on crude is — it can be summed up in one neat sentence from their latest research note:
The world crude oil market remains exceptionally tight.
The reasoning is pretty straightforward.
What happens when you lose a global oil benchmark…
Another one, somewhere in the world, flourishes…
From the Dubai Mercantile Exchange — the keeper of the world’s only possible alternative to the ailing WTI and Brent crude contracts (for now) — on Monday:
China hikes interest rates by 25bps
So here it is — the fifth Chinese rate hike since October last year.
As Reuters reported on Wednesday:
BEIJING, July 6 (Reuters) – China’s central bank increased interest rates for the third time this year on Wednesday,
El-Erian: On governments as portfolio managers
From the ranks of FT Alphaville’s own AAA-list comes Mohamed El-Erian with a post about the three phases of governments’ involvement in global markets since the crisis.
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Understandably,
Snap news
Breaking pre-market news on Tuesday,
- Microsoft close to deal to buy Skype — report.
- CME increases trading margins for US crude futures by 25 per cent — statement and report.
- Pace warns on profits — statement.
Settling in (or not) for a long-term Libyan oil swap
Monday — a dramatic day in the story of Libyan rebels’ bid to get their country’s crude to the outside world.
It is getting out one end, at least. The Equator, a Liberian-flagged tanker, is in Egyptian waters heading for Tubruq,
What price Saudi Arabia’s new special ‘blend’?
Answer: We just don’t know.
But it’s all very intriguing nonetheless.
FT Alphaville has reported at length (here, here and here for example) how the Libya crisis has resulted in a large deficit of light sweet crude in the European market place,
Sorry – you still can’t buy OR swap Libyan oil easily, at all
Conversely: ‘sorry rebels – you still can’t get cash to fight the brutal dictator easily, at all’.
Oh dear: one great big flaw has emerged in any plan to buy oil from Libya’s rebels, despite them forming a parallel oil infrastructure.
Sunrise over Erbil
Just in from Kurdistan, the first pictures of Gulf Keystone’s Shaikan-2 well.
(click for the full slide show).
Now, those pictures actually aren’t anything to worry about. In fact they are positive.
‘Peace’ breaks out in Brent crude
Noted by the FT’s Jamie Chisholm early on Thursday — a $3 sell-off in Brent, on reports of a survival plan for Gaddafi ‘peace plan’ for Libya:
A very odd peace plan, and a grimly amusing oil price reaction.
Elasticity *alert* — or, at what point demand destruction?
Bank of America Merrill Lynch is out with a whopper of an oil note on Monday.
Amongst other things, it makes a number of bold predictions, least of all this:
Libya could well be the 8th largest supply shock since 1950
Which brings the team at BoAML,
What Libya crude cuts mean for tanker rates
Icap’s shipping analysts have on Monday come up with an interesting hypothetical take on how an extended Libyan crisis might impact the shipping market.
In a nutshell, think more bearish than bullish for shipping rates.
Libyan oil supply, and short-term whiplash
A confusing picture at the moment on measures to address the Libyan supply shortfall in the short term — even as Gaddafi’s end seems to be nearing, at last.
And it really is the short term that matters for those exposed to Libya.
Swinging on an oil VaR
Oil price volatility is no doubt producing ample trading opportunities for many in the market, but as of Friday it has become much more expensive to take advantage of them.
The CME on Thursday announced it would be raising margins on trading crude oil by about 20 per cent for both speculators and hedgers,
The Suez effect on WTI-Brent [updated]
Speculation about the potential closure of the Suez canal is mounting on Friday, probably the reason that WTI prices are heading higher.
Notably, prices of Brent crude (which is not continent-blocked;
On the implications of a widening WTI-Brent spread
The spread between the two main global oil benchmarks, West Texas Intermediate and Brent, is blowing out (again). And it’s been doing so for most of the month.
We’ve known for a long time, of course,
Oil gusher!
Brent has surged to a 27-month high:
It’s now close to one of those psychologically-important levels:
On the other side of the pond, WTI is moving more slowly:
An unjustified WTI distortion?
JBC Energy has picked up on the ongoing problem of the WTI-Brent forward curve disconnect on Wednesday.
In a nutshell, while Brent futures prices have been jostling nicely into a flattish curve structure (and even a touch of backwardation at the very front end),
Brent’s got its problems too
We’ve documented the problems associated with the Nymex WTI crude contract regarding the onset of contango and Cushing syndrome in the US .
But as the CME Group — owner of the Nymex — has pointed out to us (in defence),
Oil contango intensifies as Cushing stocks soar
WTI front-end futures have experienced some extreme price volatility during the past two weeks due to distortions stemming from full-to-the-brim storage facilities at Cushing Oklahoma.
(Cushing is the main physical delivery point for Nymex WTI crude)
Moreover,
UK natural gas prices continue to disconnect from oil
UK natural gas prices have traditionally followed oil prices due to the practice of linking long-term contracts to crude in Europe.
Analysts in the market, however, are getting excited because of a nascent disconnect in that relationship,
Is the contango floating storage trade back?
The last couple of months has seen much talk in the oil markets about the unwinding of floating storage positions.
Goldman Sachs was among those who noted that crude was increasingly being moved out of tankers on account of the changing structure of the oil future curve — which had gone from a steep contango a year ago to a near flattening just one month ago.
Gasoline vs bimbos with big hair
We didn’t say that..
Stephen Schork of the daily energy Schork report did. And here’s the graph, charting exactly that. Gasoline versus err, bimbos, by which he actually means entertainment spending in the US as a percentage of total consumption expenditure (the reference is to Snooki in case you’re really curious):
WTI Friday meltdown
That’s crude on Friday afternoon, the same day BlueGold Capital Management fiercely denied rumours of company-related liquidations in the WTI market.
Related link:
Bluegold hedge fund denies causing
Dubai is worth more than you think
That is, Dubai EFS crude — rather than the emirate itself — is worth more than you think.
As Morgan Stanley highlighted in its commodity outlook for 2010, Dubai crude, which historically traded at a discount to Brent crude due to its heavier and sour quality,
Oil breaks
WTI crude was trading sub $70 per barrel on Monday, a move which solidifies its breakout from a recent $70-80 trading range.
The big question facing the market now is whether prices will continue to trend lower ahead of the holidays,