Oil prices rally a little after rift between Iran and Saudi Arabia

The above prices will serve as the end year numbers for reference purposes and show that whilst a lot of the damage to the oil price was done ahead of the fateful Opec meeting in late 2014, 2015 was nothing to write home about. WTI ended the year down $16.23 and Brent fared worse, down $20.05. Indeed in the last few days WTI has been at a premium to Brent whose blushes were spared with a New Year’s Eve rally to nip into the lead.

Oil prices have rallied a little in early 2016 trading, not on fundamentals but as the rift between Saudi Arabia and Iran grows following the execution in the KSA of a prominent Shi’ite Muslim cleric. Elsewhere the White House has ‘delayed plans’ to impose new financial sanctions on Iran but admits to ‘growing tensions’ with Iran over the nuclear deal brokered last year. Whilst the moves so far have been positive to remove sanctions, it is clear that there is no hurry to wave these through and there may be a modicum of relief to the oil market which is expecting something quite soon.

On the numbers front there was a flurry of data at the end of last week, EIA inventory stats were poor, a build of 2.6m barrels of crude oil including a new record high at Cushing and gasoline and distillates built as well. The rig count showed a fall of two overall to 698 and oil also fell by two units to 536, hardly a new years gift. Finally Russia announced a new record of its own, producing 10.83m b/d.