Don't rule out further enthusiasm from Oil bulls

The blog has been absent for a couple of days, much more on why in upcoming issues but the visit to Gdansk to see Ithaca’s FPF-1 was in that respect a resounding success and most impressive. Travelling by Wizz Air was a resounding failure ending up with sitting around at Gdansk airport for 11 hours without a word of explanation, more of that later also…

The oil price was probably getting carried away with itself ahead of Doha on Sunday but dont rule out further hefty enthusiasm from those who are long. The fall yesterday, which has continued this morning was down to a couple of things and poor but not irretrievable inventory numbers. First the Saudi’s made it plain that any production cut was ‘out of the question’, not surprising really, they hardly want to be responsible for the reincarnation of oil profitable at $50. Secondly, the Russian Oil Minister said that the Doha meeting/agreement will be ‘loosely formed with few detailed commitments’, no surprise there either although he could have added that all will cheat as soon as is practicable as there will be no enforcement.

On the more bullish side the Opec report, at a swift glance, showed that non-Opec production was falling more than previously expected and the headline is similar in the IEA monthly whereby it suggests that the fall in shale will wipe a lot off stocks. My own view is well known, add this to the 400bn of capex cuts by the majors and the market might start looking very squeezy indeed in the not too distant….

To those inventory stats, the build of 6.6m barrels of crude was way higher than the scribblers guesses of 1.9m but the market didnt take it so badly, as the gasoline number was a draw of 4.2m against the whisper of only 1.4, overall still a big add to stocks.