Analysts at BBH shared his views on the crude oil market and its recent developments, "Oil prices rallied yesterday following the EIA weekly data and are up further today. Despite the rise in US inventories (4.1 mln barrels) more than four times greater than expected, participants focused on other details. In particular, the stocks in Cushing fell by almost 580k barrels, while the market had been looking for an increase of around the same magnitude. Also, the 17.4 mln barrel demand by refineries was the most in nearly 30 years."
Key Quotes
"The bullish case for oil was predicated on rising demand, OPEC cuts and a natural decline in output in some countries, like Mexico. China's economy appears to be stabilizing (with a continued robust increase in credit expansion. Europe growth appears to have accelerated in Q4. Earlier today, EMU reported industrial output jumped 1.5% in November, more than twice what was expected. Even if the output was flat in December, the industrial output is set to expand in Q4 by the most since Q4 2010. Japan's November industrial output rose 1.5%, the most in five months. India's output surged 5.7% year-over-year in November after contracting 1.8% year-over-year in October."
"What has captured the attention of the markets today are the reports indicating that Saudi Arabia (and Kuwait) have cut output more than they were committed to delivering. The Saudi oil minister announced that output has fallen below 10 mln barrels for the first time in almost two years. Kuwait also reports that its output is a little less than it committed to as well."
"At least for the moment, this addresses a nagging concern of many market participants that OPEC's adherence to their agreements is often questionable. Of course, the risk of defections from the agreement increase as the price of oil increases. Also, the participation of non-OPEC countries, especially Russia, has yet to be seen. At the same time, US output is increasing. At 8.95 mln barrels a day, US output is the highest since last April. US producers have added about 100 new rigs since the end of Q3. Recall too that in 2015 and early 2016 some well were drilled, but then capped as if the producer was storing the oil in the ground."
"The February light sweet oil futures contract set a low set on Tuesday and Wednesday (~$50.70) that met a 50% retracement objective of the rally since the OPEC agreement. It also matches the low from December 8. Prices have bounced smartly. However, the $53.50 area, which is being tested, needs to be overcome to suggest another run at $55."
© 2013 "FXstreet.com. The Forex Market" Todos los Derechos Reservados. Todos nuestros esfuerzos están destinados a proporcionar información precisa y completa. Aún así, con los centenares de documentos disponibles, a menudo publicados con poco margen de tiempo, no podemos garantizar la falta de errores en los mismos. Cualquier publicación o redistribución de contenido de FXstreet.com está absolutamente prohibido sin el consentimiento previo por escrito de FXstreet.com.
Recommended content
Editors’ Picks
EUR/USD drops below 1.0800 after German Retail Sales data
EUR/USD has come under fresh selling pressure and trades below 1.0800 after the data from Germany showed that Retail Sales declined by 1.9% MoM in February. Resurgent US Dollar demand is adding to the downside in the pair. US data are next in focus.
GBP/USD stays weak near 1.2600 amid market caution
GBP/USD remains defensive near 1.2600 in European trading on Thursday. The hawkish tone from Fed Governor Christopher Waller keeps the US Dollar afloat amid a cautious trading environment ahead of key US data releases and the Good Friday trading lull.
Gold price holds strength ahead of US core PCE inflation
Gold price holds onto gains near $2,200 in Thursday’s European session. The precious metal exhibits firm footing ahead of the United States core PCE Price Index data for February, which will be published on Friday.
XRP price falls to $0.60 support as Ripple ruling doesn’t help Coinbase lawsuit against SEC
XRP programmatic sales ruling by Judge Torres was completely rejected by another US Court that ruled in favor of the SEC in a lawsuit against Coinbase.
Portfolio rebalancing and reflation trades emerge into Q2
Yesterday’s price action pointed at a possible end-of-quarter portfolio rebalancing as the session saw the laggards of the quarter like Apple and Tesla gain, and the stars like Microsoft and Nvidia retreat.