Oil rose 3.23 % last week reaching our first technical target at 55.6 on WTI. Back in May, several OPEC oil ministers were talking quite casually about $50 a barrel as a good price for crude. Don’t expect that to be repeated when they convene again at the end of this month.
OIL DEMAND IN CONTRACTION
As oil prices sag despite OPEC’s renewed efforts to shore up world crude markets, Wall Street banks have more bad news for the producer group: the outlook for next year isn’t great either.
EXXON, ROYAL DUTCH and CHEVRON are jumping into American shale with gusto, planning to spend a combined $10 billion this year, up from next to nothing only a few years ago.
The giants are gaining a foothold in West Texas with such projects as Bongo 76-43, a well which is being drilled 10,000 feet beneath the table-flat, sage-scented desert, and which then extends horizontally for a mile, blasting through rock to capture light crude from the sprawling Permian Basin.
Oil barely budged on Friday as OPEC agreed to extend oil supply restraint until the year-end.
OPEC’s in a quagmire however, foreshadowing disappointment for oil bulls counting on the group and its allies extending output curbs by nine months, according to Goldman Sachs Group Inc.
Saudi Arabia’s proposal to prolong cuts from their current expiration on March 31 through to the end of 2018 hasn’t been easily endorsed by Russia, which provides the second-largest share of reductions..
The first half fo 2017 was an eventful period for commodity traders.
OIL fell 14 % over the half year, losing back almost all the ground gained since the OPEC agreement in December. The 7 % rise of last week akin to window dressing as oil companies and traders alike are long the commodity and do not want to show too heavy losses.
This time last year, equity markets were contemplating the abysses, bonds were making new Lows in yields, Gold was rallying and Oil was trading at US$ 29.
Market psychology was mired in fears of deflation and central banks were busy telling the markets that interest rates would not go up.
U.S. oil inventories last week rose to 520.2 million, the most in weekly data going back to 1982.
They have increased by more than 41 million barrels since the start of the year.
Supplies at Cushing, Oklahoma, the delivery point for WTI, gained 495,000 barrels to 63.5 million last week.
U.S. crude exports are poised to surpass production in four OPEC nations in 2017 and may grow even more if President Donald Trump honors pledges to ease drilling restrictions and maximize output.
The world’s largest oil-consuming country could sell as much as 800,000 barrels a day of crude overseas this year, according to four analysts surveyed by Bloomberg.
In 2016, Oil made the biggest annual gain since 2009 as OPEC and other producing nations plan to start supply cuts next month to reduce swelling global inventories.
Futures rose 52 percent in London this year.
In another sign that the world has reached the end of the oil era, the recent statistics of the US solar industry show that SOLAR energy accounted for the majority of new power generation in the US for the first time in history and that fossil fuel new capacity only accounted for 3 % of new capacity.