LONDON (Reuters) – Futures prices indicate the physical market is easily absorbing the large volume of crude being supplied and global rebalancing is well underway.
The price for storing a barrel of Brent for six months has fallen from more than $1.23 per month at the start of 2015 to just 37 cents per month on May 21.
LONDON, May 20 (Reuters) – Oil-market watchers are
struggling to reconcile the large estimated oversupply in the
market with the much smaller buildup of reported inventories and
narrowing contango in futures prices.
Some blame the barrel counters who compile official
statistics on supply, demand and stocks. But the truth is that
information on the world oil market is incomplete and it is easy
for hundreds of millions of barrels of oil to disappear from the
supply chain without being counted.
LONDON (Reuters) – Oil prices have become much less volatile in recent weeks as the record short position previously established by hedge funds has been squared up and prices return to a level at which many U.S. shale wells are profitable.
Realized volatility, a technical measure of the day to day variability in prices, has fallen to an annualized rate of just 24 percent, down by more than half from its peak of 60 percent in late February.
LONDON, May 15 (Reuters) – The United States is fast
becoming the major refining hub for the entire western
hemisphere as plentiful crude at home and superior efficiency
enable U.S. refiners to grab market share across the region.
U.S. refiners now supply almost a quarter of the rest of the
hemisphere’s daily fuel demand, up from less than 10 percent a
LONDON, May 14 (Reuters) – U.S. shale producers are the new
“swing producers” in the oil market, as many analysts have
noted, but the status of swing producer is hugely misunderstood.
It is often portrayed as if it confers power and control. In
fact, it often means the opposite. The swing producer often
becomes the passive absorber of shifts in market supply and
LONDON, May 12 (Reuters) – “The data must be wrong,”
according to veteran oil analyst Phil Verleger, who wrote in a
blistering note that the Energy Information Administration is
probably overestimating U.S. oil production by 1.6 million
barrels per day.
Verleger argues substantially lower U.S. production is the
most likely explanation for why global stocks are not rising as
fast as predicted and discounts for storing barrels are
narrowing (“Notes at the margin” May 11).
LONDON (Reuters) – Oil’s sharp rally since the middle of March has been driven by a race among bearish hedge funds to cover loss-making short positions rather than any great bullishness about the outlook.
On the eve of the rally, hedge funds and other money managers had amassed record short positions in WTI-linked futures and options amounting to 209 million barrels of oil.
LONDON, May 8 (Reuters) – Underground disposal of waste
water produced from oil and natural gas wells has been blamed
for triggering thousands of small earthquakes in Oklahoma and a
number of other U.S. states since 2009.
Heightened seismic activity corresponds closely with the
timeframe and location of increased drilling and hydraulic
fracturing across the southwest United States, according to the
U.S. Geological Survey (“Incorporating induced seismicity in the
2014 United States national seismic hazard model”, 2015).
LONDON, May 6 (Reuters) – U.S. refineries are running at
near-record levels to turn the glut of crude into gasoline and
other refined fuels ahead of the summer driving season.
U.S. refineries processed an average of 16.347 million
barrels per day (bpd) last week, an increase of almost 250,000
bpd compared with the previous week.
LONDON, May 5 (Reuters) – U.S. gasoline demand is running
around 300,000 barrels per day above last year’s level, as lower
pump prices and continued economic expansion encourage motorists
to use their cars more.
Estimates for gasoline supplied to U.S. customers published
by the Energy Information Administration (EIA) show demand
consistently running above the same point in 2014 (link.reuters.com/wav64w).