A tough week for crude oil, which tumbled after algos tagged $50 stops yesterday following the biggest gasoline inventory build in 7 months. While the US oil rig count has stopped rising in the last few weeks, production continues to hit cycle highs stalling prices, but the Saudis are not giving up on their incessant jawboning – hinting that "deeper cuts" are still on the table.
US oil rig counts rose by 3 to 768 last week – it has fallen 3 times in the last 7 weeks and is practically unchanged in the last 2 months…
Just as we predicted, the lagged response to the shifting oil price has been a stalling of the rising rig count…
But even with the US oil rig count declining for 3 of the last 7 weeks, crude production in the Lower 48 rose once again to 9.048mm b/d – the highest since July 2015…
WTI prices had a disappointing week – not helped by the biggest gasoline inventory build since January…
Once WTI algos tagged $50, it was a one-way street lower
“We are stuck in a range and having found some support at $48/bbl, it’s moving higher” says Ole Hansen, head of commodity strategy at Saxo Bank. “We’re really unable to make a clean break”
But as OilPrice.com's Tsvetana Paraskova notes, the Saudis are not giving up on their incessant jawboning.
OPEC and its non-OPEC partners have not closed the door to the possibility of extending the production cut agreement or even lowering production levels, Saudi Oil Minister Khalid al-Falih told Saudi-owned newspaper Asharq Al-Awsat in remarks published on Friday..
Al-Falih’s comments were aired just a day after OPEC confirmed reports that its crude oil production increase last month, reporting a daily rate of 32.869 million barrels, up by 172,600 bpd. Libya, Nigeria, and Saudi Arabia were the main drivers behind the OPEC production increase, with Libya raising its output by 154,300 bpd—by far the biggest increase among the cartel’s members. Nigerian oil production rose by 34,300 bpd to 1.748 million bpd, while Saudi Arabia’s went up by 31,800 bpd to 10.067 million bpd.
“The possibility of continued production cuts is on the table, and the door to extension of reduction has not been closed. If further actions are needed by the market, whether to extend or change production levels, they will be examined on time and agreed through 24 countries,” Asharq Al-Awsat quoted the Saudi minister as saying.
Saudi Arabia, however, will not take unilateral actions to tweak production and will seek consensus among all parties concerned, according to the most influential of OPEC’s oilmen.
Earlier this week, OPEC held a meeting with some of the producers and cited its members Iraq and the UAE, as well as non-OPEC signatories to the deal Kazakhstan and Malaysia, as laggards in compliance, but added that they “all expressed their full support for the existing monitoring mechanism and their willingness to fully cooperate.”
“It is too early to predict what will happen following the first quarter of next year,” al-Falih told the Saudi newspaper.
Just two months ago, the minister told the same outlet that the oil market had started to show signs that it was headed in the right direction, and expectations pointed to the market returning to balance in the fourth quarter this year.
The shrinking contango structure of the oil market has almost disappeared of late, in a sign that the market is tightening.
via Read More Here..