OIL: lying low

OIL: lying low

2020-03-27 • Updated

Prepare the stage

You cannot avoid the feeling that something is lurking in the oil market. WTI at $22 per barrel, Brent at $25, diminished fluctuation… Some will say oil is just “tired” of moving and wants to rest. In the end, the weekend is coming. But where will it go? And what’s behind the scene here?

4.png

MbS

No, that’s not a new oil company. Mohammed Bin Salman, the Crown Prince of Saudi Arabia and its de-facto ruler is also known as MbS. He will be saying his word on crude supply next week: 31 March is the last day of the current term on agreed oil supply quantities. His last announced plans were to increase Saudi Arabia’s exports to 12.5mln barrels per day.

Russia

Russian officials previously informed that they would be ready to increase the supply through Rosneft by 300,000mln barrels per day in response. Now, as little as spare capacity seems in comparison to that of Saudi Arabia, that is not that crucial: Russia’s main weapon is not adding new supplies but rather holding on to its current level. Tactically, Russia is in a defensive strategy with the objective to hold the market, while Saudi Arabia is on the offensive with the objective to conquer the market; European market, specifically. Tactically, the one who attacks is the one to bring more firepower.

Stores full

Saudi Arabia offers huge discounts on its crude and huge quantities. No one can counter that. But everything gains value in the context of the situation. What is the context now?

With 100mln barrels of oil pumped daily, there is 20% oversupply at this rate. Oil tanks are so full that there is nowhere to store it. In this context, factoring in demand 20mln-bpd lower than the recent levels brings to the conclusion that it doesn’t bring too much advantage to Saudi Arabia to offer something that will surely be over the top and not required in the nearest future, and even if it was, there will be no place to store it.

What will it be then?

No one really knows. Here are some of the fresh headlines though.

3.png

It looks like observers have more faith in the post-virus global economic recovery than in the oil markets’ nearest future. We will see on April 1. As some observers mentioned, $3 per barrel is not an impossible scenario now. Either way, you can make profits on that – just watch the moment.

Similar

How Will China’s Regulation Affect Oil?
How Will China’s Regulation Affect Oil?

China has issued new oil product export quotas to allow oil companies to send surplus barrels overseas, particularly Sinopec, which has the highest volume among quota holders. While the exact quota volume remains undisclosed, oil companies are forecasted to export approximately 3.5 million metric tons of clean oil products in September, a 10% increase from August.

The Oil Market in the Month of June
The Oil Market in the Month of June

Thanks to the incredible advancements in horizontal drilling and fracking technology, the United States has experienced a mind-blowing shale revolution. They've become the heavyweight champion of crude oil production, leaving Saudi Arabia and Russia in the dust. They even turned the tables and became net exporters of refined petroleum products in 2011.

Oil Market Outlook
Oil Market Outlook

Oil prices rebounded slightly on Friday but are still expected to show losses for the week due to concerns about slowing growth in the US and China. US crude futures rose 2.7% to $70.41 per barrel, while the Brent contract increased by 2.5% to $74.33 per barrel.

Latest news

Gold is Rising Despite Inflation Returns
Gold is Rising Despite Inflation Returns

Gold prices are rising for three consecutive days ahead of the Federal Reserve (Fed) interest rate decision, which is expected to remain unchanged due to declining inflation and a positive economic outlook. Investors are keen on the Fed's interest rate guidance, fearing a hawkish stance that could trigger market risk aversion.

Can the Chinese Economy Recover?
Can the Chinese Economy Recover?

Amid concerns of a Chinese economic slowdown, reports of declining investment often overlook China's efficient investment strategy in emerging sectors for long-term growth. China has taken measures to stabilize foreign and private sector investments, like reducing the reserve requirement ratio to boost investor confidence.

Deposit with your local payment systems

Data collection notice

FBS maintains a record of your data to run this website. By pressing the “Accept” button, you agree to our Privacy policy.

Callback

A manager will call you shortly.

Change number

Your request is accepted.

A manager will call you shortly.

Next callback request for this phone number
will be available in

If you have an urgent issue please contact us via
Live chat

Internal error. Please try again later

Don’t waste your time – keep track of how NFP affects the US dollar and profit!

You are using an older version of your browser.

Update it to the latest version or try another one for a safer, more comfortable and productive trading experience.

Safari Chrome Firefox Opera