• Oil in global economy series: key Oil market updates

    Source: FxWire Pro - Commentary / 28 May 2018 06:25:58   America/New_York

    While the oil market continues to focus on supply/demand fundamentals, these are some key updates that you need to keep a tab on,

    • U.S. oil rig count: The United States is continuing to see a surge in production. According to the latest report, the production rose to a new high of 10.725 million barrels per day. Despite fewer rigs operating compared to 2014/15, the production efficiency has pushed the overall production higher.  As of latest report, the numbers of operating rigs at 859, the highest since March 2015. The numbers of operating rigs have increased more than 170 percent since bottoming in May 2016.
    • Venezuela crisis: Crisis continues in Venezuela. The latest production survey report from Platts suggests that the production declined to 1.41 million barrels per day. Reports suggest that payment starved workers are quitting Venezuela’s oil production, which is likely to dwindle further. However, the country’s leadership is trying to overcome the trouble using cryptocurrencies as a means to fund the country. According to OPEC survey, Venezuela’s production declined to 1.44 million barrels per day in April. The focus is on Venezuela’s election this week. The reelection of Maduro is likely to result in stronger sanctions from the United States.
    • Anti-petrodollar: Russia and Iran have launched oil for goods exchange program. Iran has also announced that it would report its currency reserves in Euro ditching dollar. China’s yuan-based oil contract is experiencing significant volume surpassing some of the Brent contracts. Unconfirmed reports also suggest that China is planning to make payment in Yuan instead of the dollar. China has also been reducing its Treasury holdings. Europe is considering making payments in euro for Iranian oil. 
    • Russia & Saudi Arabia: Oil price moved lower as Russia and Saudi Arabia signaled that it is considering to ease the oil cap by a million barrel after a joint meeting.   

    Key global oil benchmarks:

    WTI - $66.7/barrel

    Brent - $75.4/barrel

    OPEC basket - $74.9/barrel

    Urals - $74.3/barrel

    Oman - $74/barrel

    Dubai - $72.8/barrel

    Western Canada Select - $49.6/barrel



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