European Central Bank paper: Oil markets already priced in further shale ramp up

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European Central Bank paper: Oil markets already priced in further shale ramp up

This was the highest settlement since July 21.

October 13, 2015 

 

Brent crude oil futures rose $1.70 to $53.03 a barrel by 12:34 p.m. EDT (1634 GMT), after touching a five-week intra-day high of $53.19. On October 2, oilfield-services company Baker Hughes Inc. Until the latest report, most analysts were operating under the assumption that USA oil output was as strong as it had been in years.

World oil demand is estimated to increase by 1.5 million barrels per day in 2015, higher than the initial projection, El-Badri, secretary-general of OPEC, said in a statement to the worldwide Monetary Fund (IMF).

There were no specific recommendations or proposals for the technical meeting, Badri said, but “it will be a discussion to find a solution” for the oil market. I expected they would at least maintain, if not cut, production to command a better price.

The surge in prices prompted hopes that the oil price could be recovering finally after a sharp fall from $114 a barrellast June on the back of a glut in supply and lack of demand.

As caution reigns and the oil price hovers around the $50-mark, attention has focused on what major oil producers might do next to support prices.

However, the price of oil went in different directions in world markets later.

However, there are reasons for investors to be cautious with volatile energy ETFs.

Global crude prices showed one-month peaks on Tuesday, following Russian military actions in Syria, a weak dollar and expectations from the upcoming OPEC meeting. It has increased 11 percent this week, the most since March 2009.

“Stocks are reacting positively, and the dollar’s reacting negatively to the slightly more dovish comments about near-term prospects for inflation”, said Patrick Maldari, senior fixed income investment specialist at Aberdeen Asset Management in New York. It charges 35 bps in annual fees and expenses.

He gave examples of organizations such as the worldwide Energy Agency and the global Energy Forum as attempts to bring more transparency to the oil market but said more needs to be done. The volume of all futures traded was about 41 percent above the 100-day average.

“Whether its “fear” or “reality” remains to be seen”.

Earlier Sunday, Qatar’s Energy Ministry Mohammed bin Saleh al-Sada, who is acting OPEC president, said there were signs of an oil price rise next year, adding that the oil price has “bottomed out”. Meanwhile, the spread between theglobal and US domestic benchmarks of crude stood at $3.64, just above Wednesday’s level of $3.62 at the close oftrading. The product is largely concentrated in the top 10 firms that collectively make up for 61.7% share of the basket.

Crude oil is putting on an old-school risk-on rally reminiscent of the early days of quantitative easing.