Market Currents – Composed EditionTags: ClipperBlog
On the 84th birthday of John Williams, the crude complex is looking anything but composed. There are lots of reasons for cheer today – Chinese Lunar New Year (hark, year of the monkey), the Rio Carnival, to name two – but priceaction in financial markets is not one of them. As dollar strength returns and economic concerns are stoked, crude prices are starting the week looking lower.
There is the usual post-Nonfarm Friday dearth of US economic data, with focus for the crude complex shifting instead to oil-specific releases this week. Today we get the EIA’s drilling productivity report, followed by its Short Term Energy Outlook tomorrow. The IEA also releases their monthly oil market report tomorrow, while OPEC delivers theirs on Wednesday.
All of these reports should underscore the current overarching themes of ongoing oversupply, and demand concerns. One economic data point of note out today has been Indian Q3 economic growth, which came in just below Q2’s level of 7.4% YoY, but in line with consensus at 7.3%.
The latest CFTC data show that the total number of speculative contracts reached their highest level since data began in 2006. Speculative short positions rebounded to just shy of their record three weeks ago, while longs reached their highest level since June. This increase in volume doesn’t really give us a huge amount of insight, pointing to growing conviction among both the bulls and the bears.
As earnings season continues, eighteen of the top 30 US oil companies by output have released quarterly results, with an average budget reduction of 40%. The capex cuts are running the gamut of the industry, with the oil majors very much in this mix:
Finally, after nothing (unsurprisingly) materialized from talks between Saudi Arabia and Venezuela over the weekend, it is rhetoric out of Iran which is providing food for thought. With Western sanctions lifted, Iran is looking to claw back its market share in Europe; it plans to sell 300,000 barrels per day of oil into the region, according to its oil minister, Bijan Zanganeh. Not only has it just signed agreements with Total, Cepsa, and Litasco (Total is set to start receiving 160,000 bpd as of February 16th), but it has also stipulated it will charge for its oil in euros, as it attempts to extricate itself from dealings with the US (or in US dollars).
About The Author
Matt is a Director of Commodity Research at ClipperData. Matt specializes in extracting key themes from technical and fundamental analysis of the global energy market, and communicating these through daily and weekly deliverables. He also provides oil and natural gas analysis and commentary to national and international media outlets that include CNBC, Fox Business, Russia 24, the Wall Street Journal, MarketWatch, AFP, Bloomberg, Reuters, and the Oil Daily. Prior to joining ClipperData, he worked for eight years at Schneider Electric / Summit Energy as a Global Commodity Analyst, where he also founded and authored the blog, Energy Burrito. He started his career at the Royal Bank of Canada in the UK, spending eight years with the bank. During that time, he managed $55 million in assets as a portfolio manager and financial analyst.