Oil showing ninja skills

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It is International Ninja Day, and oil is stealthily climbing higher to another daily gain. As OPEC optimism abounds, prices push higher for a fourth consecutive day to start the new week. Hark, here are five things to consider in oil markets today.

1) While the majority of Iraqi crude exports leave from the south of the country through Basrah, production in Northern Iraq has ramped up significantly in recent years, with higher volumes traversing through the Kirkuk-Ceyhan pipeline. The 600-mile pipeline takes crude to the port of Ceyhan, before the light sour grade is loaded onto tankers and predominantly sent into Europe. 

Kurdistan’s regional natural resources minister has said that it sees no major impact on its crude oil production from the OPEC decision. The commitment to cut production has come from the Iraqi government in Baghdad, hence cuts are expected to come from the south of the country, not the north.

Kirkuk crude loadings ClipperData.jpg2) While it is too soon for the latest CFTC data to reflect the market’s response to the OPEC decison (CFTC only reports up until last Tuesday), the forward curve is giving us a good indication of what has happened.

Short positions held by speculators have surely been closed out amid the post-OPEC meeting euphoria, while producers have snapped up short positions along the forward curve, hedging future production out over the coming years.

The most conservative hedgers, such as Pioneer Natural Resources, have already hedged 75 percent of production for next year. But last week’s price pop has given the opportunity to others to lock in price certainty for the coming years at