Oil unable to rally despite sliding dollarTags: ClipperBlog, electric cars, Iran exports, Saudi crude exports
Seventy-four years after the birth of Curtis Mayfield, and oil prices are struggling to move on up, despite a wilting dollar due to a shocker of a U.S. jobs report. The combo of yesterday’s bearish-tilted OPEC meeting and today’s weak nonfarm payrolls is ushering black gold, Texas tea away from fifty-dollardom once more. Hark, here are five things to consider in oil markets today:
1) Wowee. What an ugly jobs report. Only 38,000 jobs were created last month, well below the consensus of 164,000, and the worst since September 2010. A drop in the unemployment rate to 4.7% was of little (well, no) solace. The expectation of an interest rate hike next week has been well and truly swept off the table, while the likelihood of one coming down the pike next month is waning.
2) In terms of yesterday’s OPEC meeting, much is being made of Iranian oil minister Bijan Zanganeh’s role within the cartel, as Iran aims to swing the balance of power away from Saudi Arabia. While Saudi’s new oil minister al-Falih is declaring how Saudi’s targeting of market share is working, Iran has been busy quashing a proposal to reintroduce production limits.
Iran’s power within OPEC is set to rise in tandem with its oil production. As we can see from our ClipperData, Iran is walking the walk, as well as talking the talk: oil loadings in May were at 2.5 million barrels per day, over 60% higher than year-ago levels.
Nonetheless, while the percentage increase in Saudi’s crude oil loadings year-to-date may pale in comparison to Iran’s +40% spike, exports are still up a whopping 725,000 bpd…only 11% higher than year-ago levels. It’s a market share battle royale.
3) Below is a nifty little graphic from the IEA today; electric car sales surpassed one million last year, finishing at 1.26 million units sold. As infrastructure surges for electric vehicles, market share for them has risen above 1% of total penetration in seven countries.
The global presence of 80% of electric vehicles are in four countries: China, U.S., Netherlands and Norway. (China is the leader, leapfrogging the U.S. last year). In terms of percentages, Norway has the highest share of electric cars at 23%, with the Netherlands second at 10%.
4) As we have discussed here before, the recent rally in crude has not been in isolation. As Bloomberg’s commodity index illustrates below, commodities in general are close to being in a bull market – led by soybeans and zinc. Despite the index being 50% its 2011 high, it is close to rallying 20% since the beginning of the year on supply cuts and weather worries.
5) Finally, the mighty Abudi Zein and myself will present an opinionated-and-hard-data Oil Outlook in Houston (6/8) and New York City (6/9) next week.
We will answer questions such as: when will China stop buying? How long will US production fall? Is India growing as fast as many think? Who will benefit from the coming rally? We only have about a dozen seats left! Click here for more details and to register.
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.