Tag: inventories

Quarterly Energy Comment (July 18, 2017)

Posted on by Rebekah Stovall

by Bill O’Grady

The Market
Oil prices peaked in March around $55 per barrel.  There have been a series of lower highs and lower lows, as shown by the lines on the chart.

(Source: Barchart.com)

This obvious downtrend has led to a general bearish tone to the market.  We don’t necessarily share that level of pessimism; as we will show below, dollar weakness and falling inventories are supportive for oil prices.  On the other hand, there are legitimate concerns that Saudis may reverse production restrictions after next year’s initial public offering for Saudi Aramco.

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Quarterly Energy Comment (April 11, 2017)

Posted on by Rebekah Stovall

by Bill O’Grady

The Market
Since December, oil prices have been ranging between $48 and $55 per barrel.

(Source: Barchart.com)

Prices and Inventories
Inventory levels remain elevated, reaching historic highs.

In the above charts, the one on the left shows the long-term inventory situation, while the chart on the right shows a 12-year history.  Normal inventories would be below 400 mb, so stockpiles remain elevated.

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Quarterly Energy Comment (December 30, 2016)

Posted on by Rebekah Stovall

by Bill O’Grady

The Market
Oil prices have broken above their $44 to $52 per barrel trading range in the wake of the recent OPEC output agreement.

(Source: Barchart.com)

OPEC
In a reversal of recent policy, Saudi Arabia spearheaded an agreement to cut oil production.  OPEC has agreed to cut production by about 1.3 mbpd and select non-OPEC producers have chipped in additional reductions of 0.53 mbpd as well.  The total OPEC output quota is 32.7 mbpd.

The table below shows the projected cuts relative to what OPEC said it was producing (the reference column) and what Bloomberg estimated for October’s actual production.  We have calculated the differences relative to quota from the two production estimates.  The areas in yellow represent nations that were not awarded a quota.  Indonesia is no longer an oil exporter, while Nigeria and Libya were not given a quota due to persistent production interruptions.

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