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Oil Tanks To $51 Handle – One-Month Lows

Oil Tanks To $51 Handle – One-Month Lows thumbnail

It seems ever-exuberant energy traders are finally waking up to the reality that the global rebalance is not happening. A record glut of crude and surging production has sent WTI back to a $51 handle this morning (one-month lows) and has weighed on gasoline prices…

WTI has broken below its 100-day moving average as the machines ran overnight stops and then plunged after the DOE data…


“Inventory drawdown slower than I thought after cuts,” Saudi Arabia’s Khalid Al-Falih admits.

Bloomberg’s Vince Piazza warns U.S. inventories across the product value chain remain elevated, with crude oil 39% above the five- year average and distillates, jet fuel and gasoline between 5.5% and 22% higher. This, along with the 51% rebound in rig count since last year, and the robust level of more than 5,300 DUCs (drilled yet uncompleted wells) implies the near-term return of U.S. hydrocarbon volume with an environment of lower range-bound prices.


2 Comments on "Oil Tanks To $51 Handle – One-Month Lows"

  1. dave thompson on Wed, 8th Mar 2017 7:05 pm 

    So oil has been around $50 now, so what?

  2. twocats on Wed, 8th Mar 2017 9:02 pm 

    Because this: “Investors raised their bets on rising Brent crude oil prices to a new high last week, data from the InterContinental Exchange showed on Monday, breaking the 500,000-lot mark for the first time on record.” [Feb 27, 2017]

    Well, carrying all those bets is probably starting to get expensive. And if a few large players exit the trade it could start a cascade. How is OPEC going to feel about cutting production and oil going back to $40? So they break their deal, driving prices even lower… And if a global slowdown kicks in (i.e. is realized)… And on and on and on… I’m not saying this will happen, but I’m assuming one can see the danger, sense the fear.

    And to top it off, that’s only going to limit exploration budgets for yet another year. We are in danger of leaving a three-year long shotgun hole in the abdomen of civilization due to supply shortfall. Mid-range accounts from most of the analysts I’m seeing puts the shortfall start date around 2020.

    Granted civilization has already lasted way longer than I thought it would so… slow hand-clap for that accomplishment.

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