Market Report & Analysis for 10/9/2018 Morning Edition
Morning Market Overview
Oil prices were mixed on Friday but managed to the end with the fourth weekly gain in a row. The market sentiment remains biased to the bullish side with many market participants more concerned over the exposure to potential declining production from Iran, Venezuela, Iraq, Libya and Nigeria who all are in the high geopolitical risk category.
Although Saudi Arabia said last week the market is well supplied, and they stand ready to meet any additional demand many in the market are concerned over a growing view that there is just not enough surplus oil capacity immediately available and sustainable to offset the plethora of issues bubbling up around the globe.
The oil complex has been in a steady uptrend since the middle of August and likely to remain in this pattern especially leading up to the imposition of new US sanctions on Iran on Nov 5. Iranian production has been steadily decreasing as physical oil buyers are already purchasing supplies for the fourth quarter with many eliminating Iranian oil from their portfolio. As we mentioned last week we view the market as ahead of itself and in the overbought area and susceptible to a round of profit taking selling at any time… although still in an uptrend. Although not likely to happen anytime soon the main downside exposure to the complex is a resolution between the US and Iran to tweak the nuclear pact.
This week the three agencies (EIA, IEA and OPEC) will all be releasing their monthly oil forecast reports.
The EIA STEO report will be issued on Wednesday Oct 10, the OPEC report on Thursday Oct 11 with the IEA projections due out Friday October 12 Friday afternoon the latest Baker Hughes data hit the media airwaves reporting the number of rigs deployed to the US oil sector decreased by 3 rigs on the week after increasing during the previous week. Total rigs deployed to the oil sector are higher by 113 or 15.1 percent year over year. Total US crude oil production is about 16.1 percent above where it was for the same week a year ago. This week’s production came in at 11.1 million bpd.
