WTI is going to open around $70/bbl on Monday, July 30.
COLUMN-Oil prices steady as fund managers cease liquidation: Kemp - Reuters News
30-Jul-2018 12:13:59
John Kemp is a Reuters market analyst. The views expressed are his own
By John Kemp
LONDON, July 30 (Reuters) - Hedge funds appear to have completed the recent wave of liquidation, with bullish positions increased slightly last week after heavy falls the week before, helping to steady the main crude oil benchmarks.
Hedge funds and other money managers raised their net long position in the six most important petroleum futures and options contracts by 37 million barrels in the week to July 24.
The boost was a marked turnaround from the previous week, when net long positions were cut by 178 million barrels, one of the heaviest bouts of liquidation on record.
In the most recent week, portfolio managers raised net long positions in Brent (+14 million barrels), U.S. gasoline (+11 million), U.S. heating oil (+12 million) and European gasoil (+11 million).
The only selling came in NYMEX and ICE WTI, where net long positions were reduced by 11 million barrels last week, according to data published by regulators and exchanges.
The recent wave of liquidation, which started in late April, and accelerated in mid-July, has blown off some of the froth from the top of the market.
Portfolio managers remain exceptionally bullish on the outlook for oil, but some of the momentum-chasing and more tactical long positions have been squared up.
Long positions in the petroleum complex outnumber short ones by more than 1 billion barrels, but that is down from a net long position of more than 1.4 billion barrels three months ago.
Long positions still outnumber shorts by a ratio of more than 9:1, leaving the market stretched, but that is down from almost 14:1 at the peak.
For now, bullishness about supply disruptions, the impact of Iran sanctions, and strong growth in oil consumption is outweighing concerns about the global economic outlook and the impact of high prices on oil demand.
John Kemp
Senior Market Analyst
Oil Price - July 30
Oil Price - July 30
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Oil Price - July 30
Diesel inventories very low: https://www.eia.gov/todayinenergy/detail.php?id=36712
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Oil Price - July 30
This morning, Raymond James raised their long-term oil price forecast. Prior to today, RJ had expected WTI to settle around $65/bbl after mid-2019.
NEWS FLASH: Oil Prices never "settle" anywhere.
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Energy Stat: Raising Oil Price Forecasts for 2020 and Beyond - Higher Prices are Here to Stay
by J. Marshall Adkins, head of RJ's Energy Sector Team based in Houston
Summary
The most immediate catalyst for today's increase in our long-term oil price forecast is the impact of the IMO's new fuel regulations, having the effect of essentially erasing 1.5 million bpd of global oil supply in 2020. In addition, there are two structural headwinds for global oil supply that will become increasingly visible beyond 2020.
First, the steepening base decline rates across U.S. resource plays will increasingly require a higher rig count - and thus higher industry cash flows - to counteract them.
Second, the global oil industry's unusual degree of capital discipline is resulting in a sharp reduction of long-lead-time project approvals, likely leading to non-OPEC ex-U.S. supply posting accelerating declines after 2020.
Putting all this together, our new 2020 oil price forecast is $75 WTI and $80 Brent, which is materially above Street consensus and the futures curve. Similarly, and for the second time this year, we are raising our long-term (2021+) price deck by $5, to $70 WTI and $75 Brent.
NEWS FLASH: Oil Prices never "settle" anywhere.
------------------
Energy Stat: Raising Oil Price Forecasts for 2020 and Beyond - Higher Prices are Here to Stay
by J. Marshall Adkins, head of RJ's Energy Sector Team based in Houston
Summary
The most immediate catalyst for today's increase in our long-term oil price forecast is the impact of the IMO's new fuel regulations, having the effect of essentially erasing 1.5 million bpd of global oil supply in 2020. In addition, there are two structural headwinds for global oil supply that will become increasingly visible beyond 2020.
First, the steepening base decline rates across U.S. resource plays will increasingly require a higher rig count - and thus higher industry cash flows - to counteract them.
Second, the global oil industry's unusual degree of capital discipline is resulting in a sharp reduction of long-lead-time project approvals, likely leading to non-OPEC ex-U.S. supply posting accelerating declines after 2020.
Putting all this together, our new 2020 oil price forecast is $75 WTI and $80 Brent, which is materially above Street consensus and the futures curve. Similarly, and for the second time this year, we are raising our long-term (2021+) price deck by $5, to $70 WTI and $75 Brent.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Oil Price - July 30
RJ: "Sorry, Mr. President, but higher oil prices are here to stay. Despite all of the noise this year around U.S. oil supply surging, OPEC+
ending its production cuts, oil demand growth slowing, and President Trump tweeting that oil prices are too high, our already bullish
oil model has become even more bullish through the year. Oil supply/demand fundamentals have steadily tightened despite rising
oil prices and oil inventories are now below the 5-YR averages and OECD “days of consumption” are now approaching 5-year lows.
Furthermore, the longer-term outlook for oil has only continued to improve as we get a better view of the impact of IMO 2020,
U.S. base decline rates, and future non-OPEC+/non-U.S. supplies. Not only do we remain firm in our vision that oil has more room
to rally over the next 12-18 months, but we now believe that our already above-consensus long-term price deck of $65/Bbl must
move higher."
ending its production cuts, oil demand growth slowing, and President Trump tweeting that oil prices are too high, our already bullish
oil model has become even more bullish through the year. Oil supply/demand fundamentals have steadily tightened despite rising
oil prices and oil inventories are now below the 5-YR averages and OECD “days of consumption” are now approaching 5-year lows.
Furthermore, the longer-term outlook for oil has only continued to improve as we get a better view of the impact of IMO 2020,
U.S. base decline rates, and future non-OPEC+/non-U.S. supplies. Not only do we remain firm in our vision that oil has more room
to rally over the next 12-18 months, but we now believe that our already above-consensus long-term price deck of $65/Bbl must
move higher."
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group