The price of WTI has held fairly steady in the $74-$75 range despite the fact that the U.S. dollar has moved higher over the last two weeks. Oil trades in U.S. dollars, so it has an inverse relationship to the dollar. Check the website below for charts on the dollar.
https://www.marketwatch.com/investing/index/dxy/charts
The "Talking Heads" who try to explain the movement in oil prices each day (a very tough job) don't mention the relationship between the dollar and oil very much. Since mid-April the U.S. dollar has moved up ~7%, which makes WTI's move even more impressive.
Oil Price - Oct 9
Oil Price - Oct 9
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Oil Price - Oct 9
WTI traded higher on Tuesday. It opened at $74.21, traded up to $75.28 and settled at $74.67. The closing price was $0.38 higher than Monday's close.
Hurricane forces Gulf of Mexico disruptions. BP (NYSE: BP) and ExxonMobil (NYSE: XOM) evacuated personnel from the Gulf of Mexico as Hurricane Michael intensified at the start of the week. BP shut in four platforms and Exxon removed staff from its Lena platform, but said production won’t be affected. Equinor (NYSE: EQNR) and BHP Billiton (NYSE: BHP) also removed staff from some platforms. As of now, it appears that around 20 percent of the region’s production has been temporarily idled. < Hurricane Michael is a fast moving storm, so damage should be minimal.
IEA warns about supply crunch. The IEA pleaded with OPEC and other major oil producers to increase production. “We should all see the risky situation, the oil markets are entering the red zone,” IEA Executive Director Fatih Birol said Tuesday, according to Bloomberg. “We should try to comfort the markets all together because it may be bad news for the consumers, importers today, but I believe it may well be bad news for the producers tomorrow.” Birol went on to add that “if there are no major moves from the key producers, the fourth quarter of this year is very, very challenging.” He noted that the run up in oil prices is occurring at a time when more red flags regarding the global economy are emerging, something that will ultimately spell trouble for the oil industry if it leads to demand destruction. < I agree that $75 is the "right price" for WTI, but oil can go a lot higher and usually does overshoot the "right price" at this point in the cycle.
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I would like to see WTI move firmly into Phase 5 ($75 to $82) and settle there until the Iran situation is worked out. However, Iran's leadership is a bunch of Wackos that think God wants them to kill everyone who doesn't believe what they believe. Religious Wackos don't do what is logical, so there is a high probability that the Iranian situation gets worse before it gets better. If Iran does not sit down to work out a new Nuke Deal with Trump soon, they will be in a race with Venezuela to see which one goes off the cliff first. - Dan
Hurricane forces Gulf of Mexico disruptions. BP (NYSE: BP) and ExxonMobil (NYSE: XOM) evacuated personnel from the Gulf of Mexico as Hurricane Michael intensified at the start of the week. BP shut in four platforms and Exxon removed staff from its Lena platform, but said production won’t be affected. Equinor (NYSE: EQNR) and BHP Billiton (NYSE: BHP) also removed staff from some platforms. As of now, it appears that around 20 percent of the region’s production has been temporarily idled. < Hurricane Michael is a fast moving storm, so damage should be minimal.
IEA warns about supply crunch. The IEA pleaded with OPEC and other major oil producers to increase production. “We should all see the risky situation, the oil markets are entering the red zone,” IEA Executive Director Fatih Birol said Tuesday, according to Bloomberg. “We should try to comfort the markets all together because it may be bad news for the consumers, importers today, but I believe it may well be bad news for the producers tomorrow.” Birol went on to add that “if there are no major moves from the key producers, the fourth quarter of this year is very, very challenging.” He noted that the run up in oil prices is occurring at a time when more red flags regarding the global economy are emerging, something that will ultimately spell trouble for the oil industry if it leads to demand destruction. < I agree that $75 is the "right price" for WTI, but oil can go a lot higher and usually does overshoot the "right price" at this point in the cycle.
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I would like to see WTI move firmly into Phase 5 ($75 to $82) and settle there until the Iran situation is worked out. However, Iran's leadership is a bunch of Wackos that think God wants them to kill everyone who doesn't believe what they believe. Religious Wackos don't do what is logical, so there is a high probability that the Iranian situation gets worse before it gets better. If Iran does not sit down to work out a new Nuke Deal with Trump soon, they will be in a race with Venezuela to see which one goes off the cliff first. - Dan
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group