Oil Price - Sept 6

[dan_s]

2nd quarter range for WTI
$66.30/bbl on April 23
$51.14/bbl on May 12
$59.89/bbl was the average price of the front month contract for WTI in the 2nd quarter

So far the 3rd quarter range for WTI
$60.43/bbl on July 10
$51.09/bbl on August 7
The chart for July 1 through today shows more time over $55 than below. My "eye ball" estimate is that WTI's front month has average slightly over $56/bbl so far in Q3. All of my forecast/valuation models are based on WTI averaging $55/bbl in Q3 and $60/bbl in Q4.
-------------------------------------------
Note below is from PAVEL MOLCHANOV and JUSTIN JENKINS, Energy Sector Analysts at Raymond James dated 9-5-2019

This week's petroleum inventories update was bullish relative to consensus. "Big Three" petroleum inventories (crude, gasoline, distillates – including SPR) fell by 9.7 MMBbls, versus consensus estimates calling for a draw of 3.4 MMBbls. Turning to crude, total inventories fell by 4.8 MMBbls, versus consensus calling for a draw of 2.0 MMBbls and a normal seasonal draw of 2.1 MMBbls. Refinery utilization fell to 94.8% from 95.2% last week. Total petroleum product demand decreased 2.6% after last week’s 5.8% increase. On a four-week moving average basis, there is a 1.6% y/y increase in total demand.

Since the mid-year escalation of the U.S.-China trade war, oil prices have weakened due to the negative macro sentiment, with day-to-day choppiness dominated by macro headlines and associated demand-related fears. The much more bullish supply side of the equation is largely being overlooked: the larger U.S. producers are exhibiting restraint in capital allocation, and U.S. well productivity improvements are slowing down; OPEC plus Russia’s production cuts – in place through March 2020 – are noticeably contributing to inventory draws; U.S. sanctions against Iran continue to be impactful; and IMO 2020 is looming four months from now. The 12-month futures strip ($54.66/Bbl for WTI and $58.72/Bbl for Brent) shows modest backwardation for both Brent and WTI; for comparison, our recently updated 2019 forecast is $62.50 WTI/$71.00 Brent and the 2020 forecast is $92.50 WTI/$100 Brent. There remain several key question marks, such as: 1) on the bullish side, the possibility of supply disruptions above and beyond the current ones, most notably the possibility of military escalation vis-à-vis Iran, and 2) on the bearish side, increasingly visible indications of global macro slowdown and resulting read-through for oil demand.
------------------------------------
MY TAKE: The supply/demand fundamentals point to much higher oil prices, but there is an incredible amount of "noise" impacting oil price these days. Yesterday's high within an hour of EIA's bullish storage report of $57.62/bbl was the high for the last 30 days. Computers and DayTraders seem to be trading the range of $53.50 to $57.50.

WTI prompt month (OCT 19) was up $0.22 on the day, to settle at $56.52/Bbl.

Also, NG prompt month (OCT 19) was up $0.061 on the day, to settle at $2.496/MMBtu

[ChuckGeb]

Both of Baker Hughes and the CEO of Vitol have recently reported that they expect oil prices to remain range bound for the foreseeable future. It seems that whatever bullish news there is that oil springs back to $55 or under like a yo yo. I guess Vitol would have the trading clout to make this happen. Very frustrating!

Looks like a decent close today but watch out on Monday.

Sure hope today is reflective of a paradigm shift in our favor!