Oil Price - April 21
Posted: Sat Apr 21, 2018 9:28 am
On April 20:
> WTI closed at $68.06
> Brent closed at $73.66
Yet our Sweet 16 stocks are trading as if WTI is still $50/bbl.
From Gaffney Cline & Associates Oil & Gas Monitor 4/20/2018:
Crude Oil – Global growth supports oil consumption
Oil prices kept rising to their highest since late 2014 as US crude inventories declined, moving closer to five-year averages, and top exporter Saudi Arabia rumored to support even higher prices.
Since the start of the supply cuts, crude inventories have declined gradually from record highs towards long-term average levels. In the United States, the EIA indicated on Wednesday that commercial crude stocks fell close to the five-year average of about 420 million barrels. (On 4/13 IEA said OECD oil inventories are just 30 million bbls above the 5-year average and likely to go below the average by May 31st - Dan).
Also supporting prices is the possibility that the United States may once again impose sanctions on Iran, OPEC’s third-largest producer, which could result in further supply reductions from the Middle East. (Decision on this is expected May 12. - Dan)
The state of the global economy is one of the most important drivers for oil consumption and prices, so the economic outlook is crucial to the calculations of OPEC and other oil suppliers. The current cyclical expansion has considerable momentum in the short term, which should ensure that it continues in the short term, but there is increased anxiety about whether it will be sustained in 2019 and 2020. Both the WTO and the IMF have warned about potential downside risks arising from increasing trade tensions between the United States and China.
Major economies flirting with a trade war at a time of widespread economic expansion may seem odd—especially when the expansion is so reliant on investment and trade. Particularly in advanced economies, however, public optimism about the benefits of economic integration has been eroded over time by long-standing trends of job and wage polarization, coupled with persistent sub-par growth in median wages. Many households have seen little or no benefit from growth. The IMF have been saying for a while that the current cyclical upswing offers an ideal opportunity to make longer-term growth stronger, more resilient, and more inclusive. The present good times will not last for long, but sound policies can extend the upswing while reducing the risks of a disruptive unwinding.
The world economy continues to show broad-based momentum. Against that positive backdrop, the prospect of a similarly broad-based conflict over trade presents a jarring picture. Despite the good near-term news, longer-term prospects are more sobering. Advanced economies—facing aging populations, falling rates of labor force participation, and low productivity growth—will likely not regain the per capita growth rates they enjoyed before the global financial crisis.
> WTI closed at $68.06
> Brent closed at $73.66
Yet our Sweet 16 stocks are trading as if WTI is still $50/bbl.
From Gaffney Cline & Associates Oil & Gas Monitor 4/20/2018:
Crude Oil – Global growth supports oil consumption
Oil prices kept rising to their highest since late 2014 as US crude inventories declined, moving closer to five-year averages, and top exporter Saudi Arabia rumored to support even higher prices.
Since the start of the supply cuts, crude inventories have declined gradually from record highs towards long-term average levels. In the United States, the EIA indicated on Wednesday that commercial crude stocks fell close to the five-year average of about 420 million barrels. (On 4/13 IEA said OECD oil inventories are just 30 million bbls above the 5-year average and likely to go below the average by May 31st - Dan).
Also supporting prices is the possibility that the United States may once again impose sanctions on Iran, OPEC’s third-largest producer, which could result in further supply reductions from the Middle East. (Decision on this is expected May 12. - Dan)
The state of the global economy is one of the most important drivers for oil consumption and prices, so the economic outlook is crucial to the calculations of OPEC and other oil suppliers. The current cyclical expansion has considerable momentum in the short term, which should ensure that it continues in the short term, but there is increased anxiety about whether it will be sustained in 2019 and 2020. Both the WTO and the IMF have warned about potential downside risks arising from increasing trade tensions between the United States and China.
Major economies flirting with a trade war at a time of widespread economic expansion may seem odd—especially when the expansion is so reliant on investment and trade. Particularly in advanced economies, however, public optimism about the benefits of economic integration has been eroded over time by long-standing trends of job and wage polarization, coupled with persistent sub-par growth in median wages. Many households have seen little or no benefit from growth. The IMF have been saying for a while that the current cyclical upswing offers an ideal opportunity to make longer-term growth stronger, more resilient, and more inclusive. The present good times will not last for long, but sound policies can extend the upswing while reducing the risks of a disruptive unwinding.
The world economy continues to show broad-based momentum. Against that positive backdrop, the prospect of a similarly broad-based conflict over trade presents a jarring picture. Despite the good near-term news, longer-term prospects are more sobering. Advanced economies—facing aging populations, falling rates of labor force participation, and low productivity growth—will likely not regain the per capita growth rates they enjoyed before the global financial crisis.