HomeResearch and NewsOil Market Report - November 2018

Oil Market Report - November 2018

EXECUTIVE SUMMARY

In November troubles on the crude oil market continued and a price of Brent crude oil sharply dropped by 20.9% mom and dipped down below $60 per bbl. It took the crude oil market roughly one year to move up from $60 to nearly $90, but a way back turned out to be much shorter and took only 2 months. The high of $86.74 in Brent oil was achieved in October, 3, while on November, 29 the price dug to $57.78, a free fall of 33.4%! Ongoing Iran’s oil export decline that dropped in November to 1 mln bbl / d, the lowest level since 2015 as U.S. sanctions took effect, was completely ignored by market participants. Trade war tensions combined with rising Saudi Arabian volumes of crude pumping as well as concerns of a slowdown in the global economy should be noted among the reasons of so sharp downward movement of oil prices.

Total OPEC oil production in November roughly unchanged comparing with October and stood at the point of 33.13 mln bbl / d according to data provided by Bloomberg. However the flat total number dynamic doesn’t mean that all members of the cartel produced the same amount of crude oil in November as they did in the previous month. While Saudi Arabia and U.A.E. increased oil production by 340 and 150 thsd bbl / d or 3.2% and 4.8% mom respectively Iran and Iraq reduced crude oil output by 230 and 160 thsd bbl / d or 6.9% and 3.4% mom.

In November Iran overtook Saudi Arabia and became the state with the largest spare capacities among OPEC members. Now Iran is accounted for 34% of OPEC’s total figure and can ramp up production by 910 thsd bbl / d, while Saudi Arabia is accounted only for 18.0% of OPEC’s total spare capacities and has potential to increase production by 480 thsd bbl / d.

Total crude oil production in non-OPEC states grew in October (latest EIG assessments) by another 412 thsd bbl / d or 0.8% mom and reached a new record of 51.89 mln bbl / d. The same time October became the month in the history of observations when total non-OPEC oil output (including NGLs) exceeds the level of 60 mln bbl / d. So, October is the 10th month of continuous crude oil production growth in non-OPEC states as a whole and comparing to the reference level of October 2016 (48.89 mln bbl / d) the total non-OPEC oil output in October added exactly 3 mln bbl / d. As for the year-over-year dynamic non-OPEC oil producing countries as a whole ramped up crude oil production in October by 2.9 mln bbl / d or 6.0% yoy.

Crude oil production in the USA climbed again in November 2018 by considerable 650 thsd bbl / d relative to October 2018 number or 5.9% mom. In comparison with November 2017 figures the US crude oil output added in November 2018 roughly 2.0 mln bbl / d or impressive 21.2% yoy. The same time according to the data from Rystad Energy total production of shale oil in the USA again slightly declined relative to the previous month by 24 thsd bbl / d or -0.3% mom in November 2018. Only the Permian basin marked growth equal to 43 thsd bbl / d or 1.1% mom.

According to DOE’s weekly data total commercial crude oil stocks in the USA in November 2018 grew up by 17.2 mln bbl or +4.0% comparing to the previous month. So November became the 3rd month in a row of buildup of commercial stocks of crude oil. Comparing to a year ago level crude oil stocks in the USA  in November 2018 felt by 10.6 mln bbl or -2.3% yoy. As for crude oil inventories in Cushing oil storage in Oklahoma, they also rose in November, but even at much more impressive rate comparing to total commercial stocks – by 6.4 mln bbl or 20.0% mom. The negative impact of excessive stocks has been strengthening in November, so the oil glut still has a place in the USA.

Download PDF

oil, investment, equity

Read more

Oil Market Report - March 2020

Crude oil prices ended February 2020 sharply lower with both ICE Brent and NYMEXWTI showing monthly declines of more than 12% to reach their lowest monthlyvalues in almost 2.5 years as the rapid spread of Covid-19 in China and several othercountries raised investors’ concerns about the impacts on the global economy and oildemand, and triggered a sharp sell-off in markets amid uncertainties on the extent ofdemand destruction and worries that this health crisis might evolve into a pandemic.

oil, investment, equity

Arbat Capital: Banking Sector Report - February 2020

US banks tumbled again in February after very weak performance in January amid spreading COVID-19 around the world. The broad market was underperformed substantially for the second consecutive month after 4 months in a row of leading dynamics. Thus, BKX index decreased by 12.5% MoM in February vs -8.4% MoM of SPX index. Absolute performance on MoM basis was -2 std from the mean and it is in the bottom 4% of absolute MoM performance of BKX index.

investment, banks;

Commodity market Report - February 2020

Trade war is officially over but Chinese risks resurfaced from the other side - extreme quarantine measures after coronavirus outbreak in Jan-Feb resulted in significant breakdown in the industrial production chains and construction activity. However monetary and fiscal stimuli quickly reversed negative sentiment and overall risk conditions returned to the high Greed mode with only commodities market kept in risk-off mode. Energy complex was very volatile as its initial sharp drop was lately compensated by OPEC verbal interventions and renewed risk in Libya and Venezuela. Industrial metals fell sharply, but Precious shined brightly with unbelievable bubble in Palladium. Agri commodities were mostly range bound with Cocoa being top performer

Macroeconomic drivers turn to negative as positive developments after the Trade Deal signature and record financial markets levels gave the way to fears of world economic slowdown after the virus outbreak. On the other hand there were not many voices for recession as stimulative monetary policy should provide the cushion. However we think that markets overstated willingness of the Fed to keep on printing and the main risk once again turned to the hawkish surprise when it exits REPO stimulus gambit and the ECB to end QE. 

commodity;