The Wall Street Journal posted a story today in their Heard on the Street Column on the recent euphoria in esp. Brent Oil Prices and wonders if it is sustainable given indications that Chinese demand may come off. US demand has recently picked up which compensates to a certain extent. The article says it all depends on both sides of the equation, US demand AND supply.
Below are two further indicators regarding supply outside the USA: what happens if the Iraqi Kurds get cut off by Turkey after their vote for independence referendum and the prospects for higher production coming from Libya and Nigeria going forward. The unimaginable of oil going towards $35 reflects more the world being awash in oil and alternatives rather than any significant decline in demand due to economic stress, but rather efficiency and alternative gains.
Unimaginable #4. Oil prices approach $35!
(this could adversely affect the US stock market indices)
OPEC tries to remain disciplined in their production ceilings and yet there is difficulty to figure where the real balance is between supply and demand. If American growth appears to be peaking, this should affect the demand side. Also Auto sales in the US appear to also be peaking, but remain steady at a high level. Oil prices get more and more volatile as US drillers keep supply robust and Chinese demand for commodities is challenged by Chinese policies curbing leverage financing. Not only is oil demand along with coal being challenged by increasing rig count, but also greater supply of energy from natural gas, sun and wind in the US!
September 26, 2017:
Source: @WSJ; Read full article
Brent Oil prices take off and the spread between Brent and WTI widens…
Source: WSJ-The Daily Shot
…but OPEC Wildcard Producers, Nigeria and Libya Production stabilizes Source: @IIF /WSJ-Daily Shot
The US Congress wants to strengthen the sanctions against Russia making things awkward for Europe who depends a lot on Russian oil and gas. If oil and gas prices stay relatively cheap and the US dollar weakens further, it should make it easier for Europe to import their energy needs from the USA! Another reflection of America First implemented by Congress, not Trump, oder? Go to Unimaginable no. 9…