Crude Oil recap for 06.10.2015
Crude has destroyed in the US session 47.11 and whats left of it and today it even continues to climb, even 48 was breached hard as the price aims for 50 and 52.82. The rally isn't that much of a surprise as comments came up from OPEC and the reality of what is going on in the Middle East and more specifically - the war for Syria which in my opinion turns out from a proxy war step by step to an all-out sovereign conflict now that Russia is involved and Iran is "sharpening its blades". OPEC comments:
- OPEC says non-OPEC oil supply growth may be zero or negative in 2016
- OPEC and non-OPEC should work together to tackle market surplus
- sees 2016 oil demand growth of 1.3m bpd
- sees "some light at the end of the tunnel" (regarding a consensus on the supply and demand balance and a stable price I guess)
- OPEC sec gen says $650 bln cut in upstream investment
- means less supply in very near future and high prices
- we are in extreme of low oil price. I hope it will not last
Still even with these news and the IMF's downgrade in global growth, Crude's reaction wasn't that... dramatic lets say.
Why Syria was mentioned? According to several trading desks, the pre-war jitters in (and above) Syria are finally catching up some, and there has been a distinct geopolitical-risk oil bid, on concerns the proxy war involving the US, Russia and increasingly Saudi Arabia and Iran, will finally spill over leading to forced supply cuts by middle-east nations, and a sharp, if transitory, spike in crude oil prices, such as the one the market is pricing in right now.
So finally Oil reacts to something. It "knows" it is in danger and suddenly the hard truth hits it in the face - all metaphorically speaking of course. Bulls advance!