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Brent price touches highest level since mid-2015

26 Sep 2017 10:03 GMT

By A/S Global Risk Management.



By Michael Poulson, A/S Global Risk Management

Following Hurricane Harvey shaking up things, the market has gone into a remarkably more bullish state.

One of the key people in the U.S. shale oil industry recently stated in an interview that in his opinion the EIA production forecasts are completely wrong. Basically he is arguing that, yes there is a lot of oil to be produced in the US, but no it will likely not be utilized as shareholders prefer a decent rate of return on investments, which is linked to higher oil prices. A wording striking a remarkable resemblance with a certain group of oil producing countries.

In the Middle East, the Kurdish vote for independence has resulted in a bullish addition to the already bullish oil situation, as the Turks are threatening to close off the global Kurdish oil supply worth more than 500 kbpd.

Furthermore, different news and statements about increased demand has started to emerge. Especially bullish is that the IEA has increased its demand forecast. This comes on top of quite bullish macro figures earlier this month, indicating that demand is increasing.

The non-American crude oil market seems tight as crude storage in general have been shrinking, likely pushing up the Brent price. Additionally, OPEC compliance to the current oil production cut was quite high during last month which likely adds bulls to the market at a time where OPEC has been and is going to discuss the future of the current production cut agreement.

The draw in U.S. gasoline stocks comes at a time when U.S. refineries have been operating below 80% for two weeks, which is historically low. But the gasoline price has not increased dramatically - suggesting supplies to the U.S. might come from elsewhere, namely Europe. As Europe is shipping more products to the US, more Brent must be used for production, which is bullish for the price. But the US refineries will most likely come back online operating at normal capacity before long.



A/S Global Risk Management is a provider of customised hedging solutions for the management of price risk on fuel expenses. The company has offices in Denmark and Singapore. For further details about its risk management products and services, please call +45 88 38 00 00 or email hedging@global-riskmanagement.com.


Michael Poulson, Oil Risk Manager at A/S Global Risk Management. Credit: A/S Global Risk Management




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