Saudi Arabia's reports about declining crude oil inventories were instrumental in the buildup of trust on the market that OPEC's-and the Kingdom's specifically-efforts to rebalance crude oil's fundamentals were working. West Texas Intermediate crude was trading at $44 a barrel in early July, when Barron's predicted that WTI would touch $60 before the end of this year ("The Price of Oil Is Set to Jump", July 8).
Liam Denning, columnist for Bloomberg Gadfly, notes that OPEC's expectation of tight oil production peaking in the mid-2020s "may betray a lingering unwillingness to acknowledge the important role of access to capital and logistics - not just geology - in the tight-oil boom".
That being said, I am long BP plc (NYSE:BP), from the low $30s, because the worst of times are behind BP. The stock is up significantly and broke out to a multi-year high.
EIA estimates that, without pipeline constraints, moving crude oil from Cushing to the U.S. Gulf Coast typically costs $3.50 per barrel, but it has gotten more expensive as transportation constraints have developed.
The Organization of the Petroleum Exporting Countries' 2017 World Oil Outlook showed the group predicts demand for its crude will rise more slowly than previously expected in the next two years, as higher prices from its supply policy stimulate output growth from rival producers. Nonetheless, policymakers in Delhi will surely take a cautious stance given the extensive impact that oil prices have on the Indian economy.
Notably, over the past two months, crude oil prices have increased by 22 percent from USD 52.3/bbl in August-end.
Want to be super-aggressive, purchase a 3x leveraged position, providing 3x exposure to the move in crude oil, such as the ProShares UltraPro 3x Crude Oil ETF (NYSEARCA:OILU).
Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. I believe this will ultimately grease the wheels for sanctions to be lifted against Russia, so XOM and Rosneft can begin on their long-delayed joint venture.
Oilfield services firm Baker Hughes reported that the number of active U.S. rigs drilling for oil fell by eight to 729 last week.
Dozens of people have been detained in the crackdown, which has consolidated Crown Prince Mohammed bin Salman's power. The American shale industry has been let free to increase production in response to higher prices, thus imposing a cap on the price of oil.
According to ICRA's estimates, for every USD 1/bbl rise in Indian basket crude price, annual GURs will increase by Rs. 10 billion and net import bill by USD 1.2 billion.