North American Crude Bulletin#1

Price movement recap

In the past four week we have seen a significant of USD 10 drop in oil prices with WTI crude around USD 63 per barrel in early November.

Prices reached a peak in October due to global shortage supply after announcement of US sanctions over Iran, who started on the 4th November.

Early October Saudi Arabia and Russia stated they will raise their production to compensate the shortfall in supply. U.S. Treasury yield increase also impact also impact oil price as it has added volatility across all markets including currencies and commodities.

Future prices: Prices agreed today for delivering a specified quantity of crude oil (light) at a specified time and place in the future.

before theUS midterms election in United States 02.11.2018

We can see that there is not a huge difference on the curve pace after the US midterms election. As we are still in a contango, we recommend to go on long term. Even if there is a little slight on the forward price, it is still profitable to store and sell in the future.

WTI spot and London Brent oil curve:

The exchange of crude knows a lot of variation. The variation can be influence by a lot of thing like a tweet from Donald Trump explaining that some commercial sanction will be proceed against a country from the OPEC.

This graph shows the price variation of the Brent crude and West Texas intermediate spot. We can see that the two curves are correlate and move in the same way. Even if the variation trend is clearly turned to a price decrease, the London Brent oil price remains higher than the WTI crude oil spot.

Crude oil price :

Oil prices are still dropping this week while the U.S crude oil production is increasing. A lot of crude oil actors due to the US production intensification are wondering about a global oversupply return. It is why some of the OPEC member are thinking that a production curbs may become necessary once again in order to prevent a glut.

References:

https://www.zonebourse.com/LONDON-BRENT-OIL-4948/graphiques-comparatif/

http://marketqview.com/forwardcurvechart.php?ID=23&TYPE=Price

https://www.eia.gov/dnav/pet/PET_PRI_SPT_S1_D.htm

http://www.theweek.co.uk/oil-price/95286/what-is-the-price-of-oil-and-which-way-will-it-go

https://oilprice.com/Energy/Crude-Oil/The-Real-Reason-For-The-Big-Sell-Off-In-Oil.html

 

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