The direction of hedge funds bets in the coming weeks and months will depend on a number of factors, including the U.S. rig count, the strength of the dollar, the Fed’s decision on whether to raise interest rates, and of course OPEC.
When discussing the “success” surrounding OPEC’s cuts, it’s important to remember where the market was at the beginning of 2016, when prices fell below $30. Now, prices are in the mid-$50s, reflecting the impact of OPEC's actions.
Over the past couple of years, there’s been a string of comments from executives and ministers who want and need higher prices making the case for a tighter market even though there’s little to no evidence of that reflected in the fundamentals.
Crude export deals so far have been “opportunistic” and isolated in nature and have gone to a wide variety of buyers. Cargoes will continue to trickle out, but a gusher won’t happen unless domestic production rebounds significantly.
The oil majors reported very dismal numbers for the first quarter, but earnings exceeded market expectations largely because of earnings from their downstream units: Refining operations have allowed the large integrated oil companies to weather low oil prices much better than upstream E&P companies.
Despite the decline of volumes on the tracks and controversies surrounding safety, crude shipped via rail is here to stay, given there isn’t currently pipeline capacity to move supplies from the prolific Bakken plays to the coasts.
The IMF's inclusion of China’s yuan in the global currency basket gives the country a big symbolic victory ahead of the launch of its yuan-denominated crude futures exchange.
While output in the Bakken has held up relatively well, it is set for a dramatic decline, making East Coast refineries further dependent on imports.
Intercontinental Exchange's Brent and Gasoil futures have retained their roles as the world’s crude and refined oil benchmarks because they have evolved in line with the physical markets over the course of the last three decades.
Kleinman: There’s no market rationale for U.S. crude exports, now that the Atlantic basin is glutted with supply and the differential between U.S. and global oil prices has narrowed.