Daily Oil Commentary

Brent is trading this morning at $54.84 down 0.11 and WTi is up 0.04 at $49.94 from last nights close. Another brutal day for markets in general yesterday as the World comes to terms with the fact that this Coronavirus is not going anyway, any time soon. As I have been saying, data showing that demand is actually taking a sizeable hit will start dribbling in over the coming week or so but it cannot be ignored that, regardless of a few oil ministers saying that the market will bounce back in the second half of the year, we will see some pretty grim figures. The issue now regarding the virus is not solely about China, but the fact that cases globally are growing and that most countries are preparing for further outbreaks. The market now faces a global drop in demand, not just one in China. This is being reflected in the equities market and oil is following suit. Both benchmarks are flirting around the key support levels of $55 on Brent and $50 on WTi and I don't think it is going to take lot for those to be broken. EIA data is out later, and I imagine we will see more of the same, i.e. builds on crude and draws on products. If US production stays steady at a mahoosive 13mnbpd then the market is going to have to have a good look at itself as to where all this crude oil is actually going to go. I thought we would have heard more from OPEC+ if I'm honest and I'm not sure it is a case of no news is good news, usually when we see dramatic movements in the futures markets, which we have seen this week, we hear from an OPEC minister or ten, but nothing really has surfaced this week. Libyan outages are keeping things in some kind of ironic check, being 1mnbpd of production down from this time a year ago but eventually that will come back online, then OPEC+ really do have a job to do. Last commentary until 9 March. If I'm not back by then, please send a St Bernard. Be safe.

Daily Oil Commentary

Brent is trading this morning at $56.84 up 0.54 and WTi is up 0.44, trading at $51.87 from last night's close. A brutal day yesterday across all markets really, but for the purposes of this commentary we shall dismiss other markets for the time being, Brent suffered its worst day in two years and is now officially in "bear market territory". Whatever that means. The bear market gets its name from the way in which a bear attacks its prey—swiping its paws downward. Like a honey badger. Brutal little things for such a cuddly name. Are we really in a honey badger market though? Well I read yesterday that "…some experts are saying 1 million to 3 million barrels a day are being affected by a demand crunch. But “that’s only 1% of production. That shouldn’t translate to a $13 drop in prices,” Park said in emailed commentary. “The demand for oil and gas is inelastic, so price changes are always more severe than demand. If demand goes down a little, the price goes down a lot.” Still, “the coronavirus impact does not justify a 20% price reduction,” he said. “Fear is driving the market.” Let me guess where you work Mr Park? Ah yes, an oil and gas producer. Look the market is continually driven by fear, fear is what keeps us active and makes us run faster if we're ever in close proximity to a honey badger wearing nothing but a pair of banana hammocks. You take the fear away and you are left with nothing but unbridled joy and who wants to live in a world where everybody is nice to each other and we hold hands and sing kum by yah my lord? Exactly. Do I think reactions to the current outbreak are a little excessive though? Well yes, I do but I'll tell you this - rest on your laurels at your peril. It would be dangerously arrogant to assume anyone is immune from the outbreak so in the words of Mad Eye Moody - constant vigilance. The thing is though, with constant vigilance comes scrutiny, and with scrutiny comes caution, and that's where the market find itself right now. The rally over the last two weeks has been nothing short of complacency on not what the outbreak might do to global demand but what the outbreak does to be the population's confidence in terms of travelling, recreational activities etc etc. I expect things to, sadly, get a little worse, before they get better. Good day.

Daily Oil Commentary

Brent is trading this morning at $57.05 down 1.45 and WTi is down 1.23 trading at $52.15 from Fridays close. Another weekend and another Arsenal win, lofty rumours of European ambitions are just that - rumours. Any Arsenal fan will know that a win is good, 2 wins is amazing, but 3 wins on the spin? Nah, something has to give. And indeed, the same can be said of the oil market right now, mid last week the market was Adam Ant that the Coronavirus outbreak had been contained and that enough had been done by the relevant central banks to cushions any drop in demand. Alas, too much too soon and, sadly, the outbreak seems to be spreading outside of China, raising fears that not just Chinese, but global demand could take a whack. You'd have to argue that the rally we have seen in the last couple of weeks has been one pinned on hope, not by facts, and that very hope could be wiped out quicker than my new love for Tyson Fury. What a legend btw. I don't know where markets get support from here if I'm honest, the pragmatism most Central banks showed in infected countries was laudable, but you have to wonder what other forms of confidence can be shown to investors if the virus continues to grow and spread wider. Well, in the oil markets OPEC+ are obviously there waiting to act if necessary come 5th March, and, as I said last week, it will purely be a decision based on where flat price trades over the coming two weeks before the market can ascertain if any further measures are required. On a global market basis though? Hmmm, I'm not so sure. Of course, priority will be given to ensuring any virus outbreaks are contained, this will inevitably result in forms of quarantine and lock down which yields obvious drops in demand on a retail basis which in turn spreads to the supplier etc etc. So, I think the market will prepare itself for another hit to demand but quite how it prices in a recovery I think is still far too early to say. Keep your eyes on the headlines. Good day.

Daily Oil Commentary

Brent is trading this morning at, a quite frankly bemusing, $59.24 up 0.12 and WTi is up 0.22 at $53.51 from last nights close. Friedrick Nietzsche once said "It is nobler to declare oneself wrong than to insist on being right, especially when one is right". You know what Fred? You are spot on my handlebar moustache friend. I may have made some comments recently about Brent collapsing. And, actual numbers aside I maintain my comments. I still cannot form a solid argument for why Brent should be trading around levels where it was nearly a month ago. The impact from Coronavirus is yet to be seen and documented and surely only the most naïve of traders must assume that things aren't going to be evidenced any differently? Actually, don't answer that. Of course, they think that, and hence the reason we are up close to $60 on Brent. I think the market got close to $50 before it realised that, facts aside, those kinds of levels are simply not sustainable, nor should they be entertained for longer than 48 hours. It is the dynamic of low prices that causes their very destruction. And indeed, the same can be said of higher prices. $50 is the low, $70 is the high. Or that's how it would seem after trading patterns we have witnessed over the last 12 months or so. Of course there is going to come a point in the near distant future where the virus outbreak is going to be contained and the markets can lean on some kind of assurance that things are looking up again, but it is far too early to price that in. But the bulls don't care and have done so already. Remember that correction we spoke of? Well maybe we will see another correction of that correction still to come. What else is going on? EIA data is out later and apparently, we will see a hefty build on US crude stocks - no surprise there really. OPEC+ have agreed to meet in March. Flat price will be a key indicator as to whether the group decide to take any action, but I highly doubt we will see them cut supply especially with apparent Venezuelan outlets being choked off and Libya in disarray again. It depends on how much the group want to leverage global uncertainties right now, if they cut knowing that prices are trading where they were a month ago then can it be seen as "helping the market" or just increasing fiscal income? One to watch. Good day.

Daily Oil Commentary

Brent is trading at $57.08 this morning, down 0.59 and WTI is down 0.40 trading at $51.45 from last nights close. Henry David Thoreau once said, “Not until we are lost do we begin to understand ourselves”. And this market has lost its way more than the VAR system. I suppose it was a little late, but the market is waking up to headlines that read, “Oil prices fall as market weights coronavirus demand impact”. I mean, really? Did the market need a headline to say, “listen you douche bags, this bug is pretty serious, and China is on lock down so don’t expect demand to be great OK?”. OK, thanks Sherlock. As I mentioned yesterday there is a mitigant for the bulls, and that lies in OPEC+, and quite what they do with any more potential supply cuts. I think Brent has a lot further to collapse before we see any actual decisions being made, or indeed for there to be an actual meeting. I can see the next 4 months being 4 consecutive deferred EGM’s before they meet at their usual bi-annual shindig in June. Keeping a ceiling on the market really collapsing is the, sadly, inevitable news that most of Libya’s supply is disrupted again, production is only a tenth of capacity, but as I have always said, rely on production from such states as Libya at your peril. Analysts are saying that Q2 looks optimistic for oil prices and yes, whilst stimulus measures have been put in place fairly quickly by China at least, the markets have still not seen the impact of quite what the outbreak has done for demand in Q1 anyway. I imagine we will some fairly grim data coming out of both the US in terms of EIA stockpiles and China import figures over the coming weeks before things really look to get any better. Good day.

Daily Oil Commentary

Brent is trading this morning at $57.38 up 0.06 and WTI is up 0.11, trading at $52.16 from Friday's close. First, of all 4-0! I feel drunk with happiness. Caution the man who drunk on happiness for he, like man who run behind bus, going to be exhausted. Confucius said that, honestly, he did. OK, I know the question you're all asking - Would you rather have a pet elephant, or a pet giraffe? No, not that, but it is a very good question. I think I'd go for the giraffe, personally but no, the real question you're all asking. Why, in the name of all that is holey (sic.), is crude trading at $57.40? Well, let me tell you. I genuinely do not know. There isn't a part of me right now that can form a bullish argument for crude oil. I know you're all thinking yes Stanley, but when are you EVER bullish crude? There have been times. I can name at least two or three instances in the last 7 years I have been bullish but I'm talking about right now, how can one form an argument for crude to be up here? Everyone is going to say, "ah, ha! lest ye forget the might powers of OPEC+?". Ummm, no. I haven't forgotten their powers but what exactly have they done in the last two weeks apart from stand around and drunk café au lait? The market has just guessed that OPEC+ will do something but in all honesty, they have done less than Arteta has - next to nothing. It’s just a typical example of how fickle the bulls are, risk sentiment is up because people want to believe that the powers that be will do something if they have to whereas, in realistic terms, nothing has happened and arguably we are in a worst position on a macroeconomic basis than we were when crude was trading close to that psychological $50 per bbl on Brent. I'll leave you with the from my friends at the IEA, "In its first publication on the oil market since the outbreak began, the International Energy Agency (IEA) dramatically revised its oil demand forecast, predicting consumption will actually contract by 435,000 bpd, the first outright decline year-on-year since the global financial crisis more than a decade ago. Previously, the agency expected consumption to increase by 800,000 bpd from a year earlier." In the words of Nina Simone "Nuff said". Good day.  

Daily Oil Commentary

Brent is trading this morning at $55.03 up 1.02 and WTI is up 0.69, trading at $50.63 from last nights close. Blogging is not writing. It is merely graffiti with punctuation. Just to be clear - I am not a writer, OK? This medium though that I choose to talk nonsense on every day does get a lot off my chest and let me tell you, boy do I have a lot to get off my chest today. I feel like Katie Price 10 years ago. Anyway - this rant. Can someone please explain to me how and why Brent oil is trading $55 per barrel? Please? Let's break things down, shall we? China is in nigh on lock down. President Xi came out yesterday to tell everyone that things are fine (the first time he has been in seen in public in two weeks). The thing is though that he was wearing a great big mask and one of those suits that Marty McFly wore in Back to the Future. Isn't that like Frank Lampard speaking in a pre-match press conference saying he has full faith in his team whilst lacing his boots up? So, China in lock down, which is ultimately going to have a massive impact on demand, which in turn has an impact on shipping, which has an impact on fuel oil, which has an impact on crude oil. Or am I missing something? The thing is though, as we all sadly know, that this COVID-19 outbreak is not just contained to China. Its impact is far reaching. People will not want to travel, people will not want to venture out as much, the elderly will stay in and watch Countdown reruns and Children will sit in at home smearing Smarties on to every conceivable surface. All of the above are not good for consumerism and indeed, the oil market. Jerome Powell testified last night and even he said that the US economy will suffer some kind of effect. That's about as positive a spin as he could have put on it I think. You have to wonder though, what can Powell and the Fed possibly do in the event of a financial downturn in the US. Not that I'm predicting one - far from it. But with interest rates at historical lows he doesn't have much in the bag, does he? Apart from a Tweet outburst from his Royal Trumpishness. Helloooooo Congress. Chinese crude stocks rose by 13.8mn bbls last week. That's nigh on 2 mn bbls per day. Stats are out later and of course, with Chinese demand down, we can expect to see a hugggeee crude oil build. Yet crude is up. UP! Like that stupid little Volkswagen. UP! It’s OK because if we put a ! like a stupid Trump tweet then everyone will think it's kind of funny. I told you this would be a rant, didn't I. !!!!!!!. Good day.

Daily Oil Commentary

Brent is trading this morning at $54.11 up 0.84 and WTI is up 0.68, trading at $50.25 from last nights close. I had to laugh yesterday when I watched the director of "Parasite" make his acceptance speech when he collected one of three Oscar's on Sunday night. He had a translator up on stage, that was until his closing remarks where he spoke in perfect English, "I'm going to have a bloody good drink tonight". Amazing how alcohol can be perceived as the universal language by some. On to other parasites - let's talk Coronoavirus. So, sadly, the death count stands over 1,000 now. However, I feel it is time to put things in to context. Whilst this latest outbreak is tragic and my thoughts are with all those affected, the mortality rate is less than 1pct. China has a population of circa 1.5 billion people and the current number of those infected is around 40,000. Cases in other countries top around 100. They are the simple facts. Yet as demand is so fragile an outbreak that we are in the midst of has proven to be the catalyst, and indeed the weakest start to Brent crude prices since 1991. I'll be honest, I don't think we have really seen anything like the full effect yet that the outbreak is or will have on commodity prices. At the moment forecasters can only paint a grim outlook as, of course China is on nigh on lock down and this is going to have only a negative effect on global growth, but perhaps those forecasters should look at themselves and their models, and indeed every major economy should for leveraging off economic growth so complacently for so long from China. I think last week I may have mentioned "correction". Well this could be the mother of all corrections over the next couple of months and it is highly likely that commodity prices will bear the brunt of it. I know you al think I'm a perma bear blah blah bovvered bovvered but I am only bearish on the price of crude oil and, let's face it, unless you're a day trader then majors and traders don't make money but saying "let's buy crude and sell it a higher price". Times have moved on - oil companies make their money now by trading differentials, arbitrage spreads, credit lines etc etc to squeeze as much money from the barrel as they can, not some delusional hope that because demand is "so great", surely the oil price will go up. On that note, let's talk OPEC+. Oil ministers are being quoted everywhere by saying that they will more than likely cut production again. I mean do they really have a choice? The agenda has been so clear for everyone to see, i.e. "low price, cut production". But are things really that rudimentary? I certainly don’t think so, but the market will teeter around current levels for a little while longer until eventually, the bulls hpefully hear some kind of encouraging news from Russia. Good day.

Daily Oil Commentary

Brent is trading this morning at $54.31 down 0.14 and WTI is down 0.19, trading at $50.13. So, another week has passed in 2020 and the news doesn't get any better for commodity markets. The US Energy Secretary Dan Brouillette said on Friday that coronavirus has not had a dramatic effect on energy markets - "I think the impact has been marginal". Wow, thanks Dan. Perhaps one too many corona’s before that statement came out. So, let me get this right, a 20pct fall in crude oil prices since the outbreak is "marginal". Hmmmmm, OK. I mean it depends on what way you look at that statement I suppose - should it be viewed that the US Energy department are not in any way concerned that a fifth of the oil price has been wiped off? Or is it that the real effect of Coronavirus hasn't materialised yet? Whatever way you answer those two questions the outcome is grim for the short-term oil price. I fear that the market is still acting against figures from China that are a little skewed owing to Chinese New Year and that only this time next month could we see the real impact the virus has had on Chinese import data and indeed, global trade. Moving on a second -w hat else is going on? It’s a good question. Last year all we could do was talk about the US-China trade deal, yet here we are talking about China in the midst of a virus not seen for over 20 years. Whilst the headlines are dominated with Coronavirus tragedies, the equity markets are plodding along rather nicely but you do have to think that what would a broad sell off on equities do to the commodity markets? Let’s face it since the start of the year people have thrown nigh on every conceivable commodity out of their portfolio and have piled into US bonds and the S+P. I would hesitate a guess that most traders are waiting for the inevitable profit taking and, alas, a readjustment before too long. Watch this space. OPEC+ rumours continue to fly about, and you wonder honestly how much longer rumours will continue to stir up and any interest. January production levels from the group were at a decade low, yet the oil price collapsed - what to do? I know! More cuts. Paving the way from US producers to cash in - once again. Good day, and week to all.

Daily Oil Commentary

Brent is trading this morning at $55.29 up 0.36 and WTi is up 0.27, trading at $51.22. An interesting week, I think you'll agree but one, at least in hindsight, the market will look back on with as much confusion as a pigeon looking at an abandoned breadstick, you know with that kind of side to side head movement that pigeons do. We started the week trading at around $55 on Brent and it looks like we will end up somewhere around there. It wasn't long ago we were talking about $65 being a comfort bosom for most producers, and whilst $55 isn't a disaster, it certainly isn't a level most OPEC+ producers will be very happy being sustained. It looks like nothing has come out of the 5-day meeting OPEC+ have had (quelle surprise) and you have to wonder what, if anything, will be agreed when they meet again in March. Is it to try and prove to the market that the cartel is constantly watching and ready to react to market volatility? Hmmm. That will look about as convincing as when Kevin in Home Alone tried to confused Joe Pesci with fake cut-outs of people at a party. Great film btw. But it must come to a point where the groups, hmm, what word? not integrity - that's too harsh, but effect will actually have on prices. As I have been saying, supply isn't an issue, demand is. If supply is constantly cut and nothing happens then they are destroying the very thing they are trying to protect i.e. higher prices. The irony is that in order to reinvigorate demand, which, let's be frank, is going to be an impossible job right now with China on nigh on lockdown, they will need to see lower prices in order to get people travelling, driving, consuming etc etc to bring demand back on track. It could be a brutal year for OPEC+ if I'm honest but one that shouldn't be without hope. A loss leader I think they call it. Quite whether OPEC+ will see it that way is another matter. Have a great weekend and hopefully see you a lot of you at the DMCC conference on Sunday. TTFN.

Daily Oil Commentary

Brent is trading this morning at $56.21 up 0.93 and WTi is up 1.05, trading at $51.80. So, a correction of a correction it seems is upon us. However, if you think about it, is this a correction of a correction that was incorrect in the first place? To me things were incorrect and have been incorrect for as long as I can remember so to correct that incorrection? Incorrect me thinks. Perhaps I stand to be corrected, so correct me if I'm wrong. There's a thinker. I've been saying that things were perhaps a little over sold and apart from someone saying they found a job lot of paracetamol there wasn't a great deal of bullish news in the oil market yesterday - indeed US crude stocks showed a build, as was widely expected. But I know the question you're all asking - If you could wedgie any historical figure, Who would you pick? No not that but it is a very good question. The real question you're asking - Have we seen the worst of the sell off on crude yet? Well this is the issue - we were always going to see a rebound, purely down to the fact that the selloff has been so dramatic that it was inevitable people were going to start taking some profit. I think we do have a serious chance to test the dreaded $50 on Brent again but it might take a couple of weeks to get there. OPEC+ are standing on the side-lines waiting for that potential drop down again with news that they hope will cause the market to bounce up again. It's an interesting one the current OPEC+ meeting as it is now entering its 4th day. I mean what could they possibly have to talk about for 4 days? "Nice weather". "Yeah". "Busy?" "Not bad". Zzzzzz. And this is the thing - the "do whatever it takes" attitude - is it still there? Or is it now "do the minimal we have to in order to show support". I think the latter - the newly formed cartel with its allies cannot simply be there every time flat price decides to have a little puke - even if it is triggered by an unfortunate incident - the coronavirus outbreak being the current predicament. I'm sure we will hear a minister or two come out by tomorrow once flat price has adjusted saying "we will take no action until our planned meeting in March". predictable to say the least. What else is going on? US equities continue to soar - the Trump effect is still well and truly upon us it seems - right Nancy? Rippppppp. Good day all.

Daily Oil Commentary

Brent is trading this morning at $54.46 up 0.49 and WTi is trading up 0.40 at $50.01 from last nights close. I don't much care for his novels to be honest, mainly because the clown from IT scared the absolute bejesus out of me when I was growing up, but I do rather than like this quote from Stephen King, "Panic is highly contagious, especially in situations when nothing is known and everything is in flux". Quite right Mr King. And this is when the oil market finds itself. Once again, I fear I have to reinsert the caveat regarding Coronavirus here, so deem it inserted won't you. If we look beyond the devastation and indeed, panic, the current outbreak has caused financial markets we will see a far greater truth to the fragility of the global economy, and, most importantly, the perceived strength of demand for oil. I am not denying that oil demand is growing, of course it is, you'd have to wake up in the morning and think you were a Shetland pony if you didn't believe that. The world's population grows every year and with it so does the worlds need for more fossil fuels, that much is simple, but demand is simply not keeping up with new supply - a fact that has been the case for the last few years. Of course, China reducing their appetite for oil owing to the outbreak has sent shockwaves throughout the whole supply chain and no product or bull has been left unturned but let's look at the facts so far this year in the oil market. On 3 January 2020, a United States drone strike near Baghdad International Airport targeted and killed Iranian major general Qasem Soleimani of the Islamic Revolutionary Guard Corps. 4 January Brent was trading at $68.91, up $2.37 from 2 weeks prior, an increase of 3.5%. On the 7th January China identified outbreaks of Coronavirus. On the 7th January Brent was trading at $68.27. Today we are trading at $54.46, a decrease of 20%. So, I think it can be safely assumed based on those facts that the market is not concerned about supply but is incredibly fragile when it comes to demand. How long will this continue? Well nobody knows for sure but judging by the Brent structure moving to contango I feel it safe to assume that we won't really know until mid Q2. Hold your hats because $40 Brent is a real possibility. Stats out later, and apparently, we are due to see substantial builds on everything which makes sense considering the above. Good day.


Daily Oil Commentary

Brent is trading this morning at $60.17 up 0.68 and WTi is trading up 0.60 at $54.08 from last nights close. William Arthur Ward once said, "The pessimist complains about the wind; the optimist expects it to change; the realist adjusts the sails". Now I'm not saying I'm working on Sloop John B right now, but I would certainly class myself in the latter of those three. During times of uncertainty this oil market doesn't quite know how to react but what is clear is that anything to do with possible supply disruptions have not been met with a write home about rally, have they? All news at the moment points to weakening demand and this has manifested itself in to a 10% drop over the last couple of weeks. Yes, we are seeing a mild risk on appetite this morning but I fear this is just temporary and most of the gains today, especially after EIA data later which should show a draw, will be given back at the end of the week/ early next. It's going to take time for the market to adjust whether weakening demand is the new reality or if the coronavirus outbreak is purely a temporary "snag" in demand data. I know which of side of the fence I sit on there. It was inevitable that we heard from an OPEC minister before too long, a point I raised in yesterday's commentary, and we heard from one yesterday. Nobody is sure quite who it was, but an OPEC source said, “A further extension is a strong possibility and a deeper cut is a possibility,” one OPEC source told Reuters. Gee, thanks Sherlock, keep us on our toes won't you. I'm not being facetious, but the market is able to predict the next OPEC move with ease and, frankly, if they don't pop their heads up during times of high volatility then the cartel is not doing its job. I expect to see price increases over the coming days as well as the market values quite what "deepening cuts" will mean for the Q2 outlook. What else is going on? Well, Brexit is a mere 3 days away and it strikes me that because so little has been in the press about what is the most important day for the UK in a very long time that perhaps they aren't ready? Am I allowed to say that? Of course I am. Again, we come down to the Christmas shopping analogy, last minute. What's the betting everyone working on Brexit is up until all hours and Boris is geeing them on with the promise of late-night pizzas? Watch this space and FOMC later. Good day.

Daily Oil Commentary

Brent is trading this morning at a frankly miserable $59.27 down 0.05 and WTi is trading up 0.02 at $53.16 from last nights close. To those who celebrated it, I hope everyone enjoyed Lunar New Year celebrations. Well I don't know where to begin really but I will say this, I am not being dismissive in any way for the tragedy that many families must have experienced and continue to experience over the outbreak of this coronavirus, I am merely opining on the oil markets but my thoughts are with the victims and all those affected. OK, so the news that nobody can escape from - no not that Arsenal may be pinning all their hopes on the FA Cup now that we beat the mighty Bournemouth - I am of course referring to Coronavirus and the effect it has had on all markets, not least oil. If I'm honest, I think this sell off is a little bit overdone. I have been banging on for what seems like since I was 8 years old that supply of oil isn't a problem, it's demand that is going to be key this year. And boy, didn't the market take the news that demand owing to the outbreak will soften badly? Look, you can't say it wasn't coming - when the market reacted to tensions in the Middle East at the start of the year it should have been a warning shot to the bulls that the market is no longer that concerned about possible supply disruptions. In the worlds of old Maggie, "The lady's not for turning". Or should that be "The bulls are not for turning". Hmmm. I think we could see a possible test down to $55 this week, just purely based on market sentiment before an OPEC minister or ten pop their heads up and says, "We will extend the cuts to end Q2". The thing is though is that does the market need a broad sell off or a "correction" in order to stoke up the very thing that it currently lacks - demand? Once there is containment of the current epidemic in China then the market will pick itself back up again, but do I see prices getting back up to $70 again on Brent? No, no I don’t. I think we could be stuck in a range of between $57.50 and $65 for quite a while if I'm honest. Good day, and balance week to all.

Daily Oil Commentary

Brent is trading this morning at $62.17 down 1.04 and WTi is trading down 1.10 at $55.64 from last night's close. Hmmm. Hmmmmmmmm. Not great really is it? No, not anther 1-1 draw, but as I said last week - I'll definitely take it. No, I'm talking about this oil market. We are 10% down since the 6th January, and even though it seems like months ago we were singing Auld Lang Syne it is, in fact, only a little over 3 weeks ago. Gulp. I remember when the SARS virus pandemic in 2003 started in Asia and let me tell you, there was no Facebook then, no iPhone, no oyster cards and no Justin Bieber. It was a simpler time, but I'll tell you this for nothing, that caused some serious squeaky bum time and everyone, more or less, shut down most business travel. I imagine we will see the same after this most unfortunate latest outbreak of Coronavirus so I think flat price still has some way to go before recovering in about a few weeks’ time back up to around $65 on Brent. OK, on to Davos. I'm, sorry but I'm going to be blunt (shock). Look we all know that the world is warming up. We all know that Johnny Polar Bear is in peril and half the world is on fire and sea levels are rising and that I should eat dolphin friendly tuna. I am not being dismissive about any of these things - I have 4 beautiful daughters and I want them to raise their families in a world for the next generation too but come on, Greta, Prince Charles and everyone else, if you have a medium the size of the "World Economic Forum" to discuss matters that are clear for the world to see why don't you actually get people to do something about it? Arguably the Energy industry is doing more than ever to clean up its act - IMO 2020 which reduces sulphur emissions by 85%. Cars running on diesel having little to no SO2. Refineries that are able to reprocess residual fuels that were the biggest contributors to greenhouse gases of the barrel. The Energy industry has and is standing up. Now, don't get me wrong I am not plagiarising a Trump speech here - far from it, but if there is one thing to be taken out of his speech it is that perhaps scaremongering isn't the right way to go about it. Especially after the recent tragedies in Australia. Anyway, rant over, I'm just saying perhaps get people in a room and come up with a plan rather than telling us what we already know. Stats out later and if anybody wants me then I'll be hiding behind my desk chair - just in case I get one of those Greta stares. Good day.

Daily Oil Commentary

Brent is trading this morning at $64.61 down 0.59 and WTi is trading 0.45 down at $58.09. Another Blue Monday out of the way, and no, not one of those Blue Monday's where Debbie does something, I'm referring to the most depressing day of the year. So, now that we have 364 more days to go until the next Blue Monday has the oil market woken up in a jovial mood? Ermmm, no. It has actually woken up more frightened than every energy person has woken up in Davos this morning. Greta's gonna get you, Greta's gonna get youuuuu. I wonder how Greta will turn up to Davos though? Not by car of course or any other polar bear killing internal combustion medium. Maybe she will glide in on a brace of unicorns. All eyes on Davos. Anyway, - back to this oil market. So, just a little over 24 hours where everyone was panicking that Libya outages were going to take off 1.25mn bpd of production and we are trading about a buck lower than we were this time yesterday. Are the fields back up? Nope. Has any agreement between the rival Libyan groups been agreed? Not really. So why are we trading lower if the fundamental news that caused the initial spike are still applicable? Ah ha! This my friends is the grillion dollar question. Or is it? Not really, no. I've said it so many times, but I will continue to say it until I sound like an asthmatic mouse - supply isn't the issue, demand is what the market is concentrating on.  Have demand forecasts so far in 2020 been bullish? Let me ask you that question a different way. Will Arsenal finish in the top 4 this season? Exactly. That's how simple it is. People keep on banging on about the fact that the US rig count continues to decline but I'm sorry how on earth is that relevant? I'll tell you why I think that - in 2019 the US rig count dropped 25pct yet US oil production INCREASED by 8.5%. So, what does that tell you? That the US crude oil production system is becoming ever more efficient - something this commentary raised several times last year. OPEC+ need to not look through rose tinted spectacles. I'll leave you with this quote from the Bahrain oil minister last week "Going forward, all eyes are on U.S. production again. If there is going to be an extra million barrels, yes this will suppress oil prices. But the current indicators of rig counts are telling you that is going to be a challenge." Hmmmm. Keep your eyes on Davos. Good day.