Showing posts with label Vince Fernando. Show all posts
Showing posts with label Vince Fernando. Show all posts

Tuesday, May 18, 2010

OPEC Scrambling To Jaw Bone Prices

From guest blogger Vincent Fernando.....

Light sweet crude broke $72 just recently, then bounced off of $70 a few times. It has rebounded back a bit, but could easily head lower.European economic growth is looking fragile, and more importantly China's economic growth is starting to look like it peaked based on leading indicators. Thus while we can potentially bailout the European periphery nations, and it could stabilize the world economy, it's not so clear if it will save commodities. Especially as the China growth engine slows.

OPEC's scrambling to jawbone oil prices as a result of price softness:

Forex Yard:
Investment in new energy capacity worldwide must be maintained to avoid a supply crunch in the future, Attiyah told an industry event, but deep water drilling and other high-cost operations would be unprofitable at a price of less than $70.

OPEC member Qatar supported Saudi Arabia's price aspirations for oil, Attiyah said. Saudi King Abdullah, ruler of the world's top oil exporter, said in December that a price of around $75 to $80 was fair. The kingdom has pegged that level as fair for both consumers and producers.

"I support fully what King Abdullah says," Attiyah said.

We can envision a potential 'new normal' boring growth scenario where China slows, Europe stagnates into a bailout coma, and the U.S. grows but underwhelms. Industrial commodities will be anemic to such a situation and we'll be unsurprised to see oil go below $70 in the near future given the China/Europe situation.


Vincent Fernando writes for The Business Insider


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Friday, February 5, 2010

Goldman: Oil Will Get Expensive Now That The Tankers Are Done Hoarding It

Goldman's David Greely is making a near-term bullish case for oil. His optimism is driven by A) The strong U.S. ISM Manufacturing data we had two days back, B) the fact that renewed Nigerian violence threatens supply, and C) the reduction in overhang caused by oil hoarded at sea in tankers (floating storage).

While the relationship appears far from perfect, he argues that U.S. oil demand tends to track ISM Manufacturing Index readings:

Most interestingly for short-term traders, Falling floating storage implies a tighter market, since less supply is basically out there ready to be sold into the market.

David Greely @ Goldman: [emphasis added] The area where the improvement in near-term fundamentals has been most pronounced in recent weeks is in the amount of oil in floating storage. The use of tankers to store excess supplies of crude oil and gasoil over the past year has been emblematic of the weakness in supply demand fundamentals during the recession, and the unloading of these tankers has been broadly viewed as a necessary precursor to a cleanup over the overall oil market.

Consequently, reports that anywhere from 0 to 50 million barrels of the total oil in floating storage has been recently unloaded have suggested a potential turn around in oil market fundamentals.



Follow guest blogger Vince Fernando at twitter @vincefernando


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