Insight and inspiration in turbulent times.
Oil continues to trade in one of the narrowest ranges seen in the last decade as the efficacy of the OPEC production cap weighs against increasing US and other production increases and slowing Chinese demand. Last week saw oil prices falling for three days and then rebounding sharply on Friday to close at $48.50 in New York as a combination of a large drop in US crude stocks, a weaker US dollar, and a falling rig count supported prices.
As the world wonders what comes next in the North Korean missile crisis we need to have a look what a military confrontation would mean for Australia. This is important because after 3 refinery closures in Clyde (Sydney), Kurnell (Sydney) and Bulwer (Brisbane), fuel imports from East Asia have replaced previous crude imports coming from a variety of countries outside the Korean conflict zone.
It has been two weeks of mixed signals as to the course of oil prices. Last week prices fell around 1.5 percent, closing at $48.82 in New York on concerns that the OPEC/NOPEC collation was not following through on its pledge to cap production.
Oil prices were strong last week with New York futures closing about $4 a barrel higher for the week at $49.71 and London at $52.52. Behind the move was another unexpectedly large decline in US stockpiles of 7.2 million barrels.
The markets remain confused about the future of oil prices as analysts attempt to interpret alternating bullish and bearish signals. Last week prices rose on Tuesday and Wednesday while falling on Monday, Thursday, and Friday…
Oil prices climbed steadily last week, ending up Friday about $5 a barrel higher in New York at $46.54 with London the usual $2.50 or so higher.
As David Graeber’s Debt explains in detail, the ability to force people to acquire and use the ruler’s currency has, throughout history, been a key mechanism for extracting tribute from subject populations. In today’s global economy, that is why the pricing of oil in dollars has been so important for the US.
Last Monday, oil prices rose for the eighth consecutive session closing in New York at $47 a barrel and setting a record for the longest gaining streak in nearly eight years. This surge came on speculator concerns that increases in US shale oil production were starting to slow.
After a decline of nearly $10 a barrel since mid-May, oil prices rebounded sharply last week with New York futures climbing from below $43 to close at $46 a barrel. Although many are still worried about excess oil inventories, most traders are optimistic that the worst is over and that higher oil prices stemming from the OPEC production cut are ahead.
Oil prices continued to slide last week with Brent falling below $45 on Thursday and WTI falling below $43. Prices have now dropped by more than 20 percent since the start of the year, and Brent crude will likely post its worst first half since 1997.
In the last month, US oil prices have fallen from close to $52 a barrel to below $45. Partly due to the large exports of US crude which have been around 1 million b/d in recent weeks, London prices have been running only about $2 a barrel higher than the US.
During the past month, there have been several important developments which could have a major impact on the course of oil prices and production in the next few years.
