Legendary Oil Trader Expects Crude Prices To Rebound
Just two months ago, fear of wasting Iranian supply oil market and analysts wondered how high prices could go and if we were to see 100 dollars of oil left.
Just a few weeks later, nobody talks about $ 100 anymore, and oil analysts and traders try to guess if oil prices will recover from today's decline, after sales in recent weeks have eliminated the profits of the year.
Many analysts look for recovery, factoring in anticipation that OPEC will announce a significant cut in early December to raise Brent Crude prices out of the low $ 60s to the $ 70s.
One of the analysts expects an OPEC-supported price increase is legendary oil industry Andy Hall, which was called "God" to predict oil price profits.
"The risk balance at this point favors some kind of recovery," said Hall in a recent interview with Bloomberg. "It is quite likely that OPEC will come through with some sort of cuts in the next month or two," said Hall.
Cited data from Geospatial Analytics Company Orbital Insight, Hall told Bloomberg that oil inventors have jumped in OPEC countries, Europe and North America in recent months.
On demand, stronger US dollars against emerging market currencies and concerns about the US-China trade warfare have been going as needed, according to Hall.
Andy Hall, the legendary oil company that had been focusing on higher oil prices for more than a decade, continued to keep its bullish outlook even after oil prices in 201[ads1]4. But in the summer of 2017, he closed the main fund Astenbeck after the fund had double-digit losses.
In short, Opec, the market and oil boards have run out of the runway, Hall said in a letter to investors seen by the Financial Times in July 2017. Related: Trump's impossible decision over Saudi Arabia
Hall now sees prices recover and OPEC makes a decision at its meeting 6-7 December to cut oil production again to prevent another glut and lift oil prices.
Both OPEC and the International Energy Agency (IEA) have recently said that oil stocks around the world have risen lately. However, the two organizations have different views on what growing stocks mean. The IEA sees inventory "as a form of insurance, rather than a threat." OPEC, for its part, is already discussing cuts in order to maintain prices after increasing production to compensate for what is expected to be a significant Iranian supply team. The waste has not materialized yet – at least not as steep as feared – also thanks to US subsidies to eight important customers in Iran's oil.
Analysts have begun to expect OPEC to announce a cut of at least 1 million bpd in December, and somewhat less could disappoint and lower oil prices further.
But in the past week, analyst views have become more cloudy due to the complicated US-Saudi Arabia ties. Riyad may be disappointed that it may have been "stupid" by the United States to pump more to compensate Iranian losses. But US administration this week refused to blame Saudi for the murder of Jamal Khashoggi, and President Trump thanked Saudi Arabia for the low oil prices and demanded even lower prices. Related: Trump gratitude for lower oil prices, want even cheaper commodity
"It's impossible now to do basic analyzes with some kind of security because of what's happening to the US administration and their relationship with Saudi Arabia, "Amrita Sen, chief oil analyst at Energy Aspects, told Bloomberg Wednesday.
On the basis of fundamentals, OPEC is trying to make a big cut – they know what they need to balance the market, and it's about 1.4 million bpd. Later, Energy Parts chief analyst said no-one knows about Saudi Prince Prince Mohammed bin Salman will not only tell energy minister Khalid al-Falih, "No, you can not cut". [19659002] An OPEC meeting that can not cut can meet President Trump's wish for further decline in oil prices and, in addition, lower gasoline prices, but WTI Crude in the low $ 50 or lower is dangerous near breakevens in some US slate plays it has flourished with the higher oil prices. Such is Bakken in North Dakota, where oil production continues to hit new record heights this year, and hits the previous record from the end of 2014.
"At today's prices, Bakken producers in North Dakota are at real risk," said Sen to Bloomberg, adding that even in areas of Permian, production growth will be "quite slow" if today's WTI prices continue.
Oil prices can rise if OPEC manages to bring a still tough Russia on board and announces a significant reduction in two weeks. But geopolitics can restore faithful fundamentals and push prices further down.
By Tsvetana Paraskova for Oilprice.com
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