Oil Prices Settle Below $50 – Oil and Gas Market Summary 10-17-16

Oil prices daily podcast discusses all of the news, events, and trends influencing oil prices each day.

Be sure to visit today s oil prices daily newsletter for links to all news stories and sources mentioned in this podcast.

Links:

Oil Prices Daily Newsletter for 10/17/16

Oil prices slide, OPEC action expectation limits losses Reuters

Iran offers 50 oil and gas fields to foreign bidders WaPo

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Transcript:

Hello and welcome to the “Oil Prices Daily” podcast.

Doug Stetzer here, bringing you your daily recap of all the latest news, events, and trends influencing oil prices.

Oil Prices Daily is hosted on the EKT Interactive Oil and Gas Podcast Network and is sponsored by Oil 101; a free online introduction to the oil and gas industry.

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Okay, so let’s take a look at what happened with oil prices today: Monday, October 17th.

November Crude settled lower by 41 cents, or .8% to 49.94.

Trading volume was on the lighter side with only 850,000 contracts trading. Anything below a million are pretty light these days.

The tail of what we’re looking at here can be see in the oil prices chart, on the news letter, and both the daily chart and the Intraday chart there, the 5 minute chart …

Kinda show interesting stories.

First, the overriding theme is that we’re definitely consolidating right around $50.

We’ll see if technicians and traders think a settlement below 50 is enough to start triggering some follow-through selling and getting out of length here.

On the daily chart I kind of drew in with some trend lines the flag that’s forming and again, it’s just consolidating in a tighter and tighter range right around $50.

Now today was interesting.

The low of the day was 49.47 and so, if you look at the intraday chart, that was really hit right away in the morning. Market came in, around unchanged overnight and fell off about a dollar from $50.50 down to $49.50.

Really quick, and then staged a slow but steady recovery, again on lighter volume, throughout the rest of the afternoon back up towards 50. But yes, settling below that key level.

So what are the factors that lead to this sell off?

I think … You know, at the end of last week we saw the rig count in the US continuing to climb, 16th week of straight gains in the rig count.

Although US production did take a dip below 8 million barrels a day, I think people definitely keeping an eye on that number.

And I think this Reuter’s story, even the title just sums it up: The Oil Prices Slide, But OPEC Action Expectation Limits Losses.

This idea that shorts not really willing to pile on in Intraday market action like this because we have dipped below 50 a few times only to settle back above.

So, they’ve gotten burned on this a couple of times last week and maybe waiting to get this settlement or maybe … you know, again we may not be getting real shorts with real conviction until a solid headline coming out of OPEC with something that is helping, making this deal fall apart.

Whether it’s out of Russia, Iran, who knows where this headline could come from. There’s a lot of possibilities for a deal falling apart.

So, will we see this kind of chop and consolidation around 50 all the way through the end of November?

Potentially, which would lead to a real drop in volatility in the market. But I think these Intraday moves show that the reality is that OPEC is pumping full tilt, US rig count is gaining, and if it wasn’t for this prospect of a deal, there is no was this market would be sitting above 50.

The glut is just not going anywhere right now.

So again, some stories related to this in the OilPricesDaily.com newsletter. Just summarizing this idea that the market’s kind of in wait-and-see mode right here, but clearly looking pretty nervous.

As far as other trends in the news that I notice, there is Iran offering 50 oil and gas fields to foreign bidders. So Iran kind of in play, obviously in a post sanction environment.

They are making a lot of moves to reach out towards the international community and a lot of different industries, really.

Banking restrictions limit the participation of US companies in a lot of cases, but a lot of other players dipping their toe in the water in that country.

It will be interesting to see what comes of all of this of course.

One story out of Reuters, Iran oil minister: hopes to soon reach Qatar’s gas production.

So Qatar, home to the world’s largest gas-to-liquid plant, and … To say that they are looking at that kind of gas production is pretty impressive and signaling where they’re looking to make some investment as well and where they’re maybe hoping to get some foreign companies involved. So interesting there.

As far as the OPEC deal, no real details out of that. So the stories related to that are more commentary and opinion as opposed to fact.

I thought this one was interesting. Out of Bloomberg; Russia’s OPEC Bear Hug Probably Won’t Last.

Just pointing out that there’s not really a great track record of Russian upholding their commitments on production deals such as these. So an interesting read, but nothing concrete.

Again, opinion pieces not concrete headlines there.

So that’s about it as far as the OPEC watch.

Although there was on the geopolitical front one interesting story: Kuwait’s Leader Dissolves Parliament, Citing Security Concerns and Oil Prices.

So, if you’re interested in that story, it’s out of the New York Times and of course the link is in the newsletter. But, just adding perhaps some geopolitical questions in the region.

Always worth keeping an eye on.

But that about does it for today.

Again, oil prices consolidating right around 50, remains to be seen if a settlement below 50 even if it’s just by 6 cents, triggers any algorithmic or momentum base covering.

One of the trends to keep in mind is that the market is very long. There’s not a lot of shorts, so if any of this length feels the need to cover, it could really start a stampede to the down side. And then, shorts waiting to see any momentum would be quick to throw fuel on that fire.

Although, again, in the last week little dips below 50 prove to be a hard sell that the market rallied right back up. So they’re going to wait and want some more confirmation on this move to the down side is worth selling into.

So, an interesting spot that we are in and again, always waiting for news.

Remember to get our concise recap of all the news and events influencing oil prices each day by going to OilPricesDaily.com and signing up for the newsletter there.

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All right, well thank you very much and we’ll talk to you tomorrow.

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