Oil and Gas Market Summary 9-20-16 from OilPricesDaily.com

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

Here is the oil prices daily podcast episode for 9-20-16.

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

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Hedge funds scale back short positions as oil steadies: Kemp Reuters

Iran committed to building oil-market consensus, OPEC head says Bloomberg

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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 brought to you by EKT Interactive’s Oil 101, a free online introduction to the oil and gas industry.

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All right, so welcome back. Let’s take a look at what happened in oil prices for today, September 20, 2016. As the October contract starts to wrap up, oil prices today …

Up just 14 cents or .3 percent to settle at $43.44.

Trading volume was still pretty good with over $1 million, 1.1 million contracts changing hands with most of the volume now shifting to the November contract, which traded up by 19 cents to settle at $44.05.

Now, if you look at the intra-day chart, and you look at today’s bar, you will notice that we started off and we’re pretty solidly below that key $43 level.

Prices looked really weak but continued to find support as we dipped below here, and prices are just really battling it out, finding a new range here between $43 and $44.

As positions continue to get taken off the table ahead of this month’s OPEC meeting, September 26-28. Now, we’re starting to get more visibility and more news out of that, which we’ll talk about here in a bit.

First, just looking at the charts, again, really things starting to settle in to a very tight range here, not seeing much intra-day change.

One of the stories to sum this up, Reuters’ Jack Kemp says, “Hedge funds scale back short positions as oil steadies.”

He’s referring to something that we’ve been talking about here for a little bit, which is that when you look at the CFTC reports, open interest is dropping.

People are, again … They’re taking bets off the table, which really makes sense with so much uncertainty out there.

I’m waiting for the news that’s going to spark the next trend.

However, what … I mentioned in the newsletter, while there’s a reduction in shorts, there’s really not an addition in the longs. Again, position’s stabilizing …

No one placing anything too sizable on either side at this point … Of course, the link to that article’s in the Oil Prices Daily Newsletter here.

Again, started off weak and found a solid footing as headlines and rumors about OPEC start creeping out …

There’s really a pretty sizable section on that in the newsletter today because it’s pretty dominant as we wait for tomorrow’s EIA numbers, so it was headline-driven today.

First, Wall Street Journal article, “Oil flips on … To gains on top of Russian cooperation,” so of course, Russia … A big part of this … The OPEC meeting … The last couple rounds or not the meeting necessarily but the chatter at least … Are they going to cooperate with and go along with what OPEC decides to do? So far, they are giving indications that they will.

Now of course, yesterday, we talked about how the OPEC secretary general has said there will be no decision at this meeting, that this is an informal meeting in September, and they are just meeting to reach a consensus.

He continues to support that and reiterate that, so the question that I’m wondering is, “Does it matter? If a consensus is reached and announced, does that amount to a decision? Does the market wait until November to have it formalized?”

Obviously, there could be some risk in acting on what is not deemed to be a formal decision, but it’s hard to really see in this market people waiting to pull the trigger.

Again, just from some articles that are in the newsletter, here’s a quote,

“I think we will likely reach a consensus, but there will not be a decision. This decision will be shelved until we meet in November.”

Another tidbit of information is that they’re starting to coalesce around the idea that moves to stabilize the oil market will be a deal that lasts 1 year. Again, we’ll see what the immediate impact is.

They’re saying they will stick to it for a year and that maybe they’re starting to get some kind of consensus on actually adhering to targets that they set.

Iran has committed to oil-market consensus. That’s a big part of why things fell apart last time. Iran not willing to be part of anything that limits their production as they are still looking to regain production in a post-sanction environment.

We’ll see how that plays into things, but definitely a pretty big part of having everybody on board right there.

Finally, not related so much to the consensus, but a tanker has returned to Libya’s Ras Lanouf Port port to load oil after recent violence, and again, just the idea that you do have this player out there.

You have a couple of them in terms of potential versus where they actually are as far as bringing oil to an over-supplied market. Sometimes it’s good to get these reminders and just get a big-picture perspective, and this quote from this …

From the article out of Bloomberg that Libya holds Africa’s largest oil reserves and pumped 1.6 million barrels a day of crude before Gaddafi’s ouster. Production has tumbled since then to 260,000 barrels a day in August.

Really interesting to get that perspective on where they once were, how much production they, I guess, potentially could bring to the market in a different environment.

Just something really good to keep in mind, and, of course, you have Nigeria, about 500,000 barrels a day below where they were before the violence of the last year. Really interesting to just keep that idea that these people are being locked into a freeze …

These countries are being locked into a freeze potentially well below where they potentially could produce. We’ll see if they’re able to stick to anything like this. It’s really …

History is not on their side.

All right, so really that’s it out of OPEC. As far as the EIA, forecast comes out tomorrow … Reuters poll consensus is a 2.3 million barrel build in crude oil inventories, which makes sense just based on what we’ve been expecting.

Slow builds, I guess, out of … On the heels of that huge draw a couple of weeks ago.

Those are the main stories that I saw out there today. Again, oil’s settling into another rage but really testing at the lows. It’s hard to see continued to pressure $43.

They can’t get it to settle below … We’ll see what happens if that is able to happen.

Again, it’s going to take some courageous shorts in the wake of what’s going on here for a week, so is this what we do for the next week? I guess possibly.

A $43- to $44-range? That seems pretty tight. I would expect it … Unless the EIA throws some curve balls at us here, I expect maybe a continued lower slide, but I guess the shorts are really having a hard time justifying their positions in this environment. It’s a understandable position.

It’s a hard one to go to explain to your boss.

Anyway, remember, get our concise recap, all the news and events influencing oil prices each day.

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Thanks a lot, and we will talk to you tomorrow.

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