Oil and Gas Market Summary 9/13/16 from OilPricesDaily.com

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All right, so let’s take a look what happened today. September 13th, 2016. And the oil markets, I’m not looking good oil down three percent or a dollar 39 and the October contract to sell it. Forty four 90.

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know we spiked up on last week’s EIA report but we’re already, you know, well below where that way obviously both blower that settled but even below where we started off that day, you know that led to a jump from about 46 towards $48 a barrel. You know we’re just posted below 45 but bumping up against some significant support right here around 45. And then again at 43, you know, before heading towards about $40 is a key support contract, support level for this contract.

I’m right now the CMA website is saying that over 2,000,000 contracts traded today, um, that’s really actually quite hard to believe. But, um, it would really be interesting with the [inaudible] report says as far as our people flipping around, getting out a length, you know, getting short, really reversing their positions on some of these news. So what is the news we highlighted on the oil prices daily newsletter today in this, uh, story from Reuters. The headline really basically sums it up.

Oil futures tumbles three percent after the IEA and OPEC see the glove persisting. So in yesterday’s newsletter, you’ll OPEC, it kind of spoken out that they see the glove persisting through the end of 2017 and today that Eia kinda got on confirm that sentiment and forced prices lower. So we had kind of thought that the market would be waiting for EIA statistics tomorrow to confirm that the last week’s draw was just a one off event, but traders aren’t waiting.

The were already well below their, if you bought into that rally, you’re really hurting. That’s a weak link and it’s getting flushed out right here. So what exactly are the IEA and OPEC seen mean if you had been following this? Basically it’s a complete reversal and position from no, just a month or so ago. Um, you know, they had seen production steady and demand growing and now it’s, it’s kind of the other way around. So on supply side, non OPEC production, really taking the headlines. One example is a field in a Kazakh stand, you know, they’re looking to grow a, this one field alone could bring a hundred and 50,000, a hundred and 70,000 barrels a day to the market. Um, and again, this is a flip flop for the, uh, analyst OPEC had said that a non OPEC production, it’s going to grow by 200,000 barrels a day next year where, you know, a month ago they had anticipated that it would drop a hundred and 50,000 barrels a day. So a significant turnaround there. I’m also seeing changes in demand, the demand side out of China. And India basically, you know, they were projecting growth and demand now saying demand to decline 100,000 barrels a day for 2016 and 200,000 barrels a day for 2017. So you’re talking about, you know, combined half a million barrel a day,

um,

in addition to an already overstocked market. So, you know, will this force prices back to 40 and below where we had back to the year back, we hit what, $27 a barrel, you know, it’s hard to say you when you start pushing below 40 again, we’re going to start seeing news of shut-ins and how it’s really crippling production and some areas, whether it’s the high cost OPEC producers or production here in America. Um, so we’ll see where that support falls. But right now you know, the spare capacity level looks high and when that happens things can get overly, really fast. So if you look at spreads today, you know, they all, they widened a bit in the front. I’m pretty insignificantly. However, if you look at the d, 67 contract at, why buy over forty cents as you really didn’t see the weakness in the back of the curve starting, you know, with about, you know, the end of the year for 2017, 2018, um, you know, allowing that [inaudible] spread to wide now.

So it’s down a dollar 39 in the front. I’m the only down, you know, a sensor. So in the back, you know, depending on where you start looking. So you know, those widen out a little bit. Finally, while it’s not driving oil prices lower right now, you know, it does have a long-term implication and we highlighted this in the oil prices daily newsletter, you know, some stories out today on how badly us oil lenders are suffering their recovery rates relative to historical slow periods in domestic oil and gas are just horrific. Catastrophic is one story says they’re recovering about 21 percent of their loans were historically, even in bad periods, that would be around 60 percent. So where’s this money going to continue to come from for, for some of these producers who are on life support, you know, these companies are out, they’re borrowing money to pay dividends. It’s really, I’m not painting a very pretty picture. And what you’re seeing is that the sentiment is spilling over to oil, other markets, you know, oil really dragged down equities today, no asleep. He equity market starting to see a lot of volatility in the last couple of days. And

you know, with sentiment that there a lot of pain out there. The mark stock market was going up in the face of declining economic statistics and the oil market was going up in the face of historically oversupplied situations, you know, stocks at all time highs and just hoping that things will balance. So last kind of point here, how does this affect OPEC, the meeting coming up, you know, again, hard to say, is it going to end up being a battle for prices or market share? Will Saudi Arabia make room for other producers or are they just gonna battle with each other for the last, uh, remaining scraps of dollars that are out there and obviously the way the market’s moving right now, who knows where oil prices can be, um, you know, in two weeks when they finally meet later this month. So, you know, rough day, rough day in the oil markets or rough day in the financial markets. Um, the shorts are starting to grab ahold of things here in oil and we will see if this market, you know, can gain any support and where it might come from. All right, well thanks a lot and you know, be sure to check out the newsletter for links to all of these news stories and you can subscribe to that newsletter if you’re interested in getting that. And of course you can subscribe on itunes for the podcast ratio. Thanks a lot.

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