- Bridgewater: Thoughts on the Oil Investment Cycle
In the fourth phase, there is a supply glut. The balance between demand and supply swings sharply in the other direction, as production is much greater than demand. This phase is typically characterized by large price declines.
As prices fall, margins for commodity producers are squeezed. And, in the fifth phase, producers respond to low prices by slashing investment and in some cases shutting down production permanently. This decline in supply eventually brings the market back into balance, as the low investment deteriorates capacity, sowing the seeds for the next cycle.
- Bloomberg Gadfly article: The Trump Energy Shock
what’s good for America’s fossil-fuels business isn’t necessarily great for the rest of the industry
The country with the biggest potential to ramp up oil and gas supply quickly is adopting policies tailor-made to encourage just that.
(…) OPEC and other countries — including Russia — trying to support oil prices with supply cuts. They could choose to take more barrels offline to make way, but that could just create more room for U.S. producers to take more market share — the same dilemma that has been dogging them since 2014. In all likelihood, international crude prices would instead fall in an oversupplied market, taking U.S. prices down with them
For the global energy markets, it is a deflationary force, potentially setting up another boom and bust cycle in short order.
- Bloomberg Gadfly Article: U.S. Senators should learn to love OPEC
No, the U.S. won’t join OPEC’s market management. It’s quite happy to let others bear the burden of supporting prices. But it won’t condemn the practice either. OPEC’s market machinations will boost the U.S. oil sector in the immediate future, but hasten crude’s demise as the world’s primary fuel source longer term.
- OilPrice Article: Fundamentals Be Damned – Oil Price Correction Likely
- Bullish article on Seeking Alpha: Oil: Where Do We Go From Here
The author has a nice analysis of the seasonality, but I think this is just smoke and won’t apply in 2017. Yet it is important to have different opinion and this article is pretty well-written
March and April tend to be very strong months for the commodity. The average cumulative return for oil in March/April is 6.3% over the past 30 years. While there is no guarantee that seasonality plays out the same in 2017, it’s worth noting that crude is heading into its strongest 2 months of the year once we get through February.
But his technical analysis is not correct
The commodity is making higher highs and higher lows, and continues to find support at its 200-day moving average
No, crude oil is not making any new high since the beginning of January. Yes there is a strong support at the $53 level (for Brent) but also a strong resistance at the $57 level
- Nice article on US post-OPEC deal production: OPEC’s Been Shaled