Peak Oil is You
Donate Bitcoins ;-) or Paypal :-)
Page added on October 3, 2014
Brent Crude Heads For Bear Market Amid Swelling Supply
Brent crude moved closer to a bear market on speculation rising global supplies will be more than enough to meet slowing demand. West Texas Intermediate ended below $90.
Brent fell 4.9 percent this week, the worst performance since the five days ended April 5, 2013. OPEC September oil production rose to a one-year high and Saudi Arabia cut prices this week. U.S. output is near the most since 1986. Oil also dropped as the dollar climbed to a four-year high, reducing oil’s investment appeal.
“You are seeing pretty good growth in oil supply and that’s weighing on the market,” said Greg Sharenow, executive vice president at Pacific Investment Management Co., who helps manage $26 billion of commodity investments. “You have the strengthening dollar. And this has been a big part of how it’s been trading recently.”
Brent for November settlement slipped $1.11, or 1.2 percent, to close at $92.31 a barrel on the London-based ICE Futures Europe exchange. The volume of all futures traded was about 26 percent above the 100-day average. The grade is down 19.8 percent from this year’s highest settlement of $115.06 on June 19. A 20 percent decline would mark the start of a bear market.
West Texas Intermediate crude for November delivery fell $1.27, or 1.4 percent, to $89.74 a barrel on the New York Mercantile Exchange, ending below $90 for the first time since April 23, 2013. Prices slipped 4.1 percent this week, the biggest loss since the five days ended Aug. 1. The U.S. benchmark was at a discount of $2.57 to Brent.
Gasoline Drops
Gasoline futures dropped 1.3 percent to $2.3785, the least since January 2011. A lower price for Brent can cut U.S. gasoline prices by reducing the cost of crude and fuel imports to the U.S. East Coast.
“I am looking for WTI to establish a floor possibly as low as $85, which could possibly take Brent to $88,” said Tom Finlon, Jupiter, Florida-based director of Energy Analytics Group LLC. “The Brent-WTI spread would probably end up staying at $2 or $3. U.S. production is going to continue to increase.”
The Bloomberg Dollar Spot Index increased as far as 1,080.05 amid signs of stronger U.S. economic growth. Non-farm payrolls grew 248,000 last month, the Labor Department reported. The median forecast of economists in a Bloomberg survey called for a 215,000 advance.
OPEC Output
Output from the 12-member Organization of Petroleum Exporting Countries rose by 413,000 barrels a day to 30.935 million in September, a Bloomberg survey of oil companies, producers and analysts showed. That’s the highest level since August 2013.
U.S. domestic crude production rose to 8.87 million barrels a day in the week ended Sept. 19, the most since March 1986, according EIA estimates.
Saudi Arabia reduced the price for Arab Light to Asia by $1 a barrel to a discount of $1.05 to the average of Oman and Dubai crude, the lowest since December 2008. Official selling prices, or OSPs, are regional adjustments Aramco makes to price formulas to compete against oil from other countries.
The International Energy Agency last month reduced its projections for demand growth this year and in 2015, citing a weakening economic outlook. Higher exports from Libya and booming U.S. production “deepened the overhang in crude markets,” the Paris-based IEA said.
“Supply is plentiful and demand is not keeping up with supply now,” said Tariq Zahir, a New York-based commodity fund manager at Tyche Capital Advisors. “That’s the fundamental equation and it looks more likely that we’ll continue to go lower.”
Losing Confidence
Goldman Sachs Group Inc. said it’s losing confidence in its forecast that Brent will recover to $100 a barrel next year. While the bank is maintaining its projection for now, it says that a lack of signs of accelerating global economic growth and uncertainty over the Organization of Petroleum Exporting Countries’ production plans amid rising Libyan output are weakening its conviction.
14 Comments on "Brent Crude Heads For Bear Market Amid Swelling Supply"
dissident on Fri, 3rd Oct 2014 7:18 pm
Engineered market herding. Supply is not plentiful. The 413,000 is driven by Saudi production and will not last. It can discount all it wants but that will not give it any new reserves. We all know the utter BS that the US supply is. These oil price swings are not an indication of a happy near future.
Plantagenet on Fri, 3rd Oct 2014 7:23 pm
There is a glut of crude oil due to production of oil from US tracking. The glut is resulting in lower US and lower global oil prices. Oil prices have already fallen ca. 20% in the last 3 months, and will likely fall farther.
Plantagenet on Fri, 3rd Oct 2014 7:24 pm
Make that US FRACKING (not tracking) resulting in increased oil production.
We live in interesting times.
York on Fri, 3rd Oct 2014 7:46 pm
Nonsense about supply and predictions. Few months ago price of brent was $115 and same people talk about $120 because of Iraq crisis and bad relations with Russia etc. So what is change so dramatically in 4 months? Nothing, contrary, Iraq is greater mess today with air strikes in Syria, there is even sanctions on some russian oil projects which mean that oil price go up but not. Reason is simply,. US government manipulation. Several reasons but major 2: elections and try pressure Russia.
In wednesday, oil have huge come back after lose in last day of Q3 and than in US session, without news, “somebody” pullback price in red after 1.5% green.
Norm on Fri, 3rd Oct 2014 7:47 pm
The oil wells were refilled by Jesus. Time to buy that Greyhound Bus for my interstate Evangelization Outreach ministry.
meld on Fri, 3rd Oct 2014 7:53 pm
Here comes that bursting shale bubble , we’ll be having oil company bail outs before the end of 2015.
Harquebus on Fri, 3rd Oct 2014 8:29 pm
The profit Sumitomo expected to make this year, a hefty $2.27 billion, has been all but wiped out. News of the disaster atomized 13 per cent of its stock value in one day. Its credit rating went to “negative.” And almost all of this was caused by hideous losses incurred in fracking for tight oil in Texas.
http://www.dailyimpact.net/2014/10/01/shale-oil-boom-breaking-down/
Bullhound on Sat, 4th Oct 2014 7:54 am
Put all your money on red!
Jared on Sat, 4th Oct 2014 9:37 am
^ Huge… now Sumitomo is putting a team together to come over and investigate where things went wrong. … I hope Resilience and/or Whipple follows this story… As in, was/is it anomaly, or the greater trend? I know Shell has come out and admitted fracking is a sink. Now this. … More please.
steve on Sat, 4th Oct 2014 9:41 am
these are the stories that people come up to me and say “Where is your peak oil now?” Mocking me as if by message alone I was taking away their happiness…it drives me nuts I have taken to not saying anything anymore….fools!! I wonder how so many don’t get it…but if you look back at history most people never got it…you think evolution would have taken care of that…
bill constantinidis on Sat, 4th Oct 2014 7:12 pm
what would oil at 10 dollars a barrel do to the oil supply?
Davy on Sat, 4th Oct 2014 7:24 pm
Bill, if oil gets that low it will be because there is very little economy left.
GregT on Sat, 4th Oct 2014 7:52 pm
York said:
“Reason is simply,. US government manipulation. Several reasons but major 2: elections and try pressure Russia.”
I believe we have a winner here. The rest of the market is being manipulated, as is the USD itself. To believe that the oil market isn’t being manipulated as well, is rather short sighted, IMVHO.
Bob Owens on Sun, 5th Oct 2014 1:39 pm
No matter what the situation, predicting the future price of oil is a fool’s errand. Best to take personal responsibility and use less fuel in your life. Get a bike at 100 miles to the candy bar; and a scooter at 100 miles to the gallon. Use them. Your cost is minimal and you won’t worry about the future of oil. Save your car for when you really need to use it.