BoAmL | After an astonishing 90% increase in spot WTI prices since mid-February, oil market participants are now starting to focus on the timeframe and magnitude of a potential recovery in US shale output. But US producers have yet to bring some rigs back, and oil drilling across in Canada and the US has continued to retrench in recent months.
UBS | US E&Ps cut capex by ~40% YoY in 2015 & are budgeted to cut >50% YoY this year. This has caused the US oil rig count to plunge from a peak of 1,609 in 2H14 to 328 (7- year low). But as spot WTI prices have moved from <$30/Bbl earlier this year to ~$46/Bbl currently, one of the key questions energy investors are asking is when will US E&Ps begin to add rigs?
UBS | Improved EM asset performance this year has been driven by a) the tremendous credit stimulus from China, b) a change in the reaction function of the Fed, which helped EM currencies rally against the USD, and, c) the rebalancing in the oil market. Investors are already questioning the first two, but oil has continued to trade very well.
MADRID | By Ana López-Varela | “The OPEC will not cut production even if the oil barrel drops to $20.” The intentions of the Saudi Oil Minister, Ali al Naimi, are stark. But, how will the OPEC’s decision of maintaining the production quota at 30 million barrel per day affect the markets? And which are the forecasts that market watchers have regarding the oil? In general, they expect the prices to increase. However, futures traders remain more conservative.
ZURICH | UBS analysts | We see 4 wins for Germany in a backdrop of falling oil prices
1) German equity market is not exposed to Oil & Gas earnings. 2) While our Oil & Gas analysts expect energy capex to fall by 10% (which could hurt a cyclical Germany), the overall fall to European capex is < 3%. Plus capex is already at a 23 year low – can it get much worse? 3) Our economists think lower oil triggers sovereign-based QE given their view it pushes CPI even lower than Tuesday’s 0.3%.
MADRID | The Corner | Benchmark Brent crude dived on Tuesday to its lowest in five years, plummeting below $66 a barrel after plunging more than 4 percent the day before on worries of a swelling supply glut, according to Reuters. Oil prices are likely to remain around $65/barrel for the next six or seven months, the chief of Kuwait’s national oil company said on Monday, in the latest sign that Gulf producers are ready to ride out plunging prices. According to experts at Link, this could lead to tensions on the money markets.
MADRID | By Francisco López | The collapse in the price of raw materials in the last number of weeks is good news for consumers, but very bad news in macroeconomic terms because of the heightened risk of deflation in the eurozone. Oil continues to plummet and a barrel of Brent is now priced at $82, 30%, lower than its June level and is currently trading at a four year low.
LONDON | By Kevin Norrish at Barclays | What’s all the fuss about? On many occasions over the past few years, oil prices have spiked higher only to fall back rapidly into the prevailing trend of narrow range trading and steadily falling volatility. So is the recent pickup in oil prices anything more than just another blip?
MADRID | By Donato Ndongo-Bidyogo | Its oil reserves – 15.6 billion barrels, 2.5 million exported daily – and gas (three million cubic meters) make Nigeria the leading African economy, outperforming South Africa. A notable industrial potential, petrochemicals and cinema industries stand out: Nollywood released more than 7,000 movies in the last decade, just surpassed by India (Bollywood) and ahead of the USA (Hollywood).
By Ray Kwong | It’s not an “ultimate weapon” like the Death Star from the Star Wars movie franchise, but the giant oil rig that China has parked just 140 miles away from Hanoi is equally as ominous. Much as the Galactic Empire used the Death Star’s presence to keep the weak in line, China’s decision to position the rig in the South China Sea in an area claimed by Vietnam is a demonstration of its regional muscle and resolve to assert its territorial claims.