12 Jan 2015
Oil prices might remain soft – Malcolm Graham-Wood
FXStreet (Barcelona) - Independent Analyst, Malcolm Graham-Wood, notes that Oil has seen further weakness with both WTI and Brent falling below $50/barrel handle, and further lists reasons which might keep oil prices soft further.
Key Quotes
“As is often the case on a Monday morning the prices above can be different following weekend movements and today has seen further weakness with WTI now at $47.25 and Brent changing big figure at $48.81. In no particular order here are a few factors influencing oil markets at the moment.”
“The non-farm payroll number beat the whisper again on Friday but very much like the UK, there were very weak levels of wage growth. Gasoline leads the way in terms of pleasure in the wallet department but the combination of strong employment data and weak wage growth is foxing economists.”
“In the UK today we have had the first reported signs of petrol being sold at below 100p a litre which may be a gimmick but will surely be situation normal as crude oil falls. If you want an outside bet for Chancellor Osborne’s March budget you might see a reduction in fuel duty which at this price isnt such a silly idea…All the weekend papers had stories about the budget too but they are all angling for tax breaks for the North Sea, something that Gideon has already hinted at.”
“The UAE Ambassador the the United States, Yousef Al Otaiba said yesterday in a speech that Opec had ‘no plans of cutting production no matter how much prices fall’.”
“The fall is clearly going to last for a while as for a number of reasons, such as the effect of hedging and forward sale commitments, policy doesn’t turn on a dime but the Baker Hughes rig count for last week may just be showing some give in the situation. The fall of 61 rigs is the biggest weekly fall since 1991 and the total is now 1750 from 1811 the week before, 30 of those rigs being lost in Texas alone.”
Key Quotes
“As is often the case on a Monday morning the prices above can be different following weekend movements and today has seen further weakness with WTI now at $47.25 and Brent changing big figure at $48.81. In no particular order here are a few factors influencing oil markets at the moment.”
“The non-farm payroll number beat the whisper again on Friday but very much like the UK, there were very weak levels of wage growth. Gasoline leads the way in terms of pleasure in the wallet department but the combination of strong employment data and weak wage growth is foxing economists.”
“In the UK today we have had the first reported signs of petrol being sold at below 100p a litre which may be a gimmick but will surely be situation normal as crude oil falls. If you want an outside bet for Chancellor Osborne’s March budget you might see a reduction in fuel duty which at this price isnt such a silly idea…All the weekend papers had stories about the budget too but they are all angling for tax breaks for the North Sea, something that Gideon has already hinted at.”
“The UAE Ambassador the the United States, Yousef Al Otaiba said yesterday in a speech that Opec had ‘no plans of cutting production no matter how much prices fall’.”
“The fall is clearly going to last for a while as for a number of reasons, such as the effect of hedging and forward sale commitments, policy doesn’t turn on a dime but the Baker Hughes rig count for last week may just be showing some give in the situation. The fall of 61 rigs is the biggest weekly fall since 1991 and the total is now 1750 from 1811 the week before, 30 of those rigs being lost in Texas alone.”