Wrap – Week Ended 4/15/16



Doha Sunday. Expect brinkmanship on the part of Saudi Arabia.

The ZLT ended last week up 4% and is up 12.6% on the year while the XOP was up 4% and is up 7.9% on the year. 

The Blotter is updated. 

Questions and comments will be addressed under the Monday post. 


wrap 041516


18 Responses to “Wrap – Week Ended 4/15/16”

  1. 1
    zman Says:

    Saudi and Russia reportedly wordsmithing into the 4th hour at Doha. 

  2. 2
    Baylor Says:

    Looking more and more like we're going to have low prices until after the election.  Not sure what that mans re who survives and who doesn't, but doesn't seem any of the calls for $60-70 oil are likely to happen in this calendar year.  I hope I'm Gartmaning and am completely wrong.

  3. 3
    Baylor Says:

    Z – what do you see as far as impact with the Kuwaiti oil workers strike?  Much ado about nothing or potentically marginally price supportive?

  4. 4
    zman Says:

    re 2 – I'm sticking to my forecast.  I don't see the reasoning for the "more and more" part of your comment.  

    re 3 – 3 mm bopd cut to 1.1 mm bopd today. Really depends on how long that strike goes on. Normally a disruption of that size would be very supportive but duration is unclear. 

  5. 5
    zman Says:

    Sources reporting no agreement at Doha talks. 

  6. 6
    zman Says:

    Talks ended, Reuters and Bloomberg report no deal.  No deal means nothing has changed with our fundamental picture for this year.  Moving towards balance, big dip in oil tonight to be sure but not looking for a retest beyond $30, likely traction mid $30s this coming week. 

  7. 7
    brodway Says:

    I think the Doha meeting was a dog and pony show …Prior to the meeting there was a good bit of speculation that not much will be accomplished at the meeting, as Russia has been looking for others to reduce production. Russia has not been cooperative with OPEC as was evidenced by their lack of care in the fall 2014 meeting. The Russians must be feeling the pressure of  significant revenue loss due to lower prices. Consumer budget constraint will become a major problem next year if prices continue to linger in the 30 range and social programs may be at risk of being funded. Saudis have been consistent in their approach in reducing world oil production. The route to oil price stabilization is way on its way given that demand/supply levels are working to normalize the markets . I see that a part of the lack of a deal is built in already, and although Brent may lose a few points, i think the response in equities should be more muted and many will find support at their technical levels. 

  8. 8
    Wayne G Says:

    re 6: Not sure Kuwait going to be so minor. Yes its a strike, so not permanent but 1.7 mbopd offline is insane 

  9. 9
    zman Says:

    Initial trading just under $38 this evening. 


  10. 10
    brodway Says:

    is that the April or May contract?

  11. 11
    zman Says:

    re 10 – May

  12. 12
    zman Says:

    Goldman out saying 

    Lack of OPEC freeze is bearish sentiment 

    Kuwait strike is bullish fundamentals. 

    Sounds like captain obvious but actually that makes perfect sense. 

  13. 13
    brodway Says:

    re: 11/12

    thanks…i really don't see anything changing from the posture that Saudis have taken since November 2014….the markets are going to correct and find balance on their own.

    as you have pointed out time and again, this process is ongoing…so these moves in crude are gyrations to events which are not going to help this process of equilibrium 

  14. 14
    RB Says:

    WTI gapped up on last Monday from a close of 39.66 the previous Friday.  So it looks like that gap will get closed and that we could see a test of the rising 50 avg. around $36.  That wouldn't stress me out; in fact I'd sold my trading longs ahead of this Doha Kabuki Theatre and I'd welcome an opportunity to reload FANG/WLL/OAS/WPX and maybe some add some CXO trading shares to my core.  Just the way this stuff works.  The price had gotten way out ahead of the 50 day, which was below the 200….it will take some more time and back and forth for the technicals to get firmer and the fundies to sort out too….here's my chart as of the close of business on Friday for some perspective on the moving average lines, gap up etc. I mentioned…..https://stockcharts.com/h-sc/ui?s=%24WTIC&p=D&yr=0&mn=6&dy=3&id=p81550032126&a=448745873

  15. 15
    zman Says:

    Goldman ~ "beyond … headlines … outlook for oil prices remains that gradually improving fundamentals … will bring the market into sustainable deficit in 3Q16"

    Less bearish by the month, starting to sound like something we write weekly.  

  16. 16
    zman Says:

    re 13 – yeah and see 15, now GS sees same. 

  17. 17
    zman Says:

    Kemp has a good point


  18. 18
    life’s-a-gas Says:

    As the smoke clears, well actually the Russian propaganda is exposed, the Saudis and Iranians try to destroy each other by opening the spigots. This was well telegraphed before today's meeting but many drank the Russian Kool-Aid. Can't be good for prices. Is it really possible that the Russians and Saudis did not have deal before today or were not talking? Maybe the Saudis told Russia they don't need their weapons or protection.

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