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6 Jan 2015
Rising Russian oil production sends WTI lower – DB
FXStreet (Barcelona) - The Deutsche Bank Research Team note that the Russian Energy Ministries report showing rising oil production in Russia fuelled oil’s fall, with WTI seeing below $50/bbl levels briefly.
Key Quotes
“WTI briefly fell below $50/bbl intraday for the first time since April 2009 whilst the close in Brent below $55/bbl takes it to the lowest level since May 2009.”
“Yesterday’s moves appear to be fueled by a report from the Russian Energy Ministry on the weekend showing production out of Russia rising to a post-Soviet era high and news that Iraq exported the highest amount of crude in December since the 1980s. As well as this, an article on Reuters noted that Saudi Arabia made significant discounts to its monthly oil prices for European buyers yesterday, offering the lowest discount since 2009. The article also noted that the region made its fifth consecutive monthly price cut to US refiners.”
“We’ve previously highlighted the effects of the slump at the micro-level and yesterday we saw further evidence with Canadian producer Syncrude reporting a 12% decline in production in December relative to November.”
“The latest data out of Baker Hughes also paints a fairly bleak picture, reporting that oil rigs were cut by 17 this week, the sixth weekly decline in seven and follows data which showed that the Q4 rig count dropped by the largest quarterly amount since Q1 2009.”
“After taking something of a pause for breath over the holiday period, US HY energy names widened 25bps yesterday to a spread of 789bps – the widest level since mid-December.”
Key Quotes
“WTI briefly fell below $50/bbl intraday for the first time since April 2009 whilst the close in Brent below $55/bbl takes it to the lowest level since May 2009.”
“Yesterday’s moves appear to be fueled by a report from the Russian Energy Ministry on the weekend showing production out of Russia rising to a post-Soviet era high and news that Iraq exported the highest amount of crude in December since the 1980s. As well as this, an article on Reuters noted that Saudi Arabia made significant discounts to its monthly oil prices for European buyers yesterday, offering the lowest discount since 2009. The article also noted that the region made its fifth consecutive monthly price cut to US refiners.”
“We’ve previously highlighted the effects of the slump at the micro-level and yesterday we saw further evidence with Canadian producer Syncrude reporting a 12% decline in production in December relative to November.”
“The latest data out of Baker Hughes also paints a fairly bleak picture, reporting that oil rigs were cut by 17 this week, the sixth weekly decline in seven and follows data which showed that the Q4 rig count dropped by the largest quarterly amount since Q1 2009.”
“After taking something of a pause for breath over the holiday period, US HY energy names widened 25bps yesterday to a spread of 789bps – the widest level since mid-December.”