Crude oil price fell as it became apparent that the failed Turkish coup would have little impact on key oil supply and pipeline routes and instead turned to worries about oversupply. With the post Brexit and now Turkey’s failed coup weighing on demand expectations, supplies look a lot larger.
The price point at $44 per barrell really has been a historic support for oil in recent years. In fact, in this millennium the only time oil has been below $44 a barrel is when the market is racked with economic doom and gloom. We saw that late last year and early this year as China economic fears sent oil prices crashing, driving global equity markets lower.
Crude oil prices are rebounding after getting smashed on Monday on hopes for more stimulus and pending the outcome of some oil export issues in Iraq. On Monday, oil had a hard time finding support as the dollar saw strong buying and a report by Plats that put OPEC production up 300,000 barrels last month to 32.73 million barrels of oil a day, which would be an eight-year high.
Risk on, risk off and risk all over the place. Crude oil prices are falling even as stocks fly in the aftermath of that blockbuster monthly jobs report. While stocks seem happy with the fact that the U.S. job market dismal numbers rebounded, many others are not so convinced our problems are behind us.
U.S. crude oil production is falling while Iranian production is rising as we grow more dependent on Middle Eastern oil each passing day. The Energy Information Administration reported that U.S. oil production fell 200,000 barrels a day down to only 8.428 million barrels a day.
Crude oil has been among the biggest gainers in the first half of the year. One of the main reasons oil bounced back sharply was probably the fact that it had fallen well below its fundamental value due to panic selling earlier in the year.
Regrets? Do they have a few? The hangover continues from the Brexit vote and global markets have a headache. While crude oil is trying to shake off the Brexit shock, it is having a hard time even though the supply and demand fundamentals are much tighter right now than almost anyone could have predicted.
The EIA reported crude oil fell by only 900,000 barres last week. That was a shocking contrast to the 5.5-million-barrel drop that we saw in the API report. What was more interesting is that in all of the most watched areas of crude supply, we saw a sizable drop in supply.