Det algeriska äventyret förvandlades till en nordafrikanska rysare för oljemarknaden. Nästan ingen, trodde att mötet mellan OPEC medlemmar och ryssarna skulle kunna komma fram till något annat än artigheter och en annan besvikelse när det gäller att stödja Oljepriset. Istället tog OPEC tog blankarna på sängen. Det är emellertid ännu för tidigt att jubla riktigt ännu, det finns fortfarande gott om tid till november när oljekartellen håller sitt officiella halvårsmöte i slutet av november.
Det är svårt att inte dra en parallell mellan OPEC och ryssarna med FED som i december 2015 lovade att centralbanken skulle höja räntan inte mindre än tre gånger. Trots massor av hökaktiga uttalanden och tal, har centralbanken ännu inte agerat. Mötet i Doha gav inget, och det officiella mötet OPEC var en frustrerande övning där saudierna och iranierna inte nådde någonting annat än ett nytt dödläge. Är den här gången annorlunda? Svaret kommer med tiden. Men det enda som mötet i Algeriet åstadkommit var att skrämma många spekulativa blankare som hade sålt olja i väntan på ännu ett annan meningslöst möte.
En chock från Algeriet
Oljemarknaden var inte redo för dessa nyheter från Algeriet på onsdagen. Det verkar som om det finns en överenskommelse om att minska produktionen till 32,5 miljoner fat per dag från nuvarande utgångsnivå 33,24 miljoner fat i november. Oljemarknaden slösade ingen tid att svara på nyheterna. Råolja har sedan mitten av augusti handlats i ett intervall från $ 43,06 till $ 50 per fat.
Det öppna intresset, det totala antalet öppna långa och korta positioner i NYMEX råoljekontrakt ligger på cirka 1,83 miljoner kontrakt. Med tanke på de låga förväntningarna på alla avtal från Algeriet, är chansen att det finns massor av spekulativa shorts oljeterminsmarknaden. Nu när det finns en viss rörelse från kartellen, kommer dessa blankare sannolikt att rusa för att stänga sina korta positioner, och rent av gå långa.
De initiala frågorna
Överenskommelsen verkar leda till en minskning med cirka 700.000 fat per dag av produktionen. Det är inte klart om Saudiarabien kommer att minska produktionen, om Iran kommer att frysa sin produktion eller andra detaljer som kan orsaka detta avtal att falla sönder under de kommande veckorna. Ryssarna producerar på en rekordnivå, och det finns ingen indikation på om ryssarna är villiga att göra sin del för att begränsa produktionen i de kommande månaderna. Dessutom, Libyen och Nigeria har nyligen indikerat att deras produktion skulle öka med hundratusentals fat per dag. I Venezuela är den ekonomiska krisen så allvarlig att nationen måste sälja så mycket olja som de kan pumpa att överleva dag-till-dag. Det finns så många frågor kring denna överenskommelse.
Dessutom, ju högre oljepriset blir, desto större utflöde kommer vi att få se från Nordamerika där USA och kanadensiska produktion var det primära målet för den saudiska ledda OPEC strategi för att straffa skiffertillverkare med lägre priser eftersom priset började falla i 2014.
Ingen trodde att överenskommelsen
Mycket få analytiker, oljehandlare eller marknadsdeltagare förväntade sig att något skulle komma från mötet i Algeriet. Därför orsakas den initiala nyheten av ett avtal en stegring i priset på oljan.
Vissa analytiker anser emellertid att onsdagens överenskommelse kommer att falla sönder när OPEC sammanträder i Wien i slutet av november. De kommer att säga att OPEC bara köper två månader högre priser när de försöker hantera de komplicerade och kanske omöjliga, detaljerna i denna överenskommelse.
Oljepriset
Pris på olja, både på WTI och Brent. Du kan se det aktuella priset på WTI- och Brent-olja, samt hur det oljepriset har utvecklats över olika tidsperioder. Överst visas WTI-priset och under det Brent-priset.
WTI (West Texas Intermediate), även känd som Texas Light Sweet, är den typ av olja som oftast används som riktmärke för prissättning av olja. WTI handlas i New York. Brent är den typ av olja som är vanligast i Europa. Oljefutures går till leverans varje månad året om. Olja handlas bland annat på New York Mercantile Exchange under tickersymbolen CL (avser Light Sweet Crude Oil) och huvudkontraktet prissätts i USD och cent per fat.
Cyclical commodities, such as industrial metals are enjoying a renaissance with the last four weeks of inflows being the largest since late 2014. Despite the China GDP data print at 6.7% year-on-year, other indicators, such as industrial output, retail sales and first quarter fixed asset investment all beat forecasts providing further signs that Chinas economy is stabilising. China industrial output and industrial metal prices are closely correlated. The recent strength in Chinese data is good news for industrial metals and is likely to support prices, particularly given that most industrial metals are trading well below marginal cost of production. Industrial metals saw inflows of US$60m last week (11% of AuM).
Gold saw outflows of US$66m, the first meaningful outflow since the beginning of the year. However, this outflow only represents 3.7% of the year-to-date inflows which remain at US$1.76bn. After strong price appreciation since the beginning of the year, some investors have decided to take profits. We believe the fair value of gold is US$1250. Silver continues to see inflows (US$11m last week).
Oil outflows following the Doha OPEC summit totalled US$78m, representing the largest since April 2015. Initially there was disappointment from the market that a deal with Iran on a production freeze was not agreed. This was short-lived due to fears over the Kuwait oil strike impacting a substantial 1mbpd supply. Despite the strike only lasting one day, the oil price continued to rise throughout the week, perhaps based on vague rumours of OPEC re-initiating production freeze discussions. Year-to-date performance of oil peaked at 20% mid-week, marking the best performing energy related commodity, thus the recent outflows are likely to represent profit taking. Inflows year-to-date remain high at US$965m.
We believe the potential scaling-up of Iran’s production is unlikely to have much impact on global supply in the short-term with global supply likely falling into deficit in Q3-Q4 2016. Oil has moved into backwardation in the front month, the first time since June 2014, highlighting the flattening of the futures curve, the rest of the curve remains in contango.
Key events to watch this week. Key focus is on the US housing market: new home sales and Case-Shiller house prices are published along with durable goods orders which could influence commodity demand. The Federal Reserve (Fed) rate decision is on Wednesday evening and we don’t expect any change in policy especially as there is no press conference or economic projections provided this meeting. Core PCE, an important benchmark for the Fed is published later in the week, although consensus expectations are for a relatively low print.
Video Presentation
James Butterfill, Head of Research & Investment Strategy at ETF Securities provides an analysis of last week’s performance, flow and trading activity in commodity exchange traded products and a look at the week ahead.
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ETF Securities Research team
ETF Securities (UK) Limited
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Doha – Desert storm in a teacup Expectations at the Doha OPEC Summit were for a simple rubber stamping of the agreement to freeze OPEC production but this didn’t happen. The scaling up or Iran’s production is unlikely to have much impact on global supply in the short-term with global supply falling into deficit in Q3-Q4 2016.
The acrimony between Iran and Saudi was evident as Iran did not even attend the meeting. Iran has refused to freeze production and Russia has sympathised. Saudi has picked up market share lost by Iran when sanctions were imposed and Iran sees that it is only right that they have the opportunity to regain this share. We believe the Saudi Arabia has taken such a hard-line to protect its own interests, the current oil price is painful for them given that their fiscal costs of production are around $100/bbl, pushing their budget balance to -19% of GDP for 2016 according to the IMF.
Currently Iran has managed to scale-up production from 2.88mbpd in December 2015 to 3.29mbp in March (404k change), slightly below the consensus expectations of 500k. In the short-term we believe production in Iran is unlikely to move substantially higher as production is close to maximum potential with current infrastructure. A couple of projects assisted by China could push Iranian production up by 200kbpd in 2017.
The Saudi/Iran proxy war in Syria and Yemen isn’t helping stability within the region and there is a general skepticism amongst international banks and oil exploration and production companies over Iran’s nuclear deal. It is therefore likely that additional production infrastructure will not come online in the shorter term.
June 2nd is the next OPEC meeting but it’s unlikely a production freeze will be agreed at that point either. The oil price initially dived 7% reflecting a knee-jerk reaction by investors but has since settled at -2.5% at time of print. We expect little impact on market balances and we expect a global supply deficit by either Q3 or Q4 2016.
James Butterfill, Head of Research & Investment Strategy at ETF Securities
James Butterfill joined ETF Securities as Head of Research & Investment Strategy in 2015. James is responsible for leading the strategic direction of the global research team, ensuring that clients receive up-to-date, expert insight into global macroeconomic and asset class specific developments.
James has a wealth of experience in strategy, economics and asset allocation gained at HSBC and most recently in his role as Multi- Asset Fund Manager and Global Equity Strategist at Coutts. James holds a Bachelor of Engineering from the University of Exeter and an MSc in Geophysics from Keele University.
