Etikett: Iran

Oljepriset, det är inte bara OPEC som styr

Oljepriset, det är inte bara OPEC som styrOljepriset, det är inte bara OPEC som styr

Vi har sett en hel del prisfluktuationer när det gäller oljepriset, både Brent och WTI, något som också har påverkat de ETPer och börshandlade fonder som speglar priset på råolja, till exempel United States Oil Fund (NYSEArca: USO) och United States Brent Oil Fund (NYSEArca: BNO). När det gäller Oljepriset, det är inte bara OPEC som styr utvecklingen av denna råvaras värde, det finns ett stort antal andra faktorer som påverkar.

OPECs påverkan är emellertid stor, men kanske minskande? Från oljemarknadens håll har flera bedömare sagt att de anser att OPECs inflytande minskar när de oljeproducerande ländernas organisation nu minskar produktionen i syfte att minska pristrycket på oljepriset. Samtidigt hoppas många av de amerikanska frackning företagen på att priset på olja skall hoppa upp över 50 USD igen för att de skall kunna kapitalisera på det. Enligt vissa estimat är det på denna nivå som skifferoljeproducenterna går break-even nu när framsteg inom teknik och borrteknik har hjälpt till att skära ned kostnaderna.

I en återföring av tidigare sentiment accepterade Saudiarabien Irans högre produktionsmål som ett specialfall. Tidigare har OPECs samtal brutit samman eftersom Iran ansåg sig orättvist fördelat eftersom landet hävdade att det inte kunnat exportera i samma mängd som sina konkurrenter då Iran var satt under strikta globala sanktioner. Iran har därför argumenterat för att öka sin produktion till nivåerna innan sanktionerna började att gälla. Utöver Iran finns det andra problembarn inom kartellen som skulle kunna undergräva ansträngningarna för att minska oljeproduktionen inom OPEC.

Siktar mot 60 USD per fat

Saudiarabien, OPECs största producent, siktar på ett oljepris om 60 USD per fat, en nivå som många av OPECs medlemmar skulle trivas med. Nivån är emellertid inte tillräckligt hög för att uppmuntra amerikanska skifferproducenter att avsevärt öka sin produktion.

I en nyligen publicerad analys skriver den amerikanska investmentbanken Goldman Sachs om oljan. Goldman Sachs degraderar effektivt OPEC från en prissättare till en lageransvarig eftersom banken anser att OPECs långsiktiga kontroll över det internationella oljepriset har upphört till en följd av skifferolja och –gas. Skiffer ger en betydligt snabbare produktion, från investeringsbeslut till topproduktion kan cykeln vara så kort som sex till nio månader. Detta skall ställas mig flera år för den konventionella oljan.

Aktörerna på oljemarknaden oroar sig för att de amerikanska skifferoljeproducenterna kommer att öka sin produktion om oljepriset stiger. Den senaste rigräkningen visar på ett ökat antal riggar, och kreditmöjligheterna är nu större än tidigare vilket gör att dessa företag kan komma att dra fördel av en kortsiktig prisuppgång för oljepriset.

Flera OPEC-medlemmar har redan meddelat att de är beredda att delta i en förlängning av produktionsneddragningen, eller i alla fall erkänt behovet av en sådan förlängning. Även Saudiarabien har mjukat upp sin tidigare bestämda ståndpunkt, från att tidigare ha varit ovilliga att stärka den amerikanska skifferoljeindustrin så har landet meddelat att det kommer att stödja en förlängning av produktionsstoppet om oljelagren förblir höga. Oljepriset, det är inte bara OPEC men organisationen har helt klar stor betydelse.

Olja

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.

 

Loonie set for near term tumble

Loonie set for near term tumble

Trade Idea – Foreign Exchange – Loonie set for near term tumble

Highlights

  • The tentative agreement reached by OPEC last Wednesday has sent oil prices to the top of their recent range and lent support to oil linked currencies.
  • In practice the production limit will be hard to implement and oil prices will likely retrace gains in coming months.
  • The CAD looks to continue its downtrend as extended positioning corrects lower and monetary conditions are eased.
  • OPEC surprises markets
Global crude benchmarks and oil linked currencies jumped last Wednesday on news that members of OPEC had tentatively agreed to implement a production target for the first time in seven years. Both commodity and currency markets responded positively to the surprise deal that was viewed broadly as an unlikely prospect due to long standing differences between key group members, Saudi Arabia and Iran. While the deal certainly marks a shift in stance of the oil exporting group, we do not believe it is enough to sustain support for the CAD which is at risk from a confluence of bearish factors, specifically underwhelming economic performance, stretched speculative positioning and technical resistance. We therefore see current levels as an attractive point to gain long exposure to the USD/CAD and EUR/CAD currency pairs which are set to benefit from near term oil weakness.

Symbolic but not practical

We believe the uplift in the oil market provided by the latest OPEC agreement will not last for long as the practicalities of the arrangement and wider concerns over slowing global oil demand growth keep oil prices contained. The deal itself, while an important move symbolically, did not provide a definite promise to remove a significant amount of output from the global oil market (removing anywhere from 200-700k barrels per day (bpd)) and requires the implementation of country level quotas. This is a large and politically sensitive task and is unlikely to be completed before the next OPEC meeting in November. In addition, the deal failed to provide clarity over conditions for countries under duress such as Venezuela, Nigeria and Libya where production is currently far below capacity, but has the potential to increase in the interim. Thus, support from oil prices is therefore likely to be absent for the CAD in the coming months. (Click to enlarge)

CAD underperforms NOK

While both the NOK and CAD are heavily linked to the oil price, prospects for the two currencies have recently diverged. Latest growth and inflation data from Norway has surpassed the expectations of its central bank, causing the Norges bank’s Executive Board to deliver a more hawkish policy message and raise its projected rate path. In contrast, lacklustre inflation, retail sales and manufacturing data has prompted a more dovish tone from the Bank of Canada (BoC), which makes it increasingly likely to ease monetary policy at its upcoming meetings. This has been reflected in the relative outperformance of the NOK in the past month, which has rallied by 2.8% relative to CAD on a trade weighted basis (see Figure 1).

Positioning stretched

The USD/CAD and EUR/CAD are on strong longer term upward trends (CAD weakening) which look well placed to continue. Net speculative positioning underpinning the CAD is hovering at record highs and looks increasingly subject to a correction. A fall in oil prices or further easing by the BoC could see CAD longs (which are at the strongest level in two years) fall sharply and shorts gather momentum, exacerbating any rise in USD/CAD and EUR/CAD. Investors wishing to express the investment views outlined above may consider using the following ETF Securities ETPs: Currency ETPs EUR Base ETFS Long CAD Short EUR (ECAD) ETFS Short CAD Long EUR (CADE) GBP Base ETFS Long CAD Short GBP (GBCA) ETFS Short CAD Long GBP (CAGB) USD Base ETFS Long CAD Short USD (LCAD) ETFS Short CAD Long USD (SCAD) 3x ETFS 3x Long CAD Short EUR (ECA3) ETFS 3x Short CAD Long EUR (CAE3) 5x ETFS 5x Long CAD Short EUR (ECA5) ETFS 5x Short CAD Long EUR (CAE5) Currency Baskets ETFS Bullish USD vs Commodity Currency Basket Securities (SCOM) ETFS Bearish USD vs Commodity Currency Basket Securities (LCOM)

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Proposed OPEC cuts to have little effect

Proposed OPEC cuts to have little effect

OPEC members reached an understanding that a production cut is required at its meeting in Algiers yesterday. That is not yet a commitment to cut production and the cartel is likely to wait until its formal meeting in Vienna on November 30th to thrash out the details. A press release on the group’s website says it will target between 32.5 to 33 million barrels per day of production, down from 33.2 million barrels of production in August. Proposed OPEC cuts to have little effect.

The market has cheered the news with more than a 5% increase in Brent on 28th September. However, we caution that the group has to figure out a method of apportioning the cut. The Conference decided to set up a High Level Committee to study the implementation of the production levels of individual Member countries. If formalised, this is the first time the group will assign a quota in close to two years. While the group traditionally (pre-November 2014) had an aggregate target, it had never made individual country targets. Historically, Saudi Arabia was willing to take the burden of supply cuts. But with Iran trying to pump oil at a break-neck pace, Saudi Arabia is less willing to assume this role. Any deal made in November is likely to hinge on the burden being shared across most members (although countries suffering from outages such as Venezuela and Nigeria may be exempt). We believe it will be difficult to get Iran to participate in production cuts which could damage the chances of a deal being made in November.

Lastly OPEC is aware that their efforts to stabilse the market may be thwarted by non-OPEC countries efforts to gain market share. Saudi Arabia and Russia have already had discussions on the sidelines of the G20 meeting in China about market stabilisation. It appears that Russia will be willing to participate in this effort, but to what degree is unknown. The Committee seeks to develop a framework of consultations between OPEC and non-OPEC countries before the November OPEC conference.

Capping OPEC production at 33 million barrels in of itself will do little to achieve market balance. We continue to believe that the bulk of the heavy lifting to achieve global market balance will be made by non-OPEC countries cutting supply. US$1trn of capex cuts have been planned in the oil and gas industry which will bite into supply. Additionally, weak prices should support the growth of demand.

We believe that crude will continue to trade in a range of US$40-55/bbl, with nimble tight oil producers in the US playing an influential role in setting the top and bottom of this range.

Nitesh Shah, Research Analyst at ETF Securities

Nitesh is a Commodities Strategist at ETF Securities. Nitesh has 13 years of experience as an economist and strategist, covering a wide range of markets and asset classes. Prior to joining ETF Securities, Nitesh was an economist covering the European structured finance markets at Moody’s Investors Service and was a member of Moody’s global macroeconomics team. Before that he was an economist at the Pension Protection Fund and an equity strategist at Decision Economics. He started his career at HSBC Investment Bank. Nitesh holds a Bachelor of Science in Economics from the London School of Economics and a Master of Arts in International Economics and Finance from Brandeis University (USA).

EU referendum dominates ETP flows

EU referendum dominates ETP flows

  • EU referendum dominates ETP flows
  • Last week saw investors continue to purchase safe haven assets as inflows into precious metals totalled US$111mn.
  • Long crude oil saw inflows for the first time after nine straight weeks of outflows.
  • Investors uncertainty fuelling inflows into both long and short GBP ETPs.
Last week saw investors continue to purchase safe haven assets as inflows into precious metals totalled US$111mn. Year to date inflows into precious metals now total US$2.5bn, closing in on the highest six-month period of US$2.8bn witnessed in October 2012 when the gold price hit US$1900, prompted by concerns over quantitative easing and the Greek crisis. This time around, we see investor concerns over the risk of the UK referendum and its potential departure from the EU destabilising the global economy, the US elections and overly dovish US Federal Reserve monetary policy supporting the gold price. We saw inflows across the board in precious metals, gold, silver, platinum and palladium ofUS$73mn, US$17mn, US$15mn and US$1mn respectively, whilst some investors sold out of short silver positions. Safe haven investing also saw outflows from industrial metals ETPs. Whilst palladium flows were relatively low, the trend now looks to have troughed after year of outflows. This chimes with our research which highlights the palladium has been in supply deficit for the last four years, trades well below marginal cost and is a key beneficiary of the EU6 regulations on car emission controls. Long crude oil saw inflows for the first time after nine straight weeks of outflows. During those nine weeks, investors were selling long positions and purchasing short positions across the whole energy sector with the exception of heating oil. We see this more as profit-taking and risk aversion rather than a structural bearish view adopted by investors as the short positions have been relatively much smaller. We see the Brent fair value of US$55 per barrel at the year-end, reflecting the 75th percentile of the crude production cost-curve, where supply demand responses occur. Furthermore, we expect Iran production to have achieved a 6 to 9-month production peak due to reluctance from international oil companies to invest. In currencies the biggest moves have been in Sterling ETPs, with short GBP rising from US$58mn at the beginning of the year to its peak today of US$117mn. Following a very similar pattern witnessed during the Scottish Referendum where flows peaked at US$124mn. Interestingly, due to the recent sell-off in GBP against a broad set of currencies, some investors have begun purchasing long positions in GBP, with the inflows into long GBP ETPs almost equalling the inflows into of short GBP ETPs over the last week. Key events to watch this week. Investors will be closely following the UK’s EU referendum on Wednesday. The vote is dictating short-term sentiment, and in turn market movements. The polls are indicating a slight edge for the ‘Remain’ campaign, but investor optimism that is currently boosting cyclical asset prices will quickly unravel on any sign of the ‘Leave’ result becoming more likely.

For more information contact

ETF Securities Research team ETF Securities (UK) Limited T +44 (0) 207 448 4336 E info@etfsecurities.com

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Oil rally has legs

Oil rally has legs

ETF Securities Commodities Research: Oil rally has legs

Summary

  • Market balance can be achieved in 2016 as demand grows and supply declines.
  • Many OPEC members are likely to cut back on supply. Iran is unlikely to raise production to pre-sanction levels.
  • To meet future demand for oil, prices will have to rise further.

Toward market balance

Brent has risen to above US$43/bbl from below US$28/bbl in January as investor optimism for oil has markedly improved. We believe the gains in price are sustainable and not just driven by speculative gains.

Based on IEA’s demand forecasts, we are likely to be in a global oil supply deficit by Q3 2016, even if we assume that supply does not fall from Q1 2016 levels.

Supply however has been declining from non-OPEC sources. A large part of the decline in production has come from the US where the lagged effects of cuts in oil rigs in 2014 and 2015 are substantially biting into supply. By December 2015 global oil CAPEX was declining at a rate of 32% year-on-year. Although some large projects – too far into development to reverse – are still coming on-stream in countries like Brazil and Russia, most non-OPEC producing countries should see declining production.

Will OPEC supply also decline?

While OPEC has failed to coordinate to freeze production, except for Iran, most of its members are already cutting back on production and we expect a continuation of this trend.

Iran seeks to bring its production back to pre-sanction levels (3.7 million barrels per day) and so has increased its output from 2.8 million barrels per day in Q1 2015 to 3.3 million barrels per day in Q1 2016. But we think that Iran will struggle to raise production further than 3.5 million barrels per day by 2017, as it would require a significant infrastructure build, which will be difficult to achieve while sanctions are only part-lifted and oil prices remain relatively weak.

Under the strain of low oil prices, OPEC countries have been cutting back on fiscal expenditure. The current account of the Gulf Governing Council and Algeria is expected to reverse from a comfortable surplus to a deficit of about 8% of GDP in 2016. We believe it will be very difficult for OPEC countries to invest in any additional capacity that would allow for a significant increase in oil production under such conditions.

By 2017 OPEC spare capacity is likely to fall to 1.57 million barrels per day, down from 3.98 million barrels in 2010. With reduced spare capacity, unplanned outages will be difficult to deal with without spike in prices. Unplanned outages in Saudi Arabia and Kuwait appear to have been increasing lately.

Electricity outagesi, hyperinflation and forced worker holidays could see oil outages pick up in Venezuela too.
In its “Vision 2030” plan, Saudi Arabia has articulated that it wants it economy to be less reliant on oil. If the country follows through with its plans, the country may not seek to expand production capacity as aggressively as it has done in the past.

Inventory concerns overstated

US crude oil inventories have risen strongly since the collapse in oil prices in November 2014. However, with production declining in the US, we believe that constraints on storage will be alleviated. Storage is likely to have reached 70-80%ii of capacity in the US, but with the ability to export US oil and the development of storage capacity in other countries, we believe the market concerns around storing oi in the US are overstated.

China in particular has been investing in building storage capacity. China built 200 million barrels in strategic petroleum reserves (SPR) between 2006 and 2016. According to the IEA, in 2016 alone they will build 110 mb of SPR (and a further 35 mb of commercial).

Meeting future demand

Current global oil demand is approximately 95 million barrels per day and we believe that it could rise to 98 million barrels by 2020. Only 80 million barrels of this can be met by currently producing fields. To unlock the remaining 18, oil prices will have to increase. The break-even for tight oil for example is estimated to be US$65/bbl.iii

i Venezuela is highly reliant on hydroelectricity and low water-levels have led to shut-ins.
ii The last data release for storage capacity was as of September 2015. Since then more capacity has been built, but we will only get EIA data on this at the end of May 2016 for March 2016.
iii The line in the chart represents the weighted average break-even oil price i.e. the Brent oil price at which net-present value is zero using a real discount rate of 7.5%. The bands around the break-even represent the 60% confidence interval. Producing fields have a low break-even due to CAPEX already sunk and cheap Middle East oil.

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This communication has been issued and approved for the purpose of section 21 of the Financial Services and Markets Act 2000 by ETF Securities (UK) Limited (“ETFS UK”) which is authorised and regulated by the United Kingdom Financial Conduct Authority (the “FCA”).

The information contained in this communication is for your general information only and is neither an offer for sale nor a solicitation of an offer to buy securities. This communication should not be used as the basis for any investment decision. Historical performance is not an indication of future performance and any investments may go down in value.

This document is not, and under no circumstances is to be construed as, an advertisement or any other step in furtherance of a public offering of shares or securities in the United States or any province or territory thereof. Neither this document nor any copy hereof should be taken, transmitted or distributed (directly or indirectly) into the United States.

This communication may contain independent market commentary prepared by ETFS UK based on publicly available information. Although ETFS UK endeavours to ensure the accuracy of the content in this communication, ETFS UK does not warrant or guarantee its accuracy or correctness. Any third party data providers used to source the information in this communication make no warranties or representation of any kind relating to such data. Where ETFS UK has expressed its own opinions related to product or market activity, these views may change. Neither ETFS UK, nor any affiliate, nor any of their respective officers, directors, partners, or employees accepts any liability whatsoever for any direct or consequential loss arising from any use of this publication or its contents.

ETFS UK is required by the FCA to clarify that it is not acting for you in any way in relation to the investment or investment activity to which this communication relates. In particular, ETFS UK will not provide any investment services to you and or advise you on the merits of, or make any recommendation to you in relation to, the terms of any transaction. No representative of ETFS UK is authorised to behave in any way which would lead you to believe otherwise. ETFS UK is not, therefore, responsible for providing you with the protections afforded to its clients and you should seek your own independent legal, investment and tax or other advice as you see fit.