One of Those Days

By: Daniel Guttman / February 13, 2017

We truly appreciate our readers sticking with us during, by far, the most monotonous oil market since we started writing this blog. Today is yet another one of those days. Last Friday’s Baker Hughes report showed another increase in U.S. drilling rigs, January’s OPEC compliance levels have revealed a 90% compliance rate and non-OPEC members roughly 40% compliance, but we do have a break in the 4-day trend: the market is down.


Production Cuts.png

As seen from the chart below, there is no question that OPEC producers have far exceeded production cut expectations from both a timeliness (quicker) and volumetric standpoint. However, analysts will tell you that the OPEC and non-OPEC production cuts were already priced into the market weeks, if not months, ago. Therefore, analysts and market strategists believe that current news (i.e. rig count, geopolitical news, and refinery operations) are the real factors causing the current market fluctuations. Frank Klumpp, an oil analyst at LBBW in Germany recently was quoted by saying, "The good compliance rate of OPEC seems to be priced in. The U.S. rig count from Friday is weighing, the numbers support the shale comeback story.”

The comeback kid is back at it and this is quite evident this morning. Although OPEC and non-OPEC compliance levels have been publicized, given the fact that U.S. oil drillers added an additional 8 rigs last week, have added or been neutral for 34 out of the last 37 weeks, and have hit a 5-year high of 591 active oil rigs, it is not shocking that the market is down.

WTI is currently down $0.97 to $52.89, and both RBOB and ULSD are down $0.0390 and $0.0415, respectively.


Categories: Daily Market Update

Daniel Guttman

Written by

Daniel Guttman

With a background in wholesale and commercial sales as well as pipeline scheduling, Daniel is currently the Manager, Business Development in the Card Access Fuels department. He is tasked to find new and innovative solutions to increase sales opportunities for the sales team while managing and evaluating internal department processes. He assists with day to day personnel management, customer data analysis, as well as the daily Pacific Pride inventory and pricing direction.

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