Causes of oil price fluctuations come in many forms, but the past 20 day 30% swing can fall squarely on the shoulders of uncertainty. With uncertainty comes volatility.
Uncertainty of how much oil the Saudis and the Russians will produce to fill the supply disruptions from Iran sanctions and Venezuelan economic collapse. Uncertainty surrounding the Iran sanctions in the form of potential waivers for countries that need more time to wind down imports from Iran. Uncertainty from what effects the U.S. – China tariff tit for tat “trade war” may have on economies worldwide. Uncertainty of Syncrude Canada ramping up their production of synthetic crude oil from oil sands in a quick and reasonable time frame. Uncertainty of whether the White House would tap into the SPR (Strategic Petroleum Reserves) to relieve some of the potential inventory disruptions. All of the above uncertainty has obfuscated the near-term outlook for oil fundamentals. Global inventories are low and global oil demand remains robust. For now we can only digest what data is provided to us through DOE’s weekly petroleum status update. Estimates are as follows:
US EIA WEEKLY CRUDE STOCKS -3.622M
US EIA WEEKLY DISTILLATE STOCKS 0.873M
US EIA WEEKLY GASOLINE STOCKS -0.044M
US EIA WEEKLY REFINING UTILIZATION +0.4%