The common question these days, or more accurately weeks, in the wacky world of petroleum has been who is going to win: The Bulls or the Bears? Unfortunately, placing a bet on the outcome of this tug of war match is pure speculation, and nobody truly knows which way WTI oil prices are headed. They rise for a day when news of OPEC production cuts adheres to projections, and then fall when Baker Hughes announces increased rigs. Prices then surge when Iran tests ballistic missiles and President Trump puts them on “the naughty list,” but then prices retract when Russia states its production cuts are greater and ahead of schedule. The back and forth of oil prices, stuck in the range of $50-$55 for WTI, reminds us of Atari’s Pong, except for the fact that the result of the game could be quite costly for the loser.
Key news items:
- Baker Hughes announced an increase of 14 rigs last week, all of which were oil. Active number of rigs online is now 583, the most since October of 2015.
- Iran carried out additional missile tests this past Saturday, and rising geopolitical concern between it and the U.S. has President Trump taking responsive action(s).
- In addition, post-sanction Iran is firing on all cylinders. An Iranian News Agency believes Iran’s oil output will reach 4 million bbls/day in March.
- January’s OPEC monthly report will be released on February 13th, and will represent the first month of production cut data.
- Last week’s jobs report showed a nonfarm payroll increase of 227,000, but an unemployment rate increase to 4.8%.
WTI crude is currently down $0.45 to $53.38, and both RBOB and ULSD are down, $0.0117 and $0.0098, respectively.