As the end of this week winds down and people prepare for the holidays next week, light liquidity will most likely be the name of the game in our energy markets. Light liquidity means trading volume is lower than normal which is to be expected during this time of year. Therefore, the bid/ask spreads are wider. Meaning that if the computer-driven trading houses decide to either buy or sell a lot of volume, the market can move violently in one direction rather quickly. What does this mean for our industry? This means that our customers can be very opportunistic especially if we see a retracement in prices after this rally we’ve seen since the beginning of December.
The United States has significantly ramped up oil production over the past decade, but just how far have they come? Depending on how you view oil production, the U.S. has just become a net oil exporter for the first time in 70 years. Bloomberg describes the U.S. as a net petroleum exporter, but Forbes is quick to point out that this includes both crude oil and finished products, as opposed to just crude oil.
Recent drone attacks have wreaked havoc on the Saudi Aramco oil facilities along with imposed sanctions on Venezuela and Iran. These events should all be pointing one direction for the crude prices…..up. Instead of the anticipated price increase, the recent fear of recession has helped keep the market in check.