As we near the end of May, we will put behind us one of the most bullish rallies for the WTI crude oil contract in history with crude jumping almost 75% this month alone. Of course, with WTI prices currently trading at $33.33/barrel, that’s not saying much, as it is widely perceived the breakeven price for domestic crude producers is $32/barrel. The question is: will this rally persist? Let’s review some components to watch out for this summer.
According to reports, Iran is quickly going to breach the Uranium-stockpile limit set by the current nuclear deal. President Hassan Rouhani of Iran has already warned that a new deal needed to be in action by Sunday June 7, 2019 or the Islamic Republic will increase enrichment of Uranium. Globally, there is much concern with the growth rate of Iran’s uranium cache, because they are just a step away from weapon-grade levels of uranium.
Shortly after closing the doors in Lordstown, OH, GM is in discussions to sell the facility to an Electric Truck company named Workhorse. GM made the decision in November to close down four U.S. based production plants, one of which was located in Lordstown, OH and home of the Chevrolet Cruze Sedan. According to Tom Colton, head of investor relations for Workhorse, the talks are still in the preliminary stages. There is no time table for speculation of the potential returning jobs to the area. The United Autoworkers Union (UAW) has a different agenda in mind. The UAW is trying to push for a reemergence of a petrol powered vehicle plant in the old GM facility, speculated to harbor more employees than Workhorse.
WTI failed to settle above $60/barrel yesterday and President Trump’s tweet warning OPEC on high oil prices may be taking the wind out of the bull’s sails.
The U.S. and China conclude their two-day trade talks in Beijing today with President Trump tweeting this morning “Talks with China are going very well!” This tweet and word that China had their top trade official, Liu He, attend the talks early this week have boosted equity and oil markets along with it as February WTI trades higher today to $49.42/barrel despite growing U.S. oil production.