Oil’s volatile start to 2016 has continued, with prices back below $40. The following five factors are among those that could determine crude’s next move.
It is less than two weeks until a key meeting of large producers in Doha and the outcome is in doubt.
Saudi Arabia’s Deputy Crown Prince Mohammed bin Salman said last week that it would only agree to a hold on output if joined by Iran, something that seems unlikely given that Tehran has vowed to lift exports as it emerges from years of sanctions.
Before his statement, Opec delegates indicated that Saudi Arabia would be prepared to allow Iran some leeway, despite their fierce rivalry.
While the prince’s comments may supersede those of the oil ministry, it is possible they fall short of an edict, and are partially aimed at a domestic audience used to tough talk against Iran. Equally, they may be a pre-meeting bargaining chip to try to extract more concessions from Iran, such as capping how much the country raises output before joining the freeze.
Either way, its seems unlikely the world’s largest producers would risk meeting in Doha without a deal already pencilled in.
“While a Doha deal might help to set a floor under oil prices, a sustained recovery will probably require outright cuts in global supply as well as further increases in demand to rebalance the market,” say analysts at Capital Economics.
The US shale oil boom bears at least some of the responsibility for the glut that has decimated prices since mid-2014, but slowing US output may also hold the key to an eventual recovery.
After proving more resilient to lower prices than many first assumed, US output is firmly on a downward trajectory, even as conventional production from areas such as the Gulf of Mexico continues to rise due to investments made when prices were above $100 a barrel.
From 2008 to April 2015, US crude production almost doubled from 5m barrels a day to a peak of 9.7m b/d. But in the past year it has slipped by at least 5 per cent, with the latest data indicating it was below 9.2m b/d in January.
The top 25 US oil and gas producers expect a further drop of 4 per cent on average this year. The US Energy Information Agency sees supply by 2017 averaging about 8.2m b/d for the year — a 1.5m b/d decline from its peak.
Others are sceptical. Energy Aspects, a consultancy, thinks the projected supply fall may be too high and reckons analysts are extrapolating data from smaller, cash-strapped producers that are likely to be less able to weather low prices than the oil majors.
Have hedge funds had their fill?
Hedge fund positioning has tracked the moves in oil prices so far this year. After establishing a near record bet against the price in early January, when crude fell below $30 a barrel for the first time in 13 years, funds have dramatically reversed course on hopes of a deal to freeze output. By the end of March, funds’ net long position — the difference between bets on rising and falling prices — was close to the highest level on record, totalling the equivalent of more than 0.5bn barrels of crude.
But the tide may be turning again. Last week traders reduced bets on higher prices and added to bets on another sell-off.
“Despite showing signs of improving, fundamentals are not yet strong enough to support a sustained recovery,” says Ole Hansen at Saxo Bank.
Low prices can increase the risk of production stoppages. Baghdad’s long-running dispute with Iraqi Kurdistan over independent oil sales has curtailed output from the north of the country by about 150,000 b/d. In Nigeria, Shell has declared force majeure on about 250,000 b/d of exports after an explosion disrupted its Forcados export terminal. But ahead of the output “freeze” meeting all countries appear to be trying to maximise production. Russia’s output hit a post-Soviet high of 10.9m b/d in March, and Saudi Arabia and Kuwait may restart production at a field in the jointly controlled “neutral zone”.
Demand is 2016’s wild card. Low prices helped propel demand growth in 2015, but the picture for this year is mixed. The International Energy Agency sees 1.2m b/d of growth — higher than the average over the previous five years. If that level is reached or exceeded, most analysts expect the market to start to balance towards the end of the year.
“Demand at these levels has been growing strongly,” says Henry Peabody at Eaton Vance, a fund manager. “Non-Opec production is in decline, and capital is not allocated to new projects. We should start to see the market rebalancing later this year or in 2017.
上周，沙特副王储穆罕默德?本?萨勒曼(Mohammed bin Salman)表示，唯有在伊朗也同意的情况下，沙特才会同意冻结产量——而伊朗似乎不太可能同意，因为该国在摆脱多年的制裁之后，已发誓要增加出口。
“尽管已出现改善迹象，但基本面尚未强到足以支撑油价持续复苏的地步，”盛宝银行(Saxo Bank)的奥勒?汉森(Ole Hansen)称。
“当前价格水平上的需求一直增长强劲，”基金管理公司亿廷繁世(Eaton Vance)的亨利?皮博迪(Henry Peabody)表示，“欧佩克以外国家的产量在下降，没有资本被配置到新项目中去。在今年晚些时候或2017年，我们应会开始看到市场再平衡。”