I think that the velocity of the market moving up seems to be overdone at the moment, the fundamentals are improving, but at a slow and steady pace. There are still headwinds that will keep prices choppy.

Michael Tran

Categorized in : Energy

Hedging WTI price risk often suited the risk profile well until regional bottlenecks began to emerge, which in turn exposed producers to risks that previously were not accounted for.

Tanker rates need to re-rate back to economically palatable levels to entice U.S. exports, the astronomical freight rates of last few days had eroded export economics from the Gulf Coast.

The tit-for-tat trade war now has the oil market officially caught in the crossfire, this time with China striking the heart of Trump's traditional base of support of U.S. oil producers, with China being the world's foremost crude import growth region, U.S. producers need China, not the other way around.

With China being the world's foremost crude import growth region, U.S. producers need China, not the other way around, the U.S. will have to find alternative buyers for their crude, which will be a challenge given the weakening global demand backdrop.

The sheer scale of the move is triggering unpleasant memories of... by Michael Tran

The sheer scale of the move is triggering unpleasant memories of 2014 and 2015.

It's so amazing how fast sentiment shifts, the economic slowdown... by Michael Tran

It's so amazing how fast sentiment shifts, the economic slowdown fears are winning the narrative.

The risks are skewed to the upside through the end of the year. by Michael Tran

The risks are skewed to the upside through the end of the year.

It's not that bad out there. It doesn't warrant a 20 % decline. by Michael Tran

It's not that bad out there. It doesn't warrant a 20 % decline.

I scanned the ticket with my phone last night and it said I had to contact the lottery office, then I checked the numbers for Saturday night and they looked very familiar !

We have a difficult time seeing how OPEC would in any way be swayed here in terms of changing course, in terms of policy.

One of the major variables that's fueling the rally in oil prices is the market's perception that (Trump's) administration is taking an increasingly hawkish stance on foreign policy.

Michael Cohen have to remember that sentiment in this market is still so fragile, producers ended up locking in something in case we did a double dip.

U.S. producers have been quick to lock in price protection as the market rallies given that the vast number of companies remain significantly under hedged relative to historically normal levels.

I think the market is really looking ahead to Doha, an agreement to freeze production does little to change physical balances. But constructive rhetoric could serve as a sentiment changer at a minimum, helping to legitimize the current rally and have the market hold the $40 a barrel level as the new psychological floor.

There are only a handful of pipelines available to export barrels out of Canada and when a large pipeline like Keystone goes offline, Canadian barrels become stranded and prices suffer.

The path higher for prices will be fairly slow and steady because once we get back to the $45-$50 range, you'll hit a wall of financial hedges that will cap prices.

The fall in U.S. shale production, particularly in Texas and North Dakota, will continue to overshadow the growth in the Gulf as shale production continues to fall at a steeper and steeper pace in the months to come.

The drop that we saw (from the Gulf) in the latest data for November is likely to be a one-off, it's difficult to say with certainty, but it could've been technical or weather related. The bottom line is that the Gulf of Mexico is still growing and the rest of the U.S. is not.

You're getting a deep discount, the economic incentive is there, if you're not concerned about sanctions.

China is the big fear factor right now.