Oil in Global Economy Series: Key oil market updates

Monday, May 21, 2018 12:23 PM UTC

While the oil market continues to focus on supply/demand fundamentals, these are some key updates that you need to keep a tab on,

U.S. oil rig count: The United States is continuing to see a surge in production. According to the latest report, the production rose to a new high of 10.72 million barrels per day. Despite fewer rigs operating compared to 2014/15, the production efficiency has pushed the overall production higher. As of latest report, the numbers of operating rigs at 844, the highest since March 2015. The numbers of operating rigs have increased more than 166 percent since bottoming in May 2016.
Venezuela crisis: Crisis continues in Venezuela. The latest production survey report from Platts suggests that the production declined to 1.41 million barrels per day. Reports suggest that payment starved workers are quitting Venezuela’s oil production, which is likely to dwindle further. However, the country’s leadership is trying to overcome the trouble using cryptocurrencies as a means to fund the country. According to OPEC survey, Venezuela’s production declined to 1.44 million barrels per day in April. The focus is on Venezuela’s election this week.
Anti-petrodollar: Russia and Iran have launched oil for goods exchange program. Iran has also announced that it would report its currency reserves in Euro ditching dollar. China’s yuan-based oil contract is experiencing significant volume surpassing some of the Brent contracts. Unconfirmed reports also suggest that China is planning to make payment in Yuan instead of the dollar. China has also been reducing its Treasury holdings. Russia is reportedly pushing countries to take a stance against the USD as Trump pushes America first on trade. In the latest move, Turkey is repatriating gold from the U.S. Federal Reserves as the relation with the U.S. worsens.
U.S. & Iran: As President Trump moved the United States out of the Iran nuclear Agreement and promised to impose harshest of sanctions on Iran, the European Union has activated a mechanism in the treaty that makes it illegal for EU companies to abide by the U.S. sanctions.