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 10.9 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 863, the highest since March 2015. The numbers of operating rigs have increased more than 170 percent since bottoming in May 2016.
- Venezuela crisis: Crisis continues in Venezuela. The latest production survey report from Reuters suggests that the production declined to 1.45 million barrels per day in May. 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 1.39 million barrels per day in May. The reelection of Maduro is likely to result in stronger sanctions from the United States. In addition to that, Venezuela’s state-owned oil producing company PDVSA announced that it would not be able to meet supply contracts as production dwindle. The latest report suggests that the country’s oil refineries are shutting down due to lack of crude oil supply.
- 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. In the latest move, the EU has warned the United States that it could play a prominent role in de-dollarization if the U.S. continues to impose tariffs.
- OPEC & Russia & Saudi Arabia: Saudi Arabia reportedly considering increasing its oil price to Asian customers. OPEC will hold its June meeting on 22nd of the month. This is the first production meet since Saudi and Russia’s production easing hint.
Key global oil benchmarks:
WTI - $63.8/barrel
Brent - $72.6/barrel
OPEC basket - $73.3/barrel
Urals - $70.8/barrel
Oman - $71.2/barrel
Dubai - $70.7/barrel
Western Canada Select - $40.7/barrel
