June Crude Oil rallied yesterday as attacks by Nigerian militants continued and estimates on the amount of oil production shut down in Alberta rise.
Attacks on Nigeria’s oil region are causing fears that militants might restart an insurgency that has been dormant for the past few years. Labor unions want to evacuate oil workers from the Niger Delta where the attacks occurred on concern for their safety. The attacks have reduced Nigerian crude oil output to a 22 year low. The army said they will crush the militants and they will regret their actions.
The fires in Alberta have resulted in a reduction of 1.6 million barrels of oil per day, up from earlier estimates of 1 million barrels per day. Oil companies aren’t sure when workers can get back to work as the fires continue to rage. They will need at least a week to coordinate and get their people back to work once the area is deemed safe enough to resume production.
Traders ignored Saudi Arabia’s announcement that it plans to ramp up production in response to demand and Kuwait’s assertion that it will increase its output and go from 2.8 million bpd currently to 4 million bpd by 2020. The market also had little reaction to the API report’s build of 3.45 million barrels on expectations of a 1.1 million barrel build. Gasoline had a smaller than expected (710,000 barrels) build of 210,000 barrels.
Crude Oil has been fairly volatile of late and I feel this will continue as the market tries to balance production issues and demand.
CLH16
- High -44.79
- Low -43.03
- Last -44.53
Daily Pivots for 5/11/16:
- R2 45.88
- R1 45.20
- PIVOT 44.12
- S1 43.44
- S2 42.36