Oil in Global Economy Series: Key oil market updates

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 10.433 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 declined from 804 to 797, the highest since April 2015. The numbers of operating rigs have increased more than 150 percent since bottoming in May 2016.
   
• Venezuela crisis: Crisis continues in Venezuela. The latest production report from OPEC suggests that the production declined to 1.548 million barrels per day. The production has been declining steadily since 2014 when production reached a peak of 2.9 million barrels per day. Unconfirmed reports suggest that the production is declining more rapidly in March.
   
• China set to buy oil in Yuan: As the yuan-denominated oil contract went live in China from 26th March 2018 and eclipsed Brent contract in terms of volume, China is planning to use yuan to pay for oil imports, instead of the dollar. Such a move could be groundbreaking and could end dollar’s dominance in oil trade as China is currently the largest consumer and importer of oil.    
   
• Geopolitical tension drives the price higher: oil price has been edging higher over the past few weeks as the market speculates that President Trump is likely to move the United States out of the Iran nuclear agreement by May 12th.

Key global oil benchmarks:

WTI - $64.4/barrel

Brent - $69/barrel

OPEC basket - $66/barrel

Urals - $66.9/barrel

Oman - $67.7/barrel

Dubai - $65.1/barrel

Western Canada Select - $48/barrel