Oil in Global Economy Series: Key oil market updates

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 a new high of 10.586 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 rose from 820 to 825, 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 report from OPEC suggests that the production declined to 1.488 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. In the latest move, the country’s President Nicolas Maduro certified 16 cryptocurrency exchange for the trading of Petro, the country’s oil-backed cryptocurrency.
   
• 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. Latest data show that the volume and open interest in Chinese oil contracts have jumped by four folds.
   
• Angola: According to reports, Angola is facing hardship to keep up the level of its oil production, largely due to lack of investments in the country’s offshore fields.  
   

Key global oil benchmarks:

WTI - $67.4/barrel

Brent - $73/barrel

OPEC basket - $71.2/barrel

Urals - $69.7 /barrel

Oman - $71.7/barrel

Dubai - $69.6/barrel

Western Canada Select - $50.8/barrel