Oil in Global Economy Series: Key oil market updates

Monday, May 7, 2018 10:07 AM 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 10.62 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 825 to 834, the highest since March 2015. The numbers of operating rigs have increased more than 163 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. In the latest move, the country’s President Nicolas Maduro has hit back at the Trump Presidency and its policies of sanctions on Venezuela.
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. A pilot project to pay oil in yuan to begin in H2 of 2018.
U.S. & Iran: It is near certain that President Trump would not be signing the sanctions waiver on Iran. European diplomacy via France and Germany has so far failed to persuade him otherwise.