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Brent quotes analysis, 15.07.17

Alexander Khurshudov, expert Oil and Gas Information Agency
July 18/ 09:11

At the end of June Brent formed a long-term down trend with the minimum of $44.36 (picture 1), followed by a bounce to $50. Then there were some fluctuations in the interval with the week closing at $49.09. 

The descending trend is supported by an unprecedented disinformation campaign. To illustrate this I’ll quote the headlines of   Pro Finance Service, Inc. This is an American company, which plucks Russian simpletons striving to grow rich at the Forex market.  

13.07.17. 00:54 OPEC split is obvious: Nigeria is to skip Moscow summit  

Pic.1

02:31 Oil: largest companies’ heads do not believe in price increase anymore   

09:49 Halliburton is expecting oil prices to surge by 2020  

12:57 Oil is getting cheaper: IEA forecasts on global supply and demand are discouraging Here Brent price grew by 2%. The jokers have no problem with this:

19:09 Fundamental statistics support the current oil price increase   

 

Just for fun I’ll quote some of their earlier headlines:                                                           

By 2020 the US will export more oil than OPEC countries

The US is increasing oil export, taking over the global energy markets

The US is quickly forcing OPEC out of the global oil markets

 

I can add here that oil export from the US at the beginning of July amounted to 7.3% of their production, which is eleven times LESS than import.

Our mass media keep pace with the Americans. For instance, here is a piece of news on Iran’s huge plans on increasing their oil production:

12 07.17. Iran is planning to increase oil production up to 4 mln bpd by the end of 2017   

Pardon me, I have already seen this figure. Was it here?

04.02.17. By the end of this March Iran is planning to increase oil production up to 4 mln bpd  

No, it was even earlier. Here perhaps?

02.06.17. By the end of 2016 Iran intends to achieve the 4 mln bpd level  

The ambitious intentions haven’t changed during the year. Let’s see how they are getting implemented. The changes in oil production in Iran are shown in pic.2

Pic.2

It can be seen that the major production increase (by 0.7 mln bpd) happened within the first six month last year. Then the increase was quite modest, just by 17 thousand bpd every month. This year the production in Iran is not growing at all. They may be strictly complying with the OPEC agreement, or they simply may not have the production reserves.

Which of the news items do you, readers think was false? I think they may all be false. There is no link to the source in any of the texts.  

The most suspicious information comes from the US. Commercial oil stock there reduced by 7.5 mln barrels last week, though it is partially due to the  import reduction caused by usual summer storms. While oil production fluctuates within 9.25-9.4 mln bpd according to operational data, which seems to be far from reality (see pic.3). Verified data appears two months later. Picture 3 shows that in April it was 180 thousand bpd less the operational figures. 

Pic.3.

Meanwhile I do not suspect any fiddling here, it is just the error of the method. It should be considered that the data quoted is not really statistics: a part of it is taken ex post, another part is calculated, extrapolated, assumed. So it is often necessary to correct the results post factum.

This way or the other, the current oil production in the US remains at the level of August 2015. At the time 672 rigs were drilling for oil, while the production was declining. Now 765 rigs are drilling, with 2 added last week.

Technical analysis suggests that Brent is going to reach $51 followed by reverse and a deeper decline. However, if the US production starts decreasing steadily, the down trend will be overcome and the next point will be $57 a barrel. Look forward to it.  

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