It looks to be a quiet Monday morning as little overseas data and a similar slate on the US calendar are unlikely to produce any real price action. The energy complex is up modestly as there are some reports out of Iraq that indicate that The Islamic State may have gained control over some western strategic towns over the weekend, putting Iraqi oil output into question even more.The affect of Iraqi oil currently on the pricing model for the energy complex is nominal at best, though it can be of importance particularly when there is a lack of other important fundamental news.
It seems that the weekend proved to be a grand platform for many of the interested oil nations to make their case for what the price of oil should be globally and why. We heard from Iran’s oil minister stating that OPEC was unlikely to make any production cuts in the next meeting scheduled for June 5th in Vienna.
The Kuwaiti minister stated that it was their belief that prices would stabilize near here (or slightly higher) for the rest of the year. He reaffirmed the Iranian position that OPEC would most likely not make any reductions in production at the aforementioned June meeting.
Venezuela, a nation that has been the most vocal in calling for production reductions, has stated that they have been in serious OPEC and Non-OPEC discussion concerning the stability of oil prices. As a result of these talks, they have indicated that the price of oil should rebound through the second half of the year, back to 100 dollars per barrel. It would seem for a price movement of that magnitude to occur in this supply climate those 'talks' would have to produce some measured fundamental production changes.
The Saudis have repeatedly affirmed that they (OPEC) would not reduce their production without unilateral participation from non OPEC countries as well.
The theme here appears to be producing nations using talking points to attempt to maintain the price stability rather than actual fundamental action in supply and demand. This can be effective in the short term, but it is hard to imagine that this rhetoric alone could produce any long term higher pricing or even realistic support at or around these levels without some additional bullish developments.
Natural gas continues to coil at the 3.00 dollar price, apparently waiting for something tangible to spur its next move. If there is no new fundamental development to resume the previous bearish trend, then continue to look for a slow moving grind higher to test technical levels above and a return to more normal seasonal pricing.
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