- At the beginning of last week, oil prices prices responded to the terrible events in Paris and the allied strikes on Daesh that followed, but the excitement was short-lived, with crude hovering within a range of $40.00 to $42.50 per barrel. This being said, the psychological threshold of $40 per barrel held strong, despite a series of approaches to what the technical analysts have been calling a support level.
- In Brazil, management’s latest offer in the Petrobras (N:PZE) dispute was rejected by union members, even though their leaders supported it. This effectively maintained an 185,000-barrel drop in national output. The company is in a difficult financial position, as it needs to make USD$24 billion in debt payments over the next 24 months and the Brazilian real is very weak. What is more, it would appear that the banks have lost their appetite for financing new oil projects.
- The effects of El Niño on weather are being felt, particularly on the west coast where the price of a megawatt/hour, usually $40 in California, has jumped in the short term to as high as $1000. This weather anomaly may also make greater demands on generating complexes: according to the U.S. Department of Energy (DOE), in 2014 the United States generated over 4,000 billion KW/h of electricity, approximately 67% of which required the use of fossil fuels (coal, natural gas and oil).
- The DOE’s weekly report also said that crude oil inventories did not grow as much as expected (2.2 million barrels vs. 252K), that gasoline stocks were up, and that distillate inventories fell more than expected (-791K vs. -450K).
- November 27 will mark the first anniversary of Saudi Arabia’s implementation of an energy policy aimed at optimizing market share rather than supporting prices.
Mathieu Tessier
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