Outlook and Recommendation Crude Oil closed the month at 41.77 while Brent Oil was at 44.73. Crude oil was down over 4% for the month as global supplies
Crude Oil closed the month at 41.77 while Brent Oil was at 44.73. Crude oil was down over 4% for the month as global supplies surged and the greenback rallied. The OPEC meeting will be the main focus moving into December. The OPEC’s December meeting might cause more stir than usual, as the period of low oil prices enters its 18th month with no visible signs of changes in sight, and growing dissatisfaction with Riyadh’s leadership.
The price war between the Cartel and non-OPEC producers was partially caused by the Saudi refusal to cut production in November 2014.
The initial idea behind it was to bankrupt the US shale industry with low oil prices. In theory, this would solve the oil glut; push the oil prices, while allowing the Kingdom to preserve its market portion.
In practice, things did not work out so well, and the bill that OPEC might have to pay could be higher than initially expected. The oil glut problem has actually become more acute in the past 12 months, and although the US production has slowly started to decrease, the shale sector has shown a remarkable resilience so far.
In addition, Iran is eager to alleviate the impact of long-standing international isolation and current low prices with a production increase of 1 million b/d in the next six months.
Unlike the United States and other developed countries, where the blessings of cheap energy offset the negative impacts of low prices on oil industry, the OPEC countries with their high dependency on oil exports have been hit hard.
Saudi Arabia, which collects 88% of its state revenues from oil exports, is facing a fiscal deficit of at least $145 billion in 2015, which makes more than 20% of its GDP. In comparison, the 2014 deficit was $17.5 billion. Despite heavy losses, the Kingdom is still in a good position with its hard currency cushion, but according to the IMF, the country might run out of money in five years if it continues to lavishly subsidize public services in the current low oil price environment.
Other Cartel members, such as Venezuela and Nigeria are in more dire straits and they, along with Iran, are the most likely dissidents against the current course. Venezuela is a staunch advocate of a negotiated equilibrium with non-OPEC producers that might push prices to more bearable levels of $70 per barrel. The Chavinsta regime of Nicholas Maduro desperately needs a strong financial boost to preserve its legitimacy amid economic collapse and the inevitable defeat at the December parliamentary elections.
FxEmpire provides in-depth analysis for each currency and commodity we review. Fundamental analysis is provided in three components. We provide a detailed monthly analysis and forecast at the beginning of each month. Then we provide more recent analysis and information in our weekly reports and we provide daily updates and outlooks.
WEEKLY RELEASES
This Week in Petroleum
Gasoline and Diesel Fuel Update
Weekly Petroleum Status Report
Heating Oil & Propane Update
Weekly Coal Production
Weekly NYMEX Coal Futures
Coal News & Markets
Natural Gas Weekly Update
Major Economic Events That Will Affect The Markets In December
Cur. |
Event |
|
|
|
|
|
||||
Tuesday, December 1, 2015 |
||||||||||
|
CNY |
Manufacturing PMI (Nov) |
|
|
|
|
||||
|
CNY |
Caixin Manufacturing PMI (Nov) |
|
|
|
|
||||
|
AUD |
Interest Rate Decision (Dec) |
|
|
|
|
||||
|
AUD |
RBA Rate Statement |
|
|
|
|
||||
|
EUR |
German Manufacturing PMI |
|
|
|
|
||||
|
EUR |
German Unemployment Change |
|
|
|
|
||||
|
GBP |
BoE Gov. Carney Speaks |
|
|
|
|
||||
|
GBP |
Manufacturing PMI (Nov) |
|
|
|
|
||||
|
USD |
ISM Manufacturing PMI (Nov) |
|
|
|
|
||||
Wednesday, December 2, 2015 |
||||||||||
|
AUD |
GDP (QoQ) (Q3) |
|
|
|
|
||||
|
GBP |
Construction PMI (Nov) |
|
|
|
|
||||
|
EUR |
CPI (YoY) (Nov) |
|
|
|
|
||||
|
USD |
ADP Nonfarm |
|
|
|
|
||||
|
USD |
Fed Chair Yellen Speaks |
|
|
|
|
||||
Thursday, December 3, 2015 |
||||||||||
|
GBP |
Services PMI (Nov) |
|
|
|
|
||||
|
EUR |
Interest Rate Decision |
|
|
|
|
||||
|
EUR |
ECB Press Conference |
|
|
|
|
||||
|
USD |
Yellen Testifies |
|
|
|
|
||||
Friday, December 4, 2015 |
||||||||||
|
AUD |
Retail Sales (MoM) (Oct) |
|
|
|
|
||||
|
USD |
Nonfarm Payrolls (Nov) |
|
|
|
|
||||
|
USD |
Unemployment Rate |
|
|
|
|
||||
|
EUR |
ECB President Draghi |
|
|
|
|
||||
Tuesday, December 8, 2015 |
||||||||||
|
CNY |
Trade Balance (Nov) |
|
|
|
|
||||
|
GBP |
Manufacturing Product |
|
|
|
|
||||
Wednesday, December 9, 2015 |
||||||||||
|
CNY |
CPI (YoY) (Nov) |
|
|
|
|
||||
|
NZD |
Interest Rate Decision |
|
|
|
|
||||
Thursday, December 10, 2015 |
||||||||||
|
AUD |
Employment Change |
|
|
|
|
||||
|
GBP |
Interest Rate Decision |
|
|
|
|
||||
Friday, December 11, 2015 |
||||||||||
|
USD |
Core Retail Sales (MoM) |
|
|
|
|
||||
|
USD |
PPI (MoM) (Nov) |
|
|
|
|
||||
|
USD |
Retail Sales (MoM) (Nov) |
|
|
|
|
||||
Saturday, December 12, 2015 |
||||||||||
CNY |
Industrial Production |
|
|
|
|
|||||
Sunday, December 13, 2015 |
||||||||||
|
JPY |
Tankan Large |
|
|
|
|
||||
|
JPY |
Tankan Large Non- |
|
|
|
|
||||
Tuesday, December 15, 2015 |
||||||||||
|
GBP |
CPI (YoY) (Nov) |
|
|
|
|
||||
|
EUR |
German ZEW Economic |
|
|
|
|
||||
Wednesday, December 16, 2015 |
||||||||||
EUR |
German Manufacturing |
|
|
|
|
|||||
|
GBP |
Claimant Count Change |
|
|
|
|
||||
|
EUR |
CPI (YoY) (Nov) |
|
|
|
|
||||
|
USD |
Fed Interest Rate |
|
|
|
|
||||
|
NZD |
GDP (QoQ) (Q3) |
|
|
|
|
||||
Thursday, December 17, 2015 |
||||||||||
|
EUR |
German Ifo Business |
|
|
|
|
||||
|
GBP |
Retail Sales (MoM) (Nov) |
|
|
|
|
||||
Thursday, December 24, 2015 |
||||||||||
All Day |
|
Holiday |
Germany – Christmas Eve |
|||||||
|
Holiday |
United States – Christmas Eve – Early close at 13:30 |
||||||||