Oil Weekly Fundamental Analysis – February 1-5, 2016 -Forecast

Weekly Analysis and Recommendation:

Crude Oil ended the week at 33.76 seeing a weekly gain of 4.88% after Russia and OPEC agreed to discuss reducing production quotas. Brent oil also gained to end the week at 35.91. “Possible talk” about the “probability” of OPEC, particularly Saudi Arabia, agreeing some form of supply reduction with the Russians, got the market excited.

This is nothing new; both sides have always said they are willing to talk, but this week the “feeling” was that something more than just “talk” could transpire.

This sentiment, though short-lived, was strong enough to boost oil prices mid-week around 7 percent to close to $36 a barrel, settling back around $34 in early trading on Friday.

The diplomatic lobbying has been going on at a ferocious rate all last year. OPEC is not short of verbal support from its non-OPEC colleagues when it comes to the discussion about the need to do something.

The disagreement has always arisen when it came to decide who would do that very important “something” and time and time again, the burden came back to OPEC. Last year they just said no. As always, senior OPEC ministers reiterated that they were not about to solve a problem they did not create.

This week, the Wall Street Journal and major media outlets reported that Russian Energy minister, Alexander Novak appeared to be in a bit more accommodative mood when he spoke in St. Petersburg about the possible 5 percent cutback offered by Saudi Arabia that he might match.

By Friday, senior Gulf sources confirmed that Saudi Arabia made no such offer. Cutting production is not as easy as it sounds, especially for the Russians. We also need to remember that due to harsh winter terrain, Russia’s ability to cut during the winter months is extremely limited. Capital Market’s head of commodities research Julian Jessop says, “this makes access to remote sites difficult, and means that it is hard to re-start facilities once they are shut down.” He adds that Russia lacks spare storage capacity, so holding supply back from the market to support prices would be difficult.

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

This Week in Petroleum
Release Schedule: Wednesday @ 1:00 p.m. EST (schedule)

Gasoline and Diesel Fuel Update
Release Schedule: Monday between 4:00 and 5:00 p.m. EST (schedule)

Weekly Petroleum Status Report
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Major Economic Events for the week:

 

Upcoming Government Bond Auctions

Date Time Country 

Feb 02 n/a UK Details of Gilt auctions on Feb 09 & 11

Feb 03 11:03 Sweden Holds bond auction

Feb 03 11:30 Germany EUR 5bn Apr 2021 Bobl

Feb 03 n/a Netherlands Details of DSL auction on Feb 09

Feb 03 n/a US Details of 3 & 10-yr notes on Feb 09/10

Feb 03 n/a US Details of 30-year bond auction on Feb 11

Feb 04 11:50 France Holds bond auction

Feb 04 17:20 Sweden Details of I/L bond auction on Feb 11