Oil Market, Exchange Rate, and Heating Oil Price Information February 2019.
Brent Crude Dated ($ per Barrel)
Price at Start of Month: $62.05 Price at End of Month: $65.13
Highest Price in Month: $67.14 Lowest Price in Month: $60.88
Pound £ to US Dollar Rate $ Exchange Rate FT:
Start of Month: 1.3093 End of Month: 1.3301
Kerosene (Heating Oil) Cargo Price $ per tonne
Start of Month: $599.75 End of Month: $643.00
Highest Price in Month: $642.00 Lowest Price in Month: $597.25
Resulting in a Heating Oil Price (Pence Per Litre) Monthly range: 2.84 ppl
Oil Market commentary & Market Data available from:
Crude Prices and Production Cuts:
Crude prices made gains this month with Brent gaining considerably. Bullish support for crude production cuts came from OPEC. Iran, Libya and Venezuela continued their unwilling contribution to the cuts despite being exempt from the deal and are producing 900kbpd less than when the deal was struck. This, coupled with a strong performance from the core OPEC members, led by Saudi Arabia brought overall OPEC supply 800kbpd below the targeted quota. The Saudis provided further momentum as they promised to perform over and beyond with Al-Falih announcing an additional 500kbpd of cuts in March suggesting that the market may continue to tighten.
Concerns Over Global Economics:
However, not all is as rosy as OPEC will like to paint it. As concerns grow over the global economic situation, oil demand forecasts continue to be reduced with demand growth expectations for the year reduced by another 60kbpd this month. There is also the additional issue of growing Non-OPEC production with US leading the charge with an expected production growth of 1.8mbpd this year. So while OPEC may be able to tighten the market by cutting production, how much market share are they willing to give up to support prices?
The Trump Effect:
And of course, there is Trump. To our bewilderment, Trump took centre stage in the oil market again this month via a single tweet: “Oil prices getting too high. OPEC, please relax and take it easy. World cannot take a price hike – fragile!” That was all it took for Brent to collapse almost $3/bbl! Impressively, these 20 words signifying Trump’s wishes had more impact on the oil market than Al-Falih’s commitment to a 500kbpd production cut. Really makes one wonder what the market is thinking while it does its thing. So are oil fundamentals more legitimate than Trump's twitter feed? One thing is for certain, political intention is going to continue to play a major role in the oil market for the foreseeable future.