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Another front opens in Iraq

Published Tuesday, August 12th, 2014

One take on events yesterday is that Russia did not intervene in eastern Ukraine, the ceasefire in Gaza was extended and held and the US intervention has slowed the march of Islamic State militants. Another is that Russia now has 45,000 troops close to the Ukrainian border poised to cross under the guise of opening a humanitarian corridor, the Islamic State advance has been slowed not stopped and another front has been opened in Baghdad with Nouri al- Maliki and his supporters refusing to accept his termination as Prime Minister.

Stock markets took the more benign view of yesterday’s developments and closed higher. Oil went nowhere and the small price moves that did take place went in opposite directions with WTI closing +43 (98.08) and Brent -34 (104.68). The speculative exodus from Brent continued in the week to August 5 as shown by a 20% cut in managed money net speculative length taking it below 100,000 for the first time since the end of January.

This morning the IEA has released its monthly oil report expressing surprise at the weakness of the Atlantic Basin crude market. The IEA believes that OPEC production rose to a five-month high of 30.44 mbpd in July with Saudi Arabia at 10 mbpd. They have cut their forecast of 2015 demand growth by 90,000 bpd to 1.32 mbpd and put the call on OPEC at 29.83 mbpd, 500,000 bpd higher than the OPEC forecast discussed below.

to read the rest of the report, please click here 

Posted by David Hufton