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Bad weather + QE + Ceasefire = Oil Price Rally

Published Friday, February 13th, 2015

What do you get when both financial and oil market players sing from the same bullish hymn sheet? Higher oil prices and stronger time spreads. As far as oil is concerned the market was supported by perceived and actual tightness. Falling oil prices forced Total to write down $6.5 billion in the last quarter of 2014 and the oil major is to make further investment cuts. The CEO of another major, Shell, expects supply to fall behind demand growth which could tighten the market in the not so distant future. This view comes with the proviso that global oil stocks will not be depleted any time soon.

As for actual supply disruptions, weather provided a helping hand for oil bulls. Iraqi crude oil exports fell by more than 400,000 bpd in January to 2.535 mbpd. Continuous bad weather keeps delaying shipments in the southern part of the country in February, too. Exports have reportedly averaged below 1.5 mbpd during the first 10 days of the month. This compares with an all-time high of 2.76 mbpd in December. Kuwait was also not immune from the forces nature either. According to the Kuwait National Petroleum Co both crude oil and product exports have been halted due to poor weather.

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Posted by Tamas Varga

Tamas Varga has been in the oil industry since 1992 and with PVM for 18 years. During his time in the industry he has gathered a range of experience in the oil markets. At PVM Tamas is in charge of data collection and analysis.