Technical & Fundamental Oil Reports Specialists

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It’s all a game

Published Wednesday, April 29th, 2015

Rumours that a US-flagged merchant ship had been seized by Iran produced a $1 bbl price spike yesterday but it turned out to be from the Marshall Islands so gains evaporated rapidly leading to a lacklustre close at $64.64 bbl on Brent (-19) and $57.06 bbl on WTI (+7). The Saudi oil minister talked about wanting “fair” oil prices for consumers, producers and the industry without telling us whether fair is $75 bbl or $100 bbl and whether it should be determined by the costs of production or budgetary demands.

The US 1Q GDP number is released today and the consensus is that it will come in at 1% compared +2.2% in 4Q. A strong dollar and the lengthy port strike are to blame so optimists see the dip as an anomaly. The Federal Reserve also ends its two-day monthly policy meeting with a statement due this afternoon. The recent weakening of the dollar indicates that the market now thinks that a rate rise in June is now highly unlikely and, as we commented on Monday, there is a strong chance the Fed will bottle out on any rise at all this year.

The Greek finance minister is supposedly an expert in game theory believing that all tactics are legitimate in negotiations. He likes to surprise, upset, be unreasonable and alternate between anger and delight. We therefore have two different negotiating styles confronting each other with the unpredictable versus the predictable or straight forward if you prefer.

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Posted by David Hufton