Crude Oil and oil markets

[anon46773462]

Notebook: Canada: the new guy on the shale oil block?

Canada’s reliance on its oil sands goes back some twenty years and the oil sands still account for some two-thirds of Canada’s 4.2 million barrels per day of crude. But times are rapidly changing and the growth in U.S. shale production, with its new drilling techniques and lower production costs, is bringing the era of new large oil sands projects to an end.

But now Canadian producers and global oil majors are starting to develop their own shale oil “boom” with new developments in its own shale fields such as Duvernay and Montney, which, apparently, could end up rivalling the U.S. shale fields. Canada is the first country outside the United States to start large-scale development of shale resources.

Canada has the right kind of prerequisites to facilitate shale oil development including plentiful private energy companies, mature financial markets, oil industry infrastructure, and low populations in the shale regions. This is attracting a number of global majors including both Royal Dutch Shell and ConocoPhillips who have already pulled out of oil sands last year. Also Chevron Corp and Shell will invest more money this year in the Duvernay region.

“The potential is absolutely huge,” said Mark Salkeld, president of the Petroleum Services Association of Canada. “The only thing holding us back is access to market and the cost.”

Market:
Having seen a tremendous rise in oil prices over the last 2 months, the question now is whether there remains bullish sentiment to drive this further. Certainly, the daily price action still shows a strong upwards trend, but the shorter period charts are showing signs of slowing down/weakness.

It still seems likely that we are now entering a period of consolidation with maybe a wide range driven by news of increased production here and there on one hand, and a buoyant global demand for oil products on the other. A healthy market for any speculative trader.

[anon46773462]

Market:
Following on from yesterday…

[quote=“Manxx, post:365, topic:83773”]
but the shorter period charts are showing signs of slowing down/weakness.[/quote]

This weakness was the dominant direction yesterday even before the API inventories release at the end of the US session. The hourly chart was already demonstrating this weakness and increased its downward momentum once we broke the daily trendline:

The hourly has been a consistent indicator of the inherent weakness for a few days now, remaining below the daily pivots and with negative short-term MAs:

Notebook:
The API release Tues reported a build in Crude Oil inventories of 3.229 mill barrels and another build in Gasoline inventories of 2.692 mill barrels for the week ending January 23. Analysts had expected builds but smaller figures for both of these.

Later today we have the EIA figures.

Whilst the overall consensus is that global oil inventories are approaching balance, attention is being drawn towards the likelihood that US production levels may rise above the 10 mill bpd even by this week. Production was reported at 9.878 mill bpd, being yet another new high.

The analyst projections are really extreme right now with some predicting a major soar towards USD 78 (Brent) whilst others are looking at the record bullish positions in future and predicting a crash back to USD 60 very soon.

The impact of a rapid increase in prices starts to raise fears of sharp increases in inflation, increased manufacturing costs and a negative drag on economic growth. But it also greatly increases the urge of producers to drive up output to take advantage of the bigger profits and thereby flooding the market at the same time as demand begins to feel the pinch of higher prices.

[anon46773462]

Notebook:
The Crude Oil market’s equivalent of the forex’s monthly NFP, i.e. the weekly EIA inventories and production data, gave an interesting insight yesterday into where market sentiment lies at present.

Against a broad background of bullish talk amongst investment banks, the EIA reported a surprise, potentially negative, 6.8 mill barrels build in U.S. crude oil inventories for last week. And this followed yesterday’s surprise build data from the API. Since the near term price action has been weak for a few days, this data immediately sparked a sharp spike downwards. However, this was quickly bought into and we saw a few hours of frenetic seesawing. But gradually the buying neutered out the impact of the data and we saw a steady rise in price towards the day’s close. A drop in gasoline stockpiles of 2 mill from a build of 3.1 mill barrels last week also helped support prices.

One lesson that I have learnt a long time ago is that if an already weak market does not go down on negative news then it is going up (and vice versa). But in this case, we have only risen (so far) back to the previous support-turned- resistance level below the broken uptrend. I am still inclined to expect a period of very broad consolidation between recent highs and lows for the near term.

There is no doubt that the US shale market is a huge game-changer in the global markets with its major advances in horizontal drilling techniques and low costs. The US production is now in the same league as the other global market leaders, Saudi Arabia and Russia. But when we also consider that the US is now able to rapidly increase its oil exports after the export restrictions were lifted in 2015, combined with the benefit of the current wide price differential between WTI and Brent benchmarks, then the US is now a major factor in oil exports as well as in terms of domestic energy independence.

Another interesting development concerns the recent major cuts in business taxes in the US. This is drawing new investment money into the US oil industry, Canadian drilling rigs are apparently being moved south to the US shale regions and even Saudi Arabia is now investing more in US companies. Aramco’s CEO is quoted as saying that "the tax cuts combined with clear political support for the oil industry makes investing in the U.S. much more attractive. The whole oil industry is benefiting from the current administration,” Saudi Aramco already controls the Motiva refinery in Texas, which is the largest in the US.

Market:
Yesterday’s EIA release caused some energetic seesaw action which produced some handsome tails under the hourly candles, showing strong buying into the dips. I also sold after the news on the basis that the price weakness would now continue, but had to cut it in the next hour at a loss as it was clearly going nowhere on the downside. After a couple of hours, the hourly chart turned mildly positive as a result of this buying and so I went long (being my preferred direction in commodity trading). Fortunately, the day continued with a steady rise into the close and I managed to close out with a net profit on the day.

The price managed to climb back to the previous bottom of the daily uptrend which, I guess, is now something of a resistance level.(It is worth remembering that we have not been at these price levels since 2014, and so there are no realistic S/R levels from recent times).

Considering there is a strong balance in news between significant increases in US production on the supply side and upbeat comments on strong global economic growth on the demand side, I am still anticipating a broad consolidation for the near months. I wouldn’t be surprised to see an up-day today but since we have only just broken that uptrend on the daily, I don’t have a strong directional view and will only trade off the hourly signals until a trend continuation/reversal manifests itself on the daily chart.

As we see here, there are only two directions we can go in :

[anon46773462]

MARKET:

[quote=“Manxx, post:367, topic:83773”]
I wouldn’t be surprised to see an up-day today [/quote]
…and an up-day we got…and it was one of those extremely easy/frustratingly difficult days, depending on how one traded it!

Why “frustratingly difficult”?
Well, the day started off well with a quick rise in the early london session, giving a quick 35-pip start to the new month. - but then the market went into a 6 hour dose of the wobbles offering no confident entry level at all - that is a long ,boring, period to be on watch duty! But then came the lovely tail in the circle below and that signalled the next entry - and a good follow-through back to (just) above USD 66 (WTI). All in all, a great start to the month.

Why “extremely easy”?
Well, if one trades a longer term view then this was a simple case of buy in the morning and go fishing and see where it is at EOD. More profit, less spread loss, less stress and maybe even some fish…

But then there are many more days with smaller and less unidirectional moves than yesterday and I still prefer to keep one eye on the hourlies.

Today is NFP day and, although this does not usually produce quite the same degree of impact in oil as it can do in forex, Crude has also been loosely and inversely following the dollar weakness recently and there could be a response here too.

Also, last friday saw a big increase in new oil rigs count - up by 12. So eyes will also be watching this week’s figure late today…

NOTEBOOK:
Interesting to note that Goldman Sachs has now also joined the ranks of the bullish investment banks alongside the likes of JP Morgan, and has raised its outlook for 2018 saying Brent prices could reach $82.50 by the summer.

This is based on their observations that oil inventories have declined much faster than expected, strong global demand, high OPEC compliance, refinery maintenance season and a steep decline in Venezuelan production.

On that basis it seems that at least this guy has got the message:

[anon46773462]

[quote=“Manxx, post:368, topic:83773”]
buy in the morning and go fishing…[/quote]
Just a small caveat here. When I say go fishing where I come from (in the winter) this is what we are talking about:

Which can be exhilaratingly alone in peace and nature - but do NOT tell anyone if you get the fish because soon:

and then it looks like this:

and of course there is always the risk of:

[anon46773462]

MARKET:
Yesterday’s price movements gave further evidence to my current view that whilst the long term trend is still upwards, the near term uptrend has been broken and we are likely to see some broad swinging between recent extremes. Yesterday was a total non-event for long term positions and finished lower on the week, but was a good day for trades in both directions for short-term/day-trades.

The weekly chart shows a rather insignificant inside week within an intact uptrend that has now continued since late summer 2017:

But the 4- hourly chart shows some very tradeable swings in both directions without any break of the recent highs/lows. When we remember that these swings are some 200-300 pips then they are very tradeable.

NOTEBOOK:
There are currently powerful arguments on both sides of the supply/demand equation with the surging output from U.S. shale and a return to increases in inventories after weeks of drawdowns on one side and strong economic growth, current high OPEC compliance and falling Venezuelan production on the other. For example:

• The EIA said this week that U.S. oil production surpassed 10 mb/d in November, just shy of the all-time high set decades ago.

• U.S. crude inventories also jumped last week, the first time that has occurred in several months.

• Goldman Sachs revised its forecast for oil prices this year, stating “The rebalancing of the oil market has likely been achieved, six months sooner than we had expected.” The bank predicts that prices will exceed $80 per barrel by the summer.

• OPEC compliance rate is currently at 138 percent, partly due to the meltdown from Venezuela production.

All in all, although the overall, longer term direction may be clear, the route there is hardly likely to follow the “straight and narrow”:

[anon46773462]

NOTEBOOK: Chokepoints in oil products shipping routes

Something like half of the world’s total oil/petroleum supplies are moved by large tankers along set maritime routes. Many of these routes pass through constricted areas and form significant, and vulnerable, maritime chokepoints. There are eight recognised major oil chokepoints throughout the world and if any one of these chokepoints were disrupted, ships would need to travel thousands of miles to reach an alternate route.

Strait of Hormuz - the world’s primary oil chokepoint.
Located between Oman and Iran, the Strait of Hormuz connects the Persian Gulf with the Gulf of Oman and the Arabian Sea. Oil from Saudi Arabia, the UAE, Qatar, Iran, and Iraq all pass through here and head mostly towards Asia, although tankers can also head west towards the Suez Canal and the Red Sea.

At its narrowest point, the Strait of Hormuz is 21 miles wide, but the width of the shipping lane in either direction is only two miles wide, separated by a two-mile buffer zone. The Strait of Hormuz is deep and wide enough to handle the world’s largest crude oil tankers.

Most potential options to bypass Hormuz are currently not operational. Only Saudi Arabia and the United Arab Emirates (UAE) presently have pipelines able to ship crude oil outside of the Persian Gulf and have additional pipeline capacity to circumvent the Strait of Hormuz.

Strait of Malacca
The Strait of Malacca, located between Indonesia, Malaysia, and Singapore, is the shortest waterway which connects the Indian Ocean to the South China Sea and the Pacific Ocean. Fuel from the Middle East heads primarily towards Indonesia, China, and Japan.

The Strait of Malacca is also one of the most narrow chokepoints in the world. Its narrowest point is only 1.7 miles wide, which creates a natural bottleneck for shipping, with potential for collisions, grounding, or oil spills. If the Strait of Malacca were blocked, nearly half of the world’s fleet would be required to reroute around the Indonesian archipelago. Rerouting would tie up global shipping capacity, adding to shipping costs and potentially having a significant impact on energy prices.

Cape of Good Hope
The Cape of Good Hope is located at the southernmost tip of Africa. It is not technically a chokepoint since it’s open on one side but it a significant transit point for oil tanker shipments around a critical trade route.

Crude oil moves around the Cape of Good Hope in both directions. Eastbound flows destined for Asian markets and westbound flows mostly destined for the Americas and originating from the Middle East.

The Cape of Good Hope is also an alternative sea route for bypassing the Gulf of Aden, Bab el-Mandeb Straits, and/or the Suez Canal. However, diverting vessels around the Cape of Good Hope would increase costs and shipping time, adding approximately 2,700 miles to transit from Saudi Arabia to the United States.

Bab el-Mandab
The Bab el-Mandab is one of the most precarious oil chokepoints in the world right now, situated between the Horn of Africa and the Middle East, and it is a strategic link between the Mediterranean Sea and the Indian Ocean. The strait is located between Yemen, Djibouti, and Eritrea, and connects the Red Sea with the Gulf of Aden and the Arabian Sea. Most exports from the Persian Gulf that transit the Suez Canal and SUMED Pipeline also pass through Bab el-Mandeb.

The Bab el-Mandeb Strait is 18 miles wide at its narrowest point, limiting tanker traffic to two 2-mile-wide channels for inbound and outbound shipments. Closure of the Bab el-Mandeb could keep tankers from the Persian Gulf from reaching the Suez Canal or SUMED Pipeline, diverting them around the southern tip of Africa. In addition, European and North African southbound oil flows could no longer take the most direct route to Asian markets via the Suez Canal and Bab el-Mandeb.

Oil prices took a recent jolt after the Yemeni government collapsed, raising the possibility of a security crisis in the Bab el-Mandab.

Danish Straits
The Danish Straits, formed out of a series of channels passing around Danish Islands, connects the Baltic Sea in the east to the North Sea in the west. They are an important route for Russian oil exports to Europe. The EIA estimates that 42% of all oil shipped through the Danish Straits originated from the Russian port of Primorsk.

Suez Canal
The Suez Canal passes through Egypt and connects the Red Sea to the Mediterranean. Oil exports from the Persian Gulf countries (Saudi Arabia, Iraq, Kuwait, United Arab Emirates, Iran, Oman, Qatar, and Bahrain) accounts for some 80% percent of Suez Canal northbound oil flows towards European and North American markets. The remaining southbound flows are primarily toward Asian markets.

The Suez Canal was expanded in 2010 to allow 60% of all tankers in the world to effectively pass through but it is unable to handle Ultra Large Crude Carriers (ULCC) and fully laden Very Large Crude Carriers (VLCC) class crude oil tankers. Security also remains a primary concern to cargo ships passing through the region.

Turkish Straits (Bosporus and Dardanelles)
The Turkish Straits, including the Bosporus and Dardanelles waterways, divide Asia from Europe. The Bosporus is a 17-mile long waterway connecting the Black Sea with the Sea of Marmara. The Dardanelles is a 40-mile waterway connecting the Sea of Marmara with the Aegean and Mediterranean Seas. Both are located in Turkey and supply Western and Southern Europe with oil from Russia and the Caspian Sea Region.

Only half a mile wide at the narrowest point, the Turkish Straits are among the world’s most difficult waterways to navigate because of their sinuous geography. About 48,000 vessels transit the straits each year, making this area one of the world’s busiest maritime chokepoints.

Panama Canal
The Panama Canal is an important route connecting the Pacific Ocean to the Caribbean and ultimately to the Atlantic. The Canal is 50 miles long and only 110 feet wide at its narrowest point. Alternatives to the Panama Canal include the Straits of Magellan, Cape Horn, and Drake Passage at the southern tip of South America, but these routes would significantly increase transit times and costs, adding about 8,000 miles of travel.

(Collated and redacted from various sources)

The Strait of Malacca:

[anon46773462]

MARKET:
Friday’s NFP data left us with a stronger bias on the USD, and any follow-through on that may reflect on oil prices in the absence of any other more relevant oil news. However Friday’s oil move was not unidirectional at all and showed some buying interest at the lows immediately after the data release - but the close was weak and the Asian markets remained limp this morning. This is not surprising since Friday was an indecisive end to an inside week.

I am still anticipating a period of broad consolidation in an otherwise still bullish market longer term (meaning first half 2018). But a lot of things could still put the brakes on further significant rises including a stronger USD and speculation how OPEC countries might begin to unwind their current agreement on restricting production. The risk of certain members and non-members “jumping the gun” and upping their output even before the gate is officially opened to them is very real, especially with higher oil prices.

But near term?
Well, the daily is in a neutral state at present and it may require some significant inventories data this week to jump-start it one way or another. The hourly is currently negative, reflecting this neutral stance in the daily charts but that could change very quickly - as it did last Friday. So I am not convinced enough to actually go short, but whilst the short-end charts are negative, there is a good possibility of lower levels to buy at and, as any hunter or photographer knows, it is so often worth waiting …

Daily since 1.1.:

The near end of same chart on hourly candles:
Note here that we are still in a down leg and trading below the daily pivot from last Friday, but sitting on a (fairly insignificant) S/R at 64.75-80.

It is not always plain sailing with a clear visible destination ahead. Rather, there are often storms and cloudy weather, both expected and unanticipated, which, unless we want to just stop in our tracks, make us trust, and indeed rely on, navigating with just our Instruments…

[anon46773462]

@anon46773462

but whilst the short-end charts are negative, there is a good possibility of lower levels to buy at and, as any hunter or photographer knows, it is so often worth waiting …

And so we waited and waited and waited…for hours!..

…and down we went!

There is nothing more satisfying in trading than the hunt…expect maybe catching the prey.

Sorry about the “Candy” charts… as some say here, these should just be dumped in the bin. But seeing as nowadays most conversation on BP is about each other (and not so prettily either) rather than actual trading, views and examples, I’ll just stick with my"candy" and just move on. You who matter know where to…

[Skynet_Online]

Hi there,oh yes its a big dipper for me !!

Ive started again and mixed results so far from it, the fundamentals are the issue im thinking as PAT isnt working for me on crude oil

Looking at the charts and working in Trends im currently looking at an order entry of 50 pips both long and short and then a trend should move off with a tp for a further 50 pips…then i cancel the other order and so far so good i must admit and supported by the market place information

cheers for the encouragement

[simhug]

Hi Manxx, Just to say I have really enjoyed reading your posts. It is the reason I joined Babypips. I find your comments interesting as I work for an oil major and trade for fun.

[anon46773462]

@simhug

Hi Manxx, Just to say I have really enjoyed reading your posts. It is the reason I joined Babypips. I find your comments interesting as I work for an oil major and trade for fun.

Thank you for your kind words! But are you serious??? That is the reason you joined here? If I’d known that I would have concentrated on writing something sensible instead of my usual waffle!

Sounds like you have the best of both worlds - an interesting job in the oil industry and the freedom to trade your own account. That was not allowed when I worked in banking, at least not for those involved in trading in the forex dept.

What kind of trading are you doing?

I haven’t been posting here on this thread for about a month now. But this has been a nice place to post thoughts about Crude during the learning phase as there is generally little interest, being a forex site, and therefore little worry about leading others astray! But Oil is still very much my main interest and I’m now contemplating moving to futures.

But it has been a really good market since I last was here. I was anticipating then that we would see a period of broad consolidation which has shown up well on the timeframe combination that I concentrate on (Daily/4H) as can be seen from the candy charts:

Good luck with your trading!

[simhug]

It is your “waffle” as you put it that makes it interesting. Like your comment about not going into a trade because of all the wicks putting you off. That is reality for me. You have your feet firmly attached to the ground. As for my trading I used to do stock options, and some forex, but I am just starting to dip my toe into the water with cfd’s on WTI.

[Scensc]

A wonderful book on for those who want to learn more about the commodities is by Denys Hickey “Oil and Gas Trading”. It touches subjects on international law, sales, derivates and stock market. Includes many case studies since 1970s. A very comprehensive and informative guide book. I remember reading it in my studies and still find it sometimes useful to refer to. You can buy it on Amazon, but it is very costly. Might be cheaper on eBay.

[vineeta]

Hello Manxx, Good to know that you are intersted in COMEX trading and yes i agree with you that change is all we need. A change that makes us better and helps in making decision, but as a newbie in COMEX trading we all need guidance. So I am sharing with you a guide or call it information, hope you will like to read it.

Beginner to COMEX trading??

The COMEX market is liable to theory and instability as are different markets. This is the main reason that investors need COMEX signals and advice for investing money in COMEX market. Here is the guide which helps you to know about the COMEX market.

What is COMEX?

COMEX is the essential fates and alternatives advertise for exchanging metals, for example, gold, silver, copper, and aluminum. Some time ago known as the Commodity Exchange Inc., COMEX converged with the New York Mercantile Exchange (NYMEX) in 1994 and turned into the division in charge of metals exchanging.

COMEX GUIDE

Product Exchange Inc., the principal trade for gold prospects, was first established in 1933 through the merger of four littler trades situated in New York: the National Metal Exchange, the Rubber Exchange of New York, the National Raw Silk Exchange and the New York Hide Exchange. The merger between Commodity Exchange Inc. also, the New York Mercantile Exchange (NYMEX) made the world’s biggest physical prospects exchanging trade, referred to just as COMEX. COMEX works out of the World Financial Center in Manhattan and is a division of the Chicago Mercantile Exchange (CME). As indicated by CME Group, there are more than 400,000 fates and choices contracts executed on COMEX day by day, making it the most fluid metals trade on the planet. The costs and day by day exercises of worldwide brokers on the trade affect the valuable metals advertises far and wide.

COMEX fills in as the essential clearinghouse for gold, silver and copper fates, which are all exchanged institutionalized contract sizes, and in addition a scaled down or potentially miniaturized scale variant. Different prospects contracts exchanged on the COMEX incorporate aluminum, palladium, platinum, and steel. Since the fates advertise is generally utilized as a supporting vehicle to relieve value hazard, the lion’s share of prospects contracts are never conveyed on. Most exchanges are made just on the guarantee of that metal and on the information that it exists. It is not necessarily the case that a broker or hedger can’t take a conveyance of physical metals through the COMEX, yet under 1% of the exchanges really go to the conveyance.

For merchants hoping to take real conveyance on a prospects contract, conveyances are accessible start on the principal see day and stretch out to the last day of the agreement time frame. To take conveyance, the fates contract holder should first caution the clearinghouse of his expectations and must educate the COMEX that he plans to claim the physical item in the exchanging account. Somebody who needs to take conveyance on gold, for instance, will build up along (purchase) prospects position and hold up until a short (dealer) tenders a notice to the conveyance.

Note that the COMEX does not supply the valuable metals. These are made accessible by the merchant as a component of the agreement rules. A short vender that does not have the metals to convey must exchange his situation by the last exchanging day. A short that goes to conveyance must have the metal, for example, gold, in an endorsed store. This is spoken to by the holding of COMEX-endorsed electronic vault warrants or distribution center receipts, which are required to make or take conveyance.

A speculator who solicitations to take conveyance will be given COMEX satisfactory or deliverable bars, which are valuable metal bars delivered by COMEX-affirmed refiners and made to strict models set by COMEX. For metals to be considered as COMEX deliverable or great conveyance, they should meet certain gauges that manage the base immaculateness of the bar, and its weight and size. For instance, the metal must have an examine authentication from an affirmed COMEX assayer and gold bars must be of .995 least immaculateness level, that is, 995 sections for each thousand or 99.5% unadulterated. The CME Group site might be counseled for additionally points of interest on the great conveyance of valuable metals.

Conveyance happens by the exchange of responsibility for metal warrant two business days after the vendor gives the notice of expectation. The exchange happens at the settlement value set by the trade on the day the merchant gave the notice of plan.

The trade does not decide or set the cost of valuable metals. These are set by purchasers and vendors paying regard to the level of interest and supply in the market.

Source - Investors Chat Room (investorchatroom.blogspot.com)

[anon46773462]

Thank you for the advertising………….

[vineeta]

Dear Manxx,

I just hope that you found it helpful and informative.

[ontario]

The thread sleeps while commodities market undergo big changes! Brent-WTI spread rapidly dropped in basically a month…probably a good sign for those worried about US production and curiously enough media stopped the fuss about it. New fundamentals are coming…

Btw found an interesting read to proof Permian Basin is drown in oil Permian basin oil production hits constraints, Brent-WTI spread tumbles

[fxcmacom]

Oil ( WTI ) Analysis
UPDATE: 24 July 2018

Key Support: 66.98, 65.03, 62.69

Key Resistance: 71.92, 70.71, 69.58 ( 69.64 )

The crude oil structure has been motivated by a wave of wave after its downtrend line July 16th, which is expected to continue to fall to the levels set in the chart, so you can plan your trading for Short Position in this global commodity.
CFTC Date: The non-commercial futures contracts of WTI Crude Oil futures,totaled a net position of 631,294 contracts in the data reported through Tuesday July 17th. This was a weekly fall of -23,171 contracts from the previous week which had a total of 654,465 net contracts.

[anon46773462]

Recent events and discoveries in the global oil and gas industry seem to indicate that we are entering into a new and extremely significant era concerning oil supplies and pricing as the balance of power shifts rapidly away from OPEC into the hands of the US oil industry.

OPEC has just agreed a further round in production cuts to support prices, which have dropped over 30% recently from a perceived slowdown in global economic progress as a fall out from the current US-initiated trade wars.

But the dramatic collapse in crude oil prices over the last 8 weeks or so was also exacerbated by massive increases in production from, in particular Saudi Arabia, Russia and the US. Whilst Russia reached record output levels since the end of the Soviet Union, The US also achieved a new all-time high of 11.7 mill bpd in November – as well as becoming a net oil exporter for the first time since 1949.

However, there are two major changes in the power equation compared with earlier years:

Firstly, OPEC has not, on its own, been able to achieve a change in oil reserves or prices without the joint assistance from Russia and some other non-OPEC producers. This again became clear when the announcement of this new plan was postponed until Friday in order to see whether Russia was prepared to participate or not, and by how much. Russia’s influence was also reflected in price movements yesterday. First, they rallied strongly, but briefly, on the announcement of a positive overall cut in production levels – but then sagged again into the close when the Russian oil minister warned that the cuts could take months to actually implement.

Secondly, opposing objectives among the major participants. The OPEC producers want to see higher prices because, for many producers, their break-even costs are high and in order to fund their national budgets and investment/diversification plans. But the US president has made it clear that he wants to see significantly lower oil prices to boost economic activity.

The reason why the US preference for lower prices also carries some significant weight is because the shale oil is quick and cheaper to extract and has a lower overall break-even cost (estimated around $40/barrel) – and there is lots of it.

News has just been released that the US Geological Survey has more than doubled its estimate of the technically recoverable reserves in the Permian shale play from 20 billion barrels to 46.3 billion barrels of crude. This makes it one of the largest single reservoirs of oil and gas in the world.

So at the moment the US has all the best cards, cheaper production costs to withstand lower prices - and the volume to take up extra market share released by the cutbacks by the OPEC+ group.

It seems the only difficulties facing the US oil industry are finding sufficient investment capital to finance the expansion – and a lack of pipelines to distribute it quickly enough.

There could be some volatile times ahead but within a broad price range – and with the focus back on watching the weekly reserves data. But ultimately, the key issue behind this all seems to be the state of global demand and the outcome of the trade wars, especially US-China.

Just some weekend thoughts.