Energy Commentary

Tuesday, December 18, 2018

Today’s Market News

  • U.S. Shale Output: The EIA said in a monthly report that it expects oil production from U.S. shale basins to surpass 8 million barrels per day (bpd). The forecast is for December production to top out at 8.03 for the first time on record followed by a forecasted increase of 134,000 bpd in January to 8.17 million bpd. Not to the markets surprise, the Permian and Bakken are estimated to increase production to record levels during this time.
  • Libya: Libya has declared force majeure at its largest oilfield in El Sharara as a local militia group has overtaken it yet again. The 315,000 barrel per day oilfield will not restart producing until “alternative security arrangements are put in place” per Libya’s National Oil Company.
  • Dow Jones: The Dow is inching closer towards a “death cross” where the 50-day moving average (25,110.27) drops below the 200-day moving average (25,075.38). Analysts believe that such a point is an indicator of a shorter-term decline graduating to a longer-term downtrend.
  • Market Opinion: Oil prices are on the decline this morning due to a combination of supply worries and a tumbling stock market. Yesterday was the first time since October 2017 that WTI closed below the $50 level (see chart below). With this taking place, the recommendation would be to see how far this market will fall. $50 WTI had been a strong support level for the past month and now that it has been broke analysts will most likely start looking at the $45 level.

© 2018 CHS Inc.