Analys
Brent crude is crawling higher but its feet are slipping

Price action – Marginal gains in the front but losses in the back end curve
From Friday to Friday last week Brent 1mth crude gained 0.3% to $55.99/b. Longer dated contracts however continued to erode with the Brent December 2020 contract losing 1.1% to $54.84/b. In perspective it closed at the lowest level since April 2016 last week when it closed at $54.47/b last Wednesday. With muted price action the volatility naturally continued lower last week with 30 day rolling annualized volatility for the 1mth contract ending last week at 20.3% down from 25.1% Friday the week before. We have not seen such a low level of volatility since October 2014 and it is likely to continue yet lower. Probably heading to 15%. Shale oil flexibility clearly helps to mute the price action. In addition the market is now close to balance and lower volatility is natural in such a situation. However, the longer term normal volatility in the crude oil market is about 30%. Thus we are probably heading towards half of the historical normal level.
OPEC is tightening up the front end market but reviving US crude oil production is softening the medium term balance
OPEC is delivering on cuts thus driving the market increasingly into backwardation. This is pushing front month contract higher versus longer dated contracts. However, longer dated contracts are slipping thus leaving the Brent 1mth contract with little gain despite a gradual shift to backwardation. There is still some contango in the very front of the forward curve but overall the Brent 1mth contract is now trading above the Brent Dec-2020 contract. At close on Friday we had Brent 1mth at 55.99/b and Dec-2020 at 54.84/b. Thus for Brent 1mth, it is trying to crawl higher but its feet are slipping. Longer dated contracts are slipping.
OPEC is tightening up the front, but recovering US shale production is loosening up the longer dated part of the balance. That is why the longer dated contracts are slipping. US crude production last week rose above 9 mb/d for the first time since April 2016. For lower 48 production (where shale is the lion’s share), production rose by 17 kb/d w/w. Multiply by 52 and you get an annualized US production growth rate of 0.9 mb/d YoY. I.e. US shale oil production growth is back! If the +17 kb/d w/w was only noise it would mean nothing, but it is a trend. Our projection is for US shale oil production to grow at 18 kb/d w/w in February, 23 kb/d w/w in March and then gradually rising to 36 kb/d w/w in September equaling an annualized production growth rate of 1.9 mb/d before the growth rate is moderating after that again.
Since October 2016 US crude production has on averaged increased by 27.6 kb/d w/w. Most of this is probably not due to recovering shale oil production but rather due to commissioning of prior investments in the Gulf of Mexico. However, now onwards US crude production is going to increase on a weekly basis due to recovering US shale oil production.
OPEC is successful in its effort to dry up the market and shifting the crude oil forward curve into backwardation. It had probably hoped for a situation where the longer dated contracts stands at $55-60/b with Brent 1mth contract trading at a backwardation premium of some $5/b above that. It will probably get its $5/b backwardation premium but longer dated contracts are likely to slip lower thus leaving OPEC with limited gain at the front end of the curve. We still think that Brent crude will average $57.5/b in Q2-17 as also the front end of the curve is flipping into backwardation. The erosion in the longer dated contracts is likely to continue.
US oil rig count last week increased 5 rigs but implied shale oil rig count went up by 12 as directional and vertical count fell back. Over the last two weeks the US implied shale oil rig count is up by 15 or 7.5/week which is marginally higher than our projected 7 rigs per week for H1-17. This shifts our dynamic price forecast for 2019 marginally lower from $68.3/b to $67.9/b.
Over the last two weeks weekly inventory data for the US, EU, Singapore and floating storage has moved down by 3.1 mb and 9.7 mb respectively last two weeks. OPEC’s medicine is working shifting the market increasingly into backwardation as a result. Declining inventories – that’s the proof of the pudding. That makes investors bullish. Not surprisingly speculative positions in WTI increased yet higher to a new record last week.
Analys
Tightening fundamentals – bullish inventories from DOE

The latest weekly report from the US DOE showed a substantial drawdown across key petroleum categories, adding more upside potential to the fundamental picture.

Commercial crude inventories (excl. SPR) fell by 5.8 million barrels, bringing total inventories down to 415.1 million barrels. Now sitting 11% below the five-year seasonal norm and placed in the lowest 2015-2022 range (see picture below).
Product inventories also tightened further last week. Gasoline inventories declined by 2.1 million barrels, with reductions seen in both finished gasoline and blending components. Current gasoline levels are about 3% below the five-year average for this time of year.
Among products, the most notable move came in diesel, where inventories dropped by almost 4.1 million barrels, deepening the deficit to around 20% below seasonal norms – continuing to underscore the persistent supply tightness in diesel markets.
The only area of inventory growth was in propane/propylene, which posted a significant 5.1-million-barrel build and now stands 9% above the five-year average.
Total commercial petroleum inventories (crude plus refined products) declined by 4.2 million barrels on the week, reinforcing the overall tightening of US crude and products.


Analys
Bombs to ”ceasefire” in hours – Brent below $70

A classic case of “buy the rumor, sell the news” played out in oil markets, as Brent crude has dropped sharply – down nearly USD 10 per barrel since yesterday evening – following Iran’s retaliatory strike on a U.S. air base in Qatar. The immediate reaction was: “That was it?” The strike followed a carefully calibrated, non-escalatory playbook, avoiding direct threats to energy infrastructure or disruption of shipping through the Strait of Hormuz – thus calming worst-case fears.

After Monday morning’s sharp spike to USD 81.4 per barrel, triggered by the U.S. bombing of Iranian nuclear facilities, oil prices drifted sideways in anticipation of a potential Iranian response. That response came with advance warning and caused limited physical damage. Early this morning, both the U.S. President and Iranian state media announced a ceasefire, effectively placing a lid on the immediate conflict risk – at least for now.
As a result, Brent crude has now fallen by a total of USD 12 from Monday’s peak, currently trading around USD 69 per barrel.
Looking beyond geopolitics, the market will now shift its focus to the upcoming OPEC+ meeting in early July. Saudi Arabia’s decision to increase output earlier this year – despite falling prices – has drawn renewed attention considering recent developments. Some suggest this was a response to U.S. pressure to offset potential Iranian supply losses.
However, consensus is that the move was driven more by internal OPEC+ dynamics. After years of curbing production to support prices, Riyadh had grown frustrated with quota-busting by several members (notably Kazakhstan). With Saudi Arabia cutting up to 2 million barrels per day – roughly 2% of global supply – returns were diminishing, and the risk of losing market share was rising. The production increase is widely seen as an effort to reassert leadership and restore discipline within the group.
That said, the FT recently stated that, the Saudis remain wary of past missteps. In 2018, Riyadh ramped up output at Trump’s request ahead of Iran sanctions, only to see prices collapse when the U.S. granted broad waivers – triggering oversupply. Officials have reportedly made it clear they don’t intend to repeat that mistake.
The recent visit by President Trump to Saudi Arabia, which included agreements on AI, defense, and nuclear cooperation, suggests a broader strategic alignment. This has fueled speculation about a quiet “pump-for-politics” deal behind recent production moves.
Looking ahead, oil prices have now retraced the entire rally sparked by the June 13 Israel–Iran escalation. This retreat provides more political and policy space for both the U.S. and Saudi Arabia. Specifically, it makes it easier for Riyadh to scale back its three recent production hikes of 411,000 barrels each, potentially returning to more moderate increases of 137,000 barrels for August and September.
In short: with no major loss of Iranian supply to the market, OPEC+ – led by Saudi Arabia – no longer needs to compensate for a disruption that hasn’t materialized, especially not to please the U.S. at the cost of its own market strategy. As the Saudis themselves have signaled, they are unlikely to repeat previous mistakes.
Conclusion: With Brent now in the high USD 60s, buying oil looks fundamentally justified. The geopolitical premium has deflated, but tensions between Israel and Iran remain unresolved – and the risk of missteps and renewed escalation still lingers. In fact, even this morning, reports have emerged of renewed missile fire despite the declared “truce.” The path forward may be calmer – but it is far from stable.
Analys
A muted price reaction. Market looks relaxed, but it is still on edge waiting for what Iran will do

Brent crossed the 80-line this morning but quickly fell back assigning limited probability for Iran choosing to close the Strait of Hormuz. Brent traded in a range of USD 70.56 – 79.04/b last week as the market fluctuated between ”Iran wants a deal” and ”US is about to attack Iran”. At the end of the week though, Donald Trump managed to convince markets (and probably also Iran) that he would make a decision within two weeks. I.e. no imminent attack. Previously when when he has talked about ”making a decision within two weeks” he has often ended up doing nothing in the end. The oil market relaxed as a result and the week ended at USD 77.01/b which is just USD 6/b above the year to date average of USD 71/b.

Brent jumped to USD 81.4/b this morning, the highest since mid-January, but then quickly fell back to a current price of USD 78.2/b which is only up 1.5% versus the close on Friday. As such the market is pricing a fairly low probability that Iran will actually close the Strait of Hormuz. Probably because it will hurt Iranian oil exports as well as the global oil market.
It was however all smoke and mirrors. Deception. The US attacked Iran on Saturday. The attack involved 125 warplanes, submarines and surface warships and 14 bunker buster bombs were dropped on Iranian nuclear sites including Fordow, Natanz and Isfahan. In response the Iranian Parliament voted in support of closing the Strait of Hormuz where some 17 mb of crude and products is transported to the global market every day plus significant volumes of LNG. This is however merely an advise to the Supreme leader Ayatollah Ali Khamenei and the Supreme National Security Council which sits with the final and actual decision.
No supply of oil is lost yet. It is about the risk of Iran closing the Strait of Hormuz or not. So far not a single drop of oil supply has been lost to the global market. The price at the moment is all about the assessed risk of loss of supply. Will Iran choose to choke of the Strait of Hormuz or not? That is the big question. It would be painful for US consumers, for Donald Trump’s voter base, for the global economy but also for Iran and its population which relies on oil exports and income from selling oil out of that Strait as well. As such it is not a no-brainer choice for Iran to close the Strait for oil exports. And looking at the il price this morning it is clear that the oil market doesn’t assign a very high probability of it happening. It is however probably well within the capability of Iran to close the Strait off with rockets, mines, air-drones and possibly sea-drones. Just look at how Ukraine has been able to control and damage the Russian Black Sea fleet.
What to do about the highly enriched uranium which has gone missing? While the US and Israel can celebrate their destruction of Iranian nuclear facilities they are also scratching their heads over what to do with the lost Iranian nuclear material. Iran had 408 kg of highly enriched uranium (IAEA). Almost weapons grade. Enough for some 10 nuclear warheads. It seems to have been transported out of Fordow before the attack this weekend.
The market is still on edge. USD 80-something/b seems sensible while we wait. The oil market reaction to this weekend’s events is very muted so far. The market is still on edge awaiting what Iran will do. Because Iran will do something. But what and when? An oil price of 80-something seems like a sensible level until something do happen.
-
Nyheter4 veckor sedan
Stor uppsida i Lappland Guldprospekterings aktie enligt analys
-
Nyheter4 veckor sedan
Silverpriset släpar efter guldets utveckling, har mer uppsida
-
Nyheter3 veckor sedan
Uppgången i oljepriset planade ut under helgen
-
Nyheter3 veckor sedan
Låga elpriser i sommar – men mellersta Sverige får en ökning
-
Nyheter2 veckor sedan
Mahvie Minerals växlar spår – satsar fullt ut på guld
-
Analys3 veckor sedan
Very relaxed at USD 75/b. Risk barometer will likely fluctuate to higher levels with Brent into the 80ies or higher coming 2-3 weeks
-
Nyheter1 vecka sedan
Oljan, guldet och marknadens oroande tystnad
-
Nyheter1 vecka sedan
Jonas Lindvall är tillbaka med ett nytt oljebolag, Perthro, som ska börsnoteras