Oil prices sink as USA stock market slumps and dollar strengthens

Brent Crude

If you are bullish, you might want to rethink your take. Russian Federation isn't the only country caught supporting North Korea's fuel needs this month: at least six Chinese ves-sels were delivering oil to North Korean ports as well.

Still, prices have been relatively steady in recent weeks, helped by a weakening US dollar and production outages in OPEC-member Venezuela.

The Organization of the Petroleum Exporting Countries has pumped 32.4 million barrels per day (bpd) in January, the survey found, up 100,000 bpd from December. We have the tightest oil market we have had in years.

Brent has held around these levels since mid-January, after being driven higher by shrinking US stockpiles and a weaker dollar earlier in the year.

The EIA also reported the biggest increase in crude oil stocks since March previous year, a rise of 6.8 million barrels.

But don't just stop here.

The investment bank now sees Brent, the worldwide benchmark for oil, averaging $75 a barrel over the next three months, up from its previous target of $62. It had crossed that figure twice - in October and November of 1970, but after that it had embarked on terminal decline until shale oil came along over the past decade to revive its oil fortunes. It's not rocket science.

As a matter of fact, we are starting to see them ramp up production very quickly.

"BOOM!", exclaimed an RBC Capital Markets report Thursday, awed by the rapid pace of USA production.

ExxonMobil will report on Friday but the company has announced it plans to invest heavily in the Permian Basin in West Texas and increase production by 600,000 of oil equivalent by 2025.

The EIA has said it expects the country to average 10.3 million barrels a day this year and 10.8 million barrels a day in 2019, topping 11 million barrels a day by November 2019.

Now, think from a global perspective. But while the world's newest energy superpower is now producing record amounts of crude oil, why are some saying this could be as good as it gets?

This is the chart that Saudi Arabia and Russian Federation - and even Canada - should fear the most, as the U.S.is emerging as a vital "swing exporter". So again, that's a price level that gives some pause for thought.

Dear reader, 2016 and 2017 were great for oil prices.

Crude oil prices rebounded Thursday amid signs that OPEC is complying with supply quotas.

Taylor sees prices rising on the back of "robust" growth in global demand, but tipped the market would remain "boringly rangebound" in the short and medium term. And, if you know basic economics, this is a flawless recipe for lower oil prices.

The implications of this transformation go far beyond global oil markets and are reshaping the global economic order. Jobs day and the impact on the dollar will impact crude. Otherwise, I will be looking for support closer to the $63.50 level. "The higher prices are encouraging the shale oil producers", Lipow said.

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