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8 Jan 2015
Saudi crown prince blames demand side causes for oil’s decline – DB
FXStreet (Barcelona) - Analysts at Deutsche Bank notes Saudi Crown Prince’ comments suggest that oil’s slide was more related to demand side causes than the previous supply side explanations, which led crude to recover from the consecutive 4-day slump.
Key Quotes
“Coming back to oil markets yesterday, both WTI and Brent (+0.10%) closed firmer at $48.65/bbl and $51.15/bbl respectively, recovering somewhat from 4-days of consecutive losses – although both traded as much as 2-3% lower intraday before recovering post the EIA inventories report.”
“The recovery appeared to be as a result of data showing crude inventories decreasing by 3.1m barrels in the week ending January 2nd (relative to the previous week) – although we note inventories still remain at the high end of the seasonal range.”
“The data appeared to make for mixed reading however with the WSJ noting that US stockpiles of crude, along with refined oil and other types of petroleum rose nearly 1% to 1.149bn barrels over the week.”
“The earlier news from Saudi could be a more interesting story longer-term. Crown Prince Salman (stepping in for the ill King) yesterday seemed to emphasise more demand side causes for the slide in oil rather than the previously emphasised supply side explanations that they have generally been holding responsible."
"This could matter as it may eventually give the Saudis and other GCC states an excuse to change tact on production sooner than the next OPEC meeting in June on the basis that if the facts have changed so might their policies. This is perhaps 2+2=5 but with Oil continuing its slide one has to watch OPEC's reaction carefully as they could create the basis for a snap back if they decide to alter their stance.”
Key Quotes
“Coming back to oil markets yesterday, both WTI and Brent (+0.10%) closed firmer at $48.65/bbl and $51.15/bbl respectively, recovering somewhat from 4-days of consecutive losses – although both traded as much as 2-3% lower intraday before recovering post the EIA inventories report.”
“The recovery appeared to be as a result of data showing crude inventories decreasing by 3.1m barrels in the week ending January 2nd (relative to the previous week) – although we note inventories still remain at the high end of the seasonal range.”
“The data appeared to make for mixed reading however with the WSJ noting that US stockpiles of crude, along with refined oil and other types of petroleum rose nearly 1% to 1.149bn barrels over the week.”
“The earlier news from Saudi could be a more interesting story longer-term. Crown Prince Salman (stepping in for the ill King) yesterday seemed to emphasise more demand side causes for the slide in oil rather than the previously emphasised supply side explanations that they have generally been holding responsible."
"This could matter as it may eventually give the Saudis and other GCC states an excuse to change tact on production sooner than the next OPEC meeting in June on the basis that if the facts have changed so might their policies. This is perhaps 2+2=5 but with Oil continuing its slide one has to watch OPEC's reaction carefully as they could create the basis for a snap back if they decide to alter their stance.”