SMC: Crude oil futures likely to trade on volatile path in November 2016
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In the month of October crude oil prices traded on volatile path on mixed fundamentals but ended the month on weaker note. Uncertainty regarding compliance of OPEC production cut created skepticism in investor’s mind last month. In the month of October it managed to hover in range of $46.63-51.93 in NYMEX and 3142-3464 in MCX. There is also growing skepticism about the Organization of the Petroleum Exporting Countries' (OPEC) upcoming plan to limit production.
Recently executive of Russia's Rosneft stated that the state oil producer has potential to add as much as 200 million tonnes a year, or about 4 million barrels per day, to its output. Oil prices are up about 13 percent since OPEC announced on Sept. 27 its first planned output cut in 8 years to rein in a global glut that halved prices from mid-2014 highs above $100 a barrel.
Crude oil futures are expected to trade on volatile path in the month of November. Crude oil can move in range of 2800-3400 in the month of November. Investors remain uncertain as to whether OPEC can implement the tentative agreement to cut production. As OPEC gathers in Vienna on 30th November to consider cutting its oil output, a lower profile event in Baghdad on the same day will signal Iraq's longer term ambition to do precisely the opposite. Iraq, OPEC's second biggest oil producer, wants to be exempt from the cut, arguing it needs the revenues to fight Islamic State. Other OPEC-members, including Libya and Nigeria, are likely to be exempt from cutting production, while Iran and Venezuela and Indonesia are also unlikely to reduce output.
Latest Crude oil stockpiles
U.S. crude oil stockpiles soared more than 14 million barrels, the largest weekly build since the U.S. Energy Department started keeping records in 1982, bolstered by hefty imports and a decline in refining runs. The massive build in supply represents a rebound after several weeks of sharp drawdowns in inventories that was kicked off by a 14-million-barrel draw in early September. That drop was initially thought to be an anomaly because of storm activity, but six of the seven weeks that followed also showed drawdowns. Gasoline stocks fell 2.2 million barrels, compared with analysts' expectations for a 1.1 million-barrel drop.
US Crude Oil Rig Count Rose for the 16th Time in 18 Weeks
Baker Hughes (BHI) reported that the US crude oil rig count fell by two to 441 rigs from October 21–28, 2016. It was the second fall in US crude oil rigs in the last 18 weeks. However, US crude oil rigs rose for the 16th time in the last 18 weeks. The active rigs rose as crude oil prices recovered from lows earlier this year.
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