For a long period, the oil market has been to find a balance between the reduction of the production of OPEC and the expansion of the production of the united states so that the price of oil rose. As soon as a new driver has appeared in the form of a referendum on the independence of Kurdistan, the quotes of Brent crude has climbed to 26 months. After the counting of nearly 3 million votes, 93% of participants expressed their support for the region to follow his own path, different from Iraq. The reaction of Turkey, which has a lot of very active Kurds, to be followed immediately. Istanbul is ready to close the cranes and not to allow oil from northern Iraq to the port of Ceyhan on the Mediterranean. We are talking about 500 to 600 thousand barrels per day, which, with 1.8 million bpd of cuts from OPEC, create a solid base for the continuation of the decline in global reserves and rising prices.
Bloomberg estimates that the black gold, the exports of the Kurdistan region this year has increased from $ 515 000 to 583,600 bpd. The resource base is about 45 billion barrels, and production is 544,600 dwt. However, in the case where the independence is gained, the region is ready to move on to 602 thousand barrels per day. First you need to find new markets and supply chains, because the intentions of Turkey to block the pipeline does not look like a joke.
It is curious that the speculators anticipated a similar scenario of events and the increase in their net long positions on Brent crude to the highest mark since the month of March, according to the WTI. The net growth of the nostalgia at the end of the week by the 19 of September on the first year amounted to 8% (up to 464,980 futures contracts and options contracts), on the second it is 32% (208,292 contracts).
The dynamics of speculative positions on Brent crude and WTI
The referendum on the independence of Kurdistan has given the price of the acceleration, so that the general context of the oil market can be called moderately optimistic. According to forecasts of the International Energy Agency, global demand will grow faster than expected, global reserves decline, and the restart of US refineries after the hurricanes is going to increase the demand for black gold in the united States. And in the market, it is increasingly possible to hear the conversations that OPEC has reached its goal, while the activity of the borers in the united states has reached its peak. Door for Brent and WTI do not cling to forecasts from the Energy Information Administration, which indicated that the production of shale oil in October will grow for the 10th consecutive month, as well as for the strengthening of the US dollar.
The Fed is attempting by all means possible to convince the markets to implement their own plans, which are planning of four federal funds rate increases by the end of 2018. William Dudley, the influential official of the Federal Reserve Bank of New York, said that the slowdown in inflation is only temporary, and the impact of the hurricanes on GDP in the united states can be ignored. The chances of the December monetary restriction at the level of 72-73%, which supports the dollar.
Technically, Brent very quickly reached the upper limit of the upward trading channel and the target 161.8% AB = CD pattern. Currently, there is a logic of restoration in the implementation of the model 80-20. For «the bear» to rely on the development of the correction, they need the storm, the support of $ 58.25 and $ 57.35 a barrel.
Brent, daily chart