We are fast approaching the summer and crude WTI range bound I thought it might be time to consider some of the factors that might lead to a break up/down. Here’s where we are at now:
Since the Arab spring Saudi Arabia has used much more oil for domestic consumption during these months and until it manages to bring on more gas for power generation its and by association OPEC’s exports fall.
After that you can add anything you like to the equation but sometimes a heatwave in Japan will increase demand, sometimes it will be the hurricane season, occasionally North Sea maintenance overruns and this year it might be the Iran talks slowing down. Anyway, a few thoughts I might dwell on in coming weeks and I will of course pick up on the factors that might have a downward impact on prices.
Really interesting to me is the question of Saudi succession.
The ruling al-Saud family is fast approaching the moment when it must decide how to jump down a generation from a line of brothers born to the country’s founder King Abdulaziz to their sons and nephews, a process fraught with difficulty.
If history has shown anything to be non-negotiable, it is that super powerful families in-fight for power. Is there any indication this is happening now? No. I’m absolutely speculating. However, I think it is valuable to have an ear to the pavement for potentially awkward situations that might come to bear on my trades.
If there’s any unknown besides the weather that could really shake up the oil market it would be a succession issue somehow making its way into the public sphere.
