Oil dropping like a rock again...SSN near US$0.60...yikes, page-7

May well be true (attention seeking) but I would caution against being to optimistic about oil prices. Writing this as oil has climbed the last few sessions from about $51.50 early last week to about $54.50 now. So I'm well aware of the volatility.

BUT consider

a. The Fed ... plenty of talk this past week about only one interest rate hike in 2017. Trump does not want a strengthening dollar (everyone expected multiple interest rate rises as a given). A weakening dollar results in a higher oil prices (arguing against myself -- or am I?)

b. OPEC is at it again by talking up the price of oil by pointing out how the OPEC cuts are being followed. Only in OPEC is this a cut,
per IEA: OPEC production Jan'17 est at just over 32 Mmbopd ... well under target level of 32.5Mmbopd
anyone remember that prior to OPEC pledge to cut output was 31.5Mmbopd thereabouts
Tricky aren't they. If 31.5 mmbopd was a contributor to global supply glut then 32 Mmbopd does nothing to reduce the glut

c. Perhaps not well known is US DoE is selling 10 MmBO from SPR (Tranch1 of approved 25 MmBO over 3 years). Not all at once I hope and thankfully mostly sour crude and not WTI quality but it remains to be seen what price impact may (or may not) be.
http://www.reuters.com/article/usa-crude-reserves-idUSL1N1FT1XF

d. Drillers adding rigs. Opportunities for improved hedging of cash flow as prices have risen. See PXD for example.


Still sounds to me like an oversupplied market with plenty of supply (more than enough) at below $55 (or even $50). Why then would/should oil go over $60 and remain there structurally speaking. Sanctions matter how much? Looking in the RVM ... not as much as we think (or hope).

Tough to make a buck or too.