SEB’s Bjarne Schieldrop believes that OPEC will move away from the plan to increase oil production, after prices fell on Friday. He believes that in this case, the United States achieved nothing but reduced its stockpile.
On Friday, oil prices fell more than 11 percent to below $73 a barrel.
Oil analyst Ole-Rikard Hammer at Arctic Securities noted the dramatic drop, given how short it took.
At the same time, it should be noted that the market was completely “skewed” in favor of increased consumption, despite repeated warnings, according to Bjornar Tonhagen of analysis agency Rystad Energy.
“One would expect slow but sure air traffic globally,” he wrote in an SMS.
Colleague Bjarne Schieldrop points out the same thing.
– If you look at the relationship between oil stocks and the price, we find that the price has recently risen by $10 above normal. This is because the market has set its expectations for increased travel and consumption, and it will depend on inventories.
But now the fear is spreading that the new variant of Corona, dubbed omikron, will lead to new waves of closures and restrictions. Scheldrop says that after yesterday’s dip, this balance between oil stocks and the price is becoming more normal.
Then you can ask yourself: Did the market do the right thing? We don’t know much about the new variant, so time will tell.
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Bjarne Schieldrop also emphasizes that we are at a time of year when there may be less resistance among the major oil investors.
It’s been a very profitable year for oil investors, so some might think they’d rather go out with the flag at the top. That it is better to close the books and take the Christmas holidays with the profit of the year, than to sit and watch what happens to the infection.
At the same time, the impact of the new virus is not limited to the markets, notes the SEB analyst.
– We had a problem with the infection increasing even before using Omicron. And we’re not in the middle of winter yet, where people are indoors rather than outside, which facilitates more infection. So maybe we should look at the spring segment before we start hoping for normalization.
Norway’s oil production heads towards “all-time highs”
I think OPEC is moving away from the plan
This week it became known that the United States plans to release 50 million barrels to the market, and that China, India, Japan, South Korea and the United Kingdom will follow suit.
The question is what will happen when the OPEC oil cartel meets in early December. Their current plan is to increase production by 0.4 million barrels per day.
– I think there is a fairly high probability now that OPEC has decided not to increase, says Bjarne Schieldrop.
In that case, that would mean that additional US supply will fade somewhat over the next few months, he points out.
– It would be very bitter for them. If that happens, the United States has achieved nothing but shrink its strategic stockpile.
Denmark asks Norway to set a deadline for oil production
Uncertain market for aircraft stocks
Airline shareholders were forced to watch their values race on Friday. On the Oslo Stock Exchange, the Norwegian company topped the list of losers, with a decrease of 10.3 percent. This happened after the emergence of the South African virus.
Aviation analyst Hans Jørgen Elnæs notes that it is not necessarily the travel restrictions to the southern part of Africa that are causing the lower share.
— Air traffic in the southern part of Africa accounts for only 0.5 percent of the world’s total capacity, and 80 percent of it again is domestic flights. In a global context, there isn’t a lot of air traffic in and out of this area, says Elnæs.
– However, airfares are affected, and this shows how unstable the markets are, he says.
Fear of a new type of virus could affect our travel habits, which in turn would have a negative impact on most people’s income.
Winter, which is usually a bad season for airlines, is often provided by people who book their summer holidays in December and January.
– If people sit on the fence and wait for reservations, airlines have to burn cash, he says.
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