| Iran’s Nuclear Accord and Crude Oil Market Signal Carnage | |
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Market Signals Collateral Damage for Crude Oil (Part 2 of 3) (Continued from Part 1) Massive supply consensus
The latest developments from the Iran talks signal that the oil market will be flooded with a massive supply of crude oil. Yesterday, the EIA (U.S. Energy Information Administration) released its monthly STEO (Short-Term Energy Outlook) report. It shows that Iran lifting sanctions could change the oil market’s supply dynamics. Iran could add 700,000 bpd (barrels per day) by the end of 2016.
Iran
EIA sources say that Iran is currently producing 2.85 MMbpd (million barrels per day) as of March 2015. Iran is part of OPEC (Organization of the Petroleum Exporting Countries). OPEC countries already have a surplus crude oil production capacity of 2 MMbpd for 2015 and 2.57 MMbpd for 2016. This could mean a surplus of 3.07 MMbbls of crude oil in 2016. Iran will add 500,000 barrels per day to the world output. Iran also has 30 MMbbls of crude oil inventories. That’s ~30% global crude’s demand for one day.
Global crude oil demand
Globally, crude oil demand is expected be at 93.08 MMbbls in 2015 and 94.2 MMbbls in 2016. So, we could see roughly 3.4% of excess crude oil available in the crude oil market in 2016. The excess supply of crude oil will put pressure on the oil market. As a result, the EIA expects that crude oil prices could correct between $5 and $15 per barrel.
Despite the market consensus, oil surged almost 10% in the last two trading sessions. Crude oil prices are trading near the key resistance of $54 per barrel. Oil ETFs like the ProShares Ultra DJ-UBS Crude Oil (UCO) also surged more than 17% in the last two trading sessions. Oil producers like Range Resources (RRC), QEP Resources (QEP), and Chesapeake Energy (CHK) also gained. They account for 1.73% of the Energy Select Sector SPDR ETF (XLE).
Continue to Part 3 Browse this series on Market Realist:
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Chesapeake Energy Corporation
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DEVELOPMENT STAGE |
CODE : CHK |
ISIN : US1651671075 |
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ProfileMarket IndicatorsVALUE : Projects & res.Press releasesAnnual reportRISK : Asset profileContact Cpy |
Chesapeake Energy is a producing company based in United states of america. Chesapeake Energy develops natural gas and oil in USA. Its main asset in development is DEEP BOSSIER in USA. Chesapeake Energy is listed in Germany and in United States of America. Its market capitalisation is US$ 83.7 billions as of today (€ 78.2 billions). Its stock quote reached its lowest recent point on March 13, 2020 at US$ 0.12, and its highest recent level on November 18, 2022 at US$ 99.94. Chesapeake Energy has 909 242 558 shares outstanding. |