Market Insights

January 19, 2016 • Posted in Market Insights

Week of January 18, 2016

  • Both Brent and WTI closed below $30/bbl on Friday as continuing turmoil in China’s markets and the imminent lifting of sanctions against Iran weighed on the market
  • On Saturday the UN atomic energy agency announced that inspections showed Iran had met obligations to dismantle its nuclear weapons program
  • With sanctions lifted analysts now expect Iran to quickly add between 600,000 and 1 million bbl/day to its oil output
  • Iran is paying to store large amounts of oil and will move quickly to bring it to market
  • Some analysts believe the impact of Iran’s return has already been priced into the global oil market
  • Other analysts (including Goldman Sachs) believe that oil could now drop to as low as $20/bbl
  • The current bear market for oil could lead to a major shakeup among the smaller players in the US energy sector resulting in a significant number of bankruptcies
  • We will likely see even more austerity measures from the major oil producers
  • US natural gas softened slightly last week because of unseasonably-mild weather
  • US ethylene remains competitive globally
  • US producers operating PDH and ethylene metathesis units are enjoying favorable economics

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