Weekend Summary

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Is $60 Oil Too Tempting for OPEC?

OPEC’s stated goal was to get inventory levels back to 5-year ranges, but their price target has always been an unspoken $60/bbl crude oil. With Brent crude now above that level, markets are watching to see whether the production cuts will hold. OPEC members tend to cheat on deals, and the inventive to do so is stronger than ever, especially since U.S. exports are rising rapidly and stealing market share. Will Saudi Arabia and other committed countries keep everyone in line now that prices are higher? Click Here to read more from OilPrice.com.

Hedge Funds Go All-In on Oil

The “smart money” in the market (institutional investors, compared to individual speculators) is betting on prices continuing to rise. “Fund managers have continued adding to bullish positions even as benchmark Brent prices have climbed to the highest level since July 2015.” According to Reuters analyst John Kemp, OPEC plans for $60 to be the price floor for Brent crude in 2018. He goes on: “If OPEC is targeting a floor of $60, then the average price and ceiling will be significantly higher, perhaps $70 or more.” Click Here to read more from Reuters.

The Fracking Boom’s Midlife Crisis

The driving narrative in oil markets is that as OPEC cuts production, U.S. exports are filling in the gaps. While U.S. production has exploded in recent years, it may not be sustainable. Unlike most OPEC members, production in the U.S. is driven by private companies, who must respond to shareholder demands. For many producers, investors are now demanding more fiscal discipline, reducing investments in new drilling in favor of dividend payments and investment in operational efficiencies. This focus could trade-off with production in the future, limiting how much more oil can be pulled from beneath the U.S. In turn, that could limit the oil boom we’re seeing from the U.S., and cause future supply numbers to be lower than expected. Click Here to read more from Bloomberg.

EGR Systems Can Run Cleaner with Treated Diesel Fuel

If you’re having problems with your exhaust gas recirculation (EGR) system, you may just need a better fuel. All engines, even newer engines with after-treatment systems (ie, engines using DEF), still have some EGR components, and poor fuel quality can cause issues during that re-circulation. Adding a detergency and injection stabilizing additive can reduce damage, giving you a better spray pattern and super combustion. Click Here to read more from FleetOwner. Note: Arsenal Clean365 is designed to improve your diesel engine’s performance. For more information, check out our Arsenal page or contact a fuel quality expert.