Founder & CEO. Oil markets macro-analysis., Vanda Insights

Vandana Hari

Founder & CEO. Oil markets macro-analysis.

Vanda Insights

Vanda Insights is a Singapore-based boutique provider of intelligence on the global energy markets, launched in September 2016. The venture was born out of a desire to extract the signal from the noise in the complex and often volatile oil markets. Our succinct and clear macro analysis is relied upon by thousands of readers globally, including those doing business directly or indirectly in the physical commodity and derivatives markets; wealth managers; governments, regulatory bodies and think-tanks; as well as trade organizations and educational institutions.

Global Energy Markets

Commodities

The 22-member OPEC/non-OPEC alliance of oil producers decided to raise supply by 500,000 b/d from January in a somewhat surprise decision, reached after a week of fractious meetings, on Thursday.It also made a provision for a gradual release of more oil into the market based on monthly reviews, starting with the February supply policy.The market had widely expected OPEC+ to maintain its 7.7 million b/d of production cuts at least through Q1 2020 to avoid the risk of tipping the market into oversupply as fresh waves of the coronavirus in the Western hemisphere are expected to dampen demand through the winter months.We examine the OPEC+ decision in five sections: The agreement, The Compromise, The Winners and Losers, The Market Reaction, and The Fault Lines and Trouble Spots.

The 22-member OPEC/non-OPEC alliance of oil producers decided to raise supply by 500,000 b/d from January in a somewhat surprise decision, reached after a week of fractious meetings, on Thursday.It also made a provision for a gradual release of more oil into the market based on monthly reviews, starting with the February supply policy.The market had widely expected OPEC+ to maintain its 7.7 million b/d of production cuts at least through Q1 2020 to avoid the risk of tipping the market into oversupply as fresh waves of the coronavirus in the Western hemisphere are expected to dampen demand through the winter months.We examine the OPEC+ decision in five sections: The agreement, The Compromise, The Winners and Losers, The Market Reaction, and The Fault Lines and Trouble Spots.

OPEC+ Sets Stage for a Tumultuous Start to 2021 in Oil Markets

The OPEC/non-OPEC alliance's surprise decision on Thursday to add 500,000 b/d of supply to the market starting in January was principally a compromise deal designed to hold together a 22-member coalition that is showing signs of fatigue and major cracks.The roadmap of tweaking supply policy on a monthly basis beyond January injects a new layer of complexity to the decision-making process, not to mention making it harder for members to maintain discipline or for the market to keep track of it.Crude has staged a relief rally on the latest OPEC+ decision because the more bearish potential outcomes of a 1.9 million b/d supply boost from January or even a collapse of the alliance were averted. It is hard to see continued momentum in it.

The OPEC/non-OPEC alliance's surprise decision on Thursday to add 500,000 b/d of supply to the market starting in January was principally a compromise deal designed to hold together a 22-member coalition that is showing signs of fatigue and major cracks.The roadmap of tweaking supply policy on a monthly basis beyond January injects a new layer of complexity to the decision-making process, not to mention making it harder for members to maintain discipline or for the market to keep track of it.Crude has staged a relief rally on the latest OPEC+ decision because the more bearish potential outcomes of a 1.9 million b/d supply boost from January or even a collapse of the alliance were averted. It is hard to see continued momentum in it.

OPEC+ Compromise on Q1 Oil Supply Portends Heightened Price Volatility

Managing Director

Elan Gore

TMI Data Science

TMI Data Science utilizes Natural Language Processing to build custom leading indicators using unstructured data sourced from the global financial, trade & traditional media.  Our proprietary software, TMI Machine, is a text-mining platform designed with the buy-side & capital markets professional in mind, text-mining the global media to discern and quantify nuanced qualitative shifts in press coverage as they apply to macroeconomics, equity indexes/ETFs, commodities, currencies, fixed income & individual equities.  TMI provides custom leading indicators and systematic trading strategies, operating at the nexus of linguistics & statistics drawing on vast experience in investment banking and hedge fund settings in senior quantitative and fundamental roles.  

TMI Data Science was founded by Elan Gore, an award-winning Senior Global Basic Materials Equity Analyst & China Economist with 15 years of experience in North American hedge funds & institutional managers; and Alessandro Porrino, Ph.D., an Algorithmic Trading Analyst and Programmer with 10 years of front-office experience ranging from complex FX option pricing to auto-hedging strategies at Bank of America Merrill Lynch and Standard Chartered.  Mr. Gore holds an MBA in Finance from New York University Stern School of Business, and Mr. Porrino holds a Ph.D. in Systems Engineering from Brunel University London.

Cross Asset Strategy

<ul>
<li>Following the November melt-up, we text-mine for clues on inventory restocking dynamics going into year-end</li>
<li>While references to a general inventory restocking in the global financial media are up nearly +4x STDEVs, our data suggests this is the second notable raw materials restocking wave since the recovery began, following a more robust restocking seen in August; nonetheless, the current phase is abnormal relative to typical year-end seasonality, highlighting much-anticipated pent-up demand</li>
<li>Our short-term broad commodity sentiment indicator hit +2x STDEVs, its highest reading since January, on 11/23; this followed a significant spike in China macro sentiment earlier in November, which was preceded by a multi-year record in our Copper sentiment indicator in the first half of the month</li>
<li>Current readings see continued positive sentiment momentum in palladium, copper, aluminum and crude, while negative sentiment persists in pulp, uranium and silver</li>
<li>Our sentiment picture for iron ore and steel has been obfuscated by Australia-China tensions, having turned neutral after readings of +3x STDEV and +1.8x STDEV in recent weeks; but our news attributions also identify reports of seasonally declining BF utilization and end demand in recent weeks</li>
<li>While raw materials-specific and short-cycle industrial restocking may pause in the next 6-8 weeks, the broader global finished goods restocking is likely to remain a supportive factor keeping commodities trading in tighter ranges relative to winter averages </li>
</ul><div class="content-highlight">TMI Data Science utilizes Natural Language Processing to build custom leading indicators using unstructured data sourced from the global financial, trade &amp; traditional media. Our proprietary software text-mines the global media to discern and quantify nuanced qualitative shifts in press coverage as they apply to macroeconomics, equity indexes/ETFs, commodities, currencies, fixed income &amp; individual equities. </div>


Following the November melt-up, we text-mine for clues on inventory restocking dynamics going into year-end
While references to a general inventory restocking in the global financial media are up nearly +4x STDEVs, our data suggests this is the second notable raw materials restocking wave since the recovery began, following a more robust restocking seen in August; nonetheless, the current phase is abnormal relative to typical year-end seasonality, highlighting much-anticipated pent-up demand
Our short-term broad commodity sentiment indicator hit +2x STDEVs, its highest reading since January, on 11/23; this followed a significant spike in China macro sentiment earlier in November, which was preceded by a multi-year record in our Copper sentiment indicator in the first half of the month
Current readings see continued positive sentiment momentum in palladium, copper, aluminum and crude, while negative sentiment persists in pulp, uranium and silver
Our sentiment picture for iron ore and steel has been obfuscated by Australia-China tensions, having turned neutral after readings of +3x STDEV and +1.8x STDEV in recent weeks; but our news attributions also identify reports of seasonally declining BF utilization and end demand in recent weeks
While raw materials-specific and short-cycle industrial restocking may pause in the next 6-8 weeks, the broader global finished goods restocking is likely to remain a supportive factor keeping commodities trading in tighter ranges relative to winter averages 
TMI Data Science utilizes Natural Language Processing to build custom leading indicators using unstructured data sourced from the global financial, trade &amp; traditional media. Our proprietary software text-mines the global media to discern and quantify nuanced qualitative shifts in press coverage as they apply to macroeconomics, equity indexes/ETFs, commodities, currencies, fixed income &amp; individual equities. 

TMI Indicators: December Commodity Sentiment - Restocking into Winter on Pent-Up Demand Expectations

Three Covid vaccine success stories catapulted crude to nearly nine-month highs on Wednesday, but the rally was losing steam by the end of the week. 
Covid infections, hospitalisations and deaths were hitting new highs in the US. Though the numbers were levelling off in Europe under strict lockdowns, the fresh waves have battered consumer confidence on either side of the Atlantic.  
If year-end holidays worsen the pandemic, oil demand as well as sentiment may take a hit.
We wouldn't worry about speculation that the latest surge in crude prices or fresh internal rumblings might derail the OPEC/non-OPEC alliance from staying the course on its production cuts when energy ministers meet early next week. We expect a cautious and patient approach to prevail, with an extension to the end of Q1 2021 at least. 
But that may not provide much fillip to crude prices, as the decision is all but baked in.

Three Covid vaccine success stories catapulted crude to nearly nine-month highs on Wednesday, but the rally was losing steam by the end of the week. 
Covid infections, hospitalisations and deaths were hitting new highs in the US. Though the numbers were levelling off in Europe under strict lockdowns, the fresh waves have battered consumer confidence on either side of the Atlantic.  
If year-end holidays worsen the pandemic, oil demand as well as sentiment may take a hit.
We wouldn't worry about speculation that the latest surge in crude prices or fresh internal rumblings might derail the OPEC/non-OPEC alliance from staying the course on its production cuts when energy ministers meet early next week. We expect a cautious and patient approach to prevail, with an extension to the end of Q1 2021 at least. 
But that may not provide much fillip to crude prices, as the decision is all but baked in.

Weekly Oil Views: Crude Jumps 30% on Vaccine Cheer but Not Immune to Pullback

A flurry of highly encouraging results from late-stage trials of Covid vaccines over the past fortnight sparked off a euphoric rally in risk assets and lifted crude prices to two-and-a-half-month highs.Unfortunately, the “finish line” for vaccine development is the starting point of a long, arduous journey to immunising a substantial proportion of the 7.8 billion people across the globe.Stock markets are fully pricing in an expected recovery in corporate revenues and profits. But the oil complex has to balance future optimism with the current physical markets, which may soon be teetering on the brink of oversupply.OPEC+ last week again signalled a willingness to forego its 1.9 million b/d supply boost scheduled for January 2021 but appeared to leave the door open for other options. Options it doesn't really have, unless it is willing to see Brent slipping below the $40 threshold.

A flurry of highly encouraging results from late-stage trials of Covid vaccines over the past fortnight sparked off a euphoric rally in risk assets and lifted crude prices to two-and-a-half-month highs.Unfortunately, the “finish line” for vaccine development is the starting point of a long, arduous journey to immunising a substantial proportion of the 7.8 billion people across the globe.Stock markets are fully pricing in an expected recovery in corporate revenues and profits. But the oil complex has to balance future optimism with the current physical markets, which may soon be teetering on the brink of oversupply.OPEC+ last week again signalled a willingness to forego its 1.9 million b/d supply boost scheduled for January 2021 but appeared to leave the door open for other options. Options it doesn't really have, unless it is willing to see Brent slipping below the $40 threshold.

Weekly Oil Views: Brent Eyes $45 on Vaccine Hope but Can't Ignore Current Realities

United States

Crude oil is a naturally occurring, unrefined petroleum product composed of hydrocarbon deposits and other organic materials. Crude oil can be refined to produce usable products such as gasoline, diesel and various forms of petrochemicals. It is a nonrenewable resource, also known as a fossil fuel, which means that it can't be replaced naturally at the rate we consume it and is therefore a limited resource.

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OPEC+ Sets Stage for a Tumultuous Start to 2021 in Oil Markets

The OPEC+ alliance managed to preserve unity with a compromise deal Dec 3 on supply policy for early 2021. But embracing an unprecedented and...

Vandana Hari

OPEC+ Compromise on Q1 Oil Supply Portends Heightened Price Volatility

Crude has rallied to fresh 9-month highs in a knee-jerk reaction to OPEC+'s compromise decision on Thursday to boost supply by 0.5 mil b/d from...

Vandana Hari

TMI Indicators: December Commodity Sentiment - Restocking into Winter on Pent-Up Demand Expectations

We text-mine for clues on the current restocking, and believe the anticipation of pent-up demand is likely to keep the commodities trading in a...

Elan Gore

Weekly Oil Views: Crude Jumps 30% on Vaccine Cheer but Not Immune to Pullback

Crude prices surged last week to nearly 9-month highs. November, the month of 3 vaccine success stories, alone has produced a 30% spike. How has...

Vandana Hari

Weekly Oil Views: Brent Eyes $45 on Vaccine Hope but Can't Ignore Current Realities

Oil has priced in future optimism on the back of a handful of Covid vaccines approaching the finish line. But unlike equities, oil is grounded in...

Vandana Hari

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