McMonigle: What's Behind the Big Move In Oil (And What May Be Next) - jm

Hedgeye Senior Energy Policy analyst Joe McMonigle recently appeared on BNN Bloomberg today to discuss what's pushed oil prices above $70 for the first time since 2014.

Click here to watch the interview.

Below is a brief excerpt from McMonigle's analysis.

"The market is really focused on Iran and that’s where we’ve seen the recent bump in prices.

But Venezuelan production is down dramatically. They’re losing about 50,000 barrels per month. Production in March was 1.5 million barrels per day. Under the OPEC agreement they’re allowed to produce 2 million barrels per day so it’s accelerated the decline in crude inventories. We think Venezuela is on track to lose another 500,000 barrels this year. So they could be at or below 1 million barrels per day in production by the end of the year.

Just to put that into perspective. The U.S. is exporting more crude than Venezuela is producing right now.

But Iran is the big driver and the President is going to decide whether to raise sanctions or not by May 12th.

We think he is going do that and it will have big implications for oil markets, mainly because in both Venezuela and Iran we’re talking about removing physical oil from the market. In the Syria missile strike, where oil bumped up a little bit, there was really no physical supply at risk."