Tuesday, July 25, 2017
Saudi Arabia Taking Charge: Like other OPEC countries involved in the production cut, Saudi Arabia wants to do more to boost crude oil prices. The kingdom is already doing the heavy lifting in Asia, where it is surrendering market share in the world's top importing region. Saudi Energy Minister Khalid al-Falih said that OPEC and its allies would limit crude oil exports to 6.6 million barrels per day in August.
First US Oil Producer to cut production: Anadarko Petroleum Corp said on Monday that it would cut it's 2017 capital budget by $300 million because of the depressed oil prices. Anadarko and the rest of the US shale oil industry have been debating on how to conserve cash and maintain growth as oil prices have steadily slumped since January of this year.
Consumer Confidence: The Consumer Confidence report has been steadily climbing and not looking back. For the first time in nearly twenty-years, the index has posted seven straight readings over 110 including June's 118.9. The Econoday consensus for July is near that at 117 - a positive indication for the labor market.
Market Opinion: The energy complex is trading higher this morning after news of Saudi Arabia's Energy Minister stated that August exports would be capped at 6.6 mmbpd. Supporting this is the notion that growth in the US rig count is showing signs of plateauing. Look for a bullish tone to continue as we head into mid-week.
Monday, July 24, 2017
Possible Sanctions for Venezuela: According to a senior White House official and advisor, the United States is considering to impose financial sanctions on Venezuela that would essentially stop dollar payments for the country's oil. If sanctions are put in place, the move could severely restrict the OPEC nation's crude exports.
Russian Oil Output: Russian crude oil sales to China have risen twenty-seven percent year over year to 1.27 million barrels per day; making Russia, China's biggest crude oil supplier for a fourth straight month. Meanwhile, shipments from Saudi Arabia have fallen almost sixteen percent year over year, which is less than 1 million barrels per day.
Existing Home Sales: The June sales report is expected to be released today at 10am ET. Last month existing home sales saw a rebound, however, pending sales fell 0.8%. Forecasters are expecting June to slip to a 5.580 million rate vs. May's 5.620 million which would justify the soft spring selling season.
Market Opinion: Last week oil prices slipped as several OPEC and non-OPEC ministers met to discuss a pact to curb oil output however the likelihood of a deeper production cut is touh for most to follow through on. Today the complex is starting out mixed. Look for economic reports to be released today to help push the market.
Friday, July 21, 2017
Saudi Arabia: Saudi Arabia is once again making headlines this morning as the country is rumored to cut oil shipments to the United States in continued hopes of supporting oil prices. Imports from Saudi Arabia averaged around 810,000 barrels per day (bpd) over the last four weeks, the lowest rate since January 2015. The week ending July 14th saw an average of 524,000 bpd, the lowest daily volume in over seven years.
OPEC Compliance: Petro-Logistics, the company which tracks OPEC supply forecasts, said OPEC crude production for the month of July would increase by 145,000 bpd. Increased supply from Saudi Arabia, the United Arab Emirates and Nigeria are greatly helping the increase. The first bullet point talks of Saudi Arabia cutting oil shipments to the US, that doesn't affect their overall output as the country is importing additional barrels to other countries in replacement of the US.
Global Production: Several OPEC and non-OPEC members are meeting in Russia this weekend to address rising production from Nigeria and Libya. The plan is for attendees to discuss steps to continue the implementation of production cuts.
Market Opinion: Oil is showing early losses across the board, likely the result of the news that OPEC crude production for the month of July is on pace to grow versus follow the plan of cuts based on the supply agreement. I wouldn't be surprised to see the bearish feel continue throughout the day heading into the weekend.
Thursday, July 20, 2017
Russia: A Reuters report is stating that Russia is ready to continue working with OPEC to help rebalance oil markets. The story quotes a Russian energy source who said "Moscow welcomed a flexible approach by OPEC's leader Saudi Arabia to accomodate rising output in Nigeria and Libya."
Libya: Libya is continuing to try and push above and beyond the 1 million barrel per day (bpd) mark as the National Oil Corporation said its new goal is 1.25 million bpd by the end of the year and 1.5 million bpd by the end of 2018. The rise in production in Libya has helped keep a bearish tone on the energy markets prior to the last week. This goal will still be a challenge for Libya as long shutdowns, lack of maintenance and investments are issues that the country needs to deal with on an on-going basis.
Saudi Arabia: Reports state that Saudi Arabia has been actively reducing its domestic stocks of crude oil. The country's domestic crude stocks dropped in 16 of the 19 months between November 2015 and May 2017 according to government data. Domestic stocks ended the month of May at 259 million barrels, the lowest level since January 2012 and 30 million barrels less than last May.
Market Opinion: The energy complex is once again seeing gains in the early going, likely riding the coattails from yesterday's bullish DOE report. I expect the market to continue being strong unless traders start focusing on excess supply again. However, based on the latest inventory reports, that excess supply is starting to dwindle.
Wednesday, July 19, 2017
Saudi Arabia: A Saudi source states that the country is committed to help draw down global inventories as output in Nigeria and Libya continues to increase and demand attention. The country is supposedly considering cutting its exports by up to one million barrels per day.
Market Balance: Kuwait's oil minister, Essam al-Marzouq is predicting that the oil surplus will be balanced by the end of March. He also states that OPEC does not need to take further action in making additional cuts.
US Gasoline: The US gasoline market is continuing to strengthen this week as demand, inventory draws and refinery issues on the East Coast add bullish pressure to the market. Keep an eye on this morning's DOE report to see if the momentum continues as analysts are predicting another draw.
Inventory Reports: Yesterday's API reports showed a crude build of 1.63 million barrels. Heating Oil and RBOB had draws of 2.9 and 5.5 million barrels respectively. This morning's DOE report is calling for a crude draw of 3.2 million barrels, a heating oil build of 1.3 million barrels and an RBOB draw of 700,000 bbl. Refinery utilization is seen down -0.4%.
Market Opinion: Markets are up across the board this morning as the industry awaits the DOE report. The bearish tone has subsided somewhat but by no means are the bulls back in charge.
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