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Summary of Weekly Petroleum Data for the week ending August 2, 2024 U.S. crude oil refinery inputs averaged 16.4 million barrels per day during the week ending August 2, 2024, which was 252 thousand barrels per day more than the previous week’s average. Refineries operated at 90.5% of their operable capacity last week. Gasoline production increased last week, averaging 10.0 million barrels per day. Distillate fuel production increased last week, averaging 5.0 million barrels per day. U.S. crude oil imports averaged 6.2 million barrels per day last week, decreased by 729 thousand barrels per day from the previous week. Over the past four weeks, crude oil imports averaged about 6.8 million barrels per day, 0.7% more than the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 630 thousand barrels per day, and distillate fuel imports averaged 115 thousand barrels per day. U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 3.7 million barrels from the previous week. At 429.3 million barrels, U.S. crude oil inventories are about 6% below the five year average for this time of year. Total motor gasoline inventories increased by 1.3 million barrels from last week and are about 2% below the five year average for this time of year. Finished gasoline inventories increased, while blending components inventories decreased last week. Distillate fuel inventories increased by 0.9 million barrels last week and are about 6% below the five year average for this time of year. Propane/propylene inventories increased by 0.5 million barrels from last week and are 13% above the five year average for this time of year. Total commercial petroleum inventories increased by 1.2 million barrels last week. Total products supplied over the last four-week period averaged 20.3 million barrels a day, down by 2.0% from the same period last year. Over the past four weeks, motor gasoline product supplied averaged 9.1 million barrels a day, up by 1.5% from the same period last year. Distillate fuel product supplied averaged 3.7 million barrels a day over the past four weeks, down by 2.2% from the same period last year. Jet fuel product supplied was down 1.2% compared with the same four-week period last year

U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 3.7 million barrels from the previous week. At 429.3 million barrels, U.S. crude oil inventories are about 6% below the five year average for this time of year. U.S. crude oil refinery inputs averaged 16.4 million barrels per day during the week ending August 2, 2024, which was 252 thousand barrels per day more than the previous week’s average. Refineries operated at 90.5% of their operable capacity last week. Gasoline production increased last week, averaging 10.0 million barrels per day. Distillate fuel production increased last week, averaging 5.0 million barrels per day. U.S. crude oil imports averaged 6.2 million barrels per day last week, decreased by 729 thousand barrels per day from the previous week. Over the past four weeks, crude oil imports averaged about 6.8 million barrels per day, 0.7% more than the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 630 thousand barrels per day, and distillate fuel imports averaged 115 thousand barrels per day.  Total motor gasoline
inventories increased by 1.3 million barrels from last week and are about 2% below the five year
average for this time of year. Finished gasoline inventories increased, while blending components inventories decreased last week. Distillate fuel inventories increased by 0.9 million barrels last week and are about 6% below the five year average for this time of year.
Propane/propylene inventories increased by 0.5 million barrels from last week and are 13% above the five year average for this time of year. Total commercial petroleum inventories increased by 1.2 million barrels last week.
Total products supplied over the last four-week period averaged 20.3 million barrels a day, down by 2.0% from the same period last year. Over the past four weeks, motor gasoline product supplied averaged 9.1 million barrels a day, up by 1.5% from the same period last year. Distillate
fuel product supplied averaged 3.7 million barrels a day over the past four weeks, down by 2.2% from the same period last year. Jet fuel product supplied was down 1.2% compared with the same four-week period last year

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Nasdaq 100’s rally over 400 pts on tech sell-of recoveryf

Major stock market indexes in the United States extended their gains during Thursday’s session as the reported decrease in initial jobless claims and the possibility that the country might avoid a recession pushed traders toward investing. Numerous technological companies trading on the Nasdaq 100, such as ARM Holdings, ON Semiconductor, KLA Corporation, and Microchip Technology Inc., thus soared by more than 5%. The rise in the Dow Jones Industrial Average neared 600 points as the index grew by 1.53% or 593 points at 11:28 am ET. The Nasdaq 100 increased by 2.38% or 424 points after hitting more than 430 moments earlier. The S&P 500 expanded by 1.90%.

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JPMorgan Says Three Quarters of Global Carry Trades Now Unwound

  • Returns have fallen around 10% since May, Says JPMorgan
  • Reiterates the clock is ticking for the G10 carry trade:

Three-quarters of the global carry trade has now been removed, with a recent selloff erasing this year’s gains, according to JPMorgan Chase & Co. Returns in Group-of-10, emerging market and global carry trade baskets tracked by the bank have fallen about 10% since May, quantitative strategists Antonin Delair, Meera Chandan and Kunj Padh wrote in a note to clients.

The moves have wiped out the year-to-date returns and significantly cut into profits accumulated since the end of 2022.

“The spot component of the global carry basket would suggest that 75% of carry trades have been removed,” the JPMorgan team wrote, reiterating that the “clock is ticking for the G10 carry.” The carry strategy – which involves borrowing at low rates to fund purchases in higher-yielding assets elsewhere — has been wobbling for months. Carry trades were pummeled over the past week as global market volatility jumped amid fears of rapid Federal Reserve rate cuts and after the Bank of Japan’s larger than expected rate hike. The recent selloff has been double the usual pace in a carry drawdown, with the strategists suggesting there may be small opportunity for a rebound in August as “the central bank calendar is light for this period and volatility already started to cool off.” However, the global carry trade strategy is “not offering an attractive risk-reward,” they emphasized. “The yield on the basket has plummeted since the highs of 2023 and is not a sufficient compensation for holding EM high betas through US elections and the risk of further repricing of low yielders if US yields fall.”

NN Audio File in BlaskMask Podcast:

Loses Are Humugus

 

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War Enters New Phase as Ukraine Launches Offensive in Russian Territory

A Ukrainian ground assault on Russian regions across the border continued on Wednesday for their second day, forcing Russia to evacuate residents from the Kursk region, sparking a backlash against President Vladimir Putin for failing to thwart the attacks.
According to The Moscow TImes, this latest campaign by Ukraine is “larger in scale and more prepared than previous efforts”. The English-language daily cited local officials as reporting at least five people had been killed in the attack so far, and scores of others injured.
Some three Ukrainian troops, accompanied by 11 tanks and nearly two dozen armored vehicles launched the attack on Kursk, according to The Moscow Times.
On Tuesday, Ukrainian forces attacked the border town of Sudzha, in the Kursk region, some 300 miles southwest of Moscow, Reuters cited the Russian Defense Ministry as saying, with Putin calling the move a “major provocation” and accusing Ukraine of indiscriminately targeting civilians.  On Telegram on Wednesday, Kursk Governor Alexei Smirnov confirmed that “over the past 24 hours, our region has been heroically resisting attacks by Ukrainian Nazis. All emergency services have been put on high alert”. While attacking both Ukraine and Russia have in the past resorted to targeting each others’ energy infrastructure, the war is now entering a new phase and expanding to the African front, with Moscow’s Wagner mercenaries using the continent in a flanking maneuver and Kyiv following. Both Mali and Niger have severed diplomatic ties with Kyiv, accusing it of supporting terrorist groups in the countries as a counterbalance to Wagner forces. Last week, Ukraine was under scrutiny for its alleged intelligence role in an attack conducted by Tuareg rebels in the north against Mali’s military government, during which dozens of Wagner mercenaries and Malian soldiers were reportedly killed . NN: f16’s equipped with Israeli modified missals is a game changer. 

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Gallant: Conflict with Lebanon may escalate into war……. Israel strikes Hamas, PIJ arms production facility

Israel’s Defense Minister Yoav Gallant ensured on Wednesday that his country is ready to expand its operations against Lebanon if necessary, and warned that the current conflict with Lebanon-based Hezbollah “could also deteriorate into a state of war.” “This is not theoretical, it is real,” he told Israeli soldiers. Gallant further said that Hezbollah Secretary General Hassan Nasrallah’s threats “may drag Lebanon into paying extremely heavy prices,” adding that the militant group “can’t even imagine what might happen.” The day before, Nasrallah stressed that Hezbollah’s retaliatory response to the assassination of the group’s senior commander, Fuad Shukr, committed by Israeli forces, has not yet started, adding that the militant organization intends to target new Israeli sites, “deeper into the country.”

Israel strikes Hamas, PIJ arms production facility

A weapons production facility allegedly owned by Hamas and Palestinian Islamic Jihad located within a designated humanitarian area in Deir al-Balah in central Gaza was demolished in an airstrike, according to the Israel Defense Forces (IDF) on Wednesday. Earlier, the military informed it targeted Hamas’ rocket launchers, which they claimed were placed near aid warehouses in southern Gaza. The strikes come following an evacuation order in Beit Hanoun in the northern Gaza Strip, showing how the Israeli army is targeting north, south, and central areas of Gaza, making it more and more difficult for civilians to find shelter. The latest Gaza death toll update revealed the number is getting closer to 40,000.

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Oil extends gains, WTI surges 2.45%

The prices of oil futures continued to move upward on Wednesday as supply concerns seemingly intensified. With the recent unravellings in the Middle East, the whole world turned its attention to Iran, awaiting its strike on Israel, after the latter killed Hamas’ top member, Ismail Haniyeh. Even though Tehran insisted it doesn’t seek further escalation, worries over the Gaza conflict turning into a regional war persisted. In addition, production disruptions in Lybia added to supply woes.

 

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Trump: Strategic Oil Reserves must be filled up ‘immediately’

Former United States President and Republican presidential nominee Donald Trump stressed on Wednesday that the country’s Strategic Oil Reserves have to be filled up “immediately.”

Crude oil traded 1% higher on Wednesday as uncertainty over steady supply persisted in light of a possible Middle East conflict. In addition, the Libyan state oil company announced yesterday the production at its Sharara oil field will be rolled back due to the ongoing unrest in the country.

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Oil Rebounds from Seven Month Lows

Oil bounced back from a seven-month low as equities led risk assets in a recovery from a global market selloff.  West Texas Intermediate edged higher to settle above $73 a barrel, its first daily gain after tumbling more than 6% over three straight losing sessions. As prices neared the lowest levels this year, traders received multiple warning signs that futures were oversold. Still, it was only when the S&P 500 recovered in New York trading hours that was crude able to recoup its losses.  Meanwhile, traders continued to weigh signs of potential physical market tightness. Those risks include the loss of some Libyan supplies and concerns that the conflict in the Middle East could hurt production from the region.  “Oil prices have fallen in the last few days in lockstep” with equities, with limited reaction to developments in the Middle East, Goldman Sachs Group Inc. analysts including Daan Struyven wrote in a note. They see Brent finding support at $75 a barrel due to the limited risk of a US recession and room for an increase in speculative positioning. Last week, oil notched its fourth straight weekly decline on signals of faltering demand in the US and China, with the Asian nation rolling out plans to spur domestic consumption over the weekend. On Tuesday a US government report flashed warning signs about consumption in China, citing a weak economy in the Asian country for sputtering oil demand growth.  Traders are bracing for a retaliatory attack on Israel by Iran and regional militias, though Tehran has underlined that it wants to avoid all-out war. Hezbollah and Israeli forces exchanged fire on Tuesday. For months, traders were concerned the conflict could spiral into a more devastating proxy war, embroiling the US and Iran and possibly hampering crude exports. Oil’s dive also may have been partly arrested by algorithmic traders approaching the peak of their bearish positioning, according to analysis firms.

  • WTI for September delivery AT 6:00 AM New York Time  were trading at $73.20  a barrel
  • Brent for October settlement was quoted at  $76.48 a barrel.
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Goldman Sachs Sees a $75 Floor for Brent Oil Prices

Goldman Sachs expects a $75 per barrel floor under Brent Crude prices that is unlikely to be breached due to the current macroeconomic fears of a U.S. recession. Oil prices slumped by 6% in the past few days, dragged down by weaker-than-expected jobs data in the U.S. on Friday, which sparked a massive selloff in equity markets globally and in risk assets, including crude oil. Early on Tuesday, Brent Crude prices were down by 0.43% on the day to $75.96 as of 8:37 a.m. EDT, following two consecutive daily declines on Friday and Monday. Recession fears triggered an exit and added to the perceived weak demand for Chinese oil to weigh on the petroleum futures.

However, Goldman Sachs says that the recession risk is still limited, demand in the West and India remains strong, and the speculative positioning of traders is very low. All these factors support the investment bank’s view that oil will find support in the coming weeks.

“While the increase in recession risk following the weak U.S. July employment report and the impact of volatile financial conditions on oil demand further skew the risks to our $75-90 range for Brent prices to the downside, especially in 2025, our base case remains that oil prices will find support in coming weeks,” Goldman Sachs analysts wrote in a note dated Monday. Goldman put out a $75-$90 range to its Brent forecast earlier this year. “Brent crude touched its USD 75 floor before bouncing back with focus on geopolitical developments and OPEC+ response to the latest drop,” Saxo Bank analysts wrote in a note early on Tuesday. According to ING commodities strategists Warren Patterson and Ewa Manthey, “Investors have been exiting commodities in recent weeks, highlighted in positioning data and this has continued in recent days.” “ICE data shows that aggregated open interest in ICE Brent has fallen by more than 8% since mid-June. This souring in speculative appetite comes despite oil fundamentals still looking supportive,” they wrote in a Tuesday note. NN: I could not be any clearer. I put out a very clear reco:  BUT THE SHIT OUT OF OIL

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Banks Sweeping Dead Property Loans Under the Persian Rug

 

Under the new system, in place at most large companies since 2020, lenders from day one are supposed to continuously estimate their credit losses over the life of a given instrument, be it a loan or bond. The threshold for recording losses is supposed to be much lower—when they are “expected,” rather than waiting until losses probably happened. This was supposed to lead to more aggressive, and more timely, loss recognition. The office-loan market is testing investors’ faith in the new expected-loss model. As with other commercial properties, loan payments on office buildings often are interest-only until maturity. When rates were ultralow, many lenders and borrowers went into these loans assuming they would be refinanced rather than paid off at the end. That would mean no defaults as long as they could keep rolling over the loans. The pandemic sent office values in many big cities tumbling as more people worked from home. Now, for many borrowers, refinancing isn’t an option because the buildings are worth less than the borrowers owe. That makes defaults inevitable. Until then, though, the owners still may be current on their payments. Hope springs eternal, until it doesn’t.

In a July 24 note, Pimco’s John Murray and François Trausch warned of a $1.5 trillion wall of maturities for commercial real-estate loans over the next two years. “Lenders and borrowers will be forced to ‘face the music,’” they wrote. If they are right, it would mean the expected-loss model hasn’t been working as billed. Lenders still have wide discretion to delay officially expecting red ink if they would prefer not to expect it.

At New York Community Bancorp NYCB , credit losses on commercial real-estate loans, including office loans, have surged in the past few quarters, raising questions about why management took so long to identify them. A bigger concern should be the losses at other lenders that aren’t yet visible to outsiders. Noted short seller Carson Block, in a report last December, predicted large credit losses would soon swamp  nonbank commercial real-estate lender. The company at the time called his report “self-interested and misleading” and said it was “well positioned to navigate this environment.” Then in July, it cut its dividend and posted its third consecutive quarterly net loss. Credit losses last quarter were so large that they exceeded the company’s net interest income.

Curiously, default rates have been higher for property loans backing widely held commercial-mortgage-backed securities than for the same types of loans on banks’ balance sheets. That underscores how traditional lenders have more flexibility to help borrowers work out their problems than do the vehicles that issue commercial-mortgage-backed securities, which can’t so easily “extend and pretend.” Banking regulators have said they are aware there is a problem, while also assuring the public that this won’t be another 2008. An interview that Federal Reserve Chair Jerome Powell gave to CBS’s “60 Minutes” in February is worth revisiting. Asked about banks’ office loans, he said, “There will be expected losses. It feels like a problem we’ll be working on for years. It’s a sizable problem.” The irony of that statement: If Powell was right about the losses then, under the expected-loss model, banks probably should have booked them already. NN: This will be the greatest real  estate wipe  out and banking failure of our time.