Crude prices for front-month deliveries slid on Tuesday after worse-than-expected industrial production print in China seemingly raised concerns about the commodity’s demand in in one of the world’s biggest oil importers. Markets are unsure if current government intervention is enough to rejuvenate the country’s economy. The middle of August usually sees the lowest level of crude oil trading, both on the physical and paper sides. This month is no exception, with very little in the way of strong pricing signals and the key benchmarks mostly trending sideways. China has provided some bearish sentiment, however, with a further slowdown in industrial output weighing on oil prices on Tuesday morning. The Chinese Central Bank’s cutting of corporate lending rates to 2.5% helped to offset some of that downward pressure, but both WTI and Brent had fallen by more than 1% on Tuesday morning. NN: Nothing has changed…. Best to go to the beach and ignore oil market stupidness. Do not not move aggressively. See BlackMask Market News dated today.
HOUSTON, Aug 14 (Reuters) – Oil and natural gas output from top U.S. shale-producing regions is set to fall in September for the second straight month to the lowest levels since May,
Energy Information Administration data showed on Monday. Shale oil output is expected to fall to 9.41 million barrels per day (bpd) in September, EIA data showed. It had touched 9.45 million bpd in July, its highest on record. Crude output in the Permian Basin in Texas and New Mexico, the biggest U.S. shale oil basin, is expected to fall by nearly 13,000 bpd to 5.8 million bpd, the lowest since February.
Crude oil production in the South Texas Eagle Ford region is due to fall by 11,000 bpd to 1.11 million bpd, the lowest since December. However, production in the Bakken region of North Dakota and Montana is due to rise 3,600 bpd to 1.21 million bpd, the highest since November 2020. Total natural gas output in the big shale basins will also fall for a second month in a row, by about 0.15 billion cubic feet per day (bcfd), to 98.3 bcfd in September, its lowest since May, the EIA projected. That compares with a monthly gas output record of 98.5 bcfd in July. In the biggest shale gas basin, Appalachia in Pennsylvania, Ohio and West Virginia, output will fall to 35.75 bcfd in September, the lowest since May, the EIA said. Gas output in the Permian will rise to record high of 23.67 bcfd in September, while that from the Haynesville in Texas, Louisiana and Arkansas will edge down to 16.3 bcfd. The EIA said it expects new Appalachia gas well production per rig to climb to 23.78 million cubic feet per day (mmcfd) in September, the highest since May. New gas well production per rig in Appalachia hit a record of 33.3 mmcfd in March 2021. BlackMask Pod Cast:
Five Americans who the U.S. says have been unjustly imprisoned in Iran for years may soon be freed under terms of a Biden administration deal worked out through Swiss intermediaries that would release several jailed Iranians and unfreeze Iranian oil revenues held by South Korea. The five, of which only three have been identified, are now under house arrest in a hotel in Tehran, but U.S. officials say the deal is not yet finalized. “My belief is that this is the beginning of the end of their nightmare,” said Secretary of State Antony Blinken. “It’s a positive step that they were released from prison and sent to home detention. But this is just the beginning of a process.” The office of Israeli Prime Minister Benjamin Netanyahu issued a statement on Saturday criticizing the deal between the United States and Iran made earlier this week. Iran agreed to release five imprisoned US nationals, while the US will unfreeze $6 billion in Iranian funds held in South Korea. Netanyahu’s office said the agreement “does not end Iran’s nuclear program and will only help to fund Iranian terror proxies.” It insisted that it could only support a deal that results in the dismantling of Iran’s nuclear program. BlackMask Pod Cast:
Oil supply from the OPEC+ group dipped in July by 1.2 million barrels per day (bpd) to 50.7 million bpd, the lowest level in nearly two years as Saudi Arabia began its unilateral production cut of 1 million bpd, the International Energy Agency (IEA) said on Friday. The alliance’s oil production was down by more than 2 million bpd from the start of the year. Over the same period, oil producers outside the OPEC+ group increased their combined production by 1.6 million bpd to 50.2 million bpd. For the rest of the year, the non-OPEC+ production gains are expected to be limited, the IEA said. OPEC alone saw its crude oil production from all its member states fall by 836,000 bpd to 27.31 million bpd in July, due to a 968,000 bpd decline in Saudi output as the Kingdom nearly delivered its promised 1-million-bpd cut last month. Saudi Arabia, leader of the cartel and the OPEC+ agreement, saw its crude oil production slump by 968,000 bpd from June to average 9.021 million bpd in July, per OPEC’s secondary sources in its latest monthly report. Due to Saudi Arabia’s cut, the Kingdom’s crude oil production has now fallen below the production of Russia, the key partner of OPEC in the OPEC+ alliance. Global oil supply plunged by 910,000 bpd to 100.9 million bpd in July, as the Saudi cut more than offset a 310,000 bpd increase in non-OPEC+ supply to 50.2 million bpd last month, the IEA’s estimates showed. This year, global oil output is set to rise by 1.5 million bpd to a record 101.5 million bpd, with the U.S. driving gains of 1.9 million bpd from non-OPEC+ producers. Next year, non-OPEC+ supply is also set to dominate world supply growth, and is expected to increase by 1.3 million bpd while OPEC+ could add just 160,000 bpd, the agency said.
Consumption reaches 103 million barrels a day for first time
Saudi-led supply cuts pose a ‘risk of driving prices higher’
Global oil demand has surged to a record amid robust consumption in China and elsewhere, threatening to push prices higher, the International Energy Agency said.
World fuel use averaged 103 million barrels a day for the first time in June and may soar even higher in August, the agency said in a report. As Saudi Arabia and its partners constrict supplies, oil markets are tightening significantly.
“Oil demand is scaling record highs, boosted by strong summer air travel, increased oil use in power generation and surging Chinese petrochemical activity,” the Paris-based IEA said. “Crude and products inventories have drawn sharply” and “balances are set to tighten further into the autumn.”
Oil this week touched a six-month high above $88 a barrel in London amid the post-pandemic resurgence in fuel use and supply restraint by the Saudi-led OPEC+ alliance. Brent futures eased back a little to trade below $87 on Friday. But the IEA data shows that, despite growing evidence of a warming planet shown by this summer’s heat waves and wildfires in the Northern Hemisphere, oil use is stronger than ever. China will account for 70% of this year’s demand growth, but surprisingly resilient developed nations added to the latest surge.
World markets are tightening, leaving oil inventories in developed nations about 115 million barrels below their five-year average, according to the report. Global stockpiles are set to deplete by a hefty 1.7 million barrels a day in the second half of the year, and preliminary data appears to confirm declines in July and August, the IEA said.
Major consuming nations have criticized the Saudis and their allies in OPEC+ for constricting supplies, warning that a renewed inflationary spike would squeeze consumers and endanger the global recovery. Nonetheless, Riyadh has said it could deepen current cutbacks if necessary.
Output from the Organization of Petroleum Exporting Countries and its partners plunged last month to near a two-year low as the Saudis implemented a unilateral cut of 1 million barrels a day. Russia, a fellow member of the coalition, is also reducing exports.
An average of 29.8 million barrels a day is needed from the cartel’s 13 members between October and December — far more than the 27.9 million a day they pumped in July, according to the IEA.
“If the bloc’s current targets are maintained, oil inventories could draw” significantly, the agency warned, “with a risk of driving prices still higher.” Click on link below to review actual report:
Annual inflation in the United States came in at 3.2% in July compared to 3% in June, according to the latest report by the Bureau of Labor Statistics on Thursday. The figure was slightly lower than expected. On a monthly basis, the Consumer Price Index (CPI) rose by 0.2%. The main contributor to the monthly CPI increase was shelter, accounting for over 90% of the price growth, followed by motor vehicle insurance. Meanwhile, the CPI without food and energy was up by 4.7% year-on-year and 0.2% compared to June. The energy index decreased 12.5% for the last 12 months, and the food index increased 4.9%. NN: Anyway you slice and dice and spin it reality is Inflation up. AND the zoom we had in energy prices will not hit the numbers until next months report.
An additional 2,000 troops will be sent to the Poland-Belarus border amid a recent influx of illegal immigrants, Polish Deputy Interior Minister Maciej Wasik told the Polish Press Agency (PAP) on Wednesday. The Polish border guard requested 1,000 troops earlier this week as reinforcements to the 2,000 soldiers already deployed at the border. Wasik said the troops are expected at the border within the next two weeks. He also said the situation puts a strain on Poland’s relations with Belarus. “If there were real border guards on the other side, instead of smuggling services, these crossings would not happen at all,” he told the PAP. NN: War spreads like a cancer. And this Ukraine was is metastasizing.
The British Exchequer underscored on Wednesday that the implemented price ceiling on Russian oil and oil products “successfully” managed to undermine Moscow’s ability to “fund” the “illegal war in Ukraine,” with the country’s income dropping by 20% between January and March 2023 compared to a year ago. “The oil price cap forms a critical part of the largest and most severe package of sanctions ever imposed on a major economy. We will continue to keep the pressure on Russia alongside our international partners,” Treasury Lords Minister Baroness Joanna Penn said. Namely, Russian oil export revenue decreased by $1.5 billion month-on-month in June to $11.8 billion, the Exchequer highlighted in the statement. According to findings from the Centre for Research on Energy and Clean Air, the price cap on crude oil is “costing Russia around €160 million per day.” NN: Where do they find these idiots. They are celebrating lighting their house on fire to kill the bed bugs. Oil has gone from $70 to $88 a barrel since Europe imposed price caps on Russian oil. That worked really well. I guess they showed Russia a thing or to. Almost a $20 a barrel price increase in 2 months. Wait to see what that does to the little inflation Ditti party they are throwing. Tell me MSSSSS Pen do you hear laughter?
The United States Energy Information Administration (EIA) stated in Short-Term Energy Outlook (STEO) published on Tuesday that it expects global crude prices to continue rising and international benchmark Brent to reach $86 per barrel in the second half of the year. The report noted oil prices are facing “upward pressure” due to “sustained global demand for petroleum products and Saudi Arabia’s extended voluntary production cuts.” The agency also noted it expects global oil production to increase by 1.4 million barrels per day (bpd) this year and added it sees non-OPEC output climbing by 2.1 million bpd, while OPEC production is expected to fall in 2023. Meanwhile, US crude production is seen reaching annual record levels of 12.8 million bpd in 2023 and 13.1 million bpd in 2024 as a result of “higher expected well-level productivity and higher crude oil prices.”
Crude Inventories To Sink To 8-Year Low This Year: Nuttall
Inventories of crude oil will reach an 8-year low by the end of this year, Eric Nuttal, partner and Senior Portfolio Manager at Ninepoint Partners, told BNN Bloomberg TV on Tuesday. While persistent fear of China’s stuttering crude oil demand and the boogeyman of high interest rates are periodically dragging down oil prices, the recent price rally in crude oil has been fairly substantial. “When you boil it all down, our measurement of the health of the oil market comes down to oil inventories—globally,” Nuttall explained. Using Kpler tracking data, “real time data as of this morning: global oil inventories are at an 8-month low. We expect between now and year end they will fall to an 8-year low due to strong demand still,” says Nuttal, who added that demand can be measured in real time. Nuttal also referenced last weeks’ biggest crude oil inventory draw in the history of the United States. “When we look between now and year end, there’s a strong fundamental support—we think at about $80 given where inventories are now—and we think we should strengthen as we go throughout the year.”
When speaking about recession fears, Nuttal pointed out that only twice in history has oil demand faltered—during Covid and during the Great Financial Crisis. All other recessions merely saw a slowdown in oil demand growth, not a dip in oil demand itself.
The IEA’s medium-term report released in June predicts that world oil demand is set to slow almost to a halt in the coming years on high prices and supply security issues push the world to fast-track their energy transition efforts. NN: It is settled business OPEC+, Russia and Saudi production cuts are shrinking oil inventories world wide. Now add to that record China demand and Sanction Limits on Russian Urals oil exports and you have a great big party.
Oil turned lower as bearish sentiment rippled through markets following a larger-than-expected drop in China’s trade data. West Texas Intermediate fell to under $80 a barrel. China’s trade plunged in July as slowing global demand clouded the outlook for exports, while its oil imports slipped to a six-month low. The dollar climbed and stocks fell as the trade figures fanned fresh concerns about the Chinese economy. Oil rallied to the highest level since April early in Monday’s trading, but pessimism around the global economy and higher interest rates have stalled that rally. Crude’s big three monthly reports — those from the International Energy Agency, OPEC, and the Energy Information Administration — will offer further updates on the health of the market over the rest of this week. “Trade data this morning makes for poor reading,” said John Evans, an analyst at brokerage PVM Oil Associates. “It still appears as if we are unable to escape the flux that China’s industrial complex finds itself in.” Investors will also be watching the US consumer price index for July on Thursday for clues on the path forward for monetary tightening. Aggressive interest-rate hikes have weighed on commodities.
China’s July Oil Imports Jump 17% Year-Over-Year
China imported an average of 10.29 million barrels per day of crude oil in July, a significant decrease from June but still 17% higher year-over-year, according to Reuters. This compared with a daily average of 8.79 million bpd in July 2022, the report noted, citing figures from the Chinese customs administration. Still, the July oil import figure was a decline on a monthly basis, after refiners imported a record 12.67 million barrels daily in June. The figure was a 45.3% increase on the year and came despite lukewarm demand in the country as refiners sought to build their inventories. The country is also building its strategic oil inventories with Russian crude. In June, according to Reuters calculations, state refiners added a record 2 million barrels daily to its strategic reserves, which Beijing does not officially report.
Based on these figures, it would be sensible to suggest that China is filling up its storage facilities both as insurance against undersupply and as a potential tool to control prices by releasing some of that oil, should the need arise.
“We expect pretty sizable deficits in the second half with deficits of almost 2 million barrels per day in the third quarter as demand reaches an all-time high,” the bank’s head of oil research, Daan Struyven, told CNBC last month.
China is widely seen as the single biggest driver for oil prices as one of the world’s largest consumers but also the largest importer of the commodity. Goldman Sachs recently said China had played the key role in oil’s latest rally that began in July thanks to its strong demand and to Beijing’s stimulus measures. Right now, the latest import figures served to keep prices stable rather than spur further gains, as they represented a monthly decline, sparking concern about the immediate outlook for oil demand, Reuters reported earlier today. BlackMask Pod Cast: