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Goldman Sachs Sees Oil Prices Rising On Record Demand

Oil prices are set to rise to $86 per barrel at year-end, from $80 now, as record-high oil demand and lowered supply will lead to a large market deficit.

“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,” Daan Struyven, head of oil research at Goldman Sachs,

While demand is set for a record high this summer, supply is shrinking. The production and export cuts from OPEC+ and the slowdown in U.S. oil production growth will also play a part in large deficits in the third quarter this year.

According to Goldman’s Struyven, “We expect U.S. crude supply growth to slow down pretty significantly to a sequential pace of just 200 barrels per day from here.”

The total rig U.S. count fell to 669 last week, according to Baker Hughes data on Friday. So far this year, Baker Hughes has estimated a loss of more than 100 active drilling rigs. Last week’s count is also 406 fewer rigs than the rig count at the beginning of 2019, prior to the pandemic. Also last week, oilfield services giants Halliburton and Baker Hughes both signaled softer demand for drilling on the North American market. At the same time, there is already evidence of lower supply from OPEC+.

Russian crude oil exports have shown signs of decline for a second consecutive week and are estimated to have sunk to a six-month low in the four weeks to July 16.

Russia is preparing to cut 500,000 barrels per day (bpd) off its oil exports in August, and shipping plans so far suggest that Russia could deliver on at least part of its pledge to reduce oil exports next month. Saudi Arabia’s crude oil exports have also started to decline, to below 7 million bpd in May, for the first time in many months. Crude shipments out of the world’s top exporter could further decline as Saudi Arabia is now cutting its production by 1 million bpd in July and August.

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China and India’s Oil Demand Is Soaring…. U.S. oil demand will rise to 12.5 million barrels per day this year

  • Oil prices are set to rise in the second half of the year, as supply struggles to meet demand, according to an International Energy Forum official.
  • Joseph McMonigle, secretary general of the International Energy Forum, attributes the push in oil prices to an increasing demand from China and India – two of the biggest oil consumers right after the U.S.

Oil prices are set to rise in the second half of the year as supply struggles to meet demand, according to the Secretary General of the International Energy Forum.

Oil demand bounced back to pre-Covid levels quickly, “but supply is having a tougher time in catching up,” said Joseph McMonigle, secretary general of the International Energy Forum, adding that the only factor moderating prices right now is the fear of a looming recession.

“So, for the second half of this year, we’re going to have serious problems with supply keeping up, and as a result, you’re going to see prices respond to that,” McMonigle told CNBC on the sidelines of a meeting of energy ministers from the group of the 20 leading industrial economies (G20) in Goa, India, on Saturday.  McMonigle attributes the push in oil prices to increasing demand from China — the world’s largest importer of crude oil — and India.  “India and China combined will make up 2 million barrels a day of demand pick-up in the second half of this year,” the Secretary General said. China and India oil demand to rise by 2 million barrels a day in H2 2023: IEF

Asked if oil prices could once again spike to $100 a barrel, he noted that prices are already at $80 per barrel and could potentially go higher from here.  “We’re going to see much more steep decreases in inventory, which will be a signal to the market that demand is definitely picking up. So you’re going to see prices respond to that,” McMonigle said. However, McMonigle is confident that the Organization of the Petroleum Exporting Countries and its allies — collectively known as OPEC+ — will take action and increase supply, if the world eventually succumbs to a “big supply-demand imbalance.” “They’re being very careful on demand. They want to see evidence that demand is picking up, and will be responsive to changes in the market.”   Brent crude futures with September expiry last settled at $81.07 per barrel on the Friday close, while West Texas Intermediate crude with September delivery ended the trading day at $76.83.

U.S. oil demand will rise to 12.5 million barrels per day this year, U.S. energy secretary says.

BlackMask Pod Cast;

Ships loaded with oil being held off the market
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Oil prices gain 1% on supply concerns and US deploys more forces in Middle East over Iran’s actions

China’s pledge to boost its economy has improved sentiment in oil markets while fundamentals look increasingly bullish. The prices of oil futures grew on Friday as supply woes seemingly continued to dominate the crude market sentiment. Additional voluntary oil production cuts previously announced by Saudi Arabia and Russia seem to have remained in focus. In addition, this week’s report by the United States Energy Information Administration showed that the crude oil inventories in the country declined by 700,000 barrels. West Texas Intermediate (WTI) for settlements in September rose 1.02%, going for $76.42 per barrel at 2:58 am ET. Brent for the same month’s deliveries increased 0.95% to $80.43 per barrel at 3:00 am ET.

US deploys more forces in Middle East over Iran’s actions

The United States Central Command (CENTCOM) announced it decided to deploy additional forces in the Middle East in response to Iran’s recent attempts to seize commercial ships in the region. The US stated it will deploy an Amphibious Readiness Group/Marine Expeditionary Unit (ARG/MEU) into the CENTCOM area of responsibility. “These additional forces prove unique capabilities, which alongside our partners nations in the region, further safeguard the free flow of international commerce and uphold the rules based international order, and deter Iranian destabilizing activities in the region,” CENTCOM Commander Michael Erik Kurilla said. The CENTCOM noted that Tehran either seized or tried to seize almost 20 internationally flagged ships over the past two years. According to earlier US statements, the most recent seizures or attempts to seize foreign ships came earlier this month.

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Tesla Stock Crashes

Share prices in Tesla sank nearly 10% on Thursday afternoon, even after the company reported earnings that beat market expectations. The reason for the crash? Because Tesla didn’t beat analyst expectations for the right reasons, according to the Wall Street Journal. Instead of beating expectations due to better-than-expected cost reductions, Tesla’s beat was due to something far more intangible. T esla’s “other” income was largely behind the electric vehicle manufacturer’s beat, and at a non-operating level to boot. Share prices didn’t sink immediately after the figures were released. Instead, they began their sharp dropoff shortly after the company’s earnings call—an earnings call where CEO Elon Musk failed to reiterate his previously stated goal of Tesla producing 2 million vehicles this year. Disappointingly for Tesla’s investors, Musk cited the company’s official target of 1.8 million cars. Musk also didn’t sugarcoat the possibility that demand for EVs could weaken, resulting in another round of price decreases and the potential for missing its targeted H2 revenues. Also missing from the earnings call was a bold Musk singing the praises of its imminent AI-inspired self-driving tech. Tesla stock is still up from $108ish per share at the beginning of the year into the $262 range today, but today’s loss, even on stellar earnings, could be proof that shareholders have propped Tesla’s stock up on lofty expectations rather than actual performance.  Tesla’s share price is now even with where it was heading into July. It is, however, $8 per share lower than this time last year. Tesla announced earlier this month that it was engaged in discussions with India over constructing an EV factor there with a capacity to produce half a million electric vehicles per year. The stock price rose nearly $20 per share since that announcement before falling on Thursday. NN: Musk wants you to believe you are investing in a technology company…. not a car company. Truth is all car companies are technology companies. And all are working on self driving cars which are years away if not a decade or more. Remember we still got to get through the kill a lot of people perfecting the technology stage. Tesla is a key member of the magnificent 7 bubble blowing stocks. And like the other they all have not delivered the profits to justify the bubble price.

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Nasdaq plummets after putting in a double top….. Tesla tumbles proving you can sell more cars if your willing to lose money!

The tech-heavy Nasdaq fell on Thursday, as Tesla and Netflix results underwhelmed investors, while a strong annual forecast by Johnson & Johnson set the blue-chip Dow on course for its ninth day of gains. Tesla’sTSLA.O shares fell nearly 7% after the electric-car maker on Wednesday reported a drop in its second-quarter gross margins to a four-year low and CEO Elon Musk hinted at more price cuts. “The price cuts have opened up the proverbial can of worms,” said Michael Matousek, head trader at U.S. Global Investors.

“You’re going to see more manufacturers become competitive with their pricing because these (EV) vehicles were very high margin before and now they’ve got room to cut.”

Other big names in the EV space such as General Motors GM.N and Ford Motor F.N slid over 1% each. Meanwhile, NetflixNFLX.O fell 9.4%, on track for its worst percentage drop in nearly 15 months, after the streaming video company’s quarterly revenue fell short of estimates, while analysts said its new money-making ventures will take time to bring in returns. An annual profit forecast raise by Johnson & Johnson JNJ.N pushed up its shares 6%, lifting the Dow. The Dow.DJI is on course for its ninth-straight day of gains, its longest winning streak in almost six years. “The Dow was simply neglected in this recent growth rally and now people are redeploying capital in some of the more traditional non growth names,” said David Russell, vice president of market intelligence at TradeStation. The tech-heavy Nasdaq .IXIC has advanced 35.5% so far this year, supported by a scorching rally in megacap growth and technology stocks on optimism over artificial intelligence, a resilient U.S. economy and hopes that the Federal Reserve was nearing the end of its aggressive rate-hike cycle. At 11:28 a.m. ET, the Dow Jones Industrial Average .DJI was up 263.64 points, or 0.75%, at 35,324.85, the S&P 500 .SPX was down 14.31 points, or 0.31%, at 4,551.41, and the Nasdaq Composite .IXIC was down 172.14 points, or 1.20%, at 14,185.88. United Airlines UAL.O advanced 3.9% after lifting its full-year profit outlook and posted the highest ever quarterly earnings on booming demand for international travel. U.S.-listed shares of Taiwanese chipmaker TSMCTSM.N fell 4.5% after warning of a 10% drop in 2023 sales. Overall earnings across industries are expected to decline 8.2% for the second quarter, according to Refinitiv data on Wednesday. Meanwhile, data showed the number of Americans filing new claims for unemployment benefits unexpectedly fell last week, pointing to persistent strength in the labor market. NN: Their is a good chance the top in the NASDAQ100 is already be in.

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China’s Oil Imports Hit Record Highs

China is importing oil at near-record levels while its domestic product has also increased. China’s oil imports in June jumped 45.3 percent on the year to the second-highest monthly figure on record, with refiners building up inventories despite weak domestic demand. Oil imports in June totaled 12.67 million barrels per day–a sharp increase from a year ago when the country was still under Covid-19 lockdowns. The large increase in oil imports has come after Beijing lifted curbs imposed on independent refiners aka teapots. China has also increased its natural gas imports, with imports of liquefied natural gas (LNG) hitting a 5-month high in June, although weak demand especially in Europe has capped prices. Last month, China imported 5.96 million metric tons of LNG, 28% higher than the 4.64 million the country purchased a year ago and also higher than 5.54 million metric tons imported in May. China has ramped up crude output, and is currently pumping 4.3 million barrels a day making it the world’s fifth largest producer. NN: Although you could not tell it from the AI spin the Chinese economy is zooming back to life.

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Saudi Arabia’s Crude Oil Exports 7 Million Bpd In May

  • Saudi Arabia’s crude oil exports fell below 7 million barrels per day in May, falling by 388,000 barrels per day from a month earlier.
  • Saudi Arabia’s production fell by 502,000 barrels per day in the same month, a cut in line with its OPEC+ pledge.
  • Saudi Arabia also pledged to cut an extra 1 million barrels per day in July and to extend that cut into August.

In May, Saudi Arabia’s oil exports plunged below 7 million barrels per day (bpd) for the first time this year as the world’s biggest crude exporter and several other large OPEC+ producers began a collective cut of 1.6 million bpd in May. Saudi crude exports declined by 388,000 bpd from April to 6.93 million bpd in May, data from the Joint Organizations Data Initiative (JODI) showed on Monday. In April, Saudi Arabia’s crude exports slumped by 207,000 bpd from March, to 7.32 million bpd – a five-month low at the time, according to JODI, which compiles self-reported data from many countries. Saudi Arabia’s crude oil production fell by 502,000 bpd, to 9.96 million bpd in May, according to the data reported today by the International Energy Forum (IEF). The decline in May was in line with the Saudi pledge to reduce production by 500,000 bpd as part of the OPEC+ cut, which also includes cuts from Russia, the United Arab Emirates (UAE), Iraq, and several other OPEC+ producers.

In early April, the biggest OPEC producers in the Middle East and several other members of the OPEC+ pact announced a total of 1.6 million bpd of fresh production cuts between May and December 2023.

In those OPEC+ cuts, Saudi Arabia said it would reduce its crude oil production by 500,000 bpd and said that the move was “a precautionary measure aimed at supporting the stability of the oil market.”

In a bid to push oil prices higher, or “stabilize the market” as Saudi Arabia and OPEC put it, the Kingdom also announced last month a unilateral cut of 1 million bpd to its production for July, while the OPEC+ producers who had pledged cuts between May and December extended those cuts into 2024. Earlier this month, Saudi Arabia said it would extend its unilateral production cut into August, and will be producing around 9 million bpd in both July and August.

Saudi Arabia will lose its status as the largest OPEC+ oil producer to Russia as the Kingdom begins the unilateral cut, with output in July and August at the lowest level in two years. Excluding the deep cuts during the pandemic, a Saudi production of just around 9 million bpd would be the lowest level the world’s top crude oil exporter has pumped since 2011. BlackMask Pod Cast:

Reality is Russia, Saudis and OPEC are cutting production

In early April, the biggest OPEC producers in the Middle East and several other members of the OPEC+ pact announced a total of 1.6 million bpd of fresh production cuts between May and December 2023.  

In those OPEC+ cuts, Saudi Arabia said it would reduce its crude oil production by 500,000 bpd and said that the move was “a precautionary measure aimed at supporting the stability of the oil market.”

In a bid to push oil prices higher, or “stabilize the market” as Saudi Arabia and OPEC put it, the Kingdom also announced last month a unilateral cut of 1 million bpd to its production for July, while the OPEC+ producers who had pledged cuts between May and December extended those cuts into 2024. Earlier this month, Saudi Arabia said it would extend its unilateral production cut into August, and will be producing around 9 million bpd in both July and August.

Saudi Arabia will lose its status as the largest OPEC+ oil producer to Russia as the Kingdom begins the unilateral cut, with output in July and August at the lowest level in two years. Excluding the deep cuts during the pandemic, a Saudi production of just around 9 million bpd would be the lowest level the world’s top crude oil exporter has pumped since 2011. BlackMask Pod Cast:

Reality is Russia, Saudis and OPEC are cutting production

 

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Chinese GDP climbs 6.3% in Q2……. China’s industrial production rises 4.4% in June……… Chinese retail sales up 3.1% in June

do not be so easily fooled

 

Shanghai March 2022 COVID:

And Shanghai today:

The gross domestic product (GDP) of China rose by 6.3% year on year in the second quarter of 2023, according to a preliminary report released by the country’s National Bureau of Statistics (NBS) on Monday. The Chinese economy grew by 0.8% quarter on quarter. The value of the primary industry grew 3.7% year on year, the secondary industry expanded 4.3% and the tertiary industry was up 6.4%. In the first half of 2023, the Chinese GDP reached 59,303.4 billion yuan, climbing 5.5% on an annual basis.

China’s industrial production rises 4.4% in June

Industrial production in China increased by 4.4% in June compared to the same month in 2022, according to a report by the National Bureau of Statistics on Monday. On a monthly basis, industrial output climbed 0.68%. The Manufacturing Purchasing Managers’ Index stood at 49%, and the Production and Operation Expectation Index was 53.4%.

Chinese retail sales up 3.1% in June

Retail trade in China was up by 3.1% in June on a yearly basis, the National Bureau of Statistics said in its latest release on Monday. The sales figure came in below estimates. The retail sales of merchandise rose 1.7% annually, while catering jumped 16.1%. In the first half of the year, retail sales increased by 8.2%. .BlackMask Pod Cast:

if it was any other economy china numbers would be regarded as hot

 

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Russia Is Preparing To Export Less Oil In August….. Russian gov’t proposes Urals tax discount reduction

Russia could deliver on at least part of its pledge to reduce oil exports next month as its western ports are planned to ship up to 200,000 barrels per day (bpd) lower crude volumes in August compared to July, Reuters reported exclusively on Friday, quoting sources with knowledge of the export plans. Russia said last week that it would cut its crude oil exports by 500,000 bpd in August in a bid to ensure a balanced market, and the reduction in exports would come from a further 500,000-bpd cut in oil production. This week, Russia’s energy authorities asked the top executives of local companies to plan for export cuts in August, according to Reuters’ sources. The western ports in Russia, Primorsk and Ust-Luga on the Baltic Sea and Novorossiisk on the Black Sea, are expected to ship 100,000 bpd-200,000 bpd lower volumes in August. The export programs for the Far Eastern ports in Russia, from which crude cargoes make much shorter trips to Asian customers China and India, are not available yet, according to Reuters. But the reduction in the export plans for the western ports in August suggests that Russia would make good on its pledge to reduce shipments, at least partially, as Moscow and Saudi Arabia announced cuts to exports and production, respectively, for August nearly simultaneously last week. Signs have emerged that Russian crude oil exports have already started to fall in recent weeks. Tanker-tracking data monitored by Bloomberg showed earlier this week that Russian crude oil exports by sea dropped by 205,000 bpd to 3.21 million bpd on a four-week average basis in the four weeks to July 9. The latest four-week average export volumes fell below the 3.38 million bpd in the four weeks to February 26, after holding up above that level for months.

Russian gov’t proposes Urals tax discount reduction

Deputy Finance Minister Alexei Sazanov said on Friday during a State Duma Committee on Budget and Taxes meeting that the government has proposed for the Urals oil tax discount to be reduced from $25 to $20 starting September 1, 2023.

It was previously reported that the price of Russia’s benchmark oil has exceeded the Group of Seven’s (G7) ceiling, implemented back in December 2022 in an effort to cut off Moscow’s sources of profit.

As pricing agency Argus Media will no longer be providing CIF (cost, insurance, freight) Urals oil quotes, used when calculating the MET (mineral extraction tax), the EPT (excess profit tax) and the export duty on oil, from January 1, 2024, Russia is planning to switch to its own national price index in order to calculate these taxes and duties, Sazanov stated.

 

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Oil Prices Extend Gains On Fundamentals Russia’s Crude Oil Exports Start To Show Signs Of Decline

  • Oil prices are set to post a third consecutive weekly gain, with Brent nearing $81 and WTI changing hands for $76.41.
  • Bullish sentiment is building in oil markets despite continued economic headwinds and the IEA reducing its oil demand growth forecast.
  • Supply disruptions in Libya, Saudi Arabia’s production cut, and signs of lower Russian oil exports all gave oil prices a boost this week.

Crude oil prices were set to book their third week of gains today as fundamentals begin to resurface as a factor for traders. In pre-noon trade in Asia Brent crude was trading at close to $81 per barrel and West Texas Intermediate was changing hands for $76.41 per barrel, not least because of production disruptions in Libya. Prices moved higher despite a new oil demand estimate from the International Energy Agency that said it expected demand to grow more weakly than previously estimated, because of slower economic growth. The agency continues to see a record-high global oil demand in 2023, at 102.1 million barrels per day, its closely-watched Oil Market Report showed on Thursday. However, the pace of growth in demand was lowered by 220,000 bpd from last month’s projection, the first downward revision to oil demand growth for this year from the IEA. “Persistent macroeconomic headwinds, apparent in a deepening manufacturing slump, have led us to revise our 2023 growth estimate lower for the first time this year,” the agency said. On the other hand, the U.S. reported lower inflation figures than expected, which stimulated expectations about greater oil demand that would be bullish for prices in a tight-supply environment, contributing to the oil benchmarks’ weekly performance. In addition, the first signs are emerging of lower Russian oil exports, contributing to the tighter supply environment perception. “Crude prices are getting a boost from expectations that the oil market will get very tight as Libya and Nigeria deal with disruptions, also while Russian crude exports finally decline,” Reuters quoted OANDA senior analyst Edward Moya as saying. Prices have “some room to run with the oil balance looking increasingly tight for the remainder of the year,” the head of commodities for the Commonwealth Bank of Australia, Vivek Puri, told Bloomberg.

Russia’s Crude Oil Exports Start To Show Signs Of Decline

After months of high crude oil exports by sea, Russian shipments have started to show the first signs of a decline as they dropped below the levels from February, the baseline for Russia’s oil production cut of 500,000 barrels per day (bpd) that Moscow says began in March.    Russian crude oil exports by sea dropped by 205,000 bpd to 3.21 million bpd on a four-week average basis in the four weeks to July 9, tanker-tracking data monitored by Bloomberg showed on Tuesday. The latest four-week average export volumes fell below the 3.38 million bpd in the four weeks to February 26, after holding up above that level for months, according to the data reported by Bloomberg’s Julian Lee The main reason for the lower seaborne exports was significantly reduced shipments from Russia’s western ports, the data showed. In the week to July 9, seaborne crude exports out of Russia dipped to 2.86 million bpd, which was 1 million bpd lower than in the previous week, and with no signs of maintenance at ports that had dragged shipments down two weeks ago. Most of the weekly decline in shipments – 80% — was due to lower volumes leaving Russia’s western ports, which used to ship crude to Europe before the embargo. The observed decline in Russian crude oil exports on a four-week average basis comes just as Russia said last week that it would cut its crude oil exports by 500,000 bpd in August in a bid to ensure a balanced market.