US EIA oil forecasts sees lower US supply this year

The latest forecasts from the EIA

  • Sees 2021 US output falling to by 200K bpd this year vs -160K bpd in prior forecast (to 11.08 mbpd)
  • Sees 2022 output rising 640K vs 650K bpd prior
  • Sees 2021 demand up 1.55 mbpd vs 1.58 mbpd prior
  • Sees 2022 demand rising 890K bpd vs prior forecast of 860K bpd prior
These are minor changes and forecasting oil supply and demand is very difficult (as the EIA’s record proves), especially coming out of a pandemic. I focus on the direction of changes and overall the signal is that supply is disappointing.

US EIA cuts forecast for 2021 world oil demand growth by 370K bpd

EIA out with demand and supply forecasts

  • US EIA cuts forecast for 2021 world oil demand growth by 370K bpd. Now sees 4.96M bpd YoY increase
  • Raises forecast for 2022 world oil demand growth by 10K bpd.  Now sees 3.6 million bpd YoY increase
  • Leaves 2021 world oil demand growth unchanged at 5.33M bpd YoY increase
  • Leaves 2022 world oil demand growth unchanged at 3.62M bpd year on year increase
In the US:
  • US crude output to fall 200K bpd to 11.08M bpd in 2021 (vs fall of 160K bpd forecast last month)
  • US petroleum demand to rise 890K bpd to 20.63 million BPD in 2022 (vs rise of 860K bpd previously forecast)
  • US petroleum demand to rise 1.55M bpd to 15.74M bpd in 2021 (vs rise of 1.58M bpd previously forecast)
  • US crude output to rise 640K bpd to 1.72M bpd in 2022 (versus rise of 650K bpd forecast last month)
The price of WTI crude oil futures are trading up around $0.95 or 1.36% at $69.30.

European indices end the session with declines across the board

German DAX, -1.4%

The major European indices are ending the session with the client across the board.

The provisional closes are showing:
  • German Dax -1.4%
  • France’s CAC, -0.8%
  • UK’s FTSE 100, -0.7%
  • Spain’s Ibex, -0.44%
  • Italy’s FTSE MIB, -0.6%
In other markets as European/London traders look to exit:
  • Spot gold the is trading down $-2.46 or -0.14% at $1791.54.
  • Spot silver is down $0.30 or -1.25% at $23.99.
  • WTI crude oil futures are up $0.88 or 1.3% $69.23
  • The price of bitcoin is down $732 or -1.5% of $46,163

Dollar keeps firmer on softer risk tones in the market

EUR/USD falls to a fresh one-week low

EUR/USD D1 08-09

The market is posturing more defensively in European trading and that is keeping the dollar and yen more bid so far on the session, with commodity currencies leading the way lower.
EUR/USD has dipped to a fresh one-week low, falling to 1.1826 with sellers now seizing near-term control on a break below its 200-hour moving average (blue line).


More from BlackRock – watch November for a Fed taper announcement

Adding a little more from BlackRock on central banks, this time the Federal Reserve.

(BlackRock is the world’s largest asset manager)
  • The Federal Reserve has made the start of asset purchase tapering conditional on having achieved “substantial further progress” on its inflation and employment goals. With Chair Jerome Powell acknowledging that this condition has been met for inflation, the last hurdle is employment. 
  • August payroll data released last Friday showed a 235K gain. Although far below expectations, seasonality could be at play and a revision upwards is possible. In any case, the increase is a step toward making up two-thirds of job losses outstanding in December 2020 – the level some FOMC participants have indicated could be sufficient to represent substantial further progress in employment. See the chart. 
  • Strong readings in September and October could put the Fed in a position to make an announcement on tapering in November – not impossible given the end of the unemployment benefits top-up next month, in our view. The Fed has emphasized that tapering is not a direct signal about a lift-off in policy rates, which we still don’t expect before 2023.
Adding a little more from BlackRock on central banks, this time the Federal Reserve. 

Federal Reserve Beige Book will be published today, 8 September 2021

Beige Book is the commonly used name for the Summary of Commentary on Current Economic Conditions by Federal Reserve District

  • its published eight times per year
Description from the Fed:
  • Each Federal Reserve Bank gathers anecdotal information on current economic conditions in its District through reports from Bank and Branch directors and interviews with key business contacts, economists, market experts, and other sources. 
  • The Beige Book summarizes this information by District and sector. 
  • An overall summary of the twelve district reports is prepared by a designated Federal Reserve Bank on a rotating basis.
Its due at 1800 GMT.
Also coming up today from the Fed:
  • Federal Reserve Bank of New York President John Williams will speak on the economic outlook and monetary policy … 1710 GMT
  • Fed Dallas President Robert Kaplan will participate in Discussion of Economic Developments and Implications for Monetary Policy … 2200 GMT
  • Fed Chicago President Charles Evans will give welcome remarks before a virtual “Exploring Career Pathways in Economic and Related Fields” event

Around 9m jobless in the US lost unemployment benefits on Monday

Market Watch with some info on the expiry of benefits for 8.9m in the US.

Two critical programs expired on Monday. 
  • One provided jobless aid to self-employed and gig workers
  • another provided benefits to those who have been unemployed more than six months
  • Further, the Biden administration’s $300 weekly supplemental unemployment benefit also ran out on Monday
The impact of these ahead will likely be at least a loss of some spending that would otherwise be present. Something to be aware of ahead.
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