IEA estimates Q1 oil demand to fall by 435k bpd year-on-year
- Q2 pglobal oil demand set to grow by 1.2 mil bpd
- Assuming that economic activity returns progressively to normal
- Cuts 2020 oil demand growth forecast by 365k bpd to 825k bpd
Department of Energy weekly inventory data
- Crude oil 7.459M vs 3.2M estimate. The private data came in stronger at 6.0M last night
- Cushing OK crude inventory 1.668K versus 1.068K last week
- gasoline inventories -0.095M vs 0.650M estimate. Private data came in at 1.1M
- distillates inventory -2.013M vs -0.75M estimate. Private data came in at -2.3M.
- Refinery utilization 0.6% versus -0.4% estimate
- crude oil implied demand 18912 versus 19036 last week
- gasoline implied demand 9343.6 versus 9918.9 last week
- distillates implied demand 5226.6 versus 5386.0 last week
OPEC releases its latest report on the oil market
- 2020 oil demand growth outlook cut by 230k bpd to 0.99 mil bpd
- Coronavirus outbreak adds to uncertainties for oil market this year
- The situation needs continuous monitoring
- To face oil surplus of 570k bpd in Q2
Understanding the factors influencing oil
Yesterday, I was speaking on CNBC Arabia about the factors influencing oil at the moment. Oil has been on a steady fall recently on demand concerns, but there are a number of factors influencing oil that it is good to be aware of. Here are five of the largest factors, so that you can get a handle on oil in a hurry.
- The first issue with oil is that the market is, or rather, can be easily oversupplied. OPEC+ have helped keep oil markets price supported through 2019 by agreeing to production cuts
- OPEC+ is waiting on Russia to see if they agree to the proposed 600K production cuts. Russia needs US crude to be at around $40 to balance their books, so they are not overly alarmed at current US crude prices around $50. However, Saudi need oil closer to the $80 mark, so they are incentivised to cut production. In fact production levels for January have been at historic low levels from OPEC suppliers
- Libya. The shutdown of ports in the East of Libya have really hit supply. Linya is producing around 180K barrels per day vs a normal production level of 1.2 million barrels per day. So, watch out. The Libyan crisis is currently supporting oil prices, so if the ports suddenly open then oil will fall sharply as they factor in the large inflows.
- Coronavirus demand issues. The longer and worse the coronavirus outbreak gets, the worse this is for oil prices. China is the world’s largest importer of oil at around 11 million barrels per day. The analysis that I have been reading puts China oil demand falling between 1-3 million barrels per day. So, that could be around a 20% fall in Chinese oil demand, possibly slightly more.
- The IEA and OPEC oil reports are both out this week. It will be interesting to see how they project oil demand being impacted by the coronavirus, so watch out for some potential oil wobbles as those headlines come out.
Ok folks, check the headlines as they come out, so that you can weigh them up against these factors. Trading oil is really like a puzzle at the moment, so just make sure you know how each piece is lining up before making your moves.
Weekly crude oil inventories for the week ending January 31, 2020:
- Prior was +3548K
- Gasoline -91K vs +1800K
- Distillates -1512K vs -200K exp
- Refinery utilization +0.2% vs +0.15% exp
- Production 12.9 mbpd vs 13.0 mbpd prior
- Crude +4180K
- Cushing +960K
- Gasoline +1960K
- Distillates -1780K
Iraq lays out the game plan
Oil pares losses