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US weekly EIA oil inventories -2732K vs -1500K expected

  
Analysis, Crude

US weekly energy inventory and production data:

  • Prior was +1580K
  • Gasoline +312K vs -200K exp
  • Distillates +2610K vs -300K exp
  • Cushing -2485K
  • Production unchanged at 12.3mbpd
API data released late yesterday:
  • Crude -3454K
  • Gasoline -403K
  • Cushing -2803K
  • Distillates +1806K
WTI was trading at $56.76 ahead of the data and was little changed on the headlines. The build in distillates is a bit of a surprise but it’s nothing to get excited about.

Saudia Arabia can’t support oil prices alone

  
Analysis, Crude

Via Bloomberg

Oil
This is a piece I came across on Bloomberg reflecting that at the start of the month 
 Saudi said that they were prepared to do, ‘whatever it takes’, to support prices. Perhaps Saudi is not quite as resolved as it turns out. The rationale of the article is as follows:
Saudi naturally spoke to the OPEC+ group earlier in the month to try to see what could be done to support oil prices. The progress is as follows:
Russia – E-mailed a statement from their energy ministry saying that ‘it was ‘utterly important to act responsibly’, by giving the market only as much oil as was needed. So, Russia then duly goes and oversupplies! Their output target is 11.19 million b/d which they only matched during the Druzhba pipepline crisis.
Via Bloomberg
Iraq: Tanker tracking data by bloomberg suggest that they are pumping the highest level in three months
West Africa : Robust flows
So, without much help, will Saudi alone shoulder the burden of reducing output? They have been keeping their production underneath the 10.3 million barrels a day pledged in December, but they have signalled an unwillingness to solely try and support oil.
Saudi Arabia
The obvious problem with production cuts is that there is always a financial incentive to break them. Saudi Arabia can’t be the only player keeping the cut levels. So, the article concludes by saying, ‘don’t wait for a big production cut from Saudi to rescue oil prices.’. Full Article here

US State dept: Effort to assist Iranian tanker could be viewed as support to terrorist organization

  
Analysis, Crude
#  #  #  #  #  #  #  #

Might be some oil impact from this:

A US State department official says any effort to assist Iranian tanker could be viewed as material support to a US-designated foreign terrorist organizationIn reference to
  • US has conveyed its strong position to the Greek government about Iranian tanker it says is transporting illicit oil to Syria

OPEC sees “somewhat bearish” outlook even as oil market tightens

  
Analysis, Crude

OPEC comments in its latest monthly report

OPEC
The cartel views the outlook for the global oil market to be “somewhat bearish” for the rest of the year amid slowing economic growth and ongoing global trade tensions. That comes despite their view that supply in the market will be tighter than previously thought.
In the report here, OPEC raised its assessment of consumption for this year and next by 50k barrels per day and also trimmed its projections for non-OPEC supplies by 40k barrels per day in 2019 and by 90k barrels per day in 2020.
With fears of the global economy starting to enter a period of more profound slowdown/weakness, it will no doubt take its toll on oil demand over the next year or so. In turn, that will put further downside pressure on prices in the bigger picture.
That will definitely raise some concern among OPEC members and create more incentive for markets to expect additional and bigger production cuts to keep prices supported.
The not-so positive outlook here has seen oil prices pare gains somewhat with WTI crude falling from $55.40 to $54.80 currently.

IEA says oil market outlook remains fragile

  
Analysis, Crude

IEA comments on the oil market

IEA oil
  • Notes that demand growth between January to May was just 520k bpd
  • That’s the slowest for the period since 2008
  • Outlook for global oil demand is fragile amid growing signs of an economic slowdown
  • Situation is becoming even more uncertain with a greater likelihood of a downward revision rather than an upward one
The agency trimmed its estimates for global oil demand growth this year by another 100k bpd to 1.1 mil bpd, with a 50k bpd cut to the 2020 estimate as well to just 1.3 mil bpd.
As global growth concerns continue to rise amid ongoing trade tensions, it’s not a surprise to see weakening demand in spite of Saudi Arabia trying to downplay the matter. That is going to pose a problem for oil prices moving forward considering that the global growth outlook remains bleak over the next year or so.

Saudi official says that recent concerns about oil demand growth are “overplayed”

  
Analysis, Crude

Reuters reports, citing a Saudi oil official on the matter

Oil
  • Recent concerns reflect poor macroeconomic environment
  • Oil market fundamentals are good
  • Especially on supply side due to strong commitment of OPEC+ with supply cuts
  • Says key OPEC+ countries are committed to do whatever it takes to keep oil market balanced next year
Of course you’d heard this type of comments by OPEC. For those who are unfamiliar, it’s typical of them to remark that “when prices go up, it’s due to fundamentals” and “when prices go down, it’s due to speculation”.
Oil is scaling back some of its earlier gains with WTI hovering around $52.00 currently after having been as high as $52.84 at the start of the session. The gains since overnight trading largely stems from Saudi Arabia saying that they will “consider all options” to halt the recent decline in oil prices.
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