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US weekly oil inventories -1632K vs -2850K expected

  
Analysis, Crude
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Weekly US petroleum inventory data

  • Prior was -4512K
  • Gasoline -3322K vs -1000K expected
  • Distillates +152K vs -1200K expected
  • Refinery utilization -0.1% vs +0.3% expected
  • Production unchanged at 10.7 mbpd
API data late yesterday:
  • Crude -4264K
  • Gasoline +4991K
  • Distillates -964K
Crude rose about 20 cents on the headlines to $42.79 per barrel. The headline isn’t as bullish as anticipated but the gasoline drawdown was larger.
US weekly oil inventories
The OPEC JMMC meeting is also taking place right now with Russia’s Novak stressing the need for full compliance.

Reminder: OPEC+ JMMC meeting will take place later today

  
  Analysis
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The meeting is scheduled for 1400 GMT

But just take note that with all things OPEC+ related, there’s a likelihood it could be delayed for a few minutes or hours and what not. So, it will happen when it happens.

That said, the meeting today is likely just to reaffirm the bloc’s commitment to production cuts and to assess the compliance over the past two months.
The July compliance is slated to be at around 95% to 97% – down from 107% in June – but it shouldn’t be much of a problem all things considered, especially since oil prices are holding at more favourable levels (at least from the bloc’s perception).

Heads up: OPEC+ JMMC meeting scheduled to start at 1400 GMT on 19 August

  
  Analysis
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Bloomberg with the headline, citing OPEC on the matter

Just a heads up to the meeting later this week, in case we hear of how the compliance issue is going or any possible plans for future production cuts and what not.
The latest reports are suggesting that OPEC+ sees ~95% compliance to its production cuts in July and I reckon that is somewhat of a satisfactory figure, so there shouldn’t be too much complaints despite that being down from ~107% in June.

OPEC lowers global oil demand forecast

  
Analysis, Crude
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The latest forecasts in OPEC’s monthly report

The latest forecasts in OPEC's monthly report
OPEC now sees 2020 world oil demand down by 9.06 mbpd compared to a drop of 8.95 mbpd in the previous monthly report.
They say the second-half outlook points to the need for continued efforts to support a rebalancing in the market through OPEC+ adjustments.
With that, they cut their forecast for OPEC crude by 400K bpd this year and 500K bpd in 2021. Part of that is due to higher non-OPEC supply.
Crude is unmoved by the news and up 59-cents to $42.20/barrel on the day.
The main worry for oil is that OPEC starts to ramp up production again. Non-OPEC producers are filling in gaps from the huge cuts and that’s not going to fly forever.

Russia and Saudi Arabia support tapering oil cuts in August

  
  Analysis
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Bloomberg report

This doesn’t come as a shock but it’s going to be a very delicate balance in the oil market in the months ahead. OPEC+ wants to claim the market shares as demand comes back online but private producers are going to open the taps as well. We could very easily end up in a price war.

Heads up for oil traders – OPEC to release June report Tuesday

  
Analysis, Crude
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OPEC will release its monthly market report later on Teusday (I donlt don’t have the time sry).

  • will provide OPEC production numbers for June
  • which will show compliance levels so far (with the agreed cuts)
  • preliminary numbers showed compliance for the group was over 100%, aggregated,due to extra output curbs by from Saudi Arabia, the UAE and Kuwait

OPEC and its partners will consider increasing oil output at a meeting this week

  
Analysis, Crude
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Saudi Arabia and most others in the OPEC+ alliance support increasing output by around 2 million barrels a day say reports ahead of this week’s meeting.

  • Key members of the Organization of the Petroleum Exporting Countries and its Russia-led allies will hold a virtual meeting on Wednesday 15 July
There is no further detail on this, link here
The increased optimism comes as hopes are up that demand is beginning to recover and will continue to do so. Its not going to be smooth sailing though.
Saudi Arabia and most others in the OPEC+ alliance support increasing output by around 2 million barrels a day say reports ahead of this week's meeting.

More on oil – grim outlook

  
  Analysis
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Scanning across some notes on OPEC and crude, some snippets … not optimistic:

Via RBC:
  • OPEC+ is apparently in crisis management mode
  • We think OPEC+ may make more headway by sharpening its compliance messaging, particularly around perennial underperformers, most notably Russia.
  • we think Saudi Arabia may be amenable to dropping production even further
  • none of these measures will arrest the immediate demand destruction and storage saturation problems that are weighing so heavily, particularly on US prices, they could potentially help ensure a better back half of the year if the COVID-19 crisis is contained
(Bolding above is mine)
Via TD:
  • Although we don’t expect negative prices to remain  …  the imbalance in the offer vs. demand and storage capacity issues could see a repeat of this issue.

Goldman Sachs are unimpressed by the oil output cut deal – “insufficient”

  
  Analysis
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GS say the OPEC+ G20 production cut is too little too late, and the bank sees downside risk to its $20/barrel price forecast

  • “Today’s agreement leaves the voluntary cuts as still too little and too late to avoid breaching storage capacity, ensuring that low oil prices force all producers to contribute to the market rebalancing”
  • no voluntary cuts could be large enough to offset the 19m b/d average April-May demand loss due to the coronavirus
  • OPEC+ voluntary cut is an only actual 4.3m b/d reduction in production from 1Q 2020 levels
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Oil traded higher initially upon market reopen for the week, gave it all back and turned negative and is now not much changed from late last week levels.

OPEC presidency urged an emergency meeting on collapsing prices, members said no.

  
  Analysis
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Algeria currently holds OPEC’s rotating presidency, urged convening a panel to consider assesses market conditions and falling prices.

Bloomberg cite an unnamed official as saying the request did not get enough backing to go ahead.
  • Key player Saudi Arabia said to be opposed.
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Algeria asked OPEC’s secretariat to convene a teleconference meeting of the Economic Commission Board.
Algeria currently holds OPEC's rotating presidency, urged convening a panel to consider assesses market conditions and falling prices.
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