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Iran resumed fuel exports to Afghanistan last week

  
  Analysis
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Via Reuters comes the report that the Taliban requested Iranian oil

 

  • “The Taliban sent messages to Iran saying ‘you can continue the exports of petroleum products’,” Hamid Hosseini, board member and spokesperson of Iran’s Oil, Gas and Petrochemical Products Exporters’ Union, in Tehran, told Reuters.
  • Iran lifted a ban on fuel exports to Afghanistan, which had been in place since Aug. 6 because of Iran’s concerns about the safety of trading in the country.
  • Those concerns have been eased by the Taliban’s attitude, Hosseini said.

 

Via Reuters comes the report that the Taliban requested Iranian oil Via Reuters comes the report that the Taliban requested Iranian oil 

Laura expected to make landfall in about 12 hours as Category 4 hurricane

  
  Analysis
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The latest from the NHC forecast

The latest from the NHC forecast on Laura
The US National Hurricane Center is out with its latest update on Hurricane Laura and it’s not good.
Laura is likely to continue strengthening today while it moves over warm waters of the northwestern Gulf of Mexico and the vertical wind shear remains low. Laura’s intensity could level-off by this evening due to the possibility of an eyewall replacement cycle and the expected increase in shear around the time of landfall. Even if the rate of strengthening eases, Laura is expected to be an extremely powerful category 4 hurricane when it reaches the northwestern Gulf coast.
This has the potential to be especially devastating for the oil & gas industry and its workers. The current track takes the eye through or near Beaumont, TX or Lake Charles, LA. Both are massive US refining hubs. The Houston area will also be hit but it now looks like the worst of the storm will pass to the east of it.
Category 4 hurricanes have sustained winds in the 209-251 km/h range, or 130-156 mph. Storm surges are generally 13-18 feet but can be as much as 24 feet. The NHC says the storm surge from Laura could penetrate 30 miles inland.
A recent Category 4 storm was Hurricane Harvey in 2017. It inflicted an estimated $125B in damage as it first made landfall near Corpus Christi and then raked the coast, causing widespread flooding in Houston. It matched Katrina as the most-costly US hurricane.
This storm appears to be faster moving so flood damage may not be as high but wind damage could be worse. It will also then cut across the mid-Atlantic states and could reform as a tropical storm off the coast of North Carolina or Virginia.

US storms – Oil producers on Saturday shut 13% of crude oil production ahead of Laura and Marco

  
Analysis, Crude
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Weekend news on industry response to approach of Gulf storms, posting ICYMI:

Via Reuters:
  • Producers halted 240,785 barrels per day of oil production and 119 million cubic feet per day of natural gas output before noon on Saturday, said regulator U.S. Bureau of Safety and Environmental Enforcement.
  • Crews were evacuated from six production and four drilling rigs. Another seven drilling vessels were moved out of the storms’ paths

Baker Hughes oil rigs 183 vs. 172 last week

  
  Analysis
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Total rig counts up to 254 from 244 last week

In a surprise, the Baker Hughes rig counts moved higher this week.

  • Total rigs moved to 254 from 244 last week. This is the 1st increase in 24 weeks.
  • Oil rigs rose by 11 to 183 from 172 last week. This is the largest weekly gain since January
  • Gas rigs fell by 1 on the week to 69 from 70 last week
The oil rigs reached the lowest level since 2005 last week. The move up to 183 is the highest since July 3 when rigs came in at 185.
Oil rigs
Crude oil is trading at $41.65 for the October contract. That is little changed to the pre-release level.
Looking at the daily chart below, the contract remains above its 50 day average at $40.95 (white moving average line in the chart below) and below its 200 day moving average of $43.41. The range since August 6 as a low $41.33 and a high of $43.29. The low today reached $41.46 just above the low of that range.
In between the moving averages sits the 50% retracement of the 2020 trading range which comes in at even $42. As I type, the price has moved higher and currently trades at $42 – right at that 50% level. Get above and we could see further upside momentum.
At some point, the ups and downs will cease and we will get a break. The moving averages will represent key breakpoints. Focus on those levels.
Crude oil prices for the October contract

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.

DOE crude oil inventories -4512K vs -2200K estimate

  
Analysis, Crude
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Crude oil inventories

  • crude oil inventories draw of 4512K vs. draw of 2200K estimate. Last week draw 7373K
  • gasoline inventories draw of -722K vs. draw of -400K estimate. Last week saw a build of 419K
  • distillates a draw of 2322K vs. a  build estimate of 1000K. Last week saw a build of 1591K
  • Cushing build of 1336K vs a build of 532K last week
  • Crude oil is currently trading at $42.53, up $0.93 or 2.17%
The private data last night showed:
  • Crude -4400K
  • Gasoline -1310K

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.

Crude oil inventories for July 31 -7.373M vs -3.335 est.

  
Analysis, Crude
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Crude oil inventories for July 31

  • crude oil inventories -7.373M vs -3350M estimate. The drawdown is a little lower than the 8.587 from the private data last night
  • gasoline 0.419 million vs. -0.500M estimate
  • distillates 1.591M vs 0.986M estimate
  • Cushing 0.532M vs 1.309M last week
  • crude oil implied demand 18063 vs. 17762 last week
  • gasoline implied demand 9386.6 vs. 9250.1 last week
  • distillates implied demand 4812.7 vs. 4859.1 last week
  • US refinery utilization 0.10% vs. 0.20% estimate. Last week 1.6%
The price of crude oil after a brief dip is back trading near high levels for the day at $43.41. That’s up $1.71 or 4.12%. The high for the day reached $43.52. The 200 day moving average is currently at $43.92. The price of the September contract is not traded above its 200 day

US weekly oil inventories -10611K vs +450K expected

  
Analysis, Crude
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Weekly US oil inventory data

  • Prior oil was +4892K
  • Gasoline +654K vs -2000K expected
  • Distillates +503K vs +1000K exp
  • Refinery utilization +1.6% vs +0.5% exp
  • Production 11.1 mbpd vs 11.1 prior
API data from late yesterday:
  • Crude -6829K
  • Cushing +1144K
  • Gasoline +1083K
  • Distillates +187K
Oil prices rose about 15 cents on the headlines. That’s the largest draw of the year and it’s entirely due to a 10462K draw at PADD 3, which is on the gulf coast.
In terms of oil, one thing to watch is a potential tropical cycle in the mid-atlantic. It’s on a track that could hit the gulf and Florida.
Florida

DOE crude oil inventories for July 10 week -7.493M vs -2.098 million estimate

  
  Analysis
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DOE crude oil inventories for the week of July 10, 2020

  • crude oil inventories -7.493 million vs. -2.1 million estimate
  • gasoline inventories -3.147 million vs. -1.3 million estimate
  • distillates inventories -0.453 million vs. 1.5 million estimate
  • Cushing OK crude inventories 0.949 million vs. 2 point to 0 6 million last week
  • US refinery utilization 0.6% vs. 0.5% estimate
  • crude oil implied demand 17637 vs. 17586 last week
  • gasoline implied demand 9248.4 vs. 9290.0 last week
  • distillates implied demand 5023.7 vs. 4380.1 last week
The private API data released near the close of yesterday’s trade showed a bigger than expected drawdown of -8.322. Today’s crude oil inventory data was below the API data by about 900 K. Below are the private data results:
DOE crude oil inventories for the week of July 10, 2020
Crude oil is trading at $40.50 just prior to the report. The current price is trading at $40.64
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