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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

Saudi Aramco has reduced the volume of crude it will supply to Asia

  
  Analysis
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Reuters report citing four unnamed sources that the world’s largest oil exporter has cut August heavy crude supply for some Asian refiners

  • at least four buyers in Asia
  • cuts were mainly for Arab Heavy crude
No further details in the Reuters report.

Oil likes what it heard from OPEC, prices edge higher early

  
Analysis, Crude
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Crude starts the week higher

Crude starts the week higher
WTI crude rose as high as $39.90 shortly after the open. It’s since ticked a few cents lower to $39.83, which is up 25-cents on the day.
OPEC+ announced a one-month cut extension on the weekend but it wasn’t all good news as some Libyan production came back online.
Keep a close eye on the $40 with crude in the March gap. The bottom end of it is $41.05.

Covid-19 lockdown: Petroleum sector throttled

  
  Analysis
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The lockdown has severely hurt the petroleum sector, with oil and gas as well as refining suffering a sharp decline in production.

 

Gas output in April fell 18.6 per cent to 2.16 billion cubic metres (bcm) against 2.65bcm a year ago, according to the oil ministry.The country’s top gas producer ONGC reported a 15.3 per cent drop in output at 1.72bcm.

“The shortfall in gas production (by ONGC) is primarily due to less gas offtake by consumers,” the ministry said.

State-owned Oil India Ltd also produced 10 per cent less natural gas at 202.05 million cubic metres because of the presence of carbon dioxide at one of its fields in Assam and less purchases by consumers because of the lockdown.

Crude oil production fell 6.35 per cent to 2.5 million tonnes (mt) in April.Production at ONGC was marginally lower at 1.7 mt, while private player Cairn produced 19.2 per cent less at 615,800 tonnes.

ONGC had to shut down some of its wells on the western coast because of lower demand from GAIL and the restriction of movement of its staff.

Refineries produced about 30 per cent less fuel in April at 18.9mt as the lockdown kept most vehicles off the roads.

“Reasons for the shortfall in production mainly include low demand due to Covid-19 lockdown,” the ministry said.

Petroleum product demand is expected to fall eight per cent to 4,597 thousand barrels per day in 2020, the International Energy Agency (IEA) said as part of its May oil market report.

Demand is projected to fall 350 thousand barrels per day in the second quarter of 2020, primarily because of mobility restrictions.

The IEA has projected demand to fall 60 per cent year-on-year in April and May.Diesel demand is projected to contract 690 thousand barrels per day in the second quarter of 2020, while demand for aviation turbine fuel (ATF) and kerosene is projected to fall almost 40 per cent in April-May.

Roughly half of the kerosene produced is used as jet fuel and will be severely impacted by airline restrictions, the IEA said.

Overall, India’s oil demand is expected to fall 4.60 million barrels per day in 2020 compared with 5.01 million barrels per day in 2019.

The agency expects domestic crude oil production to continue to decline in 2020.

US weekly oil inventories -4985K vs +2150K expected

  
  Analysis
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Weekly US petroleum inventory data:

  • Prior was -745K
  • Cushing -5587K
  • Gasoline +2830K
  • Distillates +3832K
  • Production estimate 11.5 mbpd vs 11.6 mbpd
API data from yesterday:

  • Crude -4800K
  • Cushing -5000K
  • Gasoline -651K
  • Distillates +5100K

Nasdaq worst day ever. Stocks plunge.

  
Analysis, US Market
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What an active day:

  • The Fed cut rates 1% in the Asian session, surprising the market.
  • The Fed announced quantitative easing to the tune of 500bn Treasuries & 200bn MBS
  • The Fed announced that banks can borrow from the Discount window for up to 90 days
  • They added liquiidity via daily repo action.  The Fed basically said, whatever you need, we will provide
  • Later in the day, the Senate Democrats offered a $750B stimulus package (TBD how it progresses).

So what happened in the markets?

Stocks plummeted

  • The Nasdaq had its worst day ever.
  • The Dow and the S&P % decline was the worst since 1987
  • The Dow’s point drop was the worst point loss ever
Many superlatives, but unfortunately they are all negative.
The numbers at the close are showing:
  • Dow industrial average fell 2997.10 points or -12.93% to 20188.52.
  • S&P index fell -324.89 points or -11.98% to 238-6413
  • Nasdaq index fell -970.28 points or -12.32% at 6904.59
Forex news for NY trading on March 16, 2020
In the US debt market, not only did yields tumble with the 10 year leading the way at -23.4 basis points….
US yields traded higher with the longer and moving up the most.
…but the spreads between European and US started to converge. European 10 year yields were mostly higher with Germany up 8.3 basis points and France up 14.8 basis points.  The combination has pushed those levels closer and closer.
European yields rose in trading today

In the gold and precious metals market, prices fell.

  • Spot gold had a volatile day and is closing down $-18.46 or -1.21% at $1511.37.  The high for the day was up at $1575.47 while the low extended all the way down to $1451.55
  • Spot silver also traded violently. It is closing at $12.90, down $-1.81 or -12.35% It traded in a $3.30 trading range. The high reached $15.15, while the low extended to $11.80. Crazy volatility
The oil markets were also volatile and moved lower as Saudi Arabia said they were not backing down from production cuts. The final numbers are showing:
  • WTI crude oil futures $28.70. $-3.03 or -9.55%. The high price reached $33.75. The low price extended to $28.10.
  • Brent crude oil is trading at $29.52, or $-4.33 or -12.79% on the day.  It’s high price extended to $35.84 while the low fell to $29.50.
Finally in the forex market, the flows so the JPY and the EUR benefit the most. They were the strongest of the major currencies. The JPY benefited from the Pavlovian flight into the “safety of the JPY”. The EUR is a bit of a head scratcher as it is the current epicenter of the coronavirus.

Oil hit by double-whammy as Bolton turfed and EIA cuts demand forecast

  
  Analysis
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Oil drops $1 fast

Oil drops $1 fast
WTI crude oil fell to $57.30 from $58.50 in a quick move after Trump announced he was firing national security advisor John Bolton. It’s since bounced back 40 cents.
Bolton has long favored military solutions everywhere, but particularly in the Middle East. The news diminishes the chances of bombs falling on Iran.
Minutes after that news, the EIA lowered its forecasts for world oil demand this year and next. They saw a rise of an 890,000 barrel per day rise compared to 1 million barrels previously for this year. For 2020, they trimmed the forecast by 30,000 bpd to a rise of 1.4mbpd.
Offsetting that somewhat is a lower forecast for US production next year at 13.23 mbpd compared to 13.26 mbpd.

WTI futures settle the day (and for the week) up $0.01 at $60.21

  
Analysis, Crude
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Up 0.02%

The price of WTI crude oil future are settling the day (and week) by the smallest of margins. The price is up 1 cent or 0.02% at $60.21.

The high for the day reached $60.74

The low extended to $59.93.
For the week, the pair is up $2.70 or 4.69% from the closing price of $57.51 last week. The gains were helped by a big drawdown of inventories on Wednesday of -9.499M barrels (expecting -3.0K).
Technically, the price moved above its 200 and 100 day MAs at $58.32 and $59.19 respectively. It will take a move back below those levels to hurt the bullish bias next week.
Up 0.02%

Oil stumbles in quiet trading as OPEC+ deal extension earlier this week fails to inspire

  
Analysis, Crude
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Oil is down by more than 1% on the day now

WTI 04-07

The ‘buy the rumour, sell the fact’ play is still very much in motion as oil is getting no reprieve at all from the fact that OPEC+ sealed a nine-month extension to the current output cuts deal, which was announced on Tuesday.
Oil fell hard on the day itself before a slight recovery amid risk-on sentiment overnight but the fall is resuming now with prices down by almost 1.3% currently.
The move higher in oil during June in anticipation of the OPEC+ decision failed to breach key resistance levels with the daily moving averages and the trendline resistance from April-May helping to limit gains and kept sellers in the game.
As such, we’re seeing sellers seize further control now and the fact that OPEC+ has done just a little above the bare minimum isn’t going to convince markets that the oversupply issue in 1H 2019 will go away in the 2H 2019.

(more…)

IEA cuts 2014 global oil demand forecast by 60k to 1.29mbpd

  
  Education
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  • Cuts 2014 forecast for non OPEC oil supply growth by 250k to 1.5mbpd
  • Lower Russian projections drive estimates lower
  • OPEC crude supply fell in March by 890k to 29.62mbpd on Iraq, Libya & Saudi
  • Says market balances indicate OPEC will need to raise output in second half of year
  • OECD commercial oil stocks fell by 6.5m in Feb to 2.567tn barrels

Brent crude has been looking slightly cheaper on the cut in demand forecast and the 108.30/50 level is still the level that needs to be broken for a push up. 

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