• 10 hours Shell Oil Trading Head Steps Down After 29 Years
  • 14 hours Higher Oil Prices Reduce North American Oil Bankruptcies
  • 16 hours Statoil To Boost Exploration Drilling Offshore Norway In 2018
  • 17 hours $1.6 Billion Canadian-US Hydropower Project Approved
  • 19 hours Venezuela Officially In Default
  • 21 hours Iran Prepares To Export LNG To Boost Trade Relations
  • 23 hours Keystone Pipeline Leaks 5,000 Barrels Into Farmland
  • 1 day Saudi Oil Minister: Markets Will Not Rebalance By March
  • 1 day Obscure Dutch Firm Wins Venezuelan Oil Block As Debt Tensions Mount
  • 2 days Rosneft Announces Completion Of World’s Longest Well
  • 2 days Ecuador Won’t Ask Exemption From OPEC Oil Production Cuts
  • 2 days Norway’s $1 Trillion Wealth Fund Proposes To Ditch Oil Stocks
  • 2 days Ecuador Seeks To Clear Schlumberger Debt By End-November
  • 2 days Santos Admits It Rejected $7.2B Takeover Bid
  • 2 days U.S. Senate Panel Votes To Open Alaskan Refuge To Drilling
  • 2 days Africa’s Richest Woman Fired From Sonangol
  • 3 days Oil And Gas M&A Deal Appetite Highest Since 2013
  • 3 days Russian Hackers Target British Energy Industry
  • 3 days Venezuela Signs $3.15B Debt Restructuring Deal With Russia
  • 3 days DOJ: Protestors Interfering With Pipeline Construction Will Be Prosecuted
  • 3 days Lower Oil Prices Benefit European Refiners
  • 3 days World’s Biggest Private Equity Firm Raises $1 Billion To Invest In Oil
  • 4 days Oil Prices Tank After API Reports Strong Build In Crude Inventories
  • 4 days Iraq Oil Revenue Not Enough For Sustainable Development
  • 4 days Sudan In Talks With Foreign Oil Firms To Boost Crude Production
  • 4 days Shell: Four Oil Platforms Shut In Gulf Of Mexico After Fire
  • 4 days OPEC To Recruit New Members To Fight Market Imbalance
  • 4 days Green Groups Want Norway’s Arctic Oil Drilling Licenses Canceled
  • 4 days Venezuelan Oil Output Drops To Lowest In 28 Years
  • 4 days Shale Production Rises By 80,000 BPD In Latest EIA Forecasts
  • 5 days GE Considers Selling Baker Hughes Assets
  • 5 days Eni To Address Barents Sea Regulatory Breaches By Dec 11
  • 5 days Saudi Aramco To Invest $300 Billion In Upstream Projects
  • 5 days Aramco To List Shares In Hong Kong ‘For Sure’
  • 5 days BP CEO Sees Venezuela As Oil’s Wildcard
  • 5 days Iran Denies Involvement In Bahrain Oil Pipeline Blast
  • 7 days The Oil Rig Drilling 10 Miles Under The Sea
  • 8 days Baghdad Agrees To Ship Kirkuk Oil To Iran
  • 8 days Another Group Joins Niger Delta Avengers’ Ceasefire Boycott
  • 8 days Italy Looks To Phase Out Coal-Fired Electricity By 2025
Alt Text

The Kurdish Oil Gamble Has Backfired

Kurdistan’s failure to hold the…

Alt Text

GE Looks To Divest Energy Assets As Turmoil Continues

General Electric’s turmoil continues as…

Alt Text

What A U.S. Electric Grid Attack Looks Like

The electrical system is the…

Matt Smith

Matt Smith

Taking a voyage across the world of energy with ClipperData’s Director of Commodity Research. Follow on Twitter @ClipperData, @mattvsmith01

More Info

Chinese Demand Is Weakening For These Key Commodities

Chinese Demand Is Weakening For These Key Commodities

On the 70th birthday of the Fonz (aka Henry Winkler), commodities are trying to stay cool amid a bearish barrage of news.

We have had Q3 earnings from Exxon Mobil and Chevron to round out big oil’s reporting; both fell in lockstep with the trend of the other members – falling profits but strong downstream performance. Chevron’s net income fell to $2.04 billion (from $5.59 billion a year ago), while Exxon posted a $4.24 billion profit, compared to $8.07 billion in Q3 of last year.

Onto economic news flow, and Japanese data were disappointing, as inflation evaporated to zero (hark, below) for the first time since mid-2013. Household spending came in exceptionally weak, housing starts were poor, while unemployment remained at 3.4 percent. Finally, the Bank of Japan not surprisingly maintained the status quo and kept interest rates at 0.1 percent.

JapaneseCPIYoY

Japanese CPI year-on-year, percent (source: investing.com) Related: One Chart That Explains The Stupidity Of Congress’ SPR Plan

Across to Europe, and German retail sales disappointed, flat for last month, and +3.4 percent YoY (vs. +4.2 percent expected). French consumer spending was also flat as a pancake crepe, while preliminary Spanish Q3 GDP was in line with consensus at +0.8 percent (QoQ). Inflation for the Eurozone matched Japan by being errant (0.0 percent YoY), while the unemployment rate surprisingly dropped 0.2 percent to 10.8 percent, the lowest since April 2012.

In terms of U.S. releases, both personal income and spending disappointed, while the PCE price index (a measure of inflation) was the same as last month at +1.3 percent YoY.

Earlier in the week we discussed how the head of China’s steel industry highlighted how Chinese demand is slumping at an unprecedented pace. The chart below shows how Chinese exports are reaching a record level, as this domestic demand drops off. Lest we forget, China is the world’s largest steel consumer (hark, 45 percent of total global consumption), hence such demand weakness is a huge red flag for the state of the Chinese economy, and does not bode well for oil demand going forward.

ChineseSteelExports

(Click Image To Enlarge)

GasGloom

A theme of weak demand is prevalent in the Chinese LNG market also, as recent data shows Chinese LNG imports have fallen 3.5 percent so far this year, compared with a 10 percent rise in 2014. LNG currently accounts for 5 percent of China’s total energy mix, with a target of 10 percent by 2020. Related: Why Do Oil Companies Manage Their Own Logistics?

It is incredible to see how low current Asian natural gas prices are (below $7/MMBtu), after being as high as $20 early last year (hark, below), while projections for the coming years point to further lower prices – in Asia and Europe alike. The oversupplied nature of the global LNG market is going to resemble the current crude market; lop-sided to say the least.

GasWars

Finally, bringing this back to the U.S., and the chart below highlights the ongoing low price of gas in the Northeast, as Marcellus production outpaces pipeline capacity. We are seeing Marcellus production starting to drop off as companies finally succumb to curtailments in this low-price environment. But with the prospect of ~2 Bcf/d of further pipeline capacity coming online in the coming months, Marcellus production is likely to rise once more. Related: Top Oil Companies Report Dismal Earnings

DeeperDiscount

(Click Image To Enlarge)

By Matt Smith

More Top Reads From Oilprice.com:




Back to homepage


Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News