• 10 mins Brazil Could Invite More Bids For Unsold Pre-Salt Oil Blocks
  • 1 hour OPEC/Non-OPEC Seek Consensus On Deal Before Nov Summit
  • 2 hours London Stock Exchange Boss Defends Push To Win Aramco IPO
  • 3 hours Rosneft Signs $400M Deal With Kurdistan
  • 6 hours Kinder Morgan Warns About Trans Mountain Delays
  • 12 hours India, China, U.S., Complain Of Venezuelan Crude Oil Quality Issues
  • 17 hours Kurdish Kirkuk-Ceyhan Crude Oil Flows Plunge To 225,000 Bpd
  • 21 hours Russia, Saudis Team Up To Boost Fracking Tech
  • 1 day Conflicting News Spurs Doubt On Aramco IPO
  • 1 day Exxon Starts Production At New Refinery In Texas
  • 1 day Iraq Asks BP To Redevelop Kirkuk Oil Fields
  • 2 days Oil Prices Rise After U.S. API Reports Strong Crude Inventory Draw
  • 2 days Oil Gains Spur Growth In Canada’s Oil Cities
  • 2 days China To Take 5% Of Rosneft’s Output In New Deal
  • 2 days UAE Oil Giant Seeks Partnership For Possible IPO
  • 2 days Planting Trees Could Cut Emissions As Much As Quitting Oil
  • 2 days VW Fails To Secure Critical Commodity For EVs
  • 2 days Enbridge Pipeline Expansion Finally Approved
  • 2 days Iraqi Forces Seize Control Of North Oil Co Fields In Kirkuk
  • 2 days OPEC Oil Deal Compliance Falls To 86%
  • 3 days U.S. Oil Production To Increase in November As Rig Count Falls
  • 3 days Gazprom Neft Unhappy With OPEC-Russia Production Cut Deal
  • 3 days Disputed Venezuelan Vote Could Lead To More Sanctions, Clashes
  • 3 days EU Urges U.S. Congress To Protect Iran Nuclear Deal
  • 3 days Oil Rig Explosion In Louisiana Leaves 7 Injured, 1 Still Missing
  • 3 days Aramco Says No Plans To Shelve IPO
  • 6 days Trump Passes Iran Nuclear Deal Back to Congress
  • 6 days Texas Shutters More Coal-Fired Plants
  • 6 days Oil Trading Firm Expects Unprecedented U.S. Crude Exports
  • 6 days UK’s FCA Met With Aramco Prior To Proposing Listing Rule Change
  • 6 days Chevron Quits Australian Deepwater Oil Exploration
  • 7 days Europe Braces For End Of Iran Nuclear Deal
  • 7 days Renewable Energy Startup Powering Native American Protest Camp
  • 7 days Husky Energy Set To Restart Pipeline
  • 7 days Russia, Morocco Sign String Of Energy And Military Deals
  • 7 days Norway Looks To Cut Some Of Its Generous Tax Breaks For EVs
  • 7 days China Set To Continue Crude Oil Buying Spree, IEA Says
  • 7 days India Needs Help To Boost Oil Production
  • 7 days Shell Buys One Of Europe’s Largest EV Charging Networks
  • 7 days Oil Throwback: BP Is Bringing Back The Amoco Brand
Alt Text

Oil Prices Rise Amid Falling U.S. Rig Count

Oil prices inched higher on…

Alt Text

India’s Urban Explosion Boosts Oil Demand

As India sees incredible growth…

Imported Oil Putting The Squeeze On Bakken Producers

Imported Oil Putting The Squeeze On Bakken Producers

As Ralph Macchio celebrates his 54th birthday (make you feel old? me neither, ahem…), the crude complex has tried to kick higher ahead of the weekly inventory report, but is losing the fight against a stronger dollar. While we continue to slowly exit U.S. maintenance season, builds to crude stocks are still underway. Last night’s API report yielded a +2.8 million barrel build, a little more than the consensus expected from today’s EIA report of +2.5 million. Draws are expected to the products again, while the potential for a third consecutive draw at Cushing is trying to provide some support for prices this morning.

Crude is also keeping an eye on supply disruptions in Brazil, where a labor strike by Petrobras workers is reducing production by the state-run oil producer by 8.5 percent (according to striking workers, it is much more). Meanwhile, oil shipments from the Zueitina port in Libya have been halted amid escalating tensions between the two ruling governments.

Onto the economic data front, and the Caixin Chinese Services PMI came in much better than expected, setting a more positive tone overnight for broader markets. This mood was somewhat endorsed by European Services data, which only missed consensus by the smallest of margins. Better-than-expected prints by Spain and France were offset by misses from Germany and Italy. For the combined manufacturing and services composite, the Eurozone saw a minor tick lower for last month, but a trend of ongoing stable growth is the key takeaway: Related: The Race To Develop The Ultimate Battery

(Click to enlarge)

Eurozone Composite PMI (source: investing.com)

Across the pond, and Brazil’s woes continue. Industrial production dropped 1.3 percent in September on the prior month, now down -10.9 percent year-on-year. The only saving grace is that expectations were for worse prints than those seen. Onto the U.S., and the trade deficit narrowed to -$40.8 billion in September. As we know all too well, all paths lead back to energy, hence the narrowing in the deficit from August’s -$48.02 billion was driven by petroleum imports dropping to their lowest level since May 2004.

The thunder-stealer from official U.S. unemployment data on Friday – the ADP report – has shown 182,000 jobs were created last month – pretty much in line with consensus. Endorsing expectations for a decent Nonfarm Friday was total vehicle sales, released yesterday afternoon. Sales hit a new multi-year high of 18.24 million (annualized), up from last month’s 18.17 million. Mo’ jobs = mo’ people buying cars: Related: OPEC Infighting Reaching Critical Levels

(Click to enlarge)

U.S. vehicle sales, millions annualized (source: investing.com)

Back to the crude complex, and despite fears of a torrid Q3 earnings season for the U.S. oil and gas industry, we are hearing some U.S. shale oil producers are revising up production forecasts, as efficiency gains are helping offset cost-cutting and lower oil prices. “We are delivering this incremental production growth with significantly lower costs” said Devon Energy’s CEO Dave Hager, while also confirming it will cut ~$1 billion from its budget by year end.

Finally, much is being made of rising crude imports into the U.S., with the assumption being made this is due to falling U.S. production. While we are seeing rising West African crude imports, these flows are finding their way to U.S. shores because of deep discounting (due to a building global glut), as well as improved economics versus Bakken crude. Related: Elon Musk’s Hyperloop Takes a Step Forward

This rise in volume is, however, marginal in the grand scheme of things (hark, below – less than 300,000 bpd), and not to be considered the result of falling U.S. production. These volumes are heading towards East coast refiners, where they are competing with Bakken crude by rail (and its higher transportation costs), and not to the Gulf Coast to compete with pipeline flows from Eagle Ford or with LLS pricing.

(Click to enlarge)

West African imports into the U.S. (source: ClipperData)

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