Starting off the week on February 18 was an unusually comfortable experience for people in the oil industry. Saudi Arabia vowed to cut its crude output beyond OPEC/OPEC+ commitments, which has palpably helped to move prices up, moreover, shutting down its Safaniyah offshore field due to a power outage even brought in an unscheduled upward pressure factor. Even the US-China trade talks have instilled hope in market watchers that a deal might be reached in the upcoming days.
The bullish sentiment was somewhat cooled by news of US shale output rising to record highs – the EIA expected shale alone to reach 8.4mbpd next month. As a consequence, Brent dropped from a year-high of $66.83 per barrel on Monday below $66 per barrel on Wednesday afternoon, whilst WTI hovered around $56-56.2 per barrel, having experienced a modest drop from its Monday year-high level of $56.39 per barrel.
1. US Crude Commercial Stocks Still on the Increase
- US commercial crude stocks have increased for the fourth consecutive week during the week ended February 8, up by 3.6 MMbbl to a total of 450.8MMbbl.
- The week ended February 15 is also widely expected to bring about another stock buildup, with a Platts analyst survey hinting at a further 3.5MMbbl inventory accumulation.
- US crude exports have declined by some 0.5mbpd w-o-w during the week ended February 8, however, they are expected to bounce back a bit from last week’s 2.4mbpd.
- The week ended February 15 should also bring about a rebound in refinery runs, which have plummeted from the early January level of 17.56mbpd to 15.77mpbd during the week ended February 8.
- Gasoline stocks have been building up for the tenth week in a row, the week ended February 8 witnessing another 0.4MMbbl increase to 258.3MMbbl, almost 10MMbbl above the 5-year average.
2. Another Oil-For-Goods Deal for Iran?
- The Iranian oil minister Bijan Zanganeh travelled to Moscow last week to discuss future energy projects with his Russian counterpart Alexandr Novak.
- Russia and Iran are closing in on a 100kbpd „oil-for-goods” contract, under which Iran would provide the crude in its ports in exchange for Russia paying half of its value in cash and the other half in goods.
- It remains to be seen who would be the crude receiver on the Russian end, however, the crude would be very well suited for Rosneft to supply it to its…