• 6 minutes Trump vs. MbS
  • 11 minutes Can the World Survive without Saudi Oil?
  • 15 minutes WTI @ $75.75, headed for $64 - 67
  • 34 mins Satellite Moons to Replace Streetlamps?!
  • 16 hours US top CEO's are spending their own money on the midterm elections
  • 2 hours EU to Splash Billions on Battery Factories
  • 2 hours U.S. Shale Oil Debt: Deep the Denial
  • 2 hours The Balkans Are Coming Apart at the Seams Again
  • 18 hours OPEC Is Struggling To Deliver On Increased Output Pledge
  • 24 hours Petrol versus EV
  • 2 hours The Dirt on Clean Electric Cars
  • 14 hours Uber IPO Proposals Value Company at $120 Billion
  • 19 hours U.N. About Climate Change: World Must Take 'Unprecedented' Steps To Avert Worst Effects
  • 4 hours 47 Oil & Gas Projects Expected to Start in SE Asia between 2018 & 2025
  • 16 hours A $2 Trillion Saudi Aramco IPO Keeps Getting Less Realistic
  • 21 hours 10 Incredible Facts about U.S. LNG
Alt Text

Canadian Oil Patch Grapples With Cannabis Legalization

Canada has officially legalized recreational…

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

Trending Discussions

Oil Rebounds After Testing Two Month Lows

Offshore UK

Crude prices have reversed losses post-inventory report, despite a bearish build to gasoline stocks. As crude tries to clamber away from key technical support, hark, here are five things to consider in markets today.

1) Halliburton CEO Dave Lesar is the voice of optimism despite the oil services company booking a quarterly loss amid hefty charges of $3.52 billion due to its failed merger with Baker Hughes. Mr. Lesar said ‘we believe the North American market has turned’ with the bottoming out of the rig count in the last quarter. He expects a modest uptick to the rig count through the second half of the year – a move which Halliburton is well-positioned to take advantage of.

2) The latest monthly OPEC oil market report has shown Saudi Arabian production is on its seasonal move higher, in an effort to meet summer power generation demand. Secondary sources reported it up to 10.3 million barrels per day, while primary sources pegged it at a higher 10.55 million bpd.

The image below shows how Saudi has been drawing down its stocks after they reached a record high last October; the Kingdom is trying to meet rising domestic demand, while trying to maintain its stance of targeting market share with its exports.

3) Saudi continues to export crude at a rapid clip, with our ClipperData showing loadings year-to-date currently 7.5 percent higher than year-ago levels. This goes some of the way to explaining the aforementioned draw in Saudi crude stocks: it has been maintaining production at ~10.2 million bpd so far this year, while domestic demand is on the rise. Inventories are plugging the supply gap.

Yesterday we illustrated how Iraqi crude exports into India have surpassed Saudi flows in Q2 – a sign that the battle for market share is alive and kicking. We can see from the chart below that supplies to Saudi’s top five destinations have dropped below 60 percent of their total exports. It would appear, at least for now, they are getting squeezed out of their largest markets.

4) Today’s weekly inventory report has encouraged a turnaround in crude prices, despite a crude draw relatively in line with consensus. While focus remains on bloated gasoline stocks, it is prudent to remember that crude inventories sit over 55 million barrels (or 12 percent) above year-ago levels. Related:Oil Prices On Edge With Few Upside Catalysts

We may have seen crude stocks draw for nine consecutive weeks, but as the chart below illustrates…that is a seasonal trend. It is also a seasonal trend for them to start rising again as we shuffle through September, as refinery runs drop off. Given current crack spreads, there is little incentive for refiners to keep refinery runs elevated going forward.

5) Finally, despite all the constant kerfuffle relating to supply and demand, we can always find solace in the inverse relationship betwixt crude and the U.S. dollar to help explain away recent price gyrations. Hence, as the dollar hits a four-month high, crude tests multi-month lows.


(Click to enlarge)

By Matt Smith

More Top Reads From Oilprice.com:


x


Back to homepage

Trending Discussions


Leave a comment

Leave a comment




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