• 3 minutes Could Venezuela become a net oil importer?
  • 7 minutes Reuters: OPEC Ministers Agree In Principle On 1 Million Barrels Per Day Nominal Output Increase
  • 12 minutes Battle for Oil Port: East Libya Forces In Full Control At Ras Lanuf
  • 3 hours Oil prices going Up? NO!
  • 1 day Could Venezuela become a net oil importer?
  • 7 hours Reuters: OPEC Ministers Agree In Principle On 1 Million Barrels Per Day Nominal Output Increase
  • 4 hours Tesla Closing a Dozen Solar Facilities in Nine States
  • 2 hours Renewables to generate 50% of worldwide electricity by 2050 (BNEF report)
  • 5 hours Could oil demand collapse rapidly? Yup, sure could.
  • 1 day Gazprom Exports to EU Hit Record
  • 2 hours Oil prices going down
  • 1 day EU Leaders Set To Prolong Russia Sanctions Again
  • 1 day Why is permian oil "locked in" when refineries abound?
  • 1 day Oil Buyers Club
  • 2 days Saudi Arabia plans to physically cut off Qatar by moat, nuclear waste and military base
  • 2 hours Saudi Arabia turns to solar
  • 1 day EVs Could Help Coal Demand
  • 2 days China’s Plastic Waste Ban Will Leave 111 Million Tons of Trash With Nowhere To Go
  • 20 hours Russia's Energy Minister says Oil Prices Balanced at $75, so Wants to Increase OPEC + Russia Oil by 1.5 mbpd
Alt Text

Canada’s Oil Crisis Is Far From Over

While the Canadian government has…

Alt Text

Energy Efficiency Adds Value To Home Prices

A new study has suggested…

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 Reverses As Buyers Enter The Market

Premier Offshore field

A weaker U.S. dollar is once again wafting smelling salts under the nose of the crude market, and this time it appears to be working. A large miss for preliminary Q2 U.S. GDP has further stoked economic concerns, but the love/hate relationship betwixt crude and the U.S. dollar means crude is trying to close with its first gain in seven attempts. Hark, here are four things to consider in energy markets today.

1) As crude prices move lower, the U.S. gasoline market has been a splendid scapegoat for the recent drop in prices. According to Goldman Sachs, however, the downside risk to prices in the near-term lies primarily with U.S. dollar strength, and not the glut.

One of my favorite movies is Lucky Number Slevin. In it there is something called the Kansas City Shuffle. It is essentially a trick by a con artist, who uses misdirection to outsmart his audience. The audience is so focused on one thing, that they totally miss what is happening elsewhere.

From a ClipperData perspective, this is happening to some extent in the global crude market. While everyone is focused on the current product glut – something which has steadily been building like a tribal drumbeat since early in the year – China has fervently been stockpiling oil like a squirrel storing nuts.

As the product glut reaches new heights and bearishness abounds, Chinese oil imports are showing significant signs of fatigue. Waterborne imports into China thus far in July are in line with the prior two months, and some 6.5 percent below the peak of import volumes seen in April.

2) Preliminary GDP data for Q2 has come in at +1.2 percent, well below consensus of 2.6 percent. This puts growth in the first half of the year at its slowest pace since 2011, as business investment was soft – offsetting strength seen in consumer spending. This weak number is again throwing cold water on any rate hike expectations, hence the dollar is charging lower today (and lending support to crude).

3) The product glut is by no means to be dismissed, however. Total crude and product inventories have clambered to a new record high this week at 1.39 billion barrels, 113 million barrels above year-ago levels. Related: Oil Industry About To Be Burned Again By Fall In Oil Prices

Crude stocks are just 20 million barrels shy of the 541 million barrels seen earlier in the year – itself the highest level in over 90 years. Meanwhile, gasoline inventories are at their highest level in at least 20 years, and edging higher at a time we should be seeing them drawn down by peak summer driving demand.

(Click to enlarge)

4) Switching commodities, U.S. natural gas prices rallied strongly yesterday, as the weekly storage report yielded a mere +17 Bcf injection. This compares to last year’s +52 Bcf injection and the five-year average of +52 Bcf. This also shrinks the surplus to last year to under 15 percent – after being nearly 70 percent back in spring.

As the chart below illustrates, natural gas has now surpassed coal as the leading source for power generation on a double whammy: low prices encourage natural gas use…while coal plant retirements limit coal consumption.

By Matt Smith

More Top Reads From Oilprice.com:

 




Back to homepage

Trending Discussions


Leave a comment

Leave a comment




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