• 5 minutes 'No - Deal Brexit' vs 'Operation Fear' Globalist Pushback ... Impact to World Economies and Oil
  • 8 minutes China has *Already* Lost the Trade War. Meantime, the U.S. Might Sanction China’s Largest Oil Company
  • 12 minutes Will Uncle Sam Step Up and Cut Production
  • 5 hours Danish Royal Palace ‘Surprised’ By Trump Canceling Trip
  • 6 hours Recession Jitters Are Rising. Is There Reason To Worry?
  • 39 mins A legitimate Request: France Wants Progress In Ukraine Before Russia Returns To G7
  • 1 hour Used Thin Film Solar Panels at 15 Cents per Watt
  • 6 hours China has invested btw $30 - $40 Billon in Canadian Oil Sands. Trump should put 10% tariffs on all Chinese oil exported into or thru U.S. in which Chinese companies have invested .
  • 12 hours US Shale Economic Impact: GDP gain realized in shale boom’s first 10 years
  • 35 mins IS ANOTHER MIDDLE EAST WAR REQUIRED TO BOLSTER THE OIL PRICE
  • 19 hours It's Not the Job of the Government to Dictate Where Businesses Should Go
  • 12 hours Wonders of US Shale: US Shale Benefits: The U.S. leads global petroleum and natural gas production with record growth in 2018
  • 19 hours Offshore subsea sub 50$/bbl : Rystad Energy: High stakes in store for subsea markets if oil falls to $50/bbl
  • 15 hours Philadelphia Energy Solutions seeks to permanently shut oil refinery - sources
  • 16 hours Tit For Tat: China Strikes Back In Trade Dispute With U.S. With New Tariffs
  • 11 hours Domino Effect: Rashida Tlaib Rejects Israel's Offer For 'Humanitarian' Visit To West Bank
  • 10 hours NATGAS, LNG, Technology, benefits etc , cleaner global energy fuel
Alt Text

The Toughest Challenge For Any Energy Company In 2019

Strong volatility and poor overall…

Alt Text

Investors Are Ditching High-Yield Shale Bonds

Investors in high-yield shale bonds…

Alt Text

Brazil Government Looks To Fully Privatize Petrobras By 2022

Brazil’s government wants to privatize…

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

Premium Content

Oil Reverses As Buyers Enter The Market

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:

 




Download The Free Oilprice App Today

Back to homepage


Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News
Download on the App Store Get it on Google Play