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Matt Smith

Matt Smith

Taking a voyage across the world of energy with ClipperData’s Director of Commodity Research. Follow on Twitter @ClipperData, @mattvsmith01

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The Numbers Behind The Current Oil Rally

The Numbers Behind The Current Oil Rally

Given it is such a colorful day in markets today, let’s do some painting by numbers to get a more complete picture of what is going down in energyland™ et al:

$130 billion: OPEC Secretary General Abdalla Salem el-Badri said global oil investments are being slashed by $130 billion this year, as projects are seeing spending cuts of 22.4 percent to $521 billion.

-10 percent: IMF forecasts that the Venezuelan economy will be the worst performing this year, dropping by a whopping 10 percent, while falling a further 6 percent in 2016. Venezuela also has the fastest inflation rate, at…………..159 percent this year (?!), increasing to 204 percent (??!!) next year. The biggest reason behind Venezuela’s deterioration? Oil accounts for 95 percent of its foreign exports, ergo lower oil prices mean revenues have dropped by 52 percent in the last year. Related: Has Oil Finally Bottomed?

(Click to enlarge)

-1.2 percent: German industrial production dropped considerably in August (although this is subject to hefty revisions). The UK saw a much more robust print of +1.0 percent.

+25.5 percent: As mortgage rates fell to a five-month low last week, mortgage applications increased by a whopping 25.5 percent versus the prior week. Related: Could The Syrian Conflict Irrevocably Change Global Geopolitics?

-1.2 million barrels: Yesterday’s API report yielded a surprise draw when a build of 1.7 million barrels was expected. Given we are in the throes of maintenance season, consensus was for inventories to build as more oil is stockpiled and less oil is refined. Our #ClipperData indicates the reason for the draw likely lies with low imports, as we saw a drop off in cargoes from Mexico and Brazil, while Hurricane Joaquin disrupted waterborne imports from the Caribbean.

(Click to enlarge)

API crude oil inventories (source: investing.com)

7: It’s been seven weeks since the direction of the API oil inventory number and EIA number has deviated. (It could be time to deviate again?).

0.1 percent: Japan decided to leave interest rates unchanged at 0.1 percent, but chose not to increase stimulus from the current annual asset purchases of ¥80 trillion.

$50 – WTI is swinging at the monkeybar of fifty dollardom today for the first time since July, as tentative signals of a tightening oil market are spurring on a break from range-bound trading in the mid-forties – where we spent all of September.

140,000: The monthly report from EIA, the Short Term Energy Outlook, estimates that U.S. oil production declined by 140,000 bpd from the prior month. Cue: oil rally. Related: VW Scandal Bad News For Diesel

$54: A combination of a slowdown in emerging markets, a supply glut, and slowing demand amid a shift towards natural gas and renewables means that international coal prices have dropped to their lowest level in eight years:

(Click to enlarge)

By Matt Smith

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