• 4 minutes China 2019 - Orwell was 35 years out
  • 7 minutes Wonders of US Shale: US Shale Benefits: The U.S. leads global petroleum and natural gas production with record growth in 2018
  • 11 minutes Trump will capitulate on the trade war
  • 14 minutes Glory to Hong Kong
  • 19 mins China's Blueprint For Global Power
  • 29 mins World Stocks Drop And Futures Tread Water After China Reports Worst GDP Growth In 30 Years
  • 6 hours PETROLEUM for humanity 
  • 5 hours ABC of Brexit, economy wise, where to find sites, links to articles ?
  • 5 hours National Geographic Warns Billions Face Shortages Of Food And Clean Water Over Next 30 Years
  • 2 hours Yesterday Angela Merkel stopped Trump technology war on China – the moral of the story is do not eavesdrop on ladies with high ethical standards
  • 2 hours Why did Aramco Delay IPO again ? It's Not Always What It Seems.
  • 5 hours Joe Biden, his son Hunter Biden, Ukraine Oil & Gas exploration company Burisma, and 2020 U.S. election shenanigans
  • 8 hours Brexit agreement
  • 7 hours Bloomberg: shale slowing. Third wave of shale coming.
  • 7 hours Why don't the other GOP candidates get mention?
  • 5 hours Idiotic Environmental Predictions
Alt Text

Oil Slides On Trade War Anxiety

Oil prices dropped on Tuesday…

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

EIA And OPEC Send Oil Prices Tumbling

The double whammy of yesterday's EIA drilling productivity report - showing rampantly rising shale production next month - combined with a bearish OPEC monthly oil market report, has sent oil prices scampering lower, testing key support levels on both Brent and WTI. With more twists and turns in the coming days than the Monaco Grand Prix, hark, here are five things to consider in oil markets today:

1) The latest OPEC oil market report has ruffled feathers, put the cat among the pigeons, and got the bears a' growlin'. We discussed yesterday how the rise in U.S. crude inventories this year (hark, 800,000 bpd) was offsetting that of last quarter's OECD stock draw (hark, 800,000 bpd).

Today's report shows that OECD stocks rose in January to a smidge over 3 billion barrels - some 278mn bbls above their five-year average. OPEC's goal is to get inventories closer in line with the five-year average; their production cut deal would need to be extended a good many times at this rate.

2) The real conjecture from today's report, however, has been from Saudi Arabian production volumes. Secondary sources indicate that production continues to drop, falling by 68,000 bpd to 9.86mn bpd. Primary sources, however, indicate that Saudi has increased production back above 10mn bpd. This appears to be a shot across the bow from Saudi Arabia at its fellow OPEC members, that it too can choose to avoid compliance. According to direct communication from the Saudis, it has reversed a third of its production cuts.

(Click to enlarge)  Related: An OPEC Deal Extension Won’t Affect Oil Prices

3) The OPEC report projects that Chinese oil demand growth was 310,000 bpd last year, dropping to 280,000 bpd in 2017. Oil demand growth was strong into the end of the year, boosted by LPG growth in the petrochemical sector, while robust car sales supported gasoline demand.

OPEC suggests there are both positive and negative risks ahead, with the petrochemical sector and refinery expansion projects set to boost demand, while environmental policy changes could weigh on transportation fuel consumption.

(Click to enlarge) 

4) According to Iraq's preliminary loading program for April, it is set to export 70 million barrels (2.33 million barrels per day) of Basrah Light, and 25mn bbls (833,000 bpd) of Basrah Heavy. This is a downward adjustment to its loadings of light crude, and an upward adjustment to its heavy - which doesn't make a huge amount of sense.

February Basrah Light export loadings are close to 2.5mn bpd, the highest level since mid-2015, while Basrah Heavy exports are at their lowest level since late 2015. It makes sense that Iraq would lean in favor of exporting Basrah Light, given it is higher quality - maximizing revenue for the Persian Gulf state. Related: Why Last Week’s Oil Price Crash Was Inevitable

(Click to enlarge)

5) Finally, the graphic below is from a study by the Federal Reserve Bank of Kansas. It shows that a number of U.S. states experienced a recession last year, such as New Mexico, Oklahoma and Wyoming. The connection between these states? They are all key oil producers.

This is a theme echoed by S&P Global Ratings, who state that six out of eight major U.S. oil-producing states fell into recession in 2015 and 2016 amid low oil prices. It also states that North Dakota - where the Bakken shale play is located - went from the fastest growing state in 2014 to the worst performer in 2015.

(Click to enlarge) 

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