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U.S. Crude Is Dominating Global Oil Markets

U.S. Crude Is Dominating Global Oil Markets

Surging U.S. crude exports, particularly…

Demand Pessimism on Oil Market Dissipates

Demand Pessimism on Oil Market Dissipates

The pessimism that has gripped…

Ten Key Market Indicators This Week

There are so many things to bring to your attention this morning that I had to number ‘em all. So henceforth, here are 10 things not to miss on this final Tuesday morning of October:

1) The White House has announced it proposes to sell 58 million barrels from the U.S. strategic petroleum reserve (SPR) to raise cash by 2025. The SPR was started in response to the Arab oil embargo in 1973-74 to ensure the U.S. had an emergency stockpile. Its current capacity is 713.5 million barrels, and it currently holds 695 million barrels.

Starting in 2018, 5 million barrels will be sold, rising to 10 million barrels by 2023. The last significant drawdown was in 2011, when 30 million barrels were sold to offset supply disruptions caused by the Arab Spring.


2) Preliminary UK GDP data for the third quarter came in shy of consensus, with growth of +0.5 percent seen when +0.6 percent was expected, while +0.7 percent growth was seen in Q2.

3) Natural gas prices have dropped below $2/MMBtu for the first time since early 2012, as a warm start to winter, ongoing strong supplies, and an impending record storage level in the coming weeks weighs heavy on prices. Prices have dropped 20 percent in the last week.

Related: Iran May Not Be That Attractive To Oil Industry After All

4) Durable goods in the U.S. have fallen for a second consecutive month in September, adding to fears that the U.S. economy is slowing in the third quarter. Durable goods (excluding aircraft) came in at -0.3 percent MoM, while August saw a downward revision to -1.6 percent.

5) BP released its Q3 results, and they unsurprisingly highlighted the common theme of lower profits and cost-cutting. Earnings before tax and interest from its exploration and production business fell to $743 million in Q3, down from $3.31 billion a year ago.

It did see strong pretax adjusted profits from its refining and trading division, however, which rose to $2.3 billion in Q3 from $1.5 billion a year ago, and results on the whole have been viewed as generally better than expected. The other four members of ‘big oil’, Shell, Chevron, Total, and Exxon Mobil, all report Q3 earnings this week.

6) South Africa’s unemployment rate for Q3 increased to 25.5 percent amid an economic slump.

Related: Next Few Weeks Will Reveal Full Extent Of Oil Industry Suffering

7) One of ECB President Mario Draghi’s favorite indicators – Eurozone M3 money supply – came in at +4.9 percent YoY for September, just below both consensus and last month’s number of +5.0 percent. This is a keenly-watched metric, because increasing money supply leads to additional spending, which in turn leads to inflation – something the Eurozone avidly seeks.


M3 money supply, 3-month moving average (source: investing.com)

Related: U.S. Oil Imports On The Rise Once More

8) The latest CFTC data show that money managers such as hedge funds increased their short positions in crude by 18 percent last week. This means net long positions have been reduced by the most since July:



9) With 15 million barrels of oil added to U.S. inventories in the last two weeks, another solid build of ~3 million barrels is expected from tomorrow’s weekly EIA report. Corresponding draws are expected from the products as we shuffle through the second-half of maintenance season. Ongoing signs of oversupply in the U.S. and elsewhere is continuing to weigh on crude prices, and once again we head lower. Products once again are outperforming, given seasonal demand strength for distillates, and seasonal supply weakness for gasoline amid maintenance season.

10) Ninety years ago today, Fred Waller received a patent for water skis. Some fourteen years after, the mighty John Cleese was born.

By Matt Smith

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