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Commodities – Daily News

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Top 5 things to know in markets Today:

 

  1. North Korea fires missile over Japan
  2. Global stocks sinking as a result of North Korea actions
  3. Investors pile into safe-heavens
  4. Euro rises above 1,20$ for the first time since 2015 !
  5. Energy markets continuing to process Harvey hurricane consequences

Zawiya oil refinery in Libya: Not operating in full capacity

Zawiya Oil refinery is the biggest plant operating in Libya. It usually gives the outputs of 120,000 barrels per day. Starting with this week, the trend changed. It was working half capacity. At only 60,000 bpd. Influenced by the Sharara oilfield shutdown.

Sharara Oilfield had a period of its equipment close down. Due to pipeline blockade, it was not able to transfer crude to Zawiya.

This shutdown in Shahara came as a result of August 10-25th period. It is when crude distillation towers were closed .Sharara has been shut down for around a week due to military block of a pipeline linking it to the Zawiya oil terminal.

Sharara’s half capacity outputs, and its shut down led to NOC subsidiary Agoco to also shut down the 10,000 barrels per day in Hamada oil plant.

Hamada shares export infrastructure with Sharara.

 

Glencore Rolleston mine blocked amid corporate deals

Yesterday, Glencore announced it was looking to sell a second Australian coal mine.

“Part of the Swiss-based resource giant’s rethink on how it deploys capital as its reins in debt and commodities prices rise.”

Stakes

Glencore, with its Japanese joint venture partners, Itochu Corp and Sumitomo Corp would start a “sales process” for its Rolleston mine. The mine produces thermal coal used in electricity market. 

Interesting thing is that Rolleston is geographically removed from Glencore’s main collieries. Which makes it less economic from a shipping standpoint.

Glencore corp. owns 75 percent of the Rolleston mine. Its Japanese partners each, are holding 12.5 percent. Both minority partners said they also intend to sell their interest.

 

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The Week Ahead: Crude Oil futures

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Short recollection:

This Friday, oil futures leveled higher. Recovering from the previous 5% drop which was the consequence of higher market expectations related to OPEC. Currently, traders are trying to refresh their attitude about Oil market and OPEC’s further steps.

The U.S. West Texas Intermediate crude July contract came on 90 cents. In percentage, that would be around 1.9%. Later it ended at $49.80 a barrel by close of trade Friday. It touched a two-week low of $48.18 earlier in the session.

U.S. benchmark cut the losses to fewer than 2%. Observing the first 4 days of the week it was slightly oscillating, then it plummeted for 4.8% on Thursday.

Following, on the ICE Futures Exchange in London, Brent oil for July delivery added 69 cents to settle at $52.15 a barrel by close of trade. Before that it was hitting a daily trough of $50.71. This level was not seen since May 12.

OPEC and non-OPEC countries decided on Thursday, in Vienna, to prolong the output cuts. Numbers are the same, million barrels per day until the end of the first quarter of 2018.

The agreement was globally accepted. But some of the market participants were still expecting the deeper cuts. In order for global market re-balance to be achieved sooner.

 

Next OPEC meeting

The next OPEC meeting is scheduled for November this year.

By now, the further production cuts did not have important impact on global inventory levels. Because the countries who are not participating in these output cuts are drilling bigger amounts of their oil. Such as Nigeria, Libya. And of course, the huge U.S. shale outputs.

Baker Hughes on Friday came out with data about U.S. shale drillers. They added rigs for 19th week in a row.

The U.S. rig count rose to the highest levels since April 2015. Declaring that further production gains in their production are ahead.

In order to bring financial markets closer to stability, the deal between OPEC countries and U.S. would be necessary. The constant amounts of Crude oil which are coming from the U.S. shale can only disturb every OPEC’s idea connected with market re-balance.

That definitely won’t be achieved easily, but if achieved would be of a huge value for the global markets.

In the following week, oil traders are going to face weekly information on U.S. stockpiles of crude and refined products on Wednesday and Thursday. In order  to track the real strength of demand in the United States.

Having in mind that Monday is a Memorial Day, the reports on these data will come out one day later than the usual.

Important Events to take place in the upcoming week:

Monday, May 29

Markets in the U.S. are closed for Memorial Day.

Wednesday, May 31

The American Petroleum Institute will publish the weekly report on U.S. oil supplies.

Thursday, June 1

The U.S. Energy Information Administration is to release weekly data on oil and gasoline stockpiles.

The U.S. government is also set to produce a weekly report on natural gas supplies in storage.

Friday, June 2

Baker Hughes will release weekly data on the U.S. oil rig count.

 

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Will OPEC make it to co-exist with U.S. shale oil ?

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At the beginning , they ignored each other. After a while, they went into a bruising fight. Now, finally, they are talking, although with opposing agendas.

The evolution of the relationship between OPEC and the United States oil industry now lasts for about 5 years. 5 years ago, OPEC discovered it has a rival emerging in a core Oil market.

Officials of the U.S. shale bankers were present this week in Vienna, when OPEC held a meeting. After what happened, OPEC is preparing a trip for its officials. Aiming to visit Texas in order to check if it is possible for two industries to co-exist. Because if some new co-existing spirit is suffocated, the major future fights are near.

“We have to coexist,” said Khalid al-Falih,

 

Output Cuts

OPEC now realizes that agreed supply cuts and higher prices only make it easier for the U.S. shale industry to deliver higher profit. While it is aware that shale industry has  found ways of slashing costs. It happened three years ago, when Saudi Arabia ”turned up the taps”.

Permian Basin – the largest U.S. oilfield. Parsley Energy Inc, Diamondback Energy Inc, and others are pumping at the highest rate in years. Now taking advantage of new technology, low costs and steady oil prices to harvest profits at OPEC’s cost.

OPEC’s latest idea is to make certain co-agreements, and hold the prices below $60 per barrel. Meanwhile it is aware of the U.S. shale power, but aims to hinder its growth.

“All shale companies in the U.S. are small companies.” (Noureddine Boutarfa)

“The reality is that at $50 to $60 a barrel, (the U.S. oil industry) can’t break beyond 10 million barrels per day.”

“For all OPEC members, $55 (per barrel) and a maximum of $60 is the goal at this stage.” said Iran’s oil minister.

“So is that price level not high enough to encourage too much shale? It seems it is good for both.”

“We had a discussion on (shale) and how much that has an impact,” said Ecuador Oil Minister Carlos Pérez.

“But we have no control over what the U.S. does and it’s up to them to decide to continue or not.”

OPEC delegates asked Mark Papa, chief executive of Permian oil, to say more about the shale’s potential. He diplomatically did not open the cards.

“In terms of the threat, we still don’t know how much (U.S. shale) will be producing in the near future.” Nelson Martinez, Venezuela’s oil minister said after the talk. (Reuters)

 

Opinions On Shale

UAE Energy Minister Suhail bin Mohammed al-Mazroui, admittedhe didn’t believe U.S. oil production would rise by 1 million bpd next year.

Some of OPEC’s customers are indeed content to see an alternative for their Oil sources. For example India, the world’s third-largest oil consumer, currently said it is looking to the United States for greater supply.

“The new normal has to be accepted.” Dharmendra Pradhan, India’s energy minister said this week at the OPEC meeting.

OPEC will meet again in November. Aiming to reconsider output policy and check if everything was going as planned. While most in the group now seem to believe that shale has to be accommodated, there are still those in OPEC who think another fight is close.

 

 

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Oil price drops; Base Metals down

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Main economic events in Market Today:

  • U.S. Core Durable Goods Orders (MoM)(Apr) fell to actual -0.2% while forecast was 0.4%
  • U.S. Gross Domestic Product (GDP) QoQ fell to actual 0.7% while forecast was 1.2%
  • U.S. GDP Price Index QoQ rose to actual 2.2% while forecast was 2.0%
  • U.S. Michigan Consumer Expectations came to actual 88.1 while the forecast was 87.0
  • European Central Bank Coeure Speaks

 

Base metals were mostly lower during Asian morning trade today. The Oil price impacted even the base metals movement, and it put a cap on copper price.

“On Thursday, base metals prices had rallied then dropped after the OPEC [Organization of the Petroleum Exporting Countries] announcement and after the dollar strengthened. LME copper prices were supported by issues at Grasberg but gains were checked by concerns over Chinese demand.” (Mailyard Futures, China)
SHFE copper prices will probably continue fluctuating around 46,000 yuan per tonne.

OPEC countries agreed on May 25th about extending the output cuts. However, this had a huge fast impact on Oil prices in negative way. The hedge funds reacted right away, and the global oil price went lower than predicted.
“Since May 15, when the Saudis and Russians announced their intention to extend the cuts for nine months rather than six, prices gained more than $2 in anticipation of an agreement today. Now, prices have roughly returned to May 15 levels,” SG added.

The Brent crude oil price dipped as low as $51 per barrel on Thursday, the lowest since May 15.

Grasberg copper mine strike

Freeport McMoRan Inc said Thursday that mining and milling rates at its Grasberg mine are affected by the extended strike. Also by a “large number” of approximately 4,000 absentee workers. Who were deemed to have resigned.

Increasing labor tension is a further disruption for Freeport. Involved in a long dispute with Indonesia over rights to the giant mine, which has cost both sides hundreds of millions of dollars.

Copper prices leveled three-week highs yesterday.  Concerns about extended disruptions at Grasberg triggered these movements.

“As a result, a large number of these workers were deemed to have resigned, consistent with agreed industrial relations guidelines and prevailing law…”

”When asked to comment, the Union officials were not available.” (Reuters)

The most of Freeport’s 30,000-strong Indonesian workforce is “productively and safely” working.

On May 15, Freeport said the strike is not legal and “voluntary resignation is the consequence” for workers ignoring demands to return to work. The workers who were absent for five consecutive days. (Reuters)

Workers now considered “resigned” are in addition to an estimated 2,000-3,000 workers Freeport placed on absence as of mid-April. At that time, approximately 10 percent of its 32,000 member workforce was “demobilized” under aims to cut the costs

The SHFE September nickel contract fell down for 700 yuan or 0.9% to 75,220 yuan per tonne. It happened  due to concerns over escalating nickel ore exports from the Philippines and Indonesia. And slower demand from the Chinese stainless steel sector.

 

Other base metals lower

Firstly,  July aluminium contract fell 10 yuan or 0.1% to 14,080 yuan per tonne. Secondly, The SHFE July zinc price slipped 40 yuan or 0.2% to 22,205 yuan per tonne.  Following, the SHFE July lead price increased 50 yuan or 0.3% to 15,980 yuan per tonne.

Finishing, the SHFE September tin price decreased 510 yuan or 0.3% to 145,490 yuan per tonne.

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Oil prices rise, as OPEC’s decision is getting closer

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Tuesday’s Oil prices were a bit volatile, but now Oil rose again on expectations of OPEC’s output cuts extension. As Thursday is nearing, the OPEC meeting is giving a support to global oil prices. There were some losses earlier today in the session. After White House said it would sell off half of the country’s oil stockpile. But as it turned out, this intentions were not strong enough to impact the oil price seriously.

Brent crude LCOc1 traded up 7 cents at $53.94 per barrel at 1348 GMT (9:48 a.m. ET), after a low of $53.20.

U.S. light crude CLc1 was up 10 cents at $51.23.

The OPEC countries, onwards with Saudi Arabia, and other producers including Russia will meet on May 25. They are going to extend a pledge to cut output by 1.8 million barrels per day (bpd). The cuts might possibly go even deeper. And they will last at least until March 2018.

The cuts were initially agreed to last six months until the end of June. But as discussed later, it is decided that Oil market would gain better back up if the prolonged cuts last 9 months.

 

Kuwait

Essam al-Marzouq, Oil Ministed of Kuwait said today that not all OPEC countries and its allies supported a nine-month extension. So the producers would discuss this week precisely whether to extend output cuts by a six or nine months.

There are many sources which say that they predict a smooth meeting with a nine-month extension likely to be agreed.

“OPEC meets on Thursday amid increasing optimism that the production cuts agreed last November will be rolled over and most likely to the end of 1Q18,” Colin Smith, analyst at Panmure, said in a note on Tuesday, adding he expected a rollover would “likely deliver a significant tightening of the market.” (Reuters)

 

Early trade today

Earlier today, oil prices declined a bit, on the White House plan to sell off half of the nation’s 688 million-barrel oil stockpile.

The budget, to be delivered to Congress on Tuesday, is only a proposal. So it will not take the real effect in its current form.

“Congress needs to agree to this which is rather uncertain,” said Carsten Fritsch, commodity analyst at Commerzbank. (Reuters)

 

Allies in OPEC deals

 

Carlos Perez, Ecuador Oil Minister said OPEC and other oil-producing countries are going to discuss a six- or nine-month extension to output cuts and probably choose the latter.

“Six and nine months are both proposals on the table … we will support the majority, probably the nine months.” Perez told reporters after arriving in Vienna today.

When asked whether deeper cuts would be discussed, he said: “Not at this point, I don’t think so.”

Noureddine Boutarfa, energy minister of OPEC member Algeria, said OPEC was discussing a possible nine-month extension, with curbs kept at the same level as under the group’s existing deal.

“Right now we are talking about nine months,” Boutarfa said.

Khalid al-Falih also arrived in Vienna on today, but didn’t want to comment to reporters.

There were some comments among delegates that they do not expect major surprises. Everything is pretty clear so far.

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The upcoming week: Crude Oil Futures

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Short Recollection of last week

 

Beginning by observing the Oil futures; they settled on nearly plane levels on Friday. But still registered the first weekly gain in a month. Inspired by the news that key crude producers will extend output cuts to the period after June;

Firstly, on Thursday, U.S. West Texas Intermediate crude came to the highest since May 3 at $48.22.

Secondly, the U.S. benchmark went up for $1.62, or around 3.4%, after posting three consecutive weekly declines.

Noteworthy, in London Futures Exchange, Brent oil for July delivery added on 7 cents. Later coming to settle at $50.84 a barrel by closing. The global benchmark hit $51.16 a day before. This level was not seen since May 2.

Thirdly, observing the weekly movement, London-traded Brent futures recorded a gain of $1.74, or nearly 3.5%.

 

OPEC & non-OPEC

OPEC and non-OPEC oil producing countries  are discussing the extension of a global supply cuts.

Recently, some officials have suggested the possibility of further & deeper production cuts to help clear a supply glut & rebalance the market completely.

Starting this week, crude sank to a five-month low. Loped by concern over increasing U.S. crude output that has shaken investors’ faith in the ability of OPEC to rebalance the market.

Fourthly, data from energy services company Baker Hughes showed on Friday that U.S. drillers last week added rigs for the 17th week in a row. Indicating that further gains in their production are ahead.

 

The further U.S. drilling

The U.S. rig count rose by 9 to 712, extending an 11-month drilling recovery to the highest level since August 2015.

Observing natural gas futures for June delivery, they rose 4.8 cents. Which makes it the highest level since January 26 at $3.424 per million. British thermal units, up 1.4% for the session and about 4.9% higher for the week.

All the participants in the market race will see recent weekly information on U.S. stockpiles of crude and refined products on Tuesday and Wednesday.  To groove the strength of demand in the world’s largest oil consumer.

 

Meanwhile, investors will keep an eye out for a monthly report from the IEA for further evidence that global producers are complying with an agreement to reduce output this year.

 

Inspired by Investing.com; here are some important next week’s events which will likely have impact on market & commodity trades:

 

Tuesday, May 16

The IEA is going to publish its monthly evaluation of oil markets.

Later in the session the API will publish its weekly report about U.S. oil supplies.

 

Wednesday, May 17

The U.S. Energy Information Administration is to release weekly data on oil and gasoline reserves.

 

Thursday, May 18

 

United States government will give a weekly report about Gas supplies reserves.

 

Friday, May 19

Baker Hughes operates in more than 90 countries, giving the oil and gas industry  info with services for oil drilling, formation evaluation, completion, production and reservoir consulting. It will release weekly data on the U.S. oil rig count in Friday.

 

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Oil Production; Summary of Main Oil News this week

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Russian energy ministry and output cut talks

The main official of Rosneft, Igor Sechin, said on Saturday that the Russian energy ministry had his backup in discussions over oil production cuts.

“The most important thing is to have a mechanism to defend our interests.”

In previous months, Sechin has expressed some suspicions about the ability of the OPEC. And its power to influence oil markets amid a shale oil production boom in the United States.

The countries: Oil producers, including OPEC and non-OPEC; agreed to cut output for 1.8 a day. This decision dates from last year, and will be active till June the 30th. It aims to reduce global oil inventories.

The Oil producing countries will meet later this month in Vienna, to discuss a possible extension of the deal.

 

Georgia nuclear plant construction (Southern Co)

Georgia Power and Westinghouse decided to transfer the Project management of Georgia nuclear power plant expansion, to Southern Co.

 

The temporary agreement until June 3 will allow construction of the plant expansion to continue.

Westinghouse Electric Co filed for bankruptcy in March, was hit by billions of dollars of cost overruns. At four nuclear reactors under construction, including at the Georgia project and another in South Carolina.

The Georgia project is owned by a group of utilities led by Southern Co.

Gasoline in India

Firstly, the gasoline consumption growth has been slowing since the middle of 2016, after rising for the previous two years.

Secondly, observing the last 9 months we see that consumption growth for most other fuels used for cooking and transportation is also slowing down.

 

Based on the current data, demand for liquefied petroleum gas and kerosene used for cooking, heating and lighting as well as diesel used for transport; all show signs of leveling off or falling in the first four months of 2017.

These trends maybe come from the demonetisation of large-denomination bank notes in India. They were announced at the start of November as part of the government’s anti-corruption campaign.

 

Crude Oil prices Impact:

 

Rising crude oil and refined fuel prices over the last year are also likely to have constrained the growth in consumption and other fuels.

Observing the retail gasoline prices, we note that they rose by around 10 percent between January 2016 and January 2017. While diesel prices climbed by almost 8 percent. (Ministry of Petroleum and Natural Gas)india

India’s middle class is pretty sensitive to increases in prices & costs, so they are curbing a demand for Oil. Their middle class, urban as well as rural, is emerging very fast.

Nevertheless the recent slowdown in consumption growth for gasoline and other fuels, it is too early to determine if the deceleration is temporary linked to demonetization and price rises or something more lasting.

India as a source of oil demand:

Noteworthy, India has been one of the most important sources of oil demand growth during the cuts. So any extended slowdown in consumption growth, would make the mission of global market harder. The rebalancing will be way more complicated.

 

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Oil prices VOLATILE; firstly UP on positive expectations, then falling DOWN after overnight gains

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Top 5 things about Monday’s Market:

  • Macron cruises to victory in France
  • Euro SLIPS as Macron relief rally loses steam
  • Global stocks mixed; Europe trades lower after French election
  • Oil gives up strong overnight gains
  • China’s april exports, imports rise less than expected

More info on these 5 from: www.investing.com

Prices; Monday Overnight Gains

Saudi Arabia’s energy minister stated that OPEC is seriously discussing the idea to prolong output cuts. The extension of oil output cuts will happen in June. And it would also likely cover all the year long period of time. It will maybe even enter the 2018. Despite U.S. production and drilling which is constantly increasing their margins and profits, the oil sector is limited. And the U.S. drilling can’t be permanent.

Brent crude futures were at $49.48 per barrel at 0652 GMT (2.52 a.m. ET). That is up for 38 cents, or 0.75 percent, from their last close.

U.S. West Texas Intermediate futures were at $46.52 per barrel. Which is up 30 cents, or 0.7 percent from their previous price.

Energy Minister of Saudi Arabia Speaking

Today, Khalid-Al-Falih, Saudi’s energy minister explained that oil market is now rebalancing. After long years of oversupply and overstressed ambient on this market. He said they are still expecting OPEC’s decision to bring the bright trends for future oil prices.

“Based on the consultations I have had with participating members, I am rather confident the agreement will be extended into the second half of the year and possibly beyond.” (Reuters)

His speech was held during an industry event in Kuala Lumpur. In Malaysia’s capital, on Monday.

 

Exports:

The Organization of the Petroleum Exporting Countries  along with other producers, together with Russia, agreed to cut output by almost 1.8 million barrels per day (bpd) during the first half of the year. In ordet to prop up the stressed market. Saudi Arabia is de-facto leader of all the producing countries. With the biggest stake with its individual oil outputs.

 

The positive comments and upward prices came after a long last week’s plummeting trends, which pumped the negative speculations into the Oil market. The countries who are not included in this output cut deals, also contributed to low prices. Including the United States, where output is simply exalted. It has took off in recent period so strongly, that it has a huge impacts on market.

 

Bringing the decision

Next official OPEC’s meeting will be on May the 25th. And finally, decision on whether to continue the cuts will be brought out to light. Officially.

“Oil may have seen the worst of the selloff for now, as the market turns its attention to the OPEC meeting at the end of the month.” said Jeffrey Halley, senior market analyst at futures brokerage OANDA in Singapore. ( Reuters)

French Election Impact on Oil Prices

Some of the market participants say that the victory of Emmanuel Macron in the French presidential election against far-right Marine Le Pen also supported oil prices. Bringing the hopes of more stable European economy, which automatically added to positive speculations. And implemented great hopes into the markets.

Still, both Brent and WTI crude are holding below $50 for now.

U.S. drilling continued to pick up last week, with the rig count climbing by 6 to 703.

Since a low point in May 2016, U.S. producers have added 387 oil rigs, or about 123 percent, Goldman Sachs said. (Reuters)

 

Change of trends:

Finishing with info that Oil price again edged lower, erasing strong overnight gains !! U.S. crude was at $46,17 a barrel, down 5 cents, or around 0.1% . While Brent Shed 6 cents to $49.04!

Doing businesses in the markets these days (the upcoming week) would certainly be very challenging for all the race participants. Rather than last week, which was filled out with suspicions on whether the oil prices will go a bit higher & what would happen in European market.

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Oil prices lower every day; OPEC’s effective and efficient decisions needed

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Today, it was a day of 5-month lows in Oil prices. This happened because of bothers on OPEC glut, and whether it would be extended. Nevertheless promises from Saudi Arabia about Russia’s preparation to join OPEC’s future cuts.

 

Low Prices of Oil

U.S. West Texas Intermediate crude oil futures  were more than 3 percent down in early trading. They came to a price of less than $44 a barrel. Which makes it the lowest since Nov 14. Yesterday, oil was down for 4 percent.

Brent Crude also went down for 3%. It went to a price less than $47. The lowest since november the 30th. The 30th of November was the date when OPEC activated a price rally. The day they announced that the output cuts are to start in the first half of 2017.

Trade losses

Both landmarks sleeked losses to trade near Thursday’s close by 1320 GMT. “OPEC and non-OPEC nations were really near to agreeing a deal on supply cuts.” said Adeeb Al-Aama, Saudi’s OPEC Governor.

  • “Based on today’s data, there’s a growing conviction that a six-month extension may be needed to rebalance the market, but the length of the extension is not firm yet.”

Deeper cut is not so likely. Speculations say that OPEC indeed will extend the cuts on May 25th. But the question is what is initially good about this. The 1017 has and will have 1.8 million bpd. That is the agreement which OPEC countries made in the beginning.

Hedge funds had speeded up decrease of their long positions. Thursday was a day when Brent crude trading volumes came to a record high. Counting about 542,000 contracts.

Pierre Andurand is the official in one of the worlds largest funds specialising in oil. He busted up his fund’s last long positions in oil last week. He is now running a very reduced risk at the moment.

“It is now-or-never for oil bulls,” said U.S. commodity analysis firm The Schork Report. They either put up a defense here or risk further emboldening the bears for a run at the $40 threshold (for WTI).” (Reuters)

 

Brend And WTI Futures

Both Brent and WTI futures are down about 17 percent so far this year despite OPEC efforts to support prices. The benchmarks are trading around levels last seen before the joint deal to cut output was first announced.

“So far OPEC’s strategy to draw down inventories has not worked.” (Neil Beveridge)

” If their strategy is to have any chance of success.. It is evident to us that OPEC will need to keep the output cuts active way more than the next six months. ”

Adding to cares about protruding inventories, traders pointed to exalted U.S. oil output. It is up more than 10 percent since mid-2016 to 9.3 million bpd. Which makes it almost matching output of top producers Russia and Saudi Arabia.

“Any likelihood of an increase in the level of cuts remains slim with OPEC officials playing down this possibility.” said James Woods, global investment analyst at Rivkin Securities. (Reuters)

 

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Oil immerses, on U.S. stock decline

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Oil prices tumbled lower today, May 3. Right after the U.S. government data showed a smaller-than-expected decline in domestic crude inventories. There was also shown a weak demand for gasoline. And it is feeding bothers about a supply glut.

 

Oil Numbers & Data

Benchmark Brent crude LCOc1 was down 8 cents at $50.38 a barrel.

U.S. West Texas Intermediate (WTI) crude CLc1 was down 18 cents at $47.48 a barrel at 11:33 EST.

Weekly crude stocks fell by 930,000 barrels to 527.8 million. Which makes it less than half the 2.3 million-barrel draw that had been in forecast. (EIA)

“U.S. domestic production increased again, and continues its steady climb.” said John Kilduff. (Again Capital hedge fund partner in New York.)

Noteworthy, sharp drop in imports turned what would have been an increase in stocks into a small drawdown.

EIA data also showed gasoline stocks rose by 191,000 barrels, which was much less than the 1.3 million-barrel gain that had been forecast. However, gasoline demand slipped 2.7 percent over the last four weeks from the same period a year ago.

  • “This is continuing a trend since the beginning of the year in which sales have been lower and that is casting a shadow on the market and pressuring crude oil prices.” Andrew Lipow, president of Lipow Oil Associates in Houston. (Reuters)

While the market remains anchored on U.S. production, oil investors continue to watch.. And think whether producing countries have been complying with their 2016 deal to cut output around 1.8 million bpd by the middle of the year.

 

Russia’s position

 

Russia’s oil cut exceeds level demanded in OPEC-led pact. Under the deal, Russia promised to cut its average daily production gradually by 300,000 barrels to 10.947 million bpd. From the October level of 11.247 million bpd.

With global crude inventories still bulging, investors are now focused on whether OPEC and others will agree to extend the cuts to the second half of the year. This will most probably become true on May 25th.

Russia, contributing the largest production cut outside OPEC, said that as of May 1, it had curbed output by more than 300,000 bpd. Since hitting peak production in October.

Russia has achieved its reduction target a month ahead of schedule. OPEC production showed the group’s compliance had fallen slightly.

Alexander Novak, Russian Energy Minister has said he would meet managers of key Russian oil producer before the OPEC event. He wants them to discuss extending the cuts. That meeting has yet to take place.

Russia’s Deputy Prime Minister Arkady Dvorkovich refused to comment about this subject when asked today.

 

More Oil from East

 

  • “Although OPEC is expected to extend a self-imposed output cap by another six months, it would be a challenge convincing several non-OPEC members to join the endeavor.” Said Abhishek Kumar, senior energy analyst at Interfax Energy’s Global Gas Analytics in London. (Reuters)

According to some news by Reuters it is clear that there was more oil from Angola and higher UAE output than originally. Thought meant OPEC compliance with its production-cutting deal slipped to 90 percent in April. From a revised 92 percent in March. Certainly, there are a lot of manipulations happening in the Oil market. Will it come out stronger after the May 25… We will see.

 

 

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