Refineries earnings signal demand outlook

Commodities

Oil outlooks continue to fluctuate but a few upcoming announcements may give some clarity.

Prices are holding around $38 per barrel for WTI while Brent crude is roughly $40 p/b.

Refineries are looking to announce their earnings this week, which may give indicators towards Q4 oil demand, specifically on gasoline, diesel and jet fuels.

Valero Energy reported an uptick in demand during Q3, up from Q2, but still way below 2019 volumes.

Q4 forecasts suggest 2.5mpd demand, which is 500,000 lower than Q4 2019’s numbers.

Inventories are thusly high while demand is low.

Majors ExxonMobil and Chevron will be reporting their quarterly earnings this week on October 20th. It will be interesting to see how the supermajors have coped. Exxon alone announced a first-quarter loss of $610m in May 2020. Its performance will be indicative of the industry as a whole.

40 North American oil & gas producers have declared bankruptcy this year. This may point towards a) further closures industry-wide or b) closer collaboration and mergers.

For instance, Conoco Phillips announced last week it was acquiring Concho Resources. Will this be an ongoing trend?

In Natural Gas, markets anticipate bullish natural gas prices in the short and mid. There are several factors at play here including:

  • an unexpected jump in US LNG exports in the coming weekend
  • Potential production drops
  • A major temperature shift towards colder temperatures.

Resilience in natural gas prices is likely to emerge as we head into winter. Colder temperatures point towards stimulated demand for gas for heating and so on. Therefore, the coming months may prove beneficial for commodities traders – if a little cold.

Cryptos rally on PayPal news, Sterling jumps on Brexit hopes

Commodities

Bitcoin rose to its highest level in over a year, hitting levels not seen since July 2019 after PayPal said it will enable cryptocurrencies on its platform.

Initially, it will allow users to buy, hold, and sell Bitcoin, Ethereum, Bitcoin Cash, and Litecoin in the PayPal wallet. It will also enable users to spend cryptocurrencies for purchases at its 26 million merchants worldwide.

It is hard to know for sure right now what it means, but because of PayPal’s sheer scale and reach I would think the development may be a potential game-changer in the mass use of cryptos, though of course there are many other barriers to its widespread consumer and business adoption.

Mainstreaming in this way should boost the usage case and this would tend to underpin renewed bullishness around the crypto space, though we are at pains to stress that nothing is certain when it comes to cryptocurrencies.

The news rekindled bullish spirits in the crypto space today.

Movements on Cryptocurrency.

Meanwhile, GBPUSD rallied through 1.3140 to reach its highest since September after some positive news around Brexit.

Cable has risen more than 2 big figures from yesterday’s lows so far, underlining the pair’s sensitivity to headlines right now.

There had been strength building all day and then news crossed the wires in the last few minutes that Brexit talks are to restart with the aim of a deal by November 13th.

Clearly in mind is the informal meeting of heads of state in Berlin scheduled for Nov 16th, by which point Macron, Merkel et al will want to have a text to sign off. There has definitely been a narrowing in the gap since the UK shut the door last Friday. This is a positive and indicates that a deal is still more likely than not, though we would be cautious about assuming anything at this stage.

Elsewhere, it’s been a rather downbeat day for equities in Europe.

The FTSE 100 is close to lows of the day and near the September lows around 5800 heading into the close, down -1.3% and not helped by sterling strength. Euro Stoxx 50 trips the middle of the range near 3,200, down -0.66%.

US equities have opened on a firmer footing with the S&P 500 +0.5% and the Nasdaq +0.7% and recovering 11,600. Snap shares +30% after a blowout quarter saw +18% y-o-y rise in users and +4% from the July quarter. More time at home has clearly left consumers spending more time on social media channels like Snap. Gold is firmer above $1,920 and facing important resistance at the 50-day SMA at $1,925.

Movement of the pound against the USD.

US EIA Oil Stocks preview: Oil rattled as Trump cancels stimulus talks

Commodities

US oil stockpiles rose by more than expected during the week ending October 2nd.

Data from the American Petroleum Institute showed that oil inventories had grown by 951,000 barrels – more than double the 400,000 barrel build analysts had predicted.

The larger-than-expected build follows a smaller-than-expected draw the week before, casting doubts over the robustness of demand in the US.

While gasoline stocks fell by -867,000 barrels during the same period, this was a little short of forecasts and only just over half the size of the build reported the week prior. Distillate inventories fell by just over a million barrels after the previous week’s -3.4 million barrel drop.

Trump tweets: No stimulus discussions until after the election

Also weighing on crude oil sentiment today is the abrupt cancellation of negotiations over a new stimulus package.

President Trump, fresh out of hospital following his Covid-19 diagnosis, tweeted that the Democrats were ‘not negotiating in good faith’ and that talks would not resume until after the election.

Although markets still expect stimulus regardless of who wins the election, the cancellation of talks adds more waiting time to the already delayed second dose of fiscal support.

US EIA Crude Oil Inventories report on tap

Oil traders will be looking for an upside surprise today when the official US Energy Information Administration data is published.

Last week’s report showed a drop in oil stockpiles of nearly -2 million barrels. Analysts this week are expecting to see an increase of nearly 300,000 barrels.

The report is due at 14.30 UTC.

EIA oil inventories preview: Crude struggles after mixed API data

Commodities

Crude oil and Brent oil are struggling below opening levels today after a bearish inventory report from the American Petroleum Institute.

Both benchmarks headed back towards the two-week lows hit yesterday before returning to trade just under opening levels.

Crude is on track to record its first monthly loss in five months, while Brent looks set to end lower for the first time in six months.

API: Oil draw falls short, surprise gasoline build

The API reported a smaller-than-expected draw in crude oil inventories and a surprise build in gasoline inventories.

Crude oil inventories fell by 831,000 barrels in the week ending September 25th, against analyst forecasts of a 2.256 million barrel drop.

Gasoline inventories also disappointed forecasts, rising by 1.623 million barrels during the same period, instead of falling by 1.3 million barrels as expected.

In more supportive news, US oil production fell to 10.7 million barrels per day.

Rising coronavirus cases raise questions over global recovery

The rising number of coronavirus cases as winter approaches in the Northern Hemisphere has heightened fears of new restrictions that could curb economic activity and therefore demand for oil.

While certain parts of the global economy are bouncing back, others continue to be hammered by the pandemic. Airlines are a key market for oil and various restrictions combined with a general fear of air travel given the current circumstances has seen a huge drop in bookings.

On Tuesday the global Covid-19 death toll passed the 1 million mark, up from 500,000 three months ago, with the number of infected exceeding 33 million.

Traders are also worried that the US Presidential Election may not produce a clear winner on November 3rd, leading to more disruption for the world’s largest economy as both Trump and Biden contest the results.

US EIA oil inventories preview: Crude edges higher on mixed API report

Commodities

Crude and Brent oil have recovered early losses and are trending higher this morning despite the downside pressure from USD as the dollar index hits a two-month peak.

Crude oil has moved off from the day’s lows of $39.30 to test $40.00, while Brent has risen back towards $42.50 after earlier falling towards yesterday’s intraday lows around $41.61,

Mixed API report shows unexpected oil build, large gasoline draw

The latest US oil inventories report from the American Petroleum Institute showed a surprise build in crude stockpiles.

US oil inventories rose by just shy of 700,000 barrels in the week ending September 18th, according to the latest API report. Analysts had predicted that crude stockpiles fell by 2.256 million barrels.

Although moving in the wrong direction the build is relatively small, especially considering the dent to inventories made by the previous week’s 9.517 million barrel draw.

The report revealed that US oil production increased during the period, but at 10.9 million barrels per day is still 2.2 million bpd below the highs of 13.1 million bpd seen in March.

Sentiment had also been supported by a much larger-than-expected draw in gasoline, with stockpiles falling by 7.735 million barrels compared to analyst’s expectations of a 614,000 barrel drop. Distillates fell by over 2 million barrels.

The official US oil inventories report from the Energy Information Administration is due out later today.

EIA crude inventories preview: Oil up after API report smashes estimates

Commodities

Crude oil and Brent oil are moving higher for a second session today after another massive draw in US oil stockpiles.

WTI has gained $0.70 (+1.8%) and Brent oil is $0.73 (+1.8%) higher. Crude oil has now almost erased the losses incurred since prices tumbled on September 8th.

Crude, Brent up on falling oil stockpiles

The latest oil report from the American Petroleum Institute revealed that US oil inventories fell by 9.517 million barrels in the week ending September 11th. Analysts had expected a draw of 1.271 million barrels.

While crude stockpiles fell last week, gasoline inventories rose. The Labor Day holiday marks the end of the US summer driving season and falling gasoline demand is expected heading into the winter months.

This may already be priced into the market, however, with crude and Brent having languished near their lowest levels since June at the start of the week. Both the Organisation of the Petroleum Exporting Countries and the International Energy Administration revealed more bearish forecasts for the recovery in global oil demand this week.

Hurricane Sally to provide short-term boost for crude oil?

Oil is being leant short-term support thanks to the approach of Hurricane Sally, which is expected to cut between 3 million and 6 million barrels of energy production along the Gulf Coast.

However, the weather system has also shuttered some refineries, meaning that oil demand has also taken a hit.

Will US EIA oil inventories data contradict API numbers again?

While the API numbers are huge it’s worth remembering that latest week’s report was later contradicted by the official Energy Information Administration figures. While the API report showed a draw of nearly 3 million barrels for the week ending September 4th, the EIA data revealed a 2 million barrel build.

It seems unlikely that the EIA numbers would diverge so heavily from the API figures, but it is worth remembering that there are discrepancies between the two data sets.

US EIA oil inventories preview: Crude tries to claw back losses

Commodities

Crude and Brent oil tanked yesterday, hitting the lowest levels since mid-June as markets continued to react to news Saudi Arabia is slashing its export prices for customers in Asia and the US.

Crude oil fell -7% yesterday to close at $36.88, while Brent closed -5% lower at $40.03. Both are moving higher today, with WTI up $0.60 and Brent up $0.53, but September losses are still in excess of -11%.

Saudi Aramco will cut prices for Asian buyers for a second consecutive month, and will cut prices for US refiners for the first time in six months. Chinese refiners have been snapping up cheap oil, importing record amounts recently, but it seems that stockpiles are now filling up.

It’s another worrying sign for the demand outlook, just a month after Aramco’s chief executive claimed Asia’s oil demand was almost back to pre-crisis levels.

Bank of America research adds to fears over oil demand recovery

At first it had been hoped that the global economy would pick up sharply once lockdowns were lifted, but the increasing numbers of coronavirus infections and some soft eco-data has put these assumptions into doubt.

Indeed, Bank of America Securities predicted yesterday that global oil demand won’t return to pre-pandemic levels for another three years. BofAS analysts point to the collapse in air travel, which they claim won’t be able to recover fully until a vaccine is developed – something they believe is still 12-18 months away.

US EIA crude oil inventories data delayed by Labor Day holiday

This week’s US crude oil inventories data is delayed by a day due to Monday’s Labor Day holiday. Figures from the American Petroleum Institute will be published at 20.30 UTC today, with the official Energy Information Administration data due at 15.00 UTC tomorrow (September 10th). EIA natural gas storage figures are released at 14.30 UTC as per usual.

US EIA Oil Inventories Preview: Crude edges higher after sixth straight API draw

Commodities

Crude and Brent oil have moved slightly higher this morning after data from the American Petroleum Institute revealed another huge drawdown in US oil stockpiles.

WTI has edged up $0.17, or 0.4%, and Brent oil has added $0.24, or 0.5%. Both benchmarks are trading above their recent long-term ranges, although below the highs struck last week when prices reached levels not seen since early March.

API oil inventories: another huge decline for US stockpiles

The latest API report revealed another large draw from US crude oil stockpiles in the week ending August 28th.

As has become usual recently due to the highly unusual conditions in the market, the actual draw of 6.360 million barrels hugely outpaced the 1.887 million barrel drop that analysts had predicted.

Last week the API reported a 4.524 million barrel drop against expectations of a 3.694 million barrel decline.

Last week was the sixth consecutive week that oil stockpiles declined. Gasoline inventories also fell, with the draw of 5.761 million barrels representing only a slight moderation from the 6.392 million barrels the week before. Analysts had expected gasoline stocks to fall by just over 3 million barrels.

Distillates were down 1.424 million barrels, erasing a bit over half of the build seen the previous week.

Official data from the US Energy Information Administration is due for release during today’s New York session.

US manufacturing uptick supports crude

Oil market sentiment has also been lifted by recent US manufacturing data. The ISM manufacturing index for August climbed to 56.0 from 54.2. Analysts had expected the index to register a mild uptick to 54.5.

The reading is the third month of growth after the sector was hammered by the coronavirus lockdowns, and is also the highest reading since November 2018.

Oil holding five-month highs ahead of US EIA crude inventories report

Commodities

Crude and Brent oil spiked to fresh five-month highs yesterday and have continued to trade around those levels as stormy weather threatens US supply and recent data points to high demand.

Both benchmarks are flat today after opening just below recent highs – yesterday saw crude climb over 2% to hit $43.62, while Brent spiked to $46.50.

Crude oil gains as Hurricane Laura threatens production in the Gulf of Mexico

US oil producers in the Gulf of Mexico have been forced to shut down around 85% of their oil output due to the approach of Hurricane Laura. 15 years ago Hurricane Katrina forced 90% of production to close.

Hundreds of workers have been evacuated from the region and output has dropped by nearly 1.6 million barrels per day as a result of the shutdowns.

While the hit to supply is likely to only be temporary, it has still given crude oil and Brent oil a boost.

Another forecast beating API drawdown boosts crude oil

The latest crude oil inventories report from the American Petroleum Institute has once again revealed a larger than expected drawdown in stocks.

Inventories fell by 4.524 million barrels during the week ending August 21st, beating analysts’ expectations of a 3.694 million barrel decline. The previous week oil stocks had fallen by 4.264 million barrels, versus predictions of a 2.670 million barrel drop.

Further improving sentiment was a forecast beating draw of gasoline, with stockpiles falling 6.392 million barrels during the period against analyst expectations of a 1.533 million barrel decline.

US EIA crude oil inventories data is due out this afternoon. Inventories have fallen for four straight months now. The rate of draw has slowed sharply, but will the official figures confirm the API data, breaking that trend?

US EIA Crude Oil Inventories preview: Oil erases losses on broad inventory drawdown

Commodities

Crude oil has erased yesterday’s losses and Brent is close to doing so as well after private oil inventories data yesterday showed a large draw.

WTI (SEP) has gained $0.40 (1%), although remains near the middle of its recent trading range at $42.14. Brent is $0.33 (0.7%) higher to trend just above $45.00. Both benchmarks had spiked to their second-highest levels since March yesterday in the wake of the latest data from the American Petroleum Institute.

Private data shows larger-than-expected oil, gasoline draws

API data released yesterday showed a drop in crude inventories of 4.4 million barrels during the week ending August 7th. Analysts had expected a drop of 2.875 million barrels.

The figures continue to point to strong demand recovery in the US, helping to counterbalance some of the downside pressure on crude as OPEC members begin scaling up production after cutting by record levels between May and July.

Further improving sentiment was a larger-than-expected draw from gasoline inventories. Stocks fell by 1.748 million barrels against expectations of a 674,000 decline.

US EIA Crude Oil Inventories forecasts

Forecasts for the US EIA Crude Oil Inventories report suggest a drop, but as we’ve seen previously both the direction and magnitude of the change often takes analysts by surprise. Predictions for the past four weeks’ worth of US EIA data have been way off the mark in terms of the size of the change, and wrong about the direction twice.

After the API data many traders will be expecting to see a similar decline in inventories when the EIA publishes its official figures.

As well as the latest inventories data, traders can also expect fundamental updates from today’s Monthly Oil Market Report published by OPEC, and tomorrow’s Oil Market Report from the International Energy Agency.

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