The “Weakest” EIA Report In Years

[Pitcher]

The “Weakest” EIA Report In Years

The EIA just published one of the “weakest” weekly oil reports in years, which suggests troubled waters ahead for the global oil market.

The timing of the report is not ideal, coming amidst a currency crisis in Turkey, which has raised fears of financial contagion in other emerging markets. The strength of the dollar is putting a long list of currencies under pressure, vexing policymakers around the world. Some countries, such as Argentina, are aggressively hiking interest rates to defend their currencies (although the peso continues to fall). Others, such as Turkey, are resisting any rate hikes at all, which is clearly not a solution to capital flight and a sharp devaluation.

It is too early to tell whether or not the sudden crisis will be confined to Turkey or if it will mushroom into an emerging market conflagration that sends emerging markets – and perhaps even the global economy as a whole – into a tailspin.

These currency troubles could severely undercut global oil demand. Not only are crude oil prices close to multi-year highs, but the strength of the dollar and the relative weakness of a variety of currencies in the developing world, combine for a toxic brew to demand. Oil prices are up some 6 or 7 percent on the year, but in Turkey, imported oil is now 60 percent more expensive – the result of the meltdown in the lira.

While the specific percentages might vary from country to country, much of the world is experiencing painful increases in fuel because so many currencies are being trampled by the strength of the dollar.

The early signs of trouble to the oil market are starting to materialize. The EIA’s weekly report showed a massive 6.8-million-barrel increase in crude oil inventories.

Investment bank Standard Chartered puts out a “bull-bear index” each week, which incorporates the latest weekly data from the EIA. The index tends to seesaw back and forth, depending on whether or not inventories fell, whether production rose or fell, etc. The bank says that this past week the index was at “-100,” or the “weakest over the past five years.” 

 

“The index tells you all you need to know, but the main detail is that total commercial inventories rose a thumping 17.53 million barrels against the five-year average,” Emily Ashford and Paul Horsnell wrote in the Standard Chartered report. “Crude oil inventories rose 6.81mb in absolute terms and 9.66mb against the five-year average, with the increase in refinery runs to a record-high of 17.98mb/d being the only bullish component of the whole crude balance equation. Cushing crude inventories rose for the first time in three months. Implied demand was lower [week-on-week] for every product except gasoline.”

Not everyone was so pessimistic. Commerzbank chalked much of the poor numbers up to a surge in imports, which may not last. “A countermovement is likely this week at least,” Commerzbank wrote in a note.

Other signs of trouble are appearing on the horizon. Reuters argues that the recent increase in distillate stocks is a red flag for the health of the global economy. Distillates, such as road diesel, marine fuels and jet fuel, reflect activity in the industrial sectors and global trade levels. As opposed to gasoline, which is a reflection of passenger vehicle activity, distillates offer a leading indicator that tracks shifts in industrial activity. Related: WTI Set For Longest Weekly Losing Streak Since 2015

Distillate stocks were drawing down quickly at the start of 2018, at a time when the global economy was strong and oil demand was growing at a blistering 1.8-million-barrel-per-day rate year-on-year. This summer, however, distillate inventories began to rise. Reuters notes that European gasoil futures were recently in a state of backwardation, but have flipped to contango. The shape of the futures curve suggests that the market is not as tight as it was a few months ago, which, in turn, is an indication that global trade and broad economic activity is slowing.

The escalating U.S.-China trade war combined with the unfolding emerging market currency turmoil could put a serious dent in global oil demand for the rest of this year and into 2019. Oil demand in Asia is already starting to slow.

“The growth story is now more or less a U.S. growth story. The rest of the world isn't playing along any longer,” said Saxo Bank commodities strategist Ole Hansen. Brent oil futures are hovering just above the 200-day moving average, which forms a bit of a resistance preventing oil prices from crashing lower. The flip side of that is that if Brent does drop below that threshold, sellers could push prices much lower.

 

https://oilprice.com/Energy/Crude-Oil/The-Weakest-EIA-Report-In-Years.html

[Calijim]

Wanna see cheap oil? Just wait till Anwar comes on line. Prices will trend lower for years to come,but Iraq has a secret weapon and we all know what that is.. Revaluation!! Am I wrong?

[heeper00]

They have got to have something up there sleeve or are they sleeveless. 

I'm hoping and so are all the citizens they need there spirit lifted it can't go on like this  

RV before they are at war with each other for REAL. 

believe in YOURSELF 

Go RV. 

[Pitcher]

Based on this article and others I read over the weekend I was looking to short oil today.  My charts were telling me not to short but to go long VLO and HFC. I day traded them both for a nice gain. Day trading is never easy but once you learn how to read a chat it’s a nice way to pick up some fast money. 

 

I had to sell my swing trades last week in Eog and SLB. When charts break down and technicals break, my disciple says  RUN!!!

i will never be a buy and hold investor ever again. If you are younger than 40 sure why not but I’ll never let the crooks in NY take 30-40% of my money again. 

[Pitcher]

Trump Administration Embraces Energy Dominance Agenda

By Irina Slav - Aug 20, 2018, 4:00 PM CDT

The United States no longer needs to conserve oil as domestic production increases have reduced the need for imports. As a result, the United States has been given “more flexibility than in the past to use our oil resources with less concern," the Associated Press reports, citing a memo from the Department of Energy.

In the same memo, the DoE added a general note about oil conservation by expressing a belief that energy needs to be used wisely, without going into detail. The AP notes that the memo effectively challenges previous attempts to conserve energy, including ones that have become legislation, such as the mileage standard.

Related to this, earlier this month reports emerged that the administration planned to freeze the mileage standard instead of requiring carmakers to improve new cars’ energy efficiency further. This, media suggested, would pit Washington against states that have voluntarily stipulated higher mileage standards in their legislation. If the mileage standard freeze proposal passes, it will increase U.S. oil consumption by half a million barrels daily.

Yet the idea presented in the memo is in tune with President Trump’s energy dominance concept aimed at making the United States not just energy independent, but also expand its clout on international oil and gas markets. 

 

Whether as a result of this policy or the oil price improvement over the last year or so, U.S. production hit an all-time high last month, and is expected to reach the highest in the world next year, surpassing Russia and Saudi Arabia. However, even that won’t be enough to meet domestic demand on its own.

As of 2017, the EIA has calculated daily oil consumption in the country averaged 19.88 million barrels. Production this summer hit 10.9 million bpd, and the EIA expects it to rise further to 11.7 million bpd in 2019, which would make the country the biggest oil producer in the world, provided Saudi Arabia and Russia continue pumping at their current level. In other words, the United States is on track to boost its oil production and exports further. but energy independence is not yet attainable.

 

https://oilprice.com/Energy/Energy-General/Trump-Administration-Embraces-Energy-Dominance-Agenda.html

[Pitcher]

China shifts to Iranian tankers to keep oil flowing amid U.S. sanctions 

1. Economy

August 20, 2018

 

Chinese buyers of Iranian oil are starting to shift their cargoes to vessels owned by National Iranian Tanker Company (NITC) for nearly all of their imports to keep supply flowing amid the re-imposition of economic sanctions by the United States.

The shift demonstrates that China, Iran’s biggest oil customer, wants to keep buying Iranian crude despite the sanctions, which were put back after the United States withdrew in May from a 2015 agreement to halt Iran’s nuclear program.

The United States is trying to halt Iranian oil exports to force the country to negotiate a new nuclear agreement and to curb its influence in the Middle East. China has said it is opposed to any unilateral sanctions and has defended its commercial ties with Iran.

The first round of sanctions, which included rules cutting off Iran and any businesses that trade with the country from the U.S. financial system, went into effect on Aug. 7. A ban on Iranian oil purchases will start in November. Insurers, which are mainly U.S. or European based, have already begun winding down their Iranian business to comply with the sanctions.

To safeguard their supplies, state oil trader Zhuhai Zhenrong Corp and Sinopec Group, Asia’s biggest refiner, have activated a clause in its long-term supply agreements with National Iranian Oil Corp (NIOC) that allows them to use NITC-operated tankers, according to four sources with direct knowledge of the matter.

They spoke on condition of anonymity as they were not allowed to speak publicly about commercial deals.

The price for the oil under the long-term deals has been changed to a delivered ex-ship basis from the previous free-on-board terms, meaning that Iran will cover all the costs and risks of delivering the crude as well as handling the insurance, the sources said.

“The shift started very recently, and it was almost a simultaneous call from both sides,” said one of the sources, a senior Beijing-based oil executive.

In July, all 17 tankers chartered to carry oil from Iran to China are operated by NITC, according to shipping data on Thomson Reuters Eikon. In June, eight of 19 vessels chartered were Chinese operated.

Last month, those tankers loaded about 23.8 million barrels of crude oil and condensate destined for China, or about 767,000 barrels per day (bpd). In June, the loadings were 19.8 million barrels, or 660,000 bpd.

In 2017, China imported an average of 623,000 bpd, according to customs data.

Sinopec declined to comment on the change in tankers. A spokesperson with Nam Kwong Group, the parent of Zhenrong, declined to comment.

Iran used a similar system between 2012 and 2016 to circumvent Western-led sanctions which were effective in curtailing exports because of a lack of insurance for the shipments.

It was not immediately clear how Iran would provide insurance for the Chinese oil purchases, worth some $1.5 billion a month. Insurance usually includes cover for the oil cargoes, third-party liability and pollution.

“This is not the first time companies exercised the option... Whenever there is a need the buyers can use that,” said another of the sources, also a senior Beijing-based oil executive.

Term buyers of Iranian submitted their plans to NIOC earlier this month of how much crude they will lift in September, said two trade sources.

It typically takes about a month for Iranian crude to reach China.

With the new shipping arrangement, Iranian oil cargoes to China are expected to stay at recent levels through October, said the four sources with knowledge of the tanker changes.

 

http://www.tehrantimes.com/news/426743/China-shifts-to-Iranian-tankers-to-keep-oil-flowing-amid-U-S

[Pitcher]

Oil giant Total has pulled out of Iran and giant gas project, reports say

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French oil giant Total has officially left Iran and abandoned its deal to develop a giant natural gas field in the country, Iran's oil minister reportedly told state television Monday, leaving the isolated republic to look for a replacement.

"Total Iran has officially left the contract to develop the South Pars Gas project's phase 11... the process to replace with another company is underway," Bijan Namdar Zanganeh was quoted as saying, Reuters reported.

Total had already signaled that it could pull out of the Islamic republic, and its intention to develop part of the world's largest gas field at South Pars, after the U.S. said it would reimpose sanctions on the country after pulling out of the 2015 nuclear deal in May.

 

The first series of sanctions were reinstated in early August and target the country's automotive sector, issuance of debt and metals trade. But more are to come in November; these will hit Iran's crucial oil sector, shipping industry and financial institutions.

 

Foreign companies like Total that have business dealings with Iran were told they could face secondary sanctions for doing business in the country, prompting a number to pull out. Maersk, Peugeot, GE, Boeing and Siemens have all cut ties with Iran in a bid to avoid U.S. sanctions, while Russian oil company Lukoil has also said it would put plans to pursue joint ventures with Iran on hold.

 

The collapse of the deal with Total to develop the South Pars gas project is a blow for major OPEC oil producer Iran. Total had signaled in May that it could pull out once it had assessed the ramifications of President Donald Trump's decision to reimpose sanctions and if it was not granted a sanctions waiver.

 

Total CEO Patrick Pouyanne told CNBC in June that U.S. sanctions mean that "there's not a single international company like Total who can work in any country with secondary sanctions. I don't have the right. It's just the reality of the world."

Iranian officials had earlier suggested that China's state-owned CNPC, which also has a stake in the South Pars project, could take over Total's stake, lifting its interest to from 30 percent to more than 80 percent, Reuters reported Monday.

Separately, Iran's foreign minister called for an accelerated effort from the European Union, one of the major supporters of the 2015 nuclear deal, to step up efforts to salvage the deal.

 

https://www.thebaghdadpost.com/en/Story/30818/PM-Majority-rule-will-be-the-solution-if-consensus-fails

 

 

[Calijim]

6 hours ago, Pitcher said:

Based on this article and others I read over the weekend I was looking to short oil today.  My charts were telling me not to short but to go long VLO and HFC. I day traded them both for a nice gain. Day trading is never easy but once you learn how to read a chat it’s a nice way to pick up some fast money. 

 

I had to sell my swing trades last week in Eog and SLB. When charts break down and technicals break, my disciple says  RUN!!!

i will never be a buy and hold investor ever again. If you are younger than 40 sure why not but I’ll never let the crooks in NY take 30-40% of my money again. 

I on the other hand have a unique gift... I can crash any stock at will, all I have to do is buy it and it’s like jumping off a cliff without a parachute.

[Pitcher]

I’ve been there and done that too Calijim. Trading is never easy.  Once you understand that stock prices are run by algos the math gets easier when you become a technical trader.  I read a half dozen books on technical trading, was tutored by a master trader of 40 years, and talked to 3 algo programmers and it still took me a few years to master day trading.  And by master it, I really mean I figured out a discipline that made sense for me.  Out of 5 trades 1 or 2 aren’t going to work the way you thought.  When that happened you gotta run before a small loss becomes a hole in your pocket!!!!

[DinarThug]

On 8/19/2018 at 5:25 PM, Pitcher said:

The “Weakest” EIA Report In Years

 

The Iraqi Goat Herders Market Is Nervously Awaiting The E-I-E-I-O Report !  

 

     

[Pitcher]

Witty, and well done Thug!!!