Oil is stuck in a rut and has the same odds to break out as we have with the House Speaker Nancy Pelosi and Treasury Secretary Munichin making a covid relief agreement today.
After posting its first gain in four sessions, oil is starting to struggle. We still have no deal on a stimulus package, but the main reason that oil is struggling is because the American Petroleum Institute (API) defied the whispers and dared report a 584,00o barrel crude oil supply build. The market seemed shocked and reversed a late-session rally because there were talks of a significant supply drop going into the report. Yet supply reports in the aftermath of a hurricane like Hurricane Delta can be messy and unpredictable.
Yet the surprise drop in supply was not in oil, it was in distillates. The API reported a massive 5.983 million barrel draw that should ease concerns of massive oversupply. Demand has been strong due to farmers harvesting crops, who are way ahead of schedule with their harvest. We also had an uptick in airline passengers that is probably helping jet fuel demand.
Gasoline supply also was reported lower by 1.622 million barrels. If the Energy Information Administration confirms, the gasoline supply will fall further below the average range for this time of year.
Russia suggests that it is too early to commit to an extension of the OPEC Plus cuts, yet suggest they are open to it if the market prospects do not improve. JODI reported that Russia registered its historic low production over the previous three months. Russian crude oil production in August rose month-on-month by 413 KBD to 9.22 MBD. Russian crude oil refinery intakes in August rose again month-on-month by 82 KBD to 5.46 MBD.
Saudi Arabia’s total oil products closing stock level in August rose sharply month-on-month by 8.06 MBBL to 89.50 MBBL. The Saudis have been storing up until demand improves. Saudi total oil products demand in August rose month-on-month by 170 KBD to 2.55 MBD.
According to JODI, having hit its all-time high in June, Chinese crude oil imports have fallen over two consecutive months by 1.77 MBD to 11.21 MBD.
According to the oil minister, Argus Media reports that Iraq’s reconstituted national oil company INOC will be operational by early 2022, more than 30 years after it was broken up under Saddam Hussein’s regime Ihsan Ismael.
Natural gas is getting a boost as LNG exports get unleashed as winter is making its move. Sergio Chapa of Bloomberg reports that, “A liquefied natural gas tanker named Golar Seal is expected to become the first vessel to dock at Sempra Energy’s Cameron LNG export terminal since before Hurricane Delta, the Lake Charles Pilots told Bloomberg Tuesday.
Golar Seal was approaching the entrance of the Calcasieu Ship Channel on Tuesday morning: Lake Charles Pilots expected to escort the tanker to Cameron LNG’s docks. Cameron LNG was shut down for weeks after Hurricane Laura and then again after Hurricane Delta SK Audace was the last tanker to dock at Cameron LNG. A rock barge that sank near the mouth of the Calcasieu Ship Channel during Hurricane Delta has limited ship traffic to a draft of 36 feet.