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Fri, 23rd June 2017

Anirudh Sethi Report

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Archives of “Crude” Category

Oil-Private inventory data shows US crude stocks bigger than expected draw

Following last week’s biggest crude build since 2016, API reports another large crude draw (seemingly confirming refinery run rates remain high), but WTI/RBOB prices slipped lower on an unexpectedly large build in Gasoline (and Distillates).

Genscape reported a 750k draw at Cushing last week…

API

  • Crude -4.62mm (-3.25 exp) -0 9th weekly build in a row
  • Cushing -1.56mm (-593k exp) – biggest draw since Oct ’16
  • Gasoline +4.08mm (-50k exp) – biggest build since Jan ’17
  • Distillates +1.75mm

Following last week’s biggest build since 2016, API reported a 9th weekly draw in Crude but Gasoline saw its biggest build since Jan 2017, very much against the recent trend…

Russia sees oil prices down USD 40 per barrel after OPEC/non-OPEC deal expires

Russian Deputy Fin Min quoted  by TASS 5  June

  • rouble dependence on oil prices is declining
  • will review macro f/cast after OPEC/non-OPEC deal extended

WTI currently on session lows of $48.11.Initial support at $48.00 then $47.80

Brent currently $50.41 also on session lows . Support/demand into $50.00 then 49.85

US crude oil price to average $53.52 per barrel in 2017

So say the results of latest Reuters poll 2 June

  • vs $57.24 in prev poll in April
  • 2018 $57.24 vs $59.23 prev
  • Brent crude ave price $55.57 in 2017 vs $57.04 prev
  • 2018 $59.63 vs $61.46 prev

34 economists polled

Reduced expectations (weakest of 2017 so far) but still seems very toppish to me.

I bet there’s a few traders who would love to see prices up there again.

Currently $47.14 and $49.33

 

(Overnight oil headline) – Russia’s eco min says can live forever at $40 Oil

Russia’s Economy Minister Maxim Oreshkin in a Bloomberg interview on the sidelines of the St. Petersburg International Economic Forum on Thursday

OPEC “has not failed at all” in its attempt to drive oil prices up
“We are targeting tighter short-term end of the curve”
From a Russian economy perspective, the key assumption on which all Russian monetary and fiscal policies are based is oil at US$40
Russia is not as dependent on the price of oil as it was five or ten years ago
We are actually ready to live forever at oil prices $40 or below

Weekly US oil inventories -6428K vs -3000K expected

weekly energy stockpiles and production from the EIA

  • Prior was -4432K
  • Cushing -747K vs -500K expected
  • Gasoline -2858K vs -1500K expected
  • Distillates +394K vs -700K expected

Late yesterday, API reported:

  • Crude -8670K
  • Gasoline -1730K
  • Distillates +124K

So it’s not quite as big of a draw as API reported for crude but add in gasoline and it’s basically there.

Crude isn’t doing much on the headlines. It’s ticked up to $48.65 from $48.50, one of the reasons might be the continued march higher in production.

  • Production +0.2% w/w
  • Production 9.342 mbpd vs 9.320 mbpd prior
  • Production up 6.9% y/y

 

OPEC starts a fresh round of jawboning

OPEC sources talk of a deeper cut

OPEC could revive the idea of a deeper supply cut at the next meeting if oil inventories stay high, according to two sources cited by Reuters.

Separately, three sources cited by Reuters said OPEC discussed cutting output by a further 1% to 1.5% last week.

WTI/RBOB Jump After Biggest Crude Draw Since September

Libya production updates and weak economic data weighed on crude ahead of the API print tonight but as the data hit showing a bigger than expected crude draw (8th week in a row), both WTI and RBOB jumped higher. This was the biggest crude draw since Sept 2016.

API

  • Crude -8.67mm (-3mm exp)
  • Cushing -753k
  • Gasoline -1.726mm (-1.5mm exp)
  • Distillates +124k

If this holds for tomorrow’s DOE data, this is the 8th weekly crude draw in a row (and this week’s 8.67mm draw is the largest since Sept 2016)

Russian deputy fin min says oil bulls will be disappointed for a long time

No jawboning from Russian deputy finance minister

Russian deputy finance minister Kolychev is on the wires with some less-than-enthusiastic talk about oil. He said prices are likely to stay in the $40-$50 range for 5-7 years. In addition, he said risks are that prices could fall below $40 and that it’s hard to say if the OPEC deal will help the market rebalance.

The market is certainly voting for the downside today. Brent is down $1.95 to $49.89.