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Fri, 20th January 2017

Anirudh Sethi Report

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Archives of “Crude” Category

IEA: 2017 could be another year of relentless global oil supply growth

Reuters with chatter from the International Energy Agency

  • 2017 could be another year of relentless global supply growth similar to 2016
  • There’s little evidence to suggest that economic activity is sufficiently robust to deliver higher oil demand growth
  • Says there is some risk that prices fall back if oil market surplus persists in 2017
  • Keeps 2016 global oil demand growth unchanged at 1.2mbpd and forecasts the same rate for 2017
  • Says global oil supply rose 800kbpd y/y to 97.8mbpd
  • OPEC crude output rose 230kbpd to a record 33.83mbpd in Oct
  • Sees Non-OPEC supply up 500kbpd in 2017 vs -900kbpd in 2016

The IEA aren’t as bullish on expected demand as OPEC and more so the Saudi’s.

WTI Crude Rises After Big Drawdown In Gasoline, Distillate Inventories

Following last week’s record build in crude inventories, API reported a bigger than expected crude build this week (+4.40mm vs +2mm exp), but the huge draw in gasoline was the most notable (-3.6mm vs -1.5mm exp) as we suspect Colonial pipeline fallout affected levels. Distillates also saw the 7th consecutive draw (-4.3mm). WTI’s initial reaction to the crude build was lower but the product draw sent priecs higher.

API

  • Crude +4.40mm (+2mm exp)
  • Cushing +156k (+300k exp)
  • Gasoline -3.6mm (-1.5mm)
  • Distillates -4.3mm
 Following last week’s biggest crude inventory build ever, crude built again but products saw a major drawdown…

Ex-Saudi oil minister isn’t bullish on Algiers deal happening

Ali Al-Naimi has been speaking in London

  • Efforts to get producers to cooperate in 2014 failed
  • None of the OPEC ministers wanted to cut in 2014
  • OPEC cannot cut output by itself
  • It is great that other producers now think about cooperating
  • Hopes OPEC members will reach a decision 30th Nov
  • It would be nonsense to leave fossil fuels in the ground

Will history repeat itself when we hit the Nov OPEC meeting?

EIA weekly US oil inventories 14420k vs 2000k exp (As Expected it’s Bloodbath in Crude )

EIA weekly US oil inventories data report 2 November 2016

  • Prior -553k
  • Cushing 89k vs 235k exp. Prior -1337k
  • Gasoline -2207k vs -1000k exp. Prior -1956k
  • Distillates -1828k vs -1900k exp. Prior -1956k
  • Production 8522k vs 8504k prior
  • Refinery utilisation -0.4% vs 0.5% exp. Prior 0.6%

WTI fell below 45.00 briefly from 45.70 odd in the bigger than expected build.

The market may have been leaning that way anyway as the ‘oil report that shall not be named’ showed a build of 9300k yesterday. Note the step up in production too.

Maybe there’s some catchup there as this is the biggest build ever (well, as far back as I can see) and comes not so long after the second biggest draw ever (Sep).

 

Oil – Non-OPEC yet to pledge concrete oil output steps

OPEC and non-OPEC countries met on Saturday in Vienna

  • It was consultation meeting
  • They agreed to meet again prior to the scheduled OPEC meeting on November 30
They didn’t make an agreement on Saturday on the detail for cuts, which makes sense – still plenty of time to go before November 30 (and agreement on the details will be difficult, too 😉 )
via Reuters

Oil falls on report that Iran and Iraq refuse to free output

WTI drops more than $1

Lost in all the Clinton hullabaloo, DJ is reporting that Iran and Iraq are refusing to freeze output in a development that could scuttle OPEC’s plans.

The report also says that Iran says OPEC underestimates its production.

Technically, oil is at the lowest since Oct 4 and it’s taken out support from the August high.

Saudis proposed a 4% OPEC cut to Russia this week – report

Reuters sources on OPEC/Russia meeting

Saudi officials along with their allies in the Gulf travelled to Moscow this week to meet Russian counterparts and proposed a 4% cut from the Gulf members (not all of OPEC). The report is from Reuters, who cites three sources.

The formal proposal will be made this week in Vienna at a committee meeting.

Meanwhile, OPEC is likely to reject Iraq’s request for an exemption, according to the same report.

On its own it sounds bullish but the market is worried about Iraq.

Weekly crude oil inventories -553K vs +2M estimate

Weekly DOE data for week of October 21

Cushing -1.334K vs -300K est
Gasoline -1956K  vs -1000K est
Distillate -3354K   vs -1500K est.
US refinery utilization 0.6% vs 0.60% estimate
The price of Crude oil futures has recovered to $49.75 currently (high extended to $49.89) on the drawdowns.