U.S. stock markets plummet, dragging down the global oil market after a weak reading in the Chinese Manufacturing data. But was the data really that bad? The Chinese official Purchasing Managers' Index did fall into contraction to 49.7 but it was better than the private forecasts. Still with the lack of trust of the Chinese Government numbers, the market took it as a big negative and an excuse to sell off stocks big time. Now oil is getting prepared for another big increase in U.S. oil supply, which will further weigh on oil prices. With the biggest three-day rally since the first Persian Gulf War, oil has met with an 8 percent pullback.
The American Petroleum Institute also weighed on oil disconnecting its inventories rose by 7.6 million barrels reversing last week's 7.3 million barrel draw. Imports last week were delayed due to pipeline issues and tropical storms. Those supplies are back. As far as the rest of the API data it was really flat. Gas stocks fell 1 million barrels and Distillate stocks up 250,000. The Increase in supply also felt the impact from unplanned refinery outages and that should lead to a drop in refining runs. All in all the EIA version of the reports should be bullish.
The downside of lower oil prices, Company ConocoPhillips (NYSE:COP) announced it is cutting around 1,810 jobs, or 10 percent of its workforce. The Wall Street Journal report that the biggest proportion of the job cuts will be in North America. ConocoPhillips said it plans to eliminate more than 500 jobs in Houston, where it is based. In a news release, ConocoPhillips said it's making the cuts because the energy industry is in a "dramatic downturn." The Journal says that ConocoPhillips has already cut 1,000 jobs this year and had 18,100 employees on June 30.
That is leading to more talk of a collapse of U.S. oil output later this year, with small shale producers under pressure and in debt up to their eyeballs there is more talk of a much larger than expected drop in US oil output.
Venezuela is saying that China to give them a $5 Billion oil they can keep producing oil and in return China will get back oil. Plus Venezuela will meet with Russia to talk about ways to prop up oil prices. Bloomberg Is reporting that Saudi Arabia and its Gulf allies are at odds with Iran and other OPEC members over whether the organization should include oil-price forecasts in its long-term strategy report, according to three of the group's delegates. The Gulf kingdom, which has led the Organization of Petroleum Exporting Countries in a battle against rival producers, is seeking to exclude price assumptions from the report, according to the delegates, who asked not to be identified because the document isn't public. The disagreement reflects internal divisions over whether OPEC policy should focus on prices or the stability of the oil market, one of the delegates said.
Oil Prices may get a big boost from Mario Draghi as most likely signal more EU stimulus!