To celebrate Hulk Hogan's 62nd birthday, the crude complex is getting body-slammed. The sell-off has been sponsored by news overnight that China has removed its currency peg. This essentially means the yuan is being devalued by the government, as it tries to reinvigorate its stalling economy. Accordingly, dollar strength is stomping on oil prices.
There is again little in the way of economic data here in the US today, although the weekly API is out at its usual time this afternoon. Economic sentiment data from Europe was a mixed bag; below expectations for Germany, but above for the Eurozone on the whole.
Over the next two days we see the triumvirate of key monthly oil reports, with OPEC kicking out the jams this morning. Its report indicated it has boosted production by just over 100,000 barrels per day to 31.5 million barrels per day, a three-year high.
This rise was led by Iraq, Saudi Arabia, and Angola, while Iran also added 33,000 bpd last month. Libya saw the biggest production loss. The cartel also revised up its oil demand growth projection for this year to 1.38mn bpd, up 90,000 bpd from last month.
While the EIA's short term energy outlook is out later today, yesterday we saw the release of the EIA's monthly drilling productivity report. While production for September is projected to drop by a rather sturdy 93,000 barrels per day from the key shale plays, led by Bakken (OTC:BKEN) (-27,000) and Eagle Ford (OTC:ECCE) (-56,000), the Permian basin continues to be rock-steady, Eddy. Production is projected to tick higher amid ongoing improving efficiencies; hark, check out the uptick in new-well oil production per rig:
In other news, the below graphic is from this article and is a pretty neat summary, highlighting how dire the economic plight is for Venezuela. Even a country with hundreds of billions of foreign exchange reserves, such as Saudi needs an oil price of above $100 a barrel to meet its budget, given it relies on oil to meet 90% of its revenues.
At the other end of the budget spectrum, low oil prices are crippling Norway far worse than the impact of the financial crisis. While OPEC's intent to keep prices lower for longer was interpreted as an attack on US shale, in reality it targets higher-cost production across the globe, and accordingly we are seeing cracks appearing in the economies of such countries such as Canada and Norway.