Breaking News

The Energy Report- Oil Steals The Show As Inventory Rises

By Phil FlynnCommoditiesJul 26, 2017 09:20AM ET
The Energy Report- Oil Steals The Show As Inventory Rises
By Phil Flynn   |  Jul 26, 2017 09:20AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items

Give me those Old Time Fundamentals

Oil prices had its biggest up move of the year, rising 3.3% on lower supply and higher demand. I don’t mean to be so fundamental about the fundamentals, but in truth, that's why we soared!

Oil prices surged even before the American Petroleum Report (API) reported another massive crude oil crude withdrawal. The 10.23-million-barrel draw, if confirmed by the Energy Information Administration (EIA), means that US oil supply is down almost 55 million barrels since the end of March, even as the Strategic Petroleum Reserve added over 13 million of barrels of oil into the marketplace.

The API brings the total inventory for crude oil in 2017 to a net draw of 7.534 million barrels, the first net draw for 2017 since January according to Oilprice. So we see that OPEC and non-OPEC cuts do matter. As I told Marketwatch, the API reported crude supply draw erases the myth that shale can offset OPEC and non-OPEC cuts barrel for barrel.

This comes as we get reports of surging oil demand in China and in the US against a back of more pledges of cutbacks and warnings for oil service companies and producers that shale output may have topped out. David Lesar, Halliburton (NYSE:HAL) CEO and President, said in an earnings call that, “rig count growth is showing signs of plateauing and customers are tapping the brakes.” Anadarko Petroleum’s Al Walker, the company’s chief executive officer, cited, “current market conditions [that] require lower capital intensity given the volatility of margins realized in this operating environment.”

China’s economy is growing faster than even the Chinese government predicted and that is raising the forecast for Chinese oil demand. Reports show that China oil demand is expected to rise by 400,000 barrels as its own domestic production plummets as those Chinese teapot refineries run hard.

Zhang Haichao, vice president of SINOPEC Group (HK:2386), told Reuters that Chinese crude oil imports are expected to exceed 400 million tons this year. China crude imports are running 13.8 percent above a year ago coming in at .8.55 million barrels of oil a day.

The UPI also reported yesterday that, “A militant attack on a crude oil pipeline in Nigeria has sidelined more than 100,000 barrels of oil per day," the head of a state oil company announced. Maikanit Baru, the head of the Nigerian National Petroleum Corp., said as-yet identified saboteurs caused a breach on a major transit artery, curbing 150,000 barrels of oil per day. The rupture from the Trans-Niger pipeline came as parties to a committee monitoring a production agreement coordinated by the Organization of Petroleum Exporting Countries, of which Nigeria is a member, met to consider its impacts.

Today we will await the EIA to see if this surge in US oil demand continues. Surging US gasoline and diesel demand has come back with a vengeance after many thought that US demand had strictly changed, some of the demand numbers were under reported or influenced by transitory factors and the data looks like it is going to make up for lost time.

US oil production numbers will be closely watched as well to see if there is sign of sputtering output. We are predicting that US shale output will soon start to disappoint. High decline rates and uncompleted wells will start to reduce oil output expectations. API said gasoline inventories rose 1.903-million-barrel build for the week ending July 21, compared to analyst expectations that inventories for the fuel would fall by 1.25 million barrels.

Platts is reporting that the US Treasury Department is crafting sanctions which would prohibit the import of Venezuelan crude oil into the US, one of several sanctions options the White House is considering in response to an expected vote Sunday in Venezuela, an administration source said Tuesday. But the Trump administration, which has studied the impact of the potential crude oil import sanctions on the US refining sector, is not expected to impose Venezuelan oil sanctions, at least in the near term, the source said. "Treasury is preparing them, but that doesn't mean they'll implement them," the source said.

The Energy Report- Oil Steals The Show As Inventory Rises

Related Articles

The Energy Report- Oil Steals The Show As Inventory Rises

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
Sign up with Email