Released September 14, 2023 | SUGAR LAND
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September 14, 2023--Editorial by Geoffrey Lakings for Industrial Info Resources (Sugar Land, Texas)--Bulls are stampeding because of perceived short supply driving tightness in these crude (and product) markets. However, in IIR's recent Market Scorecard, I inquired about where is rational, common sense--even being foolishly willing to get in front of this rampant Bull Train--to indicate we should see some retracement in price this week.
Common sense seems to have been thrown to the perceived winds as crude has further rallied this week. Even above the psychological barrier of $90. As this Bull Train chugs seemingly inexorably on.
For nearly a month, all signs pointed to a foreseeable future depressed crude market as global economics affecting Demand weighed heavily on price as written to in IIR's August Crude (& Products) featured article. But then geopolitical tensions as well as U.S. stock markets shrugging off economic naysayers began to drive a recent recovery.
But I still question "Where o' where is Demand?," as what one thought would be that Demand -- the Asian markets; namely China still has not surfaced. And likely will not.
MIT Sloan: New book details China's economic rise -- and now, its fall
China's economy is stagnating. Reduced collaboration and increased political autocracy will continue to take a toll, China expert Yasheng Huang predicts. China's economy is stagnating, plagued by a real-estate crisis, high unemployment, dwindling confidence among investors, and other setbacks.
And, one is witnessing signs of inflation increasing here in the U.S.
Forbes: Inflation Ticks Up To 3.7%--Biggest Monthly Jump Since January
Consumer prices registered their largest monthly increase since January, rising 3.7% in the 12-month period ending in August, despite the Federal Reserve's aggressive interest rate hikes to curb inflation. Surging gas prices were the biggest driver of the uptick, but core inflation, which excludes the more fickle food and energy indexes, came in at its lowest level in nearly two years.
Not to mention the recent strength of the greenback.
Reuters(Sep 8): US dollar flat, but on track for eight straight weeks of gains; yuan sinks
The dollar was little changed on Friday, consolidating gains amassed during the week on better-than-expected U.S. economic data, even as the currency's underlying strong trend remained amid stable consumer and labor markets, which have kept the prospect of another rate increase on the table this year.
Despite Friday's pullback, the dollar index was headed for eight straight weeks of gains, the longest such streak since 2014.
What is known -- or had been as common sense is not so common anymore -- to temper the price of oil; not to mention affect other Global economies. Which in turn would affect Demand. Wouldn't it??
Marketplace: U.S. dollar's strength is mostly bad news for countries and companies around the world
But Mr. Oil Market and those who trade in it are going to ignore this lack of demand for the time being and instead focus on the news which supports their "shortfall & tightness" case (and positions), which is what was reported by International Energy Agency (IEA).
IEA: Oil Market Report: Overview
As well as OPEC+ in their monthly reports...
MarketWatch: OPEC Keeps Oil Demand Forecast Flat Despite Saudi, Russia Cuts
The Organization of the Petroleum Exporting Countries left its predictions for the global oil market largely unchanged Tuesday, continuing to forecast rising demand for oil, despite Saudi Arabia and Russia saying that they would be reducing supply until the end of the year.
The Vienna-based oil-production cartel said in its monthly report that it foresees oil demand in 2023 rising by 2.4 million barrels a day, with this figure dropping to 2.2 million barrels a day in 2024, both unchanged from July's report.
The group tweaked its 2023 supply forecast for non-OPEC members by 100,000 barrels a day to a rise of 1.6 million barrels a day, led by increases from the U.S, Brazil and Norway among others. However, it left the 2024 supply prediction unchanged from last month, forecasting a rise to 1.4 million barrels a day.
As a result, OPEC sees total demand averaging 104.31 million barrels a day for 2024 while it sees total supply from non-OPEC members at 74.28 million barrels a day, leaving a roughly 30 million barrel a day shortfall it would need to fill.
So a "shortfall." Hhmmmm as we step out of this Northern Hemisphere -- North America & Europe -- summer driving season and step into the end of Q3 and start of Q4 where demand is known to fall. In fact. we were already seeing such in the EIA weekly numbers over the past month. Until a rebound this past week.
Not to mention one knows that pundits are talking about global crude inventory levels being low. Oil& Gas Journal: EIA foresees global oil inventory reduction for remainder of year Following Saudi Arabia's Sept. 5 announcement to extend its voluntary 1 million b/d production cut to yearend, the US EIA foresees a reduction in global oil inventories over the period. The development is expected to exert upward pressure on oil prices.
But here in the U.S. there was a surprise in store this week.
Reuters: Oil dips as surprise US crude stockbuild faces supply cuts
Oil prices edged lower on Wednesday, after earlier hitting a 10-month high, as a surprise build in U.S. crude inventories offset expectations of tight crude supply for the rest of the year.
One knows in the U.S. and elsewhere in the Northern Hemisphere -- that Q4 is what one dubs "maintenance season" because there is less expected demand.
IIR Energy has unique insights on what to expect.
And, refineries will no longer have to run at 90%+ utilization rates:
EIA: U.S. Weekly Petroleum Status Report Highlights
U.S. crude oil refinery inputs averaged 16.8 million barrels per day during the week ending September 8, 2023, which was 177 thousand barrels per day more than the previous week's average. Refineries operated at 93.7% of their operable capacity last week. Gasoline production decreased last week, averaging 9.2 million barrels per day. Distillate fuel production decreased last week, averaging 5.0 million barrels per day.
Though there will be unplanned outages like what unfolded at Garyville:
And Galveston Bay:
Not to mention disasters unfolding throughout the world.
So how will all of this seeming market craziness play out? If common sense will return remains anyone's guess, but nonetheless let IIR Energy's Dedicated Market Research place the world at your fingertips. Tomorrow's News Today. Ask us! We have Answers!!
As your feedback is very important to us. Please let us know if we may provide additional color or answer any other market questions you may have.
Additional IIR Resources:
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) platform helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking more than 200,000 current and future projects worth $17.8 trillion (USD).
Common sense seems to have been thrown to the perceived winds as crude has further rallied this week. Even above the psychological barrier of $90. As this Bull Train chugs seemingly inexorably on.
For nearly a month, all signs pointed to a foreseeable future depressed crude market as global economics affecting Demand weighed heavily on price as written to in IIR's August Crude (& Products) featured article. But then geopolitical tensions as well as U.S. stock markets shrugging off economic naysayers began to drive a recent recovery. But I still question "Where o' where is Demand?," as what one thought would be that Demand -- the Asian markets; namely China still has not surfaced. And likely will not.
MIT Sloan: New book details China's economic rise -- and now, its fall
China's economy is stagnating. Reduced collaboration and increased political autocracy will continue to take a toll, China expert Yasheng Huang predicts. China's economy is stagnating, plagued by a real-estate crisis, high unemployment, dwindling confidence among investors, and other setbacks.
And, one is witnessing signs of inflation increasing here in the U.S.
Forbes: Inflation Ticks Up To 3.7%--Biggest Monthly Jump Since January
Consumer prices registered their largest monthly increase since January, rising 3.7% in the 12-month period ending in August, despite the Federal Reserve's aggressive interest rate hikes to curb inflation. Surging gas prices were the biggest driver of the uptick, but core inflation, which excludes the more fickle food and energy indexes, came in at its lowest level in nearly two years.
Not to mention the recent strength of the greenback.
Reuters(Sep 8): US dollar flat, but on track for eight straight weeks of gains; yuan sinks
The dollar was little changed on Friday, consolidating gains amassed during the week on better-than-expected U.S. economic data, even as the currency's underlying strong trend remained amid stable consumer and labor markets, which have kept the prospect of another rate increase on the table this year.
Despite Friday's pullback, the dollar index was headed for eight straight weeks of gains, the longest such streak since 2014.
What is known -- or had been as common sense is not so common anymore -- to temper the price of oil; not to mention affect other Global economies. Which in turn would affect Demand. Wouldn't it?? Marketplace: U.S. dollar's strength is mostly bad news for countries and companies around the world
But Mr. Oil Market and those who trade in it are going to ignore this lack of demand for the time being and instead focus on the news which supports their "shortfall & tightness" case (and positions), which is what was reported by International Energy Agency (IEA).
IEA: Oil Market Report: Overview
- World oil demand remains on track to grow by 2.2 mb/d in 2023 to 101.8 mb/d, led by resurgent Chinese consumption, jet fuel and petrochemical feedstocks. In 2024, naphtha and LPG/ethane, especially in China, will dominate an overall increase of a more modest 990 kb/d, to 102.8 mb/d, reflecting below-trend GDP growth and a structural decline in road transport fuel use in major markets.
- The extension of output cuts by Saudi Arabia and Russia through year-end will lock in a substantial market deficit through 4Q23. So far this year, OPEC+ output has fallen by 2 mb/d with overall losses tempered by sharply higher Iranian flows. Non-OPEC+ supply rose by 1.9 mb/d to a record 50.5 mb/d by August. World supply in 2023 will rise by 1.5 mb/d, with the US, Iran and Brazil top sources of growth.
As well as OPEC+ in their monthly reports...
MarketWatch: OPEC Keeps Oil Demand Forecast Flat Despite Saudi, Russia Cuts
The Organization of the Petroleum Exporting Countries left its predictions for the global oil market largely unchanged Tuesday, continuing to forecast rising demand for oil, despite Saudi Arabia and Russia saying that they would be reducing supply until the end of the year.
The Vienna-based oil-production cartel said in its monthly report that it foresees oil demand in 2023 rising by 2.4 million barrels a day, with this figure dropping to 2.2 million barrels a day in 2024, both unchanged from July's report.
The group tweaked its 2023 supply forecast for non-OPEC members by 100,000 barrels a day to a rise of 1.6 million barrels a day, led by increases from the U.S, Brazil and Norway among others. However, it left the 2024 supply prediction unchanged from last month, forecasting a rise to 1.4 million barrels a day.
As a result, OPEC sees total demand averaging 104.31 million barrels a day for 2024 while it sees total supply from non-OPEC members at 74.28 million barrels a day, leaving a roughly 30 million barrel a day shortfall it would need to fill.
So a "shortfall." Hhmmmm as we step out of this Northern Hemisphere -- North America & Europe -- summer driving season and step into the end of Q3 and start of Q4 where demand is known to fall. In fact. we were already seeing such in the EIA weekly numbers over the past month. Until a rebound this past week.
- Aug. 11 - Demand 21.6 million barrels per day (BBL/d)
- Sept. 1-- Demand 20.2 million BBL/d (just above 2022 levels and below 2019, 2018 levels)
- Sept. 9 - Demand ~21 million BBL/d
Not to mention one knows that pundits are talking about global crude inventory levels being low. Oil& Gas Journal: EIA foresees global oil inventory reduction for remainder of year Following Saudi Arabia's Sept. 5 announcement to extend its voluntary 1 million b/d production cut to yearend, the US EIA foresees a reduction in global oil inventories over the period. The development is expected to exert upward pressure on oil prices.
But here in the U.S. there was a surprise in store this week.
Reuters: Oil dips as surprise US crude stockbuild faces supply cuts
Oil prices edged lower on Wednesday, after earlier hitting a 10-month high, as a surprise build in U.S. crude inventories offset expectations of tight crude supply for the rest of the year.
One knows in the U.S. and elsewhere in the Northern Hemisphere -- that Q4 is what one dubs "maintenance season" because there is less expected demand. IIR Energy has unique insights on what to expect.
And, refineries will no longer have to run at 90%+ utilization rates: EIA: U.S. Weekly Petroleum Status Report Highlights
U.S. crude oil refinery inputs averaged 16.8 million barrels per day during the week ending September 8, 2023, which was 177 thousand barrels per day more than the previous week's average. Refineries operated at 93.7% of their operable capacity last week. Gasoline production decreased last week, averaging 9.2 million barrels per day. Distillate fuel production decreased last week, averaging 5.0 million barrels per day.
Though there will be unplanned outages like what unfolded at Garyville:
And Galveston Bay:
Not to mention disasters unfolding throughout the world.
So how will all of this seeming market craziness play out? If common sense will return remains anyone's guess, but nonetheless let IIR Energy's Dedicated Market Research place the world at your fingertips. Tomorrow's News Today. Ask us! We have Answers!!
As your feedback is very important to us. Please let us know if we may provide additional color or answer any other market questions you may have.
Additional IIR Resources:
- IIR Team Email: iirteam@iirenergy.com
- Latest IIR Crude & Products Market Scorecard
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) platform helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking more than 200,000 current and future projects worth $17.8 trillion (USD).
