Short-Term Energy Outlook Calls for More Supply, Less Demand
August 7, 2019
The API released their weekly update on inventory and it showed that crude oil stocks were down 3.4 million barrels, gasoline stocks were down 1.1 million barrels and distillates stocks were up 1.2 million barrels. Crude stocks at Cushing, Ok were down 1.6 million barrels.
The Reuters expectations for today’s DOE inventory update are for crude to be down 2.8 million barrels. Gasoline stocks are estimated to be down 722,000 and distillate stocks are estimated to be up 482,000.
The EIA in the Short Term Energy Outlook forecasted higher supplies and lower demand for 2020. The net change in the STEO forecast from July is a rise of 142,046 bpd added to the oil market for 2020. However, EIA did lower their US crude oil production forecast by 89,366 bpd for this year down to a total of 12.3325 million bpd.
The EIA lowered their forecast for WTI crude oil by $1.68 this year and by $3.50 in 2020. EIA forecast that WTI crude oil prices will average $57.81 this year and $59.50 next year.
The EIA also adjusted up their crude oil output in the STEO for both Iran and Venezuela in June, which make July drop at or above last month’s output.
Here is a nice over view on monetary policy action around the globe from Bloomberg. Fear over trade and currency wars is prompting monetary action around the globe. New Zealand’s central bank stunned investors and sent the kiwi tumbling by dropping its benchmark rate by 50 basis points, double the expected reduction. Thailand also surprised, cutting by 25 basis points. India’s central bank lowered its rate by an unconventional 35 basis points.
China’s envoy to the United Arab Emirates, Ambassador Ni Jian, said China might escort Chinese commercial vessels in Gulf waters under a US proposal for a maritime coalition to secure oil shipping lanes following attacks on tankers. He said if there happens to be a very unsafe situation we will consider having our navy escort our commercial vessels. The US is lobbying other countries to join a maritime security coalition at a time on increased tensions with Iran. It was not clear if the US had made an official request to Beijing.
Propane inventory estimates are calling foe supplies to be up 1.38 million barrels.
The global economic concerns are the overriding issues the market is focusing on right now and that is putting selling pressure on prices. The market has been volatile and headlines could change at a moment’s notice so traders are on their toes. Inventory report today will give some very near term direction but it would have to be a big surprise to change the trend.