China May Exempt Some Tariffs on U.S. Goods to Ease the Impact of the Trade War
September 11th, 2019
The average estimates for today’s DOE inventory report from the Bloomberg survey is that crude stocks will be down 2.576 million barrels and gasoline stock will be down 970,000 barrels and distillate stocks will be down 523,000 barrels.
In the inventory update from private firm API it called crude oil stocks down 7.2 million barrels, gasoline stocks were down 4.6 million barrels and distillates were up 618,000 barrels. The outlook for today’s DOE numbers is for draws across the board and that may have added some support to price yesterday.
President Trump fired his national security adviser, John Bolton yesterday or maybe he resigned. It is not totally clear. There has been a lot of speculation on this, but some said it was because Bolton was too hardline. He had taken a tough stance against both Iran and North Korea. The implication in the energy space is that if Bolton was too hardline then maybe some progress can now be made with Iran. Of course, any progress there would be bearish for the energy market. With an inventory report coming up and the expectation for more declines to inventories, the near term is supportive for movement higher.
The EIA released their monthly short-term energy outlook (STEO) report yesterday and it was seen as bearish. They lowered world oil consumption for 2020 along with more oil supplies. They did revise up oil output for Venezuela and said Iran crude oil output stayed flat from July to August. EIA lowered their forecast for global oil consumption in 2020 by 64,504 bpd and raised global supplies in 2020 by 77,541 bpd. This is a net increase in oil supplies of 142,048 bpd for 2020.
China is looking to ease the impact of the trade war by exempting some US goods from the 25% tariffs put in place last year.
The European Central Bank is expected to announce some stimulus plans this week and that could be a positive for the markets.
China auto sales fell for the 14th consecutive months suggesting that their autos sales could experience negative to low growth over the next three years, an official with the country’s top industry association said, according to Reuters. A prior strong economy in both China and India and strong increases in car purchases was a big reason for the strong outlook for energy demand. The trade war concerns and poor global economic outlooks have totally changed this situation in both China and India and with the outlook for energy demand has gone way down.
Seeing a lot of poor outlooks in news headlines and commentaries today. From Reuters; “The flat price had the best it’s going to have this year. We’re bearish until year-end,” said Ben Luckock, co-head of oil trading house Trafigura at the Asia Pacific Petroleum Conference in Singapore this week.
“There are signals from our consuming markets that our industry should prepare for slower GDP growth. And hence it will translate into tougher days, “ Rainer Seele, chief executive of Austrian energy group OMV, told Reuters at the conference.
Energy consultancy Wood Mackenzie cut its global energy liquids demand growth forecast to 700,000 barrels a day for 2019, down from 850,000 bpd, due to stiffening economic headwinds related to the US China trade war.
The Reuters outlook from their survey for today’s DOE inventory update is that crude oil stocks will be down 2.7 million barrels, gasoline stock are called down 847,000 barrels and distillates are called higher by 72,000 barrels.
The estimates for today’s propane inventory report is that stock will increase again by 2.4 million barrels.
It has kind of snuck up on us but there is an OPEC meeting tomorrow in Abu Dhabi and the market will certainly react if there are any big changes to their policy.