China Skipped U.S. Crude Purchases
February 27, 2019
The inventory update from the private firm API called crude stocks down 4.2 million barrels. Gasoline stocks were reported down 3.9 million barrels and distillates were up 394,000 barrels. The crude oil stocks at Cushing, Ok were up 2.0 million barrels.
The estimates for today’s DOE report from the Reuters survey are calling crude up 2.8 million barrels, gasoline down 1.7 million barrels and distillates down 2.0 million barrels.
The average estimates for today’s DOE report from the Bloomberg survey is for crude stocks to be up 2.633 million barrels, gasoline stocks down 1.382 million barrels and distillates to be down 1.838 million barrels. The inventory report today could have some short term impact to the market but there are many other factors that continue to provide uncertainty for the market.
According to China’s General Administration of Customs, China skipped crude purchases from the US in January. China also did not import any oil from the US in December compared with 138,000 tons in November. It imported 6.97 million tons from Russia, 5.76 million tons from Saudi Arabia, 1.74 million tons from Venezuela and 1.6 million tons from Iran in January.
A gulf oil sources said that OPEC and its allies will stick to their agreement to cut oil supply. They will work to have better compliance to cuts despite a demand from President Trump to ease up on their production cuts to support prices.
OPEC and especially the largest and most influential producer, Saudi Arabia, seem very committed to reducing oil supplies to balance the market and with that higher prices. We have all heard that Saudi Arabia needs $80-$85 dollar oil to balance their budget. Can they do enough to get prices to these level is a big questions mark.
Citgo Petroleum is formally cutting ties with its parent, PDVSA, to meet US sanctions imposed on Venezuela. Citgo has halted payments to its parent, subscriptions to corporate services, email communications and minimized mentions to PDVSA on marketing materials and its website. The company is trying to free itself of sanctions that have hampered access to financing.
The average estimated for today’s propane inventory update is a modest 680,000 barrel draw. The five year average for this reporting week is a 1.38 million barrel decline.