Chinese Trade Talks Postponed
August 17, 2020
The United States and China postponed talks there were to review the progress made after six-months of the phase-one trade deal. This is not a positive for US and China relations. Despite these concerns Reuters reports that China’s state-owned oil companies have tentatively booked tankers to transport at least 20 million barrels of US crude for August and September.
John Kemp a Reuters report said that hedge funds and other money managers are gradually increasing their short positions in NYMEX WTI, in a short-selling cycle that started in the middle of May but has developed more slowly than any other since the start of 2015. Portfolio managers have accumulated a gross short position of almost 69 million barrels by August 11th, up from 44 million on May 19.
The Baker Hughes Rig Count had crude oil rigs down 4 as the number of active rigs continues to drop and supports an outlook that production should continue to fall. Total oil rigs are now at 172, surpassing last week’s 15-year low and making this the third consecutive week of declines. Total rigs last year at this time were at 770.
Hurricane speed winds called a derecho swept through the Midwest last week and had a hung impact on Iowa and Nebraska’s corn and soybean crops. In Iowa it is being reported that more than 10 million acres, or 43% of the state’s crop was affected.
The following is from a JP Morgan Chase research note, “On weekly demand, gasoline continue to trend at low double digit year on year declines, while diesel demand was actually flat year on year for the week ended 8/7 (but has been very lumpy week by week).”
Tankers carrying Iranian fuel cargoes covered by a US warrant for seizure are sailing to the United States after talks between US authorities and ship owners. Iran had planned to transport the gasoline to Venezuela. The US Justice Department said it executed a seizure order and confiscated cargo totaling 1.116 million barrels of petroleum from four vessels. It disrupted fuel shipments by Iran’s Revolutionary Guard bound for Venezuela. US prosecutors filed a lawsuit in July to seizes the gasoline aboard the four tankers, and a judge subsequently issued a warrant for seizure. The owners of the four vessels agreed to have the fuel transferred to other vessels so it could be shipped to the United States. Iran denies all of this taking place.