Drone Attack Causes Fire at Gas Plant
August 20, 2019
A drone attack by the Houthi group on an oilfield in eastern Saudi Arabia on Saturday caused a fire at a gas plant, adding to tension in the Middle East. However Saudi Aramco said oil production was not affected. This event over the weekend helped to offers some support to the market.
The expectation that central banks would take measures to stimulate economies gave support to the markets in general. After all the poor economic data and negative outlook for the global economies many think central banks will again be looking to offer some help.
From the Joint Organizations Data Initiative, Saudi Arabia’s crude oil exports in June fell to 6.72 million bpd from 6.94 million bpd in May. Saudi Arabia has made the statement that they plan to keep exports below 7 million bpd for the next two months.
China announced key interest rate reforms over the weekend which may reduce corporate borrowing costs in their struggling economy. This news was also supportive to price yesterday.
The energy market continues to have plenty of issues out there that could impact it both positively and negatively and the market has been trading in a range for a while but the seasonal influence is supporting the trend higher for now. The move lower in the market has rebounded from support and now traders are waiting to see if resistance can be broken. More than likely without one of the events that concerns this market breaking the market is likely to continue range bound.
The Iranian tanker caught in a standoff with Iran and the west was sailing to Greece on Monday after leaving Gibraltar. The US has warned Greece not to assist the tanker. According to the Wall Street Journal the US State Department is threatening companies and mariners of immigration that they could face potential criminal charges for assisting the tanker.
Pipelines in the Permian Basin on coming online to take crude to the Gulf. As a result Brent to WTI crude oil spread is narrowing/getting tighter as more barrels are going directly to the Gulf. Those barrels going to the Gulf means less barrels gong to Cushing, Ok. The tighter spread may at some point reduce and or discourage exports.