Fed to Resume Treasury Purchases
October 9th, 2019
The inventory report from the API called crude oil stocks up 4.1 million barrels. Crude stocks as Cushing, Ok were reported up 1.2 million barrels. The outlook for crude stocks in today’s DOE inventor report as surveyed by Reuters is the expectation for an increase of 1.4 million barrels. The API called gasoline stocks down 5.9 million barrels with the outlook for today for a decline of 257,000 barrels. Distillate stock in the API report were called down 4 million barrels and the outlook for today is for a 2.1-million-barrel decline.
The estimates for today from Bloomberg are crude up 1.465, gasoline down 364,000 and distillates down 1.935.
Federal Reserve Chairman Jerome Powell said the central bank would resume Treasury purchases in an effort to avoid a repeat of recent turmoil in money markets. He emphasized that just because the Fed may start expanding its balance sheet again, it should not be viewed as a return to crisis-era quantitative easing programs. He also gave the indications that the Fed was moving closer to cutting rates again at the next meeting.
Monday the US blacklisted 28 Chinese companies due to their role in human-rights violations against Muslim minorities. This move ahead of the meetings this Thursday and Friday between the US and Chinese trade officials lowered the market’s expectations of a possible breakthrough in the long trade disputes.
In the EIA’s Short Term Energy Outlook (STEO) the EIA lowered world petroleum supply forecast by 130,362 bpd and lowered their world oil demand forecast by 94,585 bpd for 2020, which is a net of 35,776 bpd less supplies. US oil output is expected to increase by 1.27 million bpd to 12.26 million bpd in 2019 and by 910,000 bpd to 13.17 million bpd in 20202. US petroleum demand is expected to increase by 40,000 bpd, compared with a previous estimate of 140,000 bpd, to 20.54 million bpd in 2019 and increase by 220,000 bpd, compared with a previous estimate of 310,000 bpd to 20.76 million bpd in 2020. The EIA forecast Brent crude oil sport prices will average $59 per barrel in the fourth quarter of 2019 and fall to $57 per barrel by the second quarter of 2020. It forecast the price of Brent at $60 per barrel in 2020, down $2 per barrel from its previous estimates.
International Monetary Fund Managing Director, Kristalina Georgieva, warned of a risk of complacency among countries, and without action to resolve trade conflicts and support growth, global economic deceleration could turn into “a more massive slowdown.”
From Reuters: About one-third of the oil tankers owed by COSCO Shipping Tanker (Dilian) have shut off their ship-tracking transponders since the United States imposed sanctions on the company for allegedly shipping Iranian crude, shipping data showed. The International Maritime Organization (IMO) requires AIS transceivers be fitted to commercial and passenger vessels for safety and transparency purposes. The devices can be turned off manually by the ship’s crew for legitimate reasons such as avoiding detection in piracy of high-risks zones. However, the transponders are often shut off to conceal a ship’s location when illicit activities occur.
Estimates for today’s propane inventory report are for a build to supplies for 750,000 barrels.
Energy is higher this morning on news that the Chinese are still open to a partial trade deal.