Iran Promises Revenge Against United States
January 6, 2020
On Friday the market got the Baker Hughes rig count and it showed that US crude oil rigs were down 7 and in Canada oil rigs were down 25. The outlook for US shale has been for rigs to decline as US shale companies try to generate better returns for their shareholders. If crude oil does see a spike higher on Middle East events it will give shale companies an opportunity to hedge production at higher price levels for several year into the future. If this possibility does happen it could allow for more US shale production and profits down the road.
Crude oil and refined fuels products closed higher on Friday as traders did not want to be short over the weekend with all the uncertainty surrounding the Middle East.
The DOE inventory report came out on Friday and it called crude oil down a big 11.46 million barrels much bigger than any of the expectations. Gasoline stocks were up 3.21 million barrels and distillate were up 8.78 million barrels. The report was called overall neutral. The big decline in crude was changed into products which both showed big increases. The market may have been under some selling pressure if not for the other tension around the markets.
US crude production was still strong at 12.9 million bpd. Import were down 457,000 bpd and exports were up 1.0654 million bpd. US crude stock are at the lower end of the three-year range and below last year at this time but other than the current Middle East tension not may traders seems concerns with inventory levels globally. Cushing crude oil stocks were down 1.45 million barrels and current stocks are 36.322 million barrels which is 5.610 million barrels less than last year and 16.0125 million less than the 3-year range.
Gasoline stocks are at 242.472 million barrels which is 2.4786 million barrels more than last year and 9.030 million barrels more than the 3 year-average.
Distillates stocks are at 133.720 million barrels which is 4.289 million more than last year but 6.246 million less than the three-year average.
The propane report showed that US propane stocks were down 212,000 barrels. The Midwest stocks were down 328,000 barrels and the Gulf Coast Stocks were up 16,000 barrels. No big change and with good supply levels and mild weather propane prices are likely stuck near currently levels until something changes.
The market moving news is still all about the tension in the Middle East and any potential supply ramifications. Iran’s Supreme Leader Khamenei promised harsh revenge. Iraq wants the US Military to leave their country and voted on a proposal that says that over the weekend. President Trump said the US will need to be paid for the military instillation the US built there before the US will leave. President Trump also said if necessary, he will put sanction on Iraq.