Saudi Arabia Paints Rosy Production Picture Despite Attack
September 19, 2019
The market is trading higher today as many traders say Saudi Arabia painted a rosy picture that their production was back up and all by the end of the month most everything would be back to normal. Industry experts are saying that maybe a bit optimistic as repairs take time to fix and to get the necessary part and pieces to make those repairs. So today there is a bit more skepticism in the market an as a result a bit of a rebound. One of the other things giving support is that Saudi Arabia is out looking to buy barrels from some of their neighbors. This indicates that they are trying to supply customer out of their current supplies, as well as, from purchases from others. As a result of this approach it means that spare refinery capacity is gone and if there is another upset to supply there is nowhere to make it up. All of this is the view of the market currently and as a result it is higher.
Both Saudi Arabia and the US have talked about a military response but have been very cautious and have first called on the international community to condemn Iran actions as wrong. The chances of a military response are possible, but they do seem way on the back burner. The idea that something could happen has added support or a risk premium into the market.
DOE inventory report overall was bearish with bigger builds than expected but over all that is a near term factor. Crude stocks were up 1.06 million barrels to a total of 417.126 million barrels 22.989 more than last year at this time.
Gasoline stocks were up 780,000 barrels putting total stocks at 229.685 million barrels 4.465 million barrels less than last year at this time. Gasoline stock are in the middle of it three range
Distillate stocks were up 440,000 barrels putting total stocks as 136.663 million barrels which is 3.459 million barrels less than last year at this time. Distillate stocks are below the three-year average range, so they are on the low side.
Propane stocks built by 2.931 million barrels putting total stock at 100.694 million barrels. The last time stocks were over 100 million was back in 2016 and this is only the third time in history they have been over 100 million barrels. The Midwest stocks were up 852,000 barrels putting total Midwest stocks to 27.829 million barrels which is 1.519 million more barrels than last year at this time. Gulf Coast stocks were up 1.230 million barrels putting total stocks at 59.863 million barrels which is 22.384 million more barrels than last year at this time.