Taliban Takeover of Afghanistan Not Expected to Pose Risk to Supply Disruptions
August 17, 2021
The energy market was lower in yesterday’s trading as the rising case of COVID-19 continues to concern the market. China also reported weak economic data and that added to selling pressure. China reported retails sales increased by only 8.5% versus July of 2020, which was well below the 11.5% forecast by economists. China online sales only increased by 4.4% and factory production increased by only 6.4% in July versus the 7.8% expected. China said these slowdowns were due to COVID-19 and flooding.
Prices did rebound later in the trading session after OPEC+ said there was no need to release more crude oil into the market beyond their plan.
The Taliban’s takeover of Kabul and the fall of the Afghanistan government contributed to a negative tone in the financial markets but added little to no risk premium for potential supply disruptions.
According to Energy Aspects, inventories of gasoline in Padd 1 (East Coast) will likely soon fall below 60 million barrels. A fall below that level has not happened in August since 2015. Padd 1 imports will likely struggle to average 700,000 bpd in August and September. It said tightness in Europe will keep imports at bay thought out September. Padd 1 includes New York Harbor, which is the delivery point for the NYMEX RBOB futures contract. This could offer support to RBOB futures prices if traders struggle to deliver barrels.
The Energy Information Administration in its latest monthly report said US oil output from the seven major shale regions is expected to increase by about 49,000 bpd in September to 8.1 million bpd. If US producers achieve that output level it would be the highest level since May 2020.