Tropical Storm Hillary Hits Sothern California
August 21, 2023
The Baker Hughes Rig Count had oil rigs down 5 to a total of 520 oil rigs and last year at this time there were 601 oil rigs. Oil rigs have fallen by 101 rigs so far this year.
Citi Research expects downside for crude oil in the fourth quarter, with Brent averaging $78 per barrel. It sees Brent crude prices averaging $73 per barrel. It expects supplies to be far stronger this year due to producers like Iran and Iraq increasing output. It said the key demand wildcard is whether global natural gas prices could increase again due to labor strikes at 2 LNG export terminal in Australia, leading to more natural gas to diesel switching.
Traders and analysts said China is drawing on record inventories amassed earlier this year as refiners scale back purchases after OPEC+ supply cuts increase global prices above $80 per barrel.
Crude oil inventories were down 6 million barrels last week and are 1% below the five-year average. Total gasoline inventories were down 300,000 barrels last week and are 6% below the five-year average. Distillate inventories were up 300,000 barrels and are 16% below the five-year average. Propane inventories were up 700,000 barrels and are 21% above the five-year average.
China took some action on their interest rates in an attempt to support their economy. They lowered the one-year prime rate by 0.1 percentage point to 3.45% while they left the five-year rate unchanged at 4.2%.
Tropical Storm Hilary make landfall in Southern California yesterday and has caused some flooding in Mexico and the southern US. This storm will likely cause some demand destruction.