Trump to Send Sen. Paul to Iran to Negotiate
July 18th, 2019
The news on Iran this morning appears to be at two extremes. President Trump is going to send Senator Rand Paul to Iran to talk peace. For the energy markets this is a big deal because if they can agree to something and sanctions get lifted more Iranian barrels of oil could hit the market and that would certainly push oil prices lower. It would also take the Iran risk premium out of the market as well. But on the other had Iran has confirmed that they seized the missing oil tanker from earlier this week. The US has said it is preparing to send 500 troops to Saudi Arabia. The one thing that all this means is that energy market volatility will continue and headlines and news over all these issues will be watched closely.
Russia restored its oil output to the agreed upon level that was set during the OPEC+ meetings. Russia’s oil contamination crisis dropped its production almost too three-year lows earlier this month but they will bring online 0.4 million bpd to reach production of about 11.17 million bpd in July.
The DOE inventory report called crude oil stocks down 3.12 million barrels. Cushing crude oil stocks were down 1.351 million barrels. Gasoline stocks were up 3.565 million barrels and distillate were up 5.686 million barrels. Overall this inventory report was bearish but the market tried to hold up yesterday on all the other issues out there that could disrupted supplies. The market did sell off and close lower at the end of the day and prices are mixed so far today. There is a little bit more room for price to test lower from a technical standpoint and for the market to still be in an uptrend but the bulls will need to produce a rebound into the end of the week to avoid more downside next week.
Propane stocks were up 544,000 barrels. The Midwest stocks were up 1.1134 million barrels and the Gulf stocks were down 1.216 million barrels. Total stocks are at 77.477 million barrels 12.221 million barrels more than last year at this time. The Midwest has 22.591 million barrels 898,000 barrels more than last year at this time. The Gulf Coast has 46.732 million barrels 12.009 million more than last year at this time. The barrels have been accumulating in the Gulf in anticipation or hope of more exports out if this market to others around the world.
Britain is sending its HMS Kent warship to the Gulf to protect its interest and ensure freedom of navigation following tension with Iran.
EIA reported a large drop in gasoline implied demand and a large drop in net crude oil imports which was also bearish for fuel demand.