U.S. Imposes Crude Oil Sanctions
September 26th, 2019
There continues to be a lot of news surrounding the market and it continues to congest and trade in a range. Yesterday the energy market was able to hold support and keep it in its trading range. RBOB filled the gap left behind that was created on the day of the attacks in Saudi Arabia. RBOB traded lower and filled the gap and then was able to rebound higher and if the bulls can get some follow through to the upside might be able to rally the market back to the top of the trading range but will likely need clarity on one of the concerns surrounding the market to break it out to the upside.
The DOE inventory report called crude stocks up 2.41 million barrels. Total stocks at 419.5 million barrels outs total stock at the five-year average for this time of year. Gasoline stocks built by 520,000 barrels putting total stocks roughly 4% above the five-year average. Distillate stocks were down 2.98 million barrels putting total stocks roughly 7% above the five-year average for this time of year. Over all the inventory report was bearish as stocks overall built more than the expectations.
Propane stocked were down 1.024 million barrels putting total stocks at 99.670 million barrels dropping them just below 100 million. The draw to stocks was a surprise and did provide a bit of support to the propane market. This draw seems a bit odd and many are calling it a one off with the expectations that stocks will continue to build starting again next week. Will a continued build up in stocks pressure price? This is a big question as propane has been very reluctant to move much below the high 39 cent level at Conway for the spot contract despite amble supplies. Enterprise it still expected to complete a project to add additional export capacity out of Houston by the end of the month and many traders are seeing that as helping to move out the buildup of stocks.
President Trump said that a deal to end a trade war with China could happen sooner than people think. He made his comment a day after he delivered a speech criticizing China’s trade practices at the UN General Assembly. If this could happen it would certainly be a positive for the global economy and markets.
Saudi Arabia says production could soon be just 700,000 bpd below where it was prior to the attacks. That number is roughly 11.3 million bpd. There is still a lot of debate about the topic of Saudi production and only time will really tell us is the can perform as the say.
The US put sanction on some companies and tankers that have continued to trade and transport oil from Venezuela. The US also put sanction on some Chinese tanker companies that have continued to haul Iranian crude. These sanctions ban US companies from dealing with these companies.