OPEC’s Monthly Report Noted A “Timid” Start To The Driving Season
Energy futures are drifting lower this morning after yesterday’s gains continued the upward trend we’ve seen since the June’s second trading session. Prompt month RBOB futures are leading the complex lower this morning, exchanging hands at ~.5% discount to yesterday’s settlement, while both crude and heating oil trade lower by .27%.
OPEC’s monthly report noted a “timid” start to the driving season, and disappointing economic activity in the US, Europe and Japan as reasons for lower demand recently, but countered with a note about much stronger than expected activity in BRIC countries that kept total global demand on pace to reach its 2% growth targets. The cartel’s PHDs are still calling for robust growth from developed countries in the back half of the year to keep global demand for oil and products to remain strong. The report also highlighted an uptick in both US imports and exports of crude oil, while both imports and exports of refined products have declined. Another way to look at this is that since the rest of the world has been building new refineries recently, they need US oil more than our products, and WTI’s addition to the Brent benchmark should keep the export flows going for years to come. Speaking of which, the report highlighted the 3rd consecutive month of decreasing refinery margins as output rates have increased. So far those decreased margins haven’t slowed down refinery run rates with US and Asian facilities pushing 95% of capacity.
OPEC’s total oil output held steady for the past month, with increased output from Nigeria offsetting small declines from Saudi Arabia, Libya and Kuwait. The total OPEC & Friends (NKA DoC) output dropped by 123mb/day last month due to declines in Russia and Kazakhstan.
The EIA’s monthly Short Term Energy Outlook will be released later this morning.
So it begins: The National Hurricane Center has listed the first potential storm system of the season. The bad news is this storm system is in the Gulf of Mexico, the good news is wind shear is keeping the odds of developing low, and its path is heading east to central Florida and away from refinery row. While it’s unlikely we see any meaningful disruption from this system, besides perhaps some local delays around the port of Tampa Bay, it’s a good reminder that the next several months are expected to be the busiest on record for hurricane activity in the region.
Last call: Today is the deadline for the 2nd round of bidding for Citgo, which may or may not be the final round depending on whether or not Venezuela is able to influence the court’s decision on the sale.
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