Could Oil Prices Sink Below $40 Per Barrel Again?
Arightee folks, this week is set to be a roar (R.I.P. Wes Craven) as we shimmy from Aug into Sep (hark, 114 offered days until Xmas), and into a torrent of new mercantile data. Chinese equities overnight have wilted into a finish of a month, racking adult a 12.5% detriment for August, while we’ve had a few tidbits of information out of Europe.
While a UK is kicking behind and enjoying a summer bank holiday, we’ve had clever tales of sell sales out of Germany (up 1.9% MoM contra 1.0% expected), while Italy’s were softer than gelato on a summer’s day, entrance in -0.3% contra +0.1% expected. Eurozone CPI continues to try and wand off deflation, holding during +0.2% YoY. As we know all too well, all paths lead behind to energy, hence descending oil prices are reining in inflationary pressures once again.
The biggest information indicate of note in a US currently is a Chicago PMI, that gauges a health of prolongation in a Chicago area. It generally gives us a heads-up as to what to design from tomorrow’s PMI print. China kicks off a way of new PMI prints this evening, while a week culminates in Nonfarm Friday here in a US (complete with fanfare).
From their annual shelter during Jackson Hole, Wyoming, members of a Federal Reserve have fanned a embers of wish for a intensity seductiveness travel in September. Markets have responded accordingly with a risk off position (A Nightmare on Wall Street?), and equities are offered off to start a week / finish a month. After final week’s emphatically fatiguing rally, wanton oil prices are retracing strongly so far, descending in line with ubiquitous risk ardour and spooked by Chinese mercantile fears.
As we quick proceed refinery upkeep season, a lapse to movement during a Whiting refinery is assisting to palliate sell gasoline prices reduce in a Chicago area once more. California prices are also descending in line with a standard anniversary skirmish as supply concerns palliate in a Golden State. Retail oil prices on a inhabitant normal are now dropping next $2.50/gallon, and should continue to retrace in a entrance months – notwithstanding a expectancy of a low refinery upkeep season.
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We’ve had a few developments on a European front over a weekend in terms of oil and gas. Yesterday it was announced that Italian oil and gas association Eni has detected a outrageous healthy gas margin about 80 miles off a seashore of Egypt. It is a largest ever find in a Mediterranean Sea, holding 30 Tcf – adequate to supply Egypt for decades.
It was also announced yesterday that Maersk oil has perceived capitulation to develop the Culzean gas field, a largest find in a North Sea for a decade. The margin contains between 250 million and 300 million barrels of oil equivalent, and prolongation is set to start in 2019, and run for 13 years. Production is approaching to plateau during 60,000 to 90,000 boe/d – around 5% of Britain’s direct come 2021.
Finally, a EIA’s monthly petroleum supply news out currently is set to prominence a next revisions to U.S. oil prolongation for Jan by May. June’s series is during 9.3 million barrels per day (b/d), a diminution of approximately 100,000 b/d from a revised May 2015 figure.
The reason for a revisions is due to a EIA perplexing to urge a accuracy. Previous estimates of have been formed on taxation information and other prolongation information performed directly from state agencies, while a new estimates incorporate survey-based methodologies also.
Courtesy: Matt Smith