The US Dollar Strength Takes Its Toll On Oil Prices Again
As we pierce into September, a lapse of oversupply fears are clobbering a wanton oil formidable lower, with gasoline heading a charge. With Nonfarm Friday on deck, bringing a awaiting of a decent news and a stronger dollar (i.e., headwinds for crude), hark, here are 5 things to cruise in oil markets today:
1) Back in Jul we discussed how Colombia’s economy was holding adult partially good contra a Latin American neighbors, as unfamiliar investment in new years has helped to accelerate a economy. Unfortunately, we are now saying it negligence quicker than expected, as new seductiveness rate hikes (11 consecutively!) start to bite.
Second entertain mercantile expansion was during a slowest gait given 2009 during 2 percent YoY, as policy-makers prioritized quelling acceleration during a responsibility of slower mercantile activity.
A slack in drilling activity due to a low oil cost sourroundings has put vigour on production, spiteful supervision revenues. This is also being reflected by in reduce wanton exports, that are down over 5 percent this year compared to a 2015 average.
That said, Colombian wanton exports to a U.S. (mostly of Castilla, Vasconia) are extremely aloft than final year. While a infancy of this wanton creates a approach to a U.S. Gulf coast, a East and West coasts are unchanging beneficiaries.
2) After August’s shenanigans of short-covering and Opecian jawboning, we now trifle into a shoulder deteriorate of Sep and Oct – bridging a opening mid summer and winter.
As we exit summer pushing season, and as refinery upkeep ramps up, direct eases, and typically… oil prices come underneath pressure. As a draft next illustrates, Brent prices have depressed on normal by $4.43 in Sep over a final decade, a biggest dump of any month – and we are starting this one looking reduce also.
3) The draft next is from a square by a FT, that addresses how a arise of electric vehicles might impact oil demand. After reduction than 6,000 electric cars were on a highway in 2009, this series has risen to 1.26 million final year – an considerable ramp up. That said, OPEC projects usually 6 percent of a world’s cars will be powered by something other than oil by 2040, while Exxon puts this series underneath 10 percent. IEA sees stream tellurian electric car invasion during 0.1 percent.
We have highlighted formerly here how 4 countries comment for 80 percent of a sum electric vehicles sole final year – China, U.S., Netherlands and Norway. Below shows a relapse of ride in tellurian demand; it is estimated that it would take 50million to 100 million electric cars to excommunicate 1mn bpd of oil.
4) While it is formidable adequate to appreciate China’s mercantile information in isolation, a dual PMI production numbers only expelled serve discolouration a picture, revelation opposite tales. While a central series was most improved than expected, during 50.4 (vs. an approaching contraction during 49.9), a Caixin imitation forsaken extremely on a before month to stalling speed during 50. The draft next (h/t @CapEconChina) illustrates their divergence.
5) Finally, there is a square out on RBN Energy currently created by a strong Rusty Braziel, covering condensate exports and a hurdles faced. This square is powered by a ClipperData, and highlights how condensate exports have been on a arise in a initial 5 months of this year, notwithstanding a lifting of a U.S. wanton trade ban.
Even yet exports forsaken off precipitously in July, volumes have been mustering a rebound in a initial few weeks of August:
Courtesy: Matt Smith
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