Saudi Arabia sending more crude oil into Asia
One hundred and sixteen years after the birth of Woody Woodpecker creator and animator Walter Lantz, and WTI crude oil is knocking on the door of $45 – and knocking on wood that US production is wilting. Here are six things to consider about the oil market on this final Wednesday in April:
1) Today is set to be dominated by a game of two halves; inventories this morning, and Federal Reserve rumblings this afternoon. While the inventory report points to a draw to crude stocks (h/t lower imports), expectations of dovish rhetoric from the Fed is putting downward pressure on the dollar. Hence, crude is once again pushing on to new highs for the year.
2) A piece today talking about how Saudi is making ground on an Asian ‘oil market turf war‘ by selling a spot cargo to a Chinese teapot refiner sent me scurrying off into our ClipperData to see if this an emerging trend. It definitely is.
Saudi Arabian crude oil exports are up over 3.5% in Q1 compared to last year’s average. Last year, some 61% of Saudi Arabia’s crude oil exports went into Asia; so far this year, that percentage is up to 65%. China, on average, accounts for 14% of Saudi Arabian crude exports – although this percentage spiked in February to 18% when Saudi import volumes reached a record (as Iranian sanctions were lifted, interesting timing…).
What is also fascinating about Saudi Arabian exports is that the US remains the leading recipient – with imports last month reaching an eleven-month high at 1.28 million barrels per day. In fact, US import volumes from Saudi Arabia are up 9% in the first quarter compared to last year’s average.
3) The graphic below highlights how badly the drop in oil prices is hurting certain states, as rising unemployment in states such as Texas, Louisiana and Oklahoma is causing an increase in loan delinquencies.
Widespread job losses in the oil patch are estimated at 119,600 since September 2014, or 22% of the total, causing delinquency rates in oil-rich states to rise above the national average.
About The Author
Matt is a Director of Commodity Research at ClipperData. Matt specializes in extracting key themes from technical and fundamental analysis of the global energy market, and communicating these through daily and weekly deliverables. He also provides oil and natural gas analysis and commentary to national and international media outlets that include CNBC, Fox Business, Russia 24, the Wall Street Journal, MarketWatch, AFP, Bloomberg, Reuters, and the Oil Daily. Prior to joining ClipperData, he worked for eight years at Schneider Electric / Summit Energy as a Global Commodity Analyst, where he also founded and authored the blog, Energy Burrito. He started his career at the Royal Bank of Canada in the UK, spending eight years with the bank. During that time, he managed $55 million in assets as a portfolio manager and financial analyst.