Crude oil prices stuck in tractor beam

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fsOne hundred and eighty-three years after Charles Gaylor patented the fireproof safe, and the oil market is on fire once more, trailblazing higher. It truly feels like we are in the Millenium Falcon – me your trusty wookie, you Han Solo / Princess Leia (delete as appropriate) – stuck in a tractor beam, with oil prices getting pulled higher and higher. Hence, as we strive on in our intergalactic battle, here are are five things to consider in the oil market today:

1) In overnight economic data, German inflation was inline (and benign) at 0.3% YoY. Onto Blighty, and inflation was a little warmer than expected at 0.5% YoY, but none too concerning. Indian inflation edged lower again from elevated levels, underscoring the goldilocks environment for the world’s third largest oil importer. Brazilian retail sales rebounded for the first month in three for February, giving them a glimpse of optimism among all the impeachment talk.

2) As for US economic data, imports rose for the first time in nine months. As we all know, all paths lead back to energy, hence the increase of 0.2% in March is a sign that the rebound in oil prices is egging on inflationary pressures.

3) Reuters is reporting that Iraq is cutting Basrah crude exports in May, after achieving a new record production level of over 4.5 million barrels per day in March. According to the state-run South Oil Company, exports from southern Iraq so far in April are close to 3.5mn bpd, as the country pushes this rising output out onto the global market. It is interesting to note that ahead of the Doha meeting on Sunday producers appear to be going full tilt, ramping up production ahead of a potential freeze.

After Iraq introduced a new grade of crude last year, Basrah heavy, it has been accounting for an increasingly higher proportion of exports. while Iraqi crude exports continue to rise, Basrah heavy’s share continues to increase. According to our ClipperData, Basrah heavy loadings blasted through 1mn bpd last month for the first time, accounting for its largest percentage of exports on record at 38%:

ClipperData iraqi crude basrah

4) The chart below from the EIA today highlights how Canada dominates US crude oil imports. Although imports have dropped 27% since mid-last decade (h/t rising production due to the shale oil revolution), Canada’s volumes sent south have continued to rise, reaching a record 3.2mn bpd last year, up 10% on the prior year.

crude imports

5) Digging into our ClipperData, we can gain some more timely insights into this. Total US waterborne crude imports rose last month to their highest level since mid-2014, due to surging Saudi Arabian and Mexican imports. Nonetheless, Mexican imports into the US have been dropping in recent years as Mexico attempts to diversify its export destinations.

Imports from Venezuela have also edged lower, going in the same direction as its production. Saudi imports, however, continue to exhibit strength. After averaging 1.07mn bpd last year, imports for Q1 of this year have averaged over 1.1mn bpd.

ClipperData US crude imports