Lower imports indicate slowing teapot demand
Crude prices are softening for a third consecutive day thus far, as a decent ADP employment report out in the U.S. has boosted expectations from Friday’s official employment report, as well as for an interest rate hike. The dollar is looking higher again, while oil prepares itself for a build to crude stocks from the weekly EIA report. Hark, here are five things to consider in oil markets today:
1) Surging product exports from China are pressuring refining margins lower across Asia, as refiners from India to South Korea and Singapore roll up their sleeves to do battle. Even though Chinese product exports continue to rise as they make inroads into countries such as the Philippines and Australia, impending maintenance and increased regulation / scrutinization of independent teapot refiners in the north of the country is set to stymie their refining activity. This is already being reflected in their import data; with August data nearly complete, imports are down over 20 percent from their peak in March:
2) Conjecture continues to swirl relating to China’s strategic stockpiling. The latest statement from the National Bureau of Statistics was in December, which stated that its SPR was up to 191 million barrels by mid-last year.
According to the chart below, there appears to have been another 250 million barrels accrued since; all the while, the Chinese government say it has pushed back its completion deadline to beyond the current 2020 deadline.
3) Not only has Nigeria now entered into a recession, but its inflation is up for a ninth consective month to 17.1 percent year-on-year – the highest since October 2005. Its economy contracted for a second consecutive quarter. down by 2.06 percent in Q2.
As we know all too well, all paths lead back to energy, hence the drop in oil prices has clobbered its economy – it relies on oil revenues for
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.