Market Currents – August 10, 2015

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After charging lower overnight in response to weak Chinese economic data over the weekend, oil prices are composing themselves once more and mustering a bounce from multi-month lows.

Chinese inflation data (CPI) ticked slightly higher, up to 1.6% year-over-year. Meanwhile, factory prices continued lower, while China’s producer price index took its biggest year-over-year dive in nearly six years, back to a level last seen in the belly of the great recession.

China PPI China Producer Price Index (PPI) Year-on-Year

Total Chinese exports slid 8.3% in July from a year earlier, while total imports fell for the ninth month in a row, dropping 8.1% year-over-year. This indicates both weak domestic and international demand, not good news for the global economy. The crude complex is finding some solace in Chinese oil import data, which showed an increase of 4.1% in July versus June. #ClipperData show Chinese waterborne imports continue to be strong, up 12% in July on the prior year…but dropping 5% in July versus the month prior.

ClipperData China Imports Source: ClipperData

After last week’s onslaught of economic data, this week we see a dearth of data flow. Fortunately, the oil market is set to be satiated by the three key monthly oil reports from the EIA, IEA, and OPEC in the next couple of days. The overarching theme from this trio of reports is likely to be ongoing oversupply; IEA has already whet our appetite, announcing OPEC production is up to a 3-year high at 31.7 million barrels per day:

OPEC crude supply

This does come against a backdrop of strong demand. July’s report highlighted oil demand growth this year would be 1.4 mln bpd, followed by 1.2 mln bpd next year. On Wednesday we will learn their tweaks to these numbers:

oil demand

In other news, the Saudi and Russian foreign ministers meet in Moscow tomorrow to discuss global energy markets and current geopolitical tension in the Middle East. But for now, crude is starting the week on the up.