Market Currents – July 24, 2015

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ClipperDrinkIt’s a mixed bag in the crude complex today, as Brent is getting dragged lower by further weakness in the euro, while WTI is pushing higher after being ab-sol-ute-ly bludgeoned this week. Gasoline is looking up.

Much of the focus overnight has been preliminary PMI data releases. China kicked off a rather unsavory set of global prints, as the Caixin manufacturing number came in at a 15-month low of 48.2. This was well adrift of the consensus of 49.7, and the index has been in contractionary conditions since March.

Although we saw a better-than-consensus print out of Japan, both France and Germany showed below-consensus numbers for both its flash manufacturing and services numbers, meaning the Eurozone saw weaker-than-expected numbers on the aggregate. (Although they did show expansion, which is something, I guess). The US preliminary manufacturing print is up on deck in a bit, while we switch our attention to the Baker Hughes rig count this afternoon to see if it has mustered a bounce after last week’s stalling.

A quick scan of the news and it becomes apparent that today is ‘National Weak Currency Day‘:

–Indian Rupee Completes Biggest Weekly Decline in Three Months
–Unlucky Emerging Markets Don’t Get Lift From Weak Currency 
–Australian Dollar Hits Fresh Six-Year Low as Chinese Factories Continue to Falter
–Weak Economic Data Knock The Euro
–Malaysian Ringgit Forwards Extend Weekly Losses as Oil Enters Bear Market
–Brazilian Real Hits The Skids
–Turkish Lira Weakens nearly 4 Percent on Week Over Security Concerns

In terms of global oil demand growth, we should see China and India leading the charge this year, with 300,000 barrels per day and 200,000 barrels per day growth, respectively. Similar growth expectations are envisioned for next year too, according the to the EIA. Despite having this in common, the two countries are set to see divergences ahead.

While China’s economy will likely continue to slow, dropping below 7% in Q3 and further next year, India’s economy will continue to maintain the pace seen in Q2 (+7.5%), and continue to push higher. #ClipperData show Indian waterborne oil imports are averaging 3.4 million barrels per day so far this year;  imports account for approximately 75% of India’s oil consumption.

The below chart illustrates the contrasting fortunes projected:


India versus China

Lastly – thanks to the keen market currents reader in the Canary Islands, who forwarded the image of the ClipperDrink – Cheers!!