OPEC exports keep breaking records

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As OPEC optimism continues to grow, and as the dollar eases lower, crude is moving higher today in this holiday-shortened week (woot woot!). Hark, here are five things to consider in oil markets today:

1) A headline over the weekend reads ‘OPEC’s strategy is about exports not cuts‘ – something which we here at ClipperData are most opportunely positioned to witness, and on a real-time basis. The article highlights how it is exports, not production that counts, given producers are dependent on these revenues.

The piece also points out that countries such as Kuwait – with strong production and a small population – are best positioned to benefit from price responses, while countries such as Iran and Nigeria currently face the inverse predicament, with large populations and stymied exports.

As we discussed last month, total OPEC weekly crude export loadings have been making new records, as the cartel puts the pedal to the metal ahead of a potential production cut at the end of the month. 

Stripping out the six Middle East OPEC members – Iran, Iraq, Kuwait, Qatar, Saudi Arabia and U.A.E – export loadings last week climbed to the highest on our records. Although some of this move is due to timing, as export loadings in the week prior were soft, there is a distinct trend of higher highs in recent months: 

weekly exports from Middle East OPEC clipperdata.jpg

2) While exports out of the Middle East continue to tick higher, the pace of Libyan exports also continues to accelerate. After loadings last month climbed above 12mn bbls for the first time since May last year, loadings in November are up to 10mn bbls (510,000 bpd), with still a third of the month left. 

 Libya oil exports November ClipperData.jpg

3) While we discussed last week how Nigerian crude export loadings were rebounding this month, this may change on a dime given ongoing militant attacks. As oil exports have averaged 15 percent lower than last year’s level, Nigeria’s economic slump is deepening amid the loss of revenue. 

aAs the chart below illustrates, lower oil prices and lower exports have meant that plunging revenues have only greased the wheels for its economy to enter a recession, dipping by 2.2 percent in Q3 versus year-ago levels, negative for a second consecutive quarter. 

Nigerian economy.jpg

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4) The latest CFTC data (hark, below – h/t @JKempEnergyshow that speculative net long positions increased last week, up by 9mn bbls. Long bets rose by 32mn bbls, while shorts increased by a lesser 23mn bbls. The increase to both highlights the current dichotomy: immediate bearish-tilted fundamentals, pitted against bullish expectations ahead of the OPEC meeting.

Short positioning from producers also rose to a new multi-year high, amid rampant hedging activity.  

mm positions 111816.png

5) Finally, today’s blog out on RBN Energy not only has an awesome title – Kung Fu Fighting (For Market Share) – but is authored by ClipperData’s fearless leader, Abudi Zein. It digs into rising Chinese product exports (after import and export restrictions were lifted on independent ‘teapot’ refiners late last year), and how they are impacting global product flows.

So far in 2016, Chinese middle distillate exports to the U.S. West Coast have accounted for nearly 10 percent of total deliveries. While Chinese exports are making as far afield as Canada or Chile, key markets remain closer to home, such as Singapore.  

china gasoline and distillate exports ClipperData.jpg