Head of Commodity Strategy, Saxo Bank Group
EIA Report Update: Crude oil stocks dropped in line with the American Petroleum Institute figures due to a 1.1m barrel/day net decline in imports. Production hit a record 11m b/d due to a continued ramp-up in shale oil production. Gasoline stocks rose as refinery demand slowed and net-import rose.
WTI crude is potentially on track to recover back towards the centre of the current range between $68.60 and $69.90/barrel.
“Iran says Israel, U.S. will be targeted if Washington attacks” is the headline from this Reuters article quoting a senior Iranian cleric.
Tanker tracking data from Platts show that Iran’s crude oil exports have fallen sharply during the first half of August. During this time they saw 1.68 million b/d being exported, some 640,000 b/d below the average for July. This will undoubtedly raise pressure on the remaining Opec members and also raise the question whether they will be able to meet the potential shortfall – not only from Iran but also from Venezuela which continues to deteriorate.
Also driving the market higher today is speculation that the Weekly Petroleum Status Report from the US Energy Information Administration due at 14:30 GMT may show a bigger than expected drop in crude stocks. This comes after API reported a 5.2 million barrel drop in US crude stocks.
Estimating weekly crude stocks has become increasingly difficult following the rise in US exports during the past couple of years. This seems to have increased the volatility in the weekly net import figure and it is here we normally find the main reason for a discrepancy.