Weekly Energy Recap: China Highlights Demand Strength

Aug. 04, 2019 2:40 PM ETUSO, OIL-OLD, UCO, SCO, XOP, BNO, DBO, DTO, USL, IEO, PXE, OLO-OLD, SZOXF, NDP, GUSH, DRIP, OLEM, OILK, OILX2 Comments4 Likes
Faisal Faeq profile picture
Faisal Faeq
475 Followers

Summary

  • Upcoming September crude oil trading was completed without a single unsold Gulf crude cargo.
  • Brent crude fell to $61.89 and WTI dropped to $55.66 per barrel.
  • Oil has been under pressure from concerns over global economic growth amid ongoing US-China trade tensions.
  • Stockpiles of gasoline and distillate fuels also shrank.

Oil has been under pressure from concerns over global economic growth amid ongoing US-China trade tensions. (Reuters)

Upcoming September crude oil trading was completed without a single unsold Gulf crude cargo.

An eventful week ended with downward momentum for oil prices. Brent crude fell to $61.89 and WTI dropped to $55.66 per barrel.

Oil has been under pressure from concerns over global economic growth amid ongoing US-China trade tensions.

However, crude remains healthy, reflected by growing demand from refineries in Asia, where new refining capacity is coming online.

Exports from the Arabian Gulf to Asian refiners are growing - a key barometer for the overall health of the global crude market.

Though crude oil trading activity in the Gulf region has been threatened amid political turmoil in the Strait of Hormuz, there has been no change in Asian refiner plans from the area.

Upcoming September crude oil trading was completed without a single unsold single cargo for sour crude from the Arabian Gulf.

Gulf sour crude grades have further strengthened on bullish fuel demand amid tighter supply for high sulfur fuel oil and bunker fuels. That has resulted in medium sour crude spreads pushing upwards.

The strength of underlying demand in the market was highlighted by China's record crude oil imports from Saudi Arabia in July.

OPEC crude oil production fell to an eight-year low, just 29.42 million barrels-per-day (bpd) in July, down 280,000 bpd from June. Voluntary output cuts from Saudi Arabia and steep losses from Iran contributed to this historically low figure.

Libyan crude oil production fell below 1 million bpd to just 950,000 after the Sharara oil field, the largest in the country, went offline for the second time in as many weeks.

There was a huge decline in US crude oil stockpiles for the seventh week in a row. The EIA reported that US crude inventories declined by nearly 49 million barrels in the last seven weeks. It is the longest retreat since the winter of 2017/18 when they fell for a record 10 consecutive weeks.

Stockpiles of gasoline and distillate fuels also shrank, which should ease concerns about slowing consumption, as strong summer demand in the US continued to drain stockpiles. The EIA report showed total US inventories were at their lowest level since late May.

Editor's Note: The summary bullets for this article were chosen by Seeking Alpha editors.

This article was written by

Faisal Faeq profile picture
475 Followers
Energy Adviser | Accredited Marketing Consultant | Accredited Media Professional | ex Senior Adviser / Chief Energy Studies at OPEC | ex Marketing Manager at Saudi Aramco | Energy Columnist | Twitter: @FAISALFAEQ
Follow

Recommended For You

Comments (2)

To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.