Don't call it a comeback?

Aug 1, 2017 7:39:12 PM EST

Crude has run into a wall of resistance today and fallen over, after sprinting full pelt at fifty-dollardom for the last week and a half. While we see some supportive elements appearing in our ClipperData, some startling signs of salubrious supply have sent the bulls running for the hills today.  

Libyan output is said to have climbed above 1 million barrels per day in the last month, and this is something emphatically endorsed by our export data. As we tally up the final flows for July, we can see that exports have risen to a whopping 900,000 bpd. If, as we discussed last week, Saudi Arabia is talkin' the talk and walkin' the walk, then Libya has the guise to surprise. Or something like that. 

Libya crude exports ClipperData.jpg

While the threat of further U.S. sanctions still hang over Venezuela, we can see from our ClipperData that Curacao continues to receive deliveries of U.S. naphtha.

This is used as a diluent with Venezuela's heavy crude, so that it can be exported as DCO (diluted crude oil). Imports through the first seven months of the year are averaging close to 2016's level at ~55,000 bpd, showing no signs of stress just yet - indicating credit obligations are still being met. 

naphtha to curacao ClipperData.jpg

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The EIA just released its petroleum supply monthly report, in which it pegged US oil production at 9.17 million barrels per day, up 316,000 bpd year-on-year. This is the third consecutive month of YoY gains after running at a YoY deficit for fifteen consecutive months prior. 

Nonetheless, the monthly production number still lags the reported weekly data by ~150,000 bpd, indicating current production levels may not be as rosy as the high-frequency data leads us to believe. 

US oil production EIA.jpg

Staying with the EIA, the below (super duper) graphic is from 'Today in Energy', and highlights key global maritime choke points in terms of both crude and products. The Strait of Hormuz sees the most traffic, and saw the biggest increase in flows in 2016, as crude and product exports ramped up from the Middle East.  

waterborne choke points.jpg

Finally, the chart below is a bit of an oldie, but a goodie. It shows world refinery output growth compared to oil product demand betwixt 2000 and 2015It highlights a number of takeaways:

--China's refinery output has done a good job of outpacing its rampant demand growth

--OECD refinery output has edged lower as its demand slowly contracts

--Rising demand in Africa and the non-OECD Americas is increasingly being met by imports

refinery output growth IEA.jpg

About the Author

Matt Smith

deciphers and distills what is most relevant across the energy complex into cohesive and pithy knowledge you can use. The belly laugh is a bonus.

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