| WTI Crude Oil Fundamentals$USO, $UGA
The US DOE/EIA reported that total WTI Crude Oil and petroleum products stocks rose 5.62-M bbl to 1279.46-M bbl in the week ended 7 August. Crude Oil stockpile fell 1.68-M bbl to 453.59-M bbl, as inventory fell 2.99 in PADD 3 and -0.08-M bbl in PADD 5. Cushing, OK stock dropped -0.05 to 57.11-M bbl. Utilization rate steadied at 96.1%. Gasoline inventory dropped 1.25-M bbl to 215.48-M bbl although demand decreased 0.01% to 9.69-M BPD. Production added 0.09% to 9.99-M BPD, as imports dropped 16.9% to 0.68-M BPD. Distillate inventory rose 2.07-M bbl to 147.81-M bbl as demand fell 6.22% to 3.55-M BPD. Production gained 2.45% to 5.15-M BPD, while imports dove 20.8% to 0.12-M BPD during the week.
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International Crude Oil and financial sanctions against Iran will be lifted.
Shayne and I expect it will take a year + before Iran can increase production significantly. This is probably a reason for the Crude Oil price movement.
Iran owns about 10% of global Crude Oil reserves and 18% of the Nat Gas reserves. Multinational Oil companies including Royal Dutch Shell (NYSE:RDS-A), Total of France (NYSE:TAT), and Eni (NYSE:ENI) of Italy have also approached the country for investment opportunities in recent weeks.
Before lifting of sanctions, Iran has a production capacity of 3.5-M BPD around 4% of global output. Its exportmarkets include: China, India, Japan, South Korea and Turkey.
On Crude Oil inventory, the industry-sponsored API estimated Crude Oil inventory fell -7.3 M bbl in the week ended 10 July.
For the DOE/EIA report due Wednesday, the market expects Crude stockpile to have dropped -1.2-M bbl.
For fuels, gasoline stock probably fell -2.04-M bbl, and distillate rose +1.3-M bbl.
Crude Oil’s collapse is largely attributed to lower global demand, which was accompanied by more production from the Organization of the Petroleum Exporting Countries (OPEC). OPEC members, seeking to defend their market share of a highly oversupplied Crude Oil market, have engaged in a ‘price ware.”
West Texas Intermediate (WTI), also known as WTI Crude Oil or Texas light sweet, is a grade of Crude Oil used as a benchmark in Oil pricing.
This grade is described as light because of its relatively low density, and sweet because of its low sulfur content.
WTI Crude Oil is the underlying commodity of Chicago Mercantile Exchange’s COMEX Oil futures contracts.
The price of Crude Oil is often referenced in news reports on Oil prices, alongside the price of Brent Crude (OIL) from the North Sea.
Other important Oil markers include the Dubai Crude, Oman Crude, Urals oil and the OPEC Reference Basket.
WTI Crude Oil is lighter and sweeter than Brent Crude Oil, and considerably lighter and sweeter thanDubai or Oman.
Stay tuned…
HeffX-LTN
Paul Ebeling
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