Aug 20, Bunker market this morning

A drone attack by a Yemeni Houthi group on an oil field in eastern Saudi Arabia on August 17 caused a fire at a gas plant, heightening Middle East tensions, but the state-run Saudi Aramco said oil production was not affected. .

The oil market seems to be pricing again at a geopolitical risk premium, but it may not stand if it does not result in supply disruptions. Saudi Arabia, in coalition with the United Arab Emirates, and Iran are essentially fighting a proxy war in Yemen, with the Saudis leading an Arab military coalition to “restore legitimacy” to the country, while the Houthi movement, which holds the capital, Sanaa, is backed by Iran.

Meanwhile, tensions over Iran appeared to be eased after Gibraltar unleashed an Iranian tanker captured in July, though Tehran warned the United States against any new attempts to capture the tanker offshore.

Brent for the October settlement rose $ 1.10 to $ 59.74 a barrel on London-based ICE.

Upcoming exchanges in Europe. West Texas Intermediate for September delivery rose $ 1.34 to $ 56.21 a barrel on the New York Merchantile Exchange. The Brent Standard traded at $ 3.53 premium to WTI. Gasoil for September earned $ 1.50.

Morning oil indexes today have no strong trend so far.

Meanwhile, world oil indices rose on August 19 following a weekend raid on a Saudi oil facility by Yemeni separatists and as traders sought signs that US and Chinese trade tensions could ease.

In its latest report, OPEC only slightly lowered its forecast for global oil demand, dropping it to 1.10 million barrels per day (BPD) for 2019, down just minus 0.04 million bpd from a month earlier. . OPEC also said global supply could grow by 1.97 million bpd this year, significantly outpacing demand growth. However, this figure is down by 72,000 bpd from a previous estimate, due to lower than expected production growth in the US, Brazil, Thailand and Norway.

According to OPEC estimates, oil inventories in OECD countries rose 31.8 million barrels in June from a month earlier, rising to 67 million barrels above the five-year average. In other words, just as OPEC + was meeting to extend production cuts for another 9 months, inventories were rising, an indication of an oversupply market.

Saudi Arabia and Donald Trump tend to push the oil market when prices move too far from their preferred range. As soon as Brent hit $ 60 a barrel recently, rumors surfaced that Saudi Arabia was thinking of deeper action to save prices.

Rumors just sent oil prices down. But in years past, whenever Brent rises to the 70s, Trump has fooled OPEC by demanding lower prices. The result is Brent stranded between $ 60 and $ 75.

Saudi Arabia, meanwhile, has seriously increased its oil exports to China in recent months.

Saudi Arabia’s crude shipments to China have more than doubled in a year. During the same period, its US oil exports declined by almost two-thirds. According to, Saudi Arabia exported 1,802,788 barrels per day (GDP) to China in July, compared to 921,811 bpd in August 2018. In contrast, exports to the US in July were
262,053 ppd, up 62% from 687,946 ppd in August last year. US sanctions on Iranian oil have helped change that.

The Trump administration is preparing a plan to end federal direct regulation of methane leaks from oil and gas facilities, though some power companies insist they do not want the relief. A draft proposal from the Environmental Protection Agency (EPA) would prevent the federal government from directing that powerful greenhouse gas directly as it limits emissions from oil wells and infrastructure, despite fears that time is running out to avoid the consequences catastrophic climate change.

More than 60 oil and gas companies have made voluntary commitments to free methane emissions, the main component of natural gas, though some insist federal regulation is still essential to the highly fragmented industry.

Through August, the number of bankruptcies in the US oil and gas industry this year has almost reached the 2018 total. The total volume of debt affected so far ($ 20 billion) has surpassed last year’s figure ($ 17 billion )./

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