*API FYI, but WBU EIA*
The American Petroleum Institute (API) has predicted that crude stocks rose by 1.7 mil bbls last week. This isn’t exactly the greatest news on the demand front, something which is sorely needed by producers to help drive up prices after such historic lows in April. That being said, they have predicted draws in gasoline and distillates, so perhaps this gives a glimpse of product demand returning in the US. As ever, we have to wait until later this after (3.30pm UK Time) to find out the real numbers are, and then we’ll get the usual confused and nonsensically rushed reaction to it.
*OPEC Whipped into Line*
OPEC+ are trying to increase the effectiveness of their cuts by putting pressure on nations who have not fulfilled their quotas. Previously the cuts had been supplemented by Saudi Arabia conducting extra cuts, but after their announcement that this would end, they now need to ensure everyone is strictly following the agreement. Nigeria, Angola, Gabon and Brunei have submitted plans on how they will do this.
*Port Congestion in Shandong*
Imports of crude into China have rocketed up 19.2% on this time last year to 11.34 million bpd in May. This has caused is a backlog of tankers awaiting discharge at the refining hub in Shandong. There are some 41 ships waiting to get into the port, or to put it another way, some 51 million bbls of crude. If you think the morning commute traffic is bad, spare a thought for the sailors as this tanker backlog could last until August. This has had the knock-on effect of restricting the increased throughput for Chinese refineries.
*US Shale in Trouble*
The US oil industry has suffered badly due to the collapse in price caused by the pumping war and exacerbate by the coronavirus pandemic. To illustrate its quick turn of fortunes just look at shares of the 10 largest publicly listed offshore oil companies which traded down 77% since the start of the year. This month, the number of floating rigs at work is expected to hit the lowest level since 1986 as oil contracts are deferred or cancelled. US shale companies could be forced to write down $300bn of their assets this year, starting in the second quarter, as operators begin to account for the oil-price collapse on their balance sheets, according to the FT.