*US Shale Production to Hit Two Year Low*
Shale oil production in the United States looks set to fall to 7.49 million bpd, a drop of 56,000 in a forecast published by the EIA. The U.S. oil and natural gas rig count fell by five to an all-time low of 258 in the week to July 10, according to data from Baker Hughes Co. This metric is usually used as an indicator of continued falling future production. Although some production is expected to increase in North Dakota and Montana as crude prices recover, many areas are to continue their multi-month falls.
*China’s Oil Imports at New Record*
June imports of crude oil into China hit their highest ever levels pushing to 12.9 million bpd. This surpassed the previous month record of 11.3 million bpd in May. This meant that for the first half of the year crude imports were up 9.9% (269 million tonnes) and natural gas imports up 3.3% (48.36 million tonnes) according to Reuters.
*Market Apparently Returning to Balance Before OPEC Meeting*
As we moved closer to the Joint Ministerial Monitoring Committee meeting tomorrow rumours about the future of the cut agreement are swirling. According to comments by OPEC’s Mohammed Barkindo, the market is returning to balance with a rapidly rising return of demand. The cuts are expected to move from 9.7 million bpd to 7.7 million, and no other dramatic changes are currently on the table. Iran has pledged 100% compliance with the OPEC+ quotas and Nigeria has promised to boost its adherence to the agreement.
*VLSFO Market News*
In Singapore the physical market fundamentals remain weak as onshore inventories sit with stocks at three-year highs. These high stocks levels – some 26.67 million bbls – has pushed refiners to start cutting VLSFO production as the market signals that it needs no more supply. These conditions have led the physical suppliers to reduce prices to try to increase activity.
*HSFO Market News*
The high sulphur fuel market has been strong off the back of good demand for power production fuel in Saudi Arabia and the increasing rarity of heavier crude. This has pushed up crack values, with the spot index moving into positive territory. Physically this has resulted in some traders not offering any near dated HSFO and it is expected that this tightness of market will continue to August.