Cuts and Imports
It must be music to the ears of all oil producers: the oil guzzling Chinese mainland has increased their crude imports to all-time highs. Low prices have drawn Chinese buyers to boost imports, with purchases rising to 11.3 million bpd in May. If you throw in the news of the one-month extension to the OPEC+ cut agreement, then you will understand how futures are now nearly $43 for front month Brent. $100 oil here we come! Just kidding.
Cristobal
Like the script of a bad B film, Storm Cristobal has caused the shutting down of 33% on offshore oil and 31% of natural gas output in the Gulf of Mexico according to Reuters news. Oil companies have evacuated 174 manned rigs, shutting some 616,000 bpd of oil and 853 mil cfpd of gas. Only 9 refineries, or 12% of US output, plan to continue. As one the largest US oil producing region, this could have significant impact on its ability to be energy independent, its export desires to China, as well as refined product levels to be reported by the EIA on Wednesday.
Show Me the Money
For Asian buyers of Saudi crude, do not look at your bills. Aramco increased the price of Arab Light by $6.10/bbl according to Bloomberg pricing data. These lighter grades of oil have seen the greatest increase, with heavier crudes seeing smaller increases. With the bit between their teeth from increasing demand and an extension to the cut agreement, I wouldn’t put it past the Saudi’s to continue to squeeze buyers as availability continues to be low and pricing sentiment going only one way. Lay those renminbis on the table.
I’ll Be Back
Libya is back. Two major oilfields in the south west of the country have reopened after months of blockade. It was confirmed by the state National Oil Corporation that production has resumed at Sharara oilfield (300,000 bpd), as well as the El Feel field (70,000 bpd). Production has been restarted after the retreat of Eastern based troops under Khalifa Haftar.
(FIS)