Belly Laughs and Barrels: OPEC+ Oil Inventory Games and Market Dynamics
OPEC+ is having a belly laugher of a time, watching oil inventories decline. Last week we witnessed a 6.1 million barrel US inventory draw. That’s a big number. If OPEC+ can manage to drain inventories without a demand crunching exorbitant near term price hike, they’ll have quite a bit more leverage with their global policies next year. Being shocked that Saudi Arabia is likely to extend its voluntary 1 million-barrel oil supply cut for the third consecutive month into October makes as much sense as walking into a pizzeria and being disappointed that they don’t serve Chinese food. Fortunately for oil consumers, the sanctions on Russian and Iranian crude exports have been fairly toothless, allowing for some slack in the inventory decline. China and India are lapping up most of the Russian oil. Iranian oil exports exceeded 1.5 mb/d in May, the highest level in 5 years. The $80 / barrel mark seems to be the new notch on the belt for oil prices. Brent futures ended the week $84.48, while U.S. WTI settled Friday at $79.83. While we’ve been watching inventories dwindle, we’re still seeing a full court press on alternative fuel sources. The latest and greatest of these is biogas, which is fuel made from animal waste, that will start receiving federal credits meant for powering electric vehicles. Some are poo pooing this new development, saying that it has not yet been proven that the fuel is a truly clean energy source. Ewww.
Friday will bring us Bruce Springsteen to the New Jersey Meadowlands but will also unveil the jobs report which will be the last such employment release before the central bank’s meeting on September 20. Last week’s Fed egghead Jackson Hole assembly concluded that we’re seeing stronger than expected economic growth with “especially robust” consumer spending. Data on jobless claims were below forecasts and core durable goods orders shone light on a robust July. Will you love me forever? Let me sleep on it.
The Tank Tiger team was burning up the wires arranging storage deals for very large quantities of gasoline components (800,000 barrels) and renewable diesel (2 million barrels) last week. It certainly has been a very dynamic market, and there’s no terminal storage clearinghouse more dynamic than The Tank Tiger. If you’ve got spare capacity, make sure you are receiving our daily inquiries for storage. As surely as seasons change, so do the oil markets. Speaking of seasons, football season is upon us! As the weather cools in New Jersey, the quiet town of Princeton is perking up again as the future of America is returning back to college. Congrats to all of the parents who did the best that they could for the last 18 years. Your house may be a little quieter and the grocery bills maybe a lot lower now, but remember that they can always find their way home.
