After holding around $75 yesterday amid storm news as Hurricane Michael shut more offshore oil platforms and the International Energy Agency warned that the global market is entering a “red zone”, today saw risk-off sentiment slam it lower, back below $73 ahead of tonight’s API data.
Globally, supplies from Iran and Venezuela have been shrinking, creating a “risky situation” for the world economy, said IEA Executive Director Fatih Birol.
Gulf operators shut 718.9k b/d of oil production (around 42%), 89 platforms evacuated amid Hurricane Michael, BSEE says in the notice.
“Yesterday there was some concern about more extensive losses of production due to Hurricane Michael”, said John Kilduff, partner at Again Capital LLC. Now that the oil infrastructure is in the clear, this weeks EIA report will help ease concerns once we see a build printed.
API
The storm-related impact should not be present in this data but after last week’s huge crude build we saw another massive crude build…
Bloomberg notes that sanctions on Iranian oil exports are hitting much harder than most people predicted as the Trump administration takes a tough line on enforcement, said executives from the world’s largest energy traders. However, Saudi Aramco will supply about 4 million barrels of additional crude to Indian customers for November, according to a person familiar with the matter. That’s on top of their monthly contractual supplies from Aramco.
“The market is just struggling with the expectation of the reduction in Iranian exports combined with physical evidence in the U.S. that inventories are rising”, said Kyle Cooper, a consultant at Ion Energy Group LLC.
