US crude inventories still kicking around 80-year highs (source: EIA)
As we charge towards refinery maintenance season, and a deeper one than seen in recent history, crude demand is set to wane into September. While refinery utilization on the four-week moving average remains a country mile above the range of recent years, the trend of deferring seasonal maintenance by some refiners is unlikely to carry through to this fall, especially given the costly reminder provided by the Whiting refinery outage last week.
On the economic data front, German producer prices clawed their way out of deflationary conditions (MoM), while tales of retail sales in the UK came in shy of expectations, bucking the trend of recent positive data out of Blighty. Here in the US, weekly jobless claims came in a wee bit worse than expected at 277, 000, ticking higher for the fourth consecutive week. These collective overnight releases have
done little to lift the mood in broader markets, as a blanket of bearishness has been laid across equity markets overnight, while government bonds across the board are being bought up like hot cakes.
While we’ve already discussed this week the detrimental impact that the current commodity rout is having on both OPEC and Latin America, today’s regional focus shifts to another key oil producer – that of Norway. Norway’s economy is closely tied to oil, given almost half of its exports relate to petroleum.
In what is also rather fascinating news, Mexico’s finance ministry has announced it has bought options based on Maya and Brent crude oil prices to hedge 212 million barrels of its oil for next year at $49 a barrel. Mexico has historically made some astute decisions in the past. Last November it hedged its production for this year at $76.40, while in July 2008 it hedged its 2009 exposure at $70, essentially meaning its economy managed to dodge a financial crisis amid the great recession.
Finally, it isn’t only Saudi and Iraq within OPEC who continue to push oil onto the market undeterred; as I referenced this morning on CNBC, #ClipperData show Angola is exporting at its highest level since March, as is Nigeria:
By Matt Smith/ Oil Price
