Global Oil Market - Aug 1

[dan_s]

Comments below from Phil Flynn on 8-1-2019

Our base case for oil price is that the low is in. We don’t fear the fed. A quarter point cut will juice up demand. The biggest known threat to the call is some type of waivers to buyers of Iranian crude. The U.S. did impose financial sanctions on Foreign Minister Mohammad Javad Zarif on Wednesday in an effort to further pressure Iran to end its belligerent activities in the Persian Gulf region, according to Fox News. Yet at the same time there are still back door talks and even some suggestion that the U.S. might work with the EU to ease some sanctions on Iran to keep Iran from violating the old nuclear pact. Iran sanction are taking a toll on Iranian oil exports. Reuters reports that Iran’s exports were down to as little as 100,000 barrels per day (bpd) in July, not even enough to fill two very large crude carriers (VLCCs), which carry around 2 million barrels each, according to an industry source who tracks oil flows. Refinitiv - which monitors shipments based on vessel-tracking, port and other data - also estimates Iran exported about 120,000 bpd in July, if shipments of condensate, a type of light crude are included. If these numbers are accurate, it would represent a major drop from at least 400,000 bpd exported in June, and an even more dramatic plunge from the 910,000 bpd Iran exported in April, the month before the U.S. waivers expired. Iran is capable of shipping far more, with the 2.6 million bpd it exported in April 2018, the month before U.S. President Donald Trump withdrew the United States from the multi-lateral deal with Tehran to limit its nuclear program indicative of the nation’s potential. The problem is that there are also numerous industry sources who believe Iran’s exports are substantially higher than what can be seen by ship-tracking data or confirmed by port officials.

Libya is having issues as well. Bloomberg reported that Libya’s oil production dropped to about 950,000 barrels a day, its lowest in five months, after an unidentified group closed a valve on a pipeline linking the country’s largest oil field to an export terminal on the Mediterranean. The Sharara field started shutting down at 10 p.m. on Tuesday, with Libya’s National Oil Corp. subsequently declaring force majeure on loading of the crude at Zawiya port. The deposit, which can pump about 300,000 barrels daily, is operated by a joint venture between the NOC and Total SA (PA:TOTF), Repsol (MC:REP) SA, OMV AG and Equinor ASA. Staff have tried to reopen the valve but are being prevented by armed men, the NOC said in a statement. Negotiations are underway “in an effort to restart production as soon as possible,” it said. Force majeure is a legal status protecting a party from liability if it can’t fulfill a contract for reasons beyond its control. Sharara, which is in southwestern Libya, briefly stopped production about 11 days ago when a group shut a valve. The country’s current reduced output figure was confirmed by a person with knowledge of the situation who lacked authorization to speak to media and asked not to be identified.

Fox News reported that an explosion and fire at an Exxon Mobil (NYSE:XOM) oil refinery outside of Houston Wednesday left 37 people with minor burns, plant officials said. Exxon Mobil Baytown Area said a unit processing propane and propylene burst into flames late Wednesday morning at the Olefins plant, forcing the city to issue a shelter-in-place order, according to Fox 26. Black smoke from the fire could be seen for miles. The explosion happened shortly after 11 a.m. and was contained by the afternoon. "Our first priority remains the safety of people, including our employees, contractors and the community," Exxon Mobil Baytown Area said in a statement. "As a precaution, our industrial hygiene staff is conducting air quality monitoring at the site and at the fence line, and we are cooperating with regulatory agencies."