Global Oil Market Update - Oct 5

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Crude oil prices soared on Monday, lifted by the prospect of President Donald Trump recovering sufficiently to discharge himself from hospital as well as increased hopes of a new U.S. economic stimulus package.

On October 1 Reuters reported Russian oil and gas condensate production edged up to 9.93 million b/d from an average of 9.86 million b/d in August, two sources familiar with the preliminary data told Reuters. The energy ministry did not immediately reply to a Reuters request for a comment.

On October 1 Bloomberg reported that Kuwait’s observed crude exports rose 5% m/m in September to 1.9 MMBopd, with flows to China swelling and a jump in shipments to Japan and South Korea, according to tanker-tracking data.

On October 1 Platts reported that the OPEC+ alliance has 2.375 million b/d of so-called "compensation cuts" due to make up for previous overproduction in violation of quotas, but not all members have submitted plans to implement the extra reductions, according to an internal OPEC+ document seen by S&P Global Platts. Of the 13 OPEC+ members required to make compensation cuts, only six have outlined their planned schedule of cuts, which total 1.2 million b/d. The largest volume will come from Iraq, whose 698,000 b/d of catch-up cuts will be divided into 203,000 b/d in September and 165,000 b/d in October, November and December.

On October 1 IHS Markit reported that India’s manufacturing PMI rose to 56.8 in September vs August’s level of 52.0.

On October 2 Reuters reported two weeks into an easing of a blockade by eastern forces on Libya's oil infrastructure, the OPEC member is seeing a ramp up in oil production, which has risen nearly three-fold to hit 270,000 b/d this week. Exports have nearly doubled to 200,000 barrels per day in September on a monthly basis, according to oil analytics firm Vortexa. Exports are expected to rise even further, barring any new disruptions, with the reopening of the Marsa El Hariga, Brega and Zueitina terminals. Some analysts, however, remain skeptical that the beleaguered producer can raise and sustain production levels. "It remains to be seen whether the North African OPEC member can maintain this new status quo (doubtful) but it has to be noted that the current increase in production should be manageable for OPEC," Tamas Varga of oil brokerage PVM said.

On October 2 Reuters reported the escalation of a strike among offshore oil workers in Norway could affect production from six fields with a total output of 330,000 BOE/d, the Norwegian Oil and Gas Association (NOG) said on Friday. Norway's Lederne labour union said on Wednesday it would escalate the action from October 4 after dozens of workers went on strike at the Johan Sverdrup oilfield, western Europe's largest. "The risk therefore exists that about eight percent of total petroleum production from the Norwegian continental shelf could be lost through extending the strike," NOG said.

On October 2 Bloomberg reported that the U.A.E. reduced its oil output by 310,000 b/d in September vs. August levels to 2.68 million b/d, according to a Bloomberg survey. This puts the U.A.E. 90,000 b/d above its OPEC+ quota.

On October 2 Reuters reported Asian spot LNG prices rose to their highest level since mid-January on spot demand from Japan, Pakistan and India, industry sources said. The average LNG price for November delivery into northeast Asia was estimated at about $5.20 MMBtu, up 30 cents from the previous week, the sources said. Japan's Inpex Corp offered a cargo for loading over October 19 to 23 from the Ichthys LNG plant in Australia in a tender that closes on October 2, while Angola LNG offered a cargo for November 15 to 20 loading in a tender that closes on October 8, two sources said. Pakistan LNG issued a tender to buy six cargoes for delivery in December, while Japan's Hokkaido Electric is seeking a cargo for delivery over late November to early December in a tender that closes on Friday, they said. In India, Reliance Industries Ltd likely awarded its buy tender for a cargo to be delivered in November at about $5.05 to $5.15 MMBtu while Indian Oil Corp likely bought a November 6 cargo at about $5.05 per MMBtu, the sources added.