Crude Oil WTI Futures Market News and Commentary
Oct WTI crude oil (CLV19) on Monday closed up by +8.05 (+14.68%), Nov Brent crude oil (CBX19) closed up by +8.80 (+14.61%), and Oct RBOB gasoline (RBV19) closed up +0.1993 (+12.83%). The energy complex rallied sharply Monday with Oct WTI crude oil and Nov Brent crude at 3-3/4 month highs, and Oct RBOB gasoline at a 6-week high. Crude prices surged Monday after Saudi Arabia lost about half of its oil production output (i.e., 5 mln bpd of total 9.8 mln bpd production), representing about 5% of total world output, due to a drone attack and fire at its key Abqaiq oil processing facility on Saturday. Saudi Arabia's Aramco said today that they were less optimistic about a rapid recovery in oil production as the damage was more severe than initially reported. Tensions were also high due to concern about a possible U.S. military strike against Iran after when President Trump on Sunday said the U.S. is "locked and loaded depending on verification" that Iran staged the drone attack and that he's awaiting word from Saudi Arabia about who it believed caused the attack and "under what terms we will proceed." The upward spike in crude oil prices was undercut by President Trump's statement on Sunday that he may release crude supplies from the Strategic Petroleum Reserve if needed "in a to-be-determined amount sufficient to keep the markets well-supplied." Monday's Chinese economic data signals a slowdown in China's economy, which is negative for global economic prospects and energy demand. China Aug industrial production rose by only +4.4% y/y, weaker than expectations of +5.2% y/y and the smallest increase in 17-1/2 years. Also, China Aug retail sales rose +7.5% y/y, weaker than expectations of +7.9% y/y. Last Wednesday’s weekly EIA data showed that U.S. crude oil inventories as of Sep 6 were -0.9% below the seasonal 5-year average, gasoline inventories were +3.2% above the 5-year average, and distillate inventories were -5.5% below the 5-year average. U.S. crude production in the week ended Sep 6 was unchanged at 12.4 million bpd, just below the record high of 12.5 million bpd in the week of Aug 23.