It has been noticed that Crude oil has continued to trade soft throughout the week having improved supplies in the meantime whilst demand concerns continue.
ICE-Brent and NYMEX-WTI have seen improvements over the week rather promptly; their forward curves have widened due to trading at a deeper discount to the December contract which implies higher supplies in the spot market. Investors, take note.
Moving on to refined products, new data released by Insight Global reveals that the gas oil inventory in the ARA area fell by 152kt last week due to a lack of cargo arrivals at the ports. Just the smallest change in operations can have severe effects on neighboring departments and industries.
Hurricane Laura’s activity throughout the US over the past few weeks have significantly reduced diesel shipments in the short term which has of course created supply pressures. It has been noted that the inventory withdrawal didn’t actually help the gasoil issues in Europe that dropped to a very unusual ten-year low of just under US$3/bbl because of the subdued demand and a huge stockpile within the US and Asia.
On the topic of Asia; it has been reported that Singapore’s middle distillate inventory increased by 1.7MMbbls last week which is a very significant jump, this has pushed the distillate inventory to an impressive 9 year high of 16MMbbls.
Oil investors, particularly those who are concerned with investments within Asia will be patiently waiting for Monday to come. China will be releasing its monthly oil import numbers which will give us a huge indicator of the strength of oil demand across the country. China’s oil imports shot up by 19% in May 2020 from the year before to a record high of 11.3 million barrels each day, according to figures released by S&P Global Platts.
On Wednesday EIA’s Short-Term Energy Outlook will be updated with US oil production forecasts for the rest of what’s been an eventful 2020 and also insights into 2021 also.
As always there will be the expected API and EIA weekly reports that will most likely reflect the post-hurricane back on track production.
Onto metals, across the board, they are still be traded under pressure whilst the dollar index strives to strengthen. Nickel’s Bull run looks like it hit its peak as the London three-month prices dropped by more than 3% DoD yesterday.
Due to Nickel’s impressive performance, it has rightfully claimed the second position for the best performer in LME base metals complex based on a year-to-date basis.
SHMET reports have revealed that Chinese NPI (nickel pig iron) productions are still falling which has been the case since August (-9% MoM) due to cutbacks surrounding the ore supply restrictions. Limited ore supplies continue to be one of the bull drivers behind the recent rally and China’s low inventory at their ports continues to be a case throughout 2020.
South America’s data reveals that copper is the true dark horse among the metals; Chilean copper productions have grown by 1.4% YoY to 3.25 mln tonnes during the first seven months despite Covid-19 threats however productions in July declined by 5% YoY but only due to disruptions at several operations.
Chinese bonded warehouse stocks have increased to 249.5kt at import arrivals but have been reported to be slowing down to allow clearned into the local market because the demand did not come from a seasonal lull.