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Energy Investing
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Re: API dataThe API report is clearly very strong, but bullish? I don't recall another time when I wanted a bit weaker report to help OPEC+ in making decision to cut production. Demand will eventually fall by another 2 mm bpd due to recession, but not at this point. Totally 4 mm bpd cut would be needed same as in 2009, 2 mm bpd were already cut in November, so 2 mm bpd more will be needed.... but again not today 500K bpd quotas cut at 400K bpd actual oil cut would be sufficient at this point to remove ST extra political supply. and the effect of seasonal lower demand. But at such strong report I'm not sure we will get it. Hopefully ABS will look over this report focusing on SPR releases (US/EU/China), China demand control and coming demand destruction due to coming recession. He may choose not to cut, but note that in case of misbalancing (read: oil price fall) they wouldn't wait for another meeting in a month, but will cut immediately. That may work to cool speculators. But the cut would still be more effective...the 1st from coming 4 IMHO. There's still a fresh memory of the November 2014 OPEC meeting causing the dramatic swing in entire business and starting the long bear market.. I wouldn't want them to repeat it.... As far as this API report - for reminder we had a big jump in oil imports last week - Padd 2 Canadian oil , huge Padd 5 West and some in Padd 3 South. All those imports jumps were a one-time event happening one's in several weeks. This week crude imports have likely plunged by 1 mm bpd resulting in large draws. I expect a small refinery inputs rise, really small as they have already recovered after the maintenance. I also expect a jump in gasoline/distillate imports as a flotilla of cargos was moving to US coasts. Some were reached last week, but a lot - this week. This is basically one time event as well. However - expect big consistent product builds while crude draws in December and January and a part of February. This would be normal.... romm |
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