Oil End-Day Summary: Crude Slides

Crude prices tumbled today despite China’s unexpected rate cut announcement with the 1-year MTF reduced to 2.5% from 2.65%. The rate cut preceded data showing relatively robust commodities output in July. Ongoing risks to China’s economic growth and overall strength of the US Dollar provided down-side risk.

• Brent OCT 23 down -1.7% at 84.74$/bbl
• WTI SEP 23 down -2% at 80.83$/bbl
• WTI-Brent down -0.09$/bbl at -4.39$/bbl
• China’s apparent oil demand in July was up 21.2% yr/yr according to Bloomberg with a 17.4% increase yr/yr in oil processing.
• Crude oil daily traded volumes have fallen in recent days after a spike on 9 August amid concerns for tight supplies from rising tension in the Black Sea last week.
• Crude oil daily traded volumes have fallen in recent days after a spike on 9 August amid concerns for tight supplies from rising tension in the Black Sea last week. Aggregate daily traded volumes for ICE Brent are down from 1.22m contracts to just 785k contracts yesterday and compared to around 970k average over the last month. WTI aggregate traded volumes have also dipped from 1.29m to 669k in the same time period.
• Oil output in the major US shale oil basins is forecast to fall by 20kbpd to 9.415mbpd in September according to the EIA drilling productivity report. The August output forecast was revised up from 9.397mbpd to 9.435mbpd.
• Crude inventories in the US SPR rose by 600kbbls last week. Total inventories were up to 348.4mbbl on Aug 11 from 347.8mbbl the previous week.
• Kazakhstan’s daily oil production fell further to 209.3k tons on Aug. 14 compared with 215k tons the day before because of a power outage.
• The Aframax tanker Lucia discharged a cargo of Russian Ural’s crude via ship-to-ship transfer in the at the Spanish enclave of Ceuta - the first in four months.
• Goldman Sachs MEMA economist Farouk Soussa said: “the link between oil prices and the GCC fiscal outlook remains pretty robust, higher oil prices obviously mean higher oil revenues for the GCC countries, every $10/bbl rise, more or less means another 1-1.5% GDP in extra oil revenues for the GCC countries.”
• China's independent refineries imported around 6.28 million mt of Iranian crudes in July, up 13% from June and the highest so far this year, while Russian crude is losing attractiveness amid higher prices.