WTI crude oil price fell for the first time in 6 days, pulling
back to 88 in European session, as investors awaited the US
inventory report. The industry-sponsored American Petroleum
Institute said yesterday that crude inventory increased +5.13 mmb
to 352.18 mmb in the week ended August 26. For oil products,
gasoline stockpile fell -3.11 mmb to 210.80 mmb while distillate
added +0.28 mmb to 153.11. The market expects the DOE/EIA will
report a -0.5 mmb and -0.95 mmb drops in crude and gasoline
inventories respectively. Distillate stockpile probably rose +0.9
mmb.
Brent crude initially climbed higher to 114.65 but then
faltered to 113.55, probably on profit-taking after the 6 days
rally. Expectations that oil production in Libya might soon
resumed have eased concerns over output tightness. Italy's Eni
SPA signed a memorandum of understanding with Libya's National
Transitional Council (
NTC
), pledging to create 'the conditions for a rapid and complete
recovery of Eni's activities in Libya'. Eni was the largest
foreign producer in Libya. Before the civil war broke out, Eni
was producing 273K bpd of oil equivalent in the country. The 2
parties are committed to 'doing all that is necessary to restart
operations on the Greenstream pipeline [by mid-October], bringing
gas from the Libyan coast to Italy'.
As we mentioned before, 85% of the Libya's oil is exported to
Europe, including Italy, France, Germany and Spain. Suspension of
output over the past 6 months has affected European refineries.
Yet, even if oil production in Libya can be resumed on schedule,
we do not expect a full return of the country's 1.6M bpd
production this year and not even next week. Indeed, we are only
looking for 15-30% of production to return to normal over the
coming half year.
Concerning macroeconomic data, Eurozone's unemployment rate
unexpectedly rose to 10% in July from 9.9% a month ago. For
Germany, the jobless rate stayed unchanged at 7% in August but
the number of unemployed dropped -8K in August from -10K in the
prior month. As expected, preliminary CPI rose +2.5% y/y in
August, same as July's reading but remained above ECB's +2%
target.
|
Weekly change in inventory as of
26/08/11
|
Change
|
Consensus
|
Previous
|
|
Crude oil
|
|
-0.50 mmb |
-2.21 mmb |
|
Gasoline
|
|
-0.95 mmb |
+1.36 mmb |
|
Distillate
|
|
+0.90 mmb |
+1.73 mmb |
Comparison between API and EIA reports:
|
|
API (Aug 26)
|
|
|
EIA (Aug 26)
|
|
|
Actual |
Inventory |
Previous |
|
Forecast (using API's inventory
level) |
Inventory |
|
Crude oil
|
+5.13 mmb |
352.18 mmb |
-3.34 mmb |
|
+0.41 mmb |
352 mmb |
|
Gasoline
|
-3.11 mmb |
210.80 mmb |
+6.37 mmb |
|
-0.34 mmb
|
211 mmb |
|
Distillate
|
+0.28 mmb |
153.11 mmb |
+2.00 mmb |
|
-2.59 mmb |
153 mmb |
API collects stockpile information on a voluntary basis
from operators of refineries. Data from the API and DOE have
moved in the same direction 71% of the time over the past 52
weeks
Source: Bloomberg, API, EIA