Daily Market Briefing
Oil prices are up as market ignores huge builds in crude oil inventories
Yesterday the weekly crude oil inventories from the Energy Information Administration (EIA) showed a huge build of more than 7 mbbl. Which was in line with Tuesday’s data from the American Petroleum Institute (API). The huge build likely comes as the U.S. production for the last two weeks broke the record as production was 12.1 mbpd – about 2 mbpd more than Saudi Arabia’s current production under the production cut and about 750 kbpd more than Russia. The bottlenecks in the U.S. have eased up meaning that more crude is reaching the global market as U.S. average exports this year have increased. But still the pipeline capacity could be subject to bottlenecks as the production seems to continue growing, which is why a lot of new pipeline- and export terminal projects are in scope for going online last half of this year and next year.
Russia is increasingly targeting China as a crude export market as Russia is subject to western sanctions. New pipelines to China are being built and internally in China new oil infrastructure is allegedly on the way as well. The Chinese president likely wants to merge all Chinese pipeline infrastructure under a single state-owned company with a plan of expanding the network and increasing domestic production of crude and natural gas.
The crude oil and gas markets are still growing though the OECD just announced an expected decrease in world growth for 2019 from 3.5% to 3.3% and an expected decrease in 2020 growth of 0.1 percentage points.
Turning to economic data front, today sees ECB interest rate decision and monetary policy statement followed by a press conference.