(+) US Oil Weekly Update: Will Cheaper Money Lift the Market?

The WTI has gained a few dollars this week and trying to establish a new range amid the turbulent market forecasts.

News from Lebanon where several pagers belonging to Hezbollah members blew up in what seems to be a coordinated attack against the terror organization helped push the WTI above the $70 mark towards $72 per barrel. Hezbollah, the Iranian proxy blames the Israelis after the deadly attack and has vowed to punish Israel putting more escalating pressure in the tense region. Israel has neither denied nor taken responsibility for the sophisticated attack. US has urged Iran not to heighten the tension any further.

Federal Reserve cut interest rates by 50 points Wednesday, first of what is expected to be a steady easing of monetary policy. Cheaper borrowing costs and weaker dollar has historically helped support oil price.

Global refinery data shows a slowing market with lower crude throughputs in the first eight months of 2024 compared with the same period last year. Earlier this month refinery margins came under pressure as product prices fell more than crude, reflecting a bearish view on global consumption.

Figure 1. Mid-East Tension and Monetary Policies Lifts Crude Prices.

US Crude inventories and production.

US commercial crude oil inventories decreased by a 1.6million barrels from the previous week. That is a significantstronger draw than the expected 0.1 million barrel-drawforecasted by market experts. At 417,5 million barrels excluding SPR, U.S. crude oil inventories are about 4 percentbelow the five-year average for this time of year and 1.0million barrels lower than a year ago. U.S. crude oil refinery inputs averaged 16.75 million barrels per day during the week ending September 13, 2024, which was a 50 Kbpd less than the previous week`s average. Refineries operated at 92.1percent of their operable capacity last week.

Figure 2. US Crude Stocks including SPR at 798.1 million barrels.

Figure 3. US Crude Stocks Excluding SPR at 417.5 million barrels.

US Rig Activity.

Active rigs in the US have been on a steady decline since mid- August. In the latest data from Baker Hughes, we saw a significant jump in active rigs in the US. And with 590 active rigs total, the activity is at mid-June levels. US production growth has slowed this year along with the declining numbers of active rigs. Although we had a significant uptick in the latest count, we`re still 51 rigs lower than a year ago.

Figure 4. A Sharpe Weekly increase in Active Oil Focused Rigs, From 483 to 488.

Figure 5. After Four Weeks of Consecutive Decline, Active Gas Focused Rigs Increase From 94 to 97.

Figure 6. Total Active Rigs in the U.S. Increased By 8, From 582 to 590.

Figure 7. Rig Count in Major Basins.

Baker Hughes has issued the rotary rig counts as a service to the petroleum industry since 1944, when Baker Hughes Tool Company began weekly counts of U.S. and Canadian drilling activity. Baker Hughes initiated the monthly international rig count in 1975. The North American rig count is released weekly at noon Central Time on the last day of the work week.

Disclaimer

This report is under no circumstances intended to be used for or considered as investment advice. This report is to be used as information and a general market guidance. The author, GE Briefings and Investornytt cannot guarantee that the information from sources is without incentives, but the author has taken considerable care to ensure that, and to the best of his knowledge, material information contained in the report is in accordance with the facts and contains no omission likely to affect its understanding. Please note that this report is the authors own research, opinions and conclusions, and the readers is recommended to draw their own conclusions based on other sources than this report, the facts and market picture can change in an instant and therefor the reader must do their own due diligence. The author, GE Briefings and Investornytt cannot be held responsible for the readers investments based on this report.

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