Phil Flynn is writer of The Energy Report, a daily market commentary discussing oil, the Middle East, American government, economics, and their effects on the world's energies markets, as well as other commodity markets. Contact Mr. Flynn at (888) 264-5665
It looked like a typical oil option expiration fade play in the oil market before headlines came out suggesting that this might not be your typical options expiration. Oil was down on reports that two of three Libyan fields that were shut in due to protests have resumed output. Then weak data out of China as their gross domestic product (GDP) grew 6.3% year on year in the second quarter, compared with analyst forecasts of 7.3%. Then then a headline that caused a huge oil price spike was a Reuters report quoting the ministry of energy that said that Saudi Arabia will extend its voluntary cut until the end of December 2024. Yet they retracted that headline saying it was a repeat of the headline that had had previously been released.
Wheat spiked on a report that Russia said that “The Initiative on the Safe Transportation of Grain and Foodstuffs from Ukrainian ports, also called the Black Sea Grain Initiative, the agreement among Russia, Ukraine, Turkey and the United Nations (UN) during the 2022 Russian invasion of Ukraine has expired. Reuters said that “Russia has formally notified Ukraine, via the Russian embassy in Minsk, that it was suspending its participation in the Black Sea grain deal. Kremlin spokesman Dmitry Peskov told reporters on Monday that the Black Sea agreements ceased to be valid today.” “Unfortunately, the part of these Black Sea agreements concerning Russia has not been implemented so far, so its effect is terminated” The unrest due to the ending of this deal could filter down to the oil complex as it could impact all grain prices and biofuel. It also adds risk premium to oil and grain transportation. Does say it will return to grain deal once its conditions are met. Yet Russian oil exports from western ports set to fall according to reports.
This comes as we are facing a world in oil where demand is rising, but supplies are falling. That is the take from JODI at the International Energy Forum. Jodi reports that “Oil demand in JODI-reporting countries rose by more than 3 mb/d month-on-month in May and approached March’s record, while crude oil production fell, according to the latest data issued by the Joint Organizations Data Initiative. The jump in oil demand was driven by China, India, Saudi Arabia, and the US. China’s total product demand increased by 1.7 mb/d month-on-month to 17.37 mb/d – the second-highest level ever reported in JODI.
Crude oil production in JODI reporting countries fell by 0.8 mb/d in May, driven by lower production in Saudi Arabia, Canada, and the US. Crude inventories in JODI countries fell by 10 mb and stood 324 mb below the five-year average. Meanwhile, product inventories rose by 32 mb and stood 25 mb below the five-year average. Saudi Crude inventories drew by 1.2m barrels and product inventories rose by 0.9m barrels – IEF citing Jodi data. Saudi Crude production fell by 502k bpd to 9.96m bpd in May – IEF citing Jodi data. Saudi Crude exports fell by 388k bpd to 6.93m bpd in May – IEF citing Jodi data.
Notably, this month’s update did not include April or May data for Russia, but March oil data for the country was included for the first time. Russian crude production fell by 49 kb/d from February to 10.18 mb/d in March and stood flat from year-ago levels.
Last Week OPEC predicted that world oil consumption would increase by 2.2 million barrels a day in 2024 to 104.3 million a day. OPEC+ alliance will s formally due to hold a monitoring meeting on August 3rd.
While the Chinese demand this morning was disappointing the bottom line is that China continues to import near record amounts of oil. We continue to see the supplies tightening well today we might get some option expiration madness the bottom line is use dips in the market to put on hedges.
Natural Gas demand from Jodi was lower. Jodi said that global natural gas demand declined seasonally in May by 10.4 bcm, according to the data. EU+UK natural gas demand declined by 7.4 bcm and was ~17 percent below seasonal average levels. The region’s inventories built by 9.2 bcm in May (slightly less than the seasonal average of 11 bcm) and stood nearly 70 percent full at the end of the month. The JODI oil and gas databases were updated on Monday, with 51 countries reporting oil data for May and 53 countries reporting natural gas data.
Tune into the Fox Business Network! Invested in you! Call to get the wildly popular Phil Flynn trade levels on all major Futures Markets! Call 888-264-5665 or email me at firstname.lastname@example.org
The PRICE Futures Group
Senior Market Analyst & Author of The Energy Report Contributor to FOX Business Network
141 West Jackson Blvd., Suite 1920, Chicago, Illinois 60604
312 264 4364 (Direct) | 888 264 5665 (Direct) | 800 769 7021 (Main) | 312 264 4399 (Fax) www.pricegroup.com
Senior Market Analyst & Author of The Energy Report
Contributor to FOX Business Network
141 West Jackson Blvd., Suite 1920, Chicago, Illinois 60604
312 264 4364 (Direct) | 888 264 5665 (Direct) | 800 769 7021 (Main) | 312 264 4303 (Fax)
Please do not leave any instructions for orders in your message, as we cannot execute instructions left through email or voicemail. Orders must be entered via direct verbal communication with a representative of our firm. We cannot be held responsible for orders left in any other manner. PAST RESULTS ARE NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. Investing in futures can involve substantial risk & is not for everyone. Trading foreign exchange also involves a high degree of risk. The leverage created by trading on margin can work against you as well as for you, and losses can exceed your entire investment. Before opening an account and trading, you should seek advice from your advisors as appropriate to ensure that you understand the risks and can withstand the losses. Member NIBA, NFA.Questions? Ask Phil Flynn today at 312-264-4364