ENERGY. Monthly Report. September 2015

Transcription

1 ENERGY Monthly Report September 2015

2 HIGHLIGHTS OF AUGUST Brent futures fell 5.2 percent at the start of the month to below $50 for the first time since January 29. The Obama administration won support from Gulf Arab allies for its nuclear deal with Iran, which pledged to boost production when sanctions end. The new head of Libya s state oil company for the eastern region is considering resuming exports from the nation s two largest ports and will seek to boost production. Libya plans to lift force majeure at its Es Sider and Ras Lanuf ports that were closed in December amid militia attacks. Crude stockpiles fell by 5.45 million barrels to million in the week ended Aug. 21, the Energy Information Administration reported on Aug. 26, compared with an increase of 1.45 million forecast in a Bloomberg survey. U.S. gross domestic product increased at a 3.7 percent annualized rate in the second quarter, exceeding all projections in a Bloomberg survey of economists. Oil s biggest three-day rally in 25 years was seen after futures surged 27 percent in the three days through Aug. 31, the most since August U.S. drilling added to signs producers will keep pumping crude amid a global glut. The number of rigs seeking oil rose by 6 to 670 for a third weekly gain, Baker Hughes Inc. data showed Aug. 7. Oil fell to a six-year low to $43.08 on Aug. 11, the lowest close since March 2009, as trading volatility advanced to the highest in a month and China devalued its currency a second day. China, the world s second-biggest oil user, cut the yuan s daily reference rate by 1.6 percent, making commodity imports priced in the U.S. currency less attractive. Oil's weeks-long slump accelerated sharply on Aug. 24, with prices tumbling as much as 6 percent to fresh 6-1/2- year lows as a renewed dive in the Chinese equities market sent global financial markets into a tailspin. A near 9- percent fall in China shares roiled global markets and sent the Dow Jones Industrial Average down more than 1,000 points in early trading. Oil's more nearly 40 percent slump since its late-june high set off alarm bells among some hard-hit members of OPEC, triggering some talk of an emergency meeting, although even most Gulf members saw that as unlikely.

3 INDUSTRY AND MARKET NEWS Iran s intent to go it alone threatens OPEC s cut cohesion Iran is pushing ahead with its goal to increase market share, with the nation pumping 2.9 million barrels a day in August 2015, the fastest rate in three years, according to a Bloomberg survey. This has boosted OPEC production to 32.3 million barrels a day. This has resulted on downward pressure on prices with glut in oversupply. Iran could provide downside risks to prices if restrictions on its crude exports are eased early next year as result of recent agreement. Other smaller members agitated for an emergency meeting to address the price drop before their next scheduled summit in December. The OPEC continues to pump above its 30 million barrel a day quota. Any move to scale back OPEC production, and Iran s ambitions, would require support from Saudi Arabia, the group s biggest member. The world s largest exporter led the decision last year to sustain output as prices tumbled, speculating that higher-cost producers would be forced out of the market. Reduced offshore share in U.S. oil and natural gas production lowers risk from hurricanes Offshore energy production in the Gulf of Mexico has experienced relatively minor disruptions because of tropical storms and hurricanes in recent years, and the National Oceanic and Atmospheric Administration (NOAA) has predicted a below-normal 2015 hurricane season in its updated Atlantic Hurricane Season Outlook, released in August Hurricane-related risk to total U.S. crude oil and natural gas production has decreased over recent years as the share of total U.S. production originating in the Gulf of Mexico has declined sharply. In 2003, 27% of the nation's crude oil was produced in the Gulf of Mexico; by 2014, that share had declined to 16%. The Gulf of Mexico's share of natural gas production has also declined from a high of 26% in 1997 to 5% in This decline in the Gulf of Mexico's share of production has reduced the vulnerability of U.S. crude oil and natural gas supply to hurricanes. No crude oil or natural gas production in the Gulf of Mexico was shut in during the 2014 hurricane season.

4 INVENTORY REVIEW U.S. crude oil stockpiles was near unchanged in the week ended August 28, 2015 when compared to week ended July 31, 2015.

5 Source: EIA, U.S. U.S. Crude oil stocks (million barrels) 07/31/15 08/07/15 08/14/15 08/21/15 08/28/15 Source: EIA, U.S U.S. Crude Oil Production and Imports (Million Barrels per Day) Week Ending 08/14/15 08/21/15 08/28/15 Crude Oil Production Crude Oil Imports, Excluding SPR Source: EIA, U.S.

6 CFTC REPORT The U.S. CFTC s Commitments of Traders (COT) weekly status. (Figures in mn. Lots) Total OI Long Non - Commercial Short - Non-Commercial Long Commercial Short - Commercial

7 The charts below depict the commercial and non-commercial positions at NYMEX for Light Sweet Crude Oil (WTI):

8 SPOT MARKET OVERVIEW Spot price of WTI Cushing crude oil averaged US$42.86 per barrel in August 2015, lower than US$50.89 per barrel in July It opened the month at US$45.17 per barrel and closed the month at US$49.20 per barrel, that was also the high of the month. Source: WTRG

9 INDIAN CRUDE OIL BASKET The Indian crude oil basket averaged daily US$47.46 per barrel in August 2015 with a high of US$50.63 per barrel during the month.

10 FUTURES TRADING OVERVIEW MCX crude oil contract aggregate average daily volume for August 2015 was mn. barrels and aggregate average daily open interest for the month was 3.91 mn. barrels. NYMEX Light Sweet WTI Crude oil futures aggregate average daily volume was approximately mn. barrels in August Aggregate average daily open interest for the month was approximately mn. barrels.

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13 DATA RELEASES IN SEPTEMBER 2015 Weekly crude oil inventory data every Wednesday (except for Sept. 9 would be on Sept. 10 owing to US market holiday Labour Day on Monday Sept. 7) and weekly U.S. jobless claims every Thursday German ZEW Economic Sentiment on Sept. 15 FOMC Statement and Federal Funds Rate on Sept. 17 China Flash Manufacturing PMI and German and French Flash Manufacturing PMI on Sept. 22 German Ifo Business Climate on Sept. 23 U.S. Core Durable Goods Orders m/m on Sept. 24 U.S. Final GDP q/q on Sept. 25 U.S. CB Consumer Confidence on Sept. 29 U.S. ADP Non-Farm Employment Change on Sept. 30 Source: Forex Factory Multi Commodity Exchange of India Limited Exchange Square, Suren Road, Andheri (East), Mumbai , India Disclaimer: Every effort has been made in compiling the data/ information to ensure the high quality and accuracy of the content of the MCX Energy Monthly Report. Under any circumstances, MCX shall not be liable to any user for future/accidental errors. Users may carry out due diligence before using any data/information herein, MCX will not be responsible for any discrepancies/disputes arising out of such use.