Episode 132 - China econ on the upswing? | OPEC + signals to extend cuts | Dr. Dean Foreman with the API

Energy Week

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China economy continues strong growth trajectory in October, but imbalances remain
https://www.scmp.com/economy/china-economy/article/3109967/china-economy-continues-strong-growth-trajectory-october
- Retail sales continued to lag industrial output, with consumers remaining cautious in their spending in the world’s most populous nation, will the US suffer similar retail issues?
- China isn’t all back economically. Just because industry looks strong, consumer economy hasn’t recovered.
- Will U.S. and Beijing renegotiate the phase 1 trade deal.
https://www.api.org/products-and-services/statistics/apis-economic-industry-outlook
Oil jumps 4% on latest COVID-19 vaccine progress
https://www.reuters.com/article/global-oil-int/oil-moves-higher-on-latest-covid-19-vaccine-progress-idUSKBN27W0DQ
- Oil prices are higher, have they broken out of the $40 range?
- Ryan on the record says WTI will fall to below $35 before January 1
- Rig count is rising but is it enough to maintain US oil production? 25% of the rigs are needed to maintain production.
OPEC+ meeting ends with broad support for extension to oil cuts -sources
https://uk.reuters.com/article/oil-opec/opec-meeting-ends-with-broad-support-for-extension-to-oil-cuts-sources-idUKL9N2D0017
- JTC meeting on Monday, JMMC meeting on Tuesday
- What about Libya?
Oil Prices Rise On Vaccine Fantasy But Fundamental Reality Less Stable
https://www.investing.com/analysis/oil-prices-vs-reality-200544399
Mounting piracy off Gulf of Guinea unsettles tanker owners
https://www.spglobal.com/platts/en/market-insights/latest-news/oil/111620-mounting-piracy-off-gulf-of-guinea-unsettles-tanker-owners
- Piracy has increased 40% in 2020 on key oil transit routes
- focused on refined products more than crude oil
- siphoning oil and selling it on the black market.
- piracy stories mostly came from east side of Africa, now on West side.
Interview with Dr. Dean Foreman on API monthly statistical report
- 18.8 million bpd demand in October
- last week, was over 20 million bpd
- In the past it was 80% motor gasoline, but now seeing 10% pick up in jet fuel and also increases in diesel
- 1/4 gasoline demand in US is petrochemical. Performed strongly for October
- As inventories are drawing down there is a demand for products
- Supply side - we have a very low rig count in both oil and natural gas. US crude oil production basically hold steady, natural gas liquids high and natural gas production high.
- It’s not going to take 1000 rigs to maintain this production. Productivity is really good.
- We are in good shape to participate in economic recovery, when it comes.
- Lowest crude oil imports since 1990 last month!
- Numbers indicate a continuing recovery in place.
- lower drilling activity will eventually catch up despite higher productively. Not all of the productivity gains will stick, given what we’ve seen before.
- China has been so far behind in compliance with trade deal. LNG likely would have happened anyway regardless of deal.
- demand from an external source doesn’t necessarily drive domestic natural gas prices up
- How much can we export before it impacts domestic prices? Appears we aren’t close to it. EIA thinks we’ll go up above $3 for natural gas but its still impacted by seasonality.
- As long as the international market for natural gas is healthy, that net back margin is there to be able to export North American natural gas at $3.
- Growing market that is continuing to grow.
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