From the CME:
Several factors have been impacting the oil complex overnight and into the last trading session of the week in the west. On a positive note the market is starting to view the possibility of a deal in the US to both its short term debt limit and budget issues. Although the White House reportedly rejected the first proposal by the House Republicans the meetings were described as positive and negotiations are supposedly ongoing. Some Congressmen have stated they expect both a debt and budget deal as early as Friday. Time will tell.You'll note no ascribing yesterday's action to an Israeli Defense Force tweet.
On the negative side of the complex the latest oil monthly report from the IEA just released projected global oil demand growth at around the same level as last month while non-OPEC supply outlook has brightened. In fact non-OPEC supply growth is at the highest annual growth rate since the 1970's. Oil supply will continue to be robust going forward and with global oil demand growth still running at a below normal rate inventories should grow as we saw this week in the US.
Further impacting the WTI side of the equation are the several pipeline issues this week in the US resulting in short term shut downs of both the Seaway pipeline out of Cushing and Keystone out of Canada. With refinery run rates moving lower and with the pipeline issues this week we may see the first build in Cushing crude oil stocks after thirteen weeks in a row of declines.
Although the overall oil complex remains in negative territory this morning so far the Brent side of the Brent/WTI spread is holding up much better than WTI on news of yet another force majeure declared by Shell on its Bonny Light exports out of Nigeria. Shell says 300,000 bpd of Bonny Light from two pipelines is shut-in. Also supporting the Brent side of the equation is a blast at the Swedish Consulate in Benghazi damaging the building but fortunately no reports of causalities according to a Reuters report this morning. Yet another reminder that geopolitical risk is here to stay for now in the MENA region....MORE
