Friday, October 23, 2015

Chartology: Oil Tested Recent Support and Bounced (a little)

Currently 44.66 down 72 cents after trading as low as $44.20.
From ZeroHedge:
Overnight weakness on the back of 8-month highs in Chinese crude inventory (combined with the recent plunge in super-tanker rates - i.e. China is no longer refilling its SPR) sent WTI Crude towards the critical $44 level (which has acted as support for 2 months). The China rate cut weakened crude further as PBOC admitted it was needed because of the state of the economy. And then Baker Hughes reported a total rig count unchanged 787 (lowest since April 2002) and an oil rig count decline of just 1 to 594 (the 8th weekly drop in a row). WTI slipped on the news. 
China is getting full...China September Crude Inventory Climbs to Eight-Month High
(Bloomberg) -- Crude stockpile rose to 34.31m mt, accord. to Bloomberg calculation based on percentage-change data from Xinhua News Agency’s China Oil, Gas & Petrochemicals newsletter.

Sept. kerosene inventory at record high 1.92m mt, Sept. diesel stockpiles drop to 8-mo. low at 8.79m mt, Inventory data refers to commercial stockpiles excluding Strategic Petroleum Reserves
And the artificial SPR-refilling demand appears to have stopped...Benchmark Crude Oil Supertanker Rates Fall by Most This Year
(Bloomberg) -- Charter rates on Saudi Arabia-Japan VLCC route fall 11% to 61.54 Worldscale pts, according to Baltic Exchange data.

Equates to daily return of $68,921, lowest since Sept. 16

Baltic Dirty Tanker Index falls 1.3% to 739 pts

U.S. Gulf-Northwest Europe 38kt clean tanker rates rise 3.2% to 91.43 Worldscale pts, biggest change for ships hauling refined products
And then China cuts rates and the PBOC says...
Hardly suggesting growth or demand anything like what GDP suggests.
And add to that the fact that Iran pklans to double crude oil sales to Japan post-sanctions(via
“We have reached a general agreement with Japan to increase oil sales but for political reasons, the Japanese are waiting for the complete removal of sanctions,” Mohsen Ghamsari, NIOC’s director for international affairs, was quoted as saying by oil ministry news service Shana.

Iranian oil minister Bijan Zanganeh told reporters on Monday that the exports would increase by at least 500,000 b/d on the day sanctions were removed. Six to seven months later, another 500,000 barrels will be added to the figure, he said.

“At the moment the National Iranian Oil Company is in talks with Showa Shell, a big Japanese refiner, to determine the Asian [crude] price,” he said.

He added that he welcomed the agreement for Idemitsu Kosan to take a 33% stake in Showa Shell and said the move was good for Iran because of its good relations with the two companies.
Which sent Crude to the edge of darkness at $44...
Citi's technical analysis team says there’s a huge level coming up right here in NYMEX crude.  A daily close below USD44.00/bbl is very bearish...MORE