Oil price: diverging forecasts on oil demand from two global giants

  Data and Image: credit - IEA IEA (2024), Annual oil demand growth, 2011-2025, IEA, Paris The Paris-based International Energy Agency, IEA, put a damper yet again on the perceived demand for oil in 2024 and 2025, in stark contrast to that of the OPEC+, the Organization of Petroleum Exporting Countries plus Russia. According to IEA’s latest report on the subject, released in June, 2024, the growth will be a fairly modest 960 kbpd - 960 thousand barrels per day in 2024; it is a drop of 100 kbpd from IEA’s own previous estimate. The IEA cites a weaker demand in China for the drop in demand in this year. China’s PMI, the key indicator that reflects the manufacturing activity, for instance, has been in decline for a few successive months, even below the psychologically sensitive 50%, the threshold; it went above 50% in March, only to come down again in April - and then, to continue the decline into May. It is no secret that the oil producers pin their hopes on China and India in or

Sharp rise in US crude stocks: the only chart that explains the oil price stagnation

  Palpable anxieties in the oil markets The price of oil has been down for the fourth successive week with Brent hitting below $80 again. As of 18:00 GMT on Friday, the prices of WTI and Brent recorded $75.53 and $79.62 respectively.  The long-awaited meeting of the OPEC+, meanwhile, went ahead on Sunday, June 2, with some members opted for being online and the rest meeting in person. The members, although put on a brave front, tentatively agreed to extend the  production cuts beyond 2024 so that the dwindling prices can be shored up. It, however, appears to be easier said than done. At present, the OPEC+ cuts its production by 5.58 million bpd - barrels per day: there are 3.36 million bpd production cuts that were due to expire at the  end of 2024; in addition, 2.22 million bpd production cuts by 8 members of the cartel that were supposed to expire at the end of June. The OPEC+ on Sunday 2, June agreed to extend the production cuts of  3.36 million bpd by another year - until the end

The latest blow to the oil and gas markets: Chinese manufacturing sector shrinks again!

  In the ascending order of anxiety, the OPEC+ has been forced to accumulate a growing range of bad news in recent times for its decision makers to digest. In this context, the latest manufacturing data from China hardly comes as a catalyst for optimism, as far as the oil cartel is concerned. China's manufacturing PMI, the key indicator that reflects its production activity, has fallen yet again in May, indicating a significant contraction: it has come down to 49.5 in May, from 50.4 in April; the threshold is 50% and anything below it, is a contraction in the manufacturing sector. The disappointing news from the world's second largest economy comes in the wake of the OPEC+ holding its meeting, scheduled to be held on June 1 in person, online - all of a sudden with no convincing explanation. On June 1, there was a sudden change of decision to meeting in person in Vienna, though. Prior to that, there were reports that Kazakhstan, a member of the OPEC+ from the Central Asia, wante

Argentinian Shale Oil Boom: is it Milei's miracle?

  Image Credit: Times of India Javier Milei, the flamboyant, Argentinian president, who came to power in December  by performing a series of unorthodox, political stunts, appears to be determined to assign a range of controversial tasks to his most striking political symbol during the campaign - the chainsaw. With an administrative equivalent of a chainsaw, Mr Milei is already hacking his way through the  intricate, bureaucratic woods in his native Argentina, implying nothing was off-limit.   Mr Milei, to begin with, is planning to lay off over 70,000 government employees, has frozen public projects and and devalued Argentinian peso by more than 50%. To his credit, they appear to be working in his favour, at least for now; the inflation has been slowing down for four months in a row, but it is still high; Argentina, up until recently, had the world's highest inflation - a staggering 280%.  In 2025, if all goes well, economists believe that the inflation could be brought down to ar

The release of 1 million barrels of gasoline may not make a dent in the energy prices

  With just six months to go before the presidential election in the fall, the Biden administration of the US appears to be taking the task of taming the inflation much more seriously than it did in the past few months. In this context, the announcement made by the DoE, Department of Energy, on May 21, Tuesday, does not come as a surprise: it announced that 1 million barrels of gasoline from the NGSR, Northeast Gasoline Supply Reserve, will be sold off in time for the peak travel period between the Memorial Day and July 4; gasoline will be sold in batches of 100, 000 barrels,  each.  “By strategically releasing this reserve in between Memorial Day and July 4th, we are ensuring sufficient supply flows to the tri-state and northeast at a time hardworking Americans need it the most,”  said  the US Energy Secretary Jennifer Granholm  in a statement. The announcement by the DoE, coincided with the latest US crude inventory data from the API, American Petroleum Institute; there was a signifi

Cracks Appear in OPEC+ Facade as Kazakhstan Seeks Production Hike

The OPEC+ alliance is bracing itself for yet another acid test in the next few days, as Kazakhstan, a key member from the Central Asian region, said on Tuesday that it wanted to have a bigger quota in 2025, when the currents oil output cuts expire. Unless the members of the OPEC+ settle the dispute amicably, the group is going to face a potential test of unity, before the scheduled meeting on June 1, to discuss the next move; maintaining the oil production cuts, lifting it up or in the worst case scenario, increasing it further. The fact the Kazakhstan move is already in the public domain shows that there is  discord  within the OPEC+ over the existing production cuts - or any further rise to shoring up the falling oil prices. The OPEC+, on its part, meanwhile, wants to investigate current oil  output capacity in order to set what it calls, reference production levels. According to Reuters, three global companies with the relevant experience in the field, have been tasked with the anal

Stagnating Oil Prices: can OPEC+ ever provide the crucial spark?

Image The members of the OPEC+, who met virtually last week, decided to leave the production cuts unchanged, perhaps in light of stagnating oil prices.  Having failed to shore up the prices by tinkering with the supply side of the oil equation, the de facto leader of the organization, Saudi Arabia, even the raised the price of its flagship Arab Light crude for Asian buyers for the third successive time, while inadvertently leaving the loyalty of the old customers in the region on the line. Although the Kingdom had been in the habit of raising the price of oil for this particular domain in the recent past, only to bring it down a few weeks later, judging by the frequency of price rises, it may not happen very soon this time. According to the latest IMF forecast, Saudi Arabia has to sell oil above $96.20 to make a profit, provided that it maintains its production at 9.3 million barrels per day(bpd).  As of 13:45 GMT on Monday 6, 2024, the prices of WTI and Brent were tra

The latest blow to the oil markets: Chinese manufacturing activity slows down again!

  With the latest manufacturing data from China that shows a relative slowdown, compared to March, both the traders and investors have been compelled to accept the inevitable; it is neither easy nor feasible to shore up the oil and gas prices in the current circumstances. According to China's National Statistics Bureau, the manufacturing manager's PMI for April was 50.4%,  a drop of 0.4% from that of March; having been below 50% since September, 2023 - the threshold - the key Chinese manufacturing index rose above the latter in March. Investors, not just in oil and gas sectors, breathed a collective sigh of relief, when they noticed a growth in the manufacturing sector in the world's second largest economy, China. The evolving volatility in the Middle East, coupled with China's encouraging manufacturing data, did push the price of oil in April, only to come down as the days wore on.  In this context, the latest Chinese manufacturing data is hardly going to be a catalyst

Mideast Strike Fizzles: Oil Prices Dip Despite Geopolitical Jitters

  The energy markets breathed a sigh of relief on Friday, as the military conflict between the arch-enemies in the Middle East, Israel and Iran, appeared to have subsided - at least, for now. As the news trickled in about an Israeli strike inside Iran in the morning on Friday, it was not clear what really was going on in the Islamic Republic: the airspace was closed all of a sudden in the wee hours on Friday; there were reports about explosions in the city of Isfahan, the third largest Iranian city of immense cultural significance as well as the home for major military sites and above all, Iranian nuclear sites. The Iranian authorities downplayed the attack while reopening the airspace for flights in a couple of hours. The US military officials, meanwhile, had already confirmed about the attack and the involvement of Israel in it. Israel, however, as usual, kept mum about it, neither denying nor admitting it.  A four letter Tweet, 'lame', from a member of the Israeli war cabine

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