It appears that Saudi Arabia is saying "enough is enough" when it comes to the correction in crude oil and wants to set the record straight, just one day after an unscheduled Joint Ministerial Monitoring Committee with all the OPEC and Non-OPEC conspirators, Saudi Arabia wanted the market to know that they were not flooding the market with oil.
If you want 11 million reasons to be optimistic about America, you might want to start with counting barrels of crude oil. The Energy Information Administration (EIA) reported that U.S. crude oil production exceeded 11 million barrels a day for the first time in history. Not too many years ago, that would have seemed to have been impossible by many who lacked the imagination and drive of those in the U.S. energy industry.
Fed Chairman Jerome Powell’s testimony took its toll on crude oil, and a bearish report from the American Petroleum Institute (API) isn’t helping either. The Fed chairman caused the dollar to soar which pressured many commodities as he told the Senate Banking Committee that "Several years” of strong jobs, low inflation still ahead of us."
Asian equities fell on Tuesday after crude oil prices tumbled by more than 4.6% during the previous session, following reports that Saudi Arabia has offered additional crude supplies to some of its Asian customers and that the U.S. may release some of its strategic petroleum reserves to bring prices down.
Crude prices got whacked on oil supply, real and imagined. Talk of futures strategic petroleum reserve releases along with signs of real increases of production in some OPEC countries sent oil into the basement. Weak economic data out of China and some warnings about trade wars by the International Monetary Fund did not help and it overshadowed the reality that U.S. oil supplies will probably fall dramatically again this week.
Today’s meeting between President Trump and Russian President Putin is more symbolic than anything. Sanctions, the U.S election meddling and Syria are expected topics, but we are unlikely to find real substance coming from this headline-grabbing summit. Earnings and economic data are the headlines we are paying attention to most closely this morning.
The world’s oil-consuming nations are showing growing unease about the rapidly tightening global crude oil market and are considering releasing oil from their strategic petroleum reserves. On Friday, Bloomberg News reported that the Trump Administration is reviewing options ranging from a 5 million-barrel test sale to the release of 30 million barrels from its oil reserve to cool pump prices ahead of congressional elections in November and as sanctions on Iran are due to snap back.
Expect more crude oil price volatility as the global oil market can flip from a global supply surplus to a global supply deficit at the drop of a hat. The market is trying to assess whether more sources of oil will get us to the point where daily global oil production is once again ahead of our daily consumption. So far it has not.