TPH view today:
Quote:
MACRO
- IEA Monthly Oil Market Reportbullish on OECD inventory draws and OPEC production (WTI $57/bbl and Brent $63/bbl) OECD Sept'17 total stocks down 40mmbbls vs. norm 7mmbbls draws and 3Q'17 stocks are down 46mmbbls vs normal +47mmbbls. I should stop writing.this is all that matters. For those interested, the IEA dismisses the OECD stock draw as due to Harvey yet non-NAM OECD stocks drew a larger % than NAM.go figure? OPEC production of 32.5mmbpd (-80kbpd) m/m shows continued compliance with large m/m restraint from Iraq and continued volatility in Libya and Nigeria. Market won't like headlines on demand as IEA tweaking '17 down 50kbpd (round-off) and '18 down 200kbpd (still +1.3mmbpd y/y). The demand revisions are across the board and not concentrated on one region.
- IEA Monthly Oil Market ReportWhat do you believe!? (WTI $57/bbl and Brent $63/bbl) It is conviction time. Do you believe the IEA when they talk about an oversupplied oil market in 2017 and thru 1H'18? Or, do you take a peek behind the numbers and see that 3Q'17 OECD stocks drew 46mmbbls vs. 47mmbbls builds (5-yr avg)and posted the largest 3Q draw in the past 15 years. Do you look at total OECD stocks at 371mmbbls (+12%) above normal in Feb'17 which are now 223mmbbls (+7%) and wonder "how can the global market possibly be oversupplied"? We do. Outside of NAM, OECD stock levels are only 2% above normal and the Brent forward curve is in long-term backwardation and Brent is >$6/bbl vs. WTI. Inventories are the compass pointing toward an energy recovery. Come on into the tentthe revival is just getting started.
- India oil demand rises +56mbd y/y in Oct '17, albeit at a slower pace (XOI $1269) India total oil demand in Oct '17 rose +56mbd y/y (+1.3%) for the second consecutive month to 4,396mbd, although this pace measures well below last month (+8.8% y/y). The softer rate was primarily due to a -51mbd y/y decline in middle distillate consumption, with softer diesel demand and ongoing declines in kerosene. In an effort to limit pollution, India has gradually substituted away from kerosene (-44mbd y/y YTD) for lighting and cooking in favor of cleaner LPG (+59mbd y/y YTD) use. Further recovery of light distillates (+9mbd y/y) and petroleum coke (+33mbd y/y) consumption also contributed to demand growth in the month. YTD '17 oil demand was revised up to 4,376mbd (+37mbd y/y, +0.8%) following October growth, which is currently tracking below TPHe +130mbd of 2017 growth.
TPH has an agenda as well.
We'll see where DOE inventories come in tomorrow, but overall the last few months have proven a tightening of the oil market.
I'm okay with some demand negativity through the end of the month. I'd like just enough to assure OPEC extending cuts. If the market is going to be manipulated, I'd like to see it work so good that it doesn't work again.