Oil prices quickly fell back to earth after Brent crude yesterday reached a year-high of $73.50 — an unsurprising rise given the positive manufacturing data from China and the US, a weaker US dollar and a surge in global equities.
So oil surged on a number of macro-economic factors, despite the oil majors being almost universally pessimistic in their demand outlook in last week’s second-quarter results.
But once again non-fundamentals are ruling the day. Olivier Jakob at Petromatrix notes that even today’s API and EIA storage figures are likely to be seen as less important than other figures:
Later today we have the API numbers and the DOE tomorrow but given that the oil markets are currently taking their direction from the exogenous inputs of equities and the Dollar we will have to pay a greater respect to the employment numbers published by the ADP tomorrow, kicking the countdown to the July non-farm payroll numbers of Friday.
Certainly Opec output is doing little to impact oil prices, as a Bloomberg survey showed output grew for the fourth month in a row in July. It seems a long time ago now that some of the cartel were talking about 100 per cent compliance. Most of the group’s members exceeded their quotas:
Saudi Arabia, Kuwait and Qatar were the only OPEC members to keep within their targets in July. Saudi Arabia, the world’s biggest oil exporter, pumped 8.02 million barrels of crude a day, unchanged from the previous month, the survey showed.
And this is even with involuntary reductions in Nigeria due to attacks:
Nigeria’s production slipped 100,000 barrels a day to an average 1.75 million in July because of attacks by militants on oil facilities in the country’s oil-rich Niger River delta. It was the biggest decline by any OPEC member and left Nigerian output at the lowest level since August 1994.
Doom and gloom in oil (FT Energy Source, 30/07/09)