Morning Oil Note 1/7/20

Oil futures rose this morning after lower than expected crude inventories in the United States, and despite an increase in coronavirus cases lightly obfuscating a positive demand outlook. At 3.45 am GMT front-month Brent futures were up 48 cents (1.2%), to $41.75 a barrel. WTI was up 54 cents (1.4%), at $39.81 a barrel. According to data from the American Petroleum Institute (API), crude stocks dropped by 8.2 million barrels to 537 million barrels, against analysts’ forecasts for a draw of 710,000 barrels. Gasoline inventories were significantly down as well, while distillates stocks rose. More definitive data from the US Energy Information Administration is due for release later in the day to confirm these estimates. Supporting prices was also at a 20 year low in June output from OPEC+ members, at 22.62 million bpd. Despite record levels of compliance at 107%, it is likely that such compliance will slip again in July. ConocoPhillips will start increasing production in its North American oilfields in July, after curtailing 460,000 boe/d in June. A Reuters poll suggests that oil prices will consolidate at around $40 a barrel this year, with a potential recovery in the fourth quarter. Meanwhile, rising coronavirus total is now more than 10 million with more than half a million casualties. As the return of lockdown is looming in certain states and US citizens are banned from travelling to Europe, bullish market sentiment is dampened, capping any strong recovery in crude prices in the short term.



MARKETS NEWS:
* Shell Warns of Record Writedown as Virus Curbs Oil Demand
* Conoco to Bring Back Curtailed Oil Output in Response to Rally
* Venezuelan Crude Output Falls for Sixth Month, Deepening Crisis
* China’s Largest Oilfield Plans to Increase Output 10% by 2025
* Canadian Oil Discount Tops $10/Bbl as Surmont Output Rises
* Libya’s Eastern Messla Field Resumes Oil Output at 10K B/D
* Petrobras Says Buzios Oil Field Posted Record Output on June 27
* API Reports U.S. Crude Stockpiles Fell 8.16M Bbl Last Week
* U.S. April Crude Oil Output Fell 5.3% M/M to 12.06M B/D: EIA
* Oil Has Best Quarter in 30 Years After Historic Crash: Chart

OTHER NEWS:
* Asia Gas-to-Plastic Ventures Bleed as U.S. Shale Output Sputters
* From Fear in Wuhan to Oil Crash: Six Months in Emerging Markets
* Oil Search Cuts Staff, Sees Lower Production Costs

PHYSICAL CRUDE NEWS:
* ASIA: Saudis Seen Raising Arab Light OSP for August Sales
* LATAM: Aruba Seeks to Reopen Refinery; Buzios Record
* US/CANADA: Conoco to Bring Back Curtailed Oil Output
* NSEA: Litasco Bids Ekofisk, Forties Up; Gullfaks Loadings
* MED: OMV Bids CPC Blend Higher; Urals at Record Premium
* WAF: Nigeria’s Unsold Backlog Persists; Rabi Blend Exports

OIL PRODUCT NEWS:
* U.S.: Michigan Wants Line 5 Shutdown to Last Days
* EUROPE: ICE Gasoil Contango Shrinks; EasyJet Hedges
* ASIA: Road Fuel Demand to Peak; Sinochem Unit Sells

ECONOMIC EVENTS: (Times are London)
* 3:30pm: EIA weekly report on U.S. oil inventories; TOPLive blog begins 3:20pm
* Bloomberg survey on OPEC’s June crude production
* Bulk of Bloomberg monthly tanker-tracking compilations for June published throughout the day
* Genscape weekly ARA crude inventory report

ANALYST COLUMNS:
* Jet Fuel Demand Won’t Recover to 2019 Levels Next Year: IATA

OTHER FINANCIAL MARKETS:
* Asian Stocks See Muted Start to Third Quarter: Markets Wrap

Rotterdam 3.5% INDIC                                 

Aug20   225.50   /             227.50

Sep20    223.50   /             225.50

Oct20    221.75   /             223.75

Nov20   221.75   /             223.75

Dec20    222.75   /             224.75

Jan21     224.75   /             226.75

Q4-20    222.00   /             224.00

Q1-21    226.00   /             228.00

Q2-21    229.75   /             231.75

Q3-21    231.75   /             234.75

CAL21    228.75   /             234.75

Singapore 380 INDIC                                     

Aug20   238.75   /             240.75

Sep20    239.50   /              241.50

Oct20    240.50   /             242.50

Nov20   241.50   /             243.50

Dec20    243.00   /             245.00

Jan21     244.75   /             246.75

Q4-20    241.50   /             243.50

Q1-21    245.50   /             247.50

Q2-21    248.25   /             250.25

Q3-21    250.50   /             253.50

CAL21    248.25   /             254.25

Rott VLSFO 0.5% INDIC                                 

Aug20   296.75   /              301.75

Sep20    300.75   /              305.75

Oct20    304.25   /              309.25

Nov20   307.50   /              312.50

Dec20    310.50   /              315.50

Jan21     314.25   /              319.25

Q4-20    307.50   /              312.50

Q1-21    317.25   /              322.25

Q2-21    324.50   /              330.50

Q3-21    330.50   /              338.50

CAL21    324.75   /              332.75

Singapore VLSFO 0.5% INDIC                                     

Aug20   310.00   /              315.00

Sep20    316.25   /              321.25

Oct20    322.25   /              327.25

Nov20   327.50   /              332.50

Dec20    331.75   /              336.75

Jan21     335.50   /              340.50

Q4-20    327.00   /              332.00

Q1-21    338.25   /              343.25

Q2-21    346.00   /              352.00

Q3-21    351.75   /              359.75

CAL21    347.25   /              355.25

Sing 10ppm GO INDIC                                   

Aug20   48.32     /              48.46

Sep20    48.37     /              48.57

Oct20    48.66     /              48.86

Nov20   48.94     /              49.14

Dec20    49.22     /              49.42

Jan21     49.56     /              49.76

Q4-20    48.90     /              49.20

Q1-21    49.91     /              50.21

Q2-21    51.05     /              51.35

Q3-21    52.08     /              52.38

CAL21    51.37     /              51.77

ICE Gasoil 10ppm INDIC                                

Aug20   365.54   /              367.54

Sep20    369.23   /              371.23

Oct20    372.07   /              374.07

Nov20   373.37   /              375.37

Dec20    375.63   /              377.63

Jan21     378.81   /              380.81

Q4-20    373.70   /              375.70

Q1-21    380.69   /              382.69

Q2-21    389.19   /              391.19

Q3-21    396.72   /              398.72

CAL21    391.59   /              393.59