Energy Group Sentiment Watch: Negative.
Yesterday’s little bounce was weak, especially in oil service. Stocks
are trying to find a bottom but could easily go lower with fresh 3 month lows on
crude. From my perspective, I saw fine, go ahead, find a bottom. Good news from
companies continues to have "flash in the pan" importance and rallies are often
quickly reversed. I see no reason to try and force new trades to work in here
until such a bottom is plainly in progress.
In Today’s Post:
- Holdings Watch
- Commodity Watch - with some crude thoughts on the oil inventory report
- Stocks We Care About Today - WIOWIO - The dance list.
- Odds & Ends
Holdings Watch - No changes. Keeping powder dry.
Commodity Watch:
Crude Oil closed at a 3
month low, down $1.44 at $113.01 yesterday. Russia’s move on
Georgia and the pipelines that were shut in as a result were not enough to lift
crude but the cessation of hostilities was blamed for its continued decline.
- From The EIA’s Short Term Energy Outlook: (EIA’s comments in
italics)
Preliminary data indicates
that global consumption rose by roughly 500,000 barrels per day (bbl/d)
during the first half of 2008 compared with year-earlier levels, as a
1.3-million bbl/d rise in consumption outside of the Organization for Economic
Cooperation and Development (OECD) was partially countered by an 800,000
bbl/d drop in U.S. consumption compared with year-earlier
levels.
Total
world oil consumption is expected to grow by a little
over 1 million bbl/d during the second half of 2008 and by
almost 1 million bbl/d in 2009 compared with year-earlier levels. The
projection for 2009 consumption is about 460,000 bbl/d lower than last
month’s assessment, reflecting lower expectations for consumption in
the United States and other OECD countries. Over the next year and a half,
lower OECD consumption is expected to be more than offset by
continued non-OECD consumption growth, led by China, the Middle East, Latin
America, and India. (IEA is thinking 2009 comes to growth of
930,000 bopd)
And on Supply The EIA Wrote The Following.
Non OPEC.
EIA is revising this month’s outlook for non-OPEC supply growth in
2008 compared with last month’s, largely because of project delays in
Asia, lower output growth now expected in the Former Soviet Union, lower growth
in Canada caused by the upward revision of 2007 data, and reduced production in
Azerbaijan due to the closure of the BTC pipeline. If new projects
come online as now anticipated, total non-OPEC supply is projected to
rise by about 510,000 bbl/d in the second half of 2008 and by
850,000 bbl/d in 2009 compared with year-earlier
levels.
OPEC.
OPEC crude oil production is projected to drop to about 32.4
million bbl/d in the fourth quarter of 2008, and to decline to 31.6 million
bbl/d in 2009.
And Finally, What Has
Demand In The U.S. Been Doing Lately. Preliminary June and July
2008 weekly survey data indicate that year-over-year declines in total
consumption, which began in August 2007, have narrowed since earlier this year.
During the first 5 months of 2008, total petroleum consumption fell by an
average of almost 900,000 bbl/d from the same period in 2007. During June and
July, the year-over-year declines narrowed to just over 400,000 bbl/d.
ZComment:
You’ll note supply is not expected to keep up with demand. Where they get the
OPEC expectation of reduced production in 2009 is something of a mystery but the
important point is that Non-OPEC production growth is tentative and does not
keep up with demand…so the Saudis still hold the pricing cards. Read the whole STEO
here.
- Iran Watch: Pretty quiet with Russia and Georgia taking the
spotlight
- Russia / Georgia Watch: conflicting reports of ceasefire
mixed with bombings. As many as 4 pipelines in the region with a capacity of
> 1 mm bopd remain off line due to the conflict. Putin tightens his control
over the region’s and Europe’s access to crude.
