The Commodities Feed: No U.S. Waivers For Iranian Oil
ING Economic and Financial Analysis | Apr 23, 2019 06:24AM ET
Iranian oil exports by destination (Mbbls/d)
No US waivers for Iranian oil: The US announced its intention yesterday not to extend waivers for buyers of Iranian crude oil, which are set to expire on 2 May. The announcement was fairly surprising and this was reflected in the rally in flat price. Iranian oil exports over March averaged 1.3MMbbls/d, according to Bloomberg ship tracking data, and so if the US is successful in reducing exports to zero, this would lead to significant tightness in the oil market. However, we do believe that cutting off exports completely is an unlikely scenario.
The Saudi energy minister has said that the Kingdom and other OPEC members will ensure that the market is well balanced moving forward following the US decision on waivers. Saudi Arabia has plenty of room to increase output and still comply with the production cut deal. Under the deal, the Kingdom should be producing around 10.3MMbbls/d, yet over the last couple of months the Saudis have been pumping around 9.8MMbbls/d. As we head into summer though, it's expected that domestic output will increase.
Given that the US will not extend waivers, it will likely be increasingly difficult for OPEC+ to justify extending its current production cut deal into the second half of this year.
US crude oil inventories: The API is scheduled to release its weekly inventory numbers for the US today and market expectations are that crude oil inventories increased by around 500Mbbls over the last week. Draws are expected for both gasoline and distillate fuel oil. Additional drawdowns in gasoline inventories will only push stock levels further below the five-year average, which would be supportive for the gasoline crack.
h3 Metals/h3China copper: Treatment charges in China for copper smelters have fallen to a more than five-year low of US$66.5/t as new capacity comes online. Treatment charges are down nearly 20% since the start of the year- as a result hitting the profitability of smelters. Meanwhile, the spot premium for copper has weakened by 6.5% in April so far, and 25% since the start of the year to US$50.5/t. Large inflows of copper into SHFE warehouses and uncertainty over demand has weighed on physical premiums. However positive economic data more recently, along with prospects of a US/China trade deal should offer some support to the demand picture.
Get The News You Want
Steel cuts: The majority of steel mills in Tangshan in Hebei province in China have been asked to cut 40% of their sintering capacity this week as pollution levels are expected to increase. While those mills with higher emission levels could be ordered to shut operations over the period.
h3 Agriculture/h3USDA export inspections: Latest data from the USDA shows that US corn inspections for export over the last week totalled 1.35mt, up from 1.18mt last week. Cumulative inspections so far this season total 33.28mt, up from 29.82mt. Soybean export inspections over the week totalled 382kt, down from 476kt the week before. Total soybean inspections so far this season total 31.05mt, down from 42.82mt at the same stage last season. Over the last week, 67kt of soybeans inspected for export were destined for China.
This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.