Crude Oil Unable to Rebound

Crude oil prices dropped substantially to start the week after the dollar rallied. Softer than expected global economic data fueled the downside on yesterday’s crude oil move. Optimism around a discussion to restore the 2015 nuclear deal has led to selling pressure in crude oil markets. Crude oil inventories jumped over the past week despite being lower than the 5-year average. OPEC+ raised crude oil production limits much less than previous expectations.

Economic data released by the United States and China caused concern for global energy demand on Monday. Business conditions dropped substantially according to the U.S. Aug Empire manufacturing survey, falling -42.2 to 31.3, much weaker than the expected drop of -5.0. U.S. Aug NAHB housing market index fell -6 to 49, missing the expectation of 54.

China July industrial production increased +3.8% y/y, but missed the expected increase of +4.3% y/y. China July retail sales rose +2.7% y/y, missing the expected increase of +4.9% y/y.

Japan Q2 GDP rose +2.2% quarter-over-quarter but couldn’t reach the expected increase of +2.6%.

Last week an agreement was drafted after over a year of negotiations between the United States and Iran to restore the 2015 nuclear deal. It appeared there were still key issues that would need to be addressed before the draft was signed, however, Iranian officials reported they would inform the EU of their official position by last night. This could lead to a sharp increase in oil exports from Iran and push crude prices lower.

Last Friday's Baker Hughes report indicated the number of active U.S. oil rights increased by +3 rigs to 605 rigs in the week ending August 12th.

In the week ending August 12th crude oil stored on tankers that have been stationary for at least seven days increased +20% w/w according to data released by Vortexa on Monday.