Charts of the Week | 2nd September - 6th September 2024
Chart 1:
Dollar positioning saw it flip to negative levels ($8bn short) for the first time since February. The strong dollar has normally been a major headwind for oil prices, however, with dollar sentiment declining (largest weekly selling since March 2020), this might provide an unexpected tailwind to oil prices. (Source: CFTC)
Chart 2:
OPEC production dropped to the lowest levels since January. Total production was down by -0.34MMBD to 26.36MMBD mainly due to the production drop in Libya. Saudi and other countries like UAE and Kuwait (GCC) keep production flat this whole year while the rest of the group sees production at its lowest level since July 2023. (Source: OPEC Survey)
Chart 3:
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The combined Asian refinery runs of the 4 largest economies continue to touch YTD lows(-1.2MMBD y/y). China is the biggest driver of the decline but Japan’s runs in July also touched a record low. With Asia being the largest market for OPEC barrels, reduced runs in a challenging margin environment will be a tough challenge for OPEC to find a home for its Q4 incremental barrels. (Source: NBS China, PPAC, PAJ and KNOC)
Chart 4:
Brent settled at the lowest values since June 2023, as dip buying remains very muted in this sharp correction mode. Comparing the Brent structure of now vs then, the 2 curves look very different when Brent last touched these levels. Brent is still showing very strong backwardation in the front despite flat price falling. The disconnect between macro flat price and physical prompt timespreads continues to diverge.
Chart 5:
Russian Diesel to its 2 key customers continues to flow. Chart to the left is Russian Diesel to Turkey and chart to the right is Russian Diesel to Brazil. Volumes are combined at 460KBD and Russia contributes over 80% of Diesel imports for these countries. Imports have come off last year’s highs but remain at elevated levels and reduces the risk of Russian diesel getting stranded despite tightening sanctions. (Source: Turkey and Brazil customs)