Oil commentary - 31 August 2017

Morning all. Brent closed down 1.14 last night to $50.86 and WTi closed at $45.96 down 0.48. Oct Brent expires today. EIA data showed some unsurprising numbers last night considering the fact that by the time stats were calculated last week the shutdown effects had not filtered to EIA yet. Yet even with this foresight the market didn't budge a notch when fairly bullish stats came out (draw of 5.4mn bbls in crude) and instead slowly but surely got sold down by 2.5% on the day. I made a point early this week that owing to Hurricane Harvey the refineries will more than likely bring forward maintenance season. So in theory, with the fact that stocks are at still very high in the US and refinery shutdowns usually last 6 weeks or so I don't see the unfortunate flooding having a further effect on maintenance season than would have taken place anyway, perhaps another couple of weeks at worst. The roofer of the barrel right now is, of course, gasoline. The colonial pipeline looks like it will shut down for a while and with gasoline fuelling the majority of the Southern and Colonial states Ford F150 pickup trucks RBOB has soared like a bald headed eagle. Crude on the other hand, nah. Let's face it, the USA are still the world’s biggest consumer of crude. With 25pct of US refineries shutdown, and looking to stay that week for the next 2 months or so crude is inevitably struggling. I am not contradicting myself here - yesterday I mentioned that US production shut down will be positive for oil so allow me to clarify. There is still plenty of oil to go around - the US production increases we have witnessed this year were only nullifying the OPEC/Non-OPEC cuts. I did expect to see a rally on flat price but that was purely down to the fact that most of the day traders are all loopy so I was looking for the opposite of the opposite. Alas I was wrong. It wouldn't surprise me if over the next week or so we see Brent flirt with $45 and WTi flirt with $40. Just a glance at the Brent curve will prove that the supposed strength that was coming back in to the market is now looking weaker than Arsenal's transfer window activity. Good day.