Oil commentary - 23 August 2019

Morning all and Happy Friday. Brent closed last night at $59.92 down 0.38 and WTi closed down 0.33 to settle at $55.35. I told you Brent would struggle to maintain above $60 and the last couple of days have proved that it is about as much of a struggle as watching Australia face Jofra Archer. Honestly, I haven't seen such a good Archer since Robin Hood. You can't blame Brent for spluttering its way along as well, bullish news seems to be ever and ever harder to find, save for some geopolitical issues, of course. I have been banging a drum about demand being weaker than all and sundry originally forecast but I think it’s not only weak demand being highlighted, but also just how much oil supply there really is. Let me give you some figures about demand first - U.S. refineries have cut the volume of crude processed so far this year, but stocks of gasoline and distillates remain ample. Year-to-date processing rates have fallen for the first time since 2011 and by the most since the recession of 2008/09. Now some supply figures - The U.S. is set to account for 61 percent of all new oil and gas production over the next decade. The global oil industry is set to greenlight $123 billion worth of new offshore oil projects this year, nearly double the $69 billion that moved forward last year. 7 out of the top 10 sources of new oil and gas production globally over the next decade are U.S. states. Now, you may think that I am solely blaming the US for all this weak demand and increased supply and you'd be right - I am. Absolutely I am. Look at the data - it doesn't lie. I was always told that every problem has a solution but go and ask every OPEC minister how they intend to solve the problem that is increased US oil supply. If OPEC+ don't maintain current policy and look to extend the cuts they are left with lower flat price. If they do increase the "cuts" then all this new US oil gobbles up the market share they had in the first place. Impasse we could say. Still, could be worse, Chelsea are away at Norwich tomorrow - I wonder if Frank's got any nails left? Good weekend to you all.