Price Performance Indicators
The COFR crude oil contract closed last week's fluctuation with a significant correction of 8.64% to the level of Rp 976,900 per barrel. Still a major catalyst of pressure, price consolidation in the bearish zone weighed down by a potential increase in oil supplies from the US as well as a spike in the spread of Covid-19 globally triggering new restrictions and lockdowns that negatively impacted fuel demand.
Drilling activity in the US experienced a sharp increase according to the latest report released by the US energy services company, Baker Hughes. The total number of oil rigs rose 10 rigs to 397 rigs for the week ended Aug. 13, marking the biggest weekly jump since April. The report indicates a potential increase in oil supply from US shale producers. On the other hand, the US government statistics agency, Energy Information Administration (EIA), released its weekly report on the US oil market on Wednesday evening which showed a decline in crude oil stocks of 3.23 million barrels, larger than the initial prediction of a decline of 1.06 million barrels. However, gasoline stocks rose unexpectedly by 696 thousand barrels, from the previous prediction which predicted a decline of 1.67 million barrels. Unexpected rise in US gasoline inventories hints at slowing fuel demand due to
From the pandemic headlines, at the start of the week oil responded to negative developments, especially in Asia, where cases were close to record in Thailand, Vietnam and the Philippines. Meanwhile in Iran, on Saturday authorities re-imposed a week-long lockdown and banned travel effective from August 16 to August 21. In a similar vein coming from the West, the US Department of Transportation said on Wednesday it would limit some flights from Chinese carriers to 40% passenger capacity for four weeks after the Chinese government imposed similar restrictions on four United Airlines flights.
Both focuses have succeeded in raising concerns over the recovery in supply and demand for fuel, which is currently still weighing on the global market. However acting as hope for prices, are OPEC+ policy developments combined with a number of geopolitical issues sensitive to the energy sector.
Middle East Geopolitical Developments
Looking ahead, oil prices are projected to move steadily, supported by the heating up of US tensions with Iran after the plan to ship Iranian oil to Lebanon. News of the shipment of Iranian fuel arranged by Hezbollah for Lebanon and set to sail on Thursday. The news indicates the potential for increasing geopolitical tensions in the Middle East as well as triggering an increase in tension between the US and Iran because Iran is currently still under US sanctions.
OPEC+ Meeting September 1st in focus
Meanwhile, OPEC and its allies, including Russia, said that the market does not currently need more oil than the amount OPEC+ has planned to release in the coming months, despite pressure from the US to increase supply to keep rising oil prices under control, it said. four sources told Reuters Tuesday. In a meeting last July, OPEC+ agreed to increase production by 400 thousand bpd starting in August and will hold the next meeting on September 1.
EUR - Flash Manufacturing PMI
US - Flash Manufacturing PMI
EIA - Crude Oil Inventories
US – Prelim GDP q/q
Source: ICDX Research