Will Brent continue its bullish momentum?

By A/S Global Risk Management.

Michael Poulson, Global Risk Management. Image credit: Global Risk Management

Updated on 08 Aug 2018 08:23 GMT

Lately, there have been talks in the market of the Chinese economy slowing down; meaning a decrease in growth rate. However, yesterday's trade figures showed that exports were up 12.2%, and imports up 27.3% since last year, indicating that there is still plenty of traction despite the ongoing trade war with the US. Chinese growth figures are important to the oil market as China is one of the world's largest consumers.

Yesterday, the API released the weekly inventory stats, showing a decrease in crude oil inventories of 6 mbbl, an increase in gasoline stocks of 3.1 mbbl and an increase in distillate stocks of 1.8 mbbl. The draw on crude stocks is rather high, but so are the builds in gasoline and distillates. Therefore, the magnitude of the draws is more likely to be caused by the refinery utilization rate - as it was higher than the last two weeks - than a shortage of crude oil supply. Later today the EIA is releasing the weekly oil inventory report; if data differs considerably from the API report, volatility could increase.

Earlier this week, the U.S. implemented the first round of sanctions against Iran - sanctions that include the purchase of USD, metals and coal trading as well as sanctions against the auto sector, among others. Direct sanctions on crude oil and products are planned to be implemented in the beginning of November. The big question is if international companies are willing to agree and cut trading ties with Iran. Already, large European companies have stated that plans to invest in Iran are suspended. The next month or so is going to show if others will follow - and thereby give an indication if the sanctions on oil are going to be complied with as well.

A/S Global Risk Management is a provider of customised hedging solutions for the management of price risk on fuel expenses. The company has offices in Denmark and Singapore. For further details about its risk management products and services, please call +45 88 38 00 00 or email hedging@global-riskmanagement.com.