It’s EIA Wednesday, and the report ending the Week of June 1st showed a 4M/bbl build. I will write more on that a little later, but here are my instant thoughts on the significance of this build. Hint; I am still bearish on propane prices for the back half of 2018:
Crude oil also showed a significant build in its stockpiles domestically, and as such, WTI crude is currently off over a dollar/bbl and is now down below $65. Propane is going to follow, as I have been writing about the last few weeks.
PRIVATE ENTITIES FOLLOWING US LEAD ON IRAN SANCTION? It seems that while the governments of several European nations are not joining the United States with a new round of sanctions against Iran following America’s withdrawal from the Obama-era nuclear accord, a number of key businesses within those nations are not taking any chances of risking American economic blowback. Here’s the lede paragraph from this Reuters article:
European refiners are winding down oil purchases from Iran, closing the door on a fifth of the OPEC member’s crude exports after the United States imposed sanctions on Tehran, company and trading sources said.
Then, more from the linked item:
Although European governments have not followed Washington by creating new sanctions, banks, insurers and shippers are gradually severing ties with Iran under pressure from the U.S. restrictions, making trade with Tehran complicated and risky. U.S. President Donald Trump on May 4 announced his decision to quit a landmark 2015 nuclear deal between Iran and world powers and reimposed sanctions on Tehran. The sanctions on Iran’s petroleum sector will take effect after a 180-day “wind-down period” ending on Nov. 4. “We cannot defy the United States,” said a senior source at Italy’s Saras, which operates the 300,000-barrels-per-day (bpd) Sarroch refinery in Sardinia. Saras is determining how best to halt its purchasing of Iranian oil within the permitted 180 days, the source said, adding: “It is not clear yet what the U.S. administration can do but in practice we can get into trouble.”
WHIM (What it Means): Politicians can posture, but private business entities have their own agendas, and the business entities don’t want to get on the bad side of President Trump’s Iran policy. This, along with the drastic drops in Venezuelan production, will create a bit of pressure on global supply and demand balance in crude oil…that said, I believe OPEC (namely, the Saudi’s) and Russia will be more than capable of meeting the shortfalls, along with the production and exporting of American crude oil. Still, the loss of Iranian and Venezuelan production removes some margin for error in the marketplace, because any unforeseen supply disruptions in Russia or Saudi Arabia can move the market back to an uncomfortably tight spot.
D-DAY ANNIVERSARY: This isn’t political, and I won’t get political in this space. But on June 6, 1944, 160,000+ Allied troops landed at Normandy…More than 10,000 Allied soldiers were killed or wounded, but by day’s end, the Allies had begun liberating Europe.
I simply cannot fathom the courage it took to assault those beaches and heavily fortified positions…landing on the beach and seeing true scenes out of your worst nightmare…expecting death. It’s a miracle there were not more deaths. American soldiers entered the European theater in a big way, paid a big cost, but they tipped the balance of the outcome of war, they helped lead to the end of the murderous regime of Adolph Hitler and stopped his atrocities before they could worsen.
While most from this greatest generation have perished, as long as I draw breath, they will have my respect and my remembrance of the price they paid. Here is the letter then Gen. Eisenhower sent to the troops in advance of the Normandy assault.