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Fiji maintains rate, will keep accommodative policy

August 26, 2016 by CentralBankNews   Comments (0)

    Fiji's central bank left its Overnight Policy Rate (OPR) at 0.50 percent and said its "monetary policy will remain accommodative and focus on supporting the domestic economic recovery while the Bank will continue to monitor all macroeconomic developments and align monetary policy accordingly."
    The Reserve Bank of Fiji, which has maintained its rate since October 2011, added that the bank's twin objectives remain intact and the impact of this year's natural disasters on inflation was expected to taper with the year-end inflation forecast still at "around 3.5 percent."
    Fiji's inflation rate rose to a 2016-high of 5.5 percent in July from 5.3 percent in June, mainly driven by shortages of items following the tropical cyclones and flooding, higher duties on alcohol and tobacco, and an increase in fuel prices.
    Fiji was hit by Tropical Cyclone Winston in February, the worst cyclone ever recorded in the Southern Hemisphere, leaving 42 people dead. The government estimated damage of 1 billion Fijian dollars, or US$460 million. Fiji was also hit by flooding in April.
     The Reserve Bank added that Fiji's foreign reserves amounted to $1.920.7 billion as of Aug. 24, enough to cover 5.3 months of imports, down from $1.978 billion as of July 28.
    Fiji's economy - which grew by an annual 4.2 percent in 2015, down from 5.3 percent in 2014 - continues to be driven by strong consumption and investment, according to Barry Whiteside, governor and chairman of the central bank's board.
    But Whiteside cautioned that subdued global growth could dampen remittances and tourism earnings though the bank is still forecasting an increase from last year's record levels.

    The Reserve Bank of Fiji issued the following statement:

"The Reserve Bank of Fiji Board at its August meeting decided to maintain the Overnight Policy Rate at 0.50 percent.

In making the decision, the Governor and the Chairman of the Board, Mr Barry Whiteside highlighted that the domestic economy continues to be driven by strong consumption and ongoing investment activity. Sectoral performances remain mixed. Apart from the sugar and timber sectors, most other sectors recorded higher output annually including gold, electricity and visitor arrivals. Financial conditions continue to be favourable indicated by adequate bank liquidity and low lending rates, while credit growth has slowed over the year.”

On the growth outlook, the Governor highlighted that the subdued global growth performances and prospects imply a possible dampening in our remittances and tourism earnings although annual projections are still higher than last year’s record levels.

The twin objectives of monetary policy remain intact. As of 24 August, 2016, foreign reserves were $1,920.7 million, sufficient to cover 5.3 months of retained imports. Reflecting the impact of the natural disasters, inflation increased for the fourth consecutive month in July to 5.5 percent. This was mostly driven by the shortages in market related items following the tropical cyclones and floods earlier this year, higher excise duty on alcoholic beverages and tobacco and the increase in fuel prices in July. The year-end inflation forecast remains at around 3.5 percent. Over the medium term, the impact from the natural disasters is expected to taper. Notwithstanding any significant risks from higher commodity prices, particularly crude oil and food, inflation is expected to normalize.

In conclusion, the Chairman stated that monetary policy will remain accommodative and focus on supporting the domestic economic recovery while the Bank will continue to monitor all macroeconomic developments and align monetary policy accordingly.” 

    www.CentralBankNews.info


Moldova holds rate as inflation continues to decelerate

August 25, 2016 by CentralBankNews   Comments (0)

    Moldova's central bank maintained its base rate at 10.0 percent, saying the effect of past rate cuts were still moving through the economy's various transmission channels while the most recent data revealed the downward dynamics of inflation though it remains above the bank's target.
    The National Bank of Moldova (NBM) has cut its rate by 950 basis points this year, most recently by 300 points in July, as it unwinds rate hikes totaling 1,600 points between December 2014 and August 2015 in response to a plunge in the leu's exchange rate and accelerating inflation.
    But since April this year the exchange rate of the leu has stabilized and inflation has been decelerating from a recent high of 13.6 percent in December 2015.
    In July Moldova's inflation fell to a 2016-low of 7.0 percent from 7.4 percent in June but still remains above the central bank's target range of 5.0 percent, plus/minus 1.5 percentage points.
    In its latest inflation report published on Aug. 3, the NBM forecast that inflation will remain on a downward trend until the end of this year before stabilizing around its target as the negative output gap continues to restrain price pressures for the entire forecast period and only starts to reach positive values by the end of the forecast horizon.
   On average, inflation should be 6.7 percent this year, reaching a level of 3.5 percent in the fourth quarter of this year, and then decline further to 4.4 percent in 2017.
    The leu was trading at 19.7 to the U.S. dollar today, unchanged from the start of this year, but down 21 percent since the start of 2015 and down 34 percent since the start of 2014.
    Economic activity in Moldova continues to remain below its potential level with exports in June down by an annual 12.9 percent and imports down by 7.7 percent. Industrial output fell by 2.1 percent but retail trade turnover managed to rise by 4.2 percent at the same time that trade in services fell by 7.0 percent, the NBM said.

    www.CentralBankNews.info

 

Paraguay holds rate as inflation seen in line with target

August 25, 2016 by CentralBankNews   Comments (0)

     Paraguay's central bank left its monetary policy interest rate at 5.50 percent, saying it did not consider it necessary to make any rate adjustments as the current and expected trajectory of inflation was now in line with its inflation target over the policy horizon.
      The Central Bank of Paraguay has cut its rate twice this year - most recently in July following a cut in May - by a total of 50 basis points following a 25 point rate hike in January and cuts totaling 100 points in 2015.
      The central bank said economic data continue to show dynamism but it will carefully monitor external and internal economic data and use its monetary policy instruments in a flexible manner to ensure that inflation converges to its midpoint target of 4.5 percent.
     The target is within a 2 percentage point range.
     The central bank added that the decision to maintain the rate was decided unanimously by CEOMA, the bank's Open Market Operations Committee.
     Paraguay's inflation rate dropped to 2.9 percent in July from 4.7 percent in June and in May the International Monetary Fund forecast that inflation is expected to average 4.5 percent this year and remain at that level in 2017. 
   The exchange rate of Paraguay's guarani started depreciating in September 2014 and lost 20 percent against the U.S. dollar in 2015 before hitting a low of 5,967 to the dollar in late January. 
    But since the central bank's rate hike on Jan. 20, the guarani has steadily firmed and was trading at 5,511.5 today, up 4.9percent since the start of this year.
    Last month the central bank forecast that Paraguay's economy would expand by 3.5 percent this year, up from a previous forecast of 3.0 percent and 2015's 3.0 percent, due to faster growth in livestock, meat and construction output.
    Paraguay is the world's fourth-biggest soybean exporter and this year's harvest is expected to be very good.

    www.CentralBankNews.info

Energy Analysts at the Big Banks are Not Very Good These Days (Video)

August 24, 2016 by EconMatters   Comments (0)

By EconMatters


We look at A Bloomberg Go piece regarding the Oil Market, and illustrate just how poor critical reasoning abilities are in this role for the Big Banks. Analysts at Investment Banks are pretty bad in general, but the energy analysts require skillsets that fetch much higher pay in other roles in the Finance World.

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Iceland cuts rate 50 bps, capital flows to determine future

August 24, 2016 by CentralBankNews   Comments (0)

    Iceland's central bank cut its key policy rate, the seven-day deposit rate, by 50 basis points to 5.25 percent but said uncertainty from a liberalization of the country's capital account argued for caution in setting interest rates and any further lowering or even raising rates "will depend on economic developments and on the success of the capital account liberalization process."
    It was the first change in rates by the Central Bank of Iceland (CBI) since a 25-basis-point increase in November 2015 and the first rate hike since November 2012.
    The rate cut follows a much-improved outlook for inflation and the central bank's guidance in June that it would probably have to tighten its policy stance in light of growing inflation pressures.
   But the CBI said there "are indications that monetary policy has been more successful than was expected earlier in the year," and now it "appears that it will be possible to keep inflation at target over the medium term with a lower interest rate than was previously considered necessary."
    In its latest monetary bulletin, the central bank lowered the forecast for consumer price inflation, excluding the effect of indirect taxes, this year to an average of 1.7 percent from 2.1 percent forecast in the May bulletin, below the CBI's 2.50 percent target.
    For 2017 inflation, inflation is now seen at 3.2 percent, down from 4.1 percent and for 2018 at 3.6 percent from 3.8 percent.
    Iceland's inflation rate fell to 1.1 percent in July, the lowest rate since early 2015, with an rise in the krona's exchange rate, low global inflation and tight monetary policy offsetting the impact of wage increase on consumer prices.
    Iceland is in the final stage of dismantling remnants of capital controls that were put in place following the global financial crises in 2008 that led to the collapse of its banking system and a halving of the value of the Icelandic krona.
    Earlier this week the central bank concluded that capital can be expected to flow out of Iceland next year due to firms' foreign investments and individuals' interest in diversifying their portfolios, but the risk of substantial outflows is mitigated by the wide interest rate differential, Iceland's stronger economy, low inflation and trade-related capital inflows in connection with the higher krona.
    Annual overseas investment by Iceland's pension sector was forecast by the central bank to amount to a relatively low level of between 60 billion and 80 billion krona from 2017 and onwards, with less pent-up need for overseas investments following several exemptions since last summer that is allowing 80 billion krona to flow out by the end of September.
    After plunging from November 2007 to November 2008 to a rate of around 143 to the U.S. dollar, the krona has been trading in a much narrower range and has been firming since March 2015.
    Today the Icelandic krona was trading at 116.8 to the dollar, up 11.1 percent since the start of this year, despite what the CBI described as "substantial foreign currency purchases."
    "If the exchange rate remains unchanged, the outlook is for inflation to remain below target until early 2017," the CBI said, adding that inflation will then start to rise as import prices stop falling and the impact of the currency appreciation subsides. However, if the krona continues to rise, inflation will be lower than forecast.
    In its monetary bulletin, the central bank also upgraded its outlook for economic growth, with output this year seen rising by 4.9 percent, up from 4.5 percent forecast in May and 4.0 percent in 2015 as private consumption rises by 6.7 percent, up from a previous forecast of 6.0 percent.
    For 2017 the central bank forecasts economic growth of 4.1 percent, slightly up from the May forecast of 4.0 percent and 2.6 percent in 2018, down from 3.0 percent.

    The Central Bank of Iceland issue the following statement:
 

"The Monetary Policy Committee (MPC) of the Central Bank of Iceland has decided to lower the Bank’s interest rates by 0.5 percentage points. The Bank’s key interest rate – the rate on seven-day term deposits – will therefore be 5.25%. 
According to the Central Bank’s updated forecast as published in the most recent Monetary Bulletin, the outlook is for somewhat stronger output growth this year than was forecast in May, or 4.9%, followed by robust growth in 2017. In spite of large pay increases and a wider positive output gap, inflation has remained below target for two-and-a-half years. In July it measured 1.1%, the lowest inflation rate since the beginning of 2015. Improved terms of trade, low global inflation, tight monetary policy, and the appreciation of the króna have offset the effects of wage increases on the price level. The króna has appreciated markedly in the recent term, in spite of substantial foreign currency purchases by the Central Bank. 
The inflation outlook has improved since the Bank’s last forecast. If the exchange rate remains unchanged, the outlook is for inflation to remain below target until early 2017. According to the forecast, it will edge upwards when import prices stop declining and the effects of the currency appreciation subside. Inflation will rise more slowly than previously forecast, however, and will not be as high as was previously projected. If the exchange rate continues to rise, and other things being equal, inflation will be lower than is provided for in the baseline forecast. 
Tight monetary policy has contained demand for credit and led to increased saving, thereby supporting a larger current account surplus and a stronger króna. Alongside favourable external conditions, monetary policy has therefore led to lower inflation and recently to a better alignment of inflation expectations to the target. For the same reasons, real interest rates have risen somewhat more in the recent term than was provided for in the Bank’s previous forecasts based on an unchanged exchange rate. 
There are indications that monetary policy has been more successful than was expected earlier this year. As a result, it appears that it will be possible to keep inflation at target over the medium term with a lower interest rate than was previously considered necessary. The likelihood of increased macroeconomic imbalances and the uncertainty associated with capital account liberalisation argue for caution in interest rate setting, however. Whether interest rates will be lowered further or need to be raised again will depend on economic developments and on the success of the capital account liberalisation process."

Hungary maintains rate and guidance of steady base rate

August 23, 2016 by CentralBankNews   Comments (0)

    Hungary's central bank left its base rate at 0.90 percent, as widely expected, and repeated its guidance that it will maintain the rate at the current level and maintain loose monetary conditions "for an extended period" as there continues to be unused capacity in the economy and inflation should remain moderate.
    The National Bank of Hungary (NBH), which ended its latest easing cycle in May after cutting the rate three times by a total of 45 basis points, added that "a watchful approach to monetary policy is still warranted due to uncertainty in the global financial environment," with domestic, real interest rates in negative territory and declining further as inflation rises.
    The central bank also confirmed that it is still planning to decide next month on the required year-end level of the three-month deposit stock and operational details of that facility.
    The MNB is planning to change the use of its main policy tool, the three-month deposit facility, to encourage banks to offer cheaper loans and to buy government debt by lowering the amount from 1,600 billion forints that banks can deposit, and conduct monthly, rather than weekly, tenders.
    Hungary's consumer price inflation rate declined to minus 0.3 percent in July from minus 0.2 percent in June, the third consecutive month of deflation, while core inflation rose to 1.3 percent form 1.2 percent as inflation expectations remain at historically low levels.
    But wage growth remains strong, the central bank said, and this is likely to raise core inflation slowly through rising household consumption. In the first half of this year, gross wages were up by an annual 6.0 percent, with wages in June up by an annual 5.7 percent.
    But the MNB first expects inflation to approach its 3.0 percent target in the first half of 2018.
    In line with its expectations, Hungary's economy picked up speed in the second quarter after slowing in the first quarter as retail sales continued to expand and labour demand remains strong.
    Hungary's Gross Domestic Product grew by an annual rate of 2.6 percent in the second quarter, up from 0.9 percent in the first quarter and the central bank expects growth of around 3 percent to be maintained, helped by an extension of its various stimulus measures and the government's efforts to promote housing construction and a faster drawdown of European Union funding.
    Hungary's forint has been firming against the euro since June and is up 1.6 percent since the start of this year, trading at 309.7 to the euro today.


    The National Bank of Hungary issued the following statement:

"At its meeting on 23 August 2016, the Monetary Council reviewed the latest economic and financial developments and voted on the following structure of central bank interest rates with effect from 24 August 2016:
Central bank interest rate Previous interest rate (per cent) Change (basis points) New interest rate (per cent)
Central bank base rate 0.90 No change 0.90
Overnight collateralised lending rate 1.15 No change 1.15
Overnight deposit rate -0.05 No change -0.05

In the second quarter of 2016, the growth of the Hungarian economy picked up again following the temporary slowdown at the beginning of the year. A degree of unused capacity remains in the economy and inflation remains persistently below the Bank’s target. Looking ahead, the disinflationary impact of the domestic real economic environment is gradually decreasing.
In July 2016, consumer prices were slightly lower than a year earlier and core inflation rose somewhat relative to the previous month. The Bank’s measures of underlying inflation continue to indicate a moderate inflationary environment in the economy. Persistently low global inflation is restraining the increase in domestic consumer prices. Inflation expectations are at historically low levels. Whole-economy wage growth remains strong, which is likely to raise core inflation gradually through rising household consumption. Inflation remains below the 3 per cent target over the forecast period, and only approaches it in the first half of 2018.
Hungarian economic growth picked up again in the second quarter of 2016, in line with the Bank’s expectations. Retail sales continued to expand at a dynamic rate in June. Household consumption is expected to continue growing in the coming quarters. Industrial production fell in June relative to the same period a year earlier. Labour demand remained strong, and therefore the unemployment rate fell further in the second quarter, accompanied by an increase in the number of employees. The time profile of this year’s economic growth is characterised by duality. The economy picks up following temporary slow growth at the beginning of the year, mainly supported by domestic demand. The unwinding of adverse one-off factors affecting growth early in the year as well as the steps taken by both the Bank and the Government to support growth will result in the economy picking up further. Economic growth of around 3 per cent can be maintained by the extension of the Funding for Growth Scheme, the Growth Supporting Programme and the Government’s measures to promote housing construction as well as by the faster drawdown and efficient use of EU funding.
Moderate growth early this year has resulted in a more negative output gap temporarily; however, the acceleration in growth and the expansionary impact on demand of next year’s budget contribute to the closure of the gap. Rising incomes and the pick-up in lending will contribute to the expansion in consumption, which in turn provides considerable support to economic growth in the coming years.
Sentiment in global financial markets has been positive since the Council’s latest interest rate-setting decision. Domestic asset prices have changed little over recent weeks. The forint exchange rate remains stable and yields fell slightly at the entire length of the curve. Hungary’s strong external financing capacity and the resulting decline in external debt are contributing to the sustained reduction in the vulnerability of the economy. Following the previous signal by the Council, the change to monetary policy instruments announced in July supports a further reduction in vulnerability and encourages lending using targeted unconventional tools. In view of the assessment of the effects related to the announced measures as well as the volatile global financial environment, the Magyar Nemzeti Bank continues to closely monitor movements in interbank rates and developments in the money market and government securities market. The Monetary Council will make a decision on the required year-end level of the three-month deposit stock and the operational details of the use of the facility in September. In the Council’s assessment, a watchful approach to monetary policy is still warranted due to uncertainty in the global financial environment. Forward-looking domestic money market real interest rates are in negative territory and are declining even further as inflation rises.
In the Council’s assessment, there continues to be a degree of unused capacity in the economy and inflation remains moderate for an extended period. The disinflationary impact of the real economy is gradually decreasing over the policy horizon. If the assumptions underlying the Bank’s projections hold, the current level of the base rate and maintaining loose monetary conditions for an extended period are consistent with the medium-term achievement of the inflation target and a corresponding degree of support to the economy.
The abridged minutes of today’s Council meeting will be published at 2 p.m. on 7 September 2016."

Turkey holds key rate, trims overnight lending rate further

August 23, 2016 by CentralBankNews   Comments (0)

    Turkey's central bank left its benchmark one-week repo rate at 7.50 percent but continued simplifying its monetary policy framework by once again cutting the overnight marginal funding rate and the late liquidity lending rate by a further 25 basis points.
    The Central Bank of the Republic of Turkey (CBRT) confirmed its guidance from recent months, saying future monetary policy decisions will be conditional on the outlook for inflation and a tight policy stance will be maintained in light of inflation expectations, pricing behavior and other factors - a reference to the exchange rate - that affect inflation.
     The central bank cut the overnight marginal funding rate to 8.50 percent from 8.75 percent and has now cut its by a total of 225 points since March. The borrowing rate was maintained at 7.25 percent.
    The late liquidity lending rate was also cut to 10.0 percent from 10.25 percent while the borrowing rate was left at zero percent.
    The once-week repo rate has been maintained at 7.50 percent since February 2015 as the CBRT remains cautious over inflation which rose in July to 8.79 percent from 7.64 percent in June due to a sharp rise in unprocessed food prices. Core inflation rose to 8.8 percent from 8.7 percent in June.
    Although the central bank said it expects food prices to correct downward, the trend in core inflation is only seen improving gradually so the "developments in the inflation outlook necessitate the maintenance of a tight liquidity stance."
    In its quarterly inflation report from last month, the central bank expects inflation to stabilize around its 5.0 percent target as of 2018 after easing to an average of 7.5 percent this year and 6.0 percent in 2017.
    Inflation is seen fluctuating between 6.6 percent and 8.4 percent in the rest of this year.
    The exchange rate of Turkey's lira has rebounded following a deep plunge in response to the failed military coup attempt in July, with the lira trading at 2.93 to the U.S. dollar today, largely unchanged from 2.92 at the start of the year.



    The Central Bank of the Republic of Turkey issued the following statement:
    

"The Monetary Policy Committee (the Committee) has decided to set the short term interest rates as follows:
a) Overnight Interest Rates: Marginal Funding Rate has been reduced from 8.75 percent to 8.5 percent, and borrowing rate has been kept at 7.25 percent,
b) One-week repo rate has been kept at 7.5 percent,
c) Late Liquidity Window Interest Rates (between 4:00 p.m. – 5:00 p.m.): Borrowing rate has been kept at 0 percent, and lending rate has been reduced from 10.25 percent to 10 percent.
Annual loan growth continues at reasonable rates in response to the tight monetary policy stance and macroprudential measures. Although developments in tourism revenues will have a negative impact in the short run, the lagged effects of the developments in the terms of trade and the moderate course of consumer loans will continue to contribute to the improvement in the current account balance. While domestic demand is having a positive impact on growth, albeit at a lesser extent, demand from the European Union economies continues to support exports. Accordingly, economic activity displays a moderate and stable course of growth. The Committee assesses that the implementation of the structural reforms would contribute to the potential growth significantly.
The adverse impact of domestic developments in mid-July on market indicators has been largely reversed due to improved global risk appetite and the recent measures. Moreover, the tight monetary policy stance, the cautious macroprudential policies and the effective use of the policy instruments laid out in the road map published in August 2015 have increased the resilience of the economy against shocks. Also considering its contribution to the effectiveness of monetary policy, the Committee decided to take a measured and cautious step towards simplification.
Unprocessed food prices, which have recently shown marked increases, are projected to display a downward correction in the short term. Meanwhile, the core inflation trend is expected to improve gradually. Yet, the developments in the inflation outlook necessitate the maintenance of a tight liquidity stance.
Future monetary policy decisions will be conditional on the inflation outlook. Taking into account inflation expectations, pricing behavior and the course of other factors affecting inflation, the tight monetary policy stance will be maintained.
It should be emphasized that any new data or information may lead the Committee to revise its stance.
The summary of the Monetary Policy Committee Meeting will be released within five working days."

The US Dollar Index Should Get Stronger Into Jackson Hole Speech (Video)

August 21, 2016 by EconMatters   Comments (0)

By EconMatters


We think the U.S. Dollar is undervalued going into this week on a short term basis, and should move back above 95 going into Jackson Hole`s annual monetary policy symposium Thursday and Friday. We also think that the market is behind the curve for a 25 basis point rate hike this year.

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This week in monetary policy: Turkey, Hungary, Iceland, Paraguay, Moldova, Fiji and Jackson Hole symposium

August 21, 2016 by CentralBankNews   Comments (0)

    This week (August 21 through August 27) central banks from 6 countries or jurisdictions are scheduled to decide on monetary policy: Turkey, Hungary, Iceland, Paraguay, Moldova and Fiji.
    In addition, the Federal Reserve Bank of Kansas City will once again host top central bankers, economists and policymakers from around the world, including Federal Reserve Chair Janet Yellen, at its annual economic symposium in Jackson Hole, Wyoming. 
    The theme of this year's symposium, which takes place Aug. 25-27, is "Designing Resilient Monetary Policy Frameworks for the Future."
    Following table includes the name of the country, the date of the next policy decision, the current policy rate, the result of the last policy decision, the change in the policy rate year to date, the rate one year ago, and the country’s MSCI classification.
    The table is updated when the latest decisions are announced and can always accessed by clicking on This Week.

WEEK 34
AUG 21 - AUG 27, 2016:
COUNTRY       DATE           RATE      LATEST        YTD     1 YR AGO    MSCI
TURKEY 23-Aug 7.50% 0 0 7.50%       EM
HUNGARY 23-Aug 0.90% 0 -45 1.35%       EM
ICELAND 24-Aug 5.75% 0 0 5.50%
PARAGUAY 24-Aug 5.50% -25 -25 5.75%
MOLDOVA 25-Aug 10.00% -300 -950 19.50%
FIJI 25-Aug 0.50% 0 0 0.50%

The Definitive Answer To Whether The Oil Market Has Rebalanced

August 21, 2016 by EconMatters   Comments (0)

By EconMatters


Introduction:

There has been much debate in this oil industry regarding this subject with a lot of poor analysis, no analysis at all, opinions, raw speculation, pure conjecture and every investment bank in the world talking their book on this subject. So we thought we would settle this question once and for all so that everybody is one the same page. We analyzed the Oil Market to determine this question definitively by checking the actual data. The only valid way of determining this matter in a rational and constructive manner.

Exhibit #1: U.S. Ending Stocks Excluding SPR of Crude Oil:

2016       5/6         539,984 (Million Barrels of Oil)    8/12       521,093 (Million Barrels of Oil)

We drew down 18.9 Million of Oil Stocks during summer driving season in 2016.

2015       5/8         484,839 (Million Barrels of Oil)    8/14       456,213 (Million Barrels of Oil)

We drew down 28.6 Million of Oil Stocks during summer driving season in 2015.

Conclusion:

We drew down more oil in 2015 versus 2016 for the same strong season of the market, and we are sitting with an extra 65 Million more barrels of oil in storage year over year with less of a drawdown this year during the Summer Driving Season. Therefore: Oil Market Not Rebalanced.

Exhibit #2: U.S. Stocks of Total Gasoline:

2016       5/6         240,564 (Million Barrels of Gasoline)        8/12       232,659 (Million Barrels of Gasoline)

We drew down 7.9 Million of Gasoline Stocks during summer driving season in 2016.

2015       5/8         226,710 (Million Barrels of Gasoline)        8/14       212,774 (Million Barrels of Gasoline)

We drew down 13.9 Million of Gasoline Stocks during summer driving season in 2015.

Conclusion:

We drew down more gasoline in 2015 versus 2016 for the same strong season of the market, and we are sitting with an extra 20 Million more barrels of gasoline in storage year over year with less of a drawdown this year during the Summer Driving Season. Therefore: Gasoline Market Not Rebalanced.

Exhibit #3: U.S. Stocks of Distillate Fuel Oil:

2016       5/6         155,332 (Million Barrels of Distillate Oil)  8/12       153,135 (Million Barrels of Distillate Oil)

We drew down 2.2 Million of Distillate Stocks during summer driving season in 2016.

2015       5/8         128,270 (Million Barrels of Distillate Oil)  8/14       148,400 (Million Barrels of Distillate Oil)

We built 20.1 Million of Distillate Stocks during summer driving season in 2015.

Conclusion:

We built more Distillate Stocks in 2015 versus 2016. However, we are sitting with 5 Million more barrels of Distillates year over year. Furthermore, we were coming from such lower levels of Distillates last year there was more room to fill up storage facilities, and like Cushing this year once Oil Capacity reaches limits the Oil gets moved to the Gulf Coast. Well similarly for Distillates once inventories reach this level of overall capacity, refiners no longer want to produce extra supplies, so they have found other alternative products to process excess oil into product for available storage capacity. Therefore: Distillate Market Not Rebalanced.

Exhibit #4: U.S. Stocks of Propane and Propylene:

2016       5/5         73,176 (Million Barrels of Propane)          8/12       93,744 (Million Barrels of Propane)

We built 20.6 Million of Propane Stocks for this time period in 2016.

2015       5/8         68,459 (Million Barrels of Propane)          8/14       93,866 (Million Barrels of Propane)

We built 25.4 Million of Propane Stocks for this time period in 2015.

Conclusion:

We built more Propane Stocks in 2015 versus 2016. However, we basically have the same levels of overall stocks (Which are at Record Historical Levels) as this time last year. The big takeaway is that over the last two years a lot of oil has been processed into this category for the sole purpose of doing something with the existing oil glut. Therefore: The Propane and Propylene Market Not Rebalanced.

Exhibit #5: U.S. Stocks of Crude Oil and Petroleum Products:

2016       5/6         1,369,395 (Million Barrels of Product)      8/12       1,393,563 (Million Barrels of Product)

We built 24.1 Million Barrels of Oil and Petroleum Products during summer driving season in 2016.

2015       5/8         1,244,572 (Million Barrels of Product)      8/14       1,280,261 (Million Barrels of Product)

We built 35.7 Million Barrels of Oil and Petroleum Products during summer driving season in 2015.

Conclusion:

We built 11.5 Million more Total Crude Oil & Petro Stocks in 2015 versus 2016. However, we still added another 24 Million to total overall stocks this year during the Summer Drawing and Driving Season. Moreover, we are sitting at 1,393,563 versus 1,280,261 for last year, for the highest ever Recorded Reading of this Metric by a large margin. Therefore: Oil & Petroleum Products Market Not Rebalanced.

Exhibit #6: U.S. Stocks of Other Oils:

2016       5/6         252,979 (Million Barrels of Oil)                    8/12       291,808 (Million Barrels of Oil)

We built 38.8 Million Barrels of Other Oil Stocks during summer driving season in 2016.

2015       5/8         239,763 (Million Barrels of Oil)                    8/14       268,971 (Million Barrels of Oil)

We built 29.2 Million Barrels of Other Oil Stocks during summer driving season in 2015.

Conclusion:

We built more Other Oils in 2016 versus 2015, but both years saw substantial builds, and my guess is that with Distillates Inventories at Record Levels, refiners needed to find other available storage capacity to move excess oil into refined product and chose this category “Other Oils”. We built 22.8 Million Barrels to this Other Category year over year, and is just another sign the oil market is in fact getting worse during the strongest demand part of the season. Therefore: Other Oils Market Not Rebalanced.

Conclusion:

The oil market is not rebalancing as some have suggested, in fact it appears to be still oversupplied by a large measure when taking into account the year over year additions to Total Stocks and comparing them to last year`s additions. Plus when you add in the effects of floating storage, the additions to alternative products for refined product there seems a desperate effort by the oil industry to move the commodity around from Cushing to the Gulf Coast, Gasoline Refining to Other Product Refining Categories to find any available storage capacity.

The Oil Market again moved up above $50 a barrel on the forward curve allowing more hedging for Oil Producers, and the reason the oil market hasn`t rebalanced is not enough producers went out of business. In fact the oil market is in such a state of denial that even if Saudi Arabia and OPEC agreed to a Production Freeze, or a Production Cut this would just allow more U.S. Production to come online in the form of the Completed Wells Category. There is still way too much Oil Supply, and the Oil Market is massively oversupplied, and actually getting worse as opposed to rebalancing. Just for context, the high end of the Five Year Average Total Oil Stocks used to top out at 250 Million Barrels of Oil each year, we are now more than double that level at 521,093 Million Barrels of Oil in storage.

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