May 6 and is down $25 from the July 11 record high. This morning, oil is down some more to $121.71 at 11:06 am GMT ahead of the US inventory report. We know demand for gasoline is down for the 14th week (per Mastercard) and Bloomberg reports gasoline supplies are expected up 400,000 barrels for the 5th week of rise.
One analyst says the next layer of support is at $117.
Bloomberg reports that US drivers drove less for a seventh consecutive month in May. According to a government report on 7/28, vehicle-miles fell 3.7% y/y in May, the longest streak since 1979. Also, the Energy Dept said demand for oil and petroleum products dropped 4.3% y/y in May to 19.7 million barrels a day, or 889,000 barrels a day less for the first five months of the year over the same period a year ago. This is named demand destruction.
Exxon and Chevron will report the lowest production since 2005, with Q2 output down over 5%, so that earnings depend on price rises. According to analyst reports summarized by Bloomberg, together they will spend about $48 billion on capital outlays this year, which sounds nice until you discover that they are spending even more to buy back their own stock, a disclosure we first read in Portfolio magazine. Together they are spending about 100 million US Dollars a day on capital spending for exploration and produc-tion—but “If it maintains its first-quarter pace of buybacks, Exxon Mobil will repurchase 38 billion US Dollars of stock this year, or almost $104 million a day.”
There’s something wrong with this picture.
No comments:
Post a Comment