News

1) As crude prices move lower, the U.S. gasoline market has been a splendid scapegoat for the recent drop in prices. According to Goldman Sachs, however, the downside risk to prices in the near-term lies primarily with U.S. dollar strength, and not the glut.

One of my favorite movies is Lucky Number Slevin. In it there is something called the Kansas City Shuffle. It is essentially a trick by a con artist, who uses misdirection to outsmart his audience. The audience is so focused on one thing, that they totally miss what is happening elsewhere.

From a ClipperData perspective, this is happening to some extent in the global crude market. While everyone is focused on the current product glut – something which has steadily been building like a tribal drumbeat since early in the year – China has fervently been stockpiling oil like a squirrel storing nuts.

As the product glut reaches new heights and bearishness abounds, Chinese oil imports are showing significant signs of fatigue. Waterborne imports into China thus far in July are in line with the prior two months, and some 6.5 percent below the peak of import volumes seen in April. 

2) Preliminary GDP data for Q2 has come in at +1.2 percent, well below consensus of 2.6 percent. This puts growth in the first half of the year at its slowest pace since 2011, as business investment was soft – offsetting strength seen in consumer spending. This weak number is again throwing cold water on any rate hike expectations, hence the dollar is charging lower today (and lending support to crude).

3) The...