1. Oil prices fall on news of shaky Chinese demand.
Oil prices are down today after news of a slowdown in Chinese refining. Chinese refineries processed 10.71 million barrels per day (bpd) in July, down approximately 500,000 bpd from June according to National Bureau of Statistics data. This is the lowest level for China in nearly a year, and the month over month decrease was much steeper than analysts expected.
In addition to Chinese production decreases, U.S. drilling capacity continues to deepen and contribute to the global supply glut. Data published by Baker Hughes last Friday showed explorers increased U.S. oil drilling capacity for the second time in three weeks.
2. Libya has been a thorn in OPEC’s side, but domestic problems may hamper their recovery rally.
OPEC’s deal to cut supply in an attempt to increase oil prices has faced many hurdles over the last year, one of them being fellow OPEC member Libya, which is exempt from the global deal to cut output and has been working to restore its pre-war oil production levels.
An analyst at Panmure Gordon wrote, "The recovery in Libyan production has been the single largest factor driving global supply growth in the last few months,"
But the Libyan recovery is facing some recent troubles. Libya's National Oil Corp (NOC) stated it is now investigating security violations at its biggest oilfield, Sharara. Sharara currently produces roughly 270,000 bpd, and the NOC has not specified if the violations will affect output. Additionally, workers at Libya's Zueitina export terminal have threatened to block a tanker due to dock on Saturday unless their demands for salary and overtime payments are addressed and met.
3. Emergency team works to contain oils spill off the coast of Kuwait.
Emergency crews are working to contain a large oil spill near a joint Kuwaiti-Saudi oilfield. It is said to have originated from an old 50-km pipeline from Al-Khafji, and it’s estimated as many as 35,000 barrels of crude oil may have leaked into the waters off Al-Zour, where Kuwait is building a massive $30bn oil complex that includes a 615,000-barrel-per-day refinery.
"Emergency oil teams are still struggling to put an oil spill near Kuwait's southern Ras Al-Zour area under control," said Kuwait Petroleum Corporation spokesman Talal al-Khaled.
Both Saudi Arabia and Bahrain, located south of Kuwait along the Gulf coast, have said the spill has not yet reached their waters.