Last week’s oil trading closed on an upbeat note – U.S. inflation data surprised to the upside and demand seemed to be picking up nicely, OilPrice reports. 

Permian hits another record high. Cementing the Permian Basin’s reputation as the leading force of incremental US crude production, oil output in the largest U.S. shale play is set to rise to a record 5.408 million b/d in September according to the EIA, equivalent to 60% of the country’s shale production. 

Saudi Aramco flaunts maximum capacity coming soon. Announcing net Q2 profits of $48.4 billion, the head of Saudi Aramco Amin Nasser claimed the company is ready to bring production to its maximum capacity of 12 million b/d if asked by the government. 

Investor confidence in the German economy has plummeted to the lowest level in at least decade, with market gloom surpassing the impact of COVID-19 as German households face another challenge, a $300 annual gas levy destined to help gas retailers stay afloat. The large-scale impact of economic headwinds is still yet to be felt – Germany’s economy stagnated in Q2 and the IMF has cut its projections of economic growth to 1.2% in 2022 and 0.8% in 2023. 

Extremely low water levels of River Rhine, the navigation chokepoint at Kaub hasn’t been this low since the early 1990s at this time of the year, is sending coal and oil products prices soaring in the southern regions of the country. German power prices soar to all-time highs. Hamstrung by extremely low Rhine levels impeding usual coal flows and ongoing quarrels around Nord Stream 1, Germany’s 2023 futures contract soared to yet another all-time high of €508 per MWh.

What a change can several days make as weak Chinese macroeconomic readings added a lot more bearish pressure, causing headaches for global policymakers. Not only were Chinese crude demand and refinery runs at their lowest in the post-pandemic period, but its July industrial activity also rose less than anticipated at 3.8%. Add to this the ongoing uncertainty surrounding a possible Iran nuclear deal and you will inevitably see why the bears have taken over this week, with Brent futures dropping as low as $92.60 per barrel. 

Chinese refining still underwhelming.Chinese refinery runs dropped to the lowest daily rate since March 2020 at 12.53 million b/d, down almost 1 million b/d, surprising many in the oil markets who expected a strong post-lockdown recovery, though prolonged maintenance might have played a role. 

Chinese regions see first industry power cuts. The regional government of Sichuan has started rationing industrial power consumption amid its worst heatwave in 60 years, heavily impacting lithium producers Tianqi Lithium and Sichuan Yahua as well as several major aluminium smelters.