Hi to all,
Here’s what I have for this week’s price changes:
*Heating and stove oils show an increase of 2.5 cents a litre.
*Diesel fuel shows an increase of 1.8 cents a litre, and...
*Gasoline shows an increase of 2/10ths of a cent per litre.
Peak oil here?
“Not likely” says I...
While market speculators fret over the latest news on US domestic production growth and the latest rig counts, much is being said that the markets have hit peak production and demand is still rising. Others say we’ll hit peak production in the late 2020’s.
And while there may be some evidence that US domestic production has indeed stalled for the moment, it doesn’t mean that we have hit key peak production in the face of rising demand for oil.
The facts are simple.
The only thing that is holding back on future increases in production are the fact that West Texas Intermediate prices are held down because no one wants to get pumping oil and not make a dollar at it. Production costs are higher than elsewhere, and Chinese tariffs on U.S exports to China simply don’t help. A low price for WTI isn’t good if you’re trying to generate interest in U.S shale reserves.
It’s no wonder Baker Hughes has reported a decline in rigs operating south of the border in August as compared to July. There were 926 rigs operating against the July figure of 955, and well down from 1050 in August 2018.
Brent prices have risen slightly as a result of lower production costs, particularly for Middle East crudes, all in the face of self-imposed production quotas.
My best guess here is that this is at best a temporary slowdown as rising prices will bring domestic production up again as more get back into the markets.
EIA releases “STEO”: Short Term Energy Outlook
In a monthly update, the US Energy Information Administration has released its outlook on both West Texas and Brent crude oil for 2020.
West Texas Intermediate prices are projected to average $56.31 US a barrel for 2019 and stay steady at $56.50 US for the rest of 2020, while Brent prices will average $63.39 US a barrel for the remainder of 2019 and then average $62 US a barrel in 2020.
And on another note, the US EIA predicts domestic oil production to grow to 13.2 million barrels a day in 2020 from this year’s average of 12.2 million a day so far in 2019.
US EIA inventories
The Energy Information Administration released its latest inventory data last Thursday, a day later than usual as a result of the Labour Day holiday.
Crude supplies dropped 4.8 million barrels, while gasoline also showed a drop of 2.4 million barrels.
Distillate inventories were also down, but by 2.5 million barrels on 94.8 percent refiner capacity.
US domestic production was set at 12.4 million barrels a day for the week ending August 30th.
That’s it for this week!