Price changes for Thursday, April 23rd, 2020

Hi to all,



Here’s what I have for this week’s price changes:



*Heating and stove oil to drop by 4.1 cents a litre.

*Diesel shows a drop of 2.6 cents a litre, and...

*Gasoline shows a drop of 3/10ths of a cent a litre.



Excuse the volatility in the numbers that may be there. It’s been a hell of a week!



Market highlights



Oil loses its shirt

In a strange turn of events, for the first time in tracking of oil prices went into negative territory yesterday as sellers had no takers for WTI crude and buyers simply didn’t buy.

     Oil was hung up at a crossroads as inventories at the central selling hub of Cushing, Oklahoma went to overflowing, and inventories simply had no place to go with demand down in the wake of Covid-19.

     As disasters go on record as potentially damaging to economies, this storm is one for the record books, and it may not be over for a while.

     While WTI posted a slight gain to finish Tuesday with a slight gain above zero, June futures started the trading day lower, and headed the same direction as May futures did earlier this week.

      Brent may be different.

      With no central chokepoint, Brent is less susceptible to a point where inventories are priced, yet is still susceptible to lower prices based on the fact that there simply isn’t enough storage out there to soak up what’s already been sold over the past few weeks. And that itself is a problem.

       With no storage left by May 1^st, Brent is being stored in supertankers: the very vehicle used in it’s delivery to customers who may need it, complicating an already over-burdened delivery network.

      The Saudi-Russian oil price war may have turned Brent prices lower to a point of no return, where the laws of diminishing returns may be enough to squash the price further.

      And with a world waiting to heal before it goes back to work, it gives time for yet more crude to spill into a world that just isn’t ready to consume it for some time to come yet, regardless of how much OPEC and OPEC+ decided to cut from production last week.



US inventories

If there’s any indication of how much oil is backing up in the system south of the border, last weeks inventory report may be enough of a signal.

     US crude oil inventories gained 19.2 million barrels while gasoline stocks also increased 4.9 million barrels.

     Distillate stocks rose by 6.3 million barrels.

     US refiners operated at 69.1 percent of capacity.



That’s it for this week!



Regards,



George Murphy

Twitter @GeorgeMurphyOil