Hi to all,
Here’s what I have for this week’s price changes:
*Heating and stove oil to drop by 9.6 cents a litre.
*Diesel shows a drop of 10.4 cents a litre, and...
*Gasoline shows a drop of 1.4 cents a litre.
Market highlights
Oil storage running out... for Brent?
It’s called “borrowed time”...
And oil is running out of it fast.
With West Texas Intermediate seeing into the negative last week due to ongoing storage concerns, there’ still huge concerns for storage worldwide as Brent is now running into its issues, according to Goldman Sachs.
Predictions are being made by them that say world floating storage may run out as soon as the middle of May causing a shock to oil prices like has never been seen. They say that OPEC cuts simply aren’t going to be enough as all OPEC countries struggle to bring production down by 9.7 million barrels in time for May 1st, the time an agreement reached with non-OPEC members agreed upon just less than two weeks ago.
Goldman Sachs predicts the inventory issue is due simply to oversupply and a failure to cut production more than what was done. And to aggravate things, they simply kept pumping and putting it all into floating storage, where tankers are used for oil storage because land-based tanks are full.
Initial cuts were rumoured to be 15 million barrels with OPEC surrendering to a lower number. Goldman Sachs says 18 million in cuts should have been made.
My data on the drop in demand versus product supplied showed 20 million in cuts-minimum- was needed just to support prices.
Date to watch: May 19th
If oil prices fail to get support in the coming weeks due to production cuts, look for this date to be the next signal towards bottoming oil prices.
May 19th is the day of the expiry of the June futures contract, and also the time of the month that may signal filling storage for not just Brent, but West Texas Intermediate prices.
Yes, all over again. Days of negative pricing could be just a little bit closer than what we think they are.
US inventories weigh
The latest EIA inventory report is out, and it’s not good news for the support of oil prices.
US crude inventories added 15 million barrels, while gasoline inventories added a million barrels.
Distillates added 7.9 million barrels.
Refiner capacity was reported at 67.6 percent, a sign of slowing refineries as they throttle back with lower demand.
The American Petroleum Institute, an industry-led organisation, has already reported an inventory build of 9.9 million barrels.
The EIA’s next inventory report happens tomorrow at noon Newfoundland time.
That’s it for this week!
Regards,
George Murphy
Twitter @GeorgeMurphyOil
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