Hi to all,
Here’s what I have
for this week’s price changes:
*Heating and stove
oil to increase by 2.1 cents a litre.
*Diesel fuel to
increase by 1.9 cents a litre, and...
*Gasoline to
increase by 2.8 cents a litre.
Market highlights
Oil rises on
economy
Oil prices
continued to increase this week on an optimistic outlook that the economy in
the US will bounce back.
Demand for gasoline also increased along with other refined commodities, as the
traditional start to the summer driving season is now underway, increasing spot
prices another 2.8 cents over the last week.
It’s usually just after this session every year that we see a slow retreat in
refined prices, at least until the first major storm hits from hurricane
season, usually at the end of July.
Of course, complicating all this remains the prospect of Covid-19 that still
remains a factor in demand.
US rig counts drop
again
How telling is the
shutdown of oil production?
If the US rig count is any indication, according to Baker Hughes, another 21
rigs were offline over the last week, bringing the overall rig count down to
237 operating rigs south of the border. To put that number in context, this
time last year saw 983 rigs in the field.
US inventories down
again
US crude oil
inventories were recorded down again this week as 5 million barrels was drawn
from overall oil stocks.
Gasoline inventories added 2.8 million barrels, while distillate added 3.8
million barrels.
US refiner capacity was recorded at 69.4 percent.
US domestic output was recorded at 11.5 million barrels a day, 1.8 million
barrels lower than peak production in February.
That’s it for this
week!
Regards,
George Murphy
Twitter
@GeorgeMurphyOil
Hi to all,
Here’s what I have
for this week’s price changes:
*Heating and stove
oil to increase by 3.2 cents a litre.
* Diesel fuel to
increase by 2.9 cents a litre, and...
*Gasoline to
increase by 2.4 cents a litre.
Market highlights
Chinese demand
almost back?
Word from China
tonight where demand for oil has just about returned to pre-pandemic levels.
China imported close to 9.8 million barrels a day last month just as the
pandemic alerts were being lifted in chief manufacturing areas like Wuhan.
In
the meantime, China had put 13.1 million barrels a day through refineries to
meet demand in April, just over what they did for the same time-period last
year.
China consumed 13.7 million barrels a day in December, 2019.
US EIA inventory
data
The latest crude
oil inventory data is out, and the EIA is reporting a very slight draw on crude
oil inventories, down by 700,000 barrels the last week.
Gasoline inventories dropped 3.5 million barrels, while distillates increased
3.5 million.
Refiner capacity was reported at 67.9 percent.
US domestic production was down to 11.6 million, down another 300,000 as lower
oil shut down rigs and spigots were turned off at oil fields.
How long this
recovery?
Interesting
question, and I’d be a millionaire if I had that one figured out, but here’s
where I would start.
With oil prices rising, the question has to be asked is how fast can the US
domestic number increase with oil prices on the rise.
No secret that the US has dozens of small producers who ventured and probably
weathered the drop in oil-at least to this point. With oil rising, there’s a
strong likelihood that some of these small producers will quickly re-enter the
production fields again in an attempt to recoup some losses, and perhaps put
more crude back into the system.
It
will be worth watching the rig count this week and next for the signs that
producers are venturing back into the oil patch.
That brings with it another complication: While OPEC and non-OPEC nations may
have agreed to production cuts, then how likely is it, when producers go back,
that OPEC would likely stick to their end of the cuts?
It’s my guess we won’t have long to wait.
That’s it for this
week.
Regards,
George Murphy
Twitter
@GeorgeMurphyOil
Hi to all,
Here’s what I have
for this week’s price changes:
*Heating and stove
oils to increase by 2.1 cents a litre.
*Diesel fuel to
increase by 3 cents a litre, and...
*Gasoline to
increase by 5.4 cents a litre.
Market highlights
Saudis to cut
production further
In the face of
rising austerity measures in the Middle East country, and the need for more
revenue to meet its budget requirements, Saudi Arabia is promising to cut back
production even further by another one million barrels a day by June.
That would bring Saudi production down to 7.5 million barrels a day, a level
not seen by them since 2002.
The leading OPEC producer has already agreed to cuts along with it’s partners
by 9.7 million barrels a day.
Rig counts take a
beating
Baker Hughes rotary
rig count is well down again this week as the shutdown of oil production and
exploration South of the Border continues.
They report that only 270 rigs remain at work in the US, down sharply from 624
rigs that were operating as late as mid-March 2020.
The speed of the shutdown is a little indicative of the panic caused to small
majors who now face an uncertain future with oil prices remaining below profitable
levels.
However, there were some signs that a few small operators may be getting ready
to return to production as prices have seemed to stabilise at a break-even
point for some.
Chinese demand
increasing?
Chinese imports of
oil have increased the past couple of weeks by 9.8 million barrels a day, that
may be a signal to either rising demand in China, or bargain basement buying of
cheap product.
With Covid-19 cases reported to be lower in China, except in today’s news, it
may be a case of an anticipated increase in Chinese demand as people go back to
work with the economy there re-opening. It remains to be seen for how long
however, as the news recently reported another outbreak of the disease, and a
mass testing of over 11 million people in Wuhan is underway with another
breakout of the disease.
Looks like the world may experience the same thing elsewhere if China is a
model case, and oil demand will fluctuate right along with it.
In the meantime, any return to normalcy isn't going to happen for some time if Covid-19 has anything to do with it. The run-up is overblown with the surge in cases that are happening, not just in China with today's announcement, but in the future because of a "too early" return of workers back to an unprepared economy.
If the economy doesn't come back, neither will oil.
That’s it for this
week!
Regards,
George Murphy
Twitter
@GeorgeMurphyOil
Hi to all,
Here’s what I have
for this week’s price changes:
*Heating and stove
oil to increase by 4.7 cents a litre.
*Diesel to increase
by 5.1 cents a litre, and...
*Gasoline to
increase by 5.5 cents a litre.
Market highlights
Demand...
Markets rebounded
this week as speculators continue to hope that economies will start to open
again and consumer demand picks up right along with it, reversing the losses of
the week before when oil went negative for the first time in history.
With European countries opening up shop, and the US joining them-at least in
some states-demand is expected to rise, but for how long?
Any breaking cases as a result of the early opening of the economy may very
well set it back to a new starting point, all with oil prices paying the
price...again.
World oil
production shut down?
Worldwide, optimism
over the economy returning has added to oil’s fortunes, but it’s some data on
oil that is shut in that is awakening speculators.
Refinery
runs south of the border are down a good 20 percent plus, drilling rigs are
down sharply and production is also off worldwide with the hope that OPEC will
also stick to their end of cuts.
Estimates now show close to 20 million barrels a day in oil production has been
cut while Covid-19 rages worldwide.
Data
still needs to be seen to confirm that OPEC is cutting their own production by
an agreed-upon cut of 9.7 million barrels a day by May 1st however.
US inventory data
The latest data
from the Energy Information Administration continues to show crude oil
inventories increasing with crude adding nine million barrels of supply.
Gasoline dropped 3.7 million barrels while distillates added 5.1 million
barrels.
Refineries operated at 69.6 percent of capacity on the week.
US domestic production dropped to 12.1 million barrels a day as drillers
continues to turn off the taps.
That’s it for this
week!
Regards,
George Murphy
Twitter
@GeorgeMurphyOil
