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.
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!