Price changes for Thursday, July 30th, 2020

Hi to all,

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

*Heating and stove oils to increase by 4/10ths of a cent/Litre.

*Diesel shows an increase of 3/10ths of a cent a litre, and...

*Gasoline shows an increase of 1.1 cents a litre.

Market Highlights

Rise in Covid counters any price increases

The news this past few days has been centered around the rise in Covid-19 cases worldwide as Covid fatigue has sparked a new round of cases that has speculators worrying over the effect on demand for refined product.

     With new cases rising in Spain and Australia, besides what’s been happening in the US, concerns for any further increase in crude prices remain in doubt as demand is seen to be hit.

    Oil prices have been mostly steady with refined product prices remaining where they have been over the past three weeks now as Covid numbers have been rising steady in recent weeks.

US EIA inventory data

US crude oil inventories increased up to the week of July 17^th, adding 4.9 million barrels to present stocks.

     Gasoline inventories dropped by 1.8 million barrels, while distillates increased by 1.1 million barrels.

     Refiner capacity was recorded at 77.9 percent.

     Meanwhile, also buried deep in the data, some reason why I think prices will remain fairly steady at $40 to $43 US for Brent for the time being.

     The same inventory report for last week also showed an important increase in US domestic production, which increased 100,000 barrels, rising from 11 million barrels a day to 11.1 million barrels.

     If this is any important notification, then it shows that according to the timeline, US shale drillers can survive at $38 US, and some spigots are quick to turn back on to take advantage of rising oil prices.

     Also, after a long series of drops in overall US rig counts, the report for last week from Baker Hughes, showed an increase of but ONE rig getting back to work in the oil patch. If that trend upwards shows this next week, then expect there to be some spark to keep it playing in the oil markets to mitigate any further increase in Crude oil.

Canadian dollar gains ground

The Canadian dollar has increased in recent days, rising from $1.36 Canadian against the greenback on July 16^th, to today’s $1.337 Tuesday noon.

     The increase in the dollar has mitigated further any increases for the week as a higher dollar tends to benefit Canadian consumers against US prices.

That’s it for this week!

Regards,

George Murphy

Twitter @GeorgeMurphyOil  

Price changes for Thursday, July 23rd, 2020

Hi to all,

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

*Heating and stove oil to drop by 1/10^th of a cent a litre.

*Diesel shows no change in price, and...

*Gasoline shows a drop of 1.5 cents a litre.

Market highlights

Corona vaccine holds promise for higher oil

With oil prices hanging around $40 US a barrel, and slightly higher for Brent, word of a possible break in the search for a vaccine for the Corona virus sent oil prices higher today as optimism around a possible rebound in oil demand came with the prospects of a cure.

     Word comes from Oxford University in England over the possible vaccine.

     Anticipated demand would rise as the treatment for the virus would re-open economies worldwide, and demand for oil  and refined products would increase along with it.

China purchases down sharply

Last month, I told you all about a huge increase in purchases of oil by Chinese oil companies that helped to increase prices to present levels.

     Now comes the downside...

     Latest figures seem to indicate that China has cut back purchases of oil off the open markets as late as May with that month’s import figures showing a 22 percent drop in imports into the Asian country.

     One of two things here that may be affecting purchases: either storage is just about filled up, or secondly, even though they may have been refining it, there seems to be no markets for the refined product as Covid-19 still reigns worldwide-for now.

Eyes to the markets

With oil rising, and the prospects for a cure driving the latest round of price increases, shale producers may be starting to think about turning the taps back on to recoup losses from the extended shutdown due to Covid-19 and the economic closure brought along by it.

     The break-even point appears to be close to $40 WTI for shalers as the numbers of rigs being taken offline has decreased sharply. Only two rigs came offline last week.

      It may be time to watch US domestic figures as well that were just 1.3 million barrels a day less than what was produced for the same time last year, being 12.3 million barrels a day last July.

US EIA inventories

The latest EIA inventory report shows a 7.5 million barrel draw in crude oil inventories, while gasoline supplies also dropped 3.1 million barrels.

     Distillates were also down by 453 thousand barrels.

     Refiner capacity was recorded at 78.1 percent.

     US domestic output was recorded at 11 million barrels a day.

That’s it for this week!

Regards,

George Murphy

Twitter @GeorgeMurphyOil  

Price changes for Thursday, July 16th, 2020

Hi to all,

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

*Heating, stove oil and Diesel all show no changes to prices this week.

*Gasoline shows an increase of 8/10ths of a cent a litre.

Market highlights

OPEC meets this week

OPEC members will meet again tomorrow to discuss a partial lifting of cuts that are scheduled to be lifted as some countries economies open up again.

     OPEC cuts were supposed to ease somewhat at the start of August, going from 9.7 million barrels a day to 7.7 million barrels a day. The move is anticipated as OPEC does not want to cause any alarming fall in the price of crude, nor does it want to cause any harm to any economic recovery that may be underway.

     At the same time, OPEC members need the revenue, so there is still support for prices to be sustained over $40 US a barrel to help top up lost revenues.

     Meanwhile, new data from OPEC is showing there was stronger than usual compliance with production cuts in June month with numbers showing OPEC members actually cut 10.5 million barrels a day, well over the 9.7 million members had agreed to.

Chinese storage drying up quickly

Those readers of the update will recall just two weeks ago that I reported that data out of China indicated they were buying low and filling strategic reserves. Further to this, tanker traffic has become backlogged with unloading not going off as planned, another strong indicator of just how fast Chinese storage capacity has filled up.

      Information at that time showed China buying more than two million barrels a day more than what consumption figures were showing, ironically a figure being discussed by OPEC as the total they will throw into the markets.

      If Chinese storage does fill up, and offloading ceases in Asia, the  we may have another problem starting where, in addition to a partial lifting of cuts, plus waning China purchases, could put 4 million barrels of crude a day back onto the oil markets again.

US inventory data

The latest US EIA inventory data is out, and crude oil added 5.7 million barrels of crude to US supplies.

     Gasoline dropped 4.8 million barrels, while distillates added 3.1 million barrels on 77.5 percent refiner capacity.

     US domestic production was reported at 11 million barrels a day for the third week in a row, indicating a steady output with prices averaging $40 US a barrel.

That’s it for this week!

Regards,

George Murphy

Twitter @GeorgeMurphyOil  

Price changes for Thursday, July 9th, 2020

Hi to all,

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

*Heating and stove oils to increase by 2.7 cents a litre.

*Diesel shows an increase of 2.9 cents a litre, and...

*Gasoline shows an increase of 3 cents a litre.

Market highlights

OPEC production drops again

OPEC production figures are out and, once again there are signs of strong compliance amongst OPEC members.

     Total OPEC production was measured at 22.6 million barrels a day in June, down a good 9.5 million barrels per day after OPEC and OPEC+ members agreed to cuts just two months ago.

     Saudi Arabian production was recorded at 7.53 million barrels a day for the same month.

      Venezuela production, by comparison, was just 360,000 barrels a day.

     Overall, OPEC production is down to levels not seen since the 1991 Gulf War.

Gasoline demand on shaky ground?

While gasoline may be pointing up this week, some signs are starting to appear that may start to point gasoline prices down again.

     With rising cases of Covid-19 starting re-emerge in the US with the opening of the economy, along with holiday and summer get-togethers, gasoline demand is seen to be taking a hit in the coming days and weeks as hospitalisations and stay at home orders start taking effect again as some areas shut down again.

     Areas like Florida, Arizona and California have rising cases in recent days that are leading to second shutdowns of local economies.

EIA inventories

The latest inventory data is out, and crude oil continues to show further drops in stocks with crude dropping 7.2 million barrels.

     Gasoline inventories gained 1.2 million barrels, while distillates dropped 600,000 barrels.

     US domestic production was reported at 11 million barrels a day, no change from the week previous as it seems increased oil prices has given some support to shale producers.

     Refiner capacity was reported at 75.5 percent.

     Meanwhile, the Baker Hughes rig count shows 263 rigs operating in oil and gas fields south of the border, down an even 700 rigs for the same time period last year.

That’s it for this week!

Regards,

George Murphy

Twitter @GeorgeMurphyOil