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