Price changes for Thursday, October 1st, 2020

 

Hi to all,

 

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

 

*Heating and stove oil to drop by 4/10ths of a cent a litre.

*Diesel fuel shows no changes, and...

*Gasoline shows an increase of 4/10ths of a cent a litre.

 

Market highlights

 

All Covid-all the time

Markets have been showing some signs of life as it seemed Covid-19 was under some semblance of control, but reality woke markets up again to day as second waves of Covid-19 soaked the markets with concerns over demand and economic recovery.

     With cases steadily rising again in Europe and the United States, concerns mounted again today that sent oil prices back to their mid-week starting point from last week. A retreat as well with refined prices, which had been showing signs of a possible sharp increase this week due to dipping gasoline inventories.

 

Alternatives making news

It may have been a small, twin-engine plane that took off into British skies last week, but what powered it is making the real headlines. And while some articles spouted the possibility of Airbus making Hydrogen powered flight as early as 2035 that could put more downwards pressure on oil and distillate prices into the foreseeable future.

     Meanwhile, a company called ZeroAvia based in California were successful in making their own flight with a six passenger Piper Malibu craft, making it the first ever flight using hydrogen powered flight. They express intent to take over smaller piston-driven 10 to 20 passenger markets first before moving to higher passenger number aircraft.

 

Companies weigh in on peak oil

British Petroleum ran three scenarios in a report released last week that suggests the world may already have hit ‘peak oil” and, because of Covid-19, we are now witness to a downturn in world demand that they predict will result in world oil use falling to 55 million barrels a day by 2050, falling rapidly due to climate change laws and measures.

     Meanwhile, ConocoPhillips says it expects oil demand to return and be even stronger with demand exceeding 100 million barrels after 2022, but describes 2021 as the “year of uncertainty”.

 

US inventory data

The latest data from the Energy Information Administration showed another draw of 1.6 million barrels, while gasoline supplied dipped 4 million barrels, leaving gasoline just one percent above the five year average for this time of year.

     Distillates increased by 3.4 million barrels with refiner capacity measured at 74.8 percent.

 

That’s it for this week!

 

Regards,

 

George Murphy

Twitter @GeorgeMurphyOil  

Price changes for Thursday, September 24th. 2020

 

Hi to all,

 

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

 

*Heating, stove oil and Diesel all to increase by 1.9 cents a litre.

*Gasoline shows an increase of 4.2 cents a litre.

 

Hurricane Sally backs down

While Hurricane Sally came ashore along the coast of Louisiana, the damage that it left may be felt in the pocketbook more so than anywhere along the Gulf coast.

     Disruptions again hit the Gulf with offshore pumping and processing facilities along the Louisiana coast, cutting off some crude oil and causing short-term spikes to oil prices, which started to retreat again Sunday as the lack of storm damage became apparent.

     Spot prices for gasoline increased from 39 cents a litre to 43.1 cents as oil prices for WTI went from $38 US to $41. Brent went from $40.70US to $43.10 before beginning the retreat Sunday, ending today at $41.70 US again as Covid concerns took over the markets again.

 

Impacts on oil may be insurmountable

While Covid-19 reigns and rails against economies, let alone people, the damage the worldwide shutdown may be causing to oil may never be fully overcome.

     Even OPEC nations are experiencing increased debt ratio numbers as they try and cope with oil prices well below what they had budgeted for.

     With nations in Europe placing fossil fueled vehicles on the endangered list, it begs to question how oil prices will survive the “green crush” that is about to hit.

     As of today, the last year for which a fossil fuel burning vehicle can be sold in Britain is being proposed to be moved ahead to 2030, the same year as France, Belgium and Germany, and to expedite the rollout of environmental programming.

     Norway has it tagged to the year 2025.

     With the shutdown by Covid-19 and the drop in demand, a worldwide issue remains with building inventories and storage areas becoming filled with unused oil and refined products. China has slowed imports as storage is reported close to full, and India’s strategic reserves are said to be filled to the brim.

     Also signalling change is directly from BP who, in their report say that India may see peak oil demand by the year 2025, a full 25 years earlier than expected.

     They go on to say that, while they will still need energy, that will come from natural gas and renewables, rather than oil itself.

     BP goes on to say in the report that the world “may have already passed peak oil demand as fuel consumption may never recover from the pandemic-inflicted decline”.

     Yes, troubles with oil are universal, and not just off our shores.

 

US inventory data weighs

The latest inventory report from the Energy Information Administration showed another drop in crude oil supplies, this time by 4.4 million barrels, but still almost 15 percent higher than the five year average.

     Gasoline inventories dropped by 400 thousand barrels, and distillates increased 3.5 million barrels on 75.8 percent refiner capacity.

      US domestic production was reported at 10.9 million barrels a day, just 100 thousand barrels off pre-hurricane levels.

 

That’s it for this week!

 

Regards,

 

George Murphy

Twitter @GeorgeMurphyOil  

Price changes for Thursday, September 17th, 2020

 

Hi to all,

 

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

 

*Heating/stove oil to drop by 1.6 cents a litre.

*Diesel to drop by 2 cents a litre, and...

*Gasoline to drop by 2.2 cents a litre.

 

Market highlights

 

IEA report released-and it’s not good

The International Energy Agency released it’s latest report on demand for oil this week as promised, and the news for oil is not good...again.

   The August report showed a drop in demand that showed 180,000 barrels a day less would be used. Demand was down by 8.1 million barrels a day.

    The September report shows an additional 300,000 barrel drop in demand growth that brings the total drop in demand to 8.4 million barrels. The agency goes on to say that they expect any recovery in oil prices to decelerate markedly during the second half of

     Overall world demand is predicted to be 91.7 million barrels a day this year.

 

Oil and gas companies set to lose

It’s a remarkable story I found through CNBC this week as estimated losses due to Covid-19 continue to confound and confuse the oil markets and the future of some oil companies and their projects.

     Before Covid-19, according to Rystad Energy, companies were set to generate a record $2.47 trillion in revenues, where with the advent of Covid-19 and the effects on supply and demand, revenues are now projected to drop by an amazing $1 trillion this year.

     And no wonder some companies are being forced to reign in spending on some projects, especially knowing that besides a projected drop in demand, there may be no recovery in oil until we get past Covid-19.

     Plain and simple, a world of instability in the industry until 2022 by the look of things.

     Story here...

https://www.cnbc.com/2020/04/30/coronavirus-creating-1-trillion-revenue-loss-for-oil-and-gas-companies.html#:~:text=Oil%20and%20gas%20exploration%20and,last%20year%2C%20the%20firm%20says.

 

Don’t look, but here comes Iran

Sanctions against Iran were lifted by the United Nations recently, and that also adds an issue to the growing world glut of oil.

     Iran produces almost 3.68 million barrels a day, and has set plans ahead for a rapid expansion of its industry, all in spite of any US attempts to shut down its oil exports and production.

     A lifting of sanctions means another load of Middle East oil that will only add to the world oversupply issue.

     It also means another source of supply and competition to other producing nations that will have the potential to choke off liquidity to companies.

 

US EIA inventory data

US crude oil inventories were up last week for the September 4^th reporting period.

     Gasoline supplies dropped by 3 million barrels and distillates decreased by 1.7 million barrels.

     Refiner capacity was recorded at 71.8 percent as some refineries still underwent the shutdown from Hurricane Laura.

 

That’s it for this week!

 

Regards,

 

George Murphy

Twitter @GeorgeMurphyOil  

Price changes for Thursday, September 10th, 2020

 

Hi to all,

 

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

 

*Heating and stove oil to drop by 2.8 cents a litre.

*Diesel to drop by 2.7 cents a litre, and...

*Gasoline to drop by 5.2 cents a litre.

 

Market highlights

 

International Energy Agency weighs in

The International Energy Agency weighed in on the world oil situation early last week and sent signals through the markets that may indicate that oil was well oversold, as most had thought.

     The report by the agency says that the recovery in demand for oil has not been as robust as first thought with world oil figures showing there has not been any significant drop in world supplies, and that those stocks may remain high for the foreseeable future amidst a weak world economic outlook.

     One of the important factors in the mix also happens to be jet fuel, which worldwide, remains weak amidst travel concerns and Covid-19.

      The next report on world oil demand should be available September 15^th which may send another signal to the markets.

 

Saudi’s begin discounting

Saudi Arabia has also started discounting some of its crude oil products, a sign that they may be recognizing that there is an oversupply problem as countries like China have slowed major purchases of crude.

     Recently, China was reported to be close to topping off their strategic reserves of crude oil as prices were low, and any slowdown may already signal topped off storage, and possibly a slowdown in the Chinese economy.

 

Goldman Sachs predicts $65 a barrel, but...

Goldman Sachs has come out with a bold prediction of crude oil averaging $65 US  a barrel by the end of the third quarter of 2021 with a drop back to average $58 US by the end of 2021.

     Meanwhile, the Russian energy minister Alexander Novak is less optimistic calling oil at $50 to $55 US for 2021 as demand will have it’s troubles coming back to normal anytime soon.

     If the IEA is right on the drawdown in world stocks, then don’t expect any recovery anytime soon as producers can’t produce crude product of there’s no where to store it. It may very well stay in the ground as storage dries up.

 

US inventories

The latest Energy Information Administration report is out and it shows another drop in crude inventories, leaving crude stocks 14 percent above the five year average.

     Crude stocks dropped 9.4 million barrels, while gasoline dropped 4.3 million barrels ahead of the Labour Day weekend. Distillates also dropped 1.7 million barrels as refinery capacity was reported to be down to 76.7 percent as refineries were shut in due to Hurricane Laura.

     US domestic output was reported at 9.7 million barrels a day, also down due to the effects of Laura, down 1.1 million barrels from the week previous.

 

That’s it for this week!

 

Regards,

 

George Murphy

Twitter @GeorgeMurphyOil  

Price changes for Thursday, September 3rd, 2020

 

Hi to all,

 

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

 

*Heating, stove oil and Gasoline all to drop by 9/10ths of a cent a litre, and...

*Diesel shows a drop of an even penny a litre.

 

Market highlights

 

Hurricane Laura damage

Damage to refinery infrastructure was said to be lighter than expected as Hurricane Laura caused short term outages to electrical infrastructure more so than refinery damage. The damage in the immediate area to electrical infrastructure is described as “catastrophic”.

 

Refineries were only temporarily offline due to the lack of electricity that was seen as being easily prepared as over 13,000 electrical workers were on the job the day after the storm hit.

 

A predicted storm surge of nine feet was much less than the twenty feet that was predicted to hit major refining areas along the coast between Texas and Louisiana. Only 225,000 barrels of refining infrastructure is left to come back online in the Port Charles area as of release time.

 

Offshore oil and gas production is back to 181 different platforms out of 310 that were shut down before Laura hit the area.

 

US EIA inventories

The latest report from the Energy Information Administration continues to show slight drawdowns in stocks, this week showing a drop of 4.7 million barrels, while gasoline supplies dropped 4.6 million barrels. US crude supplies are 15 percent higher than the running five year average, so there’s plenty on hand.

    

Distillates increased by 1.4 million barrels on 82 percent refinery capacity.

 

Interestingly, gasoline supplied to the markets totalled 9.1 million barrels against 9.9 million barrels a day for the same timeframe last year.

 

US domestic production was recorded at 10.8 million barrels, an increase of 100,000 barrels from the previous week.

 

Canadian dollar up again

The Canadian dollar continues to make some headway against the US greenback, gaining two cents against the greenback since the first week of August, saving consumers from rising spot prices that have increased with oil prices this week.

 

That’s it for this week!

 

Regards,

 

George Murphy

Twitter @GeorgeMurphyOil