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 15th
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
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