Tuesday, September 08, 2020

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 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  

No comments: