Hi to all,
Here’s what I have
for this week’s price changes:
*Heating, stove oil
and Diesel to increase by 1.2 cents a litre.
*Gasoline shows an
increase of 1.3 cents a litre.
Market highlights
Oil hits $50 US
Brent oil prices
hit $50 US for the first time since March 4th as speculators bet on
economic recovery and vaccines to prevent Covid-19 hit the world.
While things still remain shut in and demand stymied almost everywhere except
in Asia, and the hopeful end to the Coronavirus now months away, speculators
bet on rising anticipated demand as more vaccines met approval, or are close to
hitting the markets.
But is oil oversold?
While shutdowns are still ongoing, demand remains weak for all fuels, with most
demand still down a rough 20 to 30% from pre-Covid levels. Spot prices for
heating and stove oils are two cents lower than pre-covid levels in early
March, while gasoline spots are roughly 6 to 7 cents lower as demand hasn’t
picked up there.
So, while demand is weak, and inventories keep building, at what point does the
market realize it has been oversold and thus, correct itself?
It could be soon, or even determined by how fast the world can get a vaccine
out to everyone.
Refineries close,
but production drops in those still open
While we have seen
several refineries close during Covid, others have remained open-at least for
now-with reduced capacity.
Latest numbers seem to indicate that fact as in the US, a drop of 1.7 million
barrels of refinery capacity has been noted.
All the same, while refineries closed, overall US refinery runs have dropped
almost 2.2 million barrels a day from the same timeframe last year.
And inventories are still building.
The data seems to indicate a lot of weakness in demand being reflected that has
a long time yet to recover.
OPEC oil demand to
fall again
OPEC is predicting
that world oil demand will drop by another 400,000 barrels a day in 2021 as
predictions initially had demand averaging 96.3 million barrels a day as the
world recovers from Covid-19.
OPEC
is now predicting world oil demand to average just over 95.8 million barrels a
day.
In
the meantime, OPEC produced over 700,000 barrels a day more than their self-imposed
quotas, mainly as a result of growing Libyan output, for which Libya wasn’t
subject to quota restrictions as the country recovers from unrest.
That’s it for this
week!
Regards,
George Murphy
Twitter
@GeorgeMurphyOil
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