Hi to all,
Here’s what I have
for this week’s price changes:
*Heating and stove
oil to increase by 2/10ths of a cent a litre.
*Diesel fuel shows
no change, and...
*Gasoline shows an
increase of 4/10ths of a cent a litre.
Market highlights
2020-The Year of
Energy Transition
This year has to be
called a year of energy transition. No one thing has stood out this week in the
markets as markets traded for just four days over the intervening period.
It
did give me some pause for thought however, on a year where the oil industry
was also hard hit by covid-19 as much as the economy was hit, so the following
is the first six months of oil events I tracked this year:
The first quarter of the year was a time of oil price recovery as demand
factors picked up prices immediately ahead of an OPEC and Russia price war at
the start of the pandemic. Both OPEC and Russia would come to a realization-probably
too late-that saw oil prices crash early in the pandemic that also saw the
advent of powerful alternative energy replacements for oil leaping to the
forefront.
Leading
the charge is hydrogen where countries like Germany and Russia are leading
change and building hydrogen powered projects and refineries/production
facilities well ahead of the curb.
March saw the arrival of a disease that completely shut down an oil-fired
economy in North America, Europe and Asia as economies were forced to grind to
a halt for months under an economic shutdown the likes this world has never
seen. A crunch in demand for all fuels forced the immediate shut-down of at
least fourteen refineries worldwide and a huge reduction in refining capacity
worldwide that some think came close to 40 percent at one point, and still
ranges down by at least 20 percent today.
Here at home, the shutdown of the economy forced the closure/shudder of the
North Atlantic refinery in Come By Chance March 30th as
inventories of heating and jet fuels remain unsold as the demand crunch
continues.
Jet travel has collapsed almost 90 percent, leaving worldwide stocks of jet
fuel unsold and left in holding tanks in refineries, causing further production
disruptions.
April month saw a disaster on the oil markets as oil prices for West Texas
Intermediate went negative for a day as stocks of oil at Cushing,
Oklahoma threatened to flood the pricing centre before inventories could be
sold.
May month saw the start of OPEC and non-OPEC cuts to production that came into
force on May 1st that saw the two groups cut production by an
unheard of 9.7 million barrels a day while the covid-19 pandemic rages. Oil rig
counts south of the border at a historic low of 237 rigs, well down from the
over 900 that were operating the year before over the same timeframe.
June saw Canadian figures on damage to oil production. Canada drops 1.1 million
barrels a day from a pre-covid level of 3.9 million barrels a day with the
demand crunch biting heavily at Alberta production and production disruptions
affected by drops in train shipments.
The
Newfoundland and Labrador government requests that the Public Utilities Board
give a one-time rebate back to electrical customers based on lower projected
costs for oil-generated electricity. The rebate will be in the form of a tax
credit on consumers’ bills for June/July month.
I’ll have the next six months events in the price change notice for next week.
Hydrogen: There I
said it
Hydrogen continues
to ride front and centre when it comes to a world transitioning from oil and to
alternative energy sources. The number one story to me this year that records
the sum-up of the transition has to be one of ongoing exploration of hydrogen as
a source for fuel cells for air travel and the first flight of an airplane
using hydrogen as a source of energy.
That was in September.
However, ZeroAvia also made a first in the annals of aviation with the first
electric-powered flight in June of this year: ZeroAvia
completes first UK flight of electric plane | The Engineer The Engineer
US EIA inventory
data
The Energy Information Administration is reporting a drop of 600,000 barrels of
crude inventories this last week, while gasoline inventories dropped 1.1
million barrels.
Distillates dropped 2.3 million barrels of inventory.
Refiner capacity was reported at 78 percent.
US domestic production was reported at 11 million barrels a day, remaining
steady over the past week.
That’s it for this
week!
Regards,
George Murphy
Twitter
@GeorgeMurphyOil
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