Price changes for Thursday, July 30th, 2020

Hi to all,

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

*Heating and stove oils to increase by 4/10ths of a cent/Litre.

*Diesel shows an increase of 3/10ths of a cent a litre, and...

*Gasoline shows an increase of 1.1 cents a litre.

Market Highlights

Rise in Covid counters any price increases

The news this past few days has been centered around the rise in Covid-19 cases worldwide as Covid fatigue has sparked a new round of cases that has speculators worrying over the effect on demand for refined product.

     With new cases rising in Spain and Australia, besides what’s been happening in the US, concerns for any further increase in crude prices remain in doubt as demand is seen to be hit.

    Oil prices have been mostly steady with refined product prices remaining where they have been over the past three weeks now as Covid numbers have been rising steady in recent weeks.

US EIA inventory data

US crude oil inventories increased up to the week of July 17^th, adding 4.9 million barrels to present stocks.

     Gasoline inventories dropped by 1.8 million barrels, while distillates increased by 1.1 million barrels.

     Refiner capacity was recorded at 77.9 percent.

     Meanwhile, also buried deep in the data, some reason why I think prices will remain fairly steady at $40 to $43 US for Brent for the time being.

     The same inventory report for last week also showed an important increase in US domestic production, which increased 100,000 barrels, rising from 11 million barrels a day to 11.1 million barrels.

     If this is any important notification, then it shows that according to the timeline, US shale drillers can survive at $38 US, and some spigots are quick to turn back on to take advantage of rising oil prices.

     Also, after a long series of drops in overall US rig counts, the report for last week from Baker Hughes, showed an increase of but ONE rig getting back to work in the oil patch. If that trend upwards shows this next week, then expect there to be some spark to keep it playing in the oil markets to mitigate any further increase in Crude oil.

Canadian dollar gains ground

The Canadian dollar has increased in recent days, rising from $1.36 Canadian against the greenback on July 16^th, to today’s $1.337 Tuesday noon.

     The increase in the dollar has mitigated further any increases for the week as a higher dollar tends to benefit Canadian consumers against US prices.

That’s it for this week!

Regards,

George Murphy

Twitter @GeorgeMurphyOil  

Price changes for Thursday, July 23rd, 2020

Hi to all,

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

*Heating and stove oil to drop by 1/10^th of a cent a litre.

*Diesel shows no change in price, and...

*Gasoline shows a drop of 1.5 cents a litre.

Market highlights

Corona vaccine holds promise for higher oil

With oil prices hanging around $40 US a barrel, and slightly higher for Brent, word of a possible break in the search for a vaccine for the Corona virus sent oil prices higher today as optimism around a possible rebound in oil demand came with the prospects of a cure.

     Word comes from Oxford University in England over the possible vaccine.

     Anticipated demand would rise as the treatment for the virus would re-open economies worldwide, and demand for oil  and refined products would increase along with it.

China purchases down sharply

Last month, I told you all about a huge increase in purchases of oil by Chinese oil companies that helped to increase prices to present levels.

     Now comes the downside...

     Latest figures seem to indicate that China has cut back purchases of oil off the open markets as late as May with that month’s import figures showing a 22 percent drop in imports into the Asian country.

     One of two things here that may be affecting purchases: either storage is just about filled up, or secondly, even though they may have been refining it, there seems to be no markets for the refined product as Covid-19 still reigns worldwide-for now.

Eyes to the markets

With oil rising, and the prospects for a cure driving the latest round of price increases, shale producers may be starting to think about turning the taps back on to recoup losses from the extended shutdown due to Covid-19 and the economic closure brought along by it.

     The break-even point appears to be close to $40 WTI for shalers as the numbers of rigs being taken offline has decreased sharply. Only two rigs came offline last week.

      It may be time to watch US domestic figures as well that were just 1.3 million barrels a day less than what was produced for the same time last year, being 12.3 million barrels a day last July.

US EIA inventories

The latest EIA inventory report shows a 7.5 million barrel draw in crude oil inventories, while gasoline supplies also dropped 3.1 million barrels.

     Distillates were also down by 453 thousand barrels.

     Refiner capacity was recorded at 78.1 percent.

     US domestic output was recorded at 11 million barrels a day.

That’s it for this week!

Regards,

George Murphy

Twitter @GeorgeMurphyOil  

Price changes for Thursday, July 16th, 2020

Hi to all,

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

*Heating, stove oil and Diesel all show no changes to prices this week.

*Gasoline shows an increase of 8/10ths of a cent a litre.

Market highlights

OPEC meets this week

OPEC members will meet again tomorrow to discuss a partial lifting of cuts that are scheduled to be lifted as some countries economies open up again.

     OPEC cuts were supposed to ease somewhat at the start of August, going from 9.7 million barrels a day to 7.7 million barrels a day. The move is anticipated as OPEC does not want to cause any alarming fall in the price of crude, nor does it want to cause any harm to any economic recovery that may be underway.

     At the same time, OPEC members need the revenue, so there is still support for prices to be sustained over $40 US a barrel to help top up lost revenues.

     Meanwhile, new data from OPEC is showing there was stronger than usual compliance with production cuts in June month with numbers showing OPEC members actually cut 10.5 million barrels a day, well over the 9.7 million members had agreed to.

Chinese storage drying up quickly

Those readers of the update will recall just two weeks ago that I reported that data out of China indicated they were buying low and filling strategic reserves. Further to this, tanker traffic has become backlogged with unloading not going off as planned, another strong indicator of just how fast Chinese storage capacity has filled up.

      Information at that time showed China buying more than two million barrels a day more than what consumption figures were showing, ironically a figure being discussed by OPEC as the total they will throw into the markets.

      If Chinese storage does fill up, and offloading ceases in Asia, the  we may have another problem starting where, in addition to a partial lifting of cuts, plus waning China purchases, could put 4 million barrels of crude a day back onto the oil markets again.

US inventory data

The latest US EIA inventory data is out, and crude oil added 5.7 million barrels of crude to US supplies.

     Gasoline dropped 4.8 million barrels, while distillates added 3.1 million barrels on 77.5 percent refiner capacity.

     US domestic production was reported at 11 million barrels a day for the third week in a row, indicating a steady output with prices averaging $40 US a barrel.

That’s it for this week!

Regards,

George Murphy

Twitter @GeorgeMurphyOil  

Price changes for Thursday, July 9th, 2020

Hi to all,

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

*Heating and stove oils to increase by 2.7 cents a litre.

*Diesel shows an increase of 2.9 cents a litre, and...

*Gasoline shows an increase of 3 cents a litre.

Market highlights

OPEC production drops again

OPEC production figures are out and, once again there are signs of strong compliance amongst OPEC members.

     Total OPEC production was measured at 22.6 million barrels a day in June, down a good 9.5 million barrels per day after OPEC and OPEC+ members agreed to cuts just two months ago.

     Saudi Arabian production was recorded at 7.53 million barrels a day for the same month.

      Venezuela production, by comparison, was just 360,000 barrels a day.

     Overall, OPEC production is down to levels not seen since the 1991 Gulf War.

Gasoline demand on shaky ground?

While gasoline may be pointing up this week, some signs are starting to appear that may start to point gasoline prices down again.

     With rising cases of Covid-19 starting re-emerge in the US with the opening of the economy, along with holiday and summer get-togethers, gasoline demand is seen to be taking a hit in the coming days and weeks as hospitalisations and stay at home orders start taking effect again as some areas shut down again.

     Areas like Florida, Arizona and California have rising cases in recent days that are leading to second shutdowns of local economies.

EIA inventories

The latest inventory data is out, and crude oil continues to show further drops in stocks with crude dropping 7.2 million barrels.

     Gasoline inventories gained 1.2 million barrels, while distillates dropped 600,000 barrels.

     US domestic production was reported at 11 million barrels a day, no change from the week previous as it seems increased oil prices has given some support to shale producers.

     Refiner capacity was reported at 75.5 percent.

     Meanwhile, the Baker Hughes rig count shows 263 rigs operating in oil and gas fields south of the border, down an even 700 rigs for the same time period last year.

That’s it for this week!

Regards,

George Murphy

Twitter @GeorgeMurphyOil  

Price changes for Thursday, July 2, 2020

Hi to all,

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

*Heating and stove oil to drop 1.8 cents a litre.

*Diesel showing a drop of 2 cents a litre, and...

*Gasoline to drop by 3.5 cents a litre.

Market highlights

Covid-19 announces its presence

For those south of the border who thought it was safe to open the economy again, we have news for you.

     Covid-19 wasn’t going away.

     Numbers of cases of the disease started to increase again in areas such as Arizona, California and Florida at a time when they thought it was safe to open a short time ago.

     Early openings have helped to spread the disease, and doubts about increasing demand of fuels riding on those hopes soon were dashed with both oil and refined commodities beating a retreat that might not stop if Anthony Fauci is right.

    Fauci, the US’s top doc and Covid-19 handler, projects as many as 100,000 extra cases of Covid-19 to wave over the US if measures to stop the disease soon aren’t taken in at least 32 US states.

    The possibility of a demand crash, at least in the US, will temper any gains made with oil. European Union countries have gained some semblance of control over the disease, so that might temper any drop in oil.

US inventories

The Energy Information Administration’s latest read on inventories is out, showing a gain in crude inventories of 1.4 million barrels.

      Gasoline stocks were down by 1.7 million and distillates up by 249 thousand barrels.

      Refiner capacity was reported up to 74.6 percent of capacity, a slight increase from the week previous.

      US domestic production was reported at 11 million barrels a day, an increase of 500 thousand barrels, and 1.1 million barrels lower than for the same timeframe last year.

Start watching your electricity bill

It will hit sometime this month...

     Last year, when I questioned Nalcor’s oil price estimates for electrical generation of $106 a barrel Canadian, I never did get an answer and suggested that it would be way off and that Nalcor should revisit the increase to electrical consumers based on the well-off estimates.

     I was proven right.

     The present government saw fit to have Nalcor revisit those numbers, lowering oil prices for electrical generation down to average $51 a barrel instead. The balance will be returned to consumers in the form of a one-time rebate in July/August.

    The amount everyone receives back as a credit will be based on overall electrical consumption.

    Again, being July, I am again looking forward to find out what Nalcor’s estimates for the price of oil for electrical generation will be in their “application” to the Public Utilities Board, but I will again question the estimates they come up with.

    Present day prices are hanging around $55 a barrel Canadian.

That’s it for this week!

Regards,

George Murphy

Twitter @GeorgeMurphyOil  

Price changes for Thursday, June 25th, 2020

Hi to all,



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



*Heating and stove oil to increase by 3 cents a litre.

*Diesel fuel shows a 3.3 cent a litre increase, and...

*Gasoline shows an increase of 4.9 cents a litre.



Market highlights



OPEC+ cuts start to bite

OPEC is finally getting serious about production cuts with member compliance reaching 88 percent during the month of May. That’s a stark change in the data that showed most member nations were doing much less on compliance.

      The latest numbers will be used to inform OPEC’s Joint Ministerial Monitoring Committee which now oversees OPEC members and their compliance at their next meeting July 15^th to gauge how much more to cut from production, if anything.



Canada getting hit hard

Over 1.1 million barrels of crude output has been shut in since the collapse in crude prices according to Oilprice.com. The story says Canada’s output of 3.5 million barrels a day in 2019 has taken a hit mainly from train exports in Alberta where crude oil shipments have dropped from 450 thousand barrels a day to just a shade over 150 thousand per day.

    The hard shutdown is also responsible for capacity issues in the pipeline export system with there being “plenty of room” for the export of crude oil to southern or western markets.



US inventory data

US crude oil inventories were recorded up marginally by 1.2 million barrels over the past week, while gasoline inventories were down on increased demand by 1.7 million barrels.

     Distillates were also down, but by 1.4 million barrels.

     Refiner capacity was measured at 73.8 percent.

     US domestic out put took another downwards hit, losing another 600,000 barrels a day of production to sit at 10.5 million barrels a day from the January high of 13.5 million barrels.



That’s it for this week!



Regards,



George Murphy

Twitter @GeorgeMurphyOil  

Price changes for Thursday, June 18th, 2020

Hi to all,



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



*Heating and stove oil to increase by 6/10ths of a cent/litre

*Diesel to increase by 7/10ths of a cent/Litre, and...

*Gasoline to drop by 1.2 cents a litre.



Market highlights



Oil rises

Oil prices faltered, sputtered and then recovered losses over this past week as a second feared wave of Covid-19 was seen to start as cases in Florida and Arizona appeared to rapidly increase two weeks after the start of the US Memorial Day weekend.

     Oil then began a rise later in this session as China was seen to be building strategic reserves over the last five months as they were successful in acquiring cheap oil to the tune of 440 million barrels, helping to support prices.

     China is not only hoping to put some oil away in reserve, but they are hoping with the rise in prices to release some from the reserve and take advantage of selling at a higher price.

      With cautious optimism however, as previous numbers were believed to be a signal of increasing industrial recovery.



Strategic oil reserve? In Canada?

     Years ago, there was heavy talk of the United States expanding its strategic reserve of oil, that is oil in storage, to help protect the supply of oil in the event of any kind of national emergency.

     The plan was to use Bell Island’s old mines for such a purpose quickly fell through as the United States wouldn’t have any part of its reserve outside the country.

     But why doesn’t Canada have one-but for a different purpose?

     While not a new idea, the problems of having a world storage issue along with an over-production problem, has led to the collapse in the price of oil. However, if Canada set up a reserve, it could buy oil at the low price, then release it again as oil prices recovered, thus helping oil companies weather any downturn in price, or at least, help avoid one.

      While the reserve, or the storage, would help offset falling prices, it has a strong ability to support oil, and thus , preserve the state of any royalties the provinces would see from their resources. As far as I know, besides the “on land” tank farm, we don’t have that capability like the US or china, the US with close to 800 million in their reserve and China with a capacity of 684 million barrels.



US rig counts stabilizing?

While US domestic production has been dropping since the start of the pandemic, from 13.4 million barrels to 11.2 million, rig counts have also dropped from 984 rigs to Friday’s 279 rigs, a drop of just 6 rigs.

     The week previous saw a drop of 17 rigs down to 284.

     Worth watching, and with oil prices showing some small signs of recovery, is the US shale industry getting set for a possible turnaround as prices rise?



That’s it for this week!



Regards,



George Murphy

Twitter @GeorgeMurphyOil  

Price changes for Thursday, June 11th, 2020

Hi to all,



First off, I have no media availability tomorrow morning. Sorry!



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



*Heating and stove oils show an increase of 3.6 cents a litre.

*Diesel fuel shows an increase of 4.6 cents a litre, and...

*Gasoline shows an increase of 4.7 cents a litre.



Market highlights



OPEC+ extends cut agreement

OPEC and non-OPEC producers like Russia reached an agreement to extend cuts past the June deadline, adding another month to the cuts agreement reached a short two months ago.

      But there remains a problem of oversupply remaining in the markets that some are speculating is still a billion barrels over world needs. OPEC and non-OPEC cuts at close to 10 million barrels a day can only account for 300 million in June month, and oil prices rising slightly have drillers in US shale regions thinking it may be time to return to the oil patch.

      US drillers may not have been taken out of the markets as much as OPEC had thought

      While oil prices increased after the agreement was reached, they didn’t hit levels that some thought would signal a significant impact on oil inventories.

       And while a US jobs report showed some optimism of increased economic activity, there’s still the spectre of Covid-19 hanging over the markets.



First real tropical storm in the Gulf takes some production offline

Tropical storm Cristobal hit the coast of Louisiana on Sunday bringing heavy rain and some flooding.

     The storm also took about 660,000 barrels a day of production offline, bringing in a temporary rise in oil prices due to the short-term disruption.



US EIA inventories

The latest report from the Energy Information Administration shows that crude supplies dropped by 2.1 million barrels as US domestic production also dropped to 11.2 million barrels a day.

     Refiner capacity was recorded at 71.8 percent.

     Gasoline inventories increased by 2.8 million barrels and distillates were up sharply by 9.9 million barrels as some distillate users like airlines remain on the ground.

     Meanwhile the Baker Hughes rig count was down another 17 rigs to 284 from 984 rigs at the same timeframe for last year.



That’s it for this week!



Regards,



George Murphy

Twitter @GeorgeMurphyOil  

Price changes for Thursday, June 4th, 2020

Hi to all,



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



*Heating and stove oil to drop by 2/10ths of a cent per litre.

*Diesel fuel to drop by 3/10ths of a cent per litre, and...

*Gasoline to drop by 4/10ths of a cent per litre.



Market highlights



OPEC meets again Thursday

OPEC will have a special meeting to further discuss a longer timeframe for production cuts Implimented just about a month ago.

     Oil prices had been increasing as a result of the cuts and a return of some demand as economies get back to work.

     However, the latest survey seems to indicate that OPEC has failed to meet it’s own production cuts only meeting about 70 percent of the agreed-upon 9.7 million barrel a day total production cut.

     According to Oilprice.com, Nigeria and Iraq are both seen as being two OPEC members who failed to meet the goal with Iraq meeting just under 40 percent of the ask of that country.

     Russia, in the meantime, is looking at an end to production cuts at the end of June, in stark disagreement with Saudi Arabia who are looking to extend the production cut agreement.



US EIA inventories

The latest inventory report from the Energy Information Administration is out, a day later because of the US Memorial Day holiday.

     Crude supplies increased by 7.9 million barrels, while gasoline showed a modest drop of 700,000 barrels.

     Distillate inventories were up by 5.5 million barrels.

     Refiner capacity was up this week to 71.3 percent, while US domestic production was recorded at 11.4 million barrels a day, down another 100,000 barrels.

     Refined gasoline supplied to the US markets was recorded at 7.25 million barrels against 9.39 million barrels a day for the same time period last year, down close to 2.1 million barrels.



   **Oddly, while oil stocks have been dropping in Cushing, Oklahoma, giving some support for WTI prices, has anyone noticed that stocks in PADD’s 3, 4 and 5 have been increasing in the last few weeks? It’s my contention that they have been diverting inventory rather than seeing a more pronounced drop in production.



Canadian dollar rises

Anytime we see a rise in the Canadian dollar against the US greenback, some effect is had against fuel spot prices. This week is no different as the sharp rise in the dollar has resulted in consumers seeing a drop in prices while actual spot prices for refined product have also risen right along with them.

     Since May 22^nd, the Canadian dollar has gained a full nickel saving consumers a rough 4 to five cent a litre increase across the board for refined products.



Rig counts down further

US drilling rigs in the field were down another 17 rigs according to last week’s Baker Hughes rig count, and down 683 rigs from the same timeframe last year.

     While rigs exploring and drilling may be down, that doesn’t mean that production of oil has dropped at the same rate as indicated by the numbers of rigs offline.

      Key US domestic production figures need to be watched closely as does the rig count as some producers may return to the field as oil prices rise again.



That’s it for this week!



Regards,



George Murphy

Twitter @GeorgeMurphyOil  

Price changes for Thursday, May 28th, 2020

Hi to all,



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



*Heating and stove oil to increase by 2.1 cents a litre.

*Diesel fuel to increase by 1.9 cents a litre, and...

*Gasoline to increase by 2.8 cents a litre.



Market highlights



Oil rises on economy

Oil prices continued to increase this week on an optimistic outlook that the economy in the US will bounce back.

     Demand for gasoline also increased along with other refined commodities, as the traditional start to the summer driving season is now underway, increasing spot prices another 2.8 cents over the last week.

     It’s usually just after this session every year that we see a slow retreat in refined prices, at least until the first major storm hits from hurricane season, usually at the end of July.

     Of course, complicating all this remains the prospect of Covid-19 that still remains a factor in demand.



US rig counts drop again

How telling is the shutdown of oil production?

     If the US rig count is any indication, according to Baker Hughes, another 21 rigs were offline over the last week, bringing the overall rig count down to 237 operating rigs south of the border. To put that number in context, this time last year saw 983 rigs in the field.



US inventories down again

US crude oil inventories were recorded down again this week as 5 million barrels was drawn from overall oil stocks.

     Gasoline inventories added 2.8 million barrels, while distillate added 3.8 million barrels.

      US refiner capacity was recorded at 69.4 percent.

      US domestic output was recorded at 11.5 million barrels a day, 1.8 million barrels lower than peak production in February.



That’s it for this week!



Regards,



George Murphy

Twitter @GeorgeMurphyOil  

Price changes for Thursday, May 19, 2020

Hi to all,



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



*Heating and stove oil to increase by 3.2 cents a litre.

* Diesel fuel to increase by 2.9 cents a litre, and...

*Gasoline to increase by 2.4 cents a litre.



Market highlights



Chinese demand almost back?

Word from China tonight where demand for oil has just about returned to pre-pandemic levels.

     China imported close to 9.8 million barrels a day last month just as the pandemic alerts were being lifted in chief manufacturing areas like Wuhan.

     In the meantime, China had put 13.1 million barrels a day through refineries to meet demand in April, just over what they did for the same time-period last year.

     China consumed 13.7 million barrels a day in December, 2019.



US EIA inventory data

The latest crude oil inventory data is out, and the EIA is reporting a very slight draw on crude oil inventories, down by 700,000 barrels the last week.

     Gasoline inventories dropped 3.5 million barrels, while distillates increased 3.5 million.

     Refiner capacity was reported at 67.9 percent.

     US domestic production was down to 11.6 million, down another 300,000 as lower oil shut down rigs and spigots were turned off at oil fields.



How long this recovery?

Interesting question, and I’d be a millionaire if I had that one figured out, but here’s where I would start.

     With oil prices rising, the question has to be asked is how fast can the US domestic number increase with oil prices on the rise.

      No secret that the US has dozens of small producers who ventured and probably weathered the drop in oil-at least to this point. With oil rising, there’s a strong likelihood that some of these small producers will quickly re-enter the production fields again in an attempt to recoup some losses, and perhaps put more crude back into the system.

      It will be worth watching the rig count this week and next for the signs that producers are venturing back into the oil patch.

      That brings with it another complication: While OPEC and non-OPEC nations may have agreed to production cuts, then how likely is it, when producers go back, that OPEC would likely stick to their end of the cuts?

     It’s my guess we won’t have long to wait.



That’s it for this week.



Regards,



George Murphy

Twitter @GeorgeMurphyOil  

Price changes for Thursday. May 14th, 2020

Hi to all,



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



*Heating and stove oils to increase by 2.1 cents a litre.

*Diesel fuel to increase by 3 cents a litre, and...

*Gasoline to increase by 5.4 cents a litre.



Market highlights



Saudis to cut production further

In the face of rising austerity measures in the Middle East country, and the need for more revenue to meet its budget requirements, Saudi Arabia is promising to cut back production even further by another one million barrels a day by June.

      That would bring Saudi production down to 7.5 million barrels a day, a level not seen by them since 2002.

      The leading OPEC producer has already agreed to cuts along with it’s partners by 9.7 million barrels a day.



Rig counts take a beating

Baker Hughes rotary rig count is well down again this week as the shutdown of oil production and exploration South of the Border continues.

     They report that only 270 rigs remain at work in the US, down sharply from 624 rigs that were operating as late as mid-March 2020.

     The speed of the shutdown is a little indicative of the panic caused to small majors who now face an uncertain future with oil prices remaining below profitable levels.

     However, there were some signs that a few small operators may be getting ready to return to production as prices have seemed to stabilise at a break-even point for some.



Chinese demand increasing?

Chinese imports of oil have increased the past couple of weeks by 9.8 million barrels a day, that may be a signal to either rising demand in China, or bargain basement buying of cheap product.

     With Covid-19 cases reported to be lower in China, except in today’s news, it may be a case of an anticipated increase in Chinese demand as people go back to work with the economy there re-opening. It remains to be seen for how long however, as the news recently reported another outbreak of the disease, and a mass testing of over 11 million people in Wuhan is underway with another breakout of the disease.

     Looks like the world may experience the same thing elsewhere if China is a model case, and oil demand will fluctuate right along with it. 

    In the meantime, any return to normalcy isn't going to happen for some time if Covid-19 has anything to do with it. The run-up is overblown with the surge in cases that are happening, not just in China with today's announcement, but in the future because of a "too early" return of workers back to an unprepared economy.
   If the economy doesn't come back, neither will oil.



That’s it for this week!



Regards,



George Murphy

Twitter @GeorgeMurphyOil  

Price changes for Thursday, May 7th, 2020

Hi to all,



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



*Heating and stove oil to increase by 4.7 cents a litre.

*Diesel to increase by 5.1 cents a litre, and...

*Gasoline to increase by 5.5 cents a litre.



Market highlights



Demand...

Markets rebounded this week as speculators continue to hope that economies will start to open again and consumer demand picks up right along with it, reversing the losses of the week before when oil went negative for the first time in history.

      With European countries opening up shop, and the US joining them-at least in some states-demand is expected to rise, but for how long?

      Any breaking cases as a result of the early opening of the economy may very well set it back to a new starting point, all with oil prices paying the price...again.



World oil production shut down?

Worldwide, optimism over the economy returning has added to oil’s fortunes, but it’s some data on oil that is shut in that is awakening speculators.

      Refinery runs south of the border are down a good 20 percent plus, drilling rigs are down sharply and production is also off worldwide with the hope that OPEC will also stick to their end of cuts.

      Estimates now show close to 20 million barrels a day in oil production has been cut while Covid-19 rages worldwide.

      Data still needs to be seen to confirm that OPEC is cutting their own production by an agreed-upon cut of 9.7 million barrels a day by May 1^st however.



US inventory data

The latest data from the Energy Information Administration continues to show crude oil inventories increasing with crude adding nine million barrels of supply.

     Gasoline dropped 3.7 million barrels while distillates added 5.1 million barrels.

     Refineries operated at 69.6 percent of capacity on the week.

     US domestic production dropped to 12.1 million barrels a day as drillers continues to turn off the taps.



That’s it for this week!



Regards,



George Murphy

Twitter @GeorgeMurphyOil  

Price changes for Thursday, April 30th, 2020

Hi to all,



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



*Heating and stove oil to drop by 9.6 cents a litre.

*Diesel shows a drop of 10.4 cents a litre, and...

*Gasoline shows a drop of 1.4 cents a litre.



Market highlights



Oil storage running out... for Brent?

It’s called “borrowed time”...

And oil is running out of it fast.

     With West Texas Intermediate seeing into the negative last week due to ongoing storage concerns, there’ still huge concerns for storage worldwide as Brent is now running into its issues, according to Goldman Sachs.

     Predictions are being made by them that say world floating storage may run out as soon as the middle of May causing a shock to oil prices like has never been seen. They say that OPEC cuts simply aren’t going to be enough as all OPEC countries struggle to bring production down by 9.7 million barrels in time for May 1st, the time an agreement reached with non-OPEC members agreed upon just less than two weeks ago.

     Goldman Sachs predicts the inventory issue is due simply to oversupply and a failure to cut production more than what was done. And to aggravate things, they simply kept pumping and putting it all into floating storage, where tankers are used for oil storage because land-based tanks are full.

     Initial cuts were rumoured to be 15 million barrels with OPEC surrendering to a lower number. Goldman Sachs says 18 million in cuts should have been made.

     My data on the drop in demand versus product supplied showed 20 million in cuts-minimum- was needed just to support prices.



Date to watch: May 19^th

If oil prices fail to get support in the coming weeks due to production cuts, look for this date to be the next signal towards bottoming oil prices.

     May 19^th is the day of the expiry of the June futures contract, and also the time of the month that may signal filling storage for not just Brent, but West Texas Intermediate prices.

     Yes, all over again. Days of negative pricing could be just a little bit closer than what we think they are.



US inventories weigh

The latest EIA inventory report is out, and it’s not good news for the support of oil prices.

     US crude inventories added 15 million barrels, while gasoline inventories added a million barrels.

     Distillates added 7.9 million barrels.

     Refiner capacity was reported at 67.6 percent, a sign of slowing refineries as they throttle back with lower demand.

     The American Petroleum Institute, an industry-led organisation,  has already reported an inventory build of 9.9 million barrels.

      The EIA’s next inventory report happens tomorrow at noon Newfoundland time.



That’s it for this week!



Regards,



George Murphy

Twitter @GeorgeMurphyOil  

Price changes for Thursday, April 23rd, 2020

Hi to all,



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



*Heating and stove oil to drop by 4.1 cents a litre.

*Diesel shows a drop of 2.6 cents a litre, and...

*Gasoline shows a drop of 3/10ths of a cent a litre.



Excuse the volatility in the numbers that may be there. It’s been a hell of a week!



Market highlights



Oil loses its shirt

In a strange turn of events, for the first time in tracking of oil prices went into negative territory yesterday as sellers had no takers for WTI crude and buyers simply didn’t buy.

     Oil was hung up at a crossroads as inventories at the central selling hub of Cushing, Oklahoma went to overflowing, and inventories simply had no place to go with demand down in the wake of Covid-19.

     As disasters go on record as potentially damaging to economies, this storm is one for the record books, and it may not be over for a while.

     While WTI posted a slight gain to finish Tuesday with a slight gain above zero, June futures started the trading day lower, and headed the same direction as May futures did earlier this week.

      Brent may be different.

      With no central chokepoint, Brent is less susceptible to a point where inventories are priced, yet is still susceptible to lower prices based on the fact that there simply isn’t enough storage out there to soak up what’s already been sold over the past few weeks. And that itself is a problem.

       With no storage left by May 1^st, Brent is being stored in supertankers: the very vehicle used in it’s delivery to customers who may need it, complicating an already over-burdened delivery network.

      The Saudi-Russian oil price war may have turned Brent prices lower to a point of no return, where the laws of diminishing returns may be enough to squash the price further.

      And with a world waiting to heal before it goes back to work, it gives time for yet more crude to spill into a world that just isn’t ready to consume it for some time to come yet, regardless of how much OPEC and OPEC+ decided to cut from production last week.



US inventories

If there’s any indication of how much oil is backing up in the system south of the border, last weeks inventory report may be enough of a signal.

     US crude oil inventories gained 19.2 million barrels while gasoline stocks also increased 4.9 million barrels.

     Distillate stocks rose by 6.3 million barrels.

     US refiners operated at 69.1 percent of capacity.



That’s it for this week!



Regards,



George Murphy

Twitter @GeorgeMurphyOil