Canadian Insight into the markets here and abroad

Markets Insight

Friday, January 17, 2020

Editor’s oil & gas markets analysis and weekly U.S. Energy Information Administration reports...

Did you know?

Contrary to the current media oriented perception, over 80% of Canadian oil sands are far too deep to be surfaced mined. Canadian oil industry has developed the Steam Assisted Gravity Drainage technology (SAGD) to extract these deep bitumen reserves.  Several horizontal wells are drilled from one pad. Shallow wells are drilled to inject steam and deeper wells are employed for extracting liquified bitumen. 

Markets commentary for Friday, January 16, 2020

Crude oil prices stalled after reports from China that its economy is sluggish. World’s largest crude oil importer has raised concerns that its  economic recovery remains slow.

Another factor which is keeping oil prices down is the increased US petroleum inventory. EIA reported that gasoline, distillates, and total petroleum inventories were up. Crude oil inventories were down but only marginally.

The phase one of the China / US trade agreement which was signed this week still remains under scrutiny and there are many loose ends to fill. Some analyst fear that the final outcome may it may fall short of expectations.

 

 

Markets commentary for Thursday, January 16, 2020

Influx of cold Arctic air brought up Alberta natural gas prices as high as $2.78 per gigajoule at the beginning of the week. Prices have now stabilized at $2.30 per gigajoule. Moderate temperatures for next week are expected to stall further advances in Alberta natural gas prices basis Calgary.

US natural gas prices are continuing to wallow just above $2.10 per MMBtu. Today’s Henry Hub prices for February at $2.146 per MMBtu and March at $2.105 per MMBtu.

Mild winter weather and huge natural gas supplies have kept US natural gas prices down. Expectations are that not much is expected to change in the US natural gas markets. US natural gas production has exploded in the past several years. Natural gas drilling from 2018 to 2019 increased by 17%.

 

 

Markets commentary for Wednesday, January 15, 2020

Energy Information Administration released its weekly petroleum inventory report this morning. Report indicates a decrease in crude oil and propane inventories.  Gasoline, distillates, and total petroleum inventories were up. Refineries maintained their operations at almost the same level as in the previous week

Crude oil imports were down 179,000 barrels per day and averaged at 6.6 million barrels per day. Four week average was 6.6 million barrels per day and 13.1% lower than the 4 week average last year.

US commercial inventories of crude oil decreased by 2.5 million barrels and totaled at 428.5 million barrels. Storage volumes are at the 5 year average.

Supplies of gasoline increased by 6.7  million barrels. Distillates inventories increased by 8.2 million barrels. Propane supplies increased by 0.7 million barrels. Total petroleum inventories increased by 14.5 million barrels as compared to the previous week.

US refineries maintained their operations at 92.2% of their optimum operating capacity. Operations processed 17.0 million barrels per day, and produced 9.3 million barrels per day of gasoline and 5.2 million barrels of distillates daily.

 

 

Markets commentary for Tuesday. January 14, 2020

Crude oil prices break the four day slide. Investors are once again turning towards optimism. Indications are that tensions between Iran and US is easing and there are possibilities that China and US is close to signing a new trade deal.

Brent crude oil rose 51 cents and is trading at $64.72 per barrel. WTI crude is trading at $58.46, up 38 cents per barrel.

US media has reported that China has pledged to buy $50 billion in energy supplies from the US in the next two years. This marks a major step in settling the trade dispute between China and US.

This trade deal could improve the economies not only of the two but that of the whole global economy.

 

 

Markets commentary for Monday. January 13, 2020

Brent and WTI crude oil prices slowly dropping. Tensions in the Mid-East are slowly easing and commodity markets are reflecting the improved state.

During the past four months, crude oil prices have been pushed up by Mid-East tensions. It is probable that this may continue in the coming month. US has once again increased sanctions against Iran.

WTI crude oil prices dropped by 68 cents to $58.49 per barrel. Brent crude oil was down by 48 cents to $64.54.

On Friday afternoon, Baker Hughes reported a drop of 11 crude oil rigs and 4 natural gas rigs during the past week. It was also reported that in Canada there was a big surge in crude oil rig activity in the past week. Canadian rig count jumped by 118 rigs to 203.

 

 

 

Markets commentary for Friday, January 10, 2020

Brent and WTI crude oil prices continued their descent as market signal have now changed from threat of war to rising US crude oil inventory and global economy. 

WTI crude oil dropped this morning by 50 cents to $59.06 per barrel. Brent crude oil fell by 33 cents to $65.04. This is the first drop in prices in the past six weeks.

Investors will once again focus on US rig count and US crude oil inventories. A further drop in oil rig count and a drop in US crude oil inventories next week could bring back the real focus on markets trend.

 

 

Markets commentary for Thursday, January 9, 2020

Alberta based natural gas prices continue to hold well above $2 per one gigajoule. During the week , natural gas prices averaged at $2.30 per gigajoule. This is much improve that the going prices were a year ago.

Henry Hub natural gas futures range from $2.145 per MMBtu for February to $2.129 per MMBtu for March.  Henry Hub prices do not make a marked improvement until December, 2020; trading in the final month of the year at $2.592 per MMBtu.

US natural gas prices as compared to WTI crude oil are going in opposite directions. This is the first time in six years that oil prices are surging up while natural gas is in a downward spiral. US drillers are now leaving the oil patch and focusing more on natural gas drilling and development.

 

 

Markets commentary for Wednesday, January 8, 2020

Energy Information Administration released its weekly petroleum inventory report this morning. Report indicates an increase in crude oil, gasoline, distillates, propane and total petroleum inventories. Refineries decreased their operations as compared to the previous week

Crude oil imports were up by 379,000 barrels per day and averaged at 6.7 million barrels per day. Four week average was 6.6 million barrels per day and 12.7 % lower than the 4 week average last year.

US commercial inventories of crude oil increased by 1.2 million barrels and totaled at 431.1 million barrels. Storage volumes are at the 5 year average.

Supplies of gasoline increased by 9.1 million barrels. Distillates inventories increased by 5.3 million barrels. Propane supplies increased by 0.7 million barrels. Total petroleum inventories increased by 14.8 million barrels as compared to the previous week.

US refineries maintained their operations at 93.0% of their optimum operating capacity. Operations processed 16.9 million barrels per day, and produced 8.9 million barrels per day of gasoline and 5.3 million barrels of distillates daily.

 

 

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      WCS  / WTI

   Price Spread -$23.80

         January 17, 2020

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