Canadian Insight into the markets here and abroad
Tuesday, July 16, 2019
Editor’s oil & gas markets analysis and weekly U.S. Energy Information Administration reports...
Did you know?
Acidizing was first performed in 1932 by Pure Oil Company in cooperation with Dow Chemical Company to stimulate a low productive oil well. It was successful and by 1934 acidizing was commonly used. The process dissolves and breaks up certain rock formations and reduces well bore resistance.
Markets commentary for Tuesday, July 16, 2019
Brent and WTI crude oil prices traded steady in mid-morning trading. It appears that traders are waiting for further signs as to market direction.
This afternoon, American Petroleum Institute will release its estimated petroleum inventory report. Tomorrow morning, US Energy Information Administration will release its weekly fundamental; petroleum inventory report.
Energy Information Administration, in its latest monthly report, stated that US shale crude oil production will reach 8.55 million barrels per day in the month of August.
EIA stated that despite the new record high, US shale oil production is beginning to slow down. Production increase in the next month is expected to be up by 49,000 barrels per day.
The slowdown in US shale oil development is due to independent oil and gas companies making spending cuts on new drilling while focusing on increasing production output at each wellhead.
Markets commentary for Monday, July 15, 2019
Brent and WTI crude oil prices moved up following Chinese government data indicating industrial output and retail sales exceeded expectations. Despite these positives, China experienced its worst economic growth in several decades.
What is surprising, China has continued to import crude oil at a higher volumes than a year ago. China’s crude oil imports during June were &% higher than a year ago.
Paris based International Energy Agency predicts that crude oil demand will be lower than global oil supplies in 2019. This will leave an over supplied oil market in 2020.
Tropical storm Barry has not affected Gulf refineries. Refined petroleum production has continued during the weekend. Oil production from the Gulf was slashed by 1.38 million barrels per day. This didn’t affect the refineries as stored supplies were more than adequate.
Markets commentary for Friday, July 12, 2019
Brent and WTI crude oil prices were up following another incident in the Strait of Hormuz. A British war ship had to intervene in a possible Iranian militant attack on a loaded oil tanker.
The possibility of a conflict in the region has raised insurance premiums for oil tankers transporting crude oil through the Strait of Hormuz. This is a cost that will be added to the price of crude oil from the Mideast.
US oil producers have closed off their production in the Gulf of Mexico ahead of an oncoming tropical storm. Tropical Storm Barry has begun to intensify and is headed northwest across the Gulf of Mexico. It is possible the storm can intensify into a hurricane.
US crude oil production from the Gulf exceeds 1.0 million barrels of daily production. This loss and the latest US oil inventory drop of 9.5 million barrels has caught the attention of oil inventories of a possible oil shortage in the Gulf based refineries.
Markets commentary for Thursday, July 11, 2019
Alberta based natural gas spot prices zoomed up to $2.04 per gigajoule. This is a 71 cent per gigajoule increase fro Monday’s prices. This is a direct response to the Canadian Premiers Conference now on in Saskatoon.
Saskatchewan’s Premier Scott Moe and Alberta’s Jason Kenny are pushing for an energy corridor. This has been spearheaded by Conservative leader Andrew Sheer on his federal election platform.
Quebec Premier François Legault is in soft support of the ‘Energy Corridor’ proposal but is not in favor of a crude oil pipeline through his province. He has stated that the people of Quebec are the ones that dictate whether an oil pipeline is acceptable. He did say that a natural gas pipeline would be acceptable.
The corridor idea is just a proposal and if implemented by a new conservative government may take decades to be completed.
Markets commentary for Wednesday, July 10, 2019
Energy Information Administration released its weekly petroleum inventory report this morning. Data indicates a significant decrease in crude oil inventories. Gasoline and total petroleum inventories were down as well. Distillates inventories were up. Propane inventories saw an decrease. Refineries increased their operations marginally.
Crude oil imports were down by 284,000 barrels per day and averaged at 7.3 million barrels per day. Four week average was 7.3 million barrels per day and 12.3 % lower than the 4 week average .
US commercial inventories of crude oil decreased by 9.5 million barrels and totaled at 459.0 million barrels. Storage volume are 4% above the 5 year average.
Supplies of gasoline decreased by 1.5 million barrels. Distillates inventories increased by 3.7 million barrels. Propane supplies decreased by 0.2 million barrels. Total petroleum inventories decreased by 3.8 million barrels as compared to the previous week.
US refineries increased their operations and operated at 94.7% of their optimum operating capacity. Operations processed 17.4 million barrels per day, and produced 10.4 million barrels per day of gasoline and 5.4 million barrels of distillates daily.
Markets commentary for Tuesday, July 9, 2019
Tainted crude oil has sent Russian oil output down. Latest data shows that Russia’s oil production has dropped to a three year low.
Tainted crude oil coming through the Druzhba pipeline was discovered by several importers in April. Crude oil imports by European importers was slashed and eventually stopped as Russia’s pipeline operator, Transneft, dragged their feet in solving the problem.
Russia largest oil and gas producer, Rosneft, has openly criticized Transneft and has stated that Rosneft has lost million of dollars in revenues because of the pipeline operators neglect.
Transneft transports a majority of Russian produced oil while Rosneft produces close to half of Russia’s oil output.
WCS / WTI
Price Spread ↑ -$19.15
July 16, 2019
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