Canadian Insight into the markets here and abroad
Tuesday, August 20, 2019
Editor’s oil & gas markets analysis and weekly U.S. Energy Information Administration reports...
Did you know?
Two French inventors, Conrad and Marcel Schlunberger, were the first to, invent an electric device which could measure well bore properties and identify oil bearing formations. The two brothers were successful in 1927 to design an electrode connected to a lengthy cable which was lowered into a freshly bored oil well. Electric conductivity was measured at one meter intervals and recorded. This survey data was the beginning of well logging and introduced to America in 1938.
Markets commentary for Tuesday, August 20, 2019
Some Alberta crude oil producers are concerned that they may be facing another obstacle. This time there may be changes coming a major pipeline operator which could hurt smaller oil producers.
Enbridge has announced that it will no longer offer spot shipping on its Mainline System which transports 2.85 million barrels of crude oil from Alberta into US markets.
Enbridge is about to switch from a monthly nomination system to “contract carriage”. Concerns are that large producers will grab the allocated volumes and smaller producers will be left out.
MEG Energy is one of the smaller oil producers that has expressed concerns MEG’s CEO Derek Evans stated, "“It is MEG’s position that Enbridge’s contract carriage proposal should be abandoned, as it is not in the overall public interest."
MEG Energy announced that it has submitted a letter to the NEB in objection to the intended changes by Enbridge. MEG Energy is hoping that the NEB disallows the major pipeline operator from proceeding with monthly volume contract awards.
Markets commentary for Monday, August 19, 2019
WTI and Brent Crude oil prices were up following news that drones attacked Saudi Arabian crude oil facilities. It is believed that the attack was instigated by Yemen separatists.
Prior to the attack, tensions in the region had cooled this month. Iran attacked several oil tankers and hijacked one in July.
Baker Hughes announced on Friday that US oil rig activity rose during the past week. This is the first time in seven weeks that US rig activity showed signs of a recovery.
US oil rig count was up by six. Total oil rig count was up to 770 last week. There was an increase of one in natural gas drilling. Total oil and gas activity climbed to 935 rigs.
There was another oil pipeline rupture in western Canada. Alberta Energy Regulator announced yesterday that 40,000 liters of crude oil was spilled into a creek south of Drayton Valley.
Bonterra, a Calgary based oil and gas company, announced this morning that it discovered a leak in one of its pipelines. It reported that crude oil leaked into Washout Creek before the leak was contained.
Markets commentary for Friday, August 16, 2019
As the week draws to an end, crude oil prices edged up on the hopes of some market optimism. Several factors spurred the markets. It appears that speculators have interred the oil markets on the bases that US and China will end their trade wars soon.
Latest US government data shows that domestic retail sales have increased. US car sales rose by 0.7% in the month of July.
There is a possibility that between U.S. President Donald Trump and Chinese President Xi Jinping may meet to settle their differences in the ongoing trade disputes. Both leaders have publically voiced that they are ready for more serious trade talks.
On the negative side, OPEC announced that it believes that global oil markets will remain bearish for the remainder of this year. It bases its prediction on the sluggish global economy.
Markets commentary for Thursday, August 15, 2019
Alberta natural gas prices continue seeking direction. Prices have fallen from $1.12 per gigajoule on Monday to today’s ongoing bids of $0.59 per gigajoule. Most analyst are expecting volatile natural gas prices in the coming months.
Henry Hub natural gas futures are beginning to show a small upward trend. September futures are up by $0.117 and trading at $2.259 per MMBtu. October futures were up by $0.111 and trading at $2.263 per MMBtu. November futures were up by $0.105 and trading at $2.333.
Weather conditions on both sides of the border remain on a different course. Expect temperatures in Canada to be near normal or slightly below normal. In the US, forecasts predict above normal temperatures. This will continue to keep injection rates a bit smaller as domestic demand will be more than average for this time of the year.
Markets commentary for Wednesday, August 14, 2019
Energy Information Administration released its weekly petroleum inventory report this morning. Data indicates an increase in crude oil inventories, propane and total petroleum. Refineries stepped up their operations for the second week.
Crude oil imports were up 566,000 barrels per day and averaged at 7.7 million barrels per day. Four week average was 7.1 million barrels per day and 12.0 % lower than the 4 week average last year.
US commercial inventories of crude oil increased by 1.6 million barrels and totaled at 440.5 million barrels. Storage volumes are 3% above the 5 year average.
Supplies of gasoline decreased by 1.4 million barrels. Distillates inventories decreased by 1.9 million barrels. Propane supplies increased by 3.2 million barrels. Total petroleum inventories increased by 2.4 million barrels as compared to the previous week.
US refineries increased their operations by 1.8% and operated at 94.8% of their optimum operating capacity. Operations processed 17.3 million barrels per day, and produced 10.2 million barrels per day of gasoline and 5.1 million barrels of distillates daily.
Markets commentary for Tuesday, August 13, 2019
Crude oil prices stabilized after Kuwait announced that it was fully committed to its agreement with the rest of the OPEC members in making and following its agreed to output cuts.
Kuwait’s Oil Minister Khaled al-Fadhel said that he would go even beyond the agreed to oil output cuts. He went on to say that global economic woes are greatly over exaggerated.
It appears that the Saudi’s national oil company, Aramco, is attempting to diversify. It announced that it has signed an agreement with India’s Reliance Company to buy a stake in its petrochemical and refining business.
Aramco is also contemplating on going onto the world markets and making its initial public offering. There is no word yet if it intends to have its shares listed on a notable stock exchange.
Markets commentary for Monday, August 12, 2019
Crude oil prices were down in early morning trading. Investors are once again concerned with the global economy; this is based on fears that US and China cannot reach a trade agreement.
International Energy Agency stated on Friday that there are various signs that the global economy is exhibiting signs of a slowdown. This has affected global crude oil demand to its lowest pace of growth since 2008.
It appears that OPEC is continuing to cut its oil production in order to stop global oil supplies from building. Saudi Arabia has cut its crude oil output more that it had previously agreed to.
Analysts see a further need for output cuts if OPEC wants oil prices to remain in the same price range as present. If further cuts are not made, crude oil prices could drop significantly in 2020.
WCS / WTI
Price Spread ↑ -$13.30
August 20, 2019
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