Canadian Insight into the markets here and abroad

Markets Insight

Wednesday, May 27, 2020

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

Did you know?

 

The ancient people of Greece, Persia, and India discovered natural gas many centuries ago. These people were mystified by the burning springs created when lightning ignited natural gas seeping from cracks in the ground. They sometimes built temples around these eternal flames so they could worship the fire.

Markets commentary for Wednesday,  May 27, 2020

Crude oil prices are down this morning; this is the first dip in prices in several weeks. Brent crude oil is down by 4.78% and WTI crude oil is down by 5.59%. Bids for Brent crude oil were at $34.44 per barrel while WTI bids were at $32.43 per barrel.

Crude oil prices were down today after Russia announced that it will raise its output at the end of June. This is in contradiction of a Reuters report that Russia was considering extending its position on current cuts. Russia is meeting with OPEC members next month to discuss strategies.

Bloomberg announced that it has noticed that Algeria and Nigeria have increased their selling price for crude oil. This signifies a stronger demand. Some analysts predict that China’s demand will rebound soon, possibly as early as next month.

Energy Information Administration will release its weekly petroleum inventories report tomorrow morning.  This delay is due to the US Memorial observed holiday.

 

 

Markets commentary for Tuesday,  May 26, 2020

Brent and WTI crude oil markets continue on a roll. Brent crude oil is up by 0.56% and bids are at $35.73 per barrel. WTI crude oil is up by 2.11% and bids are at $33.73 per barrel.

Crude oil oversupplies are slowly going down. This has spurred both Brent and WTI crude oil prices. Price differential appears to be narrowing between the two.

Chief commodities analysts of SEB AB, Bjanre Schieldrop, stated that global crude oil prices are rising as supplies have been on a steady decline. This is laying the ground for higher oil prices in the very near future.

Crude oil prices have increased by well over 80% this month. Crude oil futures have begun to become steady and less volatile.

 

 

Markets commentary for Monday,  May 25, 2020

Bent and WTI crude oil prices are up this morning on a start of a more optimistic week. Brent crude oil is up by 0.31% and WTI crude oil is up by 0.63%. Brent crude oil bids were at $35.24 per barrel and WTI crude oil was at $33.46 per barrel.

Tensions between China and US are continuing to increase. China has warned that this may escalate into a cold war and prolong market and economic recovery.

There are indications that crude oil demand is beginning to revive. Petrol demand is increasing in parts of the world which has eased on lockdown restrictions.

IEA head, Faith Birol, said that continued low oil prices and lack of government policy may lead global oil demand to another high. Birol said that governments should focus on combating climate change.

 

 

Markets commentary for Friday, May 21, 2020

Crude oil markets on the downturn this morning. Brent crude oil prices dropped by 3.99% and early bids this morning were at $34.62 per barrel. WTI crude oil was down 3.57% and early morning bids were at $32.71 per barrel.

Crude oil markets are being affected by increasing tensions between China and US. Optimism that China’s economy will bounce back is beginning to diminish.

China’s implementation of a new security law for Hong Kong is stoking further tensions between China and US. US has condemned the new law and has stated this this will be disastrous.

Latest government data from China states that domestic demand for petroleum products will drop by 5%. This is adding to the crude oil markets concerns that global demand for crude oil will be down.

 

 

 

Markets commentary for Thursday,  May 21, 2020

Alberta natural gas spot prices are once again going up. Prices basis Calgary have risen this week from $1.79 per gigajoule to $2.01 per gigajoule.

Alberta natural gas prices are riding a wave of optimism that demand will continue to increase. The slowdown in natural gas drilling has helped.  Natural gas production has been dropping since early this year.

US Henry Hub natural gas prices have been in a freefall since record highs of $4.60 per MMBtu in December of 2018. Over production and falling demand due to dismal global economic growth is the main factor.

US Henry Hub future bids this morning are down right across the board from June 2020 to March 2022. June natural gas bids were at $1.729 per MMBtu.

 

 

Markets commentary for Wednesday,  May 20, 2020

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

Crude oil imports were down by 194,000 barrels per day and averaged at 5.2 million barrels per day. Four week average was 5.4 million barrels per day and 24.6% lower than the 4 week average last year.

US commercial inventories of crude oil decreased by 5.0 million barrels and totaled at 526.5 million barrels. Storage volumes are 12% above the 5 year average.

Supplies of gasoline increased by 2.8 million barrels. Distillates inventories increased by 3.8 million barrels. Propane supplies increased by 1.1 million barrels as compared to the previous week. Total petroleum inventories decreased 5.0 million barrels last week.

US refineries increased their operations by 1.5% over the previous week and operated at 69.4% of their optimum operating capacity. Operations processed 12.9 million barrels per day, and produced 7.2 million barrels per day of gasoline and 4.8 million barrels of distillates daily.

 

 

 

Markets commentary for Thursday,  May 14, 2020

Alberta natural gas spot prices bases Calgary are beginning to drop this week. Prices on Monday were $2.03 per gigajoule and are now at $1.79 per gigajoule.

Alberta gas prices are being subjected to lower consumer demand which is because of warmer temperatures and reduced usage in the oil sands. Companies such as Suncor and other bitumen producers have reduced their production volumes.

In the US, Henry Hub natural gas futures for June and July are trading well below $2 per MMBtu. Today, June bids are coming in at $1694 per MMBtu and July bids are at $1.906 per MMBtu.

Low natural gas demand in the US and throughout the globe has kept the natural gas prices down. Like crude oil, natural gas markets are being subjected to much uncertainty in the global economy as a result of covid-19.

 

 

 

Markets commentary for Wednesday,  May 13, 2020

Energy Information Administration released its weekly petroleum inventory report this morning. Report indicates a small decrease in crude oil, gasoline and total petroleum inventories. Distillates and propane  inventories were up. Refineries decreased their operations  marginally as compared to the previous week.

Crude oil imports were down by 321,000 barrels per day and averaged at 5.4 million barrels per day. Four week average was 5.3 million barrels per day and 26.1% lower than the 4 week average last year.

US commercial inventories of crude oil decreased by 0.7 million barrels and totaled at 531.5 million barrels. Storage volumes are 12% above the 5 year average.

Supplies of gasoline decreased by 3.2 million barrels. Distillates inventories increased by 3.5 million barrels. Propane supplies increased by 2.2 million barrels as compared to the previous week. Total petroleum inventories decreased 0.5 million barrels last week.

US refineries decreased their operations by 0.6% over the previous week and operated at 67.9% of their optimum operating capacity. Operations processed 12.4 million barrels per day, and produced 7.5 million barrels per day of gasoline and 4.9 million barrels of distillates daily.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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      WCS  / WTI

   Price Spread -$8.35

         May 27, 2020

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