Canadian Insight into the markets here and abroad
Thursday, October 10, 2019
Editor’s oil & gas markets analysis and weekly U.S. Energy Information Administration reports...
Did you know?
‘Shooting’ or well fracturing was first pioneered in hard rock wells situated in Pennsylvania in the 1860's using nitroglycerine. Although the process was very dangerous , it was in most cases successful in breaking up rocks in an oil bearing formation.
Markets commentary for Thursday, October 10, 2019
The sudden approach of a cold Arctic front has inspired the natural gas prices. Alberta natural gas spot prices have almost doubled in price this week. Last Fridays closing prices was $1.35 per gigajoule while yesterdays prices rocketed to $2.21 per gigajoule. This is a huge difference from natural gas prices 10 days ago.
This same cold front has penetrated into the northern and central US. Temperatures in certain cases like Denver, dropped over 30◦ F in just a few hours. The north central region of the US (Montana, North and South Dakota) are still recovering from the record breaking snowfall over a week ago.
US natural gas prices continuing to be burdened by huge inventories which are nearing the five year average. EIA reported this morning an increase of 98 billion cubic feet in the past week. Total inventories have reached 3.415 trillion cubic feet.
Last weeks working natural gas inventories as compared to a year ago are 472 billion cubic feet larger. In comparison to the five year average, last weeks inventories are only 9 billion cubic feet less.
Markets commentary for Wednesday, October 9, 2019
Energy Information Administration released its weekly petroleum inventory report this morning. Report indicates an increase in crude oil and propane inventories. Gasoline, distillates and total inventories were down. Refineries decreased their operations for the fourth consecutive week.
Crude oil imports were down 67,000 barrels per day and averaged at 6.2 million barrels per day. Four week average was 6.5 million barrels per day and 16.8 % lower than the 4 week average last year.
US commercial inventories of crude oil increased by 2.9 million barrels and totaled at 425.6 million barrels. Storage volumes are 3 % below the 5 year average.
Supplies of gasoline decreased by 1.2 million barrels. Distillates inventories decreased by 3.9 million barrels. Propane supplies increased by 1.0 million barrels. Total petroleum inventories decreased by 8.3 million barrels as compared to the previous week.
US refineries decreased their operations by 0.7% and operated at 85.7% of their optimum operating capacity. Operations processed 15.7 million barrels per day, and produced 10.1 million barrels per day of gasoline and 4.8 million barrels of distillates daily.
Markets commentary for Tuesday, October 8, 2019
Crude oil markets watching the situation in Iraq. Social unrest and demonstrations have now spread to the city of Basra. The city is responsible for most of Iraq’s oil shipments.
Iraq relies mostly on the oil industry which drives that nations economy. This OPEC member is the second largest producer in the cartel. Oil shipments through Basra, in the month of September, averaged 3.5 million barrels per day.
Shipping disruptions in Iraq could send ripple effects throughout the global oil markets. China, India and other far east countries rely on Iraq for its heavy oil which was at one time supplemented by Venezuela. That nation’s production has almost ceased.
Markets commentary for Monday, October 7, 2019
Crude oil prices were up in early morning trading, Investors focused on several factors which affect crude oil markets.
China and US will once again meet in Washington on October 10 and 11. President Trump has recently stated that there is a good chance that a resolution can be arrived at.
Iraq is in the midst of social unrest. Demonstrations have been getting larger and more violence has erupted. This is leading to concerns that this could lead to interruptions in Iraq’s crude oil exports. Iraq is OPEC’s second largest oil exporter.
Baker and Hughes reported on Friday another downturn in US oil rig activity. This is the seventh consecutive week where American rig activity has fallen.
Baker Hughes stated that US oil rig were down by five to a total of 855.
Markets commentary for Thursday, October 3, 2019
Alberta natural gas prices edging up this week as we approach upcoming winter. On Monday, Alberta natural gas spot prices were at $0.80 per gigajoule. Yesterday, they jumped to $1.00 per gigajoule.
US Henry Hub natural gas future prices for November were up by $0.012 per MMBtu and traded at $2.260 per MMBtu. December Henry Hub prices were down $0.005 and traded at $2.446 per MMBtu.
EIA reported this morning that US working gas inventories increased 112 billion cubic feet. Total inventories as of last Friday were 3.317 trillion cubic feet.
Last weeks working gas inventories as of last Friday as compared to last year are 465 billion cubic feet more. As compared to the five year average, last weeks inventories are 18 billion cubic feet lower.
Markets commentary for Wednesday, October 2, 2019
Energy Information Administration released its weekly petroleum inventory report this morning. Report indicates an increase in crude oil, propane and total inventories. Gasoline and distillates inventories were down. Refineries decreased their operations for the third consecutive week.
Crude oil imports were down 87,000 barrels per day and averaged at 6.3 million barrels per day. Four week average was 6.6 million barrels per day and 15.7 % lower than the 4 week average last year.
US commercial inventories of crude oil increased by 3.1 million barrels and totaled at 422.6 million barrels. Storage volumes are 3 % below the 5 year average.
Supplies of gasoline increased by 0.2 million barrels. Distillates inventories decreased by 2.4 million barrels. Propane supplies increased by 1.0 million barrels. Total petroleum inventories decreased by 09 million barrels as compared to the previous week.
US refineries decreased their operations by 2.4% and operated at 86.4% of their optimum operating capacity. Operations processed 16.0 million barrels per day, and produced 10.1 million barrels per day of gasoline and 4.8 million barrels of distillates daily.
Markets commentary for Tuesday, October 1, 2019
Crude oil markets are recovering from yesterday’s slide. Several reports have been released that US, OPEC and Russia’s crude oil output is less than originally estimated. Output of the three largest oil producers dropped in the third quarter.
Russia’s oil output dropped from August high of 11.29 million barrels per day to 11.24 million barrels per day in September. US oil output dropped from its record high of 12.12 million barrels per day in April to 11.81 million barrels in July.
OPEC’s crude oil output fell to the lowest in eight years in September at 28.9 million bpd, down 750,000 bpd from August revised figure and the lowest monthly total since 2011, a Reuters survey found.
Analysts are predicting that crude oil prices will remain near present values as there is much uncertainty in the global economy. An economic downturn could drop or stall crude oil demand and create a larger oil surplus.
WCS / WTI
Price Spread ↑-$14.65
October 10, 2019
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