Canadian Insight into the markets here and abroad
Tuesday, January 22, 2019
Editor’s oil & gas markets analysis and weekly U.S. Energy Information Administration reports...
Did you know?
World’s largest oil refinery was completed by Reliance Industries in western India in December of 2008 at a cost of $6 billion. The new refinery added a capacity of 580,000 barrels per day to the existing refinery built in 1999. The resultant Jamnager Refinery complex is the world's largest refinery with an aggregate processing capacity of 1.24 million barrels of oil per day.
Markets commentary for Tuesday, January 22, 2019
The brief oil price rally ended today with a drop of 3%. Investors are taking into account that China’s economy is in its worst downturn since 1990 and South Korea’s economy is down to its six year low. The IMF on Monday downgraded its 2019 global forecast.
China and south Korea import a significant amount of crude oil. Stagnating economies in these two industrial powerhouses could significantly lower global crude oil demand. This in turn could possibly send crude oil prices in down.
Without doubt, China’s economy has been hit by the trade war with US. Surprisingly, China’s crude oil demand peaked at 10 million barrels per day in December of last year.
There are indicators that the global economy will still sustain a healthy growth in 2019. This could lower global oil inventories and OPEC still could balance global oil markets.
Markets commentary for Monday, January 21, 2019
Oil prices crept up in early morning trading on indications that China’s oil demands remains strong. On the negative side, government data shows that China’s economy is slowing down. This may lead to lower oil demand in the very near future.
US rig count dropped for the third consecutive week. Baker Hughes reported on Friday that there was a drop of 21 oil rigs in the past week. Analysts believe that this may be an indication that US oil development may have peaked and is beginning to drop or become flat.
US crude oil output reached a new record high last week when it averaged at 11.9 million barrels per day. Indications are that US oil production will hit 12 million barrels per day later this year and may even surpass 13 million barrels by the end of this year.
Markets commentary for Friday, January 17, 2019
The morning trading started with mixed commodity prices. Oil prices attempted to be a positive territory but were only marginally up.
Investors are still weighing surging oil production despite a lesser rig count in the past two weeks. All eyes will be on the Baker Hughes rig count report to be released later this afternoon.
American Petroleum Institute reported yesterday that US oil well completions in the fourth quarter of 2018 were up by 23%. This indicates a further advance in US oil production is still coming.
This week’s EIA inventory report stated that US crude oil inventory is still 6% higher than the five year average. High US oil inventories are still a major concern despite global oil output reductions.
EIA reported went on to say that US oil production has surpassed all previous records. US oil production as of this week is 11.9 million barrels per day.
Markets commentary for Thursday, January 16, 2019
Canadian oil companies are not the only ones in difficulty. While low oil prices dropped to the low double digits last year, natural gas prices in Canada have been down to historic lows for well over five years.
Canadian natural gas companies such as Crescent Point Energy, Peyto Exploration & Development Corporation, Painted Pony Energy Ltd. and Zargon oil and Gas Ltd. have managed to make adjustments and able to survive during these stressful years.
One has to wonder how long can any Canadian natural gas company can continue under these conditions. Natural gas prices will remain low due to lack of pipelines and diversified markets.
Several natural gas companies have asked the Alberta provincial government to intervene and apply a similar course of action as the government did with Alberta crude oil.
While instituting such course of action may have some immediate results, it is not a long term cure for the real problem. Canada needs a government that is willing to ease not restrict LNG projects and pipelines.
The Trudeau administration certainly has no intention of changing its course. Justin is hell bent on an environmental crusade even though Canada’s carbon emissions are less than 1.5% of the world’s total. He’s a ‘Bird Box’ Crusader!
Markets commentary for Wednesday, January 16, 2019
Energy Information Administration released its weekly petroleum inventory report this morning. Data indicates a decrease in crude oil, propane and total inventories. Gasoline, and distillates inventories increased over the previous weeks supplies.
Crude oil imports were down by 319,000 barrels per day and averaged at 7.5 million barrels per day. Four week average was 3.6% less than a year ago and average at 7.6 million barrels per day.
US commercial supplies of crude oil decreased by 2.7 million barrels and totaled at 437.1 million barrels. This is 6% above the five year average.
Supplies of gasoline increased by 7.5 million barrels. Distillates inventories increased by 3.0 million barrels. Propane supplies were down by 1.2 million barrels. Total petroleum inventories increased by 5.0 million barrels as compared to the previous week.
US refineries decreased their operations by (1.5%) 194,000 barrels per day and operated at 94.6% of their optimum operating capacity. Operations processed 17.2 million barrels per day, and produced 9.6 million barrels per day of gasoline and 5.4 million barrels of distillates daily.
Markets commentary for Tuesday, January 15, 2019
Crude oil prices were up after taking a 2.1% drop yesterday. Investors today are slightly more optimistic that the cuts made by OPEC are working. Future trading volumes continue to be heavy.
A positive development for crude oil prices is that the US oil rig count has dropped for the second consecutive week. Baker Hughes reported on Friday that US oil rig counts dropped by four.
Lower rig counts spell future US oil output may have reached a plateau or is in a slowdown. This is good news for international oil prices, as global oil inventories may become close to being balanced with demand.
Al eyes will be on the US petroleum inventory data due to be released by EIA tomorrow morning. Most investors are hoping for a decline in US crude oil supplies.
Markets commentary for Friday, January 11, 2019
Crude oil rally has ended after nine successive days of gains. Both Brent and WTI crude oil were down. It appears that investors want a clearer evidence that US and China talks are succeeding and that OPEC is making sufficient output cuts.
Investors are also keeping an eye on the Trump administration and the stalled government. It appears that President Trump has painted himself into a corner and must attempt to use unwarranted powers to save face.
Most analysts are downgrading global economic growth for 2019. Evidence points to a much smaller economic growth than previously predicted. Continuing trade disputes between two of the largest economic powers and growing global debt is raising fears of a recession.
Prime Minister Trudeau is finding more hostility in western Canada. Most western Canadian are against Trudeau’s new energy reforms and legislations. It is evident that he has no interest in initiating the building of more pipelines and reviving the oil and gas industry.
Markets commentary for Thursday, January 10, 2019
It appears that there is an opposition building internationally and here in Canada to the energy truth. Until now, news media has focused on environmentalist groups who have noticeably slandered the petroleum industry.
Environmentalist, such as the David Suzuki Foundation, have for the longest time been favored by the news media. False statements and half truths have been stretched to appear as gospel truths. The news media never questions their press releases or speakers.
Demonstrations against all pipelines have appeared to be genuine. Unfortunately, the truth is that most of the demonstrators have been funded by environmentalist such as the David Suzuki Foundation and Hollywood actors. Without them, these demonstrations would rarely have happened.
During the past several months, the energy truth has started to surface in opposition to the environmentalists. The ‘yellow vests’ which started in France, in opposition to the governments stance on carbon taxing, is taking hold here in western Canada.
Most Canadians are fed up with the fake demonstrations, news media’s stance on carbon taxing and fake news reporting. Truth is beginning to surface.
WCS / WTI
Price Spread ↑ -$18.75
January 22, 2019
Copyright © 2019, 2018, 2017, 2016,2015, 2014, 2013, 2012, 2011, 2010, 2009 Canadian Insight