Canadian Insight into the markets here and abroad

Markets Insight

Tuesday, March 26, 2019

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

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Markets commentary for Tuesday, March 26, 2019

Crude oil prices remain stable on the pretence that crude oil supplies are close to being balanced. Several US notable analysts stated that US crude oil supplies are not expected to rise much above the present volumes.

Oil production from questionable oil producers such as Libya, Nigeria and Venezuela is not expected to change much during the year. Libya is continuing to have labor problems. Nigeria is continuing to experience a rash of pipeline sabotages while Venezuela is in a midst of political unrest and economic uncertainty

Despite political tensions between Peking and Ottawa, and serious pipeline issues, it appears that China has been importing crude oil from the Burnaby terminal on the west coast. The Vancouver Sun stated that on average 62,000 barrels of crude oil per day has been exported to China. The article states that China’s oil imports from Canada have taken a huge jump in recent years.




Markets commentary for Monday, March 25, 2019

Latest Baker Hughes rig report, released on Friday, reveals another drop in US rig count. There was a total of ten less rigs than in the previous weeks report. There was one less natural gas rig and a drop of nine oil rigs.

The lower oil rig count demonstrates that there has been a slowdown in US Permian Basin. Other regions indicate a subdued drilling interest as well but not as pronounced. Overall US rig count is the lowest since May, 2018.

CAODC drilling data released recently indicates that losses in Canadian drilling operations is even steeper. As of last Monday, there were  only 108 rigs that were active in western Canada. The drop in activity is partly due to warmer spring conditions and dismal outlook in Canadian oil industry.

Overall, oil drilling in North America has lost some interest; more so in Canada than in the US. Oil production in US is still expected to rise while Canadian oil industry awaits direction due to political overtures.




Markets commentary for Friday, March 22, 2019

Crude oil prices continue to remain below $59 per barrel despite dropping US crude oil inventories as reported by EIA on Wednesday. In early morning Friday trading, WTI crude oil was down by 2%.

Investors are once again concerned with recent global developments and the economic direction. Great Britain is facing further uncertainty without a possible Brexit agreement. China and US have yet to come to a trade agreement.

Premier Rachael Notely  declared a provincial election on April 16, 2019 earlier this week. Early polls indicate that her NDP government is facing defeat.

UPC leader, Jason Kenny, has stated that if elected, his government will abolish all oil output restrictions and shelf the ship by rail agreement. He went out to say that he’d drop corporate taxes by 8%. Major oil companies are reaching out in support of the UPC policies.



Markets commentary for Thursday, March 21, 2019

Warm weather has taken a toll on Canadian natural gas prices. Alberta natural gas prices have fallen from a high of $4.82 per gigajoule on March 3, 2019 to $1.42 per gigajoule basis Calgary. Expectations are that natural gas prices may be up next week as warm weather begins to shallow out.

US gas prices have been quite stable despite cooler than average temperatures in US northeast states. Average natural gas prices  in the US averaged at $2.82 per MMBtu. Weather forecasts indicate much warmer weather which may squeeze natural gas prices down. There are possibly three more draw downs before spring weather sets in.

EIA reported this morning its weekly working gas inventory report. US working gas inventories were down by 47 billion cubic feet. Total inventories fell to 1.143 trillion cubic feet as of last Friday.

Last weeks total working gas inventories as compared to last year are 315 billion cubic feet lower and in comparison to the five year average, are 556 billion cubic feet lower.





Markets commentary for Wednesday, March 20, 2019

Energy Information Administration released its weekly petroleum inventory report this morning. Data indicates an decrease in crude oil, gasoline, distillates,  propane and total inventories. Refineries increased their operations .

Crude oil imports were up by 186,000 barrels per day and averaged at 6.9 million barrels per day. Four week average was 6.6 million barrels per day and 11.2 % lower than the 5 year average .

US commercial supplies of crude oil decreased by 9.6 million barrels and totaled at 439.5 million barrels. This is 2% above the five year average.

Supplies of gasoline decreased by 4.6 million barrels. Distillates inventories decreased by 4.1 million barrels. Propane supplies increased by 1.0 million barrels. Total petroleum inventories decreased by 12.6 million barrels as compared to the previous week.

US refineries increased their operations by 1.3% and operated at 88.9% of their optimum operating capacity. Operations processed 16.2 million barrels per day, and produced 9.9 million barrels per day of gasoline and 4.9 million barrels of distillates daily.




Markets commentary for Tuesday, March 19, 2019

Some analysts predict that crude oil recovery may be short lived and is already running out of steam. Dismal global economic outlook and expected lower demand may quench crude oil prices.

Some analysts predict that OPEC cannot continue with further output cuts, let alone make increased cuts. The cartels present success is largely due to political upheaval in Venezuela and continuing unrest in Libya which has restricted the two oil producers output.

US oil production has continued to grow and during the month of February it reached 12.1 million barrels per day. This has created a surplus of high grade crude oil in the Gulf states. This region has now turned into exporting high quality crude oil and refined petroleum products such as gasoline.





















































































































































































































































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      WCS  / WTI

   Price Spread -$19.15

         March 26, 2019

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