Canadian Insight into the markets here and abroad
Friday, February 28, 2020
Editor’s oil & gas markets analysis and weekly U.S. Energy Information Administration reports...
Did you know?
Commercial quantities of crude oil was first discovered in Manitoba in 1951. The province has two potential oil and gas production areas, southwest Manitoba and the Hudson Bay lowlands. There are 14 designated oil fields and 135 oil pools. There are close to 3000 producing wells in that province. Manitoba produces 40% of its domestic petroleum requirements.
Markets commentary for Friday February 28, 2020
Crude oil prices are being affected very hard by the coronavirus outbreak. OPEC member are expected to meet this weekend as calls are being made to cut supplies by 500,000 barrels per day and stop crude oil prices from sinking to below a four year low.
WTI and Brent crude oil prices are at the lowest level since 2016.. WTI crude is down by 4% and trading this morning at $51.42. Brent crude is down by 3.1% and trading at $50.12.
Bloomberg reported that China’s crude oil demand has slumped by 20% since the coronavirus outbreak. China’s largest refinery operated by Sinopec has cut crude oil processing by 12% or 600,000 barrels per day.
The sharp drop in China’s oil demand indicates the serious effect the outbreak of coronavirus has had on China’s economy. It is already estimated to be at a 30 year low.
Markets commentary for Thursday February 27, 2020
Despite falling crude oil prices and all the problems in Canada and the world, natural gas prices are holding up quite well. Alberta based spot prices for natural gas selling at an average of $1.76 per gigajoule this week.
Natural gas futures in the US are not quit as promising. Henry Hub natural gas futures are down this morning and are bearish. April futures are down by $0.094 and bids are at $1743 per MMBtu and May bids are down by $0.091 and selling at $1.787.
EIA reported this morning that US working gas inventories dropped by 143 billion cubic feet. Inventories as of last Friday were 2.2 trillion cubic feet. Supplies were 637 billion cubic feet higher than last year and 179 billion cubic feet above the five year average.
Markets commentary for Wednesday February 26, 2020
Energy Information Administration released its weekly petroleum inventory report this morning. Report indicates an increase in crude oil inventories. Gasoline, distillates, propane and total inventories were down. Refineries decreased their operations as compared to the previous week.
Crude oil imports were down by 330,000 barrels per day and averaged at 6.2 million barrels per day. Four week average was 6.6 million barrels per day and 1.6% lower than the 4 week average last year.
US commercial inventories of crude oil increased by 500,000 barrels and totaled at 443.3 million barrels. Storage volumes are 2% below the 5 year average.
Supplies of gasoline decreased by 2.7 million barrels. Distillates inventories decreased by 2.1million barrels. Propane supplies decreased by 0.7 million barrels as compared to the previous week. Total petroleum inventories decreased 2.1 million barrels last week.
US refineries decreased their operations by 1.5% and operated at 87.9% of their optimum operating capacity. Operations processed 16.0 million barrels per day, and produced 9.8 million barrels per day of gasoline and 4.8 million barrels of distillates daily.
Markets commentary for Tuesday February 25, 2020
Brent and WTI crude oil prices heading in opposite directions this morning. The widening differential is due to spot demand and isn’t necessarily a new trend. Brent crude is down by 0.74% and trading at $58.18 per barrel. WTI crude increased by 0.83% and trading at 52.48 per barrel.
Faith Birol, director in the International Energy Agency, expressed his concerns as to the global crude oil oversupplies and the possible effects of the coronavirus epidemic.
Birol states that despite oil supplies being shut out from Iran, Libya and Venezuela, global crude oil supplies are continuing to increase. If this all happened a few years ago, oil prices would have skyrocketed. Increased production from US , Brazil and Iraq has filled in the void and has helped increase a global surplus.
Markets commentary for Monday February 24, 2020
Crude oil prices tumbled by 4% in early morning trading. Brent crude oil was down by 4.1% or $2.42 per barrel and was trading in mid-morning at $56.09 per barrel. WTI crude oil was down by 4% or $2.12 and was trading at $51.26 per barrel.
News that the coronavirus has spread from China to South Korea and other Asian countries. There have been reported cases in Mid-East countries as well as in Italy and Turkey. It is feared that there could be a significant impact on the global economy.
Goldman Sachs announced that commodity prices may be impacted by the virus outbreak despite China’s measures in softening an economic blow. This has a potential to cause a massive drop in business activity.
Markets commentary for Friday February 21, 2020
Natural gas prices basis Calgary remain above $1.74 per gigajoule during this week. Expectations are that trend will continue next week as well as temperature hover above or near normal for the next ten days.
In the US Henry Hub natural gas prices are showing some upward movement. March natural gas bids this morning are $$1.898 per MMBtu, April bids at $1.909 per MMBtu and May at $1.952 per MMBtu.
Future of Canadian economy remains uncertain as illegal railway blockades continue for over two weeks. The federal government has shown little to no leadership in solving the problems. Prime Minister Trudeau remains steadfast and has stated that he wants a peaceful solution and will not endorse police to step in and disperse the blockades
WCS / WTI
Price Spread ↓-$15.85
February 28, 2020
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