4Godnwv
5 years ago
The Energy Report
Phil Flynn
http://www.pricegroup.com/
pflynn@pricegroup.com
The Energy Report May 29th, 2020
Fly in the Ointment
Demand is rising, and production is falling, but China might be the fly in the oil market ointment. The Energy Information Administration report (EIA)t was a feel-good story about the resilience of American people and the American economy and the road back as oil and gas demand were on the rise, and that gave a boost to petroleum prices.
Oil prices are giving back their demand growth inspired gains as it is concerned about rising tensions between the U.S. and China. President Trump is going to have a press conference about China's new security law for Hong Kong, and oil traders are concerned that this could lead to another US-China trade war and kill oil demand. That demand has shown signs of coming back much more energetic and faster than most people had expected in China and the U.S. as well. A big jump in U.S. oil refinery runs, and a leap in U.S. gasoline demand had oil traders driving prices to post-coronavirus highs.
Demand increases are coming as U.S. production continues to plunge and report overnight that OPEC oil production has crashed by 6.3 million barrels per day to 23.75 million barrels per day in May, according to JBC data. All of this would suggest that the world is going to see the global oil oversupply start to disappear as long as we don't take a big step back with another trade war.
The EIA numbers were encouraging. While the overall commercial crude oil inventories increased by 7.9 million barrels from the previous week, we saw a big 3.395 million-barrel draw at the Cushing, Oklahoma delivery point. We also saw a 3.96 million barrels drop in the Midwest crude oil supply. The reason for the build was a 10.249 million barrel build on the Gulf Coast. We also saw 2.11 million barrels of oil go into the Strategic Petroleum Reserve at 534.4 million barrels. Crude oil inventories are about 13% above the five-year average for this time of year.
Yet refinery runs and gasoline demand were on the rise, and that shows that as the U.S. starts to open up its economy, demand for oil will spike. We saw gasoline demand snapback to 7.253 million barrels a day. Total motor gasoline inventories decreased by 0.7 million barrels last week and are about 10% above the five-year average for this time of year.
Refinery runs also came in stronger. The EIA reported U.S. crude oil refinery inputs averaged 13.0 million barrels per day during the week ending May 22, 2020, which was 87,000 barrels per day more than the previous week's average. Refineries operated at 71.3% of their operable capacity last week. Gasoline production increased last week, averaging 7.2 million barrels per day. Distillate fuel production decreased last week, averaging 4.8 million barrels per day.
The EIA also reported that distillate fuel inventories increased by 5.5 million barrels last week and are about 24% above the five year average for this time of year. Propane/propylene inventories increased by 1.5 million barrels last week and are about 13% above the five year average for this time of year. Total commercial petroleum inventories increased last week by 14.9 million barrels a new record.
Still, while demand is coming back, we have a long way to go to get back to one year-ago levels. The EIA reported that, "Demand based on products supplied over the last four-week period averaged 16.2 million barrels a day, down by 20.1% from the same period the previous year. Over the past four weeks, motor gasoline product supplied averaged 7.0 million barrels a day, down by 25.7% from the same period last year. Distillate fuel product supplied averaged 3.5 million barrels a day more than the past four weeks, down by 13.6% from the same period the previous year. Jet fuel product provided was down 66.6% compared with the same four-week period."
Natural gas is getting weighed down by significant supply. The EIA reported that working gas in storage was 2,612 Bcf as of Friday, May 22, 2020, according to EIA estimates. This represents a net increase of 109 Bcf from the previous week. Stocks were 778 Bcf higher than last year at this time and 423 Bcf above the five-year average of 2,189 Bcf. At 2,612 Bcf, the total working gas is within the five-year historical range.
There is a substantial risk of loss in trading futures and options.
Past performance is not indicative of future results. The information and data in this report were obtained from sources considered reliable. Their accuracy or completeness is not guaranteed and the giving of the same is not to be deemed as an offer or solicitation on our part with respect to the sale or purchase of any securities or commodities. PFGBEST, its officers and directors may in the normal course of business have positions, which may or may not agree with the opinions expressed in this report. Any decision to purchase or sell as a result of the opinions expressed in this report will be the full responsibility of the person authorizing such transaction.
Phil is one of the world's leading energy market analysts, providing individual investors, professional traders and institutions with up-to-the-minute investment and risk management insight into global petroleum, gasoline and energy markets. Phil's market commentary, fundamental and technical analysis, and long-term forecasts are sought by industry executives, investors and media worldwide.
PLACING CONTINGENT ORDERS SUCH AS "STOP LOSS" OR "STOP LIMIT" ORDERS WILL NOT NECESSARILY LIMIT YOUR LOSSES TO THE INTENDED AMOUNTS. SINCE MARKET CONDITIONS MAY MAKE IT IMPOSSIBLE TO EXECUTE SUCH ORDERS.
Past performance is not indicative of future results. The information and data in this report were obtained from sources considered reliable. Their accuracy or completeness is not guaranteed and the giving of the same is not to be deemed as an offer or solicitation on our part with respect to the sale or purchase of any securities or commodities. Alaron Trading Corp. its officers and directors may in the normal course of business have positions, which may or may not agree with the opinions expressed in this report. Any decision to purchase or sell as a result of the opinions expressed in this report will be the full responsibility of the person authorizing such transaction.
Contact Phil at 1-888-264-5665 or pflynn@pricegroup.com.
4Godnwv
5 years ago
US gasoline demand falls by 8.2pc: EIA
20 May 2020
US implied fuel demand tumbled last week and fuel stockpiles rose as refiners navigate a rocky return to fuel consumption.
Implied gasoline demand fell by 8.2pc to 6.8mn b/d in the week ended 15 May, according to the Energy Information Administration (EIA). Consumption sank to 28pc lower than year-ago levels and 25pc below the five-year average for the week, even as more states loosened travel and business restrictions imposed to limit the spread of the Covid-19 pandemic.
Implied diesel demand fell by 3.9pc to 3.7mn b/d, 3.1pc lower than the same week last year.
Weekly EIA data offers only volatile estimates of consumption, and will be revised weeks from now to more exact monthly data. But the snapshot could temper optimism earlier this month of recovering fuel demand heading into the traditional US driving season.
US gasoline inventories increased by 1.1pc to 255.7mn bl, their highest level since the beginning of May and largest weekly rise in about a month. The US Gulf coast led the build with a 2.2pc increase to 90.3mn bl, the largest stockpile volume there since mid-February. Inventories were 8.5pc higher than the five-year average for the week, and 14pc higher for conventional gasoline blendstock stockpiles, which increased by 4.4pc to 38.5mn bl. Gasoline inventories increased by some volume in every region but the Rockies, where inventories fell by 2.8pc to 7.8mn bl.
Estimated US gasoline exports increased from the previous week by 40pc to 244,000 b/d, still 41pc lower than the same week last year. Gasoline imports increased by 8.2pc to 526,000 b/d, mostly to the Atlantic coast.
US diesel stockpiles increased by 2.5pc to 158.8mn bl, their highest volume since early March 2017. Ultra-low sulphur diesel in storage increased by 2.8pc to 145.9mn bl, the highest volume since February 2017. Estimated weekly diesel exports increased by 19pc from the previous week to 911,000 b/d, 35pc lower than the same week last year.
Atlantic coast diesel inventories reported the largest build of any region. ULSD increased by 4.3pc to 49.6mn bl, the highest volume since March 2017 and 31pc larger than the five-year average for the week. West coast ULSD stockpiles were effectively flat, at 12.7mn bl.
By Elliott Blackburn
https://www.argusmedia.com/en/news/2107060-us-gasoline-demand-falls-by-82pc-eia
4Godnwv
5 years ago
Signs of a rebound in gasoline demand hint at higher oil prices
Published: May 14, 2020 at 3:18 p.m. ET
By Myra P. Saefong
April U.S. motor gasoline deliveries fell 31.1% month on month: AP
Gasoline demand in April suffered its worst month on record, but signs of rebound in consumption as some U.S. states emerge from COVID-19 related lockdowns may offer an indication for higher oil prices ahead.
The faster gasoline ‘sees demand improvement, the faster the underlying barrel of oil will rally.’
— Patrick De Haan, GasBuddy
“The largest portion of a barrel of oil is refined into gasoline here in the U.S.,” said Patrick De Haan, head of petroleum analysis at GasBuddy. “The faster that portion of the refined barrel sees demand improvement, the faster the underlying barrel of oil will rally.”
April U.S. motor gasoline deliveries, a demand indicator, fell by 31.1% month on month, the largest monthly decrease on record, according to a report Thursday from the American Petroleum Institute. Demand for the month was at 5.7 million barrels a day, the lowest demand for any month since January 1972.
However, as some states have re-opened non-essential businesses, fuel-price tracker GasBuddy pointed out that demand in the last week of April rebounded by 22% from the lowest overall week of gasoline demand on April 5 to April 11.
“There was a lot of ugliness in the downstream petroleum sector, but there’s just a few ounces of sunlight now starting to come into the picture for select segments, like gasoline,” De Haan told MarketWatch.
The “ultra-low prices” for gasoline “appear to be behind us,” he said. The national average remains well below a year ago at just over $1 a gallon, and De Haan said he expects “the gap will narrow slightly” this summer, perhaps down 50 cents to 75 cents a gallon from year-ago levels. “That means there’s potential for further price increases.”
https://www.marketwatch.com/story/signs-of-a-rebound-in-gasoline-demand-hint-at-higher-oil-prices-2020-05-14
frenchee
16 years ago
Hi giff,
Oil has declined nearly 66% from its peak closing price of $145.29 on July 3rd to its closing low of $49.62 on November 20th. With gas prices down significantly since then, drivers no longer dread filling up at the pumps like they did just a couple of months ago.
I recently came across a good article highlighting a simple way to lock in low gas prices. The US Gasoline Fund (UGA) is an ETF that tracks the price of gasoline futures in the US. If you want to go to the pump and not even care what gas prices are, you can buy the same dollar amount of UGA that you would normally spend on gas each year based on the current price of gas. If gas prices go up and you're paying more at the pump, your UGA will also be going up by a similar amount. If gas prices go down, your UGA will also go down, but you'll be paying less at the pump as well.
Seems like a good hedge...
zsvq1p
17 years ago
Gasoline makers lost money 1st Q due to high oil prices....
HONG KONG (Reuters) - Top Asia oil producer PetroChina (0857.HK: Quote, Profile, Research) and the region's No. 1 oil refiner Sinopec (0386.HK: Quote, Profile, Research) lagged forecasts with weaker first-quarter profits, as sky-high crude prices forced their refining businesses into loss.
http://www.reuters.com/articlePrint?articleId=USL2992676720080429
and
Valero 1Q profit drops on lower margins
http://ap.google.com/article/ALeqM5j0PhAg52_6FQRcZ4TKB9MX2HE7dwD90BP0E80
zsvq1p
17 years ago
BP sees Texas City, TX refinery full contribution end 2008
Tue Apr 29, 2008 10:57am EDT
LONDON, April 29 (Reuters) - BP expects its Texas City, Tx refinery to reach "full economic contribution" by the end of the year as units continue to return to service.
Byron Grote, chief financial officer, told a conference call with analysts that the crude distillation capacity at the troubled refinery is now over 400,000 barrels per day.
The refinery has been operating at about half of its crude distillation capacity since it returned from its shutdown ahead of Hurricane Rita in September 2005.
An ultraformer is expected to come online in the second half of the year, which will allow for naphtha upgrading. (Reporting by Janet McGurty; editing by James Jukwey)
http://www.reuters.com/articlePrint?articleId=USL2992676720080429
Does this mean no $4 gasoline?
zsvq1p
17 years ago
Oil Prices Slide, Retail Gas Hits Record
By ADAM SCHRECK – 13 hours ago
NEW YORK (AP) — Gas prices at the pump surged to a new record over the weekend, while crude oil accelerated its slide Monday amid a broad-based commodities sell-off.
The average price for a gallon of regular unleaded rose to $3.287, according to AAA and the Oil Price Information Service. That's two-tenths of a penny higher than a record set earlier in March. Prices were highest in Hawaii and California, where the average price topped $3.60 a gallon.
Drivers hoping for relief are likely to be disappointed. Gasoline prices are expected to keep rising as the summer driving season brings with it greater demand for the fuel and refineries shift over to more expensive summer-grade fuel.
"We need to see the price of oil come down well below $100 for a sustained period of time before we'll see these gasoline prices move lower," said AAA fuel price analyst Geoff Sundstrom.
Last year, prices peaked in May before backtracking; with gasoline already at a record it will like only continue its advance. The price of crude oil, the main ingredient in gasoline, is also much higher than it was when gas prices spiked a year ago.
"There's been a massive increase in the primary cost component in gasoline. That's simply going to be passed on to the consumer," Sundstrom said.
On Monday, light, sweet crude for May delivery dropped $4.04 to settle at $101.58 a barrel on the New York Mercantile Exchange, adding to a decline of nearly $2 a barrel on Friday. Even so, prices finished the first three months of the year 5.8 percent higher than where they started; crude set a record of $111.80 in March before giving up ground.
Monday's drop came as traders sold off a wide range of commodities, from precious metals and gasoline to pork bellies and soybeans at the end of the first quarter. The price of gold, for instance, sank $14.40 to settle at $916.20 on the Nymex.
Speculators have poured money into commodities in recent weeks as a hedge against inflation and a weakening dollar, which neared its all-time low against the euro Monday.
But traders unwound some of those trades as the quarter came to a close and contracts for heating oil expired. Market observers said investors may have sold to settle future positions and lock in profits, or were simply holding back their bets in the absence of headlines that would entice fresh buying.
"We've seen some ... air come out of the bubble," said Phil Flynn, an analyst at Alaron Trading Corp. in Chicago. "We may see some confidence return to the dollar, and all this money that embraced commodities as a hedge could go away."
Not all commodities fell, however. Natural gas was one of the few to buck the downward trend, jumping 30.1 cents to settle at $10.101 per 1,000 cubic feet on the Nymex.
Jim Ritterbusch, president of Ritterbusch & Associates in Galena, Ill., attributed the gain to cold weather earlier in the year. Supplies of the heating, cooking and power-generation fuel typically increase at this time of year as warmer springtime temperatures slow demand.
"That process is going to be delayed this year due to the cold weather," he said. "We've virtually erased a huge supply surplus that existed at the beginning of winter."
Analysts are split on oil's direction. Many think prices will rise to new records in coming months as the dollar weakens further, but others say such high prices can't be sustained.
"We have huge speculative positions in oil," said Flynn, who believes prices are likely to move lower. "Some may call it a bubble, some may just call it overbought."
The dollar sank as low as $1.5895 against the 15-nation euro — just shy of its March 17 record of $1.5904 — before strengthening to $1.5871 later in the day.
Crude prices were also responding to reports of relative calm in Iraq, where two attacks on oil pipelines in Basra last week had raised concerns about a plunge in that country's exports. An official with the country's South Oil Co. said Saturday that operations were back to normal.
Meanwhile, Shiite cleric Muqtada al-Sadr has ordered his fighters to stand down, and a top Shiite cleric in Lebanon who was born in Iraq and holds some sway with that country's Shiites issued a religious edict prohibiting attacks on Iraq's oil industry and other public infrastructure.
"The risk of another (pipeline) explosion is a little bit less, at least in the view of the market," Flynn said.
In other Nymex trading, heating oil futures fell 5.58 cents to settle at $3.0492 a gallon, while gasoline futures sank 10.07 cents to settle at $2.6163 a gallon. Brent crude futures fell $3.47 to settle at $100.30 a barrel on the ICE Futures exchange in London.
http://ap.google.com/article/ALeqM5i5TtajgUpSm7KY5jf-lCJGHBB-tAD8VOM4702
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