Opening Prices:
> WTI is down 69c to $38.86/Bbl, and Brent is down 52c to $41.78/Bbl.
> Natural gas is down 0.5c to $1.777/MMBtu.
Energy Report: To Be 40 Again
By Phil Flynn Jun 08, 2020 09:03AM ET
Has $40.00 a barrel oil ever felt so good? WTI breached that historically and economically critical level, as we saw a combination of events drive prices. Economic- and oil-price pessimists are getting squeezed out, and I am sure they will be blaming Wall Street and evil speculators for getting it wrong. They fought the Fed, and they doubted OPEC and Russia's resolve. They predicted that crude storage would overflow and there’d be oil running down the streets. Now, oil bulls have everything going their way, as the U.S. jobs report stunned the bears, and OPEC plus Russia extended the biggest oil production cut in history.
Non-farm payrolls grew by 2.5 million positions last month, the most significant increase ever, lowering the unemployment rate from 14.7 percent in April to 13.3 percent. Russia and Saudi Arabia came to the tables after convincing OPEC cheaters, like Iraq, Nigeria, and Algeria, to comply with reductions, thereby striking a deal to extend cuts until the end of July, by keeping 10% of the global supply in the ground.
The Saudis also sent a strong signal by delivering the most substantial increase to its selling price for oil in 20 years. That should force some refiners and countries to draw down stored supply. While there are reports of some shale producers coming back online, the U.S. oil rig count suggests that we will still see U.S. oil production fall as old wells deplete.
On Friday, Baker Hughes showed that there is still a continuation of historic retrenchment in drilling. According to the company, U.S. rigs drilling for oil declined by 16 to 206 this week. The total active U.S. rig count, meanwhile, also fell by 17 to 284. That is the 13th week in a row of falling rig counts, and that signals a continued drop in U.S. oil output.
We also saw output shut-in from tropical storm Cristobal, taking out 635,000 barrels per day of oil and 878 million cubic feet of natural gas. The Bureau of Safety and Environmental Enforcement (BSEE) estimates that approximately 34.30 percent of the current oil production in the Gulf of Mexico has been shut in. BSEE estimates that roughly 32.41 percent of the natural gas production in the Gulf of Mexico has been shut in as of yesterday.
Still, there is some OPEC drama. Reports from Reuters say that there are no plans for Gulf OPEC producers to continue with their 1.180 million barrels per day, voluntary deeper oil cuts beyond June, according to OPEC industry sources. Yet remember, the Saudis are using that as a threat to keep OPEC cheaters in line.
The Saudi oil minister Khalid A. Al-Falih said: "We have no stomach whatsoever for any country abstaining from their obligation under the OPEC+ agreement."
So if they cheat, get ready for more Saudi oil. If they don’t, then look for another extension of cuts beyond July.
Strong jobs data and the reopening of New York and other cities will see a continued recovery in gasoline and diesel demand.
Oil & Gas Prices - June 8
Oil & Gas Prices - June 8
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Oil & Gas Prices - June 8
Great News for global health and Oil Demand
British scientists at Oxford University working toward a COVID-19 vaccine are "near breakthrough" in an antibody treatment, and so confident, AstraZeneca is producing millions of doses, Sky News reported. Also, a treatment specific for the elderly and vulnerable, using two antibodies to reduce the chance of the body rejecting both in its defense against COVID-19, is moving at "full speed," per the report.
It would be vital for the elderly and vulnerable, because they develop the worst response to the coronavirus and "may not be able to develop a good response to the vaccine," AstraZeneca CEO Pascal Soriot told Sunday Telegraph, per the report.
There is little conclusive evidence antibodies are effective as a COVID-19 vaccine, working merely to lessen the virus' impact on the body rather than keeping it from infection. National Health Service staff on the front lines are getting antibody tests to see if they have already fought off the virus.
But a vaccine remains a priority for the Oxford scientists, particularly because antibody therapies are far more expensive than a vaccination, according to Soriot.
Trials are underway in the United Kingdom and Brazil, which has become the epicenter for the coronavirus as it has slowed down in the U.S.
The vaccine ChAdOx1 nCoV-19 uses a weakened version of the common cold with part of COVID-19 to help the body build the immune system's response to the virus' spike proteins, per the report.
British scientists at Oxford University working toward a COVID-19 vaccine are "near breakthrough" in an antibody treatment, and so confident, AstraZeneca is producing millions of doses, Sky News reported. Also, a treatment specific for the elderly and vulnerable, using two antibodies to reduce the chance of the body rejecting both in its defense against COVID-19, is moving at "full speed," per the report.
It would be vital for the elderly and vulnerable, because they develop the worst response to the coronavirus and "may not be able to develop a good response to the vaccine," AstraZeneca CEO Pascal Soriot told Sunday Telegraph, per the report.
There is little conclusive evidence antibodies are effective as a COVID-19 vaccine, working merely to lessen the virus' impact on the body rather than keeping it from infection. National Health Service staff on the front lines are getting antibody tests to see if they have already fought off the virus.
But a vaccine remains a priority for the Oxford scientists, particularly because antibody therapies are far more expensive than a vaccination, according to Soriot.
Trials are underway in the United Kingdom and Brazil, which has become the epicenter for the coronavirus as it has slowed down in the U.S.
The vaccine ChAdOx1 nCoV-19 uses a weakened version of the common cold with part of COVID-19 to help the body build the immune system's response to the virus' spike proteins, per the report.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Oil & Gas Prices - June 8
An increase in LNG demand during 2H 2020 is just one bit of the bullish outlook for natural gas prices in Q4 2020 and all of 2021. We are sending out updated profiles on GPOR and GDP today.
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On June 5 Reuters reported Asian spot prices for liquefied natural gas (LNG) rose this week amid easing of lockdown measures in some countries and expectations of reduced exports from the United States this month. The average LNG price for July delivery into northeast Asia was estimated at $2.10 per MMBtu on Friday, $0.25 above last week's assessment. There are signs that Indian LNG demand is picking up as the government eases lockdown measures, while Chinese demand is expected to maintain year-on-year growth, consultancy Energy Aspects said in a report this week. "But there is ample uncertainty over the trajectory of a COVID-19 recovery, including the risk of a second wave of infections that could dent gas demand again," the report said. Market sources said that cancellation of at least 20 cargoes for loading from the United States in June was also filtering through, supporting the price.
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On June 5 Reuters reported Asian spot prices for liquefied natural gas (LNG) rose this week amid easing of lockdown measures in some countries and expectations of reduced exports from the United States this month. The average LNG price for July delivery into northeast Asia was estimated at $2.10 per MMBtu on Friday, $0.25 above last week's assessment. There are signs that Indian LNG demand is picking up as the government eases lockdown measures, while Chinese demand is expected to maintain year-on-year growth, consultancy Energy Aspects said in a report this week. "But there is ample uncertainty over the trajectory of a COVID-19 recovery, including the risk of a second wave of infections that could dent gas demand again," the report said. Market sources said that cancellation of at least 20 cargoes for loading from the United States in June was also filtering through, supporting the price.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Oil & Gas Prices - June 8
Note that OPEC+ will be taking more oil off the market in June and July than they did in May.
On June 6 Reuters reported OPEC, Russia and allies agreed on Saturday to extend record oil production cuts until the end of July, prolonging a deal that has helped crude prices double in the past two months by withdrawing almost 10% of global supplies from the market. The group, known as OPEC+, also demanded countries such as Nigeria and Iraq, which exceeded production quotas in May and June, compensate with extra cuts in July to September "Demand is returning as big oil-consuming economies emerge from pandemic lockdown. But we are not out of the woods yet and challenges ahead remain," Saudi Energy Minister Prince Abdulaziz bin Salman told the video conference of OPEC+ ministers.
On June 5 Bloomberg reported that OPEC+ cut production 8.6 million b/d in May, suggesting 89% compliance with the 9.7 b/d agreement, according to data intelligence firm Kpler. Saudi has been over complying by 37%, with Aramco cutting output by 3.35 b/d or 940,000 b/d more than its 2.5 b/d target for May. Russia cut production by 2.3 b/d with compliance of 93%. Mexico output fell 152,000 b/d in May vs. its pledge of a 100,000 b/d cut. Iraq, Nigeria, Angola, and Algeria compliance is relatively low, ranging from Algeria’s 7% to Iraq’s 64%.
On June 6 Reuters reported OPEC, Russia and allies agreed on Saturday to extend record oil production cuts until the end of July, prolonging a deal that has helped crude prices double in the past two months by withdrawing almost 10% of global supplies from the market. The group, known as OPEC+, also demanded countries such as Nigeria and Iraq, which exceeded production quotas in May and June, compensate with extra cuts in July to September "Demand is returning as big oil-consuming economies emerge from pandemic lockdown. But we are not out of the woods yet and challenges ahead remain," Saudi Energy Minister Prince Abdulaziz bin Salman told the video conference of OPEC+ ministers.
On June 5 Bloomberg reported that OPEC+ cut production 8.6 million b/d in May, suggesting 89% compliance with the 9.7 b/d agreement, according to data intelligence firm Kpler. Saudi has been over complying by 37%, with Aramco cutting output by 3.35 b/d or 940,000 b/d more than its 2.5 b/d target for May. Russia cut production by 2.3 b/d with compliance of 93%. Mexico output fell 152,000 b/d in May vs. its pledge of a 100,000 b/d cut. Iraq, Nigeria, Angola, and Algeria compliance is relatively low, ranging from Algeria’s 7% to Iraq’s 64%.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group