Opening Prices:
> WTI is up 42c to $40.24/Bbl, and Brent is up 50c to $42.53/Bbl.
> Natural gas is up 2.1c to $1.692/MMBtu.
Investing.com -- Crude oil prices held above $40 a barrel in early trade in New York on Thursday as the market shrugged off a report saying that Saudi Arabia had threatened its OPEC partners with another price war if they don’t comply with the most recent agreement on output restraint.
The Wall Street Journal had reported that Prince Abdullah bin Aziz, the Saudi oil minister, had threatened Nigeria and Angola in mid-June that it would offer discounts to their customers if the two countries failed to rein in production as agreed.
The report revived doubts about the fate of the pact, under which OPEC and key allies such as Russia are to set to restore 2 million barrels of oil a day to world markets from the start of August. Both companies have since filed plans with OPEC on bringing their production into line, but Petroleum Argus reported on Wednesday that Nigeria’s exports were still above the agreed level in June.
Alexander Novak, Russia’s Energy Minister, said he expected that relaxation of supply to proceed as planned, given that the global market may return to a physical deficit as early as this month, Reuters reported him as saying on Thursday.
By 8:15 AM ET, U.S. crude futures were up 0.6% at $40.05 a barrel, still enjoying a degree of support from the bigger-than-expected drop in U.S. inventories last week. The international benchmark blend Brent was trading at $42.31 a barrel, up 0.7% from Wednesday’s close.
Global demand still appears to be struggling to recover completely from the shock of the pandemic even so. Bloomberg reported that Indian fuel demand was still anything from 20% (for diesel) and 33% (for jet fuel) below year-earlier levels in June, while the amount of floating storage in Chinese waters rose to a record high of nearly 43 million barrels as of Wednesday, Platts reported, citing data from inventory tracker Kpler. That’s a rise of over 40% from a week earlier.
For the rest of the day, the market is likely to take its direction from U.S. labor market data for June, which will shed more light on the trajectory of U.S. demand.
Oil & Gas Prices - July 2
Oil & Gas Prices - July 2
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Oil & Gas Prices - July 2
LONDON (Reuters) - Tens of millions of barrels of crude and oil products stored on tankers at sea due to the coronavirus crisis are being sold, in a sign fuel demand is recovering as lockdowns ease, shipping sources say.
Fuel demand tumbled as much 30% from March to May, with some surplus stored at sea as land storage filled up.
Crude held on tankers fell below 150 million barrels by the end of June, down from more than 180 million barrels in late April, IHS Markit estimated.
Refined products held on vessels dropped to 50 million barrels from a mid-May peak close to 75 million barrels, IHS said, adding gasoline stocks were the fastest to be offloaded.
“With output levels lower, this has reduced the need for storage on land and combined with a reduction in price contangos, there is less of an incentive to store crude at sea,” said Rebecca Galanopoulos Jones, with broker Alibra Shipping.
Clarksons Research estimated 218 million barrels of crude was held on tankers by June 26 from a peak of 290 million barrels in early May, while about 70.5 million barrels of oil products were stored versus a May peak of 100 million barrels.
“We believe floating storage is going to gradually decline from now and reach normal levels sometime during the autumn,” a spokeswoman with shipping group NORDEN said.
Fuel demand tumbled as much 30% from March to May, with some surplus stored at sea as land storage filled up.
Crude held on tankers fell below 150 million barrels by the end of June, down from more than 180 million barrels in late April, IHS Markit estimated.
Refined products held on vessels dropped to 50 million barrels from a mid-May peak close to 75 million barrels, IHS said, adding gasoline stocks were the fastest to be offloaded.
“With output levels lower, this has reduced the need for storage on land and combined with a reduction in price contangos, there is less of an incentive to store crude at sea,” said Rebecca Galanopoulos Jones, with broker Alibra Shipping.
Clarksons Research estimated 218 million barrels of crude was held on tankers by June 26 from a peak of 290 million barrels in early May, while about 70.5 million barrels of oil products were stored versus a May peak of 100 million barrels.
“We believe floating storage is going to gradually decline from now and reach normal levels sometime during the autumn,” a spokeswoman with shipping group NORDEN said.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Oil & Gas Prices - July 2
U.S. stock markets opened higher on Thursday, after labor and unemployment data came in better than expected, and ahead of a long holiday weekend.
The U.S. labor market extended its recovery from April’s collapse in June, creating over 1.5 million more jobs than expected as lockdown restrictions across the nation were eased.
Nonfarm payrolls increased by 4.8 million jobs in June, the Labor Department's monthly employment showed Thursday. That was the most since the government started keeping records in 1939. Payrolls rebounded 2.699 million in May.
The unemployment rate fell to 11.1% last month from 13.3% in May.< We are heading in the right direction, but we cannot accept a double digit unemployment rate. Also, I'm sure that many of those who have gone back to work are doing so at much lower pay. Just in the energy industry hundreds of thousands of six figure jobs are gone.
The U.S. labor market extended its recovery from April’s collapse in June, creating over 1.5 million more jobs than expected as lockdown restrictions across the nation were eased.
Nonfarm payrolls increased by 4.8 million jobs in June, the Labor Department's monthly employment showed Thursday. That was the most since the government started keeping records in 1939. Payrolls rebounded 2.699 million in May.
The unemployment rate fell to 11.1% last month from 13.3% in May.< We are heading in the right direction, but we cannot accept a double digit unemployment rate. Also, I'm sure that many of those who have gone back to work are doing so at much lower pay. Just in the energy industry hundreds of thousands of six figure jobs are gone.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group