On April 20:
> WTI closed at $68.06
> Brent closed at $73.66
Yet our Sweet 16 stocks are trading as if WTI is still $50/bbl.
From Gaffney Cline & Associates Oil & Gas Monitor 4/20/2018:
Crude Oil – Global growth supports oil consumption
Oil prices kept rising to their highest since late 2014 as US crude inventories declined, moving closer to five-year averages, and top exporter Saudi Arabia rumored to support even higher prices.
Since the start of the supply cuts, crude inventories have declined gradually from record highs towards long-term average levels. In the United States, the EIA indicated on Wednesday that commercial crude stocks fell close to the five-year average of about 420 million barrels. (On 4/13 IEA said OECD oil inventories are just 30 million bbls above the 5-year average and likely to go below the average by May 31st - Dan).
Also supporting prices is the possibility that the United States may once again impose sanctions on Iran, OPEC’s third-largest producer, which could result in further supply reductions from the Middle East. (Decision on this is expected May 12. - Dan)
The state of the global economy is one of the most important drivers for oil consumption and prices, so the economic outlook is crucial to the calculations of OPEC and other oil suppliers. The current cyclical expansion has considerable momentum in the short term, which should ensure that it continues in the short term, but there is increased anxiety about whether it will be sustained in 2019 and 2020. Both the WTO and the IMF have warned about potential downside risks arising from increasing trade tensions between the United States and China.
Major economies flirting with a trade war at a time of widespread economic expansion may seem odd—especially when the expansion is so reliant on investment and trade. Particularly in advanced economies, however, public optimism about the benefits of economic integration has been eroded over time by long-standing trends of job and wage polarization, coupled with persistent sub-par growth in median wages. Many households have seen little or no benefit from growth. The IMF have been saying for a while that the current cyclical upswing offers an ideal opportunity to make longer-term growth stronger, more resilient, and more inclusive. The present good times will not last for long, but sound policies can extend the upswing while reducing the risks of a disruptive unwinding.
The world economy continues to show broad-based momentum. Against that positive backdrop, the prospect of a similarly broad-based conflict over trade presents a jarring picture. Despite the good near-term news, longer-term prospects are more sobering. Advanced economies—facing aging populations, falling rates of labor force participation, and low productivity growth—will likely not regain the per capita growth rates they enjoyed before the global financial crisis.
Oil Price - April 21
Oil Price - April 21
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Oil Price - April 21
US crude oil refinery inputs averaged 16.9 million barrels per day, with refineries at 92.4% of their operating capacity last week. This is 70,000 barrels per day less than the previous week’s average.
US gasoline demand over the past four weeks was 9.4 million barrels, up 0.7% from a year ago. Total commercial petroleum inventories reversed and decreased by 10.6 million barrels last week.
On the supply side, EIA data indicated that total domestic crude production increased 15,000 barrels to 10,540 million barrels a day. The Lower 48 crude production now stands at 10,052 million barrels per day, an increase of 25,000 barrels this week.
US crude imports averaged 7.9 million barrels per day last week, down by 720,000 barrels per day from the previous week. Over the last four weeks, crude oil imports averaged 8.2 million barrels per day, 2.7% more than the same four-week period last year.
US crude exports averaged 1.749 million barrels per day last week, an increase of 544,000 barrels per day from the previous week. Over the last four weeks, crude oil exports averaged 1.677 million barrels per day, 136.2% more than the same four-week period last year.
Crude oil inventories decreased 1.1 million barrels from the previous week. The crude stored at Cushing (the main price point for WTI) decreased 1.1 million barrels; total stored is 34.9 million barrels (~38% utilization).
US gasoline demand over the past four weeks was 9.4 million barrels, up 0.7% from a year ago. Total commercial petroleum inventories reversed and decreased by 10.6 million barrels last week.
On the supply side, EIA data indicated that total domestic crude production increased 15,000 barrels to 10,540 million barrels a day. The Lower 48 crude production now stands at 10,052 million barrels per day, an increase of 25,000 barrels this week.
US crude imports averaged 7.9 million barrels per day last week, down by 720,000 barrels per day from the previous week. Over the last four weeks, crude oil imports averaged 8.2 million barrels per day, 2.7% more than the same four-week period last year.
US crude exports averaged 1.749 million barrels per day last week, an increase of 544,000 barrels per day from the previous week. Over the last four weeks, crude oil exports averaged 1.677 million barrels per day, 136.2% more than the same four-week period last year.
Crude oil inventories decreased 1.1 million barrels from the previous week. The crude stored at Cushing (the main price point for WTI) decreased 1.1 million barrels; total stored is 34.9 million barrels (~38% utilization).
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Oil Price - April 21
From OilPrice.com on 4/20/2018:
Geopolitics and an ever-tightening oil market are pushing prices up to fresh multi-year highs. “Brent crude oil is ticking higher by the day as OPEC+ cuts are intact, global oil demand growth is firm…Venezuela oil production is in a death spiral, renewed Iran sanctions are imminent (12 May) and sanctions towards Russia on oil and not just aluminum is possible,” Bjarne Schieldrop, chief commodities analyst at SEB, wrote in a note. “Barring a global recession we think there is more room on the upside and as we stated in early march, if OPEC+ sticks to its cuts we are likely to see $85/bl later in the year as inventories draw lower.” While Friday morning saw a string of bearish news push oil down, this bullish sentiment drove a rebound in prices.
Trump criticizes OPEC in tweet. In an early morning tweet on Friday, President Trump took aim at OPEC. “Looks like OPEC is at it again. With record amounts of Oil all over the place, including the fully loaded ships at sea, Oil prices are artificially Very High! No good and will not be accepted!” His tweet helped reverse the gains for crude benchmarks, although the effect will likely be brief.
Phasing out OPEC cuts premature. Saudi oil minister Khalid al-Falih said that OPEC will phase out its cuts so as not to shock the market, but that it would be premature to discuss such plans at the June meeting. He also said that the global economy could tolerate higher oil prices and that there wouldn’t be demand destruction. The comments suggest OPEC is set on keeping the limits in place for the rest of this year. Still, OPEC is meeting in Jeddah to take stock of the market, and the data suggests that they have just about eliminated the inventory surplus, which means that keeping the cuts in place could help drive up prices. “The petro-nations seem willing to over-tighten the market, with the current price levels fostering confidence in their supply deal,” Norbert Ruecker, head of macro and commodity research at Julius Baer, wrote in a note.
Geopolitics and an ever-tightening oil market are pushing prices up to fresh multi-year highs. “Brent crude oil is ticking higher by the day as OPEC+ cuts are intact, global oil demand growth is firm…Venezuela oil production is in a death spiral, renewed Iran sanctions are imminent (12 May) and sanctions towards Russia on oil and not just aluminum is possible,” Bjarne Schieldrop, chief commodities analyst at SEB, wrote in a note. “Barring a global recession we think there is more room on the upside and as we stated in early march, if OPEC+ sticks to its cuts we are likely to see $85/bl later in the year as inventories draw lower.” While Friday morning saw a string of bearish news push oil down, this bullish sentiment drove a rebound in prices.
Trump criticizes OPEC in tweet. In an early morning tweet on Friday, President Trump took aim at OPEC. “Looks like OPEC is at it again. With record amounts of Oil all over the place, including the fully loaded ships at sea, Oil prices are artificially Very High! No good and will not be accepted!” His tweet helped reverse the gains for crude benchmarks, although the effect will likely be brief.
Phasing out OPEC cuts premature. Saudi oil minister Khalid al-Falih said that OPEC will phase out its cuts so as not to shock the market, but that it would be premature to discuss such plans at the June meeting. He also said that the global economy could tolerate higher oil prices and that there wouldn’t be demand destruction. The comments suggest OPEC is set on keeping the limits in place for the rest of this year. Still, OPEC is meeting in Jeddah to take stock of the market, and the data suggests that they have just about eliminated the inventory surplus, which means that keeping the cuts in place could help drive up prices. “The petro-nations seem willing to over-tighten the market, with the current price levels fostering confidence in their supply deal,” Norbert Ruecker, head of macro and commodity research at Julius Baer, wrote in a note.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group