Canadian Insight into the markets here and abroad
Tuesday, November 13, 2018
Editor’s oil & gas markets analysis and weekly U.S. Energy Information Administration reports...
Did you know?
The International Energy Agency is an intergovernmental organization based in Paris . It acts as an energy policy advisor to its 28 member countries. It was originally founded during the oil crisis in 1973 to coordinate measures in time of tight oil supplies. IEA member countries are required to maintain total oil stockpiles of at least 90 days of the previous year's net imports. IEA has intervened in oil markets three times by releasing oil stocks to prevent rising oil prices in a tight market.
Markets commentary for Tuesday, November 13, 2018
Crude oil prices dipped following a very brief rally after Saudi Arabia announced that it was intending to cut their output. President Trump immediately warned the Saudis not to proceed with such actions.
The decline in crude oil prices is the eleventh consecutive trading day decline. According to several reliable sources, this is the longest interval where crude oil prices dropped.
The Saudis stated that they would cut their oil output by a half million barrels. Over the weekend, OPEC officials hinted that they were contemplating of reintroducing further oil output cuts for 2019. There were suggestions that the 2019 cuts would be in the one million barrels per day range.
OPEC will be holding their general meeting in early December. The cartel sets its output limits for the following year during this time.
International Energy Agency and OPEC will release their crude oil and petroleum updates and forecasts this week.
Markets commentary for Friday, November 9, 2018
Crude oil prices were down for the tenth consecutive trading day. This is the longest falling streak since November of 1984. Investor confidence in crude oil seems to be waning following the strong trading sessions of October.
Most investors feared that US sanctions against Iran would affect global oil inventories . Apparently this is not happening, as eight largest oil importers are exempt from the US sanctions .
EIA reported this week another gain in US crude oil inventories. This is the seventh consecutive week that US oil supplies have made significant gains in inventories.
Production and output from three of the worlds largest oil producers is running at an all time high. Russia, Saudi Arabia and US supply 30% of the global oil production and it appears that the three major oil producers have no intent on output cuts.
Markets commentary for Thursday, November 8, 2018
Unexpected arrival of the first cold Arctic air through most of Canada has boosted natural gas prices this week. Calgary natural gas index rose to $3.10 per gigajoule on Wednesday on the Natural Gas Exchange. Prior to this, western Canadian natural gas prices were the worst in the past 26 years.
The coastal region of British Columbia, including the city of greater Vancouver, are finding that natural gas supplies are very tight. FortisBC, the main natural gas distributor, is scrambling to acquire more natural gas and is hoping for additional supplies from Alberta..
Fortis is blaming last months pipeline explosion near Prince George for the tight natural gas situation. The distributor stated that while Enbridge has repaired the pipeline, capacity has only been at about 55% of normal deliveries.
Enbridge has stated that it will increase the pipelines output but limit the gas pipeline to 80% of its full capacity. This is primarily for safety reasons as the energy transporter tries to assure the pipeline safety.
Fortis had previously depended on the Enbridge pipeline to deliver 100% of its capacity. As a result, there is an acute shortage of natural gas through most of British Columbia.
Markets commentary for Wednesday, November 7, 2018
Energy Information Administration released its weekly fundamental petroleum inventory report this morning. Crude oil inventories increased for the seventh consecutive week. Gasoline, propane and total inventories were all up while distillates dropped. American refineries maintained their operations as compared to the previous week
EIA reported that US commercial crude oil inventories increased by 3.2 million barrels. Total commercial crude oil stockpiles increased to 426 million barrels.
Gasoline inventories increased by 1.9 million barrels and distillates decreased by 3.5 million barrels. Propane stockpiles increased by 1.5 million barrels. Overall, total commercial petroleum inventories increased by 4.8 million barrels in comparison to the previous week.
US crude oil imports were up by 195,000 barrels per day from last week and averaged at 7.5 million barrels per day during the past week. Four week US crude oil imports were 1.2 % lower than last year in the same period and averaged at 7.5 million barrels per day.
American refineries increased their operations by 0.6% and operated at 80.0% of their optimum operating capacity. Operations processed 16.4 million barrels of crude oil and on average produced 9.7 million barrels of gasoline and 5.0 million barrels of distillates per day.
Markets commentary for Tuesday, November 6, 2018
Most analysts agree that the two year crude oil rally is coming to an halt. Global economic and political uncertainty seems to be affecting most commodity markets and crude oil being one of them.
Today is US mid-term elections and there may be some surprises in the outcome. President Trump will likely face a new and more hostile Congress and possibly even a change in the Senate.
Western Canadian Select crude prices continues to be in the doldrums. The outlook doesn’t look great either. There has been an increase in rail shipments but the railways are not prepared for a significant increase.
The Canadian pipeline situation is still questionable and most oil companies are wondering how serious the Trudeau government is about the problem. There are no guarantees that Keystone XL or Trans Mountain twinning will be constructed within the next several years.
WCS / WTI
Price Spread ↔ -$44.00
November 13, 2018
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