Oil Market Waiting For A Catalyst

Robert Boslego - INO.com Contributor - Energies


On November 15th, Saudi Energy Minister Khalid al-Falih said, “We need to recognize that by the end of March we’re not going to be at the level we want to be which is the five-year average, that means an extension of some sort.”

He went on to say that Saudi Arabia favors making an extension decision at the OPEC meeting at the end of this month. “My preference is to give clarity to the market and announce on November 30 what we’re going to do.”

At the conclusion of the last OPEC meeting in May, the Saudi minister had stated that the current production quotas will “do the trick” of rebalancing stocks to normal levels within six months. Earlier this month, the DOE projected that global OECD stocks at end-2017 would be right where they were at end-2016. And it projected that 2018 inventories will be higher, not lower.

Russia’s continued participation seems to be a linchpin, and the Russian energy minister, Alexander Novak, reportedly met with Russian oil producers about their view of extending the production deal. According to TASS, everyone but Gazprom Neft agreed to a six-month extension, not the nine-month extension favored by Mr. Al-Falih. Gazprom Neft expects to launch new projects in 2018. Continue reading "Oil Market Waiting For A Catalyst"

Peak Oil Demand Season is Coming To A Close

Robert Boslego - INO.com Contributor - Energies


Peak demand for crude at refineries and for products to consumers is drawing to a close this season. Together, they caused total U.S. oil inventories to drop by 49 million barrels from their peak in the week ending June 9th. Total U.S. oil inventories stand at 1.304 billion barrels in the week ending August 11th, 58 million barrels lower than a year ago.

Refinery demand for crude oil set a new record high this summer, as the 4-week trend reached 17.458 million barrels per day, 4.4% higher than last year. As depicted in the graph below, refiners will soon be dialing back their operations for maintenance, and this will reduce the demand for crude at U.S. refineries by about 1.5 mmbd.

U.S. Crude Input to Refineries

Domestic demand was relatively strong this summer, up about 2.0% from last year. Gasoline demand was somewhat disappointing, but distillate demand spiked. As shown in the graph below, seasonal demand has likely peaked and will be headed lower in the weeks and months ahead. Continue reading "Peak Oil Demand Season is Coming To A Close"