Will Russia Join OPEC in Deeper Oil Production Cuts?
February 21, 2020
The DOE inventory report released yesterday had crude oil stocks up 420,000 barrels and the crude stocks at Cushing, Ok, the delivery point for the NYMEX futures complex, were down 133,000 barrels. Gasoline stocks were down 1.97 million barrels and distillates were down 640,000 barrels.
Propane stocks were down 3.013 million barrels putting total stocks at 74.260. This draw was bigger than the five year average of 2.169 million barrels. The Midwest had a decline in inventory of 1.093 million barrels and the Gulf Coast had a decline of 963,000 barrels. Midwest total stocks are at 14.304 million barrels which is 1.414 million barrels more than last year at this time. The Gulf Coast total stocks are at 52.367 million barrels which is 16.922 million more than last year at this time. Production was down 23,000 barrels and has been on a pretty steady decline since the start of the year, but despite that at 2.2 million bpd it is still well above the three-year average range.
EIA reported in yesterday’s report that total US gasoline product supplied (implied demand) rose by 198,000 bpd up to a total of 2.918 million bpd for the week ending February 14th. US gasoline demand is done by 2.0% over the past 4-weeks versus last year and down by 1.9% based upon a cumulative daily average versus last year.
Total distillate product supplied ( implied demand) fell by 92,000 bpd down to a total of 3.728 million bpd for the week ending February 14th. US distillate demand is now down by 6.7% over the past 4-weeks versus last year and down by 8.9% based upon a cumulative daily average versus last year.
Chinese government asked companies to accelerate the pace of resuming business as soon as possible and in an orderly way amid the coronavirus outbreak.
Russia’s Energy Minister, Alexander Novak, said there was a common understanding among global oil producers that it would now no longer make sense for OPEC and non-OPEC producers to meet before their planned gathering in early March . He said Russia was still talking to other countries about the situation on the oil markets. OPEC has been trying to persuade Russia to join deeper production cuts. Russia has stated that it will decide its stance in the coming days. He said Russian was still discussing its position did not say if Russia would support deeper cuts.
A bit of fear has come back into the market as cases of the virus outside of China had appeared to spread. It appears that several cases have spread in South Korea has been the main news sparking the fears. It has been reported that three soldiers in South Korea tested positive and military bases are now on lockdown.