Layoffs Show Recovery Has a Ways to Go
September 30, 2020
The inventory report from the API said that crude oil stocks fell by 831,000 barrels to about 494.4 million barrels. This is less than the Reuters poll expectation of down 1.6 million barrels. The crude oil barrels at Cushing, Ok were up 1.6 million barrels.
Gasoline stocks were up 1.6 million barrels compared with the outlook for today’s DOE report to be down 1.1 million barrels. Distillate inventories were down 3.4 million barrels and the Reuters estimate for today’s DOE are stocks down 917,000 barrels.
Reuters: OPEC is due to taper their production cuts by 2 million barrels per day in January. “I don’t think OPEC will increase production in January… if they do, the market will test them to the downside, “ Pierre Andurand, founder and chief investment officer at Andurand Capital, told the FT Global Commodities Summit. Both Andurand and Trafigurs’s co-head of oil Ben Luckock, said they saw oil prices only recovering to $50 a barrel by the end of next year, from around the current $40. “2022 is the earliest when prices can go higher.” Trafigura’s co-head of oil Ben Luckock said.
The outlook has been positive as the recovery after the shutdowns has been good. But like the comments above we are starting to get a little dose of reality from some sources. The biggest impact to labor was announced in the last few days as Disney said they would let go 28,000 workers, and Royal Dutch Shell said they will eliminate 9,000 jobs due to low demand and their shift to be more carbon friendly. Marathon also let some of their higher salaried employees go in the last few days.
The clock is ticking on another round of stimulus. If anything is going to take place in needs to happen soon.
The average propane number for today’s inventory report is to see a build of 2.2 million barrels.
The margin for refiners for combined gasoline and diesel moved lower yesterday after a little recovery. The crack spread remains below $10 per barrel, its lowest seasonal level since 2010. “It is a very difficult situation for refiners,” said Stewart Glickman, energy equity analyst at CFRA Research. “The crack spreads aren’t great, utilization is low” and they’re “operating under more uncertainty than usual with how long it’s going to take before pre-pandemic levels get back.”