Energy CEO calls third quarter “worst ever for oil and refining industry”
October 16, 2020
OPEC sources stated that OPEC+ made little progress in September in compensating for overproduction in previous months. The volume of compensatory cuts stood at 2.33 million bpd in September, down from 2.38 million bpd in August.
The EIA this week estimated US shale production should drop by 121,000 bpd to 7.692 million bpd in November from October levels. The agency forecast is based on low drilling activity especially in the second half of 2020, which will result in limited new wells being brought into service and them being unable to sustain production.
Italian multinational energy company Saras’ chief executive said the third quarter was probably the worst ever for the oil and the refining industry. Saras, which cut investments to tackle fallout from the health crisis, is working on a plan to steer the company through the energy transition, using more vegetable oils, renewable energy, carbon storage and hydrogen.
The chief executives of Vitol, Trafigura and Gunvor said they saw slow oil demand recovery because of a second coronavirus wave. Vitol’s CEO, Russell Hardy, said oil demand recovery “will be tricky” this winter in the northern hemisphere. He said oil demand can begin to recover if there is a vaccine in the second quarter of 2021. He said jet fuel demand will struggle until the second quarter of 2021. Trafigura’s CEO, Jeremey Weir, sees muted oil demand for a few years, at least through 2022. Separately, Gunvor’s CEO, Torbjorn Tornqvist, said oil demand is 6-7 million bpd below last year’s levels, with half of it from lower jet fuel demand.
Propane inventory update showed a surprise draw of 1.945 million barrels putting total stocks at 99.897 million barrels. The Midwest saw stocks declined by 1.345 million barrels putting total Midwest stocks at 25.658 million barrels. Most of this decline came because barrels are being shipped south out of Conway to Mt. Belvieu for export. Exports were 1.391 million bpd up 219,000 bpd from last week. The export number is a 5-year seasonal high. Gulf Coast stocks were up 173,000 barrels putting total Gulf stocks at 59.881 million barrels. US total stocks sit at 99.897 million barrels last year there were 95.794 million barrels. Midwest total stocks are 25.658 million and last year 27.163 million. Gulf stocks are 59.881 million and last year there were 56.701 million.
The DOE inventory report had crude stocks down 3.82 million barrels putting total stocks at 489.109 million barrels compared to last year when there were 434.850 million. Gasoline stock were down 1.63 million barrels putting total stocks at 225.121 million compared to last year at 226.201 million. Distillates were the big surprise called down 7.25 million barrels putting total stocks at 164.551 million compared to last year at 123.501 million. Cushing, Oklahoma crude oil stocks were up 2.91 million barrels putting total stocks at 59.442 million compared with last year when there were 42.953 million barrels.