Fracking Demand Not Expected to Rebound to Pre-Pandemic Levels Until 2025
September 23, 2020
The market was softer on the trading day yesterday mainly pressured by a higher US Dollar, and demand destruction fears from rising cases of the coronavirus.
The API inventory report said that crude stocks were up 691,000 barrels, and crude stocks at Cushing, Ok, the NYMEX WTI crude oil future contract delivery point, were up 298,000 barrels. Gasoline stock were down 7.7 million barrels and distillates were down 2.1 million barrels.
The US Department of Transportation reported that US motorist drove 262.4 billion vehicle miles in July, 33.2 billion fewer than the same month last year. The largest year-on-year declines were in the Northeast at 15.4% and the South Atlantic at 11.3%.
Rystad Energy said demand for US fracking services will not return to pre-pandemic levels until 2025. Thomas Jacob, vice president of Shale Research said a recovery in demand for hydraulic fracking services will be “slow and painful’. He said that at between 250 and 300 fracking fleets will meet demand, even if US oil prices recover to above $60 per barrel.
Bank of America energy analysts said that another wave of global COVID-19 infections poses the biggest downside risk to petroleum prices, a warm winter now ranks second given a persistent global surplus in distillate fuels.
Estimates for today’s propane inventory is for it to build by 500,000 barrels.
Average estimates for today’s DOE inventory update from the Bloomberg survey are calling for crude to be down 2.472 million barrels, gasoline down 750,000 barrels and distillates up 1.081 million barrels.
US Federal Reserve Chair Jerome Powell said yesterday that more stimulus is needed for the economy and the Fed will do all it can to accommodate that fact. He said that the Fed will continue to push aid into the economy for as long as it takes.