Could More Lockdowns Be Coming?
September 22, 2020
The news that the blockade is lifted, and more Libyan oil is coming to market is still garnering headlines today and if they can pull it off at some point it could be an issue which OPEC will need to address. Libya is an OPEC member but currently is not a part of any quota and could produce flat out if they can get to that point but that is still a big “if”.
Rising cases of COVID-19 is also in a concern as cases in some part of Europe are on the rise and could cause some decrease to demand. The UK government asked the public to work for home again if it was possible. Boris Johnson is expected to announce new measures for restaurants and bars to curb the spread of the virus.
The current tropical storm in the gulf has shut down the Houston Ship Channel and cut off exports which will have an impact on inventory reports in the next few weeks. Energy prices have bounced a little after yesterday sell off but the sentiment with all this negative news still has the market under pressure.
WTI crude oil has traded from a $43 dollar per barrel high to a $36 dollar low over the last two weeks. It is currently in the middle of that range and could be for the near term. The products RBOB and ULSD are also in a range but more on the lower end of the recent highs and lows. There is a lot of uncertainty and many questions that this market is dealing with and it will likely trade in a range for the medium term. Historically the seasonal trend is lower, but the current tropical disturbances and lower production are supportive to prices. That keeps this market rangebound until these issues become clearer.
Early estimates I have seen for the DOE inventory report tomorrow are; crude down 2.358 million barrels, gasoline down 528,000 barrels and distillates up 1.158 million barrels. The API will release it numbers later today.