Crude Set for Biggest Weekly Gains Since June
October 9, 2020
Crude oil is set for its biggest weekly gain since June being helped by approaching Hurricane Delta which has shut in roughly 90% of crude production in the Gulf of Mexico and 61% of natural gas output. Hurricane Delta is expected to make land fall in Louisiana later today currently as a Category 3 storm. Hurricane Delta is the 10 tropical storm or hurricane to hit the US this year.
EIA reported on 10/7/2020 that total US gasoline product supplied (implied demand) rose last week by 367,000 bpd up to a total of 8.896 million bpd for the week ending October 2nd.
US gasoline implied demand is down by 6.7% over the past 4-weeks versus last year and down by 13.3% based upon a cumulative daily average versus last year.
EIA reported on 10/7/2020 that total distillate product supplied (implied demand) rose by 214,000 bpd up to a total of 3.868 million bpd for the week ending October 2nd.
US distillate demand is now down by 9.3% over the past 4-weeks versus last year and down by 9.5% based upon a cumulative daily average versus last year.
EIA lowered their world petroleum consumption forecast by 227,323 bpd for 2020 and lowered their forecast by 509,093 bpd for 2021 in this month’s Short Term Energy Outlook on 10/6/2020.
The energy markets continue to get support from the hurricane and the Norwegian oil workers’ strike. From a technical trading standpoint, the energy markets have also gained some support. The markets are down slightly in early trading as some traders take profits but with the weekend at hand and a hurricane heading into the Gulf Coast the selling should not last into the close.
OPEC’s Secretary General, Mohammad Barkindo, said the worst was over for the oil market following a price and demand decline this year due to the coronavirus pandemic. Separately, OPEC’s research head said OPEC+ hopes that we will be able to get rid of the supply overhang by the middle of next year.
Saudi Arabia is considering reversing course over OPEC’s planned production increase early next year. Some Saudi advisers say markets are not ready for a planned 2 million bpd increase starting in January. OPEC and its allies are expected to make a final decision at the November 30th meeting.