Market Eyes U.S. Stimulus for Energy Impact
July 29, 2020
The inventory report from the API said that crude oil stocks were down 6.8 million barrels and the stocks at Cushing, Ok were up 1.1 million barrels. Gasoline stocks were up 1.1 million barrels and distillates were up 187,000 barrels.
The average estimates from the Bloomberg survey are calling for crude to be down 171,000 barrels, gasoline stocks down 1.196 million barrels and distillates up 534,000 barrels.
The Reuters survey is looking for crude to be up 357,000 barrels, gasoline down 733,000 and distillates down 267,000.
The fiver year average for this reporting week on propane is a 385,000 barrel build and the estimate for today is for stocks to build by 2.1 million barrels.
Despite the fact that there are still many millions that have lost their jobs due to the impacts of the coronavirus, and I still think this eventually catches up to the strong stock market, there has been some positive economic data. The US home ownership rate increased to its highest level in nearly 12 years in the second quarter as low mortgage rates boosted demand for housing, offsetting record unemployment triggered by the COVID-19 crisis.
US shale oil producers, whose weak returns in recent years had them out of favor with investors even before the coronavirus pandemic pressured oil prices and cut production, are expected to post their worst second-quarter results since 2016. US shale is set to report the worst operating results excluding impairments, since the last oil bust in 2016, according to a Reuters analysis of financial data from 10 top producers in the sector.
The market will be looking at the inventory numbers today, any news out of Congress on the next relief package, and the conclusion of the Fed’s two day meeting. Any good news on any of these fronts will give the market a pop.
Oil prices were under selling pressure yesterday as US lawmakers debated a new stimulus package. John Kilduff, a partner at Again Capital LLC in New York said, “There’s a concern with the stimulus out of Washington, which is critical to the oil complex and to supporting demand, especially for gasoline.”