Vitol Energy Chief Expects Weaker Oil Prices
September 6th, 2019
Propane stocks had another weekly build of 2.862 million barrels putting total stocks at 97.019 million barrels. Midwest stocks built by 603,000 barrels and Gulf Cost stocks built by 1.657 million barrels. Midwest total stocks sit at 26.738 million barrels 1.049 million more barrels than last year at this time. Gulf Coast total stocks now sit at 58.124 million barrels 20.976 million more barrels than last year at this time. Despite the build to stocks propane has moved higher as crude oil and the rest of the energy market has move higher over the last two days.
In the DOE inventory report crude stock were down 4.77 million barrels putting total stocks at 422.98 million barrels 21.490 million more barrel than last year at this time. Cushing, Oklahoma crude stocks were down 230,000 barrels in this week’s report putting total stocks at Cushing at 40.126 million barrels. Last year at this time there were 24.825 million barrels at Cushing giving the market a 15.301 million barrel cushion over last year.
Gasoline stocks were down 2.40 in this week’s DOE update putting total stocks at 229.59 million barrels. Last year at this time total stocks were at 234.619 million barrels putting gasoline stocks 5.033 million barrels behind last year.
Distillate stocks in this week’s inventory update were down 2.54 million barrels putting total stocks at 133.52 million barrels. Last year at this time stocks were at 133.120 putting stocks 402,000 barrels more than last year at this time.
With draws across the board in crude and refined product that was enough to support the energy market in the near term. But with all the other concerns out there for the market it has really been driven by the headlines and technicals. Over the last five trading days there has been some extreme volatility and the market has taken some wide swings. Over all despite the big ranges were have seen over that time frame the market is still within it trading range. The market has not really broken out either on the upside or the downside and with all the market has to consider I guess we should not be surprised. The market reacts to the news but there has been not clear decisive decision or conclusion to any of these issues that would allow the market to get into a trend. Historically over the medium term the market trends higher. But every day that passes get us closer to the end of that traditional seasonal fall rally and into the time of year that the market softens and trend lower into the end of the year and January February time frame of the next year. Where the stock market goes and how the China vs US trade war goes will be huge determining factors. There are o0ther issues at play for the markets but in my opinion, those are the tow key one with the Fed’s actions on interest rates a close third.
Vitol’s Chief Executive, Russell hardy, said he expects a weaker oil price in the short term but does not see sustained levels below $50 per barrel. He sees price at around $60 per barrel in 2020 as another 2 million bpd of supply reaches the market. He also expects adequate supplies for very low sulfur fuel oil in major hubs when the International Maritime Organization rules take effect January 2020.
The market got some upside support yesterday from a report by Yemen’s al-Masirah news that 30 Saudi Arabian troops were killed and injured after Yemeni troops launched a missile attack on Saudi Arabian positions.
ADP private sector payrolls were up 195,000 but the market will be looking at today’s at today non-farm payroll numbers. Non- farm payrolls were just released, and it showed new jobs created at 130,000 versus and average expectation of 150,000.