Sign up to create alerts for Instruments,
Economic Events and content by followed authors
Free Sign Up Already have an account? Sign In
Quotes
All Instrument Types
- All Instrument Types
- Indices
- Equities
- ETFs
- Funds
- Commodities
- Currencies
- Crypto
- Bonds
- Certificates
Please try another search
🌊 NVIDIA ripple effect: Track AI stocks' response to chip giant's earnings
Explore AI Stocks
Energy Report: Rollback
www.investing.com/analysis/energy-report-rollback-200530666
Energy Report: Rollback
By Phil Flynn | Jul 14, 2020 08:59AM ET Rollback and rollover. News that California was rolling back its economic re-opening caused a sharp reversal as stock and oil rolled over, giving back its day’s gains. Shutdown fears and uncertainty about OPEC raising oil output shook the confidence of oil market bulls as well, especially if the U.S. economy starts to again shutdown. Yet even Dr. Anthony Fauci says we do not have to shut down the economy, but pull back a bit. That may suggest that some of the sharp pullbacks might be a pre-mature knee-jerk reaction. U.S. stocks are trying to come back, and oil is getting back some of its losses after data that showed that Chinese imports from the U.S. rose for the first time since the new coronavirus hit. Chinese imports of U.S. goods jumped by 11.3% in June from a year earlier, after a 13.5% drop in May, as data from Beijing’s General Administration of Customs reported. China’s June crude oil imports hit both daily and monthly highs.
The next big driver for oil will be after the OPEC meetings. OPEC’s Joint Technical Committee meets on today, with the Joint Ministerial Monitoring Committee due to meet on Wednesday. Reuters says that under the existing supply pact, OPEC+ is set to taper its record production cut of 9.7 million barrels per day (bpd) to 7.7 million bpd from August through December. The Joint Ministerial meeting makes its announcement tomorrow as it seems that the U.S. oil supply will start to dwindle in the coming weeks on reduced imports and falling U.S. production and rising oil demand. For OPEC, it is a big decision. Talk of increasing production by 2.0 million barrels probably makes sense in real terms, but psychologically, it could hurt this market.
Yet the reality is that demand destruction from the coronavirus, while historical, was not as bad as initially feared according to data. HFRI research points out that, “The Organization for Economic Co-operation and Development (OECD) Counties inventories in May rose far less than people expected, growing only at a clip of 2.64 mb/d. From January to May, the average build has only totaled ~2 mb/d, implying a deficit of 2 mb/d is needed to bring OECD inventories back to normal. But more importantly, IEA noted that floating storage fell by 34.9 bbls in June.
Natural gas prices are getting a boost from the heat but does not change the fact that natural gas prices are low. How cheap? The Energy Information Administration says that In the first half of 2020, natural gas prices at the U.S. Henry Hub benchmark reached record lows. The average monthly Henry Hub spot price in the first six months of the year was $1.81 per million British thermal units (MMBtu). Monthly prices reached a low of $1.63/MMBtu in June, the lowest monthly inflation-adjusted (real) price since at least 1989. Prices started the year low because of mild winter weather, which resulted in less natural gas demand for space heating. Beginning in March, spring weather and the economic slowdown induced by mitigation efforts for the coronavirus disease 2019 (COVID-19) contributed to lower demand, further reducing prices.
Warmer-than-normal temperatures in January through March resulted in more natural gas than average in underground storage at the end of the heating season. The traditional heating season runs between November 1 and March 31. Injections into underground storage so far during the 2020 refill season (April 1 to October 31) have also been relatively high, lagging behind only 2019 and 2015 for total net injections for the Lower 48 states through May. High storage levels indicate high natural gas production relative to consumer demand. Contributing to high U.S. storage levels and lower prices have been a decline in liquefied natural gas (LNG) exports. Demand for U.S. liquefied natural gas exports has fallen by half in the first half of 2020, from 9.8 billion cubic feet per day (Bcf/d) in late March to less than 4.0 Bcf/d in June. U.S. industrial demand is down by 0.6 Bcf/d, or 2.7%, compared with the first half of 2019.
Related Articles
The Energy Report: Venezuela Off Balance
By Phil Flynn - Feb 27, 2025
1
President Trump has had success bringing down oil prices by sheer force of will and keeping traders off balance. Perhaps the biggest success has a lot to do with not only...
WTI Crude Oil Plunges Below Diagonal Line
By Trading Point - Feb 27, 2025
Will WTI crude oil hit 67.00 key level? MACD and stochastics indicate further losses WTI crude oil futures dived below the long-term descending trend line again, meeting the...
Crude Oil Falls Amid Uncertainty, While European Gas Hits New Lows
By Warren Patterson - Feb 27, 2025
Oil prices are largely under pressure amid demand concerns, while the European gas market continues to sell off aggressively Energy – TTF Sell-Off Continues Oil prices continued...
Energy Report: Rollback
Add Chart to Comment
Confirm Block
Are you sure you want to block %USER_NAME%?
By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.
%USER_NAME% was successfully added to your Block List
Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.
Report this comment
I feel that this comment is:
Comment flagged
Thank You!
Your report has been sent to our moderators for review
Add a Comment
We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:
Enrich the conversation, don’t trash it.
Stay focused and on track. Only post material that’s relevant to the topic being discussed.
Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.
Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.