farmward energy x weekly update this week’s energy market news · x friday, june 12, 2020 x...
TRANSCRIPT
Friday, June 12, 2020x
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Farmward Energy
Weekly Update
This Week’s Energy Market News US Consumption Rebound: Petroleum consumption is rebounding throughout the United States, mainly led by gasoline, as stay-at-home orders are lifted but recovery in diesel has been inconsistent. Last week, the total volume of petroleum products supplied to the domestic market reached 17.6 million barrels per day, up from 13.8 million bpd in April. Gasoline has rebounded the strongest and consistently as restrictions ease with volume of gasoline supplied rising by around 5% per week for the past nine weeks and now running at 82% of the seasonal average for the last five years. Distillate has been hit less hard by the lockdowns and have shown a more gradual recovery.
Market Opinion: Despite moving higher this morning, yesterday’s major downturn has prices set for a weekly decline for the first time in the past nine weeks. Many analysts claimed it was a matter of time before the momentum would run out and a correction was due.
US Inventory Reports: Yesterday, the DOE report had builds across the board with a large build of 5.7 million barrels of crude oil stocks that has pushed inventory levels to the most in Unit-ed States history. Product builds were not as significant with distillate adding 1.6 million barrels and gasoline only adding 866,000 barrels to their stockpiles. There was also a nice uptick in de-mand measured last week for both products which is hopefully a positive signal of the recovery efforts following the global pandemic. Prices did not react much to the relatively bearish report yesterday but that sentiment could be carried over to today as markets are moving significantly lower.
This communication may contain confidential and/or proprietary information and is intended only for the use of the individual or entity to which it is addressed. If the reader of this communication is not the intended recipient, you are hereby notified that any unauthorized dissemination, distribution, and/or use of this communication is strictly prohibited. The information contained herein is accurate to the best of our knowledge and belief. This report and any views expressed herein are provided for information purposes only and should not be construed in any way as an inducement to buy or sell. Farmward Cooperative does not ac-cept any liability for any loss or damage howsoever caused to anyone trading in reliance upon such information. Any prices indicated are subject to change with market conditions.
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Farmward Energy
Weekly Update
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This communication may contain confidential and/or proprietary information and is intended only for the use of the individual or entity to which it is addressed. If the reader of this communication is not the intended recipient, you are hereby notified that any unauthorized dissemination, distribution, and/or use of this communication is strictly prohibited. The information contained herein is accurate to the best of our knowledge and belief. This report and any views expressed herein are provided for information purposes only and should not be construed in any way as an inducement to buy or sell. Farmward Cooperative does not ac-cept any liability for any loss or damage howsoever caused to anyone trading in reliance upon such information. Any prices indicated are subject to change with market conditions.
U.S. fuel ethanol pro-duction fell dramatical-ly during late March and in April 2020, driven by significant reductions in motor gasoline demand due to the virus. Fuel eth-anol production fell to 537,000 barrels per day in the week ending April 24, which was the lowest level on record since June 2010. Because almost all finished motor gasoline sold in the U.S. is blend-ed with 10% ethanol, the drop in gasoline demand
has driven similar decreases in fuel ethanol demand and, correspondingly fuel ethanol production. How-ever, production is finally starting to pickup as states start to re-open.
OPEC Meeting: On Saturday, OPEC, Russia, and other allies agreed to extend production cuts to the end of July. Markets jumped higher on the anticipation of the deal being made over the weekend and “As a result, this weekend’s agreement was somewhat priced-in by the close of business on Friday” said BNP Paribas Global Head of Commodity Markets Strategy Harry Tchilinguirian. The deal is to cut supply by 9.7 million barrels per day, which is roughly 10% of global supplies, and should provide underlying support for energy markets moving forward.
Goldman Sachs sees a correction in oil prices on the horizon even amid a significant recovery in the last month and the recent decision by OPEC and its allies to extend production cuts through July. Some analysts believe it could take until the middle of 2021 to reverse the inventory build, and that’s assuming that demand does recover and OPEC sticks to cutting its quotas.
Mt. Belvieu propane looks mispriced to the high side in comparison with Europe and Asia. It is hard to understand why U.S. propane exports are faring as well as they are, but perhaps some of the exports were previously contracted.
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Weekly Update
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This communication may contain confidential and/or proprietary information and is intended only for the use of the individual or entity to which it is addressed. If the reader of this communication is not the intended recipient, you are hereby notified that any unauthorized dissemination, distribution, and/or use of this communication is strictly prohibited. The information contained herein is accurate to the best of our knowledge and belief. This report and any views expressed herein are provided for information purposes only and should not be construed in any way as an inducement to buy or sell. Farmward Cooperative does not ac-cept any liability for any loss or damage howsoever caused to anyone trading in reliance upon such information. Any prices indicated are subject to change with market conditions.
Propane exports certainly ha-ven’t recovered to the lofty high over 1.7 mb/day that we saw on April 10th, but they have remained healthy at more than 1.0 mb/day for the last four weeks and despite the tight arbitrage in global pro-pane (chart on previous page).
The oil market had a big cor-rection on Thursday; propane by comparison had a small correc-tion. That was in part due to the 1-million-barrel stock draw on the overall U.S. inventory that we saw
on Wednesday. How unusual was it? Well, reliable sources say that the U.S. stocks haven’t had a draw (any draw) on week 23 in at least 17 years. I looked back at the stats also and found just a few standouts:Week 29, 2018 overall propane stocks had a draw of 800kWeek 33, 2018 overall propane stocks had a draw of 1 millionWeek 38, 2015 overall propane stocks had a draw of 600K.
The consensus thoughts on propane seem to be that we could see propane fall further if crude does, but it may instead manifest itself as a lower percentage to crude rather than an outright lower price.
Propane prices have firmed up with crude oil lately, and resorts to its own fundamentals other days. There is ongoing concern in the market that propane stocks will not be able to build enough this summer to get to a comfortable spot this fall. Both crude production and propane production have fallen. Overall propane stocks and stocks in the Gulf started off the previous season at a high level, but like last year Midwest stocks
are very much in question again. It’s too soon to say how it will play out, but Mid-west invento-ries are about ½ million bar-rels above last year this week.
xFarmward Energy
Weekly Update
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This communication may contain confidential and/or proprietary information and is intended only for the use of the individual or entity to which it is addressed. If the reader of this communication is not the intended recipient, you are hereby notified that any unauthorized dissemination, distribution, and/or use of this communication is strictly prohibited. The information contained herein is accurate to the best of our knowledge and belief. This report and any views expressed herein are provided for information purposes only and should not be construed in any way as an inducement to buy or sell. Farmward Cooperative does not ac-cept any liability for any loss or damage howsoever caused to anyone trading in reliance upon such information. Any prices indicated are subject to change with market conditions.
xFarmward Energy
Weekly Update
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Farmward Energy
Weekly Update
This communication may contain confidential and/or proprietary information and is intended only for the use of the individual or entity to which it is addressed. If the reader of this communication is not the intended recipient, you are hereby notified that any unauthorized dissemination, distribution, and/or use of this communication is strictly prohibited. The information contained herein is accurate to the best of our knowledge and belief. This report and any views expressed herein are provided for information purposes only and should not be construed in any way as an inducement to buy or sell. Farmward Cooperative does not accept any liability for any loss or damage howsoever caused to anyone trading in reliance upon such information.
As of 06/10/20 Price 1000 Gal 1500 Gal 2000 GalRuby FM $1.549 $153.9 $1.529 $1.519#2 Clear $2.009 $1.999 $1.989 $1.979
PricePropane Ag/Comm $.99 SummerfillPropane Home Heat $.99 Summerfill
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