OPEC + 1, led by Saudi Arabia and Non-OPEC Russia agreed to cut production on Friday, driving cued h...
Gulf Storm Shuts in More than 50% of Gulf Production
07/12/2019 12:02 pm EST
Crude oil is getting a boost as production in the Gulf of Mexico is getting shut in in preparation of Tropical Storm Barry.
Oil prices are getting a boost on Tropical Storm Barry, as more production gets shut in. As of yesterday, 11:30 central time, the Bureau of Safety and Environmental Enforcement from operator reports estimates that approximately 53.39% of the current oil production in the Gulf of Mexico has been shut-in, which equates to 1,009,012 barrels of oil per day. It is also estimated that approximately 44.51% of the natural gas production, or 1,237.28 million cubic feet per day in the Gulf of Mexico, has been shut-in and that is supporting prices.
Yet you still have a backdrop of demand worries because of reports from the International Energy Agency (IEA), OPEC and the Energy Information Administration (EIA) market share. Yet, why worry about that when Fed Chairman Jerome Powell has your back. OPEC gave its first 2020 forecasts in a monthly report, saying the world would need 29.27 million bpd of crude from its 14 members next year, down 1.34 million bpd from this year.
The International Energy Agency (IEA) also is bearish on oil and demand. As reported by Bloomberg News “World supply exceeded demand at a rate of 900,000 barrels a day during the first six months of 2019 as consumption proved far weaker than expected amid a faltering economy, the IEA said.” With the outlook for 2020 also deteriorating, OPEC may need to reduce output to the lowest in 17 years to keep markets in balance, the agency predicted.
“This surplus adds to the huge stock-builds seen in the second half of 2018,” the Paris-based IEA said in its monthly report. “Clearly, market tightness is not an issue for the time being and any rebalancing seems to have moved further into the future. The forecast points to the return of a surplus despite an OPEC-led pact to restrain supplies and was seen as a drag on prices.”
Natural gas is seeing production shut but an easing in the weather forecast caused a drop-in price. The EIA reported working gas in storage was 2,471 Billion cubic feet (Bcf) as of Friday, July 5, 2019, according to EIA estimates. This represents a net increase of 81 Bcf from the previous week. Stocks were 275 Bcf higher than last year currently and 142 Bcf below the five-year average of 2,613 Bcf. At 2,471 Bcf, total working gas is within the five-year historical range.
Related Articles on COMMODITIES
Grain and agriculture market traders are waiting on this week’s crop production and WASDE repo...
Next week’s predicted market ranges from Trevor Smith....
Will OPEC cut production and will Russia go along? That is the main questions to be answered at the ...