farmward energy x weekly update this week’s energy market news · this week’s energy market...
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Friday, June 19, 2020x
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Farmward Energy
Weekly Update
This Week’s Energy Market News Forty-dollar crude oil is back in the market’s sights. The market has tested $40 but not been able yet to close through it. There would be a psychological benefit to hopping over $40, but also is a number that OPEC is watching closely. U.S. shale pro-ducers could have about 500,000 barrels per day of crude output by the end of June. While prices are certainly not high enough to pay to drill a new well,
opening an existing well doesn’t require as much capital. Several producers did not cap existing wells, but rather turned them down to minimal production. Recovering these wells are going to cause problems with OPEC and their pledge to cut production until the end of July.
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.
Group diesel rack basis values put in a low in Mid-May and have since been trending higher. Howev-er, current basis values are very much inline with basis values in years past for this time of year. Typically, thestrongest diesel basis values will come in the fall months.
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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.
The average price of retail gasoline rose more than 6 cents per gallon from the previous week to $2.10 per gallon, 57 cents lower than the same time last year. The Midwest price rose almost 4 cents to $2.03 per gallon, the Gulf Cost price increased nearly 10 cents to $1.78 per gallon, and the East Coast price rose more than 7 cents to $2.02 per gallon.
U.S. shale producers are expected to restore roughly half a million bpd of crude output by the end of June, according to crude buyers and analysts, amounting to a quarter of what they shut since the coro-navirus pandemic cut fuel demand and hammered oil prices. A swift rise in U.S. production would complicate efforts by top producers Saudi Arabia and Russia to encourage global allies to fulfill their commitments to make record production cuts. The increase in production may not last, analysts said. North American oil companies have cut spending by 35%, and U.S. rig counts have dropped to a record low. Since shale well output declined by more than 60% after the first of the year, the reduced spending on drilling will weigh on shale production over the long term.
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.
Distillate Inventory: Refiners pro-cessed an average 13.5 million bpd (bar-rels per day) in early June, producing 8.1 million bpd of gasoline and 4.8 million bpd of distillate. After the last weekly 1.6 m/b distillate increase, inventories now surge 29% above the 5-year average. Normally high inventory would bring expectations of lower prices, however in this seemingly distressed territory, it is important for refin-ers to manage their production and stocks for the long-term, creating price support.
EIA Detail: U.S. distillate stocks fell by 1.4 m/b, PADD 2 (Midwest) in particular, dropped by 1.6 m/b. That means there were slight builds in PADD’s 1 and 4 (East Coast and Rockies). Crude stocks, which showed a build of 1.2 m/b overall, also showed a draw in PADD 2, the region dropped 2.9 m/b. Cushing, OK stocks have dropped from 65.45 m/b May 1st to its current inventory of 46.84 m/b.
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.
Petroleum naphtha is derived from the crude stream during the distillation process. One of its uses is as a feedstock to manufacture olefins by the petrochemical industry. Naphtha competes with propane. With crude production falling, naphtha’s price is rising and becoming less competitive with propane. Asian naphtha crackers can choose between naphtha and LPG, as can many crackers around the world. LPG is a mixture of propane and butane. The industry keeps a close eye on the spread between various feedstocks and it is thought that Asia will continue to be very interested in U.S. propane. That is certainly a supportive factor for the U.S. propane industry which is well-supplied in the Gulf region. The Midwest propane supply is more concerning as it has not been in the same surplus situation as the total U.S. stocks and Gulf stocks have. The U.S. Midwest can attract gallons up from the Gulf by paying the price; otherwise those excess gallons from the Gulf area will be exported.
Total U.S. propane stocks had a good build, especially in comparison to last week’s historical draw. Hubs had small builds. U.S. propane exports fell hard this week, to the lowest number thisyear.
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. Any prices indicated are subject to change with market conditions.
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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