Oil markets have had a tumultuous week, but bullish factors are swamping the bearish, and prices are broadly up. WTI crude futures prices regained the $41 a barrel level. Hurricane Delta is approaching the Gulf Coast, shutting in Gulf of Mexico oil and gas production. On the global scene, the expansion of Libyan crude production is being offset by an oil workers’ strike in Norway, potentially affecting over 0.9 million barrels per day. The OPEC+ Group may delay the scheduled relaxation of production cuts to avoid worsening global oversupply. U.S. gasoline and diesel inventories fell modestly. The oil complex is heading for a finish in the black this week.

Hurricane Delta forced producers to shut in approximately 1.67 mmbpd of crude production in the Gulf of Mexico, or 92%. This is reportedly the largest shut-in since 2005, when Hurricane Katrina destroyed over 100 offshore platforms and hobbled production for months. The hurricane regained Category 3 status, but weather forecasters believe it will slow to a Category 2 level. It is expected to make landfall in Louisiana on Friday night, projected to land near the same stretch of coastline battered by Hurricane Laura just six weeks ago. The storm could bring winds of up to 115 mph and a storm surge of up to 11 feet. Storm-weary residents fear that the high winds could pick up the debris from the last storm, converting it into deadly projectiles that could destroy partially rebuilt structures. Hurricane Delta is the 25th named storm in this year’s record-shattering Atlantic hurricane season. Some residents have faced three evacuations this year.

President Trump left the hospital to return to the White House. This initially supported market confidence, then dashed it when he ordered a stop to discussions on a federal stimulus package. Fed Chair Jerome Powell warned that the economy could face “tragic” results without strong federal support. The President has sent mixed messages. The on-again-off-again process is hard to decode, and there is little chance for success any time soon.

COVID-19 deaths have passed the one-million mark. The Johns Hopkins Coronavirus Resource Center reports that global cases of COVID-19 have now passed 36 million, reaching 36,577,872, with 1,062,677 deaths. Confirmed cases in the U.S. have risen to 7,609,505. President Donald Trump and members of his key circle are high-level additions to the infected roster. U.S. deaths attributed to the disease have reached 212,805. There are worrisome new outbreaks in the U.S., showing an increase in the latest seven-day average of new confirmed cases.

Initial weekly unemployment claims fell by 9,000 during the week ended October 3, coming in at 840,000, a weaker-than-expected result. Last week’s claims originally had been only 837,000, but they were revised up by 12,000 to reach 849,000. Initial weekly claims have been below the one-million mark for six consecutive weeks. According to data collected by the Department of Labor, during the week of March 28, initial jobless claims hit a peak of 6,867,000. From that peak, initial jobless claims fell for 15 weeks. July brought a setback, and claims rose again. During the week ended August 8, claims finally fell below one million, but they were not able to sustain the downward trend. During the 29 weeks since U.S. states began to issue shelter-in-place orders, approximately 63.6 million Americans have filed initial jobless claims.

WTI crude futures prices opened at $41.31 a barrel today, a recovery of $2.71 a barrel (7.0%) from last Friday’s open of $38.60 a barrel. Hurricane Delta, constraints on global output, and a refined product inventory drawdown all served to boost prices. Market volatility was introduced by President Trump’s return from his hospital stay, which initially reassured markets. The mixed messages about a federal stimulus package have been impossible to decode, but markets appear to assume that nothing firm can be achieved anytime soon. WTI futures prices are hovering around $41 a barrel currently. Prices are heading for a finish in the black. Our weekly price review covers hourly forward prices from Friday, October 2 through Friday, October 9. Three summary charts are followed by the Price Movers This Week briefing, which provides a more thorough review.

Gasoline Prices Trend From Oct 2, 2020 to Oct 9, 2020

Source: Prices as reported by DTN Instant Market

Gasoline Prices

Gasoline futures prices opened at $1.2338 a gallon today on the NYMEX, compared with $1.1465 a gallon last Friday. This was a significant increase of 8.73 cents (7.6%). Oil prices climbed this week in response to approaching Hurricane Delta and global supply constraints. The market coped with mixed signals surrounding President Trump’s return to the White House and the on-again-off-again possibility of a federal stimulus bill. March brought a crippling collapse of nearly 87 cents per gallon, but prices gradually crept back up in April and May. U.S. average retail prices for gasoline rose modestly by 0.3 cents to average $2.172/gallon during the week ended October 5. Retail prices reclaimed the territory above $2 per gallon during the first week of June. Gasoline futures are trading in the range of $1.2004/gallon to $1.2353/gallon. The week is heading for a finish in the black. The latest price is $1.2086/gallon.

 

Diesel Prices Trend From Oct 2, 2020 to Oct 9, 2020

Source: Prices as reported by DTN Instant Market

Diesel Prices

Diesel opened on the NYMEX today at $1.1895/gallon, up significantly by 7.12 cents, or 6.4%, from last Friday’s open of $1.1183/gallon. U.S. average retail prices for diesel fell by 0.7 cents per gallon during the week ended October 5 to average $2.387/gallon. Diesel prices generally have weakened this year, missing some of the price recovery seen in crude and gasoline markets. The week is headed for a finish in the black. Currently, diesel is trading in the range of $1.1815-$1.1972/gallon. The latest price is $1.924/gallon.

 

 

WTI Crude Prices

Crude Oil Prices Trend From Oct 2, 2020 to Oct 9, 2020

Source: Prices as reported by DTN Instant Market

WTI crude forward prices opened on the NYMEX today at $41.31 a barrel, compared with $38.60 a barrel last Friday. This was a recovery of $2.71 a barrel (7.0%.) Prices began to rise when President Trump left the hospital, though they backtracked when he nixed further negotiations for a comprehensive federal stimulus package. Prices then received major support from Hurricane Delta, a refined product inventory draw, and constraints on global oil supply. Prices are now back to $41 a barrel. The week is headed for a finish in the black. WTI crude is trading in the $40.65–$41.47 a barrel range currently. The latest price is $41.03 a barrel.

 

PRICE MOVERS THIS WEEK: FULL BRIEFING

Oil markets have had a tumultuous week, but bullish factors are swamping the bearish, and prices are broadly up. WTI crude futures prices regained the $41 a barrel level. Hurricane Delta is approaching the Gulf Coast, shutting in Gulf of Mexico oil and gas production. On the global scene, the expansion of Libyan crude production is being offset by an oil workers’ strike in Norway, potentially affecting over 0.9 million barrels per day. The OPEC+ Group may delay the scheduled relaxation of production cuts to avoid worsening global oversupply. U.S. gasoline and diesel inventories fell modestly. The oil complex is heading for a finish in the black this week.

Hurricane Delta forced producers to shut in approximately 1.67 mmbpd of crude production in the Gulf of Mexico, or 92%. This is reportedly the largest shut-in since 2005, when Hurricane Katrina destroyed over 100 offshore platforms and hobbled production for months. The hurricane regained Category 3 status, but weather forecasters believe it will slow to a Category 2 level. It is expected to make landfall in Louisiana on Friday night, projected to land near the same stretch of coastline battered by Hurricane Laura just six weeks ago. The storm could bring winds of up to 115 mph and a storm surge of up to 11 feet. Storm-weary residents fear that the high winds could pick up the debris from the last storm, converting it into deadly projectiles that could destroy partially rebuilt structures. Hurricane Delta is the 25th named storm in this year’s record-shattering Atlantic hurricane season. Some residents have faced three evacuations this year.

President Trump left the hospital to return to the White House, which initially supported market confidence, then dashed it when he ordered a stop to discussions on a federal stimulus package. Fed Chair Jerome Powell warned that the economy could face “tragic” results without strong federal support. President Trump reversed course and tweeted support for smaller relief bills for individuals and the airline industry. Negotiations resumed. The Democrat party continues to press for a comprehensive relief bill. This morning, the President changed stance again and moved closer to a larger stimulus package, but the on-again-off-again process is hard to decode, and there is little chance for success any time soon.

COVID-19 deaths have passed the one-million mark. The Johns Hopkins Coronavirus Resource Center reports that global cases of COVID-19 have now passed 36 million, reaching 36,577,872, with 1,062,677 deaths. Confirmed cases in the U.S. have risen to 7,609,505, with President Donald Trump and members of his key circle being high-level additions to the infected roster. U.S. deaths attributed to the disease have reached 212,805. There are worrisome new outbreaks in the U.S., showing an increase in the latest seven-day average of new confirmed cases.

Initial weekly unemployment claims fell by 9,000 during the week ended October 3, coming in at 840,000, a weaker-than-expected result. Last week’s claims originally had been only 837,000, but they were revised up by 12,000 to reach 849,000. Initial weekly claims have been below the one-million mark for six consecutive weeks. According to data collected by the Department of Labor, during the week of March 28, initial jobless claims hit a peak of 6,867,000. From that peak, initial jobless claims fell for 15 weeks. July brought a setback, and claims rose again. During the week ended August 8, claims finally fell below one million, but they were not able to sustain the downward trend. During the 29 weeks since U.S. states began to issue shelter-in-place orders, approximately 63.6 million Americans have filed initial jobless claims.

The U.S. Energy Information Administration (EIA) published official inventory data for the week ended October 2. The EIA reported a small build in crude oil inventories of 0.501 million barrels (mmbbls.) This was outweighed by drawdowns of 0.962 mmbbls from diesel inventories and 1.435 mmbbls from gasoline inventories. The EIA net result was an inventory drawdown of 1.896 mmbbls.

During the worst of the oversupply, the EIA reported that crude oil in storage at Cushing rose from 35,501 barrels during the week ended January 3, 2020, to 65,446 barrels during the week ended May 1, 2020, an increase of 29,124 barrels. Cushing stocks fell to 45,582 mmbbls during the week ended June 26. However, the downward trend was reversed in July through early August, sending Cushing stocks back up to 53,289 mmbbls during the week ended August 7. The current week ended October 2 showed Cushing crude stocks at 56,536 mmbbls.

During the week ended October 2, U.S. crude production rose to 11.0 mmbpd, up by 0.3 mmbpd from the prior week, which had remained flat at 10.7 mmbpd. Approximately 0.5 mmbpd of production had been shut in to prepare for Hurricane Sally last month, but most production was quickly restored. According to the EIA, U.S. crude production averaged 13.025 mmbpd in February, the highest total ever. Production fell to 12.25 mmbpd in April, 11.52 mmbpd in May, and 10.9 mmbpd in June. Production in July rose to an average of 11.04 mmbpd. In August, however, production fell to an average of 10.475 mmbpd. Production during the first four weeks of September averaged 10.575 mmbpd. Next week’s data will show a dip because of Hurricane Delta offshore platform shut-ins.