The oil complex had a strong week, elated by the rollout of the Pfizer-BioNTech COVID-19 vaccine. On Thursday, the FDA Advisory Panel unanimously endorsed the emergency use of the Moderna vaccine as well, and the FDA is expected to grant the authorization soon, perhaps even today. The prospect of inoculations comes none too soon, with COVID-19 infections, hospitalizations and deaths growing at appalling rates. Markets also are optimistic about progress on a long-awaited federal economic stimulus package, which now is envisioned as including $900 billion worth of aid, including stimulus checks. For months, Congress has been at loggerheads on the package. Congress must pass a spending bill today to avoid a federal government shutdown. WTI crude futures prices opened at $48.43 a barrel today, an increase of $1.46 a barrel (3.1%) from last Friday’s open of $46.97 a barrel. WTI futures prices have not opened above $48 a barrel since late-February. Gasoline and diesel futures prices also rose strongly, and the oil complex appears to be headed for a finish in the black this week. Trading today is expected to be more conservative, since the market has hit record highs, and investors may await more solid news.
The bullishness of the market is not entirely warranted by the fundamentals: Demand is down, infections are up, unemployment is up, and the U.S. is now struggling with its worst cybersecurity breach. Multiple U.S. agencies have been hacked, including the departments of Homeland Security, State, Commerce, and the U.S. Treasury.
The Energy Information Administration (EIA) this week reported on the drop in U.S. fuel demand. According to the EIA: “Responses to the 2019 novel coronavirus disease (COVID-19) continue to affect transportation—and by extension, fuel demand—in the United States, particularly for aviation. For the week of Thanksgiving 2020, total U.S. consumption of major petroleum transportation fuels (motor gasoline, distillate, and jet fuel), for which the U.S. Energy Information Administration (EIA) uses product supplied as a proxy, was down 1.7 million barrels per day (b/d) (11%) relative to Thanksgiving week 2019. Jet fuel accounted for about half of this decline. Jet fuel’s relatively large role in the decline of overall U.S. transportation fuel consumption is particularly noteworthy given that it has the smallest share of the three major transportation fuels used in the United States. Jet fuel consumption averaged 1.8 million b/d in 2019, compared with 9.3 million b/d for gasoline and 4.0 million b/d for distillate.”
The U.S. continues to suffer ever-higher levels of COVID-19 infections, deaths, and hospitalizations. According to the COVID Tracking Project, new cases in the U.S. have averaged over 211,825 per day for the past seven days, a new record. Hospitalizations have continued to climb and are at a record high of 113,090. This is the third, and worst, surge. Late-April brought a peak of 35,958 new daily cases. Mid-July brought a second peak of 76,550 new daily cases. The Johns Hopkins Coronavirus Resource Center reports that global cases of COVID-19 stand at 75,130,608, with 1,665,474 deaths. The U.S. continues to lead the world with 17,215,067 cases and 310,806 deaths.
Unemployment claims continued to rise last week. According to data collected by the Department of Labor, initial weekly unemployment claims rose by 23,000 during the week ended December 12, rising to 885,000. The prior week’s figure was revised upward by 9,000 to a total of 862,000. Initial weekly claims had finally subsided below the one-million mark at the end of August, but it took until mid-October before claims finally fell below 800,000. Unfortunately, claims have been climbing again over the past two weeks, and they are back above 800,000. Prior to the pandemic, initial claims were typically 200,000–220,000 each week. During the 39 weeks since U.S. states began to issue shelter-in-place orders, approximately 71.5 million Americans have filed initial jobless claims.
WTI crude futures prices opened at $48.43 a barrel today, up by $1.46 a barrel (3.1%) from last Friday’s open of $46.97 a barrel. WTI futures prices had a strong week, as the first COVID-19 vaccine was rolled out, and a second appears to be on the way. WTI crude is trading in the range of $48.18-$48.95 a barrel currently. Prices appear to be heading for a finish in the black this week. Our weekly price review covers hourly forward prices from Friday, December 11 through Friday, December 18. Three summary charts are followed by the Price Movers This Week briefing, which provides a more thorough review.
Source: Prices as reported by DTN Instant Market
Gasoline Prices
Gasoline futures prices opened at $1.3894 a gallon today on the NYMEX, compared with $1.3166 a gallon last Friday. This was a strong increase of 7.28 cents (5.5%.) It builds further upon last week’s gain of 5.41 cents a gallon. U.S. average retail prices for gasoline rose slightly by 0.2 cents to average $2.158/gallon during the week ended December 14. Retail prices reclaimed the territory above $2 per gallon during the first week of June. Contracts are trading in the range of $1.3784/gallon to $1.3934/gallon. This week appears to be heading for a finish in the black. The latest price is $1.3914/gallon.
Source: Prices as reported by DTN Instant Market
Diesel Prices
Diesel opened on the NYMEX today at $1.4935/gallon, up by 5.56 cents, or 3.9%, from last Friday’s open of $1.4379/gallon. This adds to the 4.64 cents per gallon added last week. U.S. average retail prices for diesel rose by 3.3 cents per gallon during the week ended December 14 to average $2.559/gallon. Diesel prices weakened significantly this year, until November and early December brought a price rebound. Currently, diesel futures prices are trending up, and the week appears to be headed for a finish in the black. Contracts are trading in the range of $1.4869-$1.5087/gallon. The latest price is $1.5082/gallon.
Source: Prices as reported by DTN Instant Market
WTI Crude Prices
WTI crude futures prices opened at $48.43 a barrel today, an increase of $1.46 a barrel (3.1%) from last Friday’s open of $46.97 a barrel. WTI futures prices have not opened above $48 a barrel since late-February. Prices were strong this week, as the first COVID-19 vaccine was rolled out, and a second appears to be on the way. Hopes must be pinned on the vaccines and the prospect of a federal stimulus bill, since the immediate fundamentals are poor: The COVID-19 pandemic continues to rage; oil demand is depressed; unemployment is up; and the U.S. is struggling with its worst cybersecurity breach yet. Futures contracts are trading in the range of $48.10-$48.84 a barrel currently. The week appears to be headed for a finish in the black. The latest price is $48.76 a barrel.
PRICE MOVERS THIS WEEK: FULL BRIEFING
The oil complex had a strong week, elated by the rollout of the Pfizer-BioNTech COVID-19 vaccine. On Thursday, the FDA Advisory Panel unanimously endorsed the emergency use of the Moderna vaccine as well, and the FDA is expected to grant the authorization soon, perhaps even today. The prospect of inoculations comes none too soon, with COVID-19 infections, hospitalizations and deaths growing at appalling rates. Markets also are optimistic about progress on a long-awaited federal economic stimulus package, which is now envisioned as including $900 billion worth of aid, including stimulus checks. For months, Congress has been at loggerheads on the package. This compromise measure is likely to include stimulus checks but exclude aid to states and cities. Congress must pass a spending bill today to avoid a federal government shutdown. WTI crude futures prices opened at $48.43 a barrel today, an increase of $1.46 a barrel (3.1%) from last Friday’s open of $46.97 a barrel. WTI futures prices have not opened above $48 a barrel since late February. Gasoline and diesel futures prices also rose strongly, and the oil complex appears to be headed for a finish in the black this week. Trading today is expected to be more conservative, since the market has hit record highs, and investors may await more solid news.
The bullishness of the market is not entirely warranted by the fundamentals: Demand is down, infections are up, unemployment is up, and the U.S. is now struggling with its worst cybersecurity breach. Multiple U.S. agencies have been hacked, including the departments of Homeland Security, State, Commerce, and the U.S. Treasury.
The Energy Information Administration (EIA) this week reported on the drop in U.S. fuel demand. According to the EIA: “Responses to the 2019 novel coronavirus disease (COVID-19) continue to affect transportation—and by extension, fuel demand—in the United States, particularly for aviation. For the week of Thanksgiving 2020, total U.S. consumption of major petroleum transportation fuels (motor gasoline, distillate, and jet fuel), for which the U.S. Energy Information Administration (EIA) uses product supplied as a proxy, was down 1.7 million barrels per day (b/d) (11%) relative to Thanksgiving week 2019. Jet fuel accounted for about half of this decline. Jet fuel’s relatively large role in the decline of overall U.S. transportation fuel consumption is particularly noteworthy given that it has the smallest share of the three major transportation fuels used in the United States. Jet fuel consumption averaged 1.8 million b/d in 2019, compared with 9.3 million b/d for gasoline and 4.0 million b/d for distillate.”
The U.S. continues to suffer ever-higher levels of COVID-19 infections, deaths, and hospitalizations. According to the COVID Tracking Project, new cases in the U.S. have averaged over 211,825 per day for the past seven days, a new record. Hospitalizations have continued to climb, they and are at a record high of 113,090. This is the third, and worst, surge. Late-April brought a peak of 35,958 new daily cases. Mid-July brought a second peak of 76,550 new daily cases. The Johns Hopkins Coronavirus Resource Center reports that global cases of COVID-19 stand at 75,130,608, with 1,665,474 deaths. The U.S. continues to lead the world with 17,215,067 cases and 310,806 deaths. There are significant regional variations among the states, with infections rising rapidly in California, the southern states, and the Northeast.
Unemployment claims continued to rise last week. According to data collected by the Department of Labor, initial weekly unemployment claims rose by 23,000 during the week ended December 12, rising to 885,000. The prior week’s figure was revised upward by 9,000 to a total of 862,000. Initial weekly claims had finally subsided below the one-million mark at the end of August, but it took until mid-October before claims finally fell below 800,000. Unfortunately, claims have been climbing again over the past two weeks, and they are back above 800,000. Prior to the pandemic, initial claims were typically 200,000–220,000 each week. During the 39 weeks since U.S. states began to issue shelter-in-place orders, approximately 71.5 million Americans have filed initial jobless claims.
U.S. oil inventories unexpectedly were drawn down modestly during the week ended December 11. The U.S. Energy Information Administration (EIA) reported that crude oil inventories declined by 3.135 million barrels (mmbbls.) This was partly counterbalanced by additions of 1.02 mmbbls to gasoline inventories, plus 0.167 mmbbls to diesel inventories. The EIA net result was a modest inventory drawdown of 1.948 mmbbls. This was a more bullish result compared to the numbers reported earlier by the American Petroleum Institute (API.) The API had reported a crude stock build of 2.0 mmbbls, a gasoline stock build of 0.8 mmbbls, and a distillate stock build of 4.8 mmbbls. Last week, the official EIA data had shown a major increase in inventories, shaped by a large increase in imported crude combined with a drop in exports.
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. Cushing stocks generally have trended up this autumn. The most recent weekly data showed Cushing crude stocks at 58,409 mmbbls.
During the week ended December 11, U.S. crude production remained stable at 11.1 mmbpd. According to the EIA, U.S. crude production averaged 13.025 mmbpd in February, the highest total ever. The COVID-19 pandemic forced prices down. U.S. 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 before rising to 10.575 mmbpd in September. October production averaged 10.6 mmbpd, and November production averaged 10.875 mmbpd. Along with impacts caused by the pandemic, this year’s production has varied because of record-breaking hurricanes.
