Petroleum September News

Fundamentals still showing impacts from Hurricane Harvey and likely a bit of the early product demand ahead of Hurricane Irma. Products might see further draws next week for resupply needs and ramped up demand this week for Irma before returning to more seasonal levels. As Gulf Coast refiners get back online, we should see some draws in crude again (or at least far less significant builds.) Nigeria says it will cap oil production if the nation can produce 1.8M B/D consistently for 6 months. IEA has raised it’s global demand growth number for 2017, which mirrors an OPEC report that also supports growing demand and shrinking surplus of crude. Market beginning to show a few more bullish signs for the longer term forecast, so might start looking at 2018 budgets and be ready to hedge in the coming weeks if futures values provide the opportunity.
The U.S. rotary rig count from Baker Hughes was up 1 at 944 for the week of September 8, 2017. It is 436 rigs (85.8%) higher than last year.
The number of rotary rigs drilling for oil was down 3 at 756. There are 342 more rigs targeting oil than last year. Rigs drilling for oil represent 80.1 percent of all drilling activity.
Rigs directed toward natural gas were up 4 at 187. The number of rigs drilling for gas is 95 higher than last year’s level of 92.
Year-over-year oil exploration in the U.S. is up 82.6 percent. Gas exploration is up 103.3 percent. The weekly average of crude oil spot prices is 6.5 percent higher than last year and natural gas spot prices are 1.4 percent higher than last year.
Canadian rig activity was up 1 at 202 for the week of September 8, 2017 and is 68 (50.7%) higher than last year. Rigs targeting oil were unchanged at 102 and are 28 (37.8%) higher than last year. Gas directed rig count at 100 was up 1 and is 41 rigs (69.5%) higher than last year. Canadian drilling falls rapidly in the spring to avoid environmental damage moving drilling equipment during the spring thaw and rainy season. With large weather related seasonal swings, even year-over-year comparisons can lead to incorrect conclusions.
IEA Sees Strongest Global Oil-Demand Growth in Two Years: Global oil demand would climb this year by the most since 2015, the IEA said, amid stronger-than-expected consumption in Europe and the U.S. The IEA increased its estimate for demand growth in 2017 by 100,000 Bbls/d to 1.6 MMBbls/d, or 1.7%. The re-balancing of oversupplied world markets is continuing, it said, with OPEC supplies falling for the first time in five months and inventories of refined fuels in developed nations subsiding toward average levels. “Demand growth continues to be stronger than expected, particularly in Europe and the U.S.,” the Paris-based agency said in its monthly report.
Gasoline: The gasoline had a draw in stocks of over 8-mln barrels in todays DOE report (9/13) with demand jumping back up over 9.6ml barrels per day. Granted we probably saw a demand spike from all the people trying to leave Florida but Houston should have been a little slower. Regardless of the inventory draws and the big jump in demand, the gasoline price charts are showing every sign that they want to move on higher.