WEEKLY ENERGY RECAP: Oil price trends suggest OPEC+ output cuts having desired effect

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Updated 12 July 2020

WEEKLY ENERGY RECAP: Oil price trends suggest OPEC+ output cuts having desired effect

  • Brent crude oil nudged higher to end the week at $43.24 per barrel

Brent crude oil nudged higher to end the week at $43.24 per barrel as WTI also gained to $40.55. 

Oil prices have been moving in an extremely narrow band over the last two months of just $3-$4 and this week that band was squeezed further from dollars to cents.

Accordingly, the US Energy Information Administration (EIA) raised its price outlook for Brent crude to $41 per barrel for the second half of 2020, which is $4 per barrel higher than last month.

More importantly, the latest oil price trends confirm that historical output cuts made by OPEC+ are working to re-balance the market in the wake of the largest oil demand shock in history.

OPEC slashed its crude output in June to a three-decade low when it produced 22.31 million bpd, the organization’s lowest collective output since September 1990. 

These cuts appear to have achieved high compliance rates and have been largely responsible for keeping the market intact. 

But while consumers have benefited from market stability recently, the same cannot be said for speculators who love volatility.

Instead the hedge fund heads have been turned by airlines, cruise companies, banks and other sectors hard hit by the pandemic.

This won’t support upward movement in oil prices as sentiment remains bearish.

In the physical market, sour crude grades with high sulfur content are trading at prices getting closer to sweet barrels with low sulfur content. Crude grades with high sulfur content are showing signs of under-supply, with record premiums to Brent.

Coronavirus disease cases continue to rise in the US, a major threat to oil markets. 

Brent’s premium against Dubai has narrowed sharply this year and even flipped to a discount against Arabian Gulf crude grades for the first time in March.

At the same time, US shale prices linked to WTI remains relatively expensive.


Canada’s Trudeau to unveil plan to address coronavirus outbreak, revive economy

Updated 23 September 2020

Canada’s Trudeau to unveil plan to address coronavirus outbreak, revive economy

  • Trudeau will stress the need for environmental policies such as retrofitting buildings, boosting the use of electric vehicles and biofuels
  • Trudeau is paring down talk of a green revolution to slash reliance on export of fossil fuels

OTTAWA: Canadian Prime Minister Justin Trudeau will unveil on Wednesday what he says is a far-reaching plan to help the economy recover from the coronavirus pandemic while ensuring efforts to fight the outbreak do not falter.
Trudeau, who has consistently vowed to do more to combat climate change, is paring down talk of a green revolution to slash reliance on export of fossil fuels as Canada faces a resurgence in coronavirus cases.
“The three prongs of what we are doing are fighting COVID-19, supporting Canadians, and a resilient recovery,” said a government source who requested anonymity given the sensitivity of the situation.
The so-called Speech from the Throne outlining government plans is a confidence measure and given that Trudeau’s Liberals only have a minority in the House of Commons, they will need the support of opposition legislators to avoid being toppled and plunging the country into an election.
The left-leaning New Democrats have made clear they are likely to vote in favor. Trudeau’s popularity initially soared over his handling of the pandemic, but polls suggest he and the Liberals were damaged by a scandal over his close ties to a charity chosen to run a student grant program.
Parliament is usually packed for the occasion but COVID-19 means few legislators will be present when Governor General Julie Payette — the representative of Queen Elizabeth, Canada’s head of state — delivers the speech at around 3 p.m. (1900 GMT).
Later on Wednesday, Trudeau plans to make a national address to address the urgency of fighting COVID-19, a spokesman said.
Officials say the throne speech will contain policy proposals such as childcare and an expanded employment insurance program rather than specific spending commitments, some of which will be disclosed in a fiscal update later in the year.
But Trudeau will stress the need for environmental policies such as retrofitting buildings, boosting the use of electric vehicles and biofuels, aides say.