Crude Oil Futures

  Oil prices continue to soar as the markets approached the weekend. The slight reduction of the US oil inventories may have played its usual part in stabilizing the price. At present, there are signs it may stay bullish for now. There are a few scenarios that may decide the rate of recovery, especially in the light of the second wave of Covid-19 in Europe and elsewhere. A sensible approach by the OPEC may have played a role it the current trend. There are no signs that the global body will aggressively go for substantial cuts in the current circumstances. Hurricane Teddy, meanwhile, has lost its strength from category 4 to category 3, which could have disturbed the markets the way Hurricane Sally did.    

  Hurricane Sally fizzled out without causing the anticipated, dreadful destruction along the US Gulf Coast. The mood of relief, however,   has been dampened by the emergence of the new threat that is developing into a Category 4 hurricane – Hurricane Teddy. It may make landfall on Tuesday if the predicted path by models is correct. If it does not lose its strength in the coming days, it has the potential to cause havoc when it makes the landfall. In the light of the development, oil production is going to be hit on many fronts. Although the logical conclusion is that it may hit the supply and distribution – causing a hike in crude price in theory – it may bring the activities to a halt too, as the movement of people and vehicles are going to be down too in proportion to the impact of the storm. This is not good news for the oil markets, though. There were signs of subtle recovery of the oil price this week and the natural events like this kind may dampen the mood of investors.

  The shocking announcement by the oil giant BP that the oil would never recover to the level that the markets were aspiring for, was the last thing that the producers wanted to hear in a turbulent time. The producers, mainly the OPEC, did not try to dampen the pessimism. On the contrary they added fuel to the fire by saying that the global demand will be down by 400,000 bpd this year. The OPEC and BP saw eye to eye on the issue and the influential global Green lobby, understandably, was ecstatic. It is highly debatable why BP chose to embrace the gloomy outlook for the future of fossil fuels, when the evidence clearly shows signs to the contrary – fossil fuels are here to stay for decades to come. In fairness to BP – and all those in similar positions – we have to admit the oil giant knows the influence that environment activists wield over many global bodies. With the minority that defends the industry is on permanent and irreversible decline, these companies were left with

  Hurricane Sally, which was downgraded to Category 1 on Tuesday, slowly makes its inward journey, causing serious flooding in the region around the US Gulf Coast. Although it lost its strength in terms of destructive speed, it brought the oil and gas production in the crucial region to a partial paralysis; it is estimated that more than a quarter of production was shut along with the export ports. Understandably, oil prices recovered slightly perhaps based on the temporary disruption to the production and distribution of oil and gases in the region. The weather data, meanwhile, shows the formation of another potential storm, far away from the US East Coast in the region. Its path and strength in the coming days is anybody’s guess at present, because these storms can never be modelled with 100% accuracy despite the availability of vast amount of data and the tools to analyse it. Evolving weather patterns are not the only factor that the analysts keep focusing on at present. Alt

  The traffic data gathered by Reuters, based on TomTom traffic indicators, clearly show an upward trend in traffic in London, Paris and New York. People use private vehicles to move between cities and towns for their needs, which could boost the demand for gasoline. Although it’s a positive factor in favour of increasing the consumption of fuel, short trips may not increase the demand of oil considerably in the short-term. In Beijing and Moscow, meanwhile, traffic has reached pre-pandemic level, according to Reuters. By contrast, most people avoid public transport for the fear of catching Covid-19. This is particular the case in London; in Paris, however, people use the public transport more than they do in London or New York. On a negative note, the report says that the sale of vehicles is significantly down that could affect the sale of oil in the long run. To make matters worse, a significant number of the workforce have opted for working from home. In addition, the surge

The EIA, US Energy Information   Agency, says in its latest report that fossil fuel, including petroleum, natural gas, and coal, formed the largest share of energy production and consumption in the United States, the world’s top fuel user, last year. In 2019, it was staggering 80% of domestic energy production and 80% of the domestic energy consumption. The revelation casts a worrying a shadow over the optimism of going Green any time soon: 80% of production and that of consumption are not small numbers; they are immensely significant. That means the supply-demand lever of fossil fuels, especially crude oil, is going to shape the US energy realm for years to come. In this context, it is not feasible to see notable drop from 80%, both in production and consumption, in the near future –certainly not after being bruised by a pandemic.

We may not be out of the woods yet, as far as the once-in-a-century pandemic is concerned. The world, however, had witnessed the worse before and managed to come out of it. In 1918, the Spanish flu was a case in point: it affected over 500 million people and around 10% of them died with enormous suffering at a time, even in the West, the medical facilities were not great. It lasted over two years and came in four waves. In the end, the world bounced back and the recovery slowly picked up. The oil price that languishes in a cauldron of uncertainties, will bounce back in a matter of weeks too, when the world is reeling from the impact. In 2020, the world is in a better place: the health care may not be perfect, but way better than it was a century ago; the communication among nations is quick and efficient; sharing, both information and resources, is at an all-time high level; preventive measures are easy to implement. We may have a second or even third wave of the pandemic

The oil rig count in the US fell by 2 this week, according to weekly data from Barker Hughes on the subject. It may seem a small number at first; however, when you take into account what the rig count was this time last year, it's a serious matter for the industry, which is already at the epicentre of unknowns. According to the information available from Barker Hughes, the rig count was 632 this time, last year. It's a massive percentage drop. In this context, it's not rocket science to guess the impact; the loss of rig count means loss of activity and hence the production of oil. The news of the loss of rig count coincides with the rise in oil inventories this week - a clear sign of lack of demand on the ground. Although there was a significant increase in traffic on the roads, both in Europe and Asia in the past few weeks, the fear of lockdowns still looms over the entire industry, which in turn could turn thing around for the worse again. Really uncertain times lie ahea