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Covid-19 lockdown: Petroleum sector throttled

  
  Analysis
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The lockdown has severely hurt the petroleum sector, with oil and gas as well as refining suffering a sharp decline in production.

 

Gas output in April fell 18.6 per cent to 2.16 billion cubic metres (bcm) against 2.65bcm a year ago, according to the oil ministry.The country’s top gas producer ONGC reported a 15.3 per cent drop in output at 1.72bcm.

“The shortfall in gas production (by ONGC) is primarily due to less gas offtake by consumers,” the ministry said.

State-owned Oil India Ltd also produced 10 per cent less natural gas at 202.05 million cubic metres because of the presence of carbon dioxide at one of its fields in Assam and less purchases by consumers because of the lockdown.

Crude oil production fell 6.35 per cent to 2.5 million tonnes (mt) in April.Production at ONGC was marginally lower at 1.7 mt, while private player Cairn produced 19.2 per cent less at 615,800 tonnes.

ONGC had to shut down some of its wells on the western coast because of lower demand from GAIL and the restriction of movement of its staff.

Refineries produced about 30 per cent less fuel in April at 18.9mt as the lockdown kept most vehicles off the roads.

“Reasons for the shortfall in production mainly include low demand due to Covid-19 lockdown,” the ministry said.

Petroleum product demand is expected to fall eight per cent to 4,597 thousand barrels per day in 2020, the International Energy Agency (IEA) said as part of its May oil market report.

Demand is projected to fall 350 thousand barrels per day in the second quarter of 2020, primarily because of mobility restrictions.

The IEA has projected demand to fall 60 per cent year-on-year in April and May.Diesel demand is projected to contract 690 thousand barrels per day in the second quarter of 2020, while demand for aviation turbine fuel (ATF) and kerosene is projected to fall almost 40 per cent in April-May.

Roughly half of the kerosene produced is used as jet fuel and will be severely impacted by airline restrictions, the IEA said.

Overall, India’s oil demand is expected to fall 4.60 million barrels per day in 2020 compared with 5.01 million barrels per day in 2019.

The agency expects domestic crude oil production to continue to decline in 2020.

Oil hit by double-whammy as Bolton turfed and EIA cuts demand forecast

  
  Analysis
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Oil drops $1 fast

Oil drops $1 fast
WTI crude oil fell to $57.30 from $58.50 in a quick move after Trump announced he was firing national security advisor John Bolton. It’s since bounced back 40 cents.
Bolton has long favored military solutions everywhere, but particularly in the Middle East. The news diminishes the chances of bombs falling on Iran.
Minutes after that news, the EIA lowered its forecasts for world oil demand this year and next. They saw a rise of an 890,000 barrel per day rise compared to 1 million barrels previously for this year. For 2020, they trimmed the forecast by 30,000 bpd to a rise of 1.4mbpd.
Offsetting that somewhat is a lower forecast for US production next year at 13.23 mbpd compared to 13.26 mbpd.

WTI futures settle the day (and for the week) up $0.01 at $60.21

  
Analysis, Crude
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Up 0.02%

The price of WTI crude oil future are settling the day (and week) by the smallest of margins. The price is up 1 cent or 0.02% at $60.21.

The high for the day reached $60.74

The low extended to $59.93.
For the week, the pair is up $2.70 or 4.69% from the closing price of $57.51 last week. The gains were helped by a big drawdown of inventories on Wednesday of -9.499M barrels (expecting -3.0K).
Technically, the price moved above its 200 and 100 day MAs at $58.32 and $59.19 respectively. It will take a move back below those levels to hurt the bullish bias next week.
Up 0.02%
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