Daily Management Review

American refineries cannot recover after Hurricane Harvey


09/20/2017


It's been two weeks since Hurricane Harvey hit Texas, but the volatility of the stock statistics is still there.



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Traditionally on Tuesday, the American Petroleum Institute (API) publishes a fresh portion of statistics. According to the latest data, oil reserves grew less than expected, and gasoline stocks went up. Nevertheless, both futures for gasoline and oil futures reacted to this short-term growth.

So, crude oil inventories in the US increased by 1.43 million barrels in a week, while analysts expected 3.9 million barrel increase. At the same time, oil reserves in the transshipment hub in Cushing increased by 420 thousand barrels. Gasoline stocks, meanwhile, declined by 5.06 million barrels, although the reduction was expected to be only 2.1 million barrels.

Against the background of the published statistics, the prices for the American mixture WTI finally managed to overcome the mark of $ 50 per barrel.

A serious reduction in gasoline stocks indicates that the refineries have not yet recovered their work to full capacity, which means that the entire US oil sector is working with interruptions. However, not only American history influences the oil market.

Recall that the Ministry of Energy will publish official data on oil reserves and oil production tonight.

Next meeting of the OPEC countries and other oil-producing countries will also be held this week. Now their efforts to limit the extraction yield their fruits: oil is trading near its local highs.

The OPEC Committee will review the progress achieved on September 22 before the ministerial meeting in November, at which a decision will be made on the possible extension of the agreement.

It is also worth noting that in the world market there is a situation where the North Sea Brent blend, which is a landmark in Europe, now costs about $ 5 more than the US WTI, and this is also a success to some extent. The lower the price in the States, the worse the working conditions for shale companies - the lower the profitability. At the same time, the issuance of debt securities has recently been reduced, that is, raising funds for development, launching new drilling facilities is becoming problematic.

Despite all the optimism of analysts, the shale sector may well experience problems, and the reports of oil shale companies, if carefully studied, suggest that many work if not at a loss, then on the verge of profitability.

The other day Iraq said that OPEC could make new efforts to eliminate excess oil in the world market, reports Bloomberg.

Iraqi Oil Minister Jabbar al-Luaibi said that a number of OPEC countries support an increase in production reduction of 1%. A formal decision on this issue has not yet been made, he added.

According to the minister, at present, Iraq does not see the need for further production cuts, but if necessary, the country will maintain consensus within the Organization of Petroleum Exporting Countries.

Iraq cut oil production by about 260,000 barrels per day, exceeding its share in the planned reduction, said the minister in an interview with Reuters at an energy conference in the United Arab Emirates.

He also noted that prices ranging from $ 55 to $ 60 per barrel will be the most profitable for everyone.

source: bloomberg.com, reuters.com






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