The Phil Flynn Energy Report
Covid-19 Takes a Back Seat
Oil prices opened Sunday night lower, on rising Covid-19 concerns but are rallying back hard on reports of strong global demand. China is raising prices on retail gasoline to temper rising demand and Japan is facing a tight market as demand for gasoline and gasoil (diesel) faster than expected. Centaurus Energy reports that, "China’s state-owned oil refining giants forming purchasing group to buy crude together, increasing their bargaining power and avoiding bidding wars. Senior executives from China Petroleum & Chemical that we expect gasoline demand to start moving up.”
S&P Global Platts is writing that, "Japanese refiners may not be able to ramp up its refinery run rate to meet demand in July mainly due to the slow revival in jet fuel demand. This means that Japan will look overseas to bring in cargoes to plug any shortfall arising from the low refinery runs at home.”
The U.S. also may tighten but fears that the coronavirus may shut down some states and an uptick in inflections was raising fears of a big demand oil stall. Still, we’re looking for a draw in crude oil supply of 2 million barrels breaking string of increases. We also expect to see a drop in products. This week may start a string of draws as the Saudi oil exports and OPEC cuts start to impact U.S, oil supply. Despite some fears the trend of global oil demand is decidedly higher.
Chesapeake Energy filed Chapter 11 on Sunday. A sad day in the shale world.
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