Energy Report: The Daily Grind

Nov 20, 2020 1:57PM | Commodities

prices are doing the daily grind higher as vaccine hopes rise and some renewed stimulus talks. Before the election, House Speaker Nacy Pelosi thought she held all the cards in stimulus negotiations with polls showing a ‘” blue wave”. Now it seems that it will be the Republicans that will have more sway, assuming a smaller package. Yet more virus news may show that a bigger package may not be needed.
The Wall Street Journal is reporting that, “Pfizer(NYSE:) will submit applications to the FDA and other world agencies for approval of their Covid 19 drug. They say upon acceptance; they could produce 50 million doses in 2020 and 1.3 billion doses by the end of 2021. The potential for a safe and effective vaccine will change the oil supply and demand dynamic, and we are going to see a very tight oil market in the latter half of 2021. Once approved, they say the vaccine would be available in hours.
OPEC plus is still being cagey. Libyan oil production is rising, but it is starting to attract foreign investment because of recent political stability. Reuters reports: Loadings of Libya’s most massive crude stream are set to rise sharply after the OPEC member managed to raise output to pre-blockade levels of 1.25 million barrels per day (bpd). Loadings of Es Sider crude in December were pegged at around 258,000 bpd, a preliminary program seen by Reuters showed on Thursday. This compares with 187,000 bpd in the final November program.
On Wednesday, the country’s National Oil Corp (NOC) said it had restored output to 1.25 million bpd, a level not seen since eastern forces imposed an eight-month blockade in January that choked oil exports. Before 2011, Libya was producing about 1.6 million bpd. NOC held a meeting with France’s Total Wednesday to discuss ways of raising output further. In a statement following the meeting, NOC said budgetary constraints were one of the top challenges to developing the country’s oil sector.
While gasoline prices are low, diesel prices are rising. Truckers moving goods and trains are helping spike demand. Robust housing data is bullish for diesel and building materials, and transport will keep the demanding track rising. Now, if you start to put more planes in the sky, we could see quite a price recovery.
The Heat Is Off. Above average temperatures across the nation suggest that the heat is off for bulls. While trades are starting pricing, a tight market based on long-term weather forecast calling for a November arctic blast that turned out to be wrong is now going into deep retreat mode. No one could argue that it is way too early to write off winter. According to EIA estimates, the EIA  showed that working gas in storage was 3,958 Bcf as of Friday, Nov. 13, 2020. This represents a net increase of 31 Bcf from the previous week. Stocks were 293 Bcf higher than last year at this time and 231 Bcf above the five-year average of 3,727 Bcf. At 3,958 Bcf, the total working gas is within the five-year historical range.

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