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Phil Flynn

Phil Flynn is writer of The Energy Report, a daily market commentary discussing oil, the Middle East, American government, economics, and their effects on the world's energies markets, as well as other commodity markets. Contact Mr. Flynn at (888) 264-5665

There seems to be a little trouble brewing in the OPEC Cartel. It seems the UAE is not happy with its oil production share and is considering going out on its own and leaving the OPEC cartel’s cozy world.  This comes as oil traded but failed to break out of its trading range as Mixed data from the Energy Information Administration (EIA0 was unable to withstand stock market weakness and ongoing Covid demand weakness concerns. While Hurricanes and Covid shutdowns caused U.>S Gulf of Mexico oil production to fall to its lowest level since 2008, another wave of Shale oil bankruptcy still keeps oil supported in the longer term. The legacy from COVID-19___0, which at first was demand destruction, will flip to long-term production destruction and a world in our future of much higher prices when the COVID-19___0 vaccines arrive.

Reports that the UEA Might leave OPEC weakened the oil price, but some doubts will happen. Analyst Anas Alhajji says that the story about a rift between the UAE and Saudi Arabia on oil production policy and then talk about the UAE leaving OPEC is not only exaggerated; it is NOT TRUE! Still, the oil market worried that if it was true, we might see the UAE raise output gave us a dip.

 Charles Kennedy at Oil Price writes that After a wave of bankruptcies in the third quarter, oil producers and oilfield services companies in the U.S. shale patch continued to file for protection from creditors at the start of the fourth quarter, law firm Haynes and Boone said in its latest tally, warning that the ongoing borrowing base redetermination season could result in more filings.   Filings from exploration and production (E&P) numbered 17 in the third quarter, while another three firms filed for bankruptcy in October, according to Haynes and Boone data as of October 31.

“While the pace of bankruptcy filings for producers has slowed from the wave last summer, the current borrowing base season for oil and gas borrowers may put further pressure on some of the already financially stressed producers. Combined with the general lack of access to capital, additional filings are likely before 2020 comes to a close,” the law firm said.

Between the beginning of 2015 and the end of October 2020, as many as 250 North American oilfield services providers filed for bankruptcy. Another over 250 filings in the industry came from E&P companies in North America, so more than 500 bankruptcies have been filed in the North American oil and gas industry since 2015, Haynes and Boone said. More bankruptcies are expected by the end of the year, Rystad Energy said at the end of October.

The EIA is reporting that the Gulf of Mexico saw its largest decrease in crude oil production since 2008 in August. n August 2020, the Federal Offshore Gulf of Mexico (GOM) saw its largest monthly decrease in production of crude oil since September 2008, dropping by 453,000 barrels per day (b/d), or 27%. Production of crude oil in the GOM totaled 1.2 million b/d in August 2020, which is its lowest production rate in nearly seven years. The regional drop in production resulted from the path of both Hurricanes Laura and Marco in late August.

Hurricane Laura and Hurricane Marco, which came through the GOM consecutively, caused shut-ins (in other words, not operating) starting on August 22, 2020, and led operators to reduce output for 15 days. Hurricane Marco (the weaker of the two storms) came through first, making landfall on August 24, which affected the magnitude and timing of Hurricane Laura’s shut ins.

Three days later, Hurricane Laura (the 10th-strongest U.S. hurricane on record, as determined by its winds’ speed) made landfall on August 27. The U.S. Bureau of Safety and Environmental Enforcement (BSEE) estimates that 14.4 million barrels of crude oil production were curtailed over 15 days because of the storms. BSEE estimates that about 84% of GOM crude oil production was shut in at the peak of the disruption due to crew evacuations.

In 2020, five hurricanes and one tropical depression have caused disruptions to crude oil production in the GOM. Hurricane Zeta was the most recent storm to hit the GOM, causing production curtailments through November 4, 2020. To date, 30 named storms have formed in the Atlantic in 2020, surpassing the 28 storms of 2005 and making the 2020 Atlantic hurricane season the most active on record.

We get the Nat gas report today. Warm weather killing prices. Oil should attempt to close above 4215 breakouts as refinery runs rise. The EIA Reported that U.S. crude oil refinery inputs averaged 13.8 million barrels per day during the week ending November 13, 2020 wh was 395,000 barrels per day more than the previous week’s average. Refineries operated at 77.4% of their operable capacity last week. Gasoline production decreased last week, averaging 9.1 million barrels per day. Distillate fuel production increased last week, averaging 4.3 million barrels per day.

U.S. crude oil imports averaged 5.3 million barrels per day last week, down by 245,000 barrels per day from the previous week. Over the past four weeks, crude oil imports averaged about 5.4 million barrels per day, 12.5% less than the same four-week period last year. Total motor million barrels per day, 12.5% less than the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 530,000 barrels per day, and distillate fuel imports averaged 285,000 barrels per day.

U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) inventories are about 6% above the five-year average for this time of year. Total motor gasoline inventories increased by 2.6 million barrels last week and are about 4% above the five-year average for this time of year. Finished gasoline and blending components inventories both increased last weeks.

increased last week.

 Distillate fuel inventories decreased by 5.2 million barrels last week and are about 11% above the five-year average for this time of year. Propane/propylene inventories decreased by 2.0 million barrels last week and are about 6% above the five-year average for this time of year.  Total commercial petroleum inventories deceased by 10.2 million barrels last week.

Total products supplied over the last four-week period averaged 19.4 million barrels a day, dow by 9.1% from the same period last year. Over the past four weeks, motor gasoline product supplied averaged 8.5 million barrels a day, down by 9.5% from the same period last year.

Distillate fuel product supplied averaged 4.1 million barrels a day over the past four weeks,down by 6.5% from the same period last year. Jet fuel product supplied was down 39.8%compared with the same four-week period last year.
Thanks,
Phil Flynn

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