Each week Josef Schachter will give you his insights into global events, price forecasts and the fundamentals of the energy sector. Josef offers a twice monthly Black Gold newsletter covering the general energy market and 34 energy and energy service companies with regular updates. He holds quarterly subscriber webinars and provides Action BUY and SELL Alerts for paid subscribers. Learn more and subscribe.
This weeks EIA data had a lot of cross currents due to the first storm of the season, Hurricane Barry that made landfall. This impacted shipping and loading and causing delays in the movement of crude oil and products during the week. As a result commercial crude stocks fell 3.1Mb on the week vs the expectation of a 3.6Mb decline. Offsetting this was an increase in motor gasoline of 3.6Mb and distillate fuels which rose 5.7Mb. Overall stocks rose 11.7Mb and remained 109.5Mb or 9.1% above last year. Because of the hurricane, offshore US production was shut in and lower 48 production fell 400Kb/day to 11.5Mb. Demand also fell. Last week, product supply fell 986Kb/day to 20.3Mb/day and motor gasoline fell 540Kb/day to 9.2Mb/d, again due to the weather and a slow down in summer driving.
As the trade war rhetoric picked up by President Trump and some weaker economic data including from CSX (a big US railroad company) the price of WTI crude has fallen over 9% in just a week. Last week WTI reached US$60.94 and today continues down and is now at US$55.39/b.
We continue to expect WTI to fall below US$50/b over the coming months. The S&P TSX Energy Index now at 136 (down from 171 in late April) should fall to below 130 before the next low risk buy signal occurs. The next buying opportunity is just ahead and we look for our key indicators to provide us with the window for new Action Alert Buys.
The 2nd Annual Schachter Catch the Energy Conference will be held at Mount Royal University in Calgary on Saturday, October 19th. This is a rare opportunity for investors to learn more and interact with 26 Energy Sector CEOs. Register early as a VIP to have lunch with your preferred CEO or company. Learn more and register.