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Oil's Luck Runs Out As Driving Season Ends – OilPrice.com

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Oil’s Luck Runs Out As Driving Season Ends | OilPrice.com

Irina Slav

Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.

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    This year’s driving season was a disappointment for those who hoped and expected it to pull oil prices higher, helped by the pandemic that, those optimists reasoned, would motivate people to rely more heavily on personal transportation than public transit.

    Yet prices have remained low throughout the summer despite a modest improvement. This week, the first week after the end of driving season, prices started with a loss, with WTI falling below $40 a barrel. The trend is likely to continue as pessimism prevails. Is that justified?

    According to some, such as energy historian Ellen R. Wald, not really. Data from the EIA, Wald writes in an article for Forbes, suggests that the actual decline in gasoline demand, hence oil demand, from last summer to this was moderate, at less than 300,000 bpd. In itself, this decline could not be reason enough to keep U.S. oil prices as low as they are, not to mention going even lower.

    Prices, however, are trending lower because gasoline demand in the United States is just one of many factors traders watch, and it has recently been overshadowed by others, notably expectations for future oil demand in some key markets. Recently, there has been cause to believe this future oil demand will not be as strong as many may have hoped.

    Earlier this week, it emerged that Saudi Arabia had cut its official selling oil prices for buyers in Asia, the United States, and even Europe. This has been taken as a sign even OPEC’s number-one producer, one of the most upbeat producers when oil demand recovery was concerned, is not so sure it is recovering so well any longer.

    China’s oil-buying spree has been showing signs of a slowdown even if imports continue to be higher than they were this time last year. This has led to fears China’s oil storage may be getting full, and these fears have been reflected in oil price movements. In all fairness, most news from China has been positive for prices, however, with oil imports continuing higher. The negative is in the uncertainty, equally strong for both the global economy and China’s specifically.

    In more negative developments for prices, OPEC+ started easing its record production cuts last month, from 9.7 million bpd to 7.7 million bpd. Despite that fact, a few laggards were forced to effect additional cuts to compensate for their failure to stick to their production quotas for May, June, and July, the relaxation of the cuts has been bearish for oil prices.

    The new flare-ups of Covid-19 in many parts of the world—including China—have not helped at all. Initial optimism about the return of oil demand hinged, perhaps unconsciously, on hopes for a stable and sustained recovery in normal economic activity after the spring lockdowns. This has not exactly panned out with many countries in Europe fearing a second wave of infections, and the U.S. still fighting high daily new infection numbers.

    Amid all this, jet fuel demand is still in the gutter, with U.S. refiners struggling with excessive distillate fuel stockpiles. Expectations for the recovery of jet fuel demand are nowhere near as optimistic as they were about gasoline demand: it could take years for the air travel industry to recover, with pore-crisis levels seen no sooner than 2023. This, of course, is weighing on prices additionally.

    Taking all these factors together, it is pretty easy to see why prices were trending lower at the start of the week. Indeed, they may well continue down: as energy industry commentator Osama Rizvi noted in an article for Oilprice.com, oil’s fundamentals do not justify higher prices at this point.

    By Irina Slav for Oilprice.com

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      Why some snowbirds are still heading south this winter despite COVID-19 and a closed land border

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      Despite the U.S. having the world’s highest number of COVID-19 cases, Canadian snowbird Elizabeth Evans is determined to head south next month. That’s because her only winter home is parked at an RV resort in Williston, Florida.

      “I don’t have a [winter] home here,” said Evans, who’s currently living in her summer trailer at a campground in Niagara Falls. “I don’t have any winter clothes.”

      Evans is one of a number of snowbirds set on going to the U.S. this winter, despite the ongoing pandemic. But getting there may not be easy: To help stop the spread of COVID-19, the Canada-U.S. land border remains closed to non-essential traffic until at least Oct. 21.

      Evans believes the closure will be extended, so she plans to fly to Florida on Oct. 30 — two days before the campground where she’s living closes for the season.

      “There’s no way I am staying here,” she said. “Even if I had to get on the plane buck-naked, I’d be on it.”

       

      Elizabeth Evans and friend Susan Walley at at RV resort in Williston, Florida, where Evans lives during the winters. (Submitted by Elizabeth Evans)

       

      The Canadian Snowbird Association — which has more than 110,000 members — said it’s hard to gauge at this point what percentage of its members will actually head south this winter.

      Some snowbirds have already nixed their plans, while others are undecided.

      “A significant portion of them are in a holding pattern, just to see what shakes out at the land border,” said spokesperson Evan Rachkovsky.

      WATCH | Alberta snowbirds planning to spend winter at home:

       

      Snowbirds who would normally be preparing to head off for warmer climates are now stuck in Alberta preparing for winter thanks to the COVID-19 pandemic. 3:32

      Some experts predict the Canada-U.S. land border could stay closed to non-essential travel until the new year.

      Although Canadians can still fly to the U.S., Rachkovsky said many snowbirds won’t go without their cars but can’t afford the big fees — between $1,500 and $6,000 — to ship their vehicles.

      “It’s not really an option for some of them to fly.”

       

      Elizabeth Evans’ RV, which is parked year-round at an RV resort in Williston, Florida. (Submitted by Elizabeth Evans)

       

      Evans is one of those who would typically drive down to the U.S., which allowed her to transport her household supplies in her truck. She said she’s can’t ship her truck packed with luggage, so this year she’s leaving it behind, along with many household necessities.

      But she’s still bent on going to the U.S., even as health experts warn of a possible surge of COVID-19 cases in the fall.

      Evans said she plans to take precautionary measures such as social distancing and keep to her RV resort.

      “I will take the risk because I know how to protect myself, and everybody — at least in my resort — follows the rules,” she said. “I’m more concerned about falling off my bicycle than I am of COVID.”

      Escape winter while isolating

      Travel insurance broker Martin Firestone said so far less than 10 per cent of his snowbird clients have made firm plans to go south this winter. He said those who are going say they will aim to avoid crowds, just as they would in Canada during the pandemic.

      “They’re going to be prisoners in their developments or their condos,” said Firestone, with Travel Secure in Toronto. “They’re saying, ‘I guess I’d rather sit down in Florida than sit here in Ontario and face the harsh climate.'”

       

      Perry Cohen said he and his wife, Rose, plan to take all necessary precautions when they head to their condo this winter in Deerfield Beach, Florida. (Submitted by Perry Cohen)

       

      That about sums up Perry Cohen’s itinerary. The snowbird — who is one of Firestone’s clients — aims to head to his condo in Deerfield Beach, Fla., in early December as long as the COVID-19 case count remains low in that area.

      Cohen, who lives in Toronto, said he plans to take the necessary precautions and stick to his gated community — all while enjoying the warm weather.

      “Why would I want to be cooped up here when I can be there, out in the sunshine, in the fresh air?” he said. “You have more positives to go than to stay here.”

      Cohen also plans to fly to Florida and has a car parked at his condo. He said an added reassurance for him is that he can now purchase COVID-19 medical insurance — just in case he or his wife did get the virus.

      “I like a complete package to know I’m looked after [if], God forbid, I have a problem.”

      COVID-19 medical coverage returns

      Several travel insurance providers recently restarted selling COVID-19 medical coverage, after dropping it in March when the pandemic began its global spread

      Firestone said that even with the coverage, snowbirds could face problems if the community where they’re living has an outbreak.

      “The hospitals will get filled, the intensive care units will get filled, and then the fun will begin, regardless of whether you have insurance or not.”

      Cohen argues Canada could also experience overrun hospitals. Currently, COVID-19 case numbers are surging in Ontario and Quebec.

      “You take a chance and go, because we can have the same problem here.”

      Source:- CBC.ca

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      Oil Prices Under Pressure As Gasoline Inventories Climb

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      The American Petroleum Institute (API) reported on Tuesday a draw in crude oil inventories of 831,000 barrels for the week ending September 25 – but this draw was more than offset by a build in gasoline inventories.

      Analysts had predicted an inventory draw of 2.325-million barrels.

      In the previous week, the API reported a small build in crude oil inventories of 691,000 barrels, after analysts had predicted a draw of 2.256 million barrels.

      Oil prices were trading down sharply on Tuesday afternoon before the API’s data release as the market continues to be spooked by the rising number of coronavirus cases around the world – a factor that could lead to decreased movements and industrial activity around the world, and ultimately, to decreased oil demand.

      In the hours leading up to Tuesday’s data release, at 12:44 pm EDT, WTI had fallen by $2.00 (-4.93%) to $38.60, down $1 per barrel on the week. The Brent crude benchmark had fallen by $1.82 at that time (-4.29%) to $40.61.

      Oil production in the United States fell during the last week, and it is still down significantly from a high of 13.1 million bpd on March 13. U.S. oil production currently sits at 10.7 million bpd, according to the Energy Information Administration – 2.4 million bpd under those March highs.

       

      The API reported a build in gasoline inventories of 1.623 million barrels of gasoline for the week ending September 25 – compared to the previous week’s 7.735-million-barrel draw. Analysts had expected a much smaller 648,000-barrel draw for the week.

      Distillate inventories were down by 3.424 million barrels for the week, compared to last week’s 2.104-million-barrel draw, while Cushing inventories rose by 1.610 million barrels.

      At 4:36 pm EDT, the WTI benchmark was trading at $38.99 while Brent crude was trading at $40.76.

       

      Source:- OilPrice.com

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      COVID-19 on flights: More trips added to B.C.’s exposure warning list

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      VANCOUVER —
      Several more flights have been added to B.C.’s COVID-19 exposure list, with passengers being warned they should self-monitor for symptoms of the disease.

      The B.C. Centre for Disease Control posted details about the latest flights Monday evening. All four are domestic and either departed from or landed at Vancouver International Airport.

      The flights most recently added to the BCCDC’s list are:

      • Sept. 18 – Air Canada flight 122 from Vancouver to Toronto (rows 13 to 19)
      • Sept. 19 – Air Canada flight 303 from Montreal to Vancouver (rows four to eight)
      • Sept. 22 – Air Canada flight 304 from Vancouver to Montreal (rows 22 to 28)
      • Sept. 24 – Air Canada flight 123 from Toronto to Vancouver (rows 20 to 24)

      Passengers seated in the specified rows may be at a greater risk of exposure to the coronavirus, the BCCDC says.

      More than 50 flights have been added to the BCCDC’s exposure warning list so far this month. Last week, Health Canada said there was no confirmed COVID-19 transmission on domestic flights within Canada, or on international flights to or from Canada.

      Health officials in B.C. no longer directly contact people who were seated near someone with a confirmed case of COVID-19. Instead, health authorities post notices online about flights with confirmed cases.

      Source: – CTV News Vancouver

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