Last quote by Andy Lipow
Andy Lipow quotes
The bottom line is they've yet to come to a deal in spite of all their optimistic pronouncements, and the heavy lifting is going to have to be done by Saudi Arabia.
While OPEC may announce a freeze and a cut in production at the end of November, there has been a free for all among its members to produce as much as possible since the September freeze announcement. I think that in spite of whatever agreement comes out of Vienna at the end of the month, the market will be skeptical that OPEC can bring the self-discipline to its members to actually enact a substantial production cut.
It's good news for the refiners because both gasoline and distillate inventories dropped far more than the market anticipated. That is going to help refining margins in a difficult period.
Refiners are importing less crude oil and are really just starting to draw down onshore inventory. Week in and week out we're seeing lower amounts of imports than one might expect given the amount of crude oil we're processing.
This "puts OPEC in an even tougher spot because they have to cut even more production to accommodate the resumption of sales out of Libya and Nigeria.
I think there's a very good chance that [the deal] gets derailed. The production cuts involve countries like Iraq and the Emirates who probably are not very excited about cutting their production.
Clearly, it is inconsistent with the Saudis claim that they're going to cut production in the future, because one would think if you're going to cut production you don't have to cut your crude oil price very much.
We still have two months of rapid free-for-all.
A lot of people ran to the pump to fill up so it created demand early. With the Colonial start-up over the next five days, terminals will be getting supplies.
There's no other way to get barrels in there. It's right in the middle of the Southeast.
But it will happen and the consumers will get their gasoline.
You might have an unusual situation where people could pay more at the pump, and they'll be watching gasoline futures dropping off.
Judging from the Nymex action right now, it doesn't look like the market thinks it's going to be fixed today or tomorrow.
It's very much station by station.
Inventories will have pulled down. It will take quite a while to replenish those inventories.
It will eventually go away. The question is how long will it take to repair but it's been down 10 days already.
I'm expecting that in the Carolinas, maybe some parts of Virginia and possibly some locations in Georgia.
If it continues it could mean 15 to 20 cents.
We really don't know exactly when Colonial is going to get started back. By Sunday, you might see some brown paper bags on gas pumps.
I think certainly some of the unbranded stations will probably run out of gas.
I would just say gasoline prices are likely to fall another 5 to 10 cents a gallon over the next several weeks, and the national average should actually approach $2 and $2.05 a gallon over the next few months.
It continues to turn the crude oil surplus into a product surplus.
I suspect over the next few weeks we're going to see inventories recover to a certain extent, as the imports catch up. There's still plenty of oil out there. What we're seeing is the result of storm impacts on vessel shipping at the same time we still see members of OPEC to increase their oil production.
I think the big news is really in the products. That's what's driving the market down. Gasoline (supply) has been rising over the last several weeks, in the heart of the summer driving season. Good for consumers, and bad for refiners.
If you look at inventory levels, since Memorial Day, gasoline inventories have trickled on up. I expect that we're going to maintain high inventory levels throughout the summer, going into Labor Day.
They're buying time. It's going to fall off another 300,000 or 400,000 barrels a day by the end of the year.
I remain sceptical, at the end of the day, about that happening as the oil producers are looking at the other guy to cut production while maintaining their own levels.