Yesterday the market saw losses across the board with October WTI crude settling down 66 cents to $46.98 and HO finishing down $0.0110 to $1.4862. Gasoline weakened the most, losing $0.0459 to $1.4669, as summer driving season begins to wrap-up and the transition to winter-grade higher RVP gasoline nears. Additionally, optimism in a possible production freeze is lessening. The storm which threatened the market last week is expected to land near Tampa, FL, away from the Gulf Coast refining hub, and therefore is not expected to impact supply. Tomorrow October contract takes over as front-month RBOB, currently trading 8 cents cheaper than September. Gasoline continues to see losses of $0.0150 this morning, while the market is trading fairly flat on HO and WTI Crude.
Norwegian oil and gas company, Statoil, has been restructuring and creating efficiencies to now be able to make profit at under $25 a barrel. Through cutting $99 billion in costs, rising their current production output over 60,000 bbls a day, and with plans to run at full capacity to 600,000 bbls a day, they have found a way to make money in such a tight-margin market.
At $23.50 to produce a barrel of oil, Venezuela’s production costs are fairly low. However, the country is now one of the hardest hit from the fall in oil prices. They are the ninth largest exporter of crude, and the drop in revenue currently has the country in threat of “economic collapse.” At higher production costs, Russia, Nigeria, and Canada are also suffering. Brazil has one of the highest production costs of $48.80, and will be feeling the pain of a huge fall in demand post-Olympics.
Image Source: Marketwatch.com