Blog > October 2020 > Crude Oil Markets

Crude Oil Markets

October 21, 2020

What a year this has been! Weather and crop production, for the most part, have been good. However, our country still struggles with the pandemic and the question of when a vaccine will be available. While driving down the road this week, I heard that there may be some uncomfortable side effects to the vaccines that are in phase three trials. The problem that we are seeing is that this knowledge could drive people away from taking it vaccine.

This by itself creates uncertainty in the markets as traders, investors, and refineries try to position themselves for the current conditions.  When travel attempts to regain some direction throughout the country, this will also create challenges for the markets. OPEC met last week and plans to scale back oil production in January from 7.7 million bpd to roughly 5.7 million bpd. But one OPEC member, Libya, who is exempt from the cuts, plans to ramp up production - adding further uncertainty in the markets.

Airlines continue to face the reality that many people have chosen to not fly domestically.  Additionally, international flights are down over 90% based upon the concern of, “What if the place I travel to declares some emergency and I can’t get home?” This alone leaves millions of gallons of fuel unused.

Some feel that a coronavirus aid package will help with crude prices. Many believe that a deal between the Democrats and President Trump is close enough that checks could go out early next month. Crude is currently trading in the $40 range, which for the end-user, provides for some good opportunities for contracting fuel needs.

As we continue to watch this year unfold with all its uncertainties, take the opportunity to set down with one of CVA’s energy team members to explore how we can assist you with your energy needs.  If we have learned anything from this year, it’s that we don’t know what is coming next.  Be diligent in planning ahead as we enter the last quarter of 2020.
by Karl Serrien
Posted: 10/21/2020 2:36:46 PM by Kristin Petersen | with 0 comments

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