Daily Energy Report 05.12.2020

Crude Oil Futures for June 2020 settled up $1.64 @ $25.78/bbl trading in a $2.01 range including the overnight-RBOB settled down 0.57/cpg and Heating Oil settled down 3.03/cpg.

Global crude oil prices continued to rally into Tuesday’s trading session after an unexpected commitment from Saudi Arabia to deepen current production cuts in June. Saudi Arabia said late in the day Monday it would cut output by another 1 million barrels per day in June, cutting total production to 7.5 mil/bpd, or down nearly -40.0% from April. The United Arab Emirates and Kuwait also committed to cut an additional -180,000/bpd in total, adding to reductions of the OPEC+ producers. Market advisors note that the market is far from certain that the additional cuts announced yesterday will be able to drive the oil price materially higher.

Natural Gas Futures for June 2020 settled down $0.106 @ $1.720/mmbtu trading in a .140 cent range including the overnight session.

According to EIA data, domestic coal-fired generation dropped to 966,000 gigawatt hours in 2019, the lowest level since 1976. The decline in last year’s coal generation levels was the largest percentage decline in history-in excess of-16.0%-and second largest in absolute total terms. Although lower electricity demand in 2019 was partly responsible for less coal-fired generation, the primary driver was increased output from Natural Gas fired plants and wind turbines. Natural gas fired generation reached an all-time record of nearly 1.6 million GWh in 2019, up +8.0% from 2018. Electricity generation from wind turbines also set a new record, surpassing 300,000 GWh, up +10.0% from 2018. Domestic coal-fired capacity peaked at 318 gigawatts in 2011.