Oil Prices Rise As Inventories Tighten Further Alex Mills

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Oil prices edged up this week.

Crude oil peaked midweek at $ 83.87 a barrel on the New York Mercantile Exchange on Wednesday, but fell back $ 2 to $ 81 in Thursday’s session.

Gasoline prices followed the rally in crude oil, rising $ 0.072 per gallon over the past week, according to AAA. The average price in the United States was $ 3.369 on Wednesday.

California has the most expensive gasoline with an average of $ 4,531.

Texas has the cheapest at $ 3,018. All parts of Texas have seen increases in gasoline prices this week. Prices in North Texas averaged $ 2.998 up $ 0.083, Midwest prices averaged $ 3.070 up $ 0.081, and East Texas averaged $ 3.058 up $ 0.085, according to AAA.

Diesel prices across the country were on average $ 3.579 and $ 3.262 in Texas.

Rising prices for crude oil, gasoline and diesel can be attributed to increased demand and lower oil inventories.

The Energy Information Administration reported this week that oil inventories fell by 400,000 barrels to 426.5 million barrels, a drop of 61.6 million barrels from a year ago and a decrease from 123.5 million barrels since last June.

The EIA also reported declining inventories of refined products, as demand for distillate and gasoline increased despite rising consumer prices. Gasoline inventories have fallen 5.37 million barrels to their lowest since November 2019 and demand is at its highest since 2007 for this time of year.

As demand for petroleum products increases and prices firm up, oil and gas companies have gained the attention of financial institutions, according to a Bloomberg report.

Banks are gradually offering more credit to U.S. shale oil and natural gas producers as the industry recovers from last year’s contraction and rebound in energy prices.

So-called borrowing bases will rise by as much as 20% in the looming round of talks between drillers and lenders, according to most of those interviewed in a survey by law firm Haynes & Boone LLP.

The results point to continued improvement after dire conditions in the oil and gas sector last year, when the pandemic and global gluts caused energy prices to plummet and prompted banks to cut lending.

The previous Haynes & Boone survey, published in April, indicated that borrowing bases would remain stable or increase by 10%. Loans against crude and gas reserves, a key source of capital for explorers, are typically subject to semi-annual reassessments, during which bankers reassess their liabilities.

Alex mills is the former chairman of the Texas Alliance of Energy Producers.


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