Over the past few months, there has been a lot of negativity in the global fuels market. The price war between Russia and Saudi Arabia, as well as the COVID-19 pandemic are at the top of the list when it comes to driving crude oil prices to historic lows. However, recently there has been some small and simple actions that show signs of turnaround in a positive direction in the crude market. The Texas Railroad commission, production cuts, relaxing of local travel restrictions, and construction resuming, will all have a positive influence on the oil market.
The Texas Railroad Commission (TRC) has the ability to influence local oil production. With national rail traffic being down due to the COVID-19 virus, the TRC planned to vote on production cuts. Texas Railroad Commissioner, Ryan Sitton, told Bloomberg that the push for mandated production cuts will likely not even go to vote. This can be attributed to local economies starting to open back up little by little, and the crude oil oversupply seemingly on its way back down to reality.
OPEC+ enforced a 9.7 million barrel per day (bpd) cut through May and June. This has already shown good impact in driving the oil markets in a positive direction. The 3rd and 4th quartile of 2020 also show an 8 million bpd production cut. There has already been a 20-cent increase in the distillate market over the last week, from April 27th through May 5th.
State Parks in California post this advice for recreational hiking and camping:
With a positive outlook, the flattening of the COVID-19 curve is working and allowing select states to relax the travel restrictions. Opening campgrounds, marinas, lakes and state parks in select regions has offered some uplift to the surrounding communities. This is allowing individuals to get out of the house and enjoy the spring weather and providing an extra boost in morale.
In the working class, construction companies are now allowed in some areas where production has been previously put on hold. This will help to resume job activity and stimulate more usage particularly in the diesel fuel industry with both on and off-road diesel products being the main fuel used in the construction trade.