JAKARTA (TheInsiderStories) – Concerns on the Marco and Laura’ tropical storms passing through the heart of the oil industry in the United States (US) also affected the Indonesian Crude Price (ICP) in August, said the energy and mineral resources ministry (MEMR) on Saturday (09/05). For that, the department set the ICP for August US$41.63 a barrel or an increase of 2.37 percent compared to the previous month.
“The August ICP was strongly influenced by the US’ policy of addressing the Laura hurricane incident around the Gulf of Mexico. Apart from being trimmed, they even stopped offshore oil operations even though they did not cause widespread damage,” the ministry stated.
In addition, it was observed that the market prospects for crude oil demand were still heavily affected by the pandemic. According to the ministry’ data, the average ICP from 2020 to the current month reached $40.08 per barrel. In detail, the January ICP at $65.38 per barrel, then moved down due to $56.51 a barrel in February, $34.23 per barrel in March, and $20.66 a barrel in April.
However, with the gradual relaxation of economic activity and hopes for the discovery of a COVID-19 vaccine, make the ICP slowly crept up to $25.67 a barrel in May, $36.68 per barrel in June, $40.64 a barrel in July and now at $41. 63 per barrel.
According to MEMR, other factors that affect the ICP movement are the level of OPEC+ compliance with the production cut agreement which reached 95 percent and plans to cut production in several OPEC+ countries in August and September 2020 as compensation for excess production in May – July 2020.
Its August report shows a positive economic trend with the recovery of the service sector, marked by more than expected revenue growth, which generally supports equity markets. In addition, the number of rigs operating in the US began to decrease to 176 units in early August 2020 (683 rigs in March 2020 and 185 rigs in July 2020).
There are also refinery margins globally which began to recover in July 2020 due to increased transportation activity as a result of easing lockdowns in several countries. While, the Energy Information Administration (EIA) detailed reports that the decline in US crude oil stocks would drop by 10.8 million barrels to 507.8 million barrels and US gasoline product stocks would drop by 8.6 million barrels to 239.2 million barrels. .
Not only that, the improvement in US manufacturing activity and the decreasing demand for steel products in the week from 9.16 million barrels per day to 8.78 million bpd also had an impact on the decision to determine the ICP.
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