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The National Energy Board (NEB) today approved TransCanada’s Keystone Pipeline GP Ltd. (Keystone) request to begin winter clearing work on the North Spread of its Keystone XL Project (Project).
- US crude oil inventories declined 2.7 MMBbl last week, according to the weekly EIA report. Gasoline and distillate inventories showed sizable gains of 7.5 MMBbl and 3.0 MMBbl, respectively. Total petroleum inventories posted a gain of 5.0 MMBbl. US crude oil production was estimated to be up 200 MBbl/d. Crude oil imports were down 319 MBbl/d, to an average of 7.5 MMBbl/d, versus the week prior.
- While some bullish expectations remained in the market, last week started with price declines. For imports and exports during December, China reported its lowest level over the past two years, causing the declines. This news enhanced concerns about slowing economic growth and demand for petroleum products. These concerns were quickly reversed with news that China is planning to introduce policies to stabilize the slowing economy. On Friday, news of a Chinese proposal to reduce the trade imbalance between China and the US over the next six years resulted in WTI prices rising $1.78/Bbl and closing the week at the highest level since early December.
- Other supportive elements continue in the market as Saudi Arabia’s energy minister Khalid Al-Falih announced that OPEC is on track to comply with the production cuts. He added that OPEC will have no need for an extraordinary meeting before the April meeting, where it will decide on output policy for the remainder of 2019.
- The China announcements and perceived strength in the US economy had the US dollar gaining last week. The inverse relationship between the US dollar and WTI prices disappeared as both gained over the week.
- Last week’s inventory release continued the trend of late, with crude oil declines but gains in total petroleum inventories. This reflects historic demand declines in the first quarter and may have a reduced impact on prices.
- Prices in WTI settled the week up $2.21/Bbl, but the market internals were not as supportive to additional gains. WTI had a decrease in volume and continued declines in open interest as prices increased, testing resistance. A long-term bullish market needs to keep feeding the rallies with additional volume and open interest gains if the price run is to maintain its structural bias. The CFTC report is still not available, due to the government shutdown, so the market is blind to position structure among the sectors.
- WTI prices are now challenging the high end of the range and an area of consolidation from last November and December between $49.00/Bbl and $54.55/Bbl. As the market digests production cuts, sanctions, and tariffs, the price range will be between $42/Bbl and $55/Bbl near-term. Once the market has a full understanding of these elements, the price will likely stabilize around $55/Bbl.
- Natural gas dry production gained 0.25 Bcf/d, while Canadian imports decreased 0.17 Bcf/d.
- Res/Com demand increased 6.73 Bcf/d due to cooler temperatures. Power and Industrial demand also increased 1.86 Bcf/d and 0.49 Bcf/d, respectively. LNG exports declined 0.31 Bcf/d on the week, while Mexican exports were flat. Totals for the week show the market gaining 0.08 Bcf/d in supply while demand increased 9.14 Bcf/d.
- The storage report last week came in with a withdrawal of 81 Bcf, well below historical withdrawals for the same week. The upcoming weeks should show more historical seasonal withdrawals.
- The week started with a large price gap created from changes in the weather forecasts. Forecasted temperatures support stronger demand through the end of the month. As discussed previously, the market adjusts to changes in the forecasts, which occur throughout the day. An example of this intra-day volatility was seen on Friday, when the market opened lower and moved down, trying to close the gap from earlier in the week, only to reverse when the late-morning forecasts reaffirmed the cold weather.
- With the CFTC not reporting the positions of trade sectors (due to the government shutdown), it is impossible to identify shifts within traders’ expectations and positions. Market internals had volume and open interest gaining (compared with the previous week) as prices rallied.
- An early week run took prices up to the week’s high at $3.722/MMBtu. Prices then declined throughout the week, likely creating the low side of the trade range between $3.167/MMBtu and $3.201/MMBtu, barring any significant forecast changes. The high side of the range may be tested during the coming week, with a potential for a $0.55+/MMBtu trade range, as prices continue a period of potentially high volatility.
- Trade has not reached a consensus about the outcome of the winter, with many traders concerned about ending storage inventories in March. This concern is buoyed by the flattening of production gains over the past two months. Other traders are not worried about the ending inventories. This struggle to assess the market is the reason that price action is so sensitive to the forecasts.
- Prices improved week over week across the board. Ethane was up $0.01 to $0.30, propane up $0.02 to $0.67, normal butane up $0.02 to $0.80, isobutane up less than $0.01 to $0.80, and natural gasoline up $0.01 to $1.06.
- The Conway to Mont Belvieu ethane/propane mix spread shortened to about $0.09, with the differential as large as $0.15 in prior weeks.
- US propane stocks decreased about 1.2 MMBbl in this past week’s inventories. Stocks now sit at 67.5 MMBbl, about 9.5 MMBbl higher than in the first week of 2018, but 4.7 MMBbl lower than in the first week of 2017.
The post The Week Ahead For Crude Oil, Gas and NGLs Markets – Jan 21, 2019 appeared first on Drillinginfo.
Source: BOE Report
Source: BOE Report
Адлерская ТЭС ПАО «ОГК-2» увеличила выработку электроэнергии на 27 %!в(MISSING) 2018 г.
Source: BOE Report
Source: Oilandgasinvestor.com Feeds
A pharmaceutical company’s ill-fated attempt to focus on trading bunker fuel derivatives highlights the unpredictability that IMO 2020 has injected into oil markets.
Having sold off its opioids business the previous year, in early 2018, Norway’s Vistin Pharma announced it would set up a new oil trading unit focusing on profiting from the International Maritime Organization’s lower sulfur limits for shipping in 2020. Ten months and $9.8 million of paper losses later, the company said in early January that it would be closing the unit.
Vistin had bet on the spread between gasoil and high sulfur fuel oil in Singapore widening in the run-up to 2020, when fuel oil demand is set to plummet as the IMO prompts shipowners to shift to cleaner-burning fuels.
In a presentation from September 2018 on the company’s website, it projected the spread widening to as much as $800/mt by the end of 2020.
But the strategy appears to have been foiled by a combination of last year’s strength in fuel oil prices and the rapid drop in crude prices in the fourth quarter.
By December 31, the 150,000 mt of contracts the company held represented a mark-to-market loss of NOK 85 million ($9.8 million). Vistin’s head of energy trading resigned at the start of the year, and after a swift strategic review, the company decided to shutter the unit he had set up.
Not as easy as it looks
The episode highlights the dangers faced by some of the outside players currently eyeing up the bunker industry for money-making opportunities in 2020.
On paper the changes coming next year look easy to profit from: a sharp drop in fuel oil prices towards the end of 2019 and a more steady rise in middle distillates looks all but inevitable, and is potentially not yet fully priced into the forward curve.
But Vistin’s difficulties show how some of the less-familiar moving parts around IMO 2020 may make it tricky for new money to enter the bunker industry and take advantage of the regulatory disruption.
The scale of last year’s fuel oil strength was unexpected: a combination of sinking Russian output and firm Saudi demand left the bottom of the barrel briefly trading above gasoline prices in Singapore towards the end of 2018.
Investments in emissions-cleaning scrubber equipment may be another area where outside money gets tripped up by some of the nuances around how 2020 plays out.
Ships have the option of paying a few million dollars to install a scrubber that cleans their emissions and allows them to continue burning fuel oil, and financial institutions including Goldman Sachs have shown interest in financing these investments and profiting from the potential fuel bill savings to be made.
Scrubbers fall out of favour
But in recent months, the scrubber industry has been taken aback by a series of regulatory decisions against open-loop models of the technology — a type of scrubber that deposits sulfurous wash water back into the sea.
It recently emerged that China would be likely to ban the use of open-loop scrubbers in some of its waters, following a similar decision by Singapore last month, raising the prospect of those that have invested in — and financed — this equipment finding themselves unable to profit from it across large parts of Asia.
This isn’t to say that turning a profit will be impossible in 2020. Vistin Pharma’s bet may yet pay off to some extent.
The company has decided to hang onto its bunker derivative investments, and they may look less disastrous later this year as fuel oil’s recent strength wanes.
But outsiders coming to this industry for the first time in the run-up to 2020 will need to be wary. The bunker and shipping industries are anything but simple, and involvement with them is not for the faint-hearted.
The post As IMO 2020 lures newcomers to bunker sector, profit is far from guaranteed: Fuel for Thought appeared first on The Barrel Blog.
Source: Oilandgasinvestor.com Feeds