Hedging Energy Bets: The Case for a 2018 Oil Bull Run
Hedge funds gamble OPEC will tighten oil market too much. Hedge funds are the most bullish about oil prices in years, expecting further gains even as prices touch multi-year highs and ignoring the risk linked to such a large concentration of positions. A record net long position has been accumulated by hedge funds and other money managers, amounting to 1,183 million barrels in the five biggest futures and options contracts covering crude, gasoline and heating oil. Portfolio managers held a record 1,328 million barrels of long positions in Brent, WTI, U.S. gasoline and U.S. heating oil on Dec.
Wells Fargo Calls $100 Oil a 'Pipe Dream'
USD 100 per barrel oil is but a “pipe dream,” Wells Fargo said in a new investor note, reports MarketWatch. The report quoted Wells Fargo’s John LaForge saying that he’s doesn’t expect oil prices to climb anywhere near $100 a barrel over the next few years. Barrels price will bounce between $30 and $60 in the coming years, according to top bank’s diagnosis. “We continue to hear that big cutbacks are on the cusp of happening,” he said. “The evidence, however, implies otherwise. Shale production has caused American output to stand higher than it did in 2014, before the oil price crisis began.
Japan: Little Chance Sanchi Oil Slick Reaches Its Coast
Japan sees little chance of the oil spill from a stricken Iranian tanker that sank on Sunday in the East China Sea reaching its shores, an official at the nation’s environment ministry said on Tuesday. The large tanker Sanchi (IMO:9356608) sank in the worst oil ship disaster in decades and produced a large oil slick, Chinese media and Japanese authorities said on Monday, as worries grew over damage to the marine ecosystem. The vessel’s crew of 30 Iranians and two Bangladeshis are all believed to have perished in the incident.
Asian Coal Prices Spike Amidst Shipping Congestion
Over 500 ships waiting to load or unload coal; strong winter demand has driven coal, LNG and oil prices. Asian benchmark thermal coal prices have pushed to their highest levels since 2016, fuelled by demand in China and loading delays in Indonesia that have ramped up shipping congestion outside major coal ports. Spot cargo prices for Australian Newcastle coal have risen nearly 15 percent from lows in late November after China loosened import restrictions to help meet a winter fuel shortage.
Winter Storm Threatens U.S. East Coast Energy Industry
The U.S. energy industry braced for a major test to refineries and power plants as an intense winter storm roared up the Atlantic Coast, bringing heavy snowfall and high winds to a region already beset with several days of extreme cold. The storm is the product of a rapid and rare sharp drop in barometric pressure known as bombogenesis, or bomb cyclone. Heavy snow pounded the East Coast along a front stretching from Maine as far south as North Carolina early on Thursday, knocking out power, icing over roadways and closing hundreds of schools.
India's Oil Imports Surged in 2017
India's oil imports rose by about 1.8 percent in 2017 to a record 4.37 million barrels per day (bpd) as the country boosted purchases to feed its expanded refining capacity, ship-tracking data obtained from sources and data compiled by Thomson Reuters Oil Research & Forecasts showed. To meet its growing fuel demand India, the world's third-biggest oil consumer, raised its refining capacity in the second half of 2017. India's capacity expansion to about 5 million bpd was aided by Reliance Industries…
Iranian Tanker Produces 2 Slicks in East China Sea
An Iranian oil tanker that sank in the East China Sea has left two oil slicks covering a combined 109 square km (42 square miles), the Chinese government said, as maritime police scoured for damage and prepared to explore the wreck. Satellite imaging showed a slick of 69 square km (26.6 square miles) and a second 40 square km (15.4 square miles) slick, which is less thick and not as concentrated, the State Oceanic Administration (SOA) said in a statement late on Tuesday. The large tanker Sanchi (IMO:9356608) sank in the worst oil ship disaster in decades on Sunday…
Trump Aims to Open Nearly All US Offshore to Oil Drilling
The Trump administration on Thursday proposed opening nearly all U.S. offshore waters to oil and gas drilling, a move aimed at boosting domestic energy production that sparked protests from coastal states, environmentalists and the tourism industry. The effort to open previously off-limits acreage in the Atlantic, Arctic and Pacific oceans comes less than eight years after BP Plc's Deepwater Horizon oil spill in the Gulf of Mexico - the largest in American history. The disaster…
Hapag-Lloyd: Shipping Demand Up, More Mergers in 2018
German shipping group Hapag-Lloyd sees demand for transport growing 4 percent in 2018 and expects more shipping firms to merge in the year, the chief executive said. CEO Chief Executive Rolf Habben Jansen also said Hapag-Lloyd, which merged with its Arab peer UASC, could achieve 85 to 90 percent of targeted annual savings from the deal of $435 million this year and 100 percent from 2019. More savings could be made in future, he told reporters in Hamburg, where he reiterated guidance for rising full-year 2017 earnings before interest, tax, depreciation and amortisation (EBITDA) and for EBIT.
Oil from Sunken Iranian Tanker Diffusing in East China Sea
Oil from an Iranian tanker that sank in the East China Sea has diffused into four separate slicks, covering a combined area of just over 100 square kms (39 square miles), Chinese authorites said late on Wednesday. Earlier satellite imaging showed two large slicks, with the larger one also thicker and more concentrated, but the latest data had found four slicks ranging in size from 48 square kms (19 square miles) to 5.5 square kms (2.1 square miles), the State Oceanic Administration (SOA) said.
Indonesia, CNOOC Talks End in Deadlock
Early renegotiation of gas selling price with China National Offshore Oil Company (CNOOC) has ended in deadlock as the ceiling price proposed by CNOOC was seen as too low, according to Asian Pulse. Indonesia has signed a long term contract to supply China's Fujian province with 2.6 million tons of liquefied natural gas (LNG) annually from Tangguh, Papua. Under the agreement in 1992 the LNG price was tide with crude oil price or around $2.4 per MMBTU based on a ceiling price of $25 per barrel of crude oil. The ceiling price is no longer acceptable to Indonesia with the soaring crude oil price at present. Currently the LNG price is around $8 per MMBTU based on a crude oil price of $65 per barrel.
As US Opens Up Offshore Waters, Eastern GoM Beckons
President Donald Trump's administration has proposed opening up nearly all of America's offshore waters to oil and gas drilling, but the industry says it is mainly interested in one part of it, now cordoned off by the Pentagon: the eastern Gulf of Mexico. The industry's focus on an area located near a sprawling network of existing platforms, pipes and ports could ease the path to new reserves, and assuage the drilling opponents near other places offered under the Interior Department's proposed drilling plan issued last week, like California's Pacific, the Atlantic and Arctic.
Asia Tankers-VLCCs Rates Ease as Tanker Jams Fade
Port congestion eases at Basra and Chinese ports; tanker demand set to expand on lower oil prices. Freight rates for very large crude carriers (VLCCs), hurt by slower-than-usual release of cargo, could slip further next week as more tonnage becomes available with the easing of recent tanker traffic jams in China, ship brokers said on Friday. Charter rates from the Middle East to Japan slipped to a six-month low on Thursday, falling by 12 Worldscale points or almost $14,000 since April 21.
Stricken Iranian Oil Tanker Keeps Exploding
The stricken Iranian oil tanker Sanchi keeps exploding, hampering efforts to extinguish the fire and rescue survivors, state media Xinhua said on Friday, citing the Ministry of Transport, as the blaze raged and worries grew the ship may break up and sink. The week-long rescue effort following the tanker's collision with a freight ship on Saturday night has been roiled by poor weather, including 3-metre (10 feet) high waves and strong winds, and toxic fumes from the burning oil. Dozens of the rescue boats were forced to retreat from dousing the tanker with foam on Wednesday due to an explosion.
Moore Stephens: Optimism to Outweigh Shipping Pessimism in 2018
International accountant and shipping adviser Moore Stephens expects optimism to triumph over pessimism in the shipping industry during the next 12 months. Writing in the latest issue of Bottom Line, the newsletter of the Moore Stephens shipping industry group, partner Richard Greiner says, “According to a recent study, pessimists live longer than optimists, and shipping is short of neither. But the industry has always valued longevity as well as new blood, and it certainly ended 2017 in more optimistic mood than it closed the previous year.
Asia: LPG Shipping and LNG Pricing
While declining Asian LNG prices have reduced margins on the long-distance LNG trade, causing spot-charter rates for LNG vessels to fall, LPG shipping earnings are forecast to remain buoyant on the back of low oil prices and the absence of fuel substitution. According to LPG Forecaster, published by global shipping consultancy Drewry, low oil prices have not triggered the substitution of LPG as the fuel of industrial use, as feared by some analysts. As a result, LPG shipping demand has remained intact and low bunker prices have supported vessel earnings.
Search for ONGC Offshore Helicopter Crew Continues
The Indian Navy has widened its search operations for the missing crew members of the Pawan Hans helicopter (C/s VT-PWA) which crashed off the Mumbai coast on Saturday. The helicopter with seven people on-board, including five Oil and Natural Gas Corporation (ONGC) officers and two pilots, crashed off the Mumbai coast minutes after it took off for the state-owned company’s oil installation in the Arabian sea on Saturday. According to NDTV report, on the third day of search in the high seas, the rescuers located the last remaining body - of the missing pilot.
U.S. Crude Imports To Continue To Rise
Due to declining domestic crude oil production and rising oil demand, crude imports will continue to increase over the next two decades accounting for 64 percent of U.S. oil supplies by 2020, the U.S. Energy Information Administration (EIA) said in its annual long-term energy outlook. Currently, the U.S. imports 52 percent, or 8.6 million bpd of its oil and domestic oil output at 6 million bpd is at its lowest level since the early 1950s. U.S. petroleum consumption is projected to rise an average 1.3 percent annually over the next two decades, growing from the current 19.4 million bpd to 25.1 million bpd by 2020, EIA said. Although world crude oil prices have more than doubled since the beginning of 1999…
Oil Finishes Strong in 2017
U.S. oil prices rose above $60 a barrel on the final trading day of the year and hit their highest since mid-2015, as an unexpected fall in American output and a decline in commercial crude inventories stoked buying in generally thin trading. International benchmark Brent crude futures also rose, supported by ongoing supply cuts by top producers OPEC and Russia as well as strong demand from China. Oil prices are set to close out the year with strong gains. Brent is up 17 percent since the beginning of the year and U.S. West Texas Intermediate is up 12 percent.
Vanishing Volatility Signals Oil Market Shift
The oil market has rarely been so quiet. Benchmark Brent has traded in a narrow range of $5 either side of $110 per barrel since the summer of 2012. Price volatility has fallen to some of the lowest levels since crude futures markets were established in the early 1980s. Oil prices have rarely been so stable for so long since the 1973 oil shock ended the long period of calm in the 1950s and 1960s and ushered in the era of OPEC dominance. Measured volatility in front-month Brent futures prices has been below average continuously for almost two years.
MAN's Part-Load Optimization a Fuel Saver
MAN Diesel & Turbo’s Part-Load Optimization is a tuning method designed to optimize fuel-oil consumption during the part-load operation of four-stroke, small-bore MAN auxiliary engines. “Part-Load Optimization works on the principle that fuel consumption is reduced at low and part load at the expense of a higher fuel consumption in the high-load range, without exceeding the IMO NOx limit,” explained Finn Fjeldhøj – Head of Small-Bore, Four-Stroke Engineering – MAN Diesel & Turbo. “We can deliver new engines pre-optimized or retrofit as necessary.
Two-month Global LNG Rally Ends, Weak Oil Tempts Buyers
Asian spot liquefied natural gas prices ended their 2-month rally this week, interrupted by weak demand in Japan and South Korea as falling crude oil prices push importers to turn to oil-linked long-term LNG supplies. Spot LNG prices for November delivery lost ground to $14.60 per million British thermal units (mmBtu), versus $15 per mmBtu last week, amid still scarce demand from end-users in Asia. Most LNG trade takes place via 20-year supply deals offered by major oil companies and producer countries such as Qatar, where buyers pay a price linked to the cost of crude oil. With the benchmark Brent crude price slipping nearly as far as $92 a barrel, from $105/barrel several weeks ago, oil-linked LNG for delivery in January is becoming increasingly competitive against spot priced cargoes.
Oil Below $40/bbl After Rise in US Oil Rigs
U.S. crude oil prices on Friday dove below $40 a barrel for the first time since the 2009 financial crisis, notching their longest weekly losing streak in 29 years after a further rise in U.S. drilling and a drop in Chinese manufacturing. Oil prices pushed briefly below the $40-pivot mark following weekly data that showed U.S. energy firms added two oil drilling rigs last week, the fifth increase in a row. The rise in rigs, which is emerging now after a second quarter lull in prices, is adding to concerns U.S. shale production is proving slow to respond to falling prices, prolonging a global glut. "Everyone is still looking at it saying 'Wow, you still don't have production coming down,'" said Tariq Zahir, founder at Tyche Capital in Laurel Hollow, New York.