The OPEC+ deal will ensure another year of robust NGL supply growth in 2019, leading to an excess of LPG.
According to ESAI Energy’s recently released One-Year Global Fuels Outlook, the US gasoline surplus will expand by roughly 80 000 bpd next year as demand continues to plateau and output keeps rising. Since first moving into surplus in 2016 the US gasoline balance has risen steadily to roughly 350 000 bpd this year. As a result of a growing surplus, combined US exports of finished gasoline and motor gasoline blending components will rise to over 1.0 million bpd next year.
Low water levels on the Rhine and a strike at French refineries converged to cause a spike in refining margins in Northwest Europe in November. That isolated support was short-lived,though, and margins will remain soft until the second half of 2019 when new IMO specifications for bunker fuel markets bolster diesel and low sulfur fuel oil spreads to crude.
Hellenic Shipping News:
Three new pipelines coming online in the second half of 2019 will deliver an onslaught of crude to the port of Corpus Christi. According to ESAI Energy’s recent North America Watch, local refinery demand for light sweet crude will remain unchanged, so these new flows will double the surplus crude available for export.
Mexico’s refining needs will drive growth of light crude imports
New pipelines in 2H 2019 will bring a flood of Permian crude to Corpus Christi. Exports from the port will double by the end of next year as terminals expand loading capabilities.
Global demand growth for transport fuels will accelerate next year due to turnarounds in China,Saudi Arabia, and Brazil. Yet, next year’s transport fuel demand growth will still be modest, especially when compared with the 2015-2017 period.
Two U.S. Senate votes last week highlight Congressional opposition to President Trump’s foreign policy regarding Saudi Arabia. Although neither will bring about change in the short-term, they reflect bipartisan support in opposition to the president, which could eventually impact the President’s foreign policy initiatives.
ESAI Energy expects elevated maintenance activities again in 2019, despite already high levels in the second half of 2018. Large scale maintenance programs in India and Mexico along and with last minute preparations for IMO specification changes in 2020 will keep turnaround activity elevated next year.
Despite the new president’s promises, next year, Mexico’s throughput will be limited by extensive repairs and maintenance. With demand flat, the impact on product imports will be modest, which means another strong year for US Gulf Coast exporters.
The threat to Europe from the expansion and modernization of Russian refineries is looking less ominous. As Russia’s tax reform unfolds, refining interests are increasingly losing out. These developments have negative implications for the expansion and modernization of Russian refining.
Hellenic Shipping News:
Contrary to some observers who focus intently on trade data as a proxy for demand, China’s total oil product demand rose by only 150,000 b/d in 2018. This is part of the reason why the global oil market is so weak as the year comes to an end. China’s oil demand will surprise again in 2019, but this time by rising by over 400,000 b/d, according to ESAI Energy’s latest China Watch. This rebound is comprised mainly of non-marketed naphtha at two new petrochemical integrated refineries, as well as LPG demand from a wave of PDH investment.
Contrary to some observers who focus intently on trade data as a proxy for demand, China’s total oil product demand rose by only 150,000 bpd in 2018.
Russia will be fully compliant with production cuts by March 2019, according to ESAI Energy projections. Producers have demonstrated an ability to manage output at mature fields. That said, new projects and upcoming haggling over production quotas could lead to bumps in the road, including for Rosneft.
The Louisiana Offshore Oil Port is pushing out the most crude it’s shipped in any one month since the terminal began supertanker exports in February.