Singapore Faces Challenging Demand Shift from IMO 2020

Hellenic Shipping News: ESAI Energy’s recently released Global Fuels 12-month Outlook highlights how Asia will bear the brunt of the demand shift caused by the International Maritime Organization’s new sulfur cap for shipping fuels in 2020. Asia makes up 40 percent of global bunker demand, with Singapore, China, and Hong Kong accounting for most of that market. At the same time, the relative availability of MGO to LSFO in Asia means that MGO will be a more likely substitute in that market. In other regions, substantial shifts are taking place from HSFO to LSFO. A big shift in demand will move global markets.

Ship Fuel Change Becomes Refiner Gamble As Heavy Crude Dwindles

Gulf Times: A change in ship fuel that seemed like a sure profit churner for sophisticated refiners a year ago isn’t a clear winner now. When the International Maritime Organisation imposed clean-fuel rules for ships starting in 2020, the popular outlook was that thicker, dirtier crude would plummet in price, as it yields more of the high-sulphur fuel oil that can’t be burned unless ships have special equipment to scrub their emissions. Diesel prices would surge as vessel owners use it as a substitute.

Demand Not Inventories Should Drive OPEC+ Decision

World Pipelines: As the OPEC+ meeting, now delayed until July 7, approaches, the question of inventory levels will gain considerable attention. As we have written before, we believe global (OECD and non-OECD) crude oil and product inventories are adequate, but not excessive. This month, however, we parse just the OECD stock picture, which will shape impressions of over or under supply before and during the OPEC+ meeting. Although we are not supporters of the five-year average measurement, that approach (when corrected for demand) shows crude inventories are in the middle of the historical range, and product stocks are actually at the low end of the range. We do not believe inventories will or should be justification for further production restraint. But, we are concerned about weak underlying demand growth as discussed in our Global Oil Balance analysis.

Tariff on Mexican crude could be resolved

Oil and Gas Journal: US President Donald Trump announced that he would impose a 5-25% tariff on all Mexican goods. There are ways to avoid the tariff on imports of Mexican crude oil, but at this point it is unclear whether those will succeed, according to an analysis from Energy Security Analysis Inc. If not, ESAI says, some refiners will pay more, and some crude will head to Asia.

Is There Really An Oil Shortage?

Oil Price: “I am not sure there is a supply shortage,” Khalid al-Falih, the energy minister of the world’s top oil exporter and OPEC’s largest producer, Saudi Arabia, told Reuters in the middle of May, commenting on concerns that a growing number of supply outages may have tipped the market into deficit.

Russian Oil Production Should Recover

World Pipelines: Russian production fell by 170 000 bpd from April to May, as the disruption to oil exports caused output to fall to 60 000 bpd less than the OPEC+ commitment. The last hurdle is restoring 750 000 bpd via the northern leg of Druzhba. Due to spare export capacity, however, Russian production will recover in June after falling to 11.1 million bpd in May.

Russian Oil Production Set to Recover

Oil and Gas Journal: Russian production fell by 170,000 b/d from April to May as the disruption to oil exports caused output to fall to 60,000 b/d less than the production-cut commitment. The last hurdle is restoring 750,000 b/d via the northern leg of Druzhba. However, thanks to the restoration of some pipeline flows and spare capacity in ports, Russian production will recover in June after falling to 11.1 million b/d in May, according to an analysis from ESAI Energy.

Russian Production to Recover

Hellenic Shipping News: Russian production fell by 170,000 b/d from April to May, as the disruption to oil exports caused output to fall to 60,000 b/d less than the OPEC+ commitment. The last hurdle is restoring 750,000 b/d via the northern leg of Druzhba. Due to spare export capacity, however, Russian production will recover in June after falling to 11.1 million b/d in May.

Russian Production Will Recover

Oilfield Technology: Russian production fell by 170 000 bpd from April to May 2019, as the disruption to oil exports caused output to fall to 60 000 bpd less than the OPEC+ commitment. The last hurdle is restoring 750 000 bpd via the northern leg of Druzhba. Due to spare export capacity, however, ESAI energy believes Russian production will recover in June.

US LPG Exports Set to Climb

Oil and Gas Journal: Renewed LPG demand growth in India and China will lead to growth of US exports later this year, according to ESAI Energy’s newly published Global NGL Outlook. Since exports have bumped up against capacity constraints, the timely completion of new LPG export terminals in the US and Canada will be vital to this export growth. Stronger demand has implications for propane and butane prices, whose discounts to naphtha have widened considerably.