China Mega-Refineries Barely Impact Diesel Supply

Hydrocarbon Engineering:

China will add 900 000 bpd of crude distillation capacity between late 2018 and early 2019, but China’s overall production of transport fuels will grow less than one might think, according to ESAI Energy’s newly released China Watch. Most notably, ESAI Energy projects China’s overall diesel production could grow by 50 000 bpd or less in 2019. The growth of China’s supply of middle distillate and overall transport fuel output has implications for Asian product markets and China’s least sophisticated independent refineries struggling to remain viable in the domestic market.

U.S. Unlikely to Take Significant Action Against Saudi Arabia

The presumed execution of Saudi Journalist Jamal Khashoggi at the Saudi consulate in Turkey has seriously rattled U.S.- Saudi relations and led to the discussion of sanctions in the U.S. Congress. Even so, the complex relationship between the two countries, and especially the joint effort to contain and weaken Iran, tilt against a significant economic response from the Trump Administration.

Asia’s Fuel Subsidies Not Enough to Support Oil Demand Growth

Hydrocarbon Engineering:

Fuel price increases will outpace Asian governments’ ability to offset them with subsidies, according to ESAI Energy’s recently published Asia Watch. India, Malaysia, and the Philippines have already boosted subsidies for gasoline and diesel and Indonesia could soon follow, with national elections coming in 2019. But weakening local currencies are exacerbating the effects of rising oil prices for consumers in many Asian countries. At the same time, trade tensions between China and the US are eroding regional business confidence and threaten to drag on Asian economic growth next year.

Oil Edges Lower in Wednesday Trade

DTN:

Oil futures on the New York Mercantile Exchange nearest to delivery and the front month Brent contract on the Intercontinental Exchange edged lower from Tuesday’s shallowly mixed session ahead of weekly supply data for the United States to be released midmorning, and following bullish statistics released late Tuesday afternoon by the American Petroleum Institute.

There is Enough Crude Supply

Hydrocarbon Engineering:
In its recently published, Global Crude Oil Outlook, ESAI Energy asserts that there will be enough crude oil supply in 2019 as long as there are no significant new disruptions. Even with the estimated loss of 1.1 million bpd of Iranian exports, more crude production from the US, Brazil, UK, Russia and the Arab Gulf producers can offset other declines and still meet demand for crude-derived petroleum products.

China’s Naval Power Grows

Over the last several years we have written about the growing imbalance between U.S. and Chinese dependence on the Persian Gulf for oil. Chinese oil demand growth and U.S. oil supply growth have shifted the importance of the region for both importers. A significant and lengthy disruption in the Persian Gulf could still impact all oil consumers through the price mechanism, but the U.S. economy is now far more insulated from energy disruptions than the Chinese economy. Not surprisingly, China’s naval capabilities have grown considerably to address this vulnerability to the flow of oil and other goods

Eliminating Permian Bottleneck by 2020

Oilfield Technology:

In the next five years, potential pipeline projects could add over 5 million bpd to US destinations at Cushing and to USGC port locations, significantly increasing US crude oil exports. Elisabeth Murphy, analyst at ESAI Energy, however, points out that “not all of these projects may go forward, but the race to bring more capacity will be key in determining the amount and timing of production growth, not only for the Permian, but for the other US shale basins and the Canadian Oil Sands”.