Other products made from oil & gas

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dan_s
Posts: 34471
Joined: Fri Apr 23, 2010 8:22 am

Other products made from oil & gas

Post by dan_s »

Northface refuses to make clothing for oil company: https://www.youtube.com/watch?v=4lWro0U-iRE

90% of their products are made from oil & gas.
Dan Steffens
Energy Prospectus Group
dan_s
Posts: 34471
Joined: Fri Apr 23, 2010 8:22 am

Re: Other products made from oil & gas

Post by dan_s »

Products made from oil & gas are all around you. Watch this one minute video.

https://www.youtube.com/watch?v=mclv06j ... zE&index=4
Dan Steffens
Energy Prospectus Group
Fraser921
Posts: 2955
Joined: Mon Mar 22, 2021 11:48 am

Oil demand

Post by Fraser921 »

https://www.cazbaaenergy.com/its-all-ab ... re-demand/

I’m very pleased the first international gathering of leaders since the start of the coronavirus pandemic is happening in the UK, around Carbis Bay on the beautiful Cornwall coast, but I’m also feeling a little deflated. You’re probably asking why? Well, it’s all to do with location. Cornwall ends-up getting this huge event bestowed upon them by our government, and I assume those in a G7 steering committee, while my coastal paradise, the Isle of Wight, ends up with a totally different present from the same UK government, namely Radovan Karadzic, the ex-Bosnian Serb leader, who was convicted of serious war crimes, and is now sat in Parkhurst jail, fortunately on the other side of the island. The moral of the story, if there is one, is that you don’t always get what you ask for, and that peaceful summer equilibrium looks as if it might well have to be put on the LPG back burner.

Without doubt one discussion topic on the agenda at the G7 will be the global economy, probably only just behind vaccines, world education and of course climate change. OPEC though were able to get in on the act first, releasing their Monthly Oil Market Report on Thursday, indicating that global oil demand will rise by circa 6 million Bbls/d over the balance of 2021, albeit when compared to the lows of 2020 (a degree of clever statistical presentation!). This is despite the resurgence of COVID variants, and renewed lockdowns in key economies in the Eurozone, Japan and India. But OPEC have this feeling that pent-up demand, fueled by high personal savings and huge stimulus packages in the west, will take crude oil demand close to the 100 MM Bbls/d mark by the end of the year. And they’re pinning this belief mainly on the U.S., where transportation fuels, mainly gasoline, will provide the catalyst. The IEA forecast released soon afterwards varied little from OPEC’s forward visualization of crude oil demand.

Despite a little profit-taking on WTI, as it hit the $70/ Bbl level, and the apparent lifting of sanctions on a few Iranian officials and companies connected to the energy sector (eventually seen as only an act of good faith by the U.S. in anticipation of better co-operation in the future), the crude oil market survived a few jitters, and now seems to be holding firm above the $70/ Bbl benchmark. While the buzzword has been “demand”, the concern is whether production will keep pace, or more likely fall off the pace. Rumours of LPG supply issues, yet to be confirmed, but emanating out of Ras Tanura and Abu Dhabi, has heated the CP market beyond the influences of just a strong crude oil price, with July CP paper up close to $35/ Mt on the week, outstripping FEI by nearly $15/ Mt. That said, FEI is now at a four month high. It might not be demand actually pressing the button, but there’s growing concern that as winter buyers enter the market, they’ll need to start bidding the price up in order to get their hands on cargo. Butane has already become parity with propane, but it won’t be too long before propane starts to get increased interest as well. Maybe it’s a little too early to spot much direction from the Ginga window, but July is being bid-up and the curve, normally in contango at this time of the year, is getting flatter and flatter, with the front starting to test levels closer to $7/ Mt premiums.

But hold on, I guess there’s always the U.S. exports to fall back on. In fact it seems to have been a bumper week as far as the EIA inventories are concerned, with a pretty dramatic 5.5 MM Bbl increase in propane stocks. Most players ideas were in and around a 1.5 – 2 MM Bbl increase, but again for a second week we overshot expectations. There’s some calling foul, suspect numbers and so on, but there seems to be a pattern developing, although all patterns inexorably change. Production is holding steady, if not inching up, which should continue over the balance of the year if a strong crude oil price remains. Demand, aka Product Supplied, is at last being reported where I would expect it to be for this time of the year, spot-on 750 M Bbls/d. The conundrum is the level of propane exports we’re seeing, edging below the 1 MM Bbl/d mark on a four week rolling average. Okay we’ve certainly seen butane exports up, cancelled cargoes, ships sat on the berth maybe at the end of the week, even mention of reclassification of the PADD 3 (U.S. Gulf) inventory levels, but the number just doesn’t feel right to me.

Again the ARB remains in limbo tiptoeing above the $105/ Mt point for a July loading, flirting with cancellation levels at the beginning of the week, but gaining something of a reprieve by end-week as freight levels eased. With the spread between WTI and Brent struggling to maintain $2/ Bbl, the emphasis will be on Asian buyer’s reaction to potential supply issues in the Middle East, and the “will they, won’t they” reaction to U.S. stock levels. Even such a large weekly build in EIA propane stocks didn’t prolong any drop away in Mont Belvieu propane values. But the market does face something of a challenge in these next few weeks. On the one hand, LPG values keeping pace generally with crude/ naphtha movements is ensuring the flexi crackers in Europe and Asia are maintaining their absorption of LPG for feedstock. Imports into Europe in May were up nearly 80% on the back of petrochemical demand, also buoyed by super high ethylene and propylene prices over $1,300/ Mt. With all the extra economic demand feeding through in the next few months there’s no reason these levels in Europe or for that matter Asia are going to decline. The sting in the tail will come if winter buyers in Asia, eager to build stocks prior to the normal seasonal demand, feel they are forced to outbid the crackers. What then happens?

The likelihood is that premiums will increase, but at what cost? Well, we could see feedstock demand falter too soon, and if prices don’t adjust quickly enough then the move to naphtha might not only be a sudden one, but also one that stays in place for the rest of the summer. In a couple of weeks players will be talking about August loaders in the U.S., arriving in Asia by September, it’ll be the watershed period without doubt, where the prices should start to test feedstock buyers, while at the same time encouraging seasonal buying interest. The gloves will be off! In the meantime the ship owners are having to face up to lower U.S. propane exports, cancellations, slow recovery in Saudi oil production and much more, just at a time when the dry-dock schedule is taking a bit of a breather and Panama delays are not the talk of the market. Having dropped down to the low $80s/ Mt for a VLGC between Houston and Japan, you feel as if it might still have a few dollars to go, but the netbacks give the impression that they will improve, and a sudden move-up in terminal fees looks a little short-term in nature.

As the sun shines on the politically ordained this weekend, spare a thought for those LPG protagonists facing equally daunting decisions related to the real impact of demand, future winter weather assumptions, the U.S. propane stock dilemma, and the now you see them, now you don’t potential reality of the feedstock buyers. But then, would we ever really want to swap roles?
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