Oil Market News - May 28
Posted: Tue May 28, 2019 1:10 pm
IEA: World hits another grim milestone. The IEA said that energy consumption in 2018 grew at its fastest pace in a decade. And 70 percent of the additional supply came from fossil fuels. Many of the technologies needed to slash carbon emissions are not on track, the IEA said. CO2 concentration in the global atmosphere continues to rise, and recently hit 415 parts per million.
Iran oil exports drying up. Traders say that buyers of Iranian oil have disappeared following U.S. sanctions. In March, the countries that had exemptions on U.S. sanctions purchased 1.6 million barrels per day from Iran, and evidence suggests that they are all mostly abiding by U.S. demands to cease purchasing. “China has enough problems with the U.S. They don’t want to give them a pretext,” an Iranian oil executive told the WSJ.
Kuwait: Oil balance later this year. Kuwait’s oil minister argued that the oil market will reach balance later this year with steady demand and declining inventories. But uncertainties, including the trade war, mean that OPEC+ has more work to do. < Saudi Arabia and friends around the Persian Gulf want $80/bbl Brent. I see OPEC extending the production quota agreement although they might increase the quotas a bit to make up for Iran's exports coming off the market. - Dan
Refiners face shifting markets. A shortage of heavy oil due to the outages in Venezuela and Iran are cutting into the profits of refiners who rely on such oils. Gulf Coast fuel oil, a byproduct of heavy crude, saw prices surge to a six-month high. As refiners ramp up production of gasoline, their margins are narrowing. Meanwhile, for refiners who have made expensive upgrades to produce cleaner fuels, the forthcoming IMO rules on sulfur concentration could provide a windfall, the Wall Street Journal reports.
Iran oil exports drying up. Traders say that buyers of Iranian oil have disappeared following U.S. sanctions. In March, the countries that had exemptions on U.S. sanctions purchased 1.6 million barrels per day from Iran, and evidence suggests that they are all mostly abiding by U.S. demands to cease purchasing. “China has enough problems with the U.S. They don’t want to give them a pretext,” an Iranian oil executive told the WSJ.
Kuwait: Oil balance later this year. Kuwait’s oil minister argued that the oil market will reach balance later this year with steady demand and declining inventories. But uncertainties, including the trade war, mean that OPEC+ has more work to do. < Saudi Arabia and friends around the Persian Gulf want $80/bbl Brent. I see OPEC extending the production quota agreement although they might increase the quotas a bit to make up for Iran's exports coming off the market. - Dan
Refiners face shifting markets. A shortage of heavy oil due to the outages in Venezuela and Iran are cutting into the profits of refiners who rely on such oils. Gulf Coast fuel oil, a byproduct of heavy crude, saw prices surge to a six-month high. As refiners ramp up production of gasoline, their margins are narrowing. Meanwhile, for refiners who have made expensive upgrades to produce cleaner fuels, the forthcoming IMO rules on sulfur concentration could provide a windfall, the Wall Street Journal reports.