Record EV sales in 2017… IEA

by Jim Colburn • Wednesday, May 30, 2018

From the International Energy Agency, here

”The number of electric and plug-in hybrid cars on the world’s roads exceeded 3 million in 2017, a 54% increase compared with 2016, according to the latest edition of the International Energy Agency’s Global Electric Vehicles Outlook.

China remained by far the largest electric car market in the world, accounting for half sold last year. Nearly 580,000 electric cars were sold in China in 2017, a 72% increase from the previous year. The United States had the second-highest, with about 280,000 cars sold in 2017, up from 160,000 in 2016.

Nordic countries remain leaders in market share. Electric cars accounted for 39% of new car sales in Norway, making it the world leader in electric vehicle (EV) market share. In Iceland, new EV sales were 12% of the total while the share reached 6% in Sweden. Germany and Japan also saw strong growth, with sales more than doubling in both countries from their 2016 levels.”

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US, OECD inventories back to five-year average… EIA

by Jim Colburn • Wednesday, May 30, 2018

Here is the EIA’s,”Today in Energy”:

”Global petroleum inventories declined through 2017 and the first quarter of 2018, marking the end of an extended period of oversupply in global petroleum markets that began before the Organization of the Petroleum Exporting Countries (OPEC) November 2016 agreement to cut production. OPEC plans to reconvene on June 22, and markets now appear more in balance, but uncertainty remains going forward.”

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Some energy charts from The Daily Shot, WSJ…

by Jim Colburn • Tuesday, May 29, 2018

Here are a couple of charts from The Daily Shot showing which countries cut oil production and which have capacity to increase… There are more interesting charts here

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OPEC/Russia Target Free Riders… WSJ

by Jim Colburn • Monday, May 28, 2018

Spencer Jakob, WSJ, tells us why OPEC/Russia are about to end their agreement to curtail oil production here

“One reason may be that prices recently touched their highest since 2014, potentially slowing economic growth and harming future demand. A more important one is the political misfortune of fellow cartel members Venezuela and Iran and a host of production issues experienced by some smaller ones. The largest cartel members want to fill the void left by these disruptions rather than allowing others to do it.”

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US gasoline exports… EIA

by Jim Colburn • Sunday, May 27, 2018

US gasoline exports go mostly to Mexico… From the EIA’s Today in Energy, here:

 

“U.S. motor gasoline gross exports increased to 821,000 barrels per day (b/d) in 2017, despite rising domestic consumption. In 2017, U.S. consumption of gasoline, measured as product supplied, matched the previous record high set in 2016 of 9.3 million b/d. Record-high refinery runs and historically high gasoline production supplied both record-high domestic consumption and increasing gasoline exports. The United States became a net exporter of gasoline in 2016, and net 2017 gasoline exports increased to an average of 185,000 b/d.”

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Oil helps some, hurts others… The Economist

by Jim Colburn • Sunday, May 27, 2018

The Economist uses some UBS research to say this:

“Many emerging economies import oil; others export it. As a rule, higher prices hurt the first group and lower ones hurt the second. But it can be more complicated than that. Indonesia, for example, is a net importer of oil, but a net exporter of “energy”, more broadly defined, including coal and palm oil. Since coal, palm and oil prices tend to rise roughly in tandem, Indonesia would benefit overall from $100 oil, according to UBS. Mexico, like America, is also a net importer of crude. But in both countries a higher oil price will help investment and employment in the oil industry by more than it hurts household spending.”

“The impact of a price change also depends on the price level. A jump from cheap to dear oil works differently than a jump from dear to even dearer. In America, many rigs that are not profitable at $40 become viable at $60 or more. Conversely, most rigs that would be lucrative at $120 are already viable at $100. So an increase in price from $40 to $60 might inspire a lot of additional investment and employment, whereas an increase from $100 to $120 might induce less. Meanwhile, the damage to household wallets increases relentlessly.”  Here is the link… (Note the UBS reference in the chart)…

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Gasoline expenditures… NY Times

by Jim Colburn • Sunday, May 27, 2018

From the NY Times, on gasoline prices… There is more here

“Americans consume roughly 400 million gallons of gasoline a day, so the 60-cent increase over the last year means roughly $240 million less every day in consumer pockets. It is particularly burdensome for working-class Americans or those in rural areas who drive older, less fuel-efficient cars and spend a higher percentage of their income on fuel.
Gasoline prices vary greatly by state, in part because of differences in taxes and fuel regulations. Californians paid an average of $3.73 a gallon on Friday, for instance, while Texans paid an average of $2.76.
Prices are still well below what they were a decade ago, when the national average topped $4 a gallon and oil prices topped $100 a barrel. The American benchmark price is now about $68 a barrel.”

Gasoline futures collapsed on Friday… Here is barchart..com:

 

 

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Andy Furman, Risked Revenue on hedging oil price risk…

by Jim Colburn • Sunday, May 27, 2018

 

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OPEC, Russia prepared to,raise oil output… Reuters

by Jim Colburn • Friday, May 25, 2018

Here is Reuters:

”Riyadh and Moscow are prepared to ease output cuts to calm consumer worries about supply adequacy, their energy ministers said on Friday, with Saudi Arabia’s Khalid al-Falih adding that any such move would be gradual so as not to shock the market.”

“Russian Energy Minister Alexander Novak said current cuts were in reality 2.7 million bpd due to a drop in Venezuelan production – somewhere around 1 million bpd higher than the initially agreed reductions.

Novak declined to say, however, whether OPEC and Russia would decide to boost output by 1 million bpd at their next meeting in June.”

And, here are crude prices this morning from barchart.com:

 

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A conversation about hedging oil price risk…

by Jim Colburn • Wednesday, May 23, 2018

As energy prices rally, we can get a sense of what large speculators are doing from the CFTC’s Commitment of Traders report. But what are hedgers doing? To find out, Andy Lebow and I had a conversation with Andy Furman a risk management consultant with Risked Revenue (R-squared). Risked Revenue is an independent commodity risk advisor that helps clients build and maintain hedge programs. Their clients include S&P 500 E&P’s, private equity companies, utilities and other oil producers and consumers. Andy Furman sheds some light on issues facing hedgers and shows how some make hedging decisions.

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