OPEC production, supply/demand…

by Jim Colburn • Wednesday, February 14, 2018

The tables below are from OPEC’s Monthly Oil Market Report, released on Monday… Note the two production numbers in January for Venezuela, 1,600 from “secondary sources’ and 1,769 from “direct communication” …

OPEC produced at a 32.3 mbd pace in January which is enough to cover the first half of the year, but second half gets interesting with the call for OPEC crude increasing by +1.4 in Q3 and +1.6 in 4Q… We are setting up for a very interesting June meeting…

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The LOOP is testing the exporting of crude… WSJ

by Jim Colburn • Tuesday, February 13, 2018

The LOOP is testing the process of exporting oil… This, from the Wall Street Journal’s, Alison Sider:

”A supertanker recently pulled up to the Louisiana Offshore Oil Port to test loading up on crude at the facility, the port announced on Tuesday. The test is significant because no other Gulf Coast ports have the capability to fully load the large crude carriers that can more profitably export oil to Asian markets.”

Here are exports so far…

 

”LOOP, as the Louisiana port is known, has been receiving oil shipments from abroad since 1981, but unlike other Gulf Coast ports has never sent oil out. The port, which is 17 miles out to sea and connected to the shore by pipeline, is the only one in the U.S. deep enough to allow these large carriers to be fully loaded with oil without scraping along the bottom. These supertankers can carry 2 million barrels of crude, so they can more profitably make the long journeys to markets in Asia, analysts say.”

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Power price, expenditure rankings, by state… EIA

by Jim Colburn • Tuesday, February 13, 2018

From “Today in Energy”:

 

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The IEA weighs in on shale… WSJ

by Jim Colburn • Tuesday, February 13, 2018

The Wall Street Journal reports on today’s release of the IEA’s monthly oil supply/demand report:

”Shale producers “cut costs dramatically” during the oil-industry downturn, the IEA said. They then took advantage of the Organization of the Petroleum Exporting Countries cartel’s decision last year to cut its own output, which helped prices rise from the low $40s to over $70 a barrel in January.”

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The IEA’s Oil Market Report is out…

by Jim Colburn • Tuesday, February 13, 2018

The summary is here

”Our demand growth estimate for 2017 remains strong at 1.6 mb/d, reinforced by November data for the US. For 2018, the more positive global economic picture published by the International Monetary Fund is a key factor in raising our growth outlook to 1.4 mb/d. It was thought that the significant increase in the dollar price of crude oil since the middle of 2017 would dampen growth, and this might be the case to some extent, but the impact of higher prices has been partly offset in some countries by currency appreciations.”

And, this:

”It is clear that strong demand growth in 2017, alongside a modest increase last year in non-OPEC output, and the cuts made by leading producers, has contributed to the extraordinarily rapid fall in OECD oil stocks. A year ago, they were 264 mb above the five-year average and now they are only 52 mb in excess of it, with stocks of oil products actually below the benchmark. Although the OECD is not the whole world, the leading oil producers who agreed to cut output identified the level of the group’s stocks as an indicator of the progress of their initiative. With the surplus having shrunk so dramatically, the success of the output agreement might be close to hand. This, however, is not necessarily the case: oil price rises have come to a halt and gone into reverse, and, according to our supply/demand balance, so might the decline in oil stocks, at least in the early part of this year.”

And, this is amazing:

”Today, having cut costs dramatically, US producers are enjoying a second wave of growth so extraordinary that in 2018 their increase in liquids production could equal global demand growth. This is a sobering thought for other producers currently sitting on shut-in production capacity and facing a renewed challenge to their market share. Another sobering thought is that it is not just a matter of production: trade patterns are changing. Recently we read of a shipment of condensate from the US to the UAE. Such a development would have seemed incredible a few years ago, now it looks like the shape of things to come.”

Here is their chart showing supply/demand:

 

 

 

 

 

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Big batteries as peaking plants… WSJ

by Jim Colburn • Monday, February 12, 2018

This article from today’s Wall Street Journal, by Russell Gold, discusses the use of batteries to store power and release it during peak demand periods:

”Giant batteries charged by renewable energy are beginning to nibble away at a large market: The power plants that generate extra surges of electricity during peak hours.

Known as peakers, the natural-gas-fired plants are expensive to run, and typically called into service only when demand rises and regular supplies are insufficient. That makes them vulnerable to disruption from lithium-ion batteries, which have fallen in price in recent years, and are emerging as a competitive alternative for providing extra jolts of electricity.”

But battery costs are still high:

”Overall, it still generally costs 35% more today to provide extra power via a battery compared with a conventional peaker plant, according to energy analysts at SSR LLC. But they estimate that batteries will be less expensive by 2024. Batteries, they add, are better suited to replace peaker plants in warmer areas than in colder climates, where winter peaks can last for longer than four hours.”

Me:  The amount of optionality embedded in power markets is amazingly high but also very constrained… Batteries can be valued like oil storage facilities or like pipelines, but don’t seem to be…

 

 

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Trading market volatility… Financial Times

by Jim Colburn • Saturday, February 10, 2018

Joe Rennison, Robin Wigglesworth and Miles Johnson describe what happened to vol traders here

Note the increase in “vega” over time:

Ouch!

 

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Jill Mislinski, Advisor Perspectives on gasoline consumption…

by Jim Colburn • Saturday, February 10, 2018

Jill Mislinski, at Advisor Perspectives, posts some interesting charts on gasoline consumption which show a sharp decline in per capita consumption… Here are total sales:

Here are sales per capita:

Jill offers some reasons:

 

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Our latest podcast on Energy Markets…

by Jim Colburn • Saturday, February 10, 2018

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EIA expects an oil market in balance…

by Jim Colburn • Thursday, February 8, 2018

Despite the recent increase in estimates of US oil production, the EIA is only looking for a build in world inventories of .2 mbd for 2018 and 2019:

“EIA estimates that U.S. crude oil production averaged 10.2 million b/d in January 2018, up 100,000 b/d from December 2017. EIA estimates that total U.S. crude oil production averaged 9.3 million b/d in 2017 and will average 10.6 million b/d in 2018, which would mark the highest annual average U.S. crude oil production level, surpassing the previous record of 9.6 million b/d set in 1970. EIA forecasts that 2019 crude oil production will average 11.2 million b/d.
OPEC total liquids production is expected to grow modestly through the forecast period, averaging 39.4 million b/d in 2018 and 39.9 million b/d in 2019. As a result, EIA estimates that global inventories will build by 0.2 million b/d in both 2018 and 2019, indicating that global markets are largely in balance.” The link is here:  https://www.eia.gov/petroleum/weekly/

 

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