Category Archives: Energy

Energy

Commodities … Weakness despite Ukraine

Energy, Global Economy, On the cover, Sin categoría
Brent -0.6% MTD, WTI -1.1%. Brent-WTI spread +8.2% MTD. In the US, DOE data showed crude built 1.43 MMBbls vs. expectations for a 1.08 MMBbl build. Cushing crude inventories were down 2.67 MMBbls on the week and now stand at 32.1 MMBbls vs. approximate capacity of 66 MMBbls. Gasoline drew 1.60 MMBbls vs. expectations for a 0.88 MMBbl draw and distillates built 1.41 MMBbls vs. expectations for a 1.03 MMBbl draw. All products built 0.03 MMBbls. Refinery utilization was down 0.6% vs. expectations for a 0.3% decrease. Refinery utilization stands at 87.4% vs. a 5-year average of 82.4%. The 4-week average gasoline demand was down 0.9% YoY, and 4-week average distillate demand was up 1.0% YoY.
Japanese growth was revised down 30% to 0.7% in 4Q 2013. Aramco reduced Arab Light premium to Asia 20 cts/bbl, to $1.55 over average of Oman/Dubai grades; also cut Extra Light 20 cents, to $3.50/bbl; both had been expected to rise 15 cts. Shows how well supplied the market is. China’s overseas shipments declined by 18.1 percent in February from a year earlier, the biggest drop since August 2009, the General Administration of Customs reported on March 8. A median 7.5 percent increase was projected in a Bloomberg News survey of 45 economists.
Escalation of the conflict in Libya, as the country’s PM ordered an attack on a North Korean tanker which reportedly loaded $36m of crude from the rebel-controlled Es Sider terminal, if the tanker leaves the port. The rebels said any attack on the tanker would be interpreted as a declaration of war. Continue reading Commodities … Weakness despite Ukraine →

Baltic Dry Index Shows The Global Economy Is Not Moving

Energy, Global Economy, On the cover, Sin categoría
Baltic Dry Index Shows The Global Economy Is Not Moving
 
 
The big moves seen in the Baltic Dry Index falling aggressively (down 52% YTD and back to September levels) have come from a combination of:
–          . Capesize rates have fallen 48% in a week to $17k per day. This has been driven by spot chartering falling to 72 vessels relative to the highs of 161 vessels chartered seen at the peaks in December.
–        .  Iron Ore imports are on hold after stockpiles in major Chinese ports have gone to 82mt versus 71mt average in 2013. Chinese crude steel output has fallen driven by pollution control measures as well.
. Panamax rates have fallen 7% in a week due to the suspension of Colombian coal shipments until March by Drummond, the world’s 4th largest coal exporter.
–         . Crude tanker rates (VLCCs) have fallen 28% in a week to $30k per day, as vessels to the US are reducing given lower imports.
 
These moves justify the decline back to September levels, as the previous increases arrived from short term big rate improvements driven by re-stocking in India and China and an increase in refinery utilization –and oil imports- from the US.
In essence, rates are returning to a normalized level of small improvement from the lows but a shipping environment that is still oversupplied and global commerce is not improving drastically, and definitely not even close to 2007 levels. 
 
The moves up in rates in October-December were driven by one-off events that drove to a short-term tightness in very particular segments (Capesize and Panamax).