The Oil Big Five: The Second Half Begins
The beginning of July is the beginning of the second half of the year, and just over the weekend I was looking at a calendar and marveling that we’d arrived here already. We started this feature a little over a year ago, but especially within the past 12 months, the oil industry seems like it’s been taking us all on a roller-coaster ride. On July 1 of last year, for example, Dated Brent was assessed by Platts at $110.46/b, but on July 1 of 2015 it was assessed at $61.67/b. Today, we’re attempting to pull out some highlights from the most recent part of that wild ride.
Just as we have in months past, we’ve asked our oil editors and analysts around the globe to send us their nominations for The Oil Big Five. Which big news stories or trends kept them busy, rattled their markets or prompted head-scratching recently and could have implications for the rest of the month and beyond? Read on and find out, and then tell us what you think of our list in the comments. What did we rightly include, what could have been left out, and what should we have included instead? Share below or on Twitter with the hashtag #oilbig5.
- Singapore upsets top exporters’ pecking order
An upset is always exciting, and late June revealed a new top exporter of liquid fuels. China, India and South Korea are giants of the increasingly competitive Asian export markets, but it was Singapore that exported a little over 1.12 million b/d of naphtha, gasoline, gasoil, jet fuel and fuel oil from January through April, claiming the No. 1 spot for Asian refined product exports and squeaking by India’s 1.1 million b/d. That level was a near 3.6% year-on-year rise in exports for the period for Singapore, while India slid 7.8%. A Platts analysis of data shows it was a jump in naphtha and jet fuel exports that helped catapult Singapore into the leading position. Naphtha exports from the island nation topped 18,000 b/d in January through April, a more than four-fold increase from the same period in 2014, while at the same time a rise in jet fuel demand led to jet exports of nearly 70,000 b/d, a 22.5% hike from the year-ago period. Almost all of Singapore’s exports went to Asia-Pacific markets, but the surge begs the question of whether Singapore can remain in the top spot, and where the market opportunities lie to support increasing gains.
- Argentina’s vanishing fuel oil imports
It’s winter in the southern hemisphere, a time when imports for winter power generation are not uncommon. In Argentina, though, one thing is missing that is typical for winter: fuel oil imports. The country usually buys millions of barrels of foreign residual fuel for power gen, and imported more than a dozen fuel oil cargoes last year, including from the US, the Caribbean and Brazil. But since January, no Argentina-bound residual fuel fixtures have been seen, market sources say. It appears that state-run electricity producer Cammesa has instead turned to cargoes of high sulfur diesel and locally produced fuel oil. By this time last year, government-owned oil company YPF had purchased 11 fuel oil cargoes totaling 550,000 mt, or about 3.5 million barrels, according to tender reports. Will there be any fuel oil imports to Argentina this year, and is this a permanent change for the country? And for barrels that would usually go to Argentina, where could they land?
- Wet weather along the US Gulf Coast
It’s been a wet, rainy spring and beginning of summer along the US Gulf Coast. (A personal attestation: Many Platts workers have had to work from home on various days within the past couple of months due to flooding in Houston.) The heavy rains and flooding are also affecting salt caverns, a common storage solution for various oil products, including distillates. Tighter storage is leading to more volatile scheduling days, with differentials for products such as US Gulf Coast high sulfur heating oil jumping on the first day of each new cycle and dropping on the last days of each cycle on aggressive selling. Additionally, the nasty weather can lead to bearish demand, and a ULSD broker told Platts the supply can be backed into the Gulf. The US East Coast has borne the brunt of hurricanes and tropical storms in recent years, but is the Gulf Coast due for more nasty storms of its own and further hits to its storage, markets and more?
- North Sea crude cargoes
North Sea crude differentials have sunk to their lowest levels in nine years for some grades, depressed by an overhang of crude in West Africa and the Mediterranean. Much of the crude is hung up in tankers, and June North Sea cargoes struggled to clear as some failed to find a buyer within their natural trading window. As a result, some tankers are waiting to be delivered into later demand slots (despite floating storage not really being economic at the moment), and with so many vessels out of the market, freight rates in the United Kingdom/European Continent region have spiked. Further crude flows from Iran, Libya and even parts of Nigeria are still not on the market, but even at current levels, people are asking whether differentials can still sink. What would happen with even more crude coming online?
- Singapore’s fuel oil loadings
June was the busiest month ever for fuel oil trading activity during the Platts Market on Close assessment, and now comes the task of loading and shipping the product from oil terminals across Singapore and Malaysia. More than 5.7 million mt of fuel oil, or the equivalent of more than 36 million barrels, changed hands for delivery at terminals in Singapore and southern Malaysia. The FOB Singapore physical fuel oil market saw more trading volume reported during the June MOC process than in a full month of trade in physical refined oil product market anywhere in the world, according to Platts records. With June being such a historic month, what will July bring?
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