Energy trading volumes: what a difference a couple of months can make

In May, this blog looked at April data for crude oil trading on Platts market on close, or MOC, system, and saw a steep falloff in volumes of barrels traded in the Americas and in Europe, the Middle East and Africa.

The apparent cause of the decline in liquidity of these markets was the lack of volatility in prices. A Platts review of April numbers said that trading volumes in energy futures products had been “caught in a declining trend” as “major price fluctuations came to a standstill.” It said that volatility had “eerily decreased,” with standard price deviations down across oil and oil products.

Now, from the vantage point of late July, MOC numbers for April, May and June–in other words, for the second quarter–look quite different, even though volatility mostly remains at bay.

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EIA analysis: strong runs lead to a drop in crude oil stocks

The weekly EIA report showed a fairly sharp decline in crude oil inventories, led in part by strong refinery operating rates. You can see our analysis here. 

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Guest blog: Hamilton has it right on oil

Steven Kopits is the Managing Director of Princeton Energy Advisors, LLC.  He is currently writing a book on supply-constrained oil markets analysis.

Once again, we return to the debate over the direction of oil prices, this time led by the high price school.

In a recent article, Professor James Hamilton of the University of California argues that sluggish supply growth, coupled with sustained emerging market demand, will tend to keep oil prices elevated.  He writes, “the world of energy may have changed forever…hundred dollar oil is here to stay.”

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Energy Economist: The amount of oil the world uses, seen through different eyes

Counting barrels is always tough to do, as Ross McCracken discusses in this month’s excerpt from Platts Energy Economist.

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At the Wellhead: China struggles to open its energy sector to more non-state entities

China is shifting its focus on state-owned enterprise reform, but it still remains to be seen if the SOEs will make significant changes to the roles non-state entities can play. Song Yen Ling discusses China’s energy sector reform goals in this week’s At the Wellhead column from Oilgram News, and also takes a look at whether internal turmoil within China’s dominant upstream player is a hurdle to advancing projects.

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Australian Wolf stalks Mongolian oil opportunities

Mongolia might not be the first place that springs to mind as a potential investment destination for oil and gas players, but one small Australian company is hoping the recent passing of a new petroleum law will open up opportunities in the landlocked nation between Russia and China.

Wolf Petroleum is the only Australia-listed oil and gas company operating in Mongolia. But the industry minnow, capitalized at just A$5.5 million ($5.2 million), claims a position as Mongolia’s largest petroleum acreage holder, with one production block and two exploration areas covering more than 74,400 sq km (18,000 million acres).

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The last contango? ICE Brent futures curve breaks from backwardation

In early July, there was a shift in the ICE Brent crude futures market — the backwardation that market players had become accustomed to flipped into contango. Some even said the market “collapsed” into a “supercontango” in a way not seen since 2008.

A contango market suggests ample supply in the prompt market, as the futures price of a commodity is above the expected future spot price. The contango in the Brent curve seems to suggest fatigue in oil demand, some say.

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EIA analysis: a big drop in crude oil inventories

Our analysis of this week’s EIA oil data can be found here.

A small Maine city may have set off a big fight over oil movements

The next big fight in the war over oil and gas development in the US — or at least one of the next big fights – will be over local control. That issue ramped up this week and appears to raise a significant question of federalism.

The city council in South Portland, Maine, voted this week to approve a package of zoning restrictions that would affect the handling of crude oil in the city. But the laws were drawn to impact the handling of oil being put on to tankers. It doesn’t affect oil being taken off tankers.

Why this is significant is because South Portland is the eastern terminus of the Portland-Montreal Pipeline, which takes crude oil imported into Maine and brings it to Montreal near the St. Lawrence Seaway. It can be refined in Montreal, or moved down Line 9 to Canadian refineries in Ontario.

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The political calculations of ethanol in Iowa and in Washington

Conventional political wisdom has held that given Iowa’s importance in US presidential contests as host of the first-in-the-nation nominating caucuses, the Renewable Fuel Standard is pretty much unassailable.

The federal biofuels mandate enjoys immense bipartisan support in the state, where corn is king.

Candidates hoping to curry favor with state voters would need to wholeheartedly endorse the RFS or at least pay lip service to the law while campaigning there. Iowa, after all, leads the nation in biofuels production, with 41 ethanol plants in the state, along with 18 biodiesel facilities.

But, if RFS opponents are to be believed, the political landscape could be changing.

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