Archive for the ‘oil fundamentals’ Category

California’s cap-and-trade no more than road bump in gasoline’s steep price decline

Drivers in car-crazed California paid more than 10% more for their gasoline at the start of the year. They just didn’t realize it.

As expected, California’s introduction of the emissions cap-and-trade program for transportation fuel suppliers boosted Los Angeles regular gasoline rack prices nearly 17 cents in the first two days of 2015 to $1.5885/gal. The rack is the wholesale level where gasoline and diesel is moved onto those often-shiny tanker trucks that hold roughly 9,000 gallons.

What barely changed right away was the price up and down the supply chain.

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Is the tide about to turn for oil prices?

The International Energy Agency on January 16 gave the beleaguered oil industry something to feel happy about, suggesting that an oil price recovery could be around the corner. However, producers suffering from sub-$50/b oil will still have some time to wait yet before they can expect any real improvement in prices.

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EIA analysis: an enormous build in oil products

The numbers in this week’s Energy Information Administration statistical report showed a build in product inventories that can fairly be called “staggering.” You can read our analysis here. 

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Guest blog: Are low oil prices good or bad for oil traders?

Guest blogger Jonathan Kingsman is the founder of Kingsman SA, which is now a unit of Platts, and he remains a Platts consultant.

Are low oil prices good or bad for oil traders?

In theory oil traders should not care about the price of oil; as they have reminded us many times recently, the big trading companies trade differentials and spreads, not flat (outright) price.

In a trader’s ideal world oil prices would fluctuate in a range, giving traders just enough volatility for risk-free plays on shipment dates and tonnages.

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The plunging US Gulf Coast diesel market

It has been a wild ride for the US Gulf Coast diesel market, driven by oversupply and tax considerations in just the last two weeks.

The longer-term market is reflecting that glut, because the NYMEX ULSD contract is in a relatively steep contango of 10 cts/gal out over the next year. But in the short-term, it’s been the physical Gulf Coast market that’s been the most interesting.

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Guest blog: Scrap “The Call on OPEC”

Steven Kopits is the President of Princeton Energy Advisors, and has been a guest blogger on The Barrel numerous times in the past. 

Seven years ago, when I first turned my attention full time to oil, one of the strangest concepts I encountered was the “call on OPEC”. The call on OPEC means different things in different contexts, but fundamentally, it is as non-economic and culturally imperialist a term as one could imagine.

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The diverging paths of gold and oil in 2014

Gold is a commodity that in the real world doesn’t get used for a whole lot of truly important things, but is seen as a financial asset, and always has been.

Oil is a commodity that in the real world makes modern life possible, gets used for many, many important things, and yet is also seen as a financial asset. It hasn’t always been as that last descriptor, but it’s been that way for awhile.

In the past year, the fundamentals of the industrial asset–oil–ripped through the market in the last few months of the year and sent the price of that commodity plunging. And during that same year, the so-called “safe haven” of gold actually turned out to be something like that in the face of global upheaval, after an extremely bearish 2013. The metal’s price basically didn’t do much of anything over the course of the year.

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Chinese oil demand: a new export force in the world

A big net importer of crude oil or oil products doesn’t just import. It might export too, a lot, and the US is a prime example of that. The US remains a net importer of about 5 million b/d or less of total petroleum barrels, yet is the single biggest exporter of oil products in the world.

China isn’t quite at that level yet, but what started out as an interesting quirk in the data earlier this year is now clearly a trend: China is a net exporter of oil products. You can see our analysis of the November figures here.  

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EIA analysis: Oil futures jump as US crude stocks fall

US commercial crude oil stocks were 847,000 barrels lower for the week ended December 12, helped along by a drop in imports, according to data released Wednesday from the US Energy Information Administration.

It represented a smaller-than-expected draw, but oil futures jumped regardless on a wave of short covering. Read more in the Platts analysis here.

It’s now Ant and Grasshopper days in the oil industry

During most times, the oil industry may operate in a dog-eat-dog world.  Now it’s also in an ant-and-grasshopper world.

You know the story of those two insects — they’re paired together in Aesop’s Fable of the same name.

The ant toils hard to save and scrimp for a rainy day, while the grasshopper flits around, enjoying the moment with no thought for tomorrow. Then winter comes and the ant has stores of food to last him for months; the grasshopper dies.

It’s hard to think, especially given the lavish times of several months back when Niagaras of oil revenues were pouring into corporate coffers, that any operator would ever be out shivering in the cold, harsh winter of sub-$60/barrel oil prices, but that reality is now here. And those who prepared for it in better times, are holding their heads up.

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