Chinese oil demand growth outweighs OECD weakness: Opec

Spanish Market: Crude oil, Oil products
14/03/23

Opec has increased its 2023 oil demand growth forecast for China, outweighing a far weaker growth outlook in the OECD.

In its latest Monthly Oil Market Report (MOMR), Opec says its 2023 world oil demand growth forecast remains unchanged at 2.3mn b/d, with OECD Americas and OECD Europe both revised slightly lower, but Chinese growth revised higher, with jet/kerosene and gasoline leading demand growth.

OECD demand is expected to grow by 0.2mn b/d on the year to 46.23mn b/d, after a 0.35mn b/d forecast made in the previous MOMR. Demand in the non-OECD world is forecast to increase by 2.1mn b/d to 55.67mn b/d. China leads the way, jumping by 0.71mn b/d to 15.56mn b/d. The rise was forecast at 0.59mn b/d in the previous MOMR, and the higher revision comes after a rebound of 0.8mn b/d in January — from 0.2mn b/d in December — as the country abandoned its zero-Covid strategy and transport, economic and social activities could return to normal.

Oil demand dropped by 0.5mn b/d on the year in December in OECD Europe, a fourth consecutive monthly annual fall, Opec said, weakened by macroeconomic effects and "geopolitical developments", meaning the war in Ukraine and resultant sanctions. Diesel demand has been weak for seven months in Europe because of the faltering economic situation, and Opec expects European oil demand to show no growth this year, a revision down from its expected growth of a modest 40,000 b/d made a month ago.

US oil demand growth is also expected to be modest this year, at 90,000 b/d. Demand there fell by an unexpected 1.2mn b/d on the year in December, affected by bad weather.

Non-Opec liquids supply growth is forecast at 1.4mn b/d this year, to 67.2mn b/d, unchanged from last month's MOMR, with growth driven by the US, Brazil, Norway, Canada, Kazakhstan and Canada and declines primarily in sanctioned Russia. Opec expects Russian output to drop by 750,000 b/d this year to 10.3mn b/d, sharply lower than the 900,000 b/d drop forecast last month after higher than expected output in the first quarter this year. Opec said there are large uncertainties over non-Opec output growth because of the impact of "ongoing geopolitical developments", and the potential for US shale.

Opec puts the call on its members crude at 29.3mn b/d this year, up by around 800,000 b/d from 2022 and down by 100,000 b/d from last month's update. Argus estimates Opec crude output was 28.88mn b/d in February.

By Gavin Attridge

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05/11/24

US attorneys cast light on Venezuela oil trade

Washington, 5 November (Argus) — The next US president will have to decide how to continue to apply economic penalties against oil-producing countries such as Russia, Iran and Venezuela — but the sanctions regime is hardly a barrier for some determined sellers and buyers. A US federal indictment, unveiled on Monday, accused Turkish national Taskin Torlak of trading Venezuelan oil in 2020-23 despite US sanctions against Caracas. Torlak allegedly relied on individuals and companies operating in Ukraine, China, Turkey, Russia and other countries to access US banks, insurers and freight companies to transport Venezuelan oil to China. US sanctions cut off Venezuela from the US financial system under the threat of economic and criminal penalties. Torlak's methods included re-naming and re-flagging oil tankers, covering tanker names with paint or blankets, and turning off the AIS transponders and obtaining fake bills of lading, according to the US criminal indictment. Venezuela state-owned PdV allegedly paid tens of millions of dollars to Torlak to facilitate shipment of oil. But the US indictment also cites frequent complaints from Torlak about PdV's arrears for such services. "We would like to emphasize our satisfaction in operating our fleet under the commercial interest serving the Bolivarian Republic of Venezuela and [PdV] for nearly 2.5 years, with strong technical management and continuous validation from charterers", an associate of Torlak wrote to PdV in July 2023 to complain that the Venezuelan company was late in making a $32.5mn payment. President Joe Biden's administration lifted sanctions against PdV in October 2023, only to reimpose them six months later as Caracas reneged on its promise to hold a free and fair presidential election. The US backs the Venezuelan opposition's claim that its candidate Edmundo Gonzalez defeated incumbent president Nicolas Maduro in July. But Washington has backed away from adding more sanctions against Venezuela. Most Venezuelan crude heads to China, where many independent refiners rely on networks such as Torlak's alleged organization to access discounted crude from countries under US sanctions. By Haik Gugarats Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Phillips 66 Calif shutdown to shift tanker flows

05/11/24

Phillips 66 Calif shutdown to shift tanker flows

Houston, 5 November (Argus) — Phillips 66's plans for a late 2025 shutdown of its 139,000 b/d refinery in Los Angeles, California, will likely lead to more trans-Pacific refined products tanker shipments into the US west coast while having a more muted effect on crude tankers. Phillips 66 said it would likely shut the refinery in the fourth quarter of 2025, citing the high regulatory costs of operating in California. While it is unclear what will become of the facility, Phillips 66 said it still plans to supply the region with road fuels in the future. The closure will reduce California's refining capacity by 8.6pc to about 1.48mn b/d and removes about 14pc of refining capacity in the Los Angeles area. Tankers hauled about 160,000 b/d of refined products to California in January-October, with about 95,000 b/d going to Los Angeles, according to data from analytics firm Vortexa. About 27pc of the deliveries to Los Angeles came from refiners on the US Gulf coast and elsewhere on the US west coast on Jones Act-compliant vessels, which must be US-built, US-flagged and US-crewed. But the relatively small Jones Act fleet is already fully utilized, with no additional ships on order, shipbroker Poten said. This means replacement supplies of refined products will need to come from farther afield, likely Asia-Pacific. South Korea is Los Angeles' biggest source of waterborne refined products so far this year, shipping about 33,000 b/d in January-October, Vortexa data show, followed by other US sources (25,000 b/d), China (9,000 b/d), India (9,000 b/d) and Canada (8,500 b/d). Taiwan, Singapore and Japan also have supplied marginal cargoes to Los Angeles this year. An increase of California-bound shipments from these countries would create additional demand for voyages lasting a range of 19-35 days, boosting ton-mile demand and tanker employment in the Pacific basin. Medium range (MR) and long range 1 (LR1) refined product tankers would benefit the most from these increased trade flows, with MRs accounting for 67pc of the current market share and LR1s 33pc, according to Vortexa data. Tanker demand for exports from the US west coast is unlikely to be affected. Phillips 66 Los Angeles exported just 2,000-4,000 b/d of products in January-October, data from Kpler and Vortexa show. Limited impact on crude tankers Because Phillips 66's Los Angeles refinery was designed to process domestic California crude, the impact on the regional crude tanker market likely will be much more limited — and offset by increased tanker demand on Canada's Pacific coast. With available domestic — albeit declining — California crude production, the 139,000 b/d refinery imported 64,000 b/d of crude in January-August 2024, mostly from short-haul sources in the Americas, the latest data from the US Energy Information Administration (EIA) show. The trade was dominated by 1mn bl Suezmaxes and 500,000-700,000 bl Aframaxes. The refinery imported 15.52mn bl of crude in January-August 2024, according to the EIA. Canada was the largest international supplier (4.84mn bl) in that span, boosted by the Trans Mountain Expansion (TMX) pipeline start-up in May, followed by Guyana (3.48mn bl) via the Trans-Panama Pipeline, Mexico (2.98mn bl), Brazil (2.92mn bl) and Ecuador (1.3mn bl). Because of the refinery's use of domestic crude supplies, the complex's imports are equivalent to just two Suezmax shipments or three Aframax shipments per month. For the regional tanker market, that is more than offset by the burgeoning TMX flows on Canada's Pacific coast, which in October loaded a record 24 Aframaxes , destined to refineries in China and the US west coast. By Tray Swanson Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Port of Vancouver grinds to halt as picket lines form

05/11/24

Port of Vancouver grinds to halt as picket lines form

Calgary, 5 November (Argus) — Commodity movements at the port of Vancouver have halted as a labour dispute could once against risk billions of dollars of trade at Canada's busiest docks. The International Longshore and Warehouse Union (ILWU) Local 514 began strike activity at 11am ET on 4 November, following through on a 72-hour notice it gave to the BC Maritime Employers Association (BCMEA) on 1 November. The BCMEA subsequently locked out workers hours later that same day, 4 November, which the union says is an overreaction because the union's job action was only limited to an overtime ban for its 730 ship and dock foreman members. Natural resource-rich Canada is dependent on smooth operations at the British Columbia port of Vancouver to reach international markets. The port is a major conduit for many dry and liquid bulk cargoes, including lumber, wood pellets and pulp, grains and agriculture products, caustic soda and sodium chlorate, sugar, coal, potash, sulphur, copper concentrates, zinc and lead concentrate, diesel and renewable diesel liquids and petroleum products. These account for about two-thirds of the movements through the port. Canadians are also reliant on the port for the import of consumer goods and Asian-manufactured automobiles. The two sides have been at odds for 19 months as they negotiate a new collective agreement to replace the one that expired in March 2023. Intervention by the Canada Industrial Relations Board (CIRB), with a hearing in August and September, followed by meetings in October with the Federal Mediation and Conciliation Service (FMCS), failed to culminate in a deal. The BCMEA's latest offer is "demanding huge concessions," according to the ILWU Local 514 president Frank Morena. The BCMEA refutes that, saying it not only matches what the ILWU Longshore workers received last year, but includes more concessions. The offer remains open until withdrawn, the BCMEA said. A 13-day strike by ILWU longshore workers in July 2023 disrupted C$10bn ($7.3bn) worth of goods and commodities, especially those reliant on container ships, before an agreement was met. Grain and cruise operations are not part of the current lockout. The Westshore coal terminal is also expected to continue operations, the Port of Vancouver said on 4 November. The Trans Mountain-operated Westridge Marine Terminal, responsible for crude oil exports on Canada's west coast, should also not be directly affected because its employees are not unionized. In all, the port has 29 terminals. By Brett Holmes Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

EU contributed $31.2bn public climate finance in 2024

05/11/24

EU contributed $31.2bn public climate finance in 2024

Edinburgh, 5 November (Argus) — The EU has contributed €28.6bn ($31.2bn) in climate finance from public sources in 2024 to help developing countries cut their greenhouse gas emissions (GHG) and adapt to climate change, according to the European Council. Around half the funding went to climate adaptation or to cross-cutting action, which involves both mitigation — reducing GHG emissions — and adaptation. Almost 50pc took the form of grants, according to the EU. The €28.6bn includes €3.2bn from the EU budget, including from the European Fund for Sustainable Development Plus, and €2.6bn from the European Investment Bank. The EU said it also mobilised €7.2bn of private finance last year, and it "seeks to extend the range and impact of sources and financial instruments and to mobilise more private finance". The figures were released ahead of the UN Cop 29 climate talks, which open on 11 November in Baku, Azerbaijan. Finance will be a key topic at this year's summit as parties to the Paris deal will seek to agree on a new finance goal for developing nations, following on from the current, but broadly recognised as inadequate, $100bn/yr target. EU negotiators have signalled willingness to support "a stretched goal" with a public finance core, but have yet to provide a figure. Developed countries in general have yet to commit to a number for climate finance, while developing nations have for some time called for a floor of at least $1 trillion/yr. By Caroline Varin Europe's contribution to climate finance €bn Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Voting set to conclude in race for White House

05/11/24

Voting set to conclude in race for White House

Washington, 5 November (Argus) — Voting concludes today in the US presidential contest between former president Donald Trump and vice president Kamala Harris, a race with high stakes for energy policy, trade and climate change. Polls will close by 6-9pm ET in eastern states and by 11 pm ET in most western states, but election officials say it will take time to count votes, including from mail-in ballots that will trickle in over the coming days. As of 3 November, voters who went to the polling stations early or sent mail-in ballots added up to 48pc of the total turnout in 2020, according to analysis by the Washington Post. The presidential race is likely to be determined by voters in Michigan, Wisconsin, Pennsylvania, North Carolina, Georgia, Arizona and Nevada, where pre-election polls have shown no decisive lead for Harris or Trump. Voters are casting ballots at a time when domestic oil and gas production is booming. US crude output reached a record high 13mn b/d last year, while gas production hit a record 103 Bcf/d, according to the US Energy Information Administration. Despite record production and profits in the oil industry, Trump has focused heavily on energy policy — and voter anger over higher prices across the economy — in his bid to win a second term. US drivers paid an average of $3.07/USG for regular grade gasoline in the week ended on 4 November, the lowest price in 10 months — but still higher than at any point during Trump's first presidency. On the campaign trail, Trump has assured oil and gas producers that under his watch they would be permitted to "drill, baby, drill" and has promised to dismantle the energy tax credits in President Joe Biden's signature climate initiative, the Inflation Reduction Act. Harris has committed to support the 2022 law and other energy policies adopted by Biden, including continued support for electric vehicles. Harris has disavowed her 2019 pledge to ban hydraulic fracturing. But oil and gas firms remain concerned about restrictions on federal leasing and efforts to electrify the vehicle fleet if she is elected. The next president will decide key questions on energy policy, such as how to proceed with a "pause" on the licensing of new US LNG export facilities and to manage climate-related rules for power plants, oil and gas facilities and vehicles. The race for the White House will have equally high stakes for companies involved in metals and agriculture , as well as other commodities. Trump is planning a combative approach to trade, with a 20pc tariff on all foreign imports and even higher tariffs against China, and to rescind many regulations. In 2025, the US Congress is poised for a major fight on tax policy because of the year-end expiration of an estimated $4 trillion in tax cuts. Russia's war on Ukraine, and the future of US restrictions on Russian energy exports is also at stake during the election. Trump has vowed to end the war by forcing Kyiv to negotiate a deal with Russian president Vladimir Putin and appears to back the Kremlin's argument that the continuation of US sanctions on Russia would weaken and undermine the dollar. A Harris administration would continue enforcing the G7 price cap on Russian oil exports and, possibly, add to the restrictions on Moscow's earnings from its oil and gas exports. The growing threat of an Israel-Iran war and its potential impacts on oil flows from the Middle East is threatening to overwhelm the final months of Biden's term in office and any foreign policy initiatives either candidate vying to succeed him will pursue in the region. US-China relations are likely to remain adversarial in coming years. Viewing Beijing as the principal economic and geopolitical challenge for the US is a rare overlap in foreign policy priorities identified by Trump and Harris. Of particular concern in Washington is the ability of oil exporting countries such as Iran, Venezuela and Russia to find willing buyers for their crude in China despite US sanctions. Polls also show a tight race in the fight for control of the US House of Representatives, where Republicans hold a slim 220-212 majority. Up to 22 congressional races are up to grabs, with a range of potential outcomes favoring either party, election ratings firm Cook Political Report says. Cook rates 208 seats as solid or leaning Republican, and 205 solid or leaning Democratic, with both shy of the 218 needed for control of the chamber. In the US Senate, where Democrats hold a 51-49 majority, Republicans have a clear path to taking control because of polling leads in West Virginia and Montana. Republicans could win control of the Senate by flipping just one seat, if Trump wins the election, but would need to flip two seats if Harris wins. By Chris Knight and Haik Gugarats Presidential race still a toss-up Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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