Overview: Weak Chinese data pressure prices
Chinese state-owned refiners are drawing crude from stocks to use as feedstock, while the country's independent sector is running at relatively low rates
Weak Chinese economic data pressured prices but crude stockdraws are lending some support, especially to light sweet grades.
Atlantic basin benchmark North Sea Dated fell by 77¢/bl to $86.39/bl in the week to 18 July. Mideast Gulf medium sour marker Dubai was down by 89¢/bl to $84.29/bl, but US light sweet WTI gained by 20¢/bl to $82.82/bl.
Chinese GDP growth slowed to 4.7pc in the second quarter, with consumption weak, including lower diesel demand alongside decelerated construction activity. Chinese demand for crude imports is relatively slow, as state-owned oil companies draw crude from stocks and Shandong province independent refiners run at below-average rates of less than 70pc.
US crude inventories fell by 4.9mn bl in the week to 12 July to close at 440mn bl, led by declines on the Gulf coast. Inventories have shed 20.5mn bl over the past three weeks, leaving stocks 17.2mn bl below the same week last year.
The WTI Cushing market is seeing increased demand for prompt crude, which is steepening backwardation — prompt premiums to forward values — and August Nymex WTI firmed by 50¢/bl relative to the September contract. Its discount to Ice Brent has also narrowed, making US crude exports harder to work.
A scheduled two-week, 160,000 b/d shutdown at ExxonMobil's Liza-1 production vessel offshore Guyana this month is cutting into global light sweet supply, with a similar suspension to follow at Liza-2 in August.
Light sweet Nigerian grades climbed as demand rose, and differentials firmed by $1.50-1.60/bl relative to North Sea Dated. Libyan Es Sider's differential rose by $1.80/bl to a four-month high as lower freight costs made it more competitive, compared with similar Nigerian crudes.
Wildfires near Alberta's oil sands are helping to support Canadian heavy crude, including at Cushing, where it can be blended with light production into benchmark grade Domestic Sweet. Canadian WCS' discount to calendar-month average WTI narrowed by $1.27/bl. Heavy Canadian crude also continues to be supported by its increased access to the Pacific coast through the newly commissioned 590,000 b/d Trans Mountain Expansion pipeline. And Iraqi Basrah Heavy's premium to its formula price rose by 20¢/bl as Mediterranean refiners sought cargoes for delivery in September, when bitumen demand firms.
But medium sour grades were relatively weaker. August-loading Iraqi Basrah Medium's premium to its European formula price fell by 25¢/bl as the long journey time around the Cape of Good Hope means that supplies will arrive in September or later, when Europe's seasonal demand for transport fuels will have cooled. Congolese Djeno shed 50¢/bl as participants expected the grade to trade well below current offer levels, given cheaper offers for medium sour Oman.
Oil products inventories on the water are high, as an intensification of the Yemen-based Houthi attacks on shipping boost diversions away from the Suez Canal, but demand for diesel and gasoline remains generally weak.
The US Gulf coast diesel crack spread fell by over $1/bl and diesel exports have been slow this month. But the arbitrage from Texas to Indiana opened for the first time in three months following a shutdown at ExxonMobil's 252,000 b/d Joliet refinery in Illinois, following severe weather.
The European diesel crack spread was down by $2/bl on the week at $16.59/bl. This comes despite a drop in US imports because of poor arbitrage economics and lower Turkish supply because of a persistent issue at a diesel-producing unit at Turkey's primary export refinery. Europe remains beholden to longer supply chains, mainly from east of Suez suppliers, meaning that any prompt spike in demand is unlikely to be met by short-haul suppliers.
European gasoline demand remains thin, with recent data showing lower demand from Sweden and France year on year.
Fed focus
Despite lacklustre US demand signals, there is some expectation that oil demand will pick up if the Federal Reserve cuts interest rates this autumn. A rise in US jobless claims last week brought the total to the highest in 10 months, suggesting a weaker labour market that could encourage the Fed to begin cutting borrowing costs. Lower borrowing costs could spur economic activity and, in turn, drive up oil demand.
US | |||
Aug | 18 Jul | 11 Jul | ± |
WTI | 82.82 | 82.62 | +0.20 |
WTI Houston | 83.56 | 83.51 | +0.05 |
Mars | 81.24 | 83.07 | -1.83 |
WCS Houston | 74.98 | 73.57 | +1.41 |
Europe | |||
18 Jul | 11 Jul | ± | |
Brent | 87.89 | 88.66 | -0.77 |
North Sea Dated | 86.39 | 87.16 | -0.77 |
Johan Sverdrup | 87.14 | 87.91 | -0.77 |
Mideast Gulf | |||
Sep | 18 Jul | 11 Jul | ± |
Dubai (Lon) | 84.29 | 85.18 | -0.89 |
Oman (Sing) | 84.83 | 85.40 | -0.57 |
Murban (Sing) | 84.80 | 84.63 | +0.17 |
Asia-Pacific | |||
18 Jul | 11 Jul | ± | |
ESPO Blend | 78.82 | 79.55 | -0.73 |
Urals del. India | 82.89 | 83.66 | -0.77 |
WTI del. NE Asia | 88.40 | 88.12 | +0.28 |
West Africa | |||
18 Jul | 11 Jul | ± | |
Bonny Light | 89.39 | 88.66 | +0.73 |
Forcados | 89.89 | 89.91 | -0.02 |
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Union plans new rail strike despite order: Update
Union plans new rail strike despite order: Update
Adds additional comment from Teamsters Canada Rail Conference Washington, 23 August (Argus) — The status of rail freight in Canada remains uncertain after a Canadian labor union today issued a new strike notice to Canadian National (CN), less than a day after the federal government ordered all parties to participate in binding arbitration. The Teamsters Canada Rail Conference (TCRC) today issued notice to CN that members will go on strike at 10am ET on 26 August. The union had not issued a strike notice to CN earlier this week, but employees could not work yesterday after the CN and Canadian Pacific Kansas City (CPKC) locked them out. The union said it moved to strike to "frustrate CN's attempt to force arbitration", and protect workers' rights to collectively bargain. CN had previously sought a federal order for binding arbitration. The government's back-to-work order yesterday sidestepped the collective bargaining process, and "undermined the foundation on which labour unions work to improve wages and working conditions for all Canadians", union president Paul Boucher said today. "Bargaining is also the primary way our union fights for rail safety — all considerations that outweigh short-term economic concerns," Boucher said. The union was more optimistic in its strike notice to CN this morning. "We do not believe that any of the matters we have been discussing over the last several days are insurmountable." It said it would be available to discuss issues to avoid another work stoppage. CN indicated it was frustrated with the union's action. "While CN is focused on its recovery plan to get back to powering the economy, the Teamsters are focused on returning to the picket line and holding the country hostage to their demands," the railroad said. CN last night had begun implementing a recovery plan to restore service . The union has not yet responded to inquiries about its action today. The office of labour minister Steven MacKinnon declined to comment. Rail operations at CN and CP stopped at 12:01am ET on Thursday after the union launched a strike at CPKC and both railroads locked out employees. That action ended late Thursday afternoon with the federal government directing the Canada Industrial Relations Board (CIRB) to manage binding arbitration on the railroads. CIRB, an independent agency, has not yet said if it will accept the government's order. CN began moving some freight early on 23 August, but the new strike order issued soon by the union today could disrupt those plans. The union has also challenged the constitutionality of MacKinnon's order regarding CPKC operations pending the outcome of a new ruling by the CIRB. CPKC's rail fleet remains parked in the meantime. CPKC said late Thursday it was disappointed in the minister's decision and sought to meet with CIRB to discuss resumption of service. CPKC said the union "refused to discuss any resumption of service, and instead indicated that they wish to make submissions to challenge the constitutionality of the Minister's direction." A case management meeting with CIRB occurred last night and another was scheduled for early today. Hearings are also underway to address preliminary issues, the union said. But the Teamsters said it was prepared to appeal the case to federal court if necessary. By Abby Caplan Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Union plans new rail strike despite arbitration order
Union plans new rail strike despite arbitration order
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Court endorses Maduro win amid warnings, violence
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Caracas, 23 August (Argus) — Venezuela's supreme court validated the reelection of President Nicolas Maduro to a third six-year term, maintaining he is the victor of the polemic 28 July vote. The court did not present any electoral material, ballots or tallies to support the claim, and no experts offered testimony. "This chamber declares ... the validity of the electoral material surveyed and validates the results of the presidential election," court chief justice Caryslia Rodriguez said. She also declared presidential candidate Edmundo Gonzalez to be in contempt of court for not attending the proceedings. Rodriguez's announcement came two hours after a UN mission questioned the official results. "We warn about the lack of independence and impartiality of the supreme court of justice and the national electoral council of Venezuela, which have played a role within the repressive machinery of the state," the UN fact-finding mission on Venezuela posted on social media. Gonzalez has produced electoral material, including tallies printed by voting machines and signed by witnesses on election day, giving him the victory by almost 70pc to 30pc. The "actas," as the tallies are known in Venezuela, were validated by several independent parties, including the Carter Center, the UN and the Organization of American states. The CNE electoral agency has also failed to present any of the other sets of these documents. Audits were never conducted. The Maduro government confirmed this week that 27 Venezuelans were killed in post-electoral violence, for which it blamed the opposition. Human rights non-government organization Provea said the bulk of the violence came from police and the military. Six anti-Maduro demonstrators were killed on 29 July near an army base. By Carlos Camacho Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Libya's parliament speaker warns of oil blockade
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