Subdued crude amid ample supply

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Talk of rebalancing from the IEA and OPEC / NOPEC assurances of an extended production cut have not been enough to encourage the market higher. Even though global crude flows are showing new trends, the key takeaway is that the market appears well-supplied – at least for now. With that in mind, hark, here are five things to consider in oil markets today: 

1) Today’s monthly IEA oil market report completes the trifecta of monthly oil reports after last week’s EIA and OPEC reports. The agency has kept its projection for global oil demand growth unchanged at +1.3 million barrels per day, while seeing OECD inventories continuing their decline from the month prior.

Nonetheless, total OECD stocks remain above 3 billion (beeelion) barrels, although product inventories took a dive into their five-year range due to lower refinery output.  

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2) We’ve recently discussed here how the U.S. still imports crude from Asia, despite sending more barrels in the opposite direction (hark, see next topic after this). The U.S., and particularly the West Coast, is a regular recipient of Russian crude, with 40,000 bpd of Russian crude imported to the U.S. last year. Light sweet Sokol accounted for nearly two thirds of the volume. 

This year, there have been a couple of absent months in terms of arrivals, but there has also been a new development: the first delivery of Russian crude to the East Coast since at least 2012. Earlier this month, 686,643 bbls of Urals was delivered to PBF’s Delaware City refinery, and 35,000 bbls delivered to PBF’s Paulsboro refinery.  

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3) Today’s piece out on RBN Energy discusses the impending rise of Bakken crude heading to the US Gulf and off to Asia, as the DAPL pipeline prepares to get up and running. The first cargo of Bakken crude is currently arriving in Malaysia, after departing Enterprise’s Beaumont terminal on March 27, and subsequently transferring her cargo to a VLCC, the Maran Canopus. This is only the second time ClipperData has observed Bakken crude being shipped to a foreign country other than Canada.

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4) My latest showing on NPR’s Texas Standard addressed the issue of methane flaring, and the recent failed attempt to repeal a ruling limiting it. The interview can be found here, and here are five takeaways:

–Methane venting and flaring happens because in some cases there is a lack of infrastructure in place to capture the natural gas at the well head. It is also necessary to release pressure. 

–The senate has just narrowly voted to uphold regulations to control methane venting. If it had been overturned, a similar regulation could never be proposed again. 

–This is viewed as a win for environmentalists, but producing states say it will cause fewer drilling rigs, less production and fewer jobs. Some states have regulations on methane venting, others do not. For example, Colorado has rules in place to limit and regulate methane venting, while New Mexico – where there are 35,000 oil and gas wells – does not.

–Although leakage is low – at under 2 percent of production – lost methane is enough to power more than 6 million homes, and the equivalent of $330 million of natural gas lost every year.

–In 2013, North Dakota was flaring well over a third of its gas, simply because of a lack of infrastructure. This number has now dropped to 10 percent. The oil and gas industry has spent more than $13 billion on infrastructure in recent years, leading to a 54 percent drop in flaring.  

5) File Under: there’s always a bull market somewhere. After we discussed the bull market in avocados at the beginning of the month, there is another monounsaturated fat-heavy food which is experiencing a bull market: brazil nuts.

After a severe lack of rain in South America last year, only a third of last year’s supply has been gathered thus far, causing a spike in prices. Prices have jumped to $14,500 a tonne, up over 60 percent from the start of the year. Hark, a price rocket: