Global Liquid Fuels – Short-Term Energy Outlook

Onyx Power and Gas Consulting continues a weekly series providing the Short-Term Energy Outlook as of March 6, 2018.  This series of news articles should provide a complete insight on the current conditions of the energy…enjoy, check out archives and come back each week for additional information on how all sorts of energy sources impact our daily lives

Global Liquid Fuels

  • North Sea Brent crude oil spot prices averaged $65 per barrel (b) in February, a decrease of $4/b from the January level and the first month-over-month average decrease since June 2017. EIA forecasts Brent spot prices will average about $62/b in both 2018 and 2019 compared with an average of $54/b in 2017.
  • EIA expects West Texas Intermediate (WTI) crude oil prices to average $4/b lower than Brent prices in both 2018 and 2019. NYMEX WTI contract values for May 2018 delivery traded during the five-day period ending March 1, 2018, suggest a range of $51/b to $76/b encompasses the market expectation for June 2018 WTI prices at the 95% confidence level.
  • EIA estimates that U.S. crude oil production averaged 10.3 million barrels per day (b/d) in February, up 230,000 b/d from the January level, when there were some well freeze-offs in the Permian and Bakken. EIA has reported that total U.S. crude oil production averaged 9.3 million b/d in 2017, ending the year with production of 9.9 million b/d in December. EIA projects that U.S. crude oil production will average 10.7 million b/d in 2018, which would mark the highest annual average U.S. crude oil production level, surpassing the previous record of 9.6 million b/d set in 1970. EIA forecasts that 2019 crude oil production will average 11.3 million b/d.
  • EIA estimates that inventories of global petroleum and other liquid fuels declined by 0.6 million b/d in 2017. In this forecast, global inventories grow by about 0.4 million b/d in 2018 and by another 0.3 million b/d in 2019.

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The professional consultants at Onyx Power & Gas Consulting are always ahead of the current issues that may affect energy consumption and pricing. Now is the time to partner with an Onyx professional consultant to discuss energy management and secure energy prices based on today’s stable pricing. Volatility in the energy markets makes it too precarious to take chances. Partner with Onyx Power & Gas in Making Energy Make a Difference!

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Prices – Short-Term Energy Outlook

Onyx Power and Gas Consulting continues a weekly series providing the Short-Term Energy Outlook as of March 6, 2018.  This series of news articles should provide a complete insight on the current conditions of the energy…enjoy, check out archives and come back each week for additional information on how all sorts of energy sources impact our daily lives

Prices

  • North Sea Brent crude oil spot prices averaged $65 per barrel (b) in February, a decrease of $4/b from the January level and the first month-over-month average decrease since June 2017. EIA forecasts Brent spot prices will average about $62/b in both 2018 and 2019 compared with an average of $54/b in 2017.
  • EIA expects West Texas Intermediate (WTI) crude oil prices to average $4/b lower than Brent prices in both 2018 and 2019. NYMEX WTI contract values for May 2018 delivery traded during the five-day period ending March 1, 2018, suggest a range of $51/b to $76/b encompasses the market expectation for June 2018 WTI prices at the 95% confidence level.
  • In February, the U.S. benchmark Henry Hub natural gas spot price averaged $2.66 per million British thermal units (MMBtu), down $1.03/MMBtu from January. Winter weather moderated in February after extremely cold temperatures in much of the country during the first half of January. U.S. heating degree days were an estimated 17% lower than the 10-year average for February, which contributed to lower consumption and prices.
  • EIA expects natural gas prices to moderate in the coming months, based on a forecast of record natural gas production levels. EIA expects Henry Hub spot prices to average $2.72/MMBtu in March and $2.99/MMBtu for all of 2018. In 2019, EIA forecasts prices will average $3.07/MMBtu. NYMEX contract values for June 2018 delivery that traded during the five-day period ending March 1, 2018, suggest that a range of $2.16/MMBtu to $3.49/MMBtu encompasses the market expectation for June Henry Hub natural gas prices at the 95% confidence level.

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The professional consultants at Onyx Power & Gas Consulting are always ahead of the current issues that may affect energy consumption and pricing. Now is the time to partner with an Onyx professional consultant to discuss energy management and secure energy prices based on today’s stable pricing. Volatility in the energy markets makes it too precarious to take chances. Partner with Onyx Power & Gas in Making Energy Make a Difference!

Posted in CO2, Community Improvement, Consulting, Crude Oil, Crude Oil Prices, Drilling, Electricity, Electricity Prices, Emmissions, Energy, Energy Consumption, Energy Deregulation, Energy Prices, Environment, Fuel, Fuels, Gas, Generation, Natural Gas, Natural Gas Prices, OECD, Oil, Press Releases, Services, Shale Gas | Tagged , , , , , , , , , , , , | Leave a comment

Forecast Highlights – Short-Term Energy Outlook

Onyx Power and Gas Consulting continues a weekly series providing the Short-Term Energy Outlook as of March 6, 2018.  This series of news articles should provide a complete insight on the current conditions of the energy…enjoy, check out archives and come back each week for additional information on how all sorts of energy sources impact our daily lives

Forecast Highlights

Global Liquid Fuels

  • North Sea Brent crude oil spot prices averaged $65 per barrel (b) in February, a decrease of $4/b from the January level and the first month-over-month average decrease since June 2017. EIA forecasts Brent spot prices will average about $62/b in both 2018 and 2019 compared with an average of $54/b in 2017.
  • EIA expects West Texas Intermediate (WTI) crude oil prices to average $4/b lower than Brent prices in both 2018 and 2019. NYMEX WTI contract values for May 2018 delivery traded during the five-day period ending March 1, 2018, suggest a range of $51/b to $76/b encompasses the market expectation for June 2018 WTI prices at the 95% confidence level.
  • EIA estimates that U.S. crude oil production averaged 10.3 million barrels per day (b/d) in February, up 230,000 b/d from the January level, when there were some well freeze-offs in the Permian and Bakken. EIA has reported that total U.S. crude oil production averaged 9.3 million b/d in 2017, ending the year with production of 9.9 million b/d in December. EIA projects that U.S. crude oil production will average 10.7 million b/d in 2018, which would mark the highest annual average U.S. crude oil production level, surpassing the previous record of 9.6 million b/d set in 1970. EIA forecasts that 2019 crude oil production will average 11.3 million b/d.
  • EIA estimates that inventories of global petroleum and other liquid fuels declined by 0.6 million b/d in 2017. In this forecast, global inventories grow by about 0.4 million b/d in 2018 and by another 0.3 million b/d in 2019.

Natural Gas

  • EIA estimates that U.S. dry natural gas production averaged 73.6 billion cubic feet per day (Bcf/d) in 2017. EIA forecasts that natural gas production will average 81.7 Bcf/d in 2018, establishing a new record. That level would be 8.1 Bcf/d higher than the 2017 level and the highest annual average growth on record. EIA expects natural gas production will also increase in 2019, with forecast growth of 1.0 Bcf/d.
  • In February, the U.S. benchmark Henry Hub natural gas spot price averaged $2.66 per million British thermal units (MMBtu), down $1.03/MMBtu from January. Winter weather moderated in February after extremely cold temperatures in much of the country during the first half of January. U.S. heating degree days were an estimated 17% lower than the 10-year average for February, which contributed to lower consumption and prices.
  • EIA expects natural gas prices to moderate in the coming months, based on a forecast of record natural gas production levels. EIA expects Henry Hub spot prices to average $2.72/MMBtu in March and $2.99/MMBtu for all of 2018. In 2019, EIA forecasts prices will average $3.07/MMBtu. NYMEX contract values for June 2018 delivery that traded during the five-day period ending March 1, 2018, suggest that a range of $2.16/MMBtu to $3.49/MMBtu encompasses the market expectation for June Henry Hub natural gas prices at the 95% confidence level.

Electricity, coal, renewables, and emissions

  • EIA expects the share of U.S. total utility-scale electricity generation from natural gas-fired power plants to rise from 32% in 2017 to 34% in both 2018 and 2019. The forecast generation share from coal in both 2018 and 2019 averages 29%, down from 30% in 2017. The nuclear share of generation was 20% in 2017 and is forecast to average 20% in 2018 and 19% in 2019. Nonhydropower renewables provided slightly less than 10% of electricity generation in 2017 and are expected to provide 10% in 2018 and nearly 11% in 2019. The generation share of hydropower was over 7% in 2017 and is forecast to fall below 7% in both 2018 and 2019.
  • EIA forecasts coal production to decline by almost 5% to 736 million short tons (MMst) in 2018 and then increase by 1% to 745 MMst in 2019. Lower expected global demand for U.S. coal exports (down 17% in 2018 and another 5% in 2019) and lower forecasts of coal use in the electric power sector (down 5% in 2018) contribute to the forecast of lower coal production.
  • U.S. coal exports were 97 MMst in 2017, a 61% increase from the previous year, but they are expected to decrease in both 2018 and 2019. Exports of metallurgical coal, which are used in the steelmaking process, remain at 55 MMst in 2018 and decline to 54 MMst in 2019. Steam coal exports, which were an estimated 42 MMst in 2017, are expected to decline to 26 MMst and 23 MMst in 2018 and 2019, respectively.
  • Total solar electricity generation averaged an estimated 211,000 MWh/d in 2017. EIA projects that it will reach 246,000 MWh/d in 2018 and 294,000 MWh/d in 2019.
  • After declining by 0.6% in 2017, EIA projects that energy-related carbon dioxide (CO2) emissions will increase by 1.0% in 2018 and by another 0.8% in 2019. Energy-related CO2 emissions are sensitive to changes in weather, economic growth, and energy prices.
Price Summary
2016 2017 2018 2019
aWest Texas Intermediate.
bAverage regular pump price.
cOn-highway retail.
dU.S. Residential average.
WTI Crude Oila
(dollars per barrel)
43.33 50.79 58.17 57.51
Brent Crude Oil
(dollars per barrel)
43.74 54.15 62.13 61.51
Gasolineb
(dollars per gallon)
2.15 2.42 2.60 2.58
Dieselc
(dollars per gallon)
2.31 2.65 2.90 2.86
Heating Oild
(dollars per gallon)
2.10 2.51 2.80 2.82
Natural Gasd
(dollars per thousand cubic feet)
10.04 10.92 10.66 10.94
Electricityd
(cents per kilowatthour)
12.55 12.90 13.17 13.57

The professional consultants at Onyx Power & Gas Consulting are always ahead of the current issues that may affect energy consumption and pricing. Now is the time to partner with an Onyx professional consultant to discuss energy management and secure energy prices based on today’s stable pricing. Volatility in the energy markets makes it too precarious to take chances. Partner with Onyx Power & Gas in Making Energy Make a Difference!

Posted in CO2, Community Improvement, Consulting, Crude Oil, Crude Oil Prices, Drilling, Electricity, Electricity Prices, Emmissions, Energy, Energy Consumption, Energy Deregulation, Energy Prices, Environment, Fuel, Fuels, Gas, Generation, Natural Gas, Natural Gas Prices, OECD, Oil, Press Releases, Services, Shale Gas | Tagged , , , , , , , , , , , , | Leave a comment

Natural Gas – Markets Review

Onyx Power and Gas Consulting continues a weekly series providing the Short-Term Energy Outlook as of March 6, 2018.  This series of news articles should provide a complete insight on the current conditions of the energy…enjoy, check out archives and come back each week for additional information on how all sorts of energy sources impact our daily lives

Natural Gas

The front-month natural gas futures contract for delivery at Henry Hub settled at $2.70/million British thermal units (MMBtu) on March 1, a decrease of 16 cents/MMBtu from February 1 (Figure 8). Warmer weather in the second half of January and in February contributed to the fall in natural gas prices. U.S. population-weighted heating degree days (HDD) averaged 12% below normal for the four weeks ending February 22, which put downward pressure on natural gas prices throughout the month. The Henry Hub natural gas spot price averaged $2.66/MMBtu in February, $1.03/MMBtu lower than January.

Figure 8: Natural gas front-month futures prices and actual minus historical average HDD and CDD

The historical and implied volatilities of natural gas prices both increased in January, as typically happens each winter (Figure 9). Historical volatility reached 67% on February 5, the highest level since January 2017, reflecting the price spikes at the beginning of January and significant price declines at the end of the month. Implied volatility, however, declined quickly at the end of January and fell to 26% on February 28, the lowest implied volatility since June 2014. Implied volatility represents the market’s expectation about near-term price movements; as a result, the low natural gas price implied volatility may indicate that strong production growth will be sufficient to meet demand, despite inventories that are currently below their five-year average.

Figure 9: Natural gas historical and implied volatility

Natural gas futures prices fell in the front-month contract, and substantial price decreases occurred in contracts several months into the future. These price declines significantly reduced the market-derived probability of the July 2018 Henry Hub futures contract expiring above $3/MMBtu; the probabilities fell from 42% at the beginning of the month to 28% on March 1 (Figure 10). Natural gas inventory withdrawals for the four weeks ending February 23 were 53 billion cubic feet (9%) below the five-year average, which likely contributed to an improved supply outlook for the next several months.

Figure 10: Probability of the July 2018 Henry Hub contract expiring above price levels

The professional consultants at Onyx Power & Gas Consulting are always ahead of the current issues that may affect energy consumption and pricing. Now is the time to partner with an Onyx professional consultant to discuss energy management and secure energy prices based on today’s stable pricing. Volatility in the energy markets makes it too precarious to take chances. Partner with Onyx Power & Gas in Making Energy Make a Difference!

 

Posted in CO2, Community Improvement, Consulting, Crude Oil, Crude Oil Prices, Drilling, Electricity, Electricity Prices, Emmissions, Energy, Energy Consumption, Energy Deregulation, Energy Prices, Environment, Fuel, Fuels, Gas, Generation, Natural Gas, Natural Gas Prices, OECD, Oil, Press Releases, Services, Shale Gas | Tagged , , , , , , , , , , , | Leave a comment

Petroleum Products – Market Review

Onyx Power and Gas Consulting continues a weekly series providing the Short-Term Energy Outlook as of March 6, 2018.  This series of news articles should provide a complete insight on the current conditions of the energy…enjoy, check out archives and come back each week for additional information on how all sorts of energy sources impact our daily lives

Petroleum Products

Gasoline prices: The front-month futures price of reformulated blendstock for oxygenate blending (RBOB, the petroleum component of gasoline used in many parts of the country) settled at $1.90 per gallon (gal) on March 1 (Figure 5), virtually unchanged since February 1. The RBOB-Brent crack spread (the difference between the price of RBOB and the price of Brent crude oil) increased by 14 cents/gal over the same period to settle at 38 cents/gal. The RBOB-Brent crack spread declined 5 cents/gal in February before the contract changed to summer grade gasoline on March 1, causing a significant one day increase in the crack spread.

Gasoline inventories, which typically decline between January and February, rose this year in all regions of the United States. Total U.S. gasoline stocks rose 6.3 million barrels between the weeks ending February 2 and February 23. Total U.S. gasoline stocks have declined between January and February on average by 5.8 million barrels over the past five years, according to EIA’s Petroleum Supply Monthly (PSM).

Figure 5: Historical RBOB front-month futures prices and crack spread

Ultra-low sulfur diesel prices: The ultra-low sulfur diesel (ULSD) front-month futures price decreased 20 cents/gal from February 1 to settle at $1.89/gal on March 1. The ULSD-Brent crack spread (the difference between the price of ULSD and the price of Brent crude oil) decreased by 7 cents/gal over the same period, settling at 37 cents/gal (Figure 6).

Similar to the movements seen in the gasoline market, distillate crack spreads fell in February, as distillate inventories rose counter-seasonally. In the Central Atlantic (PADD 1B), which includes the New York Harbor delivery point of the ULSD futures contract, distillate inventories rose 0.7 million barrels between the weeks ending February 2 and February 23. In comparison, distillate inventories in PADD 1B declined 2.7 million barrels on average between January and February in the past five years, according to the PSM. For much of February, the U.S. East Coast and the U.S. Northeast experienced warmer-than-normal temperatures, which likely reduced demand for home heating.

Figure 6: Historical ULSD front-month futures price and crack spread

In recent months, year-over-year growth in total U.S. liquid fuels consumption and exports has accelerated to levels not seen since 2015. Since October 2017, year-over-year growth in total liquid fuels consumption and exports averaged 1.0 million b/d, with an increasing portion of the growth coming from hydrocarbon gas liquids (HGL), which includes propane and ethane (Figure 7).

EIA expects U.S. liquid fuels consumption to grow 0.47 million b/d (2.4%) in 2018, the highest growth rate since 2013. EIA projects that most of the consumption growth will come from natural gas-sourced products. HGL consumption is expected to account for 0.34 million b/d of total liquid fuels consumption growth. Ethane is expected to account for almost 65% of this HGL consumption growth, as new domestic ethylene crackers begin operating.

Figure 7: Historical ULSD front-month futures price and crack spread

The professional consultants at Onyx Power & Gas Consulting are always ahead of the current issues that may affect energy consumption and pricing. Now is the time to partner with an Onyx professional consultant to discuss energy management and secure energy prices based on today’s stable pricing. Volatility in the energy markets makes it too precarious to take chances. Partner with Onyx Power & Gas in Making Energy Make a Difference!

Posted in CO2, Community Improvement, Consulting, Crude Oil, Crude Oil Prices, Drilling, Electricity, Electricity Prices, Emmissions, Energy, Energy Consumption, Energy Deregulation, Energy Prices, Environment, Fuel, Fuels, Gas, Generation, Natural Gas, Natural Gas Prices, OECD, Oil, Press Releases, Services, Shale Gas | Tagged , , , , , , , , , , , | Leave a comment

Crude Oil – Market Review

Onyx Power and Gas Consulting continues a weekly series providing the Short-Term Energy Outlook as of March 6, 2018.  This series of news articles should provide a complete insight on the current conditions of the energy…enjoy, check out archives and come back each week for additional information on how all sorts of energy sources impact our daily lives

Crude Oil

Prices: The front-month futures price for North Sea Brent crude oil settled at $63.83 per barrel (b) on March 1, a decrease of $5.82/b since February 1. Front-month futures prices for West Texas Intermediate (WTI) crude oil for delivery at Cushing, Oklahoma, decreased $4.81/b over the same period, settling at $60.99/b on March 1 (Figure 1). February Brent and WTI monthly average spot prices were $3.76/b and $1.49/b lower than the January average spot prices, respectively.

Crude oil prices declined in February after seven consecutive months of increases. Despite the recent price declines, most fundamental crude oil supply and demand indicators suggest global petroleum inventories are declining. EIA estimates that total commercial petroleum inventories in countries in the Organization for Economic Cooperation and Development (OECD) declined to 2.83 billion barrels in February 2018, a decrease of 211 million barrels since February 2017 and the largest annual decrease in inventories since 2003. Inventories are 40 million barrels (1.4%) higher than the five-year average level for February, the narrowest difference to five-year average levels since November 2014, suggesting an increasingly balanced market.

A significant increase in price volatility after prices started declining in equity and bond markets likely affected crude oil prices as well. The rolling 60-day correlation between daily price changes of WTI crude oil and the S&P 500 index recently increased from near zero at the beginning of January to over 0.3 in late February. The VIX, a measure of implied volatility (the market’s expected range of near-term price changes) on S&P 500 index options, closed above the OVX, a measure of implied volatility on crude oil options prices, for four consecutive days in early February. Not only was this the first time since 2008 that the VIX closed above the OVX, but the VIX has only closed above the OVX four other times since the inception of the OVX in 2007 (Figure 2).

Under typical trading conditions, a single commodity would be expected to have higher volatility than an index whose underlying value consists of a basket of 500 large capitalization stocks, representing a variety of U.S. companies. Although the direct causes of increased equity market volatility remain uncertain, increased trading volume of inverse VIX exchange-traded funds (ETF) and exchange-traded notes, as well as direct selling of VIX futures contracts, could have contributed to the increase. A significant increase in volatility may have prompted the inverse VIX ETF to close positions. Several inverse VIX products have ceased trading, having lost more than 80% of their value in one day on the some of the highest trading volume in the many ETFs’ history. Both the VIX and the OVX have declined since their early February increases, but remain at higher levels than at the beginning of 2018.

Figure 2: Equity and crude oil volatility indicies

The Brent-WTI price spread narrowed to its lowest level in more than six months, closing at $3.03/b on March 1 (Figure 3). Several factors specific to the crude oil market in the U.S. midcontinent could be contributing to a narrowing spread. Crude oil stocks in Cushing, Oklahoma, the delivery point for the U.S. light sweet crude oil futures contract, continued to decrease in February. Stocks declined to less than 29 million barrels the week ending February 23, 2018, the lowest level in more than three years, and they are being drawn down at the largest rolling 13-week rate since EIA began publishing Cushing stock levels in 2004. Recent trade press reports that the Keystone pipeline, which flows directly into Cushing, is still operating below nameplate capacity. Crude oil inputs to refineries in Petroleum Administration for Defense District (PADD) 2 averaged 3.7 million barrels per day (b/d) for the four weeks ending February 23, 2018, according to EIA’s Weekly Petroleum Supply Report, which would be an all-time high for the month of February.

Figure 3: Brent-WTI futures price spread

In addition to high refinery demand in PADD 2, higher export demand could be contributing to near-term price support for U.S. light sweet crude oil. Weekly U.S. crude oil exports were more than 2 million b/d for the week ending February 16, 2018, the second highest level since EIA began publishing weekly export data from U.S. Customs and Border Protection in 2016 (Figure 4). The Louisiana Offshore Oil Port (LOOP) is the largest crude oil import terminal in the United States, but recently the port began to test loading crude oil for export. LOOP loaded a Very Large Crude Carrier (VLCC) on February 18February 18, which can hold approximately 2 million barrels of crude oil. Further infrastructure developments along the U.S. Gulf Coast (PADD 3) could allow more U.S. crude oil exports.

Figure 4: Weekly U.S. exports of crude oil

The professional consultants at Onyx Power & Gas Consulting are always ahead of the current issues that may affect energy consumption and pricing. Now is the time to partner with an Onyx professional consultant to discuss energy management and secure energy prices based on today’s stable pricing. Volatility in the energy markets makes it too precarious to take chances. Partner with Onyx Power & Gas in Making Energy Make a Difference!

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Natural Gas, Market Review – Short-Term Energy Outlook

Onyx Power and Gas Consulting continues a weekly series providing the Short-Term Energy Outlook as of December 12, 2017.  This series of news articles should provide a complete insight on the current conditions of the energy…enjoy, check out archives and come back each week for additional information on how all sorts of energy sources impact our daily lives

Natural Gas

The front-month natural gas futures contract for delivery at Henry Hub settled at $2.76/million British thermal units (MMBtu) on December 7, 2017, a decrease of 13 cents/MMBtu from November 1 (Figure 8). Several factors affected price movements in November. Natural gas inventories fell further below the five-year average in recent weeks until a rare injection into storage for the week ending December 1 brought inventories up to 36 billion cubic feet below the five-year average. Increased takeaway capacity from Appalachia is expected to result in increased natural gas production in the coming months and could limit significant upward price pressure, although colder-than-normal temperatures throughout the rest of 2017 could contribute to price increases. The Henry Hub natural gas spot price averaged $3.01/MMBtu in November, almost 14 cents/MMBtu higher than in October. EIA expects that price to average $3.13/MMBtu in December and average $3.12/MMBtu in 2018.

Figure 8: U.S. natural gas front-month futures prices and storage

Natural gas futures prices in November traded within a 43 cents/MMBtu range, wider than in recent months, but they stayed close to $3.00/MMBtu. In comparison, natural gas futures prices in October traded within a 31 cents/MMBtu range, the narrowest range for October since 1995. Natural gas front-month implied volatility increased 2.3 percentage points since November 1, settling at 39% on December 7 (Figure 9). After reaching a three-year low in August 2017, volatility has been steadily increasing, as is typical heading into winter, but it remains below the volatility levels seen in November 2015 and 2016. In November 2016, liquefied natural gas gross exports were more than 1 billion cubic feet per day (Bcf/d) for the first time in U.S. history, as Sabine Pass entered service, and storage reached an all-time high of more than 4 trillion cubic feet, factors that may have contributed to higher volatility. Natural gas production has shown year-on-year growth since June 2017, and inventories are within 1% of the five-year average level, which may moderate implied volatility.

Figure 9: Natural gas implied volatility

The professional consultants at Onyx Power & Gas Consulting are always ahead of the current issues that may affect energy consumption and pricing. Now is the time to partner with an Onyx professional consultant to discuss energy management and secure energy prices based on today’s stable pricing. Volatility in the energy markets makes it too precarious to take chances. Partner with Onyx Power & Gas in Making Energy Make a Difference!

Posted in CO2, Community Improvement, Consulting, Crude Oil, Crude Oil Prices, Drilling, Electricity, Electricity Prices, Emmissions, Energy, Energy Consumption, Energy Deregulation, Energy Prices, Environment, Fuel, Fuels, Gas, Generation, Natural Gas, Natural Gas Prices, OECD, Oil, Press Releases, Services, Shale Gas | Tagged , , , , , , , , , , , , | Leave a comment

Petroleum Products – Short-Term Energy Outlook

Onyx Power and Gas Consulting continues a weekly series providing the Short-Term Energy Outlook as of December 12, 2017.  This series of news articles should provide a complete insight on the current conditions of the energy…enjoy, check out archives and come back each week for additional information on how all sorts of energy sources impact our daily lives

Petroleum Products

Gasoline prices: The front-month futures price of reformulated blendstock for oxygenate blending (RBOB, the petroleum component of gasoline used in many parts of the country) fell by 4 cents per gallon (gal) from November 1 to settle at $1.70/gal on December 7, 2017 (Figure 5). The RBOB-Brent crack spread (the difference between the price of RBOB and the price of Brent crude oil) fell by 8 cents/gal to settle at 22 cents/gal over the same period. EIA compares RBOB prices with Brent prices because EIA research indicates that U.S. gasoline prices usually move with Brent prices, the international crude oil benchmark.

Despite the decline in the gasoline crack spread towards the end of November 2017, the average gasoline crack spread set a five-year high for November. EIA estimates that U.S. gasoline consumption in November averaged almost 9.2 million barrels (b/d), which would be close to the five-year high for the month, if confirmed by EIA’s Petroleum Supply Monthly (PSM). Similarly, U.S. finished gasoline exports in the four weeks ending December 1 were more than 0.9 million b/d, which would set a five-year high for November.

Figure 5: Historical RBOB futures prices and crack spread

Ultra-low sulfur diesel prices: The ultra-low sulfur diesel (ULSD) front-month futures price increased by 3 cents/gal from November 1 to settle at $1.90/gal on December 7, 2017. The ULSD-Brent crack spread (the difference between the price of ULSD and the price of Brent crude oil) declined by almost 1 cent/gal over the same period, settling at 42 cent/gal (Figure 6).

Distillate stocks as of December 1, 2017, were 0.7 million barrels lower than the five-year average. The total of distillate consumption and exports rose to 5.3 million b/d for the four weeks ending December 1, which would set a five-year high, if confirmed by the PSM. Because of lower distillate stocks and increased distillate demand this year, the ULSD crack spread has remained higher than its five-year average each month since July 2017 and has also remained significantly higher than the crack spreads in the second half of 2016.

Figure 6: Historical ULSD front-month futures price and crack spread

High demand for both gasoline and distillate resulted in each petroleum product’s days of supply in the U.S. market reaching the lowest levels in several years. When adding exports to product supplied in the traditional days of supply calculation, days of supply of total motor gasoline was 22 days as of the four weeks ending December 1, 2017 (Figure 7), slightly higher than the days of supply in October, which would have been the fewest days of supply since August 2012, if confirmed by the PSM. Similarly, days of supply of distillate fell to 24 days during the same period and would be the fewest days of supply since February 2015. The increasingly tight U.S. distillate market could make ULSD price increases more likely this winter if global demand for distillate remains high and if the United States experiences colder-than-normal temperatures in the U.S. East Coast, where heating oil is widely used for residential heating.

Figure 7: Days of supply including exports

The professional consultants at Onyx Power & Gas Consulting are always ahead of the current issues that may affect energy consumption and pricing. Now is the time to partner with an Onyx professional consultant to discuss energy management and secure energy prices based on today’s stable pricing.  Volatility in the energy markets makes it too precarious to take chances.  Partner with Onyx Power & Gas in Making Energy Make a Difference!

Posted in CO2, Community Improvement, Consulting, Crude Oil, Crude Oil Prices, Drilling, Electricity, Electricity Prices, Emmissions, Energy, Energy Consumption, Energy Deregulation, Energy Prices, Environment, Fuel, Fuels, Gas, Generation, Natural Gas, Natural Gas Prices, OECD, Oil, Press Releases, Services, Shale Gas | Tagged , , , , , , , , , , , , | Leave a comment

Crude Oil – Short-Term Energy Outlook

Onyx Power and Gas Consulting continues a weekly series providing the Short-Term Energy Outlook as of December 12, 2017.  This series of news articles should provide a complete insight on the current conditions of the energy…enjoy, check out archives and come back each week for additional information on how all sorts of energy sources impact our daily lives

Crude Oil

Prices: The front-month futures price for North Sea Brent crude oil settled at $62.20 per barrel (b) on December 7, 2017, an increase of $1.71/b since November 1. Front-month futures prices for West Texas Intermediate (WTI) crude oil for delivery at Cushing, Oklahoma, increased by $2.39/b over the same period, settling at $56.69/b on December 7 (Figure 1). November Brent and WTI monthly average spot prices were $5.20/b and $5.06/b higher, respectively, than the October average spot prices.

Figure 1: Crude oil front month futures prices

Crude oil prices traded at the highest levels in more than two years in November and early December 2017. On November 30, the Organization of the Petroleum Exporting Countries (OPEC) announced an extension of the crude oil supply reduction agreement through the end of 2018, which was broadly in line with market expectations in the days leading up to the meeting. The non-OPEC countries that agreed to crude oil production cuts in 2017 also agreed to continue limiting output through the end of 2018. Saudi Arabia and Russia will co-chair a monitoring committee designed to assess the group’s adherence to the production targets. The group plans to review production levels at the June 2018 meeting depending on market conditions at that time. EIA estimates OPEC crude oil production averaged 32.5 million barrels per day (b/d) in 2017, a 0.2 million b/d decrease from 2016 levels, and EIA forecasts OPEC crude oil production will average 32.7 million b/d in 2018.

An important metric for identifying oil market balance is the level of commercial liquids inventories compared with their five-year average for countries in the Organization for Economic Cooperation and Development (OECD). Since reaching a record high of almost 3.09 billion barrels at the end of July 2016, total OECD liquid fuels inventories have fallen by 137 million barrels to 2.95 billion barrels at the end of November 2017. Over the same period, the surplus to the five-year average has declined by 210 million barrels, ending November at an estimated 174 million barrels (Figure 2). Going forward, the five-year average will include a higher proportion of data points from 2015-17, which were years of high inventory levels, resulting in higher five-year average stock levels for comparison. The OECD five-year average inventory level for May 2018, the last full month before the June 2018 OPEC meeting, will be 2.8 billion barrels, 80 million barrels higher than the five-year average for December 2017. Although EIA forecasts OECD inventories to increase by 51 million barrels from December 2017 through May 2018, the level of OECD inventories relative to the five-year average is expected to decrease by 29 million barrels because of the increase in the five-year average.

Figure 2: OECD commercial liquids inventories and Brent price

Despite the extension of the OPEC agreement, EIA forecasts higher output from non-OPEC countries to contribute to growth in total liquid fuels supply in 2018. The non-OPEC outlook is 0.1 million b/d higher than EIA’s November STEO, averaging 60.3 million b/d in 2018, which would be 1.7 million b/d higher than 2017 levels. This growth, together with the forecast 0.3 million b/d growth in OPEC crude oil production and another 0.1 million b/d increase in OPEC non-crude liquids production, results in forecast total global liquids production growth of 2.0 million b/d in 2018. EIA expects that crude oil price increases in late 2017 will contribute to U.S. crude oil production growing to more than 10 million b/d by mid-2018. Overall, U.S. crude oil production is forecast to increase by an average of 0.8 million b/d in 2018. Canada, Brazil, Norway, the United Kingdom, and Kazakhstan are forecast to add a combined 0.7 million b/d of liquids production in 2018.

Despite higher oil prices, EIA expects global liquid fuels demand to increase by more than 1.6 million b/d in 2018, up from growth of 1.4 million b/d in 2017. Demand growth is not forecast to keep pace with supply growth, however, resulting in global liquids inventories increasing modestly in 2018. With global inventories expected to increase in 2018, EIA forecasts Brent crude oil prices will decline from current levels to an average of $57/b in 2018, which is $2/b higher than forecast in the November STEO.

In late November 2017, the WTI futures curve reached the same level of backwardation (when near-term prices are higher than longer-dated prices) as the Brent futures curve, based on the 1st-13th month futures price spread. The Brent 1st-13th spread decreased by 34 cents/b from November 1 to settle at $2.39/b on December 7, whereas the WTI 1st-13th spread increased by 33 cents/b over the same period, settling at $1.89/b (Figure 3).

The Keystone Pipeline, which delivers crude oil from Western Canada to the U.S. midcontinent, leaked approximately 5,000 barrels in South Dakota and was temporarily shut down. The pipeline leak reduced flows into Cushing, Oklahoma, (the delivery point for the WTI futures contract) and likely contributed to a $1.01/b daily increase in WTI front-month futures prices relative to longer-dated futures prices on November 21, 2017, the largest daily increase in almost a year. Cushing stocks fellby 2.9 million barrels the week ending November 24, and imports from Canada declined by 0.4 million b/d. The Keystone Pipeline resumed operations on November 28.

Total U.S. crude oil inputs to refineries set an all-time high for the month of November, reflecting the refining sector’s return from hurricane disruptions and maintenance season in the third quarter. Increased refinery demand, in addition to the Keystone Pipeline disruption, contributed to the stock draws from Cushing, Oklahoma, and likely provided upward price pressure on WTI front-month futures prices.

Figure 3: Crude oil front-month - 13th month futures price spread

U.S. crude oil imports: The OPEC crude oil production cut agreement and other supply reductions have changed U.S. crude oil import trends in 2017. Saudi Arabia reduced crude oil exports to most regions, including to the United States, as a result of both its voluntary crude oil production cuts and the increase in the amount of crude oil Saudi Arabia refines domestically. Total Saudi Arabian crude oil exports fell to 6.5 million b/d in September 2017, the lowest level since March 2011, according to the Joint Organization Data Initiative (JODI). Motiva Enterprises LLC, which owns the largest refinery in the United States in Port Arthur, Texas, is a wholly-owned refinery subsidiary of Saudi Arabia’s national oil company, Saudi Aramco. Motiva’s imports of Saudi Arabian crude oil decreased significantly in 2017, down to 30% of Motiva’s total crude oil imports in September (Figure 4), compared with 65% on average during 2016. Overall, total U.S. crude oil imports from Saudi Arabiafell to the lowest level in 30 years, with some of that decline made up by increased imports from Iraq.

Venezuela’s crude oil production has declined since 2016 because of operational and financial difficulties. EIA estimates Venezuelan crude oil production averaged 1.9 million b/d in November 2017, down from 2.4 million b/d as recently as December 2015. Reduced production has lowered the available amount of Venezuelan crude oil for export, with some cargoes being diverted away from the United States to other countries to repay oil-for-loan agreements. Citgo Petroleum Corporation is a wholly-owned refinery subsidiary of Venezuela’s national oil company, Petroleos de Venezuela SA (PDVSA), and owns refineries on the U.S. Gulf Coast. Between 2015 and April 2017, Citgo Petroleum had been generally increasing its share of crude oil imported from Venezuela, from 59% in January 2015 to more than 85% in April 2017. Since then, the share of crude oil Citgo imports from Venezuela fell to a three-year low in August 2017 before rising slightly in September. In September, total U.S. imports of Venezuelan crude oil fell to the lowest point since 2003. In November, major credit rating agencies declared both Venezuela and PDVSA to be in varying levels of default because of late interest payments. Any increased financial difficulties could exacerbate Venezuelan crude oil production and export declines, ultimately removing its crude oil from the global market.

Figure 4: Refinery crude oil import share from  major supplier

The professional consultants at Onyx Power & Gas Consulting are always ahead of the current issues that may affect energy consumption and pricing. Now is the time to partner with an Onyx professional consultant to discuss energy management and secure energy prices based on today’s stable pricing.  Volatility in the energy markets makes it too precarious to take chances.  Partner with Onyx Power & Gas in Making Energy Make a Difference!

Posted in CO2, Community Improvement, Consulting, Crude Oil, Crude Oil Prices, Drilling, Electricity, Electricity Prices, Emmissions, Energy, Energy Consumption, Energy Deregulation, Energy Prices, Environment, Fuel, Fuels, Gas, Generation, Natural Gas, Natural Gas Prices, OECD, Oil, Press Releases, Services, Shale Gas | Tagged , , , , , , , , , , , | Leave a comment

Renewables and Carbon Dioxide Emissions – Short-Term Energy Outlook

Onyx Power and Gas Consulting continues a weekly series providing the Short-Term Energy Outlook as of December 12, 2017.  This series of news articles should provide a complete insight on the current conditions of the energy…enjoy, check out archives and come back each week for additional information on how all sorts of energy sources impact our daily lives

Renewables and Carbon Dioxide Emissions

  • U.S. wind electricity generating capacity at the end of 2016 totaled 81 gigawatts (GW). EIA expects wind capacity additions in the forecast to raise total wind capacity to 88 GW by the end of 2017 and to 96 GW by the end of 2018.
  • Total U.S. utility-scale solar electricity generating capacity at the end of 2016 was 22 GW. EIA expects solar capacity additions will bring total utility-scale solar capacity to 27 GW by the end of 2017 and to 30 GW by the end of 2018.
  • After declining by 1.7% in 2016, U.S. energy-related carbon dioxide (CO2) emissions are projected to decrease by 0.8% in 2017 and then to increase by 1.8% in 2018. Energy-related CO2 emissions are sensitive to changes in weather, economic growth, and energy prices.

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The professional consultants at Onyx Power & Gas Consulting are always ahead of the current issues that may affect energy consumption and pricing. Now is the time to partner with an Onyx professional consultant to discuss energy management and secure energy prices based on today’s stable pricing.  Volatility in the energy markets makes it too precarious to take chances.  Partner with Onyx Power & Gas in Making Energy Make a Difference!

Posted in CO2, Community Improvement, Consulting, Crude Oil, Crude Oil Prices, Drilling, Electricity, Electricity Prices, Emmissions, Energy, Energy Consumption, Energy Deregulation, Energy Prices, Environment, Fuel, Fuels, Gas, Generation, Natural Gas, Natural Gas Prices, OECD, Oil, Press Releases, Services, Shale Gas | Tagged , , , , , , , , , , , | Leave a comment