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Sunday, September 27, 2020

John Kemp News

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Fuel Market Calm ahead of IMO Changeover

Fears about a shortage of diesel and other middle distillates stemming from new marine pollution regulations have receded, with distillate premiums falling to some of the lowest levels for two years.From the start of 2020, ocean-going ships will be required to use low-sulphur fuels or employ exhaust gas cleaning systems, known has scrubbers, under pollution control rules approved by the International Maritime Organization (IMO).Fuel traders and shipowners have warned for several…

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Freight Volumes Impacted by World Economy

Freight volumes in the United States and around the world are falling, signalling tougher times for manufacturers amid escalating trade tensions and heightened uncertainty.Freight volumes in the United States were up by just 0.8% in the three months from March to May compared with the same period a year earlier, according to the Bureau of Transportation Statistics.Volumes fell year-on-year in May, for the first time in more than two and half years, according to the agency's transportation services index.Freight is growing at the slowest rate since the mid-cycle slowdown of 2015/16…

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Diesel Traders See Shortage, but not yet

Gasoil traders expect the middle distillates market to stay well supplied until almost the end of 2019 before swinging into deficit with the introduction of new maritime fuel regulations.Calendar spreads for low-sulphur gasoil delivered to Europe's Amsterdam-Rotterdam-Antwerp hub are currently in contango through until October before shifting to backwardation from November onwards (https://tmsnrt.rs/2WgXabR).In futures markets, contango structures, where future contract prices are higher than front-month prices, are associated with expectations of adequate or rising inventories.

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U.S. Economy Accelerates Towards Cyclical Peak: John Kemp

The U.S. economy shows signs of extending its nine-year expansion with the help of tax cuts and strong business and consumer confidence.Both the longevity of the expansion and the apparent limited slack in the labour and product markets suggest the current pace of growth is probably not sustainable in the medium term.The current cyclical expansion is 110 months old and will be the longest on record if the economy is still growing in July 2019. (https://tmsnrt.rs/2PlpDto)While longevity alone is not a good predictor of cyclical turning points…

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White House Escalates China Trade Dispute in hopes for Early Solution: Kemp

The United States has adopted an "escalate to negotiate" strategy towards China, threatening a dramatic hike in tariffs to try to force a resumption of trade talks while the U.S. economy remains strong and as elections approach in November.U.S. President Donald Trump has reportedly rejected a plan to levy tariffs of 10 percent on an additional $200 billion of imports from China and ordered aides to prepare a proposal for tariffs at the higher rate of 25 percent.The levies are…

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Kemp: Trade Restrictions puts World Economy at Risk

Trade and investment restrictions are proliferating around the world, driven by a combination of security concerns and protectionist pressures. In each instance, policymakers can usually cite a justification of why trade and investment restrictions are necessary. But taken together, a thickening web of restrictions on cross-border transactions is imposing a growing burden on business as well as complicating supply chains. The United States and China have threatened to hit each…

U.S., China Stumble into the Thucydides Trap: Kemp

The United States and China have fired the opening shots in a trade war that may be hard to stop. Washington has published a target list of 1,300 items imported from China worth an estimated $50 billion that would be hit with an extra tariff of 25 percent (“Notice of determination”, USTR, April 3). Beijing has responded with a target list of 106 items imported from the United States worth a similar amount that would be hit by the same ad valorem tariff (“China retaliates for U.S. tariffs”, Reuters, April 4).

Global Trade Recovery Lifts Diesel Demand: Kemp

World trade is growing again which will give a big boost to middle distillates such as diesel used in the high-power engines that move almost all freight. World trade volumes grew by 5 percent in the three months to May compared with the same period a year earlier, according to the Netherlands Bureau for Economic Policy Analysis (CPB). Trade growth came close to a standstill in the first quarter of 2016 but has been accelerating gradually since then especially from the fourth quarter onwards ("World Trade Monitor", CPB, May 2017).

Trade Flows Eliminate US Gasoline Surplus

The U.S. gasoline surplus has disappeared thanks to a sharp drop in prices which has caused imports from Europe to slow and exports to Latin America and other markets to accelerate since the start of June. U.S. refineries are processing record volumes of crude while domestic gasoline consumption appears to be holding steady at the same level as 2016 which threatened to flood the market with excess fuel. But low domestic gasoline prices at the start of the summer driving season have encouraged the diversion of tanker shipments from Europe and incentivised U.S.

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US O&G Industry Reaps the Benefits of International Trade

Rising exports have thrown a lifeline to U.S. shale producers and refiners, giving them an additional outlet at a time when the domestic market has been at risk of becoming saturated. The United States exported record quantities of natural gas, propane, gasoline, distillate fuel oil and light crude last year while continuing to import the heavy oils needed by its refineries. Gas exports increased by almost 30 percent in 2016 and have more than tripled in the last decade, limiting the build up of unused gas and supporting prices in recent months despite the warmest winter on record.

Joseph Keefe is the lead commentator of  MaritimeProfessional.com.

Getting Onboard the Regulatory Train

Rail transport activists, analysts and environmentalists get a real taste of what the waterfront has endured for decades. They’ll just have to get in line with the rest of us. This week finds the collective domestic oil industry wringing its hands about the latest in a series of serious oil transport train casualties. This time, on Monday, the news involved a crude-carrying train that derailed in West Virginia, complete with more than one dozen tank cars afire and necessitating the evacuation of nearby towns.

Mass Layoffs Complicate Oil Industry's Long-Term Plans

"This is the really crappy part of the job, and this is what I hate about this industry frankly," the chief executive of oilfield services company Baker Hughes complained as he announced it would lay off 7,000 employees. Baker Hughes is cutting jobs in response to slumping prices and a downturn in drilling activity. So the company will cuts costs, he told investors in a conference call on January 20 to discuss the firm's fourth-quarter earnings and outlook for 2015. More than 100…

Kemp: California Drillers Impacted by Prices

California's oil industry is being hit harder than any other state by falling prices because of the comparatively poor quality of its crude and its aging fields. The number of active drilling rigs in the state has more than halved since June 2014, from 48 to just 21, according to oilfield services company Baker Hughes (http://link.reuters.com/ruz73w). The California rig count is the lowest since October 2009, when producers were struggling with low prices in the aftermath of the global financial crisis and deep recession that began a year earlier.

Peak of Petroleum Engineers?

Petroleum engineers are among the best paid professionals in the United States. Only chief executives and some specialist doctors earned more last year, according to federal government pay data. Petroleum engineers were paid an average of $132,000 a year, with the top 10 percent on more than $187,000, according to the Bureau of Labor Statistics (BLS). These figures include everyone from the newest graduates to the most experienced engineers with decades of experience, and are based on median earnings in May 2013.

Opinion: Oil Market Risks Grow as Chaos Spreads

Iran, Syria, Sudan, Libya, Nigeria and now Iraq: the crude oil market has weathered a long list of actual and threatened supply shocks with remarkable calm. According to the U.S. Energy Information Administration (EIA), unplanned disruptions have removed around 2.5 million barrels per day from the crude market since the start of 2011. But for most of that time, Brent, the international marker, has traded in a narrow range around $105 per barrel and daily price volatility has fallen to the lowest level for 20 years.

For Polluted China, Gas is a Matter of life or Death

"If I work in your Beijing, I would shorten my life at least five years," Premier Zhu Rongji, a career politician from Shanghai, quipped in 1999, referring to the notorious air pollution in China's northern capital. Research has confirmed life expectancy in northern China is 5.5 years shorter than in the south owing to the worse air pollution, and the shocking difference stems from a well-intentioned government policy to keep the residents of northern China warm in winter. According to a group of U.S.

US 2014 Petroleum Production: Why Hubbert was Wrong

Combined production of crude oil, gas and condensates in the United States is on course to a hit a record this year, passing the previous peak set in 1972. The rise in output has confounded the famous forecast made by Shell geologist M King Hubbert who predicted that U.S. oil and gas production would peak in the 1970s and then decline. Hubbert's prediction was contained in a paper entitled "Nuclear Energy and the Fossil Fuels," published in 1956, in which he argued the coming decline of oil and gas output would make the development of nuclear energy essential.