From: Wagner, Jonathan
Sent: Monday, September 10, 2018 7:05:30 AM (UTC-06:00) Central Time (US & Canada)
To: Curves
Subject: ION Morning Rundown
Good morning. Oil prices are pushing higher this morning with European equity and US index futures higher to start the day as well. The $ is unchanged at 95.35 while Chinese equities were down over a percent last night on continue trade war fears. Middle east crude prices remain bid with Cash Dubai trading up 5c to +1.49 over swaps. Last Night Iraq left their Oct OSP unchanged for Basrah Light and Heavy bbls to Asia. 15 Nov Dubai partials traded in the window with BP, Shell and Equinor buying from Unipec. Sep/Oct Dubai spreads are trading 75c back while Oct/Nov spreads are trading 65c backward. This morning Libya’s NOC headquarters were stormed by gunman with chairman Sanalla evacuating unharmed. According to the NOC Chief, “The National Oil Corp. will not be affected by such actions and we are determined to carry out our mission.” “We will continue with our job and our production normally.” August tanker data continues to be published with Korean data released last night showing that they imported 0 bbls from Iran last month (down from 194k b/d in July). Iran currently has 6 VLCC’s anchored off the country’s oil terminals after loading crude. However, it is too soon to say if these are all storing crude (possibly condensate) and if and when they will make their voyage. In the North Sea, Buzzard will restart from maintenance after lousy weather delayed the restart. Crude spreads are unchanged this morning with the front end WTI/Brent arb continuing to weaken as today is day 1 of the monthly index rolls.
Top stories listed below
China vows to respond if U.S. takes new steps on trade – Reuters News
Gunmen attack headquarters Libya’s oil corporation -witness – Reuters News
Libya’s NOC Chairman: Tripoli Attack Won’t Affect NOC Operation
India opposition block roads, offices shut in fuel price protests – Reuters News
Middle East Crude-Benchmarks stay firm in bullish market – Reuters News
Iran Tankers Holding Crude Build Up at Nation’s Ports: Tracking
KOREA TANKER TRACKER: Iran Oil Imports Shrink to Zero in August
North Sea Buzzard Restart Is Said to Be Pushed Back to Today
Azeri BTC Crude Loadings to Rise to 14-Month High in October
OPEC Has Barely Enough Spare Capacity to Ease Oil Squeeze: FGE
Hedge fund Citadel replaces head of crude trading -sources – Reuters News
U.S. oil refiners’ weekly capacity seen down 231,000 bpd -IIR – Reuters News
Buckeye Shuts Down Pipeline After Fuel Spill in Indiana
Asia Distillates-Jet fuel cash discounts narrow, margins slip – Reuters News
Asia Naphtha/Gasoline-Naphtha supply seen high; BPCL cancels sale – Reuters News
|
WTI Vol |
10-Sep |
Change |
BRT Vol |
7-Sep |
10-Sep |
Change |
|
|
V8 |
25.00 |
2.66 |
X8 |
23.46 |
24.90 |
1.44 |
|
|
X8 |
24.37 |
0.36 |
Z8 |
24.87 |
25.14 |
0.27 |
|
|
Z8 |
24.88 |
-0.05 |
F9 |
24.94 |
25.00 |
0.06 |
|
|
F9 |
25.55 |
-0.11 |
G8 |
25.76 |
25.75 |
-0.01 |
|
|
G8 |
25.21 |
-0.15 |
H9 |
25.38 |
25.35 |
-0.03 |
|
|
H9 |
25.27 |
-0.2 |
M9 |
25.57 |
25.40 |
-0.17 |
|
|
M9 |
25.10 |
-0.18 |
9/10 Block Highlights
BRT G19 90 Call x76.70 TRADES 81 500x 12d
WTI X/F19 70 Call Roll x68.30/67.90 TRADES 119 100x 41d/38d
BRT H19 70/80 Fence x76.60 TRADEs 106 100x 67d
BRT X18 76/74 1×1.5 Put Spread TRADEs 30 400x
BRT H19 65/90 Strangle TRADES 207 75x
China vows to respond if U.S. takes new steps on trade – Reuters News
China will respond if the United States takes any new steps on trade, the foreign ministry said on Monday, after President Donald Trump warned he was ready to slap tariffs on virtually all Chinese imports into the United States. On Friday, Trump said he was ready to levy additional taxes on practically all Chinese imports, threatening duties on $267 billion of goods over and above planned tariffs on $200 billion of Chinese products. "If the U.S. side obstinately clings to its course and takes any new tariff measures against China, then the Chinese side will inevitably take countermeasures to resolutely protect our legitimate rights," Foreign Ministry spokesman Geng Shuang told a regular briefing, when asked about Trump’s warning. He did not elaborate. The United States and China have activated additional tariffs on $50 billion of each other’s goods since July, as trade friction between the world’s two biggest economies worsened, despite several rounds of negotiations. Trump has criticized China’s record trade surplus with the United States, and has demanded that Beijing cut it immediately. Tension has also persisted over limits on U.S. firms’ access to Chinese markets, intellectual property protection, technology transfers and investment. In August, China unveiled a proposed list of retaliatory tariffs on $60 billion of U.S. goods ranging from liquefied natural gas to some types of aircraft, should Washington activate the tariffs on its $200 billion list. The tariffs, ranging from 5 percent to 25 percent, would apply to 5,207 products, and U.S. actions will determine whether China adopts the additional duties, Beijing said at the time. China has either imposed or proposed tariffs on $110 billion of U.S. goods, representing most of its American imports, though crude oil and large aircraft are still not targeted for penalties. The $200 billion of Chinese goods on the U.S. list includes some consumer products such as cameras and recording devices, luggage, handbags, tires and vacuum cleaners, with additional tariffs ranging from 10 to 25 percent. Spared until now, mobile telephones, the biggest U.S. import from China, would be engulfed if Trump activates the $267 billion tariff list. Trump’s threatened tariffs cover a total of $517 billion in Chinese goods, which would exceed last year’s goods imports of $505 billion from China. China’s official export data has been surprisingly resilient, with growth exceeding analysts’ expectations for five months in a row.
Gunmen attack headquarters Libya’s oil corporation -witness – Reuters News
Several armed men attacked the headquarters of the National Oil Corporation (NOC) in the Libyan capital on Monday and blasts were heard before wounded people were ferried away from the building in ambulances, a Reuters witness said. The attack came less than a week after a fragile truce suspended fierce clashes between rival armed groups in Tripoli, the latest eruption of violence in Libya, which has been in turmoil since a 2011 uprising. No group immediately claimed responsibility for Monday’s attack. Militants loyal to Islamic State have previously carried out attacks in Tripoli and other Libyan towns and cities. Gunfire rang out as security forces allied to the Tripoli-based government arrived at the large glass-fronted office complex located in central Tripoli. "Three or five gunmen were shooting inside the building," an NOC member of staff told Reuters after he said he had jumped out of a window to flee. "Several people were shot." Security force were smashing windows so staff could escape and several people were hurt by shattered glass, witnesses said. NOC Chairman Mustafa Sanalla and his office manager could be seen safely leaving the building. Smoke rose into the air as the security forces took up their positions, and surrounding roads were cordoned off. A member of staff from a hotel next to the NOC offices said he had heard about five blasts. Libya has been divided between rival governments and military factions based in the east and west of the country since 2014, causing political deadlock and an economic crisis. However, the NOC has continued to function relatively normally across Libya, which relies on oil exports for most of its income. Oil production has been hit by attacks on oil facilities and blockades, though last year it partially recovered to around one million barrels per day (bpd). Islamist militants have sleeper cells in northern cities as well as operating mobile units in Libya’s southern desert, according to Libyan and Western officials. In May, Islamic State claimed a deadly attack on the national election commission offices in Tripoli. The group also claimed an attack in 2015 on the Corinthia hotel, a landmark location in Tripoli.
Libya’s NOC Chairman: Tripoli Attack Won’t Affect NOC Operation
Libya’s National Oil Corp. staff will continue carrying out operations normally at facilities across the country, Chairman Mustafa Sanalla says in phone interview.
“The National Oil Corp. will not be affected by such actions and we are determined to carry out our mission"
“We will continue with our job and our production normally”
India opposition block roads, offices shut in fuel price protests – Reuters News
Nationwide protests against record high petrol and diesel prices shut down businesses, government offices and schools in many parts of India on Monday, and in some places protesters blocked trains and roads and vandalised vehicles. Gearing up for a general election less than nine months away and provincial polls expected in some states later this year, opposition parties banded together to organise their first protest action in a joint campaign to stir discontent with Prime Minister Narendra Modi’s Hindu nationalist government. Opposition Congress party activists marched, blocked roads and disrupted trains in the eastern Indian state of Odisha, while other opposition parties protested outside offices of oil marketing companies. Congress leader Rahul Gandhi blamed the higher fuel prices and a falling rupee currency on the prime minister’s policies. "The rupee has never has been weaker in 70 years of independence," Gandhi said. "Farmers, labourers see no light at the end of the tunnel. Only 15-20 big industrialists are prospering." Protesters burnt tyres and blocked traffic in the north eastern state of Assam. Several people were arrested in Assam and West Bengal, officials said. Television footage showed protesters breaking car and bus windows in Patna, the capital of the northern state of Bihar. Modi’s Bharatiya Janata Party (BJP) accused its opponents of "unnecessarily politicising" high fuel prices and the weakening currency, which it blamed on external factors such as Turkey’s economic crisis which affected emerging markets. Ravi Shankar Prasad, the country’s law minister, condemned the incidents of violence. "The BJP strongly believes that despite some momentary difficulties, the people of India do not support this protest," he said in a televised address. Taxes on petrol and diesel, which account for more than a third of retail fuel prices, are one of the biggest sources of income for the government, and an emotive issue for voters. Past governments have usually lowered taxes when international oil prices shot up, but Modi’s administration has made little concession so far. Modi’s popularity has come down in the past few months and his party is likely to face a tough challenge in three BJP-ruled states – Rajasthan, Madhya Pradesh and Chhattisgarh – expected to vote this year, and at the general election expected early next year.
Middle East Crude-Benchmarks stay firm in bullish market – Reuters News
Middle East crude benchmarks stayed firm on Monday ahead of trading in November-loading barrels that will kick off this week. Some buyers are still calculating the volumes and grades they need to buy in the spot market while some sellers are holding off offers to see if strong demand could push prices higher, traders said. The market is bullish this month because traders expect Iran to reduce exports when U.S. sanctions take effect in early November while Asian refiners are preparing to ramp up output to meet peak winter demand, they said. Some traders also expect refiners’ demand for spot barrels to rise this month as they forecast a big jump in term crude prices for November. China’s crude import demand has also rebounded strongly, underpinning Oman’s premium to Dubai swaps, traders said. DME Oman’s premium to swaps eased 8 cents to $1.87 a barrel on Monday after hitting multi-year high of close to $2 on Friday.
IRAQ: Iraq has set the October official selling price (OSP) for Basra Light crude to Asia to minus $0.15 a barrel against the average of Oman/Dubai quotes unchanged from the previous month, the State Oil Marketing Organization (SOMO) said on Monday. Basra Heavy to Asia in the same month was priced at minus $3.35 a barrel to Oman/Dubai quotes, SOMO said in an e-mailed statement.
WINDOW: Cash Dubai’s premium to swaps rose 5 cents to $1.49 a barrel after oil majors snapped up the 15 November partials sold by Unipec.
Iran Tankers Holding Crude Build Up at Nation’s Ports: Tracking
6 Iranian VLCCs anchored off county’s oil terminals after loading crude, possibly indicating the resumption of storage at sea by the Persian Gulf nation, as U.S. sanctions deter buyers, according to Bloomberg tanker tracking.
Since the suspension of sanctions on Iran’s oil exports in 2016, vessels have typically departed immediately after loading
The following ships loaded Iranian crude but remain anchored close to the terminals:
Vessel Load date Volume Terminal
Navarz Aug. 24 2m bbl Kharg
Happiness I Sept. 1 2m bbl Kharg
Humanity Sept. 3 1m bbl Soroosh
Hedy Sept. 3 2m bbl Kharg
Halti Sept. 6 2m bbl Kharg
Sea Cliff Sept. 9 2m bbl Kharg
All are owned by NITC
Too soon to say vessels are storing
KOREA TANKER TRACKER: Iran Oil Imports Shrink to Zero in August
South Korea’s observed crude oil imports from Iran dropped to zero in August even before U.S. sanctions on the Persian Gulf state take effect in early November, according to tanker-tracking data compiled by Bloomberg.
Nation’s total crude imports fell to ~2.89m b/d last month, down from ~3.43m b/d in July
Country’s major suppliers in Aug. vs July (b/d):
Saudi Arabia 833k vs 887k
Kuwait 532k vs 559k
U.A.E. 134k vs 290k
Qatar 161k vs 107k
Iraq 387k vs 387k
U.S. 309k vs 215k
U.K. 65k vs 65k
Kazakhstan 113k vs 306k
Russia 84k vs 105k
Iran 0 vs 194k
North Sea Buzzard Restart Is Said to Be Pushed Back to Today
Field restart was delayed by poor weather conditions in the North Sea, according to people with knowledge of matter.
Buzzard, which has been shut since Aug. 31, was due to restart late last week
Azeri BTC Crude Loadings to Rise to 14-Month High in October
Azeri BTC Blend crude loadings to rise to 768k b/d in October, vs 628k b/d in September, according to loading program seen by Bloomberg.
OPEC Has Barely Enough Spare Capacity to Ease Oil Squeeze: FGE
With Iranian supplies already dropping as U.S. sanctions threats care key importers away, world spare capacity, including those of OPEC and Russia, seen fluctuating ~1.3m-1.9m b/d through 2019, FGE says in emailed note received Monday.
That’s historically less than the 2m b/d market needed to avoid price volatility and may scare the market, pushing prices higher
While spare capacity is probably enough to compensate for lost Iranian barrels, any combination of supply loss from other producers like Venezuela, Mexico or Libya “can send oil prices skyrocketing”
U.S. output seen rising 1.2m-1.3m b/d annually over 2018-19, which will be needed to help cover demand growth and some supply losses; barring a crisis, demand is expected to grow by about 1.5m b/d in 2019
Permian bottlenecks will slow progress for a while, but new pipelines will open the floodgates once again in 2H 2019
More likely, markets are headed for impact of harsher-than-expected U.S. sanctions against Iran, with Japan, South Korea, and India quickly reducing imports
Despite some tough talk by govts, most national oil cos say they won’t risk U.S. financial penalties and loss of shipping insurance
For now, Trump’s twitter silent on Iran, probably to avoid a spike in pump prices before U.S. Nov. midterm polls; a planned SPR release also likely to be timed to coincide with the election
That means a hard U.S. push will come, and by end-2018 sanctions will severely bite, with Iran’s crude and condensate exports likely to be cut by 1.2m b/d vs mid-2018
By mid-2019 Iranian exports will be lower by ~1.8m b/d to only 800k b/d; LPG, gasoil and fuel oil exports will also be affected
FGE says “many known unknowns” could take prices to $100/bbl, and that only a “catastrophic collapse” in demand could take crude below $60/bbl
Sees $65/bbl as a trigger for OPEC cuts
Hedge fund Citadel replaces head of crude trading -sources – Reuters News
Citadel, one of the world’s largest hedge fund managers, is replacing its head of crude oil trading, according to two sources familiar with the matter, after what one of the sources said were disappointing returns under his leadership. Chicago-based Michael Forsyth, who had been at the company 11 years, left last week along with members of his team Jason Stanley and Peter Debaz, the sources said. Forsyth will be replaced by Jonah DiPane, a trader from global merchant Castleton Commodities International, later this year, one of the sources said. "They were not hitting their P&L (profit and loss) targets consistently," the other source said, explaining the departure of Forsyth and his colleagues. The sources asked not to be named. Citadel’s flagship Wellington fund is up about 11.15 percent through the end of August, according to a source close to the fund. It was not possible to determine the returns within Forsyth’s portfolio. Overall, the firm manages over $30 billion in assets, and its commodities business, which invests across both financial and physical markets, is one of Citadel’s five core investment strategies. Citadel declined to comment The changes at Citadel come during a difficult year in energy, which has seen trading desks of oil majors, trade houses and funds post steep losses. Top energy-focused funds, Andurand Capital and BBL Commodities, for example, suffered double-digit percentage losses in July as crude futures notched the biggest monthly declines since July 2016. Multi-strategy funds such as Citadel have fared relatively better this year, industry sources have said. Forsyth’s colleague Jason Stanley did gasoline research and analytics, while Peter Debaz was an oil trader, according to LinkedIn and sources familiar with the matter. Stanley and Debaz did not respond to requests for comment. Efforts to reach Forsyth were not immediately successful. DiPane began his career as an oil-trading analyst at UBS Investment Bank in 2006 and has had a decade-long career in crude oil trading at Castleton, one source said. Citadel also hired Sameem Lutfi as associate portfolio manager on the crude oil team in August, according to LinkedIn and a source. Separately, Citadel earlier this year hired about 20 traders and analysts from fund Cumulus, including founder and Chief Investment Officer, Peter Brewer, sources said.
U.S. oil refiners’ weekly capacity seen down 231,000 bpd -IIR – Reuters News
U.S. oil refiners are estimated to have 507,000 barrels per day (bpd) of capacity offline in the week ending Sept. 14, decreasing available refining capacity by 231,000 bpd from the previous week, data from research company IIR Energy showed on Monday. IIR expects offline capacity to rise to 949,000 bpd in the week to Sept. 21. The following are IIR weekly figures for offline capacity (in thousands of bpd):
|
Week ended Friday |
Sept. 10 |
Sept. 7 |
Sept. 5 |
|
9/21/18 |
949 |
929 |
– |
|
9/14/18 |
507 |
589 |
589 |
|
9/07/18 |
276 |
257 |
257 |
|
8/31/18 |
663 |
663 |
663 |
|
8/24/18 |
673 |
673 |
673 |
Buckeye Shuts Down Pipeline After Fuel Spill in Indiana
Buckeye Pipe Line confirmed a pipeline failure at 5:17pm CST on Sept. 7 resulted in an accidental release of approximately 195 bbl of jet fuel into the St. Mary’s River in Decatur, IN, co. says in emailed statement.
The pipeline was shut down immediately after detecting pressure irregularity; to remain shut until it is repaired and deemed safe to return to service
No fires or injuries reported; co. investigating cause of the failure
Co. has been working to secure the area, contain and collect the released jet fuel
Asia Distillates-Jet fuel cash discounts narrow, margins slip – Reuters News
Asian refining margins for jet fuel slipped on Monday after registering their biggest percentage gain in two months last week, but traders remained optimistic about stronger demand over the next few months. Jet cracks, which rose 5 percent last week, were at $15.92 a barrel over Dubai crude during Asian trading hours, against $16.03 on Friday. Cash differentials for the aviation fuel narrowed discounts to 30 cents a barrel to Singapore quotes on Monday, compared with a 31 cent discount on Friday. The jet fuel market is a little slow at the moment, but overall sentiment is on the bullish side because fourth-quarter demand is around the corner and supply is relatively tight, trade sources said. During winter months in the northern hemisphere, typically from around the fourth quarter, demand in the region picks up for kerosene used in heating. Kerosene and jet fuel belong to the same grade of oil products, with jet fuel margins determining the profitability of both. Meanwhile, cash premiums for 10ppm gasoil GO10-SIN-DIF edged lower on Monday to 57 cents a barrel to Singapore quotes, partly hurt by weaker bids and offers in the physical market. The prompt-month time spread, however, widened its backwardated structure and prevented a wider slip in cash differentials. On Friday gasoil premiums were at 59 cents a barrel, the highest since S&P Global Platts switched the benchmarks in gasoil grades in January to maximum sulphur content of 10 ppm sulphur, from 500 ppm sulphur previously. Inventories for middle distillates in Singapore have climbed in the past two weeks but are still much lower than a year ago, which is providing price support, market watchers said. Singapore onshore middle distillate stocks rose by about 10 percent in the week to Sept. 5 to 11.4 million barrels, which is about 15 percent lower than a year ago, International Enterprise (IE) data showed last week. The crack for gasoil with 10ppm sulphur content, which has gained about 4 percent in the past month, dipped to $16.33 a barrel over Dubai crude on Monday, from $16.44 on Friday.
Asia Naphtha/Gasoline-Naphtha supply seen high; BPCL cancels sale – Reuters News
Asia’s naphtha inter-month spread was flat on Monday in reflection of weaker fundamentals as ample supplies weighed.
– Typically, front-month prices are higher versus the following month when supplies are balanced-to-tight.
– For almost two weeks, front-month prices were at a premium against the following month but the tide changed as cargoes coming from the West would outpace demand.
– Western cargoes arriving in Asia this month are expected to exceed 1.55 million tonnes based on Thomson Reuters Oil Research data on Sept. 10.
– This would be the highest monthly volume to arrive from the West in more than five months.
Jonathan Wagner
Ion Energy Group
88 Pine Street, Suite 15
New York, NY 10005
Direct: 212-709-2261
Cell: 914-843-6986