OPEC Production and Truck Orders | Weekly News Update

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OPEC Oil Production

Last week, multiple news stories broke surrounding the Organization of Petroleum Exporting Countries (OPEC) crude oil production.  Iranian crude exports continue to plummet to their lowest levels in two and a half years ahead of the US sanctions going into effect in early November.  It is estimated that crude exports dropped 1.72 million barrels per day (mmbd) in September, down 260,000 bpd from the previous month.  India, one of Iran’s largest customers, is not planning to import from Iran in November, joining other countries including South Korea, Netherlands, and France.  The declining Iranian oil supply on the marketplace is a big factor in rising prices the past week.  The Brent crude benchmark topped at $86.29/bbl last week.

On the other hand, it is reported that Russia and Saudi Arabia have increased oil production in September.  Russia production rose to a post-Soviet high last month, producing 11.356 mmbd and has completely erased its 300,000 bpd cut agreed on with OPEC in 2016.  The Russian Energy Minister, Alexander Novak, said the country has spare capacity of “a few hundred thousand barrels” if needed.  Saudi Arabia rose their oil production to 10.7 mmbd, just shy of the record set in 2016 before the agreed upon cuts.  The Saudi Energy Minister stated, “We’ve increased production quite significantly.  We just have to be responsive to demand.”

Heavy Duty Truck Orders Remain Strong

North American Class 8 truck orders reached 42,800 in September according to preliminary data.  This is 19 percent lower from August’s orders of 53,069.  Most of these orders will not be fulfilled until the second half of 2019.  The volume is a 90% increase from a year earlier.  The past three months of truck orders have been the strongest three months in history, reaching 711,000 units.  Year-to-date orders have reached 397,000, which is the most in two decades.  The surging truck orders are attributed to fleets trying to keep up with strong demand in the market.

In Other News

9/30

Bloomberg: After Three Years of Talking, Mexico May Finally Buy U.S. Crude

The U.S. and Canada reached a dramatic, last-minute deal late Sunday night on revising the North American Free Trade Agreement, lifting a cloud of uncertainty over the quarter-century-old continental commercial bloc.

FreightWaves: Post ELD Mandate Update: Trucking Market has Added 4 Percent More Trucks Since April 1, 2018

There have a lot of questions regarding the state of capacity in the trucking market and whether the market is adding capacity or losing it. The surge of new truck orders suggests that the industry is growing, but most of the answers to date have been subjective. The challenge is that most of the sources for finding out the information are derived from the FMCSA and vehicle registration databases.

WSJ: Saudi Arabia Shelves Work on SoftBank’s $200 Billion Solar Project

Saudi Arabia has put on hold a $200 billion plan with SoftBank Group Corp. to build the world’s biggest solar-power-generation project, Saudi government officials said, in a complication for another eye-catching transformation project in the kingdom.

10/1

WSJ: U.S. and Canada Reach NAFTA Deal

The U.S. and Canada reached a dramatic, last-minute deal late Sunday night on revising the North American Free Trade Agreement, lifting a cloud of uncertainty over the quarter-century-old continental commercial bloc.

Bloomberg: Iran’s Tracked Oil Exports Hit 2 1/2 Year Low Before Sanctions

Iran exports hit lowest level since February 2016. Iranian oil exports are plunging and fell to their lowest level since at least February 2016 last month at 1.72 million barrels per day. That was a decline of around 250,000 bpd from August, and down roughly 1 mb/d since a peak in April.

Journal of Commerce: Convoy, project44 Ride Ramp-Up in Freight Tech Investment

Digital freight brokers and visibility tools have been the hot commodities in the US domestic market for a few years now, but the pace of investment in these areas is ratcheting up quickly, as evidenced by the infusion of $230 million to two major players.  Also see, Project44 Gets $45 Million in Funding for Freight Tech Expansion.

Bloomberg: Kuwait Oil to U.S. Stops for 1st Time Since 1990-91 Gulf War

Kuwait has mostly stopped shipping crude oil to the U.S. for the first time since the Gulf war in the early 1990s, in a sign of shifting global oil trade routes.

10/2

Transport Topics: US-China Trade War Could Last 20 Years, Alibaba Founder Jack Ma Says

Alibaba founder Jack Ma said Oct. 2 that the trade dispute between the United States and China could last 20 years. But he expressed hope that a solution could be reached as a trade war would “hurt everybody.” The Chinese e-commerce billionaire also questioned the focus among some on trade deficits, calling it a relic of the 20th century. U.S. President Donald Trump has long decried the United States’ large deficit with China.

Bloomberg: Russian Oil Output Rises to Record as OPEC Cuts Rolled Back

Russia’s oil production rose to a post-Soviet high last month as the country completely rolled back the output cuts it had agreed on with OPEC, then pumped some more.

Reuters: Bill Allowing US to Sue OPEC Drawing Renewed Interest

With oil prices hitting fresh four-year highs, long-dormant proposals to allow the United States to sue OPEC nations are getting a fresh look in Congress, though they were once considered a longshot to becoming law.

10/3

WSJ: Honda to Invest in GM’s Self-Driving Car Unit GM Cruise

Honda is investing $2.75 billion in General Motors’s self-driving car unit, a move that comes as auto makers and technology giants scramble to plant stakes in a transportation landscape that is swiftly being reshaped by technology.  Also see, Honda to Invest $2.75 Billion in GM’s Self-Driving Car Unit.

Bloomberg: Saudis Raise Oil Output to Near-Record Amid Pressure from Trump

Saudi Arabia has increased crude production “significantly” to a near-record level amid intense pressure from U.S. President Donald Trump to reduce prices. The kingdom is currently pumping about 10.7 million b/d. That’s just shy of the record set in November 2016, before the kingdom and allies including Russia agreed to cut production to boost prices.

FreightWaves: The ‘new NAFTA’ Creates Certainty for Oil and Gas Investors

Some of the most important—and controversial—provisions were big wins for the North American oil and gas industry and should spur further investment, exploration, and production. First, the new framework requires that the US government automatically approve any gas exports to Mexico. More significantly, a dispute resolution process that allows multinational corporations to sue governments over regulatory changes has been preserved for the oil and gas industry, prompting objections from environmentalists.

EIA: U.S. crude oil inventories at Cushing, Oklahoma, fell by more than half in the past year

Crude oil inventories held at Cushing, Oklahoma, decreased by more than half since this time last year, recently falling to lows last reached in 2014. Logistical factors and strong demand for crude oil from both domestic refining and exports markets have contributed to the steep year-over-year decrease.

CBC: ‘We say no’: Manitoba defies Ottawa by killing its carbon tax plan

In a surprise announcement, the Manitoba government will no longer willingly impose a carbon tax on its citizens.  Premier Brian Pallister revealed in the provincial legislature Wednesday that he will defy the federal government’s carbon-pricing strategy and abandon the carbon tax from his own policy, focusing instead on other efforts to curb emissions.

Reuters: Toyota, SoftBank in first-ever alliance, target self-driving car services

Toyota Motor Corp and SoftBank Group Corp are teaming up to develop self-driving car services, signaling deepening alliances between top automaker and tech firms as the global race to develop autonomous cars intensifies.

Lloyd’s List: Fuel suppliers seek to quell industry concerns

Maritime fuel suppliers are assuring shipping companies they will have bunker fuel widely available that will comply with new global emissions restrictions.

Transport Topics: Truck Orders Reach Peak Levels, Analysts Say

The aggressive demand for trucks rolled on in September, contributing to record strength over the past three months on a seasonally adjusted basis, ACT Research Co. reported.  Also See, September Truck Orders Remain Strong, Drop From August Highs.

WSJ: Canada Won’t Appeal Pipeline Ruling

Canada said Wednesday it would waive its right to appeal a court ruling that blocked work to expand the existing Trans Mountain pipeline, arguing it would unnecessarily delay government efforts to complete the energy project.

10/4

FreightWaves: Shell Says Where it Will Sell its New IMO 2020

Oil Major Shell has announced upcoming availability its newly developed Very Low Sulphur Fuel Oil (VLSFO) ahead of the International Maritime Organization (IMO)’s 0.50% global Sulphur limit for marine fuels which comes into force in 2020.

Transport Topics: Platooning Tries to Move Past a Work in Progress

The head of Daimler Trucks has questioned, but not completely written off, the business case for heavy-duty truck platooning in light of other emerging technologies and fuel gains from new combination vehicles operating independently.

Journal of Commerce: US Intermodal Spot Rates Outpace Truck Prices on Key Lanes

Not all on-tine intermodal rates are higher than truckload, but rate comparisons show pricier spot rail rates versus spot truck from Los Angeles to Chicago, Dallas, and northern New Jersey. The dynamic is somewhat counterintuitive considering the double-digit increases in spot and contract truck rates, but it shows railroads have been quite aggressive in controlling demand to ensure service levels through record-high spot quotes.

Reuters: U.S. plans to rewrite rules that impede self-driving cars

The National Highway Traffic Safety Administration (NHTSA) is moving ahead with plans to revise safety rules that bar fully self-driving cars from the roads without equipment like steering wheels, pedals and mirrors, according to a document seen by Reuters.

Trucks: Heavy-Duty Truck Orders Hit Highest 9-Month Total in 20 Years

Motor carriers have placed orders for 397,000 big trucks so far this year, a 109 percent gain over the first three quarters of last year and the most in two decades.  Surging freight demand, higher shipping rates and a lack of trucks to haul goods has led trucking fleets and dealers to order earlier than usual.

10/5

Reuters: Rising use of plastics to drive oil demand to 2050

Plastics and other petrochemical products will drive global oil demand to 2050, offsetting slower consumption of motor fuel, the International Energy Agency (IEA) said on Friday.   Also see, There’s One Word That Looms Large in Oil’s Future: Plastics.

This weekly publication is designed to highlight relevant industry news to provide professionals in the transportation, supply chain, and energy sectors with up-to-date information in a rapidly changing marketplace. This update is purely a compilation of industry news and as such, does not necessarily reflect the opinion of Breakthrough. We do not warrant or guarantee accuracy or completeness of information. For additional information, please contact us at info@breakthroughfuel.com.

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