OPEC Production Cuts Take Effect
The Organization of Petroleum Exporting Countries’ (OPEC) estimated output fell in December by the largest amount in almost two years. This is a result of the agreement OPEC and supporting countries (OPEC+) to cut crude oil production by 1.2 million barrels per day (mmbd). The production cuts went into effect the start of 2019, despite some countries like Russia believing the cuts will be more gradual over time. Saudi Arabia has a different view as they significantly dropped production by 0.4 mmbd, which is 0.15 mmbd more than their original share of agreed cuts. The crude producing powerhouse said it plans to go even further in January to make up for smaller OPEC nations lagging behind. Algerian’s energy minister also stated they will cut additional output if oil prices fail to recover to $65-$70 per barrel. Official December production numbers for OPEC countries will be released on January 17 in the OPEC Monthly Report. West Texas Intermediate (WTI) and Brent crude oil prices rose on the news of declining OPEC production by roughly six percent from January 1 – when OPEC+ cuts went into effect – to January 4.
Trump, Congress Eye 2019 Infrastructure Bill
Amid a partial government shutdown, President Trump and leadership of the US House and Senate announced that a new infrastructure projects will be a top priority in 2019. As both sides want a new infrastructure bill, neither side has a viable proposal. Tentative improvements to upgrade the current infrastructure range from severe-weather resiliency to renewable-energy infrastructure. The greater unknown is how the bill will be funded. There have been talks of increasing the federal diesel tax, which has not been increased since 1994.
In Other News
In no order, FreightWaves editors are recapping here what they see as the biggest stories impacting the trucking and transport sector this year. As we go into 2019 from 2018, here’s a look back at some of the stories that made the biggest splash in the year about to end.
In 2019, as in 2018, the US trade community will face multiple uncertainties generated by the Trump administration’s often unpredictable trade policy, especially with respect to US-China trade tariffs and the impact of a possible new US-Mexico-Canada Agreement.
Some frackers are scaling back next year’s drilling plans amid weak crude prices, a quick reversal for an industry that months earlier expected 2019 to be a banner year.
Oil headed for its first annual decline since 2015, slumping more than 20% in a turbulent year that saw fears of supply scarcity turn to expectations of a surplus.
A new carbon market will emerge in the northeast US in the new year as nine states and the District of Columbia flesh out a program designed to curb greenhouse gas (GHG) emissions from the transportation sector.
Algeria’s energy minister said he was confident oil prices will return to between $65 and $70 a barrel by April but stressed that the OPEC alliance would cut production further if the market had not responded by then.
Oil prices rose slightly Monday, driven by higher stock market prices on Wall Street. But U.S. crude prices ended the calendar year down 25% amid rising output from major oil producers and worries of an economic slowdown that could weaken oil demand. Also see, Oil posts first year of losses since 2015.
Federal regulators are scrutinizing fees imposed by Norfolk Southern Corp., Union Pacific Corp. and other railroads that are meant to get their customers on board with new procedures to operate more efficiently.
A group calling itself Black Smoke Matters is trying to organize a shutdown of truckers on April 12, 2019, to protest a variety of conditions affecting drivers, including hours of service and training levels.
If 2018 could be called the year of the electronic logging device (ELD), then get ready for a potential repeat in 2019. While much of the industry switched over to ELDs by the April 1, 2018, hard enforcement deadline, there were still some stragglers.
President Donald Trump’s push to open more federal to oil and gas development and roll back environmental regulations in 2019 will likely depend on how well the administration fares in court.
Thousands of shale wells drilled in the last five years are pumping less oil and gas than their owners forecast to investors, raising questions about the strength and profitability of the fracking boom that turned the U.S. into an oil superpower.
After increasing 25% from January through the beginning of October in 2018, the spot energy index in the S&P Goldman Sachs Commodity Index (GSCI) ended the year 21% lower than at the beginning of the year.
OPEC crude cargoes leaving for the United States in December dropped to the lowest level in at least five years. Oil cargoes departing from OPEC nations to the United States fell to 1.63 million barrels per day (bpd) last month, down from 1.80 million bpd in November and 1.78 million bpd in October, the data show.
Reuters: US Energy Executives’ Outlook Sours for First Time Since 2016
U.S. oil and gas executives’ outlook turned negative for the first time since the low point of the last oil bust, according to results of a survey released on Thursday by the Federal Reserve Bank of Dallas.
For US shippers and transportation providers, so much of 2019 is uncertain and uncontrollable, on both the micro and macro levels. Will China and the United States reach a trade deal? Will the US enter an economic slowdown or recession?
OPEC oil supply fell in December by the largest amount in almost two years, a Reuters survey found, as top exporter Saudi Arabia made an early start to a supply-limiting accord while Iran and Libya posted involuntary declines.
Transport Topics: Used Class 8 Prices Rise as Inventory Tightens and Demand Slows, ACT
The price of the average used Class 8 truck in November rose by $8,000 to $47,675 compared with a year earlier as inventory tightened, ACT Research Co. reported, noting demand for the vehicles is slowing in some quarters.
Oil prices increased Friday for a fifth straight session amid rebounding stocks on Wall Street, a strong jobs report and hopes for a resolution to a U.S.-China trade fight. But a bearish report on weekly U.S. oil and fuel inventories turned oil investors cautious, reducing earlier gains.
General Motors Co.’s self-driving car unit, Cruise, and DoorDash Inc. plan to provide food deliveries via autonomous vehicles, the latest attempt to use driverless technology to improve the shipment of goods.
Volvo AB, the world’s second-largest truck maker, will set aside $780 million (7 billion kronor) to address a faulty emissions-control component that’s worn out more quickly than expected.
JOC: US Trucking Firms Look to Cultivate Their Own Drivers
US trucking companies struggling to recruit drivers increasingly are targeting new drivers, offering training and apprenticeship programs aimed at growing a new generation of truckers. In many cases, they’re finding the best way to recruit drivers is to cultivate their own.
While the new Congress and the White House kick off 2019 during a partial government shutdown, President Donald Trump and the leadership of the U.S. House and Senate have acknowledged that authorizing funding for infrastructure projects will be atop their legislative priorities.