Plunging Oil Prices Creating Supply Concerns | Weekly News Update

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Oil Prices Plunge Creating Supply Concerns

Crude markets continue its downward trend as West Texas Intermediate (WTI) crude dropped nearly eight percent on Friday.  WTI prices reached $50 per barrel for the first time since October 2017.  The large drop is attributed to concerns of an oversupplied market of crude oil.  Saudi Arabia, Russia, and other nations apart of the Organization of Petroleum Exporting Countries (OPEC) decided to increase production to make up for supply loses from Iranian sanctions.  As oil production surged to record highs, the US granted waivers to eight countries.  In addition, President Trump has been putting pressure on Saudi Arabia to lower prices, including a tweet thanking Saudi Arabia for dropping prices, but wanted them to go lower.  OPEC is meeting in early December to discuss potential production cuts for 2019, as Saudi Arabia is pushing for a cut of 1 million barrels per day.   However Russia has not expressed any interest in cutting production yet.  Russia believes the cartel should wait to see how the market reacts to higher demand in winter months.

FedEx to Get fleet of 1,000 electric vans from Chanje EV

FedEx announced they will be ordering 1,000 electric delivery vans to add to their fleet.  FedEx is a huge advocate for alternative energies and continues to find ways to incorporate their Reduce, Replace, Revolutionize approach.  The electric vehicles (EVs) are medium duty with a range of 65-100 miles depending on weight.  The vans will be used for commercial and residential pick-up and delivery services as apart of their FedEx Express fleet.  FedEx will purchase 100 vehicles and the remaining 900 will be leased from Ryder.  This move continues to push the adoption for electric vehicles and alternative energies forward.

In Other News

Bloomberg: The Oil Price Is Now Controlled By Just Three Men

OPEC has lost what control of the oil market it ever had. The actions (or tweets) of three men — Presidents Donald Trump and Vladimir Putin and Crown Prince Mohammed Bin Salman — will determine the course of oil prices in 2019 and beyond. But of course they each want different things.

WSJ: CIA Concludes Saudi Journalist Was Killed on Crown Prince’s Order

The Central Intelligence Agency has concluded that the killing of Saudi journalist Jamal Khashoggi was carried out under the orders of Saudi Crown Prince Mohammed bin Salman, a close ally of President Trump, U.S. officials familiar with the matter said.  Also See, Trump Stands With Saudi Arabia, Plays Down Crown Prince’s Alleged Role in Journalist’s Killing.

Bloomberg: Russia’s Wait-and-See Stance on OPEC+ Cuts Shows Gap with Saudis

Russia’s energy minister insisted the country and its allies in OPEC need to watch the oil market in the coming weeks before making any decisions to cut output.  Russia’s refusal to join Saudi counterpart Khalid Al-Falih in calling for a broad production cut shows their different positions persist just weeks before a key OPEC+ summit in Vienna.

WSJ: Analysis: Path Grows Rockier for Trump’s Saudi Policy

The Central Intelligence Agency assessment linking Saudi Arabian Crown Prince Mohammed bin Salman to the killing of Saudi journalist Jamal Khashoggi is the most direct challenge the Trump administration has faced on its policy toward Riyadh.

Bloomberg: Alberta Seeks Refineries, Could Cut Oil Output, Notley Says

The price of Canada’s crude grade has been falling because of factors including pipeline bottlenecks, and the overall decline in global oil prices. “The Western Canada Select benchmark fell to under $14 a barrel last week, the lowest in Bloomberg data stretching back a decade,” reports Bloomberg. The fall has increased calls for a supply cut.

NGT News: Colorado Green-Lights Low-Emission Vehicle Standards

Colorado’s Air Quality Control Commission has approved new low-emission vehicle (LEV) standards for light- and medium-duty motor vehicles sold in Colorado beginning in the 2022 model year.  Also see, Colorado Adopts California Clean Car Standards, Eyes Zero Emissions Policy

11/20

Bloomberg: Texas Is About to Create OPEC’s Worst Nightmare

OPEC’s bad dream only deepens next year, when Permian producers expect to iron out distribution snags that will add three pipelines and as much as 2 million b/d.  The U.S. energy surge presents OPEC with one of the biggest challenges of its 60-year history. If Saudi Arabia and its allies cut production to keep prices higher, shale will thrive, robbing them of market share. But because the Saudis need higher crude prices to make money than U.S. producers, OPEC can’t afford to let prices fall.

WSJ: Desperate Venezuelans Dig Up Paradise in Search of Gold

As Venezuela’s economy spirals out of control the government is encouraging people to replace oil with gold as the main driver of commerce.  “I think the most notable, enticing and popular gift next Christmas will be a gold certificate,” Mr. Maduro said in a recent speech. “Gold! Gold! It’s always worth the same or more, never less.”

Electrek: FedEx is getting a fleet of 1,000 electric vans from Chanje EV startup

FedEx announced today its latest move to accelerate the electrification of its massive delivery vehicle fleet by securing 1,000 electric vans from Chanje.  Last year, we reported on Chanje, a Chinese EV startup, when it launched a commercial all-electric van in the US.

Reuters: Oil Market Readies for New IMO Regulations

Global oil markets are adjusting to relatively strong demand for diesel and jet fuel compared to gasoline, coupled with the introduction of new bunker fuel regulations at the start of 2020.

CCJ: Tesla’s Musk Says Company Has Acquired Trucking Companies

In a brief tweet, Tesla boss Elon Musk says the company has “acquired trucking capacity” to help aid in the delivery of its Model 3 electric car, which has been plagued by production problems and years-late deliveries to those who ordered the vehicle.

Reuters: US Sanction Waivers Provided Relief, but Global Economy Still Fragile

Waivers on Iranian sanctions granted by the United States provided some relief to oil markets, but the global economy is still very fragile, the head of the International Energy Agency told Reuters on Tuesday.

Transport Topics: Truck Tonnage Surges 9.5% in October

Truck tonnage surged in October after a brief lull in September as shippers stockpiled goods ahead of possible tariffs on imports from China, according to data released Nov. 20 by American Trucking Associations.

Reuters: EPA plans biofuel ‘reset’ as program misses Congress’ targets

The U.S. Environmental Protection Agency will propose new targets for the final three years of the nation’s renewable fuel program in January, replacing ambitious decade-old goals set by Congress with volumes closer to the industry’s current output, two people familiar with the matter said.

11/21

Transport Topics: Volvo Launches Transport Service Using Fully Autonomous Trucks

Volvo Trucks announced it has signed a “landmark” agreement in Norway with mining company Bronnoy Kalk AS that calls for the truck maker to haul commercial loads of quarried limestone across mine property using six fully autonomous heavy-duty trucks.

Bloomberg: Trump and MBS Reveal What Energy Dominance Really Entails

As millions of his fellow citizens began easing into Thanksgiving, President Donald Trump was tweeting about oil again early on Wednesday morning.  The tweet said, “Oil prices getting lower. Great! Like a big Tax Cut for America and the World.  Enjoy! $54, was just $82.  Thank you to Saudi Arabia, but let’s go lower!”

Platts: Iraq Says OPEC, Allies Will Address Oil Price Slump at Vienna Meeting

OPEC and its allies will work to stabilize the oil market and reverse the slump in prices when they meet in Vienna in two weeks, Iraq’s deputy oil minister said Wednesday. OPEC and 10 non-OPEC partners, led by Russia, will meet December 6-7 to decide on output policy, with some members, notably Saudi Arabia, suggesting that the coalition may need to cut up to 1.4 million b/d in 2019 to prevent a supply glut.

Bloomberg: OPEC Will Struggle to Muster Its Friends for 2019 Oil Cuts

OPEC will struggle to carry all of its partners from outside the group along with it as oil producing group looks to extend output cuts into a third year at meetings to be held in Vienna in early December.

Trucks.com: Regulators Crack Down on Illegal Diesel Emissions-Control Equipment

New heavy-duty diesel trucks are required to meet federal emissions standards when they’re purchased, but it’s up to individual states and municipalities to ensure that vehicle owners keep emissions in check.

11/22

Reuters: Oil plunges nearly 8 percent despite talk of output cut

Oil prices slumped up to nearly 8 percent to the lowest in more than a year on Friday, posting the seventh consecutive weekly loss, amid intensifying fears of a supply glut even as major producers consider cutting output.  Also see, Oil Prices Plunge on Global Growth, Supply Concerns.

11/23

WSJ: Saudis Mull Quiet Cuts to OPEC Production

Saudi Arabia and OPEC are inching toward a compromise between pleasing the U.S. with policies that won’t lead to price spikes and throttling back the flow of its oil to rebalance oversupplied global markets.

Bloomberg: China Resumes Iran Oil Imports After Receiving Waiver

Asia’s largest buyer of Iranian oil is said to have resumed purchases from the Persian Gulf state following a one-month hiatus, a move that will help allay fears that U.S. sanctions will constrain global supplies. China will start loading again in November after it halted purchases in October, according to people familiar.  Also see, Iran Oil Waivers: How Buyers Are Lining Up After U.S. Exemptions.

WSJ: U.S. Pushes Iraq to Wean Itself Off Iranian Energy

The U.S. is pressuring Iraq to sever extensive energy ties to Iran, enlisting American companies and allies such as Saudi Arabia to develop alternatives and drive a commercial wedge between Baghdad and Tehran.

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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