Saudi Arabia Calls for Market Stabilization
Despite an overall downward week for oil markets, Friday saw prices start to gain once more on news that Saudi Arabia is reaching out to other oil-producing nations in an attempt to stabilize prices. Earlier in the week, oil had continued to plummet as the US-China trade war faced the possibility of escalating into a currency war, and as the International Energy Agency (IEA) announced that oil demand growth has lowered to levels not seen since the 2008 financial crisis. Despite these problematic headwinds, following the news of Saudi Arabia’s plans Brent rose by 2 percent to $58.53 per barrel, and WTI rose by 3.7 percent to $54.50.
As the de-facto leader and largest oil-producing member of OPEC+, Saudi Arabia stated that it will be keeping exports below 7 million barrels per day in September, as well as allocate less crude volume than is demanded by its customers to stabilize prices. Additionally, state-run oil company Saudi Aramco will provide customers across all regions with 700,000 barrels fewer than requested. Currently cutting more than they are required to under the existing OPEC+ agreement, Saudi Arabia also reiterated the importance of OPEC+ meetings taking place in Abu Dhabi next month in evaluating the success of the group’s production-cutting strategy going forward.
Class 8 Truck Orders Fall to Lowest Level Since 2010
Despite a strong rebound in truck buying in 2018, orders for Class 8 trucks fell in July to their lowest level since 2010. According to FTR, a transportation research group, heavy-duty truck orders fell to 9,800 units in July, representing a decrease of over 82 percent from this time last year. In contrast, 52,000 new units were ordered in July and August of 2018.
While it is common for truck order figures to decline in summer months, this year’s trend offers a stark contrast to last year’s market, where trucking companies benefiting from a tight-capacity market had more funds available to invest in new vehicles. This year, however, indications of weakness in the manufacturing sector have reduced demand to move freight, and this dynamic may persist as global trade uncertainty between the US and China continues.
In Other News
China’s currency broke through the psychologically important level of 7 yuan to the dollar, prompting President Trump to accuse Beijing of manipulating its currency in a way that would backfire.
A gauge of service industries declined in July to an almost three-year low as orders continued to cool, indicating a sluggish start to the third quarter for the biggest part of the economy.
With their output shattering records, US oil producers are flaring an unprecedented amount of unwanted gas.
Testing by federal regulators in 2017 that found air pollution from glider kits to be “many times” the level generated by new heavy-duty truck engines complied with approved standards, a government watchdog agency has found.
The Trump administration imposed a total economic embargo against the government of Venezuela, a significant escalation of pressure against the regime of President Nicolás Maduro and countries including Russia and China that continue to support him, a senior administration official said.
The electric battery boom has a new target: ships. Four Japanese companies have teamed to build the world’s first zero-emission tanker by mid-2021 that will be powered by large-capacity batteries and will operate in Tokyo Bay, according to a statement Aug. 6.
Kodiak Robotics is now making commercial deliveries in the Dallas, Texas, area with its self-driving Kenworth trucks. The company, founded in April 2018, is running loads out of its North Texas facility.
Saudi Arabia’s energy minister Khalid Al-Falih and U.S. Energy Secretary Rick Perry on Tuesday expressed concern over threats targeting freedom of maritime traffic, Al-Falih said in a tweet.
U.S. crude stocks rose last week, while gasoline and distillate inventories also rose, the Energy Information Administration said on Wednesday.
Shippers use intermodal because while slower, it’s cheaper than truck, although those savings are tighter than at any point in the last five years, according to a JOC analysis.
The Canadian Trucking Alliance has initiated conversations with transportation ministers in an effort to encourage adoption of electronic logging devices at the provincial level.
Nigeria’s newest export crude, the medium sweet Egina, is proving popular with European refiners due to its high distillate yields, with output from the Total-operated field close to its full capacity of 208,000 b/d.
The operators of two new pipelines in West Texas shale fields are offering discounted prices to attract shippers accustomed to high fees to move oil to export hubs, according to the pipeline companies and federal filings.
The number of active US oil drilling rigs edged down by 11 to 815 this week, the lowest since January 2018 and 100 lower than year-ago levels. The decline in oil drilling activity led the combined US oil and gas rig count down 11 to 1,022 last week, itself a 19-month low.
Shifting weather patterns have increased the chances for named storms in the US Gulf of Mexico as peak hurricane season arrives, according to federal meteorologists. A more active hurricane season could stir up more of the disruptions that backed up fuel exports and sent US Gulf coast benchmark medium, sour crude prices to a record premium to light sweet crude in late July.
The Commercial Vehicle Safety Alliance announced commercial vehicle inspectors conducted 10,358 inspections across the U.S. and Canada and sidelined 1,667 (16.1%) of those trucks.
Whoever is doing the spying, there is little doubt that cloak-and-dagger tactics have buffeted the shrinking Iranian oil trade. Traders say they have been offered all kinds of enticements in exchange for information.
A Venezuelan oil joint venture with a state-owned Chinese company has started an expansion project to boost output to 165,000 barrels per day (bpd), President Nicolas Maduro said on Thursday, from a current capacity of 110,000 bpd.
Worries about the health of the economy and increasingly uncertain trade relations between the U.S. and China will put further pressure on global oil demand in 2019, the International Energy Agency said Friday.
The IEA has cut its forecast for global oil demand growth in 2019-20, as the prospects of a resolution to the US-China trade dispute worsen and evidence of an economic slowdown mounts.
A trucker in the Port of New York and New Jersey has completed the port’s first delivery by a zero-emission electric truck as ports across the country — most notably those in California — try to reduce pollution while maintaining cargo flow.
Though IMO 2020 regulations don’t impact trucking fuel, which uses ultra-low-sulfur diesel, the tighter maritime regulations likely will alter the global diesel market and could put upward pressure on diesel prices as soon as the fourth quarter of this year.