US-China Trade War Creates Uncertainty and Volatility in Oil Markets
US President Trump announced that the US will be delaying a portion of the tariffs that were set to take effect on September 1. The delayed tariffs will be pushed back to December 15 to avoid hurting consumers for the holiday season. The big-ticket items that will be delayed consist of electronics, toys, and some apparel products. Due to the announcement, crude oil and diesel prices rallied. Crude oil gained over $2 per barrel for both WTI and Brent benchmarks and diesel rose almost 7 cents per gallon.
A large amount of those gains was quickly reversed as the 2-year and 10-year Treasury yield curves inverted for the first time in 12 years on Wednesday. This typically is a sign that a recession could arise in the near future. Oil prices dropped just under $2 per barrel, while diesel dropped nearly 4 cents per gallon because of the news.
Autonomous Vehicles Hit the Road
Early last week, digital brokerage Loadsmart and autonomous vehicle technology company Starsky Robotics announced that the two companies partnered and successfully completed a fully autonomous shipment. Loadsmart priced, tendered, and booked the load to the Starsky Robotics truck, where the truck was able to accept the shipment, pickup, and deliver the shipment with Level 4 autonomous technology. The integration of the two companies’ technologies meant no human intervention was needed.
Additionally, UPS has bought a minority stake in autonomous technology provider TuSimple. This comes after the two companies were testing the autonomous technology since May and delivering real freight in Arizona. UPS sees the investment as a way to apply autonomous driving capabilities to their current networks, such as lane departure technology, advanced braking systems, and sensor technology, before implementing fully autonomous vehicles. The legislation is currently lagging behind the technology, but UPS plans to capitalize on the benefits autonomous technology can provide in the meantime.
In Other News
Carbon-emission credits, long shunned by traders, are now one of the world’s best-performing investments. The price of the credits, doled out by governments in Europe to polluting power plants and steel mills to curtail the production of greenhouse gases, has soared more than fivefold over the past two years.
Loadsmart and Starsky Robotics said the companies have automatically dispatched an autonomous truck to haul freight. The truck was successfully priced, tendered and booked via Loadsmart. It then picked up and delivered the shipment using Starsky Robotics’ self-driving technology.
Freightliner’s first two Class 8 battery electric trucks were built for Penske Truck Leasing of Reading, Penn., and NFI of Camden, N.J. – customers at its research and development center in Portland – and will be part of Freightliner’s Electric Innovation Fleet to test the integration of battery electric trucks in to large-scale fleet operations.
Oil, gas and petrochemical projects at risk of U.S.-China trade war. China has promised tens of billions of dollars of investment in oil, gas and petrochemical projects in the U.S., particularly in Alaska, the Gulf Coast and Appalachia. But the trade war may prevent those investments from being realized.
Domestic intermodal volume was down 6 percent year over year during the first half of 2019 and down 7.7 percent in the second quarter. US domestic intermodal longhaul market share has now declined for four quarters in a row for the first time since before the Great Recession — from 7.1 percent in Q2 2018 to just 6.5 percent in Q2 2019.
The U.S. has become the world’s top oil producer, at more than 12 million barrels a day, thanks in large part to shale companies that figured out how to unlock crude from dense rock formations via horizontal drilling and hydraulic fracturing. But many of the companies have yet to show they can deliver consistent returns or live within their means, even as investors have ratcheted up pressure to do so.
US imports from Asia rose 4.2 percent year over year in July, with analysts forecasting a retraction to slight uptick in volumes in the traditionally busy August-October period.
The Trump administration abruptly suspended plans to impose new tariffs on about $156 billion in goods from China, saying the move was driven by concerns about the impact an escalating trade fight would have on businesses and consumers ahead of the holiday shopping season.
In what the Federal Motor Carrier Safety Administration chief called a “common-sense approach,” the agency has proposed five key revisions to truck driver hours-of-service rules. The changes were made in a process that started with trucking industry concerns about a lack of flexibility in the rules.
UPS said on Thursday it has bought a minority stake in self-driving company TuSimple, and the world’s largest package delivery company has been testing the startup’s autonomous trucks since May on a busy freight route in Arizona.
Israel and the United Arab Emirates held secret meetings arranged by the U.S. in recent months to share information and coordinate efforts to counter what they see as the increasing threat posed by Iran, according to U.S. officials familiar with the clandestine diplomacy.
The U.S. has made an application in Gibraltar’s Supreme Court to seize an Iranian tanker that the British overseas territory impounded in July, a move that complicates efforts to resolve a brewing crisis between the U.K. and Iran. Also see, Gibraltar Court Orders Release of Iranian Tanker.
The rise of electric vehicles may come with increased cybersecurity risks to the grid — multiple high-wattage charging stations could be used in tandem to launch an attack and potentially cause a blackout.
Presently, ocean freight accounts for 2.4 percent of global greenhouse gas (GHG) emissions. Under the International Maritime Organization’s (IMO’s) initial strategy on GHG emissions reduction released in 2018, the container shipping industry must reduce emissions by a minimum of 50 percent compared with 2008 levels by 2050.
U.S. gross inputs to refineries, also known as refinery runs, have increased each year since 2009, most recently reaching a record high of 17.3 million barrels per day (b/d) in 2018. However, based on its monthly refinery run data through May and forecast for the remainder of 2019, the U.S. Energy Information Administration (EIA) expects refinery runs to decline and average 17.0 million b/d in 2019.