This week oil prices surge to their highest in over two years as geopolitical unrest in Nigeria factors into WTI pricing. Trucking freight futures make their debut in the marketplace subject to approval and will potentially affect rate volatility. Electric vehicles will be out for rent by the end of the year and small carriers are adapting post ELD-mandate. Pemex discovered the largest onshore oil reserve of the last 15 years, which will interact with pricing in the post-liberalization Mexican energy market.
WTI Closes Above $55.00, Uncertainty in Nigeria Drives Price Upward
West Texas Intermediate (WTI) finished above $55.00 on Friday, the first time the US crude oil benchmark had reached this price since July 2, 2015. US inventory reports have been steadily applying upward pressure on WTI since Hurricane Harvey. This week, geopolitical events factored into the price increase, too.
The militant group responsible for pushing the Nigerian economy into recession last year called off a ceasefire with the Nigerian government on Friday. The Niger Delta Avengers and Nigerian government had agreed to a ceasefire during August 2016. The Delta Avengers produced statements on Friday that said, “We can assure you that every oil installation in our region will feel the warmth of the wrath of the Niger Delta Avengers.” Oil prices finished higher on Friday following the statements.
TransRisk, DAT, and Nodal Exchange Announce Trucking Freight Futures Contracts
TransRisk, DAT Solutions, and Nodal Exchange jointly announced an agreement to develop, market and list the first and only trucking futures and options futures contracts on Friday, October 27th. The companies stated the contracts are planned to be listed for trading on Nodal Exchange in late 2018. The financial contracts will be settled using DAT Solutions’ Truckload Rate Index, which is based upon DAT’s freight rates for major freight lanes within the US. The opening of the exchange and the execution of contracts are subject to regulatory approval.
Nodal Exchange is a derivatives exchange providing price, credit and liquidity risk management to participants in the North American energy markets, and offers more than 1,000 electric power and natural gas contracts on hundreds of unique locations, according to its website.
In Other News
FreightWaves – A Futures Market Could Decrease Rate Volatility in Trucking
DAT and TransRisk have chosen to collaborate, along with Nodal Exchange, LLC, a leading futures exchange for electricity, in developing a futures contract for trucking freight. Nodal Exchange, part of the EEX Group, and TransRisk are planning to list Nodal Exchange futures contracts that settle to the DAT spot-rate index.
September’s Cass Truckload Linehaul Index improved by 4.2 percent year-over-year to 128.2, a new all-time high for the index since it was established in 2005. The Cass Truckload index has increased for six consecutive months since March. The Cass Truckload Linehaul Index™ is a measure of market fluctuations in per-mile truckload linehaul rates, independent of additional cost components such as fuel and accessorials.
US distillate exports continue to increase significantly during 2017. US refineries in the Gulf Coast are geographically well positioned to export to Mexico and other countries throughout Latin America, and exports to these regions are increasing.
According to Reuters Gulf OPEC sources, OPEC will likely maintain its current objective to reduce global oil stocks by keeping its current production quotas in tact for 2018. Another OPEC source added there is “a high risk of supply drop from Venezuela next year but the its decreasing production does not mean OPEC will raise production elsewhere.”
Rental company Ryder ordered 125 all-electric vans from Chanje (pronounced “change”), a California startup. The vans will be made available in New York, California, and Illinois by the end of the year. A 70kWh battery is used to power the vans, giving them an estimated range of 100 miles depending on the weight of its cargo.
A recent survey of carrier compliance among small fleets from CarrierLists.com showed only 35 percent of fleets have purchased and installed ELD devices. Records kept by the American Trucking Association (ATA) show 97.2 percent of fleet owners operate fewer than 20 trucks, classifying most carriers as small-fleet carriers. Authorities from state and federal law enforcement departments understand that the change is hard for the smaller fleets and thus plan only on fining truckers without ELDs and not force them off the road until April 2018.
Mexican President Enrique Peña Nieto announced the discovery of an oil field 72 kilometers south of Veracruz by Pemex. The oil field’s estimated reserves are approximately 350 million barrels.