Shippers Struggling to Test Fuel for IMO 2020 Regs
November 19th, 2019
Crude oil and refined product prices closed lower yesterday mainly due to continued uncertainty over the US and China trade deal and concerns of excess world crude oil supplies.
News that Russia is unlikely to agree to deepen crude oil output cuts at the next OPEC+ meeting in Vienna on December 5-6, helped to push crude prices lower in yesterday’s trading.
Also helping to put selling pressure on price in the overnight session was the API inventory report that showed crude stocks up 6 million barrels. Gasoline stocks were up 3.4 million barrels and distillates were down 2.2 million barrels.
The EIA in their “monthly Drilling Report” said that US shale oil production from 7 major basins would increase by 49,000 bpd from November to December.
President Trump said the US would raise tariffs on Chinese imports if no deal is reached with China to end a trade war.
Canadian Prime minister, Justin Trudeau’s government said it would monitor the Canadian National Railway strike that is set to disrupt gain and oil deliveries as thousands of works walked off their jobs for the first time in a decade. About 3,000 workers went on strike after the workers and the government failed to resolve contract issues.
The US Senate unanimously passed a bill aimed at supporting protestors in Hong Kong. President Trump has been quiet on this situation so far, but this bill will now go to his office for approval. Beijing has warned of the consequences should the bill become law.
Estimates for today’s DOE inventory report from the Bloomberg survey. Crude stocks are estimated to be up 1.310 million barrels. Gasoline stocks are estimated to be up 893,000 barrels and distillates are called to be down 938,000 barrels.
The estimates for today on the propane inventory report is that propane stocks will decline by 1.87 million barrels.
A Bloomberg story says that ships hauling everything from iron ore, coal, and grains are struggling to obtain the fuels they need to test them in time for IMO 2020. The deadline for IMO 2020 is six weeks away and these types of stories make you wonder how this will play out. I keep going back to a story I was many months ago that said there were many tankers with IMO 2020 compliant fuel sitting off the coast of Singapore just waiting for a chance to sell this fuel in a hyped-up market. IMO compliant fuels have seen prices move up but nothing that suggest traders are worried about short supplies.