Kpler Crude OIL (Hurricane Harvey)

Originally Released on 24 August 2017

North West Europe

  • BFOE crude
High levels of BFOE floating storage have finally begun to clear towards Asia and provide supply for local demand. Currently, there are 6.6 million barrels of BFOE crude oil floating on the North Sea, down from 12 million barrels 2 weeks ago.
Southwold anchorage is now host to 4 VLCCs: two fully loaded and two others partially loaded at 1.6 million barrels and 366,000 barrels, respectively.
Diminished loadings of Forties at Hound Point in August have helped to reduce North Sea crude surplus. Only 1 VLCC and 3 Aframax vessels loaded at the terminal since the beginning of the month (4 VLCCs and 3 Aframax loaded in July, which was the lowest level of 2017).
Hound Point loadings – kbd
  • Urals
Urals supply from the Baltics is expected to increase following 3 consecutive months of reductions resulting from pipeline maintenance. Exports from Primorsk and Ust decreased from 1,884 kbd in April to 1,402 kbd in July. Total exports volumes in August are expected at 1,508 kbd –  a total of 255 kbd remains scheduled according to AIS and Fixture data:

 

Expected loadings at Primorsk and Ust-Luga – August

MED zone

  • Libya
Libyan exports are expected to remain nearly flat at a sustained level despite the Al-Sharara oil field outage. Exports continue to be boosted by Ras Lanuf, Zueitina and Es Sider terminals, offsetting the reduced number of shipments observed in Zawiya terminal.
Libyan exports – split by origin instalaltion – kbd

  • CPC
CPC exports in August are expected to end the month significantly below July levels at 806 kbd, down from 1,100 kbd in July according to our predictive model and observations of unusually lower tanker activity outside the terminal.

 

Hurricane Harvey

A strengthening Hurricane Harvey is expected to impact the coast of Southeast Texas with strong winds and torrential rain over the next 3 to 6 days. The Flint Hills and CITGO Refineries as well as the Magellan Marine Terminal, all of which are located in Corpus Christi, have been closed in anticipation of the storm. Further closures are possible and likely as the storm draws nearer to the Texas coast.
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Kpler Crude OIL (Saudi Arabian Exports to the United States)

Originally Released on 17 August 2017

North Sea Floating Storage

Kpler continues to monitor the unusually high floating storage level in Northwest Europe. Beginning in early July, floating storage rapidly increased from 4.41 MMbbl to a peak of 15.92 MMbbl later in the same month. Total volume has since pulled off the peak, but remains within a tight 2.37 MMbbl variance. The Kpler platform reveals several VLCCs holding AIS and/or Fixture destinations in Asia. This tends to align with expectations of further Saudi export cuts. Yet, several of these expected Asia bound vessels, including the Boston, the Olympic Leopard and the Gener8 Supreme, continue to sit idle while fully loaded and holding ETA’s that are or will soon be unachievable.

Saudi Arabian Exports to the United States

In mid-July, Saudi Arabia expressed the intent to further cut exports in order to assist in rebalancing global crude oil supply-demand. The United States represents a key link in this strategy, as it is closely monitored by the broader global market. Kpler data reveals that such cuts have clearly filtered through to monitored trade flows. Between March and July, Saudi exports to the United States have fallen from 36.9 MMbbl to 18.7 MMbbl. It is likely that Saudi implemented deeper cuts well before July.

Year-over-year export differentials indicate a similar story. The graph below indicates how much higher (if a positive number) or lower (if a negative number) are exports from Saudi Arabia in the given 2017 month compared to the same month in 2016. Only March realized a higher level of Saudi exports to the United States compared to the year earlier. These differentials have grown increasingly large over the past few months – 8.4 MMbbl in June and 15.9 MMbbl in July.

Venezuelan Production

The U.S. officially implemented sanctions on several political leaders, including President Maduro in the final week of July. These sanctions were widened to additional leaders a week later. While said sanctions are a key indicator of U.S. frustrations with the political and social problems present there, oil continues to flow out of the nation state. Three key Venezuelan loading installations – Jose Zuata, Jose Oil and Jose Terminal – remain consistently occupied. Last week, 12.7 MMbbl was exported from the country.

Long waiting times continue to hamper crude exports around these three terminals. The following vessels have arrived empty:

  1. The Atlanta Spirit arrived from Chalmette on August 11th. The vessel just entered the Jose Oil berth.
  2. The Phoenix Vigor arrived from Galveston Light on August 14th and is currently awaiting further orders.
  3. The Gener8 Pericles arrived from Castries on August 15th and is currently awaiting further orders.
  4. The Cap Leon arrived from Valero Jean Gaulin on August 16th and is currently awaiting further orders
  5. The Mistral arrived from Tarragona on August 16th and is currently awaiting further orders.

It also appears that the Coral Sea partially loaded at one of the Jose Terminal berths earlier in the week, and expected to re-enter yesterday, August 16th, according to her AIS signal. She is currently awaiting further orders and never re-entered any berth.

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Kpler OIL – BFOE floating storage: sold or unsold?

Originally Released on 11 August 2017

BFOE floating storage: sold or unsold?

BFOE floating storage remained unusually high over the past week close to 10 million barrels. This represents a slight decrease compared to July 25th when Kpler reported 12 million barrels floating in the North Sea. The decrease was mainly due to the Sea Lynx leaving the region headed towards Asia. The Southwold anchorage alone is currently host to more than 10 vessels. This is in part because some vessels expected to sail towards Asia have not yet left the zone.

 

Southwold anchorage and vessels holding crude at Southwold

  • The Olympic Leopard VLCC, chartered by Shell, was expected to deliver her cargo to South Korea according to fixtures data, yet she continues to remain in the zone. The VLCC first arrived in early July. She currently holds approximately 1.5 million barrels of Urals and 600,000 barrels of Forties.
  • The Boston VLCC, chartered by CSSA, is carrying approximately 1.6 million barrels of Forties. She is expected to head towards South Korea according to available Fixture data.
  • As was mentioned last week, Desimi and Agrari were seen performing off-shore operations. However, draught for both vessels remained constant. The Agrari recently loaded at Primorsk on August 7th. The Desimi appears to still be storing 2 million barrels of Forties, where it has remained since April 26th.
  • Gener8 Supreme, chartered by ST shipping, is expected to head towards South Korea according to available Fixture data. She is currently carrying approximately 1.8 million barrels of Forties received from the Primero, Hildegaard and Spirit Li vessels towards the end of July and early August.
  • The New SuccessSea Hope and Sola Ts are carrying Ekofisk. The New Success already received approximately 600,000 barrels from Blue Pride, chartered by Vitol. Sea Hope is chartered by Shell until Feb 15th, 2018, when the lease expires on the vessel.
  • The Gener8 Neptune VLCC holds approximately 500,000 barrels of Ekofisk and 1.1 million barrels of Brent. She was also expected to sail towards South Korea chartered by Shell, according to available fixture data, yet she also continues to remain in the zone.
  • Searanger loaded Brent on August 3rd. The vessel is awaiting orders and is currently stopped near Falmouth OPL.
Summary of vessels carrying BFOE grades stopped and waiting for orders (click to expand)

BFOE crude floating storage in the North Sea by grade

Urals

There are also a few vessels carrying Urals at the Southwold anchorage. The Overseas Yosemite, Ridgebury Alice M and New Laurel are all carrying the grade :
  • The New Laurel received 1.4 million barrels from the Belmar and Suvorovsky Prospect, chartered by Glencore and ST shipping respectively.
  • The Overseas Yosemite and Ridgebury Alice M are both chartered by UNIPEC and currently stopped at Southwold anchorage.

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Kpler Oil (European MED refineries slate)

Originally Released on 7 August 2017

European MED refineries slate

European refineries in the Mediterranean Sea have faced a significant shift in their overall crude diet for 2017.
Iran’s return to the global crude market has played a major role in precipitating this change. In one year, processing of Iranian crude in European MED refineries has more than tripled. In June, a record 726 kbd of Iranian crude was processed in the region, averaging 573 kbd over the first half of the year.  This is a stark change from volume levels seen June 2016, in which Iranian crude input amounted to approximately 210 kbd.
WAF grades are also progressively returning to MED slates after lower than average volumes realized in April and May.
Iranian and WAF crude oil grades are increasingly serving as substitutes for CPC and other Middle-Eastern grades, which have shown to be less present in June’s slates.

 

Mediterranean crude slate (%)

Mediterranean crude slate (kbd)


MED European installations included in the volumes

*Sidi Kerir (SUMED) shipments are included in the middle East (ex-Iran) groupblog-orange-lineblog-orange-line

Kpler OIL (World Floating Storage)

Originally Released on 27 July 2017

World floating storage

Floating storage averaged 71.2 million barrels over the last 30 days, down from a peak of 100 million barrels in June. Floating volumes in the Malacca Strait dropped sharply averaging 8.5 million barrels over the last month down from 26 million barrels in June.

Floating volumes on the North Sea remain high, but several ship-to-ship transfer operations and a high amount of vessel movement in the Southwold STS area is an indicator that these barrels are likely to clear towards Asia or feed into local demand.

 

Global floating storage – million barrels
Libya and Nigeria

Libyan export growth continued in July, outpacing export volumes seen in June by a slight margin. The Ras Lanuf, Zueitina and Zawyia terminals are driving this growth.

Nigerian exports are likely to drop for the third consecutive month, largely a result of force majeure declared at Bonny following attacks on the pipeline there. The last vessel to load at the installation was the Eser K on July 17th. Zouzou N. and Evgenia are currently stopped in the West African Gulf. Both signaled a Bonny ETA of July 26th and July 27th respectively. The Nordic Moon and Front Clipper also signaled Bonny as the next destination of loading with August 3rd and August 7th expected arrival dates. Hence, it is likely that operations will shortly resume at the terminal.

Libya and Nigeria exports – kbd

Saudi Arabia exports
Saudi Arabia exports are expected to remain at June levels of 7.2 million barrels per day in July. Saudi Arabia is likely to cut August exports in order to accelerate the global rebalancing effort.
Saudi Arabia exports – kbd
United States exports
U.S. seaborne exports recovered in July following a depressed June total. July will be the second highest export month behind February 2017, when seaborne exports hit 894 kbd. U.S. seaborne imports are expected to total 860 kbd in July, with around half of this volume moving towards Asia.
United States Exports – kbd
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Kpler OIL (Saudi Arabia and Iraq exports)

Originally Released on 21 July 2017

Saudi Arabia and Iraq exports

Saudi Arabia is likely to reduce exports in July compared to June 2017. Kpler data currently indicates that Saudi exports could end July between 6,421 kbd and 7,100 kbd. While the variance of this range is quite wide, it still serves as an indication that exports might not increase compared to June assuming the higher end of the range and below May levels assuming the lower end of the range. The month of May saw the lowest export total since December 2015, according to Kpler data.

Saudi Arabia is particularly concerned regarding U.S. imports, due to the visibility of crude movements into the nation. U.S. imports of Saudi crude hit a 7-year historical low on a weekly-basis, according to EIA data. Kpler data shows a steep reduction of U.S. imports year-over-year and compared to an average of the last 3 years.

Furthermore, Saudi cuts to the United States will continue and possibly deepen further. Kpler data reveals that on July 20th, there are 15 VLCCs and 3 Suezmax vessels in transit to the U.S.

Saudi crude in transit to United States – July 20th

However, the Saudi strategy has been partially offset by increasing U.S. imports from Iraq which grew by 113 kbd (26%) in June 2017 compared to the same month a year earlier and will increase by 335 kbd (85%) year on year in July 2017, according to our predictive model. With that being said, the number of shipments headed from Iraq to the United States has significantly decreased over the last few weeks, as shown in the Kpler screenshot below. It is possible that Iraq could join the Saudi strategy to accelerate the rebalancing scenario.

Iraq crude in transit to United States – July 20th
Ecuador officially breaks the OPEC production agreement

On Tuesday, July 18th, Ecuador officially announced its intent to break the OPEC production agreement. While Ecuador only represented approximately 1.4% of the total OPEC production cut, it could serve as dangerous precedent for larger nations to break from the agreement. The Ecuadorian government cited fiscal constraints as a reason for the need to increase production. Kpler data reveals consistent monthly increases in Ecuadorian exports from 382 kbd in March to 435 kbd in June – a near 11% increase. These elevated production levels have not been seen since last June 2016.

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Kpler OIL (EIA Weekly Export numbers comparison)

Originally Released on 13 July 2017
EIA Weekly Export Accuracy
On the August 31st 2016, the EIA changed its methodology to estimate weekly crude oil exports:
“EIA previously relied on weekly export estimates based on monthly official export data published by the U.S. Census Bureau roughly six weeks following the end of each reporting month” – EIA website
The agency is now using U.S. Customs and Border Protection export values obtained on a weekly basis. U.S. players have no obligation to declare volumes exported to Canada. As a result, the EIA developed a statistical model for the Weekly Petroleum Status Report. Monthly data is issued from the U.S. Census Bureau who has forged an agreement with Statistics Canada, a national economic data aggregation agency, in order to receive reliable import data.
In order to evaluate the accuracy of the EIA model, Kpler aggregated the weekly export values on a monthly basis and compared them to the EIA monthly values published with a six-week delay. The results show that since the implementation of the statistical model, EIA tends to underestimate the weekly export volumes.On average, EIA weekly export levels are underestimated by 113 kbd. A delta of 268 was realized in April, as shown in the figures below:
EIA month from weekly exports vs EIA monthly exports – kbd

Kpler reported 803 kbd of seaborne exports from PADD 3 in April 2017. EIA figures revealed total exports of 1,001 kbd in April among which 775 kbd came out of PADD 3.

Official Trade Figures

Additional official crude oil trade data was released over the last few days. Kpler presented an accuracy rate above 99% for Iraq (Basrah), Chinese and Japanese imports, >97% for U.S. imports and 94% for U.S. exports and CPC exports, as shown below:

Kpler and official data – kbd
*United States imports exclude land-based and seaborne imports from Canada
*United States exports exclude land-based exports
*China imports excludes land-based imports (assumption : 475 kbd imports by pipe from China and Kazakhstan)