GS Caltex's rare buy & tankers in English Bay

It is great to be back in Vancouver, Canada for Christmas. Of course, no trip some 4,700 miles westward goes without the Oilholic taking his customary walk from the City’s Waterfront facing Vancouver Harbour to Beach Avenue facing English Bay, and watching both waterways interspersed with oil tankers of all description heading in and out of the Burrard Inlet to Port Moody. 

Business is ticking along even in trying times, if this blogger's unscientific assessment of traffic volume is anything to go by. At the moment, the Western Canadian Select (WCS) is seeing its weakest price since the first quarter of 2014, and hit sub $30 per barrel levels at one point this month with regional inventories at a record high. 

Kinda feels like the marginal oil price recovery of 2017 didn’t really hit these shores customarily used to trading their benchmark at a steep discount to the WTI (roughly $5-7 per barrel in the old days, typically $12-15 and currently well above $20). But such a pricing level brings in fresh interest too, and of course arbitrage opportunities depending on what’s afoot elsewhere. 

According to a Reuters report, South Korean refiner GS Caltex recently picked up a rare cargo of heavy Canadian crude from Vancouver.

It seems 300,000 barrels of Cold Lake heavy sour crude were loaded onto the Panamax Selecao on 13 December. The consignment may not be the last; the Cold Lake heavy sour is quite close to pricier Middle Eastern heavy crudes. 

Sources here also suggest other Asian refiners might want to go down GS Caltex’s path, including its domestic rival Hyundai Oilbank. If that were to materialise, as opposed to what is quite frankly a small trial consignment taken by GS Caltex, the crude world could see meaningful cargo dispatches from Canada to South Korea for the first time since 1995, and well more tankers on the English Bay horizon. 

Away from here, the latest rig counts from Baker-Hughes point to a decline in the number of Canadian rigs by 28 to 210, while the US rig count was broadly unchanged at 931, up one on the week before. Finally, here's the Oilholic's latest Forbes post on the 'OPEC put' versus direction of the oil market in 2018.

That’s all from Vancouver for the moment folks! Keep reading, keep it ‘crude’!

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© Gaurav Sharma 2017. Photo: Oil tankers at sunset on Vancouver's English Bay, British Columbia, Canada © Gaurav Sharma 2017. 

Medium term oil forecast unaltered by OPEC & non-OPEC action

One week on from OPEC and non-OPEC producers' decision, to roll over their ongoing oil production cuts of 1.8 million barrels per day (bpd) to the end of 2018, there's no bullish frenzy in the crude futures market.

In the Oilholic's humble opinion, that was never their intention in the first place anyway. The primary purpose was to keep the OPEC put in place, and protect the oil price floor in 2018 at $50 per barrel, using Brent as a benchmark.

Given that the global proxy benchmark is currently well clear of $60, and lurking near 2-year highs; most analysts would say it's a case of job done for now. 

That said, the current range is the new normal, and there's little on the horizon to suggest otherwise. For instance, following the OPEC meeting, ratings agency Moody's said it would keep its medium-term oil price estimates at $40-$60 per barrel. 

"Recent higher oil prices have been supported by global economic growth forecasts, production restraints and increased geopolitical risk," said Terry Marshall, a Moody's Senior Vice President. "But risks to prices persist, including reduced consumption due to higher prices, as well as increased supply."

It's a view this blogger shares, and few analysts in the City of London would suggest otherwise. Of course, as expected, the number of US rigs has risen too with Brent prices firming up above $60 and WTI fast approaching the mark. There maybe an upside in the wake of OPEC's decision, but the US shale drag is well and truly alive and kicking. That's all for the moment folks! Keep reading, keep it crude!

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© Gaurav Sharma 2017. Photo: Oil extraction site © Lukoil.

OPEC, non-OPEC producers extend crude cuts

It's official - OPEC and non-OPEC producers have extended their joint 1.8 million barrels per day of oil production cuts until December 2018, following the conclusion of their ministerial meeting here in Vienna, Austria.

There were some doubts that the Russians will not play ball, but in the end they did. Energy Minister Alexander Novak and his Saudi counterpart Khalid Al-Falih subsequently turned up portraying an air of harmony. It's been a long crude day, with plenty of words to punch on a keyboard, plus radio, TV and OPEC webcasts to contend with for the Oilholic who is well and truly knackered. Hence, apologies for not providing some instant and more meaningful commentary here. 

To make up for it, here's a spot report for IBTimes UK with some market analysts' quote.

And here is yours truly's customary OPEC take for Forbes.

Some more composed thoughts to follow once this blogger has had some sleep after a long hectic day; but in the interim that's all for the moment folks! Keep reading, keep it crude!

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© Gaurav Sharma 2017. Photo: (L to R) Russian Energy Minister Alexander Novak and his Saudi counterpart Khalid Al-Falih announce the extension of OPEC and non-OPEC production cuts at the conclusion of the 173rd OPEC ministers' meeting in Vienna, Austria on 30 November, 2017 © Gaurav Sharma.

'R-OPEC' or OPEC? All about Russia at Helferstorferstrasse 17

The Oilholic has negotiated some serious snowfall to arrive at Helferstorferstrasse 17, OPEC's secretariat in Vienna, Austria for the 173rd OPEC Ministers' meeting. 

The winter wonderland that the Austrian capital has transformed into overnight should make the Russians feel right at home. That's because all the soundbites here are about the Russians, and what they may or may not agree to this time around. 

The collective OPEC and non-OPEC production cut, pegged at 1.8 million barrels per day (bpd) in May, is valid until March 2018. So the question is a simple one where from here? The Gulf exporters led by Saudi Arabia want a nine month extension beyond that to cover most of 2018. However, Russian oil minister Alexander Novak is not so keen on the idea, questioning why OPEC wants to extend a deal that is yet to expire.  

Here's some overnight analysis for Forbes. Sooner or later Russia will part company with OPEC and the many in the market are cognizant of that.

And here's the first report from OPEC for IBTimes UK. Plenty more from here soon, but that's all for the moment folks! Keep reading, keep it 'crude'!

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© Gaurav Sharma 2017. Photo: View of snowfall on Westbahnhof / Europaplatz, Vienna, Austria, November 30, 2017. 

Feeling the crude temperature ahead of OPEC 173

The Oilholic has arrived in Vienna, Austria to gauge the crude temperature ahead of the 173rd meeting of OPEC ministers.

Going by the events of the last 24 hours, looks like the Russians, in town leading the 10 non-OPEC producers, seem to be giving the most briefings, and mostly to Russian journalists and analysts.

You could be forgiven for thinking they'd joined OPEC; but the Kremlin's message to analysts and scribes alike seems to be a simple one - the current production cut agreement reached in concert with OPEC producers for taking out 1.8 million barrels per day (bpd) out of the market is valid until March 2018, so why tamper with it now? 

On the other hand the few odd soundbites coming out of OPEC seem to "express hope" the cut agreement, of which the cartel has a lion's share of 1.3 million bpd, is rolled over for a further nine months. With both parties not appearing to be on the same page, oil futures are sliding. 

At 7:45pm GMT, Brent is down 0.53% or 34 cents to $63.27 per barrel, while WTI is down 1.09% or 63 cents to $57.36 per barrel, making it a second successive session of intraday declines extending from European hours to US trading hours.

Expect more of the same, though OPEC's problem is the lack of an exit strategy, which is why some in its ranks want to kick the can down the road even if the Russians aren't keen. Meanwhile, since its been over 10 years of covering OPEC by the Oilholic, here's a look back at the last ten years for IBTimes UK. A whole lot memories, episodes and experiences to narrate. 

Finally, here is one's take on what to expect on IG Markets TV and Core Finance TV. 

And that's all from Vienna, for the moment folks! Plenty more to follow. In the meantime, keep reading, keep it crude!

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© Gaurav Sharma 2017. Photo: OPEC signage outside its secretariat in Vienna, Austria © Gaurav Sharma.