We welcome article submissions from experts in the areas of coal, mining,
shipping, etc.
To Submit your article please click here.
|
|
|
Saturday, 27 September 14
OIL MARKET CONTANGO: SPECULATION ON FUTURE PRICES CAN BE A RISKY MOVE, EVEN FOR TANKER OWNERS HELLENIC SHIPPING NEWS
.jpg) Despite the fact that tanker owners can easily use their vessels as floating storage units for oil, in a bid to exploit the current oil market dynamics, a recent analysis from Mcquilling Services noted that it could prove to be a risky move, as today’s contango is rather different that the one observed during the 2009-2010 period. Just for reminders, after the collapse of the global financial system in 2008, crude oil forward curves moved into steep contango. Fortunes were made in storage asset plays in 2009-2010, which is likely the reason that so much attention is being devoted to the topic today; however, the contango is inherently different today than it was after The Great Recession.
According to Mcquilling, “as the US energy revolution continues to develop, global crude oil supply and demand dynamics have begun to evolve. Improvements to hydraulic fracturing processes have helped the US become the world’s largest crude oil producer. However, due to a protectionist energy policy, US produced crude oil cannot be exported, apart from a few exceptions. This scenario has created a shift in crude oil trade flows and has also impacted regional crude oil pricing. The US now requires less crude imports to meet domestic demand and the new supply and demand rebalances have reduced the longstanding price interdependency between US and foreign crudes. One interesting development that has been closely monitored this summer is the price polarity between the US and European crude oil benchmarks. WTI, the US benchmark, is currently in a forward curve formation referred to as backwardation, while Brent, the European benchmark, has moved into a forward curve formation referred to as contango. In a backwardated market futures prices are lower than spot prices; and in a contangoed market, futures prices are higher than spot prices. A variety of trading strategies are developed when forward commodity curves move into these forward curve formations”.
Mcquilling Services added that “the shape and depth of the forward curve can assist the trader in developing hedging or speculative strategies. Commodity storage is a potentially lucrative strategy that is implemented when futures curves move into contango, predicated on the assumption that you can store a commodity today to sell at a higher spot price in the future. Many analysts and journalists have correctly identified the current contango phenomenon in the Brent curve, and many have begun to link the contango with cargo asset plays utilizing crude oil tankers for crude storage in the Atlantic Basin. However, there are a variety of considerations that must be taken into account when evaluating floating storage plays, which many recent reports have overlooked”.
Meanwhile, “the cost of carrying, or storing, the commodity and the perceived price the cargo can fetch in the future are critical components of a storage asset play. In the floating storage case, the cost of the vessel, financing, insurance and crew represent the bulk of the carrying costs. Storage costs are not uniform, though. For instance, if you are a tanker owner, crude oil producer or are bank with low financing costs, your cost of implementing a floating storage play will likely be lower than other non-strategic speculators. That said, current market conditions make a pretty weak case for floating storage regardless of strategic positioning”.
According to the analysts, “storage plays are normally exercised as a result of bullish sentiment; but, contango curves don’t necessarily reflect a bullish market. It is our view that the current contango is more likely a result of short-term over-supply in the Atlantic Basin, which has driven down near-term prices. The shallow Brent contango levels out by the end of 2014, not leaving much meat on the bone for speculators. In other words, we do not see a long-term increase in crude oil demand leading to higher prices in the future that would justify putting oil into storage at current prices to sell in a future spot market at a premium. Another meaningful difference between today’s contango and the contango of 2009 is the price level at which the contango curves formed, respectively. In 2009, the contango took shape as markets started to recover after the economic collapse. As the global economy weakened, so did crude oil demand. As the global economy recovered, so did crude oil demand. From the bottom of the collapse, there was abundant upside price potential that coincided with increasing crude oil demand. In contrast, today’s contango formed at the top of a multi-year rally. It is our view that we are at the top of a consolidating price range and without substantial changes to demand, prices will likely not have much room to the upside”.
Mcquilling said that “we still perceive the physical crude oil markets to be soft. When global crude oil production decreases at a slower pace than demand, some cargoes may sit on the water and wait for off-takers. We believe this is the case in Asia and the Atlantic Basin. When there is a surplus of crude oil, savvy traders could delay purchasing cargoes until the over-supply starts to dissipate and prices reach a bottom. There is some evidence hinting that this may be taking place. Last week, the US Energy Information Administration, the energy statistics arm of the Department of Energy, released inventory data revealing that US East coast refiners imported 460,000 barrels, as PADD 1 refinery utilization increased by 10.2%.
US crude oil production has been so robust that geopolitical turmoil in key producing nations like Iraq and Libya seem to have little effect on prices. While US production is expected to peak within the next several years, the one to three year global supply forecast is very strong. At the same time, global crude oil demand forecasts are being pared back. The International Energy Agency (IEA) has reduced its global demand target for 2015 to 92.6 million b/d. The revision was made after historical demand figures showed that 2Q2014 demand was the lowest in the last 10 quarters. In correlation with the IEA forecast, OPEC has also indicated that it will likely reduce production volumes by 500,000 b/d in 2015. While floating storage is an enticing strategy to consider, a meaningful shift in crude oil supply, demand and futures prices would have to transpire for this contango to be more than an interesting phenomenon”, it concluded.
Source: Nikos Roussanoglou, Hellenic Shipping News
If you believe an article violates your rights or the rights of others, please contact us.
|
|
Tuesday, 09 September 14
PORT OF NEWCASTLE SHIPPED 13.207 MTN OF COAL IN AUGUST; TRADE VALUE AROUND $1.17 BILLION
COALspot.com: The Port of Newcastle, Australia’s major trading ports and the world’s largest coal export port, has shipped $1.17 billio ...
Monday, 08 September 14
SUB-BIT FOB INDONESIA COAL SWAP UNDERPERFORMED LAST WEEK
COALspot.com: Indonesian coal swaps for average October 2014 decreased US$ 0.20 (-0.39%) day on day and US$ 1.60 (-3.04%) per mt week on week. The ...
Monday, 08 September 14
API 8 CFR SOUTH CHINA COAL SWAP FOR DELIVERY JAN'15 CLOSED AT US$ 66.30 PMT W/E 5 SEPTEMBER 2014; LOST 5.15% M-O-M
COALspot.com: API 8 CFR South China Coal swap for delivery in October 2014 decreased US$ 0.15 (-0.23%) day on day and US$ 2.05 (-3.04%) week on wee ...
Monday, 08 September 14
CHINESE IRON ORE IMPORT DEMAND VERY STRONG - COMMODORE
COALspot.com: 30 dry bulk vessels were chartered in the spot iron ore market last week to haul iron ore import cargoes to Chinese buyers.
Acco ...
Sunday, 07 September 14
FREIGHT MARKET CONTINUED TO BE FIRM IN SPITE OF CAPE'S THIS WEEK'S WEAK PERFORMANCE
COALspot.com: BDI up by 0.7 pct week on week and closed at 1155 points this week. The Baltic Dry Index is a composite of three sub-indexes that mea ...
|
|
|
Showing 3496 to 3500 news of total 6871 |
|
 |
|
|
|
|
| |
|
 |
|
|
| |
|
- Goldman Sachs - Singapore
- Intertek Mineral Services - Indonesia
- SMG Consultants - Indonesia
- Kaltim Prima Coal - Indonesia
- Price Waterhouse Coopers - Russia
- Madhucon Powers Ltd - India
- SN Aboitiz Power Inc, Philippines
- Kideco Jaya Agung - Indonesia
- Therma Luzon, Inc, Philippines
- Coastal Gujarat Power Limited - India
- Romanian Commodities Exchange
- Malabar Cements Ltd - India
- Grasim Industreis Ltd - India
- Bhatia International Limited - India
- Renaissance Capital - South Africa
- Straits Asia Resources Limited - Singapore
- Sojitz Corporation - Japan
- Ministry of Finance - Indonesia
- Petron Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Thai Mozambique Logistica
- Medco Energi Mining Internasional
- Africa Commodities Group - South Africa
- Carbofer General Trading SA - India
- South Luzon Thermal Energy Corporation
- Bukit Asam (Persero) Tbk - Indonesia
- Orica Australia Pty. Ltd.
- Rashtriya Ispat Nigam Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Iligan Light & Power Inc, Philippines
- IHS Mccloskey Coal Group - USA
- Globalindo Alam Lestari - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Marubeni Corporation - India
- Gujarat Sidhee Cement - India
- Siam City Cement - Thailand
- Sakthi Sugars Limited - India
- Uttam Galva Steels Limited - India
- Coalindo Energy - Indonesia
- Power Finance Corporation Ltd., India
- Indika Energy - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Miang Besar Coal Terminal - Indonesia
- Siam City Cement PLC, Thailand
- Kalimantan Lumbung Energi - Indonesia
- OPG Power Generation Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Cigading International Bulk Terminal - Indonesia
- New Zealand Coal & Carbon
- Metalloyd Limited - United Kingdom
- Petrochimia International Co. Ltd.- Taiwan
- Minerals Council of Australia
- Rio Tinto Coal - Australia
- Antam Resourcindo - Indonesia
- Ind-Barath Power Infra Limited - India
- The University of Queensland
- Gujarat Mineral Development Corp Ltd - India
- Bukit Baiduri Energy - Indonesia
- Global Green Power PLC Corporation, Philippines
- Georgia Ports Authority, United States
- Toyota Tsusho Corporation, Japan
- Vizag Seaport Private Limited - India
- Trasteel International SA, Italy
- Jorong Barutama Greston.PT - Indonesia
- Larsen & Toubro Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Meenaskhi Energy Private Limited - India
- Standard Chartered Bank - UAE
- Ambuja Cements Ltd - India
- Indo Tambangraya Megah - Indonesia
- Maheswari Brothers Coal Limited - India
- Dalmia Cement Bharat India
- Borneo Indobara - Indonesia
- Commonwealth Bank - Australia
- PNOC Exploration Corporation - Philippines
- Indonesian Coal Mining Association
- PetroVietnam Power Coal Import and Supply Company
- AsiaOL BioFuels Corp., Philippines
- Central Java Power - Indonesia
- ASAPP Information Group - India
- Kartika Selabumi Mining - Indonesia
- Orica Mining Services - Indonesia
- Central Electricity Authority - India
- Star Paper Mills Limited - India
- GMR Energy Limited - India
- GVK Power & Infra Limited - India
- Sical Logistics Limited - India
- European Bulk Services B.V. - Netherlands
- Sarangani Energy Corporation, Philippines
- Energy Link Ltd, New Zealand
- Singapore Mercantile Exchange
- Tamil Nadu electricity Board
- Karbindo Abesyapradhi - Indoneisa
- Timah Investasi Mineral - Indoneisa
- McConnell Dowell - Australia
- Global Coal Blending Company Limited - Australia
- VISA Power Limited - India
- Deloitte Consulting - India
- Pendopo Energi Batubara - Indonesia
- Directorate Of Revenue Intelligence - India
- Indogreen Group - Indonesia
- Heidelberg Cement - Germany
- Australian Coal Association
- Tata Chemicals Ltd - India
- Wood Mackenzie - Singapore
- Pipit Mutiara Jaya. PT, Indonesia
- Agrawal Coal Company - India
- Mercuria Energy - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bahari Cakrawala Sebuku - Indonesia
- Salva Resources Pvt Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Gujarat Electricity Regulatory Commission - India
- The Treasury - Australian Government
- Baramulti Group, Indonesia
- Mercator Lines Limited - India
- Parliament of New Zealand
- Bhoruka Overseas - Indonesia
- GAC Shipping (India) Pvt Ltd
- Bharathi Cement Corporation - India
- Coal and Oil Company - UAE
- Eastern Energy - Thailand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Interocean Group of Companies - India
- Indian Energy Exchange, India
- Ministry of Transport, Egypt
- PowerSource Philippines DevCo
- Electricity Authority, New Zealand
- Karaikal Port Pvt Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Makarim & Taira - Indonesia
- Oldendorff Carriers - Singapore
- Bhushan Steel Limited - India
- Altura Mining Limited, Indonesia
- MS Steel International - UAE
- CNBM International Corporation - China
- Vedanta Resources Plc - India
- Asmin Koalindo Tuhup - Indonesia
- Economic Council, Georgia
- Thiess Contractors Indonesia
- Simpson Spence & Young - Indonesia
- PTC India Limited - India
- Bangladesh Power Developement Board
- Australian Commodity Traders Exchange
- Planning Commission, India
- Xindia Steels Limited - India
- Meralco Power Generation, Philippines
- Bukit Makmur.PT - Indonesia
- Kobexindo Tractors - Indoneisa
- Alfred C Toepfer International GmbH - Germany
- Videocon Industries ltd - India
- IEA Clean Coal Centre - UK
- Banpu Public Company Limited - Thailand
- TeaM Sual Corporation - Philippines
- Parry Sugars Refinery, India
- Riau Bara Harum - Indonesia
- Eastern Coal Council - USA
- Aboitiz Power Corporation - Philippines
- Independent Power Producers Association of India
- San Jose City I Power Corp, Philippines
- Posco Energy - South Korea
- Chettinad Cement Corporation Ltd - India
- Mintek Dendrill Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kumho Petrochemical, South Korea
- Indian Oil Corporation Limited
- Sinarmas Energy and Mining - Indonesia
- Essar Steel Hazira Ltd - India
- Latin American Coal - Colombia
- Savvy Resources Ltd - HongKong
- Jaiprakash Power Ventures ltd
- ICICI Bank Limited - India
- Cement Manufacturers Association - India
- Barasentosa Lestari - Indonesia
- Semirara Mining Corp, Philippines
- Port Waratah Coal Services - Australia
- Global Business Power Corporation, Philippines
- India Bulls Power Limited - India
- Kepco SPC Power Corporation, Philippines
- Ministry of Mines - Canada
- Manunggal Multi Energi - Indonesia
- Edison Trading Spa - Italy
- Lanco Infratech Ltd - India
- Samtan Co., Ltd - South Korea
- London Commodity Brokers - England
- Binh Thuan Hamico - Vietnam
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- SMC Global Power, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Wilmar Investment Holdings
- White Energy Company Limited
- Semirara Mining and Power Corporation, Philippines
- CIMB Investment Bank - Malaysia
- Chamber of Mines of South Africa
- Anglo American - United Kingdom
- Attock Cement Pakistan Limited
- Bayan Resources Tbk. - Indonesia
- The State Trading Corporation of India Ltd
- Neyveli Lignite Corporation Ltd, - India
- Merrill Lynch Commodities Europe
- Leighton Contractors Pty Ltd - Australia
- International Coal Ventures Pvt Ltd - India
- Energy Development Corp, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Formosa Plastics Group - Taiwan
- LBH Netherlands Bv - Netherlands
- Electricity Generating Authority of Thailand
- Bulk Trading Sa - Switzerland
- Directorate General of MIneral and Coal - Indonesia
- Aditya Birla Group - India
- Mjunction Services Limited - India
- Jindal Steel & Power Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Sindya Power Generating Company Private Ltd
- Krishnapatnam Port Company Ltd. - India
|
| |
| |
|
