We are delighted to present the first issue of Energy Aspects’ new Global arbs and trade flows service.
The Global arbs and trade flows service will be available for annual subscription from October 2018. Starting with the October issue, the service will also include data sets.
The Global arbs and trade flows service, a partnership between Energy Aspects and the leading cargo-tracking provider Kpler, provides in-depth analysis of current dynamics in the physical oil market, utilising underlying data on global oil exports and imports from Kpler and Energy Aspects’ suite of key fundamentals and global oil prices.
The service provides insights into developing trends in the physical oil market, assessing how changes to fundamentals and arbs will shape crude flows in the coming months. The service, using Energy Aspects’ proprietary global arbitrage models, builds upon prompt and historical cargo flow data from Kpler to forecast forward flows on key routes. The service includes historical and forecast data for flows by country in the key regions of Asia Pacific, North America, FSU, Latin America, the North Sea, the Mediterranean, the Middle East and West Africa.
The Global arbs and trade flows service can be broken down into four key products:
- Outlook monthly summary report
- The regional overview (delivered monthly with the outlook), offering more granular analysis on developments in key regions
- Market alerts
- Data service
Global crude oil exports jumped by 0.95 mb/d m/m to 44.49 mb/d in August according to Kpler’s cargo tracking data. We expect loadings in September to be close to August’s levels (or modestly higher) as we see a drop in Iranian and Venezuelan exports being offset by higher Saudi loadings, as several August cargoes spilled over to September due to delays caused by the Bab el-Mandeb closure. Indeed, following loadings of 7.2 mb/d in August, Saudi exports in September could rise to 7.6 mb/d. Preliminary October loadings show North Sea, BTC and CPC programmes all higher m/m but WAF and Iranian exports falling, while US should rise. Most of the increase in exports is in light sweet crudes while sour grades will remain tight. This is despite the closure of Petrotrin’s refinery in Trinidad from 1 October, which will free up around 0.12 mb/d of medium sour crudes (84 thousand b/d of imports and increase exports by 40 thousand b/d), including Russia’s Arctic Varandey grade. Refinery problems in Brazil and Mexico will also help release medium sour crudes for export this month and next. Still, the loss of Iranian crude is substantial, with suggestions that even Indian imports may fall dramatically ahead of the 4 November deadline, meaning they may load next to nothing in October. A pick-up in teapot buying means higher volumes of Brazilian, ESPO, WAF and Omani crudes are heading to China while low stocks are also boosting Unipec’s buying. More Urals and CPC are also headed east. While Chinese buying of Urals has been well publicised, Urals is also finding a home in India as refiners there look for alternatives to Iranian oil. Still, Oman has turned out to be the crude of choice to replace Iranian crude, trading up to $2 above Dubai in early September.
So, we expect sweet-sour switching to pick up due to tightness in sour crude availability. This will put a cap on sour crudes in the interim and boost Brent spreads and the Brent-Dubai spread. North Sea crudes should find a bid in the east, and also within Europe given that Urals prices are stronger than North Sea lights. Two VLCCs of Forties headed to Korea in August and two more have been fixed for September departure. The start-up of Hyundai Oilbank’s SDA unit and expanded CDU following the completion of maintenance will boost demand for both light and heavy crudes and back out mediums. We also expect higher flows of medium sweet crudes from Angola and Brazil east, with India’s IOC tendering for Brazilian Iracema and Sapinhoa last week.
US crude exports in August fell for the second month to 1.61 mb/d, down by 0.13 mb/d m/m and 0.5 mb/d lower than June’s record high. However, even as Chinese buying stopped in August, exports to Asia were supported (primarily WTI and DSW grades) with Taiwan, India and South Korean pulling more. We see a pick-up in US crude exports in Q4 18 to above 2 mb/d, especially with a higher volume of baseload flows to India and Taiwan. India’s IOC is lifting barrels for November, December and January delivery, and Taiwan’s Formosa has also started taking regular term barrels. India’s Reliance is said to have picked up 10 mb of US crude across August and September. Export arbs vs MEH have also become more economical for October loaders.
With new refineries starting up in China and Malaysia, alongside new commercial and SPR tanks in China, Asia’s net crude short (mostly for sour crudes) is set to rise by 1 mb/d over the next six-nine months, so we expect lower Middle Eastern flows to Europe and higher west-east flows.
How to order
To order the Global arbs and trade flows service from Energy Aspects please contact your account representative or e-mail email@example.com
The Global arbs and trade flows service is only available to companies that also subscribe to Energy Aspects’ Crude oil service.