Monthly Archives: January 2018

Oil prices soar and production cuts may be in trouble

Since the new year, crude oil futures continue to be strong, constantly touch high. As of yesterday, the United States crude oil futures trading in 64.48 U.S. dollars/barrel line, Brent crude oil futures are close to 70 U.S. dollar mark. This round of crude oil long trend began in late June 2017, the domestic a-share oil and gas assets after 2 months followed the trend of oil bulls, such as Warburg oil and gas since the beginning of September has been harvested 25% of the gains.


However, yesterday’s oil futures bulls apparently converged on EIA inventory data as oil prices rose, and markets such as shale oil production and U.S. production growth were emerging.


The 70-dollar pass reproduces the “danger” argument.


Crude oil prices climbed in 2017, buoyed by the effective production cuts by the Organization of Petroleum Exporting Countries (OPEC) and continued declines in U.S. crude stocks.


The continued decline in U.S. crude stocks is an important support for oil prices in the 2017. According to the analysis, this is mainly due to the second half of the U.S. crude oil production growth slowed and oil demand increased, as well as the U.S. crude oil imports and exports increased. In particular, since August, the two hurricane attacks have led to a reduction in refinery processing and production in the United States, resulting in a widening price gap between WTI and Brent and a surge in U.S. crude exports.


At the resonance of the above factors, crude oil broke 50-dollar spell in September, and surged to the current 70-dollar pass. See the situation is good. A number of research institutions are reversing the idea of “short-selling” of crude oil.


Asia’s emerging and developing economies are expected to grow by 6.5% per cent, with growth expected to boost demand for oil, a combination of rapid declines in Venezuela’s expectations and a strong support for oil prices, according to a semi-annual report by the IMF, which is expected to raise global growth forecasts for the next two years by 0.2% to 3.9%. In addition, Saudi Arabia has recently openly expressed its stance of stabilizing the market.


The Research institute macro OPS predicts that crude oil will rise to $75/barrel by the end of 2018. This will push up the number of energy stocks and the energy sector will be the best performing industry by the end of 2018.


However, the figures released recently do not seem to support the continuation of this optimism. The latest American Petroleum Institute (API) data shows that as of January 19 the week, the U.S. crude oil inventory increased by 4.8 million barrels, gasoline inventory increased by 4.1 million barrels, distillate inventory reduced by 1.3 million barrels, Cushing’s region, the oil inventory reduced by 3.6 million barrels.
Benzalkonium chloride
Analysts said that if the EIA data and API performance is consistent, that is, if crude oil inventory also ended nine consecutive weeks of decline, will be a certain pressure on oil prices, the 70-dollar pass is at stake.


The US market will be the focus of oil markets


Concerns about an increase in crude inventories suggest that the accumulation of crude oil inventories is mainly due to seasonal declines in refinery operating rates. The key to determining oil prices in the future lies in the game between US crude oil and shale oil production and the OPEC limited-output agreement; Oil prices may start to fall as the US increases expectations.


In recent days, OPEC has warned that rising oil prices have stimulated the enthusiasm of shale oil producers, raising expectations for U.S. production. The International Energy Agency (IEA) also said that with the stimulus of high oil prices, U.S. crude oil production was the highest or up to 10 million barrels/day, replacing Saudi production status.


Analysts say this could hamper the oil market’s supply-and-demand balance, and the continued high oil price means it is not far from being adjusted.


Hughes statistics show that as of the end of 2017, the U.S. oil drilling has climbed from the 2016 lows of 316 to 751, and U.S. crude oil production has climbed from 2016 lows 15% to 9.71 million barrels/day, the highest level since the early 70. In 2018, U.S. crude oil production was expected to increase by 807,500 barrels/day, according to the average of the combined institutions.


Liu Jin, Zhang Yi and Li Yunxu of COFCO Futures Research Center noted that with the strengthening of oil prices in the second half of 2017, the number of active drilling rigs began to return to an upward trajectory, which will lead to accelerated future production of crude oil and more than 9.8 million barrels/day of crude oil production in the United States. According to the December 2017 EIA short-term Energy outlook, the 2017 U.S. crude oil average production of 9.24 million barrels/day, 2018 to 10.02 million barrels, will be more than 1970 years of U.S. history 9.6 million barrels/days of historical peak. In addition, the Trump government launched at the beginning of the U.S. National Energy Plan and the 2018 tax cut policy, will vigorously promote the shale oil industry rapid growth.


They believe that in the first half of 2018, the main OPEC countries will reduce the rate of implementation of production, and may even under the current high oil prices to increase domestic revenue, to avoid the subsequent fall in oil prices into a passive situation, the so-called prisoner’s dilemma.


According to historical experience, the “Prisoner’s Dilemma” under the OPEC cut cut agreement may be weakened, since the first time in 1982, since the introduction of limited production quotas, the initial implementation of a better, but with the marginal improvement in oil prices, the Member States will tend to overproduction.


However, Chen Tong that the growth of shale oil production in the United States still faces some challenges. First, the shale oil profit and loss balance price uplift. From 2014 to 2016, such factors as reducing the price of shale oil decreased significantly, but some factors were cyclical. In the past three years, North American E&Ps have lowered prices by signing fixed contracts with oil companies that desperately need cash flow, but the cost of drilling rigs, equipment and personnel is expected to increase after those contracts expire. Second, E&Ps the cost of capital increase. Unlike conventional oil and gas resource exploitation, 90% of shale wells will be released in the first two years of oil well production, so it is necessary to keep the output of shale oil growing continuously by adding capex to open drilling new wells, and many shale oil e&ps have relied on loans and issuing bonds for financing. However, as the US enters the interest-rate hike cycle, E&Ps is facing mounting credit crunch pressures, with some small and medium-sized companies having to shift to High-yield bond markets, with significantly higher capital costs.


How to deduce oil price in the future


Looking ahead, Chen Tong said the 2018 weak balance will be the main tone of the oil market supply and demand situation, oil prices will appear in a broad pattern of shocks. The effects of seasonal factors on oil prices under the weak equilibrium market will be highlighted, and the annual peak of oil prices is expected to appear in the two or three quarter demand season.

Gamma-PGA (gamma polyglutamic acid)


COFCO Futures Research believes that the overall focus of oil prices in 2018 is expected to move up, Brent oil range at 50 USD/barrel-70 USD/barrel, WTI in 45 USD/barrel-65 USD/barrel. From a rhythmic standpoint, the core factor in the first half is to stock and shale oil production, the National energy plan and tax cuts will drive the rapid development of shale oil, U.S. crude oil production is expected to break through the first half of 2018 10 million barrels/day capacity, when the U.S. oil inventories stabilized rebound and production growth resonance, Prices were dominated by shocks; in the second half of the year, the Saudis could dominate OPEC’s efforts to boost oil prices by cutting output in a short period of time to lay the groundwork for a Saudi Aramco IPO and OPEC withdrawal from production. In addition, since the second half of 2017, the international geopolitical risk has spiked, the Saudi anti-corruption, the Trump government refused to recognize Iran’s compliance with the Iraq nuclear agreement, etc., may further push up oil prices in the short term, need to pay attention to the geopolitical increase in volatility.

Spot price of styrene in Europe rose to 4.5-month highs

According to the latest statistics, the spot price of styrene in Europe has soared to its highest level since early September last year. Statistics show that the 5-30-day forward spot price of styrene in Europe soared by 80.5 USD/ton in Monday, and rose 34 USD/ton in Tuesday, reaching 1462 USD/ton.


The European styrene market remained relatively calm last week, despite the problems in the Boehlen device in Germany following the Sheng of the Dow Chemical Company at the same location.


This week the price spike in styrene was actually a reaction to the expected transitions in February and March. The United States has heard that it has recently begun maintenance operations on cracking devices.

Decline in domestic consumption prompted Pakistan to limit fuel oil imports

According to Platts News in Singapore on January 2, Pakistan’s fuel oil imports have come into effect immediately due to increasing imports of liquefied natural gas (LNG) and closure of several oil-fired power plants, resulting in a drop in domestic fuel oil consumption limit.

An official from Pakistan’s Department of Energy said Pakistan has also set up a new energy commission headed by a power minister to approve future fuel oil imports, monitor fuel oil production at domestic refineries, demand from the power sector, and oil marketing companies’ in stock.

This decision was made at a meeting held in Islamabad on December 28 last year. Pakistani Prime Minister Abbas, electricity minister and officials from oil refineries, oil marketing companies and the Department of Energy attended the meeting.

The official said at the meeting, participants made an immediate decision to limit the import of fuel oil. Pakistan will receive only 4 shipments of fuel oil this year, a long time ago by Pakistan’s national oil company.

Sodium Molybdate

Japan made final tax decision on PET products

Learned from the Ministry of Commerce, Japan’s Ministry of Finance released an official communiqué recently to finalize the anti-dumping case of poly (ethylene terephthalate) (hereinafter referred to as “PET”) in China, deciding to start a case involving China from December 28 Product export enterprises impose 39.8% -53% anti-dumping duties.

Revocation of Malaysian bauxite seizure may cause Pahang environmental problems again

Ari Ahba Osman Ali Akhbar Othman recently said in Pahang that the Malaysian Anti-Corruption Commission (MACC) must first develop and appropriate standard operating procedures before issuing instructions to repeal the bauxite mining ban.


Recently, the Malaysian Anti-Corruption Commission has decided to withdraw 10 million tons of deposits of bauxite, which may cause new environmental problems in the Pahang state.


“Since 2016, the government issued a ban on bauxite mining, the local residents enjoy a long absence of fresh environment, no longer affected by dust, dust, these dust are from the local bauxite field to the port in the process of transport of bauxite production.”


“Since there is no suitable standard operating procedure, I do not think it is necessary to repeal the bauxite mining ban,” Ari Ahba Osman said. ”

Gamma-PGA (gamma polyglutamic acid)


December 24, the Malaysian federal Government and the Ministry of Natural Resources and Environment told the public through the media that the existing ban on bauxite mining will be postponed to June 30, 2018.


After announcing the moratorium on mining, the Malaysian Anti-Corruption Commission immediately ordered the revocation of the state’s bauxite seizure order, which would allow the export of bauxite with the relevant permits.


Local residents are concerned that the withdrawal of the seizure order will lead to further deterioration of the environment.

Egypt continues to impose export tariffs on products such as nitrogen

According to the Daily News December 27, the Ethiopian Trade Minister Tariq Kabil recently signed a decision to extend the 2017-year Decree 1157th (valid until December 26, 2017) valid for one year, continue to impose export tariffs on some metal raw materials, and issued a new order for the export of nitrogen fertilizer 125 per ton tariff, valid for one year.


According to Decree No. 1157th of 2017, 20,000 Egyptian pounds per ton of export copper is levied, exports of iron ore and waste lead and its products levied 6,000 Egyptian pounds per ton tariffs, exports of scrap iron and scrap stainless steel per ton levied 1300 Egyptian pound tariff, export of scrap aluminum 7,000 Egyptian pound tariff, export zinc ore, waste zinc, such as the imposition of 3000 Egyptian pounds per ton, The export of waste paper is levied at 3600 Egyptian pounds per ton.


The Ministry of Industry and Trade believes that these abandoned financial and raw materials can save domestic industrial production costs. Since the implementation of Act 1354th (amended on this basis by Decree No. 1157th of 2016), the annual export volume of aluminum and spent aluminium has been 3834 tonnes (2016), 4703 tonnes (2017), 373 tonnes (2016) and 353 tonnes (2017), Scrap iron and scrap exports stabilized at 11,000 tonnes per year (21,000 tonnes in 2014), and exports of Galena, lead and lead products fell from 13,000 tonnes in 2016 to 38.54 million tonnes in 2017 years, and waste paper exports fell from 279 tonnes in 2016 to 2017 tonnes in 37 years.


According to the regular import control Bureau statistics, 2016 agricultural season (to the end of October), Ethiopia exports nitrogen fertilizer 3.3 million tons, 2017 agricultural season nitrogen fertilizer exports up to 3.6 million tons. From the beginning of 2017 to the end of October, the production of nitrogen fertilizer amounted to 6.8 million tons, which is 105% of the planned capacity