John Kemp’s latest column takes a shot at bullish oil analysts for shifting their focus from spot prices to forward prices to the spread between the two, and back again.
“The focus seems to be (arbitrarily) shifting depending on which market segment is more consistent with a basically bullish story…” he writes. The time spread is a function of the spot and the forward markets – so which of those two is driving the market momentum?
The answer, apparently, 10 or 15 years ago would have been that spot prices drove the forward markets. But in recent years it is the forward markets – dominated, incidentally, by hedge funds and swaps dealers – that are the cart pulling the horse.
That’s quite strong stuff, given the current debate over speculation in energy commodities.
On FT Energy Source:
- Refinery slowdown, China edition
- Saudi Arabia struggling with gas needs
- Electric vehicle excitement keeps trying
- EPA regulation delays leave bigger question
- More investors interested climate change
- Finishing touches on Mexico’s new oil contract rules
- Yukos and methane leak in Energy headlines
- More on US climate bill as early as today
- Saudi Arabia loses count, drills too many wells in Ghawar
- Who can afford Areva’s high-end reactors?
- Geopolitics spurs deepwater oil search
- ‘Range anxiety’ over electric vehicles often unfounded
- Avatar and oil sands
- Oil prices and recession: is a double dip coming?
- How clean is underground coal gasification?
- How to make high speed rail fail
- Desalination companies as an energy play
- Will solar prices fall to grid parity?
By Izabella Kaminska
Vienna-based energy consultants JBC Energy have turned our attention to an interesting story on Friday.
According to Reuters, Chinese refineries will be scaling back crude runs by a sizeable 5.6 per cent in March.
As the wire reported on Thursday:
BEIJING, March 4 (Reuters) – China’s top refineries will cut crude runs this month by 5.6 percent from record rates in February as plants take turnarounds to trim swelling stocks.
Twelve major plants accounting for more than a third of China’s total crude run capacity, most of them on the eastern and southern coast, plan to process 2.175 million barrels per day (bpd) crude in March, 161,000 bpd less than February, a Reuters poll showed.
Oil firms were anxiously waiting for a strong uptick in fuel demand after a lull since late January through February as cold winter weather and Lunar New Year holiday slowed industrial activities and construction works.
The cut in runs was put down to swelling product stocks.
This would suggest refinery runs, which are supported by state guaranteed margins in China, have now surpassed domestic needs, according to JBC Energy.
Saudi Arabia, the world’s biggest oil producer and the only one with significant spare capacity, is having trouble meeting its own needs for natural gas – much of which come from the oil industry itself.
Saudi Aramco predicts natural gas demand will double from 2007 levels of about 2.7tcf by 2030, and the state utility wants to add another 2,500MW this year, and 12,043MW by 2015.
But some analysts believe it won’t be able to hit that mark, The National reports:
The plan faces a number of constraints, including shortages of fuel and manpower, and a lengthy contracting process, said Douglas Caskie, an expert in Gulf power at the international consultancy IPA Energy and Water Economics.
It seems that with each new auto industry show we hear more and more about electric vehicles. This week and next, it’s Geneva’s turn.
Nissan/Renault’s Carlos Ghosn re-iterated his goal for Nissan to lead in mass market EVs, saying that his competitors – most of whom are more conservative about the near-term outlook – will be caught by a scramble for the vehicles. From the FT:
“If I had to make a bet today, I’d say we’re going to be very quickly in short capacity for electric cars,” said Mr Ghosn. “From everything I’m seeing, in 2011 or 2012 we’re going to have to rush to build capacity for both batteries and cars.”
More intriguingly, German auto maker Daimler announced plans to work with China’s BYD – the Warren Buffett-backed company that recently began selling its E6 model electric vehicles in China and plans to sell vehicles to the US by the end of this year. Daimler last year bought 10 per cent of Californian high-performance EV maker Tesla, so the move wasn’t entirely out of the blue.
Several Congressmen moved on Thursday to delay the Environmental Protection Agency from regulating carbon emissions from stationary sources, such as power plants. Senator John D Rockefeller IV issued legislation to suspend such action for two years to give Congress a chance to pass its own regulations. Representatives Alan Mollohan, Nick Rahall II and Rick Boucher – all three Democracts – introduced a similiar measure in the House. All of the lawmakers represent coal-producing states.
Here is how Representative Boucher explained his move:
Following the decision by the US Supreme Court that greenhouse gases are a pollutant, the Environmental Protection Agency is now legally compelled to regulate greenhouse gases under the existing Clean Air Act. That law is not well suited for such action since it disables EPA from taking into account the unique needs of the coal industry and electric utilities that burn coal. EPA regulation of greenhouse gases would be the worst outcome for the col industry and coal related jobs.