Goff Heating Oil Market Price Information
Oil Market, Exchange Rate and Heating Oil Price Information June 2021.
Brent Crude Dated ($ per Barrel)
Price at Start of Month: $69.37 Price at End of Month: $76.12
Highest Price in Month: $76.12 Lowest Price in Month: $69.37
Pound £ to US Dollar Rate $ Exchange Rate FT:
Start of Month: 1.4172 End of Month: 1.3814
Kerosene (Heating Oil) Cargo Price $ per tonne
Start of Month: $590.75 End of Month: $616.25
Highest Price in Month: $627.75 Lowest Price in Month: $590.75
Resulting in a Heating Oil Price (Pence Per Litre) Monthly range: 3.23 ppl
Market Commentary on the Newsfeeds:
EIA: Brent Oil To Average $68 In Q3 2021
Brent Crude prices are expected to average $68 a barrel in the third quarter this year, the U.S. Energy Information Administration (EIA) said in its latest monthly outlook, raising the forecast by as much as $5 per barrel from the previous projection.
In the June Short-Term Energy Outlook (STEO), the EIA also raised its Brent Crude forecast for June by $4 a barrel from the May STEO and now sees the international benchmark averaging $69 per barrel this month.
Despite the COVID crisis in India, global oil demand remained higher than supply in May, which extended the global inventory drawdown of crude and fuels, although the withdrawal is estimated by the EIA at 1.2 million barrels per day (bpd) last month, compared with average monthly withdrawals of 2.1 million bpd since June 2020.
EIA’s latest price outlook is close or slightly below current levels and “incorporates the recent price increases and our forecast of mostly balanced oil markets in the coming months,” the administration said.
Global production is set to increase more rapidly in the second half of this year to catch up with rising demand, according to the EIA.
Rising production from OPEC+, as well as growth in non-OPEC supply, including from the United States, is set to exert downward pressure on oil prices next year when Brent Crude is expected to average $60 per barrel.
Referring to the U.S. oil price and rig counts, the EIA believes the rig count is likely to continue to increase in response to WTI Crude prices rising from less than $50 a barrel in late 2020 to a monthly average of $65 a barrel in May.
“Although U.S. crude oil producers have some incentive to remain cautious about deploying rigs and increasing production because of overall market uncertainty, if WTI crude oil prices remain near $65/b in the coming months, as we forecast, prices will continue to provide an incentive for producers to deploy additional rigs and resume production,”
the EIA noted.
Onshore U.S. crude oil production in the Lower 48 is set to reach almost 9.3 million bpd by December 2021 – from an estimated 8.9 million bpd in May – with further increases into 2022. Yet, those forecasts are lower than in recent STEOs because of relatively fewer rig deployments at existing price levels, particularly in the Permian, the EIA said.
By Tsvetana Paraskova for Oilprice.com 9th June 2021
OPEC Sees Strong Oil Demand Recovery This Autumn
Global oil demand will rise by 6 million barrels per day (bpd) this year from the lows of 2020, led by strong consumption in China and the United States, especially in the second half of 2021 with growing economies and border reopenings, OPEC said on Thursday.
In its Monthly Oil Market Report (MOMR), the organization continues to expect total global oil demand to average 96.58 million bpd this year, up from 90.63 million bpd in 2020, despite the COVID resurgence and renewed lockdowns in key economies, including the Eurozone, Japan, and India.
“However, the ongoing vaccination efforts, growing share of recovered cases leading to increasing herd immunity, and the easing of lockdown restrictions lend optimism that the pandemic could be contained in the few months to come,”
OPEC said in its report.
The global economic rebound will benefit from stimulus measures, high savings rates in advanced economies, and pent-up demand following the lockdowns, the cartel noted.
The economic momentum and reopenings are set to accelerate the oil demand rebound in the second half of the year, when total demand worldwide is expected to reach 99.0 million bpd, up from an estimated 94.1 million bpd for the first half of 2021. Improving mobility in major economies support gasoline and diesel demand, while seasonal summer demand will also add to higher consumption. The ongoing vaccination is also a bullish factor in OPEC’s outlook for the second half of the year.
“OECD Americas, led by the US, is projected to be the largest contributor to oil demand growth in 2021, supported by rebounding transportation fuels, mainly gasoline, and healthy light- and middle-distillate requirements,”
OPEC said.
Despite this, oil demand in North America is not expected to return to pre-pandemic levels this year, the cartel noted.
In developing economies, China will lead the demand growth, followed by India and other markets in Asia, according to OPEC.
By Tsvetana Paraskova for Oilprice.com 10th June 2021
$100 Oil Is Now A Distinct Possibility
$100 Oil Is Now A Distinct Possibility | OilPrice.com
Although oil may not be headed to a new supercycle, prices still have room to rise from current levels because of a strong demand rebound and expected tightness in supply, some of the world's largest commodity trading groups say.
There is a chance for $100 oil, Jeremy Weir, chief executive officer at commodity trader Trafigura, told the FT Commodities Global Summit on Tuesday.
"You need higher prices to incentivize… and also maybe to build on the cost of carbon in the future as well. You also need to attract capital in the business," Weir told the online debate.
The largest commodity traders are bullish on oil in the near term, too.
Brent Crude traded at over $73.50 a barrel early on Tuesday, but the top executives of the trading houses see further upsides.
"Higher from here" for the next six months, Glencore's Head of Oil Marketing, Alex Sanna, told the same event today. According to Sanna, better news about vaccination programs, inflation bringing in investor cash, and the demand recovery will all contribute to rising oil prices.
Russell Hardy, the chief executive officer of the world's biggest independent oil trader Vitol, also said that $100 per barrel oil is "of course a possibility," but warned the overenthusiastic bulls that "we're in a slightly artificial market at the moment," as the OPEC+ group still has around 5.5 million barrels per day (bpd) to bring back to the market, by April 2022 per current plans.
According to Hardy, diesel demand globally is now back to pre-pandemic levels, gasoline demand will return to pre-crisis levels in the fourth quarter, petrochemical demand is already ahead of 2019 levels, while jet fuel consumption is still a long way behind, as summed up by Financial Times Energy Editor David Sheppard.
Global oil demand will not peak until "around 2030," while a faster decline is to be expected only after 2040, Hardy told the FT summit.
Despite the decisively bullish oil price forecasts, Vitol's CEO doesn't see a new supercycle in oil. "It's a more contained situation than 2008," he said.
By Tsvetana Paraskova 16th June 2021 Oilprice.com
Emerging Economies Face An Impossible Challenge In The Energy Transition
Climate concerns are driving an acceleration in the global transition towards environmentally sustainable energy sources, with significant implications for emerging markets as they seek to keep pace with high demand growth over the long term. In a sign of the growing influence of environmental, social, and governance (ESG) standards on the energy industry, three of the world’s energy majors recently experienced significant developments that could dramatically change the way they do business.
In a landmark ruling, on May 26 a Dutch court ordered Royal Dutch Shell (-5.26%) to reduce its carbon emissions by 45% – as measured against 2019 levels – by 2030.
The lawsuit was filed by seven groups, including environmental organizations Greenpeace and Friends of the Earth Netherlands, on behalf of 17,000 Dutch citizens, and claimed that the company was threatening their human rights by continuing to invest in fossil fuels.
Although Shell, which had previously unveiled a carbon reduction plan, has pledged to appeal the ruling, the decision is nevertheless indicative of the growing pressure on energy majors to improve their climate credentials.
On the same day as the court ruling, shareholders of US energy giant Chevron (-3.77%) voted in favor of a proposal to cut emissions generated by the use of the company’s products, while one day later, on May 27, the hedge fund Engine No.1 was successful in unseating two of Exxon Mobil’s board members as part of a bid to change the company’s efforts towards climate change.
While these latter two developments do not contain concrete steps towards decarbonization, they do highlight investor appetite for more stringent ESG standards and a faster transition to renewable sources.
Indeed, many financial analysts believe that banks will face new capital requirements in the future based on how exposed their loans are to climate change. While regulators have not yet released binding rules, European Central Bank guidelines released in November last year instructed banks to factor in climate risks when assessing capital requirements.
Furthermore, in an example of governmental developments, on May 25 G7 climate and environment ministers agreed to end direct government support for coal power generation by the end of this year and pledged to ban fossil fuel subsidies by 2025.
The path to net-zero:
These efforts to improve sustainability come amid the release of detailed carbon-neutral climate plans for the energy industry, which accounts for around three quarters of global greenhouse gas emissions.
In mid-May, the International Energy Agency (IEA), a Paris-based intergovernmental organization, released the “Net Zero by 2050” report, the first comprehensive energy roadmap detailing how the energy sector can achieve net-zero carbon emissions by 2050.
Featuring 400 milestones to achieve the target, the report calls for an immediate ban on investment in new fossil fuel projects globally, along with the prevention of sales of new internal combustion engine passenger cars from 2035.
To meet demand, it foresees a massive rollout of renewable energy, which, according to the roadmap, would account for almost 90% of electricity generation by 2050. For example, it outlines a 20 fold increase in solar capacity between now and 2050 and an 11 fold expansion for wind power.
While solar would become the single largest source of energy under the plan, fossil fuels would fall from current levels of almost four-fifths of global energy supply to slightly more than one-fifth.
Acknowledging that the roadmap is ambitious, the IEA places a huge responsibility on governments to promote environmentally sustainable technologies and forms of energy to meet the net-zero goal.
“Making net zero emissions a reality hinges on a singular, unwavering focus from all governments – working together with one another, and with businesses, investors and citizens,” the report states. “All stakeholders need to play their part. The wide-ranging measures adopted by governments at all levels in the net-zero pathway help to frame, influence and incentivise the purchase by consumers and investment by businesses.”
Emerging markets’ challenges and opportunities
This push for carbon neutrality and improved environmental sustainability places a unique set of pressures on emerging markets.
For example, the IEA report states that emerging markets will account for the majority of electricity demand over the coming decades as economies industrialize and grow. Perhaps equally as challenging is the fact that many of the world’s large oil and gas producers are emerging markets in the Middle East and Africa.
In an indication that oil producers are adapting to the new demands, in early May Qatar and Saudi Arabia joined Canada, Norway, and the US in establishing the Net-Zero Producers Forum, a body designed to come up with long-term strategies to reach global net-zero emissions.
Saudi Arabia, the world’s largest oil producer, has particularly ambitious plans to become a leader in the energy transition. The country aims to derive 50% of its electricity from renewable sources by 2030, a dramatic increase from 0.05% in 2018.
Towards this end, in April it unveiled the 300-MW Sakaka solar plant, the country’s first utility-scale renewables project, which was followed by the announcement that deals for seven new solar projects – with a combined capacity of 3.7 GW – had been signed.
While the energy transition will undoubtedly require significant economic restructuring from countries that derive large portions of GDP from oil and gas, there are also considerable economic benefits to be gained.
The IEA estimates that while some 5m jobs will be lost globally in the shift away from fossil fuels, some 14m are set to be created as a result of the development of and investment in renewables.
By Oxford Business Group 20th June 2021
Additional Oil Market commentary & Market Data available from the BBC here: Market Data
The Office for National Statistics record the price of heating oil and publish monthly updates on the average delivered cost of a domestic delivery of 1000 litres of kerosene in the UK . The information held by the ONS is freely available online and can be found here: ONS Price of heating oil
Last month’s oil market report can be found here:
Goff Heating Oil Market Price Information for May 2021 - Goff Petroleum