Η ανάλυση του ΙΕΑ Μαρτιος 2016 (still in progress) έχει πραγματικό ενδιαφέρον σε σχέση με τα περι έλλειψης μαζούτ. Είναι σημαντική η παγκόσμια πτώση στη ζήτηση Fuel Oil (συνολικά χαμηλού-ψηλού θείου κλπ) όπως και σε ετήσια βάση στην Ευρώπη (0,92 from’14 to 0,87 mbd ‘15) και πραγματικά δύσκολο να κατανοήσει κανείς που υπάρχει έλλειψη όταν παράλληλα με την πτώση ζήτησης υπάρχει και υπερπροσφορά που οδηγεί στο κλείσιμο διυλιστηρίων λόγω overcapacity (πολλά μάλιστα δεν έχουν μεταστραφεί στα λευκά και ακόμα παράγουν μαζούτ). Επίσης αυτό το 40% στην πτώση των τιμών του fuel oil χαμηλού θείου στην Ευρώπη (τελευταίος πίνακας) γιατί δεν την είδαμε στην Ελλάδα? Συγκεκριμένα βαση πρόσφατης μελέτης του ΕΙΑ (on going):
Current low prices in global diesel markets can be attributed to slow demand growth, high inventories as a result of reduced winter heating demand in the United States and Europe, and from new or expanded refinery capacity in theMiddle East designed to maximize diesel production. Particularly relevant to the Asia-Pacific market is the emergence of China as a growing net exporter of diesel. China was a key driver of diesel demand growth over the past several decades but is now a net diesel exporter, contributing to the growing oversupply in global diesel markets.
The stellar year of 2015, when European refiners contributed a third of the global throughput increase, has not swayed many observers from the view that in the long-run, European refining will be pulled down by strong gravitational forces of structural demand decline and competition from refiners in other regions. In March this year the CEO of Spanish refiner CEPSA proposed at a public forum that the EU should follow the example of Japan’s Ministry of Economy, Trade and Industry, and set specific targets for refinery closures. There will be refinery shutdowns, either in a planned manner, or, more spontaneously. His idea was that it would be easier if the closures were specifically mandated. The EU in response distanced its institutions from mandating or coordinating refining industry reorganisation, so it will be up to the invisible hand of the market to conduct the process.
A recent paper by the Dutch think-tank Clingendael International Energy Programme attempted to identify refineries in North-West Europe that have a more assured future versus refineries that are the most likely candidates to close. The authors analysed all refineries located in the five principal countries of the NWE trading hub: Netherlands, Belgium, Germany, France and the UK. If a refinery did not fall into one of the four ‘must-run’ categories (captive demand, petrochemical integration, downstream integration and surplus coking capacity), it was identified as exposed. Of the 34 refineries, only 12 qualified for the ‘must-run’ status. Thus, the paper concludes that half of the close to 7 mb/d of capacity in the region is a candidate for restructuring in the long term. The differences by country are even more striking. Germany’s refining sector is the most protected, with only a third of the capacity in the danger zone, while all of France’s and all but one UK refinery are exposed. The authors also considered the barriers to exit, such as the refinery site’s environmental clean-up costs or political intervention driven by public protests at job losses. This would add back nine refineries, with a total of 1.5 mb/d capacity, to the must-run list, reducing the hypothesised NWE capacity closures to about 35% of current capacity.
In the business of refinery closures, the first mover is at a disadvantage. Margins, even if temporarily, tend to improve, but it is the companies that did not part with their unwanted capacity that benefit most. This variation of the prisoners dilemma adds further complication to refinery industry rationalisation in the free markets.
As denoted in the previous post there seems no important impact on price of oil evenwith the contingency clause of Iran participation. The freeze takes back oil production at peak January levels and this decision hits the ball in the Iranian field by giving the role of regulator while his market come back is in its infancy (already shipping in Europe & started in Greece).
The market didn’t reacted upwards and most people claim the contingency clause (regarding to other producers participation in the scheme).
As Market Efficiency hypothesis imply that the current price is the best forecast, thus I believe that there will be no significant change in the market. As you can see in the graph below at the end only volatility increased and price fluctuates within the risk bandwidth:
Oil market volatility closed in January up to 70% the highest since 2009.
If you take also into account, from the Market Dynamics point of view, that the current high inventory level is an important determinant, than you understand the significant time lag needed for a stop in oil accumulation and inventory absorption before any price “correction” (consider also that inventory cannot depleted at current low price levels).
Moreover, the forward curve structure also remains in contango with the same basis risk which further indicates the importance of inventories:
Thus from fundamentals and technical analysis point of view there seems no significant impact on the short term (Russian companies can remain in positive FcF territory even for prices ~30$is very significant as well as taxes (Russia needs higher prices to breakeven loss in budget revenues), but its more of a game story since US exports compete for market share and sustained low price strategy of OPEC seem to have results since Moody’s already downgraded many companies (175 on watch). For Europe a price increase in Oil will be of benefit in terms of Monetary policy and regarding deflationary pressures:
On the Long Term many companies are already distressed and started to be in divestment territory definitely there will be a return to its LT average thus a price increase to levels higher than the 40$/bbl.
Energy Ministers decided to freeze production at January levels in order to control the oversupply, an attempt to control-stabilize the price. Remains to see whether this movement will break even with Iran supply policy or change the current trend. The effect on the market currently is an increased volatility and not a trend change on price.