Exclusive Satellite Surveillance Shows Damage To Oil Facilities In Libya

Exclusive Satellite Surveillance Shows Damage To Oil Facilities In Libya
Etereuti / Pixabay

Global crude Oil inventories Measured a Significant Draw Last Week While Satellite Surveillance Showed Damage to Facilities in Libya

Get The Timeless Reading eBook in PDF

Get the entire 10-part series on Timeless Reading in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues.

Q1 hedge fund letters, conference, scoops etc, Also read Lear Capital: Financial Products You Should Avoid?

Kayrros Commodity Digest, June 25, 2018

Seth Klarman Describes His Approach In Rare Harvard Interview

Seth KlarmanIn a rare interview with Harvard Business School that was published online earlier this month, (it has since been taken down) value investor Seth Klarman spoke at length about his investment process, philosophy and the changes value investors have had to overcome during the past decade. Klarman’s hedge fund, the Boston-based Baupost has one of Read More

  • Kayrros reported a draw in global inventories outside the US last week, while EIA reported a draw in US commercial crude oil inventories.
    • This meant a large draw week-on-week for global crude storage. This comes after a small draw two weeks ago, and the large build from early April to the end of May.
    • Last week's draw validates the change in trend observed by Kayrros the previous week, marking the end of the transitory looseness in the market observed in April and May, partly linked to refinery turnarounds in China as well as globally.
    • All regions except the Carribean showed larger than usual draws.
    • The draw in MENA was driven by Kuwait, the UAE, and Qatar. These draws come after unusual builds in the three countries from May 21 to June 11 that added a large amount to their inventories. The draw in Kuwait is particularly noteworthy as it takes crude inventories in this country out of the usual operational range, and to the lowest level observed since February 2016.
    • Other noteworthy week-on-week draws were in the Netherlands, India, and France.
  • Crude time spreads widened early last week, in line with the move in global inventories. Watching inventories in the coming weeks will be key as a continuation of the large draw observed last week could signal further widening.
    • The Brent 6m vs 1m time spread widened to $2/b last Tuesday from $1.6/b at the end of the previous week. Since then, this spread has narrowed again to a level that represents no change week-on-week, driven by the large flat price moves and the high volatility observed last week ahead of the OPEC meeting on Friday, June 21.
  • Crude inventories in Cushing measured by Kayrros showed a large draw last week, accelerating the rate of draws observed since early May.
    • The WTI-Brent spread narrowed last week, from around $-10/b early in the week to above $-7.5/b on Friday.
    • On Wednesday, June 20 Kayrros reported a draw in Cushing compared to the previous measurement.
    • EIA reported a draw in Cushing this week in line with the last two Kayrros measurements that surrounded the EIA snapshot.
  • Kayrros satellite surveillance provided a live view last week of the disruptions in Libya.
    • On June 18 and 22, Kayrros provided live updates on storage tanks in Ras Lanuf, showing fire spreading to all but four tanks in the tank farm.
    • Kayrros will continue to provide live updates on damage to the facilities in Libya.

Below is a recap of publications by Kayrros for the week ending June 22:

1. Kayrros measured a large global draw in land crude oil inventories between June 11 and June 18.

  • MENA led the global movement. Significant draws were measured in Kuwait (the second consecutive major draw), the UAE, Qatar, and Iraq. On the other hand, inventories in Iran, Egypt, and Saudi Arabia increased on the other hand.
  • France and Rotterdam accounted for the draw in Europe.  
  • India accounted for the bulk of the draw in Asia-Pacific. A draw was also measured in Mexico, driving the draw in North America outside the US.
  • In LATAM, the draw measured in Venezuela was offset by a build in Brazil.

2. 10-day floating inventories drew despite a significant build in China – 30-day global inventories built in the Middle East Gulf and China

  • The 10-day floating inventories decreased between June 11 and June 18, although the decrease was partially offset by a build in China.
  • North West Europe, Venezuela, the Mediterranean Sea, and the Middle East Gulf led the draw.
  • The 30-day floating inventories increased, driven by builds in the Middle East Gulf and China.

3. Kayrros measurements for US crude oil inventories revealed builds in the Gulf Coast and West Texas between June 10 and June 17

  • In the Gulf Coast, inventories in Saint James increased.
  • West Texas inventories also increased marginally, as the build measured in Wink was offset by a draw in Colorado City.

4. Kayrros measured a draw in Cushing crude oil inventories from June 13 - 19.

5. Fighting at Libyan Ports damaged storage facilities, halting exports and production from major fields in the Sirte Basin.

  • Damage to Tanks 2 and 12 at Ras Lanuf, visible on satellite images, resulted in a loss of storage capacity at this key terminal. Storage tanks 5 and 6 were on fire at 11:30 local time on Thursday 21 June, destroying more stored crude oil.
  • Production seems interrupted at the Amal oil field. Facilities on this site are used to store and forward crude oil from neighboring concessions to the Ras Lanuf terminal.
  • The Wahah oil field, which exports its oil through the Es Sider terminal, has been shut down since June 17.
  • The Elephant oil field is still shut down as of last week.

6. After India announced its new clean fuel policy, the demand for kerosene dropped while the demand for LPG increased.

  • The demand for kerosene in India has remained stable since it dropped two years ago after the announcement of a new government policy in May 2016. The policy encourages the use of LPG as a cleaner cooking fuel option by offering free connections in rural areas.
  • The Kayrros forecast shows an increase in LPG demand in Q2 2018.
  • The Kayrros forecast predicts a decrease in kerosene demand in Q1 2019 as compared to a constant increase for LPG demand.
  • Forecasts showed an increase in May and an increase in June for kerosene demand. Kerosene demand is expected to further increase in Q2 2018, while LPG demand should fall in Q2 2018.
  • Kayrros forecasts show an increase in demand for diesel in Q4 2018 in France, Germany, Spain, and the UK.

7. Kayrros estimates that total disruption increased on June 21.

  • Recent fighting at Libyan ports has caused significant oil supply disruptions in the country, leading to additional lost production last week compared to the previous week.
  • Disruptions in Algeria stabilized last week, while all the fields in Iran monitored by Kayrros showed normal activity.
  •  No major disruptions were observed in non-OPEC countries last week. New warnings emerged this week regarding the slow-down of US shale production within the next few months due to the lack of pipeline capacity.

Updated on

No posts to display