|
ANS slips into $60s
Market awaits results of talks between Trump and Putin set for Aug. 15
Steve Sutherlin Petroleum News
After spending most of the summer in the $70s, Alaska North Slope crude joined West Texas Intermediate and Brent in the $60s and spent a trading week there.
On Aug. 12, ANS shed 53 cents to close at $68.29 per barrel, WTI dropped 79 cents to close at $63.17 and Brent shed 51 cents to close at $66.12.
(See chart in the online issue PDF)
Crude futures continued lower Aug. 13, taking WTI down 52 cents to close at $62.65, and taking Brent down 49 cents to close at $65.63. Price action was subdued due to uncertainty of the outcome of Russia/Ukraine peace talks between President Donald Trump and Russian President Vladimir Putin scheduled for Aug. 15 in Alaska.
ING said in an Aug. 14 note that "hopes are high" that the meeting between Putin and Trump "might remove much of the sanction risk hanging over the market."
But there is upside risk for the market if little progress is made, which could spur Trump to extend secondary tariffs on other buyers of Russian energy, ING said.
"The expected oil surplus through the latter part of this year and 2026, combined with OPEC spare capacity, means that the market should be able to manage the impact of secondary tariffs on India," ING said, "But things become more difficult if we see secondary tariffs on other key buyers of Russian crude oil, including China and Turkey."
Such upside risk blunted the bearish effects of a surprise build in U.S. crude inventories.
U.S. commercial crude oil inventories over the week ended Aug. 8 jumped 3 million barrels from the previous week to 426.7 million barrels -- 6% below the five-year average for the time of year, the U.S. Energy Information Administration said in its Aug. 16 petroleum report.
Analysts in a Reuters poll had expected a 275,000-barrel draw.
Total motor gasoline inventories shed 0.8 million barrels on the week to 226.3 million barrels -- average for the time of year, the EIA said. Distillate fuel inventories increased by 0.7 million barrels to 113.7 million barrels -- 15% below the five-year average for the season.
ANS rose 44 cents Aug. 11 to close at $68.82, as WTI rose 8 cents to close at $63.96 and Brent edged 4 cents higher to close at $66.63.
ANS fell 28 cents Aug. 8 to close at $68.38, but WTI was unchanged at $63.88 and Brent gained 16 cents to close at $66.59.
Price action was negative Aug. 7. ANS shed 29 cents to close at $68.58, WTI fell 47 cents to close at $63.88 and Brent fell 46 cents to close at $66.43.
ANS dropped 88 cents Aug. 6 to close at $68.87, while WTI plunged $1.02 to close at $64.21 and Brent dropped 85 cents to close at $66.83.
ANS shed $1.46 over five trading days from its close of $69.75 Aug. 5 to $68.29 Aug. 12.
On Aug. 12, ANS closed at a $5.12 premium over WTI and at a $2.17 premium over Brent.
China, India, Middle East expand refining capacity China, India, and the Middle East are leading growth in global refining capacity, according to Rystad Energy.
Rystad's news is significant for North Slope crude, because Asia competes for Pacific waterborne crude cargos with the West Coast -- where most of ANS is sold. Strong demand in Asia has historically lifted West Coast prices.
"In the last two decades, global primary refining capacity has increased by about 13.5 million barrels per day, or roughly 15%," Rystad said in an Aug. 11 release. "In contrast, the absolute number of refineries peaked in 2011 and has been in steady decline since, driven by aging infrastructure, shrinking profit margins and weakening fuel demand as electrification advances."
China has almost doubled its refining capacity over the period, jumping from 10.6 million bpd in 2005 to 18.8 million bpd in 2025 to meet rising domestic demand, improve energy security and position the country as a key exporter of refined products, Rystad said. India's refining capacity jumped from 2.9 million bpd in 2005 to 5.2 million bpd today. supported by similar drivers.
Middle Eastern refiners have boosted refining capacity from some 8 million bpd in 2005 to 13 million bpd now, with major additions in Saudi Arabia and the UAE, Rystad added.
"The Middle East and Asia are driving global refining growth by focusing on large, integrated mega-refineries that secure energy supplies and meet rapidly rising demand," said Arne Skjaeveland, Rystad vice president, oil and gas research, energy. "In contrast, Europe and the U.S. are retreating, with older, less efficient plants closing due to high costs and uncertainty over future fuel needs."
| 