2024.10.24

Oil Prices Fall 1% on U.S. Crude Stock Build, Market Eyes Middle East Tensions

Oil prices dropped by 1% on Wednesday following a larger-than-expected increase in U.S. crude inventories, despite higher refinery output post-maintenance.

Brent crude settled at $74.96 per barrel, while U.S. West Texas Intermediate closed at $70.77.

The 5.5 million barrel rise in U.S. crude stocks outpaced the expected 270,000-barrel increase.

A strengthening U.S. dollar also weighed on prices. However, concerns over potential oil supply disruptions from the ongoing conflict in the Middle East limited further price declines.

Traders are closely watching developments, particularly Israel's response to the conflict with Hamas and Hezbollah.

[SLOW] Oil Price Monitor

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U.S. Crude Oil Stockpiles Surge Amid Rising Imports and Refinery Output

U.S. crude oil inventories saw a sharp increase of 5.5 million barrels for the week ending October 18, driven by a rise in crude imports, according to the Energy Information Administration (EIA).

This exceeded analysts' expectations of a smaller 270,000-barrel rise. While crude stocks at the Cushing, Oklahoma, hub declined slightly, overall imports surged by 913,000 barrels per day as refineries ramped up production following seasonal maintenance.

Gasoline stocks also unexpectedly grew by 900,000 barrels, while distillate inventories, including diesel and heating oil, saw a modest 1.1 million-barrel drop.

Despite these builds, crude oil and gasoline futures extended losses.

The increase in refinery utilization, now at 89.5% capacity, is expected to continue as refinery complete maintenance.

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[SLOW] EIA Crude Oil Outlook 

Scorpio Tankers Optimistic as Larger Crude Ships Exit Product Trade, Rates Rebound

Scorpio Tankers is bullish on product tanker prospects as 17 large crude carriers (vlccs and suezmaxes) exit the clean product trade, reducing competition and improving rates.

The shift back to crude shipping, driven by increased refinery demand and rate shifts, has eased pressure on product tankers. Rates, which had been affected by crude vessels taking clean cargoes, are now recovering as dirty vessels return to their original markets.

The company also highlights growing tonne-miles due to refinery closures and shifts in global trade flows, along with a significant increase in product tanker demand since the Ukraine war.

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[SLOW] https://slowspace.io/_LR2 Market Mornitor- Ton Mile 

Marathon Prepares to Restart Hydrocracker at Texas Galveston Bay Refinery

Marathon Petroleum is preparing to restart its 60,000 barrel-per-day hydrocracker and 65,000 barrel-per-day reformer at the Galveston Bay Refinery in Texas City

The units were shut down in mid-September for scheduled maintenance, expected to conclude by November 1.

The Galveston Bay Refinery, the largest in the U.S., is currently removing blocks from the supply pipes as part of the restart process. Marathon declined to comment on the refinery’s operations.

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Iino Orders Japan’s First Methanol-Powered VLCC as Tanker Orders Surge

Iino Kaiun Kaisha has ordered Japan’s first dual-fuel methanol VLCC, set to be delivered in 2027 and chartered to Idemitsu Tanker.

Built by Nihon Shipyard, the eco-friendly vessel is part of a strategy to promote decarbonization. The 309,400 dwt tanker can run on methanol and conventional fuel oil, and features a shaft generator for energy efficiency.

This order is part of a broader surge in tanker newbuilds, with 74 vlccs now on order worldwide.

High demand and aging fleets are driving new investments despite rising costs and environmental challenges.

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Shadow Fleet Insurance Network Uncovered in Russia, Cameroon, and Kyrgyzstan

An investigation by Danwatch has revealed a shadow fleet of tankers transporting Russian oil under sanctions, insured by new entrants from Russia, Cameroon, and Kyrgyzstan.

With Western insurers avoiding coverage, Russian companies like Ingosstrakh, alfastrakhovanie, and Sogaz have expanded their roles, alongside Russian National Reinsurance Co.

Estonian authorities found 20-25% of Russian oil tankers are now covered by Russian insurers, while others use insurers from Cameroon and Kyrgyzstan.

The report raises concerns about compensation delays or denial in case of accidents in countries deemed hostile by Russia.