Energy Market Update

November 20, 2019
The energy markets continue to be range bound, even with news of the talks with China going well, it just cannot break out either way, up or down.  As we get closer to the end of the year, history will tell us there should be an opportunity to lock in some attractive values for next growing.  Will there be that opportunity this year? 

I believe there will be, however, we may not see as good of values as we did last year.  While Crude Oil and Gasoline stocks continue to be at or above 5-year averages, Diesel stocks are not.  The US diesel inventories are significantly below 5-year averages and lower than last year. 

The energy industry also has IMO 2020 taking effect January 1, 2020.  What is IMO 2020? The International Maritime Organization (IMO) has ruled that from January 1, 2020, marine sector emissions in international waters be slashed. The marine sector will have to reduce Sulphur emissions by over 80% by switching to lower Sulphur fuels. IMO 2020 will require all marine fuel used by shipping vessels to start using Ultra Low Sulfur Diesel, prior to this they could use fuel containing higher levels of sulfur.  Why is this significant?

Shipping vessels use approximately 5 million barrels per day and moving to a .5% sulfur from 3.5% sulfur creates a significant challenge to supply this need.  Propane stocks continue to be at record levels nationwide but getting where it needs to be had been the challenge this fall.  While we have seen prices jump some this harvest, I do expect it to soften as harvest wraps up.  We need to see cold weather and a robust export market before I see prices gaining anymore strength. 

If you have any questions or would like information about our contracting programs, please contact anyone on the Energy Team.
by Jeff Ingalls, SVP of Energy 
Posted: 11/20/2019 8:48:20 PM by Mallory Shoemaker | with 0 comments


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