Compiled by the FUELSNews Editorial Team
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Livin’ on the Edge – Are the Capline Pipeline and LOOP About to Enter a New Era?
Two related oil infrastructure projects could provide new opportunities for exports to overseas markets if undertaken. The first of the two projects would be to reverse the Capline Pipeline, originally built to transport oil from the Gulf Coast north to the Midwest refiners. The second would be to remodel the Louisiana Offshore Oil Port (the LOOP), to allow the crude import facility to load directly on ships. Click here to read more about these important infrastructure projects and the market forces that could act as a catalyst for reversing the pipeline and lead the LOOP to enable exports.
Goodbye contango? Oil’s long march toward backwardation: Kemp
The process of rebalancing the oil market has been a slow and stubborn process for leading producers according to the International Energy Agency (IEA) in its most recent monthly report. It has become increasingly more challenging to use trading strategies based on supply and demand fundamentals with the combination of a growing number of computer-driven trading programs and a seemingly trendless market. Analyzing last year’s WTI and Brent futures prices with this year’s prices, they are essentially unchanged and right back where they started. However, rebalancing seems to finally be on the horizon as hedge funds appear somewhat more confidant; although the confidence is not universal. The strengthening of the calendar spreads has exhibited a strong trend. Calendar spreads are related to the balance between supply and demand and are viewed by many traders and researchers as more closely related than spot prices. Backwardation of the market is likely to occur over the next year if calendar spreads continue to shift from large contango close to flat. Click here to read Reuters full article about oil’s march toward backwardation.
Canada’s Oil Industry Doomed If Prices Fall Lower
Canada’s oil industry has faced much strain lately in a $50 market as a list of majors are selling off assets and withdrawing from high-cost oil sands, viewing the market as no longer competitive. The industry has long dealt with a lack of pipeline capacity; however the situation looked to be resolved with the Trans Mountain Expansion pipeline. Unfortunately, the government of British Columbia recently said that they would do all they could to block to project until Kinder Morgan, the project’s owner, “meaningfully” consults with First Nations Communities affected. Click here to read about the future outlook of Canada’s oil industry.
Oil in Holding Pattern as OPEC Meets about Cheating on Output Deal
OPEC is set to hold a meeting with non-OPEC members Monday in Vienna to discuss compliance levels. Compliance with the agreement fell to 75% in July, its lowest level this year. According to the IEA’s latest monthly report, this was due to higher output from Iran, Equatorial Guinea, Gabon, Algeria and the United Arab Emirates. Click here to read Market Watch’s full report.