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Energy Market Report, 19 March 2020
On 19 March 2020, we noted in our Energy Market Report that negative crude prices were a strong possibility in the future. In April 2020, Nymex WTI settled in negative territory.
Benigni on Oil Markets, Issue 8 August 2019
In Issue 8 of our Benigni on Oil Markets report (12 August 2019), we argued that forward cracks for gasoline in summer 2020 would surge on the back of lower FCC operations as more LSSR was diverted to the bunker pool. Within two months of the publication the indirect benefit of IMO 2020 on gasoline became a major story!
Benigni on Oil Markets, Issue 8 August 2019
In Issue 8 of our Benigni on Oil Markets report, we argued that the forward mogas vs diesel summer 2020 spread was completely undervalued on account of weakening gasoil/diesel and strengthening mogas in line with our IMO forecasts. Within a matter of weeks of our forecast, mogas began strengthening relative to gasoil over the relevant period.
Benigni on Oil Markets, Issue 8 August 2019
We reported that the forward HSFO crack, at -$18/bbl in the Dec-19 to Feb-20 forward IMO implementation phase was much too high and would crater. A few weeks later the relevant forward HSFO cracks fell to -$30 per barrel.
Russian Refining
Over the course of 2019 we argued that Russian simple refiners would not significantly cut production due to IMO. To date there have been no shut-ins due to IMO.
Bunkers and VLSFO
In a multiclient bunker study published in January 2017 we forecast VLSFO to be the bunker fuel of choice after IMO 2020, while MGO would see only marginal upside. We stuck to this view throughout 2018 and 2019 in stark opposition to the dominant view that MGO would prevail and turned out to be one of the few research and consulting firms to be bang on the money.
JBC Study | 2020 Bunker Regulation: A Refined View published January 2017
Already in 2017 we argued that compliance with the IMO sulphur spec change would not be a big issue come 2020. We are consistently seeing compliance rates greater than 90% in 2020.
JBC Study | 2020 Bunker Regulation: A Refined View published January 2017
Our 2017 Bunker study concluded that scrubber adoption would be widespread enough to keep HSFO in the game as a bunker fuel. Shipowners began placing widespread orders for scrubbers from mid-2018 all the way to the present such that HSFO bunker demand is very much alive.
JBC Energy City Briefing: London IP Week 2019
In February 2019 we argued that US refinery crude intake would be sharply lower y-o-y. At the time this was a gutsy call to make considering that the US shale boom was still in full swing, giving US refiners ample access to cost-advantaged crude. But we recognised that underperforming gasoline and expensive heavy crude would impact US FCC economics considerably. It turned out to be on the money as US crude intake in March and April was down a massive 580,000 b/d y-o-y, basis EIA data.
2018 Market Watch, Issue 11
In late 2018 we were already predicting that 2019 demand growth would fall below 1 million b/d. This became a major story, but only in Q2-2019. We now see annual 2019 oil demand growth at just 680,000 b/d, the lowest level since 2011.
Bottom of the Barrel 2019, Issue 03
Throughout 2019 we repeatedly argued that stakeholders were preparing well in advance for the IMO shift, implying that the changeover would happen smoothly. The changeover did indeed go over quite smoothly and widespread fears regarding VLSFO availability and quality have turned out to have been largely unfounded.
Coronavirus Good Calls
In Issue No.3 of our Benigni on Oil Markets report published on 23 March 2020, we introduced a detailed new base case with Q2-2020 demand forecast at -15 million b/d y-o-y, and suggested that international travel bans would only start to be relaxed in Q3, while pointing out that air travel would lag. Further, we noted that the pandemic would only end in Q2-2021 due to developing herd immunity, and the growing availability of increasingly powerful vaccines and drugs.
The jury is still out on this one, but we still agree with the reasoning set forth in the report, though we did cut our Q2 demand forecast by a further 4 million b/d as new data came in.
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