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MARKET TREND ANALYSIS

Weekly Energy Market Updates by Region - Archive

 

 

 


Issue week: December 12th, 2019  (Wk 50)

 

POWER MARKETS

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WEST Over the past seven days, the index markets have been rela-tively soft; SP15 and Mid-C have averaged $39.55/MWh and $32.20/MWh, respectively. The mild temperatures and return of the key DC transmission line and Diablo Canyon nuclear unit have reduced the need for older natural gas generators, which had raised marginal costs.

ERCOT   Term heat rates are flat to down a bit out the curve, low-ering forward prices. As the moderate temperatures have reduced even peak demand, ORDC has become relatively nonexistent for the month. The only strength in real-time prices continues to be West Load Zone basis, which is averaging just over $19.00/MWh for the month.

EAST  Changes in weather forecasts and gas prices continue to be the main influence on term prices. Amid projections of a warmer-than-expected December in the Northeast, winter prices have so far avoid-ed the typical spikes. Average Day Ahead prices in Mass Hub are $6/MWh lower than last week; Hudson Valley has remained fairly stable.

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IS THE U.S. A NET OIL EXPORTER?

Many news outlets have recently called the United States a “net oil exporter” for the first full month in its history. Although some might happily proclaim the ultimate energy independence, the details of this claim are nuanced.
When considering both unrefined crude oil and finished petroleum products together, the U.S. has indeed been a net exporter for five of the past nine weeks. However when looking specifically at unrefined crude oil, the input to oil refineries, the U.S. still imports between 2.7 and 3.7 million barrels per day (mBPD). Domestic refineries collectively process approximately 16.5 mBPD with 12.5 mBPD coming from domestic production (as shown in the chart above).

 

 

Regional logistics create even more variation in the oil trade balance, refineries across the United States are sourcing their oil from 48 countries in total. As one example, the California Energy Commission reports that foreign imports made up more than 57% of oil used in California refineries during 2018 with Saudi Arabia comprising the largest foreign source.

Despite substantial importation of crude by U.S. refineries, refined products are providing the counterbalance in international trade. Product exports have skyrocketed over the past 15 years from a steady 1.5 mBPD in 2005 to 8.8 mBPD in 2019. These products depart U.S. soil for 140 different countries and our neighbors Mexico and Canada are, unsurprisingly, the largest destination.

Further blurring the line between imports and exports from a national viewpoint is the extent of foreign investment in the U.S. oil industry, for example Saudi Arabia owns the largest oil refinery in the U.S. at Port Arthur, Texas.

Although it’s true that the United States has recently been a net exporter of petroleum, the details are extremely complex. It’s likely the US will remain a net importer of unprocessed crude oil for the foreseeable future, but with some luck product exports will continue to benefit the balance of trade. One thing is for certain, with petroleum produced in many places and used in many more, the global logistics of “oil” will continue to intertwine most countries across the planet.

 

 

 

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