[ihc-hide-content ihc_mb_type="show" ihc_mb_who="10,13,14,16,18,19" ihc_mb_template="1"] By Mark Rossano Summary U.S. Activity UpdateUS Spot and Realized PricesOPEC+ Production/ Exports Shifting Higher, but Jan Increase Called into QuestionChina’s New Import QuotasOil Demand Will Struggle Through Year-End U.S. Activity Update U.S. activity remains robust given the uncertainty in the market and growing levels of floating barrels in the market. Our expectation at the start of Oct was to see some additions throughout the month, but not closing out the month at 127 spreads. The view was that we would average about 109 and maybe get a quick spike to 113 but average something below 110 on a 4-week rolling average. Instead, we are closing out the month with a rolling average of about 127 driven by growth in the Permian, Western Gulf, TX-LA-Salt, and Williston. We expected to see additions increase in November as well, but with the increase in Oct- some of the activity we believed coming in Nov was pulled forward on the oil front. Historically, Appalachia sees a decline in activity as we head into the colder months where it is more expensive to complete wells in the Northeast and natural gas storage is at its peak. The below charts help to drive home the key points: The Marcellus completion activity going back to 2013 shows the varying degrees of seasonality that impact drilling. We have seen activity peak sometimes in June/ July and shift lower through Nov where activity normally flatlines. We have switched the setup to factor in all of Appalachia, but the trend still holds firm with a peak at 19 middle of June and a drift lower as we head into Nov. Appalachia has been one of the only bright spots of activity and is following a similar path.Storage typically peaks anytime between end of Oct and middle of Nov, which prohibits realized prices and places to put product. The completions can be carried out and shut-in to be released at optimal times throughout the winter to capture the spot market and advantaged pricing in storage. Natural gas is a very seasonal play, which has remained true even in the time of COVID. Appalachia and Haynesville were also able to capture some benefits as associated gas fell and even with LNG cargoes falling as COVID forced some individuals to pay and not take, deferrals, and limited (if any) spot cargo sales. The Haynesville will see activity remain stable as Appalachia trends closer to 10 spreads over the month of November. As we look forward, the Williston will shift down to about 7-10 spreads through November, while we see an increase in activity across Texas and the Permian in general. We expected another 3-6 spreads to be added through month end, and we came in at the top end of our range with another 5 and closing out the month with a rolling 4-week average of 54. The Permian is slated to see more activity increase over the next month with another 5-7 spreads added over the next 2 weeks. We will see activity pick up and could see as many as 10 spreads added to the area over the rest of November. Historically, spreads in the Permian see additions from about Oct 15 until Nov 15, and after Nov 15th work slows down for Thanksgiving and remains depressed through Christmas/New Years. We are clearly in a very unique time- so we may not see the same type of drop off- because in 2016/2019 we bucked the trend a bit with 2019 not seeing a real reduction in activity until about Dec 13th. We have a mixture of inputs at work with U.S. crude spreads struggling to incentivize exports, storage rising in Cushing, but E&Ps guiding to flat Q4 oil production and stable growth through 2021. In order to stem the declines, we will need to see activity accelerate in the oil basins to average closer to 150-160 spreads to keep production stable at our expected exit rate of 10.5-10.7M barrels a day. The Eagle Ford will see some growth of about 2-3 spreads over the next 2 weeks as work increases to stem decline curves in the region. In total, the Permian and Eagle Ford will be the biggest drivers getting the national spread count back above 130 spreads. As we have been discussing, the national spread count would increase in some weeks driven by one off activity in fringe areas, which we saw in Arkoma and Ardmore. Denver and Forth Worth also saw a small increase in activity but will remain muted and start to roll off as prices come under pressure and decline curves are managed. Texas and New Mexico will be the key focal points as North Dakota and Pennsylvania see reductions. Even with the increases in key basins, the total national frac spread number will remain between 130-137 over the next few weeks as some activity drops off and offsets some of the bigger bumps in activity. US Oil & Gas Exploration & Drilling Frac Spread Count Marcellus U.S. Natural Gas Storage Levels Natural Gas Flows into LNG US Spot and Realized Prices As we have been discussing, spot prices remain problematic in the U.S. with the current differentials between LLS- Brent at $.51 and MEH- Brent at $1.26. These prices are not conducive to see flows into Europe especially as Norway/ North Sea has an increase in loadings and rising floating storage. This is on top of the increase in lockdowns and curfews resulting in economic run cuts across the board- and more Libya crude!!!!!!!! Yay oversupply. The U.S. has been able to maintain some growth as barrels flowed into Asia (mainly South Korea and China), but given the current spreads in the U.S. there have been limited new purchases of crude over the next 3 months. Later on, in the report, we discuss the OSPs (official selling prices) coming out of Saudi and Nigeria specifically that will keep U.S. crude trapped within the US. While our refinery runs remain depressed, getting back to about 80% utilization rates by month end, limited exports, and stable production- builds will accelerate- especially in Cushing and PADD 3 (Gulf of Mexico). We were expected to see LLS-Brent widen out to about $1-$1.50, but instead it has held to sub a dollar, and given the current dynamics in the market- the spread will remain sub $1 unless we get a big shift lower in Cushing. Based on the current bids in the market, it is unlikely that we will get a large shift in the front month to put more exports in play. The crude curve has shifted down as we look below comparing it to Oct and Aug, but we will need to see a steeper decline in the front months to push more crude into the export market. The current pricing backdrop does support onshore storage with offshore storage still expensive. “Storing crude at sea has become profitable again for short-term contracts in some areas as tanker rates remain low amid a widened oil futures contango, shipbroker and exchange data compiled by Bloomberg show.” “In northwest Europe/Mediterranean, the storage cost for 3 months was at $1.06/bbl, compared with contango of $1.31/bbl for Brent, according to Bloomberg estimates from E.A. Gibson Shipbrokers data; that would make floating storage profitable It’s unprofitable for 6 and 12 months;The storage cost for 6 months was at $2.39/bbl, compared with contango of $2.25/bbl12-month storage cost was at $4.68/bbl, compared with $2.70/bbl of contango” The current backdrop in the U.S. makes it profitable to put it in commercial storage onshore for a period of time, but offshore floating remains expensive and not economic. U.S. crude builds will rise in key areas- specifically Cushing and PADD 3 (along the Gulf Coast). Canadian imports will remain strong as well with more entering both PADD 2 and 3 with exports mounting into the Gulf of Mexico. The builds have been gradual and steady off the low in June as shut-ins reverse and activity in the U.S. moved higher. DOE Crude Oil Storage at Cushing WTI Cushing Curve The draws in PADD 3 haven’t been enough to get storage back within the top of the 30-year range as refinery utilization rates remain at seasonally adjusted all time lows. The below chart highlights how there hasn’t been much headway made with reducing the storage levels in PADD 3 even though we have had 4 hurricanes (with a potential for a 5th) reducing total production by 35M barrels. With onshore production remaining stable, Gulf of Mexico production getting back to normal, pricing prohibitive to exports, KSA OSP Price cuts, and additional refinery shut-downs- we will see builds start to move higher instead of heading lower. The below chart helps to highlight just how aggressive the Hurricane season has been for PADD 3 with the impacts from the storm. We had another announcement today with Shell shuttering the Convent refiner as they ramp down operations totaling about 210k barrels a day. This will put more GoM and floating crude into storage as another refiner reduces/ shutters operations do to the low demand environment. DOE Percent Utilization Refinery Operable Capacity Data OPEC+ Production/ Exports Shifting Higher, but Jan Increase Called into Question By OPEC+ trying to support pricing, they are also hurting downstream demand because of failing margin. A rising issue in the market- especially at Emerging Markets and struggling OPEC nations- is the need for US dollars to help secure balance sheets and currencies. Central Banks became net sellers of gold for the first time in almost 10 years as action was taken to secure local currencies. The need for USD is a key aspect why countries have continued to cheat and find ways to put more volume into the market because they haven’t been able to get price. The problems will keep mounting as COVID cases increase and pressure to stimulate local economies puts more stress on local currencies and central banks. We have already seen inflation rising, subsidies rolled back, and additional changes to the way governments/countries are interacting on a geopolitical front… more on that in next week’s report. Our expectation is for a slow grind back up to about 80% utilization rates over the next 4 weeks as refiners start to normalize some operations as heating demand picks up for the winter. If we look at the 30 year average, utilization rates start to shift higher from about Oct 7th and peak right around the first week of Dec where they remain stable through most of Jan. Rates will follow a seasonal trend higher, but it will clearly be depressed across the board. The total amount of crude that this equates to is described just below- The U.S. is processing about 2.2M barrels less vs last year and 2.36M barrels a day. Based on the recent news, PADD 3 will see another shift lower over the coming few weeks with about 200k barrels coming out of the market. The lack of demand in our market won’t turn around and send more into the international markets as pricing is prohibitive. The below chart helps to highlight how we will still outpace 2018, and track some increases over the next 2 weeks as exports catch up following hurricane Zeta, but we won’t have a similar surge that we got in 2019. There is mounting pressure on OPEC+ to adjust their expected increase of supply by 2M barrels a day in Jan 2021. It is unlikely (if not impossible) for them to increase 2M let alone 1M barrels a day. We initially expected Libya to reach 350k barrels a day by the end of Oct and 750k a day in Q1’2021. Instead, Libya is now pumping 850k barrels a day with the ability to reach 1M a day within the next 2 weeks. The National Oil Company (NOC) has targeted an exit of about 1.2M barrels a day, which wasn’t initially expected when the OPEC+ deal was struck. The Gulf Cooperation Council (GCC) were providing support to General Haftar and financing the blockade, weapons, equipment, mercenaries, and other means of keeping the divide going and crude off the water. As the price of oil fell and Haftar was defeated at Sirte, a stalemate ensued with support from Turkey. We have been highlighting the backdrops in Libya with a laser focus on the outcomes of Sirte as the failure of Haftar to advance and the drop in crude prices was going to signal a much broader shift in strategy for proxy battles. As balance sheets have become more stressed within Russia, UAE, and Saudi Arabia, it became important to adjust proxy battles and tighten subsidies and payments. Libya has now restarted the last of its major oil fields following a ceasefire in its civil war as the last force majeure on export was lifted from El Feel. The move will bolster the Tripoli-based National Oil Corp.’s attempt to boost Libyan production to 1 million b/d within a month. The ramp in production always starts gradual in order to test the system- normally starting with 10k-40k barrels a day, but once everything is tested and operating normal- production can ramp back quickly. The below chart helps to drive home that Libya production is outpacing many expectations (including my own) in the market. While we have Libya increasing production to 1M, two of their largest clients are cutting refinery runs- Spain and Italy. “ Italy's Sarroch refinery said it would operate at minimal levels in October and November to offset the effects of a drop in refining margins over the past few past months as part of a wider cost-cutting program it was introducing, a statement released Oct. 12 by plant owner Saras said.” “Spain's La Rabida will keep two units at the refinery -- fuel unit 1 and vacuum unit 2 -- offline once they conclude their current maintenance in order to adapt to the current weak demand for refined products, it said Oct. 8. Cepsa told S&P Global Platts Sept. 30 that it was carrying out maintenance on one of the two crude distillation units at the site, without saying when it would return or whether other units were affected.”[1] Libya is expecting to export at least 805k barrels a day in November, which excludes Es Sider and compares to Oct exports of 559k which included Es Sider (just timing delays on released information.) This will keep pressure on spreads throughout Europe as Urals have already seen consistent declines over the last week in pricing. Libya’s largest buyers Italy, Spain, and China have all seen run cuts so the total crude demand is falling at the same time as new supply is coming to market. The growth of Libyan oil will also displace Nigeria, Russia, U.S., Iraq, and some KSA flow from Europe. This is already happening with Urals starting to trade lower and Nigeria crude seeing an increase in deferrals and a rise in storage. The below chart covers West Africa, but Angola has been able to move more cargoes over the last few weeks with China remaining fairly active in the market. So the below builds are mounting more from Nigeria as Angola moves cargoes into the Chinese, while we see an increase in loadings. Nigeria has had some shipments slip out of Nov and into Dec, which will move Dec loadings over 1.6M a day as we see more flow also coming from Europe and storage rising. “Nigeria plans to increase exports of Brass crude to 119k b/d in December -- the highest since May -- from a revised 77k b/d in November, according to loading schedules seen by Bloomberg.” Nigeria has cut OSPs in NOV in order to move more cargoes as pressure builds across the complex- especially their key customers: “Nigeria sets November official selling price for Qua Iboe crude at a 66c/bbl discount to Dated Brent That’s the weakest since June; compares with -56c/bbl for OctoberBonny Light OSP cut to -63c/bbl, also the weakest since June, vs-37c/bbl in October” The growth in West African Storage is happening not only as Italy and Spain cut runs and Libya ramps up, but while Norway and the North Sea also see an increase in activity. Loading schedules are back to 2012 levels with several fields still to come online-Johan Sverdrup Phase 2/ Johan Castberg/ and Njord Future. These last 3 fields could bring the total production to 4.8M barrels a day. “In addition to the 83 current deposits -- and 12 projects under development -- Sandoy expects producers to submit development plans for “several smaller fields with tie back potential” by the end of 2022. “As these are small developments, several may start producing by the end of 2024.” Norway pumped 4.56 million barrels of oil equivalent a day in 2004, the most of any year so far. European crude storage levels have shifted higher, which has displaced some of the new crude from Libya- pushed more Nigerian back into the market and sent additional North Seas/ Norwegian crudes into Asia. Crude storage has risen onshore while floating storage shifts higher with more cargoes being deferred and left in storage. “Two North Sea Ekofisk cargoes and one Oseberg were deferred to early December from late November, according to people with knowledge of matter. Only half of the 10 supertankers with October-loading North Sea crude are heading east, while the rest are still floating off the European coast.” The rise in loadings and decline in demand in Europe has pushed KSA to cut prices on their crude into Asia and the U.S. Saudi Aramco increased prices into Europe, which is fine as demand into that region was already dropping with loadings rising and storage of crude increasing. Pricing into Asia and the U.S. against previous spreads remain at 10-year lows in some key grades for Dec. The pressure in pricing has increased across the globe as KSA attempts to avoid additional storage in the Middle East by not raising prices in Dec as per usual. While the cut is welcome, it is still relatively flat vs the previous month and will do little to pull additional barrels into the market. A big test will be how Nigeria responds with their Dec pricing as deferrals from Nov mount and new barrels from Libya complicate the European markets. Middle East Extra Light Crude Saudi Arabia to US vs ASCI Spread Middle East Extra Light Crude Saudi to Asia OSP Spread vs Average Oman/Dubai FOB The below chart breaks down the North Sea and European storage levels that are set to climb with increased flow from Norway and lockdowns expanding throughout Europe. Greece is the newest to join the ranks of lockdown participants with U.K’s going into effect today. This will also impact more than just oil as we see flows dropping of refined products as well from the Middle East. Asia and the Middle East have seen steady flow over the last few months of refined product into Europe, but with renewed lockdowns, slowing economies, and floating storage of products rising- we are seeing big drop in flow. “European imports of oil products from the Middle East are expected to fall this month from the 2 1/2-year high recorded in October.” The drop isn’t only impacting imports from the ME and Asia, but we will also see a decline of imports coming from the U.S. as well. “At least 9 tankers hauling about 326k tons, mostly middle distillates, are expected to arrive in Europe from the Americas this month- compares with 26 tankers that arrived with 1.03m tons in October.” The pressure in the market is mounting with builds in products in key areas rising- the builds were driven by light distillates that have increased well ahead of seasonal norms. Even with a small decline in Middle Distillates- total storage remains at record levels and given renewed slowdowns in demand- builds will keep trending higher in Singapore. International Enterprise Singapore Oil Products Singapore Stock Data There have been some reductions in storage around the world as refiners carried out some recracking and other strategies to limit storage levels and losses. There have been additional run cuts across the U.S. and Europe, but some of the reductions are pushing up against minimums needed to maintain operation. This just means that refiners can’t reduce runs any further without shutting down completely. Shell just announced shutting down Convent Refinery in Louisiana that processes about 211k barrels a day. “In Louisiana, Shell will retain its refinery and chemical sites in Norco and Geismer, its midstream infrastructure assets, branded retail presence, Gulf of Mexico operations and offices in New Orleans- Shell said in September that it would retain six refinery and chemical site combinations, including Norco and Deer Park in Texas, Rhineland in Germany, Pernis in the Netherlands, Pulau Bukom in Singapore and Scotford in Canada Shell currently has 14 sitesConvent employs approximately 675 people, according to Shell The reduction in runs and recracking have helped to normalize some builds in distillates- specifically middle distillate. The below gives a backdrop of total distillate inventories in the area, but it only provides a piece of the whole story. Middle Distillates are at record highs and given the current backdrop in the market (especially Europe and Singapore storage)- it will trend higher over the coming weeks. As refinery runs continue to shift lower and crude loadings start to edge higher across the globe, we will see crude increase not only in storage but also in transit. Based on the seasonality chart below, we can see that there is normally a rise in total volumes throughout Oct into Nov. By looking at the 5 year average, we can see the trend shifts higher from middle of Sept and increases into year end. The difference has been the loss of demand driven by COVID19 limiting total flows and the OPEC+ cuts that have taken about 8M barrels a day out of the market. The fact there remains this much crude on the water is driven by the elevated offshore storage that is about 102% above last year. Crude Oil on the Water The below chart provides a backdrop of crude in transit and crude in floating storage- we are starting to see more barrels in transit as loading schedules pick up in several oil producing regions. While oil in transit ramps, we are still facing an increase in total crude in storage that fell week over week but remain well above seasonal norms-specifically in Asia. Total is up 102% year over yearTotal is down 7.7% from 146.37m bbl on Oct. 23Asia Pacific down 3.9% w/w to 103.73m bbl; lowest since JuneEurope down 21% w/w to 8.00m bblMiddle East down 15% w/w to 7.48m bblWest Africa down 6.6% w/w to 5.51m bblNorth Sea down 8.6% w/w to 4.64m bblU.S. Gulf Coast up 4.7% w/w to 826.00k bbl The below chart also shows the growth year over year in floating storage on a global level. We expect to see more volumes appearing in the North Sea and Europe over the coming weeks, while Asia builds remain firm with speculative purchases showing up in China. Import quotas were increased for China in 2021, but it is more for the ramp of 3 facilities and not to enable for an increase in runs in current facilities. China’s Ministry of Commerce (MOFCOM) has said they are leaving open the chance to increase import allotments to some facilities if they are needed as the year progresses and COVID demand losses start to alleviate. China’s New Import Quotas China has officially increased the import quote for 2021: “China, the world’s top crude oil importer, will raise its non-state crude oil import quota for 2021 by 20% on-year to 243 million tonnes, the country’s commerce ministry said on Monday.” The increase works out to about 823k barrels a day, which is being setup to run directly into the new facilities. “Refinery sources said the incremental volume of 41 million mt should cover the feedstock requirements for the new 20 million mt/year phase 2 project of the Zhejiang Petroleum & Chemical in Zhejiang province, as well as the need of the new 16 million mt/year Shenghong Petrochemical in Jiangsu province, both in eastern China.” The alotments will stay the same for most with MOFCOM increasing for the state owned assets, and smaller increase for the independent refiners. Ahead of the increase in allocations, speculative buyers were purchasing crude in expectation of an increase. The problem remains onshore storage is already full, and the new shipments showing up will be stuck off the coast for an extended period. Angola has been able to maintain normal flows into the Chinese market, but Nigeria is the one that has struggled to find a buyer with Nov OSPs being cut to push more crude into the market. Iraq pushed October flows higher again to 3.87M barrels a day, which is well past the allotment awarded under the OPEC+ deal as the country not only fails to “make-up” for previous cheating but increases their production/exports. We have discussed the last few weeks how they officially increased production by 250k barrels with exports rising by about 222k barrels a day. The total OPEC increase was estimated to be about 470k barrels a day. Russia continues to produce over their target, with the recent cheating measured at about 200k barrels a day. Based on the below chart, Libya will account for another 400k barrels in Nov- so as we progress throughout the month we can expect to see another increase of a similar quantity. The problem is- the increases are happening as Europe goes inton lockdown and U.S. cases surge to new highs. Oil Demand Will Struggle Through Year-End Oil demand will remain under pressure as economic data suggests a long drawn out painful recovery that will have many adjustments over the long term. Will business travel go right back to previous levels? Will families have the spare cash to go on trips requiring air travel? What does a blended work schedule mean for gasoline demand and urban settings? Does the suburban growth really drive a large pick-up in gasoline demand? Does ordering online and ecommerce remain elevated and limit the travel into stores? We have attempted to answer each of those questions in different ways, and our resounding view is that many of these changes in the market today are permanent. They will not be as severe as they are today, but real changes are occurring with the way business and general travel is conducted. Many companies are trying to project their adherence to the “green” revolution and showing a reduction of their carbon footprints- with the easiest being eliminating or slashing corporate travel. These shifts in travel were already starting to roll out, but COVID forced many people to adopt quickly to video conference calls- while face time can’t be replaced- we are finding the effectiveness of online meetings. This is leading to a limit on future travel, which also cuts hotel occupancy and the need for car rentals. Each of these pieces reduces general overhead and costs for the business, while also cutting their carbon footprint- or at least they can claim. As we go through in our Econ show and cover again in this week’s show- the cost of employment is dropping as people are accepting lower wages for jobs. This is on top of the drop-in hours worked and unemployment numbers hovering over 21M people as the participation rate falls to the lowest level since 1971. Consumers are losing discretionary income and given the pressure in the market- it is unlikely to see a near to medium term rise in income especially as inflation rises across key costs of living. This will limit general air travel, and vacations as spending is reigned in for an extended period of time. The rise in cases has corresponded with a reduction in consumer activity as behaviors adjust to limit exposure to areas seeing increases. Tests have shifted higher allowing for much better tracking and diagnosis, which will also help bring cases higher. The bigger issue is the hospitalizations and daily death count that has to be tracked closely for signals of stressed infrastructure. Lockdowns and curfews are typically tied closely to hospitalizations vs case counts- but we have seen some states/cities trying to get out ahead of the rising case counts as the U.S. sets a new record. There is typically a lag of about 10-14 days between cases and hospitalizations so we will be watching any increases closely because it will spark a government mandated response. The case increases have driven people to adjust spending/ travel/ and general patterns in order to limit total exposures. The impacts are already being felt across the gasoline demand stream, mobility data, high frequency inputs, and economic activity. The recent election and warmer weather will provide a boost for this week in gasoline demand, but it will reverse next week as cases rise and colder weather returns. We have been highlighting the slowdown in global trade that has been cropping up as lockdowns intensify in Europe and inventories normalize around the world. China has picked up a significant amount of new flow based on reports that eight of their major ports saw throughput rise 11.9% year over year in Oct. The problem is their largest trade partners are struggling over rising cases and slow down in imports. U.S. imports on a rolling 4-week average remain well below normal, while our trade deficit “improved” as imports into the U.S. slowed. As we have covered in the econ show and other reports, trade has slowed in key areas including- Germany and Japan- while South Korea slowed after having a bump. Taiwan/Singapore remain a bright spot on the global front, but those growths are smaller and specific to shifting supply chains. This is another area that begs the question- because the gains in these two areas are driven by diversification away from China- but China claims to see record growth on a year over year basis. Some of the growth is real- as we can see textiles and other goods flowing but not to the levels portrayed. U.S. September wholesale inventories rose by .4% vs the expected -.1% as inventories are restocked and demand slows. The overarching fact remains cases are on the rise across key developed nations and it is impacting economic activity in a big way. Most of the countries below have all experienced increases in cases while also seeing a reduction in total activity. The below only carries us through Nov 3, which means the UK will be worse as the lockdown went into effect on the 4th. France has been in full lockdown the longest, and helps to highlight how quickly the impacts can be seen in the underlying data. Mobility and general economic activity is impacted almost immediately, which will result in GDP headwinds throughout not only Q4’2020 but well into 2021. Driving activity across most of the G20 has taken a hit with reductions realized across the board as case counts rise and general movements abate. Pressure will mount across key European regions as lockdowns intensify and other take effect on Nov 4th. The pressure will mount on gasoline demand, which will push more product into storage and keep refinery runs inherently capped. There have been some slowdowns in economic activity- specifically India and Russia. Russia has seen a steady increase of COVID cases while econ activity slows down throughout the region. India had a nice increase of activity following the start of the festival season, but it as slowed down now that the first increase has passed things are normalizing at reduced rates vs expectations. The market was expecting a steady rise of activity, but after a small bump- India has leveled off and start to slow a bit now that everyone has traveled to their locations. Some bright spots have been Caspian Blend crude showing some signs of life as demand in Asia picks up, but many of these flows will be fleeting. As we discussed earlier in the report, China released new import quotas, but the increases are around the new activity of facilities- which begs the question on the expected utilization rates in the region. We expect to see utilization rates remain low across the state-owned enterprises while teapots start to roll back runs into year end. We are going to do a whole separate report on the China as we collect more data from the recent Congress and 5-year planning committee. But at the moment, we see a tightening in global storage space around the world: “Royal Vopak NV, the world’s largest independent provider of oil storage, has no space for hire at its key fuel-trading locations in the Netherlands, the UAE and Singapore. “In the main hubs we are essentially sold out,” Vopak Chief Financial Officer Gerard Paulides said in a phone interview.” “For Rotterdam-based Vopak, which has on-land tanks, the only oil capacity not hired out at its main hubs is what’s in maintenance, Paulides said, adding that there are occasional openings in separate distribution locations. In July, the company said almost all of its oil storage tanks were booked.” The issues are mounting globally as more loadings and crude in transit (as mentioned previously) enter the market and weigh on total pricing metrics- specifically the front month. [1] https://www.spglobal.com/platts/en/market-insights/latest-news/oil/101420-refinery-news-roundup-maintenance-run-cuts-closures-in-focus-in-europe [/ihc-hide-content]