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Category: Oil

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News Oil

Ethanol production remains dormant, but not imports

June 15, 2012

The Petrojam Ethanol Limited (PEL) processing plant will remain shuttered for this year and probably until 2014 because of ethanol shortages, but it will continue to import and distribute the fuel for cars.

PEL hopes that market conditions will eventually normalise allowing it to produce ethanol following the shutdown of its 40-million gallon hydrous or wet-alcohol processing plant in November 2009 after its partnership with Brazilian company Coimex ended and its supply source dried up.

The state-owned energy company does not expect the current “unfavourable market conditions” to change during this fiscal year, according to disclosures to Parliament.

“Specifically, the unpredictability of viable supplies of hydrous ethanol for processing is not anticipated to improve, hence the company will not pursue the production of anhydrous ethanol,” said the Jamaica Public Bodies report produced by the Ministry of Finance.

Operators of the energy plant did not return calls for comment.

The sale of sugar cane to ethanol producers carries an opportunity cost for sugar producers. But as sugar prices spike on the world market, it has been increasingly difficult for fuel processors to maintain secure supplies of raw material or feedstock.

Sugar commodity prices have doubled over five years to US$0.20 per pound in May 2012 compared with US$0.09 in May 2007.

These market changes resulted in eroding the profit margin for production and left PEL without cheap raw material.

“With the unfavourable price differential for Caribbean Basin Initiative producers, it is now expected that stability will only be realised in another one to two years,” said the Public Bodies report. Jamaica’s fuel enter the US market duty-free under the Caribbean Basin Economic Recovery Act or CBERA.

PEL intends to capitalise on opportunities to process ethanol under toll processing arrange-ments if they arise in the current financial year.

Even without manufacturing fuel-grade ethanol, the plant expects to double its profit from ethanol sourced from the United States – projected at J$43 million net profit this fiscal year from J$22 million last year. The profit projection rests on hitting a target of J$4.01 billion or 30 per cent increase in revenue. But it is still below earlier profit levels nearly three years ago when the plant was pumping out fuel-grade ethanol for export.

PEL will mainly import denatured anhydrous ethanol from the US to satisfy the local demand for E87 and E90 gasolene processed and sold by oil refinery Petrojam Limited. Ethanol was added to the fuel mix in November 2008 to save on cost and replace a less eco-friendly additive to gasolene.

PEL was formerly owned directly by Petrojam but was restructured in 2008 as a subsidiary of Petroleum Corporation of Jamaica, which is now parent to both energy operations.

Steven Jackson, Business Reporter

steven.jackson@gleanerjm.com

http://jamaica-gleaner.com/gleaner/20120615/business/business2.html

News Oil

Oil closes below US$84

June 15, 2012

Hopes that the United States Federal Reserve will do more to support the US economy drove oil to its biggest gain in two months on Thursday. Meanwhile, natural gas rose the most since January 2010 on signs of increased use of the fuel by utilities.

Speculation that the Fed will announce new steps to boost the economy grew after government reports showed that hiring is still weak while inflation remains in check. Any boost to the economy should increase demand for oil, gasolene and diesel fuel.

Benchmark crude rose US$1.29 to finish at US$83.91 per barrel Thursday in New York, the largest increase since April 11.

Brent crude, which is used to price international varieties, gained 45 cents to US$97.17 per barrel in London.

In Vienna, ministers of the Organisation of the Petroleum Exporting Countries (OPEC) decided to keep a production target of 30 million barrels a day.

The decision had been expected. Although some members of OPEC want to reverse a recent sharp decline in oil, others worry that higher oil prices could hurt global economic growth.

Oil has fallen 24 per cent from its peak in late February.

Natural gas futures soared 31 cents to finish at US$2.495 per 1,000 cubic feet, the sharpest gain since January 6, 2010. The Energy Department reported that natural gas in storage grew by 67 billion cubic feet to 2.944 trillion cubic feet for the week ended June 8. That increase was four billion cubic feet less than analysts expected.

Rusty Braziel, president of RBN Energy, a consulting company based in Houston, says the report relieved fears that the nation’s natural gas storage facilities would reach capacity and prices would plummet further.

He sees signs that natural gas drillers have curtailed the dramatic growth in production that sent prices near a 10-year low earlier this year.

At the same time, utilities are burning more natural gas in place of coal, helping to relieve the gas glut a bit. Total inventories are still 29 percent above the five-year average of 2.278 trillion cubic feet.

Heating oil rose 1.69 cents to end at US$2.6278 per gallon and gasolene futures gained 2.1 cents to US$2.6764 per gallon.

http://jamaica-gleaner.com/gleaner/20120615/business/business93.html

News Oil

Oil Prices Fall On Global Economic Concerns

June 12, 2012

Oil fell Monday on the realisation that a short-term fix in Spain won’t offer a long-term solution to Europe’s debt crisis.

A multibillion-dollar bailout loan for Spain’s banks generated initial enthusiasm in the global stock, bond and energy markets. But by the close in New York, the good feeling had given way to scepticism.

Benchmark oil fell $1.40 to $82.70 per barrel in New York. Brent crude, which is used to price international varieties of oil, dropped 81 cents to $98.66 per barrel in London. The broad S&P 500 stock index fell nearly one per cent.

Leaders of European countries agreed over the weekend to lend Spain up to $125 billion to help its troubled banking system. Spain is the fourth European country after Greece, Portugal and Ireland to request financial help since the debt crisis began.

Oil jumped above $86 per barrel in trading in Asia. But the relief was temporary, replaced by concern over Spain’s ability to repay the money. The potential for Greece to abandon the European currency still hangs over the market, as does a deepening recession in Italy. That turmoil, as well as slowing economic growth in China and the United States (US), is reducing demand for oil, gasolene and diesel fuel.

It’s not yet clear whether Europe’s ongoing efforts to put the financial crisis to rest will result in an economic turnaround. “It just doesn’t seem like that’s very close,” said Michael Lynch, president of Strategic Energy & Economic Research.

Meanwhile, oil supplies continue to build despite ongoing weak demand around the world.

US oil production topped six million barrels a day in the first quarter of 2012, which was a 14-year high, according to the Energy Information Administration. Most of the increase was the result of more production in North Dakota, Texas and the Gulf of Mexico.

Oil’s decline was tempered by data showing China imported nearly six million barrels of crude a day in May. That was about 10 per cent more than April and 18 per cent more than a year earlier. China is a huge importer of oil and other commodities.

Meanwhile, motorists are continuing to see a steady decline in pump prices. The national average for gasolene fell less than a penny overnight to $3.54 per gallon, according to AAA, Wright Express and the Oil Price Information Service. That’s 19 cents less than a year ago. Gas has dropped 50 cents per gallon in a little more than two months.

Natural gas dropped 8.1 cents to $2.218 per 1,000 cubic feet. The price has plunged about 50 cents in three weeks as supplies remain well above normal levels.

In other trading, heating oil fell 3.64 cents to $2.638 per gallon and gasolene dropped 2.86 cent to $2.657 per gallon.

– AP

http://jamaica-gleaner.com/gleaner/20120612/business/business2.html

News Oil

Current Fuel Price Index ($/L)

May 24, 2012

05/24/2012
News Oil

Oil Drops To US$91.66

May 24, 2012

Oil prices dropped near their lows for the year following warnings of a “severe recession” in Europe and an apparent easing of tensions over Iran’s nuclear program.

Benchmark US crude on Tuesday lost 91 cents to end the day at US$91.66 per barrel in New York while Brent crude fell by 40 cents to end at US$108.41 per barrel in London.

Both contracts hit a low for 2012 on Friday at US$91.48 and US$107.14, respectively.

Oil has declined almost every day this month as elections in Greece and France threatened existing plans to fix the eurozone economy. A top economist for the Organization for Economic Cooperation and Development warned Tuesday that the eurozone could fall into recession this year if leaders fail to stimulate the economy.

Stunt growth

If that happens, it would stunt growth in world oil demand at a time when supplies are expanding.

Fears of a protracted standoff with Iran had helped push benchmark crude near US$110 per barrel in February. Prices have since fallen below levels of early November, when the United Nations first warned of a potential nuclear threat from Iran.

Uninterrupted Iranian exports could boost world oil supplies to an average of 89.15 million barrels per day, according to the latest projections from the Energy Information Administration. That would be more than enough to meet world demand.

In other futures trading, natural gas added 9.8 cents, up 4 per cent, to finish at US$2.707 per 1,000 cubic feet.

Natural gas prices have jumped by 42 per cent since hitting a 10-year low on April 19 as supplies declined.

Heating oil and wholesale gasolene were both flat, ending the day at US$2.8614 and US$2.937 per gallon, respectively.

– AP

http://jamaica-gleaner.com/gleaner/20120523/business/business5.html

News Oil

Oil prices hold at lows

May 24, 2012

NEW YORK – The price of oil is holding near seven-month lows following warnings of a “severe recession” in Europe and easing tensions over Iran’s nuclear program.

Benchmark US crude lost 13 cents to US$92.44 per barrel in morning trading in New York while Brent crude added 27 cents to US$109.08 per barrel in London.

Oil prices have declined almost every day this month as political changes in Greece and France threatened existing plans to fix the eurozone economy. The Organisation for Economic Cooperation and Development says Europe, which consumes 18 per cent of the world’s oil, could fall into recession this year if leaders fail to stimulate the economy

Meanwhile, analysts say Iran‘s oil exports could keep flowing if it lets international inspectors into its nuclear facilities as part of a new deal.

By early afternoon in Europe, benchmark oil for June delivery was down 44 cents to US$92.13 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose US$1.09 to settle at US$92.57 in New York on Monday.

In London, Brent crude for July delivery was up 14 cents at US$108.95 per barrel on the ICE Futures exchange.

Crude has slumped from US$106 earlier this month on fears that global economic growth might slow more than expected this year. In Europe, government austerity measures meant to lower debt have been crippling growth in many large economies like Italy and Spain.

Also hurting energy prices yesterday was a rise in the dollar, which tends to push down oil prices by making crude more expensive for investors trading in other currencies. The euro slipped to US$1.2758 from US$1.2793 late Monday in New York, while the dollar rose to 79.77 yen from 79.36 yen after Fitch lowered Japan’s sovereign debt rating.

Meanwhile, the head of the International Atomic Energy Agency, Yukiya Amano, said Tuesday that Iran had agreed to let IAEA inspectors to resume their investigation into its nuclear program. On Wednesday, talks are set to start in Baghdad between Iran and six world powers about the country’s uranium enrichment efforts and its suspected intent to develop nuclear weapons. Prices had risen in previous months due to international tensions over Iran, which had threatened to block oil shipments out of the Persian Gulf.

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