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IMTT announced today that it has closed on the sale of the company’s bulk liquids storage terminals located in Alamogordo, NM; Bremen, GA; Macon, GA; Montgomery, AL; and Moundville, AL to JET Infrastructure.

These terminals collectively represent approximately one million barrels of storage capacity, leaving IMTT with 41 million barrels of storage capacity at its terminals on the East, West, and Gulf Coasts and in the Great Lakes and Canada.

“The proceeds from this sale will be reinvested into current and future growth projects, allowing us to continue executing our Greener and Cleaner strategy,” said IMTT Chairman and CEO Carlin Conner.

“As of today, over half of IMTT’s revenue in 2023 is expected to be generated from the storage and handling of non-petroleum products, such as renewable diesel feedstocks, renewable diesel, vegetable and tropical oils, and chemicals. At the same time, we remain committed to supporting our legacy petroleum positions in advantaged markets across the US and Canada.”

New Orleans-based IMTT will continue to own and operate its 11 other terminals across North America, all of which can facilitate marine product movements, including eight terminals with deep water dock capabilities.

Businesswire, Kim Nave, November 2, 2023

Italy recently announced its plan to deploy its first hydrogen powered train by the end of 2024. The Coradia Stream H – which will run on hydrogen fuel cells – is equipped with 260 seats and has a range of 600 km or 373 miles.

Hydrogen as a fuel for rail transportation remains in its early stages. However, the potential exists for applications including industrial, passenger, freight, mining, rapid transit and even trams or hydrolley or hydrogen trollies. The technology -which is similar to that used in the automotive and aerospace industries is being developed by China, Germany, Japan, Taiwan, the UK and the United States.

Alstrom presented the Coradia iLint™ for the first time at Innotrans 2016 in Berlin. Entered into commercial service in Germany in 2018, it became the world’s first hydrogen passenger train. Using a combination of hydrogen fuel with battery energy storage, the zero-emission train releases only steam and condensed water.

The UK’s first hydrogen-powered train – the HydroFLEX – was launched in 2019 and is fitted with hydrogen fuel tanks, a fuel cell, and two lithium-ion battery packs for energy storage. Development plans are on-going to improve the train’s power and performance.

The use of hydrogen shows promise but comes with numerous technical challenges. Hydrogen is almost three times as dense as gasoline on a mass basis but is far less dense on a volume basis. That means it has to be compressed to produce the same energy per volume.

Germany plans to put a total of 14 hydrogen trains in service. However, given there are more than 4,000 diesel-powered trains running in Germany alone, this nascent hydrogen effort is truly just a baby step. But baby steps eventually turn into adult strides, and that’s where the stop that I believe hydrogen transportation will soon achieve.

Energy Central, Tony Paradiso, November 1, 2023

While oil futures are rocketing – on Friday they were just below $95 a barrel in London – the rally pales in comparison with the surge in diesel.

The world’s oil refiners are proving powerless to make enough diesel, opening a new inflationary front and depriving economies of a fuel that powers industry and transport alike.

While oil futures are rocketing — on Friday they were just below $95 a barrel in London — the rally pales in comparison with the surge in diesel. US prices jumped above $140 to the highest ever for this time of year on Thursday. Europe’s equivalent soared 60% since summer.

And it could get worse. Saudi Arabia and Russia have turned down the taps on production of crudes that are richer in diesel. On Sept. 5, both nations — leaders in the OPEC+ alliance — announced they would prolong those curbs through year-end, a period in which demand for the fuel usually picks up.

“We’re at risk of seeing continued tightness in the market, especially for distillates, coming into the winter months,” said Toril Bosoni, head of the oil market division at the International Energy Agency, referring to the category of fuel that includes diesel. “Refineries are struggling to keep up.”

The situation is challenging for a global refining fleet that’s been dogged by lackluster production for months. Searing Northern-Hemisphere heat this summer forced many plants to run at a slower pace than normal, leaving stockpiles stunted.

There’s also been pressure on them to make other products instead like jet fuel and gasoline, where demand has rebounded hard, according to Callum Bruce, an analyst at Goldman Sachs Group Inc.

Other Fuels

All this comes on top of a global refining system that shuttered less-efficient plants when Covid-19 trashed demand. Now consumption is rebounding but many refineries are gone.

There’s still hope that the diesel crunch can ease. With cooler winter months approaching, the weather-related constraints on the refineries overall decrease — even if some of them will undergo routine seasonal maintenance.

“We think margins have overshot for now,” Bruce said, adding that stretched market positioning and the temporary nature of some refinery disruptions could spark a reversal.

Still Concerns

Even so, there are still worries about supply from some key diesel-exporter nations.

Russia — still a major supplier to the world despite Western sanctions — has indicated that it’s looking to limit the volume of the fuel it sends to global markets. 

China — another potential supply-relief valve — recently issued a new fuel export quota, but traders and analysts in Asia said the volume currently planned won’t be enough to prevent a tight market through the end of the year. The country’s shipments have been stuck near five-year seasonal lows for much of 2023. 

Those lower flows are showing up at key storage hubs. Observable stockpiles in the US and Singapore are all currently below seasonally normal levels. Inventories in OECD nations are lower than they were half a decade ago.

The restricted supply has economic consequences. The surge in US futures has been driven in part by truckers snapping up the fuel.

“Diesel is the fuel of the 18-wheeler truck that moves products from factory to market, so when prices spike, those higher transportation costs get passed on to businesses and consumers,” said Clay Seigle, director of global oil service at Rapidan Energy Group. 

While there has been growing hope that the US economy can avoid recession, “an energy price spike – whether in gasoline or diesel fuel prices – could undermine much of that progress,” he added. “This risk is not lost on anyone in Washington as election campaign season approaches.”

Soaring diesel prices may also push refineries to prioritize the fuel at the expense of making gasoline, he said.

Weak Demand

The situation for diesel could have been worse because consumption growth hasn’t been as robust as other parts of the barrel. 

The IEA’s monthly report last week anticipated consumption growing by about 100,000 barrels a day this year. That compares with almost 500,000 barrels a day for gasoline and more than 1 million barrels a day for jet fuel and kerosene.

“It’s a supply issue at heart,” said Eugene Lindell, head of refined products at consultant FGE. “European refineries were also unable to build up supplies over the summer because of widespread unplanned outages which has left inventories tight ahead of winter.”

Business Standard by Jack Wittels, September 29, 2023

Hopes that inflation might really have been “transitory” look premature.

How worried should we be about the oil price?

I’m only asking because it has gone up an awful lot in the last few months. In fact, since it hit a low for the year in early June, the price of Brent crude has risen from just under $72 a barrel to nearly $94 today – a gain of more than 30%.

Thankfully, the US has not seen the same sort of leap in petrol prices as yet. But it is fair to say that petrol prices in the UK bottomed out in June/July and are now significantly higher – up about 7%, from an average of £1.42 per litre to £1.53 now.

It’s entirely in keeping with the ornery nature of markets that central banks around the globe are now largely agreed to be at or near the peak of interest rates, just as the price of fuel — which is of course, a big component of overall price indexes — is taking off again. That obviously bodes ill for global consumption. Even if the world can avoid the scary cost-of-living crisis expected in a wartime economy, the spectre of global inflationary pressures subsiding anytime in the near future is still a mirage.

Supply is tight, demand uncertain

So why is the price of oil rising? Long story short, the big issue right now is mostly on the supply side. Russia and Saud Arabia have reduced their exports, and have been unusually disciplined about sticking to the plan.

This is happening at a time when the US Strategic Petroleum Reserve has fewer barrels in it than usual, because it unleashed them to try to keep prices down back in 2021 and also when Russia invaded Ukraine, and it hasn’t yet rebuilt that stockpile.

Note too that Javier Blas, Bloomberg energy columnist, warns that oil prices are in fact even higher than most of us might think, because the specific kind of crude that Saudi Arabia produces is priced even higher than the benchmarks most of us watch – that is, Brent crude and WTI (the US benchmark).

So, the supply side is tight. As for the demand side – well, for all that everyone seems to expect a recession to kick in at any moment, we’re still not seeing one.

And bear in mind that this is happening while China’s economy is widely regarded as having sat the global recovery out. Yet Chinese economic data actually surprised to the upside this morning (which is one reason the FTSE 100 is having a good day today).

So, I’d say the risks are quite finely balanced there. Say we don’t have a recession and say it turns out that China was just taking longer to get back on its feet, rather than sinking into depression. The idea of a return to $100 a barrel fairly quickly is by no means radical.

Expect a period of inflation scares

So, what would that mean for the rest of us?

There are two big problems with a rising oil price. One is that — speaking purely in terms of what it does to the consumer prices index — it’s inflationary. That in turn makes it harder to justify cutting interest rates. It might even end up putting more hikes on the table at some point, depending on what happens from here.

The other big problem is that even as a rising oil price makes life harder for central banks, it’s also acting as a tax on consumption. As I’ve mentioned many times before, if you spend more money on filling up your car, you’ve less money available for that microwave pasty or terrible bunch of flowers to go with it. Higher oil prices mean less consumption, and for a consumer economy like that of the US or India, that’s bad news.

Of course, these things should, in theory, work against each other. If oil prices rise to the point where it hurts the wider global economy, then what should happen is that we get a slowdown, and then oil prices fall again, because demand is curbed.

But as we all know, theory and practice often don’t entirely reflect each other, particularly given the lags involved. It’s probably safer to say that this is one reason not to assume that inflation will revert to being well-behaved in the near future. Instead, I rather suspect a series of inflation scares is a more likely outcome over the next few years. But we’ll see.

On the upside, it does mean that the commodity and oil-heavy FTSE 100 will quite possibly do better than anyone expects, which does make it look like an appealing hedge for your portfolio. 

By The Business Standard, September 29, 2023

Dutch tank storage company Vopak (VOPA.AS) said on Tuesday it had reached an agreement with M&G Plc’s (MNG.L) infrastructure equity investment arm Infracapital for the sale of its chemical terminals in Rotterdam.

The total purchase price for the three chemical terminals is 407 million euros ($434.72 million) including a conditional deferred payment of 19.5 million euros.

“The divestment of the three chemical terminals in Rotterdam is in line with our strategic goals to improve the financial performance of the portfolio,” chief financial Michiel Gilsing said in a statement.

Vopak launched a strategic review of the terminals in February, opening the door to a possible divestment.

The company said it expects the transaction to partially reverse an impairment charge recorded in 2022 by around 54 million euros, which will be reported as an exceptional item.

By Reuters, September 29, 2023