On Tuesday, March 23rd, the giant container ship, the Ever Given, ran aground in the Suez Canal causing hundreds of ships to get stuck at both ends of the canal. The canal connects the Red Sea to the Mediterranean Sea and carries approximately 10% of global shipping traffic. The Suez Canal is vital for nearly every cargo ship that moves between Asia and Europe, and it is also an important shipping lane for cargo coming from Asia to the East Coast of the United States. At the time of this writing, the Ever Given has been partially refloated and moved alongside the canal bank, but the backup is still impacting oil markets.
Crude has been the underdog since Covid-19 broke onto the scene in early March of 2020. We have seen historic contango, negative trading, inventories at the verge of 100% capacity. However, we have also seen refineries curtailing production and shutting down, crude breaking technical level after level, OPEC + committing to decreased outputs, a Texas winter weather creating supply concerns, and a slow steady recovery of crude as inventories are drawn down and production resumes. Crude has built a full head of steam and looks to be an unstoppable force and a surefire pick to rise to glory yet again for 2021. March Madness is known for its volatile emotional up and downs and surprise sleeper teams with unimaginable upsets. Will 2021 and a third European lockdown amid vaccine safety concerns be the sleeper to upset the rise of Crude?!
Senator Todd Young of Indiana is leading a group of legislators in unveiling a new program to enable truck drivers under the age of 21 to cross state lines, which is currently prohibited. The DRIVE-Safe Act, (Developing Responsible Individuals for a Vibrant Economy) aims to enhance safety training and includes an apprentice program that allows individuals under the age of 21 to operator commercial motor vehicles for interstate commerce. While this proposed legislation is not a new topic, it has gained momentum from both sides of the aisle and has the support of organizations such as the American Trucking Association (ATA) and the International Foodservice Distributors Association (IFDA).
After a year of uncertainty and instability in the market created by COVID-19 and a global shutdown, we are starting to see signs of a return to normalcy. Over the past 8 weeks there has been a gradual decline in COVID-19 cases nationally. According to Bloomberg business, “retail gasoline sales rose last week to just 1% below year-ago levels, just before regional lockdowns brought fuel consumption to a crawl.”
The winter storm that impacted so many in Texas is now looking to have long term impacts on global consumers. Major petrochemical plants throughout the Gulf of Mexico were forced to shut down during the freeze, and many remain offline a month after the incident.
Between November 2020 and January 2021, four natural gas pipelines were up and running in the United States. Those pipelines are:
Last week, three ships carrying ethanol from the U.S. Gulf Coast were headed to China. Reuters confirmed, from multiple sources, that this is a sign that fuel exports were increasing from the U.S. to China. These ethanol shipments may be enough to surpass the total amount of ethanol exported from the U.S. to China in 2020.
With COVID-19 still dominating the headlines, this time with vaccination news, it is easy to lose sight of other note worthy incidents that would typically make headlines surrounding the crude industry. According to the Wall Street Journal, Iranian oil tankers have been struck by the Israeli Army, which were headed towards Syria over the last few months. The motivation for such an attack is due to the oil profits are considered to support extremist actions in the middle east. Iran and Syria remain under sanction with U.S. and Europe.
Recruiting women in the trucking industry is not an easy task, however more and more trucking companies are focusing on hiring women to join their workforce. According to Ellen Voie, CEO of Women in Trucking, “Best practices show that more women in leadership roles in a trucking company will result in more women as drivers, technicians and in lower-level jobs, because diversity of thought leads to a more diverse workforce.”
The United States Department of Energy Office of Fossil Energy announced last Friday that contracts have been awarded for the sale of crude oil from the Strategic Petroleum Reserve (SPR). The sale is for 10.1 million barrels of fuel to be sold during the fiscal year 2021. The Strategic Petroleum Reserve was established in the 1970s as a response to the Arab Oil Embargo that caused a fuel crisis in the United States. It was recently determined the SPR held 637.8 million barrels of crude oil, which makes it the world’s largest supply of emergency crude oil.