Slowed global demand with supply glut to drain in 2019
As supply continues to grow and global demand has slumped leading into 2019, OPEC and other Oil producing countries such as Russia met in Vienna on November 6th and 7th and came to an agreement to cut production to support crude oil pricing (WTI) which has fallen dramatically since the October 4-year-high of $86.74 bpd. Price drops were so strong that analysts believe non-OPEC members will either agree to freeze production or join in the cuts OPEC is planning to announce that could be anywhere between 1-1.4 million bpd (barrels per day).
Canadas Alberta province to buy rail cars to reduce oil glut
Canada’s Alberta province is exploring buying rail cars to transport 120,000 bpd of crude to alleviate the bulk of oil stuck in the region due to lack of pipeline capacity. Alberta is producing an estimated 250,000 bpd, which is more than the rail and pipeline capacity can handle. Plans to ship the 120,000 bpd are to be completed by August 2020. This purchase of rail cars will ease the provinces current supply glut.
Blockchain platform goes live for North Sea crude oil trading
Oil majors and trading firms may have found a new way to operate in the near future and it is coming via a London based Blockchain platform named Vakt. Blockchain is the platform that cryptocurrency Bitcoin is based upon and is currently observed as a solution to trade settlement inefficiencies and disparities, as well as a method to reduce the risk of fraud. Vakt uses J.P. Morgan’s Quorum Blockchain technology to digitize, and centralize what was previously a mountain of paperwork and distribute to all parties involved. Oil companies included in the Vakt consortium include BP and Royal Dutch Shell, Norway’s Equinor, global energy trading firms Mercuria Energy Group and Koch Supply and Trading, as well as Gunvor.