|Bid||21.70 x 0|
|Ask||19.60 x 0|
|Day's range||20.70 - 22.25|
|52-week range||18.32 - 35.96|
|Beta (5Y monthly)||0.52|
|PE ratio (TTM)||14.41|
|Earnings date||25 Feb 2020|
|Forward dividend & yield||0.83 (3.80%)|
|Ex-dividend date||09 Mar 2020|
|1y target est||30.75|
(Bloomberg) -- The world is close to running out of space to store all the fuel that jets are no longer burning.Only about 20% of land-based storage for the product remains -- about 50 million barrels -- while airlines cut flights, according to Vienna-based consultant JBC Energy GmbH. A collapse in air travel due to the coronavirus pandemic has brought with it a plunge in fuel demand and the threat of a shortage of places to keep unwanted supplies.The picture looks sure to worsen in the coming weeks and months unless oil refineries take drastic action of their own to cut output. Flight cancellations are destroying demand for the roughly 7 million barrels-a-day market, with some traders speculating consumption could have dropped by as much as 50% of that. Dubai-based Emirates, which runs the world’s biggest airline by international traffic, will suspend most passenger flights from March 25, it said Sunday.The product has slumped by more than 60% from its high this year and is trading at around $260 a ton for May supply in northwest Europe. More importantly, perhaps, December prices for jet fuel are at about $340 a ton. In other words, if traders can find a means of storing until the end of the year that costs less than the gap between the two months -- around $80 a ton -- then they can profit from hoarding supplies.It’s hard to pinpoint exactly when storages would hit tank tops because it’s unclear at this stage precisely how big the hit to aviation demand has been. Also uncertain is the extent to which refineries have already cut production or how much they can do so if required. Storage sites currently dedicated to diesel could be re-purposed for jet fuel -- if there’s time and a workforce available to do that.Energy Aspects Ltd., a consultant, estimates that 2.7 million barrels a day of demand will be cut in April and May compared with what it was previously anticipating. Separately, Facts Global Energy estimates a drop of about 2 million barrels a day, or 30% of current demand. The curtailment could be as large as 50% of typical consumption, a senior executive at one of the world’s biggest commodity traders estimated. Caltex Australia Ltd. estimates jet fuel demand could drop as much as 80%-90% while announced flight cancellations are in place.If either figure is right, and if oil refineries fail to respond by dialing back output, then land-based tanks will start to fill within weeks. While storage companies sometimes have unused space, that doesn’t necessarily mean it’s available for anyone to use. It can be reserved but not utilized.“We could see floating storage being used as there is no other option,” said Sri Paravaikkarasu, Asia oil director at FGE. “Clearly onshore tank storage is getting filled at this point.”Traders and shipbrokers report strong interest in booking tankers to keep fuel cargoes at sea.There is nevertheless still some space left. In Antwerp, Rotterdam and Amsterdam, the trading hub in northwest Europe, independently held inventories stand at about 3.6 million barrels, well below seasonal norms. They peaked at 7.1 million barrels in 2009. Insights Global, a firm that monitors the stockpiles, says it could take several weeks from the fuel being produced to it reaching storage.There are also pockets of buying still. More jet fuel is finding its way to Latin America, where consumption has yet to have the same kind of hit seen in other parts of the world.Weak DemandSigns of weak demand abound, however. The Colonial Pipeline, the largest fuel-link between the Gulf of Mexico and the East Coast, is lowering flows. The conduit carries multiple products including jet fuel, gasoline and diesel. The Philadelphia-based Trainer refinery, owned by a unit of Delta Air Lines, has shifted from jet fuel production to focusing primarily on diesel.Analysts say there could be reductions in how much fuel refineries are making. That, though, would only add to challenges in the crude oil market, where an increasing number of tankers are already being booked to hoard barrels because of weak near-term demand.While global oil consumption is being destroyed by the coronavirus -- aside from the collapse in air travel, city lockdowns and quarantines mean people are driving less -- Saudi Arabia is flooding the market with oil. The kingdom began aggressively adding barrels after Russia rejected its proposal to curb output and help shore up a glut.Jet fuel’s premium to crude, its so-called crack spread, has plunged to about $8 a barrel in northwest Europe. That could mean even less refining, adding to an oversupply of crude.“Jet fuel cracks have been hit the hardest as flights have been grounded to halt the spread of the coronavirus,” according to Rui Hou, a research analyst at Wood Mackenzie Ltd., adding that sluggish demand for transport fuel is generally bad for refining margins. “Consequently, refiners are likely to cut the crude runs to get through the tough time.”(Updates with Caltex Australia demand estimate in sixth paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Caltex Australia has warned the drop in jet fuel demand could blow out further following further service reductions by the likes of Qantas and Air NZ.
Petrol station and refinery operator Caltex Australia says a takeover offer undervalues the company but it wants to continue discussions.
(Bloomberg Opinion) -- Investors in the retail sector can’t get their fill of gas stations. Seven & i Holdings Co., the Japanese company that controls 7-Eleven, is in exclusive talks to acquire Marathon Petroleum Corp.’s Speedway gas stations for about $22 billion, people familiar with the matter told Scott Deveau, Kiel Porter and Manuel Baigorri of Bloomberg News.That’s not the only deal out there. EG Group, a closely held U.K. forecourts operator that had also shown an interest in Speedway, this week offered A$3.9 billion ($2.6 billion) in cash for the gas stations owned by Caltex Australia Ltd.Alimentation Couche-Tard Inc. is also bidding for Caltex’s entire business, including its refinery and fuel distribution unit as well as the retail gas-station network. Couche-Tard, Seven & i, and Berkshire Hathaway Inc. went on a similar spree for U.S. fuel retailers, truck stops and convenience stores in 2017.The argument for these deals is quite straightforward. Grocery retail for several decades has been shifting away from the stereotype of large nuclear families doing weekly shopping trips in big-box supermarkets, toward individuals, working parents and retirees picking up a few things from a local convenience store several times a week.If you’re looking to expand into convenience stores, gas stations are a target-rich environment — scattered through urban areas and along major highways, and ripe for upgrading beyond their traditional fare of basic fuel for vehicles and their drivers. In the meantime, the constant need to fill up gas tanks provides a reliable stream of cash, although one that’s highly leveraged to the price of oil.Seven & i hopes to echo the revival of its domestic business by offering a wider range of products and fresh food to customers. EG Group, which has grown from a single U.K. gas station in 2001 to encompass around 5,900 sites on three continents, makes a similar argument. It hopes to eventually make about 70% of its profits from non-fuel retail, up from around 50% currently, by bringing recognized retail brands into its forecourts to create mini-malls.There’s just one problem with this bold vision. Fuel retail is on the verge of a major structural revolution — and the result isn’t likely to be a pretty one for gas stations.The most obvious bear scenario would come if automakers’ rush to electrify their product ranges succeeds in bringing about the decline of the internal combustion engine. Around 10 million electric vehicles will be on the road by the end of this year and there’s already nearly a million EV charging stations, according to BloombergNEF.While that still represents a small share of the car market, the situation should change rapidly in the second half of this decade, as the costs of electric vehicles fall definitively below those of conventional ones and government phase-out targets in the 2030s start to loom. On a global basis, the International Energy Agency expects gasoline demand to peak in the late 2020s. The sorts of developed markets where the current gas station M&A frenzy is playing out are unlikely to be the most resilient to that shift.Even if gas stations invest in their own charging infrastructure — a relatively costly activity, and one that would commit them to purchasing from third-party utilities rather than the vertically integrated refining businesses they’re often bundled up with — they risk losing their traditional monopoly on fuel supply to chargers in homes and workplaces. That threatens footfall, a key metric for retailers who depend on high volumes of customer traffic to make the most of their store assets.Things may be somewhat better if the electric-car revolution fails to catch light. Even then, though, fuel-efficiency mandates mean fewer trips to buy gas, leading to a similar effect on footfall. Combined with a shift toward more online delivery, the effect could be dismal: By 2035, more than a quarter of gas stations will be unable to make economic profits in even the least electrified scenario, according to a report last year by Boston Consulting Group. All of this would be fine if convenience stores were going to be so profitable over the next few years that they could afford to make a quick buck and transform themselves before they’re overwhelmed by change.There’s little sign of that, though. EG Group made just 16 million euros ($17.3 million) of net income on an underlying basis in its latest results, despite more than 12 billion euros of revenue (on a statutory basis, there was a 138 million euro net loss). Net income margins at Seven & i’s U.S. unit tend to hover around 3%, and returns on equity are an unspectacular 8% or 9%. Viva Energy Group Ltd., a competitor to Caltex which operates Shell-branded forecourts in Australia, has lost about 25% of its market capitalization since an initial public offering in 2018.The days of the conventional gas station are numbered. Anyone who wants to make money from transforming them had better have their foot firmly pressed on the accelerator.To contact the author of this story: David Fickling at email@example.comTo contact the editor responsible for this story: Rachel Rosenthal at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.David Fickling is a Bloomberg Opinion columnist covering commodities, as well as industrial and consumer companies. He has been a reporter for Bloomberg News, Dow Jones, the Wall Street Journal, the Financial Times and the Guardian.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
The S&P/ASX 200 (Index:^AXJO)(ASX:XJO) and ALL ORDINARIES (Index:^AXAO) (ASX:XAO) ended down on Monday, here are 8 ASX shares you missed.The post ALL ORDINARIES finishes lower Monday: 8 ASX shares you missed appeared first on Motley Fool Australia.
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The Caltex Australia Limited (ASX:CTX) share price could be on the rise on Monday after takeover talks with Alimentation Couche-Tard advanced...The post Caltex share price on watch after takeover talks advance appeared first on Motley Fool Australia.
The Caltex Australia Limited (ASX: CTX) share price will be on watch this morning following the release of two separate market announcements.The post Why the Caltex share price is on watch today appeared first on Motley Fool Australia.