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Oil nudges higher on tightening supplies, weak dollar

18 Aug 2017   Prices

Oil prices edged higher on Friday, with investors offered some encouragement from data hinting that oversupply was easing steadily and a weaker dollar. But prices were still on track to close the week 2 to 3 percent lower after concerns about weaker Chinese oil demand weighed earlier in the week. At 0935 GMT, benchmark Brent crude futures LCOc1 were up 7 cents at $51.10 a barrel on the day but still about 2 percent lower on the week. U.S. West Texas Intermediate (WTI) crude futures CLc1 were up 16 cents at $47.25 a barrel, although they were also set to end the week more than 3 percent lower. “Falling U.S. commercial stocks are supportive and I also believe that high U.S. product demand, and gasoline […]

Oil edges up on decline in crude stocks, but high production caps gains

18 Aug 2017   Prices

Oil prices edged up early on Thursday, clawing back some ground after losses in the previous session. Traders said the market was range-bound as falling crude inventories provided price support while high output was capping gains. Brent crude futures, LCOc1 the international benchmark for oil prices, were at $50.43 per barrel at 0101 GMT, up 16 cents, or 0.3 percent, from their last close. U.S. West Texas Intermediate (WTI) crude futures CLc1 were at $46.88 a barrel, up 10 cents, or 0.2 percent. The slight gains followed a more than 1 percent fall in the previous session. Data published late on Wednesday by the Energy Information Administration (EIA) showed that commercial U.S. crude oil stocks C-STK-T-EIA have fallen by almost 13 percent from their peaks in March to 466.5 million barrels, well below this time last year. “If inventory declines continue at this pace, stocks will […]

July ranks 2nd for heat globally, hottest recorded on land

18 Aug 2017   Climate

Earth yet again sizzled with unprecedented heat last month. The National Oceanic and Atmospheric Administration said Thursday Earth sweated to its second hottest month since recordkeeping began in 1880. At 61.89 degrees (16.63 Celsius), last month was behind July 2016’s all-time record by .09 degrees. But Earth’s land temperatures in July were the hottest on record at 59.96 degrees (15.5 Celsius), passing July 2016’s by one-seventh of a degree. Land measurements are important because that’s where we live, said NOAA climate scientist Jake Crouch. Earlier this week, NASA calculated that July 2017 was a tad hotter than 2016, making it essentially a tie for all-time hottest month. NASA uses a newer set of ocean measurements and includes estimates for the Arctic unlike NOAA. Record heat was reported in Africa, Australia, parts of Asia, the Middle East and the Indian ocean, Crouch said. “There […]

Analysis: OPEC caught in limbo as options to change status quo limited

18 Aug 2017   OPEC

As OPEC and non-OPEC nations meet for another joint technical committee meeting on August 21, the oil producer group’s options seem limited, leading to a preoccupation with ensuring compliance with output cuts and hoping that the strength of the oil markets lasts longer.  This upcoming meeting in Vienna, following on from a similar meet-up in Abu Dhabi earlier this month in which Iraq, Kazakhstan, Malaysia and UAE were scrutinized, highlights OPEC’s commitment to the pact but also the fact that its hands are somewhat tied.  Analysts have said that this need for patience is a “fact of life” that the group and even the oil market will have to live with.  OPEC production starts to climbThere also seems to be a consensus that if deeper cuts aren’t invoked then the rebalancing could drag on much longer, placing even greater pressure to maintain conformity. But deeper cuts could compound the problem.  “The conundrum OPEC and Russia face is as follows: more aggressive supply cuts may raise the oil price but will only invite more US shale production. Abandoning supply cuts will no doubt lead to a price correction into the $40/b [territory] and maybe lower,” according to Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas.  “This catch-22 situation may leave no other option than continue current supply policy and see where oil inventories end up by March 2018,” he said.

Former Exxon advisor likely to succeed ousted Basra governor

18 Aug 2017   Iraq

In the wake of a scandal that led to the sudden resignation of Basra’s governor, Taha al-Tamimi has emerged as the top candidate to lead Iraq’s oil capital. Basra’s then-governor, Majid al-Nasrawi (L), walks with Iraqi President Fuad Masum in Basra on Feb. 23, 2015. (ESSAM AL-SUDANI/Reuters) BASRA – Days after the sudden resignation of Basra Gov. Majid al-Nasrawi, a former ExxonMobil advisor has emerged as the top candidate to replace him as the leader of Iraq’s oil capital. Taha al-Timimi, who managed government relations for Exxon’s Iraq operations from 2010 to 2014, has won the endorsement of Oil Minister Jabbar al-Luiebi and his powerful political party, the newly formed Hikma movement (Arabic for “Wisdom”). This content is for registered users. Please login to continue. If you are not a registered user, you may purchase a subscription or sign up for a free trial .

Libya Gets Better at Keeping Oil Flowing as Industry Stabilizes

18 Aug 2017   Libya

Libya’s getting better at resolving stoppages in its oil industry, underpinning a growing perception that the OPEC member is closer to becoming a stable producer again. (Bloomberg) — Libya’s getting better at resolving stoppages in its oil industry, underpinning a growing perception that the OPEC member is closer to becoming a stable producer again. That’s because of the duration of the incidents. While in prior years protests could shutter fields for months and years, now the stoppages are being resolved within days and barely hindering flows. Sharara, Libya’s biggest field, had several short disruptions this year, including two this month, after being closed for more than two years. Mustafa Sanalla, chairman of state-run National Oil Corp., was quick to visit Sharara this week to resolve the latest dispute, offering to revise security measures. “One fundamental change that allows upstream activities to restart quickly after a disruption is that Sanalla […]

Nigeria: Oil Production At $32 Per Barrel Too High – Kachikwu

18 Aug 2017   Nigeria

The Minister of State for Petroleum Resources, Ibe Kachikwu, has decried the high cost of oil production at 32 dollars per barrel, saying it makes cost of Foreign Direct Investment very expensive. Kachikwu made the assertion at the 2017 annual conference of the National Association of Energy Correspondents (NAEC), in Lagos. The minister said that the Federal Government was making frantic efforts to bring down the cost to 15 dollars per barrel in order to significantly bring down cost of FDI. “The outcome of this initiative will be a win-win for investors and the nation,” Kachikwu said. He said the Petroleum Industry Governance Bill (PIGB) had been structured to fully turn around the petroleum sector and make it attractive to investors. Kachikwu also said that the security issues and funding gap in the area of refinery had delayed the take-off of refinery projects, even after licences had been issued. […]

Nigeria: NNPC Cuts Production Cost to $23/Barrel

18 Aug 2017   Nigeria

The Nigerian National Petroleum Corporation (NNPC) said yesterday that the country has saved a minimum of $3billion per annum by cutting the cost of crude oil production from $78 dollars per barrel to $23 per barrel as at August 2015, representing 70.5 per cent reduction. The Group General Manager of National Petroleum Investment Management Services (NAPIMS), a unit of NNPC, Engr. Dafe Sejebor, disclosed this during the inauguration of the anti-corruption committee of the unit. A statement issued by the Corporation’s spokesperson, Ndu Ughamadu, noted that NAPIMS arrived at the figure after looking at the difference between the $78 and $23 which represent the old and new cost of production in relation to the present daily average production in the country. “If you knock down your cost of production from $78 per barrel to $23, take the difference and multiply by the average daily production, you will discover that […]

Exclusive: Bank jitters over Venezuela stall oil delivery to U.S. refiner

18 Aug 2017   Venezuela

A tanker carrying a cargo of about 1 million barrels of Venezuelan heavy crude has been stranded for more than a month off the coast of Louisiana for lack of a bank letter of credit to discharge, three sources have told Reuters. The tanker’s fate is just the latest sign of state-run oil company PDVSA’s precarious financial position. Major banks are cutting exposure to Venezuela as a result of political upheaval in the South American country. Some banks have closed accounts linked to officials of the OPEC member who have had sanctions leveled against them by the U.S. government and have refused to provide correspondent bank services or trade in government bonds. The United States is considering further economic sanctions that would dry up the country’s access to Wall Street. The Suezmax tanker Karvounis carrying Venezuelan diluted crude oil is anchored at South West Pass […]

The Make Or Break Moment For Argentina’s Shale Boom

18 Aug 2017   Argentina

Argentina’s abundant shale resources have attracted a growing number of major international companies since the beginning of this year—all of them interested in developing the prized Vaca Muerta shale formation; but mid-term elections are making everyone nervous, and a change in the current pro-business climate could mean bust rather than boom for shale. Much is at stake. Vaca Muerta is thought to be a highly prolific basin, and even though it’s in the early stage of development, well performance there is already catching up with some U.S. shale plays. A lot of investment would be needed for a play-wide development at Vaca Muerta, but attracting investment and luring more and more experienced drillers to the country hinges on Argentina’s energy, tax, and pro-business policies. Currently, right-of-center President Mauricio Macri is betting big on welcoming more foreign investment into Vaca Muerta. He’s introducing various reforms to make doing business in […]

Floating solar power: new frontier for green-leaning water utilities

18 Aug 2017   Solar

Lakes and ponds used by water utilities have long been viewed with a single purpose: holding water. Now a handful of pioneering water utilities are looking at their aquatic real estate with a new purpose in mind: solar energy generation. Large-scale floating solar projects have been installed in Japan and China, as well as on ponds at California wineries. But solar energy has remained primarily a terrestrial endeavor because, in most cases, it is simpler and cheaper to mount photovoltaic (solar) panels on land. That is beginning to change. The floats and other mounting components unique […]

U.S. gasoline exports overshadow strong production

18 Aug 2017   exports

The production of gasoline in the United States is near a record high, though supply levels are under pressure from exports, a federal report said. “Gasoline production by U.S. refiners and blenders has run near record levels over the first seven months of 2017, with four-week rolling average production well above its five-year average and close to the top of its five-year range,” a daily brief from the U.S. Energy Information Administration read. Motor club AAA reports a national average retail price for a gallon of regular unleaded gasoline at $2.34 for Thursday, about 2 cents less than one week ago. The summer travel season in the United States, which runs through […]

Clouds developing over U.S. LNG export potential

18 Aug 2017   LNG

A U.S. industrial trade group said Washington’s domestic focus should prioritize the retention of natural gas, rather than target it for the export market. As a candidate, Donald Trump ran under the slogan of “Make America Great Again.” As president, he’s steered efforts to put U.S. national interests first. Paul Cicio, the president of the Industrial Energy Consumers of America, said in a letter to U.S. Energy Secretary Rick Perry that stance should extend to liquefied natural gas. “It is time for the U.S. Department of Energy to put American residential and industrial consumers first by establishing a moratorium on further LNG export approvals to non-free trade agreement [NFTA] countries, and put consumer safeguards in place,” he said in a […]

Growing Shale Output Drags Oil Prices Lower

18 Aug 2017   Shale Oil

Oil prices flipped from losses to slight gains Thursday morning as the market rebounded from three week lows. U.S. crude futures were recently up 8 cents, or 0.17%, at $46.86 a barrel on the New York Mercantile Exchange. Brent, the global benchmark, rose 18 cents, or 0.36%, to $50.45 a barrel on ICE Futures Europe. “It just looks like a bounce off the recent weakness,” said Donald Morton, senior vice president at Herbert J. Sims & Co., who oversees an energy trading desk. Oil prices have been on a three day downward slide. Data released Wednesday showing that U.S. crude output to 9.502 million barrels a day last week weighed on the market. The prospect of rising oil output in the U.S. “took the wind out of the sails” of more bullish data also released Wednesday, which showed a further drawdown in U.S. oil stocks, said Gene McGillian, research […]

U.S. gasoline production is running near record levels

18 Aug 2017   Oil Supply, USA

Gasoline production by U.S. refiners and blenders has run near record levels over the first seven months of 2017, with four-week rolling average production well above its five-year average and close to the top of its five-year range. U.S. gasoline inventories also remain relatively high despite growing domestic and foreign demand. Growth in U.S. gasoline production since March is the result of record-high refinery runs. For the week ending April 21, 2017, U.S. refinery runs exceeded 17.5 million barrels per day (b/d) for the first time since EIA began publishing the weekly data series in 1990. Refinery runs have since exceeded this threshold eight additional times, reaching an all-time high of 17.9 million b/d the week ending on August 4, 2017. About 44% of the input to […]

Citi: U.S. Shale Beats OPEC At $40 Oil

18 Aug 2017   Shale Oil

Citigroup has said that U.S. shale will prevail over OPEC because of its higher resilience to low prices and OPEC’s losing strategy of cutting output and losing revenues and market share. Citigroup’s head of commodity research, Ed Morse, told Bloomberg in an interview that OPEC and its partners cannot sustain their current strategy over a longer term, while shale producers have adapted to low prices and can break even at WTI as low as US$40 a barrel. “In the end, the markets are going to win, and it’s going to be shale. If we’re in a $40 to $45 world, we’ll have enough drilling to add to the surplus in the world as a whole,” Morse said. So far this year, trends have supported the suggestion that cutting production to restore prices to at least some of their previous glory leaves a lot to be desired. Brent is still […]

Wrong-Way Gas Bet Fueled Goldman’s Second-Quarter Swoon

18 Aug 2017   Shale Gas

Construction of the 713-mile Rover pipeline ran into trouble this spring. Goldman Sachs Group Inc. GS -1.86% lost more than $100 million in a wrong-way bet on regional natural-gas prices this spring, a setback that played a large role in the New York bank’s subpar second-quarter trading performance. Goldman wagered that gas prices in the Marcellus Shale in Ohio and Pennsylvania would rise with the construction of new pipelines to carry gas out of the region, said people familiar with the matter. Instead, prices there fell sharply in May and June as a key pipeline ran into problems . Goldman said in July that the quarter ended June 30 was the worst ever for its commodities unit, which has been one of the firm’s most consistent profit centers and a training ground for many of its top executives, including Chief Executive Lloyd Blankfein. The setback extended a broader trading […]

Are Investors Bailing On U.S. Shale?

18 Aug 2017   Shale Oil

U.S. oil production continues to grow, with the EIA reporting a shocking jump in output last week. Total U.S. production rose to 9.5 million barrels per day (mb/d) for the week ending on August 11, up 79,000 bpd from a week earlier. That puts U.S. output at the highest level in nearly two and a half years. The U.S. shale industry has been adding new supply pretty much uninterrupted since late last year, despite volatile swings in oil prices over the course of 2017. In fact, the gains continued even through the price downturn in June, which saw WTI flirt with the $40 per barrel threshold, which, at first glance, suggests that the shale industry is doing just fine. To be sure, some shale drillers have breakeven prices well below the prevailing market price, allowing them to make money even during those tough times. But in the aggregate, the […]

Alaska’s Conflicted Oil Future

18 Aug 2017   Arctic

Alaska, the final frontier, may be the next oil industry goldmine thanks to aggressive drilling, changing environmental policies, and a bullish administration. Not all Alaskans, however, are on board with the transition, and the issue is now more divisive than ever. Take for example, the polemic Hilcorp, the fast-growing and assertive Houston-based company that while keeping a low public profile, has made a name for itself within the energy industry as a money-making powerhouse. Though the company is less than 30 years old, Hilcorp founder Jeffery Hildebrand has swiftly become a billionaire . His employees are some of the best-paid in the business, famously receiving six-figure bonuses for meeting output goals. Their extreme success, however, comes at a high cost to the same oil-rich terrain that’s putting money in their pockets. Hilcorp is not just famous among energy moguls – it’s also infamous in environmentalist circles. The corporation has […]

Gazprom’s gas exports inch higher

18 Aug 2017   Russia

Russia natural gas company Gazprom said it’s scaling up its deliveries to consumers that would be fed eventually by a pipeline through Turkey. The company said its natural gas shipments to countries outside the Russian commonwealth were up 12 percent year-over-year for the period ending August 15. By countries, gas exports to Bulgaria were up 11 percent, up 13.2 percent to Greece, up 24.4 percent to Hungary, up 40.8 percent and 22.4 higher year-over-year for Turkey, according to Russia news agency Tass. The first leg of the pipeline would primarily feed the Turkish market, with the second leg expected for southern European demand. Gazprom in December approved a three-and-a-half-year loan to aid the construction of the planned pipeline. The […]

Russia Claims To Have Invented Alternative To Fracking

18 Aug 2017   Russia

Russian scientists and local oil field services companies claim to have created a technology for thermochemical gas fracturing that could be an alternative to hydraulic fracturing and could increase oil production by between 1.7 and 6 times, Russia’s news agency RIA Novosti reports , citing the University of Tyumen’s press service. In hydraulic fracturing, rocks are fractured with high-pressure injection of fluids, while the new breakthrough technology, as claimed by Russian scientists and media , is creating chemical reactions in the strata that contain oil. The chemicals react and emit heat and gas, which makes extraction easier and lifts well productivity, according to the scientists and researchers. The other upside in the technology, the Russians claim, is that the main component in the chemical reactions is ammonium nitrate, which is often used as fertilizer. According to Professor Konstantin Fedorov, Director of the Institute of Physics and Technology at the […]

UK Oil Production, Reserves and Future Projection

18 Aug 2017   United Kingdom

Production History and Reserves UK oil production peaked in 1999. The peak was probably pushed out a couple of years because of the major production interruptions following the Piper Alpha disaster. Production declined quickly until around 2011, then the high oil price allowed more brownfield and then greenfield developments that created a third local peak in 2016. Production is declining again this year but there are several large projects due that will create another peak in 2018 or 2019 (nearly equal to the 2016 one). After that terminal decline is likely. The chart below shows C&C production split according to the year of first production of the field. Like all such all diagrams, this shows that the largest fields were developed first and declined the slowest. Most data here is taken from the new UK Oil and Gas Authority (which replaced part of […]

Why Would Oil Demand Peak, Contrary to Peak Oil Supply?

18 Aug 2017   Peak Oil

People find it hard to believe that there is another side of the ‘Peak Oil Supply’ theory, which is ‘Peak Oil Demand’. The oil industry is quite familiar with the concept of a “Peak Oil Supply” but people find it hard to believe that there is another side of the theory, which is “Peak Oil Demand”. This article will examine why the concept of peak oil supply failed to materialize and why one should believe the concept of peak oil demand will materialize. Peak Oil Supply Theory Going back in history, the term “peak oil” was originally coined in the 1950s by M. King Hubbert who predicted that the US oil production would peak in 1970, and decline at the same rate as it arose. But in the history of the petroleum era, Matt Simmons will be remembered for calling attention to peak oil. In reality, whenever oil prices […]

Oil Falls as Production Increase Outweighs Stockpile Decline

17 Aug 2017   Prices

Oil prices fell to a three week low Wednesday as data showing an increase in U.S. oil production outweighed the largest weekly decline in oil stockpiles this year. U.S. crude futures declined for a third straight day, falling 77 cents, or 1.62%, to $46.78 a barrel on the New York Mercantile Exchange—their lowest settlement since July 24. Brent crude, the global oil benchmark, fell 53 cents, or 1.04%, to $50.27 a barrel on ICE Futures Europe. The amount of oil in U.S. storage tanks fell by more than 8.9 million barrels last week according to the latest figures from the U.S. Energy Information Administration—on par with the 9.2 million barrel drop anticipated by The American Petroleum Institute, an industry group. The decline was nearly three times the 3 million barrel drop forecast by analysts and traders surveyed by The Wall Street Journal. U.S. stockpiles have become a closely watched […]

Goodbye contango? Oil’s long march toward backwardation: Kemp

17 Aug 2017   Prices

“The rebalancing of the oil market desired by the leading producers has been a stubborn process,” the International Energy Agency wrote in its latest monthly oil market report. The agency’s evident frustration about the slow and uneven pace of rebalancing, and the conflicting signals about whether it is happening at all, is shared by many traders, analysts and investors. “The medium-term outlook for oil still looks challenging with, if anything, balances for 2018 having deteriorated in recent weeks,” hedge fund manager Andy Hall wrote to investors this month. The combination of a trendless market and the growing number of computer-driven trading programmes has made trading strategies based on supply and demand fundamentals increasingly difficult: […]

The Single Biggest Bullish Catalyst For Oil

17 Aug 2017   Prices

One of the key objectives for OPEC is to bring down inventories, a goal that has been elusive this year. But if the oil futures curve is anything to go by, the oil market is showing signs of tightening. Brent futures have recently begun to exhibit a state of backwardation , which is when near-term oil futures trade at a premium to contracts dated further off into the future. This is the first time in years that backwardation has occurred, and most analysts are taking it as a sign that the oil market finally could be getting closer to rebalancing. In the past, backwardations have accompanied a rebound in the oil market after a bust, while a contango (the opposite of backwardation) tends to occur when the market crashes because of a supply glut. There are several reasons why backwardation is bullish, which has been discussed in previous articles […]

Will Oil Demand Growth Be Enough To Tackle Inventories?

17 Aug 2017   Oil Supply, Prices

The first is a report on bets taken by the highly successful hedge fund manager Pierre Andurand on the direction for prices. Andurand is predicting prices will rise above $100 per barrel by 2020 as demand growth exceeds the ability of the U.S. shale industry to meet demand at current prices. The article quite reasonably points out investment in the oil industry has fallen dramatically as prices have declined, saying on average 40 new developments were approved annually between 2007 and 2013 by the oil majors. That number fell to just 12 last year, as the low oil price left only the most simple and straightforward projects viable. Furthermore, Andurand believes the U.S. shale industry will find it increasingly difficult to justify new investment if prices remain at current levels — as new fields will become more expensive to develop and maintain, the industry is surviving on the low-hanging […]

Analysts See OPEC Compliance Erode In H2 2017

17 Aug 2017   OPEC

OPEC’s compliance with the output cuts will continue to slip in the second half this year, despite recent rhetoric reiterating the cartel members’ commitment to stick to the production quotas, according to JP Morgan. “More positive overtures from the Saudi Arabian and Iraqi Energy Ministers on their respective commitments to the agreed cuts helped bolster market sentiment on the outlook for prices,” JP Morgan said in a note, as quoted by the Trend news agency. At the beginning of last week, OPEC held a meeting with some of the producers and cited its members Iraq and the UAE, as well as non-OPEC signatories to the deal Kazakhstan and Malaysia, as laggards in compliance. OPEC however added that they “all expressed their full support for the existing monitoring mechanism and their willingness to fully cooperate.” The jawboning continued when Iraqi oil minister Jabar al-Luaibi visited Saudi Arabia last week to […]

Turkey Expands Influence In Kurdish Energy Sector

17 Aug 2017   Iraq, Turkey

Over the past 12 years, Turkish energy companies have moved into the Kurdish energy sector at great pace in line with the sector’s rapid expansion under the semi-independent government in Erbil. Energy cooperation between the Kurdistan Regional Government (KRG) and the Turkish government is the single greatest factor for energy companies’ involvement in the region and the commercial realization of this cooperation is no doubt the result of high-level political alignment. The recent downturn in the global petroleum market, the outbreak of war in North-Western Iraq, and internal political tensions have dampened investors’ expectations vis-à-vis energy sector viability in Iraqi Kurdistan. However, questions still remain as to which parties were the key beneficiaries of energy cooperation and how some of the most lucrative contracts were negotiated during the sector’s peak – many of these parties are primed to benefit should the industry pick up again. Humble Origins The KRG […]

Libya Boosts Oil Output At Biggest Field

17 Aug 2017   Libya

Crude oil output at Sharara–the biggest field in Libya, which is exempt from OPEC cuts–rose to 230,000 bpd on Tuesday—a 30,000 bpd increase just since Sunday, Bloomberg reports , citing an unidentified source familiar with the issue. In another boost to Libyan oil exports, the Zueitina oil terminal resumed loading, Merhi Abridan, head of the Zueitina workers’ union, told Bloomberg. The Zueitina oil terminal had ceased loading cargos on Sunday, as port workers protested, demanding better working conditions. This meant that oil coming from the fields around Zueitina was to be stored at the port for the duration of the protest, and a spike in exports would likely follow. As of Sunday, Bloomberg sources claim that Sharara’s output had fallen by 100,000 bpd over the past week, to 200,000 bpd. There had been an incident involving the theft at gunpoint of two vehicles property of Repsol, the company operating […]

Saudi Arabia crude oil exports fall slightly in June: JODI

17 Aug 2017   Saudi Arabia

Saudi Arabia’s crude oil exports in June fell slightly to 6.889 million barrels per day (bpd), 35,000 bpd lower than the May level, official data showed. OPEC’s biggest producer also pumped 10.070 million bpd in June, up 190,000 bpd from May, according to a posting on the Joint Organizations Data Initiative (JODI) website. The kingdom increased direct-burn crude used for power generation in June as demand for electricity increases during the hot summer months. It used 680,000 bpd of crude oil to generate power in June, up 76,000 bpd from May. The Muslim fasting month of Ramadan, when the use of electricity surges, ran from May 27 to June 25 this year. Saudi demand for oil products rose to 2.634 million bpd in June, up from 2.535 million bpd in May. The kingdom also continued to draw crude oil from its inventories, which fell […]

With a wary eye on Iran, Saudi and Iraqi leaders draw closer

17 Aug 2017   Iraq, Saudi Arabia

It was an unusual meeting: An Iraqi Shi’ite Muslim cleric openly hostile to the United States sat in a palace sipping juice at the invitation of the Crown Prince of Saudi Arabia, the Sunni kingdom that is Washington’s main ally in the Middle East. For all the implausibility, the motivations for the July 30 gathering in Jeddah between Moqtada al-Sadr and Crown Prince Mohammed bin Salman run deep, and center on a shared interest in countering Iranian influence in Iraq. For Sadr, who has a large following among the poor in Baghdad and southern Iraqi cities, it was part of efforts to bolster his Arab and nationalist image ahead of elections where he faces Shi’ite […]

Venezuela mulls ‘law against intolerance,’ aimed at dissenters

17 Aug 2017   Venezuela

Venezuelans who express “hate or intolerance” will be jailed for up to 25 years under a bill pending in the country’s newly-formed constituent assembly, a measure the opposition fears will be used by the government to further crack down on dissent. President Nicolas Maduro has faced a cacophony of international criticism – from the United Nations to Pope Francis – since he installed the 545-member assembly stacked with Socialist Party allies earlier this month. The president defends the new legislative superbody as Venezuela’s only hope for peace and prosperity The OPEC member has been rocked by anti-government unrest that has left more than 120 people dead while the country sinks further into a recession compounded by triple-digit inflation and acute food shortages. Local rights group Penal Forum estimated […]

Booming thermal coal price on China demand cheers miners

17 Aug 2017   China, Coal

Australian thermal coal prices for spot cargoes above $100 a tonne, lifted by reports of strikes and strong Chinese demand, are providing a boost in earnings and share prices for miners like Glencore and Whitehaven Coal. A crackdown on illegal mining and pollution in China has curbed domestic supplies, just as a heat wave and lower hydro power output have boosted demand for coal for power generation, forcing up prices. A similar squeeze in 2016 pushed prices to $114 a tonne and miners are again eyeing windfall profits, despite warning that the market is volatile. “Coal demand remains strong, especially in Asia,” said Paul Flynn, managing director of Whitehaven Coal. “Imports of thermal coal into China have been higher than anticipated, and when combined with weather related constraints on supply from Indonesia and some production issues in Australia, have pushed up the price of seaborne thermal […]

Prominent China debt bear warns of $6.8tn in hidden losses

17 Aug 2017   China

One of the most influential analysts of China’s financial system believes that bad debt is $6.8tn above official figures and warns that the government’s ability to enforce stability has allowed underlying problems to go unchecked. Charlene Chu built her reputation as China banking analyst at credit rating agency Fitch, where she was among the earliest to warn of risks from rising debt, especially in the country’s shadow banking system. Today many of her original views — such as concern about Chinese banks concealing risky credit in off balance sheet vehicles — have become consensus among analysts. “Everyone knows there’s a credit problem in China, but I find that people often forget about the scale. It’s important in global terms,” Ms Chu said in an interview by phone from New York. Ms Chu left Fitch in 2014 to help launch the Asia operation for Autonomous Research, which specialises in analysis of financial institutions. In her latest report, Ms Chu estimates that bad debt in China’s financial system will reach as much as Rmb51tn ($7.6tn) by the end of this year, more than five times the value of bank loans officially classified as either non-performing or one notch above. That estimate implies a bad-debt ratio of 34 per cent, well above the official 5.3 per cent ratio for those two categories at the end of June. Charlene Chu was one the first analysts to warn of risks from China’s rising debt

Oil producers signal offshore return in latest Gulf of Mexico auction

17 Aug 2017   Offshore

Major oil producers pushed up high bids at a Gulf of Mexico offshore auction to $121 million on Wednesday, a nearly seven-fold increase from a year ago, as their return to deep water exploration gained momentum. This compared with $18 million in high bids at the Bureau of Ocean Energy Management’s (BOEM) Outer Continental Shelf auction last summer. Winners will be announced after a 90-day review. Some producers have signaled that they expect Gulf of Mexico projects to become more profitable now that they have trimmed operations to adapt to low oil prices. Offshore drilling typically requires higher prices for producers to break even. Royal Dutch Shell claimed the largest number of blocks, with 19 high bids valued at a combined $25.1 million. Chevron Corp followed with 15 high bids totaling $27.9 million. Anadarko Petroleum Corp won 10 blocks for $10.6 million. Exxon Mobil Corp took […]

U.S. crude stockpiles fall the most in nearly a year: EIA

17 Aug 2017   Oil Supply, Prices

U.S. crude oil inventories fell for the seventh consecutive week in their largest drawdown in nearly a year while exports and production continued to rise, the Energy Information Administration said on Wednesday. Crude inventories fell 8.95 million barrels in the week to Aug. 11, nearly three times analysts’ expectations for a decrease of 3.1 million barrels and the largest draw in since the week to Sept. 2. At 466.5 million barrels, crude stockpiles were at their lowest since January 2016. Including emergency reserves, crude stocks were at 1.15 billion barrels, the lowest levels since October 2015, according to EIA data. […]

Summary of Weekly Petroleum Data for the Week Ending August 11, 2017

17 Aug 2017   Oil Supply

U.S. crude oil refinery inputs averaged about 17.6 million barrels per day during the week ending August 11, 2017, 9,000 barrels per day less than the previous week’s average. Refineries operated at 96.1% of their operable capacity last week. Gasoline production decreased last week, averaging over 10.0 million barrels per day. Distillate fuel production decreased last week, averaging 5.3 million barrels per day. U.S. crude oil imports averaged over 8.1 million barrels per day last week, up by 364,000 barrels per day from the previous week. Over the last four weeks, crude oil imports averaged over 8.0 million barrels per day, 4.7% below the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 667,000 barrels per day. Distillate fuel imports averaged 167,000 barrels per day last week. U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum […]

Known Gulf of Mexico deepwater areas most attractive in modest lease sale

17 Aug 2017   Offshore

US Gulf of Mexico Lease Sale 249 on Wednesday was not a barn-burner, but it did show a measure of competitive bidding in the deepwater and even boasted two eight-figure bids and dozens more that topped $1 million each. The sale appeared to highlight majors’ preferences for known deepwater areas, since shallow-water bidding accounted for a scant 10 blocks and offers received for these were mostly under $200,000 each. But sale sponsor Bureau of Energy Management officials expect interest in shallow water bidding to improve in subsequent sales, owing to the agency’s recent lower royalty relief reduction aimed at drumming up more development in that arena. “We only provided a month’s time for [operator] interest in the lower royalty,” said Mike Celata, BOEM Gulf regional director, in a post-sale telephone press conference. “My expectation is that in March we’ll have greater interest.” In July, the agency reduced the royalty […]

Has Gulf Of Mexico Production Peaked?

17 Aug 2017   Offshore

Amid strong indicators that U.S. shale production will reach new heights by the end of 2017, efforts to promote further exploration and production in the Gulf of Mexico, long a center of U.S. energy output, have run into some headwinds. Some even doubt that Gulf production, much of it from expensive off-shore rigs, can compete in the “lower for longer” price climate that will likely endure through the end of 2017. With a much longer lag-time for off-shore projects, production in the Gulf of Mexico (GOM) is less sensitive to short-term changes in price. But with the consensus around lower prices growing, it’s possible likely that investment in offshore may taper off, as investment seeks out more reliable returns from shale fields. On Wednesday the first bids on new oil and gas leases in the Gulf of Mexico were offered. The Secretary of the Interior, Ryan Zinke, revealed plans […]

Russian company Lukoil reports slight dip in oil production

17 Aug 2017   Russia

Russian energy company Lukoil said total oil production for the second quarter was slightly lower, in part because of a reduction from operations in Iraq. One of Russia’s largest energy companies, Lukoil said second quarter production of crude oil was around 156 million barrels, a decline of about a half percent from the first quarter. Russian oil production for the period was 148 million barrels, a decline of about 0.3 percent. Its share of oil from the West Qurna-2 project in Iraq actually increased for the second quarter by 19 percent, but year-on-year compensation was lower by 75 percent to 6.4 million barrels for the first half of the year. “The year-on-year dynamics was mainly driven by the reduction […]

Russian scientist says leave coal in the ground

17 Aug 2017   Coal, Russia

Nearly all of the world’s coal reserves and 30 percent of its oil should be left alone in order to keep climate change at bay, a Russian scientist said. Mikhail Yulkin, the director general at the Center for Environmental Investments, told Russian news agency Tass that investors were moving to low-carbon energy resources with such vigor that it was “needless” to call it alternative energy. A report last week on the global energy balance from the International Energy Agency found coal was more or less at parity with natural gas as an energy source for the first time ever. According to the IEA, global coal production declined last year by 458 million tons as advanced economies move toward greener resources. “In order to […]

Will EV’s Break The Grid?

17 Aug 2017   Electric Cars

While the UK government has vowed to end the sale of all new conventional gasoline and diesel cars by 2040, as part of a wider plan to fight air pollution, there is talk that electricity demand will lead to a fast and dirty response to a strained power grid. But here’s what everyone’s missing in that debate: While EV sales are going to rise and electricity demand to power them will strain the grid and lead to less-than-ideal power generation solutions, the whole plan will help clean power generation to increase its market share. Nothing is black and white. And big transformations are never immediate. We’re not talking about an overnight elixir that will magically clean up the air; we’re talking about a step-by-step process that is gradually less dirty. Overloading the Grid (Mind the Gap) The UK’s National Grid anticipates peak demand from electric vehicles alone being around […]

Oil prices edge up on falling US crude stocks, but global glut still weighs

16 Aug 2017   Prices

Oil prices edged up on Wednesday on a fall in U.S. crude inventories, although markets were still being weighed down by general oversupply. Brent crude futures LCOc1 were at $51.02 per barrel at 0218 GMT, up 22 cents or 0.4 percent from their last close. U.S. West Texas Intermediate (WTI) crude futures CLc1 were at $47.70 a barrel, up 15 cents, or 0.3 percent. U.S. crude inventories fell by 9.2 million barrels in the week to Aug. 11 to 469.2 million, industry group the American Petroleum Institute said on Tuesday. That compared with analyst expectations for a decrease of 3.1 million barrels. “The market took this as a mildly bullish report,” said William O’Loughlin, investment analyst at Rivkin Securities. However, gasoline stocks climbed by 301,000 barrels, compared with analyst expectations […]

Oil Prices Rise As API Reports Huge Crude Inventory Draw

16 Aug 2017   Prices

The draw compares to analyst expectations of a draw of 3.6 million barrels for the week ending August 11. Gasoline inventories rose by 301,000 barrels for the week ending August 11, compared to analyst expectations that inventories for the fuel would fall by 1.5 million barrels. Crude prices fell on Tuesday—despite an export terminal closure in Libya on the back of worker protests—on weakening China demand. China’s oil refineries saw their lowest daily throughput in July at 10.71 million barrels per day according to China’s National Bureau of Statistics on Monday. OPEC’s noncompliance also continues to weigh on traders, with OPEC’s MMOR last week showing a 172,600-barrel-per-day increase in oil production in July for the cartel, based on secondary sources. Total daily production for OPEC in July was 32.869 million bpd—up from 32.696 million bpd. Traders are also watching US shale production, which is trudging on full steam ahead […]

Offshore drilling mergers raise hopes for sector recovery

16 Aug 2017   Offshore

Transocean’s GSF Development Driller II crosses Istanbul’s Bosphorus on its way to the Black Sea September 6, 2014.Murad Sezer HOUSTON (Reuters) – Mergers among offshore oil drillers are raising hopes that consolidation could bring relief to a sector struggling to emerge from an industry downturn triggered by low crude prices. Transocean Ltd, one of the world’s largest offshore drilling contractors, on Tuesday agreed to buy Norwegian rival Songa Offshore SE for $1.1 billion. The deal follows Ensco Plc’s pending purchase of Atwood Oceanics Inc in a transaction valued at $839 million. The deals would bolster both companies’ positions in major oil and gas-producing regions: Transocean in the North Sea and Ensco in offshore Australia. They come as oil prices remain below where they began the year, adding to worries about excess rig capacity continuing into the next year. “I think everyone realizes that consolidation is important […]

Iran sees banking channels opening up

16 Aug 2017   Iran

With foreign energy companies signing early deals with Iran, the country’s president said banking channels to the world could be opening up. Last month, a consortium of French energy company Total, China National Petroleum Corp. and Petropars Ltd., a subsidiary of the state-run National Iranian Oil Co., signed a 20-year contract to help develop parts of the giant South Pars natural gas field in the Persian Gulf. It was the first contract since Iran implemented a multi-lateral nuclear deal in early 2016. With Iranian President Hassan Rouhani earning a second term in office earlier this year, the Total-led deal cleared a path for future investments from foreign energy companies. Rouhani, who helped steer the post-sanction economy, set a goal of signing 10 new […]

IEA: OPEC Must Extend Cuts To Balance Oil Markets

16 Aug 2017   OPEC

It has long been the suspicion of many oil market analysts that the U.S. shale industry was likely too nimble for OPEC to really hammer it into oblivion. That proved to be the case after two years of low prices – shale production came off from peak levels, but held up through 2016. That was long enough to force OPEC’s hand. The deal that OPEC put in place late last year, taking a combined 1.8 million barrels per day (mb/d) off the market, really took the pressure off of shale producers. OPEC decided that it would sacrifice some production in order to boost revenues through higher prices. That threw a lifeline to shale producers, and shale output has made a swift comeback since last year. Now, there is a growing expectation that OPEC can’t keep its cuts going. The OPEC/non-OPEC coalition had hoped that the market would have balanced […]

Libyan Oil Liberator Aims To Boost Russian Ties

16 Aug 2017   Libya, Russia

In a sign that Libya’s powerful military is moving closer to Russia, Libyan National Army (LNA) commander Khalifa Haftar—the man responsible for recapturing the country’s oil ports and essentially restarting production—is meeting top officials in Moscow. Haftar is the key political and military rival to the Western-backed central government in Tripoli, and his trip to Russia indicates a fragile game of alliances that could upset the delicate balance of control over Libyan oil. Last weekend’s was not Haftar’s first visit to Moscow: he had visited Russia at least twice in the past year, and has been forging friendly relations with Moscow, while the U.S. is supporting the increasingly weakened internationally recognized Government of National Accord (GNA). During Haftar’s meeting with Russia’s Defense Minister Sergei Shoigu this past weekend, “Special attention was paid to situation in the North Africa focusing on situation in Libya. The parties stressed the importance of […]

Libya’s Sharara oilfield output dropped after security breaches: engineer

16 Aug 2017   Libya

Production at Libya’s Sharara oilfield dropped to between 130,000 and 150,000 barrels per day (bpd), from about 280,000 bpd, because of recent security breaches, an engineer who works at the field said on Tuesday. Field employees had difficulty accessing some of the field’s facilities after cars and mobile phones were stolen, said the engineer, who did not want to be named because he was not authorized to speak to the media. It was not clear if production at Sharara had recovered since the security problems, which occurred several days ago. On Monday, the National Oil Corporation (NOC) said security breaches in recent days were the result of an individual act, that the perpetrator had been punished and that the field was safe and secure. It gave no information about any impact on […]