April 09, 2019 07:38 PM / By Tom Kool Editor, Oilprice.com
Today, we will take a quick look at some
of the critical figures and data in the energy markets this week.
We will then look at some of the key market movers early this week before
providing you with the latest analysis of the top news events taking place in
the global energy complex over the past few days. We hope you enjoy.
- Between 2013 and 2017, Pennsylvania was the largest
exporter of electricity, shipping out 59 million megawatt hours (MWh) on
average each year.
- California, on the other hand, imported an average of 77
million MWh, the most out of any other state.
Norway’s opposition Labor Party withdrew support for oil exploration off the Lofoten Islands in the
Arctic, an environmentally sensitive area. With Labor moving against
exploration, there is now a solid majority in parliament to keep the area off
limits. Equinor (NYSE: EQNR) has said that the Lofoten Islands
are key to preventing Norwegian oil production from declining in the long run. Royal Dutch Shell (NYSE: RDS.A)
signed an agreement with Sinopec (NYSE: SNP) to jointly
explore shale oil and gas in China’s Shangdong province. “China’s shale oil has
very low permeability, which means very low per well output that makes the
economics hard to work,” an oil and gas official with China’s Ministry of
Natural Resources told Reuters.
- Callon Petroleum (NYSE: CPE) agreed to sell non-core assets in the Permian’s Midland Basin to
an unnamed buyer for $260 million.
Tuesday April 9, 2019
Oil prices hit a five-month high on Monday, with WTI surging above $64 per
barrel and Brent topping $71. “The mood is increasingly turning bullish, but
several feedback loops are about to start spinning that stand in the way of a
prolonged oil rally,” Norbert Ruecker of Swiss bank Julius Baer told Reuters. “Russia already signaled its willingness to raise oil
output from June. Fuel remains costly in emerging markets, with soft currencies
adding to high oil prices.”
Libyan oil faces potential disruptions. Battling
in and around Tripoli has intensified in recent days, with the Libyan National Army (LNA)
conducting some airstrikes on the city and its airport. The international
community, including the U.S., called on the LNA to cease fighting. Libya’s
main oil fields are away from Tripoli and are already in territory controlled
by the LNA. They don’t face immediate disruption, but because the LNA could
become stretched by fighting for Tripoli, the potential for outages is on the
rise. Oil prices spiked on Monday as a result of uncertainty.
Banks hike oil price forecast. A Wall Street
Journal survey of 12 investment banks finds rising expectations for oil
prices. The banks average forecast puts Brent at $68 per barrel this year, up
$1 from the same survey in February.
India delays Iran oil purchases. Indian refiners
are holding off on buying oil from Iran ahead of the expiration of U.S. waivers
on sanctions, according to Reuters. India had been granted a waiver by the Trump
administration to buy about 300,000 bpd, which was about half of what India was
importing prior to sanctions. Until the White House offers clarity on next
steps, India is delaying purchases, Reuters reports.
Shale industry risks output by maximizing short-term production.
A blockbuster report from the Wall Street Journal posits that the shale industry, in its quest to
aggressively ramp up output from wells, could be front-loading production but
reducing overall output over time. “In effect, frackers have jumped on a
treadmill and ratcheted up the speed, becoming ever more dependent on new
capital to keep oil production humming, even as Wall Street is becoming more
skeptical of funding the industry,” the WSJ wrote. Some wells are exhibiting an
increasing proportion of natural gas output relative to oil, a sign of dropping
reservoir pressure. In 2013, for instance, EOG Resources (NYSE: EOG) produced
an average of 227,000 barrels of oil from a well’s first year of production,
but last year the average well only produced 134,000 bpd. At the same time,
natural gas output jumped.
Shale industry using CO2 for more output.
Bloomberg profiled Occidental Petroleum (NYSE: OXY) and
its campaign to inject CO2 at its Permian wells to increase production. “We are
trying to be very conservative, but certainly we believe that we can improve
from 10-11 percent to 17-18 percent," Occidental CEO Vicki Hollub told Bloomberg in an interview. “It’s a lot. When you consider the scale
of the Permian basin, to do that will be amazing.”
Oil and gas ETFs performing well. Rising oil
prices and strong economic performance have led to a soaring start for energy-related ETFs. The Energy Select Sector SPDR
Fund is up more than 16 percent this year.
Trump to speed up pipeline approvals. President
Trump is expected to sign an executive order on Wednesday that could accelerate
the approval of new oil and gas pipelines by stripping states of some authority
to hold up projects due to environmental or public health concerns. Still, the
effect of the order is unclear since any such changes would require an act of
Congress. “An executive order cannot take off the table the ability of a state
to say no for reasons it believes are appropriate, and the venue for
adjudicating that is not the White House,” Christi Tezak, managing director at
ClearView Energy Partners, said in a Bloomberg interview.
Cheaper renewables makes climate challenge $10 trillion cheaper.
Falling costs for solar and wind has trimmed the price tag for meeting climate goals, according to the International
Renewable Energy Agency (IRENA). To meet the Paris Climate goals by 2050, the
world needs $115 trillion worth of investment in clean energy, down from the
$125 trillion estimate from last year.
New U.S.-Mexico gas pipeline about to come online.
The imminent startup of the Sur de Texas-Tuxpan marine pipeline is days away
from coming into operation, providing a new outlet for U.S. natural gas as well
as new supplies for Mexico.
ExxonMobil leading in new discoveries. ExxonMobil
(NYSE: XOM) has logged a series of new discoveries, which means the company
accounted for about 40 percent of new oil and gas discoveries in the first
quarter of the year.
Oil and gas industry face risks from heavy petrochemical investments.
Some speakers at the World Petrochemical Conference sounded the alarm about
slowing economic growth, trade risk and policy crackdowns on plastic, all of
which could put the industry’s major bet on petrochemicals in jeopardy.
“Plastic waste, I believe, is going to be the sustainability issue of our
time,” Jim Fitterling, CEO of Dow Chemical, said. He said a series of plastic bag bans “threatens our industry.”
1. Oil Hits $70 On
Libya Unrest, Crisis In Venezuela – OIR 050419
2. Sahara Group
Canvasses Intra-Africa Solution for Petroleum Sector Challenges
3. Axxela Now 100
Percent Owned by Helios
4. 5.32bn Litres of
PMS Imported Into Nigeria in Q4 2018 - NBS
5. Oil Hits 2019
High On Shale Slowdown - OIR 020419
6. Oil Breaks $60
As Bullish News Mounts - OIR 290319
7. Sahara Group
Advocates Adoption of Uniform Petroleum Products Standards in Africa
8. The World's
Largest Oil Company And Petrochemical Company Merge
9. Oil Prices Dive
On Economic Fears - OIR 220319