January 15, 2019 08.39 PM / By Tom Kool Editor,
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.
of the Week
• Iraq’s oil production topped 4.6 million barrels per day
(mb/d) in late 2018, roughly double production levels from a decade earlier.
• Iraq is the second largest oil producer in OPEC, and holds
the world’s fifth-largest oil reserves,according to the EIA.
• About 90 percent of Iraq’s oil production comes from the
massive oil fields in the south near Basra and the Persian Gulf. The remaining
10 percent comes from the oil fields in the north, some of which are in
disputed territory, but most of which are run by the semi-autonomous region of
• A Colorado Supreme Court ruling overturned a lower state court ruling that ordered state regulators
to prioritize public health and environmental impacts when licensing oil and
gas drilling. The state Supreme Court ruling is a win for the industry.
• A large crude distillation unit at ExxonMobil
(NYSE: XOM)’s Baytown refinery has shut down for maintenance. The unit will see 280,000 bpd of refining
capacity go offline for at least two months.
• Chevron (NYSE: CVX) was downgraded by HSBC to
Hold from Buy with a $122 price target, down from $136.
Tuesday, January 15, 2017
Despite troubling economic data from China which weighed on oil on Monday,
improving fundamentals are beginning to push crude prices upward.
Saudi Arabia: Russia’s cuts are slow. Saudi oil
minister Khalid al-Falih told CNBC on Sunday that Russia’s oil production cuts are “slower than I’d like,”
although he added that the OPEC+ coalition would succeed in balancing the oil
market this year. “Russia has started, slower than I'd like, but they've
started, and I am sure as they did as in 2017 they'll catch up and be a
positive contributor to re-balancing the market,” al-Falih said. Al-Falih added
that the OPEC+ cuts are on track to balance the market this year.
Oman says cuts can sustain $60. Oman’s oil
minister Mohammed Al Rumhi told Bloomberg that the OPEC+ deal would likely eliminate the oil market
supply surplus this year. “I think 1.2 million [barrels per day] would go a
long way” to eliminating the inventory glut. “The real test will come in the
second quarter” when seasonal demand picks up, he said. He added that the OPEC+
cuts could likely sustain $60 per barrel. China’s slowdown sinks oil prices. Oil prices sank on Monday after gloomy trade data from
China added further evidence of an economic slowdown. Both imports and exports
in China fell in December. “This data drives home just how negative of an
impact trade war is having on the Chinese and perhaps global economy,” Stephen
Innes of futures brokerage Oanda said in a report.
Haynesville shale to break new records. Natural
gas production in the Haynesville shale in Louisiana could soon break new
production records. The Haynesville added 1.3 billion cubic feet per day
(bcf/d) of output in 201, and could rise by an additional 0.7 bcf/d this year,
according to Rystad Energy. The increases come after years of stagnation. “We
conclude that Haynesville Shale’s revival, for the second year in a row, looks
sustainable. Supported by its proximity to a new LNG export terminal, gas
production will continue to grow, and achieving new all-time high gas
production levels should happen within a matter of months,” Rystad Energy
partner Artem Abramov said.
Saudi Arabia plans $10 billion refinery in Pakistan.
Saudi Arabia is planning to build a $10 billion oil refinery in Pakistan at the
deepwater port of Gwadar.
Saudi Arabia nearing U.S. LNG deal. Saudi Aramco
is considering an investment in at least one of four different U.S. LNG
projects and would announce a decision in the first half of this year,
according to the Wall Street Journal. Aramco is considering equity stakes in the projects, all
of which are located on the U.S. Gulf Coast.
U.S. may not extend Iran waivers. Brian Hook, the
U.S. State Department’s special representative for Iran, indicated in a Bloomberg interview that the American government would be much less
accommodative with sanctions waivers when they expire in May. Hook said the
U.S. had already successfully cut Iran’s oil exports from 2.7 mb/d to just 1
mb/d. “We are going to continue our path to get to zero [oil exports from
Iran].” However, he hedged on when they might happen, stating that the effort
to zero out Iran’s oil exports needs to be balanced against national security
and economic interests.
South Korea imports Iranian oil. South Korea began
importing Iranian oil in January after previously cutting purchases
to zero. The resumption in imports comes after Korea obtained a sanctions
waiver from the Trump administration.
U.S. issues sanctions warning on Nord Stream 2. The
U.S. ambassador to Germany warned German companies that they could face
sanctions if they moved forward with the Nord Stream 2 pipeline. Germany
diplomats are reportedly displeased, suggesting the U.S. ambassador has been flouting
Corruption probes target oil trading firms. A series of separate corruption investigations have
targeted a few of the world’s largest oil trading houses. Trafigura is under
the microscope for alleged bribery cases in Brazil as part of the country’s
sweeping Lava Jato investigation into Petrobras, Reuters reports. So too is Glencore (LON: GLEN), Vitol SA and
Mercuria Energy Group. Meanwhile, the Wall Street Journal reports that
Glencore, in a separate case, has provided loans to an Israeli businessman with
known corrupt ties to the government of the Democratic Republic of
Congo-related to a copper project in the DRC.
Saudi and Canadian cuts drain heavy oil supply. The
production cuts from Saudi Arabia and Canada have reduced the volume of medium
and heavier oil around the world, at a time when light oil supply from U.S.
shale is surging. Venezuela’s heavy oil supply has also been plunging for more
than a year. “The broad trend we are seeing is that it is a short market for
heavy crude,” Kurt Barrow, vice president of the oil markets, midstream and
downstream energy at IHS Markit, told Bloomberg.
U.S. considers oil sanctions on Venezuela. The
U.S. government has slapped several rounds of sanctions on Venezuela but has
repeatedly stopped short of targeting the country’s oil sector, which would
amount to a much harsher blow. However, the Trump administration is now
considering doing just that. “Until now, we have been going around the
edges,” a senior White House official told The Wall Street Journal, following President Nicolas Maduro’s second inauguration.
“Now it’s a new dynamic. We are no longer going to be tinkering along the
edges. Nowadays, everything will be put on the table.”
1. The Oil Bull
Market Is Back
2. Why Have Oil
Markets Turned So Bullish? – OIR080119
3. Oil Rallies On
Trade Optimism – OIR 040119
4. Oil Is At The
Mercy Of Financial Markets
5. Oil Prices Set
To Rebound In 2019 - OIR 281218
6. OPEC Battles To
Halt Oil Price Slide – OIR 211218
7. Average Prices
of PMS, AGO, HHK and Cooking Gas – November 2018
8. Oil Prices Crash
To 1-Year Lows – OIR 181218
9. Has OPEC
Stabilized Oil Markets? – OIR 141218
Lingers In Oil Markets Despite OPEC Cuts – OIR 121218
11. OPEC Surprises
Markets With Last Minute Deal - OIR 081218