October 08, 2019 /08:52PM / By Tom Kool of Oilprice.com
/ Header Image Credit: CNBC.com
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.
- U.S. oil exports increased from an average
of 966,000 bpd in the first half of 2018 to an average of 2.9 mb/d in the same
period this year.
- In June 2019, the U.S. set an average monthly record high
of 3.2 mb/d.
- The U.S. still imported 4.2 mb/d in the first half of 2019,
but that was down sharply from 6.1 mb/d in the first half of 2018.
- Occidental Petroleum (NYSE: OXY)
will delay its plans to divest
part ownership in pipeline operators Western Midstream Partners (NYSE: WES)
until next year because it could not find attractive offers.
- Continental Resources (NYSE: CLR) and
Petroleum (NYSE: WLL) were both downgraded by Credit
- Chevron (NYSE: CVX) bought a 40 percent stake
in three deepwater blocks held by Royal Dutch Shell (NYSE: RDS.A)
in the Gulf of Mexico.
Tuesday, October 8, 2019
U.S.-China trade talks resume on October 10, a high stakes negotiation that
leaves the global economy in the balance. Bloomberg reported that China is
likely going to attempt to narrow the talks, removing any proposal of reforms
to industrial policy and intellectual property. With the Trump administration
on the backfoot due to a weakening economy and a mushrooming impeachment
investigation, Beijing may believe it has the upper hand. That does not bode
well for a trade breakthrough.
plans Syria withdrawal. Turning back on a longstanding
partnership with Kurdish allies, President Trump said that Turkey was free to
launch an invasion to sweep aside Kurdish fighters in Northern Syria. The move
sparked a bipartisan rebuke, denouncing Trump
for abandoning allies.
pulls out of Iran gas project. CNCP has exited a $5 billion natural
gas project in Iran due to pressure from U.S. sanctions. Iran had hoped that
CNPC would take over from Total SA (NYSE: TOT), which
withdrew in the face of sanctions last year. The departure of CNPC is another
blow to the Iranian economy.
Perry engulfed in impeachment inquiry. Secretary of Energy
Rick Perry reportedly attempted to install two U.S. executives onto the board
of Ukraine's Naftogaz, sweeping him into the center of the impeachment inquiry
in the United States. He has denied any
Arabia and Iran quietly try diplomacy. Saudi Arabia and
Iran are tentatively opening a diplomatic avenue
to de-escalate tension, dramatically reducing the odds of a hot war. The New
York Times reports that the Trump administration's refusal to attack Iran led
to the thaw, as Riyadh came to the conclusion that it cannot count on
Washington. "The anti-Iran alliance is not just faltering, it's crumbling," Martin
Indyk, a distinguished fellow at Council on Foreign Relations and a former
senior diplomat, said Thursday on Twitter. "MBZ has struck his deal with Iran;
MBS is not far behind."
oil market in 2020s? While oil futures over the next few
years remain subdued, a new report says that the market could tighten up
significantly in the 2020s, cutting against a narrative of peak demand and
oversupply. "[W]e are increasingly confident that failure of demand growth to
crater, much less peak, constitutes the next big 'surprise' in the oil market," Rapidan Energy said in a note. Spare capacity is "too low to cap prices, much
less mitigate geopolitical risk." The consultancy is skeptical of the mass
adoption of EVs and says demand will continue to rise.
admin opens 725,000 acres in California for drilling. The
Bureau of Land Management opened 725,000 acres in
California for oil and gas development.
flaring stays near record high. The rate of flaring and
venting in the Permian basin stabilized in the range of 600 million to 650
million cubic feet per day in the third quarter, according to Rystad Energy. The recent
startup of the Gulf Coast Express natural gas pipeline could reduce venting and
flaring in the fourth quarter. "However, it should be noted that the
significant number of new well connections in the second half of 2019 might
result in a sustained high flaring level, because from an operational
perspective, associated gas flaring is normal in the first two weeks following
an oil well completion," Artem Abramov of Rystad Energy said in a statement.
Energy Corp. files for bankruptcy. EP Energy
Corp. (OTCMKTS: EPEG) filed for bankruptcy
protection, and with debt at $4.6 billion, it is the largest bankruptcy filing
in more than three years.
could lose 80 percent of its value. Tesla (NASDAQ:
TSLA) could lose 80 percent of its
value or disappear entirely according to an NYU professor of business. "Tesla
doesn't have the scale to compete in a well-run, low-margin business - auto," he said.
production falls to 600,000 bpd. Venezuela's oil production
fell sharply in September
to 600,000 bpd, down from over 700,000 bpd a month earlier. Poor
infrastructure, brimming inventories and a
lack of oil tankers docking at Venezuela's ports forced upstream production
redetermination could hurt U.S. shale. For the first time
since 2016, lenders could cut the credit available to
shale drillers, which could tighten the noose on the shale boom. According to a
survey from Haynes and Boone, a majority of respondents - including both oil
and financial executives - expect tighter credit conditions in the latest
shipping costs soar. The cost of chartering a very large
crude carrier (VLCC) from the U.S. Gulf Coast to Asia has spiked by $10 million, or
$5 per barrel, in the wake of American sanctions on a Chinese shipping giant.
The move comes at a time when another portion of tankers are sidelined as they
are undergoing maintenance ahead of IMO regulations on maritime fuels. The
soaring cost of shipping could curtail U.S. oil exports, which may depress WTI
relative to other benchmarks. "Asia has been pulling barrels from everywhere," Michael Tran, an analyst with RBC Capital Markets, told the WSJ. â€œIf it becomes
uneconomical to ship U.S. barrels to Asia, that essentially leaves barrels
stranded in the U.S."
Oil sells high-carbon assets...but emissions may not decline.
Under pressure from shareholders, the oil majors are exiting high-carbon projects.
But divestment often means offloading the project to a smaller company who has
more aggressive plans for development. The conundrum is a major challenge as
the oil industry seeks to lower emissions.
- A Crisis
Looms Over U.S. LNG
Markets: Everything Is About Weak Demand
Optimism In Oil Won't Last - OIR 011019
- Oil Slides
As Middle East Tensions Fade - OIR 270919
- Saudi Aramco
Ramps Up IPO Preparations Despite Weakened Demand Outlook
Maritime Organization 2020 Deadline Fast Approaching
- Where Has
The Risk Premium Gone For Oil? - OIR 240919
- Fear Of An
Iran War Sends Oil Prices Up - OIR 200919
- The Biggest
Day For Oil In 50 Years - OIR 170919
Prices Of PMS, AGO, HHK and Cooking Gas - August 2019
- Platts: Oil
Could Test $80 After Attacks In Saudi Arabia