August 27, 2019 /07:14PM / By Tom Kool of Oilprice.com /
Header Image Credit: scmp.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.
- In 2018, U.S oil production rose by 17
percent, mainly in the form of light oil, which generally is defined as oil
with an API gravity of 40 or higher.
- According to the EIA, production of light oil grew from 1.2
mb/d in 2015 to 5.8 mb/d in 2018, accounting for about 55 percent of total
Lower 48 output in 2018, up from 50 percent in 2015.
- Meanwhile, U.S. oil imports tend to be heavier (much of
which comes from Canada). In 2018, the 7.5 mb/d average imports had API of 40
- China Petroleum and Chemical (NYSE: SNP) reported
a 24.7 percent decline in 1H2019 earnings, year-on-year, due to rising
downstream competition and weak demand.
- Range Resources (NYSE: RRC) and Oasis
Petroleum (NYSE: OAS) each fell more than 3 percent on Monday
after they were downgraded to Neutral from
Buy by Ladenburg Thalman. A week ago, Range Resources was upgraded to a â€œBuyâ€ rating
by MKM Partners.
- Verisk (NASDAQ: VRSK) agreed to acquire data firm
Genscape for $364 million. Genscape, known for oil market data, will become a
part of Wood Mackenzie.
Tuesday August 27, 2019
Mixed messages from President Trump at the G-7 summit in France have left
investors guessing on what happens next regarding the trade war. Shifting from
a hard line to a more conciliatory and upbeat note, Trump sowed confusion as higher
tariffs are days away from taking effect. But with the two leaders trapped in a
cycle of escalation, there is little face-saving room for a deal at this point. "The likelihood of any sort of sustainable deal was already a long-shot a week
ago. And now the political terrain on which you could create a deal is just so
infinitesimal," Jude Blanchette, a China expert at the Center for Strategic and
International Studies, told Bloomberg.
to meet with Rouhani? The G-7 summit produced very few
deliverables, but one interesting development was the possibility that Trump
would meet with Iranian President Hassan Rouhani. French President Emmanuel
Macron invited Iranian foreign minister Javad Zarif to the summit, and also
angled to convince Trump to negotiate with Iran. Trump suggested he was open to
the idea even as he was non-committal, while the Iranian side said that a future
meeting depended on the removal of sanctions. The idea appears likely to go
nowhere, but the atmosphere is notably different from two months ago, when
Trump was on the verge of launching a military strike.
yuan raises risks for oil. While financial markets were
left confused but hopeful after Trump's seemingly softer line regarding China,
the fact is that tariffs are set to rise next week. Also, China's currency has
weakened further, dropping to its weakest point since prior to the 2008
financial crisis. That will put deeper pressure on emerging
market currencies, which could slow oil demand and prompt central banks to take
more aggressive action to cut interest rates.
nears deal on gas pipeline. The Mexican government has reached a preliminary
agreement with private companies that could result in the startup of the South
Texas-Tuxpan marine gas pipeline. The project was completed in June but gas
flows have been stalled due to disagreements over pricing. The pipeline could
increase gas flows in Mexico by 40 percent.
said oil sold from pursued tanker. Iran said that the 2.1 million
barrels of oil aboard the closely watched tanker in the Mediterranean has been
sold, although it did not disclose the buyer.
Energy to buy SRC Energy for $971 million. Oil producer PDC Energy
(NASDAQ: PDCE) agreed to buy SRC Energy
(NYSEAMERICAN: SRCI) for $971 million in an all-stock deal. The
combined company will hold 182,000 net acres in the DJ Basin and 36,000 net
acres in the Permian Delaware.
pipeline vandalism in Nigeria soars 77%. The Nigerian
National Petroleum Corporation (NNPC) said that vandalism on its pipeline
infrastructure soared 77 percent in June. An estimated 106 individual points
were breached, up from 60 in May.
works to cut electricity dependence on Iran. Under pressure
from the U.S. government, Iraq is trying to reduce its dependence on Iran for
electricity. Iraq has received a rare exemption from U.S. sanctions on Iran
because it needs to import electricity to meet about 30 to 40 percent of its
needs. In the past nine months, Iraq has increased domestic power generation by
about 3.5 GW, and is also looking to import electricity from other neighbors,
according to the Wall Street Journal. The
situation presents another vulnerability for Iran.
war could lead to LNG delays. The U.S.-China trade war
could result in delayed final investment
decisions on new LNG export projects. "We see delays as likely given current
pricing headwinds, no resolution yet on the U.S.-China trade war, and minimal
contract announcements in recent months," BofA analysts wrote in a recent note.
for heavy fuel oil shrink. Looming IMO regulations on
high-sulfur fuel are cutting into prices for
heavy oil. Heavier oils had traded at a premium over the past year, largely due
to outages in Venezuela, Iran, declining production in Mexico and pipeline
bottlenecks in Canada.
looks to add LNG import terminals. Germany is expected to add four LNG
import terminals over the next four years, which could expand the market for
to split into two companies. Franco-American oilfield
services firm TechnipFMC PLC (NYSE: FTI) announced plans to split
into two companies, spinning off its engineering unit from its oil and gas
unit. The spinoff comes three years after Technip merged with FMC
sector worst performing in last decade. Energy stocks have
been the worst-performing sector in
the S&P 500 over the last year - and the last decade as well. Lately,
independent shale E&Ps have fared the worst, while integrated oil majors
have done a bit better, although they all still badly trail broader non-energy
scrambles for ethanol fix. Facing a growing backlash from
American farmers already reeling from the trade war and a series of waivers to
oil refiners for ethanol requirements, the Trump administration is casting
about for a way to help ethanol producers. One idea is to boost blending
mandates, but as Reuters reports, the surplus of
ethanol credits could blunt the intended impact.
Vehicles Will Win Big In A Recession
2. Oil Plunges On
Trade War Escalation - OIR 230819
3. U.S. To Drown
The World In Oil
4. Saudi Aramco
Posts Strong Cash Flows, Boosting M and A Prospects
5. Oil Markets On
Edge Over Trade War Uncertainty OIR 200819
6. U.S. Oil Data
Brightens A â€˜Dark Economic Universeâ€™ â€“ OIR 160819
7. Average Prices
of PMS, AGO, HHK and Cooking Gas â€“ July 2019
8. Oil Soars As The
U.S. Delays Trade War Tariffs
9. Oil Price Risk
Has Shifted To The Downside
10. Oil Markets On
Edge Despite Price Bounce â€“ OIR 090819
11. OPEC Production
Slumps To 5-Year Low