Tuesday, June 18, 2019 /06:19PM / By Tom Kool of Oilprice.com / Header Image Credit: Oilprice.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.
Chart of the Week
- U.S. oil imports from OPEC members
recently plunged to a thirty-year low. In March 2019, imports from OPEC
members dropped to 1.5 mb/d, the lowest since 1986.
- Soaring shale production has eliminated a large portion of
imports more generally.
- Most recently, however, imports from Venezuela have nearly
vanished due to sanctions. Last year, the U.S. imported more than 500,000 bpd
from the South American OPEC member.
Product Partners (NYSE: EPD) is seeking the sale of its 50
percent joint venture stake in a recently completed south Texas oil export
terminal, according to Reuters. Enterprise is considering building its own export
EQM Midstream Partners (NYSE: EQM)
hiked the cost estimate for its Mountain Valley Pipeline, a
natural gas pipeline aimed at carrying Marcellus shale gas to the U.S.
southeast. Legal and regulatory challenges forced another delay – EQM said the
completion date is now set for mid-2020 and the cost has climbed to $4.8-$5
billion, up from the last estimate of $4.6 billion. The original estimate was
$3.5 billion with an in-service date at the end of 2018.
A BP (NYSE: BP) drilling rig
heading to location in the North Sea was twice forced to turn back because of
protestors from Greenpeace. “We are determined to stop BP drilling new oil
wells in the North Sea,” Sarah North, Greenpeace International climate activist
on the Arctic Sunrise said in a statement.
Tuesday June 18, 2019
Oil prices started down on Tuesday but jumped
quickly on hopes of a U.S.-China trade deal. President Trump said that he will have an “extended meeting” with Xi Jingping next week in
Japan on the sidelines of the G-20. The Dow Jones Industrial Average surged by
more than 300 points on the news.
Argentina suffers nationwide blackout. Argentina suffered through a nationwide blackout, which even stretched into
parts of Uruguay and Paraguay. The cause was unknown, but comes at a time of
U.S. wields cyber weapon. The U.S. is reportedly stepping up cyber infiltrations into the Russian power
grid as a way of deterrence. The “American strategy has shifted more toward
offense, officials say, with the placement of potentially crippling malware
inside the Russian system at a depth and with an aggressiveness that had never
been tried before,” the New York Times wrote.
Pompeo says U.S. doesn’t want war but keeps option on the table.
“We don’t want war. We’ve done what we can to deter this,” U.S. Secretary of
State Mike Pompeo said on Sunday. While the U.S. says Iran was behind the tanker attacks, some
experts say there isn’t enough evidence. Meanwhile, Iran said its uranium
enrichment would breach the limits of the 2015 nuclear deal within 10 days if
Europe did not help it circumvent U.S. sanctions. President Trump seemed to downplay the conflict, calling the tanker attacks “very minor,”
indicating a disagreement within his administration.
Saudi Arabia to push for OPEC extension. Saudi
Arabia is pushing for an extension of the OPEC+ production cuts and also plans
on pressing participating countries to abide by their limits rather than
overproducing, a Saudi oil adviser told the Wall Street Journal. That could take 300,000 to 400,000 bpd off of the
Iraq lifts production at West Qurna 1 field. Oil
production at Iraq’s massive West Qurna 1 field in the south has hit
465,000 bpd, up from 440,000 bpd.
Banks to include CO2 emissions in lending decisions for shippers.
For the first time, a group of top banks will include greenhouse gas emissions
in their decision-making when they provide loans to shipping company, according
to Reuters. A group of 11 banks, making up a fifth of global shipping
finance, will establish carbon intensity metrics.
Weak naptha demand a warning sign. Demand for
naptha is a leading indicator of the health of the global economy because it is
used in gasoline as well as in a range of petrochemicals. As Bloomberg reports, naptha demand right now is really weak, with
refining margins at their weakest in years. “Naphtha demand is simply very
sensitive to economic sentiment and growth,” Jan-Jacob Verschoor, London-based
director of Oil Analytics Ltd., told Bloomberg. “The trade war with escalating
tariffs, has killed manufacturing sentiment in the East, thereby weakening
margins of petrochemical plants.”
U.S. solar to grow by 25 percent this year. Solar
installations will jump to 13.3 gigawatts this year, up 25 percent from last year, according to
a new report. That is sharply up from a previous estimate of only 14 percent
growth. The upward revision comes as the U.S. installed 2.7 GW in the first
quarter, a record high for the first three months of the year.
New York and EU aim for net-zero CO2. The state of
New York is on the verge of passing into law one of the most ambitious state-level climate rules, which would slash the state’s
CO2 emissions by 40 percent below 1990 levels by 2030 and then by 85 percent by
2050. The remaining 15 percent would be offset. The European Union is close to
a deal on a similar target.
Democrats support oil and gas disclosure requirements. Most
leading Democratic candidates for president support strengthening standards through the Securities and
Exchange Commission to require the oil and gas industry to disclose their risks
to climate change.
Childhood cancer in PA worries shale gas industry.
A raft of rare cancer has hit southwestern Pennsylvania, near a concentration
of shale gas operations. A group of 100 environmental organizations sent a letter to the PA Governor Tom Wolf, calling for an investigation
into the links between the two. The letter also requests a halt to new
permitting for shale drilling.
IEA: Fossil fuel subsidies increased in 2018. The
world saw an uptick in fossil fuel subsidies in 2018, according to new data
from the IEA. The amount increased by a third to over $400 billion.
Total’s supercomputer to help find oil and gas. Total SA
(NYSE: TOT) has a new supercomputer that it believes will make oil exploration cheaper and
Canadian oil outlook downgraded on pipeline woes.
The Canadian Association of Petroleum Producers (CAPP) lowered its medium-term production growth forecast due to the lack
of pipelines. The group now sees Canadian oil growing by 1.4 percent per year,
half the rate the group expected five years ago.
Shipping costs soar. Because of the tanker attacks
in the Gulf of Oman, insurance costs have spiked. According to Bloomberg, war risk premiums have shot up to $185,000 for
supertankers traveling to the Persian Gulf, and were up to $50,000 last month
after the first wave of attacks.
ConocoPhillips to step up Eagle Ford drilling. ConocoPhillips
(NYSE: COP) is preparing for an increase of drilling in the Eagle Ford shale.
Conoco’s subsidiary, Burlington Resources, is looking to obtain permits for 13
1. Average Prices
of PMS, AGO, HHK and Cooking Gas – May 2019
2. The Tanker
Attacks: A Storm In A Teacup – Oil Markets Refocus On Fundamentals
3. Saudi Arabia
Successfully Calms Oil Markets – OIR 110619
4. An OPEC plus Extension Is All But Certain – OIR
5. DPR Revokes Six Oil Licences To Recover Legacy Debts
6. Oil Is On The Brink Of A Bear Market– OIR 040619
7. Is Trump Reversing Course On Iran?
8. Oil Tanks On Fears Of U.S., Mexico Trade War – OIR
9. OPEC plus Has Capacity to Offset Iran Crude Supply
10. Déjà Vu: Oil Prices Stuck Once Again – OIR 280519
11. The Silver Lining Of An Oil Price Crash – OIR 240519
12. 4.87bn Litres of PMS Imported in Q1 2019 - NBS