Friday, June 28, 2019 /20:05PM / By Tom Kool of Oilprice.com / Header Image Credit: Oilprice.com
Oil markets are in limbo as the G20
conference takes place and OPEC+ prepares to meet in Vienna to discuss a
possible production cut extension.
June 28th, 2019
Oil prices moved higher at the end of this week, on the eve of a highly
anticipated meeting between Donald Trump and Xi Jingping, which could result in
a breakthrough in trade negotiations, an agreement to resume talks, or a
collapse and subsequent increase in tariffs. On Monday, OPEC kicks off its
meeting in Vienna. “The next few days will provide a much-needed dose of
clarity for the oil balance over the coming months,” PVM’s Stephen Brannock said in a note.
“Market bulls will be (hoping) that the G20 summit will provide a trade
breakthrough ... All the while, the supply side of the oil coin continues to
display bullish signals,” he added.
Europe sprinting to keep Iran on board. European
governments will “double down” on efforts to keep economic ties alive with
Iran, in an effort to keep the nuclear deal on life support, according to the Wall Street Journal. The EU has tried to develop a financing mechanism to circumvent U.S.
sanctions but few foreign companies are willing to do business in Iran. Iran
said that it would breach limits on uranium stockpiles as soon as this weekend.
The last-ditch effort looks set to fail.
U.S. to assemble naval watch in Persian Gulf. The
U.S. is hoping to enlist other nations in an effort to keep an eye on the
Persian Gulf, according to the Wall Street Journal. The U.S. would contribute ships and aircraft but operational control
would be headed by another nation. The plan aims to present deterrence to Iran,
securing oil shipment lanes through the Strait of Hormuz.
Saudi investment to bring Russia on board. Saudi
Arabia is set to invest $5 billion
in Russia this year, and many analysts believe that Saudi investments are
inducements to keep Russia on board with an extension of the OPEC+ production
Philadelphia refinery set to close. Philadelphia
Energy Solutions may permanently shut down its damaged refinery, decimated from a series of explosions last week.
PES may try to sell the complex as well.
Drillers use gas for electricity. Permian drillers
are beginning to use some of their surplus gas to power their operations, a
practice that will save on costs, reduce flaring and emissions, according to Bloomberg.
Kinder Morgan wins court decision for gas pipeline. Kinder
Morgan won a court
decision that will allow them to move forward with a natural gas pipeline,
easing the company’s way to plan its own route and acquire land without a
ConocoPhillips: U.S. to lead global supply growth. The
U.S. will be the dominant source of supply growth through the 2030s, according
to ConocoPhillips (NYSE: COP). The company sees infrastructure bottlenecks
having only a temporary impact on the sector, “but we don’t foresee those being
permanent issues,” ConocoPhillips’ chief economist Helen Currie told S&P Global Platts. “There are plenty of projects along the Gulf Coast.”
Investors with $34 trillion urge climate change action. Investors
managing more than $34 trillion in assets are demanding urgent action from
governments at the G20 to address climate change, according to Reuters.
Renewables surpass coal. For the first time ever,
renewable energy generated more
electricity in the U.S. than coal on a monthly basis.
India looks for alternatives to Iran. Indian Oil
Corp., a state-run company, is looking to replace 70 percent
of its Iranian imports with crude from Saudi Arabia and the United States,
according to S&P Global Platts.
Tesla aiming to reach sales target. Despite
financial distress and investor scrutiny, Elon Musk said that Tesla
(NASDAQ: TSLA) could reach its second quarter sales target if
everyone goes “all out.” Tesla hopes to reach a record target of 90,700 units
sold for the quarter.
Exxon to invest in carbon capture. With an eye on
future carbon restrictions, ExxonMobil (NYSE: XOM) said on
Thursday that it would invest in a new carbon-capture tech company, a joint
venture with Global Thermostat, which has a pilot project in Alabama.
Canada explores fuel standards with California. Canada
and California announced an agreement
to harmonize fuel economy standards, bolstering California’s battle against the
Trump administration’s effort to slash standards. Fearing a patchwork of
markets, automakers have urged the White House not to gut the standards, to no
avail. Instead, California will press ahead with its own standards, and
Canada’s announcement to join expands the North American market for more
BASF to slash 6,000 jobs. BASF SE plans to cut
6,000 jobs worldwide in a sign of weakening demand for petrochemicals,
according to Bloomberg.
Michigan sues to shut down Line 5. The
state of Michigan has sued to shut
down Enbridge’s (NYSE: ENB) aging Line 5 pipeline, a move
that could disrupt a significant chunk of midstream capacity from Canada. The
540,000-bpd pipeline has been the subject of controversy due to its risk to
water supply in Michigan. Enbridge wants to build a replacement, but has run
into regulatory roadblocks in Michigan.
1. Middle East
Tensions Move Oil Prices Higher – OIR 250619
2. War Worries Send
Oil Prices Soaring – OIR 210619
3. Fitch Ratings
Updates Oil Price and Lowers Gas Price Assumptions
4. Are Oil Markets
At A Turning Point? – OIR 180619
5. Average Prices
of PMS, AGO, HHK and Cooking Gas – May 2019
6. The Tanker
Attacks: A Storm In A Teacup – Oil Markets Refocus On Fundamentals
7. Saudi Arabia
Successfully Calms Oil Markets – OIR 110619
8. An OPEC plus
Extension Is All But Certain – OIR 070619
9. DPR Revokes Six
Oil Licences To Recover Legacy Debts
10. Oil Is On The
Brink Of A Bear Market– OIR 040619
11. Is Trump
Reversing Course On Iran?
12. Oil Tanks On
Fears Of U.S., Mexico Trade War – OIR 310519
13. OPEC plus Has
Capacity to Offset Iran Crude Supply Cuts