Tuesday, March 27, 2018 /08:03 AM / Oilprice.com
In today’s newsletter, we will take a
quick look at some of the critical figures and data in the energy markets this
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.
Urgent: Before we take a
look at this week’s data, we would like to inform you that we've just published
a special report on a breakthrough technology in solar. This report along
with several other reports will turn you into an expert in the rapidly growing
and dynamic solar power industry. Find out how you can consistently make money
from investing in renewable energy. Click here to find out more.
- Solar costs have fallen rapidly over the past
decade. The EIA estimates that solar system costs on a per-watt basis
declined by 10 to 15 percent per year between 2010 and 2016.
- There are various ways to estimate costs in the solar
industry, and a variety of sources, but the EIA puts the installed capital cost
of a fixed-tilt PV system at about $1.85 per watt in 2018.
- A single-axis tracking system has installed capital costs
of about $2.11 per watt this year, although other analysts have that figure
much lower today.
- SM Energy (NYSE: SM) said on Monday that its first quarter production would be
at the high end of its guidance, noting that Permian production exceeded
expectations. SM jumped by more than 2 percent in afterhours trading.
- Chevron (NYSE: CVX) said that its
oilfields in Venezuela are operating normally amid speculation that the
country’s oil output is plummeting across the board. Jay Johnson, Chevron’s
head of upstream operations, declined to comment when asked if PDVSA had requested Chevron divert oil
exports to Venezuelan refineries.
- Concho Resources (NYSE: CXO) said that the cost and time needed to drill a shale well
will continue to fall, dismissing concerns that the industry is set for cost
inflation. “The changes won’t be this dramatic and this obvious in the future,
but there are many small improvements that can occur over the next two to three
years," CEO Jack Harper said at the Scotia Howard Weil energy conference
in New Orleans.
Tuesday March 27, 2018
Oil prices dipped on Monday as traders booked profits following last week’s
enormous jump, and while they fell slightly on Tuesday morning as well, both
WTI and Brent are still sitting comfortably above last week’s range.
firms step up dividends. About a third of the top 25 shale
producers have either paid or have promised to pay a dividend this year,
according to Reuters. That is the largest number in over a decade since
the shale revolution began. The shale industry has largely been unprofitable,
even when oil prices were high prior to the collapse in 2014. Low prices forced
an efficiency drive, and with WTI now above $60 per barrel, a lot of shale
companies are beginning to post profits for the first time. Shareholders are
finally starting to see some return. Diamondback Energy (NASDAQ: FANG) became
the first shale company in years to initiate a dividend last month when it
announced a 12.5-cent quarterly dividend. “You’re going to see more shale
producers focus on dividends,” Leigh Goehring of energy investment research
firm G&R Associates told Reuters. “Shareholders are demanding it and a trend
launches oil futures. China’s oil futures contract began
trading on Monday on the Shanghai International Energy Exchange, a
yuan-denominated futures contract intended to eventually rival WTI and Brent
for influence as an oil benchmark. The most actively traded futures contract on
the exchange closed up 3.3 percent at 429.9 yuan ($68.07) per barrel on
in danger of closing 3 of its 4 domestic refineries. PDVSA
might be forced to shut down three of its four domestic refineries because of a
shortage of feedstock and refinery workers. Argus reports that the refineries facing potential closure
include the 305,000 bpd Cardon refinery, the 140,000 bpd El Palito refinery,
and the 190,000 bpd Puerto La Cruz refinery. Taken together, they account for
about half of PDVSA’s 1.3 mb/d refining capacity. Meanwhile, Reuters reports that PDVSA might shut the Petromonagas oil upgrader
in April for maintenance, a joint venture with Russia’s Rosneft. Venezuela’s
refineries are in a decrepit state, forcing PDVSA to rely more on imports. But
without cash, the imports are becoming harder to finance. Canadian
producers continue to suffer from lack of pipeline capacity.
Energy (NYSE: CVE) said last week that it lowered oil production at two of its
facilities in February because it has struggled to ship its oil. Canada’s
pipeline system is virtually tapped out, and rail shipments have stepped up to
take on some of the burden of moving some of the oil. But a lack of locomotives has also created a bottleneck on the
rail system. Canadian oil production exceeded pipeline capacity by 87,000 bpd in
December, a gap that is expected to swell to 338,000 bpd by the end of this
year as new projects reach completion, according to Genscape Inc. Saudi-Iran
tension rises over missile attack. Saudi Arabia is blaming
Iran for intercepted missiles over the weekend, and a Saudi spokesperson said that they “reserve the right to respond against Iran
at the right time and right place.” The recent appointment of John Bolton to be
President Trump’s National Security Advisor has raised a lot of speculation
about heightened confrontation with Iran. EPA
looks to roll back fuel efficiency standards. The WSJ reports that the EPA has readied a document that would
initiate a process to weaken U.S. fuel efficiency standards for cars and light
trucks. The move is not a foregone conclusion, but if successful, it would gut
standards that call for the U.S. auto fleet to average 54.5 miles per gallon by
2025, a standard that had the support of the auto industry prior to the 2016
presidential election. Iraq’s
oil exports dip by 70,000. Oil exports from Iraq’s southern
coast declined by 70,000 bpd so far in March, according to Reuters, an indication that the country could post the
third consecutive month of declining exports. “We are seeing lower volumes,” a
source who tracks Iraq’s exports told Reuters. Part of the southern port was
under maintenance, which explains some of the drop off. Exports from Iraq’s
north are also down by about half from a year ago, and because of the dispute
over control of the oil with Kurdistan, there are no plans to step up shipments
north through Turkey.
Oil prices could go higher. Trafigura's co-head of market
risk Ben Luckock spoke with Argus and said that oil prices could go higher
in the years ahead due to strong demand the slowdown of U.S. shale. “U.S. shale
growth has been quick, immediate and flexible but it would be a mistake to
think shale is your one solution to meet demand growth, which could lead to
higher prices in the next couple of years,” Luckock said.
Exxon set to drill first ultra-deepwater well in Mexico. Total SA
(NYSE: TOT) and ExxonMobil (NYSE: XOM) are planning to begin drilling on the first deepwater block in
Mexican waters since the country opened up to international investment. The
block is located in the Perdido Fold Belt, which is considered the most
attractive part of Mexican’s offshore offerings.
soaring gas production cuts imports. Brazil’s LNG imports
plunged by 75 percent over the past two years as its natural gas production has
skyrocketed. Gas output is up because it is produced in conjunction with
Brazil’s rising oil production. “No doubt there will be more natural gas coming
from the pre-salt fields in the next few years,” Joao Vitor Velhos, a manager
at Gas Energy, a consultancy in Porto Alegre, Brazil, told Bloomberg. “There is no expectation Brazil will become a
net exporter anytime soon, but the historical dependence on natural gas is
to install 80,000 EV recharging stations in China. BMW announced plans to install 80,000 EV recharging stations
across 100 Chinese cities by the end of this year.
We invite you to read several of the most recent articles we have published
which may be of interest to you
Trump's New Appointment Means For Oil Prices
- $70 Oil
Could Spark An Offshore Oil Boom
Rebounds Despite Trade War Fears
- Is Guyana
Prepared For An Oil Boom?
- Why Are Oil
Petroleum Reforms To Be Signed Into Law
News Fails To Subdue Oil Prices
Domestic Fuel Scarcity via Higher Profit Margins
Finally Moves to Cut Sulfur In Fuels, A Year After Deadline
- Is Another
Oil Price War Looming?
- How Will
OPEC React To Soaring Shale Production?
- Shale is
Still the Key Long-Term Constraint on Oil Prices
Grips Oil Markets
Prices of PMS, AGO, HHK and Cooking Gas – February 2018
Energy Advisory - March 9th 2018
- Oil Prices
Bounce After A Tough Week