April 21, 2019 03:30 PM / By Tom Kool Editor, Oilprice.com
Oil prices held at a five-month high earlier this week, and only just
managed to close the week higher as the crude complex is looking increasingly
April 19, 2019
Oil held steady at the close of the week, with a slowdown in U.S. shale and the
looming deadline for a decision on Iran sanctions waivers putting a floor under
Schlumberger sees shale slowdown. Schlumberger
said its earnings were hit in the first quarter by the drilling slowdown in the
Permian, while market conditions globally continue to improve. Schlumberger
sees “higher investments in the international markets simply to keep production
flat, while North America land activity is set for lower investments with a
likely downward adjustment to the current production growth outlook,” according to CEO Paal
Kibsgaard. “the higher cost of capital, lower borrowing capacity and investors
looking for increased returns suggest that future E&P investments will
likely be at levels dictated by free cash flow.”
Rig count falls. The U.S. oil industry slashed its rig
count by 8 rigs this week, bringing the total down to 825. The sharp decline
put an end to two consecutive weeks of increases.
Trump spoke about oil with Abu Dhabi crown prince. President
Trump spoke with the
crown prince of Abu Dhabi and they talked about “contributions to the global
energy markets as a reliable supplier of oil,” according to a readout of the
call from the White House. Trump is expected to make a decision on Iran
sanctions in the next week or two, and a hardline may require higher oil production
Venezuela sends oil through Russia. Venezuela is
skirting U.S. sanctions by moving oil through Russia’s Rosneft. According to Reuters, PDVSA has
passed invoices from its sales to Rosneft. Rosneft buys the oil at a discount
and resells cargoes to international buyers at the full price. PDVSA receives
the money upfront rather than at a later date.
Cooler temperatures push down electricity. Cooler
than average temperatures are expected for this
summer, and the U.S. could see lower electricity bills, according to the EIA.
Relatedly, natural gas prices are near multi-year lows on expectations of
record-breaking gas production this year.
Tellurian receives federal approval on $28 billion LNG project. Tellurian
Inc. (NASDAQ: TELL) won federal approval for
its $28 billion Driftwood LNG export terminal on the Gulf Coast, and Sempra
Energy (NYSE: SRE) also got the go-ahead from regulators for
its Port Arthur LNG project. The project approvals come even as the market for
LNG has become oversupplied, amid a wave of new export capacity in the U.S.,
Australia and Qatar.
Saudi Aramco considers 20 percent stake in Indian refiner. Saudi
Aramco is mulling a 20 percent stake in
India’s Reliance Industries. Aramco has been stepping up investments in
overseas refiners and petrochemical companies as a way of securing long-term
buyers for its crude oil. India, in particular, is expected to be a strong
source of demand growth going forward.
Petrobras reverses course, hikes diesel prices. Less
than a week after Brazilian President Jair Bolsonaro decided against a price
increase for diesel, Petrobras (NYSE: PBR) raised prices by
10 cents per liter and promised that it would remain free of political
interference. When news broke that Bolsonaro opposed raising diesel prices last
week, Petrobras’ share price plunged. The hike in prices was meant to send a
signal to investors that the company would keep a keen eye on company finances,
pursuing divestment and debt reduction.
Colorado Governor signs major oil and gas overhaul.
Colorado’s Governor Jared Polis signed into law a
major overhaul of the state’s oil and gas sector, granting more authority to
localities over drilling operations and also reforming the mission of the state
regulator to prioritize public health and environmental protection instead of
promoting oil and gas development. The law is seen as a blow to the industry,
but the silver-lining could be more certainty. “Today, with the signing of this
bill, it is our hope that the oil and gas wars that have enveloped our state
are over, and the winner is all of us,” Gov. Polis said.
ExxonMobil won three offshore blocks in Argentina. ExxonMobil
(NYSE: XOM) won three
offshore oil blocks in Argentina, in the Malvinas basin at the southern tip of
the country. The closely-watched auction reportedly attracted offers from 13
companies for a combined $995 million.
Repsol suspends gasoline swap with Venezuela. Spain’s
Repsol has suspended fuel swaps with PDVSA, fearing retaliation from American
sanctions. Respol had been sending gasoline in exchange for crude oil, helping
ease a fuel crisis in the country.
Kinder Morgan considers third Permian gas pipeline.
Morgan (NYSE: KMI) is considering building a third natural gas
pipeline for the Permian. “Demand to get gas out of the Permian continues to
grow and the desire to unlock value that’s in oil and (natural gas liquids)
continues to put pressure on need for additional takeaway capacity,” CEO Steven
Kean said. “There is
interest in pipe three.”
Europe imposes caps on CO2 for trucks. The
European Parliament passed a 30
percent CO2 reduction target for 2030 and establish the first CO2 limits for
Permian sees discounts for too much light supply.
With the Permian overflowing with ultralight oil, refiners are beginning to
demand discounts because of a mismatch with medium and heavy refining capacity.
Reuters reports that
ultralight oil has begun trading at a $1 to $2-per-barrel discount to
1. Oil Bulls
Undaunted By OPEC Fears - OIR 160419
2. Average Prices
of PMS, AGO, HHK and Cooking Gas – March 2019
3. Oil Climbs For
Sixth Straight Week - OIR 120419
4. GACN Issues Gas
Purchase Order to Axxela and NGMC Joint Mini LNG Project
5. Smart Money Is
Piling Into Oil
6. Brent Breaks $70
On Libya Violence - OIR 090419
7. Oil Hits $70 On
Libya Unrest, Crisis In Venezuela – OIR 050419
8. Sahara Group
Canvasses Intra-Africa Solution for Petroleum Sector Challenges
9. Axxela Now 100
Percent Owned by Helios
10. 5.32bn Litres of
PMS Imported Into Nigeria in Q4 2018 - NBS
11. Oil Hits 2019
High On Shale Slowdown - OIR 020419
12. Oil Breaks $60
As Bullish News Mounts - OIR 290319
13. Sahara Group
Advocates Adoption of Uniform Petroleum Products Standards in Africa