Friday, June 07, 2019 /08:02 PM / By Tom Kool of Oilprice.com / Header Image Credit:
The oil price fall appears to have been
halted, at least temporarily, by confirmation from Saudi Arabia that OPEC+ will
almost certainly extend production cuts and news that Trump may hold off on
June 7th, 2019
Oil prices showed some life at the end of this week on news that Saudi Arabia
was holding firm on the OPEC+ cuts. Also, there are some glimmers of hope that
the Trump administration won’t move forward on its proposed trade war with Mexico.
Automakers warn Trump on emissions deregulation.
The world’s largest automakers warned the Trump
administration that its effort to water-down fuel economy standards for cars
and trucks would create “untenable” instability in the manufacturing sector and
slash profits for the automotive sector. In a letter signed by 17 car
companies, including Ford (NYSE: F) and GM (NYSE:
GM), they urged the administration not to move forward with a
plan to roll back fuel economy standards. In particular, because California
would continue to enforce its own standards, the nationwide fuel economy
standards would give way to a patchwork across various states, something the
auto industry desperately wants to avoid.
Saudi Arabia affirms plans to extend cuts. Saudi
oil minister Khalid al-Falih said that an OPEC+ extension was all but certain.
“I don’t think the question is at all whether we will extend or not,” he said at a
conference in St. Petersburg. “A rollover is almost in the bag for OPEC. The
question is to calibrate with non-OPEC if there needs to be an adjustment from
the first half.” His comments were the strongest signal yet that the group
would extend the production cuts for the rest of the year.
Putin fine with $60 oil. Russia had been itching
to get out of the OPEC+ cuts a few weeks ago, but now appears willing to go
along with an extension after the slide in prices. But Russian President
Vladimir Putin said that oil
between $60 and $65 is “quite satisfactory.”
Keystone XL construction can begin. A panel of
federal judges ruled on Thursday
that construction on the Keystone XL pipeline can proceed. “We are pleased with
the ruling,” a spokesman from TC Energy (NYSE: TRP), formerly
TransCanada, said in a statement. “We look forward to advancing the project.”
The pipeline is not out of the woods yet; it still faces legal challenges
IEA: Natural gas demand to rise 10 percent over next 5 years.
The IEA highlighted the growing importance of natural gas around the world in a
new report, estimating
that global demand would rise by 10 percent over the next five years. Roughly
40 percent of that would come from China.
West Virginia court hits shale drillers. A ruling
from the West Virginia Supreme Court of Appeals sided with
landowners in an important case over drilling. The court said that drillers
cannot use their holdings on one tract of land to extract oil and gas from an
adjacent tract. “Using the surface to extract minerals elsewhere, without the
permission of the surface owner, is a trespass,” Supreme Court of Appeals
Justice John Hutchison wrote in a Wednesday opinion. “Should the mineral owner
or lessee want to utilize the surface to access minerals under neighboring
land, they can certainly reach a separate agreement with the surface owner.”
The landowners sued EQT (NYSE: EQT), one of the
largest shale gas producers in the country, for illegally trespassing on their
Michael Bloomberg to donate $500 million to kill coal. Former
New York City Mayor Michael Bloomberg will donate another
$500 million to help kill off coal. Under a new campaign dubbed Beyond Carbon,
the effort will focus at the state and local level to shut down coal-fired
Toyota aims for half EV sales by 2025. Toyota
plans an aggressive push on
electric vehicles, aiming to get half of its global sales from EVs by 2025,
five years earlier than its previous target. Because of a need for more battery
capacity, Toyota will partner with China’s Contemporary Amperex Technology Co
Ltd (CATL) and the Chinese EV maker BYD Co for battery procurement, according
Colorado to establish zero-emission vehicle rule. Automakers
wanted a voluntary target, but Colorado regulators are set to establish a
zero-emissions vehicle (ZEV) rule, which will take effect beginning in 2022.
Gulf Coast oil imports hit 33-year low. Oil
imports in March at the Gulf Coast fell to their
lowest level since 1986. Imports averaged 1.8 mb/d in March, down from a peak
of 6.6 mb/d in March 2007. Higher production combined with sanctions on
Venezuela and a period of refinery maintenance helped trim imports.
Discounts for Permian oil. Growth in supply in the
Permian is coming from lighter and lighter types of oil, creating a mismatch between supplies and refining
capabilities. As a result, there is a sort of three-tiered system emerging –
West Texas Intermediate (WTI), West Texas Light (WTL) and a newer so-called
West Texas Condensate (WTC). But as the stream becomes lighter, discounts are
becoming more pronounced.
U.S. pushing for Eastern Med gas. According to McClatchy, the U.S.
government sees the promotion of natural gas production and related
infrastructure in the Eastern Mediterranean as a key effort in tying countries
in the region together and promoting peace. It’s a continuation of an Obama-era
foreign policy objective. But the effort has also led to conflict.
Trump tariffs anger oil industry. The oil industry
launched an aggressive lobbying effort in Washington to convince the Trump
administration not to move forward with tariffs on Mexico. The tariffs would increase costs on
the roughly 712,000 barrels of oil and products imported from Mexico each day.
The danger is particularly pronounced for Gulf Coast refiners who import
Mexico’s heavy Maya blend, including Royal Dutch Shell (NYSE: RDS.A), Valero
Energy (NYSE: VLO) and Chevron (NYSE: CVX).
Venezuela’s oil exports plunge by 17 percent in May. Venezuela’s
oil exports fell to 875,000 bpd in May, down another 17 percent, according to Reuters.
Permian gas flaring hits new record. Gas flaring
in the Permian hit a record high, averaging
661 MMCfd in the first quarter.
1. DPR Revokes Six
Oil Licences To Recover Legacy Debts
2. Oil Is On The
Brink Of A Bear Market– OIR 040619
3. Is Trump
Reversing Course On Iran?
4. Oil Tanks On
Fears Of U.S., Mexico Trade War – OIR 310519
5. OPEC plus Has
Capacity to Offset Iran Crude Supply Cuts
6. Déjà Vu: Oil
Prices Stuck Once Again – OIR 280519
7. The Silver
Lining Of An Oil Price Crash – OIR 240519
8. 4.87bn Litres of
PMS Imported in Q1 2019 - NBS
9. Oil Markets In
Limbo After OPEC plus Meeting – OIR 210519
10. Middle East
Tensions Put Oil Markets On Edge – OIR 170519
11. 4 Geopolitical
Trends To Watch In 2019 - Oilprice.com
12. Sahara Energy,
Brooge Petroleum Partner To Build Up To 250,000bpd Refinery In Fujairah
13. Oil Jumps On
Middle East Tensions - OilPrice Intelligence Report
14. Average Prices
of PMS, AGO, HHK and Cooking Gas – April 2019
15. Shell Docked As
Nigerian Oil Community Wins Court Judgment in The UK
16. Oil Supply
Shortages Countered By Trade War – OIR 100519