July 09, 2019 /07:02PM / By Tom Kool of Oilprice.com / Header
Image Credit: Oilprice.com
Today, 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.
- U.S. oil production continues to break records, surpassing 12 mb/d in April for the first time on a
- The soaring production gains over the last few years came
overwhelmingly from Texas. Production in Texas stood just shy of 5 mb/d in
April, while U.S. offshore hit nearly 2 mb/d.
- Texas has added 1.1 mb/d of new supply since the start of
Pioneer Natural Resources (NYSE: PXD)
to hold from buy by SunTrust Robinson, with its price target cut from $205 to
$160 per share.
- ExxonMobil (NYSE: XOM) said it could restart its Baytown refinery complex this week, following a
period of maintenance.
Enterprise Products Partners (NYSE: EPD) plans to increase the capacity to load liquefied petroleum gas,
polymer grade propylene, and crude oil from its facility on the Houston Ship
Tuesday July 9, 2019
Oil prices edged up at the start of the week due to the OPEC+ cuts and rising
U.S.-Iran tension. Trade and economic concerns continue to keep prices in
surpasses enrichment level. Iran said that it exceeded the 3.67
percent uranium enrichment level laid out in the 2015 nuclear deal, and in recent
days exceeded 4.5 percent. Iran said that it would continue to pull out of
parts of the accord on an ongoing basis until Europe delivers on some of the
benefits laid out in the accord. The decision will increase tension with the U.S. and put pressure on Europe to carry out its
promises to Iran. But it may also push Europe away and it increases the odds of
punitive action from the EU.
production dips on contamination. Russian oil production fell
to a three-year low at the start of July, the result of lingering effects from
the pipeline contamination crisis. “The Russian story definitely supports
prices today. Market participants remain concerned that Russian compliance
could deteriorate again, and lower Russian output together with elevated
compliance from OPEC nations should rebalance the oil market faster,” said
Giovanni Staunovo, oil analyst for UBS, according to Reuters.
refiners cut processing. China’s refiners are cutting runs
after a wave of new refineries came online and created a glut of supply. Tepid
demand is also exacerbating a fuel surplus. As a result, China’s oil imports
could stagnate, a negative for the global oil market. “For markets that are
already consumed with fears about a global recession ... headline numbers of
oil demand growth slowing alongside talk of run cuts seem to reinforce a
bearish narrative,” said Michal Meidan, a London-based analyst at Energy
Aspects, according to Reuters.
proposes higher biofuel requirement but doesn’t touch waivers.
In a move that angered both sides of the ethanol versus oil refining battle,
the EPA proposed higher blending requirements for refiners in 2020, but
declined to scrap previously issued waivers. The Trump administration more than
quadrupled the volume of waivers issued to refiners, roiling the market for
ethanol and for credits that can be bought and sold by refiners.
seizure of Iranian tanker won’t go “unanswered.” Iran said that the seizure of its ship in Gibraltar by the UK won’t go
“unanswered.” BP (NYSE: BP) reportedly rerouted one of its tankers
heading for Iraq to Saudi waters over fears of retaliation.
bet on Venezuela. Despite an economic and political crisis and
crippling sanctions, Chevron (NYSE: CVX) has not
pulled out from Venezuela, even as most other international companies have
already done so. Chevron received a waiver from the U.S. government to continue
operating, and the company expects to profit from production if Maduro stays in
power, or be first in line to a potential historic privatization if opposition
forces take over. “They will try to hang on for as long as they can,” Francisco
Monaldi, a fellow at Rice University’s Baker Institute for Public Policy, told Bloomberg. However, the company’s waiver from the U.S. government
expires at the end of this month and its operations would be wrecked if the
waiver is not extended.
Sachs: Shale keeps oil prices low through 2020. Ongoing
production gains from U.S. shale means that supply will outstrip demand into 2020, according to Goldman Sachs. OPEC+ will help
take some surplus offline, but that only offers more space for shale. “An exit
strategy from the cuts was not discussed, and it remains to be seen whether the
decision to extend cuts to accommodate shale growth will ultimately drive the
need for deeper cuts in 2020,” the investment bank said in a note.
tropical storm in Gulf of Mexico. A storm system in the Gulf of
Mexico has an 80 percent chance of becoming a tropical in the next few days,
according to the National Hurricane Center. “All three of our top models say
something is going to form,” Jeff Masters, co-founder of Weather Underground,
told Bloomberg. “If it does, it will take a track through the oil
producing region from east to west making landfall near the Texas and Louisiana
and China to relaunch trade talks. Trade negotiations are set
to restart this week after two months of American and Chinese negotiators
refusing to talk. However, despite the Trump-Xi “truce,” there is little
clarity on how the two sides will proceed. The same points of contention
remain. “The pressure for one side to give into the other is diffused right
now. I expect this to drag out for months,” Derek Scissors, a China expert at
the American Enterprise Institute, told Reuters.
shares plunge on earnings hit. German chemicals giant BASF saw
its shares plunge by more than 7 percent after it said that its earnings could
fall by as much as 30 percent because of the economic slowdown and trade war. “Everybody
expected a warning. But not to that extent. ...Really disastrous numbers,” one
trader told Reuters.
to buy $56 billion in batteries. VW is creating joint ventures with battery makers for its aggressive push
into electric vehicles and will spend around 50 billion euros (~$56 billion) on
battery cells. The German automaker said that it will need 150 GW of battery
production capacity by 2025 in Europe, and another 150 GW in Asia. Those
figures will double by 2030. VW said it would overhaul 16 factories to create
EVs and will roll out 33 different models by 2023. Meanwhile, VW and Ford
(NYSE: F) are set to sign an agreement to share the cost of developing autonomous vehicles and
- Why Oil
Prices Are Refusing To Rally - OIR 050719
Reconstitutes Gas Flaring Steering Committee
- Of Trade
Wars and Oil Thieves: As Nigeria's Key Industry Legislation Gathers
Extends Voluntary Production Adjustments For An Additional Period Of Nine
- Oil Markets
Unimpressed By OPEC plus Deal - OIR 020719
- The Oil
Crisis Saudi Arabia Can't Solve
- Oil Markets
Await Two Vital Decisions– OIR 280619
- Middle East
Tensions Move Oil Prices Higher – OIR 250619
- War Worries
Send Oil Prices Soaring – OIR 210619
Ratings Updates Oil Price and Lowers Gas Price Assumptions
- Are Oil
Markets At A Turning Point? – OIR 180619
Prices of PMS, AGO, HHK and Cooking Gas – May 2019