April 16, 2019 06:34 PM / By Tom Kool Editor, 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.
- In 2018 the U.S exported 2 mb/d of oil, up from 1.2 mb/d in
2017, according to the EIA.
- Exports to China declined, while exports to South Korea,
Canada and Taiwan increased.
- The mismatch between the medium and heavy oil oriented
refining infrastructure on the Gulf Coast, and the increasing volumes of light
oil from U.S. shale fields, has contributed to the surge in exports.
- Concho Resources (NYSE: CXO) says it will establish a 50-50 joint venture with Frontier
Midstream Solutions to build oil gathering, storage and
transportation services in the Permian.
The EPIC Pipeline, backed by Ares
Management (NYSE:ARES), including stakes by Noble
Midstream Partners (NYSE:NBLX), Altus Midstream (NASDAQ:ALTM)
and Diamondback Energy (NASDAQ:FANG), won approval for its initial rates for shippers from FERC.
Shale stocks soared on Friday after Chevron (NYSE: CVX) announced its
$33 billion purchase of Anadarko Petroleum (NYSE: APC). Pioneer Natural
Resources (NYSE: PXD, was up 11.3%), Concho
Resources (NYSE: CXO +8.7%) and Noble Energy (NYSE: NBL +7.4%) all
rose on the news.
Tuesday April 16, 2019
Oil prices dipped on Monday on renewed fears that OPEC+ might abandon
production cuts, but prices firmed up in early trading on Tuesday.
Oil bullishness at a 2019 high. Hedge funds and
other money managers are at their most bullish so far this year, posting a
fifth consecutive week of rising bullish bets on Brent crude. Short positions
fell by 18 percent last week, according to Bloomberg. “There’s not many people who are willing to short this
market,” Tyler Richey, co-editor at Sevens Report in Palm Beach Gardens,
Florida, told Bloomberg. “We could be near a market top, but it’s just too
early to tell. Right now, the path of least resistance is higher for oil.”
buys Anadarko for $33 billion, signaling shale consolidation. Chevron
(NYSE: CVX) announced a decision to buy Anadarko
Petroleum (NYSE: APC) for $33 billion, a move that could spark
a wave of consolidation in the shale industry. Occidental Petroleum (NYSE:
OXY) reportedly was scrambling to propose a merger with Anadarko before
Chevron won out. The acquisition could set off a round of M&A activity as
bigger oil companies swallow up smaller ones, and the industry as a whole
shifts towards large-scale development. Other E&Ps saw their share prices
soar on the news on expectations that they will be bought out by larger rivals.
Delek and Ineos looking at Chevron’s North Sea assets.
Chevron is looking to dispose of non-core assets, particularly after its
purchase of Anadarko, and that includes some projects in the North Sea. Delek Group
(TLV: DLEKG) and Ineos are reportedly the “front-runners” to scoop up Chevron’s North Sea
U.S. shale production to rise by 80,000 bpd in May. According
to the EIA’s latest Drilling Productivity Report, U.S. shale output is expected to rise by 80,000 bpd next
month, led by a 42,000-bpd gain in the Permian.
Russia considers higher production. Russia’s
finance minister Anton Siluanov suggested that Russia and OPEC could fight for market share with
U.S. shale, a move that would likely crash prices. “There is a dilemma. What
should we do with OPEC: should we lose the market, which is being occupied by
the Americans, or quit the deal?” Siluanov said at a forum in Washington. “(If
the deal is abandoned) the oil prices will go down, then the new investments
will shrink, American output will be lower, because the production cost for
shale oil is higher than for traditional output.”
Petrobras dragged down by Brazilian government’s pricing decision. The
government of Brazilian President Jair Bolsonaro decided to cancel a price hike on diesel last week, over concern for the
impact on truckers and consumers. After cultivating a pro-business reputation,
the decision spooked investors and dragged down Petrobras, which will have to
shoulder the burden of regulated prices. Petrobras’ share price fell 8 percent
on the news, the largest decline in 10 months.
Vermilion Energy to drill in Croatia. Canada’s Vermilion
Energy (NYSE: VET) will drill two exploration wells in Croatia
in June, according to Reuters. “Although we see evidence of gas charge from the
new seismic data we have acquired, we’ll not know for sure whether any of this
is commercially producible until after these initial wells are completed,”
Bryan Sralla of Vermilion told Reuters.
Flaring surging in New Mexico. Natural gas
pipeline bottlenecks are contributing to a soaring rate of flaring in the
Permian basin. The Environmental Defense Fund estimates that flaring rates are five times higher than what the
industry has reported to the U.S. EPA.
Volkswagen wants more gigafactories. Volkswagen
wants joint venture partners, including SK Innovation, to build new battery
gigafactories to ensure adequate battery supply for a rush of new electric
vehicles. “Anything below that amount would make little sense,” VW CEO Herbert said on the sidelines of the Shanghai Auto Show on Sunday, referring to
plants with the capacity to produce at least one gigawatt of batteries.
Juan Gauidó: China should overthrow Maduro. Venezuela’s
opposition leader and self-proclaimed president wrote an op-ed in Bloomberg Opinion on why China should abandon President Nicolas Maduro. “I
trust that China, whose leaders know exactly what’s happening here, will
contribute as the great power that it is and help facilitate the political
transition that we so urgently need,” he wrote. “We want to put an end to the
looting that Chinese investors have suffered.”
Alta Mesa burned through $1 billion. A startup
shale company targeting Oklahoma’s STACK play, backed by a $1 billion investment,
is on the brink of financial ruin, according to a profile by the Wall Street Journal. Alta Mesa was a “special purpose acquisition company,” or
SPAC, a strategy in which the company starts with no assets and issues shares
to raise funds in order to make acquisitions. It’s supposed to be a rapid way
of scaling up, but is riddled with risk. The tale is indicative of a broader
experience by multiple shale companies in Oklahoma, buoyed by hype and interest
from Big Finance, but ultimately producing disappointing results. The WSJ says
that more than 60 percent of the energy companies acquired by SPACs since 2016
are now worth less than they were when they began trading publicly.
Ineos warns it could abandon fracking in England.
Ineos said it would abandon drilling in England unless regulators loosen
drilling rules that guard against seismic activity, according to the FT. Rules on seismic activity have slowed drilling efforts by
both Ineos and Caudrilla.
Warren proposes ban on new drilling on public lands.
Democratic presidential candidate Senator Elizabeth Warren (D-MA) has proposed
to ban new oil and gas drilling on public lands. “The Trump administration is
busy selling off our public lands to the oil, gas and coal industries for
pennies on the dollar — expanding fossil fuel extraction that destroys
pristine sites across the country while pouring an accelerant on our climate
crisis,” she wrote. “That’s why on my first day as president, I will sign an
executive order that says no more drilling — a
total moratorium on all new fossil fuel leases, including for drilling offshore
and on public lands.”
1. Average Prices
of PMS, AGO, HHK and Cooking Gas – March 2019
2. Oil Climbs For
Sixth Straight Week - OIR 120419
3. GACN Issues Gas
Purchase Order to Axxela and NGMC Joint Mini LNG Project
4. Smart Money Is
Piling Into Oil
5. Brent Breaks $70
On Libya Violence - OIR 090419
6. Oil Hits $70 On
Libya Unrest, Crisis In Venezuela – OIR 050419
7. Sahara Group
Canvasses Intra-Africa Solution for Petroleum Sector Challenges
8. Axxela Now 100
Percent Owned by Helios
9. 5.32bn Litres of
PMS Imported Into Nigeria in Q4 2018 - NBS
10. Oil Hits 2019
High On Shale Slowdown - OIR 020419
11. Oil Breaks $60
As Bullish News Mounts - OIR 290319
12. Sahara Group
Advocates Adoption of Uniform Petroleum Products Standards in Africa