July 23, 2019 /09:20PM / By Tom Kool of Oilprice.com / Header Image Credit: Oilprice.com
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.
Chart of the Week
- Henry Hub natural gas prices are expected to average just
$2.37/MMBtu this summer, according to the EIA, which would be the
lowest summer average since 1998.
- The EIA said that mild weather at the start of summer led
to a higher-than-expected build in inventories. Production growth continues to
soar to new record highs.
- The agency says that production growth will begin to slow
down later this year, helping to push prices back up to $2.77/MMBtu in
- Halliburton (NYSE: HAL) saw its
share prices jump by 8 percent after it reported
better-than-expected earnings and after the company said that it would idle
unused fracking equipment. Halliburton was the worst performer in the S&P
500 over the past year.
- Philadelphia Energy Solutions filed for bankruptcy, which follows the massive explosion
at its refinery in Philadelphia in June, the largest refinery on the east
coast. The bankruptcy will be the company’s second Chapter 11 filing.
- Halcon Resources (NYSE: HK) will
be delisted from the New York Stock Exchange due to “abnormally low” trading
Tuesday July 23, 2019
Oil prices initially traded up on Monday on geopolitical tension in the Middle
East, but gave up some of those gains on fears of an oil glut. At the start of
Tuesday, oil prices dipped further, weighed down by demand fears.
tension continues. The tit-for-tat tanker seizures between the
UK and Iran has heightened tension, but unlike last month, there appears little
chance of and no appetite for a military confrontation. Tension in the Persian
Gulf remains elevated, but oil prices have barely budged, not least because of
ample global oil supplies. “The response of oil prices to the seizure of a
British oil tanker by armed Iranian forces near the Strait of Hormuz has been
amazingly muted so far,” Commerzbank said. “It appears that the majority of
market participants are convinced that there will be no open conflict between
the West and Iran.”
oil prices drop on new pipeline capacity. WTI based in Houston
fell to its weakest level in almost a year after new pipelines came online,
according to Reuters. New lines owned by
EPIC Crude Pipeline LLC and Plains All American Partners LP (NYSE: PAA)
began filling up in recent days, Reuters reports. The new supply eases
bottlenecks and pushed Houston prices lower. “Houston prices should weaken with
more supply and limited new storage at refineries,” a trader told Reuters. WTI
at Magellan East Houston (WTC-MEH), or MEH, fell to a
$4-per-barrel premium to WTI, the smallest premium since August 2018.
seizures hit shipping industry, but oil prices muted. Oil
prices traded up on Monday, but gains were relatively minor in light of the
seizure of a British oil tanker by Iran. The seizure comes as retaliation for
the British seizure of an Iranian tanker earlier this month. Oil prices have not spiked, as they
might have in the past, but the shipping industry is bearing the brunt of the
fallout. “Shipping and insurance costs have already been on the rise and the
latest event will only add to that,” Amrita Sen of Energy Aspects told the FT. “Asian refiners in
particular will be even keener now to search for alternative oil supplies and
ship owners will look for alternative routes where possible, further adding to
judge says climate case against oil industry can continue. A
U.S. federal judge ruled against multiple oil
companies, saying that the state of Rhode Island can proceed with its climate
liability case against the companies. The judge said that the federal
government didn’t have jurisdiction, allowing states to bring cases. In this
instance, it involves 21 companies, including Chevron (NYSE: CVX),
(NYSE: BP) and Royal Dutch Shell (NYSE: RDS.A).
sanctions on Chinese oil trader. On Monday, the Trump
administration announced sanctions on
Chinese state-owned oil trader Zhuhai Zhenrong Co. for violating U.S. sanctions
on Iran. China has continued to stockpile oil from Iran,
despite the U.S. ending waivers in May. The move may also add yet another point
of contention between the U.S. and China has they seek to negotiate a
resolution to their trade war.
restarts Sharara field. Libya’s largest oil field was briefly
knocked offline at the end of last week, but was quickly restarted. If Libya
can manage to bring production online and maintain it, the increase would exacerbate the global glut.
However, that all largely depends on a resolution to the civil war.
weighs on oil. Despite tension in the Middle East, oil
continues to languish, with WTI stuck in the mid-$50s and Brent in the
mid-$60s. “The market seems obsessed with demand fears,” Commerzbank said in a
note. Consultancy FGE cut its demand forecast
down to as low as 740,000 bpd for 2019 and 920,000 bpd in 2020, much lower than
the prevailing estimates from the EIA and IEA.
natural gas is killing coal. The story of cheap natural gas
killing coal is not a new one, but the recent plunge in gas prices in Europe –
aided by a glut of LNG – is accelerating coal’s decline. At the same time, the
sharp increase of carbon prices in Europe has slashed coal use this year. Coal
use in Italy, France, Germany, Spain, Portugal and the UK was down 40 percent
in the second quarter, year-on-year. “Closing coal capacity is a theme that is
developing momentum in Europe,” Lueder Schumacher, a utilities analyst at
Societe Generale SA in London, told Bloomberg. “Be it for
environmental or economic reasons, coal just can’t compete at these carbon prices.”
CNOOC signs deal with ADNOC. China’s state-owned CNOOC signed a memorandum of
understanding with Abu Dhabi National Oil Co. (ADNOC) for
oil exploration, refining, and LNG trade.
teams up with Bunge on bioenergy. BP (NSYE: BP) and commodities
trader Bunge Ltd. (NYSE: BG) will merge their sugar and
ethanol operations to create the world’s third largest sugarcane processor,
according to Reuters. It will also be
the largest deal in Brazil’s bioenergy sector in 8 years.
could expand. The consortium behind the Kashagan oil field in
Kazakhstan, one of the largest and most expensive oil projects in the last few
decades, could expand production from
370,000 bpd to as much as 450,000 bpd.
sales rising in Europe. EV sales are surging in Europe, but are
set to climb even more as a wave of new EV models hit the market in the next
1. Oil Capped By
Shaky Demand Outlook - OIR 190719
2. Oil Falls Back
As Iran Risk Factor Fades - OIR 160719
3. Average Prices
of PMS, AGO, HHK and Cooking Gas – June 2019
4. WTI Tops $60 On
Gulf Of Mexico Shut-Ins - OIR 120719
5. Middle East
Tension Boosts Oil Prices - OIR 090719
6. Why Oil Prices
Are Refusing To Rally - OIR 050719
Reconstitutes Gas Flaring Steering Committee
8. Of Trade Wars
and Oil Thieves: As Nigeria's Key Industry Legislation Gathers Momentum
9. OPEC Extends
Voluntary Production Adjustments For An Additional Period Of Nine Months
10. Oil Markets
Unimpressed By OPEC plus Deal - OIR 020719
11. The Oil Crisis
Saudi Arabia Can't Solve
12. Oil Markets
Await Two Vital Decisions– OIR 280619