Sunday, December 10, 2017 04.56AM / OilPrice
Intelligence Report /Tom Kool, Editor, Oilprice.com
Oil prices had been falling following
the OPEC deal extension, but Trump's decision to officially recognize Jerusalem
as the capital of Israel has caused tensions in the Middle East to spike and
oil prices along with them.
Important Note for Energy Investors: The World Economic Forum, the Institute of
Electrical and Electronics Engineers, the MIT Technology Review, prestigious
national laboratories, and a slew of other experts are buzzing about this new
element that will transform the energy industry. Early investors are already
reaping the benefits. Are you in? After sinking for much of the week, oil prices recovered slightly on Thursday
and Friday. Analysts attributed the rise to tensions in the Middle East after
the Trump administration announced the U.S. would move its embassy in Israel to
Jerusalem, a move that was met with widespread protest in the region.
Meanwhile, data from China showed strong crude import data for November –
imports jumped above 9 million barrels per day, up from 7.3 mb/d a month
of Libya in OPEC deal insignificant. Saudi
oil minister Khalid al-Falih seemed to pull off an unexpected victory with the
inclusion of Libya and Nigeria into the OPEC agreement – the two countries
agreed to cap their output at 2017 levels – but their participation actually
means very little for the oil market, consultants from Wood Mackenzie and
Eurasia Group told Bloomberg. “The OPEC quota doesn’t matter,” Riccardo
Fabiani, an analyst at Eurasia Group, said of Libya’s participation. “Moving
beyond 1 million barrels a day in 2018 is going to be very difficult anyway.”
Sinopec sues Venezuela’s PDVSA over missed payments. In
another sign that the cash crisis in Venezuela is bleeding into its oil
operations, China’s Sinopec is suing PDVSA over missed payments for an order of
steel rebar. According to Reuters, Sinopec’s lawsuit is seeking $23.7 million for
a breach of contract and conspiracy to defraud. The case is also significant
because for years China was one of the few main backers of Venezuela, offering
the cash-strapped nation more than $50 billion in loans over the past decade in
exchange for oil shipments. The complaint suggests “patience is getting really
thin at this point,” Mark Weidemaier, a law professor at the University of
North Carolina and an expert on international debt disputes, told Reuters.
“This is a further sign of frostiness in the Chinese-Venezuelan relations.”
Secretary of Energy visits Middle East, pushes American LNG. U.S.
Secretary of Energy Rick Perry trumpeted the opportunity of U.S. LNG for the
Middle East in a visit to Abu Dhabi this week. “We want to be in the mix of LNG
suppliers for the Mideast,” Perry said at the news conference. “Creating a
relationship, having these conversations is good, it gives the U.A.E. some
options.” Jordan, the UAE and Egypt have occasionally purchased LNG cargoes
from Cheniere Energy’s (NYSE: LNG) Sabine Pass facility
over the past two years, according to Bloomberg. Qatar is the largest LNG exporter in the
world, but the deep rift between them and other Gulf countries led by Saudi
Arabia opens up an opportunity for other suppliers to fill the void.
unveils details of carbon pricing for oil industry. In
an effort to slash greenhouse gas emissions by 19 percent by 2030, Canada’s
oil-producing province of Alberta announced details of how it will charge the
industry. Large emitters (any facility emitting more than 100,000 tonnes of
carbon a year) would have to meet a benchmark set at 80 percent of
production-weighted average emissions, according to Reuters. If a facility fails to hit that target, it has
to purchase credits at a cost of C$30 per ton. Those that reduce their
emissions below that threshold can accumulate credits. The provincial
government said it established the target in consultation with the oil sands
industry. “This plan is an important step forward in addressing climate change
as it will incent those facilities with the lowest emissions intensity,” a
spokeswoman for Cenovus Energy (NYSE: CVE) said.
California considering bill to ban fossil fuel vehicles by 2040. A
California assemblyman says he will introduce a bill next month that would ban gasoline and
diesel vehicles by 2040, following the UK, France and China. Meanwhile, the
California Air Resources Board (CARB), the state’s powerful air quality
regulator, has mulled over regulatory action after California Governor Jerry
Brown expressed interest.
betting on EV boom in China. Ford (NYSE: F) says
that China will be the most attractive market for electric vehicles as it steps
up its efforts to accelerate EV adoption at a time when the U.S. is scaling
back incentives. "I do think electric vehicles make sense. For a lot of
reasons it's a good way to go around the world and so I am a big believer in it
… We are betting very heavily in it," Bill Ford, executive chairman at
Ford Motor Company, told CNBC Wednesday. "The entire Ford nameplate will be electrified by
2025 here,” Ford added, referring to its lineup in China.
emerges as key oil hub. The WSJ reported that Houston is beginning to rival Cushing,
Oklahoma in terms of its importance as an oil hub in the physical market for
crude, as well as its significance in the oil futures market. The price for WTI
in Houston has typically traded at a $2 per barrel premium to WTI in Cushing,
reflecting the cost of transport. But that premium has widened recently to as
much as $5 per barrel, the result of strong demand from buyers around the
world. The reason is that the U.S. has become a significant oil exporter, and a
lot of oil is flooding from the Permian straight to Texas ports in and around
Houston, reaching the global market without ever being routed through Cushing.
In short, Houston is becoming more and more important to the global oil market.
“Cushing is becoming irrelevant,” Philip Verleger, an energy economist, told
lease sale disappoints. A lease sale for vast territory
in the National Petroleum Reserve Alaska (NPR-A) only received seven bids, representing less than 1 percent of
the territory offered. The results reflect a lack of interest from the oil
industry, and is even more significant as the U.S. Congress moves closer to
opening up the neighboring Alaska National Wildlife Refuge (ANWR) for drilling.
Thanks for reading and we’ll see you next week.