Home » Posts tagged 'crude oil' (Page 2)

Tag Archives: crude oil

Saudi Arabia’s bet that the golden age of U.S. shale is over appears to be a safe one – for now, at least.

(Bloomberg) — Saudi Arabia’s bet that the golden age of U.S. shale is over appears to be a safe one — for now, at least.

A round-up of data on shale drillers shows they’re sticking to their pledge to cut costs, return money to shareholders and reduce debt. If they stay the course, it would validate the OPEC+ alliance’s high-stakes wager that it can curb output and drive crude prices higher without unleashing an onslaught of supply from U.S. rivals.

That’s still a big “if,” one that’s keeping the oil market on edge as crude’s rally makes it more tempting for shale producers to go back on their word. But the U.S. shale patch is showing little sign of a true comeback so far, and even a dramatic boost in activity would leave oil output below pre-pandemic levels until late next year. Drillers that have shown signs of straying from the script and boosting production have been punished by investors.

Publicly traded explorers that are remaining disciplined on output are helping to keep crude prices aloft, said Michael Tran, managing director for global energy strategy research at RBC Capital Markets. The motives of closely held producers, on the other hand, remain “an open-ended question,” he said. The number of oil rigs has already jumped 80% after bottoming out in August, Baker Hughes data show.

The more restrained shale drillers are this year, “the more they can potentially grow production at higher prices next year and beyond,” Tran said.

…click on the above link to read the rest of the article…

Bloomberg, M.Tobin, D.Wethe, K.Crowley, oil price, oil, crude oil, saudi arabia, shale oil, opec+, rigzone.com

Is The World About To See An Oil Shortage?

March 9, 2021

Is The World About To See An Oil Shortage?

It’s possible we could be headed for a shortfall in global oil supply as soon as next year – pretty remarkable considering where oil demand was last spring, with economies slowing under the weight of the pandemic.

Based on projected rising demand, the natural production decline from existing wells and decreases in drilling activity and industry investment – especially in the U.S. – the world’s oil needs could outpace production in 2022. An undersupply potentially could put upward pressure on costs, impacting consumers, manufacturers and, generally, any process that utilizes oil.

API’s outlook has maintained that global oil markets would improve in tandem with the economy, but uncertainties remain about the timing and extent to which the U.S. could participate in that recovery. As a primary source of U.S. petroleum data and analysis, API is able to shed some light on recent developments. Consider:

U.S. and global oil demand through mid-February 2021 nearly returned to pre-COVID-19 levels, mainly due to strong refining & petrochemical needs as well as seasonal winter heating fuels demand.
By all indications, global oil demand exceeded supply and supported prices since the third quarter of 2020.
Current official global oil demand projections through 2022 call for record, two-year demand growth that could require virtually all of the world’s oil spare production capacity.
Additionally, oil production declines naturally and that production must be replaced. Combine that expected decline with projected demand growth, and the world could require more than 14 mb/d of new production by 2022.
Global oil drilling activity and capital investments have remained historically weak, suggesting a potential supply gap.

…click on the above link to read the rest of the article…

Exxon Mobil’s refinery closure in Australia: peak oil context

February 17, 2021

Exxon Mobil’s refinery closure in Australia: peak oil context

Exxon Mobil’s Melbourne refinery is closing and will be converted into a fuel import terminal. The Australian public broadcaster has found the right title for its article:

Australia loses another oil refinery, leaving our fuel supply vulnerable to regional crises
11/2/2021
https://www.abc.net.au/news/2021-02-11/australia-loses-another-oil-refinery-risking-fuel-supply/13139648

Fig 1: Exxon-Mobil Altona refinery in Melbourne

The refinery has a capacity of 86 kb/d, around 10% of Exxon Mobil’s Asia Pacific capacity.

Fig 2: Exxon Mobil’s refineries in Asia Pacific

“The Altona refinery produces up to 14.5 million litres of refined products per day.
Petrol represents approximately 60 percent of production [8.7 ML/d], with diesel representing a further 30 percent [4.35 ML/d] and jet fuel around 10 percent [1.45 ML/d]. The percentage of each product depends on the type of feedstock used – different types of crude oil, for example, will produce more or less LPG from the refining process.

Around 90 percent of products are transported by pipeline from the refinery to Mobil’s Yarraville terminal and other industry terminals for distribution by road.

The refinery supplies feedstock for the nearby Altona chemical complex, which in turn supplies feedstocks to a number of petrochemical manufacturing plants at Altona. These plants produce the raw material from which a multitude of consumer products are made.”

https://www.exxonmobil.com.au/Energy-and-environment/Energy-resources/Downstream-operations/Altona-Refinery#AltonaRefineryfacts

How much is that compared to Victoria’s fuel sales?

Fig 3: Victoria’s petroleum sales by product

Between 2010 and December 2019 Victoria gasoline sales were practically flat at 400 ML/month or 13.2 ML/day. In contrast, Diesel sales increased by a whopping 5.5% pa from a trend average of 290 ML/month in July 2010 to 440 ML/month or 14.4 ML/day by end 2019. Jet fuel sales increased from 100 ML/month in 2010/11 to 200 ML/month or 6.5 ML/day in 2018/19 (jump due to international flights)

Let’s stack it all up:

Fig 4: Total Victoria fuel sales

…click on the above link to read the rest of the article…

Oil Tanker Owners Pay to Move Crude in Wake of Supply Cuts

January 20, 2021

Oil Tanker Owners Pay to Move Crude in Wake of Supply Cuts

(Bloomberg) — Saudi Arabia’s oil production cuts have hit the tanker market so hard that owners of the biggest vessels are effectively subsidizing cargo deliveries on the industry’s main trade route.

Supertankers delivering 2-million-barrel shipments of the kingdom’s oil to China are losing $736 a day for the privilege, according to data from the Baltic Exchange in London on Tuesday. While owners might, in practice, be able to mitigate such losses by ordering captains to sail the vessels slower, the reality is that some ships are losing money on Middle East-to-Asia deliveries, according to Halvor Ellefsen, a shipbroker at Fearnleys.

“Even the most economical ships out there are struggling to get positive numbers,” he said. “It’s carnage right now.”

While tanker rates weren’t particularly strong up to the end of last year, they weren’t disastrous either. What really seems to have tipped the balance is when Saudi Arabia, wary of oil demand risks posed by Covid-19, announced that it would unilaterally cut 1 million barrels a day of production to support crude prices. That removed a big chunk of seaborne shipments in a market where cargoes were already curtailed.

It also came at a time when the supply of ships was being bolstered. Huge numbers of tankers had been used to store crude at sea when an oil market glut built up last year, and that’s now tumbling. Since its peak last year, about 132 million barrels of oil are no longer being stored at sea, enough to fill 66 supertankers, Vortexa data shows.

Traders also reported lower demand over the past few days from some buyers in Asia where refineries will soon start carrying out seasonal maintenance programs and therefore need fewer crude cargoes.

…click on the above link to read the rest of the article…

Crude Oil Flow From Saudi Arabia To U.S. Falls To Zero

January 7, 2021

Crude Oil Flow From Saudi Arabia To U.S. Falls To Zero

For the first time in 35 years, no oil flowed from Saudi Arabia to the United States last week, according to EIA data, in a show that the United States—at least for now—isn’t as reliant on oil from the Middle East like it used to be.

In October, according to the EIA, the United States imported 8.544 million barrels. In June, that figure was more than 36 million, although that figure was a bit of an anomaly as Saudi Arabia threatened to flood the U.S. market with crude oil.

In much of the early 2000s, the United States imported more than 45 million barrels of Saudi crude oil on a monthly basis.

Source: EIA

On a weekly basis, that figure has now fallen to zero.

Source: EIA

And the U.S. imports of crude oil are not just falling from Saudi Arabia. Through October, the United States imported significantly less crude oil from the Persian Gulf region.

In the early 2000s, the United States was importing more than 3 million barrels of crude oil per day from the Persian Gulf region. In October 2020, the United States imported less than a half a million barrels per day—and that figure isn’t an anomaly, it’s a clear trend. The United States is relying less and less on foreign oil, and particularly less and less on oil from the Persian Gulf.

Source: EIA

The data comes just as Saudi Arabia announced a voluntary million-barrel-per-day cut to its oil production as the OPEC+ group sat down to the negotiating table to hatch a plan to react to the oil market and the lack of demand.

It also comes on the same day that Saudi Arabia announced a crude oil price increase for the United States for February by $0Mor.20 per barrel.

Shell’s Largest Refinery Reduces Crude Processing Capacity By 50%

November 12, 2020

Shell’s Largest Refinery Reduces Crude Processing Capacity By 50%

Shell will halve the crude oil processing capacity of its largest wholly owned refinery in the world, Pulau Bukom in Singapore, as part of its ambition to be a net-zero emissions business by 2050 or sooner, the supermajor said on Tuesday.

Pulau Bukom hosts the largest wholly-owned Shell refinery globally in terms of crude distillation capacity, 500,000 barrels per day (bpd), and it also has an ethylene cracker complex with a capacity of up to a million tons per year and a butadiene extraction unit of 155,000 tons annually.

As Shell is looking to cut carbon dioxide (CO2) emissions and is transforming its refining business for the new future, it will cut the crude processing capacity at Pulau Bukom by about half, the company said. In that new future, the Pulau Bukom Manufacturing Site will be one of Shell’s six energy and chemicals parks, and will pivot from a crude-oil, fuels-based product slate towards new, low-carbon value chains.

“Our businesses in Singapore must evolve and transform, and we must act now if we are to achieve our ambition to thrive through the energy transition. Our decisive action today will help Shell in Singapore stay resilient and build a cleaner, more sustainable future for all of us,” said Aw Kah Peng, Chairman of Shell Companies in Singapore.

The reduced refinery capacity in Singapore will result in fewer jobs at the site, Shell said, while a Shell spokeswoman told Reuters that the supermajor would cut around 500 jobs by the end of 2023. Currently, Pulau Bukom employs around 1,300 people.

Shell is implementing a new downstream strategy to reshape its refining business towards a smaller, smarter refining portfolio focused on further integration with Shell Trading hubs, Chemicals, and Marketing.

As part of this strategy, Shell has sold the Martinez Refinery in California to PBF Holding Company for US$1.2 billion.

Shell is also set to shut down its 211,000-bpd refinery in Convent, Louisiana, after failing to find a buyer for the site.

CHART OF THE WEEK: The Surprising Drop In U.S. Crude Oil Production

August 16, 2020

CHART OF THE WEEK: The Surprising Drop In U.S. Crude Oil Production

U.S. crude oil production experienced a surprising drop last week, even though domestic demand for oil and petroleum products increased. This came as a surprise to some energy analysts. Furthermore, the IEA, International Energy Agency came out with a forecast for global oil demand to fall 8.1 million barrels per day in 2020.

I have to say, this is terrible news coming from the IEA. Just last month, the IEA stated that global oil demand could fall to 7.1 mbd (million barrels per day), but only recently updated their forecast for an 8.1 mbd decline in 2020 due to “gloomy airline travel.”

Actually, we don’t really know what global oil demand will look like by the end of the year. There are way too many variables. Even though the Fed and central banks are planning to pump in more stimulus plans over the next few months, the negative SNOWBALL EFFECT of all the closed stores, unemployment, commercial real estate armageddon, collapse in airline travel, supply chain disruptions, and so forth, will likely impact oil demand to a greater degree by the end of 2020 and into 2021.

Another CURVEBALL to hit the United States is the coming collapse in U.S. Shale oil production. While some companies have curtailed production, and are now bringing some of it back online, total U.S. crude oil production surprisingly declined to 10.7 mbd last week.

U.S. crude oil production reached a peak of 13.1 mbd in late February, right before the global contagion and shutdown of economies. It fell to a low of 10.5 mbd in mid-June, then rebounded to 11.0 mbd for the next two months. However, in the lasted EIA, U.S. Energy Information Agency weekly report, U.S. oil production fell from 11.0 mbd to 10.7 mbd last week.

…click on the above link to read the rest of the article…

Crude Crashes Over 10% After OPEC+ Meeting Delays

April 5, 2020

Crude Crashes Over 10% After OPEC+ Meeting Delays

Crude prices are plunging early in Asian trading with Brent down 12% following a delay to the much-hoped-for OPEC+ meeting (due tomorrow, Monday, but now pushed off until Thursday).

As Ransquawk details, an OPEC+ call that was scheduled for Monday has been delayed until Thursday, amid an intensifying dispute between Russia and Saudi Arabia over who is to blame for falling crude prices.Participants are to discuss the demand hit to crude from COVID-19. Analysts do not seem to be convinced that the group will make sufficient progress; the Saudis and Russia have called for other global producers – namely US, Canada and Mexico – to share the burden of cuts, while Norway has also said it would consider cutting production in any coordinated global effort.

LEVEL OF CUTS: Ahead of the now notorious March OPEC meeting, there was a recommendation to cut an additional 1.5mln BPD from April 2020 through the end of 2020, with a review in June. The deal was conditional on support from OPEC+, and OPEC said any deal could only be applied on a pro-rata basis, and proposed core members cut by 1mln BPD, and non-OPEC by 500k. Ahead of Thursday’s meeting, a figure of 10mln BPD cut to output has been floated (around 10% of global supply), although following a call with Saudi Arabia, US President Trump last week indicated that it could be as much as 15mln BPD. A source has suggested that the 10mln should be slashed from current levels of output. Either way, Goldman Sachs thinks that the demand hit might actually be more like 26mln BPD, and a cut of 10mln BPD may prove to be insufficient.

…click on the above link to read the rest of the article…

Crude Crashes As Asia Trading Opens; Stocks Slump, Gold Jumps, Yuan Dumps

January 26, 2020

Crude Crashes As Asia Trading Opens; Stocks Slump, Gold Jumps, Yuan Dumps

While gold is spiking higher and stocks are getting hammered lower after a weekend of ugly headlines surrounding the lethality and spread of the novel coronovirus, the Saudis are desperately talking down the crash in crude oil prices…

Brent is back below $60 and WTI has crashed to almost a $51 handle…

Saudi Arabia is “closely monitoring” the impact of the coronavirus outbreak on oil markets, but so far sees the crisis having a “very limited impact” on global demand, Energy Minister Prince Abdulaziz bin Salman says in a statement.

Current market impact on oil, “primarily driven by psychological factors and extremely negative expectations adopted by some market participants, despite its very limited impact on global oil demand.”

It seems that “psychological” impact is sending gold higher…

And stocks lower… Dow futures down over 300 points, back below 29,000…

And S&P futures back below the key 3,300 level…

…click on the above link to read the rest of the article…

IEA Sees $90 Crude Ahead Of Oil’s Downfall

November 14, 2019

IEA Sees $90 Crude Ahead Of Oil’s Downfall

Global oil demand will plateau around 2030, according to a major new report, but the decline in demand is way too slow to head off the worsening effects of climate change.

Oil demand begins to flatten out in the 2030s “under pressure from rising fuel efficiency and the electrification of mobility,” The International Energy Agency (IEA) said in its widely-anticipated annual World Energy Outlook.

However, the agency does not see a peak in CO2 emissions through 2040, even in a scenario that incorporates some intended policy targets. The IEA says that an expanding economy and growing global population outweigh efforts to cut emissions. Reducing emissions will require “significantly more ambitious policy.”

“The dissonance between the rising trend for CO2 and the commitment of countries to reach an early peak in emissions was especially striking in the light of the latest scientific findings from the Intergovernmental Panel on Climate Change,” the IEA said, referring to the rather dire conclusions from the IPCC report in 2018, which found that the world is running out of time to make deep and far-reaching cuts to emissions.

As Reuters reports, some groups criticize the IEA for consistently predicting strong oil demand growth. “The IEA is effectively creating its own reality. They project ever-increasing demand for fossil fuels, which in turn justifies greater investments in supply, making it harder for the energy system to change,” Andrew Logan, senior director of oil and gas at Ceres, told Reuters.

With that said, renewable energy is growing fast and taking a growing slice of all new investment. The IEA sees solar becoming the single largest source of installed electricity capacity by 2040, surpassing coal in the 2030s.

…click on the above link to read the rest of the article…

Ceasefire On The Rocks? Trump Sanctions Chinese Firm For Importing Iranian Crude

July 22, 2019

Ceasefire On The Rocks? Trump Sanctions Chinese Firm For Importing Iranian Crude

A huge escalatory step in the US-led economic war on Tehran and its global oil exports, and amid continued trade tensions with Beijing: the US State Department said Monday the US will impose new sanctions against a Chinese company for transporting Iranian crude in contravention of US sanctions. As the WSJ reports:

Secretary of State Mike Pompeo told The Wall Street Journal on Monday that Chinese company Zhuhai Zhenrong and one of its executives knowingly violated U.S. law barring the import of Iranian crude oil.

China had previously been part of the so-called waiver program, which had granted eight countries exceptions which allowed temporary imports of Iranian oil, but which expired May 2 of this year.

*Crude oil is unloaded at Zhoushan, East China’s Zhejiang province in February 2018. Image source: VCG*

The US did not renew the waiver program, known as ‘Significant Reduction Exceptions,’ in what was seen globally as a serious escalation by Washington attempting to bring Europe and other economic partners to heel over continued dealings with Tehran.

The Chinese company has been identified as Zhuhai Zhengrong Co Ltd, which Pompeo accused of violating US law over its continued Iran crude imports. Notably, its CEO will also be under sanction.

The WSJ continued:

The company and the executive will be barred from engaging in any foreign exchange, banking or property transactions under U.S. jurisdiction. The company couldn’t be immediately located for comment. Chinese officials did not respond to a request for comment.

Pompeo said while addressing reporters in Florida, “We’ve said that we will sanction any sanctionable behavior and we mean it.”

…click on the above link to read the rest of the article…

Two Pipelines Shut Down After 43 Barrels of Crude Leak into Missouri Soil

February 8, 2019

Two Pipelines Shut Down After 43 Barrels of Crude Leak into Missouri Soil

Parts of two pipelines owned by controversial Canadian pipeline companies remained shut down Thursday following the discovery of a leak near St. Louis, Missouri on Wednesday, CBC News reported.

Both TransCanada‘s Keystone pipeline and Enbridge‘s Platte pipeline run parallel to each other through the area. The Keystone pipeline, which carries 590,000 barrels of crude oil a day from Alberta, has faced opposition from environmental activists in the area because it transports from Alberta’s tar sands.

“[Leaks] are one more reason on top of climate change to show that tar sands are dangerous and should not be running through our state,” Missouri Sierra Club Director John Hickey told St. Louis Public Radio. Residents are also worried the poor quality of the pipeline’s steel makes leaks more likely, Hickey said.

The leak was discovered by a TransCanada technician 7:14 a.m. Wednesday. The technician found crude oil covering some 4,000 square feet around the pipeline in St. Charles County, Missouri. TransCanada said it was not sure how much oil had leaked, but thought it was around 43 barrels. The company said it was not yet possible to tell if the leak came from the Keystone or neighboring Enbridge pipeline.

“Until you can excavate and see the top of the pipes, you can’t really determine which pipeline the release occurred from,” TransCanada Public Information Officer Matthew John told St. Louis Public Radio.

…click on the above link to read the rest of the article…

Darkening Outlook For Global Economy Threatens Crude

January 10, 2019

Darkening Outlook For Global Economy Threatens Crude

“The outlook for the global economy in 2019 has darkened.”

That conclusion came from a new report from the World Bank, citing a variety of data, including softening international trade and investment, ongoing trade tensions, and financial turmoil in emerging markets over the past year. “Storm clouds are brewing for the global economy,” the World Bank warned.

As a result, economic growth in emerging markets could “remain flat” this year, while overall growth could be “weaker than anticipated.”

One of the key backdrops to this assessment is the rate tightening from the U.S. Federal Reserve. “Advanced-economy central banks will continue to remove the accommodative policies that supported the protracted recovery from the global financial crisis ten years ago,” the World Bank report said. After several rate hikes in 2018, the Fed had suggested that two more were on the way in 2019, although the central bank’s chairman Jerome Powell recently softened that tone.

Higher interest rates and a corresponding strengthening of the dollar puts enormous pressure on indebted countries, companies and consumers in emerging markets. Such countries are vulnerable to sudden capital outflows, which could leave them crushed under the weight of dollar-denominated debt. Worse, government debt in low-income countries has surged over the last four years, from 30 percent of GDP to 50 percent of GDP, according to the World Bank. Related: Energy Experts Are Watching This Hotspot In 2019

Growth contracted in Japan, Italy and Germany in the third quarter of last year, and financial turmoil rocked global equities in the final few weeks of 2018.

“At the beginning of 2018 the global economy was firing on all cylinders, but it lost speed during the year and the ride could get even bumpier in the year ahead,” said World Bank Chief Executive Officer Kristalina Georgieva.

…click on the above link to read the rest of the article…

What’s Behind The Crash In Crude?

December 19, 2018

What’s Behind The Crash In Crude?

Oil prices crashed to new one-year lows on Tuesday, dragged down by a deepening sense of global economic gloom as well as fears of oversupply in the oil market itself.

The reasons for the sudden meltdown were multiple. Rising crude oil inventories and expected increases in shale production weighed on oil prices, but the price crash was accentuated by the broader selloff in financials.

Genscape said that inventories are rising, which has raised fears of tepid demand amid soaring supply growth. “The Cushing number came in higher than anticipated … it’s definitely pointing to the concern that there’s more supply and demand is weakening,” said Phil Flynn, analyst at Price Futures Group in Chicago, according to Reuters. “The market is still very nervous about that.”

Crude prices fell 4 percent on Monday and about 7 percent on Tuesday. WTI dropped below $47 per barrel and Brent fell to the $56 handle.

The EIA said in its latest Drilling Productivity Report that it expects U.S. shale production to top 8.1 million barrels per day (mb/d) in January, rising by a massive 134,000 bpd month-on-month. The Permian alone will see production rise by 73,000 bpd next month. By way of context, the gains in the Permian are bigger than even some of the large monthly declines that we have seen in Venezuela, for instance.

Still, with WTI dropping below $50 per barrel, shale drillers will start to face increasing financial strain. That could force a slowdown in the shale patch. “We’re probably going to see a supply slowdown in the U.S.,” Michael Loewen, a commodities strategist at Scotiabank, told Bloomberg. “I do think that producers will react.”

…click on the above link to read the rest of the article…

No, The U.S. Is Not A Net Exporter Of Crude Oil

December 14, 2018

No, The U.S. Is Not A Net Exporter Of Crude Oil

Last week Bloomberg created quite a stir with this story: The U.S. Just Became a Net Oil Exporter for the First Time in 75 Years. I have seen a number of follow-up stories that praised the significance of this development, but others laughed it off as misleading or incorrect.

There is some truth to both viewpoints. Yes, the headline is somewhat misleading and requires some context. But there continues to be a trend in the direction of energy independence for the U.S. So, today I want to break down the numbers so readers can understand the truth about U.S. petroleum production, consumption, and exports.

Domestic Crude Production Has Surged

The Bloomberg story is based on data from the Energy Information Administration (EIA). Each week the EIA publishes detailed statistics on U.S. oil production, consumption, exports, and inventories in a report called the Weekly Petroleum Status Report. So, let’s go straight to the source.

For the week ending 11/30/18, the EIA reported that the U.S. produced 11.7 million barrels per day (BPD) of crude oil. That represents a 2 million BPD increase from the year-ago number. This number is generally accepted even by those who believe the Bloomberg headline was misleading.

Further down in the report, the category of Products Supplied is listed at 20.5 million BPD. This is approximate U.S. crude oil consumption for the week. Thus, as some skeptics of the story suggested, the bottom line is that the U.S. is burning more than 20 million BPD while producing less than 12 million BPD. Thus, the conclusion for some was that the U.S. isn’t close to being energy independent.

Other Supply

But there is important context between these numbers. First, the 20.5 million BPD is a fairly accurate representation of U.S. consumption, but there is a large U.S. production number that isn’t included in the crude oil production numbers.

…click on the above link to read the rest of the article…

Tag Archives: crude oil

Content

Post categories

Economic Links

Energy/Resource Links

Environmental Links

Geopolitical Links

Liberty Links

News Links

Other Links

Survival Skills

Post Archives by Category

Post navigation

Latest Posts