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In a move that could reshape Europe’s energy landscape, the European Commission is poised to propose new sanctions targeting Russian liquefied natural gas (LNG) imports. According to Reuters sources close to the matter, the proposed measures will include a ban on shipments within the EU and sanctions on three Russian LNG projects.

The European Commission’s decision comes amid growing concerns over Europe’s reliance on Russian energy, particularly in the wake of the ongoing conflict in Ukraine. While the EU imposed a ban on Russian seaborne oil imports earlier this year, it has thus far refrained from taking similar action against LNG imports. However, with imports of Russian LNG surging since the start of the war, accounting for around 15% of EU gas supply, pressure has been mounting on Brussels to act.

The proposed ban on trans-shipments within the EU is aimed at preventing the diversion of Russian LNG cargoes to other destinations. Currently, Belgium, France, and Spain are the largest importers of Russian LNG, with many of these imports being re-exported to other countries, including China. By imposing restrictions on trans-shipments, the EU hopes to ensure that Russian LNG does not find its way to markets outside of Europe.

In addition to the ban on trans-shipments, the European Commission is also considering sanctions on three Russian LNG projects – Arctic LNG 2, Ust Luga, and Murmansk. While the details of these sanctions are still being discussed, they are expected to target projects that are not yet operational, further complicating Russia’s efforts to expand its LNG exports.

The move by the European Commission reflects growing unease within the EU over its dependence on Russian energy. With tensions between Russia and the West showing no signs of abating…

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

Andurand: Oil Prices Could Exceed $140 If China’s Economy Fully Reopens

January 10, 2023

Andurand: Oil Prices Could Exceed $140 If China’s Economy Fully Reopens

Hedge fund manager Andurand: full reopening of Chinese economy could send oil prices past $140 per barrel.
Andurand: The market is underestimating the scale of the demand boost.
Andurand did say last week that oil demand will be limited somewhat by a growth in the EV sector.

Crude oil prices could exceed $140 per barrel yet this year if China’s economy fully reopens, hedge fund manager Pierre Andurand said on Friday.

Andurand sees the possibility of crude oil demand growing by more than 4 million barrels per day this year—a 4% increase over last year. This far exceeds crude demand growth set out for 2023 by other oil market forecasters.

“I think oil will go upwards of $140 a barrel once Asia fully reopens, assuming there will be no more lockdowns, Andurand said, adding that the “market is underestimating the scale of the demand boost that it will bring.”

Andurand’s forecast goes against the trend that crude oil prices set so far this year. During the first week of the year, crude oil prices tumbled by 9% in the first two trading days in what was the worst start to a year since 1991.

Last week, Andurand said in a tweet that oil demand could increase between 3 and 4 million bpd this year, aided by the switch from oil to gas.

China’s reopening has been on the oil industry’s radar ever since it employed its zero-covid policies and locked down much of its economy. China only recently made significant changes to its covid policies, abandoning its strict measures in favor of relaxed testing requirements and travel restrictions. But China’s reopening has been plagued with a new wave of Covid, spooking many oil bulls off what would be their rejoicing at what should be a significant bump in demand.

Andurand did say last week that oil demand will be limited somewhat by a growth in the EV sector, as EVs have the potential to displace 600,000 bpd of oil demand.

OPEC Production Fell In November, But 3 Members Actually Boosted Output

December 13, 2022

OPEC Production Fell In November, But 3 Members Actually Boosted Output

OPEC’s crude oil production fell by an average of 744,000 barrels per day, according to OPEC’s Monthly Oil Market Report released on Tuesday.

Saudi Arabia’s November production fell by the most among its members, by 404,000 bpd, to 10.474 million bpd—Saudi Arabia’s lowest monthly average since May 2022.

Other significant production decreases were realized by the United Arab Emirates, which saw a decrease of 149,000 bpd in November, landing at 3.037 million bpd; Kuwait, which saw a dip of 121,000 bpd to 2.685 million bpd; and Iraq with a loss of 117,000 bpd to 4.465 million bpd.

Overall, OPEC’s average production for November fell to 28.826 million bpd—the lowest average production level since June.

While the overall production was significantly lower for November and largely in line with OPEC’s plan to reduce output in response to market conditions, a handful of members increased their production.

Libya’s production also decreased by 32,000 bpd, to 1.133 million bpd. Earlier this week, Libya’s oil minister said its oil production was 1.2 million bpd. “We hope to return to 2010 levels, which was 1.6 million bpd, within two or three years,” Oil Minister Mohamed Oun told reporters on Monday.

Libya lifted its force majeure on oil and gas last exploration last week in hopes of luring foreign oil companies back into the country that has seen significant unrest in recent years.

Angola, Gabon, and Nigeria went the other way, increasing their production by a collective 132,000 bpd.

While OPEC saw its overall crude production fall, non-OPEC liquids production, according to OPEC’s latest report, increased month on month in November by 800,000 bpd to 72.7 million bpd. This figure is also 2.1 million bpd higher than the same month last year.

This means that OPEC’s share of crude oil in the global production mix slipped by 0.7%, to 28.4% in November from the month prior.

Cash For Fracking: UK Households May Receive Payouts For Allowing Fracking

October 12, 2022

Cash For Fracking: UK Households May Receive Payouts For Allowing Fracking

The UK lifted its long-running ban on fracking last month.
UK households could soon receive cash payouts for allowing fracking in their neighborhoods.
Drilling companies could soon go door to door in Britain, offering money in exchange for fracking support.

UK households could soon receive cash payouts for allowing fracking in their neighborhoods, media reported on Monday.

The UK may have lifted its long-running ban on fracking last month, but its fracking industry still has one big hurdle that it must overcome: local opposition.

Fracking has been criticized for its reported ties to earthquakes and other environmental damage, and has fallen out of favor. The practice’s sullied reputation has led to its ban in several countries, including France, Germany, Spain, and until recently, the UK.

Despite its pariah status, fracking managed to make its way into the hearts and minds of Texans to eventually become the backing behind the United States’ rise to stardom within the global oil and gas industry. Fracking was able to make inroads in the U.S. shale patch precisely because locals benefited from the fracking activity by way of receiving money from the oil and gas taxes that the states collected, which then flowed into the areas that allowed it.

That those areas benefited greatly from the fracking dollars cannot be denied. Now Britain, too, is taking a page from the U.S. shale handbook: paying households £1,000 for allowing fracking in their areas. But the money will come directly from drillers rather than from industry tax revenue.

Drilling companies could soon go door to door in Britain, according to media reports on Monday, offering money in exchange for fracking support.

When the UK’s new Prime Minister Liz Truss removed the fracking ban last month, she did so with one caveat: it would only be allowed in communities that showed at least 50% support. Drillers must now gain half the residents over to the controversial practice in order to commence drilling.

Oil Likely To Hit $200: SEB Group

June 30, 2022

Oil Likely To Hit $200: SEB Group

Oil prices are likely to soar past $200 per barrel if G7 manages to cap the price of Russian crude oil, according to chief commodities analyst at Swedish bank SEB Group.

Bjarne Schieldrop, SEB analyst, said on Wednesday in no uncertain terms that the G7’s price capping proposal was a “recipe for disaster” given the current stress that the oil market is under.

The G7 leaders agreed on Tuesday to study ways to cap the price of Russian oil sold internationally and are seeking support among “like-minded” nations. It was one of the critical items to be discussed at this week’s G7 meeting as the group tries to find creative ways to lower energy prices for themselves and maintain adequate crude supplies from Russia—while simultaneously punishing Russia in what many see as an impossible task.

U.S. Treasury Secretary Janet Yellen continued to put pressure on European countries to support a price cap.

According to Schieldrop, the plan seems “neat on paper, but it sounds like a recipe for disaster right now,” given the strong demand for crude oil and low supplies that so far given Russia the upper hand in the market. Russia could, the analyst argued, choose not to sell the oil at a capped price—a decision that could lead to Russia’s production falling by as much as 2 million barrels per day.

Russia’s crude and condensate production rose in June by 5% to 10.7 million bpd, according to Kommersant sources—a figure that includes between 800,000 and 900,000 bpd of condensate, which is not included in the OPEC+ agreement. But Russia’s oil exports have slipped 3.3% in June with the rise of domestic refining demand.

Russian Deputy Prime Minister Alexander Novak said that Russia would raise its production again in July.

IEA: Europe Will Have To Cut Gas Usage By Nearly One-Third

June 30, 2022

IEA: Europe Will Have To Cut Gas Usage By Nearly One-Third

In the first quarter of next year, the countries of the European Union will have to cut their usage of natural gas by up to 30% in preparation for a complete stoppage of Russian gas flows, according to the International Energy Agency (IEA).

IEA Director Fatih Birol on Tuesday said that “a complete cut-off of Russian gas supplies to Europe could result in storage fill levels being well below average ahead of the winter, leaving the EU in a very vulnerable position.”

“In the current context, I wouldn’t exclude a complete cut-off of gas exports to Europe from Russia,” he stated.

Citing technical issues related to the Nord Stream pipeline, Russia earlier in June cut flows of gas to Germany by 60%.

Plans to boost natural gas storage filling in Europe would not withstand a full Russian cut-off if it were to happen between now and the fourth quarter of this year.

By the first of November, the European Union should have its gas storage filled to 90%; however, a complete Russian cut-off would reduce that significantly, leading to another surge in natural gas prices, which have already tripled year-on-year, according to Bloomberg, citing figures from the ICE Endex.

European natural gas prices remained steady from Monday to Tuesday, in part due to a resumption of the flow of Russian gas through the TurkStream pipeline, which was undergoing maintenance. The pipeline has a 31.5-billion-cubic-meter capacity, Bloomberg reports.

On Tuesday, Dutch front-month gas futures dropped 0.2% at the close.

Also steadying natural gas prices in Europe on Tuesday were new estimations for demand, which could see a drop due to sunnier weather that can better support solar energy.

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

Diesel In ‘Crisis’ Mode As Prices Break Records

May 1, 2022

Diesel In ‘Crisis’ Mode As Prices Break Records

Diesel prices, the lifeblood of industry, have hit a record $5.16 per gallon, trending $1 per gallon higher than gasoline prices, with inventory shortages adding severe pressure and resulting in inflated prices for consumer goods.

“While gasoline prices get much of the attention, diesel, which broadly is the fuel that moves the economy, has quietly surpassed its recent record high as distillate inventories, which include diesel and jet fuel, have plummeted to their lowest level in years,” media quoted Patrick De Haan, head of petroleum analysis at GasBuddy, as saying.

AAA records diesel at $5.18 per gallon as of early Friday.

De Haan warned that if U.S. distillate inventories fall much further–by five million barrels–they will be lower than at any point in the last two decades.

In the first half of March, diesel and gasoline prices began to soar to record highs as a result of Russia’s invasion of Ukraine and subsequent sanctions, coupled with post-pandemic economic recovery that has led to a continual uptick in demand.

Loss of refining capacity will make the diesel crisis the most painful for the U.S. Northeast, and there is no indication of a reprieve in the near future, with GasBuddy predicting that diesel prices will remain high and continue to outpace gasoline prices.

Record-high diesel prices continue to drive up the cost of consumer goods, which all have to be transported by a trucking industry powered by diesel engines.

There is now concern that a ripple effect could see U.S. diesel prices topping $6 per gallon as Russia cuts off natural gas supplies to Poland and Bulgaria. That could potentially force Europe to shift to other fuels, such as diesel, to fill in gaps.

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

Oil Prices Rebound As U.S. Walks Back Plan To Tap Strategic Petroleum Reserve

October 10, 2021

Oil Prices Rebound As U.S. Walks Back Plan To Tap Strategic Petroleum Reserve

The U.S. Department of Energy is walking back previous comments that it was considering a release of the Strategic Petroleum Reserve and a ban on crude oil exports
The DoE isn’t considering tapping the SPR “at this time”
Goldman Sachs: SPR release would have limited impact on crude prices

The U.S. Department of Energy is walking back previous comments that it was considering a release of the Strategic Petroleum Reserve and a ban on crude oil exports, Bloomberg’s Javier Blas reported on Twitter.

According to Blas, the DoE isn’t considering tapping the SPR “at this time”.

The news comes shortly after Goldman Sachs estimated that if the DoE released oil from the SPR, it would likely be limited to just 60 million barrels—posing a $3 downside risk to its year-end $90 barrel Brent forecast.

A White House press briefing took a similar no-SPR tone.

The Biden Administration will not make any predictions about releasing the SPR to alleviate high gasoline prices, Press Secretary Jen Psaki said at the daily briefing on Wednesday.

Psaki instead focused on the climate crisis, commenting on the fact that the matter was so urgent that it could not wait any longer.

“I’m not going to make any prediction of that from here.”

The press secretary noted that the Administration took steps in the aftermath of Hurricane Ida, including by authorizing exchanges from the SPR with oil and refining firms.

“We’ve also taken steps into — including engaging with members of OPEC,” Psaki said.

“But I’m not going to make any other predictions at this point in time. We’re continuously monitoring. We’ll look to take additional steps as needed,” she added.

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

Yellen Urges Development Banks To Stop Fossil Fuel Funding

July 14, 2021

Yellen Urges Development Banks To Stop Fossil Fuel Funding

U.S. Treasury Secretary Janet Yellen is prepared to gather together the heads of development banks to persuade them to stop fossil fuel project funding, according to Bloomberg.

The Treasury Secretary intends to “articulate our expectations that the MDBs align their portfolios with the Paris Agreement and net-zero goals as urgently as possible,” according to a written speech she is set to deliver at a climate conference in Italy.

The speech, soon to be delivered, follows just days behind a similar message that the financial community received at the G20, where financial leaders for the first time every acknowledged that carbon pricing was at least a potential tool in addressing climate change.

While Bloomberg notes that while development banks have never been responsible for the big bucks behind most fossil fuel projects, those funds are largely seen as a stepping stone for the projects to secure hefty commercial funding.

Since the pandemic began, development banks have thrown just $3 billion into oil and nat gas, with $0 going towards coal projects for the first time ever.

Meanwhile, development banks have funded $12 billion in clean energy projects.

But it is precisely these natural gas projects that will allow many countries to quickly and efficiently transition away from coal.

Prior to her appointment as Treasury Secretary, Yellen was criticized for her fossil fuel stock holdings. The Secretary vowed to divest her holdings in all fossil fuel companies as well as any companies that support fossil fuels.

Nevertheless, even before her time as Treasury Secretary and the chairman of the Financial Stability Oversight Council (FSOC), Yellen has been a staunch supporter of the environment and highly critical of the role fossil fuels have played in greenhouse gas emissions.

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

OPEC+ Will Keep A Lid On Oil Production

March 25, 2021

OPEC+ Will Keep A Lid On Oil Production

OPEC+ will likely decide to keep oil production essentially steady for another month, according to four Reuters sources.

Saudi Arabia and the UAE have both spoke out in favor of the need to tread lightly when it comes to how much oil is put into the market. And this week is perhaps proof positive that the group would be wise to heed.

On Tuesday this week, the price of Brent crude plunged to $60.86 per barrel from $69.63 per barrel on March 11. By Wednesday, the price had rebounded to nearly $64 per barrel—up more than 5% on the day.

The dramatic price fluctuations are attributable to a variety of events, including U.S. oil inventory figures, another round of lockdowns in the EU, AstraZeneca vaccine safety and efficacy concerns, and a vessel stuck in the Suez canal causing a traffic jam of oil tankers.

No matter the reason for the price swings, the data suggests that the market is still sensitive to stimuli—bullish or bearish, and nothing but a sustained increase in demand is likely to cure that.

Even if OPEC holds production steady for April—or allows a couple of eager producers to ramp up just slightly—there remain a couple of wildcards that threaten OPEC’s ability to keep supplies tight: Libya and Iran.

Libya, complete with its unified government and exempt from OPEC’s production cut agreement, has plans—and now perhaps the ability—to increase its oil production. Libya’s ambitions are to lift its oil production to 1.45 million bpd by the end of the year from 1.3 million bpd now.

Iran and Venezuela are also exempt from the production cuts. Iran’s oil exports have been on the rise, and Venezuela’s production has been rising, even if only slightly.

Julianne Geiger, Oilprice.com, opec+, oil production

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.

The Most Outrageous 2020 Oil Predictions

January 3, 2021

The Most Outrageous 2020 Oil Predictions

As we approach the close of 2020, we’re reminded of one statistical certainty when it comes to oil price predictions. If you set anything other than a range, you will be proven wrong. And even for the forecasters and predictors that do set a range, the likelihood that the actual price will fall within the chosen range is about as sure as a range of prices selected by throwing a dart at a number on the wall. That has never stopped oil price forecasters from giving it a go.

We’ve rounded up some of our favorite oil price predictions from this year. And while you’re thinking that this might not be a fair exercise given the black swan event such as the coronavirus pandemic, we will remind you that the predictions made even in the middle of the pandemic were quite suspect.

The U.S. Energy Information Administration (EIA) has the unfortunate position on our list of going first. Its January prediction for 2020 oil prices for both WTI and Brent would later prove to be high–not unsurprisingly given the events that were about to unfold. While there were reports that an outbreak was brewing as early as the first few days of January 2020, it wouldn’t be until January 13 that the first Covid-19 case was known to have escaped China’s borders. But when the EIA published its STEO on January 14, cratering oil demand due to the future pandemic wasn’t even on its radar. What was on its radar? Tensions between the United States and Iran, and the corresponding fear that there would be some oil supply disruption in the Middle East.

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

The Oil Refinery Crisis Will Worsen This Winter

December 16, 2020

The Oil Refinery Crisis Will Worsen This Winter

It was only to be expected that many of the world’s refiners would be pinched between low demand for finished products and rising inventories as the pandemic lockdowns continue to stifle activity. But the warm December that is expected this year is also threatening finished products demand. And it’s possible that many of the older, small refiners won’t survive at all.

According to HIS Markit, eleven U.S. refiners are scheduled to close.

The largest refinery in the United States, Royal Dutch Shell’s Convent, Louisiana refinery has shut down after it was unable to find an interested buyer. But the Dutch oil major is closing six more refineries according to Reuters, because it cannot sell those refineries either.

Then, the largest U.S. refiner, Marathon Petroleum, is set to close several refineries, including its Gallup, New Mexico, refinery and its refinery in Martinez, California.

Japan’s Eneos Corp has shut its Osaka refinery, too, but the real pain is in Australia.

BP announced back at the end of October that it was shutting down its aging 65-year-old Kwinana refinery in Perth, because it was simply “no longer economically viable.” Instead, the refinery will be turned into an import terminal. After this closure, BP has only three refineries left in Australia.

PBF Energy shut 85,000 bpd of its Paulsboro, NJ, refinery down. Phillips 66 shut its Alliance refinery down in the runup to Hurricane Sally, but just left it shut while it waits for better days.

Other refineries that are not shutting down are simply extending maintenance or bringing maintenance forward.

Australia’s Caltex is a prime example of this, when in early April it brought forward—and extended—maintenance on its only refinery, Lytton. Caltex vaguely said that it would restart the refinery when conditions recover.

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

U.S. Oil, Gas Rigs Fall Below 400 For The First Time Since 1940

May 9, 2020

U.S. Oil, Gas Rigs Fall Below 400 For The First Time Since 1940

Baker Hughes reported on Friday that the number of oil and gas rigs in the US fell again this week by 34, falling to 374, with the total oil and gas rigs sitting at 614 fewer than this time last year as U.S. drillers scurry to keep their heads above water amid strict stay-at-home orders that caused oil demand to plummet at alarming rates—and oil prices along with it.

It is the fewest number of active rigs since Baker Hughes started to keep in 1940.

The number of oil rigs decreased for the week by 33 rigs, according to Baker Hughes data, bringing the total to 292—a 513-rig loss year over year. It is the fewest number of active oil rigs since late 2009.

The total number of active gas rigs in the United States fell by 1 according to the report, to 80. This compares to 183 a year ago.

The EIA’s estimate for the week is that oil production in the United States fell to 11.9 million barrels of oil per day on average for week ending May 1, which is 1.2 million bpd off the all-time high and a substantial 300,000 bpd lower than the week prior. It is the fifth straight weekly production decline. It is the first sub-12 million bpd rate in the United States since February 2019.

Canada’s overall rig count decreased by 1 rigs this week, to 26 rigs. Oil and gas rigs in Canada are now down 37 year on year.

At 1:12 am, WTI was trading up 1.53% at $23.91, while the Brent benchmark was trading up 2.82% at $30.29.

U.S. Oil Companies Are Cutting Production Much Faster Than Expected

May 8, 2020

U.S. Oil Companies Are Cutting Production Much Faster Than Expected

Shale Permian

The United States is on track to cut 1.7 million barrels of oil production per day, according to Reuters calculations of state and company data shared on Thursday.

It was U.S. President Donald Trump that suggested at the beginning of April, prior to the most recent OPEC deal signing that the United States would cut its oil output as a natural response to the worsening market conditions. The statement was not initially good enough for OPEC, who wanted more of a commitment from the world’s largest producer and consumer of crude oil.

“Well, I think it’s automatic. Because they’re already cutting. I mean, if you look, they’re cutting back. Because it’s… it’s market. It’s demand. It’s supply and demand. They’re already cutting back, and they’re cutting back very seriously,” U.S. President Trump said at a press briefing early last month.

OPEC+ eventually agreed to cut production by 9.7 million bpd—a landmark figure that is significantly larger than previous OPEC cuts in recent years. Its non-OPEC allies who partnered with OPEC in the deal pledged to cut an additional 10 million bpd.

U.S. Energy Secretary said last month that the DoE expected that production in the United States would fall by between two and three million bpd by the end of the year—it appears the cuts have come even quicker than the department expected.

The need for the production cuts grew more evident as the United States shut down nearly all activity in an attempt to flatten that curve of infections that sought to overwhelm the country’s healthcare system. Doing so, however, has idled much of the economy and crippled demand—and as such, its oil and gas industry that fuels that economy.

The cuts from U.S. producers may seek to quiet the disgruntlement of OPEC and Russia, in particular, who expressed their displeasure that the U.S. would not require its producers to curb production. After all, the U.S. shale industry has benefited greatly from previous rounds of OPEC cuts.

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