Home » Posts tagged 'Tsvetana Paraskova'

Tag Archives: Tsvetana Paraskova

Olduvai
Click on image to purchase

Olduvai III: Catacylsm
Click on image to purchase

Post categories

Yergin: Expect Extreme Volatility In Oil Markets

Yergin: Expect Extreme Volatility In Oil Markets

Flaring

Rising pipeline takeaway capacity in the Permian and global oil demand growth at its weakest in a decade are set to lead to more volatility in oil prices in the near term, a prominent energy expert said, joining a growing number of analysts who see prices further depressed by slowing economies and crude demand.

“The pipeline bottlenecks are in the process of being resolved, so a lot more oil is going to come onto the market by the end of the year. We expect the U.S. (crude oil output) to be up to 13 million barrels a day,” IHS Markit’s vice chairman Daniel Yergin told CNBC on Tuesday.

While U.S. production will continue to add more supply in an already oversupplied global market, on the demand side, expectations are getting increasingly pessimistic.

“We’re in one of the weakest periods since 2008 and we think demand growth this year is under a million barrels per day. So you have that factor at the same time as you have more oil coming to the market. So expect some volatility,” Yergin told CNBC in an interview on the sidelines of a conference in Abu Dhabi.

Despite expectations of volatility, IHS Markit’s vice chairman sees Brent Crude prices range-bound in the US$55-65 range.

Yergin is not alone in predicting substantially lower oil demand growth this year than originally anticipated.  

The International Energy Agency (IEA) revised down its demand growth estimates for 2019 in its latest Oil Market Report, by 100,000 bpd to 1.1 million bpd, after seeing that between January and May demand growth was just 520,000 bpd, the lowest increase for the period since 2008.     

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

ExxonMobil Looks To Exit UK North Sea Oil & Gas

ExxonMobil Looks To Exit UK North Sea Oil & Gas

ExxonMobil

ExxonMobil has recently discussed with operators selling part or all of its assets in the UK North Sea in a move that could raise up to US$2 billion for Exxon and mark another major U.S. exit from the area, Reuters reported on Tuesday, quoting three industry sources familiar with the matter.

Exxon has been a major investor in the UK North Sea since 1964, when the first exploration drilling in the area began. The U.S. major holds interests in 40 producing oil and gas fields and produces around five percent of UK oil and gas production, with an average 80,000 barrels of oil and 441 million cubic feet of gas a day. Exxon’s investment in the North Sea is managed through a 50/50 joint operation with Shell.

If Exxon sells some or part of its assets in the UK North Sea, it will be yet another major U.S. oil and gas firm to divest interests in this mature area to focus on their current key growth areas, which for Exxon right now are the Permian in Texas and conventional oil production offshore Guyana.

While European supermajors Shell, BP, and Total continue to view the North Sea as one of their core assets, U.S. majors have been selling North Sea stakes as many of them are now focused on U.S. shale.

Marathon Oil said in February that it would be exiting the UK North Sea as it continues to focus on high-return U.S. shale oil operations.

In April, ConocoPhillips sold its UK oil and gas business to Chrysaor Holdings for US$2.675 billion in a deal which Wood Mackenzie described as “another story of the changing corporate landscape in the North Sea – for the first time, a non major is the number one producer in the UK.”

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

OPEC’s Fight To End The Oil Glut Is Far From Over

OPEC’s Fight To End The Oil Glut Is Far From Over

Offshore rigs

OPEC and its Russia-led non-OPEC allies are in their third year of managing supply to the market, hoping to draw down high inventories and push up oil prices.

Early this month, the so-called OPEC+ coalition of partners rolled over their production cuts of a combined 1.8 million bpd into March 2020, as the resurging oil glut threatened to derail their continued efforts to manage the market.

OPEC is now considering using several metrics to assess where global oil (over)supply stands, including taking the five-year average of oil stocks in 2010-2014 instead of the most recent five-year average 2014-2018, which it currently reports in its monthly oil market reports and which the International Energy Agency (IEA) also takes as a benchmark to measure oil inventories.

Analysts warn that the 2010-2014 average metric will not give a correct comprehensive assessment of the oil market.

Fatih Birol, the IEA’s executive director, warns that moving the goalposts doesn’t change the situation in the oil market. The glut is there, regardless of how OPEC wants to measure inventories.   

“The important thing is that you can change the methodology but you cannot change the realities of the market,” Birol told Reuters, noting that the 2010-2014 average is a new perspective OPEC proposes to use, while the IEA has its own perspective.  

On the sidelines of the OPEC+ meeting in Vienna earlier this month, Khalid al-Falih, the Energy Minister of OPEC’s largest producer and de facto leader Saudi Arabia, told Al Arabiya:

“With demand rising over the next nine months and the commitments from all the countries, including the Kingdom of Saudi Arabia, we are approaching the normal levels of supplies of 2010-2014. It is one of the options in front of us as a goal.” 

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

‘’Biofuels Haven’t Cut Gasoline Prices Or Emissions’’

‘’Biofuels Haven’t Cut Gasoline Prices Or Emissions’’

Grass

Since its introduction more than a decade ago, the Renewable Fuel Standard (RFS) hasn’t cut gasoline prices outside the Midwest and has even led to a slight rise in pump prices in states far from ethanol production, while the standard has had a limited effect, if any, on greenhouse gas emissions.    

These are the key findings of a new report from the United States Government Accountability Office (GAO) prepared at the request of Republican Senator for Oklahoma, James Lankford, who supports policies to lower the biofuel volumes to reflect market realities that gasoline demand turns out to be lower than what the legislators had predicted when enacting the RFS more than a decade ago.  

Under the RFS, oil refiners are required to blend growing amounts of renewable fuels into gasoline and diesel. This policy has long pitted the agriculture lobby against the oil refining lobby. The Midwest farm belt benefits from the RFS policy because it increases demand for ethanol, but the oil refiners do not—they lose petroleum-based market share of fuels, and meeting the blending requirements costs them hundreds of millions of dollars.

In a recent blow to the ethanol industry in the farming vs. oil refining battle, a federal appeals court has denied a renewable fuel group’s attempt to block the Environmental Protection Agency (EPA) from issuing small refinery exemptions (SREs) to the Renewable Fuel Standard.

Now it looks like the RFS and its effects on prices and emissions are also pitting one government agency against another.   

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

Tainted Russian Oil Crisis May Drag On For Months

Tainted Russian Oil Crisis May Drag On For Months

Crude Oil

It’s been a month since Russian oil flows through the Druzhba pipeline were suspended due to contamination, and despite Russia’s assurances that clean oil will resume flowing through the pipeline westward to Europe in the second half of May, analysts and traders say the progress is very slow while costs could be very high.

Last month, Russia halted supplies via the Druzhba oil pipeline to several European countries due to a contamination issue, which the Russians say was deliberate

Refineries in Belarus, Poland, Hungary, Slovakia, the Czech Republic, and Germany have been impacted by the contamination issue as clean Russian oil is not flowing normally yet, while Western refiners and Russian companies are in a dispute over who’s paying for the clean-up and when.

Western oil traders tell Bloomberg’s Javier Blas that the contamination issue and the subsequent clean-up, blending of dirty oil, and restart of normal deliveries via the pipeline will be much costlier than initial estimates and could take much longer than anticipated.

The cost could be as high as US$1 billion, according to traders and executives at refiners in Moscow, Geneva, and London, who spoke to Bloomberg. Traders also believe that the contaminated oil volume could be as high as 40 million barrels, double the 20 million barrels that Russian officials are claiming

Earlier this week, Russia said that it is already sending clean within-standards crude oil via the Druzhba pipeline toward Hungary and Slovakia, with first clean oil expected to arrive at the metering stations in those countries within a week.

A spokeswoman for Czech pipeline operator Mero told Reuters on Friday that clean Russian oil via the pipeline is expected to reach the Czech Republic on Monday afternoon. Russian oil reached Slovakia on Wednesday evening.

The now month-long suspension of Russian oil supply to several European countries comes as global supply outages mount with Venezuela and Iran, and with increasing supply disruption risks in Libya and the Middle East.  

A New Mega Cartel Is Emerging In Oil Markets

A New Mega Cartel Is Emerging In Oil Markets

Oil port

China and India—two of the world’s largest oil importers and the biggest demand growth centers globally—are close to setting up an oil buyers’ club to have a say in the pricing and sourcing of crude oil amid OPEC’s cuts and U.S. sanctions on Iran and Venezuela, Indian outlet livemint reports, citing three officials with knowledge of the talks.

This is not the first time that the two major oil importers are working to create such an oil club.

India and China have discussed creating an ‘oil buyers’ club’ to be able to negotiate better prices with oil exporting countries and will be looking to import more U.S. crude oil in order to reduce OPEC’s sway, both over the global oil market and over prices, India’s Petroleum Ministry said in June 2018.

“With oil producers’ cartel OPEC playing havoc with prices, India discussed with China the possibility of forming an ‘oil buyers club’ that can negotiate better terms with sellers as well as getting more US crude oil to cut dominance of the oil block,” a tweet from the Petroleum Ministry’s Twitter account said in the middle of last year, when oil prices were rising ahead of the return of the U.S. sanctions on Iran’s oil industry.

According to the officials cited by livemint, China and India have exchanged senior-level visits several times since then and have made progress on “joint sourcing of crude oil.” Related: Massive Drop In U.S. Oil Rig Count Fails To Arrest Price Slide

Reports of the strengthened Chinese-Indian cooperation in potentially forming an oil buyers’ club come just as the U.S. sanction waivers for all Iranian oil customers expire this week.

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

Saudi Oil Minister: We Won’t Ramp Up Oil Production Soon

Saudi Oil Minister: We Won’t Ramp Up Oil Production Soon

Khalid al Falih

Saudi Arabia plans to stay within the limits of its ceiling under the OPEC+ production cut deal in May and will certainly not rush to ramp up production, although it would respond to customer needs if they want more oil, Saudi Energy Minister Khalid al-Falih said on Wednesday.

As the U.S. announced on Monday that it would be ending sanction waivers for all Iranian oil customers, the Trump Administration said that it “had extensive and productive discussions with Saudi Arabia, the United Arab Emirates, and other major producers to ease this transition and ensure sufficient supply.”

While the U.S. and President Trump appear certain that Saudi Arabia would compensate for Iranian losses, the Kingdom seems reluctant to start swiftly raising production before seeing actual figures for how much Iranian oil will actually be lost and how tight the market will be.

Saudi Arabia’s oil production in May is pretty much set and will differ “very little” from previous months, Reuters quoted al-Falih as saying in Riyadh today.

Last month, OPEC’s de facto leader and largest producer Saudi Arabia followed through its commitment from February to cut deeper and pump well below 10 million bpd in March. Saudi Arabia’s crude oil production dropped by a massive 324,000 bpd from February to stand at 9.794 million bpd in March—just as al-Falih had said the Kingdom would do. Saudi Arabia pumped around 9.8 million bpd in March, some 500,000 bpd below the 10.311-million-bpdcommitment in the OPEC+ deal.

Speaking today, al-Falih said, as carried by Reuters:

“Inventories are actually continuing to rise despite what is happening in Venezuela and despite the tightening of sanctions on Iran. I don’t see the need to do anything immediately.”

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

Platts Survey: OPEC Oil Production Down To More Than 4-Year Low

Platts Survey: OPEC Oil Production Down To More Than 4-Year Low

oil drilling

Over-delivering Saudi Arabia and blackouts in Venezuela helped push OPEC’s crude oil production down by 570,000 bpd from February to 30.23 million bpd in March—the lowest production from the cartel in more than four years, according to the monthly S&P Global Platts survey published on Friday.

OPEC’s de facto leader and biggest producer, Saudi Arabia, saw its production drop in March to the lowest level since February 2017. The Saudis delivered on their promise to cut more than pledged in the pact and slashed output by another 280,000 bpd last month, with March production at 9.87 million bpd, according to the S&P Global Platts survey.

Venezuela, for its part, saw its production drop to a 16-year-low, at 740,000 bpd, due to the massive blackouts that crippled oil production and exports in March, the Platts survey found.

OPEC’s second-biggest producer Iraq cut its production by 100,000 bpd from February to 4.57 million bpd in March, according to the survey. This, however, was still slightly above Iraq’s 4.512 million bpd production cap under the deal.

After an initial plunge following the U.S. sanctions on its industry, Iran’s production has been holding relatively steady over the past couple of months, and the Islamic Republic pumped 2.69 million bpd in March, the Platts survey showed.

The resumption of operations at Libya’s biggest oil field, Sharara, pushed Libya’s production up to 1.06 million bpd in March, according to the survey.

Earlier this week, the monthly Reuters survey showed that OPEC’s oil production in March 2019 fell to its lowest level since February 2015, as Saudi Arabia cut more than it had pledged and Venezuela continued to struggle amid U.S. sanctions and a major blackout.

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

Reuters: OPEC’s Oil Production Drops To Lowest Since 2015

Reuters: OPEC’s Oil Production Drops To Lowest Since 2015

oil storage

OPEC’s oil production in March 2019 fell to its lowest level since February 2015, as Saudi Arabia cut more than it had pledged under the output cut deal and Venezuela continued to struggle amid U.S. sanctions and a major blackout, the monthly Reuters survey showed on Monday.

The combined production of all 14 OPEC members stood at 30.4 million bpd last month, down by 280,000 bpd compared to February and the lowest level of OPEC production since February four years ago, according to the survey.  

Production in March beat the previous four-year-low record of the cartel’s oil production from February 2019. As per Reuters survey last month, OPEC’s oil production fell by 300,000 bpd in February compared to January to stand at 30.68 million bpd.  

The figures in the survey for March suggest that Saudi Arabia continues to over-deliver in its share of the cuts, as it has promised multiple times since the new OPEC+ deal began in January 2019.

Under the OPEC/non-OPEC agreement for a total of 1.2 million bpd cuts between January and June, Saudi Arabia’s share is a cut of 322,000 bpd from the October level of 10.633 million, to reduce output to 10.311 million bpd.

The rate of compliance from the eleven OPEC members bound by the pact—with Iran, Venezuela, and Libya exempted—also suggests that the Saudis and their Arab Gulf partners are deepening the cuts.

The eleven OPEC members with quotas had a combined compliance of 135 percent in March, surging from 101 percent in February, according to the Reuters survey tracking supply to the market and based on shipping data and information provided by sources at oil companies, consulting firms, and OPEC.

The survey did not provide figures for the Saudi production, but estimated that exempt Venezuela—under U.S. sanctions and suffering from a major power blackout in March—saw its oil production plummet by 150,000 bpd in March compared to February.

The Easy Money In European Natural Gas Is Gone

The Easy Money In European Natural Gas Is Gone

Gas Storage

At the end of last winter’s heating season, it was an unusually cold spell that upended European natural gas markets, with storage levels falling below average and prices firming up as demand shot up.

At the end of this winter’s heating season, it is the unusually mild weather in most of Western Europe for most of the winter that has driven natural gas prices down and left supplies higher than the seasonal average.

The summer gas futures at the Dutch TTF hub have declined by 16 percent so far this year and have been trading lately around the lowest in 10 months. The winter gas futures contract, however, has dropped by just one third of the decline in the summer contract, according to data from ICE Endex compiled by Bloomberg.  

So the discount of the Dutch summer natural gas futures to the winter contract widened to the biggest since 2011 as of early March. Typically, such a wide spread would mean that one of the most common European gas trades—buying cheaper gas futures in the summer to sell in the winter—would be the most profitable in eight years.

However, traders are unable to take full advantage of the wide winter-summer spread because several factors have combined this winter season to create a perfect storm in the European natural gas markets. These factors are higher stockpiles than usual, limited available storage capacity as most of it is booked out amid declining overall capacity, and increased liquefied natural gas (LNG) shipments to Europe as Asian LNG spot prices continue to tumble.

First, unlike last year’s winter, this winter has been unusually mild in many parts in Western Europe. This has led to lower natural gas demand and lower withdrawal from storage—a stark contrast compared to the 2018 winter.

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

Kashmir Conflict Has Riyadh On Edge

Kashmir Conflict Has Riyadh On Edge

Satellite image

Just days after Saudi Arabia’s Crown Prince Mohammed bin Salman finished his charm-offensive Asian trip to Pakistan, India, and China, the ever-simmering tensions between Pakistan and India flared up again over Kashmir—the territory the two countries have been disputing since 1947 when Britain partitioned its colonies and India and Pakistan became independent countries.

Commodity, currency, and equity markets were on edge last week while nuclear arsenal owners India and Pakistan were saying they carried out air strikes over the so-called Line of Control—the boundary between Indian and Pakistani areas of control over Kashmir.

The two countries have dialed down hostilities since last week and Pakistan said last Thursday that it would release an Indian pilot it had been holding “as a gesture of peace.”  

One of the first countries to send a high-profile official to seek de-escalation of the tension was Saudi Arabia, which had just pledged US$20 billion in investments into Pakistan and another US$100 billion in India, with a large part of these billions of dollars to be invested in the oil industries in both countries.

The world’s top crude oil exporter Saudi Arabia cannot easily ignore a potential new conflict between India and Pakistan, as it has strategic interests in both countries, (apart from the obvious worst-case scenario—a nuclear war in its backyard), Andrew Critchlow, head of news in EMEA for S&P Global Platts, writes in a blog postRelated: Is This The End Of Alaska’s LNG Ambitions?

Saudi Arabia’s Crown Prince Mohammed bin Salman sent last week the Minister of State for Foreign Affairs, Adel al-Jubeir, to Pakistan with a letter to the Pakistani leadership in an attempt to defuse the latest tension.

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

Saudi Arabia: We’ll Pump The World’s Very Last Barrel Of Oil

Saudi Arabia: We’ll Pump The World’s Very Last Barrel Of Oil

Saudi Flag

Saudi Arabia isn’t buying the peak oil demand narrative.  

OPEC’s largest producer continues to expect global oil demand to keep rising at least by 2040 and sees itself as the oil producer best equipped to continue meeting that demand, thanks to its very low production costs.

Saudi Arabia will be the one to pump the last barrel of oil in the world, but it doesn’t see the ‘last barrel of oil’ being pumped for decades and decades to come.  

“I don’t see peak [oil] demand happening in 10 years or even by 2040,” Amin Nasser, president and chief executive officer of Saudi oil giant Saudi Aramco told CNN Business’ Emerging Markets Editor John Defterios on the sidelines of the World Economic Forum in Davos this week.

“There will continue to be growth in oil demand … We are the lowest cost producer and the last barrel will come from the region,” Nasser told CNN.

For several years, Nasser has been saying that peak oil demand is nowhere in sight, that petrochemicals will drive oil demand growth through 2050, and that all the ‘peak oil demand’ and ‘stranded resources’ talk is threatening an orderly energy transition and energy security.

Saudi Arabia—which has just announced that its huge oil reserves are slightly higher than previously estimated—looks to diversify its economy away from heavy dependence on crude oil, but one of the goals of its Vision 2030 diversification plan is to use less oil in domestic power generation to free up more barrels for exports. Related: IEA Chief: EVs Are Not The End Of The Oil Era

As the world’s top crude oil exporter, Saudi Arabia will not be giving away easily its crown and the geopolitical clout that comes with it.

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

Canada’s Natural Gas Crisis Is Being Ignored

Canada’s Natural Gas Crisis Is Being Ignored

Gas pipelines

“Alberta and its natural gas producers face a daunting crisis,” Alberta’s Natural Gas Advisory Panel said in a report in December, highlighting the challenges that natural gas producers in Alberta face in market access and pricing for their commodity.

Industry officials and analysts say that the situation with the steep natural gas discounts in Canada to the U.S. Henry Hub benchmark is similar to the huge discounts of Canada’s heavy oil benchmark—the Western Canadian Select—to the U.S. benchmark West Texas Intermediate (WTI).

The record-low oil prices in Canada have attracted a lot of media attention in the past few months, but the steep discounts and volatile prices of Alberta’s natural gas have received less attention, although the pricing and problems are similar.

“It’s absolutely a similar situation,” Advantage Oil and Gas president and chief executive Andy Mah told the Financial Post.

Like oil, natural gas prices have also been suffering from the steep discounts, but the attention has been on oil “because of the slower decline in natural gas prices,” Mah told Geoffrey Morgan of the Financial Post.

According to Samir Kayande, director at RS Energy, the natural gas prices discounts have been plaguing the industry for longer and the problem has been “far worse than it is for oil.”

“Gas is such a forgotten commodity now,” Kayande told the Financial Post.

Alberta’s government has recently taken drastic measures to prop up the price of heavy oil in Canada, but it has yet to address the distressed natural gas pricing.

Natural gas “is just as important (as oil), it’s just not getting the same kind of attention as oil” but that could soon change, a government official told the Financial Post.

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

Falling Oil Prices May Spark New Debt Crisis

Falling Oil Prices May Spark New Debt Crisis

benj

U.S. oil prices at below $50 and now even below $45 a barrel could cause concerns about the debt levels of some energy companies, Nasdaq energy analyst Tamar Essner told CNBC on Wednesday.

“Credit markets have held up a lot better than the energy equity markets right now, so that tells you that credit investors out there believe in the oil story much more so than energy equity investors do right now,” Essner said.

Consumers in the U.S. like the low gasoline prices that come with lower oil prices, but a slide in the price of oil has a broader impact on the economy, Essner said.

Some of the newer U.S. shale producers are probably deep into cash-flow negative at the current oil prices of $43 a barrel WTI Crude, although the energy industry as a whole is “in a lot stronger position” today than it was in the price crash of 2014, according to the energy analyst.

“A lot of the debt has been put in a much more consolidated position. We’ve just had a round of credit redetermination in the fall when prices were higher, so that should buy us some time in the market as well,” Essner said, referring to the banks’ twice-yearly borrowing base redetermination of energy companies.

Over the past few weeks, when oil prices were falling due to fears that the OPEC+ production cuts won’t be enough to rebalance the oil market, some companies announced their 2019 capital budget plans.

Many of those companies said they would be cutting spending and the number of rigs, Essner said, noting that lower spending levels will ultimately result in a lower pace of oil production growth, but it will take time.

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

IEA Chief: U.S. Oil Output To Near Saudi+Russian Production By 2025

IEA Chief: U.S. Oil Output To Near Saudi+Russian Production By 2025

Offshore rig

Total U.S. oil production around 2025 will almost equal the combined production of Russia and Saudi Arabia, Fatih Birol, the Executive Director of the International Energy Agency (IEA), told Turkish state-run Anadolu Agency on Friday.

The huge growth in U.S. shale production will completely change the balance of oil markets, Birol told the news agency.

The IEA’s Oil 2018 report from earlier this year sees the United States dominating the global oil supply growth over the next five years.

OPEC capacity will grow only modestly by 2023, while most of the growth will come from non-OPEC countries, led by the United States, “which is becoming ever more dominant in the global oil market,” the IEA said.

Driven by light tight oil, U.S. production is seen growing by 3.7 million bpd by 2023, more than half of the total global production capacity growth of 6.4 million bpd expected by then. Total liquids production in the United States—including conventional oil, shale, and natural gas liquids—will reach nearly 17 million bpd by 2023, “easily making it the top global producer, and nearly matching the level of its domestic products demand,” the IEA said in March this year.

“The United States is set to put its stamp on global oil markets for the next five years,” Birol said back then.

The U.S. is currently pumping oil at record levels of more than 11 million bpd, while Russia and Saudi Arabia—which also hit record highs in October and November, respectively—will curtail 230,000 bpd and 322,000 bpd of their production in the first six months of 2019, respectively.

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

Olduvai IV: Courage
In progress...

Olduvai II: Exodus
Click on image to purchase