IMF Slashes Saudi Growth Outlook On Lower Oil Prices, Production

The International Monetary Fund (IMF) cut on Monday its forecast for Saudi Arabia’s economic growth this year to 1.8 percent, down by 0.6 percentage point from the previous economic outlook in October, due to lower oil prices and lower oil production growth. The IMF sees growth in Saudi Arabia for 2019 at 1.8 percent, compared to 2.4 percent expected last October, while it lifted its 2020 economic growth forecast by 0.2 percentage point from October to 2.1 percent. In its World Economic Outlook (WEO) Update published on Monday, the IMF expects…

Source: Oilprice.com

Hitachi Halts Nuclear Megaproject In The UK

Japanese technology giant Hitachi on Thursday Jan 17 announced it was suspending all further work at its Wylfa Newydd nuclear project in Anglesey, north Wales. This decision by Hitachi’s Board of Directors yesterday in Tokyo included writing off the $2.8 billion already invested in site preparation work. The board also decided to cancel a second nuclear project in the UK at Oldbury in Gloucestershire. This move hardly comes as a surprise. (See our previous Oilprice report “Another Nuclear Megaproject Bites the Dust”, November…

Source: Oilprice.com

TransCanada’s Keystone Pipeline GP Ltd. authorized to begin additional construction activities on its Keystone XL Project in Canada


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The National Energy Board (NEB) today approved TransCanada’s Keystone Pipeline GP Ltd. (Keystone) request to begin winter clearing work on the North Spread of its Keystone XL Project (Project).

Source: National Energy Board - News Release

The Week Ahead For Crude Oil, Gas and NGLs Markets – Jan 21, 2019

CRUDE OIL

  • US crude oil inventories declined 2.7 MMBbl last week, according to the weekly EIA report. Gasoline and distillate inventories showed sizable gains of 7.5 MMBbl and 3.0 MMBbl, respectively. Total petroleum inventories posted a gain of 5.0 MMBbl. US crude oil production was estimated to be up 200 MBbl/d. Crude oil imports were down 319 MBbl/d, to an average of 7.5 MMBbl/d, versus the week prior.
  • While some bullish expectations remained in the market, last week started with price declines. For imports and exports during December, China reported its lowest level over the past two years, causing the declines. This news enhanced concerns about slowing economic growth and demand for petroleum products. These concerns were quickly reversed with news that China is planning to introduce policies to stabilize the slowing economy. On Friday, news of a Chinese proposal to reduce the trade imbalance between China and the US over the next six years resulted in WTI prices rising $1.78/Bbl and closing the week at the highest level since early December.
  • Other supportive elements continue in the market as Saudi Arabia’s energy minister Khalid Al-Falih announced that OPEC is on track to comply with the production cuts. He added that OPEC will have no need for an extraordinary meeting before the April meeting, where it will decide on output policy for the remainder of 2019.
  • The China announcements and perceived strength in the US economy had the US dollar gaining last week. The inverse relationship between the US dollar and WTI prices disappeared as both gained over the week.
  • Last week’s inventory release continued the trend of late, with crude oil declines but gains in total petroleum inventories. This reflects historic demand declines in the first quarter and may have a reduced impact on prices.
  • Prices in WTI settled the week up $2.21/Bbl, but the market internals were not as supportive to additional gains. WTI had a decrease in volume and continued declines in open interest as prices increased, testing resistance. A long-term bullish market needs to keep feeding the rallies with additional volume and open interest gains if the price run is to maintain its structural bias. The CFTC report is still not available, due to the government shutdown, so the market is blind to position structure among the sectors.
  • WTI prices are now challenging the high end of the range and an area of consolidation from last November and December between $49.00/Bbl and $54.55/Bbl. As the market digests production cuts, sanctions, and tariffs, the price range will be between $42/Bbl and $55/Bbl near-term. Once the market has a full understanding of these elements, the price will likely stabilize around $55/Bbl.

NATURAL GAS

  • Natural gas dry production gained 0.25 Bcf/d, while Canadian imports decreased 0.17 Bcf/d.
  • Res/Com demand increased 6.73 Bcf/d due to cooler temperatures. Power and Industrial demand also increased 1.86 Bcf/d and 0.49 Bcf/d, respectively. LNG exports declined 0.31 Bcf/d on the week, while Mexican exports were flat. Totals for the week show the market gaining 0.08 Bcf/d in supply while demand increased 9.14 Bcf/d.
  • The storage report last week came in with a withdrawal of 81 Bcf, well below historical withdrawals for the same week. The upcoming weeks should show more historical seasonal withdrawals.
  • The week started with a large price gap created from changes in the weather forecasts. Forecasted temperatures support stronger demand through the end of the month. As discussed previously, the market adjusts to changes in the forecasts, which occur throughout the day. An example of this intra-day volatility was seen on Friday, when the market opened lower and moved down, trying to close the gap from earlier in the week, only to reverse when the late-morning forecasts reaffirmed the cold weather.
  • With the CFTC not reporting the positions of trade sectors (due to the government shutdown), it is impossible to identify shifts within traders’ expectations and positions. Market internals had volume and open interest gaining (compared with the previous week) as prices rallied.
  • An early week run took prices up to the week’s high at $3.722/MMBtu. Prices then declined throughout the week, likely creating the low side of the trade range between $3.167/MMBtu and $3.201/MMBtu, barring any significant forecast changes. The high side of the range may be tested during the coming week, with a potential for a $0.55+/MMBtu trade range, as prices continue a period of potentially high volatility.
  • Trade has not reached a consensus about the outcome of the winter, with many traders concerned about ending storage inventories in March. This concern is buoyed by the flattening of production gains over the past two months. Other traders are not worried about the ending inventories. This struggle to assess the market is the reason that price action is so sensitive to the forecasts.

NGLs

  • Prices improved week over week across the board. Ethane was up $0.01 to $0.30, propane up $0.02 to $0.67, normal butane up $0.02 to $0.80, isobutane up less than $0.01 to $0.80, and natural gasoline up $0.01 to $1.06.
  • The Conway to Mont Belvieu ethane/propane mix spread shortened to about $0.09, with the differential as large as $0.15 in prior weeks.
  • US propane stocks decreased about 1.2 MMBbl in this past week’s inventories. Stocks now sit at 67.5 MMBbl, about 9.5 MMBbl higher than in the first week of 2018, but 4.7 MMBbl lower than in the first week of 2017.

The post The Week Ahead For Crude Oil, Gas and NGLs Markets – Jan 21, 2019 appeared first on Drillinginfo.

Signatories Should Stick To Iran Nuclear Deal: UN Official

The International Atomic Energy Agency (IAEA) has verified several times that Iran is sticking to its commitments in the nuclear deal, and so should all other signatories to the pact, Iranian media quoted the director of the United Nations Information Center (UNIC) in Iran, Maria Dotsenko, as saying. According to IRNA and Fars news agencies, Dotsenko said that United Nations Secretary-General António Guterres had expressed concern over the United States withdrawing from the Iran nuclear deal, as the Joint Comprehensive Plan of Action (JCPOA)…

Source: Oilprice.com

Oil Flat As U.S. Drilling Slows Down

Oil prices were up early on Monday, steadying at a two-month high last seen in mid-November, as the plunging U.S. rig count last week signaled a slowdown in shale drilling amid the lower price of oil.   At 10:34 EST on Monday, WTI Crude was up 0.44 percent at $54.28, while Brent Crude was up 0.38 percent at $62.94. On Friday, oil prices surged as Baker Hughes reported a drastic reduction to the number of active oil and gas in the United States in the week. The total number of active oil and gas drilling rigs fell by 25 rigs, according to the…

Source: Oilprice.com

China Refiners Break Processing Record In 2018

Chinese crude oil refineries processed an average 12.07 million barrels of oil daily in 2018, up by 6.8 percent on the year and the highest daily processing rate on record, government statistics show, as cited by Reuters. In December alone, local refiners processed 12.05 million bpd, a 4.4-percent annual improvement, the data also showed, reflecting a sharp increase in imports of crude oil in the last month of the year. China imported 30 percent more crude oil in December than a year earlier. The surge was the result of independent refiners rushing…

Source: Oilprice.com

Tesla To Start Model 3 Deliveries To Europe In February

Tesla expects to begin deliveries of its Model 3 to Europe in February, after having received permission to sell the model in the Netherlands. The Dutch vehicle authority RDW has added Model 3 to the type of vehicles it has authorized for sale, with which Tesla cleared the final hurdle to start delivering the model to the European market, Bloomberg reports. Just like with U.S. sales of Model 3, Tesla will start delivering in Europe the Long Range Battery version of the midsize sedan. Model 3 is key to Tesla’s vehicle offering as it aims to…

Source: Oilprice.com

China Refiners Break Processing Record In 2018

Chinese crude oil refineries processed an average 12.07 million barrels of oil daily in 2018, up by 6.8 percent on the year and the highest daily processing rate on record, government statistics show, as cited by Reuters. In December alone, local refiners processed 12.05 million bpd, a 4.4-percent annual improvement, the data also showed, reflecting a sharp increase in imports of crude oil in the last month of the year. China imported 30 percent more crude oil in December than a year earlier. The surge was the result of independent refiners rushing…

Source: Oilprice.com

French Total To Enter Saudi Downstream Business

Saudi Aramco is currently mainly in the news with regards to multibillion investment schemes in Asian markets, showing an increased appetite to lock in demand for Saudi crude in China, Pakistan and India. But make no mistake, local ventures could be making headlines again very soon. In the last couple of days, news has popped up that Aramco and French oil major Total, through its Satorp joint-venture, Sumitomo Mitsui Banking Corporation and Riyad Bank to help raise funds to develop a petrochemical facility in the kingdom. The parties are asked…

Source: Oilprice.com

Iran Says Japan Restarts Oil Imports

Japan has resumed purchases of Iranian crude oil, the governor of the central bank of Iran told state news agency IRNA, Reuters reports. “After China, South Korea, India and Turkey, Japan also started the process of importing Iranian oil,” Abdolnaser Hemmati said. Japan refinery industry insiders said late last year that they were planning to resume imports of Iranian crude in early 2019, with Trade Minister Hiroshige Seki telling Reuters in November “It would be up to the judgment of private firms, but based on this decision,…

Source: Oilprice.com

Is Kuwait’s $500 Billion Oil Plan Overoptimistic?

Kuwait’s oil minister is skeptical about the need—and the ability—of the state oil company to spend close to US$500 billion on an expansion program that should run until 2040, Reuters reports, citing local media. Khaled al-Fadhel said he was not against the expansion as such, but added that he believed the projected US$495 billion (150 billion dinars) to fuel this expansion are “optimistic.” Kuwait, along with the UAE and Saudi Arabia, contributes half of OPEC’s total, Wood Mackenzie’s chief analyst Simon…

Source: Oilprice.com

Mexico Gasoline Pipeline Blast Kills More Than 80

A gasoline pipeline in central Mexico that exploded on Friday has killed more than 80 people to date, media report. The initial death toll was a lot lower, but the latest update from the Wall Street Journal pegs the number of casualties at 85. The pipeline, owned and operated by state energy giant Pemex, was breached by fuel thieves, and at the time of the explosion a lot of people were gathered around it to take home some “free fuel.” Unfortunately, the free fuel came at a very high cost when a leak in the breached pipeline caused…

Source: Oilprice.com

The Adler TPP of OGK-2 has announced its operational results for 2018. Over the 12-month period, the TPP produced 2.472 billion kWh of electricity, an increase of 27%!f(MISSING)rom 2017 (1.944 billion kWh). The plant’s installed capacity utilization factor was 77%! (MISSING)The TPP’s heat output in 2018 totaled 174,000 Gcal, down by 6%!v(MISSING)ersus 2017 (184,000 Gcal). The decrease in the net heat output was caused by weather conditions: the average air temperature in the 6-month heating period grew by approximately 1ºC against 2017 and reached 5.8ºC.

The Adler TPP of OGK-2 has announced its operational results for 2018. Over the 12-month period, the TPP produced 2.472 billion kWh of electricity, an increase of 27%!f(MISSING)rom 2017 (1.944 billion kWh). The plant’s installed capacity utilization factor was 77%! (MISSING)The TPP’s heat output in 2018 totaled 174,000 Gcal, down by 6%!v(MISSING)ersus 2017 (184,000 Gcal). The decrease in the net heat output was caused by weather conditions: the average air temperature in the 6-month heating period grew by approximately 1ºC against 2017 and reached 5.8ºC.

Адлерская ТЭС ПАО «ОГК-2» увеличила выработку электроэнергии на 27 %!в(MISSING) 2018 г.

Corporate/Asset Divestiture: Wolf Coulee Resources Inc.

Sayer Energy Advisors (“Sayer”) has been engaged to assist Wolf Coulee Resources Inc. (“Wolf Coulee” or the “Company”) with the sale of the shares of the Company or any of its assets. The Company’s Board of Directors has determined that concluding a transaction or series of transactions is imperative.  Although the sale of the shares [Read more]

Source: BOE Report

Iraq’s Southern Oil Exports Hold Near Record In January

Oil exports from southern Iraq are holding close to a record high so far in 2019, according to shipping data and an industry source, which could raise questions over whether OPEC’s second-largest producer is following through on a deal to cut output. Southern Iraqi exports in the first 21 days of January averaged close to 3.6 million barrels per day (bbl/d), according to tanker data on Refinitiv Eikon and separate tracking by an industry source. That's close to December's 3.63 million  bbl/d—a monthly record. The figures suggest there is little sign yet of lower supplies from Iraq, despite a deal by OPEC and allies to reduce output by 1.2 million  bbl/d as of Jan. 1 to support the market.

Source: Oilandgasinvestor.com Feeds

As IMO 2020 lures newcomers to bunker sector, profit is far from guaranteed: Fuel for Thought

A pharmaceutical company’s ill-fated attempt to focus on trading bunker fuel derivatives highlights the unpredictability that IMO 2020 has injected into oil markets.

Having sold off its opioids business the previous year, in early 2018, Norway’s Vistin Pharma announced it would set up a new oil trading unit focusing on profiting from the International Maritime Organization’s lower sulfur limits for shipping in 2020. Ten months and $9.8 million of paper losses later, the company said in early January that it would be closing the unit.

Vistin had bet on the spread between gasoil and high sulfur fuel oil in Singapore widening in the run-up to 2020, when fuel oil demand is set to plummet as the IMO prompts shipowners to shift to cleaner-burning fuels.

Singapore fuel oil prices vs gasoil

In a presentation from September 2018 on the company’s website, it projected the spread widening to as much as $800/mt by the end of 2020.

But the strategy appears to have been foiled by a combination of last year’s strength in fuel oil prices and the rapid drop in crude prices in the fourth quarter.

By December 31, the 150,000 mt of contracts the company held represented a mark-to-market loss of NOK 85 million ($9.8 million). Vistin’s head of energy trading resigned at the start of the year, and after a swift strategic review, the company decided to shutter the unit he had set up.

Not as easy as it looks

The episode highlights the dangers faced by some of the outside players currently eyeing up the bunker industry for money-making opportunities in 2020.

On paper the changes coming next year look easy to profit from: a sharp drop in fuel oil prices towards the end of 2019 and a more steady rise in middle distillates looks all but inevitable, and is potentially not yet fully priced into the forward curve.

Go deeper: Explore S&P Global Platts’ content on IMO 2020

But Vistin’s difficulties show how some of the less-familiar moving parts around IMO 2020 may make it tricky for new money to enter the bunker industry and take advantage of the regulatory disruption.

The scale of last year’s fuel oil strength was unexpected: a combination of sinking Russian output and firm Saudi demand left the bottom of the barrel briefly trading above gasoline prices in Singapore towards the end of 2018.

Investments in emissions-cleaning scrubber equipment may be another area where outside money gets tripped up by some of the nuances around how 2020 plays out.

Ships have the option of paying a few million dollars to install a scrubber that cleans their emissions and allows them to continue burning fuel oil, and financial institutions including Goldman Sachs have shown interest in financing these investments and profiting from the potential fuel bill savings to be made.

Scrubbers fall out of favour

But in recent months, the scrubber industry has been taken aback by a series of regulatory decisions against open-loop models of the technology — a type of scrubber that deposits sulfurous wash water back into the sea.

It recently emerged that China would be likely to ban the use of open-loop scrubbers in some of its waters, following a similar decision by Singapore last month, raising the prospect of those that have invested in — and financed — this equipment finding themselves unable to profit from it across large parts of Asia.

This isn’t to say that turning a profit will be impossible in 2020. Vistin Pharma’s bet may yet pay off to some extent.

The company has decided to hang onto its bunker derivative investments, and they may look less disastrous later this year as fuel oil’s recent strength wanes.

But outsiders coming to this industry for the first time in the run-up to 2020 will need to be wary. The bunker and shipping industries are anything but simple, and involvement with them is not for the faint-hearted.

The post As IMO 2020 lures newcomers to bunker sector, profit is far from guaranteed: Fuel for Thought appeared first on The Barrel Blog.


Source: Platts - The Barrel Blog News Feed

UPDATE: Death Toll Raised To 89 In Mexico Pipeline Blast; New Focus On Fuel Theft

A blast at a gasoline pipeline in Mexico that killed at least 79 people has put renewed attention on the government's strategy to stop fuel theft, with some relatives saying fuel shortages stemming from the plan led people to risk their lives. Fuel thieves punctured the Tula-Tuxpan pipeline a few miles from one of Mexico's main refineries on Friday. Up to 800 people flocked to fill plastic containers from the 7-m (23-ft) gasoline geyser that ensued, officials said. A couple of hours later, it exploded. Mexican Health Minister Jorge Alcocer said on Jan. 20 the number of dead in the incident had risen to 79 people.

Source: Oilandgasinvestor.com Feeds