Sunday, November 18, 2018

natural gas prices hit 4 year high, pre-winter supplies at a 15 year low; oil supplies rise most in 21 months; OPEC report, DUC wells, et al

oil prices fell for the 6th week in a row, extending their record losing streak to twelve days before recovering a small fraction of their earlier losses...after falling 4.7% to $60.19 a barrel on the US waiver of Iran sanctions last week, prices of US oil contracts for December delivery opened more than 50 cents higher on Monday morning and rose to as high as $61.28 a barrel after Saudi Arabia announced a December production cut of a million barrels a day, but then gave up those early gains after Trump warned he hopes OPEC doesn’t cut crude production because oil prices should be much lower, with prices then falling below $60 a barrel for the first time since February before steadying to close at $59.93 a barrel, a loss of 23 cents on the day and down a record 11 sessions in a row...oil prices then tumbled to one year lows in high trading volume on Tuesday as oil traders capitulated and sold their positions en masse, with oil prices ending down $4.24 or 7% at $55.69 a barrel in the largest one-day percentage decline for the contract since September 2015....oil prices finally rebounded on Wednesday, rising as much as 3% as OPEC leaders discussed a supply cut, before settling back to end with a 56 cent increase at $56.25 a barrel, after the API reported the largest increase in US crude supplies since February...oil prices managed another increase on Thursday despite a jump in US crude stockpiles and production, closing up 21 cents at $56.46 a barrel...oil prices then staged another 3% rally on Friday morning, rising as high as $57.96 a barrel on a Saudi push for a deep oil output cut, before settling back to close at $56.46 a barrel, unchanged on the day...however, after the big Tuesday selloff, oil prices still ended down 6.2% for the week, and are now down more than 26% from the 4-year high of $76.41 a barrel that they hit on October 3rd, just a little over 6 weeks earlier...

as volatile as oil prices were this week, the swings in the front month contract for natural gas almost defy explanation...natural gas contract prices for December delivery spiked 23.5 cents on a colder European weather model early Monday before pulling back anbd ending the day 6.9 cents higher at $3.788 per mmBTU, then were up limit to $4.101 per mmBTU on Tuesday on bullish weather risks and continued fear about low storage levels, before jumping nearly 20% to $4.929 per mmBTU on an even colder forecast early Wednesday in the largest price move since February 2003 and ending at $4.837 per mmBTU, the highest closing price in more than four years...however, after some warmer weather model guidance on Thursday, natural gas prices gave back all of their Wednesday gains and then some, tumbling nearly $1 to as low as $3.882 per mmBTU before recovering to close at $4.038 per mmBTU....a forecast for a cold early December sent natural gas prices flying again to as high as $4.390 per mmBTU on Friday, before settling at $4.272 per mmBTU at the close, for a net increase of 14.9% on the week...

the natural gas storage report for the week ending November 9th from the EIA showed that natural gas in storage in the US rose by 39 billion cubic feet to 3,247 billion cubic feet during that week, which left our gas supplies 528 billion cubic feet, or 14.0% below the 3,775 billion cubic feet that were in storage after a 13 billion cubic feet withdrawal on November 10th of last year, and 601 billion cubic feet, or 15.6% below the five-year average of 3,848 billion cubic feet of natural gas that are typically in storage on the second weekend of November....this week's 39 billion cubic feet increase in natural gas supplies was somewhat more than the low- to mid-30s billion cubic feet increase in stocks that was projected by major surveys, and was much above the average of 19 billion cubic feet of natural gas that have been added to storage during the first full week of November in recent years, the 7th average or above average inventory increase over the past nineteen weeks...natural gas storage facilities in the Midwest saw an 11 billion cubic feet increase over the week, which reduced the region's supply deficit to 9.3% below normal, and natural gas supplies in the East increased by 4 billion cubic feet and their supply deficit fell to 9.2% below normal for this time of year...meanwhile, the South Central region saw a 30 billion cubic feet increase in their supplies, as their natural gas storage deficit decreased to 22.6% below their five-year average for the second weekend of November...on the other hand, only 1 billion cubic feet were added to supplies in the Pacific region, but their deficit from normal still fell to 24.2%, while 1 billion cubic feet were withdrawn from storage in the Mountain region, where their natural gas supply deficit rose to 17.4% below normal for this time of year.... 

the natural gas in storage as of this reporting week ending November 9th will most certainly be the high for the year, because as most of you know, the past week has seen an outbreak of winter-like cold temperatures across most of the US...this year's peak at 3,247 billion cubic feet thus compares to the lowest pre-winter peak in the past 5 years of 3611 billion cubic feet on November 7th of 2014, the 10 year low pre-winter peak of 3,488 that was hit on November 14th of 2008, and the early decade low pre-winter peaks of 3,282 billion cubic feet on November 11th of 2005, and the 3,187 billion cubic feet on that were in storage to start the winter on November 7th of get an idea of what kind of temperature factors will be influ​​encing next week's natural gas supply report, we'll take a quick look at the most recent average temperature summary from the EIA's natural gas storage dashboard

November 16 2018 daily average temps thru Nov 15th

the above graphic from the EIA's natural gas storage dashboard gives us both the average daily temperature from November 2nd thru November 15th in each of the five natural gas regions, as well as a color-coded variance from normal for each of those daily temperature averages, with shades of brown indicating the average temperatures in the region were above normal on a given date, while shades of blue indicate average temperatures that were below normal for the date, as indicated in the legend at the bottom....thus this graphic gives us not only the actual average temperature for each region for each day, but also indicates how much that temperature deviated from the norm...we can see that average temperatures began to shift from above normal to below normal on November 7th for the Mountain and Midwest states, and by November 9th that cold weather outbreak had spread to the East Coast and South Central regions, with the latter experiencing an average 20 degree temperature drop in just a matter of days...

The Latest US Oil Data from the EIA

this week's US oil data from the US Energy Information Administration, ​referencing the week ending November 9th, indicated a moderate decrease in our crude oil exports while most other crude supply and demand metrics were relatively little changed, and hence there was an even larger addition to our commercial crude supplies ​than the prior week, the 8th increase in a row...our imports of crude oil fell by an average of 87,000 barrels per day to an average of 7,452,000 barrels per day, after rising by an average of 195,000 barrels per day the prior week, while our exports of crude oil fell by an average of 355,000 barrels per day to an average of 2,050,000 barrels per day during the week, which meant that our effective trade in oil worked out to a net import average of 5,402,000 barrels of per day during the week ending November 9th, 268,000 more barrels per day than the net of our imports minus exports during the prior week...over the same period, field production of crude oil from US wells was reportedly 100,000 barrels per day higher at 11,700,000 barrels per day, which means that our daily supply of oil from the net of our trade in oil and from wells totaled an average of 17,102,000 barrels per day during this reporting week... 

meanwhile, US oil refineries were using 16,432,000 barrels of crude per day during the week ending November 9th, 24,000 barrels per day more than the amount of oil they used during the prior week, while over the same period a net of 1,271,000 barrels of oil per day were reportedly being added to the oil that's in storage in the US....hence, this week's crude oil figures from the EIA would seem to indicate that our total working supply of oil from net imports and from oilfield production was 601,000 barrels per day short of what refineries reported they used during the week plus what oil was added to account for that disparity between the supply of oil and the consumption or new storage of it, the EIA inserted a (+601,000) barrel per day figure onto line 13 of the weekly U.S. Petroleum Balance Sheet to make the reported data for the daily supply of oil and the consumption of it balance out, essentially a fudge factor that is labeled in their footnotes as "unaccounted for crude oil"...again, with an "unaccounted for crude" figure that large, one or more of this week's oil metrics must still be off by a statistically significant amount, most likely oil production, since it has historically been the least dependable of the​se reported​ metrics (for more on how this weekly oil data is gathered, and the possible reasons for that "unaccounted for" oil, see this EIA explainer)....that "unaccounted for crude" figure strongly suggests that US crude oil output has already topped 12 million barrels per day...

further details from the weekly Petroleum Status Report (pdf) indicate that the 4 week average of our oil imports fell to an average of 7,503,000 barrels per day, now 3.1% less than the 7,742,000 barrel per day average that we were importing over the same four-week period last year....the net 1,271,000 barrel per day increase in our total crude inventories included a 1,467,000 barrel per day increase in our commercially available stocks of crude oil, which was partly offset by a 196,000 barrel per day decrease in the amount of oil in our Strategic Petroleum Reserve, likely part of a sale of 11 million barrels from those reserves to Exxon et al that closed two months ago....this week's crude oil production was reported up by 100,000 barrels per day to 11,700,000 barrels on a rounded 100,000 barrels per day increase to 11,200,000 barrels per day output from wells in the lower 48 states, while an 11,000 barrel per day increase to 499,000 barrels per day in oil output from Alaska gave us the re-rounded national total of 11,700,000 barrel per day...last year's US crude oil production for the week ending November 10th was at 9,645,000 barrels per day, so this week's rounded oil production figure was 21.3% above that of a year ago, and 38.8% more than the interim low of 8,428,000 barrels per day that US oil production fell to during the last week of June of 2016...  

US oil refineries were operating at 90.1% of their capacity in using 16,432,000 barrels of crude per day during the week ending November 9th, up from 90.0% of capacity the prior week, a fairly normal utilization rate for the middle of November....the 16,432,000 barrels per day of oil that were refined this week were 1.2% lower than the 16,639,000 barrels of crude per day that were processed during the week ending November 10th, 2017, when US refineries were operating at 91.0% of capacity...

while the amount of oil being refined was little changed this week, gasoline output from our refineries was quite a bit higher, increasing by 342,000 barrels per day to 10,056,000 barrels per day during the week ending November 9th, after our refineries' gasoline output had decreased by 650,000 barrels per day during the week ending November a result of that rebound in our gasoline output, our gasoline production during the week was 2.1% higher than the 9,852,000 barrels of gasoline that were being produced daily during the same week last year....meanwhile, our refineries' production of distillate fuels (diesel fuel and heat oil) increased by 30,000 barrels per day to 4,993,000 barrels per day, after that output had decreased by 20,000 barrels per day the prior week....however, the week's distillates production was still 4.5% lower than the 5,231,000 barrels of distillates per day that were being produced during the week ending November 10th 2017.... 

however, even with that big increase in our gasoline production, our supply of gasoline in storage at the end of the week still fell by 1,411,000 barrels to 226,610,000 barrels by November 9th, the 22nd decrease in the past 38 weeks, after our gasoline supplies had fallen by 8,151,000 barrels during the 4 ​full ​weeks of October....our gasoline supplies fell despite higher production because our imports of gasoline fell by 338,000 barrels per day to a 13 month low of 253,000 barrels per day, while our exports of gasoline rose by 46,000 barrels per day to 740,000 barrels per day, and because the amount of gasoline supplied to US markets rose by 93,000 barrels per day to 9,192,000 barrels per day...but even after falling most of the fall, our gasoline inventories are still at a seasonal high, 7.7% higher than last November 10th's level of 210,431,000 barrels, and roughly 8% above the 10 year average of our gasoline supplies for this time of the year...

meanwhile, with our distillates production little changed, our supplies of distillate fuels fell for the 8th week in a row, decreasing by 3,589,000 barrels to 119,268,000 barrels during the week ending November 9th, after our distillates supplies had fallen by 7,517,000 barrels over the prior two weeks...our distillates supplies fell again because the amount of distillates supplied to US markets, a proxy for our domestic demand, increased by 315,000 barrels per day to 4,633,000 barrels per day, even as our exports of distillates fell by 128,000 barrels per day to 1,178,000 barrels per day, and as our imports of distillates rose by 139,000 barrels per day to 305,000 barrels per day....after this week's decrease, our distillate supplies ended the week 4.4% below the 124,763,000 barrels that we had stored on November 10th, 2017, and were nearly 10% below the 10 year average of distillates stocks for this time of the year...     

finally, with higher oil production and somewhat lower oil exports, our commercial supplies of crude oil increased for the 8th week in a row and for the 24th time in 2018, rising by 10,270,000 barrels during the week, from 431,787,000 barrels on November 2nd to 442,057,000 barrels on November 9th, the largest weekly increase since the week ending February 3rd 2017...that increase means that our crude oil inventories are now roughly 5% above the five-year average of crude oil supplies for this time of year, and roughly 27% above the 10 year average of crude oil stocks for the second weekend in November, with the disparity between those figures arising because it wasn't until early 2015 that our oil inventories first rose above 400 million barrels...however, since our crude oil inventories had been falling through most of the past year and a half until just recently, our oil supplies as of November 9th were still 3.7% below the 458,997,000 barrels of oil we had stored on November 10th of 2017, 9.8% below the 490,284,000 barrels of oil that we had in storage on November 11th of 2016, and 2.8% below the 455,074,000 barrels of oil we had in storage on November 13th of 2015...   

OPEC's Monthly Oil Market Report

next we'll review OPEC's November Oil Market Report (covering October OPEC & global oil data), which was released on Tuesday of this past week, and​ which​ is available as a free download, and hence it's the report we check for monthly global oil supply and demand data...the first table from this monthly report that we'll look at is from the page numbered 59 of that report (pdf page 69), and it shows oil production in thousands of barrels per day for each of the current OPEC members over the recent years, quarters and months, as the column headings indicate...for all their official production measurements, OPEC uses an average of estimates from six "secondary sources", namely the International Energy Agency (IEA), the oil-pricing agencies Platts and Argus, ‎the U.S. Energy Information Administration (EIA), the oil consultancy Cambridge Energy Research Associates (CERA) and the industry newsletter Petroleum Intelligence Weekly, as an impartial adjudicator as to whether their output quotas and production cuts are being met, to thus resolve any potential disputes that could arise if each member reported their own figures...

October 2018 OPEC crude output via secondary sources

as we can see on this table of official oil production data, OPEC's oil output increased by 127,000 barrels per day to 32,900,000 barrels per day in October, from their September production total of 32,773,000 barrels per day....however, that September figure was originally reported as 32,761,000 barrels per day, so OPEC's September output was therefore revised 12,000 barrels per day higher with this report (for your reference, here is the table of the official September OPEC output figures as reported a month ago, before this month's revisions) you can tell from the far right column above, increases of 142,000 barrels per day in the oil output from the United Arab Emirates, 127,000 barrels per day in the oil output from Saudi Arabia and 60,000 barrels per day in the oil output from Libya were the major reasons for this month's increase, more than offsetting the decrease of 156,000 barrels per day in Iranian output...however, excluding new member Congo, the September output of 32,576,000 barrels per day from the other OPEC members was still 164,000 barrels per day below the 32,730,000 barrels per day revised quota they agreed to at their November 2017 meeting, mostly due to the big drop in Venezuelan output, another OPEC country that has also been impacted by US sanctions...  

the next graphic we'll look at shows us both OPEC and global monthly oil production on the same graph​​, over the period from November 2016 to October 2018, and it's taken from the page numbered 60 (pdf page 70) of the November OPEC Monthly Oil Market Report...on this graph, the cerulean blue bars represent OPEC oil production in millions of barrels per day as shown on the left scale, while the purple graph represents global oil production in millions of barrels per day, with the millions of barrels per day of global output shown on the right scale...      

October 2018 OPEC report global oil supply

OPEC's preliminary estimate indicates that total global oil production rose by 440,000 barrels per day to a record high 99.76 million barrels per day in October, after September's total global output figure was revised up by 3​2​0,000 barrels per day from the 90.0 million barrels per day global oil output that was reported a month ago, as non-OPEC oil production rose by ​a rounded ​310,000 barrels per day in October after that revision, with increased US and Canadian output the major contributors to the non-OPEC oil output during October was also 3.05 million barrels per day, or 3.2% higher than the 96.71 million barrels of oil per day that were reportedly being produced globally in October a year ago (see the November 2017 OPEC report online (pdf) for the originally reported year ago details)...with the October increase in OPEC's output following the upward revision to their September output, their October oil production of 32,900,000 barrels per day represented 33.0% of what was produced globally during the month, same as their global share in September, which had originally been reported as a 33.1% share....OPEC's October 2017 production was reported at 32,589,000 barrels per day, which means that the 14 OPEC members who were part of OPEC last year, excluding new member Congo, are producing 13,000 fewer barrels per day of oil than they were producing a year ago, during the tenth month that their production quotas were in effect, with a 692,000 barrel per day decrease in output from Venezuela and a 527,000 barrel per day decrease in output from Iran from that time more than offsetting the production increases from the Saudis, the Emirates, Iraq and Libya...  

despite the 440,000 barrel per day increase in global oil output in October, increasing demand meant that we again saw a deficit in the amount of oil being produced globally during the month, as this next table from the OPEC report will show us...  

October 2018 OPEC report global oil demand

the table above comes from page 32 of the November OPEC Monthly Oil Market Report (pdf page 42), and it shows regional and total oil demand in millions of barrels per day for 2017 in the first column, and OPEC's estimate of oil demand by region and globally quarterly over 2018 over the rest of the table...on the "Total world" line ​in the fifth column, we've circled in blue the figure that's relevant for October, which is their revised estimate of global oil demand during the fourth quarter of 2018...       

OPEC's estimate is that during the 4th quarter of this year, all oil consuming regions of the globe will be using 99.98 million barrels of oil per day, which was a downward revision by a 0.10 million barrels of oil per day from their prior oil consumption estimate for the quarter (see demand revisions circled in green above)....meanwhile, as OPEC showed us in the oil supply section of this report and the summary supply graph above, the world's oil producers were producing 99.76 million barrels per day during October, which means that there was a still a shortfall of around 220,000 barrels per day in global oil production vis-a vis the demand estimated for the month...    

meanwhile, a month ago we estimated a global shortfall of around 350,000 barrels per day in global oil production during September, based on figures published at that time...however, as we saw earlier, September's global output figure was revised up by 3​20,000 barrels per day from those addition, as we've circled in the green ellipse above, oil demand for the 3rd quarter was revised 3,000 barrels per day lower, so with those two revisions September's global output would have thus​ virtually matched demand​...that 30,000 barrels per day revision to third quarter demand also means that the global shortfall of 580,000 barrels per day that we had figured for August last month would thus be revised to 550,000 barrels per day, and that the 960,000 barrels per day shortfall we had figured for July would thus be reduced to 930,000 barrels per day....

in addition, last month we estimated there was a shortfall of around 50,000 barrels per day in global oil production vis-a vis the demand in June, a shortfall for May of 490,000 barrels per day, and a shortfall in April of 300,000 barrels per day... but as we see in the green ellipse above, oil demand for the 2nd quarter has been revised 120,000 barrels per day higher, so our revised global oil shortfalls for the 2nd quarter months will thus now be 170,000 barrels per day for June, 610,000 barrels per day for May, and 400,000 barrels per day for April...

since there was no revision to demand in the first quarter, our surplus figures of 20,000 barrels per day for March, 200,000 barrels per day for February, and 40,000 barrels per day for January remain as we figured them a month by totaling up these 10 monthly revised estimates of surplus or shortfall, we find that for the first ten months of 2018, global oil demand exceeded production by roughly 81,250,000 barrels, actually a comparatively small net oil shortfall that is the equivalent of roughly 19.5 hours of global oil production at the October production rate...

This Week's Rig Count

US drilling rig activity increased for the sixth time in 8 weeks during the week ending November 16th, albeit not by much, but enough to push the rig count to a new 44 month high....Baker Hughes reported that the total count of rotary rigs running in the US increased by 1 rig to 1082 rigs over the week ending on Friday, which was also 167 more rigs than the 915 rigs that were in use as of the November 17th report of 2017, but down from the shale era high of 1929 drilling rigs that were deployed on November 21st of 2014, the week before OPEC began their attempt to flood the global oil market...  

the count of rigs drilling for oil increased by 2 rigs to 888 rigs this week, which was 150 more oil rigs than were running a year ago, while it remained well below the recent high of 1609 rigs that were drilling for oil on October 10, the same time, the number of drilling rigs targeting natural gas formations decreased by 1 to 194 rigs, which was still 17 more than the 177 natural gas rigs that were drilling a year ago, but way down from the modern high of 1,606 natural gas rigs that were deployed on August 29th, 2008...

offshore drilling in the Gulf of Mexico increased by 1 rig to 22 rigs this week, which was also 1 more rig than the 21 Gulf of Mexico rigs active a year ago...with no other offshore US drilling being done elsewhere either this week or a year ago, those Gulf of Mexico totals are also equal to the national offshore rig count.... meanwhile, one of the platforms which had been drilling through inland waters in Louisiana was shut down this week, leaving two rigs active on inland waters, ​still ​up from the 1 inland water rig running a year ago

the count of active horizontal drilling rigs increased by 4 rigs to 939 horizontal rigs this week, which was also 163 more horizontal rigs than the 776 horizontal rigs that were in use in the US on November 17th of last year, but down from the record of 1372 horizontal rigs that were deployed on November 21st of 2014...on the other hand, the directional rig count decreased by 3 to 71 directional rigs this week, which was also down from the 76 directional rigs that were in use during the same week of last year....meanwhile, the vertical rig count was unchanged at 72 vertical rigs this week, which was still up from the 63 vertical rigs that were operating on November 17th of 2017...  

the details on this week's changes in drilling activity by state and by shale basin are included in our screenshot below of that part of the rig count summary pdf from Baker Hughes that shows those changes...the first table below shows weekly and year over year rig count changes for the major producing states, and the second table shows the weekly and year over year rig count changes for the major US geological oil and gas both tables, the first column shows the active rig count as of November 16th, the second column shows the change in the number of working rigs between last week's count (November 9th) and this week's (November 16th) count, the third column shows last week's November 9th active rig count, the 4th column shows the change between the number of rigs running on Friday and those running on the equivalent weekend of a year ago, and the 5th column shows the number of rigs that were drilling at the end of that reporting week a year ago, which in this week’s case was on Friday the 17th of November, 2017...      

November 16 2018 rig count summary

the 3 rig increase in the Eagle Ford of south Texas indicated above included 2 rigs drilling for oil and one targeting natural gas, bringing the Eagle Ford deployment up to 70 oil rigs and 9 targeting gas; the rig that was shut down in the Dallas area Barnett shale had been targeting oil; a natural gas rig still remains active there...while there were 2 natural gas rigs added in the Pennsylvania Marcellus, two natural gas rigs were shut down in the Utica, one each in Pennsylvania and Ohio​; as a result, ​the Utica shale rig count is now at a 2 year low...the natural gas rig count was still down by one, however, because 2 gas rigs were idled in formations not tracked separately by Baker Hughes...note that in addition to the rig changes in the major producing states shown above, Illinois also saw a rig start up this week, the first drilling activity in that state since February 23rd of this year; a year ago, there was also one rig active in Illinois..

DUC well report for October

Wednesday of this past week saw the release of the EIA's Drilling Productivity Report for November, which includes the EIA's October data for drilled but uncompleted oil and gas wells in the 7 most productive shale regions...for the 25th consecutive month, this report again showed an increase in uncompleted wells nationally in ​October, as both drilling of new wells and completions of drilled wells increased, but the new drilling increased at a faster most previous months, this month's uncompleted well increase was mostly due to a big increase of newly drilled but uncompleted wells (DUCs) in the Permian basin of west Texas, with increases of uncompleted wells in the Anadarko basin of Oklahoma and the Eagle Ford of south Texas also contributing...for all 7 sedimentary regions covered by this report, the total count of DUC wells increased by 269, from 8,276 wells in September to 8,545 wells in October, again the highest number of such unfracked wells in the history of this report, and up 32.5% from the 6,329 wells that had been drilled but remained uncompleted in October a year ago...that was as 1,577 wells were drilled in the 7 regions that this report covers (representing 87% of all U.S. onshore drilling operations) during October, up from the 1,547 drilled in September, while 1,308 wells were completed and brought into production by fracking, a increase of 23 well completions over the 1285 completions seen in the October completion rate, the 8,545 drilled but uncompleted wells left at the end of the month again represent a 6.5 month backlog of wells that have been drilled but not yet fracked...

as has been the case for most of the past two years, the October DUC well increases were predominantly oil wells, with most of those in the Permian basin...the Permian basin saw its total count of uncompleted wells rise by 249, from 3,617 DUC wells in September to 3,866 DUCs in October, as 684 new wells were drilled into the Permian​,​ but only 435 wells in the region were the same time, DUC wells in the Anadarko basin region in & around Oklahoma rose by 41, from 1,043 DUC wells in September to 1,084 DUCs in October, as 206 wells were drilled in the Anadarko basin during October, while 165 Anadarko basin wells were completed...over the same period, the number of DUC wells in the Eagle Ford of south Texas increased by 25 to 1,546, as 210 wells were drilled into the Eagle Ford while 185 Eagle Ford wells were addition, the natural gas producing Haynesville shale of the northern Louisiana-Texas border region saw their uncompleted well inventory increase by 7 wells to 203, as 60 wells were drilled into the Haynesville during October, while 53 Haynesville wells were fracked during the same period...

on the other hand, the drilled but uncompleted well count in the Appalachian region, which includes the Utica shale, fell by 19 wells, from 642 DUCs in September to 623 DUCs in October, as 119 wells were drilled into the Marcellus and Utica shales, while 138 of the already drilled wells in the region were addition, the drilled but uncompleted well count in the Niobrara chalk of the Rockies' front range decreased by 14 wells to 401, as 178 Niobrara wells were drilled while 192 Niobrara wells were being fracked...lastly, DUC wells in the Bakken of North Dakota fell by 20, from 817 DUC wells in September to 797 DUCs in October, as 120 wells were drilled into the Bakken in October, while 140 of the drilled wells in that basin were completed....thus, for the month of October, DUCs in the 5 oil basins tracked by in this report (ie., the Anadarko, Bakken, Niobrara, Permian, and Eagle Ford) increased by a net of 281 wells to 7719 wells, while the uncompleted well count in the natural gas basins (the Marcellus, Utica, and the Haynesville) decreased by 12 wells to 826 wells, although as the report notes, once into production, more than half the wells drilled nationally will produce both oil and gas... 


Environmental groups up in arms about bill they say targets legitimate protests - Athens environmental activists and the Buckeye Environmental Network are raising the alarm about an Ohio Senate bill that seeks to severely punish people found to have trespassed onto “critical infrastructure facilities” such as oil and gas wells and pipelines.Specifically, the boards of the Athens County Fracking Action Network (ACFAN) and the Buckeye Environmental Network are warning that Senate Bill 250 could be passed by the Ohio Legislature during the lame-duck session between now and the end of the year.  “S.B. 250 is being crammed down the throats of Ohio citizens,” local activist Roxanne Groff charged in a statement over the weekend. “There has been little if any effort to inform the public about this bill that would intentionally thwart efforts of individuals and groups, who have as one of few tools to raise their voices and educate others the right to free speech and protest. The very idea of making non-profit and citizen community groups pay outrageous fines and be charged as criminals for support of these constitutional rights is egregious and terrifying.” Senate Bill 250, introduced by Ohio Sen. Frank Hoagland, R-Mingo Junction, has been amended since the last time The NEWS reported on it earlier this year, but the intent largely remains the same: It ramps up the criminal penalty for “knowingly” engaging in “aggravated trespassing” on public and private utility infrastructure (previously the bill had made that charge a first-degree felony, whereas it’s currently a first-degree misdemeanor under Ohio law; under the new substitute bill, it’s listed as a third-degree felony). The bill also proposes to increase the fines for these third-degree felony charges to 10 times the maximum currently allowed (currently, it’s $10,000 – so, one felony charge under the provision could mean a fine of $100,000). The bill also proposes that any organization found “guilty of complicity in a violation” of the new trespassing law would be punished with a similar fine.  Meanwhile, the bill also proposes stiffening criminal mischief charges (typically a third-degree misdemeanor) relating to a “critical infrastructure piece” up to a first-degree felony, with a similar fine and “complicity” structure proposed.

Injection-well critics urge county to take stronger action - Athens NEWS - Athens County residents and activists packed the small conference room where the Athens County Commissioners meet last Tuesday morning to plead for help addressing a proposed fourth injection well on the K&H facility in Torch, near the county’s eastern border.   K&H Partners, LLC, of Parkersburg, West Virginia, has applied for a 4th Class II injection well within a half mile of the existing K&H facilities in Torch. According to a fact sheet provided by Groff, who is also a member of the Buckeye Environmental Network, the proposed well has been requested to take up to 20,000 barrels of oil-and-gas fracking waste every day, or 840,000 gallons, which is 7.3 million barrels a year, or 306.6 million gallons of waste. Each of the existing three wells in that area already can take up to 20,000 barrels of waste a day, according to Groff. With the new well in place, she maintained, the K&H facility could be injecting more than 613 million gallons of fracking waste into the area each year. “That is intolerable, it’s outrageous,” Groff said. “It’s not enough that it’s another injection well,” Groff argued, “but all of these wells are within less than a half mile from each other.” The number of barrels a well can take per day is controlled by the pressure of the injection, she said, which is not to exceed the legal allowance set by the Ohio Department of Natural Resources (ODNR). For that reason, Groff argued that it’s possible that the new well could take more than the amount stated on the application. Another concern shared by the injection-well opponents at Tuesday’s Commissioners meeting is an increase in the number of trucks that have been idling at a state of Ohio rest area in Torch. Trucks used to transport fracking waste-water “are pulling into the rest area and using that rest area as a staging area before they go up to the tank site,” Groff said. “... As many as 20, 30,” or more “in one day.”

Nearly a year after federal approval, PennEast Pipeline still faces uphill battle  - early a year after getting a federal nod for a natural gas pipeline, PennEast still has a way to go before it can begin construction on the utility that would cut through the Lehigh Valley on its 120-mile path from Luzerne County to New Jersey. PennEast officials say they still plan to start construction next year, despite outstanding permits required from several state and federal agencies and pending eminent domain lawsuits. Even with the hurdles, legal experts say the pipeline isn’t likely to go away. But PennEast faces an uphill battle thanks to an unprecedented level of opposition from landowners who have blocked access to surveys of their properties, and particularly strong opposition in New Jersey where the New Jersey Department of Environmental Protection rejected PennEast’s applications for water permits in February, citing a lack of survey data. What’s at stake for the consortium of PennEast investors is a $1 billion project with the potential for a significant return on investment, experts say. “Most of these recent pipelines have a 14 percent return on equity, which is at least 3 to 4 percent higher than any other utility investment, and in fact, higher than most investments at all,” she said. New Jersey eminent domain attorney Timothy Duggan of Stark & Stark, which has several law offices throughout the state, thinks there’s a “very real possibility” the pipeline won’t be constructed along the projected path because so many environmentally sensitive properties are involved. “Because so many people said ‘no’ and held their ground, PennEast doesn’t have the ability to submit the necessary information. I think that’s what’s different about this case. [PennEast] picked an area where there are environmental groups, townships and people who are really concerned about the impact,” Duggan said. He believes there’s likely less push back in Pennsylvania because of the money to be made from fracking, which goes on in the Marcellus shale region of the state.

Understanding why fracking wastewater contains radioactive waste -RESEARCHERS at Dartmouth College, US, have released a study explaining the transfer of radium to wastewater during hydraulic fracturing for oil and gas extraction. An understanding of the mechanisms involved could lead to the development of strategies to mitigate wastewater production. During hydraulic fracturing, or fracking, fluid is pumped underground at high pressure to break apart rock and create fractures which oil and natural gas can flow through. A common practice is to use “slick water”, which is a combination of water, a proppant – typically sand – and a mixture of chemicals. After the hydraulic pressure has been dropped the proppant holds the fractures open. Friction reducers, usually a polyacrylamide, are a critical component added to increase fluid flow. Other chemicals, such as biocides, surfactants, and scale inhibitors can also be added. Once the pressure has been dropped slick-water returns to the surface as wastewater which is salty and highly toxic. It contains toxins such as barium (Ba) and radioactive radium (Ra). As Ra decays it releases a cascade of other elements, such as radon, that collectively generate high radioactivity.  Taken together, the twin studies published in Chemical Geology are the first to help to explain the mechanics that result in the high salinity and Ra content of fracking wastewater. Before the release of these studies researchers were uncertain if radioactive Ra came directly from the shale, or if it came from naturally occurring brines present deep in Pennsylvania Marcellus Shale. 

Using Marcellus gas in area becomes a priority - More and more people are recognizing the potential Marcellus and Utica Shale natural gas could have if the gas and associated natural gas liquids were used in Pennsylvania, rather than being exported to other areas of the U.S. — and internationally.PIOGA, the Pennsylvania Independent Oil and Gas Association, a 100-year-old trade group originally founded to represent conventional drillers, recognizes its members must expand their outlook past drilling and producing. Last Friday, PIOGA hosted "Marcellus to Manufacturing," a day-long program in Pittsburgh which brought current and potential natural gas-related companies together to hear how firms are and can capitalize on gas, and how Pennsylvania’s state government can help make investment a reality. One of the primary reasons Shell selected the western Pennsylvania site for the first cracker built in the Appalachian Basin in decades was abundant, inexpensive gas. “We’re seeing facilities being built now, that if they had been built 10 years ago, would never have been built here,” according to Andy Huenefeld, price risk manager, for Kinect Energy Group. “They would have built elsewhere for low labor costs. Now, they are building here for low energy prices.” With more companies looking for property to build facilities and take advantage of low and abundant natural gas, brownfield sites, former industrial or commercial sites where future use is affected by real or perceived environmental contamination, are getting a closer look. One of the drawbacks of western Pennsylvania and West Virginia is a dearth of flat land. Brownfield sites, some of which may date back to the early 20th century, are flat, located near a river and often offer rail and road availability.

U.S. approves part of TransCanada WB XPress natgas pipe for service (Reuters) - U.S. federal energy regulators on Wednesday approved a request by TransCanada Corp’s (TRP.TO) Columbia Gas Transmission unit to put the eastern facilities of its $900 million WB XPress natural gas pipeline into service in West Virginia and Virginia. WB XPress is one of several pipelines designed to connect growing output in the Marcellus and Utica shale basins in Pennsylvania, West Virginia and Ohio with customers in other parts of the United States and Canada. The 1.3-billion cubic feet per day (bcfd) WB XPress project was designed to increase gas capacity in Virginia and West Virginia. The project includes construction of 2.9 miles (4.7 km) of new pipeline, two compressor stations and replacement of 26 miles of existing pipeline. One billion cubic feet is enough gas to power about 5 million U.S. homes for a day. New pipelines built to remove gas from the Marcellus and Utica basins have enabled shale drillers to boost output in the Appalachia region to a forecast record high of around 30.4 bcfd in December from 26.9 bcfd during the same month a year earlier. That represents about 37 percent of the nation’s total dry gas output of 83.2 bcfd expected on average in 2018. A decade ago, the Appalachia region produced just 1.6 bcfd, or 3 percent of the country’s total production in 2008. Separately, TransCanada has said it plans to complete its $3 billion Mountaineer and $600 million Gulf XPress projects by the end of the year. Mountaineer is designed to increase gas capacity in West Virginia by 2-bcfd. Gulf XPress is designed to move 0.88 bcfd of gas from Appalachia to the U.S. South.

West Virginia’s Natural Gas Industry Keeps Pushing to Whittle Away Payments to Residents - For decades, Arnold and Mary Richards collected monthly royalty checks — most recently from $1,000 to $1,500 — for the natural gas sucked up from beneath their West Virginia farm by small, old wells. So in 2016, when EQT Corp. drilled six new gas wells, the Ritchie County couple expected to see their royalty payments skyrocket. The much-larger wells would collect far more natural gas from the Marcellus Shale formation, which is fueling the boom in the state’s gas industry. The Richards’ checks did grow considerably. But the couple also saw something they didn’t expect: EQT was cutting the size of those new checks. EQT began deducting for what it said was the cost of transporting the gas, for processing the gas and even for state taxes. All told, since November 2016, the Richardses calculated they were missing about $235,000 in royalties. The Richardses had looked closely at their lease agreements. The agreements stated that EQT would give them 12.5 percent of the revenue generated from the wells. They didn’t say anything about allowing deductions. So the Richardses went to court, filing a federal suit against the company in February 2017. “I only want the royalty that is due us, according to our lease,” Mary Richards told a jury in Clarksburg this September. Arnold and Mary Richards are the latest among thousands of West Virginians who have watched the state’s natural gas producers whittle away at royalties promised to them, according to a review of court records by the Charleston Gazette-Mail and ProPublica. Sometimes, the companies deduct a variety of “post-production” costs from gas proceeds, as appears to have happened in the Richards’ case. Other times, they’ve avoided paying full royalties by creating shell companies that, at least on paper, buy the gas at reduced prices. These practices have gone on for decades. While the state Legislature and courts have both tried to ensure that residents are getting their fair share, gas companies have simply shifted their tactics. 

ACP and MVP are Polluting the Land and Streams in West Virginia - As battles over two major natural gas pipelines play out in court, state regulators have continued to cite the Atlantic Coast Pipeline and Mountain Valley Pipeline for environmental problems. The Mountain Valley Pipeline has received 19 violation notices from the West Virginia Department of Environmental Protection for failing to comply with the project’s West Virginia/National Pollutant Discharge Elimination System general water pollution control permit. The violation notices date back to early April, and the most recent was issued in early October, according to the DEP’s database. The violations happened in several West Virginia counties, including Greenbrier, Harrison and Doddridge. The pipeline is approved to span 303 miles from Wetzel County, West Virginia, into Pittsylvania County, Virginia. In many cases, a DEP inspector visited the site of construction and warned the site operator to take measures to comply with its permit. Then, the inspector wrote up a Notice of Violation, telling developers to provide a written response to the violation within 20 days. The violations don’t come with a monetary penalty. In the most recent case, an inspector followed up on a citizen complaint in Monroe County and found sediment was flowing off the right-of-way. The inspector, Jason Liddle, issued a Notice of Violation, citing three sections of the permit the pipeline builders had violated. Liddle also wrote that developers had violated state legislative rules governing water quality standards by letting “distinctly visible settleable solids in pond and stream.” Photos that accompany the Notice of Violation show muddy water and sediment deposits. The Atlantic Coast Pipeline, which would also start in northern West Virginia and span 600 miles into North Carolina, has been cited twice for problems in Upshur and Randolph counties. Neither pipeline company responded to inquiries about the violations. These are the kinds of problems residents feared from the very beginning, said Joan Walker, senior campaign representative for the Sierra Club’s Beyond Dirty Fuels campaign. “Absolutely, we saw it coming,” she said. “There’s no safe way to build these fracked gas pipelines in any terrain, especially in mountainous terrain in West Virginia and Virginia. This is not a surprise, this is what we warned about in hundreds and hundreds of public comments to FERC [Federal Energy Regulatory Commission], this is what we feared would happen and sadly it’s playing out that way.”

Atlantic Coast Pipeline costs reach $7B - Construction Dive - During the company's third quarter 2018 earnings call with analysts, Duke Energy CEO Lynn Good said estimated costs for the 600-mile Atlantic Coast Pipeline under construction between West Virginia and North Carolina have increased from $6.5 billion to $7 billion.   Good said the projected $500 million in additional costs were a result of permitting delays and an August stop-work order issued by the Federal Energy Regulatory Commission, which was rescinded after right-of-way issues through national park lands were resolved. The project's Virginia water quality certificate went into effect last month after the state's Department of Environmental Quality approved the pipeline's erosion and sediment control plan, and the company has requested FERC permission to start full construction activities there. The Duke Energy chief added that future bad weather or potential "judicial or regulatory" delays could add more costs and require additional schedule time.   Currently, crews are working on mainline construction in West Virginia and North Carolina and engaging in tree-felling activity in those states and Virginia. Duke plans to put the pipeline into service in phases, with all stations and significant segments ready in late 2019 in order to meet that winter's demands. The company plans to have the remaining sections in service by mid-2020.  At the same time that Duke and its partners were working on meeting Atlantic Coast Pipeline regulatory demands this summer, Mountain Valley Pipeline developers and construction crews were dealing with similar issues — cost increases and delays. FERC slapped the 300-mile, West Virginia-to-Virginia natural gas line with a stop-work order in August, citing right-of-way issues, but lifted that order by mid-September. Mountain Valley officials attributed a similar $500 million of cost increases to forced work-stoppages and permitting delays, but added another $500 million for preparation in the run-up to Hurricane Florence and for the erosion repair and sediment control work necessary after previous excessive rainfall. As of late September, costs for the pipeline, initially estimated at $3.5 billion, had increased to about $4.6 billion.

NC lawmakers will hire investigators to look at governor’s Atlantic Coast Pipeline fund - North Carolina lawmakers voted Wednesday to hire private investigators to look into whether Gov. Roy Cooper’s administration improperly issued a state permit to the Atlantic Coast Pipeline this year on condition of securing a $57.8 million contribution from the energy consortium that’s building the natural gas pipeline.While Cooper’s office dismissed the move as a political stunt, the lawmakers were praised by an environmental activist group that has fought the Atlantic Coast Pipeline and has been frustrated by Cooper’s silence. The Republican co-chairs of the subcommittee that focuses on the pipeline said a professional investigation is required because Cooper’s office has refused to answer key questions this year on how and why the deal was negotiated. Lawmakers said the deal’s time line, as reconstructed through public records, suggests the pipeline permit was initially withheld by the N.C. Department of Environmental Quality to strong-arm the Atlantic Coast Pipeline to pay for a “slush fund” that the governor could dole out for pet projects.“These questions are serious,” said subcommittee co-chairman Sen. Harry Brown, a Republican representing Onslow and Jones counties. “They go to the very heart of honest government.” Under the pipeline deal, Cooper, or anyone he delegated, would control the $57.8 million environmental mitigation fund, which would finance economic development projects and would also finance environmental reclamation projects to compensate for natural habitat damage caused by building the underground pipeline. However, the Republican-controlled state legislature dismantled the governor’s fund earlier this year and redirected the money to be paid to schools located along the pipeline’s planned path in eight counties. Even though the fund is now moot, lawmakers have pressed the issue and created the special subcommittee.

Mountain Valley submits application for pipeline extension from Pittsylvania to N.C.  — The developers of the Mountain Valley Pipeline have taken the first formal step in seeking federal approval for a 73-mile extension of the natural gas pipeline into North Carolina. An application filed Tuesday with the Federal Energy Regulatory Commission details Mountain Valley’s plan for a new project that will begin in Pittsylvania County, at the end point of a 303-mile pipeline the company is currently building in West Virginia and Virginia. Called MVP Southgate, the underground pipeline would run to Alamance County and provide gas to PSNC Energy, a local distribution company that plans to expand a system that serves more than 563,000 customers in North Carolina. Mountain Valley’s application makes official a proposal announced in April. Although the regulatory process is just beginning, reaction has fallen into the same opposing camps that formed during years of controversy over the original pipeline’s route. In touting the pipeline’s economic benefits and reliable supply of natural gas, Mountain Valley pointed to endorsements it has garnered from such organizations as the North Carolina Chamber of Commerce and the state’s Economic Development Commission. “Many employers rely on natural gas to fuel their operations and construction of the MVP Southgate project will bolster efforts to attract and retain businesses in North Carolina,” chamber executive Gary Salamido was quoted as saying in a news release from Mountain Valley. Opponents, meanwhile, have questioned the need for the pipeline, the use of eminent domain to obtain private land along its route, and the “irreparable damage” it would cause to the environment, according to written comments submitted to FERC. Of particular concern to some Pittsylvania residents is a plan to build a compressor station, which will use two gas-driven turbines to produce the 28,915 horsepower needed to move gas at high pressure through the pipeline. The facility would be about 3 miles east of Chatham. Noise and air pollution generated by compressor stations were cited by opponents in 2015, when Mountain Valley considered building one for the current pipeline in either Montgomery County or Roanoke County. Those plans were later withdrawn. 

Center for Constitutional Rights is suing Bayou Bridge Pipeline– Judge Keith Comeaux will be hearing a pre-trial on Friday regarding the constitutionality of the Bayou Bridge Pipeline in the Atchafalaya Basin. Loyola University law professor Bill Quigly told KATC that the Center for Constitutional Rights and the Atchafalaya Basin Keepers say they are suing Energy Transfer Partners on behalf of hundreds of landowners in the Atchafalya Basin. Quigly claims that ETP violated constitutional law by excavating and building on a 38 acre parcel of land in the basin without getting proper legal consent from the landowners. The Center for Constitutional Rights will also be challenging the constitutionality of Louisiana’s eminent domain law for pipelines. They argue the law is unconstitutional because it does not require pipeline companies to gain permission from a government agency before claiming eminent domain in Louisiana. They explained that most states require pipeline companies to gain permits from their Public Service Commissions before claiming eminent domain and then building. Quigly also argues that ETP will have to prove that the Bayou Bridge Pipeline is beneficial for the public good, a stipulation for claiming eminent domain. Louisiana Bucket Brigade Founding Director, Anne Rolfes adds that ETP does not have the ability to prove that the pipeline benefits the public good.

Louisiana landowners sue Bayou Bridge pipeline for trespassing and damage - Landowners in Louisiana’s Atchafalaya Basin have filed suit against the company building the controversial Bayou Bridge pipeline for trespassing and property damage, claiming that it did not obtain legal authority before running stretches of the nearly completed pipeline through their property.It’s the latest legal skirmish in a long battle between Louisiana activists and Energy Transfer Partners (ETP), which is also behind the the more well-known Dakota Access pipeline, and one that advocates hope might shutter the nearly completed 160-mile stretch of pipe before it goes live. “I’m outraged that private individuals have trespassed on this land and have destroyed it – a private company who acts as though they are above the law,” said Katherine Aaslestad, one of three landowners named in the suit. “My objective is to be a steward of the land, to protect it from the devastation caused by pipeline development … and to encourage other landowners to stand up for their rights.”According to landowners, the pipeline construction involved the cutting down of numerous trees and the accumulations of sediment left over from digging the trench where the pipeline runs.The company was in the process of trying to use the controversial doctrine of eminent domain to “expropriate” the land, which allows the government to seize land for the public good. But according to the Center for Constitutional Rights (CCR), the company never actually finished the legal process of having the land turned over before starting to build. Construction in the 38 acres owned by landowners in the suit occurred over this summer. “The corporation didn’t even wait for permission from the court to construct the property. They didn’t even wait to get compensation [for], or written permission from all the co-owners,” said CCR attorney Bill Quigley. “They trespassed onto this property and constructed this pipeline without legal authority to do so,” he continued.

Report: 90% of Pipeline Blasts Draw No Financial Penalties -- A striking report has revealed that 90 percent of the 137 interstate pipeline fires or explosions since 2010 have drawn no financial penalties for the companies responsible.The article from E&E News reporter Mike Soraghan underscores the federal Pipelines and Hazardous Materials Safety Administration's (PHMSA) weak authority over the fossil fuel industry for these disasters.The government levied a mere $5.4 million in fines for the 13 pipeline explosion and fire cases in the last eight years, the analysis found. "That's less than one day of profits for one major pipeline company, TransCanada. It's $2 million less than what [TransCanada CEO Russ Girling] made last year," Soraghan explained in a tweet. One of the country's largest natural gas pipeline accidents—the 2010 San Bruno, California pipeline explosion that resulted in eight deaths—fell under state jurisdiction rather than PHMSA. California authorities imposed a record $1.6 billion fine against Pacific Gas and Electric (PG&E).

Husky Energy reports oil spill at White Rose Field - There has been an oil spill at the White Rose Field. Husky Energy released a statement just before 5:30 saying they are responding to an incident at the White Rose Field. Just after noon today, Husky Energy says the SeaRose experienced a loss of pressure in a subsea flowline as they were preparing to restart production after yesterdays wind storm. A quantity of oil has been lost to sea. Although the exact volumes have yet to be confirmed, current estimates are that 250 cubic meters has been released. The standby vessel Atlantic Hawk was dispatched to investigate and confirmed an oil sheen on the water. Tracker buoys have been dispatched from the Atlantic Hawk and the SeaRose, and Husky Energy says a PAL observation flight is underway. The company says sea states are currently preventing containment and recovery operations. However, as per Husky Energy’s oil spill response plan, all appropriate authorities have been notified. Onshore staff and contractors have been called in.

Haynesville's Gigantic Gas Resurgence Could Be A Winner In LNG Export Race - Ever since producers took some big financial beatings after prices plummeted a few years ago, the Haynesville Shale play has positioned itself for an economic resurgence. For those following natural gas production in the U.S., this should not come as a surprise. It has a lot going for it. Consider the following:

  • It’s a behemoth of a gas field that produces enormous wells. It’s been known for some time that the Haynesville has potential, but that is being realized further as more experience is developed among operators. For example, long lateral wells (some now stretch nearly two miles each) can produce up to 24 bcf of natural gas. Compared to the nearby Eagle Ford Shale, whose wells produce 12-15 bcf of natural gas, the Haynesville wells are big. In today’s low gas price environment, this matters quite a bit.
  • The formation is more naturally pressurized than many others. This means, among other things, that more gas is produced in the first year. This is important, considering how expensive it is to drill these wells, and in turn, it means higher rates of return for investors (since time can erode returns according to present value theory).
  • Breakeven prices have fallen. According to Chesapeake, which has the largest acreage position in the Haynesville, breakeven prices are currently between $2.00–$2.25 mcf. Even with price differentials of about $0.60 to Henry Hub, this provides an opportunity for profitable wells. Two or three years ago, this was considered an improbability.

Currently, the ability to export LNG is relatively trivial. The continental U.S. has only two facilities operating with less than 4 bcf of capacity per day.That’s about to change. The Gulf Coast alone has nearly 8 bcf per day capacity under construction and another 6.8 bcf per day has been approved. Over 26 bcf per day has additionally been proposed.  Facilities are being proposed up and down the coast from Brownsville, Texas to Pascagoula, Mississippi.In the race to chase efficiencies, the Haynesville’s proximity to the Gulf Coast provides a big opportunity for investors. At a recent conference, Tom Petrie, a leading energy investment banker, gave some estimates of transportation costs from proximate U.S. gas basins. Not surprisingly, the Haynesville was by far the cheapest at $0.25 per mcf.

US LNG player Cheniere fires up Corpus Christi production - US LNG player Cheniere said Wednesday it started producing liquefied natural gas from the first train at its Corpus Christi liquefaction and export terminal in Texas as the facility is preparing to ship its first-ever cargo of the fuel.As previously reported by LNG World News, the 170,000-cbm FSRU Golar Tundra, which is being used as an LNG carrier in the spot market, arrived at the Corpus Christi plant’s jetty on Sunday.An event to mark the commissioning of the Corpus Christi facility will take place at the Port of Corpus Christi on November 15.The Golar Tundra is expected to depart the facility with the first shipment “sometime soon”, according to a Platts report. The destination of the cargo is currently unknown.Cheniere has previously secured an approval from the US Federal Regulatory Energy Commission (FERC) to load and export commissioning cargoes at its Corpus Christi plant. However, the company has yet to receive an approval from the regulator for the start of commercial service.Cheniere already owns and operates the Sabine Pass LNG export facility in Louisiana, one of only two facilities currently exporting US shale gas-sourced LNG.The Corpus Christi facility is the company’s second LNG export facility and the third such facility in the US.Corpus Christi is a three-train liquefaction project, with each train expected to have a nominal production capacity of about 4.5 million tonnes per year of LNG. The liquefaction project is the first large-scale LNG export project to be built in Texas, with a cost of approximately $15 billion.

Permian Drillers Prepare To Go Into Overdrive In 2019 In recent months, pipeline capacity shortage in the Permian has been the center of shale drillers and oil analysts’ attention as much as the surging production from this fastest-growing U.S. oil region that has helped total American crude oil production to exceed 11 million bpd for the first time ever.Many of the big U.S. companies—including supermajors Exxon and Chevron—boosted their Permian oil production in the third quarter as they have firm capacity commitments and integrate Permian production with downstream operations.Many smaller drillers, however, are going on a ‘frac holiday’—as Carrizo Oil & Gas said in its Q3 earnings release this week—in some of their Permian acreage by the end of this year, to sit out the worst of the pipeline constraints, and to be ready to return to completions next year.The majority of company executives and industry analysts expect that the Permian bottlenecks and the wide WTI Midland to Cushing price differential are transitory issues that will go away by the end of 2019, when many of the new pipelines out of the Permian will have started operations.  Until then, some smaller drillers like Carrizo are on a ‘frac holiday’ this month and next. Commenting on the Q3 performance, Carrizo’s President and CEO S.P. “Chip” Johnson said that the company had been drilling more in the Eagle Ford than in the Permian in order to capture higher pricing from the Eagle Ford oil. “We expect our activity to remain weighted to the Eagle Ford Shale until the second half of 2019, when we plan to begin moving rigs back to the Delaware Basin,” Johnson said. In the earnings call, he noted that the shift to the Eagle Ford “shielded us from the dramatic widening of differentials in the Permian Basin during the quarter.”

Permian Pipes Are Coming, But The Workers Aren't - Ryan Byrd worked five years in oilfields from China to West Texas. But after the worst price rout in a generation left him jobless, he’s not ready to jump back into the mix. His advice to others looking to the oil patch for fat checks: "Just be prepared to one day wake up, go to work and find that the job is not there." Welcome to the next big Permian Basin bottleneck. A pipeline shortage slowed output this year, leading to a record 3,722 drilled-but-never-opened wells. But three major conduits set to open in 2019 are expected to solve that. The newest snag: Finding hundreds of workers over the next 18 months to open those wells, at a time when the firing of 440,000 workers between 2014 and 2016 remains a fresh and painful memory. “It’s a huge concern for 2019,"  . "It’s frankly today a bigger concern than oil prices, because oil prices are fine where they are. The availability of labor is not." By the time the new pipelines are fully in service, potentially adding more than 2 million barrels a day of capacity, the number of unfracked wells could reach 7,000. Now, there’s 174 fracking crews in the Permian, with roughly 20 to 30 workers each. Colin Davies, an analyst at Sanford C. Bernstein, expects that count to fall even lower. But once the pipes open, Davies believes as many as 100 more crews may quickly be needed. Schlumberger Ltd., the world’s biggest oilfield services company, said on a conference call last month that it was trying to hold tightly to some of its experienced oilfield workers by looking at shifting them to other jobs until they’re needed back in the Permian field. And the industry is starting to recruit broadly, focusing on areas well outside the Permian so as not to cannibalize companies and communities close to the oilfields. But it’s not an easy proposition. After being fired in the oil rout, many former oilfield workers, like Byrd, have settled into other jobs with much less volatility. Meanwhile, the U.S. jobless rate is at its lowest level in years.

Cleanup completed from refinery spill on South Side - A spill of about 50 gallons of flammable liquid at a South Side refinery that entered the San Antonio River appears to have been quickly and almost entirely removed, officials said Friday.The circa-1955 plant at 7811 S. Presa St., now owned and operated by Calumet Specialty Products Partners, has had a history of occasional fires and spills, but had not had a significant spill in nearly three years, San Antonio River Authority officials said.Shortly before noon Thursday, Calumet reported that naphtha, a hydrocarbon mixture used in fuels and solvents, leaked from a valve into a tributary leading to the Mission Reach of the river, just north of Mission San Juan.   Amanda Nasto, environmental investigation specialist with SARA, said three temporary floating barriers known as containment booms were placed by Calumet to keep the spill from moving downstream. Absorbent pads were used to remove the contamination. “I’d say we got 99 percent of it,” Nasto said. “We’re not seeing anything, and we’re not smelling anything.”  As a precaution, Calumet placed a fourth boom by a tunnel outlet leading into the river that will likely be removed late Saturday, in advance of possible rain, she said. There was no known impact to wildlife from the spill. More than four years ago, a spill at the plant on March 4, 2014, of more than 8,000 gallons of jet fuel, including about 420 gallons that entered the river, resulted in the documented deaths of two ducks. A second spill, on April 11, 2014, involved 1,008 gallons, including 126 gallons that entered the river. The Texas Commission on Environmental Quality later assessed a $29,780 fine against Calumet for not contacting the state agency until nearly 12 hours after the second spill.

Oklahoma Supreme Court sides with industry in fight over oil-field water regulation The Oklahoma Supreme Court on Tuesday sided with the energy industry, ruling against officials in Kingfisher County who blocked companies from using temporary lines to transport produced, treated or recycled water in one of the state’s hottest oil fields.Last spring, Kingfisher County Commissioners stopped issuing permits for temporary pipes placed in easements alongside county roads to pump water to and from drilling and oil-field sites, citing liability concerns and environmental hazards posed by leaks.Oil companies said the ban was expensive and unnecessary and could worsen truck traffic and force drillers to use fresh water instead of recycled oil-field water for hydraulic fracturing.The Oklahoma Oil and Gas Association filed a lawsuit in August, arguing the ban was unreasonable and challenged the commissioners’ authority to regulate the water lines.The chief legal counsel for the Oklahoma Corporation Commission, the state’s oil and gas regulator, agreed with that argument in a legal opinion and cited a 2015 law that crimped local governments’ ability to prohibit oil-field operations.Oklahoma’s high court agreed. In a 6-3 ruling and order, justices voided Kingfisher County’s water line ban and said the Corporation Commission has “exclusive authority” to regulate the transportation and storage of oil-field water.. “A patchwork of local ordinances and regulations creates unnecessary confusion, thwarts innovative solutions, and threatens environmental protections and public health,” OIPA-OKOGA spokesperson Cody Bannister said in a statement. “Using temporary water lines is an industry-standard practice that has numerous environmental benefits, including reducing truck traffic and supporting water recycling efforts.”

Drilling overwhelms agency protecting America’s lands - Wayne Smith was incredulous as he surveyed an area he leases for grazing, now cleared of grass and cluttered with above-ground pipelines, a drill pad for multiple wells and other oil and gas infrastructure. “I still pay a grazing lease right there,” Smith said in May, pointing to a government map showing there should be no more than 17 acres of development on the site instead of the 125 acres he saw in front of him. “Now, what’s my cow going to eat?” This isn’t what’s supposed to happen on publicly owned land the federal government oversees. The Bureau of Land Management can lease the same property to more than one party at once, but if New Mexico ranchers request it — as Smith did — the agency has instructed its field offices to contact them before such a build-up occurs. Smith said no one notified him. Violations, from oil spills to haphazard land restoration, are becoming more common in this hotbed of oil and gas activity, according to ranchers and conservation groups. One sign of the area’s increasing appeal for drilling: A September federal oil and gas lease sale brought in a record-breaking $972 million. Jim Stovall, a local BLM official, admitted at a meeting in May that his team doesn’t have the resources to enforce all the rules on the books, according to five people who heard his remarks.But the Trump administration’s priority is to speed up oil and gas permitting and to open tens of thousands of additional acres to drilling here. For years, the industry in New Mexico has had outsize access to local BLM officials — federal employees relying on the private sector for everything from money to expertise. Now, it’s getting assistance from Washington.“We want to make the BLM a better business partner for the oil and gas industry,” Michael Nedd, then-acting director of the agency, said last year at the Carlsbad Mayor’s Energy Summit. Conservationists, ranchers and others worry that allowing more drilling without addressing the problems already created by ramped-up production could threaten one of the most biologically diverse deserts in the world, put local water supplies and the global climate at risk and scar the land so it can’t be used for other purposes afterward.Government officials say accelerating permitting will bring much-needed jobs and money. New Mexico is heavily dependent on oil and gas revenue, and the permitting process, some say, has been hijacked by anti-development interests.

Trump: Keystone XL court ruling ‘a disgrace’ - President Trump slammed a federal judge’s late Thursday ruling that blocked the Keystone XL oil pipeline, calling it “a disgrace.” “It was a political decision made by a judge. I think it’s a disgrace,” Trump told reporters as he left the White House Friday morning, heading to France. “48,000 jobs. I approved it. It’s ready to start,” he added. The State Department has estimated that the project would provide up to 42,000 temporary construction jobs, but just 35 direct permanent jobs once completed. Trump indicated that his administration would appeal the ruling from Montana federal Judge Brian Morris to the San Francisco–based Court of Appeals for the 9th Circuit, which has often ruled against his administration. “I guess it’ll end up going to the 9th Circuit, as usual,” he said. “We’re slowly putting new judges in the 9th Circuit. Everything goes to the 9th Circuit, everything.” Trump signed an executive order that led to Keystone’s approval days after he took office in January 2017. Morris revoked TransCanada Corp.'s federal permit to build the Canada-to-Texas oil pipeline, stopping the company’s plans to start construction next year.  The judge said the Trump administration’s State Department didn’t adequately review the environmental impacts of the pipeline and didn’t justify why it reversed the Obama administration’s 2015 rejection of the project.

Keystone XL Ruling Could Just Be Symbolic-- TransCanada Corp.'s $8 billion Keystone XL pipeline may face another eight months of delay after a court ruling raised issues with a four-year-old environmental review. A Montana federal judge Thursday found that the 2014 environmental assessment by the Obama administration fell short. President Donald Trump used that review in a March 2017 decision allowing the project to proceed. Now, the government must consider oil prices, greenhouse-gas emissions and formulate a new spill-response strategy before allowing the pipeline to move forward, U.S. District Judge Brian Morris wrote in a ruling. TransCanada first proposed the 1,179-mile (1,897-kilometer) pipeline expansion in 2008. Designed to haul crude from Canada's oil sands to refiners on the U.S. Gulf Coast, Keystone XL became a focal point for environmental opposition to fossil fuels. The conduit would help alleviate bottlenecks that have driven oil prices in Western Canada to as much as $50 a barrel below the U.S. benchmark. On Friday, TransCanada said it's reviewing the ruling and that it remains "committed to building this important energy infrastructure project."   Adding greenhouse-gas impacts and other aspects of Morris's ruling to the government review probably will add at least eight months to the project's timeline, . "This is the world's longest tug of war, with Western Canadian oil prices as the rope," Wood Mackenzie analyst Zachary Rogers said in a note. While the court's decision is "definitely a major setback in terms of timing, this is unlikely to be the nail in the coffin for Keystone XL." That's because the ruling is "largely symbolic" and requires only that the State Department "spill a little more ink," . "We do not view this ruling as a major risk for the pipeline and expect the State Department can resolve all the deficiencies identified by the court," she said. Bloomberg Intelligence analyst Brandon Barnes characterized the ruling as "not that big of a deal" and said the issue may be cleared up even before a pending Nebraska Supreme Court decision is resolved. 

Pipeline vandals are reinventing climate activism -  IT’S PRETTY EASY to paralyze America’s oil infrastructure. All Emily Johnston and Annette Klapstein needed was a set of 3-foot-long green-and-red bolt cutters. And a willingness to go to jail for years.On October 11, 2016, as they pulled up to an oil pipeline facility in the farm fields outside Leonard, Minnesota, the pair were bent on taking direct action to address climate change, since, they figured, the US government had failed to do anything about it. “This is the only way we get their attention,” Klapstein said on video before she got out of the car. “All other avenues have been exhausted.”By “their,” she meant policymakers and oil companies (and, by extension, you and me). Johnston, now 52, is a poet and cofounder of the Seattle chapter of climate action group For years, she’d done all the things law-abiding climate change activists do: filed petitions, lobbied legislators, hosted speakers, wrote letters, blockaded refineries, and tried to block Shell from moving their drilling rigs into the Arctic. Klapstein, 66, is a retired attorney from Bainbridge Island, Washington, whose job was to protect fishing rights for the Puyallup tribe. With her group, the Raging Grannies, her actions includedblocking oil trains while chained to a rocking chair. They’re both white, middle-aged. Law-abiding folks. Except when they’re mad. It was a cold morning, aspens shaking their dull gold under heavy skies. A fellow activist, Ben Joldersma, livestreamed to Facebook as the two women cut the chains around fenced enclosures containing large shut-off valves for two oil pipelines owned by the Canadian multinational Enbridge. The pipes carry crude oil from deposits of tar sands (also referred to as oil sands) in Alberta, transporting it to Lake Superior. Because making petroleum products from this goo—called bitumen—releases more global-warming emissions than most other oil sources, the activists were going to do what they could to keep it in the ground.

Big Oil v the planet is the fight of our lives. Democrats must choose a side - David Sirota - The world’s leading scientists issued a report warning of total planetary dystopia unless we take immediate steps to seriously reduce carbon emissions. Then, oil and gas corporations dumped millions of dollars into the 2018 elections to defeat the major initiatives that could have slightly reduced fossil fuel use. Though you may not know it from the cable TV coverage, this was one of the most significant – and the most terrifying – stories of the midterms. For those who actually care about the survival of the human race, the key questions now should be obvious: is there any reason to hope that we will retreat from “drill baby drill” and enact a sane set of climate policies? Or is our country – and, by extension, our species – just going to give up? Before answering, it is worth reviewing exactly what happened over these last few months, because the election illustrates how little the fossil fuel industry is willing to concede in the face of a genuine crisis. While the dominant media narrative has been about Democratic voters euphorically electing a House majority and yelling a primal scream at Donald Trump, the loudest shriek of defiance was the one bellowed by oil and gas CEOs. As the Intergovernmental Panel on Climate Change warned that we have only 12 years to ward off an ecological disaster, those oil and gas executives’ message to Planet Earth was unequivocal: drop dead. That message was most explicit in Colorado, where a drilling and fracking boom is happening in the middle of fast-growing suburbs. With oil and gas companies seeking to put noxious derricks and rigs near population centers, local activists backed a ballot measure called Proposition 112 that aimed to make sure new fossil fuel infrastructure is set a bit farther away from schools, hospitals, residential neighborhoods and water sources. The initiative was an angry response to a state government so awash in fossil fuel campaign cash that it has blocked legislation to merely allow regulators to prioritize the health and safety of residents when those regulators issue permits for drilling and fracking.  Despite scientists warning that fracked natural gas threatens to worsen climate change, oil and gas operatives in the state promoted cartoonishly dishonest claims that burning fossil fuel “is cleaning our air and improving health”. As Colorado’s local media effectively erased the term “climate change” from its election coverage, the industry managed to defeat the measure by outspending its proponents 40-to-1. In the process, fossil fuel companies’ scorched-earth campaign was a clear statement that in the face of an environmental cataclysm, oil and gas moguls will not accept even a tiny reduction in their revenues.

Phillips 66 and Bridger Pipeline LLC Announce Open Season for Rockies and Bakken Crude Oil Pipeline System; Phillips 66 Announces Open Season for Cushing Crude Oil Pipeline System -- Phillips 66 and Bridger Pipeline LLC announce a joint open season for the proposed Liberty Pipeline, which will provide shippers the opportunity to secure crude oil transportation service from the Rockies and Bakken production areas to Corpus Christi, Texas. The Liberty Pipeline is expected to have an initial throughput capacity of 350,000 barrels per day (BPD) with the ability to expand further depending on shipper interest in the open season. The pipeline is anticipated to be placed in service in the fourth quarter of 2020.Phillips 66 also announces an open season for the proposed Red Oak Pipeline, which will provide shippers the opportunity to secure crude oil transportation service from Cushing, Oklahoma, to Corpus Christi, Houston and Beaumont, Texas. The Red Oak Pipeline is expected to have an initial throughput capacity of 400,000 BPD with the ability to expand further depending on shipper interest in the open season. The pipeline is anticipated to be placed in service in the fourth quarter of 2020. Both the Liberty Pipeline and the Red Oak Pipeline open seasons will commence at 12 p.m. CST on Nov. 12, 2018. Prior to participating in the open seasons, interested parties must execute a confidentiality agreement to govern the receipt of the open season documentation.

Crudes from Rockies and Bakken May Get New Routes - Phillips 66 and Bridger Pipeline LLC will launch open seasons next week for transportation service on a pair of crude oil pipelines that could carry Rockies and Bakken production to the Texas Gulf Coast, the companies announced Friday. At noon Central time on Nov. 12, 2018, the companies will kick off joint open seasons for capacity on the proposed Liberty and Red Oak pipeline proposals. The Liberty Pipeline, with an initial throughput of 350,000 barrels per day (bpd), would ship crude from the Rockies and Bakken production areas to Corpus Christi, Texas, Phillips 66 and Bridger stated. In addition, Phillips 66’s Red Oak Pipeline would initially transport 400,000 bpd of crude from Cushing, Okla., to Corpus Christi, Houston and Beaumont, Texas. Phillips 66 and Bridger anticipate that both pipelines would go into service during Fourth Quarter 2020. 

Officials See North Dakota Oil Production Increasing To Over 2 Million BOPD -- November 12, 2018 -A long, long time ago Bentek forecast that the Bakken would eventually produce 2.2 million bopd. I have often used that forecast and have said many times on the blog that, unfettered, the Bakken would produce 2.2 million bopd.  The story has been previously posted, but there are some new data points in this Bismarck Tribune article:Justin Kringstad, director of the North Dakota Pipeline Authority, projects the state’s oil productionwill increase from 2 million to 2.3 million barrels per day.During a North Dakota Industrial Commission meeting in September, officials discussed the need for more oil pipeline capacity to accommodate growing volumes.“We really want to see another large oil export pipeline,” Lynn Helms, director of the Department of Mineral Resources, said during the meeting.Without sufficient pipeline capacity, rail transportation of crude oil will increase. In August, 73 percent of Bakken crude oil was transported by pipeline, 18 percent by transported by rail, 6 percent was refined in the state and 3 percent was trucked to Canadian pipeline.

Judge orders moratorium on offshore fracking in federal waters off California - In a victory for the ocean, a federal judge on November 9 ordered the Trump administration to cease issuing permits for offshore fracking and acidizing in federal waters — waters over 3 miles from shore — off the coast of Southern California. U.S. District Judge Philip S. Gutierrez ruled that the federal government violated the Endangered Species Act and the Coastal Zone Management Act when it allowed fracking (hydraulic fracturing) and acidizing in offshore oil and gas wells in all leased federal waters off Santa Barbara, Ventura and Los Angeles counties. Gutierrez issued an injunction prohibiting the two responsible federal agencies, the Bureau of Ocean Energy Management (BOEM) and the Bureau of Safety and Environmental Enforcement (BSEE), from approving any plans or permits for the use of well stimulation treatments (WSTs) off California. Hydraulic fracturing is a well stimulation technique that uses a pressurized liquid to fracture rock. Acidizing is another well stimulation technique that entails pumping acids into a well in order to dissolve the rock, increasing the production by creating channels in the rock to allow oil and natural gas to reach the well. “Stopping offshore fracking is a big victory for California’s coast and marine life,” said Kristen Monsell, oceans program legal director at the Center for Biological Diversity. “We’re glad the Trump administration lost this round in its push to expand dangerous oil operations off California. This decision protects marine life and coastal communities from fracking’s toxic chemicals.” This order is an important step in addressing the expansion of fracking off California, although it doesn’t impact state waters within 3 miles from shore, where most of California’s offshore oil wells are located. Fortunately, litigation has prevented fracking from taking place in state waters for several years.

U.S. judge bars Trump administration from OKing fracking off California coast - A federal judge barred the Trump administration Friday from approving oil companies’ requests to use the high-pressure drilling technique known as fracking in offshore wells along the Southern California coast until a review of the possible effects on endangered species and state coastal resources. In lawsuits by the state and environmental groups, U.S. District Judge Philip Gutierrez of Los Angeles said federal agencies that issue underwater drilling permits must consult with the U.S. Fish and Wildlife Service, about the possible impact of fracking chemicals on sea birds and otters, before approving any permits for its use off Santa Barbara, Ventura and Los Angeles counties. He said the agencies must also present their plans to the California Coastal Commission, which reviews offshore projects for possible harms to coastal areas. Oil companies say fracking is harmless, and it was permitted in federal lands and waters under President Barack Obama, when the lawsuits were filed.   Environmental advocates contend it causes water and air pollution and have urged Gov. Jerry Brown, unsuccessfully, to ban its use on California lands. Besides offshore fracking, the suits challenge government approval of acidizing, the injection of acid into a well to increase oil production.   Gutierrez’s ruling did not criticize the drilling techniques, and in fact upheld the government’s assessment — begun under Obama, completed under Trump — that concluded their continued use offshore would have “no significant impact” on the environment. But he said the permit-issuing agencies had failed to consult adequately with the Fish and Wildlife Service about threatened species, and had failed to consult at all with the Coastal Commission. Any need by the government and oil companies to approve drilling permits with fracking or acidizing “is outweighed by the interest of the people of the state of California” in having their commission “review the proposed action for consistency with California’s coastal management plan,” Gutierrez said.

Taxpayers May Soon Be on the Hook for a $2 Billion Fracked Gas RefineryNorthwest Innovation Works (NWIW), a proposed fracked-gas-to-methanol refinery in Kalama, Washington, would be the largest of its kind in the world. The project's investors include the Chinese government and a New York-based private equity firm with $15 billion in capital—a fact that's prompted critics to ask: Why should American taxpayers be liable for the refinery's $2 billion construction? According to government documents obtained by Columbia Riverkeeper, a non-profit organization dedicated to protecting its eponymous waterway, NWIW is applying for a loan guarantee from the Department of Energy (DOE) to cover the project's completion. Despite being heavily redacted, a draft DOE presentation obtained by Riverkeeper nevertheless provides insight into NWIW's financing and the costs that may be borne by United States taxpayers. The presentation identifies the size of the refinery's proposed loan guarantee to be more than $2 billion; should the DOE accept NWIW's application, taxpayers nationwide could be on the hook for that entire amount.  "A federal loan guarantee means that the U.S. government—ultimately taxpayers—would agree to pay back NWIW's creditors if NWIW can't repay the loan that it took out to finance the construction of the refinery," says Jasmine Zimmer-Stucky, a senior organizer with Riverkeeper. Those creditors include the Chinese government. As the draft DOE presentation outlines, the Chinese government is one of the principle backers of NWIW. The first investor listed in the presentation is Pan-Pacific Energy, which was established by Shanghai Bi Ke Clean Energy Technology in 2013. The majority shareholder in Shanghai Bi Ke Clean Energy Technology is the Chinese Academy of Science Holdings, which the DOE presentation describes as a "wholly owned state company." In other words, a significant portion—if not the majority—of NWIW will be owned by the Chinese government, while the risk of financing its construction could be put on U.S. taxpayers. If completed, NWIW would become part of an extensive operation to provide methanol to China. Pipelines from Canada and the Rocky Mountains would deliver fracked gas to the refinery for conversion into liquid methanol. NWIW's proposed location in the Port of Kalama—in Southwest Washington on the Columbia River, which empties into the Pacific Ocean—has access to a natural shipping route to China, where methanol is used to manufacture plastics or burned as fuel.

U.S. crude oil and natural gas production increased in 2017, with fewer wells - The total number of wells producing crude oil and natural gas in the United States fell to 991,000 in 2017, down from a peak of 1,039,000 wells in 2014. This recent decline in the number of wells reflects advances in technology and drilling techniques. EIA’s updated U.S. Oil and Natural Gas Wells by Production Rate report shows how daily production rates of individual wells contributed to U.S. total crude oil and natural gas production in 2017.Wells classified as nonhorizontal in the report—most of which are vertical wells—have decreased from 940,000 in 2014 to 864,000 in 2017. Horizontal wells are relatively less common, but they are growing as a share of the total: the 99,000 horizontal wells drilled in 2014 accounted for 10% of the total. In 2017, 127,000 horizontal wells accounted for 13% of total wells drilled.Although horizontal wells are more expensive to drill than vertical wells, they contact more reservoir rock and therefore produce greater volumes. Only 1% of vertical wells produced at least 100 barrels per day (b/d) of crude oil in 2017, but 30% of horizontal wells produced at least 100 b/d. As these relatively prolific horizontal wells became more common, production growth continued even as the well count fell.Even with fewer wells, U.S. oil production grew from 8.7 million b/d in 2014 to 9.3 million b/d in 2017. During that same period, U.S. natural gas gross withdrawals increased from about 78.7 billion cubic feet per day (Bcf/d) to 83.4 Bcf/d. Since 2017, crude oil and natural gas production has continued to grow, most recently measured at 11.3 million b/d and 85.2 Bcf/d in August 2018, respectively. In EIA’s report, wells are grouped into 26 production volume brackets, ranging from less than one barrel of oil equivalent per day (BOE/d) to more than 12,800 BOE/d. Most of the U.S. oil and natural gas production comes from wells producing between 50 BOE/d and 1,600 BOE/d. In 2017, wells within this range accounted for 9% of the overall count of wells but 62% of crude oil production and 63% of natural gas production.

Chevron, Exxon and other big firms now outpace smaller drillers in fracking -  Smaller, nimbler companies pioneered the U.S. shale boom. But as American production scales up, those frackers are losing ground to Big Oil, The Wall Street Journal reports. Giant companies such as Chevron Corp. and Exxon Mobil Corp. are increasing shale production faster and with fewer complications than their smaller rivals. Their superior size and deeper pockets give them an edge in planning large drilling projects and locking in the pipeline and labor deals needed to ensure profitability.Exxon doubled its shale rigs across the U.S. from the end of last year through September and became the most active driller in the country, according to industry tracker RigData. Chevron’s output in the Permian Basin of Texas and New Mexico rose 80% for the year ended in September, eclipsing some of the small producers that spent years building up their fracking positions. Size also helps larger companies weather volatility in the oil markets, where U.S. crude prices have plunged more than 20% in the past month to about $56 a barrel. The bigger companies kept spending in check as oil rallied earlier in the year, making them less vulnerable to the recent selloff. As a result, Exxon shares have fallen only 4% in the past 30 days, compared with the 17% decline in the index of smaller producers, according to FactSet.

US Shale Oil Production To Hit Record High In December, EIA Says - U.S. crude oil output from seven major shale basins was expected to hit a record of 7.94 million barrels per day (bbl/d) in December, according to a monthly government forecast released on Nov. 13. The total oil output from the basins was expected to rise 113,000 bbl/d, driven largely by increases in the Permian Basin of Texas and New Mexico, where output was forecast to climb by 63,000 bbl/d to about 3.7 million bbl/d in December, the U.S. Department of Energy's Energy Information Administration (EIA) said. Output was also expected to rise in each of the other basins, except for the Haynesville, where it would remain unchanged at 43,000 bbl/d. U.S. natural gas production, meanwhile, was projected to increase to a record 75.1 billion cubic feet per day (Bcf/d) in December. That would be up more than 1 Bcf/d over the November forecast and would be the 11th monthly increase in a row. A year ago in December output was just 63.9 Bcf/d. EIA November 2018 Drilling Productivity Report Oil & Natural Gas Production (Source: U.S. Energy Information Administration) The EIA projected gas output would increase in all the big shale basins in December. Output in the Appalachia region, the biggest shale gas play, was set to rise 400 million cubic feet per day to a record 30.4 Bcf/d in December. Production in Appalachia was 26.9 Bcf/d in the same month a year ago.

US shale oil forecasts too optimistic, even IEA agrees - Since it first came on stream a decade ago, US shale oil has been hailed as the great black hope for a world still reliant on fossil fuels, despite the worsening effects of climate change. Concerns about the depletion of Middle East oil reserves have been somewhat offset by the resurgence of US oil production, which last month reached 11.6 million barrels per day (bpd), up 20 percent on the previous year. That's already more than a third of the 32 million barrels produced globally per day. The US, whose oil industry peaked in 1970s and was thought to be in terminal decline, has now overtaken Russia and Saudi Arabia to become the world's largest oil producer. Advances in fracking technology have made it possible to drill in tight shale in the North American Permian Basin, which lies under the US states of Texas and New Mexico, as well as further afield. Permian is forecast to become the most lucrative oil patch in the world over the next decade, potentially overtaking Saudi Arabia's Ghawar field. Energy analysts Wood Mackenzie predicts the region will account for two-thirds of the increase in US oil production and contribute one-quarter of world's oil production increase over the next 10 years. Although many oil industry insiders believe the US shale boom is so powerful it can plug a potential supply crunch that the International Energy Agency (IEA) has warned will lead to a global shortage of oil in the mid 2020s, others believe the expansion has been overhyped and that some of most lucrative shale wells may have already peaked.

U.S. set to produce half of world's oil, gas output by 2025, IEA report finds — Relentless American shale development is set to allow the U.S. to leapfrog the world’s other major oil and gas producers, with the potential for the country to account for roughly half of global crude and natural growth by 2025, the International Energy Agency said Tuesday.In its annual World Energy Outlook report, the IEA said its main projection scenario through to 2040 foresees the U.S. accounting for nearly 75% and 40% of global oil and gas growth, respectively, over the next six years. Growth is expected to be driven primarily by shale fracking, which should lead U.S. shale oil supply to more than double, reaching 9.2 million barrels a day by the mid-2020s, the agency said.“The shale revolution continues to shake up oil and gas supply, enabling the U.S. to pull away from the rest of the field as the world’s largest oil and gas producer,” said the Paris-based organization that advises governments and corporations on energy trends. “By 2025, nearly every fifth barrel of oil and every fourth cubic meter of gas in the world come from the United States.” The use of hydraulic fracturing to drill for oil in shale rock — known as fracking — has dramatically reshaped the global oil industry over the past decade, and it has allowed the U.S. to rival the Organization of the Petroleum Exporting Countries for market share. Shale was largely behind a glut of American oil that flooded the market over four years ago, leading oil prices to fall to $30 a barrel from more than a $100 a barrel in late 2014. U.S. shale oil production is expected to plateau in the mid-2020s, the IEA said in its central outlook scenario, ultimately falling by 1.5 million barrels a day in the 2030s as a result of resource constraints.

US shale needs to add another 'Russia' to prevent global oil shortage, IEA warns --U.S. shale oil producers would need to add the equivalent of Russia's entire crude oil production within just seven years to head off a global shortage, according to a global energy watchdog. The International Energy Agency (IEA) said Tuesday there will be robust demand growth for oil over the next few years driven by the rise in industry, aviation, and petrochemical needs.  But Fatih Birol, the executive director of the Paris-based group, told CNBC's Street Signs that because of the current low number of newly approved drilling projects in countries such as Saudi Arabia or Russia, the world can expect a supply crunch developing by the mid-2020s.The economist said while some have pointed to the ability of U.S. shale oil to make up the difference, that theory would be severely tested as between now and 2025, the U.S would need to add more than 10 million barrels per day."In other words, the U.S. needs to add one single Russia in seven years time in order to avoid a major tightening in the markets," said Birol before adding, "It can happen but it would be be a small miracle."The group's annual World Energy Outlook, published on Tuesday, predicted energy demand to grow by more than a quarter between 2017 and 2040. That figure doubles if there is no improvement from current levels of energy efficiency.In the near term, however, concerns about oversupply have sent oil prices skidding lower.  Oil prices fell by around 1 percent on Tuesday, with Brent crude sliding below $70 and WTI below $60 per barrel, after U.S. President Donald Trump put pressure on OPEC not to cut supplies to prop up the market. Both oil price benchmarks have shed more than 20 percent in value since early October. Birol told CNBC that while it was not his job to comment on the opinion of Trump, there was some merit to keeping prices at lower levels. But Birol said he was hearing from "lots of different corners" that it is time to go back and cut the production and push the prices up.

As Of October 2018, The US Is Now Energy Independent - While the main event this weekend was the latest OPEC+ meeting which saw member states of the oil cartel and their allies scramble to promise that oil production will be cut if oil prices continue to drop due to excess supply now that Iran's oil exports may rebound thanks to waivers granted to its main trading partners by the Trump administration, a just as important event to take place was the news of record oil production levels in North America. Helped by higher prices, total oil production has hit a record level in the US, reaching a combined 15.9 million b/d (crude oil and NGLs) in the past month and almost 2mn b/d above last year. This number is broken down into 11.35mn b/d of crude oil and 4.57 mn b/d of natural gas liquids (NGLs). As a reference, the US will likely consume about 20.7mn b/d of oil and other liquid fuels in 2018. The surge in US and also Canadian output has pushed total North American crude production volumes above 20 mn b/d. The larger-than-expected surge in North American oil volumes has come primarily from the Permian, Canada's oil sands, and more recently, the Gulf of Mexico. In contrast to the fast growth experienced by its Northern neighbors, Mexican oil output continues to fall as the effects of the latest energy sector reform have yet to be translated into output. Notably, this surge in North American oil production is only set to accelerate, and according to Bank of America forecasts US crude oil volumes alone will exceed 12MM b/d in 2019. It is this sky high production in the US, coupled with incremental barrels coming from Saudi Arabia and Russia, that together with the Iran wildcard is starting to impact oil market balances. As such, crude oil inventories are starting to increase once again and has led to the recent bear market in oil prices. Of course, as anyone with a passing interest in the energy sector knows, the faster than expected growth in the US, coupled with more barrels coming from Saudi Arabia and Russia following a challenging meeting last July, is starting to impact oil market balances. OPEC has worked long and hard to rebalance the market in the past two years, and it will hardly be threatened by some jawboning by the US president. But the biggest surprise from the recent data, and the biggest threat for OPEC is something different, the same thing that according to Bank of America could make the next OPEC price war a lot more costly to the cartel just as the US has continued to isolate itself from global oil price swings. The reason: as of October, the US is now energy independent for the first time, which is a seismic change considering that just 10 years ago, America was spending 3% of GDP buying foreign energy in 2008, but its energy trade balance is now positive. And, as BofA calculates, "whether measured in in BTU/oil barrels equivalent or in US dollars, we estimate that the reversal in energy balances from a deficit into a surplus happened in October 2018."

US Set to Export Petroleum Like It's 1949 - The dramatic increase in U.S. oil and natural gas production over the past decade has limited the growth of the country’s domestic merchandise trade deficit by lowering net petroleum imports. In fact, the United States is poised to become a net-exporter of petroleum for the first time since at least 1949. Those are two takeaways from a new IHS Markit report, “Trading Places: How the Shale Revolution Has Helped Keep the U.S. Trade Deficit in Check.” IHS Markit contends that the total 2017 U.S. merchandise trade deficit was nearly $250 billion lower than it would have been otherwise had the petroleum trade deficit remained at the 2007 level. To provide some context, the business information provider points out the trade deficit figures for 2007 and 2017 were $809 billion and $796 billion, respectively. It estimates that the U.S. petroleum trade deficit in dollars fell from approximately $320 billion to roughly $75 billion during the same period. Furthermore, it predicts that the U.S. petroleum trade balance will improve further – by approximately $50 billion – between 2017 and 2022. “The improved U.S. trade position in petroleum has been a counterbalancing force helping to keep the U.S. trade deficit in check over the past decade,” IHS Markit Vice Chairman Daniel Yergin said in a written statement emailed to Rigzone. “The resurgence of domestic oil and gas production has flipped the trade position of several products along the energy value chain on their heads, while that of other products, such as crude oil, have been significantly reduced.” “The United States moving from net imports to being a net petroleum exporter would be an IHStoric shift, something not achieved since at least the Truman administration,” added David White, senior vice president and division head for energy and chemicals with IHS Markit. “It speaks to the profound and continued impact that the U.S. shale boom has had in terms of investment, job creation, manufacturing, GDP and now trade.” Although IHS Markit presents a positive outlook for U.S. energy exports, it cautioned that recent trade friction between the U.S. and China “could introduce new risks and therefore alter the trajectory of global energy trade and energy demand.” The consultancy noted that China is a growth market for U.S. exports of liquefied natural gas, crude oil, natural gas liquids (NGL) and gas- and NGL-based chemicals. 

US oil firm's bid to drill for oil in Arctic hits snag: a lack of sea ice -  Plans to establish the first oil drilling operation in US Arctic waters have hit an ironic snag – a lack of sea ice caused by rapid warming in the region. Last month, the Trump administration approved the go-ahead of the Liberty project to extract oil from beneath the Beaufort Sea, off Alaska’s north coast. The drilling would be the first of its kind in federal waters in the Arctic and follows Trump’s reversal of an Obama-era ban on fossil fuel activity in the polar region. But in order to get to the oil, Hilcorp Energy, the Texas-based company behind the project, has to construct a temporary gravel island about five miles offshore so it can drill in shallow water. This nine-acre structure requires an expanse of landfast sea ice, or ice that forms each winter and attaches to the coast, which would then be covered in gravel and then concrete. However, a recent lack of shoreline ice has complicated Hilcorp’s plan to extract up to 70,000 barrels of oil a day, totaling around 150m barrels over two decades, from the site. A spokesman for the Bureau of Ocean Energy Management (BOEM), which oversees offshore leasing, said Hilcorp originally forecast it would take a year to construct the island. But this plan has now been revised due to thinning sea ice, as first reported by Alaska Public Media. “To safely transport gravel offshore in the Arctic, the ice along the route of the ice road must be of adequate thickness,” the BOEM spokesman said. “Over the last few years, that thickness has not developed until unusually late in the season.” . The region experienced its warmest winter on record earlier this year, with scientists and local communities reporting an unusually late freeze-over of the Arctic ocean. The Arctic contains year-round ice as well as fluctuating seasonal ice, which Hilcorp is relying upon for its drilling operation. In September, Nasa reported the annual minimum sea ice extent was the sixth lowest on record, with the Arctic sea ice area declining by about 13% a decade. 

Not Enough Ice to Drill the Arctic! Offshore Oil Drilling a 'Disaster Waiting to Happen' - Last month, the Trump administration approved the first offshore oil drilling development in federal Arctic waters, which environmentalists fear will ramp up carbon pollution that fuels climate change.But here's the ultimate irony: Hilcorp Alaska's project—which involves building a 9-acre artificial drilling island in the shallow waters of the Beaufort Sea—has been delayed because of the effects of climate change,Alaska Public Media reported.Hilcorp's Liberty Energy Project requires land-fast sea ice, or ice that's attached to the coastline each winter, as a foundation for the artificial island. The process involves pouring gravel through holes in the ice and through the water column to the sea floor and building the island structure from the bottom up.But the region's unusual warmth has caused ice to form later and break up earlier, Andy Mahoney, a sea ice researcher at the University of Alaska Fairbanks, explained to Alaska Public Media.That means that the ice isn't simply thick enough to transport the construction materials. "To safely transport gravel offshore in the Arctic, the ice along the route of the ice road must be of adequate thickness," a spokesman for the Bureau of Ocean Energy Management (BOEM), which oversees offshore leasing, told the Guardian. "Over the last few years, that thickness has not developed until unusually late in the season." Hilcorp initially thought it would only need one year to build the gravel island, but now it is saying it could take two years to complete the project, Alaska Public Media reported. In October, Interior Secretary Ryan Zinke touted that Hilcorp's oil and gas project was a part of his plan for "American energy dominance." But environmentalists worry that it will further stress the increasingly fragile region. The Arctic is warming at a rate twice as fast as the rest of the globe. In recent years, we've seen more ice melting each summer, and less ice forming each winter. As EcoWatch mentioned previously, this past Arctic winter was the warmest on record, and the high temperatures likely affected the thickness of the area's ice. Arctic sea ice hit its second-lowest winter peak in the 39-year satellite record, measuring 14.48 million square kilometers on March 17—or just 60,000 square kilometers larger than the 2017 record, and 1.16 million square kilometers smaller than the 1981-2010 average.

Oil pucks and pellets; Canada eyes new ways to move stranded crude - (Reuters) - Canada's biggest railroad says it is attracting interest from oil producers in its effort to move crude in solid, puck-like form, as clogged pipelines divert more oil to riskier rail transport. Congested pipelines have stranded much of Canada's crude in Alberta, driving discounts to record-high levels.  The latest blow to the sector landed on Thursday, when a U.S. court ruled construction must stop on TransCanada Corp's Keystone XL pipeline. But crude movement by rail is costly and prone to spills and sometimes disastrous accidents, such as the 2013 derailment at Lac Megantic, Quebec that killed dozens of people. Enter CN's patented Canapux product, which is solidified crude encased in plastic, named to evoke the country's most popular sport, hockey. The railroad argues that solid crude, never before commercially shipped in the world, can be transported more cheaply, efficiently and with less environmental risk than liquid crude in tank cars. Since it floats, Canapux is easier to recover from a spill into a water body.  Interest from crude producers, buyers and transport companies picked up after a Canadian court in August overturned Ottawa's approval for the Trans Mountain oil pipeline expansion, said James Cairns, CN's vice-president of petroleum and chemicals."There have been a lot more discussions about, 'How do we get this done?'" Cairns said. "Conversations are much more advanced than they were." CN is seeking commercial partners to build a pilot plant that will process 10,000 barrels per day of undiluted heavy crude into Canapux. The plant, to be built either at the Alberta crude storage hub around Edmonton or on an oil producer's site, is estimated to cost less than C$50 million ($37.8 million). It could be running as soon as 2020, Cairns said.CN's oil pucks would move in gondola cars, which weigh less than tank cars, allowing the railroad to load them with more crude. They also do not require diluent, an ultra-light oil that is mixed with crude when it is shipped in liquid form by rail or pipeline. As a result, Canapux' shipping costs would knock off nearly half the expense of rail transportation in liquid form, according to CN.  Other entrepreneurs have pursued similar ideas for several years, from semi-solid blobs to pellets.

Canada's Crude Problem: Lots of Oil With Nowhere to Go; Trapped in the country, Canadian oil has never been cheaper compared with U.S. prices - Canada, the world's fourth-largest producer of crude oil, missed out on a recent global recovery in energy prices, and is now taking it on the chin as prices fall. Crude prices in Canada briefly dropped below $16 a barrel on Friday, after a U.S. federal judge blocked construction of a key pipeline needed to transport oil from Alberta to Nebraska. That means Canadian crude is going for a fraction of supplies elsewhere, even as U.S. prices have tumbled 21% from last month's highs to about $60 a barrel . In October, Canadian crude traded at its largest-ever discount to U.S. oil of more than $51, according to S&P Global Platts. Because of the steep discount, Canadian producers are leaving 40 million Canadian dollars, or $30.65 million, a day on the table, according to an estimate from Alberta's finance department. Energy accounts for nearly 11% of the country's nominal GDP, according to government figures. Earlier this year, higher demand for fuel , coupled with lower production from major exporters, pushed oil prices to four-year highs. U.S. oil prices rose to $76 in early October, while Brent, the global benchmark, briefly surpassed $86. But congested pipelines and rails have prevented Canada from getting its oil to market, and analysts say storage facilities in Edmonton and Hardisty, Alberta, are brimming over with barrels. "At $85 Brent, it certainly didn't feel like a bull market in Calgary," The Canadian market was dealt a fresh blow Thursday, when a federal judge ruled that TransCanada Corp. couldn't advance its Keystone XL pipeline without a supplemental environmental review. Completed, the pipeline would carry up to 830,000 barrels a day to Nebraska, where it could then be carried to the Gulf Coast. A TransCanada spokesman said the company is reviewing Thursday's ruling and reiterated the company's support for the project. Meanwhile, Canada is producing more oil than ever. According to the International Energy Agency, Canadian production climbed to a record 5.3 million barrels a day in August. Many producers ramped up crude output as prices rose, only to find that the infrastructure needed to move it couldn't keep up. "If everybody grows, then everybody needs a new pipeline," said Rusty Braziel, a former trader and principal consultant at RBN Energy LLC. "Growth has just come on so much more quickly than most people were predicting."

Canadian Oil Patch Loses Patience with Country's Lack of Support --- The Canadian oil patch is losing patience with the country’s lack of support for the industry. The plunge in global crude prices is being exacerbated in Canada by a lack of pipeline capacity, sending the country’s oil prices to a near record discount to the U.S. and energy stocks reeling. Gas producers can’t even catch a break: while U.S. gas has surged about 19 percent in the past week amid an expected cold stretch, Canadian prices have actually dropped 14 percent. “Globally, we’ve politicized energy so much," Darren Gee, chief executive officer of Peyto Exploration & Development Corp., a Calgary-based gas producer, said in an interview at Bloomberg’s Toronto office Wednesday. Environmental and regulatory concerns have added an “entire layer of risk that people just don’t know how to assess.” Gee joins other executives and investors lamenting the country’s inability to get its energy to global markets. The Keystone XL and Trans Mountain oil pipeline projects are facing fresh environmental scrutiny while gas exports are largely handled by only one pipeline company, TransCanada Corp., said Gee. An analyst with one of the largest foreign holders of Canadian energy stocks, Capital Group Cos., warned in a letter to Prime Minister Justin Trudeau recently that investors and companies will continue to avoid the Canadian energy sector unless more is done to improve market access.  Canada’s main energy index is down 11 percent over the past 12 months compared with a 3.4 percent drop for U.S. energy stocks. While the government bought the Trans Mountain project in an effort to get more oil flowing to the Pacific coast, Gee holds out little hope of progress. Trudeau’s government has “absolutely no interest in having that pipeline built or expanding this basin," Gee said.The government’s seeming indifference to the patch’s plight is likely to foment political friction in Alberta, he said. “I’m quite afraid that we’re going to see a separatist agenda in the west and a lot of separatist movement because of the energy industry. I’m afraid for Canada for that reason," Gee added. 

In race to fill LNG supply gap, project goalposts have changed - The race is on for liquefied natural gas (LNG) producers to build export terminals as demand soars, but the criteria for financing such mega-projects have shifted as traditional relationships with LNG consumers have begun to disintegrate. Royal Dutch Shell’s final investment decision (FID) taken last month for a $30 billion LNG Canada project was a shot in the arm for the LNG industry, which is emerging from almost three years of low prices and investment. As a vote of confidence in the LNG market, Shell’s decision is expected to get the ball rolling on a wave of approvals for dozens of similar projects around the world that have been planned for years but not yet finalized. But the FID represented a different financing structure, unreliant on commitments from large buyers as previous mega-projects had been, such as the recently commissioned Ichthys facility in Australia or the U.S. Sabine Pass plant. Instead, Shell will absorb the cost into its budget and will effectively worry about the ultimate buyers later - as one of the largest corporate purchasers of LNG in the world, it can absorb the new volumes into its global portfolio. Demand for LNG is there - it is expected almost to double to 550 million tonnes a year (mtpa) by 2030, leaving room for plenty more export terminals despite an influx of fresh supply from new, mostly U.S., terminals. But projects have struggled to find offtakers as the world’s biggest buyers in Japan and South Korea seek nimbler terms while others such as India and Pakistan are less creditworthy. “I don’t know what the buyers are waiting for because the golden opportunity to sign up for deals was yesterday,”. Aside from 50 mtpa of supply due from U.S. projects under construction, 17 new U.S. terminals like Texas LNG need FIDs. Other plans dot the world from Qatar’s expansion to plants in Russia and Mozambique as well as Southeast Asia. HEADACHES Of all these projects, only a handful in the United States will ultimately be built and for others, the ability for the operator to absorb LNG into its portfolio will be key. “The projects that we might see now are the ones that don’t rely on offtake agreements,” said Frank Konertz, LNG analyst at S&P Global. Irrespective of price, long-term offtake commitments are risky today because the global LNG market is undergoing fundamental changes as it grows and increases liquidity. It needs to solve quandaries such as the pricing mechanism for LNG, traditionally linked to oil, and absorb new technology that shifts the commercial calculations of trading the gas.

Fracking firm boss says it didn't expect to cause such serious quakes- A senior executive at the fracking company Cuadrilla privately said this summer it did not expect to cause earthquakes that would be serious enough to force it to halt operations. But despite that confidence, the company has triggered 37 minor quakessince it started fracking for gas at its Preston New Road site in Lancashire three weeks ago. Two of those have been powerful enough to exceed a regulatory threshold that requires fracking to stop, and on a third occasion the company voluntarily ceased operations when it neared the limit. Cuadrilla has said such tremors are to be expected from fracking, which involves pumping water, sand and chemicals 2km underground at high pressure. Under government regulations, fracking must stop if a 0.5-magnitude earthquake is registered. But during a tour of the site in June, Matthew Lambert, the government and public affairs director at Cuadrilla, said: “Because we are managing that risk I don’t really accept that we are likely to cause seismicity above that level [an apparent reference to 0.5-magnitude] and we will not be causing seismicity which will damage property.” He described the system of monitoring seismicity as “highly regulated” and said the company had to “manage that risk” of causing tremors, a recording of the discussions shows. The Green party said the comments, made months before earthquakes that breached the regulatory limit, showed Cuadrilla was “obviously in way over their heads”. Jonathan Bartley, the co-leader of the Green party, said: “They were unaware they would cause tremors anywhere near this strong, and they evidently don’t know how to stop them.”

Tory ministers meet fracking giants almost once a month –  Tory ministers have met fracking giants almost once a month, damning new research reveals today. Labour accused the government of working "hand-in-hand with the fracking industry" after exposing the huge list of official contacts.  Ministers from six departments have held 31 meetings with fracking industry representatives in the last three years, according to analysis of government records by Labour. That included 13 meetings with Indeos, five with UK Onshore Oil and Gas and five with Cuadrilla, which temporarily halted fracking in Lancashire last month amid a string of earth tremors. Shadow Business Secretary Rebecca Long Bailey said: “It’s a scandal that the Government is determined to force through fracking at any cost and against the wishes of local communities.“The Tories are working hand-in-hand with the fracking industry while ignoring all the evidence and failing to give a fair hearing to local people affected. “Fracking has got to stop and the next Labour government will ban it.” The meetings were disclosed in numerous transparency files published by the government and assembled by Labour. Labour claimed ministers had "not had a single meeting" with anti-fracking campaigners from the affected areas in the UK. But the Department for Business, Energy and Industrial Strategy insisted there had been at least one meeting. A spokesman said: “Ministers and officials regularly meet with representatives from across the energy industry.

Anti-fracking seniors armed with tea and fruit cake risk jail with protest - When it comes to determined eco-revolutionaries, there are surely Nan better than these unlikely white-haired warriors. Armed with flagons of tea and fruit cake, and dressed in flowing white robes, they are fighting for their grandchildren’s future. And their foes are the frackers of shale gas company Cuadrilla. The grans in Suffragette outfits are waging war at a site in Lancashire where drilling caused 34 mini earthquakes in October. And their message to Cuadrilla is: “We’re not for shale.” The quakes – registering up to 1.1 on the Richter scale – have only served to strengthen resolve among the battling grans. Many of them have been campaigning to stop fracking near the village of Little Plumpton ever since a field was earmarked for it in 2014. Since then they’ve laid down in roads to stop lorries, with one 84-year-old protestor claiming to have been manhandled by police. Their leader has even been threatened with prison and they’ve been branded alcoholics and “unemployed anarchists”. 

Anti-fracking activists arrested after gluing themselves to government's energy headquarters - Over twenty people have been arrested after anti-fracking protesters glued themselves to the entrance of the government's Energy department offices.Extinction Rebellion campaigners blockaded the Business Energy & Industrial Strategy (BEIS) headquarters in Westminster today in protest at the government's perceived complicity in today's "ecological crisis".Some 22 protesters have so far been arrested, according to the group, with more expected after they blocked the public highway and prevented department staff from accessing the building. Some demonstrators glued their hands to the doors of the building in Victoria Street, near Parliament Square, in a deliberate attempt to be arrested, according to some reports. At its latest update the Met said six people were arrested on suspicion of criminal damage and two for obstructing the highway - but officers are yet to provide an updated number.One protester climbed the revolving doors to the building and wrote the words "frack off", while others displayed campaign umbrellas reading "rebel for life" and "tell the truth".The group said one of its members, Simon Bramwell, an outdoors-man and bush-craft instructor, was one of those arrested for spraying the windows with nonpermanent paint, including their symbol of ah hour-glass..Mr Bramwell gave a video interview as he prepared for the protest, knowing he would be arrested, but the thought of "what we're heading for" scared him more.He said: "We're at a bit of impasse at the moment that it's really really all or bust at the moment."My primary fear is that my mum might die while I'm inside. I don't like having my freedom taken away from me. Ruth Jarman of the Christian Climate Action group was said to be the first to be arrested, and another was Father Martin Newell, 50, a long-time Catholic activist who has taken part in civil disobedience actions around the globe.

‘I’m Putting My Life On Hold’: 22 Climate Activists Arrested - Extinction Rebellion, which launched itself into the public consciousness with a civil disobedience action outside London's Parliament Square a little under two weeks ago, coordinated another action Monday in which activists blocked the entrance to the Department for Business, Energy and Industrial Strategy (BEIS),The Guardian reported. Protesters super-glued their hands to the entry gates to the staff door and lay in the streets to block traffic outside the building."The IPCC report in October gave us six to 12 years, and this is known to be a conservative report. If we don't respond with a war-style effort now we are all fucked, all of us. My heart is breaking and I've got to do something, and I'm putting my life on hold," protester Bell Selkie told The Guardian.Selkie, a 48-year-old farmer from Wales, locked and glued herself to the doors of the building, said climate change had had a clear impact on her harvests.One protester used wash-off spray chalk to write "frack off" above the main entrance to the building. The UK's Conservative government has approved two controversial fracking wells in Northwest England.Extinction Rebellion said 22 people were arrested at Monday's action, and police confirmed that at least eight had been detained, BBC News reported. Everyone has since been released, according to Extinction Rebellion's Twitter feed. Protesters said Monday's action was the kick-off to a week demonstrations that will culminate with what they are calling "Rebellion Day" on Saturday.

Big Oil sees 'huge potential' in LNG — but warns it is still too expensive for consumers -- The liquefied natural gas (LNG) market has massive potential, leading energy executives said Monday, but warned the commodity is still too expensive for many consumers around the world. It comes at a time when the race is on for LNG producers to build export terminals amid soaring demand for the commodity. Speaking at an industry event at the ADIPEC oil summit in Abu Dhabi, Claudio Descalzi, CEO of Italian oil and gas giant Eni, said: "LNG has huge potential.""But one of the problems with it, one of its fragile points, is the price. It is very expensive."The global LNG market is currently going through of a flurry of fundamental changes, as demand continues to grow and market liquidity increases.But, the demand for LNG is evident — it is reportedly expected to nearly double to 550 million tonnes a year by 2030.One of the key reasons for LNG's fast-growing demand, according to BP CEO Bob Dudley, is the U.S. sourcing an "abundance" of gas supplies in recent years.Dudley also said he agreed with Eni's Descalzi regarding the cost of LNG too, saying it remained an issue for consumers worldwide."It has really become famous for how expensive it is" Dudley said Monday, adding companies had typically spent a lot of money on LNG investment projects without getting a great deal in return. "One of the issues shaping the industry is some countries are going to have to choose between low price coal and low carbon LNG. That problem has not been solved," Dudley said.

Here Comes Mother Nature As Prices Surge On Projected Chilly Temperatures --Highlights of the Natural Gas Summary and Outlook for the week ending November 9, 2018 follow. The full report is available at the link below.

  • Price Action: The December contract rose 43.5 cents (13.2%) to $3.719 on a 38.7 cent range ($3.824/$3.437).
  • Price Outlook: The market gapped higher on a massively bullish weather update indicating well below normal temperatures in the week ending November 16. Demand ended the week near 90 bcf and will head even higher if the weather forecasts prove accurate, possibly reaching 100 bcf next week. From these price levels, the market is increasingly vulnerable to pullbacks on moderating temperature forecasts. However, as long as forecasts in general remain below normal, prices are headed higher.  CFTC data indicated a 12,851 contract increase in the managed money net long position as longs added and shorts covered This is the largest net long position since February 13. This is the largest long position since June 12. Total open interest rose 103,989 to 3.903 million as of November 06. Aggregated CME futures open interest rose to 1.521 million as of November 09. The current weather forecast is now cooler than 9 of the last 10 years. Pipeline data indicates total flows to Cheniere’s Sabine Pass export facility were at 3.3 bcf. This flow volume suggests feed gas is entering Train 5. Cove Point is net exporting 0.8 bcf.
  • Weekly Storage: US working gas storage for the week ending November 2 indicated an injection of +65 bcf. Working gas inventories rose to 3,208 bcf. Current inventories fall (582) bcf (-15.4%) below last year and fall (617) bcf (-16.1%) below the 5-year average.
  • Supply Trends: Total supply rose 0.1 bcf/d to 81.5 bcf/d. US production rose. Canadian imports fell. LNG imports rose. LNG exports rose. Mexican exports fell. The US Baker Hughes rig count rose +14. Oil activity increased +12. Natural gas activity increased +2. The total US rig count now stands at 1,081 .The Canadian rig count fell (2) to 196. Thus, the total North American rig count rose +12 to 1,277 and now exceeds last year by +167. The higher efficiency US horizontal rig count rose +6 to 935 and rises +159 above last year.
  • Demand Trends: Total demand fell (1.1) bcf/d to +72.6 bcf/d. Power demand fell. Industrial demand fell. Res/Comm demand fell. Electricity demand rose +117 gigawatt-hrs to 68,752 which trails last year by (1,301) (-1.9%) and trails the 5-year average by (516)(-0.7%%).
  • Nuclear Generation: Nuclear generation fell (646)MW in the reference week to 75,812 MW. This is (8,368) MW lower than last year and (5,257) MW lower than the 5-year average. Recent output was at 81,543 MW.
  • The heating season has begun. With a forecast through November 23 the 2018/19 total cooling index is at (378) compared to (340) for 2017/18, (177) for 2016/17, (218) for 2015/16, (387) for 2014/15, (347) for 2013/14, (362) for 2012/13 and (315) for 2011/12.

Total U.S. natural gas stocks end refill season at lowest level in 13 years --Working natural gas in underground storage in the Lower 48 states as of October 31, 2018, totaled 3,208 billion cubic feet (Bcf), according to interpolated data from EIA’s Weekly Natural Gas Storage Report released on November 8. Inventory levels for the Lower 48 states and in each of the U.S. natural gas regions ended the refill season at their lowest levels since October 2005, and these levels were considerably lower than their previous five-year averages. Although the natural gas storage injection, or refill, season is traditionally defined as April 1 through October 31, additional injections may occur into November. The South Central region saw the largest margin between the five-year range and working natural gas storage levels at the end of October, reaching 932 Bcf, 159 Bcf (15%) lower than the previous five-year range. The Pacific saw the largest percent difference between the end-of-season levels and the five-year range, at 264 Bcf, or 54 Bcf (17%) lower. Other regions were 3% to 7% lower than the previous five-year range. A low starting inventory level and below-average net injections of natural gas into storage contributed to working natural gas stocks ending the refill season at this relatively low level. Lower-than-average temperatures in April 2018 resulted in uncharacteristic, continued withdrawals from storage during the month. Working natural gas stocks ended the withdrawal season this year on March 31 at 1,360 Bcf—the fourth-lowest level reported since 2005.. Although net injections recovered in the following months, the net increases in working natural gas for the injection season were lower than the five-year average. From April 1 through October 31, 2018, EIA estimates that net injections totaled 1,848 Bcf. Injections were 269 Bcf (13%) lower than the five-year average, despite being 97 Bcf (6%) higher than injections last year. This level was the fourth-lowest net injected volume for the refill season since 2005.

Natural gas stocks end refill season lower than the five-year minimum in all regions - Working natural gas in storage in the Lower 48 states as of October 31 totaled 3,208 billion cubic feet (Bcf), according to interpolated data from EIA’s Weekly Natural Gas Storage Report released November 8. Inventories as of October 31 were 598 Bcf (16%) lower than the five-year (2013–17) end-of-October average and 569 Bcf (15%) lower than last year. This level is the lowest end-of-refill season level for working gas stocks since 2005, and inventory levels in all regions were lower than their five-year minimums. Although the natural gas storage injection season is traditionally defined as April 1 through October 31, injections often occur into November. A low starting inventory level and below-average net injections of natural gas into storage both contributed to working natural gas stocks ending the refill season at this relatively low level. Working natural gas stocks ended the withdrawal season this year on March 31 at 1,360 Bcf—the fourth-lowest level reported since 2005. From April 1 through October 31, 2018, EIA estimates that net injections totaled 1,848 Bcf. Injections were 269 Bcf (13%) lower than the five-year average, despite being 97 Bcf (6%) higher than injections last year. This level was the fourth-lowest net injected volume for the refill season since 2005. The years that had lower net injections volumes—2016 (1,516 Bcf), 2017 (1,742 Bcf), and 2012 (1,456 Bcf)—were the only years where working gas levels were higher than 2,300 Bcf at the beginning of the refill season.  Lower-than-average temperatures in April 2018 resulted in uncharacteristic, continued withdrawals from storage during the month. Although net injections recovered in the following months, the net increases in working natural gas for the injection season were lower than the five-year average in almost all regions in the Lower 48 states. The South Central and Pacific regions posted the largest differences. In the Pacific region, net injections into storage fell 33 Bcf (26%) lower than the five-year average. In the South Central region, reported net injections totaled 201 Bcf (39%) lower than the five-year average, with about 85% of the shortfall occurring in the nonsalt facilities in the region. In the East and Midwest regions, net injections were each 18 Bcf lower than the five-year average (3%). The only region that matched its five-year average was the Mountain region.

Colder Weekend Model Trends And Continued Cash Strength Keep Natural Gas Incredibly Strong - It was another strong day in the natural gas complex, as though the December contract settled significantly off its highs a colder European weather model run later in the day sent prices right back up over the $3.9 level. The March contract was the strongest on the day as traders moved bullish risk further along the curve. We identified this early in the day and warned clients in our Note of the Day that any AM pullback was unlikely to sustain and $3.75 support would be firm. Our Note concluded, "...[t]he market has tightened on recent cold, and we are not sure weaker Week 2 cold trends can break $3.9 again yet, but GWDD adds should at least add support near $3.75." We ended up being able to break $3.9 again this afternoon after double-testing $3.75. This came after our Slightly Bullish AM Update where we saw bullish weather trends over the weekend likely to keep prices bid today. Prices did in fact get right back up to the $3.9 level this afternoon on a bullish European ensemble model run following a $3.75 test on warmer American model guidance. This came despite modest warmer trends earlier in the day on some medium-range model guidance. The natural gas market continues to remain incredibly weather-sensitive, with any risks of increased cold in the long-range quickly spiking prices higher. Strong cash prices have helped too, as they took another leg higher today with cold peaking Wednesday. Since the settle prices have shot higher, too, moving in much closer to where cash prices traded on the day.

November 15 Natural Gas Storage Report: Final Injection -Last week, the number of total degree-days (TDDs) jumped by around 35% w-o-w, as heating demand went up across the U.S. – particularly, in the Central and Midwest parts of the country. However, we estimate that total energy demand (as measured in total degree-days – TDDs) was some 12% below last year’s level. The latest numerical weather prediction models are showing above normal HDDs and TDDs over the next 15 days (November 13-November 28). Consumption-wise, the latest weather models are bullish in absolute terms, but not as bullish as previously. Total demand is expected to average 97.0 bcf/d over the next 15 days (some 20% above 5-year average), supported (in part) by strong exports – specifically, into Mexico – but also by strong LNG sales. Natural gas consumption is also supported by a number of non-degree-day factors such as higher nuclear outages. As of Tuesday, there were a total of15,000 MW of nuclear power generation offline (-700 MW from Monday, but +9% vs. 5-year average). Although the deviation of nuclear outages from the historical norm has been moderating lately, the absolute figures are still high.   Other non-degree-day factors, such as coal-to-gas switching is no longer providing any additional boost to consumption.  Overall, while total demand remains strong, its deviation from historical norm is declining. We currently estimate that it will drop to 8% by November 23, before growing again (see the chart below). At the same time, we estimate that total natural gas supply will remain at no less than some 16% above 5-year average over the next 30 days (at least).  U.S. Energy Information Administration should report a smaller change in natural gas storage this week compared to the week prior. We anticipate to see an injection of 30 bcf (6 bcf smaller than the comparable figure in the ICE’s latest report for the EIW-US EIA Financial Weekly Index, 43 bcf larger than a year ago and 11 bcf larger vs. 5-year average for this time of the year). The natural gas rally from mid-September and especially from October 31 is almost entirely built on very bullish expectations. Indeed, we currently expect annual storage deficit to expand by 136 bcf over the next four weeks (five EIA reports). Our projection for the next three reports is bullish compared to ICE figures (as has been the case from Nov. 1 - see the chart below). At the same time, however, our EOS index is mostly in line with market expectations. As of this morning, it stood at 1,397 bcf (13 bcf below ICE figures and 43 bcf above the comparable results from March 2018).

EIA Oct '18 Drilling Report: Shale Gas Output Up 1 Bcf/d – Again - The U.S. Energy Information Administration’s (EIA) monthly “Drilling Productivity Report” (DPR) said that in October the country’s seven major shale plays would produce an amazing, all-time high of 73 billion cubic feet per day (Bcf/d) of natural gas production (see EIA Sep ’18 Drilling Report: Shale Output Flies Past 73 Bcf/d). Last month, EIA said that in November shale gas output would rise a dramatic 1 Bcf/d to 74 Bcf/d (see EIA Oct ’18 Drilling Report: Shale Gas Output Up Another 1 Bcf/d). And now, it’s happened again! EIA issued the the latest DPR yesterday and said that in December, shale gas output will go up ANOTHER 1 Bcf/d, to 75 Bcf/d.In addition to new all-time highs for natural gas production, shale oil production will also hit a new, all-time high, of 7.9 million barrels per day.Month after month production in the Marcellus/Utica region, called “Appalachia” in the report, goes up roughly 1/3 Bcf/d. And yes, it happens again for December. EIA predicts Appalachia production will hit 30.4 Bcf/d–a full 40% of all shale gas production in the U.S.–up 403 million cubic feet per day (far more than 1/3 Bcf) from last month. Again, we’re speechless. Below are the three charts the EIA doesn’t include in the official PDF of the report (for whatever reason). We think these are the three best charts they issue each month. Note the third chart above, DUCs (Drilled but UnCompleted wells). A DUC happens when drillers put the initial hole in the ground, including the lateral, but they don’t finish the job by fracking the well and bringing it online into production.In our region the DUC number went down by 19 (down 22 the month before), indicating we’re drilling fewer new wells and completing and bringing online already-drilled wells instead. We’re burning off our DUC inventory. That’s been a trend for a number of months.

Natural Gas Goes Limit Up - For the second time in 2018 the prompt month natural gas contract went 30 cents limit up as bullish weather risks combined with continued fear about low storage levels to shoot the winter natural gas complex higher. It was the March contract that made the largest move higher today, as it was the original contract to go limit up this morning. It settled up over 40 cents on the day. This was not particularly a surprise to our subscribers, as in our Afternoon Update yesterday and our Morning Update again this morning we reiterated slightly bullish sentiment given continued cold weather risks and low storage fears. Our sentiment was "Slightly Bullish" as GWDD additions were not particularly impressive, but $4.1 was still one of our targets eyed for the day. Our intraday Note of the Day warned as well that gas prices were likely to set a new high later in the day following a mid-morning pullback. These trends came with only modest overnight GWDD additions. However, storage levels remain incredibly low, making the market uniquely sensitive to any colder weather trends, and long-range blocking signals continue to indicate cold is at least likely to get locked in across the Northeast. Other balance dynamics are not helping the bear natural gas case either, with LNG exports continuing to sit near highs. Today we also published our Seasonal Trader Report with our 5-month GWDD forecast for clients, as well as hosting our live subscriber-only chat on Enelyst to discuss the latest dynamics in the natural gas market. Of note was the development of a -NAO block downstream, which we noted would be crucial for determining how weather trends into late November and accordingly how gas prices move (image GEFS model spread forecast courtesy of the Climate Prediction Center/NOAA). 

Lagging Gas Storage Finally Triggers Market Reaction- With only a few weeks until the official end of the natural gas storage injection season, the reality of the low level of supplies has suddenly awoken gas prices from their months-long slumber. While this should not be a surprise, the fact it has taken nearly all year for this to happen has been the surprise. The apparent disconnect between weak gas prices and low weekly storage injections may be a signal that there are shifts underway in the natural gas market not well understood by the participants. In particular, it may be the traders who disproportionately help establish gas futures prices that are failing to understand the gas market’s new subtilties. Spot and future natural gas prices reflect the views of producers, consumers and speculators about the health and direction of the market. When gas prices are very high, as they were during the cold weather experienced at year-end 2017, it was a signal that consumers and speculators believed the sharp storage drawdowns meant that producers needed much higher gas prices as an incentive to develop additional supplies, and keeping us from freezing in the dark! A blast of early warm weather dispelled that view quickly. Gas prices hit rock bottom Feb. 15 this year at $2.49 per Mcf.   Since then, they have struggled to climb above $3/Mcf, until now. Natural gas production for September is estimated to be 13 percent above a year ago, providing comfort to consumers. In addition, the number of drilled by uncompleted wells has been rising throughout 2018, partially due to the pipeline congestion in the Permian Basin that has capped the growth in oil and gas output. DUCs have also grown in more gas-prone regions such as the Eagle Ford and Haynesville. While growing DUCs in the Permian draw the attention of the oil market, the basin is a significant producer of associated natural gas, which has bedeviled the gas market this year. Overall, the total number of DUCs since the start of 2018 is up about 15 percent as of September. Rising DUCs provides a measure of comfort for consumers who see them as an assurance of future gas supply. Another trend that has may have lulled the gas market into its price slumber has been the lack of growth in electricity consumption, as the public has become more efficient in its use of power. Since 2010, electricity generated by utilities has been in a slow, but steady, decline.    A last ingredient in the natural gas price puzzle is the internal shifts underway in the gas market. The major disruption in the market in recent years has been the emergence of the Marcellus/Utica supplies, now the nation’s largest gas basin. This low-cost gas was trapped for years due to a lack of sufficient demand coupled with insufficient pipeline takeaway capacity to move the gas to other regional markets. . Now, this cheap gas is flowing in all directions, meaning it may be having more of an impact on Henry Hub spot prices than people recognize.

Natural gas prices rocket higher on cold weather forecast, jumping as much 20 percent - Natural gas prices surged to a more than four-year high in panicky and volatile trading Wednesday, after the latest cold weather forecasts raised fears that the U.S. is heading for a potentially colder-than-expected winter with too little gas supply. Futures for December settled up 18 percent at $4.837 per mmBtus but had been up as much as 20 percent in an early morning rush of panic buying. Prices also rose across futures contracts that that would cover the winter months through March, indicating that prices could be pressured all winter by dwindling supply, which is at a 15-year low for this time of year. CME Group said trading in natural gas futures hit an all time daily volume record of more than 1.2 million contracts, as the price had its biggest one day jump in years. The price for the front month futures for Decemeber is now the highest since Feb. 26, 2014. "Overnight, there was another round of cold trends, and that kind of lit the fuse and everything exploded," said Jacob Meisel, chief weather analyst at Bespoke Weather Services. "Some of the later overnight weather models trended much colder...the six to 10 and 11 to 15 day [forecasts] both saw rather significant cold trends. It wasn't like we were looking at periods of very major sustained warming. We've just been continually trending colder and colder." Meisel said the price could get to $7 or $8 per mmBtus, if the months of December and January are very cold. "This looks like a capitulation move today, but if cold weather really takes off, the sky is the limit," said Meisel. Just a few weeks ago, the market was expecting warmer weather for November and natural gas was trading at less than $3 in September. "This cold is widespread and goes deep into the heart of Texas and across the Midwest and Northeast,"  As forecasts have been adjusted for colder temperatures, natural gas prices have been on a tear, and are now up 49 percent since the start of November. Government data last week showed the amount of natural gas in U.S. storage facilities rose by 65 billion cubic feet to 3.208 trillion cubic feet, 15 percent below the year-ago level and 16 percent below the five-year average. That was also the lowest amount of gas in storage during a first week of November, since 2003, according to Kilduff.

Natural Gas Goes Ballistic - It was a natural gas trading day for the record books, as the December natural gas contract shot around 18% higher on the day for the largest move since February 2003.   For the third day in a row the March contract led the day higher, though to a lesser extent today.   Colder forecasts were a large culprit for this most recent move as well. In our AM Update we noted significant GWDD additions in the medium-range and long-range. This appeared to lead to a significant stop-out of a short position just before 7 AM Eastern this morning that sent prices soaring.   Accordingly, by the time our Morning Update was out prices had already soared over $4.9 and had become to come back. We highlighted that from these levels risks were mixed through the day, and noted that while the market seemed "untradeable" intraday given recent volatility we would look for "some weakness off the cash market later" which verified well through the morning session. We also noted significant bullish trends across all major weather models and indicators we tracked that seemed to justify the move, and warned that 12z model guidance had continued bullish risks as well.  Sure enough, the 12z GEFS trended significantly colder again and shot the December contract up near highs (images courtesy of Tropical Tidbits).  With storage levels so low and weather driving so much demand in winter, weather is taking front and center in the natural gas market here. However, traders are still awaiting tomorrow's EIA print, which should show the last storage injection of the season as GWDDs only modestly ticked up last week.   Many traders will look past tomorrow's injection as they prepare for what could be a withdrawal approaching triple digits next week. Yet tomorrow's injection may be the first clue we get of whether a triple digit withdrawal may be in play, though we note the market has markedly tightened this week on significant cold. This has helped power burns increase quite a bit today compared to past years. 

U.S. natural gas prices leap to four-year high amid low stocks (Reuters) - U.S. natural gas prices have leapt to the highest level for more than four years as the market tries to conserve scarce gas stocks in the face of unusually cold weather settling across much of the country.Futures prices for gas delivered at Henry Hub in January 2019 have surged to more than $4.50 per million British thermal units, up from just $3.28 at the start of the month, and the highest since July 2014.Gas stocks are at the lowest seasonal level for 15 years and around 15-16 percent lower than at the same point last year and the five-year average, according to data from the U.S. Energy Information Administration.While most forecasters have been predicting a relatively mild winter across the northern United States because of the El Niño developing over the Pacific, temperatures have recently fallen far below the seasonal average. Until the end of the first week in November, temperatures had been slightly milder than the long-run average and in line with the start of winter in 2015, 2016 and 2017.Since then, however, temperatures have plunged well below normal across most of the lower 48 states pushing cumulative heating demand up sharply ( than average weather is expected to persist across most northern and eastern population centres for the next week according to the U.S. government's Climate Prediction Center.If the forecast is correct, this will be the first colder than average start for over three years and increase the pressure on already-stretched gas supplies.

Cold US Weather Lifts Spot Natural Gas Prices To Nearly $5 -- Cold weather blanketing much of the U.S. this week boosted spot natural gas prices for Nov. 15 to their highest since January in several regions, while natural gas futures slid 10% as investors took profits after a rally that had lifted them to their highest levels in nearly four years.Front-month gas futures rose as high as $4.929 per million British thermal units (mmBtu) on Nov. 14, their highest since February 2014.Traders said the cold this week would force utilities to start withdrawing gas from storage caverns that are already around 16 percent below normal for this time of year, prompting concerns of possible gas shortages in some parts of the country later this winter. Next-day prices for Nov. 15, meanwhile, rose to their highest since January at the Henry Hub benchmark in Louisiana, Dominion South in Pennsylvania and Chicago citygate. Next-day gas at the Henry Hub rose to $4.57/mmBtu, their highest since January for the fifth day in a row, due to cold weather nationally and as demand at nearby LNG export terminals rose to new highs with the start of new liquefaction trains.Cheniere Energy Inc. (AMEX: LNG) expects new liquefaction trains at its LNG export terminals in Sabine Pass in Louisiana and Corpus Christi in Texas to enter service in the near future.

US natural gas storage levels building - Working gas in underground storage across the US Lower 48 was 3.2 tcf as of Nov. 9, up 39 bcf from the previous week, the US Energy Information Administration reported in its Weekly Gas Storage Report.Stocks were 528 bcf less than for the same period last year and 601 bcf below the 5-year average of 3.8 tcf. Separately, EIA has forecast dry gas production will average a record 83.2 bcfd in 2018 and climb to 89.6 bcfd in 2019.

EIA Storage Report Misses Bearish as Weather-Focused Natural Gas Futures Swing Lower - The Energy Information Administration (EIA) reported a somewhat larger than expected 39 Bcf injection into U.S. natural gas stocks Thursday, giving bears further encouragement with a volatile futures market already pulling back sharply on forecasts. With natural gas futures on a run of extreme volatility amid concerns over historically low inventories and a robust start to the heating season, Thursday’s report did not appear to generate any immediate momentum in either direction. Over the last few days, forecast changes have coincided with big price moves as the market has keyed in on the weather outlook, including a 73.6 cent rally during the previous session. Warmer trends overnight heading into Thursday’s session had the December Nymex contract trading about 55 cents lower when EIA’s report crossed trading desks at 10:30 a.m. ET. In the minutes following the report, the prompt month continued to trade around $4.240-$4.300/MMBtu. By 11 a.m. ET, the December contract had slid to around $4.133, down 70.4 cents from Wednesday’s settle. The 39 Bcf build for the week ended Nov. 9 compares to a 13 Bcf withdrawal recorded a year ago, while the five-year average is a 19 Bcf injection. Prior to Thursday’s report, major surveys had pointed to a build in the mid- to low-30s Bcf, with estimates ranging from 28 Bcf to 42 Bcf. Intercontinental Exchange EIA financial weekly index futures had settled Wednesday at a build of 36 Bcf. Prior to release of the report, Bespoke Weather Services said it had viewed risks as skewed lower. “The market consensus seemed a bit lower too, so we see this number as still slightly bearish coming in above the consensus for a second week,” the firm said. “The build in the East was a bit of surprise, but otherwise the large salt build fit our expectations as we raced to fill storage ahead of the coming winter season. Total Lower 48 working gas in underground storage stood at 3,247 Bcf as of Nov. 9, 528 Bcf (14.0%) below last year and 601 Bcf (15.6%) below the five-year average. By region, the South Central injected 25 Bcf for the week, including 19 Bcf into salt and 6 Bcf into nonsalt. The Midwest saw an 11 Bcf injection, while 4 Bcf was refilled in the East for the week. The Pacific posted a 1 Bcf net build, while Mountain region saw a net withdrawal of 1 Bcf, according to EIA. 

Natural Gas Gives It All Back -- After rocketing higher in a wild short-covering rally that was the finale of a short H/J spread explosion, the prompt month December natural gas contract shot back over 16% lower today to settle below Tuesday's close, thereby giving back everything gained yesterday and then some. In our intraday Note we outlined that weakness focused most in the winter strip indicated that if 12z model guidance sustained GWDD losses from overnight weather models further downside was possible despite the December contract already being down 70 cents. Sure enough, that proved accurate as the December contract settled even lower and the later winter contracts led the way further down. It was a wicked reversal in the Z/F December/January contract spread which had recently approached its historical range. The move started overnight on some warmer weather model guidance that we confirmed in our AM Update, where we outlined "sellers should begin to return" and we see "increasing bearish risks with gas prices above 4.5..." Admittedly, our confidence was very low in the report, and we saw a bounce risk on any major colder trends in 12z model guidance, but it was clear sizable 0z GWDD losses would increase selling through the day. We also outlined to look for cash weakness to extend any sell-off, which occurred this AM into the EIA print. Yet again the EIA print missed just 3 bcf to our estimate, despite a number of other estimates clustered lower in the mid 20s to low 30s. The EIA announced that in fact 39 bcf of gas had been injected last week, compared to our expectation of 36 bcf. In our EIA Rapid Release right after the data report we warned clients we saw this number as "Slightly Bearish," as even though it was not far from our expectations it confirmed a rather loose market on a day where prices were already retracing significantly. Of course, next week's EIA print will show a lot more about balances when real cold arrives, but today's print certainly caught many off-guard. Then afternoon model guidance confirmed some of the temporary warmer trends that overnight guidance showed, seemingly helping send gas prices another leg lower. The warmer 6-10 Day Climate Prediction Center forecast today shows that well. We had been looking for these slightly warmer trends for a little while; in yesterday's Afternoon Update we highlighted that "...any weakening of the -NAO would allow the far more mild Pacific flow to take over..." which could finally reverse gas prices, and that is what seemed to happen on overnight model guidance. Still, the extent of the reversal was simply massive. 

Cold Early December Risks Send Gas Flying Again - The volatility appears here to stay in the natural gas complex, as the December contract shot 6% higher and continued upwards post-settle on continued risks that the month of December starts quite cold. The theme of March leadership continued as well, with the March contract logging the largest gain again today after it led Tuesday and Wednesday as well. In our intraday Note to clients today we warned to look for this March strength intraday as a signal that prices would remain strong, which verified well with the March contract very strong into the close with prices going out near the highs. It was a wild week in the natural gas complex overall, though, with prices shooting higher earlier in the week before Wednesday's absolute blowout, followed by a full retrace of Wednesday's explosion yesterday. Overnight we noted yet another increase in bullish weather risks in the long-range, leading us to see "more support" and an "initial cash bump" for prices today off increased long-range cold risks. We also warned that while overnight models were actually a bit less bullish in the medium-range with some warm risks, Week 3 cold risks were likely to increase on models today and 12z model guidance would increase those cold risks in the long-range, which played out on a colder 12z European model run. Admittedly it was an extraordinarily volatile week, and after we held Slightly Bullish sentiment in reports Monday and Tuesday we turned Neutral the last few days due to extremely low confidence in the face of enormous volatility. Still, we did well to identify the key trends driving the market and the price bias each day as we saw increasingly cold long-range risks responsible for the spike today (and had warned of more upside risks still Tuesday night). . Now, headed into the weekend, traders are looking to the latest weather models and trends to see where the next 30-50+ cent move could be. Climate Prediction Center forecasts do not look particularly cold in the long-range, but they were also made before colder European model guidance was released (which was then incorporated into our Pre-Close Update).

NYMEX December natural gas contract bounces back 23.4 cents to settle at $4.272/MMBtu — The NYMEX December natural gas futures contract partially recovered Thursday's losses, increasing 23.4 cents Friday to settle at $4.272/MMBtu. The contract traded between $3.907/MMBtu and $4.345/MMBtu. Total US demand - including exports to Mexico and LNG feedgas - decreased 8.1 Bcf Friday to 99 Bcf, S&P Global Platts Analytics data showed. All demand sectors across the US decreased except for LNG feedgas, which continued to increase. As the third LNG export facility in the lower 48 states comes online in Corpus Christi, Texas, and Train 5 at Sabine Pass in Louisiana continues its commissioning, an additional 400 MMcf/d of feedgas demand was tacked on Friday to 4.6 Bcf. Further along the curve, the spread between the March and April 2019 contracts -- a so-called "widow-maker" because of its extreme volatility and risk -- narrowed to $1.176/MMBtu in midday trading. This spread settled at $1.584 Wednesday and at 80.2 cents Thursday. Before the strong increases seen earlier this week, the spread had averaged 35.70 cents since the start of November. Most of the difference has come from March 2019 price swings, with the April 2019 contract remaining relatively unchanged this week. These contracts traded Friday at $3.967/MMBtu and $2.809/MMBtu, respectively. David Thompson, executive vice president at PowerHouse Brokerage, said the market is "shaking out and settling" with the volatile price swings taking place lately. "In this new range, the market will find what is an acceptable market value," he said. US temperatures have increased, with the past seven days averaging 42.85 degrees Fahrenheit, Platts Analytics data showed. Temperatures are forecast to increase to 46 degrees over the next seven days before rising further to 49.86 degrees through November 30.

Nord Stream 2 Could Still Be Derailed By U.S. Sanctions --The potential for more tensions in relations between the U.S. and Russia continue to mount. Late last week, U.S. Energy Secretary Rick Perry said that Washington could still impose sanctions related to the building of the controversial Nord Stream 2 pipeline, which would bring Russian gas directly to Germany under the Baltic Sea. Perry made his comments in Warsaw as the Trump administration tries to convince EU members to sign LNG deals with U.S. producers to offset over reliance on Russian pipeline gas. On Thursday, Polish state-run gas firm PGNiG signed a long-term LNG deal with U.S.-based Cheniere Marketing International. Poland has been fervent in its resistance to the Nord Stream 2 pipeline as well as working to reduce its reliance on geopolitically charged Russian gas. Moscow, for its part, has cut gas supply to Europe in the past during cold winter months to exert its influence in the region.Warsaw and Washington also signed on Thursday a joint declaration on enhanced energy security cooperation. “This is also a clear signal that the U.S. strongly supports a pro-Poland and pro-Europe energy security policy,” Perry said. “Energy security in turn requires energy diversity. That is the reason we oppose the Nord Stream 2 project which would further increase the dangerous energy dependence many European nations have on the Russian federation,” he added.Poland consumes around 17 billion cubic meters of gas annually, more than half of which comes from Russian energy giant Gazprom under a long-term deal that expires in 2022. However, Poland has said that it would not renew the gas supply deal, making the country race against time to replace the contract with new gas volumes.When asked at a news conference whether Washington could impose sanctions on companies working on the project, Perry replied: “I saw no signals where we would ever get to the point where we can support Nord Stream 2.” He added that “sanctions were an option that the president maintained.” The Nord Stream 2 pipeline has also been a point of contention between Trump and Germany as well. In a televised meeting with reporters and NATO Secretary-General Jens Stoltenberg before a NATO summit in Brussels earlier this year, Trump said it was “very inappropriate” that the U.S. was paying for European defense against Russia while Germany, the biggest European economy, was supporting gas deals with Moscow.

U.S. calls on Hungary and neighbors to shun Russian gas pipelines  --U.S. Energy Secretary Rick Perry called on Hungary and its neighbors to reject Russian gas pipelines which Washington says are being used to cement Moscow’s grip on central and eastern Europe. “Russia is using a pipeline project Nord stream 2 and a multi-line Turkish stream to try to solidify its control over the security and the stability of Central and eastern Europe,” Perry added during a visit to Budapest. U.S. President Donald Trump’s administration is seeking to encourage the purchase of gas from the United States or other suppliers rather than increasing purchases from Russia. “(The) United States strongly opposes these projects and we urge Hungary and its neighbors to join us in rejecting them.”

US Confident It Can Compete In Europe's Gas Market - As American LNG costs continue to fall, and as Europe looks to untangle itself from Gazprom, U.S. liquefied natural gas (LNG) exports are quickly becoming a welcome alternative to Russian gas supplies. The United States is all too happy to help Europe increase its energy security by diversifying its natural gas supplies - in which Gazprom holds more than a third of the market. These were the key messages from U.S. officials and LNG developers at this week’s gas conference in Berlin. Germany is the end-point of the controversial Gazprom-led Nord Stream 2 pipeline project, which will follow the existing Nord Stream natural gas pipeline between Russia and Germany via the Baltic Sea. The U.S. opposes the project, as do EU institutions and some EU members such as Poland and Lithuania. Germany, however, supports Nord Stream 2 and sees the project as a private commercial venture that will help it to meet rising natural gas demand. At the conference this week, Woodward Clark Price, Minister-Counselor for Economic Affairs at the U.S. embassy in Berlin, said that U.S. LNG is becoming increasingly competitive, due to continuously falling costs.“US LNG will become even more cost-competitive and attractive. We are confident US LNG can compete [in Europe] -- even on price,” S&P Global Platts quoted Price as saying at the event.Lower pipeline gas price compared to LNG has long been Russia and Gazprom’s key selling point. The U.S. is ready to help Europe to diversify its energy supply, Price noted. “We want to enhance a more secure energy situation in Europe so that no one country or corporation can disproportionately influence Europe,” Price said, in an obvious reference to Russia and Gazprom. Paul Corcoran, CFO at the Nord Stream 2 gas pipeline operating company, said that pipeline gas is cheaper than LNG and due to this, 75 percent of Europe’s LNG import capacity stays unutilized.“Russian gas is still very well placed against US LNG,” Corcoran said at the Berlin conference.At the same time in which Nord Stream 2 and U.S. LNG executives discussed the competitiveness of gas supplies to Europe, some 300 miles east of Berlin in Poland’s capital, Warsaw, U.S. Secretary of Energy Rick Perry was witnessing the signing of a 24-year LNG deal under which U.S. Cheniere will deliver growing volumes of LNG to Poland’s PGNiG. “American energy is empowering Europe and diversifying markets,” Secretary Perry said.

LNG Hunt Less Likely as Milder Asia Winter Seen -- Prospects for a milder winter in Asia may make the frenzied seasonal hunt for liquefied natural gas less likely this year and hurt the outlook for prices, which have tumbled for the past seven weeks. Weather across North Asia is expected to be warmer this winter than last year, according to four forecasters surveyed by Bloomberg, who added temperatures could come in at or above historical averages. That could weaken demand for the fuel, with storage levels in Japan, China and South Korea near multiyear-highs. Asia’s LNG users have been stocking up on gas well ahead of the winter season to avoid a supply crunch like last year, when freezing temperatures exacerbated a Chinese-backed drive to promote cleaner-burning gas over coal and pushed prices to the highest levels since 2014. Snow in Japan last winter also compelled the country’s largest utility to purchase power from rivals as heating demand skyrocketed. “With warmer weather expected now, the demand pull from China would be even less,” Xizhou Zhou, an analyst at IHS Markit, said by email. “The kind of tightness in the market we had seen last year will unlikely repeat.” Spot LNG prices in North Asia have slumped for seven weeks in the longest losing streak since January 2016, mirroring a slide in oil that has given up most of its gains this year. Buyers across the region are so well-stocked with the fuel that some are considering selling or swapping cargoes. “Last winter was persistently cold, especially in Japan, as a result of northerly flow bringing cold air down from Siberia; we do not expect the same pattern to recur,” said Richard James, a senior scientist at World Climate Service. “We expect the winds over east Asia to be directed generally from the southwest this winter, which will bring much warmer conditions on average.” El Nino, the warming in Pacific Ocean sea-surface temperatures, has emerged and there’s a high chance of it continuing through the Northern Hemisphere spring, the Japan Meteorological Agency said on Friday. The weather pattern tends to cause warmer temperatures during winters in Japan. More weather forecasts: Weather volatility is expected to be high, especially in the second half of the winter, as warm spells alternate with a few outbreaks of unusual cold, according to World Climate Service. Japan, South Korea and the North China Plain are forecast to have near normal winter weather, according to Radiant Solutions.

South Korea’s October LNG imports up almost 38 pct - South Korea, the world’s third buyer of liquefied natural gas (LNG), received 3.79 million tonnes of the chilled fuel in October, a rise of 37.9 percent year-on-year. Compared to the previous month, LNG imports rose 12.7 percent, according to the customs data. The data shows that South Korea paid an average of $11.14 per million British thermal units for LNG last month. This compares to $8.12 per mmBtu in October last year. Qatar, the world’s top LNG producer, remained the dominant source of South Korean imports with 1.15 million tonnes of the chilled fuel imported from Qatar in October, a rise of 34.6 percent on year. US was the second-largest LNG supplier to Korea last month with 606,414 mt, followed by Australia with 589,101 mt. The remaining volumes imported into South Korea last month were sourced from Malaysia, Oman, Indonesia, Russia, Nigeria, Angola, Trinidad and Singapore, the customs data shows. Worth mentioning here, South Korean state-owned Korea Gas recently reported a year-on-year jump of 37.9 percent in its domestic sales. The company sold 2.59 million tonnes of the chilled fuel which compares to 1.87 million tonnes in the corresponding month last year.

China overtakes Japan as world’s top natural gas importer (Reuters) - China has overtaken Japan to become the world’s top importer of natural gas, as Beijing’s crackdown on pollution boosts its demand for the more environmentally friendly fuel, while the restart of nuclear reactors in Japan reduces its LNG imports. China’s total natural gas imports over January to October this year via pipeline and as liquefied natural gas (LNG) were at 72.06 million tonnes, up a third from the same period last year, according to Reuters calculations based on General Administration of Customs data. Japan, on the other hand, imported about 69.35 tonnes of LNG over that period, according to ship-tracking data from Refinitiv Eikon, down 17 percent for the same 10 months of 2017. Japan imports all of its gas as LNG. China’s push to switch away from coal to natural gas is key to its rapid gas demand growth, said Edmund Siau, gas analyst with energy consultancy FGE. “Meanwhile, nuclear reactors continue to restart in Japan, which reduces demand for gas-fired power generation and consequently LNG demand,” Siau said. China - already the biggest importer of oil and coal - is the world’s third-biggest user of natural gas behind the United States and Russia, but it has to import around 40 percent of its total needs as domestic production can’t keep up with demand. China still lags behind Japan on LNG imports but could overtake its North Asia neighbour in the early 2020s, FGE’s Siau said. China’s surging demand pushed it past South Korea as the world’s second-biggest LNG importer in 2017. China last year started to move millions of households and many industrial facilities from coal to gas as part of efforts to clean its skies, sparking an unprecedented rally in overseas import orders. Its three biggest LNG suppliers are Australia, Qatar and Malaysia. Pipeline imports come from Central Asia and Myanmar, and a pipeline connecting China to Russia is under construction.

China still wants LNG this winter, but not every last drop (Reuters) - The liquefied natural gas (LNG) market in Asia appears to be coming to terms with the likelihood that China will still buy robust volumes over winter, but not quite at the rate it did last year.   In the winter of 2017-18 China’s unrestrained appetite for the super-chilled fuel drove spot prices to what was then a three-year high, upending a market that had previously believed a supply surplus was looming. However, this time around China appears to be managing its winter demand in a more orderly fashion. That means while it will still likely increase cargoes in the coming months, it won’t be trying to suck every available drop of LNG from the market. Having been caught short of natural gas last winter, China has taken steps to ensure that the coming winter will see adequate supplies. It has boosted storage facilities and domestic output, while maximising use of pipelines from Asia and LNG terminals are being maximised. China has expanded use of natural gas in winter, primarily for heating as part of its policy of burning less coal in order to improve air quality. Domestic natural gas production rose 6.2 percent to 116.17 billion cubic metres (bcm), equivalent to about 86 million tonnes of LNG, in the first nine months of the year compared with the same period last year, according to official data. Natural gas imports from both LNG and pipelines were up 33 percent in the first 10 months of the year to 72.06 million tonnes. State-controlled oil and gas major Sinopec said on Monday that it will boost its supply of natural gas for the heating season by 18 percent from last winter to 18.17 bcm, and that its three LNG receiving terminals are fully booked for December and January. PetroChina, another state-controlled oil and gas major, said on Monday that the Central Asia-China pipeline will operate at 100 percent capacity this winter and supply a record 160 million cubic metres of natural gas per day. 

India Ready To Import More U.S. Oil And Gas - India is ready to import more crude oil and liquefied natural gas (LNG) from the United States to expand bilateral trade, India’s Foreign Secretary Vijay Gokhale said on Wednesday.Speaking after a meeting between India’s Prime Minister Narendra Modi and U.S. Vice President Mike Pence on the sidelines of an ASEAN summit in Singapore, Gokhale said, commenting on the topics discussed:“There was a lot of discussion on energy, this is a new sector in the Indo-US relations. We have begun importing oil & gas from United States.”“It is expected to be valued about $4 billion this year and we expressed our readiness to import more oil and more gas from the United States as a way of expanding our trade,” Gokhale added.Two months before the U.S. sanctions on Iran’s oil were re-imposed, India—Iran’s second-biggest oil customer after China—said that it would be looking at the economics—and not the politics—of importing U.S. crude oil, and Indian imports of American oil should not be seen as a replacement for Iranian barrels.India was one of eight Iranian oil buyers that received waivers to continue importing Iran’s oil at reduced volumes until May next year. This year, India has become a regular customer of U.S. crude oil, with American crude exports significantly rising from May 2018 onwards, EIA data shows. According to the latest available EIA data, the U.S. sent 196,000 bpd of oil to India in August, up from 102,000 bpd in July, but down from the current high of 261,000 bpd from June.

Pakistan's Insatiable Appetite For Energy -  Riaz Haq - Pakistan's consumption of oil and gas has rapidly grown over the last 5 years, an indication of the nation's accelerating economic growth. Pakistan is among the fastest growing LNG markets, according to Shell 2017 LNG reportPakistan Oil Consumption in Barrels Per Day. Source: Oil consumption in Pakistan has shot up about 50% from 400,000 barrels per day in 2012 to nearly 600,000 barrels per day in 2017. During the same period, Pakistan's gas consumption has risen from 3.5 billion cubic feet per day to nearly 4 billion cubic feet per day, according to British Petroleum data. Pakistan is among the fastest growing LNG markets, according to Shell 2017 LNG report.  The country has suffered a crippling energy shortage in recent years as demand has risen sharply to over 6 billion cubic feet per day,  far outstripping the domestic production of about 4 billion cubic feet per day. Recent LNG imports are beginning to make a dent in Pakistan's ongoing energy crisis and helping to boost economic growth. Current global oversupply and low LNG prices are helping customers get better terms on contracts. Pakistan Gas Consumption in Billions of Cubic Feet Per Day. Source: .    Every modern, industrial society in history has gone through a 20-year period where there were extremely large investments in the energy sector, and availability of ample electricity made the transition from a privilege of an urban elite to something every family would have. It seems that Pakistan is beginning to recognize it. If Pakistan wishes to join the industrialized world, it will have to continue to do this by having a comprehensive energy policy and making large investments in the power sector. Failure to do so would condemn Pakistanis to a life of poverty and backwardness.

Anadarko allocates $200m for Mozambique LNG - US independent Anadarko Petroleum aims to spend about $200 million on its planned Mozambique liquefied natural gas (LNG) export project in 2019 as it is looking to make a final investment decision. Anadarko said on Thursday revealing the company’s 2019 capital investment that the investment will be allocated toward Anadarko’s portion of the costs associated with ongoing site preparation for the shared Mozambique LNG onshore facilities. Anadarko said it remains on track for the project’s FID consideration in the first half of next year, adding that it plans to adjust its capital-investment expectations associated with the Mozambique LNG project at the time of project sanction. Anadarko and its partners have discovered more than 75 Tcf of natural gas resources in the Prosperidade and Golfinho/Atum complexes in Mozambique’s Offshore Area 1, which will be used to feed an onshore LNG terminal on the Afungi peninsula in Cabo Delgado province. The discovered reserves in Mozambique are sufficient to support two initial LNG trains, as well as to accommodate expansions, including additional trains capable of producing about 50 mtpa, according to Anadarko.

Gas flaring continues scorching Niger Delta - In Nigeria's Niger Delta, gas flares are killing crops, polluting water and damaging human health. The Nigerian government has promised to tackle the problem — but new data shows flaring has even gone up.Flames as tall as 10-storey buildings burn day and night in the village of Ebedei, in Nigeria's Niger Delta. But the heat from these fires is neither soft nor warm, it's fierce and prickly. The constant noise sends wild animals fleeing, and people must shout to be heard over the roaring flames. Fields of crops, once green, have turned yellow or stopped growing entirely. The village no longer enjoys the respite of cool or darkness of night. In the oil-rich Niger Delta of southern Nigeria, 2 million people live within 4 kilometers (2.5 miles) of a gas flare. Below the flames, oil is being extracted. With the oil comes gas — considered by the oil industry to be a dangerous waste product to burned off in a process called gas flaring. And this flaring is on the rise again, despite promises to reduce it.Benjamin Nwaiku lives beside the constant flame of a gas flare. In 2001, he retired from his job in the oil industry in Lagos and moved back to his hometown of Ebedei, to become a farmer and raise his seven children. But in 2009, small Nigerian operator Platform Petroleum erected a flow station adjacent to his house to extract oil. He quickly became concerned about the possible effects on his health and that of his children. "We are living under the shade of hazard because of this flaring," Nwaiku said. His fears have a legitimate basis. Exposure to air pollutants released by gas flaring have been linked to cancer and lung damage, as well as neurological and reproductive problems.

Nigeria To Lift Crude Oil Production To 1.8 Million Bpd In 2019 - Nigeria will raise its crude oil production to 1.8 million bpd in 2019 from around 1.6 million bpd currently, the head of the Nigerian National Petroleum Corporation (NNPC) told Reuters on Tuesday.The African OPEC member also aims to increase its production of condensate—a type of ultra light oil—to 500,000 bpd next year from 400,000 bpd now, NNPC Group Managing Director Maikanti Baru said.The Nigerian state-controlled oil company also expects to sign this month agreements with various consortia to help it overhaul the old and inefficient oil refineries in the country, Baru told Reuters.   Following a wave of militant violence in 2016 and early 2017, Nigeria’s oil production started to recover in the latter half of 2017, when attacks on oil infrastructure subsided.This year, after some hiccups and pipeline outages during the spring and early summer, Nigeria’s crude oil production was on the rise in August and September.Nigeria’s crude oil and condensate production, however, dropped in October to 2.09 million bpd, oil ministry data showed last week, with output down by some 70,000 bpd compared to September, due to increased sabotage attacks on oil infrastructure by oil thieves.The NNPC warned earlier this month that sabotage attacks on oil pipelines were on the rise, while analysts also warn that violence may return in Nigeria’s oil industry ahead of the general elections in February.  According to OPEC’s November Monthly Oil Market Report published on Tuesday, Nigeria’s crude oil production dropped by 17,000 bpd from September to stand at 1.751 million bpd in October.

Nigeria: Shell decries frequent sabotage of pipeline, spills in Bayelsa - Shell Petroleum Development Company (SPDC) on Monday decried the high rate of vandalism on its pipeline network at its oilfields in Bayelsa resulting to oil leaks and pollution of the environment.Mr Bamidele Odugbesan, the Media Relations Manager at SPDC told News Agency of Nigeria (NAN) that the oil firm expressed regrets at the incessant spills and was committed to maintaining environmentally sustainable operations.He said that although, the May 17 oil spill on the Trans Ramos Pipeline was traced to equipment failure, many other leaks were predominantly caused by sabotage."The rate of spills on the Trans Ramos Pipeline is very worrisome, for instance between April and May 26, spill incidents were reported on that line and out of these, 18 of them were caused by sabotage, eight were operational," he said. Odugbesan said that SPDC had recovered more than 95 per cent of spilled oil from the spill incidents on the Trans Ramos Pipeline (TRP) which runs across Bayelsa and Delta states.

Trump Admin-approved Iran Oil Buyers Line Up -- Armed with waivers to keep importing Iranian oil without running afoul of U.S. sanctions, some of the Islamic Republic's top customers are preparing to buy. The exemptions mean at least some supplies from OPEC's third-biggest producer will keep flowing into international markets, after its exports plunged almost 40 percent since April -- the month before Washington announced the curbs. In a bid to keep customers, the state-run National Iranian Oil Co. has been offering record discounts on its crude. Almost all major buyers of Iran's oil had negotiated with the U.S. for the waivers, arguing that cutting purchases to zero would affect their energy industries and boost fuel costs. U.S. Secretary of State Michael Pompeo has defended the exemptions and said the Trump administration's campaign to pressure Iran has already reduced exports by over 1 million barrels a day and they'll continue to shrink. India, China and South Korea, three of Asia's top four buyers, got waivers allowing them to purchase a combined 860,000 barrels a day. The levels for Japan, Italy and Greece are yet to be confirmed. Turkey got waivers for about 60,000 a day, far less than it bought in 2017. A summary of plans by some of Iran's biggest oil customers and what they may buy under the waivers is set out below. This story will be updated as new information becomes available. The exemptions have been granted for 180 days, and will be reviewed toward the end of the period. 

SWIFT Cuts Off Iran Central Bank As Tehran Sells 700,000 Barrels To Anonymous Direct Buyers - As reported last week, shortly after SWIFT caved to US pressure and defied the EU announcing it would cut off a selection of Iranian banks, on Monday, the US Treasury said the Iranian Central Bank has been officially cut off the SWIFT financial messaging system. The disconnection, which comes at a time when Iran's economy is reeling and its currency is tumbling as a result of restricted oil exports (albeit offset by numerous temporary waivers for top Iranian oil clients), will made it far more difficult for the Islamic Republic to settle import and export bills.Treasury Secretary Steven Mnuchin said that the move is “the right decision to protect the integrity of the international financial system", and comes after several days planning by SWIFT.I understand that SWIFT will be discontinuing service to the Central Bank of Iran and designated Iranian financial institutions. SWIFT is making the right decision to protect the integrity of the international financial system.— Steven Mnuchin (@stevenmnuchin1) November 8, 2018As previously discussed, SWIFT said it would begin cutting off access to several unspecified Iranian banks. More than 70 Iranian and Iranian-linked financial institutions were sanctioned, including a host of banks that allegedly provided services to Hamas and Hezbollah, and others that provided services to the Iranian armed forces. While the US could not directly force SWIFT to cut off Iranian banks, US Secretary of State Mike Pompeo had warned that penalties would be applied to SWIFT and any other firms that refused to comply with the latest sanctions, effectively forcing SWIFT to pick between compliance with US demands or angering top EU officials. It picked the former.

India mulls barter system to satisfy Iran’s basmati appetite amid sanctions - The payment system with Iran is being relaxed further for basmati rice exports. This comes after the US allowed India to continue importing crude oil from Iran and develop the Chabahar port. Now, India is finalising guidelines for exporting basmati rice to its largest importer — Iran — on a rupee payment basis. The move has come as a positive development for exporters who are paying a higher price for procuring basmati. Last year, India exported $4.17 billion worth of basmati rice and Iran was the largest buyer of rice (at $905 million). In the first five months of 2018-19, exports have already crossed $2 billion and Iran continuous to be the largest buyer for India followed by Saudi Arabia. When the US announced sanctions against Iran, farmers had already increased area under basmati but exporters were cautious. However, the recent exemption for Iran followed by easing of the payment crisis has lifted the sentiments of basmati exporters. “Higher paddy price this season has put some pressure on the retail price, especially if you consider that there is recession in the global market. However, there has been some stabilisation now and we expect a good basmati export cycle this year,” Kohinoor Foods joint managing director Gurnam Arora told Business Standard. He further said that the ‘Iran issue’ had also been resolved to a large extent and traders have been allowed to barter deals and consignments valued in rupee terms. “The guidelines are being formulated and we are confident that Iranian basmati imports would start soon.”

Why a strategic port in Iran was exempted from sanctions  -- A port in Chabahar, Iran’s southernmost city, was exempted by Secretary of State Mike Pompeo from sanctions, which he called “the toughest ever put in place”, in a move to help a US ally. India has been developing the port since 2003 in a strategic bid to link to Central Asia through Iran and Afghanistan while bypassing its neighbor and rival Pakistan.The sanctions exemption for the port also aims to help the Afghan economy, according to Pompeo, as the country remains the world’s top poppy producer and still relies heavily on international aid. The port could help the war-torn country’s economy by reducing poppy production in its southern provinces, which largely underwrites the Taliban insurgency, and thus cut its dependence on aid. These upshots could help the US untangle itself for a war now past its 17th year.US sanctions were reimposed on Iran after US President Donald Trump pulled out of the Iran nuclear deal in May, opening the way for a medley of old and new sanctions, which are explicitly aimed at Iran’s banking and energy sectors.The exception for Chabahar port should obviously appear as doubtfully benevolent from a US administration that has been patently blinkered when it comes to preserving US interests, even when doing so has disconcerted long-time allies like Canada and the EU. However, in developing Chabahar, a cautious show of interest by China to enter the foray might be the real reason why the US had to carve out what must have been a painful exception.An entry by the Chinese would be deeply disquieting for its regional rivals especially as its investors already have a foothold in Chabahar. Concerns arising due to India losing its grip on the project and a handing over of the port’s development to China, which was last proposed by Iranian Foreign Minister Javad Zarif in a visit to Islamabad in March this year, has led to a proposal by even Japan – a friend and foe to India and China respectively – to express its interest in developing the sea outlet.

Indonesia interested in OPEC membership again -- Net oil importer Indonesia could reactivate its OPEC membership if it can successfully raise its crude oil production and reduce consumption by boosting the amount of biofuels used in its transportation sector, an official said Monday. Indonesia’s state-owned oil company Pertamina earlier this year began taking over operations at the country’s oil fields from foreign companies, under a government plan to consume more of its crude domestically and reduce its imports, as the rupiah depreciates against the dollar. To further cut its import bill, Indonesia on September 1 began requiring all diesel fuel sold domestically to contain 20% biodiesel. The country also has plans to boost the amount of ethanol blended with gasoline, though it has not blended much to date.

OPEC expects global energy demand to skyrocket through 2040, thanks to India and China - Global energy demand is set to skyrocket over the next two decades, OPEC said in its latest annual outlook, with India and China the most important contributors to this growth. In the influential oil cartel's 2018 World Oil Outlook (WOO), the group said it expects total primary energy demand to surge around 33 percent from 2015 levels. Driven almost entirely by developing countries — most notably India and China — demand is expected to increase at an average annual growth rate of nearly 2 percent, reaching 365 million carrels per day (bpd) in 2040. "Energy demand in India and China in this period is forecast to increase by 22 million bpd and 21 million bpd, respectively, which is more than 50 percent of the energy demand growth in developing countries during this period," OPEC said in the report. At present, energy market participants are increasingly concerned about a slowdown in the global economy, escalating trade tensions, emerging market countries' currency weakness and the potential fallout this could have on oil demand. Last month, the International Monetary Fund (IMF) cut its outlook for the world economy in 2018-19 by 0.2 percentage points to 3.7 percent. Fears of a slowdown in global growth, and by extension oil consumption, have prompted sharp falls in equity and crude prices in recent weeks. Yet, while oil consumption threatens to disappoint energy market participants on the downside, production in U.S. shale fields continues to defy expectations. This, in turn, has reinforced the market management challenge for OPEC and its partners. Saudi Arabia's Energy Minister Khalid al-Falih said Monday that OPEC and its allies had conducted an analysis which showed a 1 million bpd drop in crude supplies from October levels could soon be required to balance the market.

Global oil demand under growing threat from electric cars, cleaner fuel (Reuters) - Electric vehicles and more efficient fuel technology will cut transportation demand for oil by 2040 more than previously expected, but the world may still face a supply crunch without enough investment in new production, the International Energy Agency (IEA) said on Tuesday. Oil demand is not expected to peak before 2040, the Paris-based IEA said in its 2018 World Energy Outlook. The IEA’s central scenario is for demand to grow by around 1 million barrels per day (bpd) on average every year to 2025, before settling at a steadier rate of 250,000 bpd to 2040 when it will peak at 106.3 million bpd. “In the New Policies Scenario, demand in 2040 has been revised up by more than 1 million bpd compared with last year’s outlook largely because of faster near-term growth and changes to fuel efficiency policies in the United States,” the agency said. The IEA believes there will be around 300 million electric vehicles on the road by 2040, no change on its estimate a year ago. But it now expects those vehicles will cut demand by 3.3 million bpd, up from a previous estimated loss of 2.5 million bpd in its last World Energy Outlook. “... Efficiency measures are even more important to stem oil demand growth: improvements in the efficiency of the non-electric car fleet avoid over 9 million bpd of oil demand in 2040,” the IEA said. Oil demand for road transport is expected to reach 44.9 million bpd by 2040, up from 41.2 million bpd in 2017, while industrial and petrochemical demand is forecast to reach 23.3 million bpd by 2040, from 17.8 million bpd in 2017.    All global oil demand growth will stem from developing economies, led by China and India, while demand in advanced economies is expected to drop by more than 400,000 bpd on average each year to 2040, the IEA said. The IEA, which advises Western governments on energy policy, maintained its forecast for the global car fleet to nearly double by 2040 from today, growing by 80 percent to 2 billion. On the supply side, the United States, already the world’s biggest producer, will dominate output growth to 2025, with an increase of 5.2 million bpd, from current levels around 11.6 million bpd.   GRAPHIC: Oil supply outlook -  GRAPHIC: Oil supply and demand outlook -IEA -

OPEC and allies warn surging oil output is poised to leave crude market oversupplied  -  The oil market looks poised to swing into oversupply next year as growing global crude output swamps shaky demand, a committee of allied producer nations said on Sunday. The committee of several OPEC members and other crude exporters says a larger group of roughly two dozen nations may have to launch a fresh round of output cuts in order to keep the oil market balanced. The announcement comes as rising supply and a weaker outlook for demand have contributed to a sharp pullback in oil prices that has plunged U.S. crude into a bear market. The committee's communique sets up a potential agreement to throttle back production when the entire group meets next month. Last month, the committee tasked with monitoring compliance to the oil alliance's production quotas said the group may have to reverse course and begin cutting output again. On Sunday, it said the current situation "may require new strategies to balance the market.""The Committee reviewed current oil supply and demand fundamentals and noted that 2019 prospects point to higher supply growth than global requirements, taking into account current uncertainties," the Joint Ministerial Monitoring Committee said."The Committee also noted that the dampening of global economic growth prospects, in addition to associated uncertainties, could have repercussions for global oil demand in 2019 – and could lead to widening the gap between supply and demand." Saudi Arabia, OPEC's biggest producer and the world's top crude exporter, intends to cut shipments by 500,000 barrels a day in December, Khalid al Falih, the country's energy minister said on Sunday. Falih told CNBC on Sunday the market overreacted last month when it sent oil prices to four-year highs. He said the more than 20-percent pullback in prices over the last five weeks shows investors are now overreacting in the other direction.

Falling oil prices show markets are getting it wrong — again, Saudi Arabia energy minister says -- OPEC kingpin Saudi Arabia believes the energy market has overcorrected in recent weeks.It comes as the world's top oil exporter grapples with a sharp drop in crude prices, amid cooling supply fears about the impact of U.S. sanctions on Iran.Speaking at the Joint Ministerial Monitoring Committee (JMMC) meeting in Abu Dhabi on Sunday, Saudi Arabia's Energy Minister Khalid al-Falih told CNBC's Steve Sedgwick: "All along we said that the market overreaction to the announcement on sanctions was driven by fear rather than by real shortages.""Markets get it wrong occasionally as they did a few weeks ago on one side and they're doing it again on the other today, but ultimately the pendulum will swing to a reasonable middle," he added.Saudi Arabia's energy minister also said the wider OPEC and non-OPEC alliance would not shy away from another round of production cuts over the coming weeks — if the group decided there was a need for such action.The next full OPEC meeting, when any policy decision will be voted on, is scheduled to take place in Vienna, Austria on December 6.   About two dozen exporting nations began capping their output in 2017 in a bid to drain a global crude glut. The group agreed in June to restore some of that output, and producers with spare capacity have been pumping more oil since then.Energy market participants had expected Saudi Arabia and Russia to recommend further productions cuts on Sunday. Instead, Riyadh and Moscow went only so far as to suggest it was a possibility.The comments come after a significant drop in oil prices in recent weeks, as crude futures benchmarks have tumbled approximately 20 percent or more since climbing to a peak in early October. International benchmark Brent crude settled at $70.18 on Friday, down almost 1 percent, while U.S. West Texas Intermediate (WTI) fell for the 10th straight session to close at $59.87. The collapse in prices constitutes a stunning reversal from last month, when crude futures had hit nearly four-year highs as traders braced for potential shortages once U.S. sanctions on Iran came back into force. Saudi Arabia's al-Falih said it had become clear that this previous spike in oil prices was "an emotional overreaction." "I think the decisions that came out in Washington with granting the waivers … (And) with the volumes starting to show themselves and weekly inventory data, the market flipped from overreacting from one side to overreacting on the other side."

Russia warns OPEC against 'hasty' policy changes, says oil market volatility could be here to stay --OPEC and non-OPEC exporters must stick to a consistent message if they are to avoid exacerbating wild swings in the oil market, Russian Energy Minister Alexander Novak said Sunday."There is a lot of volatility in the market. And what's more this volatility could remain," Novak told CNBC's Steve Sedgwick, according to a translation."Therefore, right now we shouldn't be making any hasty decisions. We need to look at the situation very carefully to see how it will develop so that we don't end up changing our course by 180 degrees every month."His comments come shortly after top exporters at the Joint Ministerial Monitoring Committee (JMMC) meeting in Abu Dhabi said they would not shy away from another round of production cuts.This appeared to an abrupt turnabout from OPEC's September meeting, when some of the world's leading oil producers were talking about pumping extra oil onto the market in order to help soothe intensifying supply shock fears.The group said Sunday it would "continue closely monitoring" oil market conditions, before adding that "new strategies" could be implemented to balance the market in 2019.Saudi Arabia's Energy Minister Khalid al-Falih said Sunday that the OPEC and non-OPEC alliance would collectively decide whether reducing global output would be necessary over the coming weeks. The next full OPEC meeting, when any policy decision will be voted on, is scheduled to take place in Vienna, Austria on December 6.

Saudi Arabia's energy minister says there are no plans to abolish OPEC -- Saudi Arabia is not preparing for a break-up of OPEC, Energy Minister Khalid al-Falih said Monday, adding the group will continue as the global central bank for oil markets for a long time.It comes shortly after reportssurfaced Thursday suggesting Saudi Arabia's top government-funded think tank had been studying the potential impact on oil markets should the influential 14-member alliance breakup."There is no consideration whatsoever to eliminate OPEC," al-Falih said at the ADIPEC oil summit in Abu Dhabi on Monday."The reason they call them think tanks is because they want to think outside the box," he added.On Thursday, the Wall Street Journal reported, citing people familiar with the matter, that the King Abdullah Petroleum Studies and Research Center in Riyadh was trying to understand how energy markets would respond to a world without OPEC. The reported study comes less than a month before OPEC and non-OPEC members are scheduled to re-convene in Austria, Vienna in order to vote on its next policy decision.

Saudi Arabia and Russia have a 'long-term relationship' despite output U-turn, Dan Yergin says --- Saudi Arabia and Russia are the world's most influential oil producers right now, along with the U.S., but the kingdom appears to be going its own way, announcing half a million barrel output cut from December.With a lot at stake for the oil producers, however, the relationship should remain close, according to oil market expert Daniel Yergin."I think it's intended to be a long-term relationship and it started off about oil prices but you see it taking on other dimensions, for instance, Saudi investment in Russian LNG (liquefied natural gas) and Russian investment in Saudi Arabia and I think this is a strategic relationship because it's useful to both countries," IHS Markit vice chairman Dan Yergin told CNBC on Monday.While Saudi Arabia and Russia are close, particularly given their pact in late 2016, along with other OPEC and non-OPEC producers to curb output by 1.8 million barrels per day in order to support prices, oil markets have changed since that deal - and largely thanks to that deal. Oil prices have recovered almost too well with the U.S. criticizing OPEC (of which Saudi Arabia is the de facto leader) for higher prices and markets have been fluctuating on concerns over both a potential decline in supply (due to U.S. sanctions on Iran) and a potential oversupply – due to an increase in production from Saudi Arabia, Russia and the U.S. in recent weeks --- that led prices to fall around 20 percent since early October.  On that note, Saudi Arabia pumped 10.7 million barrels per day in October, Russia pumped 11.4 million barrels per day and the U.S. also an estimated 11.4 million bpd. Yergin told CNBC's these "big three" producers were changing the face of the global oil market. "It's the big three, it's Saudi Arabia, Russia and the U.S., this is a different configuration in the oil market than the traditional OPEC-non-OPEC (one) and so thinking is having to adjust so there's that new relationship … and the world is having to adjust." Also speaking to CNBC Monday, BP Group Chief Executive Bob Dudley said that the "OPEC-plus agreement (between OPEC and non-OPEC producers including Russia) and coalition is a lot stronger than people speculate. I think Russia doesn't have the ability to turn on and off big fields (which) can happen in the Middle East ... But I fully expect there to be coordination to try to keep the oil price within a certain fairway," he said.

Saudi Arabia to ship less oil in December as it floats cut talks possibility (Reuters) - Saudi Arabia plans to reduce oil supply to world markets by 0.5 million barrels per day in December, its energy minister said on Sunday, as the OPEC power faces uncertain prospects in its attempts to persuade other producers to agree a coordinated output cut. Khalid al-Falih told reporters that Saudi Aramco’s customer crude oil nominations would fall by 500,000 bpd in December versus November due to seasonal lower demand. The cut represents a reduction in global oil supply of about 0.5 percent. Saudi Arabia has increased output by just about 1 million bpd this year under pressure from U.S. President Donald Trump and other consuming countries to help balance the market to compensate for lower supplies from Iran due to U.S. sanctions. But since Iran’s customers were given generous waivers to continue buying crude, concerns grew about market oversupply and oil prices fell to below $70 per barrel on Friday from $85 a barrel in October. “We have been increasing production in response to demand,” Falih told reporters in Abu Dhabi ahead of a joint OPEC, non-OPEC market monitoring committee meeting. “I’ll tell you a piece of news which is (that) December nominations are 500,000 barrels less than November. So we are seeing a tapering off part of it is year end, part of it is maintenance.... so we will be shipping less in December than we are in November.” Saudi Arabia is discussing a proposal that could see OPEC and non-OPEC oil producers cut output by up to 1 million bpd, two sources told Reuters earlier on Sunday, as the world’s top oil exporter grapples with a drop in crude prices. The sources said any such deal would depend on factors including the level of Iranian exports after the United States imposed sanctions on Tehran but granted Iran’s top oil buyers waivers to continue buying oil. Russian participation was key to helping OPEC rebalance the market during 2017-18. But Russian Energy Minister Alexander Novak said on Sunday he wasn’t certain the market would be oversupplied next year. He said the oversupply for the next few months would be seasonally driven while by mid 2019 the market could be balanced again and demand could even exceed supply.

Analysis shows need for a production cut of 1 million bpd, Saudi Arabia says -- Khalid Bin Abdulaziz Al-Falih, Saudi Arabia's energy minister and president of OPEC, speaks as Alexander Novak, Russia's energy minister, left, listens during a news conference following the 172nd Organization of Petroleum Exporting Countries (OPEC) meeting in Vienna, Austria, on Thursday, May 25, 2017.OPEC and its allies have agreed that technical analysis of the energy market shows a need to cut oil supply from 1 million barrels per day (bpd) from October levels, Saudi Arabia's energy minister Khalid al-Falih said Monday.Speaking at the ADIPEC oil summit in Abu Dhabi on Monday, al-Falih said: "If all things remain equal, and they almost certainly will not as things will change — it is a dynamic market — then the technical analysis we saw yesterday … tells us that there will need to be a reduction of supply from October levels approaching a million barrels."His comments follow a meeting between some of the world's top exporters at the Joint Ministerial Monitoring Committee (JMMC) meeting on Sunday, which showed two of the world's biggest oil producers were at odds over what the OPEC and non-OPEC alliance should do next.Saudi Arabia said shortly after the JMMC meeting that while it would not overreact to falling oil prices, it would be prepared to reduce crude output in the near-term if necessary.This appeared to be an abrupt turnabout from OPEC's September meeting, when some of the world's leading oil producers were talking about pumping extra oil onto the market in order to help soothe intensifying supply shock fears.Meanwhile, Russia has urged OPEC and its partners to proceed with caution, saying the group must be careful not to make any "hasty" policy decisions.The next full OPEC meeting, when any policy decision will be voted on, is scheduled to take place in Vienna, Austria on December 6. "The consensus is we are going to do whatever it takes to balance the market. If that means trimming supplies by a million (bpd), we will," Saudi Arabia's al-Falih said Monday.

OPEC+ Floats 1 Million Barrel Production Cut After Oil Price Tumbles Into Bear Market - With oil prices entering a bear market last week, tumbling 21% from recent highs as it became clear that Trump will significantly water down Iran oil export sanctions by granting waivers to its 8 largest clients even as US inventory stockpiles are once again rising amid almost weekly records in US oil production, OPEC and its non-OPEC allies - which is pretty much everyone except US shale producers - are starting to sweat, and during today's meeting in Abu Dhabi they hinted that an oil output cut to limit excess production may be coming. Speaking to reporters, Oman’s Oil Minister Mohammed Al-Rumhy said that "a number of global producers agree they should pump less oil in 2019, and a reduction of 1 million barrels a day would be a good number" according to Bloomberg. Others echoed his sentiment, floating a range of cutbacks, however the most often cited number was a decrease in output by as much as 1 million barrels a day, roughly the amount of Iranian oil production that is expects to continue flowing thanks to the recent sanction waivers. "I think probably there is support that right now there is too much oil in the market and stock, inventories are building up," Al-Rumhy told reporters today in the UAE capital. Of course, OPEC can not be seen as responding to every political whim in the White House, especially if it will result in higher gasoline prices and an angry Donald Trump, so a technical committee representing the coalition framed the need for a production cut in the context of its projections according to which the global oil surplus - which hit unprecedented levels in 2015 - will resurface in 2019 if they continue pumping at current rates, according to delegates cited by Bloomberg. Nonetheless, Saudi Arabia’s Energy Minister Khalid Al-Falih - clearly cognizant of the political risks of Riyadh being singled out as the reason for the next oil price spike - said ahead of Sunday’s meeting in Abu Dhabi between OPEC+ member that it was “too premature” to discuss cutting output. Even so, he hinted that it was only a matter of time before the Saudis agreed, and while he hedged that OPEC+ "won’t respond to weekly oil market gyrations", and that "it’s too early to talk about oil cuts" Al-Falih also noted that a "gradual trend of rising stockpiles is emerging" and will "cut output if persistent glut emerges."

Trump warns OPEC against cutting oil production: 'Prices should be much lower based on supply' --President Donald Trump on Monday tweeted that he hopes OPEC does not cut oil output, the same day Saudi Arabia's energy minister said the cartel and its allies may need to throttle back production by about 1 million barrels per day. "Hopefully, Saudi Arabia and OPEC will not be cutting oil production. Oil prices should be much lower based on supply!" he wrote on Twitter. See the tweet.The tweet marks Trump's latest attempt to influence OPEC policy on Twitter. The president has tweeted at the 15-nation producer group several times this year, blaming it for rising oil prices and ordering its members to take steps to tamp down the cost of crude.Trump's latest broadside comes on the heels of a sharp pullback in oil prices that has seen U.S. crude plunge into a bear market and post its longest losing streak on record. Prices tumbled over the last five weeks as global equity markets sold off, crude supplies rose and the outlook for growth in oil demand weakened.The sudden drop in oil prices from four-year highs just last month has forced OPEC and a group of crude exporters including Russia to rethink how they are managing the market.On Sunday, a committee representing the group said oil supply is growing faster than demand, suggesting the alliance may have to launch a fresh round of production cuts. The same day, Saudi Energy Minister Khalid al Falih said the kingdom's oil shipments would fall by 500,000 bpd in December. On Monday, Falih told an oil conference in Abu Dhabi that technical analysis suggests "there will need to be a reduction of supply from October levels approaching a million barrels" from the alliance.   Trump began tweeting at OPEC in April, two months before the group's June oil policy meeting. His latest tweet comes just weeks before the alliance's next gathering.

Trump keeps people guessing 'on many fronts' and its impacting oil markets, BP CEO says --  President Donald Trump is one factor among many impacting oil markets right now, according to Bob Dudley, the chief executive of oil giant BP."He's (Trump is) keeping people guessing on many, many fronts and it also impacts the oil markets," Dudley told CNBC's "Squawk Box Europe," but he added that the U.S. president was not the only factor affecting prices."It's more than that (the Trump administration). There's uncertainty in the supply from Venezuela, there's still disruptions in Libya, for example, there's a lot of uncertainty out there," Dudley said.Dudley's comments at the ADIPEC energy conference in Abu Dhabi come at a pivotal moment for oil markets with Saudi Arabia performing an about-turn this weekend by announcing a 500,000 barrel per day production cut in December. The surprise move comes after it had ramped up production this summer along with other major producers Russia and the U.S. due to concerns over a decline in supply once sanctions on Iran came into effect in November. The measure, taken by the defacto leader of OPEC, is seen as a way to halt a 20 percent slump in prices seen since early October on the back of the surge in production.

Hedge funds enforce correction to oil market's course- Kemp (Reuters) - Hedge funds have sold the equivalent of almost half a billion barrels of crude oil and refined products in the last six weeks, as worries about slowing demand replaced earlier concern over sanctions on Iran.  Hedge funds and other money managers cut their combined net long position in the six major petroleum futures and options contracts by another 108 million barrels in the week to Nov. 6.  Portfolio managers have sold 479 million barrels of crude and products since the end of September, the largest reduction in any six-week period since at least 2013 and probably the largest ever in a comparable timeframe (  Funds now hold fewer than four bullish long positions for every short bearish one, down from more than 12:1 at the end of September and the lowest ratio since August 2017.Most of the adjustment has come from the long side of the market, as formerly bullish hedge funds liquidate positions accumulated in the second half of 2017 and earlier in 2018.The number of bullish long positions has fallen to just 849 million barrels, from 1.195 billion six weeks ago and a record 1.625 billion at the start of the year.Bullish positions are now at the lowest level since September 2016, according to an analysis of position data published by regulators and exchanges.But some fund managers have begun to turn outright bearish, with short positions now up to 228 million barrels from just 96 million barrels six weeks ago.Heavy selling by funds has helped push oil prices down more than $15 per barrel (17 percent) since Oct. 3. And since most hedge fund positions are held in contracts near to maturity, the selling has had a disproportionate impact at the front end of the futures curve, pushing crude futures prices deep into contango.

Oil prices rise by 1 percent after Saudi Arabia announces December supply cut - Oil prices rose Monday, breaking an extended losing streak, after Saudi Arabia's energy minister said OPEC and its allies may need to cut crude production by about 1 million barrels a day to prevent the market from swinging into oversupply. The evidence is building that OPEC and a group of exporters including Russia will agree to throttle back output when they meet next month. The alliance of roughly two dozen producers have cut their output since January 2017 in order to drain a global crude glut. They agreed in June to restore some of that production to rein in rising commodity prices. However, crude futures have pulled back sharply during the last five weeks, with U.S. crude sinking into a bear market. "Production cuts might be necessary to stem this tide, so we expect a sharp change in tone between now and December meeting from Russia/OPEC indicating that they will cut output,"  Brent crude rose 91 cents, or 1.3 percent, to $71.09 a barrel by 10:41 a.m. ET (1541 GMT) on Monday. The international benchmark for oil prices settled at $70.18 on Friday, its weakest closing price in seven months. U.S. West Texas Intermediate crude, was up 77 cents, or 1.3 percent, at $60.96. WTI posted its longest losing streak in more than 34 years on Friday, falling for 10 straight days and settling 21 percent below its 52-week high. Crude futures got swept up in a broader market sell-off that saw investors shed risk assets in October. Rising oil supplies from the United States, OPEC and Russia and forecasts for weaker-than-expected demand growth have kept pressure on the market. The Trump administration's decision to allow eight countries to continue importing some Iranian crude despite U.S. sanctions on Iran has also eased concerns about supply shortages. The steady loss of Iranian barrels since President Donald Trump announced the sanctions in May pushed oil prices to nearly four-year highs last month.

Oil prices fall, with U.S. benchmark below $60 and down a record 11 sessions in a row --Oil prices declined on Monday, giving up earlier gains to push the U.S. benchmark below $60 a barrel for the first time since February, down a record 11 sessions in a row, after President Donald Trump said he hopes OPEC doesn’t cut crude production.The move lower marks a reversal from earlier gains in prices, which had found support after the Organization of the Petroleum Exporting Countries and its allies signaled a tepid willingness to again cut production amid hefty global supply.“The combination of the weak stock market and the Donald Trump tweet had oil give up its gains,” said Phil Flynn, senior market analyst at Price Futures Group. “Oil is in a weakened technical position and we had lighter than normal volume due to the Veterans Day holiday.”And, “let’s face it—OPEC and Trump are going at it,” he said.Trump said in a tweet Monday that he hopes Saudi Arabia and OPEC won’t cut oil production and said oil prices should be much lower based on supply. West Texas Intermediate crude for December delivery fell 26 cents, or 0.4%, to settle at $59.93 a barrel on the New York Mercantile Exchange, the lowest finish for a most-active contract since February.That was also the 11th straight session decline—a record streak of session losses based on data going back to 1983 when WTI started trading, according to Dow Jones Market Data. Prices lost 4.7% for last week, tallying their fifth straight weekly drop. Saudi Arabian representatives said Sunday that the Kingdom would slash its exports unilaterally next month, as a broader OPEC alliance debated—but didn’t agree to—a collective production cut.

OPEC knocks down oil demand forecast for the 4th consecutive month -- OPEC continued to reduce its forecast for oil demand in its latest monthly report, issuing its fourth consecutive downward revision to consumption growth for 2019.The 15-member oil cartel forecasts the world's appetite for crude will grow by 1.29 million barrels per day in 2019, down 70,000 bpd from its projection last month. The group has revised its outlook lower every month since July, when it initially forecast growth of 1.45 million bpd for next year.Meanwhile, the cartel now sees output from non-member nations increasing by 2.23 million bpd next year, up 120,000 bpd from its last forecast."Although the oil market has reached a balance now, the forecasts for 2019 for non-OPEC supply growth indicate higher volumes outpacing the expansion in world oil demand, leading to widening excess supply in the market," OPEC said. "The recent downward revision to the global economic growth forecast and associated uncertainties confirms the emerging pressure on oil demand observed in recent months."The warning adds further evidence that OPEC and a group of allied oil exporters could launch a fresh round of supply cuts when they meet in a few weeks. OPEC, along with Russia and several other nations, began cutting output in January 2017 to drain global crude stockpiles and end a punishing oil price downturn. The alliance agreed in June to restore some of that production after it took more barrels off the market than it intended.With oil prices plunging into a bear market in recent weeks, the group is now considering reversing course. On Monday, Saudi Energy Minister Khalid al Falih said the producers may need to cut nearly 1 million bpd from October levels.OPEC's total output increased by 127,000 bpd in October to 32.9 million bpd, according to independent sources cited by the group in its monthly report. Saudi Arabia raised its output by 127,000 bpd to 10.6 million bpd in October, according to both independent figures and data provided by the kingdom.  That is notable because it falls short of the level the Saudis telegraphed. Last month, Falih said the kingdom would pump 10.7 million bpd, near a November 2016 record right before the production agreement started.

'OPEC is not effective,' says Malaysia's prime minister --The Organization of the Petroleum Exporting Countries hasn't been effective in stabilizing oil prices, which have been more dependent on U.S. shale production than the actions of the intergovernmental group, saidMalaysianPrime Minister Mahathir Mohamad."OPEC is not effective. They are always at loggerheads with each other so they cannot make decision," Mahathir told CNBC's Sri Jegarajah in a Monday interview. The Malaysian leader was asked whether the group should take further action to stabilize oil prices."What is more important is the production of shale oil from America," he added.Those comments by the Malaysian leader came less than a month before OPEC and non-OPEC members are scheduled to meet in Vienna, Austria to vote on their next policy decision. Those major oil producers began cutting production in January 2017 to drain a global crude glut that sent oil prices from over $100 per barrel to under $30.Oil prices did recover, but trade tensions between the U.S. and China, rising interest rates and currency weakness in emerging markets have raised concerns about a slowdown in global economic growth and oil demand. Malaysia is an oil producing country. Consequently, analysts at Fitch recently said a decline in oil prices will undermine the country's effort to cut its debt given its dependence oil revenue. But Mahathir said Malaysia's economy is more diversified than what's commonly thought.

Oil falls as Trump raps OPEC's supply cut plan, global markets skid --Oil prices fell sharply on Tuesday, deepening a rout that has plunged the energy complex into a bear market as growing supply is poised to swamp demand next year.The latest drop came after U.S. President Donald Trump urged OPEC and Saudi Arabia to maintain their current policy of gradually increasing output. OPEC and its oil market allies are mulling a fresh round of production cuts following a collapse in oil prices over the last six weeks.U.S. light crude fell $2.15, or 3.7 percent, to $57.78, hitting its lowest level since December 2017. Tuesday's decline extended U.S. crude's record losing streak into a 12th consecutive session. Brent dropped $2.40 a barrel, or 3.4 percent, to $67.72 by 10:08 a.m. ET (1508 GMT). The international benchmark for oil prices hit a fresh low going back to April.

Oil Price Tumbles As Trump Says OPEC Shouldn't Cut Production - Having surged higher at last night's futures open on the heels of headlines about Saudi's about-face on production, President Trump has reversed those gains as he tweeted: “Hopefully, Saudi Arabia and OPEC will not be cutting oil production. Oil prices should be much lower based on supply!,” Hopefully, Saudi Arabia and OPEC will not be cutting oil production. Oil prices should be much lower based on supply!— Donald J. Trump (@realDonaldTrump) November 12, 2018  Sending WTI back to unchanged...  “If we believe that Saudi Arabia will cut supply we’ll see what happens in December, but this will tighten up the market and should rally things up a bit,” said Bart Melek, head of global commodity strategy at TD Securities in Toronto.“I wouldn’t be too surprised to see crude head back closer to recent highs, maybe not to the October levels, but certainly off the recent lows.” For now, that's not happening.

Oil prices tumble as traders look beyond Iran- Kemp (Reuters) - Oil prices have fallen sharply since passing a cyclical peak at the start of October, amid surging production and mounting concerns about the state of the global economy and the outlook for consumption growth in 2019. Front-month Brent futures prices have dropped by more than $17 per barrel (20 percent) over the last five weeks while WTI futures prices have declined for a record 11 days in a row. OPEC and its allies, who were talking about increasing production as recently as October to offset the impact of sanctions on Iran, are now openly discussing the need for output cuts to avert a build-up in stocks. Some commentators have expressed surprise at the rapid turn round in the market outlook for under- to oversupply but in fact such shifts have been fairly common. The prospective reimposition of sanctions on Iran masked a big shift in the market outlook in recent months as non-OPEC oil production accelerated while consumption growth showed signs of slowing. Once the threat of severe sanctions was lifted, at least for the time being, the market refocused on the deteriorating supply-demand background and prices have adjusted downwards. 

Oil Prices Fall To One-Year Lows -- Oil fell yet again on Tuesday, with the string of losses starting to mount. WTI fell below $60 and Brent fell below $70, hitting fresh one-year lows in the morning. Saudi Arabia is trying hard to stop the price declines, but it is going to need to convince OPEC+ to do more at the upcoming meeting in three weeks’ time.   OPEC cut its oil demand forecast for 2019, the fourth consecutive month that it has done so. The cartel now only sees demand rising by 1.29 mb/d in 2019, down another 70,000 bpd from last month’s forecast. At the same time, non-OPEC supply is expected to grow by a massive 2.23 mb/d next year, an upward revision of 120,000 bpd. “Although the oil market has reached a balance now, the forecasts for 2019 for non-OPEC supply growth indicate higher volumes outpacing the expansion in world oil demand, leading to widening excess supply in the market,” OPEC said.  Total OPEC production jumped in October, as Saudi Arabia and the UAE more than offset the declines from Iran. Iran saw production fall by 156,000 bpd, and Venezuela suffered another 40,000-bpd monthly decline. But Saudi Arabia added 127,000 bpd and the UAE added 142,000 bpd. Combined the entire group’s production edged up by 127,000 bpd. As the market expected supplies to tighten due to Iran sanctions, the increase has helped push down crude oil prices. OPEC is scrambling to stop the slide in oil prices. Saudi Arabia announced that it would cut exports by 500,000 bpd in December, and it is working with OPEC+ to engineer a collective cut of about 1 mb/d, which could be on the table at the upcoming meeting in Vienna in early December. The cuts are needed as the market is suddenly awash in fresh supplies. “The market now increasingly looks concerned about the prospect of too much supply,” Norbert Ruecker, head of macro and commodity research at Swiss bank Julius Baer, told Reuters. . Last year, the five largest oil majors saw their “proven reserves life” fall to the lowest level in a decade. The majors slashed costs after the oil market downturn in 2014, and that has translated into several years in which they have produced more oil than they have discovered, leading to a significant decline in life of their reserves. The flip side of that is that investors no longer prioritize growth above all. Companies that have continued to pursue growth, such as Exxon, seen their share prices lag their peers, the Wall Street Journal writes.

Oil price slumps 7% to one-year low as rout extends to 12 days -- Oil's slide accelerated on Tuesday, with U.S. futures suffering their steepest one-day loss in more than three years due to ongoing worries about weakening global demand and oversupply. U.S. futures closed down 7.1 percent, for a record 12th straight decline and the lowest since November 2017. More than 980,000 contracts changed hands, as funds shed positions. "It's like a run on the bank,"   "It's getting to the point where it doesn't seem to be about fundamentals anymore, but a total collapse in price." Traders said the selling was an extension of Monday's, which was triggered after U.S. President Donald Trump posted a tweet meant to put pressure on the Organization of the Petroleum Exporting Countries not to cut supply to prop up prices. Trump's tweet followed weekend reports that Saudi Arabia was considering a production cut at the December OPEC meeting, on increased alarm that supply has started to outpace consumption. Speculators have pulled back on heavy bets on an oil rally, a process that continued Tuesday, traders said. As of last week, hedge funds and other money managers had reduced their long position in oil contracts to their lowest since August 2017. Traders said that recent weakness in equities has fanned concerns about global growth, which is also contributing to declines in oil. U.S. crude futures settled down $4.24 a barrel, or 7.1 percent, to $55.69 a barrel. It was the largest one-day percentage decline for the contract since September 2015. U.S. crude has lost 28 percent since its early October peak. Brent ended down $4.65, or 6.6 percent, to $65.47 a barrel, the largest one-day loss since July. Brent has lost 25 percent since peaking at a four-year high in early October. It now sits at levels not seen since March. In its monthly report, OPEC said world oil demand next year would rise by 1.29 million barrels per day (bpd), 70,000 bpd less than predicted last month and the fourth consecutive forecast cut. Output, however, rose by 127,000 bpd to 32.9 million bpd, OPEC said. Saudi Energy Minister Khalid al-Falih said on Monday that OPEC agreed there was a need to cut oil supply next year by around 1 million barrels per day from October levels to prevent oversupply.

Crude Crashes As Saudis Abandon OPEC Production Curbs - For the first time since the Vienna OPEC deal in 2016, Saudi Arabia is no longer complying with the quota as Bloomberg calculates that in October, the Kingdom boosted crude production above its starting point for oil cuts. According to secondary data, Saudi output in October was 10.63m b/d, higher than the 10.502m b/d in September. The spike, which not significant in volume terms was meant as a signal: as a reminder, as part of OPEC+ supply cuts, Saudi Arabia agreed to curb production by 486k b/d below the starting point of 10.544m b/d, which was its October 2016 output. And while Saudi Arabia had fully complied with OPEC+ agreement in every month through May, since then it had continued to cut supply, but by less than it pledged to curb. Then, in October, the data showed the first time Riyadh had increased output above the starting point. The market reaction was violent: WTI Crude has crashed over 5% on the news, and amid fears that a supply glut may be coming (even as global growth fears stoke demand anxiety): As a result, WTI has now retraced 60% of the two-year uptrend... ... and is now down over 6% YTD to its lowest since Dec 2017.

What's The Real Reason Behind Oil's Collapse - The answer to that question, naturally, depends on who is asked.If one listens to OPEC and other oil-exporting nations, the main culprit is supply - whether with or without Iran's output - and the marginal price is set by whether supply is in excess or deficit. One thing that OPEC+ always assumes is that demand is stable, and most likely rising.On the other hand, if one listens to Wall Street firms, such as Goldman for example which have been urging their clients to keep buying crude all the way down into this historic plunge (as Goldman's prop trading desk has been selling), the reason for the sharp drop has little to do with supply and everything to do with market technicals and the underlying market structure. In a note released overnight, Goldman's chief commodity strategist Jeffrey Curie writes that "driving the most recent leg of the oil sell-off has instead first been momentum trading strategies and second, increased selling of crude oil futures by swap dealers as they manage the risk incurred from existing producer hedging programs in a falling price environment."Yet another theory is that a "whale" fund had been massively long - and wrong - oil while shorting nat gas, and the result has been a two week liquidation of the pair trade, as both legs have been unwound. While all these arguments have merit, the real reason for oil's precipitous plunge - according to Bloomberg Intelligence - is neither.Observing that Brent crude has lost $21 a barrel at yesterday’s close from its high this year on Oct. 3, Bloomberg's Ziad Daoud calculates that weaker demand accounts for $18, or 85%, of the price decline, while supply is responsible for the remaining 15%.

Worried by oil slump, OPEC and partners discuss larger supply curbs: sources (Reuters) - OPEC and its partners are discussing a proposal to cut oil output by 1.4 million barrels per day (bpd), three sources familiar with the issue said, although Russia may not be on board for such a large reduction. Worried by a drop in oil prices due to slowing demand and record supply from Saudi Arabia, Russia and the United States, the Organization of the Petroleum Exporting Countries is talking about a U-turn just months after increasing production. Such a shift could anger U.S. President Donald Trump, who urged OPEC on Monday not to cut supply. It also risks handing market share to the United States, while the sources said Russia might not be willing to back such a move. A steep slide in prices has surprised many oil market participants. Brent crude has fallen from a four-year high of $86 a barrel in early October to $66 on Wednesday. Just weeks ago, some trading firms were talking of $100 oil. The sources, who declined to be identified by name as the talks are confidential, said a cut of 1.4 million bpd - equal to 1.4 percent of world demand - was one option discussed by energy ministers from Saudi Arabia, non-OPEC Russia and other nations in Abu Dhabi on Sunday. “I believe a cut of 1.4 million bpd is more reasonable than above it or below it,” one of the sources said. OPEC and a group of non-OPEC nations, led by Russia, have been cooperating to limit oil supply since the start of 2017. They partially unwound their reduction in June after pressure from Trump to lower prices. The OPEC-led deal got rid of a glut that built up in 2014 as supply from the United States and other countries outside the group soared. OPEC production rose too, after the then Saudi Oil Minister Ali al-Naimi blocked an OPEC curb on supplies to preserve market share. This time, Saudi Energy Minister Khalid al-Falih has publicly spoken of a need to lower supplies by 1 million bpd, showing price support is trumping market share. OPEC meets on Dec. 6 to set policy for 2019. A new round of OPEC-led supply cuts in 2019 would further support U.S. shale oil production, potentially repeating the cycle that played out in 2014. 

Oil rebounds, set to break record losing streak, as OPEC discusses supply cut - Oil rose on Wednesday, recouping some of the previous session's slide, on the growing prospect of OPEC and allied producers cutting output at a meeting next month to prop up the market. Prices rallied after Reuters reported OPEC and its partners are discussing a proposal to cut output by up to 1.4 million barrels per day, a larger figure than officials have mentioned previously. U.S. West Texas Intermediate (WTI) crude oil futures rose $1.24, or 2.2 percent, to $56.93 per barrel by 11:10 a.m. ET (1610 GMT). WTI fell 7 percent to a one-year low on Tuesday. International benchmark Brent crude oil futures were up $1.80, or 2.8 percent, at $67.27 per barrel. Brent plunged 6 percent to settle at an eight-month low in the previous session. Crude oil has lost over a quarter of its value since early October in what has become one of the biggest declines since a price collapse in 2014. "While the focus was on the Iran embargo and Venezuela's output struggles over the past months, i.e. the risks of too little supply, the market increasingly looks concerned about the prospects of too much supply," Swiss bank Julius Baer said. Oil markets are being pressured from two sides: a surge in supply from OPEC, Russia and other producers, and increasing concerns about a global economic slowdown. In its monthly report the Paris-based International Energy Agency said the implied stock build for the first half of 2019 is 2 million bpd. The IEA left its forecast for global demand growth for 2018 and 2019 unchanged from last month at 1.3 million barrels per day (bpd) and 1.4 million bpd, respectively, but cut its forecast for non-OECD demand growth, the engine of expansion in world oil consumption. OPEC has been making increasingly frequent public statements that it would start withholding crude in 2019 to tighten supply and prop up prices.

NOPEC to Take Gloves Off, Production Cuts In 2019 -OPEC, in cooperation with non-OPEC member Russia, are currently discussing the option to put another production cut in place. During the recent Joint Ministerial Monitoring Committee meeting of OPEC ministers in Abu Dhabi, a consensus was formed between an overwhelming majority of its members that the current oil market situation again substantiates a production cut in 2019. As stated before the implementation of the U.S. sanctions on Iran and the Midterm 2018 elections in the United States, Saudi Arabia, UAE and non-OPEC member Russia are worried about a new oil glut in the market if no proactive measures are taken. A possible 1-million barrels per day (MMbpd) production cut already is in the offing to stem the perceived oil glut currently building. Some even expect that a production cut will be necessary above this initial figure. Looking at the current buildup this could reach a level of 1.5-2 MMbpd if no other actions are taken. Saudi Arabian, Russian and Emirati oil officials will do more market analysis in coming weeks, as it is still unclear what the effects will be of the Iran sanctions being put in place by the Washington Administration. An effective U.S. sanctions regime is expected to bring Iranian exports below the 1 MMbpd level, but at present this hasn’t been reached. Iran’s pro-active production and export strategy, which was boosted by a silent increase in export volumes, has been partly behind the current increase in oil volumes in the market. China and others have been taking in additional volumes, which were not being reported. Saudi Arabia and Russia, supported by the UAE and others, also have been trying to grab part of the Iranian oil market in a response to the U.S. sanctions. The Kingdom has also been politically correct in showing its willingness to support U.S. President Trump’s calls for production increases by opening up the taps. However Riyadh, Abu Dhabi and Russia could have been playing a political game by partly supporting Trump’s call for lower oil prices, in a move to give him an election boost during the 2018 Midterm Elections. This is at present in the past, and Riyadh even unilaterally stated that it already is cutting exports by 500,000 barrels per day this month, with possible other cuts being considered. Khalid Al Falih and Russia’s Novak have already been discussing a possible schedule for new production cuts. The gloves will be off again, and Big Oil is looking for a continuation of its market dominance, whatever Washington, Beijing or New Delhi are stating.

Oil Market Report » OMR Public – IEA - Highlights

  • The outlook for global oil demand growth is largely unchanged at 1.3 mb/d in 2018 and 1.4 mb/d in 2019, as a weaker economy is largely offset by lower oil prices. OECD demand is expected to increase by 355 kb/d in 2018, slowing to 285 kb/d in 2019.
  • Oil demand is slowing in several non-OECD countries, as the impact of higher year-on-year prices is amplified by currency devaluations and slowing economic activity. Our non-OECD demand forecast has been revised down by 165 kb/d for 2019.
  • Global oil supplies are growing rapidly, as record output from Saudi Arabia, Russia and the US more than offsets declines from Iran and Venezuela. October output was up 2.6 mb/d on a year ago. Non-OPEC output will grow by 2.4 mb/d this year and 1.9 mb/d in 2019.
  • OPEC crude output rose 200 kb/d in October to 32.99 mb/d, up 240 kb/d on a year ago. Losses of 0.4 mb/d from Iran and 0.6 mb/d from Venezuela were offset by increases from others. The call on OPEC crude falls to 31.3 mb/d in 2019, 1.7 mb/d below current output.
  • After a refine products stocks build of 0.7 mb/d in 3Q18, October refining margins plunged to the lowest levels since 2014. Global refinery throughput is also likely to exceed refined product demand both in 4Q18 and into 2019.
  • OECD commercial stocks rose counter-seasonally by 12.1 mb in September to 2 875 mb. In 3Q18, stocks increased by 58.1 mb (630 kb/d), the largest gain since 2015. OECD holdings are likely to exceed the 5-year average when October data is finalised.
  • ICE Brent prices hit a four-year high of over $86/bbl at the beginning of October but have since fallen back to below $70/bbl. Brent and WTI futures curves have flipped to contango. Except for gasoline and naphtha, product prices did not match the drop in crude prices.

Global oil supply will outpace demand throughout 2019 - Global oil supply will outpace demand throughout 2019, the International Energy Agency forecasted in its latest Oil Market Report. Since midyear, oil supply had increased sharply with gains in the Middle East, Russia, and the US more than compensating for falls in production in Iran, Venezuela, and elsewhere, IEA said. New data show that the pace has accelerated, and this higher output, in combination with Iranian sanctions waivers issued by the US and steady demand growth, implies a stock build in this year’s fourth quarter of 700,000 b/d, according to IEA. Already, oil stocks of countries in the Organization for Economic Cooperation and Development have increased for 4 continuous months, with products back above the 5-year average. Storage tanks are filling up as global oil supply far outpaces demand, prompting talk of a possible 1 million b/d production cut by members of the Organization of Petroleum Exporting Countries and certain other non-OPEC producers. ICE Brent prices hit a 4-year high of more than $86/bbl at the beginning of October but have since fallen back to below $70/bbl. Brent and West Texas Intermediate futures curves have flipped to contango. Except for gasoline and naphtha, product prices did not match the drop in crude prices. Since May, when US sanctions were announced, and Vienna Agreement producers began to unwind cuts, global oil output has soared by a net 1.8 million b/d. The US, with its relentless growth, has provided more than 1 million b/d, Saudi Arabia has ramped up by 620,000 b/d, and Russia has increased by 445,000 b/d. Such record-setting rates have more than made up for declines from Iran (-480,000 b/d), Venezuela (-140,000 b/d), and seasonal declines in Canada (-200,000 b/d) and Kazakhstan (-100,000 kb/d).

Global oil market faces surplus throughout 2019 as demand growth slows - Global oil supply will outpace demand throughout 2019, as a relentless rise in output swamps growth in consumption that is at risk from a slowing economy, the International Energy Agency said on Wednesday.  In its monthly report the Paris-based IEA left its forecast for global demand growth for 2018 and 2019 unchanged from last month at 1.3 million barrels per day (bpd) and 1.4 million bpd, respectively, but cut its forecast for non-OECD demand growth, the engine of expansion in world oil consumption.For the first half of 2019, based on its outlook for non-OPEC production and global demand, and assuming flat OPEC production, the IEA said the implied stock build is 2 million bpd.Output around the world has swelled since the middle of the year, while an escalating trade dispute between the United States and China threatens global economic growth.On Wednesday, three sources familiar with the matter told Reuters that OPEC and its partners are discussing a proposal to cut oil output by up to 1.4 million bpd for 2019 to avert an oversupply that would weaken prices.Since early October, the oil price has fallen by a quarter to below $70 a barrel, its lowest in eight months, which may protect demand to an extent, the IEA said."While slower economic growth in some countries reduces the outlook for oil demand, a significant downward revision to our price assumption is supportive," it added.The agency raised its forecast for oil output growth from countries outside the Organization of the Petroleum Exporting Countries to 2.4 million bpd this year and 1.9 million bpd next year, versus its previous estimate of 2.2 million bpd and 1.8 million bpd, respectively. The United States will lead output growth. The IEA estimates total U.S. oil supply will rise by 2.1 million bpd this year and another 1.3 million bpd in 2019, from a current record of more than 11 million bpd.

Crude’s Collapse Is Sending Shockwaves Across Global Markets Investors have gone from contemplating the prospect of oil at $100 to sub-$50 in less than two months. No wonder global markets are playing catch-up. From stocks and bonds to currencies, assets worldwide are gripped by a crude awakening. Monday saw oil’s largest one-day drop in three years, securing its longest losing streak on record. Early trading jitters on Wednesday suggested the sell-off may not be over, though West Texas Intermediate later climbed after OPEC President Suhail Al Mazrouei said the group and its allies would do what is needed to balance the market. The Stoxx Europe 600 Index dropped on Wednesday, with oil and gas companies among the big losers. There could be more pain in store. The performance of energy shares relative to the broader index has yet to hit year-to-date lows despite elevated price swings in the oil-market complex. In the U.S., energy stocks were the biggest drag on the S&P 500 Index on Tuesday as the benchmark gauge reversed a gain of more than 1 percent to finish in the red. The jump in volatility of the oil price will feed into already bruised U.S. stocks, according to Macro Risk Advisors. The corporate bond market had taken the slide in crude on the chin but Tuesday’s rout may force investors to pay closer attention. U.S. investment-grade debt was already facing the worst year since 2008, and energy securities make up some 15 percent of the BBB rated universe.

U.S. oil prices halt 12-session, record-setting streak of declines - Oil prices finished higher on Wednesday, with U.S. benchmark crude putting an end to its record 12-session streak of declines, as traders weighed rising crude supplies against lingering questions about demand. Natural-gas futures, meanwhile, saw a spectacular climb of about 18%—their biggest in more than 14 years—as cold weather forecasts continued to feed concerns about tight U.S. supplies. West Texas Intermediate oil for December delivery rose 56 cents, or 1%, to settle at $56.25 a barrel, after settling Tuesday at $55.69 on the New York Mercantile Exchange. That was the lowest front-month contract finish since Nov. 16, 2017, and biggest one-day percentage decline, at over 7%, in more than three years, according to Dow Jones Market Data. Global benchmark Brent crude was now down about 23% from its peak in October, with January Brent added 65 cents, or 1%, to $66.12 a barrel Wednesday. The contract tumbled 6.6% to settle at $65.47 a barrel on ICE Futures Europe Tuesday, officially joining its U.S. counterpart in a bear market, defined as at least a 20% pullback from a recent high. “The dramatic selling across the oil markets in recent days has come to a brief pause” Wednesday, “but many remain stunned by the acceleration in aggressive momentum that has transpired over the past couple of sessions,”  “We have not seen such a disastrous day for the oil markets in terms of negative momentum like the one on Tuesday in around three years,”  However, “I think what we need to accept moving forward is that traders are waking up to the significant threat that slowing global growth in 2019 will weaken demand for commodities like oil.”At the same time, more signs of strong supply data may drive price action as the U.S., Russia and Saudi Arabia are pumping crude at record levels, causing global supply to significantly outrun demand, a monthly update from the International Energy Agency showed Wednesday.  IEA also said crude output from the world’s three biggest producers is holding global supply steady, at around 100.7 million barrels a day last month. That’s 2.6 million barrels a day higher than the same period last year. Some analysts think oil’s move has been too dramatic in a short period, with a still-unfolding production picture.

WTI Tumbles Back Below $56 After Bigger Than Expected Crude Build - After bouncing modestly today following oil's worst day in almost 4 years yesterday, amid fund liquidation rumors, supply glut fears (Saudi production surge) and demand concerns (global economic slowdown, cough China cough), traders could be forgiven for ignoring the small matter of tonight's API crude inventory data.A lot of folks threw in the towel and got as bearish as can be so now it was ripe for us to at least attempt to move back higher,” said John Kilduff, a partner at New York-based hedge fund Again Capital LLC. Signals of impending supply cuts “helped stock the bullish spirits back in here for the first time in a while.” API:

  • Crude +8.79mm (+3.2mm exp) - bigest build since Feb
  • Cushing +726k (+2.5mm exp)
  • Gasoline +188k
  • Distillates -3.224mm

This is the 8th weekly crude build (and Cushing) in a row and the biggest crude build since Feb (if it holds for tomorrow's DOE data).  WTI was hovering just above $56 ahead of the inventory data (well off the day's highs above $57), but kneejerked back to a $55 handle on the print.

Did Ya'll See This? API US Crude Oil Inventory --- Up Another Whopping 9 Million Bbls -- November 14, 2018 -- Link here.The American Petroleum Institute reported late Wednesday that U.S. crude supplies rose by 8.8 million barrels for the week ended Nov. 9, according to sources.The API data, which was released a day later than usual because of Monday's Veterans Day holiday, also showed gasoline supplies edged up by 188,000 barrels while distillate stockpiles fell 3.2 million barrels, sources said.Inventory data from the Energy Information Administration will be released Thursday. Analysts polled by S&P Global Platts expect the EIA to report a climb of 2.3 million barrels in crude supplies.   Absolutely incredible.

Oil rises despite jump in US crude stockpiles and production - Oil prices held onto gains on Thursday, despite the U.S. government reporting a large increase in the nation's stockpiles of crude, marking the eighth consecutive week of inventory increases.U.S. commercial crude stockpiles rose by 10.3 million barrels in the week to Nov. 9, the U.S. Energy Information Administration said in its weekly report. That compared with analyst expectations for an increase of 3.2 million barrels in a Reuters survey.Meanwhile, stockpiles of gasoline fell by 1.4 million barrels, while inventories of distillate fuel, which includes diesel and heating fuel, dropped by 3.6 million barrels.  Brent crude oil futures rose 80 cents, or 1.2 percent, to $66.92 a barrel by 11:26 a.m. ET (1626 GMT), while U.S. crude futureswere up 63 cents at $56.88. The gains put the benchmarks on pace for their second consecutive increase, but concern over the prospect of an oversupplied market next year remained in spite of OPEC's message that it may cut crude output.The oil price has lost about a quarter of its value in only six weeks in the face of soaring production led by the United States as well as a slowing global economy.U.S. production hit a new record at 11.7 million barrels per day, according to preliminary figures subject to revision in the EIA report on Thursday."With inventories likely to build in 1Q19, prices could remain under pressure in the near term," Bernstein Energy analysts said in a note.OPEC, led by Saudi Arabia, is considering a cut of up to 1.4 million barrels per day (bpd) next year to avoid the kind of build-up in global inventories that prompted the oil price to crash between 2014 and 2016. "(A cut) helps, but based on my balances, I think we'll need to see 1.5 million bpd at least for the first half of the year. Words aren't going to work.The market is going to need to see action as well," The International Energy Agency (IEA) and OPEC this week warned of a sizeable surplus at least in the first half of 2019, and possibly beyond, given the pace of growth in non-OPEC production and slower demand in heavy consumers such as China and India.

Oil market roiled by too much gasoline, not enough diesel: Kemp (Reuters) - Global oil markets are increasingly over-supplied with light distillates, such as gasoline, while there are not enough middle distillates, such as diesel, which has opened a big price differential between the two fuels. To keep meeting healthy demand for mid-distillates, refiners are processing high volumes of crude and creating a glut of gasoline. U.S. gasoline prices for delivery in June 2019 are trading just $7 per barrel above benchmark Brent futures for the same month, compared with a premium of $18 per barrel for low-sulfur distillate fuel oil. Early in October, the gap in cracking margins was much narrower, with premiums of $14 and $17 per barrel over Brent respectively, but since then gasoline prices have slumped amid fears of over-supply. Gasoline prices have been hit by a combination of record refinery processing in the third quarter and flattening consumption from U.S. motorists which have left the market carrying record stocks for the time of year. Diesel prices, on the other hand, have been supported by strong demand from the freight, manufacturing and mining sectors as well as from oil and gas drillers themselves. Distillate prices are also being supported by the prospect of even higher consumption from the start of 2020 when new pollution regulations on bunker fuels used in the shipping industry come into force. Regulations adopted by the International Maritime Organization will require shipping firms to switch from using heavy fuel oil to middle distillates unless they install expensive scrubbers to clean up their sulfur emissions. Differential growth in light and middle distillate consumption is not a new problem ( Gasoline and diesel consumption are driven by different factors which means that growth rates differ more often than they are the same. Gasoline consumption is more weighted toward private motorists while distillate is geared toward commercial freight transport, aviation, manufacturing, farming, mining and oil and gas production. Gasoline is weighted regionally toward the United States and Japan while distillate is weighted more toward Europe, Latin America, Africa, Asia and the Middle East. As a result, gasoline use tends to be steadier across the business cycle while distillate consumption varies much more with the state of the economy.

'Duped,' 'tricked' and 'snookered': Oil analysts say Trump fooled Saudis into tanking crude prices - Earlier this year, Saudi Arabia pulled off a challenging U-turn in global oil market policy, convincing a fractious group of two dozen nations to hike output and undercut the oil market rally that was filling their coffers.The Saudis undertook this unpopular task at least in part to help its allies in the White House — and for its troubles, the kingdom was rewarded with a series of blistering tweets from President Donald Trump and the biggest pullback in oil prices since the historic downturn of 2014.Oil market analysts say it now appears that Trump hoodwinkedSaudi Arabia, fooling the U.S. ally into pushing the oil market into oversupply and sparking a roughly 25 percent drop in crude prices. That accomplished Trump's goal of driving down energy costs for Americans, but left nations dependent on oil income like Saudi Arabia with the prospect of shrinking revenues.The analysts say Trump essentially bamboozled the Saudis by threatening for months to implement sanctions against Iran so strictly, the Islamic Republic's exports would go into free fall. But when the administration's deadline for oil buyers to quit Iranian oil arrived on Nov. 4, Trump instead dolled out six-month exemptionsto some of the country's biggest customers."They got sort of tricked here," said John Kilduff, founding partner of energy hedge fund Again Capital. "The Russians and the Saudis in particular ramped up production, ramped up exports ahead of what was supposed to be severe sanctions on Iran, and when the administration gave the eight waivers to Iran's largest buyers, it undercut that whole equation.""So now we've tripped into an oversupply situation almost overnight because of the severe reaction by Russia and the Saudis to cover for Iran losses, which never materialized." To be sure, the sanctions have shrunk Iran's exports by about 1 million barrels per day. Few thought the Trump administration would actually achieve its stated goal of cutting its rival's shipments to zero. But the sanctions, backed by the administration's hawkish rhetoric, cut Iran's exports more quickly than many anticipated. The market also expected another big drop after the Nov. 4 deadline passed. That fear fueled a rally that sent oil prices to four-year highs.

OPEC+ Said to Weigh Bigger Production Cut-- OPEC and its allies are considering cutting oil output by more than the 1 million barrels a day Saudi Arabia proposed earlier this week as the group is increasingly worried about the potential for oversupply, people familiar with the matter said. The talks are preliminary, however, and the size of the final production cut will largely depend on the starting point the Organization of Petroleum Exporting Countries and its partners use, said one of the people, asking not to be identified because the discussions are private. In the most recent agreement, the alliance used 2016 output figures as the baseline number, but now they are discussing updating the starting point to a level closer to current production, the person said. The final decision will be taken when producers meet in Vienna in early December. OPEC’s biggest producer, Saudi Arabia, said on Monday that oil producers need to cut 1 million barrels a day, reversing a June decision to boost supply to contain a price rally. The group and its allies first agreed to limit their production starting in January 2017 to drain a global glut. If the so-called OPEC+ group agrees again to reduce output, the baseline should be a recent production level, Saudi Energy Minister Khalid Al-Falih said when ministers met on Nov. 11 in Abu Dhabi. Depending on the final baseline for the production cuts, the reduction could be in the range of 1 million to 1.5 million barrels a day, one of the delegates said. Despite Saudi Arabia’s pledge to cut production, the decline in prices has accelerated this week. Brent crude oil fell 6.6 percent yesterday to just over $65 a barrel. At the start of October, it had reached $86 a barrel. The benchmark recovered to about $67 on Wednesday. OPEC+ will cut or adjust production as needed to balance the market, United Arab Emirates Energy Minister Suhail Al Mazrouei, also OPEC’s current president, said in a Bloomberg TV interview on Wednesday in Abu Dhabi. Oil production is above expectations and OPEC+ needs to change its strategy, he said. Yet Saudi Arabia still has work to do persuading other major producers -- notably Russia, the largest non-OPEC nation in the alliance -- to agree to curbs. “I would not want to focus purely on production cuts,” Russian Energy Minister Alexander Novak said in a Bloomberg television interview on Sunday. “We have to wait and see how the market is unfolding.” 

Brent crude is going back to $75 after likely OPEC supply cut, Goldman commodities chief says --The commodities chief at Goldman Sachs says the oil market sell-off is likely nearing its end and forecasts Brent crude will soon return to $75 a barrel. Oil prices have lost about a quarter of their value in just six weeks, plunging the energy complex into a bear market. Brent crude, the international benchmark for oil prices, dipped below $65 a barrel this week, tumbling from a four-year high near $87 over the last six weeks.The market has pinned the pullback on a broader stock market sell-off in October, forecasts that see oil demand growing less than originally anticipated, and rising oil supplies from major producers.But Jeff Currie, head of commodity research at Goldman Sachs, believes supply and demand is only part of the story. He says investor positioning and one trading strategy in particular are largely responsible for deepening the oil market rout in recent days. That suggests the worst losses for crude futures are likely in the rear view mirror."Our base case is we'll bounce around here," Currie told CNBC's "Squawk on the Street" on Wednesday. "I like to think about it like a pinball machine, but eventually the momentum is going to be to the upside."Currie says concerns about deteriorating demand for oil are "overblown." More pressing, he says, is the surge in output from the United States and Libya, and the Trump administration's decision to allow eight countries to keep importing Iranian crude despite U.S. sanctions on the Islamic Republic.Those factors added about 1 million barrels per day to the market, he said, but they still does not justify a more than 20 percent pullback in oil prices.Currie believes the rapid decline over the last few days was driven by momentum trading, a strategy in which traders buy or sell assets as the price moves decisively higher or lower. That momentum selling largely accounts for U.S. crude prices falling below $60 a barrel and toward $55, according to Currie.At that point, another quirk of the market kicked in. When oil fell to about $55, it triggered selling by swap dealers, who had sold options to oil producers giving them the right to sell the commodity at that price level. Historically, this environment can last for three to four weeks, Currie says. However, rising volatility in oil markets will discourage momentum traders, who like low volatility markets that are either trending higher or lower.

Putin completely satisfied with oil price of $70 per barrel - -One should ensure the optimal oil price for consumers and producers, Russian President Vladimir Putin said at a press conference in Singapore.  "One needs an optimal price for both producers and consumers. The price that we've had just recently - about $70 per barrel - is fine with us," Putin said adding that one should not restrict oil output. Putin also said that the Russian budget was calculated on the price of $40 per barrel. "This gives us an opportunity to feel confident, to work calmly and achieve very good results, which are reflected in macroeconomics," Putin said noting that this year Russia's budget will "most likely" have a surplus. With a minimum external debt of 15% of GDP and a positive trade balance of $100-120 billion, there is a "good base" to achieve higher GDP growth rates and deal with structural changes. On November 13, oil prices fell by almost seven percent - by $4.65. January futures for Brent closed at $65.47 a barrel, whereas December futures for WTI crude also fell by $4.24 to $55.69 per barrel. However, on November 14, oil prices (Brent) climbed higher than $66 per barrel. See more at

Oil Prices Mixed In Choppy Trade -  Oil prices were mixed in choppy trade Thursday amid concerns about oversupply and fears surrounding potential slowdown in the global economy. Global benchmark Brent crude rose 0.23 percent to $66.27 per barrel while U.S. West Texas Intermediate (WTI) crude futures were down about half a percent at $55.97 per barrel. Analysts expect slower growth in oil demand from both China and the U.S. next year, given the concerns about a possible slowdown of the global economy and associated uncertainties. In its monthly report earlier this week, OPEC revised its forecast for 2019 oil demand lower for the fourth consecutive month. The oil cartel expects oil demand to grow by 1.29 million barrels per day in 2019, down 70,000 bpd from its projection last month. At the same time, supply has been surging amid a massive increase in U.S crude oil production. Russia and Saudi Arabia are also pumping crude at record levels. With American Petroleum Institute (API) reporting a sizeable crude oil inventory build for the week ending on November 9th, traders now await the EIA's weekly report on petroleum inventories for further direction.

Wow! EIA: US Crude Oil Inventories Jumped 10.3 Million Bbls -- Even More Than API Estimate -- Now At 442.1 Million Bbls -- November 15, 2018 - Weekly petroleum report, EIA: posted. Yesterday's API report showed a whopping 9 million-bbl increase. Today, EIA validates that estimate:

  • US crude oil inventories: surged 10.3 million bbls -- most I have ever seen; this must be a record
  • US crude oil inventories: now back to 440 million bbls -- near the level at which the industry said "we" needed to re-balance a few years ago
  • US crude oil inventories: 5% above 5-year average
  • US crude oil inventories: no evidence to suggest the trend will change
  • refineries operating at 90.1% capacity; unchanged from last week; at lower end of capacity
  • distillate fuel up by a whopping 8% from same period last year

Natural gas fill rate. Link here. Small print in the graphic below:

  • natural gas inventories are 528 Bcf less than last year at this time
  • natural gas inventories are 601 Bcf less than the five-year average
  • at 3,247 Bcf, total working gas is [well] below the five-year historical range

Oil Algos Panic-Buy Despite Biggest Crude Build In 21 Months, Production Surges - After bouncing modestly following a record 12-day losing streak into a bear market, last night's API-reported surprisingly large crude build spooked WTI back down once again. Those losses have been reversed after a sudden plunge at 5amET, since then WTI is a one way street higher (above $57). “The fact that U.S. crude-oil stocks are still rising sharply shows that the oil market is already oversupplied,” Commerzbank AG analyst Eugen Weinbergwrote in a report.  DOE:

  • Crude +10.27mm (+3.2mm exp) - biggest build since Feb 2017
  • Cushing  (+2.5mm exp)
  • Gasoline -1.41mm
  • Distillates

This is the eight weekly crude build in a row (and the largest build since February 2017)... Overall, US Crude inventories have risen for 8 straight weeks, rebounding back to the 5-year average (and well above the 1980-2014 normal range)...

Upset by Trump's Iran waivers, Saudis push for deep oil output cut (Reuters) - When U.S. President Donald Trump asked Saudi Arabia this summer to raise oil production to compensate for lower crude exports from Iran, Riyadh swiftly told Washington it would do so.  But Saudi Arabia did not receive advance warning when Trump made a U-turn by offering generous waivers that are keeping more Iranian crude in the market instead of driving exports from Riyadh’s arch-rival down to zero, OPEC and industry sources say.Angered by the U.S. move that has raised worries about over supply, Saudi Arabia is now considering cutting output with OPEC and its allies by about 1.4 million barrels per day (bpd) or 1.5 percent of global supply, sources told Reuters this week. “The Saudis are very angry at Trump. They don’t trust him any more and feel very strongly about a cut. They had no heads-up about the waivers,” said one senior source briefed on Saudi energy policies. Washington has said the waivers are a temporary concession to allies that imported Iranian crude and might have struggled to find other supplies quickly when U.S. sanctions were imposed on Nov. 4. U.S. Secretary of State Mike Pompeo said on Nov. 5 that cutting Iranian exports “to zero immediately” would have shocked the market. “I don’t want to lift oil prices,” he said. A U.S. source with knowledge of the matter said: “The Saudis were going to be angry either way with the waivers, pre-briefed or even after the announcement.” A U.S. State Department official said: “We don’t discuss diplomatic communications.” The U.S. shift toward offering waivers adds to tension between the United States and Saudi Arabia, as Washington pushes for Riyadh to shed full light on the murder of Saudi journalist Jamal Khashoggi in the Saudi consulate in Turkey. “The Saudis feel they were completely snookered by Trump. They did everything to raise supplies assuming Washington would push for very harsh Iranian sanctions. And they didn’t get any heads up from the U.S. that Iran will get softer sanctions,” said a second source briefed on Saudi oil thinking.

Russia wants to steer clear of any OPEC-led oil production cut: sources W (Reuters) - Russia wants to stay out of any oil-production cuts being touted by some of its partners in an OPEC-led supply pact, two high-ranking Russian sources told Reuters. Worried by a drop in oil prices due to slowing demand and record supply from Saudi Arabia, Russia and the United States, the Organization of the Petroleum Exporting Countries is talking about a policy U-turn just months after increasing production. Russian President Vladimir Putin on Thursday avoided giving a direct answer on whether production should be limited, but said he had discussed the situation in global oil markets with U.S. President Donald Trump. “We need to be very accurate here, each word matters,” Putin told reporters in Singapore. “But the fact that the cooperation (with OPEC) is needed is obvious and we will cooperate.” This week, Trump said he hoped Saudi Arabia and the rest of OPEC would not cut production. Putin said an oil price of around $70 per barrel suited Russia. A steep slide in prices has surprised many oil market participants. Brent crude has fallen from a four-year high of $86 a barrel in early October to $66 as of Thursday. Just weeks ago, some trading firms were talking of $100 oil. “I think (oil) production should not be lowered. Yes, we have done this in the past but this was not the right systematic approach,” a senior Russian government source said. “Oil production in Russia has been on the rise in recent years, by around 100,000 barrels per day each year, and it will continue to do so in future.” Earlier this week, three sources familiar with the issue said OPEC and its partners were discussing a proposal to cut oil output by 1.4 million barrels per day (bpd), although Russia may not be on board for such a large reduction. Another source familiar with Russian thinking said Moscow may support smaller cuts, most likely by other producers. “We think 1 million bpd (cuts) is more realistic, not 1.4 million bpd ... But who is going to do this is another question,” the source said. Putin said last month that Russia was able to add another 200,000–300,000 bpd to its production. Russia pumped 11.41 million bpd in October, a post-Soviet high. October’s level was proposed by Saudi Energy Minister Khalid al-Falih as the reference point for any cut. 

Oil prices stable on expected OPEC cuts, but surging US supply drags --Oil rose on Friday on hopes that supply cuts will be agreed at OPEC's meeting on Dec. 6, but failed to recoup recent losses on oversupply concerns that have shaved more than a fifth off the Brent crude benchmark since early October.Brent was up 85 cents at $67.47 a barrel by 0929 GMT. It has been recovering for three sessions since hitting an eight-month low on Tuesday but is still on course for a weekly loss of about 4 percent.U.S. West Texas Intermediate (WTI) futures rose 55 cents to $57.01 a barrel after their steepest one-day loss in more than three years on Tuesday.With WTI set for a weekly loss of about 5.3 percent, both benchmarks are poised to chalk up their sixth consecutive weekly drop."The trend is down - stick with it," PVM technical analyst Robin Bieber said.Prices were mainly supported by expectations that the Organization of the Petroleum Exporting Countries (OPEC) would start withholding supply soon, fearing a repeat of the 2014 price rout.Some analysts said an extended rally is possible with support from U.S. sanctions on Iranian oil once current waivers expire, as well as lower Venezuelan production and uncertainly over Libyan output."We are likely from December onwards to have at least 1 million barrels a day less of crude exports," Harry Tchilinguirian, global head of commodity markets strategy at BNP Paribas, told the Reuters Global Oil Forum.Tchilinguirian said he would not be surprised if Brent hit $80 a barrel this year.OPEC's de facto leader, Saudi Arabia, wants the cartel to cut output by about 1.4 million barrels per day (bpd), around 1.5 percent of global supply, sources told Reuters this week.The Saudis would ideally have Russia participate but Russia has yet to commit to any renewed joint action.

Oil Rebounds On Hopes Of OPEC+ Action - Oil prices posted some gains on Thursday and in early trading on Friday, rising on the hope that OPEC+ might agree to a production cut in early December.  The IEA said in its latest Oil Market Report that the OPEC+ coalition had largely succeeded in heading off the tightening oil market. Major oil producers within OPEC+ may not be that pleased with the price decline, but the IEA welcomed the surge in supply. “Rising stocks should be welcomed as a form of insurance, rather than a threat,” the agency said Wednesday. Reuters reports that Saudi officials were reportedly caught off guard by the degree to which the Trump administration offered waivers on Iran sanctions. The waivers to eight countries will largely allow Iran to continue exporting oil and it effectively caps the potential outages from Iran in the short run. Those waivers are widely cited as one of the most important drivers in the recent oil price meltdown, something that Riyadh is not happy about. Saudi Arabia ramped up supply on the understanding that Iran’s exports would be going offline. Saudi sources told Reuters that the Saudi government feels betrayed by the Trump administration and that they are more determined than ever to engineer a production cut in order to put a floor beneath prices. Riyadh already announced that it would cut exports by 500,000 bpd in December. A senior Russian official told Reuters that Russia was not keen on reducing output, despite reports that OPEC+ is considering such an option. “I think (oil) production should not be lowered. Yes, we have done this in the past but this was not the right systematic approach,” a senior Russian government source said. Russian President Vladimir Putin was more careful and non-committal in recent comments, saying only that Russia will continue to cooperate with OPEC.  The Trump administration deserves a lot of blame for the recent plunge in oil prices, according to Citibank. The waivers on Iran sanctions, U.S. shale growth, Trump’s tweets about OPEC, and the trade war with China have all contributed to a declining oil price. “The oversupply in the market is a made-in-America phenomenon,” Citi’s Ed Morse told Bloomberg. “It’s the unexpected consequences of American policy and the unintended impact of technological changes that made this historically unprecedented arena for production growth blossom.”

Rig Count Inches Higher Despite Oil Price Slide -- Baker Hughes reported a 1-rig increase for oil and gas in the United States this week—a far more tempered figure after last week’s 14-rig increase. The total number of active oil and gas drilling rigs to 1,082 according to the report, with the number of active oil rigs increasing by 2 to reach 888 and the number of gas rigs falling by 1 to reach 194. The oil and gas rig count is now 167 up from this time last year. Crude oil prices picked up earlier in the trading day as data showed that Saudi Arabia has been slashing oil exports to the United States in an effort to lessen transparent stockpiles here in the States. The WTI benchmark was trading up 1.09% (+0.62) at $57.30 at 11:39 am EST, with Brent trading up 1.10% (+0.73) at $67.35. Both benchmarks are dollars below this time last week Earlier in the week, oil prices saw the largest daily loss in year, but the fall was arrested by OPEC’s talks about even more production cuts on the horizon—possibly a cut of 1 million bpd—although nothing official has been announced. Canada’s oil and gas rigs for the week increased by 1 rigs this week after losing 2 rigs last week, bringing its total oil and gas rig count to 197, which is 11 fewer rigs than this time last year, with a 1-rig increase for oil rigs, and no change to the number of gas rigs. The EIA’s estimates for US production for the week ending November 9 were for an average of 11.7 million bpd­—a brand new record high that has contributed in part to the lower prices. By 1:08pm EDT, WTI was trading up 0.51% (+$0.29) at $56.97. Brent crude was trading up 0.62% (+$0.41) at $67.03 per barrel, still down week on week.

Oil Poised for Sixth Weekly Loss-- Oil is poised for a sixth weekly loss, trading near $57 a barrel as lingering concerns over a supply glut continue to weigh on the market. Futures in New York rose 1.1 percent on Friday, trimming the weekly drop to 5.2 percent. Government data on Thursday showed American crude inventories rose the most in 21 months last week as output hit a record high. With the Organization of Petroleum Exporting Countries seeing declining demand for its oil, the group and its allies are said to be considering bigger-than-expected cuts despite criticism from U.S. President Donald Trump. Oil is in a bear market after plunging from a four-year high in October on concerns over a glut, following surprise American waivers allowing some Iranian oil flows to continue even after its sanctions against the Islamic Republic took effect. Meanwhile, the outlook for demand remains uncertain due to ongoing trade tensions between the U.S. and China. And speculation is swirling over the output strategy of OPEC and its allies including Russia before they meet in Vienna in early December. “It remains to be seen whether oil markets have bottomed out with a price slump coming to a pause” with various reports pointing to a loosening supply and demand balance, Jun Inoue, a senior economist at Mizuho Research Institute Ltd., said by phone from Tokyo. “The prospect of OPEC and allies cutting production and maintaining it for a certain period of time could increase as their December meeting approaches, supporting prices.” West Texas Intermediate for December delivery traded 61 cents higher at $57.07 a barrel on the New York Mercantile Exchange at 4:53 p.m. in Tokyo. The contract advanced 21 cents to $56.46 on Thursday. Total volume traded was about 9 percent below the 100-day average. Brent for January settlement rose $1 to $67.62 a barrel on the London-based ICE Futures Europe exchange. The contract has dropped 3.5 percent this week. The global benchmark crude traded at a $10.18 premium to WTI for the same month. The dollar staying near an 18-month high has also reduced the appeal of commodities priced in the U.S. currency.

Oil prices suffer sixth weekly loss in a row --Futures prices for U.S. oil settled flat on Friday as global crude gained, but both benchmarks suffered sizable losses for a sixth week in a row. Talk of production cuts among major oil producers provided some support to prices, but a supply build, including in the latest U.S. data out Thursday, has pushed the market down for the week. Evidence of weakening global economic growth and the decision by the Trump administration to grant waivers to major buyers of Iranian crude following the enactment of sanctions added further pressure. Sanctions had been expected to keep most Iranian oil off the market. December West Texas Intermediate crude settled unchanged at $56.46 a barrel, down from a high near $58. Phil Flynn, senior market analyst at Price Futures Group, said the resumption of oil exports Friday from the Kirkuk region in Iraq was behind a brief turn lower for oil prices. Exports from the region had been halted since federal forces retook control of it more than a year ago, according to the Financial Times. Prices for the U.S. benchmark were down 6.2% for the week. A late-week recovery for WTI allowed the benchmark to halt what had been a record 12-session streak of declines, which took it on Tuesday down to $55.69 on the New York Mercantile Exchange. It was the lowest closing price for a front-month contract since Nov. 16, 2017, according to Dow Jones Market Data. The December contract expires at Monday’s settlement. Global benchmark January Brent added 14 cents, or 0.2%, to $66.76 a barrel on Friday. Its close at $65.47 a barrel on ICE Futures Europe, also on Tuesday, meant it officially joined its U.S. counterpart in a bear market, defined as at least a 20% pullback from a recent high. The contract saw a roughly 4.9% retreat from where it finished last Friday. Supply concerns continue to drive trading. On Thursday, the Energy Information Administration reported that domestic-crude supplies rose for an eighth straight week—up 10.3 million barrels for the period ended Nov. 9. Crude stocks at Cushing, Okla., the delivery hub for Nymex oil futures, saw another large build last week, while U.S. production rose to another record, analysts noted. “Price reaction to the U.S. inventory data shows that negative news is now largely priced in ...this was the eighth consecutive weekly rise in U.S. crude oil stocks, during which time stocks soared by a total of 48 million barrels. This highlights the need for OPEC to cut production,”

NATO Commits Long-Term to Military Training Mission In Iraq - NATO has committed to a long-term military training effort in Iraq, where the Iraqi Security Forces are still struggling against pockets of ISIS fighters in several areas despite declaring victory over the terror group nearly a year ago, a British officer with the U.S.-led coalition said Tuesday. Maj. Gen. Christopher Ghika, deputy commander for strategy for Combined Joint Task Force-Operation Inherent Resolve, also announced that the U.S.-backed Syrian Democratic Forces had renewed a stalled offensive in northeastern Syria against an estimated 1,500-2,000 fighters of the Islamic State in and around the town of al-Tanf. In a video briefing from Baghdad to reporters at the Pentagon, Ghika said the new, open-ended NATO training mission in Iraq would begin early next year and would essentially involve teacher-on-teacher instruction. "It's going to focus its efforts on the institutional education establishments, such as the National Defense University, the Staff College, the institutional structure of the Iraqi Ministry of Defense," Ghika said. In addition, the NATO instructors will be involved with some of the schools "which are building military capability in areas such as engineering, such as infantry fighting and things like that," Ghika said. The NATO instructors "will focus themselves on teaching the Iraqis, who will be instructing in those schools, rather than actually instructing in some of the combat skills," he said. He declined to say which NATO countries would be participating or how many personnel they would contribute. Last December, Iraqi Prime Minister Haider al-Abadi declared "final victory" over ISIS, but Ghika described recent fighting in widely separated areas of the country. Ghika said the Iraqi Security Forces were now conducting Operation Last Warning, which he said was "a series of coordinated military efforts" that began in the Anbar region, targeting small pockets of ISIS fighters, and has broadened to include the whole country. 

Saudis Close to Crown Prince Discussed Assassinations Before Khashoggi Killing - NYT - — Top Saudi intelligence officials close to Crown Prince Mohammed bin Salman asked a small group of businessmen last year about using private companies to assassinate Iranian enemies of the kingdom, according to three people familiar with the discussions. The Saudis inquired at a time when Prince Mohammed, then the deputy crown prince and defense minister, was consolidating power and directing his advisers to escalate military and intelligence operations outside the kingdom. Their discussions, more than a year before the killing of the journalist Jamal Khashoggi, indicate that top Saudi officials have considered assassinations since the beginning of Prince Mohammed’s ascent. Saudi officials have portrayed Mr. Khashoggi’s death as a rogue killing ordered by an official who has since been fired. But that official, Maj. Gen. Ahmed al-Assiri, was present for a meeting in March 2017 in Riyadh, the Saudi capital, where the businessmen pitched a $2 billion plan to use private intelligence operatives to try to sabotage the Iranian economy.The interest in assassinations, covert operations and military campaigns like the war in Yemen — overseen by Prince Mohammed — is a change for the kingdom, which historically has avoided an adventurous foreign policy that could create instability and imperil Saudi Arabia’s comfortable position as one of the world’s largest oil suppliers.

New Images Of Alleged “Torture Kit” Used On Saudi Journalist NBC (video).

Saudi Arabia Seeks Death Penalty for Five Khashoggi Murder Suspects - Saudi public prosecution says five out of 21 defendants have been found guilty of killing Khashoggi – but that Mohammed bin Salman wasn’t involved.— Saudi Arabia is seeking the death penalty for five people convicted of killing prominent Saudi journalist Jamal Khashoggi, Saudi media reported on Thursday. According to a press statement read by the deputy Saudi public prosecutor and spokesman Shaalan al-Shaalan, 11 defendants in the Khashoggi trial have been convicted in relation to the murder, which took place on 2 October at the Saudi consulate in Istanbul.   Saudi authorities had said that 21 suspects were detained as part of the murder investigations. But the public prosecution said in its Thursday statement that only 11 of them had been indicted thus far, five of whom were charged with “ordering and committing the crime”.The prosecution made no direct mention of Crown Prince Mohammed bin Salman – commonly referred to as MBS – who, despite Saudi denials, is widely believed to have had knowledge of the plan to kill Khashoggi.The Saudi version of events does not explain the presence of a forensic doctor specialised in speedy autopsies and equipped with a bone saw at the consulate.The statement added that the sacked deputy chief of Saudi intelligence, Ahmed al-Assiri, had formed a team to repatriate Khashoggi to his home country, and that a former royal adviser had taken part in preparing the operation.“The leader of the mission to repatriate Khashoggi decided to kill him when he failed to convince him to return,” Shaalan said. In response to Saudi findings, Turkish Foreign Minister, Mevlut Cavusoglu, said that Ankara is “not satisfied” and that it still believes the murder was pre-planned. He reiterated Turkey’s call for an international investigation.

French remarks on Khashoggi affair prompt Turkish anger (Reuters) - Turkey reacted with fury on Monday after French Foreign Minister Jean-Yves Le Drian said President Tayyip Erdogan was playing a political game over sharing intelligence about the killing of Saudi journalist Jamal Khashoggi. Le Drian had questioned remarks by Erdogan at the weekend in which he said Turkey gave tapes relating to Khashoggi's killing to the United States, Saudi Arabia, Germany, France and Britain. Le Drian said he was not aware that France had any tapes. Asked if Erdogan was lying, he said: "He has a political game to play in these circumstances". That prompted a furious response from Ankara, which insisted it had shared evidence with Paris and said Le Drian's comments were unacceptable. "Our intelligence shared information with them on Oct 24, including the voice recordings," Foreign Minister Mevlut Cavusoglu said. "It is very impudent for them to accuse our president of playing political games." "What's behind the remarks of the French foreign minister? I wonder if they are trying to cover up the murder," he added. The furious Turkish remarks towards France were the most direct public expression yet of a concern in Ankara that Western countries with close commercial relations with Riyadh might soft-pedal their response to the Khashoggi killing. Seeking to clarify Le Drian's comments, a senior French diplomat later said the minister never commented on intelligence shared between countries and that he was neither confirming or denying French officials having listened to recordings. "What counts for us is to establish the complete truth ... whatever one may think of the recordings the entire truth can't be based on the Turkish recordings. We are still waiting for elements from the Saudis," the diplomat said. The dispute between Ankara and Paris may hinge on Erdogan's account that Turkey "gave" recordings to the other countries. Turkish officials said instead that France had been allowed to hear a recording, and blamed France for the misunderstanding. "If there is miscommunication between the French government’s various agencies, it is up to the French authorities – not Turkey — to take care of that problem," Erdogan's communications director Fahrettin Altun said.

Turkey's Sea Bandit Threats Are Indirectly Aimed Against The US - Turkish President Erdogan warned against so-called “sea bandits”. He was speaking in regards to the controversial issue of energy exploration in disputed Aegean and Eastern Mediterranean territories along his country’s maritime borders with Greece and Cyprus, the latter of which is comprised of a northeastern third that declared itself the “Turkish Republic of Northern Cyprus” and is only recognized by Ankara.  The Turkish leader threatened that his country “will not allow bandits in the seas to roam free just like we made the terrorists in Syria pay”, which strongly implies its intentions to militarily defend it and its ally’s interests against the much weaker forces of Greece and Cyprus, despite the first-mentioned being a “fellow” member of NATO. It’s more than likely bluster at this point, but his eyebrow-raising rhetoric draws attention to some very important trends. The first is that maritime tensions along Turkey’s western and southern peripheries have been heating up, partially due to Israel’s prospective plans to build an “EastMed” gas pipeline connecting the self-proclaimed “Jewish State” with Italy via Cyprus and Greece. Not only could drilling take place off of the divided island, but its internationally recognized government could also receive a windfall of revenue by facilitating this pipeline’s transit across its maritime territory, funds that might be withheld from the northeastern region pending an official resolution of the conflict on Nicosia’s terms. The second trend that President Erdogan’s polemics seem to address is the increasing sense that his country is being “contained” along its maritime and mainland borders, the first of which was just touched upon while the second deals with the Syrian Kurds and Armenia. It’s well known that Ankara regards the PYG-YPG as terrorists and has militarily intervened against them twice in Syria, while there’s a looming unease that the new pro-Western Color Revolutionary government of Nikol Pashinyan in Armenia might move uncomfortably closer to the US in the coming future.

Saudi Journalist Tortured To Death After Online Identity Exposed By Regional Twitter HQ - Another Saudi journalist was reported tortured and killed at the hands of Saudi authorities last week, but this time the Saudis may have actually had assistance from Twitter in uncovering the identity behind a controversial account which led to the detention of the journalist. Arabic news source The New Khaleej was the first to report that Saudi journalist and writer Turki Bin Abdul Aziz Al-Jasser died after being tortured while in detention after his initial arrest last March. According to the report his arrest came after it was learned that he administered the Twitter account Kashkool which was known for highlighting human rights violations and crimes committed by the royal family and government officials. The Twitter account is still online after it stopped tweeting to its 183,000 followers early lost March prior to that it appeared to tweet frequently in Arabic and sometimes in English. The New Khalieej report was the first to reveal that authorities identified Al-Jasser's online identity using informants in Twitter’s regional office located in Dubai. And following up on the story, the UK's highest circulation newspaper Metro late last week published an explosive report that quickly went viral as it cited sources confirming leaked information out of Twitter's offices in the region led to the arrest of the dissident journalist.  According to the Metro report: "They got his information from the Twitter office in Dubai. That is how he was arrested,"

Yemen – Holding Hodeidah Is The Houthi’s Last Chance - The UAE and its mercenaries have renewed a large attack on Hodeidah. Should they capture it they will control all supplies to the Houthi areas. The Saudis and the UAE seem to use the 30 days Trump has given them for maximum gain.  The city and its port are the only way left to provide food to some 20 million people living in the capital Sanaa and the northern highlands. Should Hodeidah fall, the Houthi and their allies will have to submit to the Saudis or see their people die of starvation. The Norwegian Refugee Council (NRC), which works in Hodeidah, notes: There is now only one viable overland route from Hodeidah city to Sana'a, and a very high risk that further aerial or land attacks on roads or bridges could sever access roads between the cities entirely, cutting the last remaining supply route for food, fuel and medicine to many of the estimated 20 million Yemenis who depend on imports through Hodeidah to meet their basic needs. Currently the Houthi try the same tactic that broke earlier UAE attempts to conquer Hodeidah (upper left). They cut the long UAE supply line coming from the south along the western coast over which the attacking force (red) is provided with food, fuel and ammunition. If the latest news is correct they achieved that in two places. bigger It is relatively easy to interrupt the logistic line for a few hours. It is far more difficult to hold the blocking positions. The landscape along the coast is flat and the UAE proxy forces have tanks, artillery and air support, all of which the Houthi lack. They are mountain infantry fighters and have no means to defend themselves on flat land. They will have to resort to constant surprise attacks in different locations along the supply line to keep the UAE forces off balance. They are somewhat successful (pics) with that. It is not known if they have the manpower and ammunition reserves to maintain such attacks for long.

UAE backs ‘early’ UN peace talks to end Yemen conflict The United Arab Emirates on Wednesday backed the "early convening" of planned United Nations peace talks about the conflict in Yemen. Anwar Gargash, UAE's foreign minister, wrote on Twitter that "we welcome early convening of UN-led talks in Sweden." "At UNSC meeting on Friday, Coalition will urge all parties to take advantage of window of opportunity to restart political process. We look forward to hosting [UN special envoy] Martin Griffiths this week in Abu Dhabi." The UAE, along with Saudi Arabia, is leading the Arab-coalition of troops in the war against Houthi rebels in Yemen. The UN said it planned to reconvene peace talks in Sweden by the end of the year. The last attempt in Geneva collapsed when the Houthi delegation failed to arrive. The United States has assisted the coalition forces, but recently announced plans to end in-air refueling of their planes, which had been the most concrete form of support for the war.

Saudi Crown Prince “Tried to Persuade Netanyahu to Go to War in Gaza”: Report -- War was among scenarios suggested by damage-limitation task force established to advise Saudi crown prince in aftermath of Khashoggi killing. Saudi Crown Prince Mohammed bin Salman attempted to persuade Israeli Prime Minister Benjamin Netanyahu to start a conflict with Hamas in Gaza as part of a plan to divert attention from the killing of journalist Jamal Khashoggi, sources inside Saudi Arabia have told Middle East Eye. A war in Gaza was among a range of measures and scenarios proposed by an emergency task force set up to counter increasingly damaging leaks about Khashoggi’s murder coming from Turkish authorities, according to sources with knowledge of the group’s activities. The task force, which is composed of officials from the royal court, the foreign and defence ministries, and the intelligence service, briefs the the crown prince every six hours, MEE was told. It advised bin Salman that a war in Gaza would distract Trump’s attention and refocus Washington’s attention on the role Saudi Arabia plays in bolstering Israeli strategic interests.It also advised bin Salman to “neutralise Turkey by all means” – including attempts to bribe Turkish President Recep Tayyip Erdogan with offers to buy Turkish arms and statements by the crown prince attempting to shore up relations between Riyadh and Ankara.  In comments made at last month’s Future Investment Initiative, bin Salman claimed Khashoggi’s murder was being used to drive a wedge between Saudi Arabia and Turkey. He said that would not happen “as long as there is a king called King Salman bin Abdelaziz and a crown prince called Mohammed bin Salman in Saudi Arabia”.Khashoggi was brutally killed in the Saudi consulate in Istanbul on 2 October, in an operation which Turkish authorities believe was carried out by a hit squad whose suspected members contained several members of bin Salman’s personal bodyguards. Saudi officials have denied that the crown prince has “any knowledge whatsoever” of Khashoggi’s killing. Some of the task force’s other recommendations were leaked to a close confidant of bin Salman, Turki Aldakhil, the general manager of the Al Arabiya news channel. He revealed “more than 30 potential measures” that Riyadh could take if Washington imposed sanctions. He said the kingdom was capable or doubling or tripling the price of oil, of offering Russia a military base in the north of the country, and of turning to both Russia and China as its main arms suppliers. Two weeks after the murder, Saudis government sources also noted an abrupt change of tone in Netanyahu’s remarks about Hamas during negotiations with Qatar aimed at easing the blockade on the Gaza Strip. Netanyahu told his cabinet meeting on 14 October: “We are very close to a different kind of activity, an activity that will include very powerful blows. If it has sense, Hamas will stop firing and stop these violent disturbances, now.”

Israel Conducts Daring Special Forces Raid Deep Into Gaza, Kills Top Commander - Major Israeli operations occurred in the Gaza Strip in the night hours of Sunday during which Palestinian medical sources say at least 6 people have been killed in what was a daring Israeli elite forces raid that breached about 3 kilometers into Palestinian territory.Palestinian officials confirmed an Israeli special forces raid on a group of Hamas commanders in the city of Khan Younis, which the Israeli Defense Forces (IDF) say killed suspected Hamas terrorists, including a senior commander in its military wing. Israeli media sources uploaded a military video of the brazen raid into Gaza:תיעוד התקיפות בעזה-   Hamas sources say the group returned fire upon Israeli soldiers, resulting in unconfirmed reports circulating that one IDF soldier was either nabbed or killed.  Responding to the early reports, the IDF denied that one of its soldiers had either been killed or captured. Hamas meanwhile acknowledged that a top Qassam Brigades commander, Nour Baraka, was killed by Israeli special forces who entered the area by driving what it described as a “civilian vehicle”. Gaza's Interior Ministry reported at least one other Hamas commander killed in the shootout which began when the Israeli commandos ambushed the Hamas location in a drive-by shooting.  The Israeli military confirmed that “an exchange of fire broke out during security activities by the IDF in the Gaza Strip region,” but did not elaborate further. Israeli warplanes and drones began striking the Gaza during the raid.

The Short War With Gaza Exposed Israel’s Weakness - Last week a ceasefire was agreed upon between Palestinian factions in Gaza and Israel:The aim of the change, in a plan mediated by Egypt and with money supplied by Qatar, is to provide much-needed relief for Gaza, restore calm on the Israeli side of the border and avert another war.On Sunday night Israeli special forces broke the ceasefire by invading Gaza under disguise. Such incursions happen quite often but are usually left unreported. The invaders wore civilian clothing and some were cloaked as women. Their cars arrived at the house of a local Qassam commander but suspicious guards held them up. A firefight ensued in which 7 Palestinians and 1 Israeli officer were killed. It is not clear what the intent of the Israeli raid was. A car left behind held what appeared to be surveillance equipment. The intruders fled back to Israel.It is likely that rivalry within the Israeli government was behind this provocation:[T]he perception that Israel, by allowing the fuel and cash shipments into Gaza, was paying off Hamas set off acrimonious wrangling between two rival right-wing members of Israel’s security cabinet. Earlier Sunday, Education Minister Naftali Bennett called the cash infusion “protection money.” Defense Minister Avigdor Lieberman accused Mr. Bennett of having supported such payments and of having opposed in recent weeks the more aggressive military reprisals against Hamas that Mr. Lieberman favored. ..By night’s end Mr. Netanyahu had cut short his trip [to Paris] and was flying back to Israel in response to the Gaza hostilities. Did Lieberman order the incursion to undercut Netanyahoo ceasefire and his rival Bennet?

Celebrities Raised $60 Million for the Israeli Military Before It Bombed Gaza — Just two weeks before Israel pounded Gaza with bombs last night, over 1,200 celebrities came together to raise a record-breaking $60 million to support the Israeli Defense Forces and Israel’s occupation of Palestine at a gala called Friends of Israeli Defense Forces (FIDF).The Israeli jets bombing the Gaza Strip targeted the Al-Aqsa TV headquarters and killed at least five Palestinians.At least 214 Palestinians have been killed and over 18,000 wounded since beginning the Great Return March on the 30th of March this year, coinciding with the Trump administration’s decision to move Washington’s embassy from Tel Aviv to the holy Palestinian city of Jerusalem Al-Quds.Despite their support for seemingly progressive politics at home, these celebrities apparently see no contradiction in supporting the U.S.-backed Israeli occupation of Palestine and blockade of Gaza — the world’s largest open-air prison, which Israel has bombed to rubble.Ninety percent of Gaza’s main water supply is unfit for consumption (including agricultural use) due to contamination from sewage. Meanwhile, children must pass through military checkpoints and risk death to attend school each day. Here are some of the most prominent celebrities who attended the gala last weekend to support the Israeli occupation and its ongoing assault on the Palestinian people.

Noam Chomsky Warns of the Rise of ‘Judeo-Nazi Tendencies’ in Israel — Prominent Jewish intellectual Noam Chomsky has raised concerns over what he believes is the rise of “Judeo-Nazi tendencies” in Israel. Speaking to i24NEWS last week, the renowned political dissident, linguist and scholar repeated warnings given by Yeshayahu Leibowitz, an Israeli public intellectual, biochemist and polymath, concerning the dehumanising effect of Israel’s brutal occupation of Palestine on the victims and the oppressors.

The Twisted Logic of the Jewish ‘Historic Right’ to Israel - Haaretz. I enjoy the vacillations of Chaim Gans, even if I don’t always understand them.  In the article, “From rabid Zionism to egalitarian Zionism” (November 9), Gans writes, “because, according to [Sand], there is purportedly no genetic continuity between ancient and modern Jewry, it follows that the Jewish nationhood engendered by Zionism is a total fabrication, a nationhood created out of thin air.”  If my assumption that Gans has perused my books is correct, he appears to have read them both too quickly and at a diagonal. Since the publication of my first book "The invention of the Jewish people" a decade ago, I have made a point of emphasizing that it’s not only Jews who don’t possess a common DNA – neither do all other human groups that claim to be peoples or nations – besides which I have never thought that genetics can confer national rights. For example, the French are not the direct descendants of the Gauls, just as the Germans are not the offspring of the Teutons or of the ancient Aryans, even if until a little more than half a century ago many idiots believed just that. One trait that all peoples have in common is that they are retroactive inventions with no distinctive genetic "traits." The acute problem that genuinely disturbs me is that I live in a singular political and pedagogical culture that continues persistently to see the Jews as the direct descendants of the ancient Hebrews.  The founding myth of Zionism – which proceeds in an unbroken line from Max Nordau and Arthur Ruppin, to worrisome geneticists in several Israeli universities and at Yeshiva University in New York – acts as the principal ideological glue for the nation’s everlasting unity, and today more than ever. The justification for Zionist settlement/colonization (choose your preferred term – they mean the same thing) is the meta-paradigm that is expressed in the declaration of the establishment of the state, namely: “We were here, we were uprooted, we came back.”   Even when I believed, mistakenly, that the “Jewish people” was exiled by the Romans in 70 C.E. or 132 C.E., I didn’t think that this conferred on the Jews some sort of imagined “historic right” to the Holy Land. If we seek to organize the world as it was 2,000 years ago, we will turn it into one big madhouse. Why not bring Native Americans back to Manhattan, for example, or restore the Arabs to Spain and the Serbs to Kosovo? Of course, such twisted logic of “historic right” will also commit us to supporting the continued settlement/colonization of Hebron, Jericho and Bethlehem.

11 Wars In Iraq, Afghanistan, And Pakistan Killed 500,000 People- Brown University Study - A shocking new study produced by Brown University finds that between 480,000 and 507,000 people were killed during America’s Post-9/11 Wars. The study examined the three "war on terror" conflicts of Iraq, Afghanistan, and Pakistan the latter an extension of the Afghan war and focus of US drone attacks. The half million figure accounts for both combatant and civilian deaths from direct fighting and war violence, however the number could be much higher as the study didn't account for the perhaps far higher number of civilians killed through infrastructure damage, such as hospitals or water supplies becoming inoperable, or other indirect results of the wars. Tragically, civilians make up over 50% of the roughly 500,000 killed, and the study estimates further that both US-backed foreign forces and opposition militants each sustained over 100,000 deaths.  In terms of American forces, the report finds that over 60,000 US troops were either killed or wounded within the three post 9/11 conflicts. This includes 6,951 US military personnel killed in Afghanistan and Iraq since US invasions of those countries in 2001 and 2003.  Concerning the now seventeen year long "forgotten war" in Afghanistan, the study concluded, according to VOA: Fatalities in Afghanistan, as of October 2018, stood at about 147,000 people, including Afghan security forces, civilians and opposition fighters. The figure also included the deaths of 6,334 American soldiers and contractors, as well as more than 1,100 allied troops.Notably the Brown study explicitly calls out the US government's attempts to "paint a rosy picture" of the wars which has shielded the true scope of American and foreign civilian casualties from the American public.

Displaced victims of worst Afghan drought in years fear harsh winter (Reuters) - For all the billions of dollars spent since the Taliban were ousted in 2001, Afghanistan remains a desperately poor country, lacking basic infrastructure, including electricity and paved roads across most of its territory. Struggling after decades of war, Afghanistan is now facing an acute food shortage in many regions, with 2.6 million people enduring emergency-level food insecurity, one stage short of outright famine, according to the U.N. Food and Agriculture Organization. With his crops failing and his animals dying of thirst, Mahiuddin left Kolari village, in an area under Taliban control, for the more stable province of Herat, joining some 223,000 people displaced in western Afghanistan. The exodus underlines the deep environmental problems facing Afghanistan, much of which consists of dry, rugged and inhospitable terrain subject at various times to both drought and deadly flash floods made worse by deforestation. International aid groups say that without urgent help, 10.6 million people, more than a quarter of Afghanistan’s population, could be “food insecure” by next year, with 2.9 million facing emergency-level insecurity. With much of Afghanistan’s agricultural land degraded, and many areas lawless after years of war, food insecurity has added to the suffering without generating the same headlines as the fighting. “The tent is so cold and I have two small children,” said Abdul Wakil from the northern province of Faryab, who arrived four months ago at a camp outside Herat. “I turn to one side to warm up and then turn to warm the other.” Already the U.N. Office for the Coordination of Humanitarian Affairs (OCHA) has reported the first deaths among displaced children because of the cold in Herat and Badghis. Officials say relief efforts have been hampered by a lack of coordination between central and local government and aid organisations, with displaced people spread out over 10 main camps and dozens of smaller settlements around Herat. “Our food stocks are empty and we have asked the central government to provide us assistance. Once we receive help from central government, we will distribute food to displaced people,” he said. 

Iran could be the key to cementing India and Japan ties - US President Donald Trump has elevated India and Japan to the top of his list of strategic partners in the Indo-Pacific region. At the same time, US efforts to isolate and redirect Iran away from its nuclear weapons programs resulted in another round of sanctions being implemented in early November. Iranian sanctions complicate matters for New Delhi and Tokyo in their relationship with Washington, as neither shares the intense US dislike for Tehran. x Iran will continue to ship oil in lesser amounts to eight nations including India, China, Japan and Turkey after 180-day waivers were approved by the US in early November. Both Japan and India want to ensure their access to Iranian oil and LNG supplies. Japan now obtains 5% of its imported oil from Iran, while India is second only to China as a purchaser of Iranian oil. With Japan and India seeking to retain ties with Iran, the US faces challenges as it attempts to seal off Iran economically and politically from the rest of the world. Creating an effective alliance with its Indo-Pacific partners such as Japan and India would be much easier if their interests converged, a very rare phenomenon. A key case may be Chabahar Port on the southern coast of Iran, which India is spending up to $500 million to develop. Chabahar is the most reliable way to connect India to Afghanistan after Pakistan sealed India off from all the direct East-West overland routes years ago. India has already started to build the related railroad and highway infrastructure. And India is bearing the cost not only financially, but also in lives lost – dozens of Indian workers were killed by the Taliban in the initial phases of the project. “Beyond oil, Iran and Chabahar are important to India because they allow India access to Afghanistan and Central Asia to circumvent Pakistan,” said James Dorsey, a senior fellow focusing on the Middle East and North Africa at the Rajaratnam School of International Studies (RSIS) in Singapore. “That access is important to India in and of itself as well as in terms of India’s response to China’s Belt and Road Initiative.”