Sunday, October 15, 2017

US exports record distillates as domestic shortage worsens; OPEC revises oil demand estimates higher, glut disappears

oil prices rose in 4 out of 5 trading sessions this week and ended at a 2 week high...US WTI crude for November delivery initially rose 29 cents on Monday to close at $49.58 a barrel, on indications from OPEC that they would extend their production cuts past March of next year and attempt to get other producers who were not part of the original pact to go along...the embryonic rally picked up steam on Tuesday after the Saudis announced they would cut their exports by 560,000 barrels per day in November, shorting their Asian customers 10% of their allocations, with US crude increasing $1.34 or 2.7% to close at $50.92 a barrel...prices then rose for a third day on Wednesday, closing 38 more cents higher at $51.30, as Kurdish and Iraqi troops moved to confrontational positions after a Kurdish independence vote and OPEC reported increasing demand for oil...oil prices then slipped on Thursday despite the EIA report that showed lower oil supplies, as the same EIA report showed an unexpected increase in gasoline supplies and the International Energy Agency lowered its 2018 forecast for oil demand, with US crude for November closing 70 cents lower at $50.60 a barrel...oil then pushed to a two week high on Friday after Trump refused to certify Iran’s compliance with the international nuclear deal, raising the specter of new sanctions on their oil output, with US crude up 85 cents, or 1.7%, to settle at $51.45 a barrel, a gain of more than 4% for the week...

international oil prices were also higher this week, with North Sea Brent for December closing Friday at $57.17 a barrel, 10.5% higher than the US December WTI closing price of $51.73 a barrel, so the underpricing of US oil that's been resulting in record US oil exports that we've been complaining about the past month still persists...while US crude exports for this reporting week were down more than 35% from the prior week's record high, they were still at their 4th highest in US history...

OPEC's October oil report

with OPEC jawboning moving the oil markets again, we're going start by reviewing OPEC's October Oil Market Report (covering September OPEC & global oil data), which was released on Wednesday of this past week....the first table from this report that we'll include here is from page 66 of that OPEC pdf, 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 resolve any potential disputes that could arise if each member reported their own figures...   

September 2017 OPEC crude output via secondary sources

from the above table of official oil production data, we can see that OPEC oil output increased by 88,500 barrels per day in September, to 32,748,000 barrels per day, from a August production total of 32,659,000 barrels per day, a figure that was originally reported as 32,755,000 barrels per day (for your reference, here is the table of the official August OPEC output figures before this month's revisions) we can see in the far right column, the reasons that OPEC's output rose 88,500 barrels per day were the 53,900 barrel per day increase in output from Libya, and the 50,800 barrel per day increase from Nigeria, the two countries that were exempt from the output quotas due to domestic strife...other than those two countries, these totals mean most OPEC members other than Iraq remain close to their agreed to production quota, as can be seen in the table below: 

October 2017 OPEC production and targets as of September via Platts

the above table is from the "OPEC guide" page at S&P Global Platts: the first column of numbers shows average daily production in millions of barrels of oil per day for each of the OPEC members over the first nine months of this year, and the 2nd column shows the allocated daily production in millions of barrels of oil per day for each member, as was agreed to at their November 2016 meeting, and the 3rd column shows how much each has averaged over or under their quotas for the eight months of this year that OPEC has curtailed you can see from the above, most OPEC members are pretty close to meeting their commitment to cutting their production back 4%, except for Iraq, who has consistently overproduced by more than 2%...however, cuts in excess of those agreed to by the Saudis and several other OPEC countries have generally made up for the 89,000 barrels per day that Iraq is overproducing, so the organization as a whole has kept their commitment to reduce supply....

the next graphic we'll include shows us both OPEC and world oil production monthly on the same graph, over the period from October 2015 to September 2017, and it comes from page 67 of the October OPEC Monthly Oil Market Report....the light 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 metrics for global output shown on the right scale...

September 2017 OPEC report global supply

the preliminary OPEC data indicates that total global oil production rose to 96.50 million barrels per day in September, up by .41 million barrels per day from a August total of 96.09 million barrels per day, which was revised .66 million barrels per day lower than the 96.75 million barrels per day global oil output for August that was reported a month oil output for September was still 0.10 million barrels per day higher than the 96.40 million barrels of oil per day that was being produced globally in September a year ago (see last October's OPEC report for the year ago data)... OPEC's September production of 32,748,000 barrels per day represented 33.9% of what was produced globally, a small decrease from their revised 34.0% share of August global output...OPEC's September 2016 production, excluding ex-member Indonesia, was at 32,672,000 barrels per day, so even after the alleged production cuts, the 13 OPEC members who were part of OPEC last year, excluding new member Equatorial Guinea, are still producing a bit more oil than they were producing a year ago, when they were supposedly producing flat out... 

however, even after the increase in global oil output that we can see on the above graph, there was again a deficit in the amount of oil being produced globally, partly because of an upward revision in the estimate of global demand for oil, as the next table from the OPEC report will show us..  

September 2017 OPEC report global demand

the table above comes from page 37 of the October OPEC Monthly Oil Market Report, and it shows regional and total oil demand in millions of barrels per day for 2016 in the first column, and OPEC's forecast for oil demand by region and globally quarterly over 2017 over the rest of the table...on the "Total world" line of the fourth column, we've circled in blue the figure that's relevant for September, which is their estimate for global oil demand for the third quarter of 2017...  

OPEC's estimate is that during the 3rd quarter of this year, all oil consuming areas of the globe have been using 97.49 million barrels of oil per day, which is a small downward revision from their prior estimate of 97.57 million barrels of oil per day.....meanwhile, as OPEC showed us in the oil supply section of this report and the summary supply graph above, after the OPEC and non-OPEC production cuts, the world's oil producers were only producing 96.50 million barrels per day during September, which means that there was a shortfall of around 990,000 barrels per day in global oil production vis-a vis demand during the month...

also note that we have highlighted last month's estimates for global demand in green, so as to point out the other revisions that came with this report, which means our previous computations of global surplus or deficit oil for the past 8 months will also have to be oil demand for the second quarter was revised 160,000 barrels per day higher, to 96.21 barrels per day, and demand for the first quarter was revised 50,000 barrels per day higher, to 95.59 barrels per day...moreover, global oil production for August was concurrently revised lower, to 96.09 million barrels per day, so that means there was also a deficit of 1,400,000 barrels per day in August output, which we had previously figured to be a global oil deficit of around 820,000 barrels per day...July's global oil production of 97.16 million barrels per day was also a shortfall, but by just 330,000 barrels per day...

in addition, the 160,000 barrels per day upward revision to second quarter demand reduces the June surplus that we had computed to 920,000 barrels per day, and increases the May deficit to 290,000 barrels per day...before that, April's recomputed figures now show a 600,000 barrel per day deficit for the month, and prior to that the global oil surplus during March would be revised down to 470,000 barrels per day, and average surpluses over January and February would be reduced to around 690,000 barrels per day....taken together, this reports data means that after nine months of OPEC production cuts, the global oil glut has been reduced by roughly 27.5 million barrels of oil since the 1st of the year, reversing the 48 million barrel addition to the glut we reported last month, and the even larger additions to the glut we had reported in the months before that...

The Latest US Oil Data from the EIA

this week's US oil data from the US Energy Information Administration, covering details for the week ending October 6th, showed an increase in our oil imports and a drop in our oil exports, but as refinery throughput also increased, our crude oil supplies fell again, for the fourth week in a row... our imports of crude oil rose by an average of 403,000 barrels per day to an average of 7,617,000 barrels per day during the week, while at the same time our exports of crude oil fell by 715,000 barrels per day to a still high 1,270,000 barrels per day, which meant that our effective imports netted out to an average of 6,347,000 barrels per day during the week, 1,117,000 barrels per day more than during the prior the same time, our field production of crude oil fell by 81,000 barrels per day to an average of 9,480,000 barrels per day, which means that our daily supply of oil coming from net imports and from wells totaled an average of 15,857,000 barrels per day during the reported week... 

at the same time, US oil refineries were using 16,258,000 barrels of crude per day, 229,000 barrels per day more than they used during the prior week, while during the same period 564,000 barrels of oil per day were being withdrawn from oil storage facilities in the US...hence, this week's crude oil figures from the EIA seem to indicate that our total supply of oil from net imports, from oilfield production and from storage, was 133,000 more barrels per day than what refineries reported they used during the account for that discrepancy, the EIA needed to insert a (-133,000) barrel per day figure onto line 13 of the weekly U.S. Petroleum Balance Sheet to make the data for the supply of oil and the consumption of it balance out, which they label in their footnotes as "unaccounted for crude oil"...

further details from the weekly Petroleum Status Report (pdf) show that the 4 week average of our oil imports still fell to an average of 5,988,000 barrels per day, 19.3% below the imports of the same four-week period last year....the rounded 564,000 barrel per day withdrawal from our total crude inventories came about on a 392,000 barrel per day withdraw from our commercial stocks of crude oil and a 171,000 barrel per day emergency withdrawal of oil from our Strategic Petroleum Reserve, which apparently is still being tapped to address short term spot shortages caused by Hurricane Harvey...this week's 81,000 barrel per day decrease in our crude oil production was due to a 87,000 barrel per day decreases in output from wells in the lower 48 states, possibly due to Hurricane Nate, while output from Alaska rose by 6,000 barrels per day...the 9,480,000 barrels of crude per day that were produced by US wells during the week ending October 6th was still 8.1% more than the 8,770,000 barrels per day we were producing at the end of 2016, and 12.2% more than the 8,450,000 barrels per day of oil we produced during the during the equivalent week a year ago, while it was 1.4% below the record US oil production of 9,610,000 barrels per day set during the week ending June 5th 2015...  

US oil refineries were operating at 89.2% of their capacity in using those 16,258,000 barrels of crude per day, up from 88.1% of capacity the prior week, but still way down from the 96.6% capacity utilization rate refineries saw in the week before Hurricane Harvey struck....the 16,258,000 barrels of oil that was refined this week was still 8.3% less than the 17,725,000 barrels per day that were being refined six weeks earlier, but it was 5,4% more than the 15,552,000 barrels of crude per day that were being processed during week ending October 7th, 2016, when refineries were operating at 85.5% of capacity, a reduction probably due to seasonal maintenance...

even with the increase in US oil refining, gasoline production from our refineries was lower, dropping by 112,000 barrels per day to 9,741,000 barrels per day during the week ending October 6th, which was also 2.0% lower than the 9,935,000 barrels of gasoline that were being produced daily during the comparable week a year ago....on the other hand, our refineries' production of distillate fuels (diesel fuel and heat oil) rose by 35,000 barrels per day to 4,964,000 barrels per day, which was 10.4% more than the 4,496,000 barrels per day of distillates that were being produced during the week ending October 7th last year....   

even with the drop in our gasoline production, our end of the week gasoline inventories rose by 2,490,000 barrels to 221,426,000 barrels by October 6th, the third increase in gasoline inventories in a row...that increase was mostly because our exports of gasoline fell by 231,000 barrels per day to 409,000 barrels per day, while our imports of gasoline fell by 2,000 barrels per day but remained elevated at 860,000 barrels per day...offsetting that, however, our domestic consumption of gasoline rose by 239,000 barrels per day to a seasonal high of 9,480,000 barrels per day at the same time...still, with significant gasoline supply withdrawals in 11 out of the last 17 weeks, our gasoline inventories are still down by 8.7% from June 9th's level of 242,444,000 barrels, and 1.8% below last October 7th's level of 225,498,000 barrels, even as they are still roughly 4.7% above the 10 year average of gasoline supplies for this time of the year...   

even with the increase in our distillates production, our supplies of distillate fuels still fell by 1,480,000 barrels to 133,959,000 barrels over the week ending October 6th, the 6th weekly drop in a row....that was because our exports of distillates rose by 246,000 barrels per day to a record 1,612,000 barrels per day, while our imports of distillates rose by 14,000 barrels per day to 85,000 barrels per the same time, the amount of distillates supplied to US markets, a proxy for our domestic consumption, fell by 359,000 barrels per day to 3,648,000 barrels per day...after this week’s decrease, our distillate inventories ended the week 14.7% lower than the 156,972,000 barrels that we had stored on October 7th, 2016, and 5.6% lower than the 10 year average for distillates stocks for this time of the year

finally, with our oil exports still at an elevated level, our commercial crude oil inventories fell for the 23rd time in 28 weeks, decreasing by 2.747,000 barrels, from 464,963,000 barrels as of September 29th to 462,216,000 barrels on October 6th...while our oil inventories as of October 6th were 2.5% below the 473,958,000 barrels of oil we had stored on October 7th of 2016, they were still 5.9% higher than the 436,590,000 barrels in of oil that were in storage on October 9th of 2015, and 36.2% greater than the 339,303,000 barrels of oil we had in storage on October 10th of 2014...

This Week's Rig Count

US drilling activity decreased for 8th time in the past 11 weeks during the week ending October 13th, and we've now seen only 4 increases in drilling in the past 14 weeks, following an expansion of drilling activity that ran 23 consecutive weeks earlier this year...Baker Hughes reported that the total count of active rotary rigs running in the US fell by 8 rigs to 928 rigs in the week ending Friday, which was still 389 more rigs than the 539 rigs that were deployed as of the October 14th report in 2016, while it was less than half of the recent high of 1929 drilling rigs that were in use on November 21st of 2014....

the number of rigs drilling for oil was down by 5 rigs to 743 rigs this week, their 9th decrease in 10 weeks, which still left active oil rigs up by 311 over the past year, while their count remained far from the recent high of 1609 rigs that were drilling for oil on October 10, the same time, the count of drilling rigs targeting natural gas formations decreased by 2 rigs to 185 rigs this week, which was 80 more rigs than the 105 natural gas rigs that were drilling a year ago, but still way down from the recent high of 1,606 natural gas rigs that were deployed on August 29th, addition, the only rig that was classified as miscellaneous was shut down this week, leaving none such active, in contrast to the 2 miscellaneous rigs that were deployed during the same week last year..

2 drilling platforms in the Gulf of Mexico off the shore of Louisiana were shut down this week, leaving 20 rigs still running in the Gulf, down from 22 Gulf rigs a year ago...however, last year there was also a rig drilling in the Cook Inlet, offshore of Alaska, which means this week's total offshore rig count of 20 rigs is down three rigs from the 23 offshore rigs of a year ago....

the count of active horizontal drilling rigs was down by 6 rigs to 786 rigs this week, which was still up by 355 rigs from the 431 horizontal rigs that were in use in the US on October 14th of last year, but still down from the record of 1372 horizontal rigs that were deployed on November 21st of the same time, the vertical rig count was down by 2 rigs to 63 vertical rigs this week, but still up from the 57 vertical rigs that were deployed during the same week last year....meanwhile, the directional rig count was unchanged at 79 rigs this week, which was up from the 51 directional rigs that were deployed on October 14th of of 2016.....

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 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 October 13th, the second column shows the change in the number of working rigs between last week's count (October 6th) and this week's (October 13th) count, the third column shows last week's October 6th active rig count, the 4th column shows the change between the number of rigs running on Friday and the equivalent Friday 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 for the 14th of October, 2016...      

October 13 2017 rig count summary

it looks like the largest losses this week were in two of the Texas basins, as the Eagle Ford in the south saw six rigs shut down, and the Barnett shale underlying the Dallas/Ft Worth region had their count cut back by 4 rigs...those two basins also account for the natural gas rig reductions, since the Eagle Ford saw its gas directed rig count drop by 2 rigs to 5 rigs, while Barnett shale drillers cut one gas rig and three oil rigs and had 3 gas rigs and one oil rig remaining...the natural gas addition to balance those closures was in the Denver-Julesburg Niobrara, where a well was spud seeking natural gas for the first time in two years...drilling in the Utica and the Marcellus remained unchanged in the aggregate, although it does appear that one Marcellus rig was shut down in West Virginia while one was started in Pennsylvania at the same time....outside of the states shown among the major producers in the first table above, Mississippi also had a rig shut down this week, leaving them with 3 rigs still running, the same number they had running on October 14th a year ago...


Ohio siting board approves 2 gas-fired projects -- The Ohio Power Siting Board last week approved construction of two natural gas-fired, combined-cycle projects totaling 1,950 MW in Guernsey and Trumbull counties. The 1,100 MW Guernsey Power Station is being developed by jointly developed by Apex Power Group and Caithness Energy in Valley Township. The 940 MW Trumbull Energy Center in Lordstown is being developed by privately owned Clean Energy Future-Trumbull. The announcement comes after the Trump administration is pushing for cost recovery for coal and nuclear plants. While coal and nuclear interests generally back the effort, gas industry stakeholders oppose the proposal, and are asking the Federal Energy Regulatory Commission to extend the evaluation period. Particularly in the MidAtlantic region, gas-fired generation has done well without any government intervention, aided by low-cost fuel from the Marcellus and Utica shale plays. Part of the Guernsey project calls for the construction of a gas pipeline to connect the plant to the Tallgrass Energy Partners Rockies Express Pipeline. The plant is scheduled to begin construction in December and begin commercial operation by October 31, 2020. The Trumbull Energy Center will be supplied with natural gas from a Dominion East Ohio pipeline and is scheduled to begin construction in November 2017 and come online by June 2020. Ohio also has been the center of contentious proposals by FirstEnergy and American Energy Power to bail out struggling coal and nuclear fleets. Both utilities are urging partial re-regulation of the state's markets as well. The approval of these gas-plants shows appetite for this cleaner source of energy despite the DOE's proposal.

Attempt to ban fracking in Youngstown derailed - Youngstown Vindicator --Youngstown voters won’t have to contend with the pesky anti-fracking issue in next month’s general election. The Ohio Supreme Court made sure of that with a 4-3 ruling handed down last week.The ruling upheld a decision by the Mahoning County Board of Elections not to place two charter amendments, including the fracking ban, on the Nov. 7 ballot. Proponents of the amendments had filed an appeal with the high court.The elections board is made up of two Republicans and two Democrats.  Had the proponents been successful in their appeal, Youngstown voters would have been asked for a seventh time to approve a misguided, self-aggrandizing ban on hydraulic fracturing in the city.We have been consistent in our opposition to this effort for the simple reason that the so-called Community Bill of Rights would not have given city government many of the rights envisioned in the proposed charter amendment.We have argued that the ban would have been unenforceable under current state statutes. Indeed, the Ohio Constitution gives the Ohio Department of Natural Resources exclusive authority to oversee the hydraulic fracturing process used to extract oil and gas from beneath the earth’s surface.  Organized opposition from the business and labor communities has centered on the practical aspect of the Bill of Rights. Jobs tied to the drilling industry in the city, including hundreds at Vallourec Star, would have been threatened. Finally, the amendment has been pulled out of thin air because there are no companies with serious plans to drill for oil and gas within city limits. That is why we characterized the effort as self-aggrandizing.

Legal Protest Targets New Fracking in Ohio's Wayne National Forest - Center for Biological Diversity (press release) — Seven conservation groups today challenged a Bureau of Land Management decision approving a December auction of 350 acres in the Wayne National Forest for oil and gas fracking leases near the controversial Rover Pipeline. The administrative protest challenges the BLM’s complete failure to assess any social or environmental impacts connected to the fracking in Ohio’s only national forest. Despite fracking threats to public health, water, forests, wildlife and endangered species, the agency approved the auction without conducting a new environmental review as required under the National Environmental Policy Act and Endangered Species Act.   “Ohioans love the Wayne for its beauty and its wildlife, and because it's a great place to play outdoors. Fracking threatens all of these important values,” “We filed today's appeal to protect both the forest and the public's interest.” The fracking industry has so far nominated about 18,000 acres of the Wayne National Forest’s Marietta Unit to be auctioned for oil and gas leasing. The BLM has leased 1,937 acres of the national forest to the fracking industry since December and plans to continue holding quarterly auctions until all 18,000 acres are leased.   “Fracking would transform watersheds in Ohio’s only national forest into polluted industrial zones,”  “These precious forests provide clean water, wildlife refuges and quiet recreation. They should be entirely off limits to polluting wells, pipelines and heavy truck traffic.”    The Rover pipeline route cuts through the northeast corner of the Marietta Unit, within four miles of the lands to be auctioned. Gas from fracked wells in the national forest could feed into the pipeline, where construction has been plagued with numerous mishaps and spills, including a 2 million-gallon spill of drilling mud laced with diesel. Conservation groups have protested every fracking lease sale on the Wayne National Forest. Earlier this year the groups sued the BLM and other federal agencies in U.S. District Court for the agencies’ failure to analyze threats to public health, water, endangered species and the climate before opening 40,000 acres of the Wayne to fracking.

Insurer Can't Compel Arbitration In $12M Halliburton Row – Law360  -- An insurer can’t force Halliburton Energy Services Inc. to arbitrate a dispute over whether it's liable for about $12 million the insurer paid Statoil ASA for an explosion at an Ohio oil and gas site where Halliburton was conducting fracking operations, a Texas federal judge held Tuesday.   Ironshore Speciality Insurance Co. had issued a site pollution legal liability select policy to Statoil — with Halliburton contends names it as an additional insured — for a crude petroleum and natural gas facility in Ohio.

Ground broken on Atlantic Sunrise pipeline in Lancaster County, protesters block work entrance -- Earthmoving has begun on the Atlantic Sunrise gas pipeline in Lancaster County. So have protests to disrupt the project, which will cut through 37 miles in western and southern parts of the county. At daybreak Monday, about 35 people participated in an 18-vehicle blockade of an access road being built by contractors for pipeline builder Williams Partners in Manor Township.  The protest was organized by Lancaster Against Pipelines. Williams spokesman Christopher Stockton said no work was done at the site Monday because of the weather.  Police were called to the scene, but there were no citations or arrests and protesters stopped blocking the road when ordered to by authorities.  The site is the first actual moving of dirt in Lancaster County since the Federal Energy Regulatory Commission gave the controversial 197-mile project the green light for construction on Sept. 15. The work site, off Witmer Road near Safe Harbor, is one of two sites where the pipeline will be drilled under the Conestoga River. The slow drilling under the river is expected to take several months so it is the first pipeline work to begin in the county. Work to lay the pipeline should begin across the county in another week or two, Stockton said. Williams has set up a staging area in a field near Marietta for contractors working on the project. And 42-inch-diameter steel pipes for the pipeline, made in Turkey, are being stored at a former industrial plant outside of Lebanon city. The $3 billion pipeline, scheduled to be in operation by the end of July, will run from Susquehanna County in the midst of Marcellus Shale gas drilling to Williams’ interstate Transco pipeline near Holtwood. The gas will be distributed up and down the East Coast and some will be exported.

Bridging Marcellus/Utica Gas Supply With Sabine Pass LNG Exports - Cheniere Energy’s Sabine Pass LNG liquefaction and export facility in Louisiana last week received federal approval to begin operating its fourth 650-MMcf/d liquefaction train, bringing the total export capacity at the terminal to 2.6 Bcf/d. Natural gas supply delivered to the terminal for export has averaged 2.0 Bcf/d in recent months, with flows jumping as high as 2.9 Bcf/d on some days last month as the operator readied Train 4 for operations. There are several supply regions targeting this new demand, including the fastest growing producing region, the Marcellus/Utica Shale in the U.S. Northeast. While there isn’t yet a direct beeline from the Marcellus/Utica to Sabine Pass, there are early indications that recent pipeline takeaway and reversal projects from the producing region and the resulting connectivity are indirectly bridging the divide. In today’s blog, we examine pipeline flow data to understand recent changes in flows and what they can tell us about future flow patterns as export demand continues to grow. LNG export demand from Cheniere’s Sabine Pass terminal — the first and, for a little while longer, the only export facility in the contiguous U.S. —  has been growing like gangbusters over the past two years. The facility has quickly increased from its first 650-MMcf/d operational liquefaction train starting in early 2016 to now four trains as of last week, in less than two years. The fourth train loaded its first commissioning cargo in August 2017 and just last week received federal approval to begin liquefaction and export activities.

The Old, Hidden Pipeline at the Bottom of the Great Lakes -  Here, in northern Michigan's Straits of Mackinac, Great Lakes Michigan and Huron meet like the middle of an hourglass. To the east, the rounded form of Mackinac Island is the centerpiece of an archipelago in Lake Huron.  I'm paddling south, dwarfed by the Mackinac Bridge, a monolithic five-mile-long ribbon of green steel and gray concrete that connects Michigan's upper and lower peninsulas. Lake Michigan sprawls westward. Its watery horizon shows the telltale dance of rising winds just as a wave splashes over my deck, reminding me to put away my camera. This isn't a place to multitask.   Almost directly beneath my kayak runs Enbridge Line 5, twin 64-year-old pipelines at the bottom of the lakebed. Line 5 transports 23 million gallons of oil and natural gas liquids daily for 645 miles through Wisconsin and Michigan to Canada. Enbridge, the Canadian oil transportation giant, operated Line 5 inconspicuously until 2010; that's when its sister pipeline, Line 6B, ruptured, pouring a million gallons of tar sands bitumen into the Kalamazoo River near Marshall, Michigan. It was the largest land-based oil spill in U.S. history. Suddenly, the peril posed by vintage infrastructure carrying petrochemicals through the heart of North America's greatest supply of freshwater loomed very large.  University of Michigan hydrologist Dave Schwab has concluded that the Straits of Mackinac is "the worst possible place for an oil spill in the Great Lakes." At any given time, one million gallons of petroleum products are contained in the 20-inch pipes that run along the lakebed. If one ruptured, oil would disperse with the currents that slosh back and forth through the straits. In Schwab's worst-case scenario, 720 miles of lakeshore would be devastated.  The U.S. Environmental Protection Agency predicts that in the event of a spill, no more than 40 percent of the oil could be recovered by deploying booms and "in-situ burning"—lighting surface slicks on fire, a technique used in the 2010 Deepwater Horizon disaster in the Gulf of Mexico. The success rate would plummet in the winter, when the Straits of Mackinac are sheathed in feet of ice. This apocalyptic vision was enough to convince more than 60 municipalities and all 12 of Michigan's Native American tribes that Line 5 should be decommissioned. Even Republican state attorney general Bill Schuette called for a timeline to shut down the pipeline.

Controversial Sunoco Pipeline Spills Drilling Fluid Three Times in Same Area -  Sunoco 's controversial Mariner East 2 pipeline project has racked up even more spills.  Pennsylvania's Daily Local News reported that horizontal directional drilling triggered three releases of drilling fluid around the same site in East Goshen over the span of three days.  The "small inadvertent returns"—an industry term for spills—happened twice on Monday and another on Saturday, Sunoco communications manager Jeff Shields said in the report. He added that drilling stopped, the fluid has been contained, and no water resources were affected.  The latest spills add to a track record of leaks and other incidents surrounding the $2.5 billion pipeline project that's designed to carry 275,000 barrels a day of butane, propane and other liquid fossil fuels from Ohio and West Virginia, across Pennsylvania, to the Atlantic coast.  In July, a judge ordered Sunoco to temporarily halt horizontal directional drilling for installation of its Mariner East 2 pipeline, siding with environmental groups that the process caused dozens of drilling fluid spills and other accidents between April and mid-June, including leaks into wetlands and waterways. The order expired Aug. 7. Sam Rubin, organizer with Food & Water Watch, gave the following statement to the Daily Local News: "Sunoco is a dangerous operator. The one person who can take immediate action to keep our community safe is Gov. Tom Wolf. Gov. Wolf has not lived up to his statutory responsibility to prepare the state of Pennsylvania for the risks of a high pressure ethane pipeline in densely populated areas. We need a full, publicly available and comprehensive safety and preparedness analysis done. Gov. Wolf needs to halt this pipeline until one is complete. Today's leak adds to the proof, which was already abundantly clear, that Sunoco cannot be trusted to operate in a safe manner. There have already been over 100 reported spills and other drilling accidents linked to the construction of the Mariner East 2 pipeline. We don't need any more evidence."

Too Much Gas On My Hands! - Impact Of New Supplies On Infrastructure, LNG And Prices -- The U.S. natural gas market tightened considerably in 2016, with a pull-back in production volumes leaving total gas supply, including imports, within a hair’s breadth of total demand (including exports) on an annual average basis. In 2017, however, gas production has climbed again. And it’s not just from the Marcellus/Utica, which grew through even the downturn over the past few years, but also from other basins, particularly ones focused on crude oil. Current production economics and drilling activity suggest continued growth over at least the next five years. Could it be too much? Will demand expand fast enough and will all the growing supply regions be able to access that demand? Or, are producers headed for another contraction before they’re barely out of the last one? In today’s blog, we begin a series unpacking RBN’s five-year natural gas supply-demand outlook. A look at the Lower-48 natural gas supply-demand balance since 2010 illustrates just how precarious market conditions have been in the last few years. The bars in Figure 1 below show the difference between total gas supply (including imports) and total demand (including exports) for the first nine months of 2017 compared to the same nine-month period in the previous seven years.

Governors vote for fracking ban in Delaware River Basin - - Governors of Pennsylvania, Delaware and New York, comprising a majority of the Delaware River Basin Commission, have voted in favor of a resolution put forward by the commission to issue draft regulations to permanently ban hydraulic fracturing for oil and gas in the Delaware River Basin. The DRBC vote was three to one with one abstention in passing the resolution for promulgating regulations that would prohibit any water project in the Delaware River Basin proposed for developing oil and gas resources by high-volume hydraulic fracturing. Delaware Gov. John Carney said that the resolution is consistent with the Delaware River Basin Conservation Act, a bill introduced by Carney and passed by Congress in 2016, by helping to ensure that the water resources of the basin will be protected for present and future generations. “Fracking could diminish water resources in the Delaware River Basin, both through consumption and degraded water quality,” said Carney. “We are pleased to join both New York and Pennsylvania in voting in favor of this resolution, which will protect public health and a precious water supply. This action will guarantee that fracking for oil and gas will not threaten water resources in the basin.” New York Gov. Andrew Cuomo said, “Protecting and preserving our water resources is paramount to ensuring the health and wellbeing of New Yorkers and of all residents living within the Delaware River Basin. With this resolution, the DRBC builds on New York’s leadership to protect the environment and public health from hydraulic fracturing, while protecting this vital water source that millions of people depend on every day. ‎I am proud to stand with my colleagues from Delaware and Pennsylvania in approving this critical resolution, and we will continue to work on developing the necessary regulations to codify this commonsense resolution.”” Pennsylvania Gov. Tom Wolf said he was pleased to see the DRBC take a step forward after years of study. “Today, we are acting to protect a watershed that supplies drinking water to more than 15 million people in one of the most densely populated areas of the country,” he said. “I believe this resolution preserves water quality and water supply for the residents of the watershed, and will protect this precious resource for generations to come. 

North Carolina officials reject environmental plan for Atlantic Coast Pipeline --  Gov. Roy Cooper’s administration has rejected environmental plans by Duke Energy and three other energy companies to build an interstate pipeline to carry natural gas from West Virginia into North Carolina. The letter of disapproval from the N.C. Department of Environmental Quality is the first decision on the proposed Atlantic Coast Pipeline from any state or federal government agency in the three states the project would traverse. Duke Energy is also expecting a decision this month from the Federal Energy Regulatory Commission as to whether the $5 billion pipeline project is necessary. The N.C. Department of Environmental Quality said the 600-mile underground pipeline, which would travel through eight North Carolina counties, including Johnston and Nash, does not meet the state’s standards for erosion and sediment control. The agency has asked Charlotte-based Duke and its business partners to resubmit the application with additional information within 15 days, or to contest the agency’s disapproval and request a hearing within 60 days.The erosion plan is one of several hurdles the Atlantic Coast Pipeline needs to clear in North Carolina. The project also needs an air-quality permit for a compressor, a machine that pushes the gas through the pipeline. And it needs a water-quality permit allowing developers to drill through streams and wetlands, as well as several storm water control permits for multiple locations along the proposed route.  Duke issued a statement Monday saying it will submit the information requested for the erosion and sedimentation permit. The company has said the pipeline is expected to start moving natural gas in late 2019.

Factbox: Agency says 78% of gas, 93% of US Gulf oil output shut in due to Nate - About 78% of gas production and almost 93% of the oil output from the offshore US Gulf of Mexico remained shut in Sunday in the wake of Hurricane Nate, which careened through producing regions in the central Gulf before making landfall late Saturday in eastern Louisiana and then Mississippi, the US Bureau of Safety and Environmental Enforcement said.  More than 2.5 Bcf/d of natural gas production was shut in, while 1.62 million b/d of oilproduction was down as a result of operators being forced to evacuate production platforms in the path of the storm. Based on data reported as of 11:30 am CDT, BSEE reported that a total of 14 rigs, representing 70% of rigs operating in the Gulf, and 298 platforms, representing 40% of operating platforms, were evacuated.  Ten dynamically positioned rigs were moved out of the hurricane's path as a precaution; that's 55.6% of the 18 such rigs currently operating in the Gulf.  Garden Banks Pipeline said it planned to return personnel to the South Marsh Island 76 platform Sunday afternoon. Garden Banks has been able to remain in service throughout the event, the pipeline said.Nautilus Pipeline is planning to return personnel to the Ship Shoal 207 platform Sunday afternoon, the pipeline said. The evacuation constitutes a point-specific force majeure for Anaconda at SS207 (992203) and Cleopatra/Walker Ridge at SS207 (992202), Nautilus said. Manta Ray pipeline said it is planning to return personnel to the Ship Shoal 207 and Ship Shoal 332A platforms Sunday afternoon.

Over 1 mil b/d of Gulf of Mexico crude output still shut-in after Nate: BSEE -- More than 1 million b/d of crude remains shut-in in the US Gulf of Mexico Tuesday after Hurricane Nate passed through the region over the weekend, although a couple of companies have publicly said they have begun to restart production. Shut-in production of 1.024 million b/d represents nearly 59% of the US Gulf's crude output, the US Bureau of Safety and Environmental Enforcement said Tuesday. In addition, 1.485 Bcf/d of natural gas output is also still shut-in, which is 46% of the US Gulf's gas output, BSEE said. Also, 66 platforms and one rig remain evacuated, which are 9% of the total platforms and 5% of the total rigs in the Gulf, respectively. Earlier Tuesday, ExxonMobil said it had restored production at its Julia and Hadrian South deepwater platforms, and was working to restore its shallow-water Mobile Bay production. Late Monday, Murphy Oil said it was restoring the output of Front Runner and Medusa, two deepwater production facilities it operates. Nate, a fast-moving storm, made landfall late Saturday as a Category 1 hurricane and raced east across Louisiana, Mississippi and Alabama on Sunday. So far it appears to have caused little or no damage to oil infrastructure. 

Offshore US operators continue restarting shut-in Gulf of Mexico output: BSEE - Offshore operators in the Gulf of Mexico continued to restart production on Thursday after as much as a week of shut-ins from Hurricane Nate last weekend, the US Bureau of Safety and Environmental Enforcement said. By noon CDT (1700 GMT) Thursday, 343,539 b/d of oil was still shut in, or about 20% of all Gulf of Mexico production, as well as 399,920 Mcf/d of natural gas, or 12% of all gas produced in the Gulf. By contrast, on Wednesday, 571,854 b/d of oil, or 33% of the US Gulf's total, and 660,550 Mcf/d of gas, or 21%, was shut in. Late Wednesday, Chevron said it had resumed normal operations in all its Gulf of Mexico fields that had been shut in prior to Nate's approach. That included the company's Jack/St. Malo, Tahiti, Petronius, Genesis and Blind Faith fields, spokeswoman Veronica Flores-Paniagua said. Nate, a fast-moving hurricane, moved ashore late Saturday as a Category 1 storm. 

Apache scouts out more drilling locations in Alpine High - Houston Chronicle: Apache Corp. has scouted out Alpine High, a region in West Texas where it discovered a large bounty of oil last year, and found thousands more drilling locations. The Houston oil producer said it has boosted the number of potential drilling spots in the area from between 2,000 and 3,000 up to 5,000. More than half of those spots, around 3,500, are in a so-called wet gas window, with 1,000 in a dry gas region and another 500 in the oil-rich Wolfcamp and Bone Springs play. "Each of these plays is highly economic at current commodity prices," Apache CEO John Christmann said in a statement.

Oil, gas executives see reduced US rig deployment in 2018: Deloitte survey -- A majority of oil and natural gas company executives polled in a survey released Wednesday expect a net decrease in rig deployment next year compared with 2016 levels, as spending by operators slides amid a forecast that US commodity prices will remain cheap.The survey by consulting firm Deloitte of over 250 industry professionals highlights the uncertainty producers, processors, pipelines and exporters see in the energy sector heading into 2018, even as the Trump administration promises new opportunities for projects.Half of upstream oil and gas executives surveyed expect up to a 10% decline in capital expenditures next year versus last year, including 4 in 10 expecting exploration spending to fall, Deloitte said. Some 58% expect a net decrease in rig deployment. On the midstream side, 56% of executives expect a decrease in capital expenditures in 2018 versus 2016, while only one in eight expect an increase over the next year, the survey found. Pipelines are seen as the best opportunity for growth in 2018, with the Gulf Coast seen as the most enticing region. Top prospects include expanding into new markets such as LNG.  Still, executives surveyed expressed concerns about environmental issues, controlling costs and existing regulations.  "The protracted holding pattern we've been in for the last two years seems to have shaken executives' confidence in every sector -- upstream, midstream and downstream," said John England, a Deloitte vice chairman and leader in the firm's US energy and resources unit, in a statement. "As the industry hunkers down to focus on cost reduction and productivity, one silver lining may be a drive to the next wave of digital technology adoption to uncover new efficiencies important to success." Other findings of the survey include:
* Almost half of respondents expect Henry Hub natural gas to be between $2.50-$3/MMBtu in 2017, with price increases expected for 2018, and into 2020, up to $3.50/MMBtu.
* Oilfield services is seen as the sector with the greatest potential for increased mergers and acquisition activity, followed by upstream exploration and production, integrated oil and midstream.

Oil storage tanks explode, burn in Brighton, for the second time in three weeks - Great Western Oil and Gas storage tanks on the north side of Brighton exploded and burned Thursday — the second time in three weeks that crews were called to fight a blaze at the site. Two workers unloading materials at 821 Weld County Road 27 reported an explosion at 2:12 p.m., Brighton Fire Department spokeswoman Natalie Ridderbos said. The tanks are just southwest of the Vestas factory where blades for wind-power systems are built. The oil workers weren’t hurt, she said. Great Western officials “had to turn off the natural gas lines before we could fight the fire,” Ridderbos said. “It is for our safety.” Nearby homes were not evacuated. Stan Hiller, 61, whose farm is about 200 yards north of tanks, said Thursday’s fire wasn’t as big as the one on Sept. 20. “But it makes you nervous,” said Hiller, who has oil and gas operations on his property. “I thought those tanks would start blowing up in sequence … just part of the business.” Crews from Brighton, North Metro, South Adams and Fort Lupton fire departments responded and will manage the fire until the oil burns out, Ridderbos said. “The last time this happened, it was a few hours.” There was an investigation of the previous fire, but officials couldn’t say what the outcome of that probe was. “We are working with the operator to find out why this happened again,” Ridderbos said.

Montana pipeline proposed to transport CO2 for oil recovery   (AP) — An energy company is seeking federal approval to build a pipeline in eastern Montana that would transport the greenhouse gas carbon dioxide for use in oil production along the North Dakota border. The $150 million pipeline would begin near the Wyoming border and stretch 110 miles to the Cedar Creek Anticline, an aging oil field near Baker, Montana, Denbury Resources spokesman John Mayer said. Carbon dioxide is considered a prime contributor to climate change, but it also can be used to breathe life into old oil fields. Companies pump the gas deep underground to push out more oil from tapped-out reserves. Cedar Creek Anticline has potential reserves of 260 million to 290 million barrels of oil, Mayer said. Denbury, based in Plano, Texas, specializes in using carbon dioxide for oil recovery with projects completed or pending in Texas, Alabama, Wyoming, Mississippi and Louisiana. A second Denbury pipeline proposal would link the Shute Creek site to an existing pipeline network that extends into Montana. The 250-mile line would cost about $400 million, according to the company. 

Feds push back deadline for new Dakota Access review | TheHill: Federal lawyers said Friday that the government’s court-ordered environmental review of the Dakota Access pipeline will be complete by next spring, not this year, as previously expected. In a court filing, the Army Corps of Engineers said it was pushing back its review schedule while it waits for new oil spill modeling from the developers of Dakota Access. “The Corps’ original estimate that its review and analysis of the remand issues would conclude between late November and early December 2017 was based in part upon the Corps’ understanding that it would take Dakota Access approximately thirty days to provide the requested information,” lawyers wrote in their filing. “Given the current expected time frame for the receipt of additional information, the Corps now anticipates that its review and analysis of the remand issues will not conclude until approximately April 2, 2018. The Corps is actively working on ways to shorten this timeline,” they wrote. District Court Judge James Boasberg, in June, ordered the Army Corps to conduct a more thorough environmental review of the Dakota Access pipeline after tribes said the project’s route through North Dakota posed environmental and cultural threats. The pipeline is operational and oil is flowing through it, and Boasberg is currently considering whether to shut it down during the Army Corps’ new review.

Dakota Access Pipeline to Remain Operational During Environmental Impact Study -  On Wednesday, a federal judge ruled that the Dakota Access Pipeline (DAPL) can continue operating pending an environmental review by the U.S. Army Corps of Engineers.  The Standing Rock Sioux Tribe sued the Corps in July 2016 , arguing that the pipeline destroyed sacred sites and threatens the water quality of the Standing Rock Indian Reservation that sits downstream of the site where the pipeline crosses the Missouri River in North Dakota.  In the ruling , the court found that shutting down the pipeline would not cause major economic disruption, as DAPL claimed. However, the court found a possibility that the Army Corps would be able to justify its decision not to do a full environmental review, and hence refused to shut down the pipeline while that process was underway. The Corps estimated that the new environmental review will be completed by April 2018.   "This pipeline represents a threat to the livelihoods and health of our Nation every day it is operational," said Standing Rock Sioux Chairman Mike Faith. "It only makes sense to shut down the pipeline while the Army Corps addresses the risks that this court found it did not adequately study. From the very beginning of our lawsuit, what we have wanted is for the threat this pipeline poses to the people of Standing Rock Indian reservation to be acknowledged. Today, our concerns have not been heard and the threat persists."

North Dakota landowners’ lawsuit against pipeline dismissed  (AP) — A federal judge has dismissed a lawsuit filed by nearly two dozen North Dakota landowners who alleged the developer of the Dakota Access oil pipeline and a consultant used deceit and fraud to acquire private land easements for the project. But a court case in Iowa involving the pipeline and landowners is expected to linger into next year. In North Dakota, U.S. District Judge Daniel Hovland in a ruling dated Tuesday sided with a subsidiary of Texas-based Energy Transfer Partners and Contract Land Staff, a land acquisition consulting business also based in that state. The two companies disputed that the landowners had any valid claims, and Hovland also found their arguments lacking. “The court finds that the plaintiffs have clearly failed to specifically allege who made the fraudulent statements, when the statements were made, and to whom the statements were made,” the judge wrote. The $3.8 billion pipeline began moving North Dakota oil through South Dakota and Iowa to a distribution point in Illinois on June 1. The 21 North Dakota landowners sued in January, seeking more than $4 million in damages for what they called “misrepresentations, deception or other unfair tactics.” They alleged the Texas companies engaged in fraud while negotiating to lay pipeline on private land, resulting in compensation that was as much as nine times lower than what other landowners got. They also alleged they were told that if they didn’t agree to the offered amount, they faced losing money or getting nothing either because their land would be condemned through eminent domain or the pipeline would be moved elsewhere.

Enbridge Energy defends plan to replace Line 3 oil pipeline (AP) — Enbridge Energy disputed a state agency's recommendation against the company's proposal for replacing its aging Line 3 oil pipeline across northern Minnesota, insisting in filings Wednesday that the project is needed to ensure adequate crude supplies for Minnesota and other Midwestern refineries for decades to come. The Minnesota Public Utilities Commission is considering whether to grant a certificate of need for the project, which has aroused opposition from environmental and tribal groups because of the potential impacts on climate change and pristine waters where Native Americans harvest wild rice. The state Commerce Department surprised both sides last month when it concluded that the project isn't needed and that it won't benefit Minnesota enough to justify the risks. Enbridge officials asserted in rebuttal filings with the PUC that the $7.5 billion project is necessary and that Minnesota will benefit because it will make its pipeline network safer across the state and more reliable, and because the state is part of a broader regional market in which products from refineries in nearby states flow back to Minnesota.  Calgary, Alberta-based Enbridge wants to replace Line 3, which was built in the 1960s, because it now runs at just over half its original capacity of 760,000 barrels per day and the costs of maintaining it are growing. The pipeline runs from Hardisty, Alberta, through the northeast corner of North Dakota, and crosses Minnesota on its way to Enbridge's terminal in Superior, Wisconsin. Construction is already underway in Canada and Wisconsin. 

Energy East Death Pins Oil Sands Hopes on Two Troubled Pipelines --- TransCanada Corp's cancellation of the Energy East pipeline leaves Canadian oil producers more dependent than ever on the Keystone XL and Trans Mountain proposals, two projects facing ardent opposition in their own right.Energy East would have given oil producers in Alberta and Saskatchewan, who are heavily dependent on buyers in the U.S., another market for their crude by carrying about 1.1 million barrels a day to refineries and a marine-shipping terminal in eastern Canada. TransCanada cancelled that project on Thursday amid regulatory hurdles and weaker oil prices.With Energy East scrapped, Western Canada's producers are now counting on Kinder Morgan Inc's project to carry crude to the Pacific Coast, and TransCanada's Keystone XL to connect with U.S. Gulf Coast refineries. Both face significant hurdles: Keystone XL needs approval in Nebraska, and Trans Mountain is hampered by a legal challenge in British Columbia. "It definitely puts the leverage on the pipes that are on the docket to get through,". Keystone XL and Trans Mountain must be built "or you are looking at an industrywide problem in a very short amount of time." Pipelines in Western Canada, which holds the world's third-largest crude reserves largely in Alberta's oil sands, can carry about 3.3 million barrels of crude a day, according the the Canadian Association of Petroleum Producers, or CAPP. Meanwhile, the area is expected to produce 3.92 million barrels a day this year and 4.2 million next year as a number of large oil-sands projects come online. The pipeline pinch already had producers shipping more of their crude by rail, which can cost as much as three times more to get oil from Alberta to the U.S. Gulf Coast. Should Keystone XL and Trans Mountain fail to be built, oil producers could end up shipping more than 300,000 barrels a day via rail for at least five years, and some producers could shut in operations, Evans said. Evans said it's probable that Trans Mountain will be built and that Enbridge Inc. will be able to proceed with the replacement and expansion of its Line 3, which carries Western Canadian crude to Wisconsin.

Sick of lawsuit limbo, protester tells fracking company: 'Put up or shut up' -  - CBC News: Some anti-fracking activists are still dealing with the legal repercussions of protests four years ago that successfully halted shale gas exploration by Houston-based SWN Resources Canada. Kent County was the scene of explosive protests throughout the summer and fall of 2013 as SWN attempted to conduct seismic testing to determine the extent and viability of shale gas deposits in the area. Mi'kmaq groups joined forces with non-Indigenous allies to halt the work, which they feared could lead to an environmental disaster.According to court filings, SWN alleged that those 10, among others, engaged in trespass, false imprisonment, conspiracy and intimidation to prevent the company from completing work it was legally allowed to do. SWN said the months of protests cost the company $5,000 an hour in lost work, and it demanded an unspecified amount in damages as well as a permanent injunction prohibiting the defendants from further protests. Ann Pohl of Bass River, one of the defendants named in the suit, was a familiar face at the roadside protests and describes herself a non-violent activist. Pohl filed a statement of defence within the allotted time frame and waited to see what would happen. After years of waiting she had enough. "For the rest of my life, I intend to be a person who is incredibly active on these issues, so having this lawsuit sitting around hanging over my head was going to get in the way of things," Pohl said. "I should either get them to put up or shut up." She said she was afraid to do it but, after getting legal advice of her own, she contacted SWN's lawyer to ask that the company move the case along. "Then six months later I get a letter from them. They decided to discontinue." 

Canadian oil & gas exploration suffers as independents struggle to find financing - Smaller Canadian independent energy companies are having trouble obtaining financing and, as a result, exploration is on a downward trend in the country.  Considerable reductions in capital for exploration and the number of smaller explorers are raising questions about the Canadian oil and gas industry’s ability to ramp up production when oil prices rebound. According to Bloomberg, Canadian oil and gas explorers suffered a 39% drop in the amount of capital raised during the first eight months of 2017 compared to the same period a year earlier. Canadian oil and gas explorers, predominantly small independents, announced 73 primary or secondary share offerings of US$100 million or less for total proceeds of US$535 million. By comparison, a total of US$881 million was raised during the same period of 2016, but even this amount was less than half of the US$1.34 billion generated in the first eight months of 2012, when oil prices averaged more than US$95 per barrel.

Tapestry spans two city blocks, nine years of one artist's life and several million years of oil - Calgary - CBC News - When it comes to creating two-block-long pieces of art that take nine years to complete, medieval European craftsmen have nothing on Calgary artist and filmmaker Sandra Sawatzky.That's because Sawatzky turned back the clock for her latest project, the Black Gold Tapestry, to around the 15th century, where she took inspiration from the Bayeux Tapestry, a 67-metre (220-foot), hand-embroidered narrative of the Battle of Hastings in the 11th century. For Sawatzky, the notion of using the format of the Bayeux Tapestry to tell a Calgary story that's also a global one was appealing — even if it was going to have to chew up a sizeable chunk of her life to get done. "I thought wouldn't it be neat to do something like a story — a film on cloth? And so that's what I did," Sawatzky said on the Calgary Eyeopener on Monday.

EIA's Monthly Short-Term Energy Outlook And Winter Fuels Outlook -- October 11, 2017 -- After last year’s relatively warm winter, our forecast assumes this winter heating season will be more normal and see increased spending on heating oil, propane, and natural gas because of higher fuel consumption and prices. Expenditures are expected to be relatively in-line with an average winter. We forecast that homes that depend on natural gas for heating will experience a 12% increase in their heating costs compared to last winter. Despite the late summer’s hurricane disruptions, petroleum markets have largely returned to normal operations. Gulf Coast refineries reached 86% utilization by the last week in September, which was only 5 percentage points below average utilization for this time of year.” Consumers should expect to see retail gasoline prices continue to decrease from the two-year high of $2.69 per gallon, following Hurricane Harvey. We are forecasting average prices at the pump will fall to $2.33 per gallon by December.” Crude oil production in the Gulf recovered following Harvey, with production increasing by about 70,000 barrels per day in September, putting that month’s average production at 1.7 million barrels per day.”  Based on our observations of current drilling and our price expectations, the forecast continues to project that U.S. crude oil production in 2018 will top the 1970 annual production record of 9.6 million barrels per day, with the current output forecast at 9.9 million barrels per day next year.   We expect that natural gas inventories will reach 3.8 trillion cubic feet by the beginning of the heating season at the end of this month, in-line with average levels from the past five years.  U.S. natural gas exports are expected to grow this winter and mark the first winter the United States will be a net exporter of natural gas. U.S. homes that depend on electricity for heating are forecast to see their bills increase by 8% this winter compared with last winter.  Coal exports were up 62% from January to July 2017 compared to the same period in 2016, based on strong global demand.. For 2017, electricity generation from utility-scale solar power is expected to increase by 40% and small-scale solar is estimated to climb by 28%.

North Sea Oil Squeezed as U.S. Ships Crude Like Never Before -- As crude oil gushes out of the U.S. like never before, it looks increasingly like North Sea oil will suffer collateral damage. America exported a record high 1.98 million barrels a day of crude in the week ended Sept. 29, equal to the crude that normally gets shipped every day in the North Sea. Much of the U.S. outflow is going to Asia, which has become increasingly important in recent years in determining North Sea oil prices, effectively sandwiching Brent crude between bearish forces. “It’s direct competition to North Sea production on many different fronts,” said Olivier Jakob, managing director at Petromatrix GmbH in Zug, Switzerland. Where U.S. exports go to Asia, “it will be more difficult for the North Sea to push some of its barrels outside of the region. It creates competition. It’s going to be a bearish factor for the North Sea market.” The impact of rising American oil shipments on Brent -- for many in the industry the most important crude benchmark -- shows the increasingly disruptive force of U.S. crude in international markets. Washington in late 2015 lifted a 40-year ban on most oil exports, in the process reshaping the world’s energy map with U.S. crude being sent by trading houses such as Vitol Group and Trafigura Group to faraway locations including Switzerland, China and Israel. The U.S. export restrictions were imposed in the aftermath of the 1973-74 oil crisis. U.S. producers ship barrels directly to refineries in Europe, placing the cargoes in competition with North Sea supply. At the same time, they’re sending a growing share to the prized Asian market. Refineries in China and South Korea in particular have become a critical source of demand for North Sea oil in recent years, helping to clear any oversupply out of the European market. Of the flood of crude exported by the U.S. late last month, more than half went to East Asia and nearly a third was shipped to Northwest Europe and the Mediterranean region, according to a trader who’s monitoring the region’s exports. The remainder was shipped to the Caribbean and Latin America, the trader said. That’s in line with exports so far this year, according to data from the U.S. Energy Information Administration and Kpler, a company that monitors ship movements. The size of the U.S. exports -- which has jumped from 25,000 barrels a day a decade ago to nearly 2 million barrels a day now -- is now rivaling those from the North Sea.

Fracking Questions – how not to conduct a consultation - The SNP led minority Scottish Government has announced that it will ban fracking for tight shale oil and gas in Scotland. A party that once drooled over North Sea oil and gas revenues and lamented the riches lost to the Sassenachs south of the border now appears to have lost its appetite for what could be a second oil and gas bonanza. This decision is nothing short of astonishing and shows how we have all become hostages of The Green Menace. A consultation on fracking was hijacked by Green lobby groups who managed to muster around 60,000 negative responses from those emotionally against all forms of fossil fuels. 5,235,000 Scots did not respond and presumably do not hold strong views on fracking. What we can say is that around 1.1% of the Scottish population are strongly opposed to fracking which is hardly a mandate for the ban. Let me begin by laying out my own stall on fracking policy. I am less gung ho than many for a number of reasons. First, shale oil and gas is often described as cheap, which it is not. What Is the Real Cost of Shale Gas is one of the most read posts on this blog (29,941 reads). To be sure, the cost of developing shale has come down, but from drilling patterns, it is clear that US shale oil still needs >>$50 / barrel to turn a profit. The shale revolution in the USA has been funded by Wall Street and not by profits made. The productivity of different shale plays in the USA varies enormously, as do the costs. How productive will Scottish shale be? There is only one way to find out and that is to drill and test it. Second, the environmental impact of drilling could be substantial. Drilling a long horizontal well has a footprint not unlike a conventional well and land-based drilling of this sort has taken place across the UK for many decades. But at the fracking stage, large numbers of trucks are required to move fracking fluids and proppants to and from the well site. And in a successful development, several hundreds of fracked wells are required. I have sympathy for those who don’t want this going on in their backyard. The UK government has opened the door to direct compensation for those adversely affected by shale developments and the Scottish Government could do the same.

Offshore Rig Firms See End To Worst Downturn In History -- (Reuters) - Demand for offshore rig rental globally is starting to recover from its worst ever downturn, led by oil firms' growing demand for harsh-environment exploration and triggering multi-billion dollar tie-ups among drillers hoping to profit, executives said. While the 2014-2016 oil price crash caused firms to cut exploration budgets, ending a boom in rig demand and bankrupting many owners, energy companies are now seeking to replenish their hydrocarbon reserves. The nascent demand for harsh-environment rigs, particularly for North Sea drilling, could lead to increased rates for these units as soon as 2018, and other categories may follow in 2019 or 2020, companies and analysts say. Transocean Chief Executive Jeremy Thighpen told UBS analysts he would not be surprised to see next fixtures for such rigs to rise to $300,000 from current levels of around $200,000. Oslo-based Pareto Securities also said it expected day rates for modern harsh-environment rigs to rise to $250,000-$300,000 in contracts awarded in 2018, with other segments rising later. Nordea bank said it saw the rig market in the North Sea tightening in 2018, particularly for high-end rigs, with Odfjell Drilling signing in August a nine-month contract with Aker BP at a day rate of $250,000. However, Simen Lieungh, chief executive of Odfjell Drilling, told Reuters he did not expect day rates rising significantly to $350,000-400,000 until late 2019. Historically, the percentage of the global fleet that has being utilised had to rise to 85 percent or more for day rates to increase significantly. Today they are around 60-70 percent, depending on the rig segment. Some, however, pointing to a large supply overhang in the jack-up market, with total supply counting more than 500 units, while current demand is around 300. Nordea says some 100-200 jack-up rigs may need to be scrapped before day rates improve.

Norway Takes Hard Look at Impact of Climate Change on its Oil Riches - What is 47 billion barrels in oil and gas really worth in an age where renewable sources are increasingly filling the world’s energy needs?That’s what Norway, western Europe’s biggest oil and gas producer, is asking itself as it prepares to take a hard look at the risks climate change poses to its economy and its petroleum resources even as it moves exploration and production farther into the Arctic. After being re-elected last month, the Conservative-led government is now setting up a commission to study climate-related risks, ranging from physical threats to the impact of changes in energy consumption on the value of its oil and gas resources, Climate and Environment Minister Vidar Helgesen said. “We’re seeing both accelerating climate change that can lead to large costs as a consequence of infrastructure destruction, and accelerating technology changes, especially in energy and transportation. That’s coming very fast, and that has an impact on the value of fossil resources over time.” Petroleum production, led by Statoil ASA, has made Norway one of the richest countries in the world, helping it amass a 8 trillion-krone ($1 trillion) sovereign wealth fund. But Norwegians are now increasingly questioning whether it makes financial or moral sense to invest in more exploration and output as energy sources such as solar and wind become cheaper.

France’s Biggest Bank Becomes The First To Cut Off Funding For Natural Gas Fracking -- BNP Paribas on Wednesday became the first big bank to pledge to stop financing natural gas fracking projects as part of a new policy cheered by environmentalists as having the greatest impact of any financial giant yet. Under the new policy, France’s largest bank will refuse to lend to companies who generate more than half their revenue from fracked oil, gas or liquefied natural gas export terminals. The rules also apply to tar sands, considered one of the dirtiest sources of oil. Multinational banks, including BNP Paribas, began putting strict limits on funding for coal projects in 2015. At that point, coal was becoming an unprofitable investment, and banks faced mounting pressure from environmentalists to stop supporting the dirtiest fuels in the lead up the Paris climate agreement. Last month, JPMorgan Chase became the target of a new campaign urging it to end financing for companies that drill tar sands, a particularly dirty source of oil that forms the backbone of Canada’s industry. Until now, no financial giant has clamped down on natural gas, which produces far less carbon dioxide than oil or coal. The fuel now provides most of the United States’ electricity and is credited with reducing emissions by weaning the country off coal. That has allowed advocates to tout the gas as a critical tool in the transition from heavily-polluting fuels to renewable energy. Natural gas also has critical geopolitical significance, as President Donald Trump moves to increase pipelines and build up export infrastructure to start selling the fuel to overseas buyers, including energy-hungry China.

BP expands its LNG Carrier Fleet - BP will soon take delivery of six new, state-of-the-art liquefied natural gas (LNG) dual-fuel tankers to support its expanding global LNG portfolio and to respond to growing demand for lower-carbon energy sources around the world. The company says the expansion will support the group’s broader shift to natural gas. BP’s finance partners KMarin and ICBC Leasing are investing over $1 billion in the tankers, which will join existing tankers in BP Shipping’s fleet in 2018 and 2019. The vessels will help service a 20-year liquefaction contract with the Freeport LNG facility in Texas, as well as other international LNG projects in BP’s global portfolio. “These vessels will significantly increase BP’s ability to safely transport LNG to anywhere in the world, directly supporting BP’s global natural gas strategy,” said BP Shipping CEO Susan Dio. “They also will be among the most fuel-efficient and technically advanced LNG tankers ever built.”  The LNG vessels will have state-of-the-art ‘slow speed’ dual-fuel engines – powered by liquid as usual or pressurised 300bar gas – which are widely recognised as the most efficient around. The new ships are designed to be about 25 percent more fuel efficient than their predecessors. They also will be fitted with a reliquefaction plant, meaning evaporated natural gas in the cargo tanks can be returned to the tanks as LNG, allowing the ships to deliver more LNG to the market.

Water Contamination and Cancer: The Other Impact of Oil Drilling - Access to drinking water is not a new problem in the Gulf of St. George; in some cases it is the birthmark that the populations carry in the Southern Patagonia. A very widespread version – and equally questioned – adjudges the discovery of oil in Comodoro Rivadavia, in December 1907, in the search for water to supply the people born of the agricultural development of Ideal colony called the Sarmiento colony.   Fable or not, from that moment the incipient port town became the cradle of the Argentine oil industry and, over the years, became National Capital of the Oil.  As in other communities in the country where certain extractive activities or industrial processes are carried out, the population of Comodoro Rivadavia and Caleta Olivia affirms that some diseases are more prevalent than in the rest of Argentina. The lack of statistics and research that give or take to that perception, transform these societies into territories of uncertainty. “There are no statistics either private or government but there are a very striking number of patients with different types of cancers. We do not know why there is so much prevalence, if the prevalence has really increased, “says Néstor Sosa, surgeon at the Zonal Hospital in Caleta Olivia. “If there are no statistics you do not know what the problem is, you do not know how big the problem is, and you will not be able to solve it”, he warns, and completes the reflection: “In fact there is a policy almost of negation, does not see important gestures. For example, the Northern area [of the province of Santa Cruz] has an oncologist, so the ability to solve the problem is very limited. “ “I know there are a lot of breast, lung and especially rectal and colon cancers, which is what you see frequently when you go through oncology rooms,” says Sosa, who is also Assistant Secretary of the branch local of the Association of Workers of the State. “Factors in common may be many, but the one that is most blamed, without having a scientific handle, is water. There is no serious study that denies or confirms it. “

Brazil to ramp up oil production before ‘renewable era’ hits (Reuters) - Brazil plans to boost oil exploration and production to seize on its reserves before the world enters the “renewable era” and other technologies hurt demand for the fossil fuel, Deputy Energy Minister Paulo Pedrosa told Reuters on Wednesday. “The stone age did not end for lack of stone, and the oil age will not end for lack of oil,” Pedrosa said in an interview. “A race has begun to take advantage of the resource, because in the future it might not have value.” Since 2006, Brazil has discovered potentially massive stores of oil and gas trapped below a layer of salt under the ocean floor off its coast, but slumping global oil prices have complicated efforts to exploit these reserves. Pedrosa said the Organization of Petroleum Exporting Countries (OPEC), which has cut output to reduce a global crude glut and support prices, should not expect Brazil to help control the global oil supply. OPEC’s chief said Tuesday the cartel was meeting with the United States and reaching out to other countries in an effort to restrict global supplies and combat low prices. “There was a time when there was concern in the sense that this wealth must be exploited carefully, so that the next generation could take advantage of it,” he said. “Increasingly, it’s the opposite, we need to accelerate the use of this wealth.”

Fracking in the NT: Indigenous community 'pushed' to consider benefits because industry 'not going away'  - Australian Broadcasting Corporation - Consultants working for the Northern Territory's independent fracking inquiry have been accused of suggesting Indigenous communities exploit the opportunity and ask for benefits, because a gas-extraction industry is inevitable.The consultants surveyed remote communities in August as part of a social impact report that was commissioned by the inquiry, which will make recommendations on whether or not to lift the ban on fracking in December. One of the remote communities was Elliot, which is 700 kilometres south of Darwin. Residents there recorded a consultation session in which they were repeatedly asked to consider asking for new houses, a cattle station, cultural centre and supermarket. Elliot resident Eleanor Dixon believes the social impact study has been compromised because of the consultation by Darwin company Cross Cultural Consultants. "I thought it was really disgusting. The consultant was really, really pushing. He was suggesting a lot of ways for us to use the benefit," she said. In the consultation recording provided to the ABC, senior consultant Philip Elsegood told residents to prepare for fracking.Mr Elsegood repeatedly suggested they should ask for benefits if fracking goes ahead. "I mean, if you mob lose the battle and they're going to do it anyway, how do you get benefit from it? What is it that you would see as benefit? So in Elliot they said we need housing, but nobody wants to pay rent," he told the residents. "Start to think, how do we benefit? How do we build culture? Do we get a cultural centre built at Elliot?"

NT Indigenous leaders tell Prime Minister to back off over fracking --  Indigenous leaders from across the Northern Territory are calling on the Gunner Government to not give in to pressure from the Prime Minister by overturning its fracking moratorium.The leaders are holding demonstrations and strategy meetings throughout the weekend in the remote town of Elliot, in the heart of the Beetaloo Basin, which gas companies including Origin Energy want to target for fracking.At a rally in Elliot's main street, Indigenous residents from Elliot, Tennant Creek, Yuendumu, Katherine and Borroloola called on the Territory Government to ban fracking permanently."Do we want to drink contaminated water? No! This will affect us mentally, socially, culturally, and our health, if fracking goes ahead," Elliot Indigenous resident Mary James said.Borroloola resident Nicolas Fitzpatrick was among the group who travelled from Borroloola."We came 600 kilometres here to stand in solidarity with these mob from Marlinja and Elliot, because if they drill here and mess up the water here it can affect us all across the Territory. So it's very important that we stand together," he said. Yuendumu community leader Ned Hargraves called on the NT Government to prioritise environmental concerns over the threat of losing GST money.

Libyan Oil Output Set to Rebound -- Libya’s oil output, hampered by sporadic shutdowns at fields and ports, is on track to resume its recovery as the OPEC nation’s biggest crude deposit started pumping after a three-day forced halt. The Sharara field re-opened on Wednesday and is restoring production, the state producer National Oil Corp. said on its website. NOC lifted force majeure at the field as of Wednesday and is able to resume delivering Sharara crude to customers, it said in an emailed statement. NOC Chairman Mustafa Sanalla said Monday on Libya TV that the nation’s daily output will reach 1 million barrels within days of the field’s re-opening. Sharara, in western Libya, pumped about 234,000 barrels a day before gunmen on Sunday forced workers to halt production. The armed group was demanding back pay, the release of some members who were under detention, and supplies of fuel. It wasn’t immediately clear if Libyan authorities had met the group’s demands. The three-day halt highlights the hurdles for Libya as it tries to reboot oil production after years of political division and internal conflict. The country with Africa’s largest crude reserves was pumping 1.05 million barrels a day in August just before armed men closed a pipeline linking Sharara to a port and caused the field to stop pumping for more than two weeks. Increasing production from Libya may complicate OPEC’s push to re-balance the oil market by urging producers to limit output.

Iraq and Iran Boost Oil Exports in Sales Battle With Saudis - Iraq and Iran boosted crude exports in September, taking advantage of a slower pace of shipments from rival Saudi Arabia to win buyers in key markets like China and the U.S. Iraq shipped 3.98 million barrels of crude a day, the highest since December, while Iran’s exports rose to 2.28 million barrels a day, the most since February, according to ship-tracking data compiled by Bloomberg. Saudi Arabia’s exports were 6.68 million barrels a day, the second-lowest for this year, the data show.  Iran and Iraq’s moves to grab market share cast a light on internal tensions within OPEC as Saudi Arabia, the group’s de facto leader and world’s top oil exporter, works to re-balance the global market. State-run Saudi Arabian Oil Co., known as Aramco, will make the deepest cuts in supplies to customers in its history in November, the energy ministry said Monday.  “Iraq and Iran are both very opportunistic in selling into markets where buyers are no longer getting the same Saudi volumes,”  . “We’ve seen Saudi Arabia’s exports lower over the last several months, which is consistent with their focus on the re-balancing process.”Saudi Arabia’s Energy Minister Khalid Al-Falih promised in May that the country would “markedly” reduce exports to the U.S. in an effort to curb swollen crude inventories. Shipments to the U.S. dropped from March through August, when they reached the lowest this year, according to the tanker data. Overall Saudi exports plunged to the lowest in 34 months in July and were about 1 million less than a year earlier, according to the Joint Organisations Data Initiative. Riyadh-based JODI collects data including production and exports directly from countries.Iraq exported 871,000 barrels of crude a day to the U.S. in September, exceeding Saudi Arabia for a second straight month, according to tanker tracking data. Iraq shipped almost twice as much crude as the Saudis did to the U.S. in August, the data show. Iraq has also edged out Saudi Arabia as the biggest supplier to India, selling more crude to the world’s second-most-populous country for seven months this year, according to tanker tracking data. Iraq’s average sales to India are 794,000 barrels a day in 2017 so far compared with 738,000 barrels a day for the Saudis. Aramco Chief Executive Amin Nasser opened an office in India this week to market crude and refined products and to target investment plans for the world’s fastest-growing oil market.

Feature: Nigerian producers eye India's new-found appetite for US crude - The competition that Nigerian crude oil cargoes has faced from US crude oil grades in Northwest Europe over the past two years has begun to expand into other regions, according to trading sources. Since the US crude export ban was lifted in December 2015, there has been a gradual increase in shipments of US barrels to Northwest European and Mediterranean refiners, with the flow increasing sharply in recent weeks due to a wider Brent/WTI futures spread. As Northwest Europe is a major demand center for Nigerian light sweet barrels, this could be a rather bearish development for Nigerian differentials. In recent weeks, this competition has also extended east, with India increasingly looking to the US for its crude oil buy tenders. India is the largest buyer of Nigerian crude and as such plays a crucial role in the direction of Nigerian crude differentials. The Association of Southeast Asian Nations is set to have a significant impact on energy and commodities in the coming decades, as the region’s demand climbs due to favorable geography and demographics. Download our latest special report to read about the challenges and opportunities in ASEAN's commodity landscape While the quantity of US crude being purchased by India companies hasn't yet impacted Nigerian differentials, West African crude traders said that it is another form of competition for Nigerian sellers to be aware of. "There is competition from the US in India, but it's not big competition yet," said one WAF crude trader. "US crude is quite variable in quality and the Indians want to be certain about the quality they are getting. Some US cargoes are better than others." 

Saudi Aramco Plans ‘Mega Investment’ in World's Top Oil Market  - Saudi Arabia’s state-owned oil giant has “mega investment” plans for the world’s fastest growing oil market. Saudi Arabian Oil Co. aims to create a fully integrated business in India and is interested in partnering on a planned refinery project on the country’s west coast, Chief Executive Officer Amin Nasser said Monday in New Delhi. Investing in the plant, which is slated to be among the world’s largest, follows efforts by the producer known as Saudi Aramco to bulk up on refining assets ahead of what could be the biggest-ever initial public offering.  “India has all the signs of a prosperous economy that is on the move. This is a market of investment priority and not a choice anymore,” Nasser said at the Indian Energy Forum by CERAWeek. “We have a number of partners with whom we are going to have serious discussions.”Saudi Arabia has been edged out as the top oil supplier to India amid an intensifying race among producers to retain their most-prized markets. India, which imports about 80 percent of its crude requirement, has been diversifying its sources of oil supply and is seeking more favorable terms from producers in the Middle East. It received its first oil cargo from the U.S. this month. Saudi Aramco held talks with India’s state-owned oil companies led by Indian Oil Corp. to discuss participation in the 60 million ton a year refinery being set up in the state of Maharashtra on India’s west coast, Oil Minister Dharmendra Pradhan said on Monday at the same event.

India 'investment priority' for Saudi Aramco on surging crude oil, LPG growth -- Saudi Aramco said Sunday India was a priority destination for investment and that it was keen to play a bigger role as a crude and LPG supplier to feed an anticipated rise in demand. "Today, India is an investment priority," President and CEO Amin H. Nasser said while inaugurating Aramco India's new office in Gurugram, a suburb of the capital New Delhi. "As reliable suppliers of oil and LPG for decades, we are committed to providing those additional supplies that India will need," he added. India's Oil and Skills Development Minister Dharmendra Pradhan, who attended the event, said that establishing a stronger presence in India would help boost ties with Saudi Arabia. The Association of Southeast Asian Nations is set to have a significant impact on energy and commodities in the coming decades, as the region’s demand climbs due to favorable geography and demographics. Download our latest special report to read about the challenges and opportunities in ASEAN's commodity landscape "Aramco is a key partner for Indian refiners and there's great potential to take our partnership to a higher level beyond the supply of crude oil, refined products and LPG to new areas of research and development, engineering and technology. In return, India can offer competitive cost and capacity advantages," Pradhan said. Saudi Arabia is India's second-largest supplier of crude oil after Iraq, accounting for about 19% of the its imports. It also accounts for 29% of India's LPG imports. During fiscal 2016-17 (April-March), India imported about 39.5 million mt of crude oil from Saudi Arabia, according to the oil ministry. "Last year, India's oil consumption grew by over 8% compared with global growth of 1.5%, making it the third largest consumer of oil," Nasser said.

China’s shale oil reserves now rank third in the world - China’s shale oil reserves have reached 764.3 billion cubic meters, ranking third in the world after the United States and Canada, the 21st Century Business Herald reported, citing Zhang Dawei, Director of the Reserves Evaluation Center of China’s Ministry of Land and Mineral Resources.Despite the rapid development, Zhang also expressed worry over the performance of central, local and private enterprises.  “Some of the areas don’t create high economic value — many projects have seen losses,” he said at a shale gas forum in Shanghai on Wednesday.Zhang Yousheng, Deputy Director of the Energy Research Institute at National Development and Reform Commission, expressed similar concerns.“Many private enterprises have just entered the shale gas industry and the cost will be high, as will the need for a suitable market environment for further development,” he said. “But the country hopes to lower natural gas prices, so that more enterprises and residents can enjoy the results of the reform.”The current oversupply situation may also exist for a long period in the international gas market, he said, leading to  possible decline in China’s domestic oil prices. “This is a very difficult choice for local and private enterprises who wish to enter the shale oil industry,” Zhang said.

IEA: China's Crude Oil Buying Spree Looks Set To Continue (Reuters) - China has built its crude oil stockpiles at a record pace in 2017 and while its purchases could tail off towards the year-end, inventories could hit the billion-barrel mark in six months, the International Energy Agency said. China has spent around $24 billion on building its crude reserves since 2015, at an average of $50 a barrel, and now holds around 850 million barrels of oil in inventory. While China's spending on "excess" crude is tiny, given its $680 billion current account surplus since early 2015, its inventories are now equal to those of Japan and South Korea together, the Paris-based IEA said. Those countries' combined demand is half that of China. "Our calculations imply that the country’s import cover stands at about 90 days, while total demand cover is about 60 days," the agency added. Chinese oil stocks are opaque and data on them has been hard to come by or unreliable. Using figures from China's National Bureau of Statistics, along with cargo tracking, refinery throughput and crude output, the IEA crunched the numbers. "China has played a major role in global crude oil markets by helping to clear most of the excess seen in the last two to three years, which puts an even greater importance on understanding better, but also scrutinising the Chinese data," the IEA said in its monthly oil market report. The IEA said that in Europe's richest nations, total commercial oil inventories are around 1.47 billion barrels, 70 percent larger than China's, but with demand only 15 percent higher. China's efforts to beef up its strategic reserves of crude have accounted for a significant amount of demand for Atlantic Basin oil, which hit record highs this year. In the fourth quarter of this year, the IEA said it does not forecast any Chinese stockbuilding as demand should remain strong, although consumption is expected to slow in 2018.

North Asia's Saudi crude buyers receive up to 10% cut in November allocations - A number of Saudi crude oil buyers in North Asia have received up to a 10% reduction from their term volumes for November loadings, market sources said Tuesday, a day after Saudi Arabia announced it was preparing to keep its supply allocations for that month a record 560,000 b/d below its customers' requests. Saudi Aramco fielded demand for 7.711 million b/d in November loadings but would only allocate 7.150 million b/d, the Saudi energy ministry had said, as the kingdom aims to keep the OPEC/non-OPEC production cut agreement on track in its efforts to rebalance the market. That is far below its exports in November 2016 of 8.258 million b/d, according to the Joint Organizations Data Initiative. Sources with North Asian refiners said the allocation shortfall was massive, and would add to the tightness in Saudi crude supplies into Asia, given their difficulties in receiving any extra supplies from Saudi Aramco across its exported grades. "Our incremental supply requests for lighter grades have not gone through since September onwards," a North Asian refiner source said, adding that was in addition to previously unavailable incremental heavier grade supplies. China, the biggest oil consumer in Asia, is also receiving a cut for November loadings but below 10%, according a Beijing-based source familiar with the matter, to meet demand from the new 200,000 b/d CNOOC Huizhou phase 2 refinery project and PetroChina's 260,000 b/d Yunnan refinery.

OPEC Sep crude oil output up slightly from Aug on more from Libya, Iraq: Platts survey - OPEC oil output in September rose marginally by 10,000 b/d, as production increases in Libya and Iraq were largely offset by declines in Venezuela and Angola, an S&P Global Platts survey of OPEC and oil industry officials and analysts showed October 6.OPEC's 14 members saw their collective September output rise to 32.66 million b/d from 32.65 million b/d in August.That is some 740,000 b/d above its declared ceiling of about 31.92 million b/d, when Equatorial Guinea, which joined in May, is added in and Indonesia, which suspended its membership in December, is subtracted.OPEC announced the ceiling as part of a production cut agreement with 10 non-OPEC members, led by Russia, that calls on the entire group to lower output by 1.8 million b/d.Libyan oil output rose in September by 80,000 b/d to 910,000 b/d, as the key Sharara field, which has a full capacity of 300,000 b/d, was producing about 200,000 b/d for most of the month after the field was down from August 19 to September 5. But the North African country's output recovery remains fraught with challenges as the security of many fields remains volatile due to threats from a militant group. Iraqi compliance with its quota under the production cut deal remains among the weakest of the OPEC members, with production averaging 4.50 million b/d in September, still 149,000 b/d above its output quota.  Iraqi production rose 40,000 b/d from August on increased exports from the southern terminals on the Persian Gulf and increased refinery consumption. Venezuelan production fell 40,000 b/d to 1.86 million b/d in September, the survey found, as the country's crude exports dipped and its imports of diluents to blend with its heavy crude were also curtailed due to Hurricane Harvey.  The decline in Venezuela's output has accelerated in the past several months as various refinery units and heavy crude upgraders have been shut down, exacerbated by the country's deepening economic crisis.  Angolan output fell 30,000 b/d to 1.64 million b/d as exports and production of grades such as Pazflor, Dalia, and Plutonio were down, according to the survey. Nigerian production, meanwhile, fell 20,000 b/d to 1.84 million b/d in the month, as key grade Bonny Light has been on force majeure since September 16 following the shutdown of the Nembe Creek Trunk Line. Output in OPEC's largest producer Saudi Arabia was down 10,000 b/d to 10 million b/d, as despite a slight rise in exports, the end of summer resulted in lower direct crude burn, survey participants said.

The Geopolitical Consequences Of U.S. Oil Exports - Two crucial things happened last week. The first you may have noticed – oil prices moved back up briefly. As for the second, most so-called “experts” seemed to have missed.See, the environment we’re seeing in energy markets is very different from what we saw only a week ago, when oil prices were also rising.Because last week also saw – for the first time in world history – a reigning Saudi Arabian monarch in Moscow for talks with Russia’s head of state.Historically, Russia has been much closer to Iran – Saudi Arabia’s main regional enemy.Now, King Salman and President Putin are expected to endorse the plan to extend the OPEC-Russia deal to cut oil production and boost prices beyond the current end date of March 2018. But that’s not all they’re going to talk about…  Other, more far-ranging matters will also be on the agenda, including the war in Syria.And the catalyst for this huge shift in global geopolitics is surprisingly simple. It’s all about America’s record-breaking oil exports… Now, there’s no indication that Russia and Saudi Arabia are on the road to an alliance on anything beyond oil prices. Even then, that accord remains only as long as it is in the subjective interest of the parties. Nonetheless, it is disquieting to Washington that any such prospects may be on the horizon… or that U.S. oil exports may be introducing a range of foreign policy concerns.  From an energy perspective, the main issue at hand is the OPEC-Russian deal to cap oil production, which is now almost certain to continue further than the agreed-on end date of March next year. And after some concerns had been raised over individual OPEC members exceeding the quotas the deal assigned them, evidence is now emerging that the restraint is holding. The major global sources of oil need to allow the worldwide market to rebalance.

Is This The Geopolitical Shift Of The Century? | - The geopolitical reality in the Middle East is changing dramatically. The impact of the Arab Spring, the retraction of the U.S. military, and diminishing economic influence on the Arab world—as displayed during the Obama Administration—are facts. The emergence of a Russian-Iranian-Turkish triangle is the new reality. The Western hegemony in the MENA region has ended, and not in a shy way, but with a long list of military conflicts and destabilization. The first visit of a Saudi king to Russia shows the growing power of Russia in the Middle East. It also shows that not only Arab countries such as Saudi Arabia and the UAE, but also Egypt and Libya, are more likely to consider Moscow as a strategic ally. King Salman’s visit to Moscow could herald not only several multibillion business deals, but could be the first real step towards a new regional geopolitical and military alliance between OPEC leader Saudi Arabia and Russia. This cooperation will not only have severe consequences for Western interests but also could partly undermine or reshape the position of OPEC at the same time. Russian president Vladimir Putin is currently hosting a large Saudi delegation, led by King Salman and supported by Saudi minister of energy Khalid Al Falih. Moscow’s open attitude to Saudi Arabia—a lifetime Washington ally and strong opponent of the growing Iran power projections in the Arab world—show that Putin understands the current pivotal changes in the Middle East. U.S. allies Saudi Arabia, Egypt, Turkey and even the UAE, have shown an increased eagerness to develop military and economic relations with Moscow, even if this means dealing with a global power currently supporting their archenemy Iran. Analysts wonder where the current visit of King Salman will really lead to, but all signs are on green for a straightforward Arab-Saudi support for a bigger Russian role in the region, and more in-depth cooperation in oil and gas markets. 

OPEC's Barkindo admits "extraordinary measures" needed to sustain oil rebalancing -- OPEC has signalled to the market that it could further broaden its OPEC/non-OPEC alliance, ramping up the rhetoric over the possibility of expanding its membership and trying to deepen its dialogue with US shale in order to rebalance the market. Speaking at the India Energy Forum in New Delhi, OPEC's secretary general Mohammed Barkindo admitted that OPEC and non-OPEC producers will require "some extraordinary measures" to sustain the rebalancing of the oil markets. "Emerging from this most vicious of all oil cycles, the need to sustain the rebalanced market in the medium to long term, some extraordinary measures could be considered by countries participating in [the current deal]... including expanding the membership," said Barkindo. In his speech, Barkindo also indicated that besides the 24 countries participating in the accord, other producers needed to be included. He specifically mentioned US shale oil producers, whose oil production has grown this year. "We urge our friends in the shale basins of North America to take this shared responsibility with all the seriousness it deserves, as one of the key lessons learnt from the current, unique supply-driven cycle," he said. In mid-July, Barkindo said OPEC planned to hold additional consultations later this year with US shale producers on the state of the market, as it deems it necessary to combine the efforts of all major contributors to the current crude supply crunch.

OPEC Secretary General urges U.S. shale oil producers to help cap global supply  (Reuters) - OPEC’s Secretary General Mohammed Barkindo on Tuesday called on U.S. shale oil producers to help curtail global oil supply, warning extraordinary measures might be needed next year to sustain the rebalanced market in the medium to long term. “We urge our friends, in the shale basins of North America to take this shared responsibility with all seriousness it deserves, as one of the key lessons learnt from the current unique supply-driven cycle,” said Barkindo. The comments by the Organization of the Petroleum Exporting Countries official came during a speech delivered at the India Energy Forum organized by CERAWeek in New Delhi. “At the moment we (OPEC and independent U.S. producers) both agreed that we have a shared responsibility in maintaining stability because they are also not insulated from the impact of this downturn,” Barkindo said, referring to a slide in oil prices that spurred OPEC to agree production cuts late last year.

Feast or famine? Oil market in 2018: Kemp - Just as Pharaoh’s kingdom experienced a cycle of feast and famine, depending on the Nile inundation, the oil market swings between periods of undersupply and oversupply.  The natural state of the oil market is not just enough, any more than the natural state of Pharaoh’s food supply was just enough.  OPEC and other commentators, including myself, characterise the process of restricting oil production and reducing excess stocks as one of market “rebalancing”. But while rebalancing is useful shorthand for a complicated set of adjustments to production, consumption and stocks, it does not imply the process ends with a “balanced” oil market.The oil market is rarely balanced, and never for very long.In the past, periods of oversupply and contango were swiftly followed by a return to undersupply and backwardation ( similar appears to be underway at present, with Brent and other international crude grades moving into backwardation over the last three months, after trading in contango since the middle of 2014.Most analysts have expressed concern about the re-emergence of oversupply, a renewed rise in crude stocks, and how OPEC and its allies will exit from their current production deal in 2018.  But it is at least possible the market is moving towards a period of undersupply, when demand will be growing strongly, supply will be lagging, and stocks will feel uncomfortably tight.

Fund managers turn cautious on oil as prices fall (Reuters) - Hedge fund bullishness towards crude oil and refined products including gasoline and diesel appears to have peaked for now, according to an analysis of regulatory and exchange records.Few long positions in crude and products were added by hedge funds and other money managers in the week to Oct.3, with some increasing short positions for the first time since August.Hedge funds cut their combined net long position in the three major crude oil futures and options contracts linked to Brent and WTI by 1 million barrels to 793 million ( the reduction was tiny, it came after portfolio managers had increased their net long exposure by 212 million barrels over the previous four weeks and indicated a potential turning point.For the first time since August, hedge funds increased short positions in NYMEX WTI by 4 million barrels over the week.Fund managers trimmed their exceptionally bullish positioning in U.S. gasoline by 6 million barrels to 65 million barrels, which was also the first significant reduction since August.Funds continued to add to their record net longs in U.S. heating oil and European gasoil by 220,000 barrels and 440,000 tonnes respectively, but the rate of accumulation slowed markedly.The probable peak in hedge funds’ net long positions comes as no surprise.Both the accumulation and liquidation of hedge fund positions and the rise and fall in prices show a strong cyclical element in the short run.Speculative traders’ positioning across crude and especially refined fuels had looked increasingly lopsided in recent weeks as fund managers turned from very bearish in June to super-bullish by the end of September.Brent prices have been drifting lower since Sept. 25 amid concerns that they had risen too far too fast and risked getting ahead of fundamentals. The concentration of hedge fund positions had itself become an additional source of downside risk, with the likelihood that prices would fall when portfolio managers attempted to realise some of their profits.

Even US shale may not be able to save markets from an oil supply crunch - (podcast) Investment cycles can give clues about future oil market shifts, and recent slow investments are pointing toward a global crude shortage and price upticks, Jonathan Chanis tells senior oil editors Brian Scheid and Meghan Gordon.Chanis is senior vice president for policy at Securing America’s Future Energy and formerly was a senior trader at Caxton Associates and a vice president at Goldman Sach’s commodities division. He tells Capitol Crude that OPEC policies have disrupted investments and a lack of spending has set the world up for a supply crunch that even US shale cannot fix.  (See excerpts of the conversation with Chanis in this story.)

Oil prices stable after OPEC signals possible further action (Reuters) - Oil prices stabilized on Monday after one of the most bearish weeks in months, propped up by OPEC comments signaling the possibility of continued action to restore market balance in the long term. Oil production platforms in the Gulf of Mexico started returning to service after Hurricane Nate forced the shutdown of more than 90 percent of crude output in the area. The prospective restarts kept price gains in check. Former hurricane Nate has become a post-tropical cyclone that continues to pack heavy rain and gusty winds, the U.S. National Hurricane Center (NHC) said on Monday. “Quiet market overall this morning though (refined) products are weaker as it looks like Nate was a non-event for refining,” said Scott Shelton, broker at ICAP in Durham, North Carolina. “I think that without the support of products and Brent, the market may get dragged lower in the near term as its apparent that the market doesn’t care much about OPEC already jawboning about an extension of the deal.” The Organization of the Petroleum Exporting Countries is due to meet in Vienna on Nov. 30, when it will discuss its pact to reduce output in order to prop up the market. OPEC Secretary-General Mohammad Barkindo said on Sunday that consultations were under way for an extension of the agreement beyond March 2018 and that more oil-producing nations may join the pact, possibly at the November meeting. He also said OPEC members and other producers may have to take some “extraordinary measures” to ensure the market is in balance in the long term.

Oil ends higher as OPEC hints at extended output curbs -Oil futures ended slightly higher Monday, finding some support after OPEC’s secretary-general said the cartel and other oil producers might need to take additional measures in 2018 to rebalance the oil market.December Brent crude, the global oil benchmark LCOZ7, +0.11% rose 17 cents, or 0.3%, to close at $55.79 a barrel on London’s ICE Futures exchange. On the New York Mercantile Exchange, West Texas Intermediate crude for November delivery CLX7, +0.22% added 29 cents, or 0.6%, to settle at $49.58 a barrel. Mohammad Barkindo, secretary-general of the Organization of the Petroleum Exporting Countries, on Sunday said there was a “growing consensus” that a rebalancing process was under way. To sustain that process into next year, “some extraordinary measures may have to be taken,” he told reporters at an oil industry forum in New Delhi, according to Reuters.Those remarks, which implied extending, or deepening, the curbs agreed by OPEC and non-OPEC producers, appear “to have provided support for th e markets to open this week’s trading,” said analysts at Tradition, in a note.Otherwise, traders were largely in wait-and-see mode ahead of the release of oil market data from OPEC on Wednesday and the International Energy Agency on Thursday.Crude prices stabilized after falling more than 2% on Friday, as around 90% of U.S. oil infrastructure was shut down in the Gulf of Mexico in preparation for Hurricane Nate, which ended up having little effect on the U.S. oil market. Some U.S. export terminals have already reopened, according to analysts. But the closures will distort U.S. inventory data, making it more difficult to assess the American oil market, analysts said.

Aggressive OPEC Pushes Oil Prices Up - Oil prices firmed up just a bit on the very aggressive comments from OPEC’s top official, although the bull run from September does not appear to be set to return.   The latest hurricane to hit the U.S. forced an estimated 93 percent of the Gulf of Mexico’s offshore oil production to go offline. The preemptive moves by the industry led to evacuations and shut ins, but the hurricane ended up being much milder than expected. There was no significant damage to the energy industry to report, and supplies should come back online relatively quickly. The Gulf’s oil and gas production “should fully recover by the end of the week, if not sooner,” Andy Lipow, president of Lipow Oil Associates in Houston, told Bloomberg.  OPEC’s Secretary-General hinted at much more aggressive action, telling reporters that the cartel might need to take “extraordinary measures” to rebalance the market. However, he also stated that there has been tangible progress, citing falling inventories. . While OPEC’s Secretary-General Mohammad Barkindo hinted at “extraordinary measures,” he also urged U.S. shale to limit its production. “We urge our friends in the shale basins of North America to take this shared responsibility with all seriousness it deserves, as one of the key lessons learnt from the current unique supply-driven cycle,” said Barkindo. The plea is almost certainly going to fall on deaf ears. . Saudi Aramco said it would take “unprecedented” action to lower exports in November, cutting allocations to customers by 560,000 bpd, the largest reduction ever. The move is intended to accelerate the rebalancing in the oil market, but as Bloomberg reports, the void leftover is being partially filled by rival OPEC members. Iraq and Iran ratcheted up exports in September, winning market share in China and the U.S. Iraq’s oil sales hit nearly 4 mb/d, the most in nearly a year, while Saudi Arabia’s dropped to 6.68 mb/d, the second-lowest for 2017. The dynamic illustrates the difficulty OPEC has in keeping all members on board with the coordinated cuts without trying to undermine the deal or each other.

The “Amazon Effect” Is Coming To Oil Markets -- While OPEC mulls over further steps to once again support falling oil prices, tech startups are quietly ushering in a new era in oil and gas: the era of the digital oil field.Much talk has revolved around how software can completely transform the energy industry, but until recently, it was just talk. Now, things are beginning to change, and some observers, such as Cottonwood Venture Partners’ Mark P. Mills, believe we are on the verge of an oil industry transformation of proportions identical to the transformation that Amazon prompted in retail.According to Mills, the three technological factors that actualized what he calls “the Amazon effect”, which changed the face of retail forever, are evidenced in oil and gas right now. These are cheap computing with industrial-application capabilities; ubiquitous communication networks; and, of course, cloud tech.The Internet of Things is entering oil and gas, and so are analytics and artificial intelligence. These, Mills believes, will be among the main drivers of a second shale revolution, reinforcing the efficiency push prompted by the latest oil price crisis. It seems that shale operators have been paying attention to what growing choirs of voices, including Oilprice, have been saying: they are talking more and more about the benefits that software solutions can bring to their business, potentially leveling the playing field for independents, a field that has been tipped in favor of Big Oil for decades.Long-standing mistrust of technology is now dwindling as the benefits—including streamlining operations, maximizing the success rate of exploration, and optimizing production—make themselves increasingly evident, not least thanks to a trove of tech startups specifically targeting the oil and gas industry. In a story for Forbes, Mills notes several examples of such startups that are already disrupting the industry with cognitive software for horizontal drilling, an on-demand contractor network, and an AI-driven software platform for well planning, among many others. The common feature among them all is they are narrowly specializing in various segments of the oil industry to deliver solutions that promise to substantially reduce times, labor, and costs, while improving outcomes. What’s not to like?

Interview: Lack of oil investment could bring shortage, price spike by 2020s - An oil supply shortage and price spikes of $80-$100/b could hit the global oil market by the 2020s if producers do not fund major projects soon, and rising US tight oil supply will not be able to stop this trend, said Jonathan Chanis, vice president of policy at Securing America's Future Energy."We're at a very perilous point because we've had two years of a really, really marked decline in investment," Chanis said on Monday's episode of the S&P Global Platts Capitol Crude podcast."If we don't start seeing some large-scale final investment decisions on mega-projects -- projects over $10 billion-$15 billion apiece -- if we don't start seeing them now and next year or shortly thereafter, by the time we get around to the 2020s, we are going to be short oil," Chanis said.Chanis is a former senior trader at Caxton Associates, a hedge fund, and a former vice president at Goldman Sach's commodities division. He thinks that OPEC policies have disrupted global investment cycles, causing spending on future projects to plummet and setting the world up for a massive supply crunch.  Investment declined 40% in 2015 and 2016 and has been flat so far this year, he said. The number of mega-projects approved in the next year to two years will determine if that shortage arrives."That's not to minimize the role of tight oil and shale because it's terribly important," he said. "But the takeaway on that is it's just not going to be enough." Chanis said the investment cycle since the rise of OPEC in the 1970s has been "extremely volatile" with periods of excessive investment followed by excessive underinvestment that lead to extreme price swings for consumers.

OPEC To Take Drastic Action Despite Shale Slowdown -- WTI recently dipped below $50 per barrel for the first time in a month, erasing the strong September rally. It’s no coincidence that after two weeks of price declines, OPEC has tried to talk up the oil market again, hinting that more drastic action could be forthcoming. Echoing the world’s top central bankers, OPEC’s Secretary General said that the oil cartel might need to take “extraordinary” measures to balance the oil market next year. “There is a growing consensus that, number one, the re-balancing process is underway,” OPEC’s Mohammad Barkindo told reporters on Sunday in New Delhi. “Number two, to sustain this into next year, some extraordinary measures may have to be taken in order to restore this stability on a sustainable basis going forward.”As always, OPEC is vague on the specifics, but the working assumption is that the group will agree to an extension of the cuts until at least mid-2018, or perhaps even as late as through the end of the year. There’s been some discussion about deeper production cuts, but there aren’t a ton of analysts who see OPEC going that far, despite Barkindo’s cryptic language.Meanwhile, Saudi Arabia engaged in a bit of its own psy-ops with the oil market on Monday, saying that it was taking “unprecedented” steps to cut its oil exports. Saudi Aramco said it would lower exports by 560,000 bpd next month, “the deepest customer allocation cuts in its history.”The comments are consistent with the country’s longstanding pattern of trying to jawbone the market when it wants higher prices. Based on Monday’s activity, the effort didn’t work.“The fact that we did not get any significant strength from the Saudi news is rather disheartening for the bulls,” Stephen Schork, an analyst and author of the Schork Report, told the WSJ. “The market is very skeptical of this.” With rising production levels and no definitive word from OPEC and the Russians that they are going to extend the cut or deepen it, the rally seems to have lost its momentum,”

OPEC considers second meeting with U.S. independent oil firms (Reuters) - The Organization of the Petroleum Exporting Countries is seeking to hold a second meeting with U.S. independent oil firms as well as hedge funds, OPEC’s Secretary General told Reuters, adding that no oil producer could afford to live in isolation. The United States is not a member of OPEC and U.S. anti-trust legislation prohibits any collective action to influence prices - precisely what OPEC has been doing for the past decades. He said the meeting could take place later this year or early in the next one. “Both groups - independents and hedge funds - have become increasingly important in the energy markets,” Mohammed Barkindo told Reuters. “What we are trying to do is to reach out to these companies who also operate in these markets, who also feel the pinch of volatility from time to time and the downturn,” said Barkindo who held the first meeting in Houston earlier this year. “We cannot continue to live and operate in isolation. The world of energy is undergoing a massive structural transformation, energy transition is real.”

Oil rises 2 percent on signs rebalancing underway (Reuters) - Oil prices rose about 2 percent on Tuesday, supported by Saudi Arabian export cuts in November and comments from OPEC and trading companies that the market is rebalancing after years of oversupply. Saudi Arabia has cut November allocations by 560,000 barrels per day (bpd), in line with its commitment to an OPEC-led supply reduction pact. The Organization of the Petroleum Exporting Countries is seeking to hold a second meeting with U.S. independent oil firms as well as hedge funds, OPEC’s Secretary General told Reuters, adding that no oil producer could afford to live in isolation. Brent crude LCOc1 settled up 82 cents, or 1.5 percent, at $56.61 a barrel while U.S. crude rose $1.34, or 2.7 percent, to settle at $50.92. From a technical standpoint, U.S. crude has staged an impressive rebound from the $49.08 level and a decisive breakout above $51 should encourage a further incline towards $52.40 a barrel, said Lukman Otunuga, research analyst at FXTM. “In an alternative scenario, sustained weakness below $49, which is also under the 50 (day) daily simple moving average, may open a path towards $47.80.” OPEC, Russia and other non-member producers are cutting output by about 1.8 million barrels per day (bpd) until next March to get rid of a price-sapping supply glut. The group is increasingly confident that the market is rebalancing fast, helped by the cutback as well as by stronger-than-expected growth in global demand. The deal is working, keeping oil prices within “a reasonable range”, the RIA news agency cited Russian Prime Minister Dmitry Medvedev as saying.

Oil prices settle up on demand forecasts, Kurdistan tensions | Reuters: (Reuters) - Oil prices rose for the third day on Wednesday as OPEC forecast higher demand for 2018 and heightened tensions in Kurdistan supported prices. Brent crude futures LCOc1 rose 33 cents, or 0.6 percent, to settle at $56.94 per barrel. Brent rose 2 percent the previous day. U.S. West Texas Intermediate (WTI) crude futures CLc1 rose 38 cents, or 0.8 percent, to $51.30 a barrel. The Organization of the Petroleum Exporting Countries forecast stronger demand for its oil in 2018 and said production cuts by producing nations were clearing the global crude glut. U.S. oil exports are pouring into the market at a record pace, but the world’s second largest crude trader Glencore (GLEN.L) said the market can absorb the volumes along with those from the North Sea and West Africa. “I think the market is able to absorb that 2 million bpd of U.S. exports easily,” Glencore’s head of oil trading Alex Beard told the Reuters Global Commodities Summit. “I don’t think there are many losers out there.” Saudi Arabia said it pumped 9.97 million barrels per day in September, up from August, but still below target. OPEC and other producers, including Russia, agreed to cut output by 1.8 million barrels per day (bpd). The United States is not party to the deal, and its crude output has risen 10 percent this year to more than 9.5 million bpd.After settlement, crude prices pared gains when the industry group the American Petroleum Institute said its data showed U.S. crude stocks rose unexpectedly last week, while gasoline inventories decreased and distillate stocks built. API said crude inventories rose 3.1 million barrels in the week to Oct. 6. Analysts had expected a draw of 2 million barrels. The U.S. Department of Energy reports official data on Thursday. 

WTI/RBOB Slide After Surprise Crude Build -- WTI/RBOB had bounced back modestly today (on OPEC jawboning) ahead of the API data with bulls hoping the trend of gasoline builds stalls. With the effects of Harvey beginning to fade (and exports at record highs), we are getting a cleaner picture of the state of the energy complex and it's no so pretty for the record-long-specs. Crude inventories saw a surprise 3.1mm build (expectations for a 2.4mm draw), Cushing saw the 7th straight week of restocking and while gasoline inventories dropped, distillates saw a big build. API

  • Crude +3.1mm (-2.4mm exp)
  • Cushing +1.216mm - 8th weekly build in a row
  • Gasoline -1.575mm (+200k exp)
  • Distillates +2.029mm - biggest in 5 months

Cushing continues to be restocked but the crude build is the biggest surprise and while gasoline saw a draw, the distillates build offsets that excitement... WTI/RBOB had rallied on the day into the API print...But the initial reaction was selling after theprint

Oil supply overhang looms in Q1 despite stock fall, IEA warns - Global oil stocks are likely to fall by 300,000 b/d on average this year, but a likely global oversupply in the first quarter of 2018 underlines the need for continued OPEC discipline on supply cuts, the International Energy Agency said Thursday. The IEA's latest monthly oil market report pointed to a likely increase in global oil stocks in Q1 2018 of up to 800,000 b/d, assuming stable OPEC production and normal weather, following continued reductions in stocks and volumes in transit both in the OECD and elsewhere in 2017. Underlining its point, it estimated the "call" on OPEC, or the likely need for OPEC crude, will drop by 1.1 million b/d in Q1 next year compared with Q4 2017 to just 31.9 million b/d. However, despite the expected Q1 oversupply, globally for 2018 as a whole, "crude and product markets look broadly balanced," it said. As for this year, "detailed analysis of the global balance shows that in 2017 each quarter will show a deficit, other than a tiny build in Q1 2017. For the year as a whole, stocks will fall by 300,000 b/d," the IEA said. The IEA closely monitors oil stocks in the OECD countries, while the numbers for the rest of the world are less clear estimates. Besides OECD stocks, "we can now clearly see a major reduction in floating storage, oil in transit, and stocks held in some independent areas," the IEA said. The report said OECD oil stocks had continued falling against the five-year average in August, to reach 170 million barrels above the five-year average, although the total remained above the 3 billion mark, at 3.015 billion barrels. Global oil stocks are likely to have fallen in Q3 for just the second time since oil prices started collapsing in 2014, it added.

RBOB Sinks After Surprise Build, WTI Bounces On Biggest Production Drop In 2 Years --WTI/RBOB have extended their post-API (crude build) losses overnight (not helped by IEA forecasts indicating the oil-inventory decline will halt in 2018). However, DOE data perfectly contradicted the API data with a big crude draw and big gasoline build. WTI bounced a little (helped by the biggest production cut since September 2015) and RBOB slumped. DOE:

  • Crude -2.75mm (-2.4mm exp)
  • Cushing +1.322mm - 8th weekly build in a row
  • Gasoline +2.49mm  (+200k exp)
  • Distillates -1.48mm

Perfectly contradicting what API said last night, DOE seees a big crude draw and gasoline build... Distillates inventories tumbled below their 5y average as exports soared to a record high... Production in the Lower 48 tumbled...This was the biggest production drop since September 2015 (ex the Hurricane plunge)

Crude Oil Price Stems Losses as Inventories Shrink - The U.S. Energy Information Administration (EIA) released its weekly petroleum status report Thursday morning, showing that U.S. commercial crude inventories decreased by 2.8 million barrels last week, maintaining a total U.S. commercial crude inventory of 462.2 million barrels. The commercial crude inventory remained near the upper limit of the average range for this time of year. Wednesday evening the American Petroleum Institute (API) reported that crude inventories rose by 3.1 million barrels in the week ending October 6. API also reported gasoline supplies fell by 1.6 million barrels and distillate inventories rose by 2.04 million barrels. For the same period, analysts surveyed by S&P Global Platts had consensus estimates for a decrease of 400,000 barrels in crude inventories, a decrease of 1.4 million barrels in gasoline inventories, and a drop of 1.64 million barrels in distillate stockpiles. Total gasoline inventories rose by 2.5 million barrels last week, according to the EIA, and remain in the upper half of the five-year average range. U.S. refineries produced over 10 million barrels of gasoline a day last week, up about 100,000 barrels a day compared to the prior week. Total motor gasoline supplied (the agency’s proxy for demand) averaged over 9.4 million barrels a day for the past four weeks, down by about 100,000 barrels a day compared with the prior week. Before the EIA report, benchmark West Texas Intermediate (WTI) crude for November delivery traded down about 2% at around $50.25 a barrel, and it traded at $50.44 shortly after the report’s release. WTI settled at $51.30 on Wednesday and opened at $51.00 Thursday morning. The 52-week range on November futures is $42.84 to $58.37. Distillate inventories decreased by 1.5 million barrels last week and remain in the lower half of the average range for this time of year. Distillate product supplied averaged over 3.9 million barrels a day over the past four weeks, up by 2.1% compared with the same period last year. Distillate production averaged over 4.9 million barrels a day last week, flat compared to the prior week’s production.

Oil slips, despite larger draw in U.S. stocks (Reuters) - Oil prices rebounded from earlier losses, although they were still down on the session, after the Energy Department reported a larger-than-expected decline in U.S. inventories and a falloff in weekly production on Thursday. The market was still under pressure, though, from a bearish outlook by the International Energy Agency, which lowered its forecast for oil demand for 2018. Oil has strengthened in recent weeks due to a sharp drawdown in distillates feeding expectations for renewed demand, but it is unclear whether U.S. crude prices will regain the high of nearly $53 a barrel reached in late September.    Brent crude oil was down 62 cents at $56.32 a barrel by 1:43 p.m. ET.  U.S. light crude was down 67 cents to $50.63 a barrel. Both benchmarks have risen more than 20 percent from their lows in June as world oil markets tightened. Crude inventories fell by 2.7 million barrels in the week to Oct. 6, compared with analysts’ expectations for a decrease of 2 million barrels. Distillate stocks fell by 1.5 million barrels, short of expectations for a drop of 2.2 million barrels. The International Energy Agency said on Thursday demand for OPEC oil would be 32.5 million bpd next year - around 150,000 bpd lower than the group pumped last month. Carsten Fritsch, commodities analyst at Commerzbank in Frankfurt, said the tone of the IEA report was bearish because it suggested that demand for OPEC crude next year would not be sufficient to absorb all the available supplies. “This means OPEC must deepen its production cuts to finish its job of bringing oil stocks back to the five-year average,” Fritsch said. 

Oil heads higher on strong Chinese crude imports and Iran uncertainty - Oil prices climbed Friday, buoyed by a mix of factors, including bullish Chinese data and geopolitical risks from oil-rich regions in the Middle East. November West Texas Intermediate crude, the U.S. price gauge, rose 57 cents, or 1.1%, to $51.17 a barrel on the New York Mercantile Exchange. For the week, it was up around 3.8%. December Brent crude, the global benchmark, rose 41 cents, or 0.7%, to $56.66 a barrel on ICE Futures Europe, trading around 1.9% higher on the week. “Oil prices are on the rise as China imports hit the second highest on record and President Trump looks to decertify the Iran nuclear deal,” said Phil Flynn, senior market analyst at Price Futures Group. Chinese crude imports rose by roughly 1 million barrels a day in September, on the month, to 9 million barrels a day, according to government data released Friday. The news alleviated investor concern that demand in the world’s largest crude importer might be waning amid faltering economic growth. The September “bounce back” was the highest import volume in China since May, according to analysts at ING Groep. Prices were also supported Friday by concerns that political developments in Iran and Iraq could reduce the global oil supply.

Factbox: Trump urges Congress to keep Iran sanctions frozen for now -- US President Donald Trump will essentially kick the fate of the Iran nuclear deal to Congress, urging lawmakers to stay in the agreement but to impose new triggers that would automatically snap US sanctions back into place based on Tehran's actions. For now, that means joint US/EU sanctions that stopped more than 1 million b/d of Iranian oil flows into Europe and Asia remain frozen.The White House is also calling on Congress to hold off on reimposing sanctions, for now. Instead, it wants Congress to amend oversight legislation to include new trigger points that will cause the sanctions to snap back based on Iran's activities.Trump certified Iranian compliance twice before, reportedly under duress, despite repeatedly bashing the Obama administration accomplishment as an "embarrassment" and the "worst deal ever negotiated."Several top advisers urged Trump to certify compliance a third time to protect US national security. Sanctions on oil flows into Europe and Asia, largely suspended under the JCPOA, do not snap back into place as a result of Trump's decertification decision. In addition, sanctions on US imports of Iranian crude remain in place, as they have for the past 40 years.The fate of the sanctions freeze appears to now rests with Congress.An oversight law passed after the nuclear deal was reached gives Congress a way to fast-track legislation to reimpose the frozen US sanctions. Congressional leaders must introduce the legislation, and it would not be subject to a filibuster in the Senate. Such a bill would receive easy approval in Congress, given the political liability of casting a vote that could be construed as supporting Iran.

OilPrice Intelligence Report: Oil Prices Rise Over Middle East Tensions - >Oil prices rose on Friday on bullish data from China showing an uptick in oil imports by 1 million barrels per day in September, from a month earlier. On top of that, anxiety over President Trump’s decision to decertify the Iran nuclear deal, plus simmering tension in Iraq likely added a bit of upward pressure on crude prices. WTI and Brent gained more than 2 percent in early trading on Friday.. President Trump has confirmed his plan to decertify the Iran nuclear deal on Friday, a move that could ratchet up tensions between the two nations. However, he will stop short of calling for new sanctions. Instead, he will ask the U.S. Congress to hold off until the administration tries a new strategy to tighten the screws on Tehran. Iran promised a “crushing” response if the U.S. declared the Revolutionary Guard a terrorist organization. As of now, the ramifications for the oil market are unclear, but probably not that significant in the near-term. The key European nations party to the agreement are still supporting the original deal.Kurdish authorities have sent thousands of troops to the key oil region of Kirkuk to defend the region, after the Iraqi government mobilized troops and tanks south of the city. The military movements raised concerns of a possible clash between the central government in Baghdad and Kurdish forces, a development that some fear could lead to civil war.  OPEC increased its demand forecast for its oil in 2018, and also said that the oil market could flip into deficit next year. The group said that the world would need 33.06 million barrels per day (mb/d) from OPEC, an upward revision of 230,000 bpd from its last forecast. That is the third consecutive month that OPEC has increased its demand projection for 2018 and it underscores the growing confidence in the impact of the collective cuts. Separately, a top OPEC official estimated that the crude inventory surplus would be eliminated next year. Meanwhile, the IEA warned that while progress is being made, the inventory gains will stall next year as non-OPEC supply picks up pace. The Paris-based energy agency said that OPEC will probably need to take more dramatic action to accelerate the tightening underway.

Oil Prices Rise Amid Falling U.S. Rig Count - The number of active oil and gas rigs in the United States decreased this week by 8 rigs. The total oil and gas rig count in the United States now stands at 928 rigs, up 389 rigs from the year prior, with the number of oil rigs in the United States decreasing by 5 this week and the number of natural gas rigs decreasing by 2. Miscellaneous rigs decreased by a single rig. The oil rig count now stands 311 above the count one year ago, shedding a total of 20 oil rigs in the last eight weeks. The spot price for WTI rose earlier on Friday as reports surfaced on Thursday that China’s oil imports hit a new high in the month of September, and that its thirst for oil imports would be robust for at least the short term, and the uncertainty around the US sanctions on Iran. Reports from earlier in the week regarding OPEC’s increased production for the month of September is doing its part in keeping prices from rising beyond its normal range as of late.At 12:09pm EST on Friday, WTI is trading up $0.75 (1.48%) at $51.35—$2 over last week’s price, and almost exactly where it was two weeks ago. Brent crude was trading up today $0.87 (1.55%) on the day at $57.12—almost $2 over last week.Oil rigs in the United States now number 743—311 rigs above this time last year.  The biggest losers this week by basin were the Eagle Ford (-6) and Barnett (-4). US crude oil production slipped a bit for the week ending October 06, standing at 9.480 million barrels per day—down from the week’s prior 9.561 million barrels per day. At 10 minutes after the hour, WTI had fallen further and was trading at $51.43. Brent crude was trading at $57.16.

Oil ends at 2-week high, with U.S. prices up over 4% on week - Oil prices settled at a two-week high Friday, with the U.S. benchmark up more than 4% for the week—the largest such gain in a month. Futures got a boost from a mix of factors, including bullish Chinese data and geopolitical risks from oil-rich regions in the Middle East, particularly in the wake of President Donald Trump’s refusal to certify Iran’s compliance with the nuclear deal. “Trump put the Iran deal back in Congress’s hands,” said Phil Flynn, senior market analyst at Price Futures Group. But “by kicking the can to Congress, fear of an immediate response from Iran or more sanctions on their oil were reduced” for now.Oil had briefly trimmed gains after a report that Saudi Arabia may shelve their Saudi Aramco IPO, he said. The Financial Times reported that Saudi Aramco may instead opt for a private share sale.“Some feared that they may not have the same incentive to raise oil prices because of it but, really, if they have to go private with the share sale, they will still need high oil prices to get a good price,” said Flynn. November West Texas Intermediate crude, the U.S. price gauge, rose 85 cents, or 1.7%, to settle at $51.45 a barrel on the New York Mercantile Exchange. For the week, it was up around 4.4%. December Brent crude, the global benchmark, rose 92 cents, or 1.6%, to $57.17 a barrel on ICE Futures Europe—around 2.8% higher on the week. Both WTI and Brent marked the highest settlements since Sept. 29 and their strongest weekly percentage gains since the week ended Sept. 15, according to FactSet data.

OPEC Boosts Oil Demand Estimates, Admits Oil Prices Can't Rise Above $55 - In its latest OPEC Monthly Oil Market Report (October) the oil cartel has increased its oil demand estimates for 2017, 2018 on strengthening world economy, and weaker outlook for supplies from its rivals.Specifically, OPEC forecasts that based on the current global oil supply/demand balance, demand for OPEC crude in 2017 is estimated at 32.8 mb/d, around 0.6 mb/d higher than in 2016. Similarly, OPEC crude in 2018 is projected at 33.1 mb/d, 350k b/d higher than September production, and ~200k b/d higher than the group estimated last month.  Global oil demand seen rising +1.38m b/d, or 1.4% in 2018 to 98.19m b/d.  Meanwhile, OPEC claims that oil inventories in developed nations continued to decline, -24.7m bbl to 2.996b bbl in August, curbing surplus relative to a 5-year average to 171m bbl.Here are the key highlights from the report: The OPEC Reference Basket rose to $53.44/b in September, its highest value since July 2015. Crude futures prices also saw gains, with ICE Brent averaging above the $55/b, supported by increasing evidence that the oil market is heading toward rebalancing. World oil demand growth in 2017 is now expected to increase by 1.5 mb/d, representing an upward revision of around 30 tb/d from last previous report, mainly reflecting recent data showing an improvement in economic activities. Positive revisions were primarily a result of higher-than-expected oil demand from the OECD region and China. In 2018, world oil demand is anticipated to grow by 1.4 mb/d, following an upward adjustment of 30 tb/d over the previous report, due to the improving economic outlook in the world economy, particularly China and Russia. Non-OPEC oil supply is expected to grow by 0.7 mb/d in 2017, following a downward revision of 0.1 m/bd from the previous report. In 2018, the growth in non-OPEC oil supply saw a downward revision of 60 tb/d to stand at 0.9 mb/d. OPEC NGLs and non-conventional liquids production are seen averaging 6.5 mb/d in 2018, representing an increase of 0.2 mb/d, broadly in line with growth in the current year. In September, OPEC crude oil production increased by 88 tb/d, according to secondary sources, to average 32.75 mb/d. Separately, according to secondary source data, OPEC output in September rose +88.5k b/d to 32.748m b/d; the increase was mostly driven by higher output from Libya +54k b/d, Nigeria +51k, who are exempt from cuts, as well as gains in Iraq production. Saudi Arabian output was unchanged at 9.975m b/d, lowest since May, although based on self-reported data, Saudi production rose by 21.7k b/d to 9.973m b/d.

OPEC Sees Oil Inventory Glut Finally Gone in One Year - OPEC expects its efforts to clear the surplus in oil inventories to finally succeed by the end of the third quarter of next year, said people familiar with the group’s internal forecasts. They hope to end an unprecedented build-up that sent prices plunging from above $100 a barrel in 2014 to around $50 currently, but the process has taken longer than expected and the deal has already been extended beyond its initial June expiry.  OPEC estimated that stockpiles in developed nations were still about 171 million barrels above that average in August, but expected trends in supply and demand will eliminate the surplus in about a year, the people said, asking not to be identified because the information isn’t public. The forecasts assume that Libya and Nigeria’s production will remain at current levels and U.S. shale output will expand by no more than 500,000 barrels a day next year, two of the people said. Although the current production curbs are due to expire at the end of March, OPEC’s estimates suggest producers will have to extend them to achieve their long-stated objective. They would need to maintain output around current levels in order to create a supply deficit next year big enough to erode stockpiles, according to Bloomberg calculations based on data published in the group’s monthly market report.

Saudi Aramco considers shelving international IPO - Saudi Aramco is considering to sell shares privately rather than list them publicly, the Financial Times reported Friday, citing five sources familiar with the matter.Talks between the Saudi state oil giant and the world's largest sovereign wealth funds and institutional investors have picked up in the last few weeks, the sources told the newspaper. A Saudi Aramco spokesperson told CNBC that "a range of options, for the public listing of Saudi Aramco, continue to be held under active review. No decision has been made and the IPO process remains on track."The world's major financial centers have vied to host Saudi Aramco's public stock offering, which could raise an estimated $100 billion.Even if Saudi Aramco decided to sell shares privately, the company would still plan to list shares on the kingdom's Tadawul exchange next year, the FT said, citing sources. An international listing could also follow, although likely not until 2019 or later, the newspaper said. The Chinese government is close to playing a key role in any new plan for offering shares, the FT report said, citing a person working for Saudi Aramco.

Saudi Aramco denies it is shelving IPO but sources say it could make sense - Saudi Aramco said it remains on track to offer shares to the public, after a newspaper report said the company was considering shelving its IPO."A range of options, for the public listing of Saudi Aramco, continue to be held under active review. No decision has been made and the IPO process remains on track," a spokesman said. The comment echoes public statements made in the past week by both Khalid Al-Falih, Saudi energy minister, and Saudi Aramco President Amin Nasser.But the report in the Financial Times echoed speculation that has been circulating as Saudi Aramco officials debate how and when to issue shares. The report is also the latest in a series to cast doubt on the massive IPO which would be five percent of what would be the world's largest listed oil company.One source close to the IPO told CNBC that one thing under review is whether to list on the Saudi market first and then list on an international exchange at a later date. The source said the debate is understood to be between a London or New York listing, given the need for substantial capital market to raise such large sums.The newspaper report quoted five unidentified sources saying that talks about a sale to a foreign government, including China, and other investors have picked up in recent weeks, amid concerns about the feasibility of a foreign listing.An energy market source said talks with Asian sovereign wealth funds and western institutions have been ongoing since the idea of the IPO was first floated."The definition of an IPO could also mean private placement with Asian sovereign wealth funds," the source said. "They've been in discussions with them about the IPO from the beginning."The source added that the difficulties of a listing , including the transparency requirements are certainly a consideration for Aramco, which is government owned and intertwined with the bureaucracy of the kingdom. "Saudi Aramco thinks by years, if not decades and financial markets think quarter by quarter," said the source.

Saudi Arabia in huge military arms deal with the United States and Russia -- SAUDI Arabia has been quietly planning to build its own military empire and over the last week, it’s announced how it plans to do so. With Donald Trump and Vladimir Putin’s help. Despite increasing criticism over the United States’ military sales to Saudi Arabia, the US State Department has paved the way for the potential purchase of controversial — and expensive — military equipment.On Saturday, the US State Department announced the approval to sell Saudi Arabia 44 THAAD anti-missile defence systems, 360 interceptor missiles, 16 mobile fire-control and communication stations and seven THAAD radars at an estimated price tag of $US15 billion, according to a press release from the Pentagon’s Defence Security Cooperation Agency.The sale, supplied by Lockheed Martin and Raytheon — also includes 43 trucks, generators, electrical power units, communications equipment, tools, test and maintenance equipment and “personnel training and training equipment”.The department said the sale of the equipment to the Saudi people would help provide a balance to a relatively unstable environment in the Gulf and to help the US forces enlarge its allied grip on the region.“THAAD’s exo-atmospheric, hit-to-kill capability will add an upper-tier to Saudi Arabia’s layered missile defence architecture.”  Meanwhile, King Salman of Saudi Arabia has entered into a preliminary agreement to purchase Russia’s S-400 surface-to-air missile defence system, he announced in Moscow last week.

The House of Saud bows to the House of Putin - What a difference a year – an eternity in geopolitics – makes. No one could see this coming; the ideological matrix of all strands of Salafi-jihadi terror – which Russia fights no holds barred, from ISIS/Daesh to the Caucasus Emirate – beating a path to the Kremlin and about to embrace Russia as a strategic ally.The House of Saud was horrified by Russia’s successful campaign to prevent regime change in Syria. Moscow was solidifying its alliance with Tehran. Hawks in the Obama administration were imposing on Saudi Arabia a strategy of keeping oil prices down to hurt the Russian economy.  Now, losing all its battles from Syria to Yemen, losing regional influence to both Iran and Turkey, indebted, vulnerable and paranoid, the House of Saud has also to confront the ghost of a possible coup in Riyadh against Crown Prince Mohammad bin Salman, a.k.a. MBS, as Asia Times reported. Under so much pressure, who’re you gonna call?The ultimate ghostbuster; Russian President Vladimir Putin.  Essentially, the House of Saud is obsessed by three main vectors; low oil prices; Iran and Shi’ism; and what to make of US foreign policy under Trump. Let’s take them one by one.

UAE Official Urges Qatar to Give Up World Cup to End Crisis (AP) -- A top Emirati security official has said the only way for "Qatar’s crisis" to end is if Doha gave up hosting the 2022 FIFA World Cup, his comments coming amid the ongoing diplomatic dispute between the energy-rich nation and four Arab countries. Dubai security Lt. Gen. Dhahi Khalfan, known for being outspoken on Twitter, later wrote Monday his "personal analysis" of what he described as the financial pressure Doha faces in hosting the games had been misunderstood. But his remarks came as lobbying firms backed by the four nations opposing Qatar in the diplomatic dispute increasingly target the upcoming soccer competition in their criticism. The tournament has not come up in the demands previously made by the boycotting countries, though losing the World Cup would represent a bitter defeat for the tiny peninsular nation that's pushed itself onto the world stage with its bid and its Al-Jazeera satellite news network.Qatari officials did not respond to requests for comment on Monday. However, the 2022 tournament's head in Qatar told The Associated Press on Friday the boycott poses "no risk" to the competition being held.Bahrain, Egypt, Saudi Arabia and the United Arab Emirates all cut diplomatic ties and began a boycott of Qatar on June 5 , in part over allegations that Doha supports extremists and has overly warm ties to Iran.Qatar has long denied funding extremists and restored full diplomatic ties to Iran amid the dispute. Doha shares a massive offshore natural gas field with Iran that makes its citizens incredibly wealthy.On Sunday night, Khalfan targeted the FIFA tournament in his tweets.  "If the World Cup leaves Qatar, Qatar’s crisis will be over ... because the crisis is created to get away from it," he wrote.

Iraq imposes new measures on Kurdistan over independence push - Baghdad launched a legal barrage against Kurdish officials on Monday as tensions between the two sides escalated over Kurdistan's independence push. President of Iraqi Kurdistan Masoud Barzani held a non-binding vote on independence two weeks ago, despite strong objections from Baghdad, Ankara, and Tehran, enraging leaders in the international community. The central government responded by banning international flights out of the region and threatening to suspend Kurdish representatives from the national parliament. While Turkey and Iran have threatened to close their borders to oil exports. On Monday, Baghdad's national security council announced that an investigation has been launched into Kurdistan's lucrative oil revenues and officials in the region who might have illegally monopolised the market. The council, headed by Iraqi prime minister Haider Al Abadi, said: "The corrupt will be exposed and the funds recovered" adding that "a list of names" of Kurdish officials who helped organised the referendum had been compiled and "judicial measures have been taken against them," without giving further details. Baghdad's central government is also looking to reclaim control over mobile phone companies in the region, including two of the largest providers in Iraq, the statement said. The statement did not identify the networks concerned, but it is believed to be directed at Korek and Asiacell, respectively based in the Kurdistan capital Erbil and Kurdish city of Sulaimaniya. Iraq's third operator, Zain, is based in Baghdad. "The government committee for national security issued a decision that all mobile phone networks must be under federal control and should be moved to Baghdad," the statement said. Meanwhile, Iraqi vice president Osama Al Nujafi said the Kurdish president has agreed not to act on the results of the referendum if Baghdad ensures the rights of the autonomous Kurdish region. 

China faces looming energy crisis, warns state-funded study -- A new scientific study led by the China University of Petroleum in Beijing, funded by the Chinese government, concludes that China is about to experience a peak in its total oil production as early as next year.  Without finding an alternative source of “new abundant energy resources”, the study warns, the 2018 peak in China’s combined conventional and unconventional oil will undermine continuing economic growth and “challenge the sustainable development of Chinese society.” This also has major implications for the prospect of a 2018 oil squeeze — as China scales its domestic oil peak, rising demand will impact world oil markets in a way most forecasters aren’t anticipating, contributing to a potential supply squeeze. That could happen in 2018 proper, or in the early years that follow. There are various scenarios that follow from here — China could: shift to reducing its massive demand for energy, a tall order in itself given population growth projections and rising consumption; accelerate a renewable energy transition; or militarise the South China Sea for more deepwater oil and gas. Right now, China appears to be incoherently pursuing all three strategies, with varying rates of success. But one thing is clear — China’s decisions on how it addresses its coming post-peak future will impact regional and global political and energy security for the foreseeable future.

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