Sunday, December 30, 2018

oil & natural gas prices both down again in volatile trading; warm spell gives natural gas stores a breather..

oil prices ended lower for the 3rd week in a row in quite volatile trading that largely synched with the wild gyrations in wall street markets this week, which in turn were driven by year end tax strategies of hedge funds and institutions rather than any specific economic developments...after falling $5.61 or 11% to $45.59 a barrel, largely on technical factors last week, contract prices of US oil for February delivery plunged another $3.06 or 6.7% to $42.53 a barrel to start the week on Monday, as fears of an economic slowdown rattled global financial markets and drove unrequited selling in light pre-Christmas trading...those fears apparently dissipated over the holiday, as financial markets roared back to their largest gain in history on Wednesday while oil prices shot back up $3.69, or 8.7%, to $46.22 a barrel, their largest daily gain in more than two years...however, as stock indices retreated again on Thursday, so too did crude prices, as they fell $1.61, or 3.5%, to $44.61 a barrel, "giving back some of the gains that were brought along with the euphoria in the stock market"...oil prices then staged a modest rally on Friday, rising 72 cents to $45.33 a barrel, after the weekly EIA inventory data showed a small drop in US crude inventories, in contrast to Thursday API figures that had showed a massive crude supply build...nonetheless, February US crude still finished with a decline of 0.6% for the week, while the global benchmark February Brent crude, which did not participate in the Friday rally, ended the week 3.0% lower at $52.20 a barrel, after having seen a 4.2% drop on Thursday...

natural gas prices, meanwhile, fell for a fourth consecutive week, as unusually warm weather for December continued to reduce demand for natural gas and thus took the edge off the deep supply deficit we started the winter with...quoting natural gas contracts for January delivery to start the week, prices fell 34.9 cents to $3.467 per mmBTU on Monday, as the forecasts for early January cold which had held up prices the prior week had been lifted over the weekend...prices then edged back up 7.6 cents on Wednesday and another 9.9 cents on Thursday as trading in the January gas contract expired at $3.642 per the same time, natural gas contracts for February delivery, which had ended the prior week priced at $3.750 per mmBTU, fell 32.7 cents on Christmas eve, rebounded 3.5 cents on Wednesday and 8.8 cents on Thursday, and then crashed 24.3 cents to an 8 week low of $3.303 per mmBTU on Friday, as the temperature forecasts again backed off earlier cold forecasts and the EIA reported the smallest withdrawal of natural gas from storage yet this winter....the February natural gas contract price thus ended down nearly 12% for the week, and 13% below where the January natural gas contract had settled the prior Friday....

the natural gas storage report for the week ending December 21st from the EIA showed that the quantity of natural gas in storage in the US fell by 48 billion cubic feet to 2,725 billion cubic feet over the week, which left our gas supplies 623 billion cubic feet, or 18.6% below the 3,348 billion cubic feet that were in storage on December 22nd of last year, and 647 billion cubic feet, or 19.2% below the five-year average of 3,372 billion cubic feet of natural gas that are typically in storage after the third week of December....this week's 48 billion cubic feet withdrawal from US natural gas supplies was just about what most analysts had been expecting, but it was well below the average of 121 billion cubic feet of natural gas that have been withdrawn from US gas storage during the third week of December in recent years...natural gas storage facilities in the Eastern US saw a 16 billion cubic feet draw from their supplies over the week, half of their average withdrawal over the past five years, as the region's gas supply deficit was reduced to 14.4% below normal for this time of year, while natural gas supplies in the Midwest fell by 23 billion cubic feet, in contrast to the normal 40 billion cubic feet pull, as their supply deficit was reduced to 12.2% below the normal for the third weekend of December...the South Central region only saw a 2 billion cubic feet drop in their supplies, in contrast to their normal 30 billion cubic foot withdrawal, as their natural gas storage deficit was reduced to 25.5% below their five-year average for this time of the same time, 3 billion cubic feet were pulled out of natural gas supplies in the sparsely populated Mountain region, which normally pulls out 7 billion cubic feet for the week, as their deficit from normal fell to 21.9%, while 4 billion cubic feet were withdrawn from storage in the Pacific region, vs 12 billion cubic feet normally withdrawn, and their natural gas supply deficit fell to 27.4% below normal for this time of year....

so, we've just seen our weekly withdrawal drop from 141 billion cubic feet during the week ending December 14th to just 48 billion cubic feet during the current reporting week ending December we've mentioned several times, natural gas demand and hence withdrawal of gas from storage is largely driven by changes in temperature, relatively steady industrial and export demand notwithstanding...that can be illustrated quite well with a couple graphics we've pulled from the EIA's natural gas storage dashboard and included below; both are similar, with the first showing daily regional average temperatures from November 30th to December 13th, and the second showing daily regional temperatures from December 14th to December 27th:

December 19 2018 average regional temps Nov 30 to Dec 13

December 29 2018 average regional temps Dec 14 to Dec 27

the above graphics from the EIA's natural gas storage dashboard gives us both the average daily temperature covering the period from November 30th through December 27th in each of the five natural gas regions, and also a color-coded variance from normal for each of those daily temperature averages, with shades of brown indicating the average temperatures in the region were above normal on a given date, while shades of blue indicate average temperatures that were below normal for the date, as indicated in the legend at the bottom....thus this graphic gives us not only the actual average temperature for each region for each day, but also indicates how much that temperature deviated from the you can see in the first graphic above, temperatures for the heavily populated East, Midwest and South Central regions were generally below normal over the period from December 8th thru December 14th, with the temperatures in the East, which accounts more than a third of the population, consistently averaging in the mid-30s, while temperatures in the Midwest saw average temperatures in the 20s for four days to start the period...that colder than normal period, which included 3 days that were 5 to 9 degrees colder than normal for each of those regions, is what resulted in the 141 billion cubic feet withdrawal from our natural gas supplies over the week ending December 14th, just modestly above the 5 year average withdrawal of 136 billion cubic feet...

now look at the period from December 15th thru December 21st, representing the dates of this week's report; not only were the temperatures in the East, Midwest and South Central regions above normal for each day during the period, but temperatures for all 5 regions were above normal for every day during the period, with temperatures in the East averaging in the mid-40s, and temperatures in the Midwest averaging in the upper 30s over the fact, except for a few counties on the Gulf Coast, the entire US saw above normal temperatures during the week, with the broad area from the northern Rockies to the Great Lakes all more than 10 degrees above normal, as you can see on the map below, also from the natural gas storage dashboard....overall, we can estimate that temperatures for the lower 48 averaged at least 7 degrees warmer during the week ending December 21st than they were during the week ending December a result, the daily production of 87.2 billion cubic feet was nearly adequate to meet the country's needs, and hence only 48 billion cubic feet, or about 7 billion cubic feet per day, needed to be withdrawn from storage during the week...furthermore, if we look at the daily regional average temperatures over the 6 days beginning December 22 shown above, they too are all above normal, with the small exception of the 30 degree average on December 27th for the mountain states...that means that the coming week's report for the week ending December 28th will again show a withdrawal from storage much below normal, also serving to alleviate the natural gas deficit which had been running 20% below normal nationally in recent weeks...

December 29 2018 temperature departure from normal for week to Dec 20

The Latest US Oil Supply and Dispostion Data from the EIA

this week's US oil data from the US Energy Information Administration, reporting on the week ending December 21st, indicated a modest increase in our oil imports and a big jump in our oil exports, while our commercial crude supplies nonetheless remained statistically unchanged, resulting in a large jump in unaccounted for crude....our imports of crude oil rose by an average of 233,000 barrels per day to an average of 7,656,000 barrels per day, after rising by an average of 30,000 barrels per day the prior week, while our exports of crude oil rose by an average of 644,000 barrels per day to an average of 2,969,000 barrels per day during the week, which meant that our effective trade in oil worked out to a net import average of 4,687,000 barrels of per day during the week ending December 21st, 411,000 fewer barrels per day than the net of our imports minus exports during the prior week...over the same period, field production of crude oil from US wells reportedly increased by 100,000 barrels per day to 11,700,000 barrels per day, so our daily supply of oil from the net of our trade in oil and from wells totaled an average of 16,387,000 barrels per day during this reporting week...

meanwhile, US oil refineries were using 17,350,000 barrels of crude per day during the week ending December 21st, 58,000 barrels per day less than the amount of oil they used during the prior week, while over the same period ​7,000 barrels of oil per day were reportedly being pulled out of the oil that's in storage in the US....hence, this week's crude oil figures from the EIA would seem to indicate that our total working supply of oil from net imports, from oilfield production, and from storage was ​​957,000 barrels per day short of what refineries reported they used during the account for that disparity between the supply of oil and the consumption of it, the EIA inserted a (+957,000) barrel per day figure onto line 13 of the weekly U.S. Petroleum Balance Sheet to make the reported data for the daily supply of oil and the consumption of it balance out, essentially a fudge factor that is labeled in their footnotes as "unaccounted for crude oil"...with our unaccounted for crude reaching 957,000 barrels per day, the largest amount in recent history, all of this week's oil supply and disposition figures ​that we have cited ​must be taken with a big grain of salt...(for more on how this weekly oil data is gathered, and the possible reasons for that "unaccounted for" oil, see this EIA explainer)....  

further details from the weekly Petroleum Status Report (pdf) indicate that the 4 week average of our oil imports fell to an average of 7,423,000 barrels per day, now 2.3% less than the 7,598,000 barrel per day average that we were importing over the same four-week period last year....the statistical ​6,000 barrel per day decrease in our total crude inventories included a rounded ​7,000 barrel per day withdrawal from our commercially available stocks of crude oil, while the oil stored in our Strategic Petroleum Reserve remained unchanged....this week's crude oil production was reported 100,000 barrels per day higher at 11,700,000 barrels per day because the rounded figure for output from wells in the lower 48 states rose by 100,000 barrels per day to 11,200,000 barrels per day, while a 1,000 barrel per day decrease to 497,000 barrels per day in oil output from Alaska was not enough to change the rounded national total...last year's US crude oil production for the week ending December 22nd was at 9,754,000 barrels per day, so this week's rounded oil production figure was almost 20% above that of a year ago, and 38.8% more than the interim low of 8,428,000 barrels per day that US oil production fell to during the last week of June of 2016...     

US oil refineries were operating at 95.1% of their capacity in using th​ose 17,350,000 barrels of crude per day during the week ending December 21st, down from last week's 95.4% of capacity, but still a high capacity utilization rate for December or for any time of year....the 17,350,000 barrels per day of oil that were refined this week were no longer at a seasonal high for the time of year, however, as they were fractionally lower than the previous seasonal high of 17,398,000 barrels of crude per day that were being processed during the week ending December 22nd, 2017, when US refineries were operating at 95.7% of capacity... 

with the small drop in the amount of oil being refined, the gasoline output from our refineries was also lower, decreasing by 190,000 barrels per day to 10,334,000 barrels per day during the week ending December 21st, after our refineries' gasoline output had decreased by 123,000 barrels per day during the week ending December 14th...with that decrease in this week's gasoline output, our gasoline production during the week was 0.8% lower than the 10,222,000 barrels of gasoline that were being produced daily during the same week last the same time, our refineries' production of distillate fuels (diesel fuel and heat oil) increased by 51,000 barrels per day to 5,444,000 barrels per day, after that output had decreased by 152,000 barrels per day the prior week....even with that increase, this week's distillates production was fractionally lower than the 5,476,000 barrels of distillates per day that were being  produced during the week ending December 22nd, 2017.... 

even with the pullback in our gasoline production, our supply of gasoline in storage at the end of the week increased by 3,006,000 barrels to 233,106,000 barrels by December 21st, the 5th increase in the past 10 weeks, which​ nonetheless​ still left our gasoline supplies 3,066,000 barrels lower than they were on the 5th of October, at a time of year when gasoline inventories are usually increasing....our gasoline supplies rose this week even though the amount of gasoline supplied to US markets rose by 105,000 barrels per day to 9,348,000 barrels per day while our exports of gasoline fell by 97,000 barrels per day to 851,000 barrels per day and our imports of gasoline fell by 86,000 barrels per day to 509,000 barrels...with this week's increase, our gasoline inventories are once again at a seasonal high for the third week in December, 2.1% higher than last December 22nd's level of 228,374,000 barrels, and roughly 4% above the five year average of our gasoline supplies for this time of the year...

even with the ongoing elevated level of our distillates production, our supplies of distillate fuels increased for just the 3rd time in fourteen weeks, but just by a statistically insignificant 2,000 barrels to 119,902,000 barrels during the week ending December 21st, after our distillates supplies had decreased by 4,237,000 barrels during the prior week...our distillates supplies eked out that small increase because the amount of distillates supplied to US markets, a proxy for our domestic demand, fell by 644,000 barrels per day to 4,242,000 barrels per day, while our imports of distillates rose by 65,000 barrels per day to 204,000 barrels per day, and while our exports of distillates rose by 155,000 barrels per day to 1,406,000 barrels per day....despite this week's increase, our distillate supplies finished the week 7.7% below the 129,935,000 barrels that we had stored on December 22nd, 2017, and roughly 11% below the five year average of distillates stocks for this time of the year...   

finally, with the caveat that oil which was unaccounted for this week approached a million barrels per day, our commercial supplies of crude oil slipped by a statistically insignificant 46,000 barrels to 441,411,000 barrels on December 21st, from 441,457,000 barrels on December 14th, the fourth straight decrease after 10 weekly increases, and the 25th down week during 2018....but even after four straight decreases, our crude oil inventories still remained roughly 7% above the five-year average of crude oil supplies for this time of year, and over 28% above the 10 year average of crude oil stocks for the first week of December, with the disparity between those figures arising because it wasn't until early 2015 that our oil inventories first rose above 400 million barrels...however, since our crude oil inventories had been falling through most of the past year and a half until this Fall, our oil supplies as of December 21st were only 2.2% above the 431,882,000 barrels of oil we had stored on December 22nd of 2017, and remained 9.2% below the 486,063,000 barrels of oil that we had in storage on December 23rd of 2016, and 3.0% below the 455,106,000 barrels of oil we had in storage on December 25th of 2015..     

This Week's Rig Count

US drilling activity increased for the second week in a row, and was thence up for the 8th time in the past 14 weeks during the week ending December 28th, as drilling for oil continued to expand despite depressed prices and a 6.7 month backlog of uncompleted wells... Baker Hughes reported that the total count of rotary rigs running in the US increased by 3 rigs to 1083 rigs over the week ending December 28th, which was also 154 more rigs than the 929 rigs that were in use as of the December 29th report of 2017, but down from the shale era high of 1929 drilling rigs that were deployed on November 21st of 2014, the week before OPEC announced their attempt to flood the global oil market...  

the count of rigs drilling for oil increased by 2 rigs to 885 rigs this week, which was also 138 more oil rigs than were running a year ago, while it was still well below the recent high of 1609 rigs that were drilling for oil on October 10, the same time, the number of drilling rigs targeting natural gas bearing formations increased by 1 rig to 198 natural gas rigs, which was also 16 more rigs than the 182 natural gas rigs that were drilling a year ago, but way down from the modern high of 1,606 natural gas rigs that were deployed on August 29th, 2008... 

drilling activity in the Gulf of Mexico was unchanged at 24 rigs this week, which was up from the 18 rigs deployed in the Gulf of Mexico a year ago at this time...since there is no other offshore drilling off either coast or off Alaska at this time, nor was there during the same week of 2017, those Gulf of Mexico totals are identical to the US totals..

the count of active horizontal drilling rigs increased by 5 rigs to 945 horizontal rigs this week, which was also 149 more horizontal rigs than the 796 horizontal rigs that were in use in the US on December 29th of last year, but down from the record of 1372 horizontal rigs that were deployed on November 21st of 2014....on the other hand, the vertical rig count decreased by 1 rig to 68 vertical rigs this week, which was still up from the 65 vertical rigs that were in use during the same week of last year...​at the same time, the directional rig count also decreased by 1 rig to 70 directional rigs this week, which was still up from the 68 directional rigs that were operating on December 29th of 2017...

the details on this week's changes in drilling activity by state and by shale basin are included in our screenshot below of that part of the rig count summary pdf from Baker Hughes that shows those changes...the first table below shows weekly and year over year rig count changes for the major producing states, and the second table shows the weekly and year over year rig count changes for the major US geological oil and gas both tables, the first column shows the active rig count as of December 28th, the second column shows the change in the number of working rigs between last week's count (December 21st) and this week's (December 28th) count, the third column shows last week's December 21st active rig count, the 4th column shows the change between the number of rigs running on Friday and those running on the equivalent weekend of a year ago, and the 5th column shows the number of rigs that were drilling at the end of that reporting week a year ago, which in this week’s case was the 2​9th of December, 2017... 

December 28 2018 rig count summary

in something of an oddity, both this week's state variance table and the shale basin table match the summary figures we have just reviewed; not necessarily because there was no change in activity outside of these major states or basins, but because if there was, it netted out to no change, and thus doesn't show any in either the Current and Historical Rigs by State xls spreadsheet, nor the count by basin table of the North America Rotary Rig Count excel file that we check each week...the Permian basin, which accounts for more than 40% of US drilling activity, also shows a net no change, even though two rigs were added in Texas Oil District 8, the core Permian - Delaware basin, and ​even ​though ​another rig was added to Texas Oil District 7C, or the southern part of the Permian Midland, because 3 rigs were pulled out of Texas Oil District 8A, or the northern Permian Midland...meanwhile, natural gas rigs were added in Ohio's Utica shale and Louisiana's Haynesville, while one natural gas rig was pulled out of Oklahoma's Ardmore Woodford, which shows no net change because an oil rig was added in that basin at the same time...


Oil and gas company eyes drilling in north-central Ohio - Canton Repository  --Cabot Oil & Gas is getting ready to drill test wells in Ashland and surrounding counties in north-central Ohio.“We’ve got a really neat group of geologists who think they see something in Ohio,” said George Stark, a Cabot spokesman based in Pittsburgh. “They see something, and we want to go touch it.”Cabot is looking for natural gas and oil a hundred miles northwest of the Utica Shale play’s core in eastern Ohio.The Houston-based company has filed paperwork with the Ohio Department of Natural Resources for two well pads in Ashland County, and plans to drill up to five test wells in an area that includes parts of Richland, Knox, Wayne and Holmes counties.  During the early days of Utica exploration, Devon Energy drilled a few wells in the area Cabot is targeting, but moved on. Cabot is planning to explore below the Utica Shale, Stark said.Paperwork filed with ODNR indicates the company is targeting the Rome and Knox formations, but Stark declined to be specific. The agency has yet to issue the company a drilling permit.The company plans to drill vertical wells and take samples that will show the ratio of oil to natural gas and the pressure and thickness of the rock, factors that determine whether it makes economic sense to drill more wells, Stark said.  Cabot has obtained the right to drill vertical wells into rock formations 3,000 to 4,000 feet beneath a natural gas storage field owned by Columbia Gas Transmission, but Cabot still needs to get horizontal-drilling rights from surface landowners.

Marksmen Energy drilling in Ohio's Clinton Sandstone - Calgary-based Marksmen Energy reports it's making progress in drilling a Clinton Sandstone well in southeast Ohio, Kallanish Energy reports. Completion of milling and drilling the 1,500-foot lateral is expected to begin this week. The lateral drilling is expected to take 10 to 15 days. The sandstone was previously stimulated with a 12-stage hydraulic fracturing or fracking process. Marksmen said it has interests in 5,500 acres of additional land with several potential Clinton Sandstone wells locations that could be developed under its agreement with its operator. The company has said it's planning “an aggressive drilling program in 2019 to fully develop the acreage,” subject to financing. The drilling is different than the horizontal wells being drilled in the Utica Shale in eastern Ohio. There are no horizontal Utica wells in Hocking County. However, Marksmen has targeted the Clinton Sandstone previously drilled in many parts of Ohio. EnerVest, it said, is evaluating plans to drill multiple horizontal wells on its 115,000 gross acres of leases in Ohio’s East Canton oilfield in Stark County. It spills into surrounding counties. EnerVest operates roughly 1,600 vertical-only Clinton Sandstone wells in that area, some dating back to the late 1940s. The oil recovery from those wells has been estimated at 7% by EnerVest, Marksmen said. EnerVest reports a nearly 10-fold increase in Clinton Sandstone production by using horizontal wells, and it reported its horizontal wells encountered near virgin reservoir pressures within the field, the Canadian company reported. It also said U.S. Energy OH LLC is also drilling Clinton Sandstone wells in the East Canton field and has drilled and completed nine of 21 permitted locations.

Columbus proposes $649,000 settlement for homeowners in Upper Arlington gas explosion - The city of Columbus has proposed nearly $649,000 as its portion of a settlement payment to owners of homes damaged by a catastrophic natural gas explosion in Upper Arlington in 2015. Columbia Gas of Ohio told Columbus Business First it also has reached a confidential settlement amount with plaintiffs in several lawsuits.Upper Arlington's proposed settlements total $80,000, the city said, covered by the Central Ohio Risk Management Association and insurance. A gas leak filled the basement and exploded a home at 3418 Sunningdale Way in March 2015, causing damage to surrounding homes, some irreparable. Numerous lawsuits by homeowners were consolidated in Franklin County Common Pleas Court in 2016.Upper Arlington owns its water system, but Columbus operates it. The city's settlement will come from Columbus' water operating fund, as did a separate$37,500 settlement paid to a different homeowner in 2016.Columbus denies liability but wants to end the litigation, according to the proposal up for a vote Monday by Columbus City Council. According to the original complaint by the homeowners, Hidefumi and Mariko Ishida, Columbia Gas had abandoned a gas line in the 1990s, but failed to disconnect and seal it properly. In 2000, Columbus' water division misidentified that line as a water line, and neither utility caught the error for years.

Utica Shale Oil, Natural Gas Production Both Increased 30% in Third Quarter -- Unconventional oil and natural gas production in Ohio’s Utica Shale saw robust year/year gains in the third quarter of more than 30% each, according to newly released data from the state Department of Natural Resources.Utica oil production continued to move higher during the period, when volumes came in at about 5.5 million bbl -- up roughly 32% from the year-ago quarter and a strong increase from 2Q2018, when volumes rebounded at 4.5 million bbl.Until earlier this year, oil production in the state had fluctuated in a reflection of the broad shift to dry gas production that occured about two years ago across much of the Appalachian Basin, when oil prices were lower. While they’ve recently slid from high points, stronger oil prices this year pushed operators back into the Utica’s wetter areas. Natural gas production, meanwhile, showed no signs of slowing down. Producers set another state record with 605.7 Bcf reported for the third quarter, up about 31% from the year-ago period. Volumes were also higher than the 554.3 Bcf reported in 2Q2018.The state’s third quarter report lists 2,242 horizontal shale wells, 2,198 of which reported oil and gas production during the period. The average amount of oil produced by each well during the quarter was 2,523 bbl, while the average amount of gas from each was 275.6 Bcf. The average number of third quarter days in production was 84.   Ohio law does not require separate reporting of natural gas liquids or condensate. Those volumes are included in the oil and gas totals. To date, 2,953 horizontal Utica permits have been issued in Ohio, while 2,469 of those have been drilled, according to state data. That compares to the 2,703 horizontal Utica permits and 2,469 drilled Utica wells reported at about this time last year.

Ohio gas production surges 39%; Ascent blows away projections - Ohio's Utica Shale gas production grew 39% in the third quarter year on year, nearing 7 Bcf/d, driven largely by continued growth in dry gas production from three counties along the state's Ohio River border with West Virginia and the need to fill new pipelines. Jefferson, Belmont and Monroe counties accounted for 74% of Ohio's 6.95 Bcf/d of shale gas production in Q3, according to data from the state Department of Natural Resources, while Carroll County, the original home of the Utica, continues to see declines in output. With the opening or expansion of Energy Transfer Partners' 1.7 Bcf/d Rover Pipeline, Columbia Gas Transmission's 1.5 Bcf/d Leach XPress and the 1.5 Bcf/d DTE Energy Nexus Gas Transmission pipeline, producers had 4.7 Bcf/d of new capacity open in 2018 to markets in the Midwest and Gulf Coast. Privately held Ascent Resources, with a C-suite stocked with executives who cut their teeth opening the Utica while working at the play's pioneer, Chesapeake Energy, continued to be the state's top producer. Ascent more than doubled its Q3 production year on year in the third quarter, well ahead of its own forecasts. According to a June 2018 presentation Ascent gave to close a $1.5 billion private equity investment, the company hoped to average 1.375 Bcf/d of gas production. In Q3, output topped 1.9 Bcf/d after starting 2018 with 1.2 Bcf/d. Gulfport Energy, previously the state's top producer, decided in 2018 to shift its spending south to Oklahoma's SCOOP shale oil and gas play. Its production in Ohio grew 6% year on year in Q3, but that could change in 2019. Gulfport's longtime CEO, Michael Moore, stepped down at the end of Q3, and the board hired a veteran Appalachian shale executive to take his place. After years at Murphy Oil, incoming CEO David Wood was chairman and CEO at West Virginia driller Arsenal Resources and was a senior adviser at First Reserve, one of the private equity backers of Ascent Resources.

Ohio moves into top five for recoverable shale natural gas reserves - Ohio has moved into the top five for recoverable shale natural gas reserves in the United States.  Data released by the U.S. Energy Information Administration shows the state saw a 24.5 percent increase in proved shale gas reserves from 2016 to 2017, bringing it to 25.6 trillion cubic feet. That moves Ohio past Oklahoma and behind only Pennsylvania, Texas, West Virginia and Louisiana. Proved reserves is a measure of oil and natural gas that can be recovered in the future. JobsOhio and economic development groups have said that a robust shale industry will create jobs in Appalachia and reduce energy costs, making it cheaper for other businesses to invest here. Before development of the Utica Shale, Ohio’s peak year for natural gas production was in 1984 at 186 billion cubic feet. In 2017, it was 1.7 trillion cubic feet, said Dan Alfaro, spokesman for Energy in Depth, an advocacy group launched by the Independent Petroleum Association of America. "What the EIA data tell us is Ohio’s status as a premiere gas-producing state is secured," Alfaro said. "Most importantly, the trends for the natural gas market bode well for continued economic growth and investment in the region."Proved reserves of both U.S. crude oil and natural gas broke records from the year before – crude jumped 19.5 percent to 39.2 billion barrels and surpassed the previous peak level of 39 billion barrels set in 1970. Proved reserves of natural gas were up 36.1 percent to reach 464.3 trillion cubic feet in 2017, surpassing the 388.8 trillion cubic feet record set in 2014.

Appalachian producers set the stage for production growth — Appalachian Basin gas producers are expected to focus production strategies to take advantage of new pipeline takeaway capacity that will be serving the region in 2019 and beyond. The substantial completion of two pipeline projects, Energy Transfer's Rover Pipeline and Atlantic Sunrise, in the second half of 2018 has added about 5 Bcf/d of capacity in the region. Rover, a 713-mile, 3.25-Bcf/d pipeline, is designed to carry gas from the Marcellus and Utica shale-producing regions of southwestern Pennsylvania, West Virginia and eastern Ohio to markets in the Midwest and through interconnects to the Gulf Coast, as well as northward into the Union Gas Dawn Storage Hub in Ontario. Additionally, Transcontinental Gas Pipe Line in October got the go-ahead from the US Federal Energy Regulatory Commission to place into service large portions of the 1.7-Bcf/d Atlantic Sunrise project, which will move gas out of the dry gas region of northeastern Pennsylvania. Other projects that have recently come online or that are expected to in the near term will add another approximately 1 Bcf/d of takeaway capacity in the region by early 2019. Range Resources said the approval for both the Majorsville and Burgettstown laterals of the Rover project allowed Range to begin flowing volumes on the pipeline in September. The  EQT, the biggest US gas producer, in November completed the spinoff of its midstream assets in order to become a pure-play Appalachian E&P company. In announcing the formation of Equitrans Midstream, EQT President and CEO Robert McNally said the spinoff would allow EQT "to develop the premier natural gas asset base in Appalachia." Another big producer in the region, Southwestern Energy, also moved to refine its focus on Appalachia, with the completion of the sale of its Fayetteville Shale assets in early December to privately held Flywheel Energy for $1.865 billion in cash. The sale would allow the company to "to drive greater value from our highly attractive and significant asset base in Appalachia,"  In what was perhaps the biggest 2018 M&A deal to affect the future of Appalachian Basin gas markets, Chesapeake Energy in July announced its plans to sell its Utica Shale assets in Ohio to allow the company to focus on growing its oil production in Wyoming's Powder River Basin. As a result, privately owned Encino Energy, which acquired the assets for $2 billion, became a major Appalachian player almost overnight. CEO Hardy Murchison said the company plans to actively develop the assets, which include more than 900,000 net acres of leasehold, spanning the condensate, liquids-rich and dry gas windows of the Utica play. As part of the deal, Encino acquired about 900 gas wells that currently produce more than 600 MMcf/d of gas equivalent.

Residents: Fracking disposal well would make Plum 'a dumping ground for the oil and gas industry' - Pittsburgh Post-Gazette - Opening the state’s largest drilling and fracking wastewater disposal well in Plum could lead to earthquakes and contaminated groundwater, according to opponents of the proposal who testified at a state Department of Environmental Protection hearing Monday. More than a dozen speakers urged DEP regulators not to approve a permit sought by at Delmont-based Penneco Environmental Solutions, a subsidiary of Penneco Oil Co. The company wants to convert an old oil and gas well into a wastewater injection well allowed to accept more than 2.2 million gallons of salty and chemically laced fracking wastewater a month.  “This injection well would put a lot of young families at risk,” said Angela Billanti, a member of Citizens 4 Plum, a community group opposed to the wastewater injection well. “This, along with new zoning that will allow the drilling of hundreds of shale gas wells, will make Plum Borough a dumping ground for the oil and gas industry.” In addition to accepting more wastewater than any other disposal well in the state, it would be the first such well in Allegheny County.  Matt Kelso, a Plum resident and manager of data and technology for the Fractracker Alliance, a non-profit that maps shale gas industry operations, said the potential for earthquakes caused by the disposal well poses a significant risk, not only due to the underlying geology, but also because of the many abandoned mines in the area. “For decades, (the DEP) determined that the subsurface geology of most of Pennsylvania was unsuitable for underground injection. But now they are tasked with overseeing an oil and gas industry that produced 58 million barrels, or 2.4 billion gallons, of toxic liquid waste in 2017 alone,” Mr. Kelso said. “Just because there is more waste to deal with does not make our area suddenly suitable to be a dump for toxic liquid waste.”

US fossil fuel exports spur growth, climate worries - The boom in fossil-fuel production in the United States has been matched by a rush on the other side of the Pacific to build the infrastructure needed to respond to the seemingly unquenchable thirst for energy among Asia's top economies. When Congress lifted restrictions on shipping crude oil overseas in 2015, soon after the Obama administration opened the doors for international sales of natural gas, even the most boosterish of Texas oil men wouldn't have predicted the U.S. could become one of the world's biggest fossil-fuel exporters so quickly.Climate experts say there is little doubt increased American production and exports are contributing to the recent rise in planet-warming carbon emissions by helping keep crude prices low, increasing consumption in developing economies.Backers of U.S. exports of liquefied natural gas, or LNG, argue that the boom will produce environmental benefits because it will help China and other industrial nations wean themselves from coal and other dirtier fossil fuels.Environmentalists counter that the massive new supplies unleashed by American advances in extracting natural gas from shale doesn't just make coal-fired power plants less competitive. LNG also competes with such zero-carbon sources of electricity as nuclear, solar and wind — potentially delaying the full adoption of greener sources. That's time climate scientists and researchers say the world doesn't have if humans hope to mitigate the worst-case consequences of our carbon emissions, including catastrophic sea-level rise, stronger storms and more wildfires. "Typically, infrastructure has multi-decadal lifespans," said Katharine Hayhoe, a climate scientist and director of the Climate Science Center at Texas Tech University. "So, if we build a natural-gas plant today, that will impact carbon emissions over decades to come. So those are the critical and crucial decisions that are being made today. Do we increase access to and use of fossil fuels, or do we make decisions that limit and eventually reduce access to fossil fuels?"

Fracking accountability will be legislative topic - Lawmakers are likely to face renewed debate in the next legislative session about how or whether to hold oil and gas companies accountable for property damage caused by earthquakes in Kansas. Earthquakes have increased in Kansas since 2013 when fracking, or hydraulic fracturing, became more common for oil and gas exploration. Some researchers believe injection of wastewater from the explorations into underground wells contributes to the quakes. The Topeka Capital-Journal reports Joe Spease, of the Kansas Sierra Club, says lawmakers should require oil and gas companies to pay a fee to help pay for damages from earthquakes. But Ed Cross, executive director Kansas Independent Oil and Gas Association, says companies would go out of business and jobs would be lost if such fees were imposed on the industry.  

Death in the oilfields | The Center for Public Integrity - Drilling is an inherently dangerous undertaking, with a fatality rate nearly five times that of all industries in the United States combined in 2014, the last year such rates on oil and gas extraction were published by the government. Production pressures — and the temptation to cut corners — intensify during boom times, as America is experiencing now due to a rush of fossil-fuel exports.The work of coaxing oil and gas from thousands of feet underground is performed in biting cold and breathtaking heat by stoics like Parker Waldridge, who burned to death at 60 in a driller’s cabin, known as a doghouse, atop the floor of Rig 219.    “They get up in the morning and eat nails for breakfast. We need those people to do that kind of work. We’ve just got to find a way not to kill them.”“We need those people to do that kind of work. We’ve just got to find a way not to kill them.” From 2008 through 2017, 1,566 workers died from injuries in the oil-and-gas drilling industry and related fields, according to data from the U.S. Department of Labor’s Bureau of Labor Statistics. That’s almost exactly the number of U.S. troops who were killed in Afghanistan during the same period.  From 2008 through October 25 of this year, the department’s Occupational Safety and Health Administration cited companies in the extraction industry for 10,873 violations, a Center for Public Integrity analysis of OSHA data found. Sixty-four percent of the violations were classified by the agency as “serious,” meaning inspectors found hazards likely to result in “death or serious physical harm.” Another 3 percent were classified as “repeated,” meaning the company previously had been cited for the hazard, or “willful,” indicating “purposeful disregard” for the law or “plain indifference to employee safety.” During that period, OSHA investigated 552 accidents resulting in the death of at least one worker.  Initial penalties in the 552 accidents averaged $16,813, but later were reduced, on average, by 30 percent. (OSHA often cuts fines in exchange for quick settlements and hazard abatement). Some violations are still being contested by employers. Others were dropped by OSHA after negotiations with companies.  The number of workers exposed to death, injury and illness in the upstream portion of the oil and gas industry — exploration and production — is growing, especially in the frenetic Permian Basin of West Texas and southeastern New Mexico. At the beginning of December, according to figures from oilfield services firm Baker Hughes, the basin accounted for more than half of the nation’s operating drilling rigs — 489 in all.

A sip of fracking wastewater? - Finger Lakes Times - In the dry Southwestern state of New Mexico, state officials and the U.S. Environmental Protection Agency are seriously considering an attempt to clean up toxic wastewater from hydrofracked oil and gas wells so it can be used in agriculture. And as drinking water. Seriously? Recycling fracking wastewater for drinking? In published reports in the last two weeks, this notion surfaced against a political backdrop of keeping the oil and gas industry fiscally healthy and profitable. “Oil and gas in New Mexico provide over a third of our general fund,” Ken McQueen, head of the state’s department of Energy, Mineral and Natural Resources said in the Washington Post. “We have to be concerned we’re doing what’s necessary into the future to make sure this industry continues to be alive and vibrant.” McQueen gushed that part of keeping the industry vibrant could include using cleaned-up toxic wastewater to irrigate crops and provide water for domestic taps. He also opined it might be used to revive dried-up wildlife wetlands.  An added benefit, which he didn’t emphasize, is that it would save oil and gas companies large sums of money now spent on injecting the toxic wastewater into deep wells. If this cleanup scheme seems a horrendously bad idea, that’s because it is. Hydrofracking wastewater is almost always disposed of by injecting it deep into the earth because the stew of chemicals in it is so toxic. The chemical-laced wastewater also often contains additional hazardous substances picked up in the drilling process, including radioactive material. The idea that fracking wastewater could be cleaned up is certainly attractive in arid oil-producing states. It takes 4 million to 8 million gallons of water to drill each oil or gas well, sometimes resulting in water shortages in communities where fracking takes place. The cleanup option is also attractive because when wastewater is injected into the earth, it can trigger earthquakes. But the technical and political hurdles are huge and complicated. The politics are complicated because the fracking industry is exempt from key provisions of the federal Safe Drinking Water Act. Exempt.

Another boat sinks and spills oil into Hoquiam River -  Another boat sank into the Hoquiam River on Christmas morning, polluting the water and creating an oily sheen over the river due to leaked fluid from the boat. This is the seventh vessel to sink at the boat yard just north of Al’s Hum Dinger restaurant, according to the Washington State Department of Ecology. Just after 9 a.m. Tuesday, a citizen reported there was a sheen of fuel on the Hoquiam River, originating from a privately owned boat yard in the 200 Block of Monroe Street, Hoquiam Police Chief Jeff Myers said in a release. Upon arrival by the Hoquiam Police and Fire departments, responders noticed a strong odor of fuel and the sheen of a petroleum product on the river heading downstream toward the Riverside Bridge.  Debris was floating adjacent to the boat yard with mooring lines still leading to a vessel completely submerged and not visible in the river. Oil pollution extended about 500 yards both upstream and downstream from the site, said Department of Ecology communications manager Sandy Howard. The department estimates between 10 and 15 gallons of oil were spilled. A person staying at the boat yard indicated that an old Navy patrol vessel was moored at the boat yard and may have been damaged by a piling during the recent high storm tides, Myers said. The boat had been moved and secured with additional floats, but at 1:40 a.m., the witness heard the sound of rushing water and found the boat tilting. The boat sank into the river with fuel or engine oil escaping into the water, but no one notified the Coast Guard or called 911 to report it at the time. The owner of the boat yard was not present upon arrival of police and fire units, Myers said. The state Department of Ecology’s spill response team was sent and assisted with cleaning up the leaking oil. With help from people associated with the private marina, the department deployed floating absorbents around the sunken boat to collect floating oil and any more residual that’s released, Howard said.   On Wednesday morning, the oily sheen could still be seen at many spots along the river’s shoreline near the boat yard.

U.S. crude inventories dip slightly – EIA (Reuters) - U.S. crude stocks fell modestly last week, while gasoline stocks increased more than expected, the Energy Information Administration said on Friday. Crude inventories were down by 46,000 barrels in the week to Dec. 21, compared with analysts’ expectations for a decrease of 2.9 million barrels. Crude stocks at the Cushing, Oklahoma, delivery hub rose by 799,000 barrels, EIA said. Refinery crude runs fell by 58,000 barrels per day, EIA data showed. Refinery utilization rates fell by 0.3 percentage points. Gasoline stocks rose by 3 million barrels, compared with analysts’ expectations in a Reuters poll for a gain of 28,000 barrels. Distillate stockpiles, which include diesel and heating oil, rose by 2,000 barrels, versus expectations for a 529,000-barrel drop, the EIA data showed. Net U.S. crude imports fell last week by 411,000 barrels per day. 

US Oil Delivers One-two Punch to Middle East Producers -- The U.S. oil industry is delivering a one-two punch to Middle East producers already reeling from a collapse in prices. A tussle is playing out in the market for so-called light oils, which have a lower sulfur content and are less dense than heavier varieties. When processed, these grades typically yield a higher amount of fuels like gasoline and naphtha. And now, American supplies are weighing on prices for such crudes as well as fuels made from them. Light oil pumped in U.S. shale fields is increasingly making its way to Asia, undercutting sales by the likes of Saudi Arabia. Additionally, America is exporting a record amount of refined fuel, contributing to a global glut in gasoline and naphtha. That’s hurting some of the biggest members of the Organization of Petroleum Exporting Countries as they prepare to curb crude output in a bid to stabilize the market. Middle East producers -- still the dominant suppliers to Asia -- are being forced to tackle American crude competition by lowering their oil pricing to defend their market share. The refiners, meanwhile, are contending with booming U.S. fuel shipments dragging down their returns from making processed products. “It is no surprise that Middle Eastern producers are having to cut light crude prices,” said Virendra Chauhan, an analyst at industry consultant Energy Aspects Ltd. Over the course of 2018, the key sources of global oil-output growth have included light crude from U.S. shale fields and Saudi Arabia, he said. While Middle East producers such as Saudi Arabia and Abu Dhabi are reducing the pricing for their lighter crudes, American exports to Asian nations such as India and South Korea are surging. Even a temporary halt by China due to its trade war with the U.S. hasn’t significantly dented overall flows this year. While the rivalry between Middle Eastern producers and sellers of U.S. oil has intensified since 2016, with even relatively heavier American crudes such as Mars and Poseidon coming to Asia, the competition is particularly stiff for lighter grades. Abu Dhabi’s Murban and Saudi Arabia’s Extra Light have similar fuel yields and chemical characteristics as shale crude.

US shale’s financial blanket at risk of wearing thin in 2019 - All industrial revolutions need two things: technology and finance. The US shale revolution was made possible by the advances in horizontal drilling and hydraulic fracturing that allowed oil and gas to be released from previously unyielding rocks. But the industry’s financing was equally important in turning those innovations into a production boom that has shaken the world. The financial model that has dominated the industry has been a highly competitive group of exploration and production companies using debt raised from bond markets and bank loans secured on oil and gas reserves. Often they use derivatives to hedge some or all of their revenues, giving lenders confidence in their ability to make interest payments if oil and gas prices fall. For most of the shale boom, that financial infrastructure has been underpinned by the low interest rates and quantitative easing that followed the financial crisis. The surge in US oil production has been a result of monetary stimulus, just as much as the tech start-up boom and the rise in the S&P 500 have been. As its output has grown, the US E&P industry has been unable to finance its drilling programmes from its operating cash flows, and a constant inflow of capital has been essential for keeping it afloat. With stock markets and oil prices falling, and while the Federal Reserve is still signalling its intention to keep raising interest rates, the financial conditions that have protected the shale industry like a warm blanket may next year start to wear thin. One issue that has been highlighted by Philip Verleger, an energy economist, is the outlook for the hedging used by E&P companies to protect their revenues and reassure their lenders. Strategies vary, but the standard practice is for companies to put a floor under the effective price of some or all of their production by buying put options. Mr Verleger argues that those options have been an important factor in the collapse of oil prices to a 15-month low since October. The investment banks and others that sold those put options have to hedge their own positions, typically by selling oil in the futures market. The more likely it is that the options will be exercised, the more oil the finance companies have to sell, in a practice known as “delta hedging”. That creates a positive feedback loop: as prices fall, financial companies that have sold puts need to sell more oil, which drives the price down further.

Global Drilling And Well Services Activity Sees An Upswing - Since the industry’s all-time low in 2016, field service activities have rebounded and are expected to grow at an average annual rate of 4 percent towards 2021. This is in response to stronger demand for oil and gas and to some of the 30 major energy projects that received final investment decisions in 2017. Industry analysts Rystad Energy predicts 72,000 wells will be drilled and completed in 2019, an increase of 3 percent on 2018. However, field services growth will not be evenly spread either between oil and gas sectors or by countries, given that Iranian oil is subject to sanctions on exports, Libya is vulnerable to interruptions by local tribes and insurgents, and Venezuela’s oil industry is in freefall. Local and international factors will govern the level and location of demand for the type of drilling and field development services. It is easy to overlook the fact that well drilling is predominantly land-based, a feature that owes much to the U.S. shale boom. In less than a decade, U.S. companies have drilled 114,000 shale oil wells and large numbers of gas wells, both in established basins and in new areas. Year-on-year, the United States saw an increase in the rig count of 144 to 1075 on Dec. 7. Rapid growth in North America’s shale oil and gas output has made the country the leading growth market for field services; however, fracking activity slowed in the last quarter as wells in the Permian were drilled but not fracked while awaiting three new pipelines to come online in 2019. Exploitation of shale resources, most notably in North America but also in Argentina and China, dominates the demand for high specification rigs to enable drilling of long horizontal wells accompanied by hydraulic fracturing services. Weaker activity in North America has however been compensated by increased activity in the rest of the world. This was seen by the increase in the number of international rigs by 49 to a total of 991, centered mainly in Latin America and the Middle East.   Moreover, Russia, the holder of considerable shale resources in the Bazhenov Basin, could potentially provide a growing market for heavy-duty rigs, horizontal drilling and fracking expertise and services once U.S. sanctions are lifted.

US Is Awash with Natural Gas and More Production Is on Its Way - The Energy Information Administration recently released its reserves report, noting that proven reserves of natural gas increased 36 percent to 464.3 trillion cubic feet—a record that surpasses the previous high set in 2014. Natural gas production in 2017 increased by almost 3 percent from 2016 production levels—another record high. Most of this natural gas is coming from the Marcellus and Utica shale plays in Pennsylvania and neighboring states. .  The Permian Basin, however, is also a major player in natural gas production, as the Department of the Interior recently found the Wolfcamp Shale and overlying Bone Spring Formation in the Delaware Basin of Texas and New Mexico’s Permian Basin to contain 281 trillion cubic feet of natural gas, or about 48 billion barrels of oil equivalency. However, that production is hampered by pipeline constraints to get the gas to demand centers. Benchmark gas prices in Permian gas markets recently averaged only $0.625 per million Btu because new pipeline capacity is at least 10 months away.  Further, at least 10 new offshore platforms in the Gulf of Mexico are expected to begin producing natural gas by the end of 2018 and another eight are expected to begin production in 2019.  Last year, the United States became a net exporter of natural gas and U.S. liquefied natural gas (LNG) exports are increasing as export terminals are coming on line. U.S. LNG exports are poised for a big year in 2019. Offshore natural gas production in the Gulf of Mexico has been declining since fiscal year 2009. The number of natural gas wells in the Gulf of Mexico fell from 3,271 in 2001 to 875 in 2017.  The new offshore field starts are expected to slow or reverse the declining trend. The 18 new projects are believed to hold 836 billion cubic feet of natural gas reserves, with the energy equivalency of around 144 billion barrels of oil. Most of the natural gas produced in the Gulf of Mexico is associated-dissolved natural gas produced from oil fields. The largest of the new offshore natural gas fields is Cesar/Tonga Phase II in the Green Canyon area—about 186 miles south of New Orleans. The project is believed to contain 158 billion cubic feet of natural gas. Recently, Chevron¬†announced that it had started production on its Big Foot deep-water project, located about 225 miles south of New Orleans. It is expected to produce up to 25 million cubic feet of natural gas per day.

Prices Little Changed As The Market Awaits January Temperatures -- Highlights of the Natural Gas Summary and Outlook for the week ending December 21, 2018 follow. The full report is available at the link below.

  • Price Action: The January contract fell 1.1 cents (0.3%) to $3.816 on a 42.2 cent range ($3.938/$3.516.
  • Price Outlook: This week’s 42.2 cent range was less than half of last week’s 87.9 cent range, but still elevated. While the 15-day forecast was quite bearish, longer-term models suggest the potential for a very cold January as a polar vortex, similar to 2013/14 delivers Arctic air into the lower 48. If this does occur, prices likely have higher to go.  CFTC data indicated a (9,370) contract reduction in the managed money net long position as longs added and shorts added. Total open interest fell (52,400) to 3.692 million as of December 18. Aggregated CME futures open interest fell to 1.231 million as of December 21. This is the lowest total delta adjusted open interest since July 31, 2018. The current weather forecast is now warmer than 7 of the last 10 years. Pipeline data indicates total flows to Cheniere’s Sabine Pass export facility were at 3.9 bcf. Cove Point is net exporting 0.8 bcf. Corpus Christi is exporting 0.425 bcf. Cameron is exporting 0.015 bcf.
  • Weekly Storage: US working gas storage for the week ending December 14 indicated a withdrawal of (141) bcf. Working gas inventories fell to 2,773 bcf. Current inventories fall (671) bcf (-19.5%) below last year and fall (713) bcf (-20.5%) below the 5-year average.
  • Storage Outlook: The EIA weekly implied flow was (8)bcf from our EIA storage estimate. This week’s storage miss is back within our tolerance. Over the last 5 weeks, the EIA has reported a total withdrawal of (294) bcf compared to our (295) bcf estimate.
  • Supply Trends: Total supply rose 0.2 bcf/d to 81.8 bcf/d. US production fell. Canadian imports rose. LNG imports rose. LNG exports rose. Mexican exports rose. The US Baker Hughes rig count rose +9. Oil activity increased +10. Natural gas activity decreased (1). The total US rig count now stands at 1,080 .The Canadian rig count fell (43) to 131. Thus, the total North American rig count fell (34) to 1,211 and now exceeds last year by +70. The higher efficiency US horizontal rig count rose +13 to 940 and rises +139 above last year.
  • Demand Trends: Total demand rose +8.3 bcf/d to +100.9 bcf/d. Power demand rose. Industrial demand rose. Res/Comm demand rose. Electricity demand rose +793 gigawatt-hrs to 79,940 which trails last year by (1,267) (-1.6%) and trails the 5-year average by (86)(-0.1%%).
  • Nuclear Generation: Nuclear generation rose 539 MW in the reference week to 91,595 MW. This is (2,887) MW lower than last year and (1,131) MW lower than the 5-year average. Recent output was at 92,091 MW.

The heating season has begun. With a forecast through January 4 the 2018/19 total cooling index is at (1,244) compared to (998) for 2017/18, (941) for 2016/17, (842) for 2015/16, (1,127) for 2014/15, (1,308) for 2013/14, (1,115) for 2012/13 and (1,091) for 2011/12.

Natural Gas Stabilizes Into January Options Expiry --It was January contract options expiry for natural gas futures today, though excitement was certainly not what it could have been should December have verified colder. On the day the January contract settled up a bit more than 2% on lingering long-range cold risks following heavy selling Monday.  Options expiry seemed to play a role, while loosening balances and expectations for a bearish EIA print to be announced Friday eased concerns about low storage, explaining why the March contract lagged.  We accordingly saw a decent bounce in the January/March contract spread today despite only a modest January rally.  Today's intraday bounce was not particularly surprising, as in our Morning Update we explained that prices under $3.5 were "undervalued" headed into options expiry given long-range cold risks. When we wrote this gas prices were down 3% on the day, and we sat bounce and watched them bounce solidly over $3.5 through the day.  Prices were aided intraday with GEFS weather model guidance that showed widespread cold risks in the long-range (image courtesy of Tropical Tidbits).  Meanwhile, we saw recent balance dynamics as potentially explaining much of the price action since last Friday. We highlighted that in our Note of the Day today, where we also looked at a recent increase in LNG exports as well.

NYMEX January natural gas settles 7.6 cents higher at $3.543/MMBtu - — The NYMEX January natural gas futures contract came out of the holiday Wednesday to rise 7.6 cents to settle at $3.543/MMBtu. February also rose 3.5 cents to close at $3.458/MMBtu. While US demand rose 1.4 Bcf to 87 Bcf Wednesday, it has been on the low side for several days, with consumption averaging 85.8 Bcf/d over the last six days, according to S&P Global Platts Analytics. To date, December demand has averaged 91.6 Bcf/d.The bulk of the consumption was seen in the major demand areas of the Northeast and Upper Midwest, where need was projected to be 39.7 Bcf Wednesday, about 1.6 Bcf below the December average of 41.3 Bcf/d. But Southeast and Texas demand is well behind year-ago levels, due to check in at 29.7 Bcf Wednesday, compared with a the month-to-date average of 33.8 Bcf/d and a year-ago average of 34.1 Bcf/d.Demand does look to rise, however, averaging 94.7 Bcf/d over the next week and 96.7 Bcf/d for the next seven-day period.That coincides with the weather forecast, which shows the bulk of the western half of the country experiencing lower-than-normal temperatures during the front part of that period and the east seeing the same during the back end.US supply continues to run at elevated levels. Wednesday's gas on hand was 90.6 Bcf, putting the monthly average to 89.9 Bcf/d. By contrast, at this point in 2017, supply was averaging 6.8 Bcf/d less at 83.1 Bcf/d.Inventories are still lagging, but withdrawals have not been too steep of late. Northeast stocks were estimated at 1.493 Tcf, down 4 Bcf from Tuesday. Pulls from storage over the last six days have averaged 3.98 Bcf/d.  But the Southeast and Texas were expected to see a 3-Bcf build to 858 Bcf.

January Gas Expires With Strength - (see graphics) It feels like we say this every natural gas contract expiry, but the prompt month contract went off the board exhibiting quite a bit of strength, with January gas contract rallying 3% despite being lower much of the morning.  The role of the January expiry was evident with the January contract leading into the settle, even as the February contract led among the winter contracts for much of the day.  The result is that the January/February F/G contract spread ticked higher on the day, with the January contract expiring almost 10 cents above the February contract (which has sense pulled back further since the expiry).    In our Note of the Day this morning we highlighted that F/G had risen into expiry each of the last 5 years, and that with any colder risks that would continue this year despite weak cash prices. All it took was a cold end to the European operational model to make it 6 years in a row.  This came after we outlined in our Morning Update that, "...we see more upside risks for gas prices today thanks primarily to what has been a pattern of very strong contract expiries in this current trading environment. Though the strength seen in the December contract expiry is highly unlikely, there still appear to be enough cold risks in January to combine with the current storage deficit and let the January contract expire with strength." We saw this strength coming despite overnight GWDD losses.  Meanwhile, traders were also preparing for tomorrow's EIA Weekly Natural Gas Storage Report, where a relatively small storage draw should be announced thanks to widespread warmth last week.   Today we looked at when cold weather could return and what stable moderate El Nino conditions per the CFSv2 climate model mean for the rest of the winter.  Things should remain busy tomorrow then with significant weekend risk before another holiday-thinned trading day Monday and an EIA report thrown in for added fun.

Natural Gas Gets Crushed As January Cold Delayed - (see graphics)It was another rough week for natural gas bulls, with the February natural gas contract settling over 13% below where the January natural gas contract settled last Friday. With the January contract now off the board, it was the February contract that logged the largest loss on the day while the March contract actually saw the largest weekly loss. Weakness today was not particularly surprising as in our Morning Update we warned that "...overnight weather model guidance was unimpressive enough to put a test of $3.25-$3.3 in play..." Sure enough, this verified well with the February contract setting a low on the day at $3.278 as afternoon model guidance was again unimpressive (images courtesy of Tropical Tidbits). EIA data today did little to spark buying interest in natural gas too, with the EIA announcing a storage draw of 48 bcf. This was just 2 bcf from our -50 bcf expectation, and we quickly labeled the report as "Neutral" but noted that "...with any warmer model guidance gas can test $3.25-$3.3" after the print which verified well on warmer 12z weather model guidance. The print confirmed that the market had loosened in recent warm weather, showing that last week's tighter print was a bit of an outlier and following right in line with the balance of the last 10 gas weeks. In the Update we noted a clear warming trend in recent Climate Prediction Center forecasts, though this is based off of past weather model guidance. Though gas prices have fallen off quite a bit and implied volatility has taken a plunge, winter is far from over, and there are likely to be quite a few more price moves from here.

Weekly Natural Gas Storage Report: The Bulls Are Giving Up, And That's A Good Thing - EIA reported a storage draw of 48 Bcf for the week ending Dec. 21. This compares to the -47 Bcf we projected and consensus average of -50 Bcf. The -48 Bcf was smaller than the five-year average of -121 Bcf and last year's -112 Bcf. For the week ending 12/28, we currently have a forecast of -40 Bcf.  We have April 2019 storage at 1.35 Bcf. We published a piece on Wednesday titled, "That cold blast always seems like a week away." The latest weather model updates do not help the bulls' cause at all as the first half of January is now expected to be warmer than normal, showing lower than normal heating degree days. (Note: The most important line in that chart is the ECMWF-EPS one.)What the current outlook is basically saying is that there's not only a cold blast in early January, but that the outlook is actually warmer than normal. With the markets coming into the end of December holding onto the belief that the bulls will get relieved via bullish weather, the latest update is a big disappointment, and hence why prices are falling some ~7%-plus today. Because sentiment and positioning is resetting precisely at a time when the long-range weather outlook shows a much better set-up. Now keep in mind that the long-range is not always accurate, but positioning/sentiment wise, if a colder than normal outlook is the set-up by the end of January just as positions get washed out, that may present the bullish trade opportunity we are waiting for. But still, nothing will eliminate the fact that the first two weeks of January may turn out to be warmer than normal. The damage is being done to our EOS 2019 April forecast which was revised from an initial 1.05 Tcf at the start of the month to 1.35 Tcf. This is what the bearish weather did to storage. For us, we like to see the sentiment washout continue. We think the set-up may be even better going into the end of January, and once traders start thinking that the rest of this winter may remain warmer than normal, that's when the set-up for a long opportunity may present itself.

B.C. regulator says fracking caused earthquakes near Fort St. John – CBC - The B.C. Oil and Gas Commission has blamed fracking for three earthquakes in northeastern B.C. last month.The provincial regulator says the events 20 kilometres south of Fort St. John on Nov. 29 occurred because of fluid injections during hydraulic fracturing at a Canadian Natural Resources wellsite.   The events, which were felt but caused no surface damage, measured 3.4, 4.0 and 4.5 magnitude. Fracking operations within the lower Montney formation, a major shale oil and gas resource near the B.C.-Alberta border, were suspended after the earthquakes and are to remain suspended at the multi-well pad, pending the results of a detailed technical review.The commission says seven wells into the upper Montney formation had previously been drilled and completed by the Calgary-based company with no seismic events larger than magnitude 2.5 detected. The immediate shutdown of operations is required when an induced seismic event in that region reaches or exceeds a 3.0 magnitude.

OGC says November earthquake caused by fracking - – The B.C. Oil and Gas Commission has determined the three seismic events which occurred approximately 20 km south of Fort St. John on November 29, were caused by fluid injection during hydraulic fracturing operations conducted by Canadian Natural Resources Limited. According to OCG, the events measured 3.4, 4.0 and 4.5 magnitude, with the first event recorded at 18:27 MST followed by two smaller aftershocks ending at 19:15 MST. The Commission received 14 reports of felt events related to this seismicity. CNRL performed wellbore integrity assessments, and no problems were reported. As per the Commission’s Kiskatinaw Seismic Monitoring and Mitigation Area Special Project Order and the Drilling and Production Regulation, CNRL immediately suspended hydraulic fracturing operations.OCG says the investigation included a review of operational and seismological data within a 10-kilometre radius of the epicentres as determined by Natural Resources Canada. “The events occurred during hydraulic fracture operations targeting the lower Montney formation. Seven upper Montney wells had been previously drilled and completed at CNRL’s well pad (5-22-81-18W6) from May to June 2018. No events larger than magnitude 2.5 were detected during that period. A pre-assessment report relating to completion operations for two wells (‘G’ and ‘H’) targeting the lower Montney was submitted as required by KSMMA and concluded induced seismicity was likely to occur, but events larger than magnitude 3 were not expected.” Factors leading to this determination include:

  • • The timing of the events coincided with hydraulic fracture operations within the lower Montney zone in the ‘G’ and ‘H’ well of the 5-22 pad which were ongoing from Nov. 27, 2018 until the occurrence of the events on Nov. 29, 2018.
  • • The epicentres of the events were located in close proximity to the ‘G’ and ‘H’ wells based on data from both the Canadian National Seismograph Network and a proprietary seismic array deployed to monitor for induced seismicity.
  • • Water disposal was occurring in the Septimus area but the closest active disposal well was approximately six km from the epicentre of the 4.5 magnitude event. Further, the depth of the events as determined by the proprietary dense array was significantly lower than the formation where water disposal was occurring.
  • • Based on “felt” reports, ground motion appears to have been strongest in the vicinity of the ‘G’ and ‘H’ wellbores.

CNRL has satisfied the pre-operation and active operation requirements as per the KSMMA order. However, all hydraulic fracture operations within the lower Montney formation will remain suspended at the 5-22 well pad pending the results of a detailed technical review. CNRL continues to cooperate fully with the ongoing investigation..

Environmental and economic development choices split Canada's First Nations - — A Vancouver-area First Nation's decision to support the Woodfibre LNG project may have come as a surprise to some, considering the nation's role in helping to derail the Trans Mountain pipeline expansion earlier this year. The Squamish Nation community was one of a handful of First Nations that lined up to convince the Federal Court of Appeal in August to overturn National Energy Board approval of the controversial oil pipeline expansion from Edmonton to the West Coast, leaving its future in doubt. But the nation's acceptance of the liquefied natural gas export project last month reinforces a simple truth, says historian Ken Coates: While Canada's first people may approach tough questions differently than non-native Canadians, their decisions are motivated by many of the same factors. "These are complex issues and you're always going to have people on both sides," said the Macdonald-Laurier Institute's senior fellow in Aboriginal and northern Canadian issues and the author of several books and publications on Indigenous relations. "These are communities that need real sustainable, substantial economic benefit, where Indigenous people have been locked out of the market economy for 150 years, since Confederation. They've been wanting in for a long period of time." Woodfibre LNG gained trust through five years of consultations and by agreeing to abide by conditions under the nation's environmental and cultural assessment process (which operates separately from federal and provincial regimes), said Khelsilem, a spokesman for the Squamish Nation council, and one of its councillors who voted against the proposal in a close 8-6 vote. In return for its support, the community is to receive annual and milestone payments totalling $226 million over the 40-year life of the project, and its companies will be in line to bid on up to $872 million in contracts.

Heritage Petroleum claims sabotage in oil leak -  - Pre­dic­tions of sab­o­tage of T&T’s oil as­sets are ma­te­ri­al­is­ing af­ter Heritage Pe­tro­le­um re­port­ed that a crude oil line had been hack­sawed on Fri­day by al­leged saboteurs. In a state­ment, Her­itage Pe­tro­le­um Com­pa­ny Lim­it­ed said it was now work­ing with the po­lice to find the par­ties re­spon­si­ble for an act of sab­o­tage on one of its pipelines at CR64 Pro­duc­tion Head­er in Cruze Field, Point Fortin. The cut line was dis­cov­ered at 3pm on Friday and came a day af­ter a sub-sea leak de­vel­oped at Sol­da­do North fields in the Gulf of Paria. While the sub-sea oil leak has not been iden­ti­fied as sab­o­tage, Her­itage Pe­tro­le­um said the dam­age to the pipeline at Cruze Field, Point Fortin seemed to be an act of sab­o­tage. The three-inch bulk pipeline was vis­i­bly hack­sawed in sev­er­al places and stolen, re­sult­ing in the spillage of ap­prox­i­mate­ly 50 bar­rels of oil. Booms were de­ployed to con­tain the spilled oil. “Recov­ery and clean-up ef­forts are on­go­ing,” Her­itage Pe­tro­le­um said. All reg­u­la­to­ry agen­cies, in­clud­ing the Min­istry of En­er­gy and En­er­gy Af­fairs; the En­vi­ron­men­tal Man­age­ment Au­thor­i­ty (EMA); and the Oc­cu­pa­tion­al Safe­ty and Health Agency (OS­HA) have been no­ti­fied. “Her­itage Pe­tro­le­um…is com­mit­ted to en­sure that all our as­sets and peo­ple were op­er­at­ing safe­ly and with­in the law,” the company said.

US Rig Count Rises As Canadian Drillers Prepare For Winter - Coming off a rather abysmal week for oil prices, Baker Hughes reported a 3-rig increase for oil and gas in the United States this week. The total number of active oil and gas drilling rigs now stands at 1,083 according to the report, with the number of active oil rigs increasing by 2 to reach 885 and the number of gas rigs increasing by 1 to 198. The oil and gas rig count is now 154 up from this time last year, 138 of which is in oil rigs. WTI prices were up slightly on Friday following a uneventful EIA report which showed US crude oil inventories were virtually unchanged for the week, contrary to Thursday’s API report which showed a surprise crude oil inventory build. Brent crude was trading slight down on Friday, at $52.44 (-0.55%) The WTI benchmark was trading up 0.29% (+$0.13) at $44.74, still down for the week. Canada’s oil and gas rigs for the week decreased by 61 rigs this week after losing over 50 rigs in the two weeks prior. Canada’s total oil and gas rig count is now just 70, which is 66 fewer rigs than this time last year, with a 43-rig decrease for oil rigs, and a 18-rig decrease for gas rigs for the week as Canada’s oil patch gears up for winter season. The EIA’s estimates for US production for the week ending December 14 continues to weigh on prices, averaging 11.6 million bpd­—a drop off from the high of 11.7 million bpd a few weeks ago. By 1:08pm EDT, WTI had increased by 1.88% (+$0.64) at $45.45 on the day. Brent crude was trading up 1.25% (+$0.66) at $53.39 per barrel.

Canada's Energy Policy Creates Structural Problems for Oil and Gas Industry - As the U.S. oil industry reels from the collapsing oil prices, Canada’s oil business is seeing its oil prices rallying. How can that be? It is the result of strong political intervention in Alberta’s oil business in an attempt to save it from devastation. When the oil price differential between Western Canadian Select and West Texas Intermediate swelled to $52 a barrel in November, the impending devastation of the Canadian oil industry demanded swift and decisive action. It was delivered, although somewhat reluctantly, and only after an earlier proposed solution failed to change the oil market sentiment. Following an OPEC-like production cut, the oil price differential has shrunk to only $16.60 a barrel, in line with what existed last spring. How the Canadian oil industry got into this mess is a tale of energy policies going off the rails when liberal politicians placed an anti-fossil fuel governing agenda ahead of the economic interests of the country’s largest industry, and a source of substantial government revenue. The tension between Canadian liberal and conservative governing philosophies has existed for decades. It has often revolved around the development of Canada’s natural resources. The first high-profile battle between the governing philosophies occurred in the 1980s, as the world dealt with the dramatic oil price hikes engineered by OPEC in the 1970s and the loss of Iranian oil supplies from the market. Today, the political battle is over constructing additional oil and gas pipelines for exporting more fossil fuels, which, when burned, release carbon emissions that contribute to global warming and threaten the existence of future generations. Stopping the burning of oil and natural gas, and especially the carbon-rich bitumen extracted from Canada’s oil sands, has become a paramount objective of environmentalists. Canada, with the world’s third largest oil reserves, of which 97 percent is oil sands, has become a prime target of the “keep it in the ground” movement. Their key disruption strategy is stopping the building of new pipelines. For Canada, oil exports are critical to its economic wealth. Unfortunately, the lack of pipelines carrying hydrocarbons anywhere other than to the United States has created a unique dilemma for Canada’s oil business. America’s shale revolution success is reducing the need for more Canadian oil. This is a change in the historical relationship between the two countries. While Canada remains the number one oil supplier to the U.S., the slowing of America’s oil use and the growth of its domestic output is forcing Canadian oil producers to seek new markets.

Fracking could fuel Top End water infrastructure expansion, NT Government says -- The fracking industry could one day be pivotal in water infrastructure expansion in the Northern Territory, with the NT Government saying it has a "keen eye" on future developments. Acting NT Natural Resources Minister Lauren Moss said future private investment "in initiatives that capture, store and transport water resources would be welcomed" by the NT Government. "Industries such as those involved in onshore gas and mining are always looking at water use as a driver of innovation, and this is something we have a keen eye on," Ms Moss said. The Minister's comments follow a Curious Darwin investigation earlier in December that asked: Why can't the Top End pipe some of its abundant water south to assist drought-stricken states? More than 2,300 of you wanted to know the answer which was, in short, that such a project would be too expensive for any government to ever fully fund.  Although nearly two metres of rain falls each year in Darwin, the region currently does not have the infrastructure in place to capture enough of it to be piped out — a project which experts from CSIRO and Power and Water Corporation have estimated would cost billions, if not trillions, of taxpayer dollars.

China's LNG imports jump to record high in November -Chinese liquefied natural gas (LNG) imports soared by 48.5 percent in November 2018, compared to the same month last year, as China continues to have parts of the country switch to natural gas from coal for heating.  China’s LNG imports last month reached 5.99 million tons, beating the previous record of 5.18 million tons from January 2018 in the previous heating season, according to data from China’s General Administration of Customs, as carried byReuters.  LNG imports into China in the first eleven months of this year jumped by 43.6 percent compared to January-November 2017, to 47.52 million tons and on course to easily beat the full-year LNG import record of 38.13 million tons from 2017, according to the customs data.  This winter season, Chinese authorities are determined to avoid another severe natural gas supply shortage. And they are handling supplies much better than past winter—domestic natural gas production is rising, state energy giants are boosting gas pipeline infrastructure and connectivity, and the coal-to-gas switch is more measured and moderate, taking into account expectations of demand.Chinese natural gas imports are soaring, but procurement for this winter’s demand started early to avoid a last-minute rush and a repeat of the 2017-2018 winter.This year, weather is also in favor of Chinese authorities. Milder weather a month into the heating season through mid-December has led to expectations that China won’t see another supply crunch between December and February.Over the past week, LNG prices for February delivery in Asia rose slightlycompared to the previous week, due to lower shipping rates as more LNG ships have become available and thanks to a slight drop in winter t emperatures in some parts of Asia. According to traders who spoke to Reuters, Asian demand as a whole remains subdued, and price rises would be short-lived. A sustainable increase in Asian LNG prices would come if the weather in Asia turns cold for at least three weeks.  

Chinese Refiners Aren't Buying U.S. Crude --  Chinese refiners are not buying more U.S. oil despite the three-month truce agreed by Presidents Trump and Xi last month, Reuters reports, citing cargo loading plans of Chinese downstream operators. According the Reuters, Chinese demand for U.S. crude has been dampened by political uncertainty around the trade war and, more directly, by relatively high costs of transportation. This means that despite the truce and future positive developments in bilateral talks on trade, U.S. oil will have yet to become a major element of China’s imported crude oil mix. One Chinese analyst told Reuters that price was the top consideration of buyers and the price of U.S. oil simply wasn’t competitive.“Chinese companies have little incentive to buy U.S. crude due to the wide availability of crude supplies today from Iran and Russia,” Seng Yick Tee from consultancy SIA Energy said. Yet trade tensions are not helping, either. With the constant threat of more tariffs, refiners are reluctant to change their buying habits.“Even though the trade tension between China and the U.S. had been defused recently, the executives from the national oil companies hesitate to procure U.S. crude unless they are told to do so.” U.S. crude oil exports hit a high of 23.95 million barrels in October 2017, data from the Energy Information Administration shows, but have since then declined, reaching 2.17 million barrels in September this year before Chinese refiners completely stopped buying U.S. crude in October.

U.S. Shale's Blows Leave Middle East Oil Producers Staggering - The U.S. oil industry is delivering a one-two punch to Middle East producers already reeling from a collapse in prices. A tussle is playing out in the market for so-called light oils, which have a lower sulfur content and are less dense than heavier varieties. When processed, these grades typically yield a higher amount of fuels like gasoline and naphtha. And now, American supplies are weighing on prices for such crudes as well as fuels made from them. Light oil pumped in U.S. shale fields is increasingly making its way to Asia, undercutting sales by the likes of Saudi Arabia. Additionally, America is exporting a record amount of refined fuel, contributing to a global glut in gasoline and naphtha. That’s hurting some of the biggest members of the Organization of Petroleum Exporting Countries as they prepare to curb crude output in a bid to stabilize the market. Middle East producers -- still the dominant suppliers to Asia -- are being forced to tackle American crude competition by lowering their oil pricing to defend their market share. The refiners, meanwhile, are contending with booming U.S. fuel shipments dragging down their returns from making processed products. “It is no surprise that Middle Eastern producers are having to cut light crude prices,” said Virendra Chauhan, an analyst at industry consultant Energy Aspects Ltd. Over the course of 2018, the key sources of global oil-output growth have included light crude from U.S. shale fields and Saudi Arabia, he said. While Middle East producers such as Saudi Arabia and Abu Dhabi are reducing the pricing for their lighter crudes, American exports to Asian nations such as India and South Korea are surging. Even a temporary halt by China due to its trade war with the U.S. hasn’t significantly dented overall flows this year.

Producer cuts are set to boost the oil market in 2019, data firm projects - An oversupply of oil will continue to pressure prices into the first quarter of 2019, but producer cuts will eventually boost crude price as the year progresses, according to Argus Media, an energy information provider.That is, supply and demand should rebalance by the second quarter of next year, said Azlin Ahmad, editor for crude oil at Argus.  Since climbing to four-year highs in early October, the price of crude futures have crashed by more than a third. The latest wave of heavy selling comes at a time when the energy market as well as the global economy is gripped by a flurry of bearish factors.Brent oil futures, the international benchmark were trading around $53.60 per barrel on Monday, representing an almost 20 percent decline in 2018.But prices are likely to pick up next year as supply cuts by the Organization of the Petroleum Exporting Countries. The cuts are scheduled to take effect in January.OPEC and allied non-OPEC oil producers including Russia agreed at the start of December to curb output by 1.2 million barrels a day. That's equivalent to more than 1 percent of global demand, in a bid to drain tanks and boost prices.The 15-member organization said it would reduce its output by 800,000 barrels a day, while Russia and the allied non-OPEC producers will contribute a 400,000 barrels daily reduction.Argus forecasts Brent crude to trade around $65 per barrel in the first quarter, rising to $68 in the second quarter and reaching the low $70s in the third quarter. Prices will breach $80 a barrel in the fourth quarter of 2019, Ahmad projected.  Average Brent oil prices will be below $70s in the whole of 2019, according to Argus' forecast.

Oil eases on oversupply concerns ahead of holiday - Oil fell on Monday, in line with another decline across global stock markets, which came under pressure from concern about a U.S. government shutdown and a worsening world economy.  The price of oil has already fallen by about 40 percent from October highs to its lowest since the third quarter of 2017, as investors have grown increasingly wary of the impact to global growth, and crude demand, from an escalating trade dispute between the United States and China. The U.S. Senate has been unable to break an impasse over U.S. President Donald Trump's demand for more funds for a wall on the border with Mexico, and a senior official said the shutdown could continue until Jan. 3.  Investors have flocked to perceived safe-haven assets such as gold and government debt, at the expense of crude oil and stocks.  Brent crude futures were down 37 cents at $53.45 a barrel by 9:39 a.m. ET (1439 GMT). U.S. crude futures lost 72 cents, or 1.6 percent, to $44.87, falling below $45 for the first time since July 2017.  Brent fell 11 percent last week and hit its lowest since September 2017, while U.S. futures slid to their lowest since July 2017. "Today is going to be a market of very thin liquidity and we don't have strong convictions in such market conditions. Brent has managed to break 55.00 $/bbl at the end of last week, the short-term momentum is negative,"

This Key Indicator Spells Trouble For Oil Investors - The price ratio between crude oil and natural gas has changed dramatically in the past few weeks, as crude prices have crashed at a time when natural gas prices hit multi-year highs. The ratio between the two prices could have consequences for a variety of natural gas and petrochemical projects, potentially leading to delays or cancellations. Oil typically trades at a premium relative to natural gas, but at the end of November, the price ratio of Brent crude to Henry Hub gas fell to its lowest level since 2009. “The relative price of oil and gas affects the economics of various infrastructure investments across the energy industry, and the recent falloff might act as a fly in the ointment to development plans in the short term and could lead to delays,” Barclays said in a report.The reasons for the plunge in oil prices have been discussed at length in this column and elsewhere – demand looks shaky, U.S. supply is soaring and oil traders are skeptical about the ability and willingness of OPEC+ to balance the market.Meanwhile, natural gas has gone in the opposite direction over the past two months or so. Low inventories, high demand and seasonal factors have dramatically tightened the market for natural gas in the United States. Prices hit $4.70/MMBtu in November, up 60 percent since September.In other words, Brent has lost more than half of its price premium to Henry Hub in the last few months.  There could be fallout for proposed LNG projects because of this development. The fall of global crude prices has also dragged down global LNG prices (LNG prices are still influenced by crude benchmarks). So, we have falling LNG prices around the world, but rising natural gas prices in the United States. The business case for exporting LNG from the U.S. has always been about taking advantage of a cheap feedstock, and selling it abroad at a higher price. With costs for the feedstock rising, and the landing price falling, the economics of building new LNG projects in the U.S. have taking a hit. January NYMEX gas prices are trading $4/MMBtu below Asian contract LNG prices, a differential that was as high as $9/MMBtu this past summer. The window for profits on shipping LNG from the U.S. to Asia has not entirely closed, but the business case looks a lot less compelling.

Oil plunges 6 pct as economic slowdown fears grip market -(Reuters) - Oil prices plunged more than 6 percent to the lowest level in more than a year on Monday, pulling back sharply late in the session as fears of an economic slowdown rattled the market. U.S. crude futures and global benchmark Brent hit their lowest levels since 2017 during the session, putting both benchmarks on track for losses of about 40 percent in the fourth quarter. "What's happening in the stock market is raising fears that the economy is grinding to a halt and thereby will basically kill any future oil demand," . "They're pricing in a slowdown in the economy if not a recession with this drop." The fourth-quarter price decline is likely to cause producers to throttle back on their output, he said. U.S. crude futures have hit the lowest level since June 22, 2017, as jitters have grown about the impact of the escalating U.S.-China trade dispute on global growth and crude demand. Brent crude is at its lowest level since Aug. 17, 2017. Markets across asset classes have come under pressure as the U.S. government shutdown that began just after midnight on Saturday intensified growth concerns. Investors have flocked to safe-haven assets such as gold and government debt at the expense of crude oil and stocks. A gauge of stocks worldwide hurtled toward an eighth straight decline on Monday as investors ignored the U.S. Treasury secretary's actions to reinforce confidence in the economy and U.S. President Donald Trump criticized the Federal Reserve as "the only problem our economy has." The U.S. Senate has been unable to break an impasse over Trump's demand for more funds for a wall on the border with Mexico, and a senior official said the shutdown could continue until Jan. 3. U.S. crude futures settled at $42.53 a barrel, down $3.06, or 6.7 percent. Brent crude futures settled down $3.35, or 6.2 percent, at $50.47 a barrel. The market settled early ahead of the Christmas holiday. Prices extended losses in post-settlement trade. Brent fell 11 percent last week and hit its lowest level since September 2017, while U.S. futures slid to their lowest level since July 2017, bringing the decline in the two contracts to more than 35 percent for the quarter.

Plunging oil prices show the market is worried about a recession in 2019, says analyst - The continuing collapse in oil prices signals that investors are worried about a 2019 recession, according to Helima Croft, global head of commodity strategy at RBC Capital Markets.  Oil prices have now plunged by about 40 percent from their 52-week highs at the start of October. Last week alone, U.S. West Texas Intermediate crude tumbled 11 percent, posting its worst weekly performance in nearly three years. On Monday, WTI fell below $45 a barrel for the first time since July 2017."I think what we're seeing in oil is a big, big concern for 2019 about a recession. I think that is really weighing heavily on this market," Croft told CNBC's "Closing Bell" on Friday.Croft's commentary reflects an emerging view on Wall Street that slowing economic growth and weaker-than-anticipated demand are pushing the oil market deeper into bear market territory.The rout has continued despite a pledge earlier this month by OPEC, Russia and several other oil producers to remove 1.2 million barrels per day from the market beginning in January.Surging oil production from the United States, Saudi Arabia and Russia is one factor behind the selling. But Croft says the depth of the pullback indicates that expectations for slower economic growth and darkening demand forecasts are what's truly driving the rout. "I think it's a broad-based fear about where is demand going to be for oil next year, concerns about Chinese demand in particular," Croft said. To be sure, Croft is not necessarily forecasting a recession, and there are few clear signs that a period of economic contraction is on the horizon. Still, surveys indicate that executives are growing more worried about the prospect. Nearly half of chief financial officers see a chance that a recession will hit by the end of 2019, according to a CNBC survey. Meanwhile, U.S.-Chinese trade tensions are causing finance executives to lose faith in China's economic growth, a Deloitte survey shows.

OPEC in a ‘Whatever It Takes’ Moment to Prop Up Oil Prices - OPEC hasn’t even started implementing its new six-month agreement to cut output, and already members responsible for most of the reductions have pledged to extend or even deepen it. Officials from Iraq, Kuwait and the United Arab Emirates agreed with Saudi Arabia’s expectation that the group, along with Russia and other oil producers, will extend the agreement for another six months. The U.A.E.’s energy minister, while stressing that the 1.2-million barrel-a-day cut will clear an inventory buildup in the first half, hinted additional curbs could be discussed. “The planned cuts have been carefully studied, but if it doesn’t work, we always have the option to hold an extraordinary OPEC meeting and we have done so in the past,” Suhail Al Mazrouei, who is also OPEC president, said in Kuwait. “If we are required to extend for another six months, we will, if it requires more, we always discuss and come up with the right balance.”   Last week, oil capped its biggest weekly decline since 2016 on concerns that weakening economic growth and surging U.S. supply will lead to a surplus next year, overwhelming OPEC’s efforts to stabilize the market. The slide continued even after the Organization of Petroleum Exporting Countries and its partners surprised traders with the size of the supply reduction announced on Dec. 7.At a press briefing in Kuwait, Iraqi, the U.A.E. and Algerian energy ministers took turns repeating the message that OPEC will deliver its 800,000 barrels per day cut and continue their cooperation with other producers to balance supply and demand. Iraq’s oil minister Thamir Ghadhban said his country’s new membership into the OPEC+ monitoring committee “indicates that we are serious about meeting our commitments that will exceed what we’ve complied with in the past.” OPEC cuts may end up being deeper than agreed because of planned maintenance and production snags in some member countries, Al Mazrouei said. Conflict, sanctions and aging oil fields have been factors that dragged on output in Libya, Nigeria, Iran and Venezuela in recent years.

OPEC+ Deal Not Enough To Save The Oil Market - If the goal of the OPEC+ cuts was to boost oil prices, then the deal is clearly failing. OPEC+ is scrambling to figure out a way to rescue oil prices from another deep downturn. WTI is now down into the mid-$40s and Brent into the mid-$50s, both a 15-month low. U.S. shale continues to soar, even if shale producers themselves are now facing financial trouble with prices so low. Oil traders are clearly skeptical that OPEC+ is either willing or capable of balancing the oil market.OPEC+ thought they secured a strong deal in Vienna in early December, but more needs to be done, it seems. OPEC’s Secretary-General Mohammad Barkindo wrote a letter to the cartel’s members, arguing that they need to increase the cuts. Initially, the OPEC+ coalition suggested that producers should lower output by 2.5 percent, but Barkindo said that the cuts need to be more like 3 percent in order to reach the overall 1.2 million-barrel-per-day reduction.More importantly, the group needs to detail how much each country should be producing. “In the interests of openness and transparency, and to support market sentiment and confidence, it is vital to make these production adjustments publicly available,” Barkindo told members in the letter, according to Reuters. By specifying exactly how much each country will reduce, the thinking seems to be, it will go a long way to assuaging market anxiety about the group’s seriousness. Still, the plunge in oil prices this month is evidence that traders are not convinced.

What is Driving the Oil Price Down? -“What is really driving this price movement down is the fact that the market believes that the market’s oversupplied and this is really the main factor coming into the end of the year when global markets are down and everybody’s feeling a bit bearish about growth more broadly and that’s affecting the price,” Rhind said in the interview. “There are a lot of people very bearish about global growth for next year and in terms of the fund manager positioning in the oil market we’ve seen that positioning come off towards the end of the year … I think that could be just a function of people looking to close up books and investment mandates for the end of the year,” he added. Rhind told CNBC that he thinks there is more risk skewed to the upside in terms of oil in 2019. “I think that OPEC will act and will look to take production off the market and that has historically helped the price of oil,” Rhind said in the video interview. “I think also China will be a big factor next year. I think China will look to go in the opposite direction of the G7 countries and look to ease and put more liquidity into the market next year and that should support oil and other commodities,” he added. Earlier this week, Wood Mackenzie’s Chairman and Chief Analyst Simon Flowers stated in his latest The Edge column that “the sharp retreat in price may turn out to be a good thing, injecting a healthy dose of reality to the industry at just the right time”. In the column, Flowers said Brent over $80 per barrel “always seemed too good to last, defying the fundamentals”. The WoodMac analyst also confirmed in the column that WoodMac expects Brent to average $66 per barrel in 2019. “That’s a tad down on 2018 though still a price that allows companies to generate free cash flow and continue to strengthen finances,” Flowers stated in The Edge.

US oil prices rebound after tumbling to lowest since June 2017 on economy fears - Oil prices rose on Wednesday on perceptions that a price slide to 2017 lows prompted by economic worries had been overdone amid an OPEC-led effort to tighten supply.  Crude has been caught up in wider financial market weakness as the U.S. government shutdown, higher U.S. interest rates and the U.S.-China trade dispute unnerved investors and exacerbated worries over global growth. Brent crude oil futures, the global benchmark, was up 95 cents, or 1.9 percent, at $51.42 at 9:32 a.m. ET (1432 GMT). It earlier fell to $49.93, the lowest since July 2017, and posted a 6.2 percent slide in the previous session. U.S. West Texas Intermediate crude futures was up $1.26, or 3 percent, at $43.79. WTI fell 6.7 percent to settle at its lowest level in a year and a half on Monday. "I think there is a little bit of over-extension to the downside linked to global market fears," said Olivier Jakob, analyst at Petromatrix. "It's all about equities." "OPEC has shown it wants a higher prices and is working towards that goal." Still, the head of Russian oil company Rosneft, Igor Sechin, predicted an oil price of $50-$53 in 2019, a long way south of the four-year high of $86 for Brent crude reached earlier this year. Sechin, an ally of Russian President Vladimir Putin and a critic of OPEC, said the price slump was mostly linked to the U.S. rate hike announced last week.

Oil bounces after steep slide, but growth fears still weigh s  - Oil surged on Wednesday, erasing some of the steep losses that have taken crude benchmarks to lows not seen in 1-1/2 years on perceptions the price slide has gone too far, too fast. Both US and Brent crude were more than 6% higher on Wednesday, but it was unclear if the move would see any follow-through when trading desks are more fully staffed after the beginning of the new year. Crude has been caught up in wider market weakness as the US government shutdown, higher US interest rates and the US-China trade dispute unnerved investors and exacerbated worries over global growth. “The market is still really concerned about demand,” said Bernadette Johnson, vice president in market intelligence at DrillingInfo in Denver. The sell-off “doesn’t signal strength of confidence in demand, but we still went too far too quick. We still believe $45 is too low.” US crude was up $2.86 a barrel, or 6.7%, to $45.38 a barrel as of 12:31 pm EST (1731 GMT). Brent crude, the global benchmark, rose $3.12, or 6.2%, to $53.59 a barrel. It earlier fell to $49.93, lowest since July 2017, after a 6.2% slide on Monday. Recent selling “has felt less fundamentally driven and more a function of the overall market meltdown as increased equity volatility and growing macro concerns have weighed on a number of asset classes,” Funds have incurred heavy losses in oil markets this year, with the average commodity trading adviser fund, or CTA, down by 7.1% on the year through mid-December, according to Credit Suisse data. Funds took big bets on oil’s rally, only to see the commodity drop by more than 40% since the October highs.

Oil surges 8 percent, erasing Christmas Eve losses - Oil surged on Wednesday, posting its strongest daily gain in more than two years in a partial rebound from steep losses that pushed crude benchmarks to lows not seen since 2017.Both U.S. and Brent crude rose about 8 percent, their largest one-day increase since Nov. 30, 2016, when OPEC signed a landmark agreement to cut production. It was unclear whether follow-through buying would push prices higher again once trading desks are more fully staffed after the new year begins.The bounce on Wednesday amounted to a relief rally after Monday's plunge, with the energy complex getting a boost from the surging equity market, said John Kilduff, founding partner at energy hedge fund Again Capital. The Dow Jones Industrial Average rose more than 1,000 points, posting its biggest-ever one-day point gainon the heels of the worst Christmas Eve on record."There was all the tumult across the market like it was the end of the world," Kilduff said. "The sun came up today."U.S. West Texas Intermediate crude futures ended Wednesday's session up $3.69, or 8.7 percent, at $46.22, rebounding from a 6.7 percent plunge on Monday. WTI traded more than 10 percent higher near $47 a barrel after the settle.  Brent crude oil futures, the global benchmark, rose $4, or 7.9 percent, to $54.47. It earlier fell to $49.93, the lowest since July 2017, and posted a 6.2-percent slide in the previous session. Brent also extended gains after the settle to trade more than 9 percent higher above $55 a barrel.Crude has been caught up in wider market weakness as the U.S. government shutdown, higher U.S. interest rates and the U.S.-China trade dispute unnerved investors and exacerbated worries over global growth. "The market is still really concerned about demand," said Bernadette Johnson, vice president in market intelligence at DrillingInfo in Denver. The sell-off "doesn't signal strength of confidence in demand, but we still went too far too quick. We still believe $45 is too low."

Oil prices fall after jump the day before; glut, economy worries weigh - Oil prices fell more than 1 percent on Thursday after rebounding 8 percent in the previous session, as worries over a glut in crude supply and concerns over a faltering global economy pressured prices even as a stock market surge offered support. Brent crude oil was down 70 cents, or 1.3 percent, at $53.77 a barrel by 0845 GMT. U.S. light crude oil was 50 cents lower at $45.72. Oil prices reached multi-year highs in early October but have fallen almost 40 percent since then and are now approaching their lowest levels for 18 months. Brent is heading for losses of almost 30 percent this year while the U.S. contract has dropped almost 25 percent. Three months ago it looked as if the global oil market would be under-supplied through the northern hemisphere winter as U.S. sanctions removed large volumes of Iranian crude. But other oil exporters have more than compensated for any shortfall, filling global inventories and depressing prices. The fuel glut has combined with faltering investor sentiment in other asset classes, producing a bear market for oil.

Oil prices slide as concerns about global economy, oversupply weigh (Reuters) - Oil prices fell on Thursday, retreating from an 8 percent rally in the previous session as the oil market focused on signs of faltering global economic growth and record production of crude. Brent crude LCOc1 futures dropped 4.24 percent, or $2.31, to settle at $52.16 a barrel. U.S. West Texas Intermediate (WTI) crude CLc1 futures fell $1.61 to settle at $44.61 a barrel, down 3.48 percent. “The market is giving back some of its gains from yesterday that were brought along with the euphoria in the stock market,” said Andrew Lipow, president of Lipow Oil Associates in Houston. Prices surged on Wednesday, tracking a spike on Wall Street after President Donald Trump’s administration attempted to shore up investor confidence. U.S. stocks retreated for most of the session on Thursday, dragging oil prices, before roaring back to end in positive territory. [.N] Brent and WTI have lost more than a third of their value since the beginning of October and are heading for declines of more than 20 percent in 2018. Concerns about slowing global economic growth have dampened investor demand for riskier asset classes and pressured crude futures. Market participants are also worried about a glut of crude. U.S. crude stocks rose by 6.9 million barrels in the week ended Dec. 21 to 448.2 million, data from industry group the American Petroleum Institute showed on Thursday. Analysts had expected a decrease of 2.9 million barrels. Official U.S. government data will be released on Friday. 

Oil Roller-Coaster Ride Hits Another Drop-- Crude’s rollercoaster ride pressed on with oil taking a turn lower along with U.S. stocks. Futures in New York fell 3.5 percent on Thursday. The S&P 500 dropped as much as 2.8 percent, making its way toward a bear market. Traders have been on edge this week amid giant swings in both equities and oil. On Monday, the U.S. benchmark crude fell more than 7 percent before jumping more than 10 percent on Wednesday. “What’s going on with the overall economy and because GDP is so correlated with oil demand, that’s really what’s driving the bus lately,” said Stewart Glickman, an energy equity analyst at CFRA Research. “Are we driving into a recession or are things going to stabilize and be a somewhat steady state?” U.S. benchmark crude is on track for the largest quarterly decline since 2014 amid fears that the ongoing trade war between the U.S. and China will hit demand. At the same time, some investors doubt that the Organization of Petroleum Exporting Countries’ deal to limit output with its allies will help tighten supplies. Producers aim to publish a statement in January on the implementation of the agreement, Russia’s Energy Minister Alexander Novak said. West Texas Intermediate crude for February delivery dropped $1.61 to settle at $44.61 a barrel on the New York Mercantile Exchange. Total volume traded on Thursday was about 16 percent below the 100-day average. A measure of oil market volatility jumped to the highest level in more than a month. Brent for February settlement slid $2.31 to end the session at $52.16 a barrel on London’s ICE Futures Europe exchange. The global benchmark crude traded at a $7.55 premium to WTI. Meanwhile, U.S. crude inventories probably fell 3.25 million barrels last week, according to a Bloomberg survey of analysts. If Energy Information Administration data due Friday shows a similar move, it will be the fourth consecutive weekly decline in U.S. crude stockpiles.

Oil prices stabilize, but remain weak due to oversupply - Oil prices stabilized on Friday, recovering slightly from heavy losses this week, but remained close to the lowest levels in over a year as rising U.S. inventories and concern over global economic growth rattled markets. Brent crude oil was down 27 cents at $51.89 a barrel by 10:31 a.m. ET (1531 GMT), having earlier risen more than 3 percent. It had dropped 4.2 percent on Thursday. U.S. light crude was up 5 cents at $44.66, after rising 3.6 percent in early trade.Oil prices fell to their lowest in almost 18 months this week and are down more than 20 percent for the year, depressed by ample supplies that have filled fuel tanks worldwide.Stock markets in Europe and Asia rose on Friday after Wall Street ended a volatile session with big gains, but fears of further price swings and worries about U.S. politics kept investors cautious."For the time being, the stock market and the oil market will echo each other," said Ahn Yea-Ha, commodity analyst at Kiwoom Securities. "Global economic slowdown worries have been weighing on stock market movements, and oil prices are not free from those concerns." Stephen Innes, head of trading for Asia-Pacific at futures brokerage Oanda in Singapore, said crude prices had been pressured by slowing economic growth "coupled with the expectation of strong U.S. production in the new year".

WTI Extends Losses After Production Rebounds To Record - WTI has slid lower overnight following API's surprise large crude build (and no equity pump) and was unable to hold gains after a bigger than expected gasoline build (and tiny crude draw) along with a production rebound to record highs.If U.S. crude output rises, it’s likely to see more inventory builds, according to Stewart Glickman, an energy equity analyst at CFRA Research. “The Permian has surprised to the upside over the last couple of months,” he says. DOE:

  • Crude _46k (+3.4mm exp)
  • Cushing +799k
  • Gasoline +3.003mm (+1.0mm exp)
  • Distillates +2k

Tiny crude draw (4th week in a row) but another Cushing build along with a rise in gasoline stocks took the edge off for the bulls.

Oil prices steady near year-and-a-half lows ahead of New Year (Reuters) - Oil prices steadied on Friday after a week of volatile trading ahead of the New Year holiday, supported by a rise in U.S. equity markets but pressured by worries about a global glut of crude. Brent crude LCOc1 futures rose 4 cents to settle at $52.20 a barrel, off the session high of $53.80 a barrel. U.S. West Texas Intermediate (WTI) crude CLc1 futures rose 72 cents to settle at $45.33 a barrel, after earlier reaching $46.22 a barrel. Both benchmarks posted third straight weekly declines, with Brent losing about 3 percent and WTI nearly 0.4 percent. Crude prices were pushed higher by a rally in the U.S. equities market on Friday, markets participants said. Oil prices have tracked closely with Wall Street, and both asset classes saw volatile sessions throughout the week. Oil prices fell to their lowest in a year and a half earlier this week and are down more than 20 percent for 2018, depressed in part by rising supply. U.S. crude inventories were down by 46,000 barrels in the week to Dec. 21, the Energy Information Administration said, a smaller draw than the 2.9 million barrels analysts polled by Reuters had expected. Gasoline stocks rose by 3 million barrels, trouncing analysts’ expectations for a gain of 28,000 barrels. The crude draw “failed to spur much buying interest,” Jim Ritterbusch, president of Ritterbusch and Associates, said in a note. “Nonetheless, we viewed the data as price supportive with the exception of the 3 million barrel gasoline supply build.” U.S. energy firms added two oil rigs in the week to Dec. 28, General Electric Co’s Baker Hughes energy services firm said on Friday. The data was seen as an indication of future production. The United States has emerged as the world’s biggest crude producer this year, pumping 11.6 million barrels per day (bpd), more than Saudi Arabia or Russia. Oil production has been at or near record highs in the three countries. 

Oil Prices Set To Rebound In 2019 -- Most major investment banks are forecasting a rebound in oil prices in 2019. Price forecasts vary widely, but most have both WTI and Brent above current spot prices. Bank of America Merrill Lync, for instance, sees WTI averaging $59 per barrel in 2019. Citi is at the bearish end with a $49 price target. For Brent, Barclays says the benchmark will average $72, and a half dozen other investment banks have price estimates within a few dollars of that price. After suffering steep losses at the start of the week, financial markets rallied strongly on Wednesday and into Thursday, regaining all the lost ground from Monday. Weak industrial data from China released this week still shows signs of a slowdown.  King Salman reshuffled the Saudi cabinet on Thursday, swapping out top security personnel. But the maneuvers did not remove power from crown prince Mohammed bin Salman. The officials that were elevated are close to MbS.. After suggesting multiple times earlier this year that OPEC and its non-OPEC partners – led by Russia – would formalize a permanent governance architecture to coordinate their efforts, the group is now downplaying such a development. Russia’s energy minister Alexander Novak said that the increase in red tape, plus antitrust risks from the U.S. government, make the idea too risky. “There is a consensus that there will be no such organisation. That’s because it requires additional bureaucratic brouhaha in relation to financing, cartel, with the U.S. side,” Novak told reporters. Instead, Novak said they will continue to cooperate without institutionalizing the arrangement. “This won’t be an organisation, this is some mechanism of cooperation: to convene, to discuss, adopt some memorandums, joint resolutions,” Novak.

Iraqi politicians attack Trump’s visit to US troops as ‘blatant violation of sovereignty’ Iraqi politicians and military leaders have criticised Donald Trump’s visit to US troops in the country. Calling it a "blatant violation of Iraq’s sovereignty" Sabah al Saadi, the former head of Iraq’s integrity commission and leader of the powerful Islah parliamentary bloc, called for an emergency session of parliament. He described Mr Trump's visit as "aggressive" before claiming the US president "should know his limits."  He said: "The US occupation of Iraq is over.”His comments came as it was revealed that a meeting between the Mr Trump and Iraq's prime minister Adil Abdul-Mahdi had been cancelled.The US had informed Iraqi authorities of the visit prior to Mr Trump’s arrival, but Mr Abdul Mahdi’s office said in a statement that the pair had talked by telephone due to a “disagreement over how to conduct the meeting.”Iraqi politicians suggested that the two leaders had disagreed over where their planned meeting should take place. Mr Trump had asked to meet at the Ain al-Asad military base, an offer which Mr Abdul Mahdi declined.The Bina parliamentary bloc, Islah's rival in parliament and led by Iran-backed militia leader Hadi al-Amiri, also objected to Mr Trump’s trip to Iraq.“Trump’s visit is a flagrant and clear violation of diplomatic norms and shows his disdain and hostility in his dealings with the Iraqi government,” Bina said in a statement. The bloc also said Mr Trump’s visit “places many question marks on the nature of the US military presence and its real objectives, and what these objectives could pose to the security of Iraq.”

Russia Blames Fed Interest Hike For Low Oil Prices --  It seems that the Federal Reserve can’t get a break. For months, President Trump has been increasingly criticizing the Fed’s policy of incrementally increasing interest rates, a near-unprecedented move for an American president. After the most recent Fed move to hike interest rates by a quarter of a percentage point last week, Trump tweeted on Monday that the Fed was the “only problem our economy has.”  Trump’s remarks sent the White House scrambling on damage control mode, trying to ensure both domestic and global markets that the president was not about to try to remove Fed chairman Jerome Powell from office. Stock markets plunged the next day as worries over U.S. leadership waned as well as other economic concerns. . Now, criticism over Fed policy is coming from an unlikely place - Russia. The head of Russian oil giant Rosneft, Igor Sechin, said yesterday the slump in global oil prices was mostly linked to a fresh interest rate hike announced by the U.S. Federal Reserve last week. "This factor is the main one, which has an impact on the price (of oil)..." He added that he saw oil prices at $50-53 per barrel next year.Not only is it noteworthy that the head of a foreign oil company would criticize the Federal Reserve, but it could open the floodgates for more criticism over Fed policy, second-guessing and angst over what should remain an institution undeterred by both domestic and international politics.Another takeaway from Sechin’s comments is what is likely growing concern among not only Russian oil production companies, but Moscow itself, over oil prices that have plunged around 40 percent since hitting multi-year highs in October. Prices remain in the doldrums over concerns about the global economy, ongoing trade tensions between Washington and Beijing, though there is a temporary freeze on increased tariffs until at least March 2, slowing oil demand growth in 2019 and record oil production, mostly coming from the U.S., Russia and Saudi Arabia - the world’s top three oil producers.

Russia dashes plans to make its oil market alliance with OPEC permanent -- The marriage between Russia and OPEC is off.  Russian Energy Minister Alexander Novak on Friday poured cold water on long-simmering plans to make Moscow's alliance with OPEC and other oil producers permanent. The group of roughly two dozen producers has been managing global petroleum supply for the last two years in order to rebalance the market after a prolonged and punishing oil price downturn.  The effort succeeded in shrinking global crude stockpiles and boosting prices to four-year highs — until the market suddenly crashed again in early October. The group has agreed to a fresh round of output cuts that begin on Jan. 1.  For at least a year, OPEC Secretary General Mohammed Barkindo has discussed "institutionalizing" the arrangement. That would essentially form a supergroup of oil producers comprised of the 14-nation OPEC, Russia and nine other oil-exporting nations, which would be able to more quickly respond to problems in the market.  Energy ministers had been talking up progress towards the permanent arrangement as recently as their meeting in Vienna, Austria earlier this month. But on Friday, Novak said the prospects for that plan now look dim, Reuters reported. He said it would create too much red tape and expose the non-OPEC members of the alliance to potential sanctions from the U.S. government. "There is a consensus that there will be no such organization. That's because it requires additional bureaucratic brouhaha in relation to financing, cartel, with the U.S. side," Novak told reporters, according to Reuters.  The U.S. penalties in question are spelled out in legislation known as NOPEC, or the No Oil Producing and Exporting Cartels Act. The bill would authorize the Justice Department to sue groups like OPEC that are deemed cartels for price fixing and antitrust violations, stripping countries of sovereign immunity protections currently built into U.S. law. The legislation was first introduced in 2007 and was revived earlier this year in both chambers of Congress by bipartisan groups of lawmakers.

McKinsey Partner Imprisoned And Beaten By Saudi Arabia -- Following a string of stories published this year about its work for autocratic regimes in Saudi Arabia (including work that helped the Saudi government crack down on dissidents living abroad), China and elsewhere, vaunted consulting firm McKinsey has endured a firestorm of criticism. But a story published Friday by the Wall Street Journal revealed that a former partner for the consulting firm has languished in a Saudi prison since Crown Prince Mohammad bin Salman's now-infamous "anti-corruption purge" cash grab/political crackdown.But instead of rallying to its employees defense, McKinsey has apparently severed ties with Hani Khoja, the founder of Elixir Consulting, a local firm that McKinsey purchased, making Khoja a partner at the firm. Khoja's physical abuse and detention underscores "the ethical quandaries multinational companies face working in Saudi Arabia," WSJ said. And of course, news of the McKinsey partner's detention on vague "corruption" charges, the justification for which remains murky (some of WSJ's anonymous sources from within the kingdom said Khoja's relationship with the kingdom's economy minister is what lead to his arrest), could revive some of the international criticism about the kingdom's abysmal human rights record just as the controversy over the killing of Jamal Khashoggi was beginning to subside.

In Surprise Cabinet Reshuffle, Saudi King Salman Establishes Space Agency, Demotes Foreign Minister - The diplomatic crisis ignited by the killing of Jamal Khashoggi has largely subsided, and Crown Prince Mohammad bin Salman's grip on power is, if anything, even stronger than it was before (having faced down incipient challenges from one of his uncles). Which is why it's somewhat surprising to see MbS's ailing father, King Salman, order a limited cabinet reshuffle that moved around some of the key players in the scandal (including Adel al-Jubeir, who was one of the kingdom's key liaisons with western media during its response to Khashoggi's killing) and removed Prince Mohammed bin Nawaf al Saud as the Kingdom's ambassador to the UK, according to Saudi State TV station Al-Arabiya. Amid the reshuffle, the king ordered the creation of a new political and security council (presumably to help protect his chosen successor's flank) and - in a move that is reminiscent of a controversial decision made by President Trump this year - establishes a new Saudi space agency.

- Adel Al Jubeir relieved from position as Foreign Minister; named Minister of State for Foreign Affairs
- Ibrahim Alasssaf named as new Foreign Minister
- King also ordered formation of new political & security council

As a result of the reshuffle, more liberals and progressives will move into positions of power, suggesting that it could be part of the Kingdom's plan to move ahead with its 'liberalizing' reforms to try and rehabilitate MbS's tarnished reputation as a reformer.

Saudi King Appoints Former Ritz-Carlton Detainee as Foreign Minister  – King Salman of Saudi Arabia has appointed a new foreign minister as part of a major cabinet reshuffle, a royal decree has said. Ibrahim al-Assaf will replace Adel al-Jubeir, the foreign ministry said on Thursday citing the decree. Jubeir will be demoted to minister of state for foreign affairs, it added.Assaf, a former long-serving finance minister and a board member of national oil giant Saudi Aramco, was among several people detained as part of a “corruption crackdown” in November 2017.He was briefly detained in Riyadh’s Ritz-Carlton, alongside dozens of other prominent Saudi royals and businessmen. However Saudi authorities said an investigation found no evidence of wrongdoing and his name was cleared.Ali Shihabi, who heads Washington-based think tank The Arabia Foundation and is close to the Saudi government, downplayed Jubeir’s demotion on Twitter describing it as a way of “relieving him of the burden of day to day management of the Ministry”.“This change in the Foreign Ministry is more of a division of labor in a space that needs a lot of bandwidth than any demotion of Jubair [sic],” he wrote. The new Foreign Minister Ibrahim Al Assaf is a seasoned bureaucrat with decades of cabinet experience and membership in the National Security subcommitee of the cabinet. — Ali Shihabi (@aliShihabi) December 27, 2018 However, a Saudi source told Middle East Eye that Jubeir’s demotion rather than outright sacking has been regarded as an act of humiliation in the kingdom. According to MEE’s source, the government shake-up was at the behest of Saudi Arabia’s powerful crown prince, Mohammed bin Salman.  The crown prince wanted Jubeir humiliated, the source said, as punishment for his perceived failure to adequately shield Mohammed bin Salman from the scandal of Jamal Khashoggi’s murder. Khashoggi, a prominent critic of the Saudi leadership and journalist, was murdered by Saudi agents in Istanbul on 2 October. The CIA has concluded that Mohammed bin Salman was responsible for ordering the operation.

Saudi Arabia Hires Child Soldiers From Darfur To Fight In Yemen: Report - Saudi Arabia has hired “tens of thousands” of soldiers from Darfur, including many children, part of an outsourced army that is fighting the war in Yemen, theNew York Times reports. The kingdom’s war effort in Yemen, headed by Crown Prince Mohammed bin Salman, has been described by Saudi Officials as at attempt to save Yemenis from Iran-backed aggressors. Officials at the United Nations, however, maintain that the conflict in Yemen has spiraled into the world’s most dire humanitarian crisis. A blockade carried out by Saudi Arabia and the United Arab Emirates has put up to 12 million people at risk of starvation and caused the death of 85,000 children, aid groups have reportedly said. According to The Times, up to 14,000 militiamen from Sudan have been fighting alongside Saudi-backed forces in Yemen “at any time for nearly four years.” Many of these militiamen are actually children. Nearly all of these Sudanese fighters appear to be from Darfur, where approximately 300,000 people died over a 12-year period in a fight over farmland and other disappearing resources, The Times reports. 

Iranian Ship Fires Rockets Near US Aircraft Carrier In Persian Gulf - A US aircraft carrier sailed into the Persian Gulf on Friday amid Iranian threats to close the Strait of Hormuz, the only sea passage from the Gulf to the open ocean and strategic waterway linking Middle East crude producers to crucial world markets. Some 30 Iranian Revolutionary Guard vessels fired rockets in the waters patrolled by a US aircraft carrier strike group led by USS John C. Stennis on Friday, the AP reported. At one point, one small ship launched what looked like a “commercial-grade” drone to film the US vessels, said the AP report, adding that journalists on the Stennis were also filming the Iranian boats. “The Iranian craft drove in front of our ship and stopped, and tried to capture their own sort of picture of what was going on”, Capt. Randy Peck, the commanding officer of the Stennis, was cited by AP as saying. There were no immediate reports of the Stennis’ arrival in the Persian Gulf in Iranian media. The US Navy statement also noted that IRGC speedboats fired rockets that weren't pointed at American vessels. The Stennis-led group was deployed on December 8, thus ending the longest period in two decades that a carrier group was absent from the region. The vessels took part in a joint naval exercise with the Essex Amphibious Ready Group (ARG) on 12 December in the Arabian Sea. Earlier on Friday, Mehr News Agency quoted Brigadier General Mohammad Pakpour, commander of IRG ground forces, as saying that the final stage of the “Great Prophet 12” drills would kick off on Saturday and include “rapid reaction units, airborne units, demolition and combat units, mid-range missiles and the third marine division”. “We pose no threat to any country but if the enemies seek to implement their malicious intentions and attack us, we will be absolutely aggressive and attack the enemies with all might and we are practicing these tactics in these exercises”, Mehr News Agency cited Pakpour as saying.

Arab League set to readmit Syria eight years after expulsion - Gulf nations are moving to readmit Syria into the Arab League, eight years after Damascus was expelled from the regional bloc over its brutal repression of peaceful protests against President Bashar al-Assad. At some point in the next year it is likely Assad will be welcomed on to a stage to once again take his place among the Arab world’s leaders, sources say. Shoulder to shoulder with the Saudi crown prince, Mohammed bin Salman, and Egypt’s latest autocrat, General Abdel Fatah al-Sisi, the moment will mark the definitive death of the Arab spring, the hopes of the region’s popular revolutions crushed by the newest generation of Middle Eastern strongmen. Syria was thrown out of the Arab League in 2011 over its violent response to opposition dissent, a move that failed to stem the bloodshed that spiralled into civil war. Now though, a regional thaw is already under way. Earlier in December, the Sudanese president, Omar al-Bashir, became the first Arab League leader to visit Syria in eight years, a visit widely interpreted as a gesture of friendship on behalf of Saudi Arabia, which has shored up ties with Khartoum in recent years. Pro-government media outlets posted pictures of the two leaders shaking hands and grasping each other’s arms on a red carpet leading from the Russian jet that ferried Bashir to Damascus along with the hashtag “More are yet to come”. Diplomatic sources have told the Guardian there is a growing consensus among the league’s 22 members that Syria should be readmitted to the alliance of Arab nations, although the US is pressuring both Riyadh and Cairo to hold off on demanding a vote from members. The move comes despite Assad’s intimate ties to Iran, to whom the regime owes its survival. For Saudi Arabia and the UAE, re-embracing Syria is a new strategy aimed at pivoting Assad away from Tehran’s sphere of influence, fuelled by the promise of normalised trade relations and reconstruction money.

Turkey Bolsters Troop Levels in Syria, Threatens to Eliminate Syrian Kurds  — Turkey on Saturday sent military reinforcements to northern Syria near an area controlled by Kurdish forces as Ankara threatens to carry out a fresh offensive to wipe them out, a war monitor said.The move comes after US President Donald Trump’s surprise announcement on Wednesday of the withdrawal of American troops stationed in northeastern Syria alongside Kurdish fighters, a long-time enemy of Turkey.Washington has for years supported the Kurdish-led Syrian Democratic Forces (SDF) in the fight against the Islamic State (IS) group in Syria, as part of an international anti-militant coalition dominated by the People’s Protection Units (YPG).But on Wednesday, Trump said he was ordering a withdrawal of about 2,000 US troops in Syria because IS had been defeated, an assessment disputed by many. America’s worst nightmare is to have reliable allies — like the Kurds who have fought so bravely against ISIS — abandoned and destroyed.— Lindsey Graham (@LindseyGrahamSC) December 21, 2018Turkey’s foreign minister said on Friday that while his country had delayed operations east of the Euphrates River, it did not mean the country had given up on them.“It doesn’t mean that we gave up on our determination to launch operations against the YPG in the future,” Mevlut Cavusoglu told Turkish state broadcaster TRT News, as cited by Hurriyet.He said postponing military operations in the region was a “logical” decision for preventing “friendly fire,” following the US decision to withdraw.

Turkish-Backed Fighters Preparing to Replace US Forces in Syria  – Turkey-backed rebel fighters in Syria are gearing up for a major deployment into northeastern Syria, with an eye on replacing the US ground troops in the area. Turkey is planning to invade in the course of this replacement, and is coordinating with the US and the pullout and deployment.  President Trump has said the withdrawal will be “slow,” and there has been no public timetable on troop movements. The rebels in question, however, are moving closer to the city of Manbij, which Turkey has indicated will be the first target.  Turkish FM Mevlut Cavusoglu addressed the situation in comments to reporters on Tuesday, saying that while the timeline of deployment may be related to coordination with the US, Turkey remains “determined” to expel the Kurds from Syria’s northeast.  Kurdish officials say that they are re-positioning their own forces in a plan to defend the area from invading Turkish and allied forces. The likelihood is that this will begin after the Manbij invasion, as few Kurds were believed to have remained in that city.

US troop withdrawal heralds the New Syria - Contrary to doomsday predictions about the fate of Syria after US President Donald Trump’s “total withdrawal” of American troops, what may happen is an overall easing of tensions in a more relaxed post-conflict Syrian order where even Israel may have much to feel comfortable about. With the Pentagon issuing the formal order on Syrian withdrawal, a big uncertainty has ended: Trump’s decision is getting implemented. Attention now turns downstream to the US troop withdrawal. After a phone conversation last Sunday with Turkish President Recep Tayyip Erdogan, the second within a week, to discuss the withdrawal plan, Trump said it would be a “slow, highly coordinated pullout.” A Turkish readout also confirmed this: “The two leaders agreed to ensure coordination between their countries’ military, diplomatic and other officials to avoid a power vacuum which could result following any abuse of the withdrawal and transition phase in Syria.” On Monday, Erdogan disclosed that a US military delegation would visit Turkey this week to discuss details. On the same day, Turkish Foreign Minister Mevlut Cavusoglu said in Ankara that he would be traveling to Russia to “evaluate the process” of US forces’ withdrawal. No power vacuum In effect, Turkey will have back-to-back discussions with the US and Russia, since the two great powers are hardly on talking terms. Meanwhile, Turkish forces have concentrated on the border with Syria and Cavusoglu said they “plan to enter areas east of the Euphrates River as soon as possible.” He added that Turkey was “working to make sure there is no vacuum after the United States pulls out of Syria, which terrorist groups will be eager to fill.” Indeed, things are not so straightforward – they never were in northern Syria. The Turkish forces will be overstretched if they occupy the entire swath of land to the east of the Euphrates that the US will be vacating, which amounts to roughly one-third of Syria. The Kurds and Arab tribes will not welcome Turkish occupation, while the residual ISIS groups may want to take advantage of any power vacuum left by the departing Americans. The Syrian government is also steadfast in its commitment to regain control of all its territory, especially the regions east of the Euphrates which contain Syria’s oilfields and water resources. Controlling the oilfields is vital for Damascus as they provide a major source of income.

US-led anti-ISIS coalition announces Syria strikes after Trump orders withdrawal -- The U.S.-led military coalition fighting the Islamic State in Iraq and Syria (ISIS) announced Tuesday airstrikes and coordinated attacks against the terrorist group’s strongholds in Syria, days after President Trump ordered the withdrawal of U.S. troops from the country. The attacks were carried out last week, from Dec. 16 to 22, in the Middle Euphrates River Valley, according to the news release from Operation Inherent Resolve. The coordinated attacks destroyed ISIS logistics facilities and staging areas, which “severely degraded” the group and “removed several hundred” of its fighters from the battlefield, the release said. The airstrikes also targeted several ISIS financial centers and capabilities in Susah and As Shafah, which the release described as dealing a “significant blow” to the terrorist group’s ability to finance its activities. “ISIS presents a very real threat to the long-term stability in this region and our mission remains the same, the enduring defeat of ISIS,” the coalition’s deputy commander, U.K. Maj. Gen. Christopher Ghika, said in the release. The released added that “coalition partner forces continue to advance through the last remaining stronghold ISIS has in the region.” On Wednesday, Trump announced that he was ordering the withdrawal of the 2,000 U.S. troops fighting ISIS in Syria. In announcing the withdrawal, Trump first declared victory over the group. He has since said others, including Turkey, Russia, Iran and Syria, can deal with the remaining ISIS fighters in Syria. Trump’s decision to withdraw sparked the resignations of Defense Secretary James Mattis and special envoy to the anti-ISIS coalition, Brett McGurk..

Two new US bases in western Iraq - "The U.S. military has established two new bases along the Iraqi-Syrian border, the Turkish state-owned Anadolu Agency reported on Tuesday. Citing an Iraqi official, the Anadolu Agency said the U.S. military established the two bases in the western countryside of the Al-Anbar. “The U.S. Army has established two new military facilities in uninhabited parts of the province,” Farhan al-Duleimi, a member of Anbar’s provisional council, told Anadolu Agency. The first base, he said, had been set up in the northern Rumana subdistrict (in Anbar’s Al-Qaim district) near the Syrian border, roughly 360 kilometers west of provincial capital Ramadi. The second base, he added, had been set up east of the city of Al-Rutbah, roughly 310 kilometers west of Ramadi and less than 100 kilometers from the Syrian border. According to al-Duleimi, the twin bases are intended to help Iraqi forces “secure the country’s borders and prevent infiltrations by the Daesh terrorist group.” “Scores of U.S. soldiers are currently stationed at the two bases, along with drones and other equipment,” al-Duleimi said without elaborating." 

Who Was Secretly Behind America's Invading And Occupying Syria? - The invasion and occupation of Syria by tens of thousands of jihadists who were recruited from around the world to overthrow Syria’s President Bashar al-Assad, was financed mainly by US taxpayers and by the world’s wealthiest family, the Sauds, who own Saudi Arabia and the world’s largest oil company, Aramco. America’s international oil companies and major think tanksand ‘charitable’ foundations were also supportive and providing propaganda for the operation, but the main financing for it came from America’s taxpayers, and from the Saud family and from the Government that they own. One of the best articles that the New York Times ever published was by Mark Mazzetti and Matt Apuzzo, on 23 January 2016, "US Relies Heavily on Saudi Money to Support Syrian Rebels”. They reported that,"the C.I.A. and its Saudi counterpart have maintained an unusual arrangement for the rebel-training mission, which the Americans have code-named Timber Sycamore. Under the deal, current and former administration officials said, the Saudis contribute both weapons and large sums of money, and the C.I.A takes the lead in training the rebels. ...From the moment the C.I.A. operation was started, Saudi money supported it.” Furthermore, "The White House has embraced the covert financing from Saudi Arabia — and from Qatar, Jordan and Turkey.” But "American officials said Saudi Arabia was by far the largest contributor to the operation.” The invasion and occupation of Syria by jihadists from around the world was primarily a Saud operation, though it was managed mainly by the US Government. Prior to the failed US-backed coup-attempt on 15 July 2015 to replace Tayyip Erdogan as Turkey’s President, Turkey was part of the U.S-Saudi alliance to overthrow and replace Syria’s Government. But afterwards, Turkey increasingly switched against the US and Sauds, and toward instead supporting the target of the Sauds and of America's aristocrats: Syria. And, so, Turkey has increasingly joined Syria's alliance, which includes Iran and Russia. That's one of the major geopolitical changes in recent decades.

Netanyahu Vows To Intensify Attacks In Syria After US Troop Withdrawal - Speaking at the fifth Israel-Greece-Cyprus summit held in the southern city of Beersheba on Thursday, Israeli Prime Minister Benjamin Netanyahu pledged to intensify military action in Syria after the White House's unexpected order for all US troops to pullout out of the country — an effort that's expected to be complete within months. “We will continue to act in Syria to prevent Iran’s efforts to militarily entrench itself against us. We are not reducing our efforts, we will increase our efforts. I know that we do so with the full support and backing of the US,” Netanyahu said. The prime minister further revealed he was personally warned in advance that the American pullout was imminent during during phone conversations with President Trump on Monday and US Secretary of State Mike Pompeo on Tuesday.Netanyahu has long lobbied the White House to take more aggressive action inside Syria while also praising and pledging support for all past US bombings targeting Damascus and the Syrian Army. Israeli officials have for years touted claims of Iran "taking control" and becoming deeply "entrenched" in Syria — something a number of analysts have doubted given that Damascus' secular Baathist political ideology doesn't mesh with Iran's hardline theocratic Shi'ism, beyond being close strategic allies confronting regional threats (namely the Sunni Gulf-NATO-Israeli axis). The prime minister also addressed ongoing IDF operations to destroy "attack tunnels" Hezbollah dug along the northern border, saying “These tunnels were built by Hezbollah with direct support and funding from Iran.” Continuing his well-known Iranian expansion theme, Netanyahu continued: “This is the Iranian web of aggression in the Middle East, which also terrorizes Europe and the entire world. Israel continues its operation against the terror tunnels and will do so until its completion. As we speak, we are employing means to neutralize these tunnels.” Netanyahu noted that his prior phone call with Trump this week focused on countering the Iran threat in the region.

Netanyahu's coalition collapses; Israel heading to elections on April  9th - Prime Minister Benjamin Netanyahu and the parties in his coalition decided Monday to disperse the Knesset this week and initiate an early general election on April 9, 2019. Netanyahu boasted to his Likud faction that his coalition lasted four years and had key diplomatic, security and economic accomplishments. He said he could not initiate the election six weeks ago, when Avigdor Liberman resigned as Defense Minister and sparked a coalition crisis, because he wanted to first complete destroying tunnels on the Lebanese border in Operation Northern Shield. "With God's help, we will win," said Netanyahu, who vowed to form the same coalition after the election. Leaders of coalition and opposition parties met with Knesset Speaker Yuli Edelstein summoned the party heads to formalize the process of dispersing the Knesset and come to an agreed-upon election date. Edelstein expressed pride in many of the laws the Knesset passed over its four years, specifically mentioning the Jewish Nation-State Law, but said he was disappointed in many lawmakers’ conduct and “verbal violence.” He expressed hope that the next Knesset will engage in more civil discourse. Justice Minister Ayelet Shaked said her ministry will begin working on the bill to dissolve the Knesset, which is set to be brought to all three plenum votes on Wednesday. Following the announcement of an election, party leaders made statements declaring victory. Yesh Atid chairman Yair Lapid, Zionist Union leader Avi Gabbay, Yisrael Beytenu leader Avigdor Liberman all predicted that they would become prime minister in the election and the Joint List’s Ayman Odeh said Israeli Arabs will come out to vote in droves. Former prime minister Ehud Barak called it “the most important election since the assassination of Yitzhak Rabin.”

Israel’s Netanyahu calls early election amid corruption charges  -- Benyamin Netanyahu announced on Monday that he will dissolve Parliament and hold early elections on April 9, instead of November as required by law, precipitating a short election campaign by Israeli standards.It follows the decision of the State Prosecutor’s Office on December 19 to recommend charging him with bribery on two counts. This, along with similar recommendations by the Tax Authority prosecutors and the police, makes it almost inevitable that Attorney General Avichai Mandelblit, who as a friend of Netanyahu has long stalled on the issue, will press charges.The resignation of Defence Minister and Israel Beiteinu (Israel is Our Home) Party leader Avigdor Lieberman last month that left Netanyahu’s fractious Likud-led coalition with a one-seat majority made an early election all but certain.Lieberman had resigned in protest, amid furious denunciations by Netanyahu’s fascistic coalition partners of the most right-wing Prime Minister in Israel’s 70-year history for being too “soft” on Gaza, in the wake of Netanyahu’s agreement to a ceasefire there with Hamas, the bourgeois Islamist group that controls the impoverished Israeli-occupied Palestinian territory.While the polls have long given Netanyahu and his Likud party a clear lead over his rivals, Netanyahu sought to use what little time he had left to choose the date that would give him maximum advantage.Determined not to be outdone by his right-wing partners, Netanyahu sought to present himself as “Mr. Security,” dispatching the Israel Defense Forces (IDF)—amid a fanfare of publicity—to blow up some abandoned tunnels under Israel’s northern border built by Hezbollah, the militant Shi’ite group that has significant support in Lebanon, and whose existence had long been known.Earlier this month, he authorized a series of provocative military operations following a drive-by shooting of Israeli settlers on the Palestinian West Bank that led to the death of six Palestinians and the arrest of at least 100 more in protests that erupted over Israeli brutality in Nablus, Tulkarem, Ramallah, Hebron and al-Bireh. Netanyahu followed up this brutal crackdown with a pledge to his right-wing base to expand the settlements in the West Bank and East Jerusalem, which Israel annexed illegally after seizing it during the 1967 June war.

Facebook's Secret Censorship Manual Exposed as Platform Takes Down Video About Israel Terrorizing Palestinians - After the New York Times on Thursday published an exposé of Facebook's global censorship rulebook, journalist Rania Khalek called out the social media giant for taking down a video in which she explains how, "on top of being occupied, colonized territory, Palestine is Israel's personal laboratory for testing, refining, and showcasing methods and weapons of domination and control." Tweeting out the Times report—and noting that while, according to the newspaper, "moderators were told to hunt down and remove rumors wrongly accusing an Israeli soldier of killing a Palestinian medic," Israeli soldiers did fatally shoot an unarmed 21-year-old female paramedic earlier this year—she announced Friday morning that Facebook had "just removed" her video. Here is my video on how Israel uses Palestine as a weapons testing laboratory, which Facebook erased without explanation.  — Rania Khalek (@RaniaKhalek) December 28, 2018 After she and other prominent reporters issued public complaints, Khalek announced a couple hours later that Facebook had restored the video. "Still this is a good reminder that at the moment these social media giants have the ability to disappear content as they please," she said in a tweet. "It's creepy and alarming and should be loudly opposed." Among those who highlighted Facebook's censorship of Khalek's video on Friday were Ben Norton of The Real News Network—who called it an "excellent, informative video report"—and The Intercept's Glenn Greenwald, who pointed out that the platform has been silencing Palestinian and pro-Palestinian voices for more than a year.

EU slams Israeli settlement plans  - The European Union on Thursday reiterated its opposition to Israel's settlement activities in the occupied West Bank after Israeli authorities advanced plans for nearly 2,200 settlement homes there."The European Union's position on Israeli settlement construction and related activities is clear and remains unchanged: All settlement activity is illegal under international law and it undermines the viability of the two-state solution and the prospects for a lasting peace," EU spokesperson for foreign affairs and security policy Maja Kocijancic said a statement.The approvals are the first of their kind since snap elections were called earlier this week.On Wednesday, a settlement watchdog, Peace Now, said the plans were at various stages in the approval process, with 1,159 housing units having received the final approvals before building permits can be issued, and 1,032 at an earlier stage. The settlements in the West Bank are considered illegal under international law as they are built on land that Palestinians see as part of their future independent state.

Israel Strikes Syria on Christmas in First Attack Since US Troops Ordered to Withdraw -- On Christmas Day, Israel launched what Bloomberg described as its first airstrike in Syria since President Trump’s “shocking”announcement that he would withdraw all US troops from Syrian territory (to the disgust of US national security officials and every neo-con anywhere). The strike targeted an ammunition depot in the Damascus countryside believed to belong either to Iran’s Revolutionary Guard, or its Lebanon-based proxy Hezbollah. According to Syrian and Russian officials, the airstrike was launched from Lebanese territory.  Air defenses intercepted most Israeli missiles, state-run Syrian Arab News Agency reported, citing an unidentified military official. However the U.K.-based Syrian observatory for human rights that monitors the war said three targets were hit, including weapons depots belonging to Iran or its Lebanese Hezbollah proxy, and that projectiles had fallen in the Israeli-occupied section of the Golan Heights.  In response to the US’s decision to withdraw, Israeli Prime Minister Benjamin Netanyahu said the IDF would “increase efforts” against Tehran’s entrenchment in Syria as a result. Israel reportedly launched six f-16 fighters from Lebanese territory to carry out the strike. The Russian Ministry of Defense claimed that 14 of 16 missiles launched by Israel had been intercepted, and that the strike had occurred while civilian planes were landing at nearby Damascus airport, threatening innocent lives. Some projectiles also fell in the Israeli-occupied section of the Golan Heights.  Israel has yet to acknowledge the strike.

Russia condemns 'Israeli' air strikes on Syria - Russia has branded as "provocative" an alleged Israeli air strike on Syria late on Tuesday. Reports from Syria said an arms depot in Qatifah, about 40km (25 miles) north-east of Damascus, was hit, injuring three soldiers. Israel has not commented, but after the reported strikes it said it had fired at a Syrian anti-aircraft missile. It did not report any damage or injuries. Israel has carried out dozens of strikes on Syria in recent years. It says it is acting to thwart advanced weapons transfers from Iran to the Lebanese pro-Iranian Hezbollah movement and the strengthening of Iran's military presence in Syria. Israel considers Iran and Hezbollah to pose a particularly dangerous threat. The foreign ministry of Russia, a key Syrian ally, said it was "very concerned" by the alleged Israeli air strikes. "The provocative actions of the Israeli air force... directly threatened two airliners," it said. The statement said the unidentified airliners "not from Russia, were preparing to land at the airports of Beirut and Damascus". The Syrian military said the attacks were carried out from within Lebanese air space. Syrian state news agency, Sana, said most of the missiles were intercepted

Israel Preparing For Comprehensive War In Syria- Report - Russia’s Nezavisimaya Gazeta said that Israel is preparing for a comprehensive war on Syria following the US’ withdrawal from the country. The newspaper said that the decision of US President Donald Trump to withdraw American troops from Syria has left Israel forced to face the Iranian presence in Syria with its troops alone.The newspaper quoted Israel’s former defence minister Avigdor Lieberman as saying that:“the United States’ withdrawal from Syria greatly increases the likelihood of a large-scale conflict in the north, whether in Lebanon or Syria”.Lieberman added that “the Americans’ departure will raise the morale of Syrian President Bashar Al-Assad and his allies, Iran and Lebanese Hezbollah.”The Russian daily quoted Russian military expert Yuri Liamin as saying that “Iran cannot interpret this decision as a blank cheque”. “We must not forget that Turkey is now threatening to launch a new military operation against the Syrian Kurds. This operation may lead to real Turkish control over a significant part of northern Syria. Such development is unlikely to please the Syrian authorities and its Iranian ally,” he added.

Syrian government troops deployed to flashpoint city of Manbij --The Syrian government announced Friday that its troops had entered the northeastern city of Manbij in an apparent bid to forestall a Turkish invasion aimed at driving out the Syrian Kurdish YPG militia.The YPG, which has served as the Pentagon’s principal proxy ground force in controlling nearly a third of the Syrian territory near the Turkish border, is regarded by the government of President Recep Tayyip Erdogan as a branch of the Turkish Kurdish PKK, against which Turkey’s security forces have waged a bloody, decades-long counterinsurgency operation.Erdogan vowed earlier this month that the Turkish military would intervene to push the YPG back from the border. US President Donald Trump’s December 19 announcement that he was ordering the withdrawal of all 2,000-plus US troops from Syria and leaving the military campaign against the Islamic State of Iraq and Syria (ISIS) in Ankara’s hands appeared to open the door to a Turkish intervention and a broader scramble for control of northeastern Syria, which consists largely of sparsely populated desert, but also contains the country’s main oil and natural gas reserves.In a statement posted on Twitter, the YPG said that it had invited the Syrian government of President Bashar al-Assad “to send its armed forces to take over these positions and protect Manbij in the face of Turkish threats.” The tweet, which was sent in the morning, was subsequently deleted and then reposted later in the day, likely reflecting the tensions between the YPG and its US military patrons following Trump’s announcement.While the Syrian government issued a statement saying that its troops had entered Manbij, a city of approximately 100,000, and hoisted the national flag, the US military, which still has special operations units based near the city, as well as some local residents speaking to the Western media denied that the Syrian army was deployed in the city.  Manbij fell to US and Turkish-backed “rebels” in 2012, including the Al Qaeda-linked Al Nusra Front, and was subsequently overrun by ISIS in 2014. In the summer of 2016 the so-called Syrian Democratic Forces, the YPG-dominated US ground proxy force, took control of the city.

Syria Sitrep – Army To Regain Northeastern Territory – Political Isolation Ends -- The fallout from U.S. president Trump's decision to retreat from Syria develops as expected. Trump had announced a rapid draw down of U.S. troops in Syria. Later he spoke of a controlled process that would allow Turkey to take over the U.S. occupied areas in northeast Syria. That plan, probably initiated by National Security Advisor John Bolton, is totally unrealistic. Such an wide ranging occupation, which would be resisted by many powerful forces, is not in Turkey's interest. Nevertheless, the Turkish president Erdogan will use the threat of a Turkish invasion to press for a dismantling of the Kurdish YPG forces which the U.S. trained and equipped. This morning the Syrian Arab Army (red) announced that it entered Manbij, west of the Euphrates. It established itself on the contact line between the Turkish supported forces (green) and the U.S. supported Kurdish YPG (yellow). The Syrian flag was raised in Manbij city. The move comes after U.S. troops and their Kurdish proxy forces voluntarily retreated from the area. Manbij was threatened by the Turkish military and its Jihadi proxy forces. To prevent a Turkish onslaught, the local armed groups, who collaborated with the U.S. military, invited the Syrian army to take over. This pattern will repeat elsewhere. A Kurdish delegation is currently in Russia to negotiate a further take over of the U.S. occupied northeastern provinces of Hasaka and Qamishli by Syrian government forces. The Kurds still hope for some autonomy from the Syrian government that allows them to keep their armed forces. But neither Damascus, nor anyone else, will ever agree to that. There will only be one armed force in Syria, the Syrian Arab Army. It is possible though, that some Kurdish units will be integrated within it.

Is China Getting Too Close To Israel? -- Two multi-billion dollar Chinese seaports near critical Israeli sites are raising concerns over potential security issues and relations with Washington ... China is constructing seaports at two sites where the US 6th Fleet deploys, in Haifa next to Israel’s main naval base and Ashdod near Tel Aviv, prompting concerns about China’s military potential in the Mediterranean Sea and Middle East. “The civilian [Chinese] port in Haifa abuts the exit route from the adjacent [Israeli] navy base, where the Israeli submarine fleet is stationed and which, according to foreign media reports, maintains a second-strike capability to launch nuclear missiles,” Israel’s Haaretz media reported.  “No one in Israel thought about the strategic ramifications,” Haaretz said in September. The guided-missile destroyer USS Arleigh Burke visited Haifa on October 25 in support of the 6th Fleet which is headquartered in Naples, Italy.Shanghai International Port Group (SIPG) signed the Haifa contract in 2015, began construction in June, and is to operate the Bayport Terminal for 25 years starting from 2021.SIPG signed memorandums of understanding with U.S. ports in Seattle, Washington in 2006 and Georgia Ports Authority in 2004, plus Barcelona, Spain, in 2006.

US Navy Could Abandon Major Israeli Port After Chinese Firms Begin Operations - The US and Chinese navies may find themselves unlikely neighbors in the Mediterranean as Israel's partnership with Beijing on constructing sea ports at two sites where the US 6th Fleet deploys is set to begin, which is raising eyebrows in Washington and could ultimately result in the Navy abandoning a key Israeli port altogether. The US Navy has acknowledged that its longstanding operations in Haifa may change once a Chinese firm takes over the civilian port in 2021, prompting Israel’s national security cabinet to revisit the arrangement, The Jerusalem Post has learnedCurrently the Shanghai International Port Group (SIPG) is set to manage Israel's largest port at Haifa as part of a contract to be inagurated in 2021, which will run for 25 years, and a separate Chinese firm was recently awarded a contract to construct a new port in the southern Israeli city of Ashdod, next to Israel's main naval base near Tel Aviv. Both deals are what both Washington officials and some Israeli generals have expressed deep concerns about of late, with the latter multi-billion dollar contract having been awarded to China Harbor Engineering, one of China’s biggest government-owned enterprises.For example in September Israeli Brigadier General Shaul Horev, who had previously served as navy chief of staff and chairman of the Atomic Energy Commission, loudly questioned the move in Israeli press, saying “When China acquires ports it does so under the guise of maintaining a trade route from the Indian Ocean via the Suez Canal to Europe, such as the port of Piraeus in Greece. Does an economic horizon like this have a security impact?"  And Israel Haaretz media recently reported of the growing controversy, “The civilian [Chinese] port in Haifa abuts the exit route from the adjacent [Israeli] navy base, where the Israeli submarine fleet is stationed and which, according to foreign media reports, maintains a second-strike capability to launch nuclear missiles.”