natural gas price at 18 month low after first January storage build on record; largest jump in ​commercial crude supplies in 22 months

natural gas prices are at an 18 month low after first January inventory increase on record; ​commercial crude oil inventories​ saw largest jump in 22 months, but the Strategic Petroleum Reserve fell to a new 39 year low​

US oil prices rose every day this week and finished higher for the fourth time in five weeks following a reopening of China and signs of easing inflation in the US....after falling 8.1% to $73.77 a barrel last week as global recession worries weighed on the outlook for demand, the contract price for the benchmark US light sweet crude for February delivery advanced more than 3% in Asian trading early Monday after China reopened its borders to international visitors for the first time since it imposed travel restrictions in March 2020, and held onto 86 cents of that gain to settle at $74.63 on NYMEX in New York as bulls in the market bet China’s reopening of its economy from tough COVID policies would boost oil consumption....prices edged higher for a fourth straight day on Tuesday as traders awaited U.S. oil inventory data and a bellweather report on inflation scheduled later in the week, but again pared early gains to settle 49 cents higher at $75.12 a barrel even as the EIA forecast record global petroleum consumption next year, as the dollar hovered at seven-month lows...however, oil prices slid after the market closed following American Petroleum Institute data showing a huge crude inventory jump and opened lower on Wednesday, but shrugged off an equally bearish EIA report confirming that huge crude inventory build and rallied to close $2.29 higher at $77.41 a barrel, supported by reports indicating that G7 countries would soon target Russian refined products with sanctions in addition to crude sanctions, which could raise the risk of a more meaningful decline in Russian supplies to global markets....oil prices continued their upward trend on Thursday amid ongoing concerns over the impact of sanctions on Russian crude output, and on expectations of increasing demand in China that could give a boost to the overall global economic outlook, and then rallied to settle 98 cents higher at $78.39 a barrel after the US consumer price index showed inflation fell for the first time since May 2020, thus taking pressure off the Fed as it shifts to smaller rate increases beginning next month...oil prices extended their gains into a seventh straight session in early trading on Friday, on expectations of improved demand growth in China and hopes for less aggressive rate hikes in the United States, and rallied to settle $1.47 or nearly 2% higher at $79.86 a barrel, after data showed easing inflation and a strong labor market was supporting US consumer spending. thus scoring an 8.3% gain for the week and posting the largest weekly net and percentage gain in more than three months...

US natural gas prices, on the other hand, finished lower for the sixth time in seven weeks, after the US saw its first January addition to gas inventories on record...after falling 17.1% to a one year low of $3.710 per mmBTU last week as extended forecasts for exceptional mid-winter warmth drove prices lower, the contract price of US natural gas for February delivery opened 13 cents higher on Monday after the latest forecast data teased a colder U.S. pattern arriving Jan. 23-27 “to finally break” from the current stretch of unseasonably mild temperatures, and settled 20 cents higher at $3.910 per mmBTU as forecasts for slightly more heating demand next week than had been expected led short sellers to take profits after prices had fallen to a one-year low the prior week...however, after again opening 13 cents higher on Tuesday, prices reversed lower and tumbled to their lowest in a year on rising output and the potential that "U.S. natural gas demand could be on track to hit record lows for January, settling down 27.1 cents at $3.639 per mmBTU...after trading lower most of Wednesday, natural gas prices ultimately eked out a 3.2-cent gain on the day amid bargain buying in the final hour of the trading session....natural gas prices tumbled more than 5% early on Thursday, after the EIA reported the first January addition to natural gas storage on record, but reversed late in session to eke out another 2.4 cent gain at $3.695 per mmBTU on the potential colder-than-normal weather coming in late January and uncertainty about when the Freeport LNG export plant in Texas would end its seven-month outage....but natural gas prices plunged 27.6 cents or 7.5% to an 18-month low of $3.419 per mmBTU on Friday on growing expectations that the Freeport plant would remain shut until February or later, and on forecasts that the weather would turn mild again in February following a late January freeze, and thus finished 7.8% lower for the week...

The EIA's natural gas storage report for the week ending January 6th indicated that the amount of working natural gas held in underground storage in the US rose by 11 billion cubic feet to 2,902 billion cubic feet by the end of the week, the first January increase on record, which still left our gas supplies 140 billion cubic feet, or 4.6% less than the 3,042 billion cubic feet that were in storage on January 6th of last year, and 40 billion cubic feet, or 1.4% less than the five-year average of 2,942 billion cubic feet of natural gas that were in storage as of the 6th of January over the most recent five years....the 11 billion cubic foot addition to US natural gas working storage for the cited week surprised a Reuters poll of analysts whose average forecast called for a 13 billion cubic feet withdrawal of gas, and contrasts with the 157 billion cubic feet that were pulled out of natural gas storage during the corresponding week of 2021, and the average 159 billion cubic feet of natural gas that have typically been withdrawn from our natural gas storage during the same winter week over the past 5 years...

The Latest US Oil Supply and Disposition Data from the EIA

US oil data from the US Energy Information Administration for the week ending January 6th indicated that after an increase in our oil imports and a near record drop in our oil exports, we had surplus oil left to add to our stored commercial crude supplies for the 4th time in 9 weeks, and for the 22nd time in the past 38 weeks, despite a partial rebound in our refinery throughput... Our imports of crude oil rose by an average of 637,000 barrels per day to average 6,350,000 barrels per day, after falling by an average of 540,000 barrels per day during the prior week, while our exports of crude oil fell by 2,070,000 barrels per day to average 2,137,000 barrels per day, which combined meant that the net of our trade in oil worked out to a net import average of 4,213,000 barrels of oil per day during the week ending January 6th, 2,707,000 more barrels per day than the net of our imports minus our exports during the prior week. Over the same period, production of crude from US wells was reportedly 100,000 barrels per day higher at 12,200,000 barrels per day, and hence our daily supply of oil from the net of our international trade in oil and from domestic well production appears to have averaged a total of 16,413,000 barrels per day during the January 6th reporting week…

Meanwhile, US oil refineries reported they were processing an average of 14,651,000 barrels of crude per day during the week ending January 6th, an average of 831,000 more barrels per day than the amount of oil that our refineries processed during the prior week, while over the same period the EIA’s surveys indicated that a net average of 2,595,000 barrels of oil per day were being added to the supplies of oil stored in the US. So, based on that reported & estimated data, the crude oil figures from the EIA for the week ending January 6th appears to indicate that our total working supply of oil from net imports and from oilfield production was 833,000 barrels per day less than what was added to storage plus our oil refineries reported they used during the week. To account for that disparity between the apparent supply of oil and the apparent disposition of it, the EIA just inserted a (+833,000) barrel per day figure onto line 13 of the weekly U.S. Petroleum Balance Sheet in order to make the reported data for the daily supply of oil and for the consumption of it balance out, a fudge factor that they label in their footnotes as “unaccounted for crude oil”, thus suggesting an omission or error of that magnitude in this week’s oil supply & demand figures that we have just transcribed.... Furthermore, since last week’s “unaccounted for crude oil” was at (+64,000) barrels per day, that means there was a 796,000 barrel per day difference between this week's balance sheet error and the EIA's crude oil balance sheet error from a week ago, and hence the changes to supply and demand from that week to this one that are indicated by this week's report are off by that much, thus rendering those comparisons useless...nonetheless, since most everyone treats these weekly EIA reports as gospel, and since these weekly figures often drive oil pricing, and hence decisions to drill or complete oil wells, we’ll continue to report this data just as it's published, and just as it's watched & believed to be reasonably accurate by most everyone in the industry...(for more on how this weekly oil data is gathered, and the possible reasons for that “unaccounted for” oil, see this EIA explainer)….

This week's ​​2,595,000 barrel per day increase in our overall crude oil inventories came as an average of 2,709,000 barrels per day were being added to our commercially available stocks of crude oil, while 114,000 barrels per day of oil were being pulled out of our Strategic Petroleum Reserve. That draw on the SPR, the smallest in 15 months, should be the last extension of the emergency withdrawal under Biden's "Plan to Respond to Putin’s Price Hike at the Pump" (sic), that was originally intended to supply 1,000,000 barrels of oil per day to commercial interests over a six month period from its inception to the midterm elections in November, in the hope of keeping gasoline and diesel fuel prices from rising over that time. The SPR withdrawals under that program began fluctuating this past summer because the administration had also been attempting to use the Strategic Petroleum Reserve to manipulate prices on a weekly basis. Before that scheme even ran its course, Biden announced another 15,000,000 barrel release from the Strategic Petroleum Reserve to run through the end of December, while simultaneously announcing he'd buy crude to replenish the SPR if oil prices fall to or below the $67-​$​72 a barrel range, effectively putting a floor under oil at that price. Then, on December 16th, the administration announced an initial token purchase of three million barrels under that plan, for oil to be delivered back to the SPR in February.  However, no one would sell us oil at the below market price we were offering, so this week that plan​ to begin refilling the SPR​ was postponed...

Including the administration's initial 50,000,000 million barrel SPR release earlier this year, their subsequent 30,000,000 barrel release, and other withdrawals from the Strategic Petroleum Reserve under recent release programs, a total of 284,567,000 barrels of oil have now been removed from the Strategic Petroleum Reserve over the past 29 months, and as a result the 371,580,000 barrels of oil that still remain in our Strategic Petroleum Reserve is now the lowest since December 2nd, 1983, or at another 39 year low, as repeated tapping of our emergency supplies for non-emergencies or to pay for other programs had already drained those supplies considerably over the past dozen years, even before the Biden administration's SPR releases. The total 180,000,000 barrel drawdown of the now ending Biden release program, which should have finished at the end of December, will have released almost a third of what remained in the SPR when the program started, and leave us with what is less than a 20 day supply of oil at the current consumption rate as we head into the new year.

Further details from the weekly Petroleum Status Report (pdf) indicate that the 4 week average of our oil imports fell to an average of 6,033,000 barrels per day last week, which was 3.1% less than the 6,227,000 barrel per day average that we were importing over the same four-week period last year. This week’s crude oil production was reported to be 100,000 barrels per day higher at 12,200,000 barrels per day because the EIA's rounded estimate of the output from wells in the lower 48 states was 200,000 barrels per day higher at 11,800,000 barrels per day, but Alaska’s oil production was 5,000 barrels per day lower at 448,000 barrels per day and thus subtracted 100,000 barrels per day from the rounded national total. (by the EIA's math). US crude oil production had reached a pre-pandemic high of 13,100,000 barrels per day during the week ending March 13th 2020, so this week’s reported oil production figure was 6.8% below that of our pre-pandemic production peak, but was 25.8% above the pandemic low of 9,700,000 barrels per day that US oil production had fallen to during the third week of February of 2021.

US oil refineries were operating at 84.1% of their capacity while using those 14,651,000 barrels of crude per day during the week ending January 6th, up from their 79.6% utilization rate during the prior week, but still well below normal utilization for early January. The 14,651,000 barrels per day of oil that were refined this week were 5.9% less than the 15,573,000 barrels of crude that were being processed daily during week ending January 7th of 2022, and 13.3% less than the 16,897,000 barrels that were being refined during the prepandemic week ending January 3rd, 2020, when our refinery utilization was at 93.0%, as refinery utilization typically hits ​its winter peak around New Year's day ...

With the increase in the amount of oil being refined this week, gasoline output from our refineries was a bit higher, increasing by 67,000 barrels per day to 8,533,000 barrels per day during the week ending January 6th, after our gasoline output had decreased by 1,678,000 barrels per day during the prior week. This week’s gasoline production was 0.5% less than the 8,574,000 barrels of gasoline that were being produced daily over the same week of last year, and 4.0% less than the gasoline production of 8,887,000 barrels per day during the prepandemic week ending January 3rd, 2020. At the same time, our refineries’ production of distillate fuels (diesel fuel and heat oil) increased by 509,000 barrels per day to 4,544,000 barrels per day, after our distillates output had decreased by 1,050,000 barrels per day during the prior week. Even after that increase, our distillates output was 5.1% less than the 4,788,000 barrels of distillates that were being produced daily during the week ending January 6th of 2022, and 14.4% less than the 5,310,000 barrels of distillates that were being produced daily during the week ending January ​3rd 20​20...

With the increase in our gasoline production, our supplies of gasoline in storage at the end of the week rose for the 7th time in nine weeks and for the 10th time in 22 weeks, increasing by 4,114,000 barrels to 226,776,000 barrels during the week ending January 6th, after our gasoline inventories had decreased by 346,000 barrels during the prior week. Our gasoline supplies rose this week as the amount of gasoline supplied to US users rose by 44,000 barrels per day but remained ​quite ​depressed at 7,558,000 barrels per day, and because our exports of gasoline fell by 190,000 barrels per day to 867,000 barrels per day, while our imports of gasoline fell by 35,000 barrels per day to 516,000 barrels per day. Even after 7 recent gasoline inventory increases, our gasoline supplies were still 5.8% below last January 7th's gasoline inventories of 240,748,000 barrels, while falling to about 7% below the five year average of our gasoline supplies for this time of the year…

Even with the increase in our distillates production, our supplies of distillate fuels still decreased for the 3rd time in 9 weeks, and for the 28th time over the past year, falling by 1,069,000 barrels to 117,716,000 barrels during the week ending January 6th, after our distillates supplies had decreased by 1,427,000 barrels during the prior week. Our distillates supplies fell again this week because the amount of distillates supplied to US markets, an indicator of our domestic demand, increased by 1,022,000 barrels per day to 3,821,000 barrels per day, even as our imports of distillates rose by 96,000 barrels per day to 209,000 barrels per day while our exports of distillates fell by 468,000 barrels per day to 1,085,000 barrels per day... After fifty-four inventory withdrawals over the past eighty-eight weeks, our distillate supplies at the end of the week were were 6.4% below the 126,846,000 barrels of distillates that we had in storage on January 6th of 2021, and about 14% below the five year average of distillates inventories for this time of the year...

Meanwhile, after the big drop in our oil exports and the increase in our imports, our commercial supplies of crude oil in storage rose for the 10th time in 22 weeks and by the most since February 2021, increasing by 18,961,000 barrels over the week, from 420,646,000 barrels on December 30th to 439,607,000 barrels on January 6th, after our commercial crude supplies had increased by 1,694,000 barrels over the prior week. After this week's increase, our commercial crude oil inventories rose to around 4% above the most recent five-year average of crude oil supplies for this time of year, and were more than 33% above the average of our crude oil stocks as of the first weekend of January over the 5 years at the beginning of the past decade, with the disparity between those comparisons arising because it wasn’t until early 2015 that our oil inventories first topped 400 million barrels. And after our commercial crude oil inventories had jumped to record highs during the Covid lockdowns of the Spring of 2020, and then jumped again after February 2021's winter storm Uri froze off US Gulf Coast refining, our commercial crude supplies as of this January 6th were 6.4% more than the 413,298,000 barrels of oil we had in commercial storage on January 7th of 2022, but 8.8% less than the 482,211,000 barrels of oil that we had in storage on January 8th of 2021, and 2.0% more than the 431,060,000 barrels of oil we had in commercial storage on January 3rd of 2020…

Finally, with our inventories of crude oil and our supplies of all products made from oil near multi-year lows over the most recent months, we are also continuing to watch the total of all U.S. Stocks of Crude Oil and Petroleum Products, including those in the SPR.  After the commercial crude and gasoline inventory increases we've already noted for this week, the total of our oil and oil product inventories, including those in the Strategic Petroleum Reserve and those held by the oil industry, and thus including everything from gasoline and jet fuel to propane/propylene and residual fuel oil, rose by 21,602,000 barrels this week barrels this week, from 1,577,627,000 barrels on December 30th to 1,599,229,000 barrels on January 6th, after our total inventories had decreased by 5,872,000 barrels this week barrels during the prior week. But even with that increase, our total petroleum liquids inventories are still down by 357,903,000 barrels or 18.3% from their prepandemic high​,​ and just 1.3% from a new 18 1/2 year low...

This Week's Rig Count

The number of drilling rigs active in the US increased for the 13th time over the prior 24 weeks during the week ending January 14th and for the 94th time in 120 weeks but is still 2.3% below the prepandemic level....Baker Hughes reported that the total count of rotary rigs drilling in the US rose by 3 to 775 rigs over the past week, which was also 174 more rigs than the 601 rigs that were in use as of the January 7th report of 2022, but was 1,154 fewer rigs than the shale era high of 1,929 drilling rigs that were deployed on November 21st of 2014, a week before OPEC began to flood the global market with oil in an attempt to put US shale out of business. .

The number of rigs drilling for oil increased by 5 to 623 oil rigs during the past week, after the number of rigs targeting oil had decreased by 3 during the prior week, and there are now 131 more oil rigs active now than were running a year ago, even as they amount to just 38.7% of the shale era high of 1609 rigs that were drilling for oil on October 10th, 2014, while they are still down 8.8% from the prepandemic oil rig count….at the same time, the number of drilling rigs targeting natural gas bearing formations decreased by 2 to 150 natural gas rigs, which was still up by 41 natural gas rigs from the 109 natural gas rigs that were drilling during the same week a year ago, even as they were only 9.3% of the modern high of 1,606 rigs targeting natural gas that were deployed on September 7th, 2008….

Other than those rigs targeting oil and natural gas, Baker Hughes reports that two "miscellaneous" rigs continued drilling this week: one of those was a directional rig drilling to between 5,000 and 10,000 feet on the big island of Hawaii, while the other was a directional rig drilling to between 5,000 and 10,000 feet into a formation in Lake county California that Baker Hughes doesn't track....While we haven't seen any details on either of those wells, in the past we've identified various "miscellaneous" rig activity as being for exploration, for carbon dioxide storage, and for utility scale geothermal projects...a year ago, there were were no such "miscellaneous" rigs running...

The offshore rig count in the Gulf of Mexico increased by three to nineteen rigs this week, with 18 rigs now drilling in Louisiana's offshore waters, and one rig still drilling for oil offshore from Texas....that Gulf rig count is one more than the 18 Gulf rigs running a year ago, when 17 Gulf rigs were drilling for oil offshore from Louisiana and one was deployed for oil offshore from Texas...since there aren't any rigs drilling off our other coasts, the Gulf rig count equals the national offshore count..

In addition to rigs running offshore, there are still two water based rigs drilling through inland bodies of water this week; those include a directional rig drilling for oil at a depth greater than 15,000 feet in Terrebonne Parish, Louisiana; and a directional rig drilling for oil to between 5,000 and 10,000 feet, inland in Lafourche Parish, Louisiana ...a year ago, there was just one such rig drilling on inland waters...

The count of active horizontal drilling rigs was unchanged at 700 horizontal rigs this week, which was still 159 more rigs than the 532 horizontal rigs that were in use in the US on January 14th of last year, but just 50.9% of the record 1,374 horizontal rigs that were drilling on November 21st of 2014....in addition, the vertical rig count was also unchanged at 26 vertical rigs this week, which was still up by 1 from the 25 vertical rigs that were operating during the same week a year ago…on the other hand, the directional rig count was up by 3 to 49 directional rigs this week, and those were up by 14 from the 35 directional rigs that were in use on January 14th of 2022…

The details on this week’s changes in drilling activity by state and by major shale basin are shown in our screenshot below of that part of the rig count summary pdf from Baker Hughes that gives us those changes…the first table below shows weekly and year over year rig count changes for the major oil & gas producing states, and the table below that shows the weekly and year over year rig count changes for the major US geological oil and gas basins…in both tables, the first column shows the active rig count as of January 13th, the second column shows the change in the number of working rigs between last week’s count (January 6th) and this week’s (January 13th) count, the third column shows last week’s January 6th active rig count, the 4th column shows the change between the number of rigs running on Friday and the number running on the Friday before the same 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 14th of January, 2022....

checking the Rigs by State file at Baker Hughes for the changes in the Texas Permian, we find that there was a rig pulled out of Texas Oil District 7C, which covers the southernmost counties in the Permian Midland, but that rig counts in other Texas Permian districts were unchanged....since the national Permian basin count was up by three, we can thus figure that all three rigs added in New Mexico were set up to drill for oil in the far western Permian Delaware, in the southwest corner of that state, but that the rig removal from Texas district 7C was either not targetting the Permian, or that rig a removal in another Permian district was offset by a rig addition in the same district that was targetting that basin...elsewhere in Texas, there were four rigs added in Texas Oil District 1, and there was also two rigs added in Texas Oil District 2, but there were three rigs pulled out of Texas Oil District 3, and there was also two rigs pulled out of Texas Oil District 4; at least three of the additions in those ​first wo ​districts were oil rigs added to the Eagle Ford shale, while at least one of the removals was a natural gas rig pulled out of the Eagle Ford; ​the other changes could have also involved the Eagle Ford, if there were concurrently an offfsetting change of the same type of rig that wouldn't have showed up in the totals, which now show the Eagle Ford with 69 oil rigs and 4 natural gas rigs active....there was also a rig added in Texas Oil District 6, apparently a natural gas rig in the Haynesville shale, since the rig count in the Haynesville shale area in adjacent Louisiana was down by two, while the national Haynesville count was only down by one....Texas alao saw an oil rig removed from the Barnett shale underlying the Dallas-Ft Worth area, but since there is no corresponding activity shown in a related Texas district, it must have been offset by a rig addition in the same area that wasn't targeting the Barnett...meanwhile, the Louisiana rig count was still up by one with the addition of three offshore directional rigs in the state's waters...

In Oklahoma, there was a rig added in the Mississippian shale, while there were two rigs pulled out of the Cana Woodford; since the Oklahoma count is down by two, there must have been a removal from another basin in he state not tracked by Baker Hughes...meanwhile, the oil rig pulled out of the DJ Niobrara chalk had been drilling in Colorado, while an oil rig was added in California in a basin not tracked by Baker Hughes...the only natural gas rig changes apparent this week were the rig removals from the Haynesville and the Eagle Ford we previously noted; all other changes involved oil rigs ...

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Two controversial Ohio bills on oil and gas drilling and election laws both signed | The Statehouse News Bureau - The state is facing a lawsuit over a bill signed on Friday that makes big changes in Ohio’s voting laws. Gov. Mike Dewine signed that and another bill left over from the lame duck legislative session, and both Republican-backed bills are controversial.Late on Friday, as his inaugural weekend was getting started, DeWine signed House Bill 507, which could speed up the process of permitting oil and gas drilling on state lands. DeWine had hinted in a year end interview with the Statehouse News Bureau that he would sign it.The Ohio Environmental Council's Action Fund said in a statement that they are "deeply disappointed" he didn't veto the bill, which they called unconstitutional. A statement from the group continued: "This bill is an egregious assault on executive authority, the public’s interest and our state parks and public lands. The bill also furthers fossil fuel misinformation campaigns designed to brand natural gas as ‘green energy,’ a nationwide effort to delay climate action and the transition to a truly clean energy future.” The other bill deals with election laws. House Bill 458:

• requires voters to show photo ID
• allows just one ballot drop box per county
• permits curbside voting only for people with disabilities
• requires requests for early ballots to be made no later than seven days before Election Day, instead of three days before
• requires mailed-in ballots, including military and overseas ballots, to arrive no later than four days after Election Day, down from ten days
• gives provisional voters four days to provide missing information, down from seven days
• eliminates special elections in August except in cases of fiscal emergency

Almost immediately, a lawsuit was filed by a group representing unions and unhoused Ohioans, from Democratic lawyer Marc Elias, who sued and won cases over Ohio’s redistricting process and helped fight lawsuits filed and lost by former President Trump after he lost the 2020 election.

Governor DeWine signs bills into law - The Highland County Press - Ohio Governor Mike DeWine signed the following bills into law:
• House Bill 45 makes appropriations and provides authorization and conditions for the operation of state programs.
• House Bill 458 modifies the law governing voter identification and absent voting and other aspects of Ohio’s election laws and makes changes regarding driver's licenses and state identification cards.
• House Bill 507, sponsored by State Representative J. Kyle Koehler, revises specified provisions of agriculture law, defines green energy, excludes natural gas from receiving renewable energy credits, revises the law governing environmental health specialists and environmental health specialists in training, allows conservancy district police departments to take specified actions regarding the towing and storage of motor vehicles. Governor DeWine issued the following statement on HB 507: The initial and primary purpose of House Bill 507 is important and worthy of passage. “While the bill initially involved agricultural issues, amendments were added regarding drilling and natural gas issues. As my administration has analyzed this bill, I believe the amendments in House Bill 507 do not fundamentally change the criteria and processes established by the Ohio General Assembly in 2011 that first established the policy of leasing mineral rights under state parks and lands."In addition, I am instructing the Director of the Department of Natural Resources to continue to follow the processes first established by the General Assembly in 2011 in this area. This includes continuing my administration’s policy of prohibiting any new surface use access in our state parks."?

OH Gov. Signs Bill Expanding Drilling in State Parks, NatGas “Green” | Marcellus Drilling News - We love this story because it’s driving the left NUTS! In December, we told you about Ohio House Bill (HB) 507 (subsequently passed), a bill that expands drilling in Ohio state parks AND officially designates natural gas as a “green” form of energy (see Ohio Senate Bill Would Expand Shale Drilling on State-Owned Land). Last week, Ohio Gov. Mike DeWine, a so-so (RINO) Republican, actually signed HB 507 into law. Which is sending the enviro-nuts into orbit. Love it!

DeWine signs bills for voter photo ID and "green energy" natural gas drilling on state lands - Ohio Capital Journal --Late Friday night, Ohio Gov. Mike DeWine cleared his desk — signing into law two controversial bills. One makes changes in the way Ohioans will vote going forward. Most notably, it requires voters casting a ballot in-person to present a photo ID. The other law orders state agencies to award drilling licenses for state-owned lands and designates natural gas as “green energy.” A lot of unexpected things happen when lame-duck deadlines loom at the Ohio Statehouse. One of the most notable from December was the chicken bill that directs state agencies to allow natural gas drilling on their land. The measure began as a way to reduce the minimum lot size for live poultry purchases from six chicks to three. A late amendment added language about drilling and designating natural gas as “green energy,” among other changes. “As my administration has analyzed this bill,” DeWine argued in his signing statement, “I believe the amendments in House Bill 507 do not fundamentally change the criteria and processes established by the Ohio General Assembly in 2011 that first established the policy of leasing mineral rights under state parks and lands.” The amendment shifts “may” to “shall” in state law. The idea is to force the hand of the state commission responsible for leases. DeWine, however, seemingly brushed off the changes, stating he’d instruct the commission to continue as usual.In a statement, Ohio Environmental Council Action Fund’s Pete Bucher lit into the bill.“This bill is an egregious assault on executive authority, the public’s interest and our state parks and public lands. The bill also furthers fossil fuel misinformation campaigns designed to brand natural gas as ‘green energy,’ a nationwide effort to delay climate action and the transition to a truly clean energy future.”OECAF’s Chris Tavenor spoke about the organization’s opposition prior to DeWine’s announcement. While he was clear they deeply opposed the policy changes, he seemed just as appalled at the policy making.“If you’re going to do it, create a system,” he argued, “this is essentially forcing it through in order to ensure that oil and gas companies can get their profits as quickly as possible,”“This is not about creating a process to ensure that state land is managed appropriately,” he said. “It’s about ensuring that oil and gas companies get access to the resources.”

New law deems natural gas as green energy - — A new law signed by Gov. Mike DeWine designates natural gas as green energy. Environmental experts have said that with DeWine signing HB 507, it paves the way to fast track the drilling of oil and gas in state parks. “When natural gas is mined from the ground, it can leak into the atmosphere and methane admissions from natural gas wells, pipelines and use of natural gas together are the second largest source of climate warming in the United States," said Amy Townsend-Small, University of Cincinnati professor of environmental studies. In a statement, DeWine said "As my administration has analyzed the bill, I believe the amendments in HB 507 do not fundamentally change the criteria and processes established by the Ohio General Assembly in 2011 that first established the policy of leasing mineral rights under state parks and lands." Nolan Rutschilling, the Ohio Environmental Council managing director of energy policy, doesn't support the new law. In his view, natural gas is not an environmentally-friendly fuel. “It's a fossil fuel now,” said Rutschilling. “Natural gas does produce less emissions than coal, but it's still a major contributor to our state's greenhouse gas emissions.” Rutschilling and his team hope to continue to encourage local governments to make purchase decisions regarding power resources, that result in a cleaner environment. 23 New Shale Well Permits Issued for PA-OH-WV Jan 2-8 | Marcellus Drilling News --New shale permits issued for Jan. 2-8 in the Marcellus/Utica included 14 new permits in Pennsylvania, 8 new permits in Ohio, and just 1 new permit in West Virginia. The top recipient of permits for last week was Apex Energy, grabbing 6 permits to drill on a single pad in Westmoreland County, PA. Right behind Apex was Coterra Energy with 5 permits to drill on a single pad in Susquehanna County, PA. Opposite sides of the state. Antero Resources, Apex Energy, Ascent Resources, Belmont County, Coterra Energy (Cabot O&G), Gulfport Energy, Inflection Energy, Jefferson County (OH), Lycoming County, Monroe County, Southwestern Energy, Susquehanna County, Westmoreland County, Wetzel County

Fracking Poisoned This Town’s Water. Now Frackers Are Being Allowed Back In. More than a dozen years after the controversial documentary Gaslandmade Dimock, Pennsylvania, the poster child for the dangers of fracking, the successor to the company responsible for poisoning residents’ drinking water pleaded no contest to violating the state’s Clean Stream Law, on November 29, 2022. As a part of the plea, Coterra Energy must pay to construct a new, permanent supply of water for residents, some of whose private water wells became laced with carcinogenic chemicals and contained methane concentrations so high that running faucets could be set on fire. “After more than a decade of denials, of shirking responsibility and accountability, Coterra pleaded to their crime, and the people of Dimock finally had their day in court,” crowed Pennsylvania Attorney General and Governor-elect Josh Shapiro, who launched the investigation that resulted in the settlement.It seemed like a turning point. Shapiro, who convened a grand jury in 2018 to investigate the petroleum industry’s and the state Department of Environmental Protection’s endangerment of Pennsylvania residents, was poised to move into the governor’s mansion. Public opinion in thestate had tilted toward support for a ban on fracking.But on the same day Shapiro held his ballyhooed press conference to announce the deal, the DEP quietly lifted a moratorium on fracking in Dimock that had been in place since 2010. (State officials called the timing coincidental and denied any quid pro quo with Coterra.) “We got played,” Dimock resident Ray Kemble told the Associated Press only hours after he triumphantly stood on the dais with Shapiro. Yet a Susquehanna County commissioner claimed that many of his constituents in Dimock actually supported the resumption of gas drilling. Bureaucrats and some locals’ willingness to restart gas production at the site of the country’s most infamous fracking-related catastrophe is emblematic of Pennsylvania’s conflicted relationship to the industry. And it maps onto the state’s rural/urban political divide. Fracking offered the tantalizing prospect of returning deindustrialized heartland communities in Pennsylvania and the Midwest to their glory days. What’s more, “landmen” hired by petroleum companies to secure rural landowners’ mineral rights routinely peddled the fantasy that allowing fracking under their feet could make land-poor residents “richer than Jed Clampett” of The Beverly Hillbillies, in the words of one Williamsport-area landowner I befriended when I lived there in 2013. The tragedy of Dimock, which reached its nadir when a resident’s water well exploded on New Year’s Day in 2009, became the central story of Josh Fox’s Emmy Award–winning documentary Gasland, which in turnturbocharged the nascent anti-fracking movement in Pennsylvania and around the country. Curiously, though, “fractivism” never caught on in most of the locales where gas and oil drilling actually takes place. Even as more and more Pennsylvanians, and Americans, express serious misgivings about the industry, research indicates that people who live closer to oil and gas wells are less likely to support restrictions on fracking than people who live further away. Fractivism is mostly a not in your backyard movement spearheaded by progressives living in urban and coastal areas. That’s certainly how it felt to friends of mine in Hughesville, Pennsylvania, when Yoko Ono’s activist group “Artists Against Fracking” chartered a tour bus from New York City to the region to draw attention to alleged industry malfeasance.

A perfect (winter) storm brings lessons for gas producers and the electric grid - The brutal, unrelenting cold that lasted for several days over the Christmas holiday froze off a sizable portion of Appalachia’s ample gas production, cutting off supply to power plants when they needed it most.Gas transmission pipelines said the gas they were promised simply didn’t show up.On the electric grid that connects Pennsylvania to 12 other states, at one point almost 25% of the capacity on the system either didn’t start up or broke while operating, leaving coal and petroleum-fired units to pick up the slack. PJM, a Valley Forge-based grid operator, is still analyzing what happened during the storm. In Pittsburgh, Jay Apt, professor emeritus at Carnegie Mellon, watched as the temperature on his home weather station plunged 40 degrees in an hour and a half. While the weather was extreme, Mr. Apt said, it was “not a black swan event.” Two years ago, as a winter storm was devastating Texas with blackouts that lasted for days in some areas, Mr. Apt wrote a provocatively titled op-ed in the Washington Post warning, “What is happening in Texas will keep happening until we take action.” A few years ago, Mr. Apt published a series of papers looking at more than two decades of PJM data on how generators function, when they break, and why. These are the same units that worked or didn’t during the Christmas storm, he said — “not just the same type, the same generators.” What he found was that “when temperature gets cold, the rate of forced outages — (aka) broken — goes way up.” This happens with most fuels. But in the winter, it’s more pronounced with natural gas plants, which are already the most prevalent type on the Eastern grid, with more being added. In typical circumstances, an average of 3% of such plants are out at any one time. During very cold weather, the outage rate climbs five times as high or more. Mr. Apt said the mechanism of failure varies. Valves might break, or the giant filter on the air intake system for natural gas plants could freeze. There could be problems with compressor stations that pack gas into pipelines, or issues at the gas wells themselves. The same goes for other fuels. Mr. Apt said he has seen coal operators unable to start up their coal grinders during freezing weather, or wind turbines programmed to shut down below a certain temperature. In very hot weather, coal and nuclear tend to perform worse. In extreme cold, gas is most impaired. Equally important is how the grid operator forecasts the demand on any given day and lines up enough generation to meet it. PJM underestimated demand during the Christmas storm by as much as 10%. .Because natural gas is a “just in time” fuel — it must arrive at power plants when it’s ready to be burned and isn’t stored onsite — a snag in the early part of the supply chain dominoes all the way to the light switch.Natural gas freeze-offs are a known and common phenomenon. The liquids in the natural gas stream — things like butane and propane — along with water molecules can freeze and can end up blocking the pipelines that carry them. This, in turn, could put pressure on compressor stations that must work harder to move the blocked gas. During the winter storm two years ago, as much as 200 billion cubic feet of gas was lost to freeze-offs over the course of several days. Last month’s storm was half as impactful — shedding about 100 billion cubic feet nationwide, with nearly half of that coming from Appalachia, according to pipeline receipts analyzed by Bloomberg New Energy Finance. “Most pipelines are deep underground. So it has to be pretty cold to freeze the liquid in those pipes,” “This time around, it got to negative 15 in some places.” And the cold persisted for days.Bloomberg’s data shows that between Dec. 22 and 26, Ohio lost more than half of its gas production. West Virginia’s dropped by a quarter and Pennsylvania — the largest Appalachian gas producer — sustained a 20% drop accounting for about 4 billion cubic feet a day.The nation’s largest natural gas firm, Downtown-based EQT Corp., said in an interview on Bloomberg Television that its production fell by 30% during the extreme cold.EQT declined to answer submitted questions from the Post-Gazette about freeze-offs or preparations for them. Its CEO Toby Rice similarly did not address the issue of weatherizing gas infrastructure when asked by Bloomberg.Instead, he said, the answer is to produce more gas and, in order to do that, the country needs to build more pipelines.

Port Richmond explosion: Interior gas leak could be culprit – WHYY -- The 3500 block of Miller Street in Philadelphia's Port Richmond neighborhood was the scene of an explosion that destroyed three houses on New Year's Day. Although the investigation by Philadelphia Gas Works does not point to the utility’s own infrastructure as causing the explosion, experts say gas was the likely culprit.The New Year’s Day incident in Port Richmond was large enough to destroy three townhomes, and inflict damage on 43 others as well as a nearby recreation center. Five people were injured.“The amount of force and the nature of the destruction … looks pretty characteristic of a contained gas explosion in a brick building,” said Rick Kuprewicz, a pipeline safety expert in Washington who reviewed media coverage and photos of the Port Richmond explosion. Kuprewicz, who heads the consulting firm Accufacts, said he can’t be sure of the cause while the investigation is ongoing.Inspectors with Philadelphia Gas Works finished checking the utility’s infrastructure outside homes — including pipelines beneath sidewalks and lines that run to individual homes — Thursday, and found no evidence of gas leaks. The explosion destroyed three homes and damaged dozens more. So far, the city’s gas utility has not found evidence of a leak.PGW, in coordination with safety inspectors from the Pennsylvania Public Utility Commission, says it conducted “state-of-the-art leak detection surveys” on all underground natural gas mains and service lines on the 3500 block of Miller Street, where the explosion occurred, as well as surrounding streets. “Mains and service pipes were found to be in good operating condition and PGW identified no natural gas leaks on any surveyed PGW natural gas infrastructure,” the utility said in a statement on its website.

Mitigating the risks of fracking — Fracking may be a settled question and a banned activity along the Upper Delaware River, but elsewhere in the United States it’s a growing industry. The Upper Delaware Council (UDC) heard a presentation about the wider world of fracking at its January 5 meeting. Dr. David Yoxtheimer gave the presentation before the UDC. Yoxtheimer is an assistant research professor and extension associate with the Marcellus Center for Outreach and Research at Penn State University; the Marcellus Center is the school’s energy education and research initiative. He serves as well as the chairperson of the Oil and Gas Technical Advisory Board, part of the Pennsylvania Department of Environmental Protection Office of Oil and Gas Management. The fracking that Yoxtheimer discussed largely took place within the boundaries of the Marcellus Shale gas reservoir. The Marcellus Shale reservoir “is a very large shale gas basin, about 500 trillion cubic feet [TCF] of gas that can be recovered with today’s technology,” said Yoxtheimer. It stretches across most of Pennsylvania and into surrounding states, and has a presence in the Upper Delaware River Valley. Other reservoirs exist within the region as well, including the Utica Shale reservoir, but the Marcellus Shale reservoir has been the most drilled in Pennsylvania. Currently, about 13,000 wells have been drilled into the various reservoirs under Pennsylvania, and current projections have shale gas production rising, increasing from 25 TCF to 33 TCF by 2050.Many of the environmental issues around fracking relate to the industry’s use of or impact on water. The fracking process takes large volumes of water—mostly surface water in this part of the world—and brings it to a well site, mixing it with a range of chemicals, Yoxtheimer said. That treated water gets forcefully sent underground to open up fractures deep beneath the surface, allowing gas to be extracted; afterward, the water gets removed for reuse or disposal. In the Susquehanna Basin, the nearest Pennsylvania basin to the Upper Delaware, the third leading withdrawal of water is for the natural gas industry, around 24.3 million gallons per day or 10 percent of total withdrawals. This impact is overseen by state and basin-specific agencies, with regulations in place to govern the effect withdrawals can have. The chemicals added to the fracking fluids are themselves a matter of concern. The industry tries to reduce their use, given their expense, said Yoxtheimer, and has released much of the data about their composition through databases like fracfocus.org. Some of the chemicals involved do however remain proprietary. As the drilling process commences, it could contaminate groundwater around the drilling site. It’s not necessarily that fracking’s fractures let gas escape into nearby wells, said Yoxtheimer, but methane leaking around the well closer to the surface can pose a problem. “Some of the shallow methane especially caught the industry off guard; the wells weren’t drilled to contain it.” N After fracking completes, the produced fluids that come out of a well contain both the chemicals that were used to treat the water pre-fracking, and the contaminants pre-existing in the earth, including salts, metals and radioactive substances. The industry treats and re-uses much of this fluid material, and has tried to increase that percentage. Whatever remains—around 6.3 percent of the fluids generated in PA in 2021—gets transported to disposal wells. The transport of the fluids to injection wells carries with it risks of contamination; they get carried by trucks, which can lead to spills and leaks. On the other side, the disposal wells that take the final fluids simply put them back into the ground, many in depleted gas fields with emptied underground reservoirs. That process has the potential to cause seismic activity. “These tend to be very controversial projects, as you can imagine,” said Yoxtheimer. “While the EPA will say that this is the safest way to dispose of these brines, the public might not exactly be buying that, and that’s understandable.”

N.Y. weighs East Coast's first statewide building gas ban - New York’s Democratic Gov. Kathy Hochul called yesterday for the nation’s most aggressive ban on fossil fuels in new buildings, setting the stage for a possible showdown with the gas industry and state lawmakers.In her State of the State speech, Hochul urged the state Legislature to phase out the sale of fossil fuel heating equipment in existing residential buildings beginning in 2030 and in 2035 in commercial ones. The governor also proposed requiring new residential and commercial buildings to be all-electric by 2025 and 2030, respectively.“We are taking these steps now because climate change remains the greatest threat to our planet, and to our children and grandchildren,” said Hochul in her speech. The state’s landmark 2019 climate law, known as the Climate Leadership and Community Protection Act, laid out strict deadlines for cutting emissions, she noted. “And now, we are executing on that plan.”Hochul’s proposals face an uncertain path ahead. Last year, the governor came out for the first time in support of a gas ban for new construction that would have gone into effect in 2027 (Energywire, Jan. 6, 2022). The idea found support in the state Senate, but was repeatedly blocked by the Democratic speaker of the state Assembly, Carl Heastie.Spokespeople for Heastie had initially insisted that the speaker’s opposition was due to how the gas ban was being proposed — in the state’s annual budget — rather than through legislation (Energywire, April 18, 2022). However, a separate bill promoted heavily by environmentalists later in the year died without being brought to the floor in either legislative chamber.Green groups have accused Heastie of being influenced by fossil fuel industry and building developers — something Heastie’s spokespeople have dismissed in public statements as “a bunch of conspiracy theories” and “beyond silly.”When asked for comment Tuesday, Heastie’s office sent audio of the speaker’s comments to reporters about the broad “energy policies” outlined by Hochul in her speech.“The faster we wean ourselves off of fossil fuels, the better we are for it,” said Heastie in his comments, without addressing the specifics of the gas ban. Some natural gas advocates have criticized bans. Michelle Hook, executive director of New Yorkers for Affordable Energy, predicted they would “send energy bills through the roof” and urge state lawmakers to “start paying attention to the majority of New Yorkers who want to keep their lights on and heat working through our cold winters” (Energywire, June 15, 2022). Yesterday, however, an umbrella coalition of local and national green groups known as the #GasFreeNY campaign, described gas bans in new construction “a critically necessary step” and a “top priority” for climate policy this year. They called on Heastie and the state Assembly to pass a law.

Average cost of wholesale U.S. natural gas in 2022 highest since 2008 - In 2022, the wholesale U.S. natural gas spot price at the national benchmark Henry Hub in Louisiana averaged $6.45 per million British thermal units (MMBtu), the highest annual average—in both real and nominal terms—since 2008, based on data from Refinitiv Eikon. The 2022 average Henry Hub real natural gas spot price increased over 53% from 2021, the fourth-largest year-over-year increase in natural gas prices on record, behind only 2000, 2003, and 2021. On a daily basis, the Henry Hub spot natural gas price ranged from $3.46/MMBtu to $9.85/MMBtu, reflecting significant day-to-day price changes.During the first quarter of 2022, declining U.S. natural gas production due to production freeze-offs in January and February and high net withdrawals of natural gas from storage caused the natural gas price to increase. Continued high demand for U.S. liquefied natural gas (LNG) exports in Europe and rising, weather-driven demand for natural gas in the United States led to relatively wide Henry Hub price ranges in February and March, between $4.03/MMBtu and $6.70/MMBtu. Despite these price fluctuations, the $4.67/MMBtu average spot price was lower in the first quarter of 2022 than during the rest of the year.In May, weather-related demand for natural gas for electricity generation and increased uncertainty around working natural gas storage injections led to an increase in natural gas prices. The Henry Hub natural gas spot price increased above $9.00/MMBtu in early June, but it then fell by 40% by July 4 because of a fire and the subsequent shutdown of the Freeport LNG export terminal. The shutdown reduced U.S. LNG exports by about 2 billion cubic feet per day (Bcf/d), and more natural gas was diverted to underground storage.The Henry Hub natural gas spot price began to rise again in July and peaked on August 22, 2022, at $9.85/MMBtu, 60% higher than the daily Henry Hub natural gas spot price at the beginning of the year.The natural gas spot price decreased late in the third quarter because of high natural gas production and the resulting above-average storage injections in September. By November, working natural gas in underground storage was close to the previous five-year average. The Henry Hub natural gas spot price reached an annual low of $3.46/MMBtu on November 9, down 65% from August 22. The natural gas price began to increase again in December because of dropping winter temperatures that increased demand for natural gas for heating.Capacity constraints also affected natural gas prices throughout the year on a regional level; for example:

• Prices at key Appalachian trading hubs continued to remain at a $0.68/MMBtu average discount to Henry Hub according to pricing data from Natural Gas Intelligence due to limited pipeline takeaway capacity in the region.
• The spot price at the Waha Hub in West Texas averaged $1.26/MMBtu below the Henry Hub in 2022, largely due to limited pipeline takeaway capacity in the region and to periods of pipeline maintenance that decreased takeaway capacity.
• Several pricing hubs in the western United States averaged over $48/MMBtu above Henry Hub onDecember 21 due to colder-than-normal temperatures and regional pipeline constraints.

Natural Gas Futures, Spot Prices Probe Higher Amid Profit-Taking, Hints of Cold - Natural gas futures found their way forward on Monday, marking only the second advance of 2023 so far. After losing 17% the week prior amid forecasts for the mildest January weather in nearly two decades, the February Nymex gas futures contract on Monday gained 20.0 cents day/day and settled at $3.910/MMBtu. March rose 17.1 cents to $3.563. NGI’s Spot Gas National Avg. advanced 71.5 cents to $5.850. NatGasWeather said forecasts heading into Monday trading continued to show “exceptionally warm and bearish” conditions for the Lower 48 over the next two weeks. However, the latest data teased a colder U.S. pattern arriving Jan. 23-27 “to finally break” from the current stretch of unseasonably mild temperatures, the firm added. The “primary reason for such light national demand the next 15 days is the southern half of the U.S. and up the Mid-Atlantic Coast will see highs in the mid-50s to lower 80s, along with little coverage of daytime highs below freezing over the northern U.S. besides portions of the Midwest and near the Canadian border,” NatGasWeather said. “It’s the Jan. 23-28 period where colder weather systems will have better opportunity to sweep across the northern U.S. and where the natural gas markets are likely to be relieved this period has the potential to finally be cold enough.” EBW Analytics Group analyst Eli Rubin also attributed Monday’s rally to “overdue profit-taking” among traders holding short positions. “Total short positions have grown to a 15-month high as traders rode the wave lower in natural gas prices,” Rubin said Monday. Prices may have room to climb further “as shorts take profits and longs cautiously look for re-entry points.” That noted, the near-term “fundamental outlook remains bearish on a seasonal basis amid the warmest January in 17 years and record production levels — and may require weather forecasts to shift colder to establish a firmer medium-term bottom.”

U.S. natgas plunges 7% to one-year low on rising output, lower demand - (Reuters) - U.S. natural gas futures fell about 7% to their lowest in a year on Tuesday on rising output and forecasts for lower heating demand than previously expected for this week. "U.S. natural gas demand could be on track to hit record lows in January if unseasonably warm weather sticks around," Emily McClain, vice president at consulting firm Rystad Energy, said in a note. "Despite consistently robust LNG (liquefied natural gas) demand ... particularly from European buyers, prices are falling and expected to continue bearish momentum until winter weather returns," McClain said, noting gas production has rebounded after a winter storm caused a sudden drop in late December. Front-month gas futures for February delivery fell 27.1 cents, or 6.9%, to settle at $3.639 per million British thermal units (mmBtu), their lowest close since Dec. 30, 2021. That continues last year's record volatility with the contract now up or down over 5% on four of the six trading days in 2023. Traders said the biggest market uncertainty remains the restart date for Freeport LNG's export plant in Texas. After several delays from October to November and then to December, Freeport now expects the facility to be back in operation in the second half of January, pending regulatory approvals. Analysts have long said Freeport would probably be back online during the first or second quarter of 2023 because further work is required to satisfy federal regulators, including training staff in new safety procedures, before the plant can be restarted. Whenever Freeport returns, U.S. gas demand will jump. The plant can turn about 2.1 billion cubic feet per day (bcfd) of gas into LNG, which is about 2% of U.S. daily production. Data provider Refinitiv said that average gas output in the U.S. Lower 48 states has risen to 98.3 bcfd so far in January, up from 96.7 bcfd in December. That compares with a monthly record of 99.9 bcfd in November 2022. With the weather expected to remain warmer than normal until late January, Refinitiv projected average U.S. gas demand, including exports, would hold at 120.8 bcfd this week and next. The forecast for this week was lower than Refinitiv's outlook on Monday.

Natural Gas Futures Claw Out Rare 2023 Gain; Spot Prices Sputter - Natural gas futures traded in negative territory most of Wednesday – and have declined all but three sessions so far this year – amid a persistently potent warm-weather pattern that squashed demand across much of the Lower 48. The February Nymex gas futures contract settled at $3.671/MMBtu on Wednesday, ultimately eking out a 3.2-cent gain day/day amid bargain buying in the final hour of the session. March rose 3.2 cents to $3.346. NGI’s Spot Gas National Avg. lost 25.0 cents to $5.170. Above average temperatures across much of the central, southern and eastern United States to kick off the new year – along with forecasts for more of the same next week – cut into heating demand and left markets expecting weak consumption for several more days. EBW Analytics Group’s Eli Rubin, senior analyst, said this January is on pace to be among the warmest in nearly two decades. On a seasonal basis, he called temperatures “scorching” and said the “extent of near-term warming has slashed seasonal supply adequacy fears and Nymex risk premiums may struggle” more in coming days. Against that backdrop, analysts are bracing for a markedly bearish storage print with Thursday’s Energy Information Administration (EIA) inventory report. Reuters’ poll found a median withdrawal estimate of 15 Bcf for the EIA week ended Jan. 6. Predictions ran from an injection of 11 Bcf to a draw of 73 Bcf. The Wall Street Journal’s survey landed at an average draw of 13 Bcf. Estimates spanned pulls of 5 Bcf to 30 Bcf.

U.S. natgas up 1% on higher demand, despite surprise storage build (Reuters) - U.S. natural gas futures edged up about 1% on Thursday on forecasts for higher demand this week than previously expected, colder-than-normal weather coming in late January and uncertainty about when the Freeport liquefied natural gas (LNG) export plant in Texas will exit a seven-month outage. That small price increase came despite a federal report showing a surprise build in gas stockpiles that was the first injection during the month of January on record because the weather last week was warmer than normal, keeping heating demand low. "With prices down so heavily to kick-off 2023, gas market players may have already largely priced in a considerably weak withdrawal," analysts at energy consulting firm Gelber & Associates said in a note. Gas futures were down about 17% so far this year. The U.S. Energy Information Administration (EIA) said utilities added 11 billion cubic feet (bcf) of gas into storage during the week ended Jan. 6. That was a surprise from the 13-bcf withdrawal forecast by analysts in a Reuters poll and compares with a decrease of 157 bcf in the same week last year and a five-year (2017-2021) average decline of 157 bcf. Last week's increase boosted stockpiles to 2.902 trillion cubic feet (tcf), or 1.4% below the five-year average of 2.942 tcf for this time of year. Front-month gas futures for February delivery rose 2.4 cents, or 0.7%, to settle at $3.695 per million British thermal units (mmBtu). Earlier in the week, the contract closed at its lowest level since Dec. 30, 2021. Despite the gain the contract remained in oversold territory with a relative strength index (RSI) below 30 for a third day in a row. Daily volume in the U.S. Natural Gas Fund, an exchange-traded fund (ETF) designed to track the daily price movement of gas, rose to 21.1 million shares on Wednesday, its highest since February 2022, according to Refinitiv data. That was the fifth most active day for the U.S. gas fund and follows a rise on Monday in shares outstanding to their highest since December 2020. Daily share purchases have entered the top 10 daily inflows three times already this year. Data provider Refinitiv said that average gas output in the U.S. Lower 48 states has risen to 98.4 bcfd so far in January, up from 96.7 bcfd in December. That compares with a monthly record of 99.9 bcfd in November 2022. With the weather expected to remain warmer than normal until late January, Refinitiv projected average U.S. gas demand, including exports, would ease from 121.2 bcfd this week to 119.4 bcfd next week. The forecast for this week was higher than Refinitiv's outlook on Wednesday.

Natural gas revisits $3 lows, raising specter of breaking that support - - The gas bears are back to torment the bulls, after allowing them a two-day reprieve. Natural gas futures on the New York Mercantile Exchange’s Henry Hub plunged 7% on Friday to approach 19-month lows and threaten a take out of the key $3 support after the U.S. government reported a day ago a rare winter-season storage build for inventories of the heating fuel. The front-month February gas contract settled at $3.419 per mmBtu, down 27.60 cents, or 7.5%, on the day after hitting a session bottom at $3.417 — its lowest since June 25. February gas rose a combined 1.5% over the past two sessions before ending the week down 8%. Cumulatively, warm winter weather has erased 52% of the market’s value over just four weeks. Friday’s leg lower on the Henry Hub came after the Energy Information Administration reported an 11-bcf, or billion cubic feet, in gas storage builds for the week ended Jan. 6. The increase in gas inventories, which came during what is being described as the warmest start to winter in 20 years, was at the high of the forecasts by some industry analysts, who expected a build of under 10 bcf for last week. Fourteen of them, polled by Reuters ahead of the data, had anticipated a draw of 15 bcf on the average. Sensing an extremely bearish storage report, some market participants had expected the last vestiges of $3 support to vanish from the front-month gas contract this week, to reintroduce the $2 trading levels not seen since May 2021. Technical charts had, however, indicated that Henry Hub’s front-month would hold above $3 this week, though there was no indication what could happen next week. After explosive upward price action for most of 2022 from weather extremities and a supply squeeze caused by political and other disruptions to Russian gas output in the aftermath of the Ukraine invasion, natural gas futures suddenly collapsed last month. The change has been attributed primarily to unseasonably warm winter temperatures that has left both the U.S. and European heating markets sufficiently supplied. Exports of LNG, or liquefied natural gas, have also been tamped down since June with the shutdown of the Freeport liquefaction facility in Texas, which has idled about 2 bcf, or billion cubic feet, of gas per day. That is independent of what’s happening on the weather front. “It is becoming increasingly evident that the Freeport LNG export terminal will likely not return online in February, adding another 60 bcf to gas storage stocks,” . On the weather front, Gelber said even if longer-range forecast models, such as the U.S. Global Forecast System and the European ECMWF, showed the potential for colder temperatures in late January, the actual outcome may be a “quick freeze…punctuated by unseasonable warmth.”

It's Basically Spring for the Natural-Gas Market – WSJ - How unusually warm has it been lately? On Thursday, the U.S. Energy Information Administration reported that natural gas inventories rose by 11 billion cubic feet last week.That's the sort of number gas traders are used to seeing in spring, not in the heart of heating season, when demand usually outstrips supply and stockpiles are drawn down to fuel furnaces and boilers.There's not a January increase in EIA data going back to the start of 2010. The average weekly change in inventories in January is a decline of about 165 bcf. The largest was a 359 bcf flow from storage facilities during the blizzard of 2018. The smallest (-44 bcf) occurred at the start of 2020.The unheard of January inventory build brought domestic inventories to just 1.4% shy of the five-year average and is erasing doubt that there will be enough of the fuel to get through winter.

U.S. natgas price plunge could limit this year's output growth (Reuters) - U.S. natural gas output is on track to rise about 2% this year and next, according to government forecasts, but sharp declines in prices in recent weeks could undercut those gains, analysts and producers said. Rising gas production from U.S. shale fields has provided low-cost fuel for domestic power, industrial and residential consumers and international exports. And with Russia's invasion of Ukraine last year pushing prices into the stratosphere, producers kept adding drilling rigs. A warmer-than-expected start to the winter and the cooling of exports to Europe as inventories filled has cut U.S. futures prices by more than half since November, causing drillers to reduce the number of rigs drilling for gas to their lowest since May. "2023 is gearing up to be oversupplied by more than 5.0 bcfd(billion cubic feet per day), which justifies the downward trend in prices," One billion cubic feet is enough gas to supply about five million U.S. homes for a day. Gas futures at the Henry hub benchmark in Louisiana dropped from a recent high of $7.11 per million British thermal units (mmBtu) in mid-December to $3.51 on Friday. That 51% price plunge over the past four weeks, the lack of enough pipeline capacity out of West Texas, and a projected decline in U.S. domestic gas consumption in 2023 and 2024 is forcing energy companies to rethink their outlook.

Washington Has Trouble Refilling The SPR After 220 Million Barrel Draw - After drawing over 221 million barrels of oil from the Strategic Petroleum Reserve (SPR) in 2022, Washington is having a tough time refilling it in the New Year, with the Department of Energy (DoE) rejecting the first offers on the grounds that they failed to benefit taxpayers. The DoE has by now received several offers for February purchases to refill the SPR, according to both Bloomberg and Reuters. However, those offers have been rejected as too expensive or failing to meet other requirements. For February, the plan was to purchase 3 million barrels, ideally when oil dropped to around $70 per barrel. This 3-million-barrel pilot program would have given sellers a fixed price for future deliveries and is in contrast to the DoE’s normal operating procedure, which had seen it purchase oil for faster delivery without fixed-price contracts. Right now, WTI is trading around $75/$76 per barrel, and new data from the Energy Information Administration (EIA) released on Monday shows another 0.8 million barrel draw from the SPR. According to Bloomberg, citing unnamed sources “familiar with the matter”, the DoE will now postpone its originally planned February purchases and embark on a new approach for fixed-price offers. “DOE will only select bids that meet the required crude specifications and that are at a price that is a good deal for taxpayers,” the DoE said in a Friday statement carried by news agencies. “Following review of the initial submission, DOE will not be making any award selections for the February delivery window.”The rejected bids are prompting speculation that refilling the SPR will be challenging, at best.The plan to fill the SPR, which has reached its lowest level since 1984, might not be attractive enough to sellers, despite the DoE’s efforts at enticement. Additionally, the Wall Street Journal speculates that the DoE may not have enough funding to refill the SPR completely. According to WSJ, the DoE has $.48 billion in purchasing power. At the desired $70 per barrel, that would give it enough funding to refill the SPR to 440 million barrels.

180 Million Barrels Of Crude May Never Be Returned To The SPR - Earlier this week, the Biden administration rejected the first bids from companies offering to sell crude oil into the strategic petroleum reserve of the country. The tender followed a record release of 180 million barrels throughout 2022. And that 180 million barrels may never be returned to the SPR. “DOE will only select bids that meet the required crude specifications and that are at a price that is a good deal for taxpayers,” the Department of Energy said in a statement following the failed tender, which invited bids for a modest 3 million barrels. And this statement reflects what many feared last year when President Biden first said the administration would sell oil from the SPR to lower gasoline prices. First, there is the crude specifications issue. When the administration was releasing crude from the SPR, there wasn’t any mention of specifications. The only important thing was the volume. At the time, critics noted that the SPR contains mostly light, sweet crude, and the release of 180 million barrels of that variety won’t make much of a difference in gasoline prices because U.S. gasoline is made by blending light with heavy crude. Yet the oil market moves in strange ways, and sometimes it’s enough to release several million barrels into the market to convince traders there’s plenty more where these came from. Fuel prices in the U.S. fell, especially as the release coincided with persistent inflation that shrank consumption.Second, however, comes the issue of price. The Department of Energy had said at the end of last year it would only start buying oil for the SPR once the price of WTI falls to around $67-70 per barrel. Right now, WTI is trading at around $75. Yet this price appears to be insufficiently low for the DoE. And this is a problem because the total release from the SPR was not the original 180 million barrels, but more than 220 million barrels of crude. This is problematic for more than one reason. First, because the SPR is at the lowest level since the early 1980s and, as some analysts have pointed out, it is astrategic reserve, meant to be there for times of emergency. So, if an emergency does occur, strategic oil reserves would be lower than they should be. The second reason this is problematic is that what the administration hoped to achieve with its offers to buy crude for the SPR was not just replenishing the reserve but motivating higher oil production from local companies. And local companies appear to remain unmotivated to do that. Production is already getting costlier for most oil companies in the U.S., according to industry executives. Even though there is optimism in the oil patch, according to the latest Dallas Fed energy survey, it is moderate and guarded, and nobody is in a rush to boost production at current oil prices. It can’t have come as a surprise: U.S. oil producers were not boosting production when prices were significantly higher, either. A bigger problem, however, is whether the Department of Energy can afford to refill the SPR, as Wall Street Journal’s Jinjoo Lee suggested in a recent article. And the answer to this question may well be “No.” Lee reports that the sale of 180 million barrels of crude from the SPR last year probably generated some $17.3 billion in proceeds at an average price of $96 per barrel. But of this $17.3 billion, $12.5 billion was set aside for use by Congress in the latest spending bill to fill the gap left by the cancellation of previously scheduled SPR sales for the period 2024 to 2027, according to ClearView Energy Partners. This leaves the DoE with $4.8 billion to spend on replenishing the SPR, and, according to Lee, this could only buy 70 million barrels at WTI prices of $70 per barrel. This is less than half of what was released last year.

Could 2023 be a turning point for U.S. offshore oil? - The Interior Department’s plan for selling new leases to drill off U.S. coasts is due any day, a legacy-defining policy for President Joe Biden that could help hasten the decline of the nation’s offshore oil business. What’s in the five-year offshore oil plan, a program required under federal law, likely comes down to a fossil fuel lifeline tucked into last year’s sweeping climate and clean energy law as a concession to pro-oil Democratic Sen. Joe Manchin of West Virginia. Overall, the road map could have long-lasting impacts on the Gulf of Mexico, the country’s largest offshore supplier of crude oil. The plan — which has been years in the making — highlights what’s been a difficult balancing act for the Biden administration, the first to fully tangle with the challenges of managing the nation’s vast resources of offshore oil and gas while also trying to address a worsening climate crisis. It is significant in that debate, as the plan determines how often the government sells new rights to drill in federal waters to oil and gas companies. Once a routine matter to encourage the nation’s energy security, the program is under fierce scrutiny from climate activists calling on Biden to shift the nation away from its heavy reliance on fossil fuels. It’s also on the radar of congressional Republicans, who noted as gas prices spiked last summer that the previous plan expired during the Biden administration without another in place. Biden officials have blamed the Trump administration for suspending work on the offshore program, which takes year to write. Biden, who campaigned on a promise to end leasing on federal lands and water, has throttled new sales both offshore and on land, but the administration’s freedom to further constrain offshore oil and gas auctions was undercut by Manchin’s provision in the Inflation Reduction Act. Designed to ensure the federal government keeps some offshore leasing in play, the law makes selling leases for offshore wind projects, a major priority for the Biden administration, contingent on recent offshore oil auctions. The calculus likely being made now in the White House is how much oil does the government have to lease to safely hit climate and clean energy goals, said Kevin Book, managing director of ClearView Energy Partners LLC. Book forecast that the administration would chart a cautious path that offers at least a few oil sales in the program. Others predicted Biden will try to keep his campaign promise to end federal oil leasing by zeroing out sales.

EPA Moves Away From Permian Air Pollution Crackdown - Federal authorities have stepped back from a proposal to address high levels of air pollution from the oil fields of West Texas and New Mexico. Last summer, the U.S. Environmental Protection Agency announced it was considering designating the Permian Basin—the nation’s top-producing oil patch and one of the largest single sources of carbon emissions on Earth—in violation of ozone standards, which would have required substantial reforms in local oil and gas operations. But the proposal was moved to a backburner in the agency’s annual agenda issued last week, reclassified from “active” to “pending,” first reported by Bloomberg News. In a statement, the EPA said it had moved the item in order “to focus on non-discretionary actions.” It marks a win for the oil sector, which pushed hard against the EPA proposal, saying it would decrease production and cost jobs. “While it is encouraging news that the Biden Administration has backed down on this disastrous plan, Texas remains ready to fight any job-killing attacks on our critical oil and gas industry,” said Texas Gov. Greg Abbott in a statement following the EPA move. Permian ozone standards are the latest setback for the Biden administration’s ambitious climate agenda. Despite promising steep, rapid cuts in carbon emissions, Biden has overseen a buildout of oil and gas export capacity, a surge in U.S. shale production and increased drilling on federal lands.. While the administration has proposed much-needed regulations, major concessions to the fossil fuel sector “contradict their commitment to stave off climate change,” said Robin Schneider, director of the Texas Campaign for the Environment. Ozone, also known as smog, forms in the atmosphere when hydrocarbon gases mix with vehicle engine emissions under sunlight. It usually accumulates in big cities with crowded highways. In recent years, ozone levels have risen in the mostly rural Permian Basin. Exposure to elevated ozone levels is the most dangerous for sensitive groups including the elderly, children and people who work outdoors. Ozone aggravates lung diseases such as asthma and emphysema. Hydrocarbon emissions, including from oil and gas wells, are one part of the ozone equation. The other part, nitrogen oxides, or NOx, come primarily from diesel engine exhaust.

Intensified Earthquakes in West Texas May Be Linked to Fracking-Related Activity, Experts Say - South Africa Today- Frequent and intensified earthquake activity in West Texas over the last several months may be linked to fracking-related activity, experts told Sputnik.West Texas, the top region in the state for oil and gas production, experienced a 5.4 magnitude earthquake that hit on November 16 and a 5.4 magnitude earthquake that occurred in the same region on December 16, marking the most intense seismic activity to strike the area in about three decades, according to the US Geological Survey."Most of the earthquakes in West Texas are considered induced earthquakes, which are mainly caused by wastewater injection-a process for oil and gas production," University of Houston Geophysics Professor Aibing Li told Sputnik."Long-term wastewater injection results in a pore pressure increase in crustal rocks, the chief reason to weaken faults and cause earthquakes. Some studies link some earthquakes to fracking activity in West Texas because the process also involves liquid injection and pore pressure increase."Li said she is not surprised by the latest seismic activity since increasing earthquake activity has been going on in West Texas for a decade, however, the increase in large-size earthquakes above magnitude 5.0 is certainly a concern for earthquake hazards.Although earthquake activity is hard to predict, Li predicts seismic activity in West Texas will continue for some time until built-up stress and pore pressure induced by long-term wastewater injection is released enough by earthquakes. However, according to Li, earthquakes have cycles and they will come back if pore pressure is built up again by wastewater injection and fracking.Alexandros Savvaidis, a senior research scientist at the University of Texas' Bureau of Economic Geology and the principal investigator of Texas’ state seismic monitoring network and seismicity research (TexNet), told Sputnik it is too early to conclude what contributed to the November earthquake in West Texas, but he expects it may be somehow linked to oil and gas production in the area."Too early to say what contributed, cannot make new assessment," Savvaidis said. "It is most likely somehow related to oil and gas production in the area."

EPA, pipeline operator reach deal to clean up Kansas oil spill (AP) — The Environmental Protection Agency (EPA) announced Monday that it has reached an agreement with a pipeline operator to clean up a spill that dumped 14,000 bathtubs’ worth of crude oil into a rural Kansas creek.. The agency said in a news release that the Dec. 7 rupture of the Keystone pipeline affected 3 1/2 miles of the creek as it flows through rural pastureland in Washington County, about 150 miles (240 kilometers) northwest of Kansas City. The order requires TC Oil Pipeline Operations Inc., whose parent company is Canadian-based TC Energy, to recover oil and oil-contaminated soil and vegetation and contain the further spread of oil in the creek. Meg McCollister, an EPA regional administrator, said in a statement that the federal government and the state are “committed to a thorough cleanup and restoration.” KDHE issues stream advisory for Slate Creek and confluence of Sand Creek near Newton The 2,700-mile (4,345-kilometer) Keystone system carries heavy crude oil extracted from tar sands in western Canada to the Gulf Coast and to central Illinois. The cause of the 14,000-barrel spill hasn’t yet been announced. Each barrel is 42 gallons, the size of a household bathtub. But U.S. Sen. Maria Cantwell, a Washington Democrat who chairs the Senate Commerce, Science and Transportation Committee, raised concerns in a letter Monday about the decision to grant TC Energy a permit that allowed the pressure inside parts of the Keystone system — including the stretch through Kansas — to exceed the typical maximum permitted levels. “This latest spill is no surprise,” Cantwell told the deputy administrator of the Pipeline and Hazardous Materials Safety Administration in demanding a review of the permit. The spill was the largest onshore in nine years and larger than 22 previous spills on the Keystone system combined, according to U.S. Department of Transportation data.

Gas prices rise as major Colorado fuel refinery remains closed (KRDO) -- Gas prices are on the rise once again in Colorado. On average, Colorado Springs gas prices are currently 22 cents higher than this time last week according to GasBuddy.com. The rising gas prices coincide with the shutdown of Suncor, a major Colorado petroleum refinery. Due to this, gas experts tell KRDO NewsChannel 13 prices will likely get worse before they get better Throughout the state of Colorado, average gas prices are up around 17 cents over the past week according to AAA, but the recent rise is on pace with the rest of the country. The Suncor shutdown is expected to change things. Suncor provides 35% to 40% of gas in Colorado, however, the fuel terminal shut down in December of because of equipment damage. Fuel trucks are now being redirected to Colorado's next-largest refinery in Aurora. Chief Petroleum, a fuel transporting company in Colorado Springs, tells KRDO NewsChannel 13 that the lines to fill up their tanks in Aurora are 6 or 7 hours long. John Schutz with Chief Petroleum says this has forced them to get creating by sending fuel trucks to neighboring states like Kansas or New Mexico to fill up. “Prices are going to rise as a function of the Suncor shutdown through March," Skyler McKinley with AAA told KRDO NewsChannel 13. "It just takes a lot more work, a lot more infrastructure to get refined products from Wyoming, from Utah, from parts of Kansas, from parts of Oklahoma, from parts of Texas that have to be trucked in, trained in, or pipelined in and can't be refined on site.” McKinley says the front range hasn't begun feeling the impact on gas prices from the Suncor shutdown yet. AAA anticipates that impact will be felt in the coming days and weeks. However, they do believe the market will eventually stabilize and come back down, especially after Suncor becomes operational again.

Corrected ozone data estimate fracking and drilling produce more emissions than every Front Range vehicle | Colorado Public Radio - To explain Colorado's consistent smog problem, regulators and scientists often point to two main sources of local air pollution: traffic and oil and gas. Driving and fossil-fuel production both release large amounts of nitrogen oxides and volatile organic compounds, two categories of chemicals that react to form ozone when exposed to heat and sunlight. Estimates suggested each activity played a more-or-less equal role in exposing Front Range residents to ground-level ozone pollution. A 2017 study based on aerial surveys suggested they cause about the same increase in ozone concentrations. More recent estimates from the Regional Air Quality Council, the lead air quality planning agency for the Front Range, showed oil and gas playing a slightly larger role. That all changed in November when Colorado air regulators announced a major correction to air quality modeling data it planned to submit to the U.S. Environmental Protection Agency. New calculations predicted nitrogen oxide emissions from drilling and hydraulic fracturing expected in 2023 were likely nearly double the state's original estimates. As a result, those two activities alone appeared likely to account for more ozone-causing emissions than all cars and trucks along the Front Range. The revised estimates also showed that all oil and gas activities, not just drilling and fracking, likely represented by far the largest source of expected releases of ozone ingredients in 2023, representing 45 percent of nitrogen oxide emissions and 41 percent of volatile organic compound emissions. Following a request from state regulators, the data error led governor-appointed commissioners to hold back parts of its new ozone plan. Michael Ogletree, the director of the Air Quality Control Division, said the decision would allow regulators to consider adding "significant pollution controls" in a follow-up rulemaking next year. "The bottom line is we're acknowledging the mistake and we're going to make lemons out of lemonade. In the end, we'll get an even stronger state implementation plan," Ogletree told CPR News.

Study finds Wyo gas fields abuzz with invertebrates – WyoFile - A pair of peer-reviewed papers examining how insects are faring in reclaimed portions of the Pinedale Anticline and Jonah gas fields found major population and diversity upticks, as well as evidence that breaking up the sagebrush benefits pollinators. To make those determinations, former University of Wyoming PhD student Mike Curran, of the Wyoming Reclamation and Restoration Center, examined 28 reclaimed well pads in the two Green River basin gas fields from 2015 to 2017. The first study, focused on the Anticline, found a surge of bug numbers and families where native grasses were planted on reclaimed well pad ground — and even greater gains where Rocky Mountain bee plant was seeded. A subsequent study, examining infill drilling sites on the more southerly Jonah Field, suggests that native, flowering vegetation planted on rehabilitated ground provided nodes of seasonal habitat for pollinator insects that were well occupied relative to undeveloped sagebrush. “It definitely shows that there are some positive benefits from the reclamation that’s being done up there,” said Curran, who now owns a consulting business, Abnova Ecological Solutions. “My hope is that by getting these native vegetation communities established with more diversity than what was there, the long-term benefit is that, as the noise [from development] moves out, some of these other wildlife species will move back in.” The Jonah and Anticline, large Sublette County gas fields developed around the turn of the century, have been testbeds for researchers studying how industrializing sagebrush-steppe habitat influences native wildlife like sage grouse, pronghorn and mule deer. Decades of monitoring and research have found that all three of those iconic sagebrush-dwelling species have suffered. Despite mitigation efforts, mule deer abundance during drilling on the Anticline declined by 36%. Over the long run, pronghorn avoided the area, too, following the unraveling of an effort to develop a pronghorn-friendly gas field. Sage grouse, likewise, collapsed in the gas fields: males gathering on leks in densely drilled areas fell by half during an era when grouse numbers were otherwise flat in the region. With that history, Curran’s findings about gas drilling reclamation areas being a potential boon for bugs presents a silver lining for gas companies that have invested funds in mitigating wildlife impacts. Josh Sorenson, Jonah Energy’s lead reclamation specialist and a co-author on Curran’s papers, said the results suggest that one long-run benefit of drilling is that the reclamation that follows could be cast as a landscape-level habitat restoration project.

U.S. sets up office to oversee abandoned oil well cleanup (Reuters) - U.S. Secretary of the Interior Deb Haaland on Tuesday issued an order to establish an office to ensure efficient use of the Biden administration's $4.7 billion investment in the cleanup of abandoned oil and gas wells. The Orphaned Wells Program Office will be led by Kimbra Davis, who has worked at the Interior Department since 2009. Orphaned oil and gas wells are those that generally have been abandoned and are no longer producing. "The Department is standing up a new office to support states, tribes and federal land managers as they close and remediate orphaned oil and gas wells that pose environmental hazards to communities across the country," Haaland said in a statement. Well-plugging efforts are part of President Joe Biden's goal to reduce climate-warming methane emissions, create jobs and address pollution in communities impacted by infrastructure left behind after more than a century of oil and gas drilling. A 2022 analysis by the Interior Department found more than 130,000 documented orphaned U.S. wells - far more than the 56,600 tallied in a report by the Interstate Oil and Gas Compact Commission in 2019.A bipartisan infrastructure bill passed in 2021 allocated $4.7 billion to well cleanup efforts, with $4.3 billion to plug orphaned wells on state and private lands, $250 million to cap them on public lands and in national parks, national forests and wildlife refuges and $150 million to do so on tribal lands.

Cleanup of oil spill in South Coast creek complete - Authorities say they’ve finished the cleanup of an oil spill in a South Coast creek. The oil was first discovered in Toro Creek, in the Carpentaria area on January 1. More than 50 people were involved in a week-long cleanup effort. The oil never made it as far as the ocean, or to beaches. There’s no word on the amount of oil involved in the spill. The cause is under investigation, but there is an old capped well dating back to the 1880’s in the area. It was involved in some leakage nearly two years ago. The state’s Oiled Wildlife Care Network was active, but there is no word of any injured wildlife.

More oil flowed through Trans Alaska Pipeline last year than in 2021 or 2020, operator reports - Alaska Beacon The amount of oil flowing through the Trans Alaska Pipeline System was higher in 2022 than in each of the two years prior, the system’s operator said on Tuesday. The system shipped over 176.4 million barrels of oil in the calendar year, averaging 483,415 barrels per day, said Alyeska Pipeline Service Co., the consortium that operates the 800-mile line and its Valdez marine terminal. It was the first time since 2017 that oil flowing through the pipeline – known as throughput – increased from the previous calendar year, Alyeska said in a statement. The 2022 totals were also higher than those from 2020, the company said. In 2021, nearly 174.4 million barrels were shipped through the system, averaging 477,798 barrels per day, Alyeska said. In 2020, about 175.8 million barrels were shipped through the system, averaging 480,199 barrels per day, Alyeska said. The Trans Alaska Pipeline System began shipping oil in 1977. Average daily throughput peaked in 1988 at over 2 million barrels per day. It has been declining since then, though with some variability, as North Slope fields age and become less productive. North Slope oil production has been influenced since early 2020 by several factors, some working in opposite directions. In the early months of the COVID-19 pandemic, ConocoPhillips Alaska Inc., the top oil producer, drastically curtailed operations in Alaska and elsewhere. That included the suspension of production at about 300 North Slope wells and demobilization of nearly 2,000 North Slope workers. The reduced production was not permanently lost but deferred until later, the company said. But also during the period since 2020, under Hilcorp Energy Co.’s new management, the long-term decline of production at the Greater Prudhoe Bay Unit was halted and, eventually, reversed. Hilcorp, a privately owned company known for revitalizing mature fields, became Prudhoe’s operator in mid-2020 after acquiring BP’s Alaska assets. Production at Prudhoe, the largest oil-field unit on the North Slope, is now higher than it was just prior to the Hilcorp takeover, according to the Alaska Department of Revenue. Average daily Prudhoe unit production was 295,427 barrels through December of 2019 but in December of 2022 it averaged 322,261 barrels, according to the department.

Chevron's first cargo of Venezuelan oil after license leaves for U.S. - Chevron's (NYSE:CVX) first cargo of Venezuelan crude under a U.S. license received in November has departed from a ship-to-ship transfer hub near Aruba to its Pascagoula, Mississippi refinery, Reuters reported Tuesday.Chevron's (CVX) Caribbean Voyager tanker transferred the 500K-barrel cargo of Hamaca heavy crude it had loaded in Venezuela to Malta-flagged vessel Sealeoat a ship-to-ship hub near Aruba, which is scheduled to arrive at the Pascagoula refinery on January 15, according to the report.The company confirmed shipping activities in Venezuela began this month and said it is focused on "operating safely and reliably" after restarting operations at its affiliated joint ventures in December.After a decade of record high capital expenditure, Chevron (CVX) is "now among the best-positioned global energy companies to grow production and invest in new technologies," Vladimir Dimitrov writes in an analysis newly published on Seeking Alpha.

Venezuela crude cargoes to arrive in US next week -- About 800,000 bl of crude from Venezuela has shipped under eased US sanctions and is set to arrive at Chevron's 369,000 b/d refinery in Pascagoula, Mississippi, next week. The Aframax Caribbean Voyager loaded with about 380,000 bl of a Merey-type upgraded crude left Venezuela's Jose terminal on 7 January and is set to arrive in Pascagoula near or on 18 January, according to ship tracking data from Vortexa. The Sealeo, also loaded with 380,000 bl of Merey-type crude, is bound for the same destination, arriving in the same time frame, after receiving a ship-to-ship transfer of crude offshore of the Jose terminal. The port handles crude from Chevron's PetroPiar joint venture with state-owned PdV. Other sources have confirmed the cargoes are bound for Chevron's refinery, which is equipped to handle the heavy crude. Chevron is ramping up production again in its joint ventures with state-owned PdV in the wake of the US easing some sanctions against Venezuela last year. But infrastructure issues from years of neglect are slowing some exports. These include a lack of dredging at Lake Maracaibo, near Venezuela' oldest oil producing areas to the west of the Jose terminal, which is forcing ships to use transfers and other maneuvers. A Chevron source said the conditions are not delaying exports but do "limit us to a maximum cargo of 250,000 bl per ship" in Lake Maracaibo. Ship-to-ship transfers are taking place near state-owned PdV's nameplate 635,000 b/d Amuay refinery in Falcon state, near the Punta Cardon port. But other sources said the conditions are a time constraint.

Venezuela December oil output reaches 712,000 b/d --Venezuelan oil output averaged 712,000 b/d in December, down slightly from November as US oil producer Chevron begins to revitalize operations following eased US sanctions.The Orinoco oil belt produced 447,000 b/d of extra heavy crude, according to analysts with Gas Energy, while the nearby Oriente division produced 170,000 b/d of medium to heavy crude. Occidente, including the Zulia fields, produced 95,000 b/d on average. Occidente production reached as high as 110,000 b/d on some day as Chevron's Petroboscan project came back on line on 21 December after a six month hiatus triggered by insufficient storage.Hopes that an increase in crude export cargoes will help lift production with the recent resumption of some Chevron operations may be tempered by ongoing infrastructure issues, including a lack of power in many fields.Another concern is the ability of tankers to navigate in the Lake Maracaibo channel, which has not been dredged since 2015. So far only smaller vessels have been able to arrive to load oil at the Bajo Grande port on the lake, according to sources, which is creating problems for crude storage and even production.The Venezuelan Oil Chamber, a collection of companies involved in the country's oil and gas business, will meet Tuesday to address dredging the channel and adding beacons to help with navigation.

Brazil on alert over protests at oil refineries - Supporters of former Brazilian president Jair Bolsonaro are organizing protests and blockades at refineries owned by the state-controlled oil company Petrobras, seeking to disrupt fuel supplies. Oil workers union FUP reported protests of around 30 to 150 people each at the Reman, Refap, Revap and Regap refineries early this morning. The protesters are demanding the removal of President Luiz Inacio Lula da Silva from office, claiming the October election that Lula won was allegedly stolen. The protests and planned attacks follow yesterday's storming of the country's congress, presidential palace and supreme court and were organized through social media, as posts and messages summoning protests at refineries started circulating over the weekend. Last night, the head of Lula's Workers Party, Gleisi Hoffmann, posted videos of a blockade at the Repar refinery entrance. But the protests have not caused disruptions to operations so far, according to FUP. The contents of the protesters' messaging indicate that Bolsonaro's followers are targeting Petrobras refineries, including the Duque de Caxias refinery (Reduc), in Rio de Janeiro state, the Gabriel Passos refinery (Regap), in Minas Gerais state, the Presidente Getulio Vargas refinery (Repar), in Parana, the Alberto Pasqualini refinery (Refap), in Rio Grande do Sul, the Henrique Lage refinery (Revap), in Sao Paulo state, and the Paulinia refinery (Replan), also in Sao Paulo and the country's biggest. Protesters also plan to disrupt deliveries from the Isaac Sabba refinery (Reman), in Amazonas state, owned since December by Ream, a subsidiary of the fuel distributor Atem. Brazil has a total of 19 refineries, of which at least seven are reportedly targeted by Bolsonaro's supporters. Last night, FUP urged governmental authorities to act against the protesters. "It is essential for the company to be prepared and to take action through all necessary means to ensure the safety of its workers and units, along with market supply", the union said. Further security measures were arranged for Reduc by Rio de Janeiro's governor, Claudio Castro. Brazil's newly-appointed mines and energy minister Alexandre Silveira promised to "ensure national fuel supply and normal operations at refineries, terminals and distribution centers."

Europe Imports Of U.S. Diesel, Gasoline To Hit 2-Year High - Europe’s imports of diesel and gasoil from the United States is on track to reach a two-year high this month, data from Vortexa shows.In December, Europe’s U.S. loadings for diesel and gasoil reached 660,000t, according to Vortexa data cited by Argus. It was the highest amount headed to Europe in any month since September 2020—and a strikingly high 70% increase over cargos loaded in November. The rush for Europe to stock up on diesel and gasoil comes just a couple of months ahead of the European Union’s full ban on crude oil products set to begin on February 5.For the United States, which is already battling falling diesel supplies that are 14% below their five-year average, the increasing European imports have collided with refinery outages over the Christmas holidays due to cold weather, further depressing U.S. distillate and gasoline inventories. Phillips 66 predicted earlier this week that the gasoline and diesel markets will be tight this summer, with refiners running at or near full capacity for months.Europe has also looked to the UAE for additional diesel imports.Russia is gearing up to increase its diesel shipments this month before the EU’s ban kicks in, with fuel shipments from Russian ports set to reach 2.68 million tonnes in January—an 8% increase over last month and the highest rate since January 2020, Bloomberg reported last month. Those export figures only include pipeline and rail shipments.In the first ten days of December, about half of Europe’s diesel imports came from Russian shipping facilities, highlighting the still-strong reliance that Europe has on Russian diesel as recently as a month ago. Europe was also importing a healthy amount of diesel from the Middle East and Asia.

Traders Are Betting On A Diesel Shortage - Talk of a global diesel shortage subsided in the past few weeks as oil prices once again took center stage, but the tight supply situation in middle distillates appears to have remained unchanged, and traders are betting it will continue to be tight. Tighter than the situation in oil, in fact. In his regular column, Reuters’ John Kemp said this week that more traders were bullish on middle distillates than on crude oil. Even though sales of diesel in the last week of 2022 hit 2 million barrels, they were nowhere near sales of crude oil at 30 million barrels for WTI. It’s all about the outlook. Diesel and other distillate fuels swung close to a shortage over the past two years as demand for freight transport surged amid the pandemic and the lockdowns, but production didn’t. As the pandemic began to subside and the lockdowns ended, demand for transportation remained strong and, it seems, so did demand for freight transport specifically. Air travel began to recover, too, with pent-up demand adding to the shortage worry in middle distillates, which, besides diesel, are used to make jet fuel. In the United States, the East Coast got a scare last October with diesel and heating oil inventories lower than usual and demand about to take off as heating season began. Luckily, a shortage was avoided, but prices soared along with many people’s heating bills.Farmers in some parts of the country are also suffering the effects of tight diesel supply and the resulting higher prices even as they still try to recover from the blow the industry suffered from the pandemic.In Europe, buyers rushed to stock up on Russian diesel before the February 5 embargo on fuels kicks in. This week Bloomberg reported that Kuwait is preparing to ramp up its diesel sales to Europe considerably this year to replace embargoed Russian fuels.However, the Kuwaiti fuel will not be able to replace all of the lost Russian diesel supply, so China and India will also probably be exporting more diesel to Europe. It is no coincidence that Beijing issued higher fuel export quotas for Chinese refiners this year.Meanwhile, the silver lining of all the bad economic news reports that marked the last quarter of 2022 appears to be lower diesel use, alleviating the tight supply situation somewhat. Reuters’ Kemp again noted it first in a column from the start of December and then another written a month later.A decline in manufacturing activity and freight transport in response to rising fuel prices has led to a decline in the demand for those fuels. As a result, U.S. distillate fuel inventories inched up between October and November, which was a very welcome development. However, they still remained lower than the five-year average for that time of the year.

US propane shipments to offset lower European output --The European propane market is unlikely to struggle with supply in 2023, with weaker regional import demand and a long global market expected to offset reduced local availability. The market heads into 2023 with limited support from its traditional demand sources — heating and petrochemicals. Ethylene cracker operating rates have dipped below levels seen at the start of the 2008 financial crisis, as demand for all downstream products has fallen. There are hopes for a petrochemical market bounce, but the mood for early 2023 is pessimistic given macroeconomic worries. The heating market could become the key driver of delivered large cargo prices to the Amsterdam-Rotterdam-Antwerp hub, given muted petrochemical sector demand, by taking a larger share of total consumption. But average regional temperatures have been elevated since the start of winter, despite a cold snap in northern Europe in early December. And they have risen to historical highs in parts of mainland Europe in early 2023, including nearly 20°C in Poland, to the alarm of meteorologists. The longer-term weather outlook is uncertain, but the current signs suggest Europe's 2022-23 winter will be well above average. Large cargo propane prices have subsequently fallen since March 2022, to as low as $510/t on 20 December, ending the year at $544/t, having been above $700/t during the summer. Propane prices have also slumped relative to crude, falling by 30 percentage points to 89pc by the end of 2022 from a year earlier. Northwest Europe should still attract US propane imports this year despite weak regional prices owing to increasing US production, slowing demand growth in Asia-Pacific and higher freight costs for long-haul shipments. Asia-Pacific's pull on US exports weakened considerably in 2022, as the Chinese petrochemical sector struggled in the face of domestic Covid-19 restrictions and a faltering global economy. Beijing recently eased its zero-Covid policy but this has had limited upside for LPG demand and the continuing pandemic-related challenges in the country should cap any immediate resurgence in import demand. Worsening delays at the Panama Canal have compounded this issue for US exporters by increasing the cost for exports from the Gulf coast to Asia-Pacific and the journey length. VLGC freight rates hit a seven-year high of $208/t in early December on the Houston-Chiba route from the Gulf coast to Japan, cutting margins for US exporters. Panama Canal delays and freight rates fell at the turn of the year, but congestion and higher shipping costs are likely to continue causing problems in 2023 despite an influx of new VLGCs into the global vessel pool.

Shell LNG trading to lift quarterly profits despite output drop -Earnings from Shell’s liquefied natural gas (LNG) trading operations are likely to have been significantly higher in the fourth quarter of last year despite an output drop caused by plant outages, it said on Friday. Europe’s largest oil and gas company’s update ahead of its full-year results on Feb. 2 also flagged a $2 billion accounting hit in 2022 as a result of European Union and British windfall taxes on the energy sector. Fourth-quarter LNG liquefaction volumes are expected to be the lowest since the company acquired BG Group in 2016 for $53 billion, dropping to between 6.6 million and 7 million tonnes after prolonged outages at two major plants in Australia. But Shell, the world’s top LNG trader, said its LNG trading results are set to be “significantly higher” than in the previous quarter. Shell shares rose nearly 1.5% at 1330 GMT. Shell’s third-quarter results were dented by weaker refining performance and a slump in LNG trading. The LNG trading division recorded a loss of nearly $1 billion in the third quarter after traders were caught out by a rally in European gas prices when Russia halted supplies following its invasion of Ukraine. Yet Shell remained on track for record annual profit in 2022, having posted earnings of $30 billion in the first three quarters, just shy of the 2008 record profit of $31 billion. Shell said it expects fourth-quarter oil product trading results to be “significantly lower” than the third quarter. Several governments across Europe and Britain have imposed windfall taxes on energy companies to limit excess profits from the surge in energy prices that is a burden, not a benefit, for most of the population. Shell expects to incur $2 billion in accounting costs related to the windfall levies on top of $360 million it announced earlier in 2022, but the charge will not impact the company’s adjusted earnings.

Shell finds gas in North Sea prospect and embarks on commerciality evaluation - UK-headquartered energy giant Shell has made a gas discovery in an exploration well in the North Sea, which was spudded using a Noble-owned rig.Shell hired Maersk Drilling, now part of Noble Corp., to provide the Maersk Resilient – currently called Noble Resilient – harsh-environment jack-up rig to carry out the drilling of the Pensacola well and seabed operations for the placing of this rig were slated to start towards the end of July. At the end of October, plans were revealed to spud this well in mid-November 2022.The 2009-built Noble Resilient Gusto-engineered MSC CJ 50 high-efficiency jack-up rig was constructed at Keppel Fels Shipyard in Singapore. It can accommodate 120 people.The drilling operations at this gas prospect started in November 2022. The well 41/05a-2 is located in license P2252, which Shell operates with a 65 per cent interest while Deltic Energy (30 per cent) and ONE-Dyas (5 per cent) act as its partners. , Shell reported that gas has been encountered in the reservoir and recommended to the Joint Venture (JV) that a full well testing programme be undertaken. Due to this, the JV has endorsed Shell’s recommendation to undertake a full well test to evaluate the commerciality of the Pensacola prospect and update the geological model. The well testing is expected to take approximately 30 days.

Norway Replaces Russia As Germany’s Top Gas Supplier -Norway became Germany’s single-largest natural gas supplier in 2022, overtaking Russia, as total German gas imports dropped by 12.3% compared to 2021, the German Federal Network Agency, Bundesnetzagentur, said on Friday.Norway provided 33% of the gas Germany imported last year, followed by Russia, whose share fell to 22% for last year, compared to a 52% share in 2021, said the German regulator.Last year, Russia started gradually cutting gas supply via the Nord Stream pipeline to Germany in June until shutting down the pipeline in early September, claiming an inability to repair gas turbines for the pumping stations due to Western sanctions. The lack of gas deliveries from Russia was partly compensated for by additional imports, including from the Netherlands, Belgium, and Norway, the German network agency said today. Europe’s biggest economy also saved a lot of gas in 2022, partly due to household saving and to industrial production curtailments due to soaring gas prices.According to Bundesnetzagentur, Germany’s natural gas consumption dropped by 14% in 2022 compared to the average consumption for the past four years. Industrial demand fell by 15% compared to the average for the past four years. Between October and December, industrial gas consumption fell by 23%, and consumption by private consumers and businesses was 21% below the previous years. As supply from Russia fell and then stopped in early September, Germany started looking at importing LNG and began construction of regasification terminals to be able to welcome cargoes. The first such terminal, a floating LNG import terminal, officially opened at the end of 2022 at Wilhelmshaven on Germany’s North Sea coast. Earlier this week, Germany welcomed the first tanker carrying LNG at the newly opened LNG import terminal at Wilhelmshaven, with the cargo arriving from the Calcasieu Pass export facility in the United States.

Europe’s Warm Winter May Not Be Such Good News For Energy - The last month has been a month of celebration in the European Union. Gas demand is down because of the unusually warm weather. As a result, prices are down, and the crisis, according to analysts, appears to be averted. The problem is that some of those analysts are adding the qualifier “For now.” The European Commission boasted an over 20-percent decline in demand in gas consumption on the continent over the period between August and November last year. This was not just a result of warm weather but also concerted action by European governments to discourage more demand.Then December turned out to be as warm as October, and demand fell naturally, as did prices. Some began talking about an end to the crisis and an end to the winter, even though in December, the astronomical winter was just beginning. January is turning out to be warm so far, adding substance to predictions that Europe lucked out in a major way this winter and will finish it with enough of a gas cushion should another cold spell pay Europeans a visit.In fact, winter has been so mild there has actually been an unseasonable increase in gas storage, Reuters’ John Kemp noted in a recent column. Only he also noted something else in that column. That the second factor leading to this unseasonable increase was the decline in industrial gas consumption. And the only way industrial consumers can reduce consumption is by shrinking their operations.This is the dark side of the success a lot of media are celebrating alongside Brussels. These celebrations appear to ignore the fact that the 20.1-percent decline in gas consumption across the bloc was also in no small part made possible by exorbitant gas prices that weighed on consumption the way excessive prices always weigh on the consumption of a commodity.Then there is the fact that although gas prices are down from last summer’s peaks, they are nowhere near where they were in 2019. As Politico noted in a recent story about European gas demand and prices, at close to 70 euro per megawatt-hour, European benchmark gas prices were about five times what they were in 2019.The problem that European politicians do not want to talk about is that as long as the EU relies on LNG, these prices are not going to go much lower for the very simple reason that LNG could never be as cheap as pipeline gas.The other reason is that Russian pipeline deliveries are not returning any time soon, not along Nord Stream 1, anyway, and this means that the EU will continue to rely on LNG both by choice and by necessity for the observable future. As wholesale prices on the TTF market fall, so will retail prices when they catch up with the wholesale prices—retail energy suppliers buy their gas on the wholesale market months in advance—and the winter may well continue mild. But that would likely mean a dry, hot summer, too. And that would increase the demand for energy for cooling purposes.

Explosion in gas pipeline in Lithuania, no injuries reported - (AP) — An explosion occurred Friday in a pipeline in central Lithuania carrying gas to the north of the country and neighboring Latvia but no injuries or significant supply disruptions were reported. Baltic media said the blast sent flames 50 meters (164 feet) into the sky and forced the protective evacuation of a nearby village. The operator of Lithuania’s natural gas transmission system, AB Amber Grid, said the explosion took place away from residential buildings and “according to initial data” no people were injured. “The fire is being extinguished by (firefighters who) immediately arrived on the scene,” the company said in a statement. Raimonds Cudars, the energy minister in neighboring Latvia, said the explosion in Lithuania so far has not caused problems with natural gas supplies in Latvia. The Baltic News Service said Cudars had been informed that the reason for the explosion was a technical accident. Amber Grid said the explosion appears to have occurred in one of two parallel pipelines, and the other was not damaged. It said the suspended gas supply to Latvia will be restored within hours. Repair work on the damaged pipeline is expected to start on Saturday. The gas flow through the damaged pipeline in the Pasvalys area was immediately interrupted. “We immediately started to investigate the circumstances of the incident and ensure gas supply to consumers,” Amber Grid CEO Nemunas Biknius said in a statement. He said the government had been informed. Firefighters rushed to the scene and flames lit up the dark sky and were visible several kilometers (miles) away as the gas remaining in the pipe continued to burn Friday evening. “It seemed as if planes were flying somewhere low -– a high-pressure gas pipeline exploded,” the Pasvalys district’s Mayor Gintautas Gegužinskas told LRT RADIO. “The flames are shooting up to a high altitude.” Lithuanian broadcaster LRT said the village of Valakeliai, with about 250 inhabitants, was being evacuated as a precaution. The village is located less that a kilometer (0.6 miles) from the pipeline. “There is no panic, there are (firefighters) standing by, making sure the buildings don’t catch fire. I think the situation will be under control,” Sigitas Šležas, a member of the Valakeliai village community, told BNS. The pipeline carries gas from Lithuania's Baltic port of Klaipeda to Latvia. Klaipeda is the only major seaport in Lithuania. In September, undersea explosions in the Baltic ruptured the Nord Stream 1 pipeline, which until Russia cut off supplies at the end of August was its main supply route to Germany. They also damaged the Nord Stream 2 pipeline, which never entered service as Germany suspended its certification process shortly before Russia invaded Ukraine in February. Lithuania was the first European Union nation which completely cut off Russian gas imports in April 2022, weeks after the invasion. The Baltic state imports gas from multiple countries through the Klaipeda Liquid Natural Gas terminal built a decade ago. The terminal satisfies all Lithuania’s natural gas needs and allows deliveries to neighboring countries.

Yellen says oil price cap limiting Russia's energy revenues so far (Reuters) - U.S. Treasury Secretary Janet Yellen said on Tuesday that the price cap on Russian oil imposed by Western countries in December so far appeared to be achieving its goals of keeping Russian oil on the market while limiting Russia's revenues. "While the crude oil price cap has only been in effect for around a month, we have already seen early progress towards both of those goals, with senior Russian officials having admitted that the price cap was cutting into Russia's energy revenues," Yellen said at the start of a meeting with Canadian Finance Minister Chrystia Freeland. The crude oil price cap was imposed on Dec. 5 by G7 countries, including the United States, Canada and Australia, prohibiting the use of Western-supplied maritime insurance, finance and other services for cargoes priced above the cap level of $60 per barrel. Russian Urals grade crude for delivery to Europe was quoted at $52.48 on Tuesday, maintaining a steep discount to benchmark Brent crude , which was trading at $80.82. Yellen said energy markets remained well-supplied following the European Union's ban on imports of Russian crude oil, also imposed on Dec. 5. "Public reports indicate countries are using the price cap to drive steep bargains on the price of Russian oil imports," Yellen added. But Moscow has vowed to ban oil supplies to countries that abide by the price cap starting on Feb. 1, and Russia's energy ministry said earlier on Tuesday it is working on additional measures to enforce the ban on direct or indirect use of the price cap.

Kremlin "Keeping Very Close Watch" On Russian Oil Prices, Will Limit Oil Discount - Russia’s government is watching Russian crude oil price trends closely after reports that its flagship crude currently trades at around half the price of the international benchmark, Kremlin spokesman Dmitry Peskov said on Tuesday. “The government, first of all Deputy Prime Minister [Alexander] Novak, is watching the situation very closely, as [well as] the Energy Ministry,” Peskov said, as carried by Russian news agency TASS. Vladimir Putin’s spokesman was asked if the Kremlin was concerned about the very low prices at which Russia’s Urals is trading and the consequences for Russia’s budget income. Urals, Russia’s flagship crude grade, was going for $37.80 a barrel at the Baltic Sea port of Primorsk on Friday, half the Brent Crude price on the same day, Bloomberg reported on Monday, citing data provided by Argus Media. Russia is also “keeping a very close watch” on the situation after the presidential decree in retaliation to the price cap on Russian oil, Peskov said today.At the end of December, Russian President Vladimir Putin banned the sale of Russian oil to countries that have joined the so-called Price Cap Coalition and comply with the cap imposed by the Western countries. The Russian move was weeks in the making and follows the start of the price cap mechanism that the G7, the EU, and Australia implemented on December 5.The EU and G7 banned maritime transportation services from shipping Russia’s crude oil to third countries if the oil is bought above the price cap of $60 per barrel, and the EU imposed an embargo on seaborne imports of Russian oil into the bloc.Putin’s decree bans the sale of Russian oil to countries that comply with the price cap and will be in effect from February 1 to July 1, 2023.Russia has the right to respond to “illegal measures” as it sees fit, Putin’s spokesman Peskov has said.

The West’s oil war against Russia is starting to take its toll — sparking calls for tougher measures - Russia's revenue from fossil fuel exports collapsed in December, according to a new report, significantly hampering PresidentVladimir Putin's ability to finance the war in Ukraine.The findings, Ukrainian officials and campaigners say, illustrate the effectiveness of targeting Russia's oil revenue and underscore the urgent need for Western policymakers to ratchet up the financial pressure on Moscow in order to help Kyiv prevail.Published Wednesday by the Centre for Research on Energy and Clean Air, an independent Finnish think tank, the report found the first month of the European Union's ban on seaborne imports of Russian crude and the G-7's price cap had cost Moscow an estimated 160 million euros ($171.8 million) per day. Ukraine war: Moscow's invasion likely to inflict economic decline on RussiaCREA's report said the Western measures were largely responsible for a 17% fall in Russia's earnings from fossil fuel exports in the final month of 2022. It means that Russia — one of the world's top oil producers and exporters — saw revenue from fossil fuel exports slump to its lowest level since Putin launched his full-scale invasion of Ukraine in late February."The EU's oil ban and the oil price cap have finally kicked in and the impact is as significant as expected," Lauri Myllyvirta, lead analyst at CREA, said in a statement."This shows that we have the tools to help Ukraine prevail against Russia's aggression. It's essential to lower the price cap to a level that denies taxable oil profits to the Kremlin, and to restrict the remaining oil and gas imports from Russia," Myllyvirta said.The Group of Seven, Australia and the EU implemented a $60-per-barrel price cap on Russian oil on Dec. 5. It came alongside a move by the EU and U.K. to impose a ban on the seaborne import of Russian crude oil. Together, the measures reflected by far the most significant step to curtail the fossil fuel export revenue that is funding the Kremlin's onslaught in Ukraine.Energy analysts had been skeptical about the impact of a price cap on Russian oil, particularly as Moscow had been able to reroute much of its European seaborne shipments to the likes of China, India and Turkey.Russia retaliated against the Western measures late last month by banning oil sales to countries that abide by the price cap.Kremlin spokesperson Dmitry Peskov has previously said a Western price cap on Russian oil would not impact its ability to sustain what it describes as its "special military operation" in Ukraine. Peskov also warned the measure would destabilize global energy markets,Reuters reported.A spokesperson for Russia's Finance Ministry was not immediately available to comment on the report's findings.

Rosneft wants to supply gas to Power-of-Siberia 2 pipeline – Kommersant - Russian oil major Rosneft wants to supply natural gas from its fields in the Krasnoyarsk and Irkutsk regions to the Power-of-Siberia 2 pipeline that will supply China via Mongolia, the daily Kommersant reported on Monday. Russia's Gazprom is aiming to start delivering gas via the 2,600-km Power-of-Siberia 2 pipeline by 2030. The pipeline could carry 50 billion cubic metres (bcm) of natural gas per year. Rosneft has reserves of 1.5 trillion cubic meters of gas in the fields along the route of the future gas pipeline, Kommersant reported. Russian President Vladimir Putin asked Deputy Prime Minister Alexander Novak to work out with Gazprom Rosneft's request to take its gas reserves into account when building the pipeline, the daily reported.

OVL retakes 20% stake in Sakhalin-1 oil, gas fields - ONGC Videsh Limited, the overseas arm of state-owned Oil and Natural Gas Corporation (ONGC), has re-taken a 20% stake in the Sakhalin-1 oil and gas fields in the far east region of Russia, an official said on Monday. Russian President Vladimir Putin in October last year disbanded Exxon Neftegaz - a regional subsidiary of U.S. super major ExxonMobil - as operator of the Sakhalin-1 and transferred the project and all of its assets and equipment to a new operator. The other former foreign shareholders in the project - Japan's Sodeco consortium and ONGC Videsh - were asked to apply to the Russian government to regain their shareholdings in the project. OVL applied and has been given the same shareholding as it had previously, the official said. Production from Sakhalin-1 stopped in April 2022 after Exxon Neftegaz declared force majeure at the project in response to international sanctions imposed on Russia following its invasion of Ukraine. Moscow assigned the Sakhalin-1 project and operatorship to a regional subsidiary of Russian oil producer Rosneft. Russia then asked foreign shareholders in the project - ExxonMobil, Sodeco and ONGC Videsh - to apply to reinstate their shareholdings in the project before mid-November. The Sodeco consortium too has retained its stake but there is no clarity on what will happen to ExxonMobil's stake. ExxonMobil had previously stated that it had fully exited Sakhalin-1 after the confiscation of assets and has no plans to operate the project. Sakhalin-1 was producing 2,20,000 barrels per day of oil before the Ukraine war. Of this, OVL's share was 44,000 bpd or 2.2 million tonne per annum. However, western sanctions following the Russia-Ukraine war led to constraints in evacuating oil. Production resumed in November and has reached 1,40,000-1,50,000 bpd, the official said adding the output is likely to restore to original levels by March end.

Russia’s Sakhalin-1 near full oil output after Exxon exit –source - Russia has restored oil output at its Sakhalin-1 project after struggling with production following the exit of previous operator Exxon Mobil Corp due to sanctions, an industry source said. Oil output from Russia’s Sakhalin-1 project has recovered to 140,000-150,000 barrels per day (bpd), about 65% of the capacity and will soon hit full level of about 220,000 bpd, an industry source familiar with the matter said on Monday. Sakhalin-1 output collapsed after Exxon issued force majeure and abandoned the offshore project due to Western sanctions. Western countries and their allies imposed various sanctions on Russia after Moscow sent its troops to Ukraine for a “special military operation” in February last year. Moscow retaliated by blocking foreign investors’ assets, seizing them in some cases. Oil output of Sakhalin-1 is expected to reach near the peak level of about 200,000-220,000 bpd in “three to four weeks”, said the source, who declined to be named as he is not authorised to speak to media. Russia has established a new entity, managed by a Rosneft subsidiary, that owns investor’s rights in Sakhalin-1 after the exit of ExxonMobil. Russia last year approved requests of India’s ONGC Videsh, the overseas investment arm of state-run Oil and Natural Gas Corp, and Sakhalin Oil and Gas Development Co (SODECO), a consortium of Japanese firms, to retain their 20% and 30% stake respectively in the project. This source said the new entity, in which Indian and Japanese investors have a stake, had sought views from the partners on new ways to operate the project.

China Ramps Up Imports Of Russia’s Arctic Crude - China has stepped up imports of Arctic Russian crude grades in the latest sign of a re-routing of Russian oil deliveries internationally.The shift was reported by Bloomberg, which cited data from Vortexa and Kpler, with the Vortexa data showing that China only bought its first cargo of Arco—a sour, heavy crude—in November last year. According to traders that Bloomberg spoke to, the grade could displace some Iraqi oil imports.“The re-routing of Arctic grades is absolutely taking place,” Viktor Katona, lead crude oil analyst at Kpler, told Bloomberg. “Russia’s Arctic grades were among the Europe-oriented streams that since Dec. 5 have to find new homes elsewhere, and in all of those cases it’s pretty much an India and China split.”Meanwhile, India is also ramping up imports of Arctic Russian crude. Last month the first-ever cargo of the Varandey crude blend from the Timan-Pechora oilfields, operated by Russian firm Lukoil, reached India, according to data from Vortexa.Since the Russian invasion of Ukraine, India—the world’s third-largest crude oil importer—has also bought cargoes of other Russian crude grades from the Arctic, such as Arco and Novy Port Light—the same grades that China is now importing, according to the latest data.Previously, Arctic crude was shipped to Europe but flows have been shifting as the EU targeted Russia’s energy industry with a series of sanction moves that culminated with an embargo on most Russian crude oil imports that came into effect on December 5. An identical embargo on Russian fuels is scheduled to come into effect on February 5. As a result, China and India have replaced Europe as the largest buyers of Russian oil, with India raising its intake of Russian crude especially markedly. From a marginal exporter before the war in Ukraine, Russia has now turned into India’s biggest supplier of the commodity.

Pakistan to sell two gas power plants to Qatar: Press - Pakistan is expected to sell two gas-fired power plants to Qatar in an estimated $1.5bn deal to avoid a looming sovereign default, The Express Tribune reported on January 7. The development came two days after the government constituted a new cabinet committee to sell state assets on a fast-track basis. The newspaper reported that the 2460 MW capacity LNG-fired power plants will now be handed over to this committee to find a suitable foreign buyer. These plants had been set up with government funding during the last PML-N government and are owned by the National Power Park Management Company. A new law enacted last year authorises the direct sale of assets to foreign nations, instead of following the long and cumbersome process set under the Privatisation Ordinance of 2000. There is one view that only 30% equity will be sold to Qatar and the price discovery will be based on known factors, reducing the element of discretion, the newspaper reported. Pakistan faces an imminent threat of sovereign default due to a delay in the revival of the International Monetary Fund programme. Finance minister Ishaq Dar has listed the sale of the gas-fired power plants among the “low-hanging fruits” that will be sold to arrange foreign currency. Dar has vehemently denied that Pakistan will default on its debt obligations. Pakistan had engaged Credit Suisse in April 2019 to sell the plants, but the contract expired in October 2020 and was extended for a period of one and a half years. The agreement, however, expired again on April 29, 2022, The Express Tribune reported.

Deal reached for sale of Russian-owned refinery plant in Italy's Sicily - Russian oil company Lukoil said Monday that it has reached an agreement for the sale of a refinery plant in Sicily, where thousands of workers have been fearing job losses due to the European embargo on Russian oil. A company statement said that the sale of the ISAB Srl refinery to G.O.I Energy is planned to be completed by the end of March pending various approvals by authorities, particularly the Italian government. The refinery employs 3,500 people and indirectly supports the jobs of 6,500 others. The workers at the refinery protested in late 2022, fearing for their future as a consequence of the embargo imposed because of Russia's war against Ukraine. About 20% of Italy's oil is refined at the plant. Lukoil said that under the agreement the new owner will retain jobs and ensure health and safety conditions. It noted that G.O.I. Energy investors own a majority stake in Bazan Group, which operates Israel's largest integrated refining and petrochemical facility. No financial details of the agreement were immediately released. Lukoil said that "for the efficient operation of the complex after its acquisition, G.O.I. Energy formed a partnership with Trafigura, an international trader of oil and petroleum products.

Flow of gas from Libya to Italy restored after two-day stop, report –The flow of gas from Libya to Italy has been restored to levels of 7-8 million cubic meters per day, after the interruption on 5 and 6 January and the reduction in the following two days, Italian news agency Nova reports. Citing operational data from Snam map, Nova highlighted that the Libyan gas arrives at Gela, in Sicily, from the Libyan plant of Mellitah via the Greenstream, the gas pipeline of over 500 kilometers which crosses the Mediterranean Sea, with an hourly frequency of approximately 330,000 cubic meters per hour.

Libya to raise oil production by 2 million b/d within 3 years, says oil minister - Libya intends to raise its oil production to 1.5 million b/d in 2023 with plans to scale up to 2 million b/d within 3 years, revealed Oil Minister Mohamed Aoun. Speaking during an interview with Al-Jazeera Mubasher which aired on Saturday, Aoun said that oil production would gradually increase according to the plans of the National Oil Corporation (NOC). “This increase would depend on the mechanism of the activity carried out by the Corporation and the completion of the development activities of oil wells,” he added. The minister also stated that he expects “large oil discoveries in the Mediterranean” and that is why he hopes for “an amicable solution” to the issue of maritime borders between Libya and Turkey on one side and Egypt and Greece on the other.

Libyan Court Suspends Controversial Oil And Gas Deal With Turkey --A Libyan court has suspended a deal for offshore oil and gas exploration that Libya and Turkey inked last year, a deal that sparked outrage from neighbors Egypt and Greece.The deal concerned waters that Libya and Turkey have declared to be theirs but that are disputed by Egypt and Greece, Reuters noted in a report on the news that cited an unnamed source. The Libyan government can appeal the ruling, the source also told Reuters.Greece’s Permanent Representative at the UN, Maria Theofili described the deal as one “violating the sovereign rights of Greece, is a violation of international law and a deliberate escalation that undermines stability in the region.”The deal, signed in October last year, followed an earlier, security agreement, inked in 2019, that demarcated the maritime border between Libya and Turkey—the same demarcation that angered Egypt and Greece."We've signed a memorandum of understanding on exploration for hydrocarbons in Libya's territorial waters and on Libyan soil, by mixed Turkish-Libyan companies," the foreign minister of Turkey, Mevlut Cavusoglu said at the time, asquoted by the AFP.The official noted, then, that the deal is only between Libya and Turkey, "two sovereign countries -- it's win-win for both, and other countries have no right to interfere".The eastern Mediterranean was put in the spotlight by a series of large gas discoveries off the coast of Israel in the past decade or so, as well as discoveries in Turkish and Cypriot waters. The potential of the region has become particularly relevant now when Europe is looking for new sources of gas.At the same time, the events around the deal with Turkey had contributed to the deterioration of the internal political situation in Libya, as Ankara signed its deals with the Government of National Unity—the entity recognized by the UN but not by rival political factions in Libya itself.

Iraq's December oil output stable, in line with OPEC+ quota -SOMO data - (Reuters) - Iraq produced 4.43 million barrels per day (bpd) of crude in December, unchanged from the previous month, data from state-owned marketer SOMO seen by Reuters showed on Tuesday. According to the production figures, Iraq's output was again in line with its quota under the OPEC+ agreement for December. Higher exports from the semi-autonomous Kurdistan Region were offset by lower refinery runs, the data showed.

Iraq complied with Opec+ quota in December: Somo - Iraq's crude production remained in line with the previous month in December and in compliance with its output quota under the Opec+ agreement, according to state-owned oil marketer Somo. Iraq produced 4.431mn b/d in December, which qualifies as its production ceiling for the month, and up by just 1,000 b/d from November output of 4.43mn b/d, according to Somo's figures.Iraq's production is likely to fall in February, a source with knowledge of the matter told Argus, because of a planned 10-day maintenance shutdown of its 400,000 b/d West Qurna 2 field. The shutdown will result in an estimated 114,000 b/d decrease in the country's overall monthly production. The Opec+ producer group opted at its most recent ministerial meeting in December to roll over the nominal 2mn b/d cut to production targets that ministers agreed at the previous meeting in October, which is due to last until the end of 2023. As the third largest producer in the group, Iraq was responsible for delivering 11pc of that cut. Iraq's Opec representative Mohammad Saadoun Mohsen told Argus in October that Iraq planned to deliver its cut by limiting refinery runs rather than lowering exports. Crude supplied to domestic refineries continued to drop, reaching 677,000 b/d in December, down from 720,000 b/d in November and 802,000 b/d in October, according to Somo. The drop in Iraq's refining runs in December is also attributed to the shutdown of the 70,000 b/d Salahuddin 1 plant, part of the 300,000 b/d Baiji complex facility, as a result of scheduled maintenance, a source with knowledge of the matter told Argus. Somo said there was also a small increase in Iraq's crude exports in December — to 3.749mn b/d from 3.678mn b/d in November, mostly attributed to an increase in exports from the northern Kurdistan region. These export figures include Kirkuk blend supplies sold by the Kurdistan Regional Government (KRG).

OPEC’s Oil Production Rises By 120,000 Bpd In December -A rebound in Nigerian production raised OPEC’s oil output in December by 120,000 barrels per day (bpd) compared to November, according to a monthly Reuters survey published on Wednesday. Despite the increase in oil production last month, OPEC was still pumping well below the collective target of the ten members bound by the OPEC+ pact. The larger OPEC+ group moved to cut its collective production target by 2 million bpd in November—about 1.27 million bpd set to come from OPEC members.The 10 producers in OPEC with production quotas saw their combined oil output at 780,000 bpd below the target for OPEC for December. The shortfall slightly decreased from 800,000 bpd below the OPEC quota for November.In December, OPEC pumped 29 million bpd, up by 120,000 bpd month over month, mostly thanks to a recovery in Nigeria’s production from outages, per the Reuters survey. Nevertheless, Nigeria is the biggest laggard in the OPEC+ production quota, alongside other African OPEC members such as Angola. Earlier this week, the Bloomberg survey of OPEC production also showed a rise in output for December, by 150,000 bpd over November, thanks to the rebound in Nigerian oil production.In October, Nigerian authorities discovered an illegal underwater 2.5-mile connection from Nigeria’s Forcados export terminal. It had been operating undetected for around nine years, state-run oil company NNPC said at the time. While Nigeria has known of the land-based pipeline taps for decades, an underwater one was the first of its kind.Nigeria estimates it is losing about 600,000 bpd of crude oil due to theft. But for December, Bloomberg’s survey showed that Nigeria’s oil production hit an eight-month high of 1.35 million bpd.OPEC’s crude oil production continues to lag behind its designated quotas, and fell in November by 744,000 bpd, its most recent Monthly Oil Market Report showed. For November, Saudi Arabia’s production fell by 404,000 bpd, to 10.474 million bpd. The UAE, Kuwait, and Iraq also saw production decreases for November, bringing the group’s production to 28.826 million bpd—the lowest since June.

Opec pres urges wait-and-see approach to output policy --Opec+ would be "wise" to wait until there is more clarity on the outlook for the oil market before amending production targets, according to new Opec president Gabriel Mbaga Obiang Lima. Speaking at a briefing organised by the African Energy Chamber, Obiang Lima said the group must be "careful" in its policy planning given the considerable uncertainties the market is facing. He characterised 2022 as a "very special" year, with a host of competing factors making it "very difficult" for Opec and its non-Opec partners to navigate. "We had so many events," Obiang Lima said. "We had a major conflict between Russia and Ukraine, we had a complete change in the flows of resources going from Russia all the way to Asia. We had the Europeans [diversifying] their sources [of energy], you had an African bloc, and even some other developing countries saying they reject the idea of abandoning fossil fuels." At its last ministerial meeting in December, Opec+ opted to roll over the nominal 2mn b/d cut to crude output targets agreed at the previous meeting in October, citing similar concerns over an uncertain market outlook. The group has since said that both the October and December decisions helped balance the oil market. Although ministers are not due to meet again until 4 June, the group's Joint Ministerial Monitoring Committee (JMMC) is scheduled to convene on 1 February to discuss the market and evaluate whether any change to production policy is needed. Obiang Lima said the group will be watching developments going into that meeting, but he urged a cautious approach, particularly in light of fresh uncertainty around the pace of China's oil demand recovery following Beijing's decision to abruptly end its zero-Covid policy last month. Chinese demand and the fallout from the war in Ukraine are "clearly the two key issues that everyone is monitoring most closely", but the prospect of a widespread recession is also on Opec's radar, Obiang Lima said. "We are going into 2023 with a lot of countries going into recession," he said. "Countries will need to re-evaluate their budgets and re-evaluate their economies."

China Signals Surge In Oil Demand With 20% Increase In Refiner Oil Import Quotas --China issued a substantial increase in its crude imports quotas for this year, the clearest sign yet that Chinese refiners are set for a material increase in output - and a surge in demand for oil - as the nation finally moves away from its ridiculous Covid Zero policy.On Monday, China issued a second batch of 2023 crude oil import quotas, raising the total for this year by 20% compared to the same time last year, according to Reuters and Bloomberg. According to the document from the Ministry of Commerce, 44 companies, mostly independent refiners, were given 111.82 million tonnes in import quotas in this round.On Monday, China issued a second batch of 2023 crude oil import quotas, raising the total for this year by 20% compared to the same time last year, according to Reuters and Bloomberg. According to the document from the Ministry of Commerce, 44 companies, mostly independent refiners, were given 111.82 million tonnes in import quotas in this round.Combined with the 20 million tonnes in 2023 quotas granted to 21 refineries in October, that takes the total for this year to 131.82 million tonnes, up from the 109.03 million tonnes issued in the first batch for 2022. The second batch of quotas for 2022 was released in June last year.

• Zhejiang Petrochemical Corp, which operates China's biggest privately-owned refinery site, was granted the largest quota of this batch at 20 million tonnes, on par with last year's issuance, according to the documents.
• Hengli Petrochemical received a quota of 14 million tonnes and Shenghong Petrochemical's newly started 320,000 barrels-per-day refinery received 8 million tonnes. Hengli won a quota of 4.83 million tonnes in the first batch in October.

Additionally, as Reuters notes, China, the world's biggest oil importer, allocated some 2023 quotas earlier than usual to shore up the sluggish economy by encouraging refiners to boost operations. "The issuance is largely in line with market anticipation, and it suggests that Beijing is trying to boost economy by allowing refineries to ratchet up operation," a Singapore-based oil trader told Reuters.

China Issues Massive Oil Import Quotas As It Reopens Borders -- China’s oil demand could soon rebound as the country reopens from Covid after nearly three years. Authorities have issued a massive batch of allowances for independent refiners to import crude oil. China’s latest batch of crude import quotas for refiners allows 44 private refiners to import 111.82 million metric tons of crude, traders familiar with the Chinese policy told Bloomberg on Monday. Independent refiners are allowed to import certain volumes of crude oil in several batches each year, with quantities set by the Chinese government. The quotas for this year are already 132 million tons, compared to 109 million tons of crude oil import allowances issued as of this time last year, according to Bloomberg. China’s reopening is expected to drive fuel demand growth after the initial exit Covid wave wanes at some point later this quarter.China’s borders reopening this weekend—after almost three years—sent oil prices surging by 3% early on Monday, as the market expects travel to pick up in the coming weeks and around the Lunar New Year on January 22. Early on Monday, Brent Crude prices jumped above $80 per barrel again as increased optimism about China’s demand trumped—for the time being—fears of recessions looming this year.In another sign that China’s refiners could import and process additional crude in the coming months, Chinese authorities have approved exports of gasoline, diesel, and jet fuel of 18.99 million tons—an increase of 46% over the 13 million tons of fuel export quotas China allocated in the first batch for 2022, consultancies based in China told Reuters last week.The latest batch of fuel export quotas signals China’s willingness to continue supporting refinery throughput and capturing good refining margins in Asia while domestic demand is still weak.

Seven large oil spills reported in 2022 - Data from ITOPF shows that seven oil spills of more than seven tonnes were recorded from tanker incidents in 2022. This brings the decade average to almost six, which is on a par with the 2010s and a dramatic reduction from the numbers reported in earlier decades.Three of the seven incidents in 2022 resulted in spills greater than 700 tonnes (classified as ‘large’ spills). Two of these incidents occurred in Asia and one in Africa. They resulted in the release of crude, bitumen and fuel oil into the marine environment.The four other incidents, classified as ‘medium’ spills, involved spills of fuel oil and diesel.The total volume of oil lost to the environment from tanker spills in 2022 was approximately 15,000 tonnes; more than 14,000 tonnes of which was lost in the three large incidents.This figure is higher than the previous three years but remains a fraction of the 2.95 billion tonnes of crude oil and petroleum products that are transported by sea each year.ITOPF has recorded tanker spill statistics over the last 50 years and in this time, despite some annual fluctuations, the number and volume of oil spills from tankers has dropped dramatically. These numbers are stabilising at a low level, with the reduction being driven by positive change from the shipping industry, and supported by governments. The ongoing commitment to exploring and investing in ways to improve standards is reflected in the trends we see in the spill statistics said ITOPF. Accidents involving non-tank vessels which carry oil as bunker fuel may also be a source of pollution. Other non-shipping sources, such as pipeline spills and oil industry activities, as well as natural seepage, also contribute towards the global input of oil into the marine environment.

Oil prices may rebound to $105 on solid demand growth, Goldman Sachs says --US investment bank Goldman Sachs expects Brent crude to trade at $105 a barrel by the fourth quarter of 2023, driven by a “solid” growth in global oil demand. It expects oil demand to grow by 2.7 million barrels per day this year and said the market would be back in a deficit in the second half of 2023. This should allow the Opec+ alliance to unwind its October production cut in the second half of the year, said Goldman Sachs. However, if the market turns out to be softer, then alliance “could stick to its October cuts or cut production even further, given its significant pricing power”. “Overall, this ‘Opec put’ limits the downside risks to our bullish oil price forecast,” the lender said. In October, the Opec+ group of oil-producing countries slashed its collective output by 2 million bpd until the end of 2023 on concerns of a global economic slowdown. The group stuck to its production targets in December amid fears that sanctions on Russian oil exports would significantly reduce global crude supplies. The impact on oil prices of news surrounding Opec+’s supply has grown “larger” in recent years, suggesting that the group’s pricing power is now much “greater than usual”, the investment bank said. This has been aided by US shale producers’ inability to increase output and the lack of immediate substitutes to crude oil, Goldman Sachs said. Meanwhile, crude futures have registered sharp declines since the start of 2023 amid concerns about China and the growing possibility of a recession. Brent, the benchmark for two thirds of the world’s oil, and West Texas Intermediate, the gauge that tracks US crude, fell by more than 8 per cent last week, their biggest weekly loss in the first seven days of a new year since 2016.

Oil prices rise as China's reopening of borders eases demand concerns -- Oil prices climbed on Monday as China’s reopening of its borders eased concerns about fuel demand. Brent, the benchmark for two thirds of the world’s oil, was 2.32 per cent higher at $80.39 a barrel at 12.15pm UAE time while West Texas Intermediate, the gauge that tracks US crude, was up 2.44 per cent at $75.57 a barrel. China’s near-total reversal of border controls — introduced to stem the spread of Covid-19 — came into effect on Sunday. The reopening ended about three years of strict entry requirements that had slowed growth in the world’s second-largest economy and biggest crude oil importer. Futures have registered sharp declines since the start of 2023 amid concerns about China and the growing possibility of a recession. Both Brent and WTI benchmarks declined by more than 8 per cent last week, their biggest weekly loss in the first seven days of a new year since 2016. Expectations of less aggressive US interest rate rises are supporting financial markets while weakening the US dollar. A weaker dollar makes oil cheaper for holders of other currencies. The US Dollar Index, a measure of the value of the greenback against a weighted basket of major currencies, was down 0.25 per cent at 103.62 on Monday morning. The index is lower by 1 per cent since January 1. US non-farm payrolls exceeded expectations slightly, with the addition of 223,000 jobs in December, the Bureau of Labour Statistics (BLS) reported on Friday. The unemployment rate dipped to a 53-year low of 3.5 per cent, from 3.6 per cent, while wage growth was up 0.3 per cent but still below forecasts of 0.4 per cent. The slowing wage growth has raised hopes that the US Federal Reserve “might yet achieve a soft landing despite its aggressive rate hiking”, Last month, the Fed raised its interest rates by 50 basis points, its seventh increase in 2022, to curb inflation, which hit a four-decade high last June. The US central bank indicated in December that more increases were planned this year.

Oil ends up 1% as bulls bank on China reopen - After the worst week in a month to launch the new year, crude prices settled up just 1% Monday as bulls in the market bet China’s reopening of its economy from tough COVID policies will boost oil consumption. In the first session of January's second week, New York-traded West Texas Intermediate, or WTI, crude settled up 86 cents, or 1.2%, at $74.63 per barrel, after hitting an intraday high of $76.72. The U.S. crude benchmark fell more than 8% last week for its biggest weekly decline since Dec. 2. The dismal showing came after WTI’s drop of 10% between Tuesday and Wednesday — the worst for any first two days of oil trading in a year since 1991. London-traded Brent crude settled up $1.08, or 1.4%, at $79.65 per barrel, after a session high at $78.42. Like WTI, Brent lost more than 8% last week. Monday’s rebound in crude came after China fully reopened its borders to international trade to eliminate the last vestiges of the draconian COVID rules that shaped much of its social policies over the past three years. Demand for oil in China typically rises each year after the Lunar New Year, which, this year, is due at the end of January. But with Beijing pivoting from a COVID-zero to a “COVID-anything” policy, there’s no telling yet how its oil demand will fare. Data last week showed Chinese manufacturing activity shrank for a fifth straight month in December, as the country grappled with an unprecedented spike in coronavirus cases. Despite this, Beijing is pressing forth with enthusiasm on its reopening, with officials saying they expected about 2 billion trips domestically during the Lunar New Year season, nearly double last year's and 70% of 2019 levels. In oil-specific developments, China also issued a second batch of 2023 crude import quotas, according to sources and documents reviewed by Reuters, raising the total for this year by 20% from the same time last year. “Oil’s downward trend was approaching critical support, so energy traders were eagerly looking for any reason to jump back into the oil trade,” said Ed Moya, analyst at online trading platform OANDA. “Chinese hopes for an improving reopening from COVID could help propel oil prices much higher.”

Oil Pares Gains Ahead of Stock Data on EIA Output Outlook -- New York Mercantile Exchange oil futures trimmed gains in market-on-close trade Tuesday, although all petroleum contracts settled the session higher. This occurred despite the U.S. Energy Information Administration lifting its oil production outlook through 2024 due to accelerated output gains in counties outside the Organization of the Petroleum Exporting Countries. In its Short-term Energy Outlook released Tuesday afternoon, the Washington-based energy watchdog said global oil production this year would average 101.1 million barrels per day (bpd), up 1.1 million bpd from 2022, before rising to 102.83 million bpd next year. The increase reflects large growth in several non-OPEC countries that more than offset a 1.5-million-bpd decline in Russian oil production forecast over the period. The United States and other non-OPEC producers outside of Russia will add 2.4 million bpd of oil production in 2023 and an additional 1.1 million bpd in 2024, according to the EIA outlook. The U.S. is forecast to be the largest source of non-OPEC production growth, contributing 40% of the gains in 2023 and 60% in 2024. Norway alone could add up to 500,000 bpd to the global oil market this year with the startup of the offshore Johan Sverdrup Phase 2 expansion project. Tuesday afternoon, traders also positioned ahead of the weekly release of U.S. inventory data, starting with the survey from the American Petroleum Institute scheduled for 4:30 p.m. EST, followed by the EIA report Wednesday morning. U.S. oil inventories are expected to have declined by 600,000 barrels (bbl) for the week ended Jan. 6, with forecasts ranging from a decrease of 4.5 million bbl to an increase of 4.3 million bbl. Traders will also closely monitor demand figures in this week's EIA report after cold weather severely disrupted gasoline and distillate fuel consumption, with combined fuel demand collapsing by 2.881 million bpd in the final week of 2022. Earlier in the session, the oil complex got a leg up from upbeat forecasts on China and EU economic growth this year that some traders bet could lift global oil demand. Goldman Sachs on Tuesday morning said Eurozone's economy would grow by 0.6% in 2023 from a negative 0.1% forecast just three months ago. The upgrade is driven by expectations for a better-than-expected year for Europe's major industrial exporters as Chinese demand recovers from a 2022 slump.. Should China's reopening prove successful, it is expected to invigorate not only domestic growth but also the global economy. At settlement, West Texas Intermediate for February delivery advanced to above $75 per bbl at $75.12, up $0.49, and Brent March futures on ICE gained $0.45 to $80.10 per bbl. NYMEX RBOB February contract added $0.0348 to $2.3277 per gallon, and front-month ULSD futures rallied to $3.1357 per gallon, up $0.0997 on the session.

Oil ends up just slightly, awaiting U.S. inventory and inflation data -- Crude prices edged higher for a second straight day on Tuesday as traders awaited U.S. oil inventory data and a much-anticipated government report on inflation scheduled later in the week. New York-traded West Texas Intermediate, or WTI, crude settled up 49 cents, or 0.7%, at $75.12 per barrel, after a session high at $75.92. London-traded Brent crude settled up 45 cents, or 0.6%, at $80.10, after an intraday high at $81.37. Both the U.S. and U.K. crude benchmarks fell more than 8% last week for their biggest weekly decline since Dec. 2, weighed by China’s coronavirus crisis and fears of a global recession. Beijing fully reopened its borders to international trade since the weekend to eliminate the last vestiges of the draconian COVID rules that shaped much of its social policies over the past three years. “As China battles an unprecedented surge in Covid cases, everyone wants to see if travel continues to rebound.” Demand for oil in China typically rises each year after the Lunar New Year, which, this year, is due at the end of January. But with Beijing pivoting from a COVID-zero to a “COVID-anything” policy, there’s no telling yet how its oil demand will fare. Data last week showed Chinese manufacturing activity shrank for a fifth straight month in December, as the country grappled with an unprecedented spike in coronavirus cases. Despite this, Beijing is pressing forth with enthusiasm on its reopening, with officials saying they expected about 2 billion trips domestically during the Lunar New Year season, nearly double last year's and 70% of 2019 levels. Market participants are awaiting the release of the Consumer Price Index, or CPI, report, due on Thursday. The CPI grew at a rate of 7.1% during the year to November, slowing from a four-decade high of 9.1% during the 12 months to June. It is expected to have slowed even further to 6.5% during the year to December, according to the consensus of Wall Street and economists polled by the media. In line with those expectations, the Federal Reserve is eyeing a 25-basis point rate hike for its policy meeting concluding on Feb. 1, a climb down from the 50-bp hike in December and four back-to-back 75-bp increases between June and November. The chances for the Fed to slow rates further are relatively high, with Investing.com’s Fed Rate Monitor tool assigning an 84.4% probability for a 25-bp hike in February. The last time the central bank had such a low rate hike was in March 2022, when it kicked off its series of rate hikes to curb runaway inflation in the aftermath of the coronavirus pandemic that broke out in 2020.. .

WTI Slides After Huge Crude Build - Oil prices eked out gains today (4th straight day higher) with WTI back above $75 as fears of a hawkish Powell speech passed painlessly (despite some hawkish FedSpeak from his underlings) and a flat dollar didn't impact direction.“Technically, the energy complex remains stuck in neutral, with a wide range for prices to swing inside of without creating a new trend,” “Fundamentally, the case for prices bottoming is getting stronger as lingering supply issues coincide with demand picking up both domestically and abroad.”Will the inventory/supply/demand data offer any more clues for the start of the new year... API:

• Crude +14.865mm (-2.375mm exp) - biggest build since Feb 2021
• Cushing +2.3mm
• Gasoline +1.8mm (+1.3mm exp)
• Distillates +1.1mm (+500k exp)

We suspect the massive 14.865mm barrel crude inventory build (the largest since Feb 2021) is likely driven by the deep freeze shutting in a number of refiners...WTI was fading back below $75 ahead of the API data and accelerated lower on the huge build print...

Oil Drops On Huge Unexpected Crude Inventory Build --Crude oil inventories rose by 14.865 million barrels, American Petroleum Institute (API) data showed on Tuesday, as refining activity begins to return to normal following previous weather-related shutdowns.U.S. crude inventories increased 13 million barrels over the course of 2022, according to API data, while crude stored in the nation’s Strategic Petroleum Reserves sunk by 221 million barrels.The large build in commercial crude oil inventories comes as the Department of Energy released 0.8 million barrels from the Strategic Petroleum Reserves in the week ending January 6, leaving the SPR with just 371.6 million barrels. The SPR now contains the least amount of crude oil since early December 1983. It also comes are refiners were still working to restart refineries after cold-induced shutdowns.Oil prices were relatively flat on Tuesday as traders take a wait-and-see attitude with upcoming rate hikes. At 2:48 p.m. EST, WTI was trading up $0.54 (0.72%) on the day to $75.17 per barrel. This is a weekly increase of roughly $2 per barrel. Brent crude was trading up $0.48(0.60%) on the day at $80.13—a weekly increase of just over $2 per barrel.U.S. crude oil production rose to 12.1 million bpd in the final week of the year, bringing the total production increase for 2022 to 400,000 bpd , and 1 million bpd lower than peak production seen in March 2020.WTI was trading at $74.86 shortly after the data release.

WTI Extends Gains Despite Massive Crude Build, Production Increase - Oil prices rallied overnight despite a huge crude inventory build reported by API, with traders shrugging it off as likely driven by the impact of the nationwide 'deep freeze' and refinery shut-ins distorting the data. Additional optimism over China’s demand outlook (after the government issued a bumper batch of import quotas, spurring hopes of improved crude consumption) offset the optics of the crude build. Will the official data confirm the huge builds? DOE

• Crude +18.96mm (-2.375mm exp, BBG +6.2mm exp) - biggest build since Feb 2021
• Cushing +2.511mm
• Gasoline +4.11mm (+1.3mm exp)
• Distillates -1.069mm (+500k exp)

Confirming and surpassing the API-reported data, official data showed a massive 18.96mm barrel crude build last week - the biggest build since Feb 2021 and stocks at Cushing soared by 2.511mm barrels (the most since Dec 2021)...We note that there was a more than 15 million-barrel increase in the Gulf Coast. Much of the rise in inventories due to the disruptions in refinery operations from a deep freeze had not materialized in data yet, so we are seeing that come through now.The SPR saw a drain of only 800k barrels last week - the smallest since Jan 2022.Bear in mind that the EIA’s January outlook expects combined gasoline, diesel and jet inventories to rise 9% in 2023, led by a 2.8% jump in refining throughput US crude production rose last week to 12.2mm b/d - equal to its post-COVID highs...

The Oil Market Rallied Higher - The oil market rallied higher as concerns over the impact of sanctions on Russian crude output outweighed a large unexpected build in crude stocks. The market was supported by reports indicating that G7 countries could soon target Russian refined products with sanctions in addition to crude sanctions, which could raise the risk of a more meaningful decline in Russian supply to global markets. The oil market posted a low of $74.31 in overnight trading and never looked back. The market rallied to a high of $77.84 by mid-day as it shrugged off a bearish weekly EIA report, which showed a 19 million barrel build in crude stocks. Market players wrote off the massive build as mostly weather-related rather than driven by fundamentals, as the refineries continue their slow return from late December’s winter storm that swept across the country. The market later erased some of its sharp gains during the remainder of the session. The February WTI contract settled up $2.29 at $77.41, the highest level since December 30th while the March Brent contract settled up $2.57 at $82.67. The EIA reported that U.S. crude oil stocks built by 19 million barrels to 439.6 million barrels in the week ending January 6th as refiners were slow to restore production after a cold freeze that shut operations. It was the largest gain since February 2021. Crude stocks in the Gulf Coast increased by 15.6 million barrels, the most since February 2021, to 249.5 million barrels. U.S. crude oil stocks at Cushing, Oklahoma increased by 2.51 million barrels, the most since December 2021, to 27.8 million barrels. Meanwhile, U.S. distillate stocks fell by 1.1 million barrels to 117.7 million barrels in the week ending January 6th. U.S. East Coast distillate stocks increased by 500,000 barrels to 34.3 million barrels, the most since January 2022. European seaborne diesel imports are expected to reach 5.99 million tons so far in January compared with the record revised 8.2 million tons in December. Russian exports to Europe in January are estimated at 2.24 million tons so far after reaching 3.49 million tons in December. The Kremlin said it had not yet seen any cases of price caps on Russian oil imposed by the West last month. Kremlin spokesman, Dmitry Peskov, said "As far as the losses are concerned, no one has especially seen the caps yet." The Kremlin’s spokesman also said that Russia would do everything to protect itself from plans by the Group of Seven leading economies to impose two sets of price caps on Russian oil products. IIR Energy reported that U.S. oil refiners are expected to shut in about 407,000 bpd of capacity in the week ending January 13th, increasing available refining capacity by 132,000 bpd. Offline capacity is expected to rise to 796,000 bpd in the week ending January 20th.

Oil rises for a sixth day on optimism over demand, U.S. inflation - Oil rose for a sixth day amid a spate of Chinese crude purchases as traders digested US inflation figures that matched expectations. West Texas Intermediate rose above US$78 a barrel and was heading for the longest run of daily gains since February. The dollar slipped after US consumer prices fell 0.1 per cent in December, a report that broadly matched analyst expectations. Federal Reserve official Patrick Harker said he supports 25-basis point rate hikes going forward, a slowdown from recent levels. China’s crude buying after Beijing issued a bumper batch of import quota this week is adding bullish sentiment about demand. The country has stepped up purchases of U.S. and West African crudes in recent days. “The month-on-month inflation data will be encouraging for oil bulls, as we see cause for further dollar weakening that would create more favorable buying conditions in physical markets,” said Harry Altham, an analyst at brokerage StoneX Group. Oil’s recent push higher gathered steam after a rocky start to the year amid fears over a global economic slowdown. Still, many analysts remain bullish on the longer term outlook. Goldman Sachs Group Inc. said on Wednesday that it expects crude to hit US$110 by the third quarter as China’s economy reopens, while Morgan Stanley sees a tighter second half to the year. Prices: WTI for February delivery rose 1.9 per cent to US$78.87 a barrel at 8:50 a.m. in New York. Brent for March was 1.9 per cent higher at US$84.22. There are also tentative signs that trading activity has picked up in the new year. Open interest across the main oil futures contracts this week climbed to the highest level since October. Low levels of futures holdings has been one driver of oil market volatility in recent months.

The Oil Market Continued on its Upward Trend on Thursday -- The oil market continued on its upward trend on Thursday in follow through strength seen on Wednesday amid concerns over the impact of sanctions on Russian crude output. The market was further supported by expectation of increasing demand in China that could give a boost to the overall global economic outlook. Overnight, the oil market traded mostly sideways, posting a low of $77.10 before it continued to trend higher ahead of the release of the U.S. consumer inflation report. The market rallied to a high of $79.16 following the CPI report, which showed consumer prices falling by 0.1% in December, the first decline since May 2020. The February WTI contract erased some of its gains and traded sideways once again, ending the session up 98 cents at $78.39, the highest settlement so far this year. The market settled in positive territory for the sixth consecutive session, the longest streak of gains since February 4th. The March Brent contract settled up $1.36 at $84.03. Meanwhile, the heating oil market settled up 11 points at $3.2190 and the RBOB market settled up 4.08 cents at $2.4753. The U.S. House of Representatives passed a bill to ban releases of oil from the U.S. Strategic Petroleum Reserve from being exported to China. The bill passed 331-97 in the House, which Republicans took narrow control of this month. Through October last year U.S. oil companies exported nearly 67 million barrels of oil to China. In 2020, the United States exported 176 million barrels to China. Morgan Stanley expects the oil market to tighten during the third and fourth quarter of 2023, supported by a recovery in demand prompted by China reopening its borders, a recovery in aviation, risks to Russian supply, a slowdown in U.S. shale and the end to SPR releases. Morgan Stanley forecast a disruption to Russian oil supply "approaching 1 million bpd from current levels" due to the price caps. While, Morgan Stanley predicted Brent prices in the first quarter to remain range bound around $80-85/barrel, it saw prices reaching $110/barrel by the end of the year and noted "the supply ceiling is still not far away and inventories are outright low." Morgan Stanley forecast Brent averaging $85/barrel in the first quarter of the year and increasing to $90/barrel in the second quarter. The bank sees WTI averaging $82.50/barrel in the first quarter and $87.50/barrel in the second quarter. PDVSA has assigned a third crude cargo to Chevron Corp under a U.S. authorization that restarted exports to the U.S. after a nearly four-year pause. Chevron received a U.S. license in November allowing it to revive its oil output and expand operations in Venezuela. The first Chevron-chartered tanker carrying Venezuelan crude oil departed on Tuesday and is set to deliver the crude next week to its Pascagoula, Mississippi refinery. The second and third tankers also are expected to deliver their cargoes this month.

Oil Rallies as Inflation Eases, Fed Signals Smaller Hikes -- New York Mercantile Exchange oil futures and Brent crude traded on the Intercontinental Exchange advanced for the sixth consecutive session on Thursday, sending West Texas Intermediate futures above $78 per barrel (bbl) after the U.S. consumer price index for December showed inflation fell to a negative print for the first time since May 2020, relieving some pressure from the Federal Reserve that signaled it would shift to smaller rate increases of 25 basis points beginning next month. "The days of us raising federal funds rates by 75 basis points at a time have surely passed ... hikes of 25 bps will be appropriate going forward," said President of Philadelphia Federal Reserve Bank Patrick Harker in reaction to the latest inflation data. U.S. consumer prices for the final month of 2022 declined to a negative 0.1%, bringing the 12-month inflation to 6.5%, showed data published this morning by U.S. Bureau of Labor Statistics. The fall marked the sixth consecutive monthly deceleration in consumer prices since their mid-2022 peak and the lowest level since October 2021. Easing inflation, meanwhile, is reflected in the sharp pullback by the U.S. dollar index that has been moving in a downtrend since early October with investors anticipating a less aggressive policy tightening by the Federal Open Market Committee in light of soft inflation readings. U.S. dollar index lost 0.9% in value on Thursday against a basket of foreign currencies to settle at a seven-month low 101.995, lending upside price support to front-month WTI futures. Investors priced in a nearly 100% likelihood for the Federal Reserve to slow increases in the federal funds rate to 0.25% during the February meeting from 0.5% in December and 0.75% seen during FOMC meetings from July through November last year. A 0.25% hike by FOMC on Feb. 1 would lift the target range in the federal funds rate to 4.5% to 4.75%. Central bank officials have pledged to raise the rate above 5% this year and leave it there at least through 2023. However, there is a gap between what the Fed says it will do and what investors expect, with some betting on a shallower peak rate, and that the first rate hike would come as early as this summer. At settlement, WTI for February delivery advanced $0.98 to $78.39 bbl, and Brent March futures on ICE rallied $1.36 to $84.03 bbl. NYMEX RBOB February contract gained $0.0408 to $2.4753 gallon, and front-month ULSD futures settled the session little changed at $3.2190 gallon.

WTI, Brent Gain 8% Week Over Week on Easing Inflation, China Outlook -- In the longest winning streak since October 2022, oil futures on the New York Mercantile Exchange and Brent crude traded on the Intercontinental Exchange settled higher for a seventh consecutive session on Friday after U.S. economic data showed easing inflation and a strong labor market supported consumer spending. Americans feel more optimistic about their personal finances than at any point over the past eight months, with year-ahead inflation expectations falling for the fourth straight month, according to the University of Michigan's consumer sentiment survey. The consumer sentiment index recovered 8.2% in the past two weeks to 64.6 -- the highest reading since April 2022. The gain in consumer sentiment is directly linked to retreating inflation, which fell to a negative monthly reading for the first time in 3 1/2 years, down 0.1% in December. Also this week, the U.S. Labor Department reported new claims for jobless benefits fell again in the week through Jan. 7 to 205,000, suggesting that layoffs across some industries have yet to spread to the broader economy. Following the latest economic readings this week, several Federal Reserve officials voiced their support in favor of smaller increases in the federal funds rate this year to let the economy absorb the lags in their monetary tightening actions in 2022. Investors priced in a nearly 100% likelihood for the Federal Open Market Committee to slow increases in the federal funds rate to 0.25% during the February meeting from 0.5% in December and 0.75% seen during FOMC meetings from July through November last year. A 0.25% hike by FOMC on Feb. 1 would lift the target range in the federal funds rate to 4.5% to 4.75%. Central bank officials have pledged to raise the rate above 5% this year and leave it there at least through 2023. Earlier in the session, oil futures got a leg up from data showing China increased its import quotas for independent refiners this year to a total of 132 million tons, which compares with 109 million tons seen over 2022. For most independent refiners, as much as 70% of their annual allowances have now been issued, according to traders. A survey from China-focused consultants published Friday morning by Bloomberg shows daily oil demand in China could increase by 800,000 barrels per day (bpd) this year after contracting sharply in 2022, taking daily consumption to an all-time high of about 16 million bpd. In 2022, China's consumption averaged only slightly above 15 million bpd, according to estimates from the U.S. Energy Information Administration. Demand recovery is mostly expected to take shape in the second quarter, with traffic and the number of flights gradually rebounding from their 2022 lows. Wood Mackenzie expects that surge in international flights in and out of China could boost daily consumption to above 900,000 bpd. At settlement, West Texas Intermediate for February delivery rallied $1.46 to $79.86 per barrel (bbl), and Brent March futures on ICE advanced $1.25 to $85.28 per bbl. NYMEX RBOB February contract gained $0.0575 to $2.5328 per gallon, and front-month ULSD futures advanced $0.0369 to $3.2559 per gallon.

Oil Posts Largest Weekly Gain in Three Months | Rigzone - Oil posted its largest gain in three months this week, mostly recouping the prior week’s steep decline, as confidence in China’s recovery solidified among traders. West Texas Intermediate rallied above $79 a barrel on Friday, capping a more than 8% weekly advance that marked its strongest week since October. China is ramping up purchases of crude after Beijing issued a fresh round of import allowances, and consumption is poised to surge to a record this year following the nation’s dismantling of its Covid Zero policy. The factors that drove the selloff in the second half of 2022 — Chinese lockdowns and global recession fears — are now in reverse, said Bjarne Schieldrop, chief commodities analyst at SEB AB. “When China reconnects with Asia and the world, there will be a significant increase in demand,” Schieldrop said. Bolstering sentiment across markets, US consumer prices in December posted the first monthly decline since 2020, fueling expectations that the Federal Reserve will slow the pace of interest-rate hikes. Oil has pushed higher after a rocky start to the year, with forecasters from Goldman Sachs Group Inc. to hedge fund manager Pierre Andurand predicting prices will rally above $100 a barrel in 2023. There are also tentative signs that trading activity has picked up in the new year, with open interest across the main oil futures standing at its highest since late October. WTI for February delivery was up $1.47 to settle at $79.86 a barrel in New York. Brent for March settlement rose $1.25 to $85.28 a barrel.

OPEC’s Second-Largest Oil Producer Issues Arrest Warrant For Donald Trump - The Iraqi supreme court has issued an arrest warrant for former U.S. President Donald Trump for the assassination on Iraqi soil of Iran’s Quds Force commander, Qasem Soleimani, IraqiNews reports, citing a Baghdad news agency. The warrant was issued on Thursday in connection both with the killing of Soleimani and of another Iraqi militia leader, chief of staff of the Popular Mobilization Forces (PMF) in Iraq–both of whom were killed in a drone strike in January 2020 near the Baghdad airport. That assassination operation led to Iranian strikes on the Aia Al-Assad U.S. base in Iraq. The arrest warrant charges Trump with premeditated murder. While the warrant is clearly symbolic, a conviction of this nature carries the death penalty. The court said the investigation into the killings was still ongoing, AP reported. Citing Baghdad Today news agency, IraqiNews quoted Supreme Judicial Council head Faiq Zaidban as calling on Baghdad to hold Trump “accountable for this heinous crime”. At the same time, in November, Iraq’s parliamentary speaker confirmed that hundreds–and possibly thousands–of people had been kidnapped and killed by Iran-backed militias from 2014 to 2016. Iraq, the second-largest oil producer in OPEC, is caught between rivals Iran and the United States, while Iran’s influence has grown exponentially since the toppling of Saddam Hussein following the 2003 U.S. invasion. In October, ending a long-running stalemate, Iraq’s parliament named a new pro-Iranian prime minister and pro-Iranian parties now dominate, having sidelined Shi’ite rival Moqtada al Sadr, who had been paralyzing the government with anti-Iranian protests. The PMF figure assassinated in a Trump-ordered military operation represented the head of an umbrella group that brought together pro-Iranian militias in Iraq, which enjoyed government support as a loosely defined element of the Iraqi armed forces.

Saudi Arabia set to overtake India as fastest-growing major economy this year - Saudi Arabia is set to overtake India as the fastest-growing major economy in 2023, driven by gains from energy prices. According to official data released by India’s Ministry of Statistics and Program Implementation, Saudi Arabia is expected to outpace India with 7.6 percent gross domestic product growth as the rising revenues from higher energy prices continue to bolster the Kingdom’s economy. This puts India in the second position with an expected GDP growth rate of 7 percent in the fiscal year ending March, as weakening demand has hampered the growth prospects of Asia’s third-largest economy. “The growth in real GDP during 2022-23 is estimated at 7 percent, compared to 8.7 percent in 2021-22,” said the Indian ministry in a statement. The Indian government is using this estimate to decide its spending priorities in the upcoming union budget that will be presented on Feb.1, 2023, which will also be the last full-year expenditure plan of Prime Minister Narendra Modi’s government before elections in 2024. Even though India started the ongoing fiscal year on a good note, monetary policies adopted by the Reserve Bank of India to combat inflation have apparently tampered with the growth curve of the nation. India's central bank, which has raised its benchmark rate by 225 basis points so far this fiscal year, is expected to announce further hike after its policy review meeting scheduled between Feb. 6 to 8. In December last year, Saudi Arabia reported a larger-than-expected budget surplus for 2022 of SR102 billion ($27.13 billion) — SR12 billion higher than the previous estimate. After the approval of the 2023 budget, Saudi Crown Prince Mohammed bin Salman said that the success of the Kingdom’s reforms in the operating model of the public sector and the economy contributed to the achievement of a budget surplus. He further noted that the budget surplus will be used to boost government reserves, support national funds, and strengthen the Kingdom’s financial position amid global economic headwinds. He also added that the government intends to prioritize capital spending in the 2023 budget based on regional and sectoral strategies in line with the goals outlined in the Kingdom’s Vision 2030. In October, the International Monetary Fund, in its World Economic Outlook Report, noted that Saudi Arabia is expected to grow by 7.6 percent in 2022 and 3.7 percent in 2023. The World Bank projection was slightly higher than the IMF estimates, as the international financial institution predicted 8.3 percent growth in 2022, before moderating to 3.7 percent and 2.3 percent in 2023 and 2024 respectively. In November, the World Bank also revealed that Saudi Arabia is the fastest-growing economy among the Group of 20 nations, adding that the Kingdom has a moderate inflation rate at 2.9 percent, the lowest among G20 countries.

India Just Became The World's 3rd Largest Automobile Market - India has officially booted Japan out of the number three spot in the global automotive market. Latest industry data, reported on by Nikkei, shows that for the first time ever, India is now the third largest global auto market. For 2022, the country's new sales came in at 4.25 million units, based on preliminary results from the Society of Indian Automobile Manufacturers. This figure tops Japan's 4.2 million units for the year. Japan's sales in 2022 were down 5.6% from 2021. Between January and November, India had delivered 4.13 million new vehicles. The total hits 4.25 million after adding December's sales volume reported Sunday by Maruti Suzuki, India's largest carmaker, the report says. And sales volume in the country is expected to rise: there are still year-end results and sales figures for commercial vehicles that have yet to be included into the 2022 totals. China led the global market in 2021 with 26.27 million vehicles sold and the U.S. came in second with 15.4 million vehicles sold. India's market has been volatile over the last few years, the report notes. 4.4 million vehicles were sold in 2018, but volume plunged back below 4 million vehicles in 2019 as a result of a credit crunch.