US oil prices finished higher for a sixth straight week after the EIA reported the largest drop in US oil supplies on record and Saudi Arabia extended their million barrel a day supply cut another month....after rising 4.6% to a fourteen week high of $80.58 a barrel last week on tightening global supplies and on indications that the US would avoid a recession, the contract price for the benchmark US light sweet crude for September delivery slipped below its three-month high in early Asian trading on Monday even as oil inventories dropped significantly in July amid deep supply cuts, then edged higher on expectations that Saudi Arabia would extend voluntary output cuts into September and further tighten global supply, then rallied during the New York session as traders remained nervous that global supplies would continue to tighten as a result of OPEC+'s production restraint, and settled $1.22 higher at $81.80 a barrel, propelled by expectations for tighter supply availability from Saudi Arabia and Russia, while improved inflation and growth outlook in the US further boosted demand expectations for the second half of the year...despite that, oil prices tumbled in overseas trading Tuesday after manufacturing surveys from China, Japan, South Korea, Taiwan and Vietnam, Europe and the UK all indicated contraction, while gains from the early lows in New York trading were limited by strength in the dollar and oil settled 43 cents lower at $81.37 a barrel amid signs of profit-taking after a 15% rally in July, when traders bet on tighter supplies in the second half of 2023...however, oil prices ballooned Tuesday evening after the American Petroleum Institute reported the largest one week oil supply crash in years and opened 1% higher on Wednesday, as the report also detailed larger-than-expected drawdowns in refined fuels supplies and at the Cushing, Oklahoma tank farm, but erased its gains and sold off sharply after the credit rating agency Fitch downgraded the U.S. government’s credit rating to AA+ from AAA, and the U.S. withdrew its offer to buy 6 million barrels of oil for the SPR, and finished trading $1.88 lower at $79.49 a barrel, despite the largest drop in U.S. crude inventories, according to EIA records dating back to 1982....oil prices fell further in Asian trading on Thursday with a firmer dollar and worries about the U.S. fiscal position weighing on prices, then turned volatile in London trading, as bearish sentiment across financial markets offset the record decline in U.S. crude stockpiles, then rallied in New York after Saudi Arabia announced a one-month extension of its unilateral 1 million barrel per day reduction in production, and hinted it could further deepen its crude output cut in coming months to support the global market to settle $2.06 higher at $81.55 a barrel, with the market also supported by the news that Russia was extending its export cuts of 300,000 bpd into September....oil prices continued to rally in Asia on Friday, after Saudi Arabia and Russia, the world’s second and third-largest crude producers, pledged to cut output through September and advanced further in New York's afternoon trading session to settle $1.27 higher at $82.82 a barrel as a nosedive in the U.S. dollar index in reaction to a weak employment report further lifted the crude complex...US oil prices thus finished 2.8% higher on the week and have now gained more than 20% over the past six weeks
Natural gas prices, on the other hand, finished lower for the fourth time in five weeks, as gas production hovered near record levels while demand forecasts moderated...after falling 2.5% to $2.638 per mmBTU last week as the extreme heat related demand was expected to moderate over the following two weeks, the contract price of US natural gas for September delivery opened 3 cents lower on Monday and traded near $2.620 for most of the session, as traders weighed continued cooling demand against healthy production levels, but recovered to settle just four-tenths of a cent lower at $2.634 per mmBTU, as record output from gas wells offset forecasts for greater demand over the next two weeks....that front-month contract opened 7 cents lower on Tuesday as healthy storage levels and a break in intense summer heat in the Northeast pushed prices even lower early on, but prices steadied in afternoon trading to settle the session 7.4 cents lower at $2.560 per mmBTU, on forecasts for less air conditioning demand over the next two weeks than was previously expected...natural gas prices opened lower again on Wednesday, then bearish pressure due to moderating forecasts drove prices even lower throughout the session and September gas prices finished 8.3 cents lower at $2.477 per mmBTU as traders looked ahead to the EIA's Storage Report the next day...natural gas prices rose overnight and opened higher Thursday, as gas traders squared their positions ahead of the weekly storage publication, then rallied after the report to settle 8.8 cents higher at $2.565 per mmBTU, as hotter-trending forecasts combined with bullish storage data to lift prices...natural gas prices hovered in narrow range on Friday as traders weighed stout supplies against the potential for strong cooling demand deep into the summer season and ultimately settled at $2.577 per mmBTU, up 1.2 cents on the day, on hotter forecasts for the first half of August and the bullish EIA weekly storage report, but still finished 2.3% lower on the week...
The EIA's natural gas storage report for the week ending July 28th indicated that the amount of working natural gas held in underground storage in the US increased by 14 billion cubic feet to 3,001 billion cubic feet by the end of the week, which left our natural gas supplies 550 billion cubic feet, or 22.4% above the 2,451 billion cubic feet that were in storage on July 28th of last year, and 322 billion cubic feet, or 12.0% more than the five-year average of 2,679 billion cubic feet of natural gas that were in working storage as of the 28th of July over the most recent five years… however, natural gas supplies were still 13.5% below normal for this date in the EIA region defining the Pacific states, while 17.0% above normal in the South Central region of the country at the same time....the 14 billion cubic foot injection into US natural gas working storage for the cited week was smaller than the 17 billion cubic feet addition to supplies that was expected by industry analysts surveyed by Reuters, and was less than half of the 37 billion cubic feet that were added to natural gas storage during the corresponding week of 2022, and also less than half of the average 37 billion cubic feet addition to natural gas storage that has been typical for the same July week over the past 5 years…
The Latest US Oil Supply and Disposition Nonsense from the EIA
US oil data from the US Energy Information Administration for the week ending July 28th showed that after a big increase in our oil exports, we had to pull oil out of our stored commercial crude supplies for the 13th time in nineteen weeks, but for just the 14th time in the past 32 weeks, and by a record amount, largely due to the disappearance of last week's record amount of crude oil supplies that the EIA could not account for....Our imports of crude oil rose by an average of 301,000 barrels per day to 6,668,000 barrels per day, after falling by an average of 807,000 barrels per day the prior week, while our exports of crude oil rose by an average of 692,000 barrels per day to average 5,283,000 barrels per day, which combined meant that the net of our trade in oil worked out to a net import average of 1,385,000 barrels of oil per day during the week ending July 28th, 391,000 fewer 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 unchanged at 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 13,585,000 barrels per day during the July 28th reporting week…
Meanwhile, US oil refineries reported they were processing an average of 16,517,000 barrels of crude per day during the week ending July 28th, an average of 40,000 more barrels per day than the amount of oil that our refineries were processing during the prior week, while over the same period the EIA’s surveys indicated that a record average of 2,436,000 barrels of oil per day were being pulled out of the supplies of oil stored in the US. So, based on that reported & estimated data, the crude oil figures provided by the EIA for the week ending July 28th appear to indicate that our total working supply of oil from storage, from net imports and from oilfield production was 497,000 barrels per day less than what our oil refineries reported they used during the week. To account for that obvious disparity between the apparent supply of oil and the apparent disposition of it, the EIA just inserted a [ +497,000 ] 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 there was an error of that magnitude in the week’s oil supply & demand figures that we have just transcribed....Moreover, since last week’s “unaccounted for crude oil” figure was at a record [+2,415,000] barrels per day, that means there was a 1,919,000 barrel per day difference between this week's oil 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, and therefore nonsense...However, since most oil traders respond to these weekly EIA reports as if they were accurate, and since these weekly figures therefore 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 reliable 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)….(NB: there is also a more recent twitter thread from an EIA administrator addressing these errors, and what they had hoped to do about it)
This week's 2.436,000 barrel per day decrease in our overall crude oil inventories came as an average of 2.436,000 barrels per day were being pulled out of our commercially available stocks of crude oil, while the amount of oil in our Strategic Petroleum Reserve was unchanged....however the 346,758,000 barrels of oil that still remain in our Strategic Petroleum Reserve are the lowest since August 19th, 1983, or at a 39 1/2 year low, as repeated tapping of our emergency oil 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 big SPR releases of last year. However, those Biden administration releases amounted to about 42% of what was left in the SPR when they took office, and that left us with what is now less than a 18 day supply of oil at the current consumption rate.
Further details from the weekly Petroleum Status Report (pdf) indicate that the 4 week average of our oil imports fell to an average of 6,523,000 barrels per day last week, which was 2.3% less than the 6,675,000 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 unchanged at 12,200,000 barrels per day because the EIA's rounded estimate of the output from wells in the lower 48 states was unchanged at 11,800,000 barrels per day, while Alaska’s oil production was 14,000 barrels per day lower at 393,000 barrels per day, but still added the same 400,000 barrels per day to the rounded national total as it did last week...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 6.9% 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 92.7% of their capacity while using those16,517,000 barrels of crude per day during the week ending July 28th, down from their 93.4% utilization rate during the prior week, and a utilization rate that's on the low end of the normal range for late-July... The 16,517,000 barrels per day of oil that were refined this week were 2.8% more than the 16,027,000 barrels of crude that were being processed daily during week ending July 22nd of 2022, but 3.3% less than the 17,034,000 barrels that were being refined during the prepandemic week ending July 26th, 2019, when our refinery utilization rate was at 93.0%, also on the low end of the normal range for this time of year...
With the increase in the amount of oil being refined this week, the gasoline output from our refineries was also higher, increasing by 341,000 barrels per day to 9,829,000 barrels per day during the week ending July 28th, after our refineries' gasoline output had decreased by 34,000 barrels per day during the prior week. This week’s gasoline production was 5.8% more than the 9,292,000 barrels of gasoline that were being produced daily over the same week of last year, but 5.6% less than the gasoline production of 10,416,000 barrels per day during the prepandemic week ending July 26th, 2019. At the same time, our refineries’ production of distillate fuels (diesel fuel and heat oil) increased by 80,000 barrels per day to 4,861,000 barrels per day, after our distillates output had decreased by 251,000 barrels per day during the prior week. Even with that increase, our distillates output was 1.5% less than the 4,933,000 barrels of distillates that were being produced daily during the week ending July 29th of 2022, and 5.9% less than the 5,164,000 barrels of distillates that were being produced daily during the week ending July 26th, 2019...
With this week's increase in our gasoline production, our supplies of gasoline in storage at the end of the week rose for the seventh time in twenty-four weeks, increasing by 1,481,000 barrels to 219,081,000 barrels during the week ending July 28th, after our gasoline inventories had decreased by 786,000 barrels during the prior week. Our gasoline supplies rose this week because the amount of gasoline supplied to US users fell by 101,000 barrels per day to 8,838,000 barrels per day, and because our imports of gasoline rose by 191,000 barrels per day to 945,000 barrels per day and because our exports of gasoline fell by 177,000 barrels per day to 818,000 barrels per day.. But after seventeen gasoline inventory decreases over the past twenty-four weeks, our gasoline supplies were 2.8% below last July 29th’s gasoline inventories of 225,294,000 barrels, and about 69% below the five year average of our gasoline supplies for this time of the year…
Meanwhile, even with this week's increase in our distillates production, our supplies of distillate fuels decreased for the twelfth time in twenty-one weeks, falling by 796,000 barrels to 117,153,000 barrels during the week ending July 28th, after our distillates supplies had decreased by 245,000 barrels during the prior week. Our distillates supplies fell by more this week because the amount of distillates supplied to US markets, an indicator of our domestic demand, rose by 108,000 barrels per day to 3,826,000 barrels per day, and because our imports of distillates fell by 47,000 barrels per day to 113,000 barrels per day while our exports of distillates rose by 3,000 barrels per day to 1,261,000 barrels per day....With 34 inventory increases over the past sixty-three weeks, our distillates supplies at the end of the week were 7.2% above the 109,324,000 barrels of distillates that we had in storage on July 29th of 2022, but are still about 15% below the five year average of our distillates inventories for this time of the year...
Finally, with the big increase in our oil exports, our commercial supplies of crude oil in storage fell for the 14th time in 31 weeks and for the 25th time in the past year, decreasing by a record 17,049,000 barrels over the week, from 456,820,000 barrels on July 21st to 439,771,000 barrels on July 28th, after our commercial crude supplies had decreased by 600,000 barrels over the prior week. With that record decrease, our commercial crude oil inventories fell back to about 1% below the most recent five-year average of commercial oil supplies for this time of year, but are 30.1% above the average of our available crude oil stocks as of the last weekend of July over the 5 years at the beginning of the past decade, with the apparent disparity between those comparisons arising because it wasn’t until early 2015 that our oil inventories first topped 400 million barrels. After our commercial crude oil inventories had jumped to record highs during the Covid lockdowns of the Spring of 2020, then jumped again after February 2021's winter storm Uri froze off US Gulf Coast refining, but then fell in the wake of the Ukraine war, only to jump again following the Christmas 2022 refinery freeze offs, our commercial crude supplies as of this July 28th were 3.1% more than the 426,553,000 barrels of oil we had in commercial storage on July 29th of 2022, and were only 0.1% more than the 435,598,000 barrels of oil that we still had in storage on July 30th of 2021, but were 15.2% less than the 518,596,000 barrels of oil we had in commercial storage on July 31st of 2020, after early pandemic precautions had left a lot of oil unused…
This Week's Rig Count
The number of drilling rigs active in the US decreased for the thirteenth time in fourteen weeks during the week ending August 4th, and is now 16.9% below the prepandemic rig count, despite increasing ninety-six times during the 123 weeks of the post pandemic recovery... Baker Hughes reported that the total count of rotary rigs drilling in the US fell by 5 rigs to 659 rigs over the past week, which was 105 fewer rigs than the 764 rigs that were in use as of the August 5th report of 2022, and was also 1,270 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 was down by four to 525 oil rigs during the past week, after the number of rigs targeting oil had decreased by one rig during the prior week, leaving 73 fewer oil rigs active now than were running a year ago, as they now amount to just 32.6% of the shale era high of 1,609 rigs that were drilling for oil on October 10th, 2014, while they are now down 23.1% from the prepandemic oil rig count of 683….at the same time, the number of drilling rigs targeting natural gas bearing formations was unchanged at 128 natural gas rigs, which left natural gas rigs down by 33 from the 161 natural gas rigs that were drilling during the same week of 2022, as they now amount to less than 8.0% of the modern high of 1,606 rigs targeting natural gas that were deployed on September 7th, 2008….
In addition to those rigs specifically targeting oil and natural gas, Baker Hughes reports that six rigs they've labeled as "miscellaneous" continued drilling this week, down from 7 such "miscellaneous" rigs last week....miscellaneous rigs still operating this week included a vertical rig targeting the Marcellus at between 10,000 and 15,000 feet in Monongalia county West Virginia, a vertical rig drilling to between 5,000 and 10,000 feet in Beaver county Utah, a directional rig drilling to between 5,000 and 10,000 feet on the big island of Hawaii, a horizontal rig drilling to more than 15,000 feet into the Williston basin in Dunn county, North Dakota, 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, and a vertical rig drilling to more than 15,000 feet into a formation in Lincoln county Wyoming, also into a formation unnamed by Baker Hughes. .the miscellaneous rig that was shut down this week was a directional rig that had been drilling to between 10,000 and 15,000 feet into a formation in Beaver county Utah, for a utility scale geothermal project, and hence we suspect that's also the case with shallower Beaver county well....in the past we've also identified various "miscellaneous" rig activity as being for exploration rather than production and for carbon dioxide storage...
The offshore rig count in the Gulf of Mexico was down by one to 19 rigs this week, and included 17 rigs drilling for oil in Louisiana's offshore waters, and two drilling for oil in Texas waters....the Gulf rig count is still up by 4 from the 14 Gulf rigs running a year ago, when all 14 Gulf rigs were drilling for oil offshore from Louisiana…in addition to Gulf rigs, this week saw the startup of a directional rig drilling for oil at a depth of between 10,000 and 15,000 feet, offshore from the Kenai Peninsula of Alaska, while there were two rigs drilling offshore from Alaska in that same area during the same week a year ago, hence, the national total of 19 rigs drilling offshore this week is thus up by 3 rigs from the national offshore count of 16 a year ago..
In addition to rigs drilling offshore, there are now five inland water based deployed this week, all in Louisiana..they include a directional rig drilling for oil at a depth of between 10,000 and 15,000 feet in Lafourche Parish, a directional rig drilling for oil at a depth of between 10,000 and 15,000 feet through an inland body of water in Saint Mary Parish; a directional rig drilling for oil at a depth of between 10,000 and 15,000 feet in Vermilion Parish, a directional rig drilling for oil at a depth of less than 5,000 feet on inland waters in Lafourche Parish, and a directional rig drilling for oil at over 15,000 feet through an inland body of water in Terrebonne Parish Louisiana....a year ago, there were just two such rigs drilling on inland waters...
The count of active horizontal drilling rigs was down by 7 to 585 horizontal rigs this week, which was also 113 fewer rigs than the 698 horizontal rigs that were in use in the US on August 5th of last year, and is now down 57.4% from the high of 1,374 horizontal rigs that were drilling on November 21st of 2014… meanwhile, the directional rig count was unchanged at 53 directional rigs this week, while those were still up by 15 from the 38 directional rigs that were operating during the same week a year ago....on the other hand, the vertical rig count was up by two to 21 vertical rigs this week, but those were down by 8 from the 29 vertical rigs that were in use on August 5th 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 August 4th, the second column shows the change in the number of working rigs between last week’s count (July 28th) and this week’s (August 4th) count, the third column shows last week’s July 28th 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 5th of August, 2022...
Checking the Rigs by State file at Baker Hughes for the changes in Texas Permian, where oil rigs were down by four to 320, while natural gas rigs were down one to nine, we find that there were seven rigs pulled out of Texas Oil District 8, which overlies the core Permian Delaware, and that another rig was pulled out of Texas Oil District 8A, which includes the counties over the northern Permian Midland, while at the same time a rig was added in Texas Oil District 7C, which overlies the southern Permian Midland...combined, the changes in those districts indicate a drop of seven rigs in the Texas Permian, while the national Permian count was down by five, which therefore means that the two rigs added in New Mexico were set up to drill in the far west Permian Delaware, in the southeast corner of that state...
elsewhere in Texas, there was a rig pulled out of Texas Oil District 1, which accounts for the loss of one oil rig in the Eagle Ford shale; which was down two oil rigs to 53, while a single natural gas rig was added back in the Eagle Ford...since there are no other count changes apparent in the Eagle Ford districts 1, 2, 3 and 4, that means that the natural gas rig addition was offset by the removal of an oil rig in the same district at the same time...there was also a rig added in Texas Oil District 6, but since the Haynesville shale rig count is unchanged and there was no activity in the Louisiana Haynesville, it's likely that rig was targeting a basin not tracked by Baker Hughes....Texas also saw a rig pulled out of the panhandle in Texas Oil District 10, which accounts for the rig pulled out of the Granite Wash basin..
in activity elsewhere, the rig pulled out of the Gulf of Mexico accounts for the drop in Louisiana's count, and while there were two rigs pulled out of the Cana Woodford, Oklahoma's rig count remained unchanged, which means two rigs were added in basins not tracked by Baker Hughes elsewhere in the state....that's also the case with the two rigs added n Wyoming, which has at least three active basins re not tracked by Baker Hughes...meanwhile, a natural gas rig was pulled out of Pennsylvania's Marcellus, and since the national natural gas rig count was only down by one, a natural gas rig was added back in some other basin not tracked by Baker Hughes, more than likely in Oklahoma or Wyoming....
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Gulfport Drilling Marcellus (Not Utica) Wells in Belmont Co., OH - Gulfport Energy, the third-largest driller in the Ohio Utica Shale (by the number of wells drilled), emerged from bankruptcy in May 2021 with a new board and top management. In January of this year, the company appointed a new CEO, John Reinhart, the former President and CEO of M-U driller Montage Resources Corporation before that company was gobbled up by Southwestern Energy, Yesterday Gulfport issued its second quarter 2023 update. The company made $78 million in net income during 2Q23 versus $216 million in 2Q22, down 64%, which tracks with similar decreases seen in other major M-U drillers. “We have identified 15,000 net reservoir acres in Belmont County in eastern Ohio for Marcellus development and in 2022 we added 8 PUD Marcellus locations within our Utica operating area. Our Marcellus development area is 3,500 to 4,500 feet shallower than the Utica.”
FERC Approves Constr. Startup for Ohio Valley Connector Expansion - Marcellus Drilling News - In February 2022, Equitrans Midstream announced it had filed a new pipeline expansion project with the Federal Energy Regulatory Commission (see Equitrans Files New $160M Pipe Expansion Project with FERC). Called the Ohio Valley Connector Expansion Project (or OVCX), the $160 million project will add compression along Equitrans pipelines in Pennsylvania, Ohio, and West Virginia that allow the company to flow an extra 350 MMcf/d (million cubic feet per day) of natural gas. The big news coming from yesterday’s Equitrans 2Q update is that FERC issued a notice on July 31st allowing Equitrans to begin construction on OVCX. Equitrans said construction will begin “in the coming days.”
Equitrans to begin construction of Ohio Valley Connector expansion project --Equitrans Midstream expects construction of the 350-MMcfd Ohio Valley Connector expansion (OVCX) project to begin soon, on target for incremental capacity in-service by first-half 2024. The company provided the update as part of its second-quarter report on Aug. 1. On June 15, Equitrans received from the US Federal Energy Regulatory Commission (FERC) a certificate of public convenience and necessity for expansion project, and on July 27, the US Army Corps of Engineers issued the project's last outstanding approval. On July 31, FERC issued the Notice to Proceed. OVCX will increase deliverability on ETRN's Ohio Valley Connector pipeline and is designed to meet growing demand in markets in the mid-continent and Gulf Coast through existing interconnects with long-haul pipelines in Clarington, Ohio (OGJ Online, Jan. 24, 2023). The 37-mile Ohio Valley Connector’s current capacity is 850 MMcfd. Equitrans expects to invest about $160 million in the project, which is primarily supported by a long-term firm capacity commitment of 330 MMcfd.
DT Midstream Makes FID on New Greenfield Pipeline in Ohio Utica - Marcellus Drilling News - DT Midstream (DTM), headquartered in Detroit, owns major assets in the Marcellus/Utica region and other regions. DTM issued its second quarter 2023 update yesterday. The company announced it had reached a final investment decision (FID) to build a new greenfield gathering system in the Ohio Utica Shale. The gathering system will transport associated gas from new wells being drilled in the rich window of the Utica.
DT Midstream to Build New Utica Shale Infrastructure - DT Midstream Inc. is ramping up investment in greenfield and other growth projects, including a buildout of infrastructure in Ohio’s Utica Shale, the company said in its second-quarter 2023 report released on Aug. 1. The company reached a finalized development plan for an emerging associated gas resource development area in the Utica, where E&Ps such as EOG Resources have been developing what it calls its “Ohio Utica Combo” play. DTM expects to invest approximately $100 million in the next year to develop the area with an initial gathering backbone buildout of more than 200 MMcf/d, according to the company’s second-quarter 2023 earnings presentation. DTM’s plan is to develop a large-scale, multi-year natural gas gathering system to transport gas from wells in the Utica and integrate the resource with DTM’s downstream assets, including the Nexus and Vector pipelines and the Detroit-area’s Washington 10 Storage Complex, according to the company’s earnings call. DT Midstream also provided updates on its carbon capture and sequestration (CCS) project in Louisiana, announcing it is on track for the project’s projected timeline with the filing of a Class V characterization well permit application. So far in 2023, DTM has invested approximately $15 million into the Louisiana CCS project, which entails capture equipment, a new CO2 pipeline and storage development, and targets a proximal geological storage formation with a capacity of over 1 million tonnes per annum, according to the earnings presentation. DTM plans to drill its Class V characterization well in fourth quarter 2023 and reach final investment decision in the first half of 2024. In fourth quarter 2024, DTM expects Class VI permit approval and by fourth quarter 2025, DTM expects full project in-service. The project’s economics are fully supported by the Inflation Reduction Act’s 45Q CO2 storage tax credit and is “a very economic project for investors,” David Slater, president and CEO, said in the company’s second quarter 2023 earnings call.
Ohio Mining Co.'s Gas Pipeline Challenge Deemed Premature – Law360 -- A coal mining company's fears that a planned natural gas pipeline could cost it $7 million in local coal sales isn't enough to halt the project, an Ohio state appeals court ruled in an opinion released Monday...
29 New Shale Well Permits Issued for PA-OH-WV Jul 24-30 | Marcellus Drilling News -- New shale permits issued for Jul 24-30 in the Marcellus/Utica were down just a couple, but still a nice number. There were 29 new permits issued last week, down from the 31 issued the previous week. Last week’s permit tally included 22 new permits in Pennsylvania, 7 new permits in Ohio, and no new permits in West Virginia. The top permittee for the week was EQT Corporation, receiving a whopping 16 permits in Greene County, PA. BLACKHILL ENERGY | BRADFORD COUNTY | COTERRA ENERGY (CABOT O&G) | ENCINO ENERGY | EQT CORP | GREENE COUNTY (PA) | JEFFERSON COUNTY (OH) | MONROE COUNTY | SOUTHWESTERN ENERGY | SUSQUEHANNA COUNTY
US Coast Guard, hazmat team responding to oil spill at Philadelphia Navy Yard - CBS Philadelphia - The U.S. Coast Guard is responding after reports of an oil spill at the Philadelphia Navy Yard along Front Street in the city's Pennsport section Thursday morning. Fire officials said they responded to the Navy Yard just before 6:30 a.m. after about 100 gallons of diesel fuel leaked from a pump hose. Chopper 3 was overhead the Navy Yard site, where an oil sheen could be seen in the water. A hazmat team also responded. The Navy Yard, which was the first naval shipyard of the United States, is set on the Delaware River. The oil spill was considered under control as of 9:38 a.m., according to fire officials.
Mountain Valley developer sticks to 2023 in-service target as construction resumes: Equitrans Midstream stuck to its target for bringing the long-delayed 304-mile, 2 Bcf/d Mountain Valley Pipeline into service by the end of 2023, maintaining a more aggressive timeline than a recent estimate from its biggest customer.The pipeline developer said Aug. 1 it anticipated "four to five months' worth of construction" remaining on the estimated $6.6 billion project that will add an outlet for Appalachian Basin production. That work is already underway, after the US Supreme Court on July 27 lifted two stay orders from a lower court holding up work on the project, Equitrans executives said. The developer told the US Federal Energy Regulatory Commission shortly after the Supreme Court order that it was resuming workfollowingFERC's June 28 order authorizing all construction."It's ordinary course construction where there could be some weather impact, as with any project," Equitrans Chairman and CEO Thomas Karam told analysts during a second-quarter earnings call. "But absent some of those extreme conditions, we're fairly confident that we're going to bring MVP into line around year-end."Executives at foundation shipper EQT, the largest US natural gas producer, had said July 26 they expected the pipeline to start service "by the first half of 2024." EQT provided its outlook a day before the Supreme Court action, which lifted stays by the US Court of Appeals for the 4th Circuit earlier in July covering the project's Endangered Species Act documents and an authorization to cross the Jefferson National Forest. Mountain Valley is fully subscribed, with EQT holding 1.29 Bcf/d of the pipeline's firm transportation capacity. Completing Mountain Valley and receiving in-service authorization from FERC by the end of 2023 would put the project on track to commence contract obligations on Jan. 1, 2024. Equitrans on Aug. 1 reported $68.9 million of net income for the second quarter of 2023, compared to $64.7 million in the same period of 2022.Equitrans is considering a 73-mile, 375 MMcf/d extension off the Mountain Valley mainline, the MVP Southgate project, stretching from southern Virginia into North Carolina. Equitrans, which has a 47.2% ownership in MVP Southgate and is expected to operate the pipeline, said in its earnings report that the company and its joint venture partners are "focused on active negotiations with the shipper and a prospective customer regarding refining the project's design, scope and/or timing in lieu of pursuing the project as originally contemplated."
Equitrans US Mountain Valley natgas pipe on track for end 2023 completion (Reuters) - U.S. energy company Equitrans Midstream on Tuesday said it still expects to complete the Mountain Valley natural gas pipeline by the end of the year despite being tangled in numerous court fights since construction began in 2018. The U.S. Supreme Court last week on Thursday removed an obstacle to completing the estimated $6.6 billion pipeline that runs from West Virginia to Virginia, one of several projects delayed by regulatory and legal fights with environmental and local groups in recent years. Mountain Valley is key to unlocking gas supplies from Appalachia, the nation's biggest shale gas-producing basin in Pennsylvania, Ohio and West Virginia. In a sign of just how difficult it has been to build fossil-fuel infrastructure in the U.S. Northeast, where gas output has slowed in recent years, Mountain Valley needed a bill from the U.S. Congress that was signed into law by the president and help from the Supreme Court before it could restart construction. The need for so much government assistance to keep Mountain Valley going "only magnifies the critical need for comprehensive permitting reform" to improve the process of building new infrastructure, Equitrans CEO Thomas Karam said in the company's second quarter earnings release. When Mountain Valley started construction in February 2018, Equitrans estimated the 2.0-billion cubic feet per day project would cost about $3.5 billion and enter service by late 2018. After hitting an 18-month high on Monday, Equitrans stock slid about 4% to $10.00 per share on Tuesday after the company's earnings missed analysts' estimates. The 303-mile (488-kilometer) Mountain Valley project is owned by units of Equitrans, the lead partner building the pipe with a roughly 48.3% interest, NextEra Energy (NEE.N), Consolidated Edison (ED.N), AltaGas (ALA.TO) and RGC Resources (RGCO.O).
Emails Reveal Eversource's Work Behind the Scenes to Push Gas Pipeline - In an exposé based on documents obtained by the Energy and Policy Institute through a public records request, the Boston Globe revealed how gas utility Eversource worked behind the scenes with Douglas, Massachusetts, and a major warehouse developer, to expand a pipeline into the town. Eversource and Douglas officials collaborated to keep the matter out of the public eye and delayed the application for franchise approval to the state’s Department of Public Utilities “since we do not want to alert antigas activists,” according to an email Eversource’s David Allain, director of gas sales and expansion, sent to town officials. The Globe also revealed that despite the warehouse developer’s claim that full electrification of the facility was unfeasible – a claim relayed by Eversource to the DPU in its application – the developer told Douglas officials in an email, “[W]e didn’t do that analysis.” Additional documents obtained by the Energy and Policy Institute and published below further detail Eversource’s pipeline expansion project strategy. The records show that Eversource was not a mere supplier of a requested utility service but active in creating the “demand” for the gas, helped craft letters submitted in support of its DPU application, assisted in passing a Douglas’ Board of Selectmen resolution in favor of the project, and coached town officials on their meetings and communications with state officials. The emails also show that Douglas plans to use the pipeline to bring methane gas to other businesses and establishments in the town, beyond the stated customers in Eversource’s DPU application.
US LNG exports rise in July as maintenance works completed (Reuters) - Liquefied natural gas (LNG) exports from the United States rebounded in July with a 9% jump from the previous month, as plants resumed operations after planned maintenance, preliminary data from Refinitiv Eikon showed on Tuesday. At the end of June, Cheniere Energy's Sabine Pass facility in Louisiana returned to full production after undergoing maintenance for several weeks. Cheniere's Corpus Christi facility in Texas had resumed full operations weeks before after scheduled maintenance, which allowed higher gas processing and exports. In July, U.S. producers exported a total of 7.44 million tonnes (MT) of LNG, of which 43% went to Europe, 36% to Asia, 10% to Latin America and 2% to the Middle East, the Refinitiv data showed. The United States is the world's second largest exporter of LNG, supplying the super-chilled product to global markets. While Europe remained the main destination for U.S. exports, shipments to the continent declined to 43% of total in July from 52% in June, while Asia received 36% last month, up from 20% the previous month, the data showed. Asia's imports from the United States hit an 18-month high in July, with commodity analysis firm Kpler recording arrivals of 2.34 MT that month, up from 1.43 MT in June and 1.91 MT in July last year. However, high LNG storage levels have so far been sufficient for strengthened demand, leading to some Asian importers taking a wait-and-see approach for additional spot LNG purchases, consultancy Rystad Energy said in a report last week. U.S. LNG exports to Latin America and the Middle East fell to 10% and 2% of total in July, respectively, compared with 23% and 3% the previous month, according to the data. U.S. liquefaction facilities are expected to run near full utilization for the rest of the summer as the scheduled maintenance season is ending, unless unexpected issues occur, according to Rystad. The high inventories, muted demand and weak economic growth are expected to limit LNG price recovery globally, Rystad's Senior Analyst Masanori Odaka said in the report. "Europe is continuing to inject gas into storage, with storage levels for this time of the year well above 2021 and 2022", Odaka said.
DT Midstream Expecting Haynesville Natural Gas Volumes to Jump as LNG Projects Near Completion - Haynesville Shale exploration and production (E&P) companies are biding their time and keeping an eye on forward natural gas prices in anticipation of more LNG takeaway by 2025, DT Midstream Inc. CEO David Slater said Tuesday.During the conference call to discuss second quarter results, Slater said the Detroit-based company is “observing moderating production levels and some short-term deferral of activity…as producers continue to operate in a disciplined manner, given the near-term weak prices. “On a positive note, over the past few weeks we have seen rig reductions stabilize, with extreme hot weather occurring across large portions of the country. This is driving strong power demand for natural gas.”
Chesapeake Working Deals to Expose More Natural Gas Production to LNG Market - Chesapeake Energy Corp. executives said Wednesday they expect to announce more deals tied to the LNG market as the company aims to expose 15-20% of its natural gas production to international trade of the super-chilled fuel. Earlier this year, Chesapeake clinched a tentative arrangement with global commodities trader Gunvor Group Ltd. to supply up to 2 million metric tons/year (mmty) of liquefied natural gas from a facility they jointly select. The producer reached another tentative deal to provide a portion of those volumes from the proposed Lake Charles export project in Louisiana at prices linked to the Japan-Korea Marker. “You should really see us announcing similar deals in the future,” said CFO Mohit Singh. “There are a lot of conversations going on."
Energy Transfer Restarting Natural Gas Permit Process for Lake Charles LNG - Energy Transfer LP plans to restart the permitting process with the Department of Energy (DOE) for its proposed Lake Charles LNG project as it seeks to capitalize on new momentum from offtakers and equity partners. During a second quarter earnings call, Co-CEO Tom Long told analysts the company has been in “discussions” with DOE following its decision in April to deny a non-free trade agreement (FTA) permit extension for the Louisiana export project. Long said reapplying for the permit is “the best path forward” after the company’s request to reconsider the decision was denied in June. “We intend to continue to work with our existing customers, prospective equity investors and other stakeholders to progress the development of this project,” Long said.
FERC Delivers Positive Environmental Review for Venture Global’s CP2 LNG - Federal energy regulators concluded in a positive final environmental impact statement (FEIS) for Venture Global Inc.’s Phase 2 expansion of Calcasieu Pass LNG (CP2) that the project could be built with limited environmental impacts. “This is a major regulatory milestone for the project that puts us on track for a Commission vote and the commencement of construction later this year,” CEO Mike Sabel said. In the FEIS published on Friday, Federal Energy Regulatory Commission staff wrote the liquefied natural gas export project planned in Cameron Parish, LA likely wouldn’t have any permanent negative effects for the environment with recommended mitigation measures. However, staff noted the assessment didn’t measure climate impacts and could “impair visual resources”..
Venture Global Eyes CP2 LNG Construction ‘Later This Year’ After Positive Environmental Review - Federal energy regulators have issued a positive final environmental impact statement (FEIS) for Venture Global Inc.’s Phase 2 expansion of Calcasieu Pass LNG (CP2), concluding it would have limited environmental impacts. “This is a major regulatory milestone for the project that puts us on track for a Commission vote and the commencement of construction later this year,” CEO Mike Sabel said. In the FEIS published Friday, Federal Energy Regulatory Commission staff wrote the liquefied natural gas export project planned in Cameron Parish, LA likely wouldn’t have any permanent negative effects for the environment with recommended mitigation measures. However, staff noted the assessment didn’t measure climate impacts and could “impair visual resources” for an
Analysts weigh in on Louisiana LNG industry amid delays -Delfin LNG just wants a little more time. Again. The floating liquefied natural gas terminal, planned for a site roughly 40 miles from the Cameron Parish coast, is asking the Federal Energy Regulatory Commission for a fifth extension of its development timeline. When authorizing LNG projects, FERC grants developers a limited window for construction. All four previous extensions were no more than one year, though Delfin LNG unsuccessfully sought a 3½-year extension in 2019. Its latest request is for another four years, until 2027, to finish building. Delfin LNG’s latest ask, filed with FERC in July, once again cited COVID-19 disruptions and “complications” related to U.S. trade with China as causes for its delays. It also cited “the continuing evolution” of floating LNG terminal technology. Delfin LNG still appears to be on track, assuming FERC grants the latest extension request. The terminal has $18 billion worth of long-term contracts either signed or in the works. It has finished an initial design study and plans to hire a primary contractor by September before closing on its financing in October. However, Delfin LNG isn’t the only Louisiana LNG project facing setbacks. Four of the 14 LNG export terminals either built in or planned for Louisiana are grappling with extended timelines because of regulatory delays or financing struggles, according to The Advocate’s record of the state’s LNG facilities. Lake Charles LNG failed to convince the Department of Energy to give it more time to begin exporting LNG. Driftwood LNG has yet to announce a final investment decision, or FID, even though its construction began in April 2022. West Delta LNG’s bid for a deepwater port license has been delayed after environmental groups raised questions about the firm’s failure to adhere to application deadlines. That list doesn’t even include G2 Net-Zero, which recently pulled the plug on its planned LNG plant in Cameron Parish, or Venture Global LNG’s Calcasieu Pass terminal, which has shipped LNG since early 2022 without reaching full commercial operations. Though bigger LNG players here are firmly established, the delays facing newer projects have raised questions about how much the state’s LNG industry will continue to boom. Analysts said delays are all too common for industrial projects that require lengthy regulatory reviews and boundless resources, particularly capital. However, fundamental capitalism could also be at play: too many players rushed into a roaring market, and some of them are getting weeded out. “It’s not a reflection that there’s an easing of interest in the LNG industry,” said Tyson Slocum, energy program director for Public Citizen, a consumer advocacy nonprofit in Washington. “It just means there are an awful lot of players competing in this space, and that’s going to result in some of them getting delayed a little bit, some of them dropping out entirely.”
As the US exports more gas, Louisiana communities pay the price – Emboldened by a surge in global demand for natural gas, a small group of companies rushed to build an industry along the Gulf Coast, from the southern tip of Texas to southeastern Louisiana, carving up thousands of acres of vulnerable shoreline to clear the way for massive plants and send American fossil fuels overseas. Liquefaction terminals are among the most complex industrial facilities in existence, with footprints that rival those of the largest chemical plants and oil refineries; the first to open — Cheniere Energy’s plant in southwest Louisiana — encompassed an area the size of nearly 700 football fields.Building them often requires dredging through shorelines and wetlands to build loading docks and lay hundreds of miles of pipelines. Seven of these facilities have started up in the continental United States in as many years, and at least two dozen more are in various stages of planning and construction along the Gulf Coast. A decade ago, the United States had never exported LNG, but earlier this year it became the world’s top exporter of the fuel, surpassing the gas-rich nation of Qatar.The growth of the LNG industry in the United States has reordered world markets, offering a new energy source to Europe and Asia even as gas exports drive up domestic energy prices. But it’s on the Gulf Coast, and in particular on the rural fringes of the Louisiana coast, that the consequences of the boom have been most visible. Grist reviewed dozens of state and federal records and found that in their haste to greenlight new terminals, regulators are exposing residents of coastal parishes to new and dangerous sources of air pollution from flares and leaks. Louisiana environmental regulators recently cited numerous violations at Venture Global’s LNG terminal in Cameron Parish, but has allowed the company’s project near McAnespy’s home in Plaquemines, on the other side of the state, to move forward. And as gas exporters build their plants on eroding swampland, they are increasing the risk of catastrophic accidents and explosions during floods and hurricanes. People like McAnespy, who live in neighborhoods surrounding the terminals, are right in the blast zone.
ConocoPhillips signs 20-year LNG supply deals with Mexico Pacific (Reuters) - ConocoPhillips has signed 20-year deals to receive a collective 2.2 million tons of liquefied natural gas (LNG) a year from Mexico Pacific's Saguaro export facility, the U.S. oil and gas producer said on Thursday. Mexico is expected to soon inaugurate the first of nine planned onshore and floating LNG production facilities both on the Gulf and Pacific coasts, which will process U.S. natural gas imported through a pipeline network between the two countries. The deals, which are subject to the project getting the final go-ahead from Mexico Pacific, would grant Conoco access to LNG from Mexico's Pacific coast, the U.S. company said in a release. Mexico Pacific last month announced a similar deal to supply 1 million metric tons of LNG a year to China's Zhejiang Energy. The Saguaro facility will process low-cost gas arriving from the Permian Basin through a dedicated pipeline. Most of the resulting LNG is expected to be bound for the Asian market through a significantly shorter shipping route avoiding the Panama Canal, Mexico Pacific has said. "We are really interested in adding West Coast LNG into our portfolio," Conoco Chief Financial Officer William Bullock told investors on Thursday on a call about the company's quarterly results. Conoco chose Saguaro over other LNG facilities under construction in Mexico because a final investment decision on that project will come sooner, he said. "Saguaro is in a quite competitive supply location for deliveries, particularly into Asia, and fits very nice if you think of an acquisition cost for LNG," Bullock added. Conoco continues to see strong demand for LNG, he said. "We are kind of laddering our build out of market and supply."
Cheniere Expecting Faster Ramp Up for Corpus Christi LNG Expansion - Cheniere Energy Inc. loaded fewer LNG cargoes in the second quarter amid a heavy stretch of maintenance and slightly weaker international demand. The company loaded 149 cargoes, or 536 TBtu, of the super-chilled fuel during the quarter, down from 156 cargoes, or 563 TBtu, in the year-ago period. While international demand for liquefied natural gas has remained strong this year, buying has dropped compared with 2022, when Russia invaded Ukraine and upended energy flows. Cheniere also completed a major maintenance overhaul during the second quarter at the Sabine Pass export terminal in Louisiana for the first time since it entered service in 2016.
Natural gas deliveries to U.S. LNG export facilities set a record in first-half 2023 –EIA - Natural gas deliveries by pipeline to U.S. liquefied natural gas (LNG) export facilities are called LNG feed gas. LNG feed gas averaged 12.8 billion cubic feet per day (Bcf/d) in the first six months of 2023, following the Freeport LNG terminal’s return to service, according to data by S&P Global Commodity Insights. Over this period, LNG feed gas averaged 8%, or 1.0 Bcf/d, more than the 2022 annual average and 4%, or 0.5 Bcf/d, more than the same six-month period in 2022.LNG feed gas set a monthly record in April 2023 at 14.0 Bcf/d, supported by high international demand for U.S. LNG exports, particularly in Europe. LNG feed gas declined slightly in May and June and averaged 13.0 Bcf/d and 11.5 Bcf/d, respectively, primarily because of maintenance at several U.S. LNG export facilities, including Sabine Passand Cameron.LNG feed gas levels are typically higher than LNG export levels because LNG export terminals consume some of the feed gas to operate on-site liquefaction equipment. All U.S. LNG export facilities, except Freeport LNG, use natural gas turbine-driven refrigerant compressors to convert natural gas from a gaseous to a liquid state, or LNG. Freeport LNG is the only liquefaction facility in the United States that uses electric motors instead of natural gas turbines to drive refrigerant compressors. As a result, most of Freeport LNG’s feed gas is converted into LNG.We capture the differences in LNG feed gas and LNG export levels under the Pipeline & Distribution Use category in our Natural Gas Monthly. In addition to LNG feed gas used during the liquefaction process at LNG facilities, the Pipeline & Distribution Use category also includes natural gas consumed in pipeline transportation.We estimate approximately 14% of LNG feed gas is used for liquefaction processes, mostly to operate on-site liquefaction equipment. In our Short-Term Energy Outlook (STEO), we account for feed gas used in the liquefaction process and natural gas consumed in pipeline transportation in the Natural Gas Pipeline and Distribution Use category in Table 5a.We forecast U.S. LNG exports to average 12.0 Bcf/d in 2023 and 13.3 Bcf/d in 2024, as two new LNG liquefaction projects are expected to come online—Golden Pass and Plaquemines. Global economic conditions and demand for natural gas in Europe and Asia may affect our forecast. The assumed ongoing replacement of Russia’s natural gas exports by pipeline to Europe with LNG supports higher U.S. LNG exports going forward. Limited growth in global LNG export capacity in the next two years may increase the need for destination-flexible LNG supplies, mainly from the United States.
Mexico LNG Project in ‘Oversubscribed Territory’ After ConocoPhillips Joins as Anchor - ConocoPhillips agreed Thursday to buy 2.2 million metric tons/year (mmty) of LNG from Mexico Pacific Ltd.’s (MPL) Saguaro Energia export terminal planned for the country’s west coast, pushing the project closer to a final investment decision (FID). MPL CEO Ivan Van der Walt said ConocoPhillips’s commitment pushed the company’s sales volumes for trains one and two past what’s required to sanction them and puts the project in “oversubscribed territory.” Management said it would continue working on contracting for train three ahead of a FID on the project that is expected this year. ConocoPhillips agreed to buy liquefied natural gas from the project for a 20-year term on a free-on-board basis. The sales and purchase agreement also gives ConocoPhillips an option to...
US natgas prices fall 3% on forecasts for lower demand (Reuters) - U.S. natural gas futures fell around 3% on Tuesday on forecasts for less demand over the next two weeks than previously expected. The price decline came despite a preliminary drop in daily output and forecasts for hotter-than-normal weather to continue through mid-August, especially in Texas. Power demand in Texas hit an all-time high on Monday, topping the prior record set on July 18, and will likely break that high again on Tuesday and next week as homes and businesses keep their air conditioners cranked up to escape a lingering heat wave, according to forecasts by the Electric Reliability Council of Texas (ERCOT), the state's power grid operator. Extreme heat boosts the amount of gas burned to produce power for cooling, especially in Texas, which gets most of its electricity from gas-fired plants. In 2022, about 49% of the state's power came from gas-fired plants, with most of the rest coming from wind (22%), coal (16%), nuclear (8%) and solar (4%), federal energy data showed. That Texas record came a few days after overall U.S. power demand hit its highest so far this year (and second highest ever) on July 27 - the hottest day this summer, according to data from the U.S. Energy Information Administration (EIA) going back to 2016. EIA said U.S. power use hit 14.7 million megawatt hours (MWh) on July 27, just shy of the 14.8-million MWh record on July 20, 2022. Data provider Refinitiv said temperatures in the U.S. Lower 48 states averaged 82.2 degrees Fahrenheit (27.9 Celsius) on July 27, a little short of the record 83.0 F on July 20, 2022, according to data going back to 2018. Front-month gas futures NGc1 for September delivery on the New York Mercantile Exchange fell 7.4 cents, or 2.8%, to settle at $2.560 per million British thermal units (mmBtu). Traders said Waha prices fell due in part to the shutdown of the 2.1-billion cubic feet per day (bcfd) Permian Highway Pipeline late on July 27 due to what the company told customers was "an operational incident". Permian Highway transports gas from West Texas to the Gulf Coast. That shutdown depressed Waha prices by trapping gas in the Permian basin in West Texas and eastern New Mexico. Permian Highway told customers that the pipe was back in service late on July 31 with around 1.2 bcfd of capacity available and should be back at full service Tuesday morning. Refinitiv said average gas output in the Lower 48 states rose to 101.7 bcfd in July, up from 101.0 bcfd in June but just shy of the 101.8-bcfd monthly record set in May due to pipeline maintenance earlier in the month. On a daily basis, however, output was on track to drop by 2.8 bcfd to a preliminary two-week low of 99.9 bcfd on Tuesday. That would be the biggest one-day decline in output since December, but traders noted preliminary data - especially at the start of the month - is often revised by large amounts later in the day. Meteorologists forecast the weather in the Lower 48 states will remain mostly hotter than normal through at least Aug. 16.
US natgas prices jumped 4% on small storage build, hotter forecasts (Reuters) - U.S. natural gas futures gained about 4% on Thursday on a slightly smaller-than-expected weekly storage build and forecasts for lower output and hotter weather over the next two weeks than previously expected, especially in Texas. That price increase came despite a decline in the amount of gas flowing to U.S. liquefied natural gas (LNG) export plants. The U.S. Energy Information Administration (EIA) said utilities added 14 billion cubic feet (bcf) of gas into storage during the week ended July 28. That was slightly smaller than the 17-bcf build analysts forecast in a Reuters poll and compares with an increase of 37 bcf in the same week last year and a five-year (2018-2022) average increase of 37 bcf. Analysts said the build was much smaller than usual because power generators burned record amounts of gas for three days in a row last week to keep air conditioners humming during an extreme heat wave blanketing much of the country. Power demand in Texas hit an all-time high on Monday and Tuesday and will likely break that record again on Thursday, Friday and early next week as homes and businesses keep their air conditioners cranked up during the lingering heat wave, according to forecasts by the Electric Reliability Council of Texas (ERCOT), the state's power grid operator. Front-month gas futures for September delivery on the New York Mercantile Exchange rose 8.8 cents, or 3.6%, to settle at $2.565 per million British thermal units (mmBtu). Data provider Refinitiv said average gas output in the U.S. Lower 48 states slid to 101.6 billion cubic feet per day (bcfd) so far in August, down from 101.8 bcfd in June. That compares with a monthly record of 102.2 bcfd in May. Meteorologists forecast the weather in the Lower 48 states will remain hotter than normal through at least Aug. 18. With pipeline and LNG exports expected to increase, Refinitiv forecast U.S. gas demand, including exports, would rise from 104.7 bcfd this week to 105.2 bcfd next week. Those forecasts were similar to Refinitiv's outlook on Wednesday. Gas flows to the seven big U.S. LNG export plants fell from an average of 12.7 bcfd in July to 12.1 bcfd so far in August due mostly to a reduction at Cheniere Energy's Sabine Pass in Louisiana. That compares with a monthly record of 14.0 bcfd in April.
Biden admin quietly settles with eco groups to restrict oil drilling in Gulf of Mexico -- The Biden administration quietly entered into a court settlement late Friday with a coalition of environmental groups who have pushed for more wildlife protections from offshore oil development activity. In a stipulated stay agreement filed with the U.S. District Court for the District of Maryland, the National Marine Fisheries Service (NMFS) agreed to a number of conditions requested by the coalition of four eco groups led by the Sierra Club which, in response, agreed to temporarily pause litigation in the case. Fossil fuel industry groups, though, blasted the settlement, saying it would hamper domestic energy production."This private settlement agreement between the federal government and environmental activists places unfounded restrictions on operations in the U.S. Gulf of Mexico that severely hamper America's ability to produce energy in a region that is responsible for the lowest carbon-intensive barrels in the world," the American Petroleum Institute (API), National Ocean Industries Association and EnerGeo Alliance said in a joint statement. "Despite no evidence to warrant this far-reaching ban on operations after extensive data collections, today’s agreement undermines the integrity of legitimate conservation and habitat protection efforts, violates the explicit directives of Congress in enacting the Inflation Reduction Act, and harms America’s energy independence," the two industry groups added. Under the settlement, the Biden administration agreed to create expanded protection areas for the Rice’s whale species that environmental groups argued weren't properly protected under previous assessments. However, the government stated it had no "reason to believe" whales would be harmed by oil and gas activities in the newly expanded Gulf of Mexico protection areas.In addition, the administration agreed to exclude about 11 million acres with rich oil resources in the Gulf of Mexico from future lease sales. That acreage would likely have been available for future lease sales mandated under the Inflation Reduction Act. And the federal government will impose new restrictions on oil and gas vessels, but not the thousands of vessels operated in other industries in the area. As such, oil and gas vessels must operate at slower speeds, which could cut transit windows to less than 40% of the time annually and 25% during the winter, according to API.
US Crude Stockpiles Fall by Record Volume After OPEC+ Cuts - - US crude stockpiles plunged by a record 17.05 million barrels last week, in the latest sign of a tightening global market following output cuts by OPEC+. American inventories are now at the lowest since January, US government data showed, a welcome sign for oil bulls who have been expecting tighter balances for months. Crude futures have recently rallied above $80 a barrel on the back of new production limits by Saudi Arabia and declining exports from Russia. To be sure, the weekly inventory figures from the US Energy Information Administration are frequently revised, with large adjustments prompting some skepticism about the data’s accuracy.
U.S. crude stockpiles in week fall by largest on record -EIA --(Reuters) - U.S. crude stocks fell the most on record last week as exports topped 5 million barrels per day and refineries processed more crude, the Energy Information Administration said on Wednesday. Most of the fall in crude stocks came from a record drop in stockpiles held in the refining hubs of the U.S. Gulf Coast. Stocks there fell by a record 15.57 million barrels to 243.4 million barrels as refiners in the region processed the most crude since August 2022, the EIA said. U.S. crude inventories fell by 17 million barrels to 439.8 million barrels, compared with analysts’ expectations in a Reuters poll of a 1.4 million-barrel drop. Despite the record stock draw, U.S. oil prices fell along with declines across financial markets, the day after rating agency Fitch downgraded the U.S. government’s top credit rating. U.S. crude futures fell $1.94, or 2.4%, to $80.77 a barrel while Brent crude futures fell $1.77, or 2.1%, to $84.41 a barrel by 11:03 a.m. EDT. News that the U.S. government has pulled an offer to buy 6 million barrels of oil for the Strategic Petroleum Reserve also pushed prices lower, traders and analysts said. “All that pours cold water on an already overbought market,” one trader said. Analysts said traders had already priced in a large stock draw following Tuesday’s American Petroleum Institute forecasts of a 15.4 million barrel draw. “Yesterday’s API report very much alluded to a large crude draw, hence it’s been a case of buying the rumor and selling the fact for WTI, which is heading lower after running into technical resistance,” said Matt Smith, lead oil analyst for the Americas at Kpler. Crude stocks at the Cushing, Oklahoma, delivery hub fell by 1.3 million barrels in the last week, EIA said. U.S. crude exports stood at 5.28 million bpd last week, the third-highest weekly export total on record. Refinery crude runs rose by 39,000 barrels per day in the last week, EIA said. Refinery utilization rates fell by 0.7 percentage points in the week. Gasoline stocks posted a modest surprise build while distillate stocks posted a modest surprise draw, the EIA said. U.S. gasoline stocks rose by 1.5 million barrels in the week to 219.1 million barrels, the EIA said, compared with analysts’ expectations in a Reuters poll of a 1.3 million-barrel drop. Distillate stockpiles, which include diesel and heating oil, fell by 0.8 million barrels in the week to 117.2 million barrels, versus expectations for a 0.1 million-barrel rise, the EIA data showed. Net U.S. crude imports fell last week by 391,000 barrels per day, EIA said.
U.S. Withdraws Offer To Buy 6 Million Barrels Of Oil For The SPR - The Department of Energy has canceled its offer for the purchase of 6 million barrels for the strategic petroleum reserve amid the latest surge in oil prices. These hit the highest in three months earlier this week on strong demand projections, OPEC cuts and outages, and a massive 15.4-million-barrel decline in U.S. inventories for the week to July 28. Last year, to arrest an inexorable climb in retail fuel prices, the White House announced a release of 180 million barrels of crude oil from the strategic petroleum reserve. Critics warned the move would have a limited effect on prices but compromise the energy security of the country by reducing the level of crude in the SPR. The release, alongside other factors such as low demand and fears of demand destruction, did help to bring both fuel and oil prices down. In late 2022, the administration said it was going to start buying crude to replenish the SPR when prices fall to around $70 per barrel. This year, the White House kept oscillating between caution and a willingness to finally start refilling the SPR, amid pressure from Congress Republicans to maintain an adequate strategic reserve of oil. Eventually, this led to the offer for the purchase of 6 million barrels of oil, which was made in early July, when oil prices were within the desired range of $67 to $72 per barrel. The offer, however, was for sour crude, which has seen substantially tightened supply due to Russia sanctions and Saudi production cuts, and this has led to an even more marked increase in prices. Despite the pullback, the Department of Energy “remains committed to its replenishment strategy for the SPR,” a spokesperson said, as quoted by Reuters. West Texas Intermediate was trading above $82 per barrel at the time of writing, up by more than $10 per barrel since early July when the Department of Energy made the SPR refill offer.
EIA Finally Announces Meaningful Decline in USA Crude Stockpiles -- Barani Krishnan, Senior Commodities Analyst at uk.Investing.com: The EIA finally announced a meaningful decline in U.S. crude stockpiles, citing a 17 million barrel drop for the week ended July 28 - apparently its largest in history - to justify all that talk of aggressive Saudi production cuts. For weeks, the Energy Information Administration, the custodian of U.S. energy data, had been reporting paltry changes to crude balances, creating doubts about whether the Saudis were really cutting an additional 1.0 million barrels per day, aside from other reductions, as they claimed. To be fair, no one should expect a barrel for barrel correlation between changes in Saudi crude exports and U.S. inventories. But the EIA, as provider of the world’s most transparent and comprehensive data on energy, had to be capturing the shifts in the global supply situation at least in its weekly data. It’s good that such a huge decline was reported, as it shows that all that bull talk of production cuts wasn’t just ‘bull’. Rigzone: What were some market surprises? Krishnan: To add to its strategy of constantly introducing ‘shock and awe’ to the market and swing prices to its favor, Saudi Arabia announced this week that it would extend its July-August production cut of one million barrels per day to September as well. That announcement interestingly came a day after a two percent price slump that cut short the five-week rally in oil. As though stung, and maybe somewhat annoyed, that short sellers were making a comeback, an official at the Saudi energy ministry was quoted saying by the kingdom’s state news agency SPA that the cuts would not only be extended but also deepened if necessary.
Gas prices hit their highest level this year as heat hampers refineries - Rising oil costs and heat-induced refinery production cuts have driven gas prices to their highest levels in nine months. The average price for a gallon of regular-grade gas in the United States reached $3.80 on Wednesday, 26 cents more compared with a month ago, according to data from AAA. It is the highest level since November, though still lower than the peak average of $5 in June 2022. Hot weather has hurt refinery output, AAA spokesman Andrew Gross said. Refineries aren’t designed to operate in temperatures above 95 degrees, so companies scale back production during heat waves as a safety and efficiency measure. Much of the country’s refinery capacity is in areas of Texas and Louisiana where the average daily maximum temperature in July has been at least 95 degrees. Weather ultimately will decide whether drivers see financial relief at the pump, Gross said. But the cost of crude oil also has an impact on gasoline prices, Gross and others said. Oil prices are around $80 a barrel. Crude supply cuts have led to global declines in oil inventories, said Patrick DeHaan, head of petroleum analysis at GasBuddy. “Heat has been a sudden jolt the past two weeks, but brewing behind the scenes has been the price of oil, which for five straight weeks has been rising,” DeHaan said. “The Russians and Saudis have been colluding to limit production into the market at a time that it’s looking like the economy may not get dragged to the depths of a recession.” Analysts expect gas prices to ease by October, but hurricane season could lead to more hikes in the short term. In South Florida especially, where water temperatures off the Gulf Coast exceeded 100 degrees last week, the potential for hurricane damage looms large.
Waha Back in Positive Natural Gas Price Territory as West Texas Imports Gain Ground – Mexico Spotlight - Natural Gas Intelligence - Natural gas imports into Mexico from West Texas rose this week amid favorable pricing and ample supply.Natural gas futures sunk lower as U.S. production remained above 100 Bcf/d. After three straight losses, the September New York Mercantile Exchange gas futures contract settled at $2.565/MMBtu on Thursday, up 8.8 cents on the day.Mexico pipeline imports from the United States for the 10 days through Thursday averaged 6.90 Bcf/d, according to NGI Data. The average for South Texas flows was 4.15 Bcf/d. West Texas flows gained about 100 MMcf/d over the previous 10-day period, hitting 1.91 Bcf/d. California and Arizona flows averaged 0.53 Bcf/d and 0.31 Bcf/d, respectively, over the last 10 days. July ended with higher average demand than June, at 7.03 Bcf/d compared to 6.98 Bcf/d in June...
Oil Driller Pioneer Tests Lithium Mining From Shale Wastewater -- Pioneer Natural Resources Co.,one of the largest US shale drillers, is experimenting with mining lithium from wastewater produced in the fracking process.Chief Executive Officer Scott Sheffield told Bloomberg Television that the company started doing tests about three years ago to see whether it’s feasible to extract minerals from the large amounts of dirty water generated by drilling in the Permian Basin of West Texas and New Mexico.In addition to lithium, a key component of electric vehicle batteries, it might be possible to produce ammonia and gold from wastewater, Sheffield said. His comments came after Bloomberg News ...
‘Halliburton Loophole’ Allows Fracking Companies to Avoid Chemical Regulation - For almost 20 years, U.S. public-health advocates have worried that toxic chemicals are getting into ground water and harming human health because of an exemption to the federal Safe Drinking Water Act that allows operators of oil and gas fracking operations to use chemicals that would be regulated if used for any other purpose.The so-called Halliburton Loophole, named after the oil and gas services company once headed by former Vice President Dick Cheney, means that the industry can use fracking fluid containing chemicals linked to negative health effects including kidney and liver disease, fertility impairment and reduced sperm counts without being subject to regulation under the act. While environmentalists and public-health campaigners have long called for closing the loophole, they haven’t known how many of the regulated chemicals are used by the industry, how often the industry reports their use in its fracking disclosures, what quantities of the chemicals are used and how often the industry chooses not to identify its chemicals on the grounds that they are proprietary. Now, some of that data is publicly available in a study by researchers at Northeastern University and three other colleges. The paper, published in its final form in February, reports that the industry uses 28 chemicals regulated under the Safe Drinking Water Act and discloses them in up to 73 percent of its reports of fracking activities to FracFocus, an industry-sponsored database. Between 2014 and 2021, the industry used 282 million pounds of the regulated chemicals, a number dwarfed by the 7.2 billion pounds of chemicals that were reported but not identified on the grounds that they are proprietary or trade secrets, the paper said.The chemical most frequently reported to the database during that period was ethylene glycol, used by the industry as a friction-reducer and gelling agent, that can harm the eyes, skin, kidneys and respiratory system and even kill humans if swallowed, according to the federal Centers for Disease Control and Prevention.Ethylene glycol was disclosed to FracFocus more than 52,000 times, or 45 percent of all disclosures, more than twice as often as any of the other regulated chemicals, during the study period. Operators used about 250 million pounds of the chemical, the study said.The second-most commonly reported fracking chemical subject to the loophole was acrylamide, another friction-reducer, which appeared in 19 percent of the cases notified to the database. Its health effects include nervous-system impairments including muscle weakness, numbness in hands and feet and sweating, according to the CDC.Benzene, which can cause cancer at high or prolonged exposures, was reported only 111 times but had one of the largest weights of the regulated chemicals, at 7.5 million pounds, according to the paper, titled “Outcomes of the Halliburton Loophole: Chemicals regulated by the Safe Drinking Water Act in U.S. Fracking Disclosures, 2014-2021.”Other regulated chemicals identified by the study include naphthalene, formaldehyde, and 1,4 dioxane, which are variously linked to negative effects on the nervous, respiratory, urinary and gastrointestinal systems.It also found that 19,700 disclosures report the regulated chemicals in masses that exceed quantities reportable under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), another federal law from the which the oil and gas industry is exempt.
White House Methane Task Force to Target Oil, Natural Gas Emissions - The Biden administration has created a new cabinet-level Methane Task Force to accelerate emissions reductions from the oil and gas industry. The announcement was part of the first-ever White House Methane Summit held last week. Methane, the primary component of natural gas, is a potent greenhouse gas with 80 times the near-term warming potential of carbon dioxide. The task force is targeting abandoned or “orphaned” oil and gas wells, along with the United States’ roughly 3 million-mile natural gas pipeline network, in order to reduce leakage of methane into the atmosphere.
Biden admin blocks more than 1.5 million acres from oil drilling after eco groups' legal challenges - The Biden administration proposed a plan to lock up nearly 1.6 million acres of public landsfrom oil and gas development across western Colorado in response to multiple legal challenges filed by environmental groups. In a draft supplemental environmental impact statement announced Thursday, the Bureau of Land Management (BLM) issued so-called resource management plans for its Grand Junction Field Office and Colorado River Valley field offices which oversee mineral leasing in the area. The proposal would restrict the two offices to leasing just 239,000 acres and 143,000 acres, respectively, for fossil fuel production, a total reduction of about 80%."Public participation is key to the development of Resource Management Plans," BLM Upper Colorado River District Manager Greg Larson said in a statement. "This new analysis will ensure the BLM’s management of these areas will best serve our multiple use mission for the future."BLM's proposal comes after years of legal challenges spearheaded by several environmental groups that argued the federal government failed to take climate change and greenhouse gas emissions into consideration when formulating its resource management plans, which are issued by field offices to outline how they will manage designated lands for the next 20 years.
Oil spill contained at Nanaimo Harbour, recovery work to begin -The Western Canada Marine Response Corporation was tasked to an oil spill in the Nanaimo Harbour on Wednesday morning. Michael Lowry, senior manager of communications for the organization says three vessels from the Nanaimo base responded, and two additional vessels from the Sidney and Vancouver bases were brought in as a precaution. “Most of the oil was confined on the deck of the M/V Maipo River and what did spill from the vessel was contained within log booms surrounding the vessel,” Lowry said in an email statement. “Initial reports indicate very little oil is outside of the containment zone. No exact numbers yet on volume.” On Thursday, crews began recovery of waste but there is no timeline for how long the work will take to complete.’
Hibernia management ordered to pay $400K for July 2019 oil spill— Hibernia management was quick to take action after a July 2019 oil spill, but not quick enough to shut down production, waiting nearly 16 hours. In provincial court in St. John’s Monday, July 31, Judge Phyllis Harris accepted a joint submission from lawyers representing the Crown and Hibernia Management and Development Company Ltd. (HMDC), and ordered Hibernia to pay $400,000 in fines for the spill, which is believed to have released 12,000 litres of oil into the Atlantic Ocean.The court heard two of the platform’s alarms had sounded within five minutes of each other, shortly before 1 a.m. on July 17, 2019. First was the oil-in-water analyzer, which continued to go off intermittently until just before 5 a.m. and again in the afternoon. The other was the ballast water tank’s high level alarm, warning the water level was approaching its top limit. A technician responded within eight minutes of the initial alarm and switched production to stop the displacement of fluid into the ballast system.As daylight broke, the platform’s control room received reports of oil on the ocean surface, and management immediately implemented a spill response and investigation, using aerial surveillance, specialized equipment, sheen monitoring and wildlife observers.It wasn’t until around 5 p.m., when crude oil was noticed in the ballast water tank, that the company shut down production. The cleanup took 2 1/2 weeks before no trace of hydrocarbon was detected in the area, and included several vessels as well as wildlife monitoring; six oiled birds were located.An investigation revealed the discharge was cause by a malfunction in the platform’s crude oil level measurement system, despite proper maintenance and no prior sign that the system wasn’t working correctly. Hibernia pleaded guilty to a breach of regulations by failing to stop work quickly enough; charges of causing the spill and failing to follow processes to manage risks were withdrawn.“I recognize the shutdown could not, in this circumstance, be instant given the size and complexity of the platform, however, I would note that it should occur as quickly as possible after a potential pollution threat is identified, in order to ensure no continuation of the problem and to allow the resulting pollution to be addressed as quickly as possible,” the judge said. She accepted the submission for a $400,000 fine — $310,000 of which will go to the Environmental Damages Fund, a federal fund that supports projects repairing damage to the environment and wildlife conservation — saying it’s an appropriate and meaningful penalty that demonstrates to others in the industry there will be serious consequences for failing to follow regulatory regimes.
Oil major BP posts 70% drop in second-quarter profit, raises dividend by 10% — Oil major BP on Tuesday reported a nearly 70% year-on-year drop in second-quarter profits on the back of weaker fossil fuel prices, echoing a trend observed across the energy industry. The British energy major posted second-quarter underlying replacement cost profit, used as a proxy for net profit, of $2.6 billion. Analysts had expected BP to report second-quarter profit of $3.5 billion, according to estimates collated by Refinitiv. The second-quarter result compared with a profit of $4.96 billion recorded in the first three months of the year and with the $8.5 billion logged in the second quarter of 2022. BP said the earnings reflected significantly lower realized refining margins, a higher level of turnaround and maintenance activity and a weak oil trading result. Nonetheless, the energy giant boosted its dividend by 10% to 7.27 cents per ordinary share for the second quarter. BP also said it would repurchase $1.5 billion of its shares over the next three months.
Europe’s LNG Imports Fall To 20-Month Low --LNG imports into Europe fell in July to the lowest level since November 2021 as low European benchmark natural gas prices are discouraging traders to ship many cargoes to the continent right now. Europe’s LNG imports declined by 7% year over year in July, to 8.6 million tons, the lowest import volumes since November 2021, when the energy crisis in Europe began, ship-tracking data compiled by Bloomberg showed on Wednesday. The front-month futures at the TTF hub, the benchmark for Europe’s gas trading, were at $30.43 (27.71 euros) per megawatt-hour (MWh) as of early Wednesday in Amsterdam. Prices jumped earlier this week as maintenance offshore Norway, including at the giant gas field Troll, reduced pipeline gas exports from Norway, which is now Europe’s single-largest gas supplier having ousted Russia from the top spot after the Russian invasion of Ukraine. However, Europe’s benchmark natural gas prices have fallen in recent months and are now 80% lower than the records seen last summer amid ample gas inventories with storage sites on track to be full well in advance of EU targets. EU gas storage levels are much higher than the five-year average and the levels from this time last year, easing concerns about Europe’s gas supply. The EU gas storage sites were 85% full as of July 31, according to data from Gas Infrastructure Europe. Comfortable inventory levels are capping the price gains from Norwegian maintenance stoppages, keeping European prices lower. The low European natural gas prices discourage traders from sending too much LNG to Europe now as sellers are looking at the Asian market where spot LNG prices have risen amid heatwaves in Japan, South Korea, and parts of China. “The discount of European gas prices compared to Asian LNG prices increased to an average of around US$2.1/MMBtu in July compared to an average of around US$0.3/MMBtu in June 2023,” ING strategists Warren Patterson and Ewa Manthey said earlier this week. “The higher discount in the European gas market could help divert more LNG cargoes towards Asia and reduce the supply glut in the European market.”
Refined Russian Oil Bucks G7 Price Cap -- Several of Russia’s refined oil products are trading above the price cap imposed by Group of Seven nations, in another sign that the value of its barrels is rising in defiance of sanctions. Since February, there have been two caps on the sale of Russian refined fuels, one for higher value products at $100 a barrel and another for lower ones at $45. Argus Media Ltd., whose prices are central to the caps, says naphtha and fuel oil are trading above the lower cap, while diesel is trading above the higher one. Of the products that are yet to breach the cap at Russia’s western ports, gasoil and gasoline are both approaching that ceiling, with the value of both fuels surging globally. Last month, Russia’s flagship Urals crude breached the price cap for the first time, offering a victory of sorts for Moscow which assembled a shadow fleet of ships big enough to transport its supplies to buyers while circumventing G-7 services. There also signs that Moscow is starting to deliver on the production cuts it agreed with its allies in the Organization of Petroleum Exporting Countries. On Tuesday, a senior US administration official said that countries signed up to the cap are continuing to monitor the policy’s progress and that its success would be gauged by whether Russia’s revenue is lower than it would be if there were no measures in place. The official said that Russia’s assembly of a fleet of vessels to ship its oil was a victory for the policy as it diverted resources away from Moscow’s war on Ukraine. The price cap on refined fuels is more complicated than the one on crude as it involves two different sets of prices for a myriad of products. For naphtha, in particular, there have been different categorizations of customs codes that could split cargoes between either the lower or higher value caps. The measures are only designed to reflect the use of services provided by countries that sign up to the cap. Transporting oil and refined products above the price cap using insurance or tankers from non-signatories wouldn’t be subject to sanctions.
UN Aims to Remove Oil from Tanker in Red Sea - An international team is working to remove oil from a ship anchored in the Red Sea off the coast of Yemen. The oil tanker, called the SOF Safer, has not been used for at least eight years. It contains over 1 million barrels of oil. Experts say the ship is at risk of breaking up or exploding. The Associated Press reported in 2020 that seawater entered the ship’s engine room and caused damage. The water also put the ship in danger of sinking. For years, the United Nations and governments of nearby countries warned that an explosion or oil leak could disrupt shipping in the Middle East. The ship is close to the Yemeni ports of Hodeida and Ras Issa. Many ships travel from the Persian Gulf, past Yemen and through Egypt’s Suez Canal to get to the Mediterranean Sea. The United Nations purchased another oil tanker so crews could move the oil from the Safer. Antonio Guterres is the UN Secretary General. In a statement, he said the work is a “critical next step in avoiding an environmental and humanitarian catastrophe.” The U.N. said the job will be done in less than three weeks. The Safer was built in the 1970s and sold to the Yemeni government in the 1980s so it could move oil pumped from the fields in Marib. The U.N. said a leak could have been worse than the 1989 Exxon Valdez oil spill, one of the largest ecological disasters. When the oil is removed, the work will not be over, however. The Safer will be anchored to an underwater oil pipeline before it is taken away to a scrapyard. David Gressly is the U.N. humanitarian official for Yemen. He said moving the oil will prevent a “worst-case scenario.” Guterres said, cleaning up an oil spill in Yemen could have cost “tens of billions of dollars.”
UN completes first phase of Safer oil transfer in Yemen --The United Nations has announced the transfer of one third of the oil from the tanker Safer, bringing the first phase of the operation to an end. The decaying ship moored off the coast of Yemen, north of the Yemeni port of Hodeidah, poses a serious environmental and humanitarian risk. According to Arab News, United Nations Development Programme (UNDP) administrator Achim Steiner said on Sunday that 360,000 barrels of oil had been pumped from the tanker to a replacement tanker, reducing the risk of an oil spill by almost a third. The tanker Safer, which has been stranded in the Red Sea since 2015, contains about 1.1 million barrels of crude oil. Experts have warned that a rupture or explosion could cause a massive environmental disaster and affect millions of people who depend on fishing and desalination for their livelihoods and water supply. The UN has been negotiating for years with the Houthi rebels, who control the area where the tanker is located, to gain access to the tanker for repairs and maintenance. The Houthis finally agreed to allow a UN team to board the tanker in February 2021, after a series of technical problems and delays. The operation is being carried out by the maritime salvage company SMIT Salvage, contracted by the UN team, which includes engineers and divers from different countries, and began transferring the oil on 11 July. This UN-coordinated operation relies on donations from private companies and public entities contributing $115 million for the prevention of the spill, with a further $28 million needed to complete the transfer operations. The clean-up of the disaster could cost $20 billion if the vessel were to rupture with the oil on board.
Iraq exports over 106 mln barrels of crude oil in July -Iraq exported about 106.75 million barrels of crude oil in July, generating 8.29 billion U.S. dollars in revenue, the country’s Oil Ministry announced on Tuesday. The average price of Iraqi crude oil in July was 77.69 dollars per barrel, the ministry said in a statement, citing statistics from the State Organization for Marketing of Oil, an Iraqi company. About 105.48 million barrels were exported from oil fields in central and southern Iraq via the port of Basra, and 922,755 barrels from the Qayyara oilfield in the northern province of Nineveh, and 344,804 barrels were sent to neighboring Jordan during the month, the statement said. Oil exports from the northern province of Kirkuk via the Turkish port of Ceyhan on the Mediterranean were suspended after Baghdad won an arbitration case against Türkiye in late March over a long dispute on the independent export of oil by Iraq’s semi-autonomous Kurdistan Regional Government. On April 4, the Iraqi federal government and the Kurdish regional government signed an interim agreement to resume Kurdish oil exports via Türkiye. But Türkiye continued to halt the oil flow, saying it wants to negotiate the arbitration before oil exports resume. Iraq’s economy heavily relies on crude oil exports, which account for more than 90 percent of the country’s revenues.
OPEC oil output declines by 840,000 bpd in July – Crude oil output of OPEC (Organization of the Petroleum Exporting Countries) declined by 840,000 barrels per day (bpd) from June to July to 27.34 million bpd, a Reuters survey showed on Monday. During that period, Angola and Nigeria reportedly failed to reach the agreed oil output and Saudi Arabia reduced its production by 860,000 as part of its voluntary output cut. Increases in Angola and Iraq's outputs, however, limited the decline in the organization's total output. Crude oil prices continue to push higher following this headline. As of writing, the barrel of West Texas Intermediate was trading at its highest level since mid-April at $81.60, gaining 1.2% on a daily basis.
OPEC’S Production Falls By Most In 3 Years: Survey - OPEC’s crude oil production fell in July by the largest amount in years, according to a new Bloomberg survey. According to the results of the survey, OPEC’s crude production fell 900,000 barrels per day (bpd) last month, to an average of 27.79 million bpd. It is the sharpest drop since 2020 when the group rushed to cut its output in the wake of Covid lockdowns and crashing demand. The survey showed that Saudi Arabia carried the heaviest load in cutting production in July, producing 9.15 million bpd. Nigeria and Libya also saw their production dip last month by 130,000 bpd and 50,000 bpd, respectively. OPEC+’s Joint Ministerial Monitoring Committee (JMMC) meeting has been scheduled for August 3 to assess the state of the oil markets, according to sources who spoke with Oilprice.com last week. Bloomberg reported today that Saudi Arabia and Russia would chair an online review of the markets at a meeting on August 4. Analysts largely expect Saudi Arabia to extend its voluntary 1 million bpd supply cut into September as it looks to support the rebound in oil prices, which have Brent pushing $85 as of Tuesday afternoon. But some anticipate Saudi Arabia unwinding at least part of its 1 million bpd cut beginning next month. Oil markets are expected to tighten during this half of the year, with even the IEA predicting an oil shortage of 1.7 million bpd in H2. Standard Chartered has predicted a 2.81 million bpd shortfall this month, with smaller shortfalls—but still shortfalls—in September and beyond. Brent prices are expected to climb in the fourth quarter above $90 per barrel—a level that some suggest would entice Saudi Arabia to unwind its voluntary cuts.
OPEC+ Not Expected To Alter Oil Production Policy Amid Price Rally --A panel of OPEC+ is unlikely to change the current oil production policy of the alliance at the Friday meeting, several sources in the group told Reuters on Wednesday, as prices rallied to more than a three-month high. The Joint Ministerial Monitoring Committee (JMMC) of the group, which regularly discusses the situation on the market and the need for OPEC+ intervention, is meeting on August 4 to take stock of the most recent developments.Since the OPEC+ meeting in early June, oil prices have rallied by more than 16%, driven by easing concerns about a U.S. recession and a tightening oil market thanks to the OPEC+ cuts.At the latest meeting in June, OPEC+ decided to extend the current cuts into 2024. Those cuts were originally intended to last between May and December 2023. But the largest surprise came from Saudi Arabia, the world’s top crude oil exporter and OPEC+ leader, which announced a unilateral production cut of 1 million barrels per day (bpd) for July.Early in July, the Saudis extended the cut into August, too, “to support the stability of the market.”Now there are expectations that Saudi Arabia will xtend its 1 million bpd production cut into September, too. The Kingdom is cutting its production by 1 million bpd in July and August, on top of around 500,000 bpd reduction as part of the OPEC+ cuts that began in May.Some analysts expect Saudi Arabia to announce the one-month extension of the 1-million-bpd cut after the JMMC meeting on Friday and ahead of the announcement of the official selling prices (OSPs) for Saudi crude grades loading in September. The cuts from Saudi Arabia and some other OPEC+ producers, and signs that Russian crude shipments are already falling, have supported oil prices in recent weeks and led analysts to upgrade their forecasts for market deficits this quarter and the rest of the year.
Saudis Extend 1MM Barrel Oil Cut -Saudi Arabia extended its unilateral oil production cut by another month, and said it could be prolonged further or even deepened. The leader of the Organization of Petroleum Exporting Countries will continue the cutback of 1 million barrels a day — launched last month — into September, according to a statement on state Saudi Press Agency. That will hold output at about 9 million barrels a day, the lowest level in several years. Crude futures jumped. The measure — which comes on top of supply curbs Riyadh was already making with others in the OPEC+ producers group — is intended “to reinforce the precautionary efforts made by OPEC+ countries with the aim of supporting the stability and balance of oil markets.” Its ally Russia also said it will extend output curbs, but taper them slightly. Oil prices have recovered recently, reaching a three-month high above $85 a barrel earlier this week in London, as the post-pandemic recovery in fuel demand, combined with output curbs by OPEC+ countries, begins to tighten world crude markets. But with the economic outlook still clouded by lackluster data from China and fears of recession in the US, Riyadh is showing no signs of relaxing its grip. Besides, the kingdom may need prices of as much as $100 a barrel to cover government spending, according to Bloomberg Economics. Brent futures surged as much as 1.7% after the Saudi announcement on Thursday, but then pared some of the gains to trade near $84 a barrel. The decision to extend output cuts was in line with the expectations of traders and analysts surveyed by Bloomberg last week. The kingdom’s hawkish approach has drawn criticism from major importing nations, which fear that rising fuel costs may inflict another inflationary spike on consumers and thwart central banks as they try to taper interest-rate increases. The Saudis introduced the extra million-barrel cut earlier this summer as a unilateral move, with most other members of the OPEC+ coalition already pumping below their assigned targets and unlikely to reduce supplies further. It since has been joined by Russia, a member of the wider OPEC+ alliance, which appears to be finally delivering on pledges to lower shipments. Moscow had maintained exports for many months in order to maximize revenue for its war against Ukraine, but tanker-tracking data show that flows are starting to come down.
How Are Saudi Oil Production Cuts Affecting the Country's Economy? --- From what Enverus Intelligence Research (EIR) can see, Saudi Arabia’s oil production cuts aren’t affecting the country’s economy in a material way. That’s according to Al Salazar, a Senior Vice President at EIR, who told Rigzone that last year was a strong one for Saudi GDP growth, which he highlighted was up 8.7 percent year on year, according to the IMF. “Undoubtedly that was buoyed by very strong oil prices,” Salazar said. “This year the IMF has them at a more normal 3.1 percent year on year growth rate for 2023. Headlines may surface showing year on year GDP figures are slowing, but I’d argue that it’s hard to beat last year’s anomalous pace,” he added. “Looking deeper at their high-frequency economic releases – monthly sentiment indexes (Purchasing Manager’s Index) are well into expansionary territory and trending higher. This feels bullish,” Salazar continued. When asked if Saudi Arabia can afford to maintain its cuts, and if so, for how long, Salazar highlighted to Rigzone that “Saudi has historically had deep pockets and access to capital if need be (see Saudi Aramco IPO)”. “Cutting production should lead to higher oil prices, providing a mathematical offset to bottom-line revenues,” he added. “There is some optimal level of production cut that should lead an oil price rise that leaves the kingdom’s bottom line relatively unscathed. We’re pretty sure that the Saudi’s have done this calculation and are not putting themselves in any sort of material financial duress given their market intervention,” Salazar continued. “Lastly, at $85 per barrel Brent, we doubt they’re losing money on a per barrel basis,”
Oil Prices Set For Largest Monthly Gain Since January 2022 -Oil prices were poised early on Monday to end July trading with the biggest monthly gain since January 2022, buoyed by tightening supply, expectations of a record demand, slower inflation in the U.S., and a still resilient American economy. As of Asian trading on Monday, both benchmarks were trading flat after another week of gains last week. The U.S. benchmark WTI Crude was up by 0.04% early on Monday, well above the $80 per barrel mark, at $80.61. The international benchmark, Brent Crude, was slightly down from the $84.99 a barrel settlement on Friday, and traded at $84.93, down by 0.07% on the day.Oil prices were headed for their strongest monthly gain since January 2022 and the best July performance in nearly two decades.Oil is now at the highest levels since early April, pushed up by the OPEC+ production cuts which are tightening supply.Demand, on the other hand, is not only resilient butheaded for a record high in the coming months, according to analysts including Goldman Sachs and oil executives including ExxonMobil’s CEO Darren Woods.The world will see a record-high demand for oil this year, Exxon’s top executive told CNBC on Friday.In addition, the market expects Saudi Arabia, the world’s top crude oil exporter, and OPEC+ leader, to extend its 1 million bpd production cut into September, too. The Kingdom is cutting its production by 1 million bpd in July and August, on top of around 500,000 bpd reduction as part of the OPEC+ cuts that began in May. Russia has pledged a 500,000 bpd cut to August oil exports, and signs suggest Russian crude shipments are already falling.The macroeconomic sentiment has also improved, with the recent inflation data from the U.S. showing slowing price increases and China expected to support its economy out of the slower-than-expected growth in the second quarter.
The Oil Markets Finished Higher on Monday Marking the Third Straight Trading Session of Price Gains -The oil markets finished higher on Monday marking the third straight trading session of price gains. The September Brent, which expired today, finished the trading session up 0.7% at $85.56 a barrel while the September WTI contract finished up $1.22 per barrel or 1.5% at $81.80. Both Brent and WTI saw their highs of the day reach the highest level since late April and recorded their steepest monthly gains since January 2022 as traders remained nervous that global supplies would continue to tighten as a result of OPEC+ production restraint and expectation for rising demand through the remainder of the year.Goldman Sachs in a research note to clients said it sees global oil demand rising to 102.8 million b/d in July and it has revised upward its 2023 demand estimate by 550,000 b/d due to stronger economic growth estimates in India and the U.S. being able to offset a downgraded estimate for Chinese oil consumption.The EIA Monday reported it estimates U.S. crude oil production in May stood at 12.662 million barrels, down 15,000 b/d from April levels. The EIA though revised upward its April production estimate by 62,000 b/d to 12.677 million b/d. U.S. crude oil exports in May averaged 3.789 million b/d down from the 4.009 million b/d exported in April. The EIA also said it estimates U.S. oil supplied, a proxy for demand, rose to 20.78 million b/d in May, the highest level since August 2019. Gasoline demand is estimated in May to have reached 9.11 million b/d the highest level since June 2022.A Reuters survey estimates OPEC oil output has fallen in July by 840,000 b/d from June, averaging 27.34 million b/d. Declines were led by Saudi Arabian and Nigerian production declines..The EIA’s latest Petroleum Monthly Report released Monday showed that total U.S. oil demand in May stood at 20.776 million b/d, up 2.5% from April and some 3.5% higher than the same month a year ago. Distillate demand was estimated at 3.93 million b/d up 1.4% from a year ago while gasoline demand was basically flat from a year ago, down just 2,000 b/d at 9.105 million b/d.Colonial Pipeline announced it is allocating space for Cycle 45 on Line 1, its main gasoline line.
WTI, Brent Notch 15% Monthly Gain on Tightening OPEC-Plus Supply -- West Texas Intermediate futures on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange settled the last trading day of July with sharp gains, propelled by expectations for tighter supply availability from OPEC+ heavyweights Saudi Arabia and Russia, while improved inflation and growth outlook in the United States further boosted demand expectations for the second half of the year. WTI September futures on NYMEX advanced for the fourth straight session on Monday to a 15-month $81.80-per-barrel (bbl) high settlement on the spot continuous chart after breaking through the 200-day moving average on July 24. ICE Brent futures for September delivery expired $0.57 per bbl higher on Monday at a 15-week spot high $85.80 per bbl, with the October contract narrowing its discount to $0.13 per bbl on the session. Both WTI and Brent contracts advanced 15% in July, the largest monthly gain since January 2022. A combination of production cuts from OPEC+ and an improved U.S. macroeconomic outlook have lifted the crude complex to fresh highs in July. Saudi Arabia and Russia, OPEC+'s two largest oil producers, are expected to extend production and export cuts, respectively, into the final months of the year when they meet on Thursday, Aug. 3, for a Joint Ministerial Monitoring Committee meeting. OPEC+ has implemented some 3.7 million barrels per day (bdp) in output reduction since October, with Riyadh topping the deal with a unilateral 1-million-bpd production cut for July and August, putting upward pressure on oil prices. Traders and analysts expect Saudi Arabia this week to rollover its unilateral cut into at least September, when the Atlantic Basin hurricane season peaks, further tightening the global supply balance. According to market sources, traders in Asia have increasingly turned to supplies outside OPEC+, namely the United States and North Sea, as Saudis and Russians cut back on exports. In terms of strategy, Riyadh has been vocal that it is targeting higher oil prices to meet vast socioeconomic projects included in its "Saudi 2020 Vision." Russia, which has been forced to reengineer its oil trading amid Western sanctions for its full-scale invasion of the Ukraine, has rerouted millions of barrels in oil and refined products exports to the Asian region. Moscow is interested in pushing oil prices as high as possible so it can narrow the discount for its barrels. Some analysts estimate the Russian budget now requires an oil price of $120 per bbl to pay for its vast military expenditures in Ukraine along with socioeconomic projects domestically. For context, Russia needed an oil price of just $40 per bbl to balance its budget before the beginning of the Ukrainian offensive in February 2022. Domestically, a myriad of unplanned refinery outages in Texas and Louisiana tied to extreme heat have further bolstered refined product prices. NYMEX August RBOB futures advanced more than 18% in July, as U.S. gasoline inventories dropped to about 7% below the five-year average. At expiration, the August RBOB contract fell $0.0268 to $2.9290 per gallon, having retreated from Friday's nine-month $2.9936 intraday high on the spot continuous chart. September futures narrowed its discount to the August contract $0.0335 gallon with a $2.8955-per-gallon settlement. NYMEX August ULSD futures rallied $0.0323 on the session for a $2.9909-per-gallon expiration, the highest settlement on the spot continuous chart since Jan. 31 when the February contract expired at $3.1823 per gallon. The September ULSD contract increased to $2.2955 gallon, up $0.0357.
Oil Prices Fall On China Demand Worries -Oil prices fell Tuesday on demand worries as weak PMI data from Asia and Europe revived worries about global growth and fuel demand. Benchmark Brent crude futures dropped half a percent to $84.94 a barrel, while WTI crude futures were down 0.6 percent at $81.28. However, both Brent and WTI contracts held near three-month highs on signs of tightening global supply and hopes of increased demand through the rest of this year. The voluntary output cuts announced by Saudi Arabia and Russia have come into effect from today. Traders also remain hopeful that Saudi Arabia will extend voluntary output cuts into September and tighten the global supply even further. A private survey showed today that factory activity in China, the world's largest importer of crude, fell into contraction territory for the first time since April. Another report showed that average new home prices in 100 Chinese cities fell for a third consecutive month in July. Japan, South Korea, Taiwan and Vietnam also saw manufacturing activity contracting in July, raising fresh concerns about Asia's fragile economic recovery. In Europe, the HCOB Eurozone Manufacturing PMI fell to 42.7 in July from 43.4 in the previous month, marking the lowest in three years. U.K. factory output fell at the fastest pace in seven months in July, hit by higher interest rates while British retail sales fell in July at the fastest rate since April 2022, separate reports showed.
Crude Oil Slides on Stronger USD with Stock Data in Focus - The crude contracts posted modest losses on Tuesday, pressured by a stronger U.S. dollar and weak industrial data for the Eurozone, where manufacturing activity deteriorated to the lowest level since spring 2020 amid dull consumer demand. The greenback's renewed strength follows a slew of dismal Eurozone manufacturing data, where all signs point to a protracted recession in the second half of the year. This has pressured the Euro against its main rival, the U.S. dollar, on the first trading session of August, with the greenback rallying 0.45% against a basket of foreign currencies. The headline manufacturing index for the German economy slid last month to the lowest level since May 2020, reflecting weak demand conditions for a broad category of consumer goods, showed data released by S&P Global overnight. German and European manufacturers broadly reported challenges in securing new work across many key export markets in Asia and the United States. This was reflected in a sharp and accelerated reduction in international sales. "These are ugly figures. The fall in demand for German manufactured goods, as measured by the survey's new orders index, is one of the most pronounced over roughly the last 30 years," said Cyrus de la Rubia, chief economist at Hamburg Commercial Bank. "The risks for the German economy as a whole running into trouble during the second half of the year have clearly increased." Domestically, the manufacturing sector did not fare much better, with the headline Purchasing Managers Index released Tuesday morning by the Institute of Supply Management revealing business conditions across all but one large industry remained in contraction. "Current U.S. market conditions of inflationary and recessionary tactics affecting overall business. Customers are reducing or not placing orders as forecast, putting internal focus on reducing financial liabilities and overhead costs," said a representative from the computer and electronic products sector surveyed by ISM. "Sales in our industry are extremely slow entering into the second half of the year, and no upturn is expected until at least the fourth quarter," assessed a representative from the chemical products industry. Also on Tuesday, oil traders positioned ahead of the weekly inventory report from the American Petroleum Institute scheduled for release at 4:30 p.m. EDT, followed by official data from the U.S. Energy Information Administration Wednesday morning. The consensus of analysts and traders surveyed by the Wall Street Journal calls for U.S. commercial crude oil inventories to have declined by 1.3 million barrels (bbl) during the week ended July 28. Gasoline inventories are also projected to have decreased by 1.3 million bbl from the previous week. Stocks of distillates, which are mostly diesel fuel, are projected to have declined by a modest 100,000 bbl from the previous week, with a wide range of estimates from a decrease of 3 million bbl to an increase of 1.4 million bbl. U.S. distillate inventories currently sit almost 14% below the five-year average. On the first trading day of August, WTI September futures on NYMEX slipped $0.43 per bbl from a 15-month high on Monday to settle at $81.37 per bbl, while the new front-month October Brent contract declined $0.52 for a $84.91-per-bbl settlement. NYMEX September RBOB futures moved $0.0225 lower to $2.8730 per gallon, continuing a retreat from the July 28 $2.9936 nine-month high on the spot continuous chart traded by the now-expired August contract. Bucking the trend, the September ULSD contract on NYMEX advanced to a fresh six-month high $3.0725 on the spot continuous chart before settling the session at $3.0234 per gallon, up $0.0379.
Oil Prices Balloon On Largest Single-Week Crude Inventory Crash In Years -- Crude oil inventories in the United States unexpectedly fell sizably this week by 15.4 million barrels, the American Petroleum Institute (API) data showed on Tuesday after increasing by 1.319 million barrels in the week prior. Analysts were expecting a draw of 900,000 barrels in U.S. crude-oil inventories. The total number of barrels of crude oil gained so far this year is 20 million barrels, according to API data, although the net draw in crude inventories since April is 27 million barrels. On Monday, the Department of Energy (DoE) reported no change for the third week in a row to the inventory held in the Strategic Petroleum Reserve (SPR) in the week ending July 28, with the SPR inventory still sitting at a 40-year low of 346.8 million barrels. The price of WTI and Brent were both trading down on Tuesday in the run-up to the data release. By 4:18 p.m. EST, WTI was trading down 0.09%, at $81.73 per barrel—up more than $2 per barrel since last Tuesday, while Brent crude was trading down 0.20% at $85.26—up just under $2 this from this time last week. Gasoline inventories saw another draw this week, falling by 1.68 million barrels after falling 1.043 million barrels in the week prior, with inventories already 7% less than the five-year average. Distillate inventories fell by 512,000 barrels, compared to the 1.614 million barrel build in the week prior. Crude oil production in the United States slipped to 12.2 million bpd for the week ending July 21, according to EIA data, flat compared to production levels at the start of the year. Inventories at Cushing, Oklahoma, fell by another 1.76 million barrels, after falling by 2.34 million barrels in the previous week.
WTI Extends Losses Despite The Largest Weekly Crude Inventory Drawdown Ever Oil prices jumped overnight (near YTD highs) after API reported a massive (record) crude inventory drawdown, but have tumbled this morning as the dollar rallies and bonds & stocks are dumped. "The OPEC+ Joint Ministerial Monitoring Committee will meet online on Friday, providing Saudi Arabia an excellent opportunity to roll its voluntary 1 million bpd production cut announced on June 3 for July production for another month to September. It would be the second time the Saudis have extended the voluntary 1 million bpd production cut. There is speculation that another 1 million roll forward could slow the global war on inflation, and kill the "golden goose," especially heading into the end of summer driving season, and the beginning of shoulder season," Volumes also remain muted in light summer trading, while volatility is at the lowest since January 2020.API
- Crude -15.4mm (-1.3mm exp) - biggest weekly draw on record
- Cushing -1.76mm
- Gasoline -1.68mm (-1.3mm exp)
- Distillates -512k (-100k exp)
DOE
- Crude -17.05mm (-1.3mm exp) - biggest weekly draw on record
- Cushing -1.259mm
- Gasoline +1.481mm (-1.3mm exp)
- Distillates -796k (-100k exp)
Confirming API's report, the official data shows a massive 17 million barrel crude draw last week - the biggest ever (in at least 40 years)...The total US Crude inventory is now back at its lowest since Jan... The so-called adjustment factor tumbled last week from a record positive... As a reminder, the Biden admin has been drawing down on the SPR for the last 14 weeks and - despite all the promises - has not refilled the "STRATEGIC" political petroleum reserve one little bit. So yeah: just 3 weeks after the DOE said it would buy a "whopping" 6 million barrels of sour crude - an amount which the SPR drained every 2 weeks for much of the past year - the Biden administration pulled said offer, an Energy Department spokesperson said on Tuesday, as oil prices are expected to keep rising after a output cut from Saudi Arabia. The U.S. made the latest solicitation to buy the sour crude oil for the SPR on July 7, and follows the release of a record 180 million barrels from the reserve last year to prevent a Democrat rout in the midterms following Russia's invasion of Ukraine. Having vowed it would refill the SPR eventually, the Energy Department bought back 6.3 million barrels in recent month... and that appears to be it. The move was not a rejection of oil companies' offers to sell oil to the SPR but a decision made on "market conditions," the spokesperson said. The person not specify what that meant, but tight oil supplies that have caused global oil prices to rise above $80 per barrel in recent weeks. Of course, by refusing to refill now, it only ensures that when the need truly arises, Biden, or rather his successor, will be forced to buy the oil at triple digits.
Oil settle lower despite record US crude stock drawdown (Reuters) - Oil prices settled down 2% on Wednesday despite a historic drop in U.S. crude stocks, as traders derisk following the downgrade of the U.S. government's top credit by a major ratings agency. U.S. crude stocks fell in the week by 17 million barrels, the largest drop in U.S. crude inventories according to records dating back to 1982, the Energy Information Administration said on Wednesday. The draw was driven by increased refinery runs and strong crude exports Despite the record stock draw, U.S. oil prices fell amid falls across financial markets after rating agency Fitch downgraded the U.S. government's top credit rating. U.S. crude futures settled down $1.88, or 2.3%, to $79.49 a barrel while Brent crude futures settled down $1.71, or 2%, to $83.20 a barrel. Both contracts rose by more than $1 earlier on the session, buoyed by falling U.S. stockpiles in Tuesday's data from the American Petroleum Industry, which also indicated a large U.S. stockpile drawdown. That the U.S. government has pulled an offer to buy 6 million barrels of oil for the Strategic Petroleum Reserve also pushed prices lower, traders and analysts said. Total product supplied - a proxy for demand - also fell by 1.3 million barrels in the week to 20 million barrels per day, the EIA said. Crude oil inventories have also begun to drop in other regions as demand outpaces supply, which has been constrained by deep production cuts from Saudi Arabia, the de facto leader of the Organization of the Petroleum Exporting Countries (OPEC) said. Concerns have risen that oil buying in China, the world's biggest oil importer, may slow as prices rise. Weak PMI data released this week, meanwhile, indicated fuel demand may be weaker than expected. "Chinese crude buying has been opportunistic rather than due to higher demand. (The) market continues to be driven purely by supply constraints, which are always subject to potential political volatility," Analysts expect Saudi Arabia to extend its voluntary oil output cut of 1 million barrels per day for another month to include September in a meeting of producers on Friday. OPEC+, which groups OPEC and allies led by Russia, is unlikely to revise its current oil output policy when a panel meets on Friday, six OPEC+ sources told Reuters.
Oil Prices Decline Amid Broad Risk Aversion - Oil prices fell further from three-month highs on Thursday despite data showing a historic drop in U.S. crude inventories. Benchmark Brent crude futures dropped 0.6 percent to $82.70 a barrel, with a firmer dollar and worries about U.S. fiscal position weighing on prices. WTI crude futures were down 0.4 percent at $79.16. The dollar is finding support from the risk-off mood triggered by Fitch's unexpected downgrade of U.S. sovereign rating. Signs of resilience in the U.S. labor market also revived Fed rate hike bets and supported the dollar. The downside in oil prices remained capped somewhat after a record drop in U.S. inventories indicated a substantial tightening in crude markets. Data from the Energy Information Administration (EIA) showed on Thursday that crude inventories in the U.S. dropped by 17.049 million barrels in the week ended July 28, substantially larger than an expected drop of just about 1.37 million barrels. Also, worries about Chinese growth eased somewhat after a private survey China's services sector activity expanded at a stronger pace in July compared to June.
Saudi Arabia Extending its Voluntary Output Cut of 1 Million Bpd by One Month to the End of Sept - The oil market rallied higher on Thursday following the news that Saudi Arabia was extending its voluntary output cut of 1 million bpd by one month to the end of September. The oil market traded mostly sideways overnight before further selling, in follow through from Wednesday’s sell off, pushed the market to a low of $78.69 after breaching its previous low and the lower boundary of its upward trending channel at $79.05. The market later retraced some of its losses following the Saudi announcement that it was once again extending its voluntary output cut. The market was also well supported by the news that Russia was extending its export cuts of 300,000 bpd into September. The crude market continued to trend higher, rallying over $2.30 as it posted a high of $81.86 ahead of the close. The September WTI contract settled up $2.06 at $81.55, while the October Brent contract settled up $1.94 at $85.14. The product markets ended in mixed territory, with the heating oil market settling up 7.06 cents at $3.0749 before it rallied to a high of $3.0907 in the post close session and the RB market settled down 1.11 cents at $2.7647. The state news agency SPA said Saudi Arabia will extend a voluntary oil output cut of one million bpd for another month to include September. The agency cited an official source at the ministry of energy as saying the cut can be "extended, or extended and deepened". The source said Saudi Arabia’s production for September will be approximately 9 million bpd. The source said "This additional voluntary cut comes to reinforce the precautionary efforts made by OPEC+ countries with the aim of supporting the stability and balance of oil markets." Meanwhile, a panel from OPEC+, which includes members OPEC and allies led by Russia, is meeting on Friday.White House national security spokesman, John Kirby, said the United States will continue to work with producers and consumers to ensure the energy market promotes growth after Saudi Arabia's decision to reduce oil production.Russia’s Deputy Prime Minister, Alexander Novak, said Russia will cut oil exports by 300,000 bpd in September. He said Russia will continue to voluntarily reduce its oil supply in the month of September to ensure the oil market remains balanced.Colonial Pipeline Co is allocating space for Cycle 46 on Line 1, its main gasoline line from Houston, Texas to Greensboro, North Carolina. The current allocation is for the pipeline segment north of Collins, Mississippi.Canadian Natural Resources Ltd expects the Trans Mountain expansion pipeline begin the line fill as soon as August. It expects the line fill to require up to 5 million barrels of oil.Diesel flows into Europe in July reached a six-month high of 7.13 million tons, up from 6.38 million tons in June. August arrivals so far stand at 1.77 million tons. Meanwhile, exports from northwestern Europe to the U.S. in July stood at about 1.06 million metric tons.
Oil Rallies 2% After Saudi Arabia Hints at Deeper Cuts --Oil futures powered higher in Thursday's afternoon session, sending the international crude benchmark above $85 bbl after Saudi Arabia announced a one-month extension of a unilateral 1 million bpd reduction in production, while hinting it could further deepen its crude output cut in coming months to support the global market balance. While the decision to extend the 1 million bpd production cut for a third month into September was fully expected and priced-in by the market, the hint at "deeper cuts" in the official statement from the Saudi Energy Ministry published on Saudi Press Agency has caught markets off guard, rallying oil prices back to near their three-month highs. The latest announced production cut by the Saudis comes atop of voluntary curbs of 500,000 bpd previously announced by the Kingdom in April, which are now extended until the end of December 2024. In effect, Saudi oil production for the month of September will be 9 million bpd -- their lowest output rate since 2012 outside of the pandemic. Riyadh had previously asserted its commitment to doing what's necessary in the interest of "market stability." Others might argue the production cuts are designed to push oil prices higher, with the possibility of a deeper reduction in output stoking concern over lower supply availability that would further tighten the physical oil market in the final months of the year. "[T]his additional voluntary cut comes to reinforce the precautionary efforts made by OPEC+ countries with the aim of supporting the stability and balance of oil markets," stated Saudi Arabia's Ministry of Energy on Thursday, according to the Saudi Press Agency. Russian Energy Minister Alexander Novak said on Thursday that Moscow would taper its 500,000-bpd export cut in effect in August to 300,000 bpd in September. Novak's statement was, however, vague on details, specifically around which export level the cut would be based on, and the possible effect on Russian oil production. Russian waterborne crude exports in June fell by 465,000 bpd from a record-high 3.9 million bpd seen in May, according to vessel-tracking data. Russian then cut its oil exports by another 500,000 bpd from July, which sent its waterborne exports from Western ports to multi-month lows. The announcements come ahead of Friday's (8/4) OPEC+ Joint Ministerial Monitoring Committee meeting among the 23-member producer coalition, chaired by Saudi Arabia and Russia, with speculation growing that additional cuts could be on the table. Saudi Arabia and Russia, OPEC+'s largest oil producers, have rapidly cut back on crude exports to key markets in Asia and Europe as part of their efforts to tighten the global oil market. This, in turn, created demand pull for oil barrels outside the OPEC+ coalition, mainly from the United States and North Sea, pressuring their domestic inventory levels. At settlement, West Texas Intermediate September futures on NYMEX jumped $2.06 bbl to $81.55 bbl, and the international crude benchmark Brent contract for October delivery advanced $1.94 to settle at $85.14 bbl. NYMEX September RBOB futures moved $0.0111 lower to settle at $2.7647 gallon, while the September ULSD contract on NYMEX advanced $0.0706 to the highest settlement since Jan. 31 at $3.0706 gallon.
Oil prices are up 20% and energy stocks are rebounding Energy stocks are making a comeback after being left for dead earlier this year. The S&P 500 index’s energy sector has gained more than 6% during the third quarter so far, outperforming the benchmark index. Energy stocks faltered in the beginning of the year, defying investors’ expectations for last year’s boom to accelerate on a lack of global supply. That drop in energy stocks came despite OPEC+ producers, the cartel of oil producing countries plus Russia, announcing several output cuts in a bid to bump up crude prices. But energy stocks have finally started to gain in recent months. Saudi Arabia slashed its output by one million barrels per day in July — a move it extended Thursday through September. Those moves mark the country’s biggest production cut in years. That’s helped boost crude prices, which are hovering above $80 a barrel after dipping below $70 earlier this year. US WTI crude oil prices have gained 22% since June 11, while global benchmark Brent is up by 19%. The slashed output coincides with what’s been a busy summer of travel, heightening demand for crude. Combined with a brightening outlook for the economy as investors grow more optimistic that the Federal Reserve could soon stop raising interest rates, the picture for energy stocks is looking better than it has all year. Recent quarterly earnings reports from oil titans showed a mixed bag. But more importantly, the companies issued forward-looking guidance that, for the most part, has given investors reason to be optimistic. Chevron said in its post-earnings conference call on July 28 that it expects “to deliver strong free cash flow for years to come” and resume share buybacks through the fourth quarter, a possible signal of confidence in its upcoming financial performance. Oil companies Shell and BP both increased their quarterly dividends. OPEC+ is expected to keep its overall oil policy unchanged at a meeting Friday, Reuters reported. But the group will likely continue being vigilant in keeping oil prices higher, says Babin. That, along with an expected increase in demand as China works to revive its economy, could give more support to crude prices — though an economic slowdown could put downward pressure on prices.
Oil prices climb as Saudi Arabia, Russia supply cuts boost supply jitters | Malay Mail — Oil prices rose today with extended voluntary output cuts from Saudi Arabia and Russia, offsetting earlier losses due to the downgrade of the US’ long-term credit rating, reported Anadolu. International benchmark Brent crude traded at US$85.36 (RM388) per barrel at 10.16 am local time (0716 GMT), a 0.26 per cent gain from the closing price yesterday of US$85.14 per barrel. The American benchmark West Texas Intermediate (WTI) traded at the same time at US$81.81 per barrel, up 0.32 per cent from the session close of US$81.55 per barrel yesterday. Both benchmarks fell during intraday trading over investor demand jitters as the Fitch rating agency downgraded the US’ long-term credit rating. However, prices rebounded as supply woes intensified after Saudi Arabia and Russia announced plans to extend existing supply curbs. The pledged production reduction is an extension of the country’s existing 1 million barrels per day (bpd) and “can be extended or extended and deepened”, according to a Saudi energy ministry source cited by Saudi state agency SPA. With the latest production cut, the total production of one of the world’s largest exporters of crude oil will be approximately 9 million bpd in September. This came just minutes before Russia’s announcement to cut oil exports by 300,000 bpd in September “as part of efforts to ensure market stability”, Deputy Prime Minister Alexander Novak said. The new cuts were additions to the OPEC+ group’s already-existing output cap of around 2 million bpd announced in October 2022 and 1.6 million bpd announced in May. The Saudi-Russia cutbacks are “exacerbated by lower supply growth in other regions,” US shale oil output is likely to fall amid the steady decline in drilling activity in the country. Investors will be monitoring the OPEC+ group’s meeting later on Friday, however, the group is mostly expected to roll over its current production policy.
Oil Posts Sixth Weekly Gain on Saudi Output Cut, Weaker USD -- West Texas Intermediate futures and Brent crude advanced in afternoon trading Friday, sending both crude benchmarks higher for the sixth consecutive week after Saudi Arabia and Russia extended a round of deep production and export cuts into September, while a selloff in the U.S. dollar index in reaction to a slowing labor market further lifted the crude complex. U.S. economy added 178,000 new jobs in July -- the slowest pace since early 2021, while employment growth in the prior two months was revised lower by a combined 49,000 jobs, according to data released Friday morning from the Bureau of Labor Department. For the second month in a row, employment in leisure and hospitality, a driver of job growth in the post-pandemic labor market remained little changed, adding an average of just 17,000 new jobs over the June-July period. The average hours worked by all employees on private payrolls also declined, signaling less demand for labor. On the flip side, the national unemployment rate dropped back 0.1% from the previous month to a 3.5% 50-year low, while wages rose more than expected from the prior year to 4.4%. Investors, however, gauged the July employment report had enough ammunition for the Federal Reserve to skip a rate increase at their Sept. 20 meeting, with the CME FedWatch Tool showing 86.5% of investors anticipating no change to the federal funds rates, which is currently in a 5.25% by 5.5% target range. In reaction to the softer-than-expected employment report, the U.S. dollar index nosedived 0.5% against a basket of foreign currencies to settle the session at a four-day low 101.836, lending upside support for the front-month West Texas Intermediate contract. WTI September futures on NYMEX rallied $1.27 bbl to a fresh three-month spot high of $82.82 bbl, and the Brent international crude benchmark for October delivery advanced $1.10 for a $86.27 bbl settlement. NYMEX September RBOB futures moved $0.0184 higher to settle at $2.7831 gallon, while the September ULSD contract was an outlier, softening $0.0127 from the highest trade in six months at $3.0954 to $3.0622 gallon. Underscoring gains in the oil complex, Saudi Arabia announced on Thursday an extension of a unilateral 1 million bpd production cut into September, while hinting that those cuts could be further extended and "deepened to support the market balances." The latest production cut by the Saudis comes atop of voluntary curbs of 500,000 bpd previously announced by the Kingdom in April, which are now extended until the end of December 2024. In effect, Saudi oil production for September will be 9 million bpd -- their lowest output rate since 2012 outside of the pandemic. Also announced Thursday, Russia said it would limit oil exports by 300,000 bpd in September, adjusting the reduction from 500,000 bpd currently. Friday morning, the OPEC+ Joint Ministerial Monitoring Committee reaffirmed the continuation of previously announced production cuts through the end of 2024, with OPEC+ previously agreeing on April 3 to reduce their production collectively by about 1.2 million bpd beginning in May. The agreement in April followed previously announced production cuts, with the voluntary reduction in output by participating members lifting the total amount cut to 1.66 million bpd. Also boosting the oil complex on Friday, a Ukrainian drone attack briefly disrupted operations at Russia's major oil shipping hub, the Novorossiysk port, on the Black Sea. Traffic at the Novorossiysk port was halted for hours, according to wire services, disrupting operations at the marine terminal of the Caspian Pipeline Consortium -- the main export route for seaborne Russian and Kazakh barrels. Some 1.9 million bpd or 2% of global oil supply is processed through the Novorossiysk port, making it one of the chokepoints for global oil trade. While short-lived, the port's closure increased concerns over the security of Black Sea oil trade in the midst of tightening global oil balances. The heightened geopolitical risk follows the termination of a one-year agreement allowing Ukrainian grains to be exported from the Black Sea unhindered by Russian attacks. Moscow declined to renew the agreement in July after the one-year term and has instead targeted Ukrainian ports along the Black Sea. For its part, Ukraine has declared any vessel leaving Russian ports on the Black Sea as a legitimate target for attack amid the escalation of the war between the two countries in recent weeks.
Opec+ made no changes to the group’s current oil output policy – GulfToday - An Opec+ ministerial panel which met on Friday made no changes to the group’s current oil output policy after a Saudi decision to extend its voluntary production cut into September helped oil prices rally further. The panel, called the Joint Ministerial Monitoring Committee, can call for a full meeting of the Organization of the Petroleum Exporting Countries (Opec) and allies led by Russia, known as Opec+, if warranted. Oil prices rose more than 14% in July compared with June, the biggest monthly percentage increase since January last year, as tighter supply and rising demand outweighed concern that interest rate hikes and stubborn inflation could hit economic growth. “The committee will continue to closely assess market conditions,” an Opec statement issued after the online meeting said, adding that the panel urged members to achieve full compliance with output cut pledges. On Thursday, Opec leader Saudi Arabia said it will extend a voluntary oil output cut of one million barrels per day (bpd) for another month to include September, adding it could be extended beyond that or deepened. Oil prices on Friday traded at nearly $86 a barrel, close to their highest since mid-April. Russia will also cut oil exports by 300,000 bpd in September, Deputy Prime Minister Alexander Novak said shortly after the Saudi announcement. Opec member Algeria, which announced an additional voluntary cut of 20,000 bpd for August, is yet to decide whether to extend the cut into September, a source with knowledge of the matter told Reuters. Opec+ agreed on a broad deal to limit supply into 2024 at its last policy meeting in June, and Saudi Arabia pledged a voluntary production cut for July that it extended to include August. The group’s output cuts, excluding the additional voluntary reductions from the three producers, amount to 3.66 million bpd, roughly 3.6% of global demand. The JMMC will hold its next meeting on Oct. 4. Oil prices rose about 1% on Friday and were on track for a sixth consecutive week of gains after Saudi Arabia and Russia, the world’s second and third-largest crude producers, pledged to extend supply cuts through September. Brent crude futures rose 74 cents, or 0.9%, to $85.88 a barrel. US West Texas Intermediate crude gained 72 cents, or 0.9%, to $82.27 a barrel. Both benchmarks were set for their longest streak of weekly gains this year. Brent has risen more than 16% and WTI by over 19% during the last six weeks. Saudi Arabia on Thursday extended a voluntary oil production cut of 1 million barrels per day (bpd) to the end of September, keeping the door open for another extension. Russia has also elected to reduce its oil exports by 300,000 bpd next month. “With the production cut extended, we anticipate a market deficit of more than 1.5 million barrels per day (bpd) in September, following an estimated deficit of around 2 million bpd in July and August,” On the demand front, global oil consumption could grow by 2.4 million bpd this year, Russian Deputy Prime Minister Alexander Novak said on Friday The panel noted that it could take additional measures at any time, which could mean additional cuts if market conditions worsen. Weighing on oil prices, data released on Friday showed the U.S. economy maintained a moderate pace of job growth in July, but solid wage gains and a decline in the unemployment rate pointed to continued tightness in labor market conditions. Additionally, the downturn in euro zone business activity worsened more than initially thought in July and the Bank of England raised its interest rate to a 15-year peak on Thursday. Global oil demand is set to grow by 2.4 million barrels per day this year, and strong demand makes the market balanced, Russian Deputy Prime Minister Alexander Novak said on Friday. Russian oil output remains steady at about 9.5 million barrels per day, he said after a meeting of the joint monitoring committee of OPEC and non-OPEC producers. “Russia is fully committed to the agreements that had been reached, and generally, within OPEC+ we are in full compliance with our obligations,” Novak told Russian state television. Saudi Arabia and Russia made additional pledges outside the OPEC+ agreement this week to support crude prices. “Today the market is stable in our view,” Novak said. “The prices are at an acceptable level. Thanks to the measures taken by OPEC+, including Russia, the balance of supply and demand is being maintained.”
OPEC+ Reaffirms Strategy -- OPEC+ signaled it will stay the course as group leader Saudi Arabia extends a production cut aimed at shoring up global oil markets. A monitoring committee comprising the kingdom and other key OPEC+ nations recommended no changes to the coalition’s supply policy at an online meeting on Friday, according to a delegate, who asked not to be named because the information was private. Riyadh announced on Thursday that it will extend a unilateral cutback of 1 million barrels a day into September — and potentially deepen the reduction after that — to support a fragile market. Crude prices are trading near a three-month high above $85 a barrel in London, yet fears over China’s economic rebound cloud the demand outlook. The committee “will continue to closely assess market conditions” and noted that OPEC+ members are willing “to address market developments and stand ready to take additional measures at any time,” according to a statement on the organization’s website. Major consuming nations have criticized the Saudis for constricting output when oil markets are already on track to tighten significantly, warning that a renewed inflationary spike would inflict more pain on consumers. The kingdom is getting some assistance from fellow OPEC+ member Russia, which is finally delivering on pledges to curb its supplies. Moscow announced on Thursday it will also continue export restraints into September, but taper them slightly to 300,000 barrels a day. The country is pumping 9.5 million barrels a day now, in line with its pledge to reduce production by 500,000 barrels a day since March, Deputy Prime Minister Alexander Novak said in an interview with Rossiya 24 TV on Friday. The global oil market “is quite stable,” and prices are at an “acceptable level,” Novak said. The current effort is largely confined to the two OPEC+ leaders: several other nations among the Organization of Petroleum Exporting Countries and its partners are pumping below their assigned quotas and unable to cut further, plagued by inadequate investment and political instability. Defending the oil market has come at a cost for the Saudis, requiring them to slash output to a two-year low near 9 million barrels a day. The kingdom suffered the sharpest downgrade to economic growth projections by the International Monetary Fund, which sees the country expanding by just 1.9% this year, a fraction of its performance in 2022. The Joint Ministerial Monitoring Committee will convene again on Oct. 4, according to the statement, while the full 23-nation OPEC+ alliance is due to meet in late November.
Asia Sees Sharp Rise in Sea Robbery Incidents -- In the first half of 2023, Asia experienced a “sharp increase” in sea robbery incidents, according to Dryad Global’s latest Maritime Security Threat Advisory (MSTA). Almost two-thirds of these occurred in the Singapore Strait, the MSTA highlighted, noting that this is one of the world’s busiest shipping lanes. “The rise in sea robbery is attributed to various socio-economic factors, including the impact of the Covid-19 pandemic, reduced fish catch due to climate change, and the prevailing Southwest monsoon,” the MSTA stated. “These challenges have pushed some local residents along the Singapore Strait to resort to sea robbery and petty crimes as a means to make ends meet,” it added. The Regional Cooperation Agreement on Combating Piracy and Armed Robbery against Ships in Asia (ReCAAP) Information Sharing Centre reported 59 instances of perpetrators boarding ships in Asian waters during this period, the MSTA noted. The MSTA dubbed this “a significant increase from the previous year’s 34 incidents”. “The surge in sea robbery in such a critical maritime region raises concerns and underscores the need to address the underlying socio-economic factors to mitigate future incidents,” the MSTA said. According to Dryad’s latest MSTA, which was published on July 31, total incidents in South East Asia in 2023 number 57, which the publication shows is a 12 percent rise compared to the same period last year. The total number of incidents in the Indian Ocean in 2023 are unchanged compared to the same period last year and the total number of incidents in West Africa in 2023 are down compared to the same period last year, the latest MSTA highlights.
US Military May Put Armed Troops on Commercial Ships in Strait of Hormuz - The US military may place armed troops on commercial ships in the Strait of Hormuz, a move that would significantly raise tensions between the US and Iran, The Associated Press reported Thursday.The idea would be to protect commercial vessels from being seized by Iran, but it could result in direct clashes between the US and Iranian militaries. The US has been steadily increasing its military presence in the Persian Gulf since Iran seized two tankers earlier this year, which was provoked by the US seizing a tanker carrying Iranian oil.Using the pretext of sanctions enforcement, the US Justice Department seized the Greek tanker Suez Rajan in April and forced the ship to head for Texas instead of China as the US intended to steal the 800,000 barrels of Iranian oil it was carrying. But according to recent media reports, US companies are hesitant to discharge the oil because they fear reprisal from Iran in the Persian Gulf, and the Suez Rajan is stuck off the coast of Texas.Five unnamed US officials speaking to AP said that no final decision on placing armed troops on commercial vessels has been made. They said discussions have been ongoing between the US and Gulf Arab nations.Placing armed American troops on commercial vessels in the region would be an unprecedented action. According to AP, the US did not even take the step during the Tanker War, which was part of the Iran-Iraq War in the 1980s.The Tanker War led to a one-day major naval battle between the US and Iran in 1988, which resulted in the sinking of most of the Iranian Navy. A few months after the battle, with tensions still high in the region, a US Navy vessel shot down a civilian airliner, Iran Air Flight 655, killing all 290 people onboard.
Ukraine Strikes Russian Commercial Port with Drones for First Time - Ukrainian drones struck a Russian commercial port for the first time since the start of the war. Novorossiysk was shut down for a few hours after it was hit by Ukrainian air and sea drones. Two percent of the world’s oil supply and grain are shipped from Novorossiysk.The Russian Defense Ministry claims that it was able to down several drones targeting its ports on Friday morning. Moscow says its defenses were able to disable Kiev’s drones targeting the Crimean Peninsula and Novorossiysk, a port located on the Russian mainland. The Russian military dubbed the Ukrainian strikes a “terrorist attack.”Kiev claims it carried out the attack. Ukrainian officials often deny responsibility for attacks conducted inside of Russia, in part because Kiev has made several assurances to Washington that it would not use American assurance to target Russian territory.The Associated Press published satellite photos of Novorossiysk appearing to show a damaged Russian ship at the port. The Security Service of Ukraine says it struck the Olenegorsky Gornyak, a Russian landing vessel. Some outlets are reporting the ship was severely damaged and leaking oil.A Ukrainian source speaking with Reuters asserted that the Olenegorsky Gornyak was unable to engage in combat due to the damage. “As a result of the attack, the Olenegorsky Gornyak received a serious breach and currently cannot conduct its combat missions,” the source said. “All the Russian statements about a ‘repelled attack’ are fake.”A retired Ukrainian military official told Reuters that the attack demonstrated a significant step up in abilities for Kiev as the drone flew an estimated 460 miles. “It was the first time … the Ukrainian navy projected power so far away,” he said.Novorossiysk is reported to have resumed normal operations within hours of the attack.
Russian Oil, Grain Export Hub Disrupted by Ukraine Attack on Warship --Russia’s commodity export hub in the Black Sea was closed for several hours on Friday after a Ukrainian drone attack on a naval vessel, the first time that operations at the key shipment point for oil and grains have been disrupted by the war. The overnight assault by two naval drones was repelled without damage to port facilities, according to the Russian Defense Ministry. Ukraine’s state security service was responsible for the attack that targeted and disabled the Russian landing ship Olenegorsky Gornyak, according to a security official familiar with the matter. Russia’s Defense Ministry didn’t respond to questions about the status of the ship. The incident highlights the growing risk to the flow of raw materials from the Black Sea. Moscow is seeking to further cripple Ukraine’s ability to export grains, while Kyiv has threatened commensurate action against Russia. “This attack on Novorossiysk seems to have been very limited, but the risk of further attacks on Russian and Ukrainian ports and export infrastructure will lead to a lot of volatility,” said Carlos Mera, an analyst at Rabobank. Wheat futures rose as much as 3.5% after the attack. Brent crude advanced 0.8% to $85.78 a barrel as of 11:29 a.m. in London. In the almost 18 months that Russia has waged its war against Ukraine, its ability to export commodities has been affected principally by sanctions. Europe banned most imports of the country’s oil, while the G-7 imposed price cap that restricts Moscow’s petroleum sales. There is one notable exception — two Russian gas pipelines to Europe called Nord Stream and Nord Stream 2 that were damaged by explosions in September 2022. The conduits were already shut down at the time of the blasts but the attacks removed a key point of Moscow’s leverage as it sought to use gas exports as an economic weapon against Europe. The New York Times subsequently reported that a “pro-Ukrainian group” was responsible for the blasts. Russia is the world’s top wheat exporter and Novorossiysk ranks as one of the main shipment points. The country is in the midst of a second bumper harvest, making this a crucial time for getting grain onto global markets. The drone attack adds to the tumult faced by the Black Sea crop trade after Russia pulled out of a deal last month that had established a safe corridor for grain shipments from three Ukrainian ports. The nation’s exports are now confined to smaller river and land routes, and Russia has launched multiple attacks on port infrastructure in the weeks since the pact ended. Novorossiysk also ships oil, coal and fertilizer. Nearby is the export terminal for the Caspian Pipeline Consortium, which loads tankers with about 1.3 million barrels a day of crude from fields in both Russia and Kazakhstan. The latter country has become a crucial sources of oil for Europe after it banned imports from Russia. Russian authorities briefly halted marine traffic around Novorossiysk, but ship movements resumed at 10:39 a.m. Moscow time on Friday, CPC said in statement. During the disruption, the oil terminal continued to load tankers that were already moored.
Russia promises retaliation after Ukrainian drones hit a Russian tanker in 2nd sea attack in a day - (AP) — Moscow promised retaliation Saturday after Ukrainian drones hit a Russian tanker in the Black Sea near Crimea late Friday, the second sea attack involving drones in one day.Ukraine struck a major Russian port earlier on Friday.Moscow strongly condemned what it sees as a Ukrainian “terrorist attack” on a civilian vessel in the Kerch Strait, said Russian Foreign Ministry spokeswoman Maria Zakharova.“There can be no justification for such barbaric actions, they will not go unanswered and their authors and perpetrators will inevitably be punished,” she wrote on the Telegram messaging app.As Kyiv’s naval capabilities grow, the Black Sea is becoming an increasingly important battleground in the war.Three weeks ago, Moscow withdrew from a key export agreement that allowed Ukraine to ship millions of tons of grain across the Black Sea for sale on world markets. In the wake of that withdrawal, Russia carried out repeated strikes on Ukrainian ports, including Odesa.An official with Ukraine’s Security Service confirmed to The Associated Press that the service was behind the attack on the tanker, which was transporting fuel for Russian forces. A sea drone, filled with 450 kilograms (992 pounds) of TNT, was used for the attack, added the official, who spoke on condition of anonymity because he was not authorized to give official statements.“The Sig tanker ... suffered a hole in the engine room near the waterline on the starboard side, presumably as a result of a sea drone attack,” Russia’s Federal Agency for Marine and River Transport wrote on Telegram, adding that there were no casualties among the 11 crew members.
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