US oil prices rose for the third time in four weeks on increasing conflict in the Middle East and on expectations that OPEC would extend its first quarter production cuts till the end of the year…after falling 2.5% to $76.49 a barrel last week on ongoing concerns about global demand, another large increase in US crude supplies, and fears that the Fed would leave interest rates higher for longer than had been expected, the contract price for the benchmark US light sweet crude for April delivery slipped in Asian trading on Monday amid speculation that unexpectedly robust inflation figures might postpone reductions in high interest rates, which have been restraining global fuel demand growth, but rallied in New York as Houthi attacks on Gulf of Aden and Red Sea shipping increased concerns of disruptions to global supplies, and settled $1.09 higher at $77.58 a barrel, boosted by expectations that OPEC and allied producers would extend their 2.2 million barrels per day output cuts through the second quarter in an attempt to balance the physical oil market against surging production from outside the cartel…oil traded higher again on Tuesday, as foreign oil buyers turned to American crude to avoid Red Sea shipping issues, and as traders focused on increased uncertainty over a potential Gaza ceasefire, and then surged to settle $1.29 higher at $78.87 a barrel in reaction to reports that OPEC and Russia-led producers were considering extending their output cuts to the end of the year to prevent oil inventories from increasing…oil prices extended their gains Wednesday morning, as reports that OPEC+ would rollover its production cuts were seen pressuring supply just as Red Sea disruptions were triggering widely tracked gauges of the physical market to point to tighter conditions, but erased those gains and traded back towards the $78 level following the EIA’s inventory report, which showed a larger than expected build in US crude supplies, and settled 33 cent lower at $78.54 a barrel as traders weighed rising US crude inventories against expectations that OPEC+ would extend supply cuts…oil rebounded early Thursday ahead of the release of U.S. inflation data for January, and remained steady as the personal consumption expenditures index showed January inflation was in line with economists' expectations, keeping a June interest rate cut on the table, then edged down to settle 28 cents lower at $78.26 a barrel as the inflation data implied a softening of the world's biggest economy that could weaken crude demand, with rising OPEC production also weighing on prices….oil prices rose on Friday after Israeli soldiers massacred more than 100 starving Palestinians waiting for flour in Gaza, raising tensions in the oil-rich Middle East, and rallied to $80.84 a barrel before pulling back to settle $1.71 higher at a four month high of $79.97 a barrel as traders weighed fresh U.S., European and Chinese economic data while awaiting the OPEC+ decision on supply agreements for the second quarter, and thus finished 4.5% higher for the week..
Meanwhile, natural gas prices rose for the 2nd time in eight weeks on a larger than expected withdrawal of gas from storage, lower production, and a switch to the higher priced April contract…after falling 0.4% to a 3½ year weekly closing low of $1.603 per mmBTU last week on a lower than expected withdrawal of gas from storage and on ongoing forecasts for continued mild temperatures, the contract price for natural gas for March delivery opened 10 cents higher on Monday, supported by last week’s news of a drop in production and by uncertainty surrounding the contract’s impending settlement. but moved decidedly lower throughout the day to settle 5.6 cents higher at $1.659 per mmBTU, as traders weighed bearish weather patterns against signs of production decline…the March contract opened 2 cents higher and traded in a wide range throughout it's last day of trading on Tuesday, but rebounded after crashing to it’s lowest price in nearly four years to settle just 4.4 cents lower at $1.615 per mmBTU, as excess inventories and near-record levels of output flooded a market overwhelmed by milder temperatures, while at the same time the more actively traded April contract opened nearly seven cents higher and settled with a 6.4 cent increase at $1.808 per mmBTU, supported by production cuts and volatility relating to the final March settlement…with commodity markets now quoting the contract price for natural gas for April delivery, that contract opened Wednesday at $1.857, five cents above Tuesday’s closing price of $1.808, supported by short-term cold settling in the Midwest and cuts to production, and settled 7.7 cents higher at 1.885 per mmBTU, as widespread reports sourced from Reuters reported a 7.7% increase supported by cooler weather forecasts…natural gas prices opened 3 cents lower on Thursday, then jumped to $1.918 as the storage report hit the wire, as the withdrawal from storage was greater than expected, but soon retreated to settle 2.5 cents lower at 1.860 per mmBTU, weighed down by balmy March weather forecasts...the weak weather forecasts and bloated storage pressured natural gas prices early on Friday, and they again settled 2.5 cents lower at $1.885 per mmBTU on more than sufficient fuel in storage and lower heating demand, and appeared to increase 14.5% over the week, even as the April gas contract, which had finished the prior week priced at $1.699, was just 8.0% higher...
The EIA's natural gas storage report for the week ending February 23rd indicated that the amount of working natural gas held in underground storage in the US was reduced by 96 billion cubic feet to 2,574 billion cubic feet by the end of the week, which left our natural gas supplies 248 billion cubic feet, or 11.7% above the 2,126 billion cubic feet that were in storage on February 23rd of last year, and 498 billion cubic feet, or 26.5% more than the five-year average of 1,876 billion cubic feet of natural gas that were typically in working storage as of the 23rd of February over the most recent five years…the 96 billion cubic foot withdrawal from US natural gas working storage for the cited week was more than the 91 billion cubic feet withdrawal from supplies forecast by a Wall Street Journal survey of analysts, and was also more than the 81 billion cubic feet that were pulled from natural gas storage during the corresponding third week of February 2023, but was much less than the average 141 billion cubic feet withdrawal from natural gas storage that has been typical for the same winter week over the past 5 years…
The Latest US Oil Supply and Disposition Data from the EIA
US oil data from the US Energy Information Administration for the week ending February 23rd indicated that as a decrease in our oil imports was mostly offset by a decrease in our oil exports and as our refining remained depressed while production continued at a record pace, we again had surplus oil to add to our stored commercial crude supplies for the fifth consecutive week, and for the 13th time in the past 19 weeks….Our imports of crude oil fell by an average of 269,000 barrels per day to average 6,385,000 barrels per day, after rising by an average of 184,000 barrels per day over the prior week, while our exports of crude oil fell by 237,000 barrels per day to average 4,728,000 barrels per day, which combined meant that the net of our trade in oil worked out to a net import average of 1,657,000 barrels of oil per day during the week ending February 23rd, 32,000 fewer barrels per day than the net of our imports minus our exports during the prior week. At the same time, transfers to our oil supply from Alaskan gas liquids, natural gasoline, condensate, and from unfinished oils averaged 475,000 barrels per day, while during the same week, production of crude from US wells remained at a record 13,300,000 barrels per day. Hence our daily supply of oil from the net of our international trade in oil, from transfers, and from domestic well production appears to have averaged a rounded total of 15,432,000 barrels per day during the February 23rd reporting week…
Meanwhile, US oil refineries reported they were processing an average of 14,674,000 barrels of crude per day during the week ending February 23rd, an average of 100,000 more barrels per day than the amount of oil that our refineries reported they were processing during the prior week, while over the same period the EIA’s surveys indicated that a rounded average of 706,000 barrels of oil per day were being added to the supplies of oil stored in the US... So, based on that reported & estimated data, the crude oil figures provided by the EIA for the week ending February 23rd appear to indicate that our total working supply of oil from net imports, from transfers, and from oilfield production was 52,000 barrels per day more than what was added to storage plus our oil refineries reported they used during the week…To account for that difference between the apparent supply of oil and the apparent disposition of it, the EIA just plugged a [-52,000] barrel per day figure onto line 16 of the weekly U.S. Petroleum Balance Sheet, in order to make the reported data for the 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 or omission of that size in the week’s oil supply & demand figures that we have just transcribed... However, since most oil traders react to these weekly EIA reports as if they were accurate, and since these weekly figures therefore often drive oil pricing (as is obvious to anyone who watches oil prices), 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)….(note there is also an aging twitter thread from an EIA administrator addressing these ongoing weekly errors, and what they had hoped to do about it)
This week's rounded 706,000 barrel per day average increase in our overall crude oil inventories came as 600,000 barrels per day were being added to our commercially available stocks of crude oil, while 106,000 barrels per day were being added to our Strategic Petroleum Reserve, the thirteenth SPR increase in twenty weeks. following nearly continuous withdrawals over the prior 39 months... Further details from the weekly Petroleum Status Report (pdf) indicate that the 4 week average of our oil imports rose to 6,604,000 barrels per day last week, which was 2.3% more than the 6,465,000 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 a record 13,300,000 barrels per day because the EIA's rounded estimate of the output from wells in the lower 48 states was unchanged at 12,900,000 barrels per day, while Alaska’s oil production was 1,000 barrels per day higher at 432,000 barrels per day, but still added the same 400,000 barrels per day to the EIA's 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 1.5% above that of our pre-pandemic production peak, and 37.1% 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 81.5% of their capacity while processing those 14,674,000 barrels of crude per day during the week ending February 23rd, up from the 59 week low 80.6% utilization rate of a week earlier, but down from their utilization rate of 92.6% six weeks earlier, a drop in operations that was due in part to damage from the arctic cold that penetrated to the Gulf Coast in mid January... the 14,674,000 barrels per day of oil that were refined this week were 2.0% less than the 14,979,000 barrels of crude that were being processed daily during week ending February 24th of 2023 (after the even worse refinery-freeze-offs following Christmas 2022's winter storm Elliot), and 8.3% less than the 16,008,000 barrels that were being refined during the prepandemic week ending February 21st, 2020, when our refinery utilization rate was also at a lower than normal 87.9%..
With the increase in the amount of oil being refined this week, gasoline output from our refineries was also higher, increasing by 390,000 barrels per day to 9,419,000 barrels per day during the week ending February 23rd, after our refineries' gasoline output had decreased by 146,000 barrels per day during the prior week. This week’s gasoline production was still 3.2% less than the 9,730,000 barrels of gasoline that were being produced daily over week ending February 24th of last year, and 3.9% less than the gasoline production of 9,797,000 barrels per day during the prepandemic week ending February 21st 2020....at the same time, our refineries’ production of distillate fuels (diesel fuel and heat oil) increased by 118,000 barrels per day to 4,289,000 barrels per day, after our distillates output had increased by 95,000 barrels per day during the prior week. But even with those increases, our distillates output was 6.9% less than the 4,609,000 barrels of distillates that were being produced daily during the week ending February 24th of 2023, and 11.5% less than the 4,846,000 barrels of distillates that were being produced daily during the week ending February 21st 2020…
Even with this week's increase in our gasoline production, our supplies of gasoline in storage at the end of the week fell for the fourth consecutive week, following five consecutive increases, decreasing by 2,832,000 barrels to 244,205,000 barrels during the week ending February 23rd, after our gasoline inventories had decreased by 293,000 barrels during the prior week. Our gasoline supplies fell by more this week because the amount of gasoline supplied to US users rose by 267,000 barrels per day to 8,467,000 barrels per day, and because our imports of gasoline fell by 350,000 barrels per day to a 25 month low of 384,000 barrels per day, while our exports of gasoline fell by 156,000 barrels per day to 752,000 barrels per day…But even after thirty-two gasoline inventory withdrawals over the past fifty-two weeks, our gasoline supplies were still 2.1% above than last February 24th's gasoline inventories of 239,192,000 barrels, while still about 2% below the five year average of our gasoline supplies for this time of the year…
Even with this week's increase in our distillates production, our supplies of distillate fuels fell for the fifth consecutive week, following eight consecutive increases, decreasing by 510,000 barrels to 121,141,000 barrels over the week ending February 23rd, after our distillates supplies had decreased by 4,008,000 barrels during the prior week. Our distillates supplies fell by less this week because the amount of distillates supplied to US markets, an indicator of our domestic demand, fell by 404,000 barrels per day to 3,536,000 barrels per day, and because our exports of distillates fell by 112,000 barrels per day to 937,000 barrels per day, while our imports of distillates fell by 133,000 barrels per day to 112,000 barrels per day...With 29 inventory decreases over the past fifty weeks, our distillates supplies at the end of the week were 0.8% below the 122,114,000 barrels of distillates that we had in storage on February 24th of 2023, and about 8% below the five year average of our distillates inventories for this time of the year...
Finally, as our refining remained depressed while our production continued at a record pace, our commercial supplies of crude oil in storage rose for the 15th time in twenty-six weeks and for the 23rd time in the past year, increasing by 4,199,000 barrels over the week, from 442,964,000 barrels on February 16th to 447,163,000 barrels on February 23rd, after our commercial crude supplies had increased by 3,514,000 barrels over the prior week... With this week’s increase, our commercial crude oil inventories increased to about 1% below the most recent five-year average of commercial oil supplies for this time of year, but were more than 35% above the average of our available crude oil stocks as of the last weekend of February over the 5 years at the beginning of the past decade, with the big difference between those comparisons arising because it wasn’t until early 2015 that our oil inventories had 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 February 23rd were still 6.9% less than the 480,207,000 barrels of oil left in commercial storage on February 24th of 2023, but 8.1% more than the 413,425,000 barrels of oil that we still had in storage on February 25th of 2022, while still 7.7% less than the 484,605,000 barrels of oil we had in commercial storage on February 26th of 2021, after winter storm Uri added to the glut of oil remaining after 2020’s pandemic precautions had left a lot of oil unused…
This Week's Rig Count
In lieu of a detailed report on the rig count, we are again just including a screenshot of the rig count summary from Baker Hughes...in the table below, the first column shows the active rig count as of March 1st, the second column shows the change in the number of working rigs between last week’s count (February 23rd) and this week’s (March 1st) count, the third column shows last week’s February 23rd 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 period a year ago, which in this week’s case was the 3rd of March 1st, 2023... 
Court dismisses appeal to block drilling and fracking under Ohio park and wildlife areas - -- An Ohio judge has dismissed environmental groups’ appeal from commission decisions to lease parts of a state park and two wildlife areas for oil and gas drilling.Judge Jaiza Page’s Feb. 23 order effectively denies the emergency stay the environmental groups had sought to stop the Ohio Oil and Gas Land Management Commission from acting on Monday to accept bids from companies to drill and frack under Salt Fork State Park, Zepernick Wildlife Area and Valley Run Wildlife Area.Starting in January, the Ohio Oil and Gas Land Management Commission solicited bids from companies to drill and frack under the state park and wildlife areas. The commission is expected to act on bids at its Feb. 26 meeting. Judge Page’s eight-page decision agreed with the commission that the court lacks jurisdiction over the appeal. She also agreed with the commission’s argument that the groups have no standing to contest its rulings. “We are disappointed with the Court’s order. We are considering next steps with our clients,” said attorney Megan Hunter of Earthjustice, which has acted as counsel for Save Ohio Parks, the Ohio Environmental Council, the Buckeye Environmental Network and Backcountry Hunters and Anglers.Energy News Network reached out to spokespeople for the Ohio Attorney General and the Ohio Oil & Gas Land Management Commission, but they have not yet provided comments.Judge Page’s order noted the word “shall” in one part of ORC Ch. 155, suggesting the commission has a mandatory duty to lease state park lands. Yet she did not mention at all the requirement in another part of the law that says the commission “shall” consider nine factors in deciding whether to allow drilling on state-owned lands. A key part of the environmental groups’ challenge was that the commission failed to consider all nine factors the law required it to consider. Those include environmental impacts, effects on visitors or users of state-owned lands, public comments or objections, economic benefits and other considerations.The commission’s proceedings also have been clouded by the submission of hundreds of allegedly falsified pro-fracking comments. The commission announced in September that it would not consider those comments. But results of an investigation by the Ohio Attorney General’s office have not yet been announced.It’s also unclear whether the commission considered and properly weighed concerns voiced by opponents of the leasing, whose comments raised worries about possible contamination from accidents, anticipated interference with their ability to enjoy state parks and wildlife areas, and more. A separate case challenges the constitutionality of House Bill 507, the law passed by Ohio’s General Assembly late last year to kickstart the commission’s leasing process. The law also declared that natural gas is “green energy.” That case is before Judge Kimberly Cocroft.In the HB 507 case, the state argued the constitutional challenge case is moot because the commission’s adoption of leasing terms meant there was no longer any mandatory duty to allow drilling on state-owned lands.It’s unclear whether appellees will appeal Judge Page’s order or if another motion for stay will be filed. It’s also unclear when Judge Cocroft will rule.Companies submitting any winning bids accepted by the commission will need to file a permit application with the Ohio Department of Natural Resources. The agency reviews those permits fairly quickly, so drilling could start this spring.
Two out-of-state companies picked to lease parts of Ohio public land for fracking --- The Ohio Oil and Gas Land Management Commission picked the “highest and best” bidders to lease parts of a state park and two wildlife areas for fracking Monday. West Virginia-based Infinity Natural Resources had the winning bid to drill in Salt Fork State Park in Guernsey County. Infinity Natural Resources — which has more than 120 wells in Pennsylvania, Ohio and West Virginia — leased two parcels at Salt Fork for $58.4 million. Texas-based company Encino Energy had the top bid for Valley Run Wildlife Area in Carroll County and Zepernick Wildlife Area in Columbiana County. Encino leased three different parcels at Valley Run Wildlife Area for $1.05 million and leased one parcel at Zepernick Wildlife Area for $231,692. According to their website, Encino Energy is the largest oil producer and second-largest producer of gas in Ohio. Fracking is the process of injecting liquid into the ground at a high pressure to extract oil or gas. It has been documented in over 30 states, according to the Center for Biological Diversity. Monday’s meeting now paves the way for the Ohio Department of Natural Resources to lease the parcels to the companies. OGLMC committee member Matthew Warnock was the lone no vote on the bid for Salt Fork. Under state law, OGLMC must pick the “highest and best bid.” Each lease agreement includes a 12.5% royalty paid to the state for production. The total lease bonuses for ODNR properties selected by the commission amount to $59.7 million. Ohio’s OGLMC started soliciting bids from companies to drill and frack under state parks and wildlife areas on Jan. 3 and the deadline was Feb. 4. On Friday, a Franklin County Court of Commons Pleas judge denied the emergency stay environmental groups had tried to stop OGLMC from leasing parts of Ohio’s land for drilling. Terri Sabo was in tears when the commission voted to accept the Salt Fork bid. “It’s just a very sad day,” said Sabo, who has lived just outside Salt Fork for the past four decades. “My biggest immediate concern, obviously, is the loss of the park to deindustrialization. I’ve really seen it grow and come back.”All Ohioans will be directly affected by fracking, said Lorraine McCosker, steering committee member of Save Ohio Parks. “It’s going to be changing the climate even further,” she said. Monday’s meeting was “highly disappointing, but not unexpected,” said Cathy Cowan Becker, steering committee member of Save Ohio Parks. “You are selling your state parks off to the highest bidder,” she said. More than a dozen protestors were at Monday’s meeting shouting “Shame,” “Do you realize what you are doing to tourism in Ohio?” and “You are selling my land to frack” while the commission voted on the bids. Others held up signs that said “Gov. DeWine, don’t be a climate criminal” and “Fracking injects toxins into mother earth.” A handful of people dressed in sackcloth to represent drought, disease, extinction and climate chaos as part of a demonstration during the meeting. However, not everyone mourned Monday’s meeting. Ohio Oil and Gas Association President Rob Brundrett said this is a big win for Ohio. “The decisions made by the Commission were the culmination of over a decade of work by the state to ensure a fair and equitable process,” he said in an email. “Our members are committed to responsibly developing these resources in the safest and most environmentally sound manner using today’s most advanced technologies.”
Ohio Awards Drilling Contracts for State Parks – Salt Fork Surprise - Marcellus Drilling News -- Yesterday, the Ohio Oil & Gas Land Management Commission (OGLMC) met to award contracts to drill under (not on) several Ohio state parks, including the 20,000-acre Salt Fork State Park in Guernsey County. Anti-fossil fuel nutters didn’t disappoint. They showed up and dressed up in burlap bags and silly hats, standing along a wall to protest against the proceeding. Fortunately, the protesters didn’t disrupt or stop the proceeding (they had been threatened with arrest if they did). The big news (for us) is that Encino Energy, which has long coveted the Salt Fork State Park property, did NOT win the contract for it! At some point, Encino pulled its proposal for Salt Fork and instead concentrated on several other parcels. The contract for Salt Fork was awarded to Infinity Natural Resources. We have the complete list of who won which contracts and how much they are paying in signing bonuses and royalties.
Gulfport Energy Drilled 2 Marcellus, 2 SCOOP, 20 Utica Wells in '23 -- Marcellus Drilling News -- 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. Yesterday, Gulfport issued its fourth quarter and full-year 2023 update. Company CEO John Reinhart, who took the reigns of the company in January 2023, reported the company drilled and turned to sales 24 gross wells, which included 2 Marcellus wells, 2 SCOOP wells, and 20 wells in the Ohio Utica. The company drilled and completed its first two operated Marcellus wells in Belmont County last year, with a promise to return to Marcellus drilling in 2025.
Gulfport to keep 2024 production flat, move to more liquids-rich development - Oil & Gas Journal - Gulfport Energy Corp. plans to deliver 2024 production in line with 2023 levels with a focus on more liquids-rich development in both its Utica shale and South Central Oklahoma Oil Province (SCOOP) positions. The move comes as “the current natural gas pricing environment is challenged,” said John Reinhart, chief executive officer, in a release Feb. 27. “Building on the momentum from 2023, we plan to remain focused on further optimizing our development programs cycle times and operating costs, and we laid out a program today expected to deliver similar production year over year on 10% less capital invested,” he said. For full year 2024, the operator expects to deliver relatively flat year-over-year net production of 1,045-1,080 MMcfed (about 92% gas) on base capital expenditures of $380-420 million, including $50-60 million spend allocated to maintenance leasehold and land investment, a decrease of about 10% compared with full-year 2023. The company plans to deliver a more capital efficient program associated with longer laterals and continued cycle time improvements as well as similar net completed lateral footage compared with 2023 while turning to sales 20% fewer gross wells. This year, Gulfport expects to turn to sales 16 gross Utica wells during 2024. For SCOOP, the plan is to drill 5 gross wells and turn to sales 3 gross wells during 2024. Fourth-quarter 2023 In fourth-quarter 2023, the company had total net production of 1,063 MMcfed. The company had net income of $245.7 million and generated $155.5 million of net cash provided by operating activities and $85.4 million of adjusted free cash flow. Incurred capital expenditures, excluding discretionary acreage acquisitions, was $82.9 million.
EOG Resources “Stepping Up Activity” in Ohio Utica for 2024 - Marcellus Drilling News -- EOG Resources, one of the largest oil and gas drillers in the U.S. (with international operations in Trinidad and China), owns a huge 430,000+ acres of leases in the Ohio Utica. EOG calls its position the “Ohio Utica combo play” and now considers it one of the company’s “premium plays.” EOG concentrates on oil drilling in the Utica. As part of the company’s fourth quarter and full-year 2023 update, EOG said it will “step up in activity in the Ohio Utica play” in 2024. During a conference call with analysts, EOG’s COO Jeffrey Leitzell said the company would boost activity in Utica to begin operating one rig full-time.
18 New Shale Well Permits Issued for PA-OH-WV Feb 19 – 25 -- Marcellus Drilling News -- March 1, 2024 There were 18 new permits issued to drill in the Marcellus/Utica during the week of Feb. 19 – 25, up from 13 permits issued the prior week. Pennsylvania issued 8 new permits last week. Ohio issued 9 new permits (after issuing none the week before). West Virginia issued just 1 new permit last week. Encino Energy took the prize for the most permits issued with 9 permits, all for Carroll County, OH. Repsol had the second most permits with 5 issued for Bradford County, PA. Everyone else had a single new permit: Beech Resources (Lycoming County, PA), Chesapeake Energy (Bradford County, PA), CNX Resources (Westmoreland County, PA), and HG Energy (Lewis County, WV). BEECH RESOURCES | BRADFORD COUNTY | CARROLL COUNTY | CHESAPEAKE ENERGY | CNX RESOURCES | ENCINO ENERGY | HG ENERGY | LEWIS COUNTY | LYCOMING COUNTY | REPSOL | WESTMORELAND COUNTY
Pa. 2023: NatGas Production Up 1%, Wells Drilled Lowest in 10 Yrs - Marcellus Drilling News -- Yesterday, the Pennsylvania Independent Fiscal Office (IFO) released its latest quarterly Natural Gas Production Report for October through December 2023 (full copy below). There were 110 new horizontal wells spud (drilled) in 4Q23, a decrease of 26 wells (-19%) compared to 4Q22. However, 4Q’s spud number was up from the 102 drilled in 3Q23. Natural gas production volume was 1,939 billion cubic feet (Bcf) in 4Q23, up 82 Bcf (4.4%) from 1,857 Bcf produced in 4Q22. There were two pieces of big news in this report: (1) Production for all of 2023 actually went up (now down) by 1%; (2) The total number of new wells drilled in 2023 was the lowest it has been in a decade.
Repsol Announces Plan to Spend $1 Billion on Marcellus Next 4 Yrs -- Marcellus Drilling News -- Spanish energy giant Repsol, with around 214,000 net acres of leases in the Marcellus Shale, primarily located in northeastern Pennsylvania in Bradford, Susquehanna, and Tioga counties, issued the company’s fourth quarter and full-year 2023 update last week. Among the tidbits coming to light is a statement by Repsol management that the company plans to spend €$1 billion (US$1.083 billion) in the Marcellus over the next four years. Repsol loves the Marcellus!
Advocates Push for Swift Update of Gas Pipeline Safety Rules - Pennsylvania environmental groups want to see a new rule implemented to improve the detection and repair of leaks from gas pipelines.The Keystone State has over 94,000 miles of pipelines used to transport natural gas. Rachel Meyer, Ohio River Valley field organizer with the group Moms Clean Air Force, said it’s important that the rule be finalized to improve safety and reduce climate-harming methane emissions. She added that these pipelines can leak and pose a safety risk to nearby communities. “When it leaks from pipelines, natural gas contributes to the climate crisis by releasing the potent greenhouse gas methane,” said Meyer. “Natural gas is composed primarily of methane. Methane is 80 times more potent than carbon dioxide during the first 20 years it’s in the atmosphere.” Meyer pointed out that a recent analysis by the Environmental Defense Fund found gas pipelines nationwide are leaking as much as 2.6 million tons of methane each year, which has the same climate impact as nearly 50 million passenger cars being driven for a year.The industry argues new regulations would increase costs.Meyer lives in Independence Township, a rural part of Beaver County in Southwestern Pennsylvania.She said there are several gas pipelines near her home, and she said she worries about the danger from potential fires and explosions.Meyer said five years ago, the Revolution gas pipeline exploded just five miles away. It destroyed a family’s home and pets and caused damage to the community.“The pipeline explosion destroyed at least two acres of the forest and left a 30 feet wide by 25 feet deep crater in the hillside,” said Meyer. “The pipeline was estimated to be about 300 feet from the home that was completely burned.”In 2022, scientists found that, in neighborhoods of color or with lower-income residents, the average gas-leak density on local distribution pipelines was 37% higher than in predominantly white neighborhoods.
New Demands to Measure Emissions Raise Cautious Hopes in Pennsylvania Among Environmental Sleuths Who Monitor Fracking Sites -For the first time, Pennsylvania fracking companies are facing real-time scrutiny from federal and state regulators over emissions of methane and other harmful air pollutants at drilling sites and storage facilities for toxic wastewater left over from oil and gas extractions. The Environmental Protection Agency (EPA) is requiring more robust tracking at extracting sites across the country through the use of on-site devices to measure methane leaks from wells and low-pressure sources such as wastewater storage tanks. It also announced penalties for companies found to exceed emission thresholds. In addition, Pennsylvania has launched a pilot program with CNX Resources Corp., one of the biggest oil and gas producers in the Marcellus Shale, to better gauge and understand on-site emissions from the fracking industry. Melissa Ostroff is among the environmental sleuths who has questioned emissions in rural Pennsylvania, and she remains cautious about how and when communities will benefit from any of the changes. The EPA is giving states up to two years to implement the reforms. For the past couple years, Ostroff, a policy advocate for the nonprofit Earthworks, has routinely documented plumes of invisible emissions from wells and storage tanks located on drilling sites using an optical gas imaging camera sensitive to hydrocarbons. Earthworks has filed 134 complaints about the vapors and emissions from sites in Pennsylvania, with over half of those captured by Ostroff since 2021. Ostroff, who wields a hand-held video camera comparable to what industry monitoring professionals use, has filed reports and footage with state regulators about potential leaks and breaches of emission standards from both storage tanks and the wells. “There’s something very different from seeing a well with nothing coming out of it and then putting the camera to your eye,” she said. Ostroff has led state lawmakers and local community members on tours—from vantage points that are steps or fields away from drilling sites, always on public property—to peek through her high-resolution lens. They are all startled, she said, as the invisible becomes visible. There are vapors in the air. Around the tanks, she has recorded pollution that the naked eye cannot see, drifting from vents atop the containers or seeping around the ground naked eye cannot see, drifting from vents atop the containers or seeping around the ground. While Ostroff can document potential errant discharge, she has no way to measure volumes or the vapor’s content. Still, “it was shocking,” said Gillian Graber, founder of Protect PT, an environmental organization in Pennsylvania focused on the effects of oil and gas drilling. Graber has been on several Earthworks tours, and said she has observed a well venting near her daughter’s school in Westmoreland County. “When you have the vent infrastructure near schools and parks where people are running and walking, walking their pets—this is really problematic,” she said. “There needs to be some way to capture these vented materials.” The vapors detected by Ostroff’s camera can include methane, a greenhouse gas over 80 times more effective at trapping heat in the earth’s atmosphere than carbon dioxide, and naturally occuring volatile organic compounds that come back to the surface in wastewater after drilling, including benzene. “None of it is great for the environment,” said Dave Yoxtheimer, a Penn State hydrogeologist who studies the Marcelus Shale in Pennsylvania. Wastewater emissions may adversely affect human health, too. Yoxtheimer listed a medley of volatile organic compounds (VOCs) that storage tank emissions can contain: benzene, toluene, ethylbenzene and xylene. “If you’re exposed to them over a prolonged term at a high enough concentration, I mean, these are carcinogens,” substances capable of causing cancer, he said. Late last year, the EPA unveiled enhanced standards for monitoring pollution sources and, for the first time, rules that require producers to actively search for leaks. In a major change, companies operating large sites must use sensors or other technology to monitor for emissions—both at new wells and those already in operation. Methane is the single biggest driver of climate change after CO2. Sites with just one well will be inspected using human audio, visual and olfactory monitoring approaches. In January, the agency announced penalties for violators: $900 fines on every excess ton of methane that oil and gas that companies emit annually, increasing to $1,500 in 2026 and thereafter. “This is the first time that we’ve seen a rule from the EPA that is going to regulate existing and new sources when it comes to methane” emissions, said John Rutecki, a regulatory and legislative manager with the nonprofit Environmental Defense Fund. And he points out that wastewater tanks are now a target. “Getting storage vessels on there has been very important for frontline community members,” Rutecki said, and the new monitoring demands may “provide some health protections” to communities near oil and gas fields. The oil and gas industry has never conducted accurate monitoring of emissions from storage tanks, on-site reservoirs for byproducts of the drilling process. The tanks hold a highly saline liquid containing a mix of volatile organic compounds (VOCs), including naturally occurring benzene, arsenic and radium 226 and 228 dredged up during hydraulic fracturing of shale formations deep underground. Companies routinely vent the storage tanks to relieve built-up pressure, and to report their emissions, they calculate estimates based on the chemical makeup of the wastewater and the size of the tank. Some producers had not been legally required to monitor, measure or capture emissions in real time, which creates uncertainty about what floats into the air or settles on the ground near the site. Ostroff’s experience is a case in point. She records vapors from tanks and shares those videos with regulators. They are rarely moved to investigate. “They say ‘they’re allowed to vent. They have to vent. There is not an alternative.’” she said. In Pennsylvania, large tanks that are calculated to emit more than 200 tons of methane and 2.7 tons of VOCs annually must reduce their emissions by 95 percent, but tanks under those thresholds can be vented as often as a company chooses. The new EPA rule, which the Biden Administration says will also reduce the amount of VOCs emitted by the oil and gas industry, requires a 95 percent reduction in methane emissions from storage tanks that have the potential to emit more than six tons of VOCs or 20 tons of methane annually. It also requires companies, instead of venting, to capture or transform the emissions, either by rerouting them to flares, or using “vapor recovery units,” to snare fugitive methane for further processing.
EPA Allows PA Radicals to Challenge Permit for Plum Injection Well -- Marcellus Drilling News -- Penneco Environmental Solutions wants to build a second wastewater injection well in Plum Borough (Allegheny County), PA, next to an existing injection well. Penneco’s first wastewater injection well in Plum finally opened for business in mid-2021, overcoming all sorts of smears, slanders, and lawsuits by the enviro-left (see Plum Boro Injection Well in SWPA Now Open for Business!). In September 2021, Penneco announced plans to build a second wastewater injection well in Plum, located next to the first one (see 2nd Shale Wastewater Injection Well Planned for Plum Boro in SWPA). Last September, the federal EPA issued a permit to Penneco for its proposed second wastewater injection well (seeFederal EPA Approves 2nd Injection Well in Plum Borough, PA). That permit was challenged by two green groups. Even though they filed their challenge after the deadline had expired to do so, the EPA is allowing the challenge to proceed.
PA boosts plugging abandoned wells with federal money · Spotlight PA — With the help of millions of dollars in federal funding, Pennsylvania has plugged more oil and gas wells in the last year and a half than it did in the past decade. Environmental advocates say this marks enormous progress for a state that has long struggled with tens of thousands of dangerous wells that leak methane — a powerful greenhouse gas that fuels climate change — into the atmosphere. But they also caution that the unprecedented amount of money flowing into Pennsylvania may not be going toward the worst wells, and they argue the plugging project needs better oversight. Take, for example, the Pennsylvania Department of Environmental Protection’s decision to plug wells on Gerry Schimp’s McKean County land last February. Schimp didn’t ask for the wells on his property to be plugged, but the state came knocking. The wells were drilled before Schimp acquired the property, and the state was unable to determine the last known operator that would have been responsible for plugging them. Workers hired by the DEP spent about two months plugging 13 wells on the land, but Schimp said about half of the work they did was replugging already capped wellbores — the drilled holes used to extract oil or gas. “They’ve done a good job, but they’ve plugged wells that didn’t need plugging,” said Schimp, a retiree who previously worked in the oil and gas industry. Schimp’s wells were plugged as a result of a huge influx of federal funding from the 2021 Infrastructure Investment and Jobs Act. The IIJA grants are intended to reduce the methane leakage generated by unplugged abandoned wells. These wells can also be hazardous to nearby residents, who can fall into open holes or be harmed by toxic fluids that seep into groundwater. The program is slated to dole out more than $4 billion to well plugging efforts across the country, and Pennsylvania could receive as much as $400 million over the next decade. The money is supposed to target wells that are unproductive and have owners who either can’t be located or can’t afford to plug the holes themselves. The commonwealth got its initial $25 million IIJA grant in August 2022. In the decade before receiving IIJA funds, the DEP plugged 165 wells. Since the funds arrived, it has plugged over 100, and plans to plug around 100 more over the next two years. But because of tight deadlines attached to the first batch of federal money, the DEP has focused most of its attention on quantity rather than targeting wells that are big polluters or that are dangerous to people, an agency official told Spotlight PA. Even if Pennsylvania receives the full $400 million from the federal government, the money won’t be nearly enough to plug all of Pennsylvania’s old, leaky wells. When the commonwealth first applied for federal assistance in 2021, it reported 26,908 unproductive wells whose owners couldn’t be located. Of the 26 states that applied for funding, that’s by far the most. The next highest, Ohio, estimated it had around 19,662. The real number of abandoned wells likely exceeds that number. An analysis by Spotlight PA found that since IIJA money was first disbursed in 2022, the average cost of plugging a single well has been about $100,000. That puts a nearly $3 billion price tag on the cost of plugging all of the state’s documented abandoned oil and gas wells.
CO2 Fracking Ban Passes Key NY Senate Committee | Food & Water Watch — Today, the New York State Senate Environmental Conservation committee voted to pass the CO2 Fracking Ban (A8866/S8357) out of committee. The bill, introduced late last month by Assemblymember Anna Kelles and Senator Lea Webb, now heads to the Senate floor for a vote. The bill is also awaiting an Assembly floor vote, after passing Assembly’s environment committee 21-8 on February 13. Food & Water Watch Northeast Region Director Alex Beauchamp issued the following statement: “New York’s fracking ban is here to stay. As dirty energy profiteers come knocking, we applaud the legislature’s swift response to slam the door shut on exploratory fossil fuel extraction in the Southern Tier. Now, New Yorkers look to legislative leaders and Governor Hochul to pass this crucial bill and sign it into law.” More than 90 organizations support a ban on CO2 fracking, to safeguard public health, safety, clean water and the climate. The push to ban CO2 fracking comes in the face of a dangerous proposal by a newly formed company, Southern Tier Solutions, to open hundreds of thousands of acres of the Southern Tier to fracking, and construct nearly a dozen new gas plants and pipelines.
Commissioners ban fracking in Broward County - County Commissioners unanimously banned any type of hydraulic and acid fracturing, known as “fracking”, to extract oil and gas from the ground in Broward County. The vote comes as the Florida Legislature contemplates a series of bills that would stop local governments from regulating the practice. “This is about protecting our water supply and environment,” said Commissioner Beam Furr, who brought the ordinance to the Commission for a vote. “We’re discussing a ban on fracking today and at the same time state lawmakers are discussing taking away our authority to do so. We must ban this now.” Fracking involves the pumping of huge amounts of water, sand and chemicals into the ground using extreme pressure to recover oil and gas deposits. Oil and gas companies are not currently required by federal or state law to disclose formulas used in fracking. “This is Tallahassee once again trying to take away the authority of local elected officials who represent the people who live in Broward County. This is a critical issue for us. If necessary, I’m in favor of pursuing appropriate legal remedies to enforce this ordinance,” said Bro ward County Mayor Marty Kiar. Dozens of people attended a public hearing to tell Commissioners they opposed fracking and spoke in favor of the ordinance to ban the controversial practice. An application to drill an exploratory oil well in the Florida Everglades, just west of the city of Miramar is currently under review by the Florida Department of Environmental Protection. Public and private water utilities across Broward County rely entirely upon groundwater sources, including the Biscayne and Floridan Aquifers for drinking water supplies. The Floridan Aquifer alone is the source of drinking water for ten million residents. Many of the chemicals used during the fracking process have resulted in thousands of documented cases of water contamination and adverse effects on human health and the environment in the United States.
Natural Gas Hasn’t Been This Cheap in Decades – WSJ -- The lowest inflation-adjusted prices in at least 34 years have drillers throttling down from record production An unusually warm winter and roaring U.S. output have pushed natural-gas prices to some of the lowest levels of the shale era. Adjusted for inflation, natural-gas futures recently hit their cheapest prices since trading began on the New York Mercantile Exchange in 1990.
Henry Hub Spot Price Hit Lowest “Real” Level in 27 Yrs in February - Marcellus Drilling News -- The U.S. benchmark Henry Hub daily natural gas price averaged $1.50 per million British thermal units (MMBtu) on February 20, 2024, the lowest price in inflation-adjusted dollars since “at least” 1997. In fact, when you look at the ten lowest daily Henry Hub natgas spot prices since Jan. 1, 1997, six of the ten lowest prices were in February 2024. The other four were in 2020, as the pandemic was taking hold. Amid this depressing news, there is a silver lining…
Nat-Gas Prices End Higher on Fund Short Covering Ahead of March Expiration — March Nymex natural gas (NGH24) on Monday closed +0.056 (+3.49%). Nat-gas prices on Monday posted moderate gains on some fund short covering ahead of the expiration of the March futures contract on Tuesday. The upside for nat-gas prices appears limited in the near term as the warm U.S. winter weather continues, which will curb heating demand for nat-gas and keep supplies elevated. Maxar Technologies said Monday that "record challenging warmth" will move across the Midwest into the eastern U.S. from March 2-6.Nat-gas prices have collapsed this year and posted a 3-1/2 year nearest-futures low last Tuesday as an unusually mild winter curbed heating consumption for nat-gas and pushed inventories well above average.Nat-gas prices are also under pressure from the announcement by the Freeport LNG nat-gas export terminal in Texas on January 26 that it was forced to shut down one of its three production units for a month for repairs after extreme cold in Texas damaged equipment. The closure of the unit will limit U.S. nat-gas exports and increase U.S. nat-gas inventories.Lower-48 state dry gas production Monday was 102.5 bcf/day (+2.1% y/y), according to BNEF. Lower-48 state gas demand Monday was 78 bcf/day (-9.5% y/y), according to BNEF. LNG net flows to U.S. LNG export terminals Monday were 13.9 bcf/day (+6.2% w/w), according to BNEF.The U.S. Climate Prediction Center said there is a greater than 55% chance the current El Nino weather pattern will remain strong in the Northern Hemisphere through March, keeping temperatures above average and weighing on nat-gas prices. AccuWeather said El Nino will limit snowfall across Canada this season in addition to causing above-normal temperatures across North America.An increase in U.S. electricity output is positive for nat-gas demand from utility providers. The Edison Electric Institute reported last Thursday that total U.S. electricity output in the week ended February 17 rose +1.8% y/y to 76,416 GWh (gigawatt hours), although cumulative U.S. electricity output in the 52-week period ending February 17 fell -0.2% y/y to 4,100,727 GWh.Last Thursday's weekly EIA report was bearish for nat-gas prices as nat-gas inventories for the week ended February 16 fell -60 bcf, close to expectations of -59 bcf but a much smaller draw than the five-year average for this time of year at -168 bcf. As of February 16, nat-gas inventories were up +12.5% y/y and were +22.3% above their 5-year seasonal average, signaling ample nat-gas supplies. In Europe, gas storage was 65% full as of February 19, above the 5-year seasonal average of 49% full for this time of year.Baker Hughes reported last Friday that the number of active U.S. nat-gas drilling rigs in the week ending February 23 fell by -1 rig to 120 rigs, moderately above the 2-year low of 113 rigs posted September 8. Active rigs have fallen back since climbing to a 4-1/2 year high of 166 rigs in Sep 2022 from the pandemic-era record low of 68 rigs posted in July 2020 (data since 1987).
US natgas futures touch 4-year lows as surplus supplies overwhelm (Reuters) - U.S. natural gas futures rebounded after crashing to their lowest levels in nearly four years on Tuesday, as excess inventories and near-record levels of output flooded a market overwhelmed by milder temperatures. Front-month gas futures for March delivery NGc1 fell 4.4 cents to settle lower at $1.615 per million British thermal units. However, the contracts were up about 3.7% after dropping to as low as $1.511 earlier in the session, its weakest level since June 2020. Prices were pressured, as "the market fundamentally is coming out of the winter at much higher storage levels than what we had anticipated. It's been a very warm November through March, so weather-related natural gas demand is lower, which allowed for larger storage," Financial company LSEG said gas output in the U.S. Lower 48 states has risen to an average of 105.5 billion cubic feet per day (bcfd) so far in February from 102.1 bcfd in January, still shy of the monthly record of 106.3 bcfd in December. Last week, prices soared about 13% after Chesapeake Energy cut planned production for 2024 by roughly 30% after a recent plunge in prices. DiDona noted that prices were also finding support from hot weather in the South, "even though it's technically February, we shouldn't be talking about cooling degree days, but there are some spots in the country that have very high temperatures that could actually be looking at cooling degree demand." Summer-like temperatures ranging up to 40 degrees Fahrenheit above normal were forecast across a wide swath of the U.S. Midwest, East Coast and South, setting the stage for a second record-breaking day in a row in some spots. In Texas, temperatures were expected to top 80 degrees F (27 degrees Celsius) after hovering at about 94 degrees F (34 C) in Dallas and other cities on Monday, the National Weather Service said. Natural gas prices have plunged more than 32% so far this year, hurt by a mild winter that has left stockpiles well above normal, while output remained near record levels despite an Arctic freeze in January that briefly cut output and sent gas demand to a record high. The European benchmark wholesale gas price eased on Tuesday after posting moderate gains in the previous session, with plentiful supplies and milder weather set to sap demand. NG/EU Qatar's planned expansion of liquefied natural gas (LNG) production could see it control nearly 25% share of theglobal marketby 2030 and squeeze out rival projects, including in the United States where President Joe Biden paused new export approvals, market experts say.
US natgas prices dip on mild weather, but posts its best week since Jan (Reuters) - U.S. natural gas futures dipped on Friday on sufficient fuel in storage and lower heating demand, but prices marked their best week in 1-1/2 months as voluntary production curtailments are likely underway. Front-month gas futures NGc1 for April delivery fell 2.5 cents, to settle lower at $1.835 per million British thermal units (mmBtu). "It still obviously looks like weather is the primary driver - it has been very bearish," Despite the declines on Friday, natgas prices gained about 14.5% this week, the most since Jan. 12. However, "it does look like the producers are indeed scaling back. The production prints at the end of the month were noticeably lower than they had been earlier in the month," Cooper said. LSEG said gas output in the U.S. Lower 48 states stood around 100.01 billion cubic feet per day (bcfd) on Friday, from an average of 104 bcfd so far in February, but still short of the monthly record high of 106.3 bcfd in December. Last week, prices soared about 13% after Chesapeake Energy CHK.O, soon to be the biggest U.S. gas producer after its merger with Southwestern Energy SWN.N, cut planned production for 2024 by roughly 30% after a recent plunge in prices. Natural gas prices logged a fourth straight monthly decline in February, pressured by a mild winter that has left stockpiles well above normal, while output remained near record levels despite an Arctic freeze in January that briefly cut output and sent gas demand to a record high. "We are still having much difficulty building a bullish case despite historically low pricing given the challenge of prices pushing higher simultaneously with a mounting storage surplus," The U.S. Energy Information Administration on Thursday (EIA) said utilities pulled a bigger-than-expected 96 billion cubic feet (bcf) of gas out of storage during the week ended Feb. 23. That cut stockpiles to 2.374 trillion cubic feet (tcf), about 26.5% above the five-year average.EIA/GAS "Demand is set to taper as the end of winter approaches, but weather forecasts have colder than normal temperatures for the month ahead in March, which could power some price upside or at minimum prevent further declines," LSEG estimated 12 cooling degree days (CDDs) for the week as of Friday, compared with 11 CDDs on Thursday. Market participants also looked out for any impact from the wildfire raging across the Texas panhandle. Dubbed the Smokehouse Creek Fire and officially the largest on record for the state, the fire has doubled in size since earlier this week and burned through an area larger than the state of Rhode Island. Meanwhile, low natural gas prices will hurt Tellurian Inc's ability to sell Louisiana gas producing properties in order to pay off enough debt to salvage its liquefied natural gas export (LNG) project, analysts said.
JP Morgan, Standard Chartered Reveal Latest Henry Hub Price Forecasts -J.P. Morgan and Standard Chartered outlined their latest Henry Hub gas price forecasts in reports sent to Rigzone recently. According to J.P. Morgan’s report, the company sees the U.S. Natural Gas Henry Hub price averaging $2.93 per million British thermal units (MMBtu) in 2024 and $4.75 per MMBtu in 2025. J.P Morgan expects the commodity to average $2.45 per MMBtu in the first quarter of 2024, $2.25 per MMBtu in the second quarter, $3.00 per MMBtu in the third quarter, and $4.00 per MMBtu in the fourth quarter, the report showed. The company projects that the Henry Hub price will average $4.75 per MMBtu in the first quarter of 2025, $4.50 per MMBtu in the second quarter, $4.75 per MMBtu in the third quarter, and $5.00 per MMBtu in the fourth quarter of next year, according to the report, which outlined that the commodity averaged $2.99 per MMBtu in 2023. In its report, Standard Chartered revealed that it sees the NYMEX basis Henry Hub nearby future price averaging $4.80 per MMBtu in the first and second quarters of 2024, and $4.70 per MMBtu in the third and fourth quarters of this year. The company projected in the report that the commodity will average $4.80 per MMBtu in the first quarter of 2025, $4.70 per MMBtu in the second quarter of next year, and $4.80 per MMBtu overall in 2025. Standard Chartered also highlighted in its report that the NYMEX basis Henry Hub nearby future price closed at $1.57 per MMBtu on February 20. In its February STEO, the U.S. Energy Information Administration (EIA) forecast that the Henry Hub spot price will average $2.67 per MMBtu in the first quarter of this year, $2.20 per MMBtu in the second quarter, $2.66 per MMBtu in the third quarter, $3.08 per MMBtu in the fourth quarter, and $2.65 per MMBtu overall in 2024. The EIA’s February STEO forecast that the commodity will average $2.95 per MMBtu in the first quarter of 2025, $2.64 per MMBtu in the second quarter, $2.98 per MMBtu in the third quarter, $3.20 per MMBtu in the fourth quarter, and $2.94 per MMBtu overall in 2025. This STEO showed that the Henry Hub spot price averaged $2.54 per MMBtu in 2023. In its previous STEO, which was released in January, the EIA projected that the Henry Hub spot price would come in at $2.64 per MMBtu in the first quarter of 2024, $2.22 per MMBtu in the second quarter, $2.68 per MMBtu in the third quarter, $3.10 per MMBtu in the fourth quarter, and $2.66 per MMBtu overall in 2024. That STEO projected that the commodity would average $2.93 per MMBtu in the first quarter of 2025, $2.64 per MMBtu in the second quarter, $2.99 per MMBtu in the third quarter, $3.22 per MMBtu in the fourth quarter, and $2.95 per MMBtu overall in 2025.
US weekly LNG exports reach 26 cargoes - US liquefaction plants shipped 26 liquefied natural gas (LNG) cargoes in the week ending February 21, while natural gas deliveries to these terminals decreased compared to the week before. The US EIA said in its weekly natural gas report that 26 LNG carriers departed the US plants between February 15 and February 21, the same as in the week before. Citing shipping data provided by Bloomberg Finance, the agency said the total capacity of these LNG vessels is 97 Bcf. Natural gas deliveries to US terminals down 1.4 percent Average natural gas deliveries to US LNG export terminals decreased by 1.9 percent (0.3 Bcf/d) week over week, averaging 13.6 Bcf/d, according to data from S&P Global Commodity Insights. Natural gas deliveries to terminals in South Louisiana decreased by 4.5 percent (0.4 Bcf/d), to 8.7 Bcf/d, while natural gas deliveries to terminals in South Texas increased by 4.6 percent (0.2 Bcf/d) to average 3.5 Bcf/d. The agency said that natural gas deliveries to terminals outside of the U.S. Gulf Coast were essentially unchanged week over week at 1.2 Bcf/d. Cheniere’s Sabine Pass plant shipped nine cargoes and the company’s Corpus Christi facility sent four shipments during the week under review. Sempra Infrastructure’s Cameron LNG terminal shipped four cargoes while Venture Global’s Calcasieu Pass LNG terminal and the Freeport LNG terminal each shipped three cargoes during the period. Also, the Elba Island terminal sent two LNG cargoes and the Cove Point LNG terminal shipped one cargo, the agency said. H This report week, the Henry Hub spot price rose 9 cents from $1.51 per million British thermal units (MMBtu) last Wednesday to $1.60/MMBtu this Wednesday. The price of the March 2024 NYMEX contract increased 16.4 cents, from $1.609/MMBtu last Wednesday to $1.773/MMBtu this Wednesday.
This report puts a price tag on the climate impacts of US LNG exports -In late January, the Biden administration announced that it was pausing new approvals for liquefied natural gas export terminals until it can reassess its review process. That decision hinges on a key question: Is continuing to expand the country’s already massive fossil-gas export capacity in the “public interest?” To answer that, the administration will likely try to determine the cost in dollars and cents of two main impacts of liquefied natural gas (LNG) exports: their effect on domestic energy prices and their contribution to climate change.These are tricky equations for the U.S. Department of Energy to solve as it undertakes the review the Biden administration has ordered. DOE hasn’t yet publicly discussed the methodology or process it plans to use to make these determinations.But amid much uncertainty and many contested claims over the issue, one thing appears clear, according to a recent report from the Institute for Policy Integrity at New York University School of Law: The assessments that have guided U.S. LNG export authorizations over the past half-decade of the industry’s startling growth are not capturing the full scope of climate harms those exports are causing — or the economic harms those emissions will create in the country or around the world. The report uses data from DOE’s previously published studies — the same ones that environmentalists say have failed to consider the broader economic and climate impacts ofLNG export terminals to date — to determine that the “climate costs” of expanding LNG exports “likely exceed economic benefits.”And these findings aren’t based on a novel methodology for calculating benefits and harms of the LNG industry, said Max Sarinsky, the report’s co-author, a senior attorney at the Institute for Policy Integrity and an adjunct clinical professor at New York University School of Law. Instead, “we just took DOE’s existing analyses and had them talk to each other,” he explained. “Because our analysis draws heavily from the DOE’s own work, including data, models and methods, it could be particularly useful for DOE’s purposes” of reassessing whether expanding U.S. LNG export capacity is in the public interest. The new report draws from two DOE analyses. The first is a 2018 study of the economic impacts of LNG exports. It found that increasing LNG exports would drive up domestic fossil-gas prices but would also increase the domestic revenue of the companies involved, which in turn would benefit American consumers and outweigh the negative effect of more expensive utility bills. This finding has remained part of DOE’s current process for reviewing LNG exports that will now be reevaluated. The second analysis is an environmental assessment prepared by DOE in 2022 on the life-cycle emissions of producing gas and shipping it from Alaska to Japan, South Korea, China and India. That study represents an updated analysis of a similar study conducted in 2019 of the life-cycle greenhouse gas impacts of U.S. LNG being used to replace coal-fired power or Russian fossil gas in Europe and Asia. It found that U.S. LNG would yield lower carbon emissions than those alternatives, a conclusion that now guides DOE determinations on LNG exports. “Then we just compared the climate costs and the economic benefits,” Sarinsky said. “And we find the climate cost is substantially higher than the economic benefit.” Even under the most conservative assumptions about the economic harms of increasing greenhouse gas emissions, the new report finds that the climate costs of gas exports are nearly twice as high as their benefits for consumers. In the worst case, those costs are nearly 19 times higher than the benefits. These findings are durable even when considering all the uncertainties around forecasting the economic and environmental impacts of increasing the supply of LNG on international markets, the report states. “While the precise difference depends on several factors — including the share of gas production that merely displaces fossil-fuel production from other sources, the economic value assigned to climate damages and the adoption of carbon-capture technology — gross climate damages greatly exceed economic benefits under all scenarios evaluated.”
Major Energy Trade Associations Challenge Legality of DOE’s LNG Export Pause - One of the U.S. oil and natural gas industry’s largest trade groups is pushing the Department of Energy (DOE) to reverse a pause on new LNG export licenses as the possibility of intervention from Congress slims. The American Petroleum Institute (API) and other groups representing the liquefied natural gas industry have filed a request for rehearing of the decision announced by the Biden administration in January. At the time, the administration said the DOE would halt considerations for non-Free Trade Agreement (FTA) permits while it reviewed its policies for determining whether a project is in the public interest. In its filing, API called the action “arbitrary and capricious” and in violation of the DOE’s authority under the U.S. Natural Gas Act (NGA).
Tellurian amends debt terms to support sale of its upstream assets - Tellurian amends debt terms to support sale of its upstream assets Driftwood LNG site (Image: Tellurian) US LNG firm Tellurian, the developer of the Driftwood LNG project in Louisiana, said it had signed a deal to amend the terms of certain debt instruments in order to boost near-term liquidity and provide the company with flexibility to complete the sale of its upstream assets. Among other items, the amendment provisions include a reduction in Tellurian’s minimum cash balance requirement and the ability for the company to make its upcoming interest payments in-kind, according to a statement by Tellurian. The firm said in a separate SEC filling that it has entered into a letter agreement with an institutional investor providing for, among other things, amendments to the indentures governing its 10.00% senior secured notes due 2025 and its 6.00% secured convertible notes due 2025 previously issued to the investor. The deal allows Tellurian to reduce its minimum liquidity requirement from $40 million to $25 million from February to through and including April 30, 2024. Also, Tellurian agreed to provide a “non-recourse pledge of all of its equity interests in Driftwood LNG Holdings and a certain intercompany note to secure the obligations under the indentures governing the notes.” CEO Octavio Simoes said this amendment to “our debt agreement is pivotal towards establishing a sustainable capital structure and accelerating our strategic priority, Driftwood LNG.” “It also provides us the time and flexibility to complete the sale of our upstream assets in a manner that maximizes value for our shareholders while we maintain our focus on the intensive negotiations associated with the commercialization of Driftwood LNG,” he said. Earlier this month, Tellurian said it is exploring the sale of its Haynesville upstream assets as it works on securing financing for the first phase of its Driftwood LNG project worth about $14.5 billion. Under the first phase, Tellurian aims to build two LNG plants near Lake Charles with an export capacity of up to 11 mtpa. However, the company is still working to secure financing for the project. Tellurian issued a limited notice to proceed to compatriot engineering and construction giant Bechtel in March 2022 and it said in August last year that Bechtel completed piling work for the first plant and also concrete pouring for all plant one compressor foundations. The firm recently also secured more time from the US FERC to complete the construction of its Driftwood LNG project. FERC said in a filling dated February 15 that both Driftwood LNG and the connecting pipeline have been granted an extension of time, until April 18, 2029.
Pembina Inks NGL Pact, Delays LNG Project Decision - Calgary-based Pembina Pipeline Corp. has secured an agreement to supply natural gas liquids (NGL) for Dow Chemical Co. and is advancing LNG pipeline expansion projects that could provide multiple opportunities and more growth following a strong year. In support of Dow’s Fort Saskatchewan Path2Zero expansion project in Canada, Pembina entered into long-term agreements to supply up to 50,000 b/d of ethane. “Given Pembina’s existing leading ethane supply and transportation business and integrated value chain, there are multiple opportunities for the company to benefit from this new development through both the existing asset base and new investment opportunities,” CEO Scott Burrows said during a recent earnings call. Dow announced plans in November to build an ethylene...
Venture Global Fighting Disclosure on Contracts, Awaiting FERC Reply on Calcasieu Pass Deadline - Long-term offtakers of Venture Global LNG Inc.’s Calcasieu Pass terminal in Louisiana are again pressing FERC to make the export project developer provide information about the facility, this time targeting a request to extend the commissioning process. Earlier this month, Venture asked the Federal Energy Regulatory Commission to extend the deadline for its 10 million metric tons/year (mmty) liquefied natural gas terminal to reach full operations by a year. The first commissioning cargo was loaded from the facility in early 2022, making it the fastest U.S. project to go from a final investment decision to first liquefaction. However, numerous issues with its equipment have been reported, mostly centered around its heat recovery steam generators for liquefaction blocks seven...
Sempra Looking Beyond LNG Pause to ‘Development Milestones’ for Port Arthur, Cameron Expansions - While U.S. LNG developers navigate the fallout of a pause in new worldwide liquefied natural gas export authorizations, Sempra Infrastructure executives said they were still focusing on the best prices and partnerships, rather than permitting timelines. The LNG and Mexico infrastructure arm of San Diego-based Sempra is currently in the early phases of construction on the 13 million metric tons/year (mmty) Port Arthur LNG project in Texas and nearing completion of Energia Costa Azul (ECA) LNG in Mexico. The Biden administration’s decision to halt new non-Free Trade Agreement permit decisions for an indefinite period doesn’t impact the progress of those projects, but does potentially cloud the timeline of Sempra’s proposed expansions, including the second phase of Port Arthur...
Freeport LNG Outage Set to Erase 40 Bcf of Feed Gas Demand as Repairs Extended - Freeport LNG Development LP’s two-week delay to finish repairs to a third train at its export terminal on the Texas coast is set to extend lower gas flows to two months, pushing the restart to mid-March. Feed gas flows to the liquefied natural gas export facility began to drop on Jan. 14 as a winter storm swept across the country, according to NGI’s U.S. LNG Export Tracker. The storm damaged an electrical motor. A spokesperson told NGI that it was extending the work by two weeks. This update came exactly a month after the terminal said it expected the unit to be down for at least one month. Prior to the outage, gas flows were topping out around 2 Bcf/d. Flows since have averaged 0.65 Bcf/d below that level through February. If the outage were to extend into mid-March,...
Devon ‘Optimistic’ About Future of Natural Gas, but Staying ‘As Oily as We Can’ for Now - Though it is a major producer of U.S. natural gas, oil economics will dictate investment decisions for Devon Energy Corp. for the foreseeable future, management indicated Wednesday. Oklahoma City-based Devon is the 16th largest producer of natural gas among U.S. publicly traded firms, according to NGI’s most recent calculations. It operates primarily in the Permian Basin’s Delaware sub-basin, the Anadarko and Williston basins, and the Eagle Ford Shale. “We want to stay as oily as we can for as long as we can,” CEO Rick Muncrief told analysts during a call to discuss fourth quarter earnings. Muncrief cited low U.S. natural gas prices that have languished below $2/MMBtu since early February. “That’s not a good spot to be in. And so for us, we want to stay as oily as we can" ...
CFE Looking to Develop Texas Natural Gas Storage as Mexico Import Needs Mount - Spotlight - Mexico’s Comisión Federal de Electricidad (CFE) wants to develop natural gas storage in South Texas in time for new industrial projects in Mexico that would require stable and increased shipments from the United States. CFE’s international marketing arm, CFE International, has issued a request for proposals (RFP) from interested parties. The RFP is seeking proposals from national or international companies “experienced in developing and operating natural gas storage facilities, for the development of a new natural gas storage facility in the South Texas region.” Management called it “essential to enhance energy security and efficiency in the operation of the Mexican electrical system.” The service period would be for 20 years. Minimum gas capacity would be...
Altamira LNG Could Ship First U.S. Natural Gas Cargo from Mexico in April - New Fortress Energy Inc. (NFE) anticipates its offshore Altamira Floating LNG unit could become the first operating Mexican export facility in the coming weeks. After delays that stretched the commissioning process, CEO Wes Edens told analysts during a fourth quarter call that the first volumes of liquefied natural gas were expected to be produced in the coming days, followed by its first cargo loading sometime in April. “While it’s been a little bit delayed, it’s important to note that it still would be the fastest LNG installation in the history of the planet,” Edens said.
Biden Moves to Restore FERC to Five in Nominating Two Democrats, One Republican to Panel - President Biden has nominated two Democrats and one Republican to join FERC, which has been perilously short-handed for months. By statute, the Federal Energy Regulatory Commission is to be composed of five people, with no more than three from the same political party. Only three people are serving FERC today, led by Chair Willie Phillips, a Democrat who was nominated to lead the Commission in February. Allison Clements, another Democrat, is planning to leave the Commission in June. Republican Commissioner Mark C. Christie was nominated by President Trump. To ensure FERC can operate, the White House has nominated Democrats Judy Chang and David Rosner. Senate Minority Leader Mitch McConnell of Kentucky nominated Republican Lindsay S. See. Chang, an energy economics and policy...
Call to regulate 3 million miles of U.S. natural gas pipelines - One Utah public lands advocate is standing behind the Pipeline and Hazardous Materials Safety Administration's proposed rule which aims to improve oversight and reduce pollution from the nation's three million miles of U.S. natural gas pipelines.Ashley Korenblat is the managing director for Public Lands Solutions. She said the rule is critical to "move the needle," in an effort to slow climate change, and contends it would play a significant role in what she called "rural public land communities," in the Beehive State."The leaks reduce the amount of gas collected and thus lower royalty payments which many counties depend on," said Korenblat. "So that is a problem. The leaks also damage air quality near important recreation assets like national parks, bike trails, climbing areas and other public lands that are economic drivers for rural communities." Korenblat said companies are moving to states like Utah in search of a better quality of life, but adds that poor air quality in oil dependent communities damages their future of economic prosperity.Korenblat encouraged operators to look at the benefits of policy action which would help slow the rate of climate change, protect public health, create jobs and prevent wasting energy.Some in the industry argue new methane leak regulations would cost too much.Korenblat said in 2019, fossil fuel producers in Utah wasted an estimated 16 billion cubic feet of natural gas, 87% coming from leaks. She said the problem results from an industry that tolerates leakage."There are technologies to detect and better monitor and better contain the gas," said Korenblat. "All of these technologies and this work would actually create jobs in oil field communities, but the operators are not that interested in making the investment unless this rule comes into play."Korenblat said larger operators do have the profits to invest in newer technologies, but should do more to support smaller operations.She contended no progress will be made unless the rule is finalized - which is why she and others are calling on Transportation Secretary Pete Buttigieg to take action.
Worker awarded $30 million in Larimer fracking explosion -- A neurophysiologist compared the fracking tank explosion — which blew Steven Straughen nearly 30 feet away one night in 2019 — to an IED explosion that soldiers see in battle. The explosion at the Simpson Pad 26 oil and gas production site on Dec. 12 that year would forever alter the life of Straughen, an Air Force veteran. After 14 surgeries and the loss of his right foot, Straughen was awarded $30 million in a U.S. District Court case, as part of a personal injury lawsuit against the company that created the tanks. Due to a Colorado law put in to place in 1986, Straughen will only see around half of the awarded amount, with over $14 million being capped under the limitations on damages for non-economic loss or injury. And now Straughen's lawyer is considering a ballot measure to get rid of the cap.Straughen, an Idaho native, joined the Air Force directly out of high school with the intention of becoming a nuclear weapons technician. While he waited a year for nuclear clearance, he volunteered with the Marines, traveling to Fallujah, where he experienced combat. He was shot nine times, with six bullets striking his Kevlar vest and three going through his arm. He was back in the field a week later.Straughen eventually left the Air Force after six years and joined the oil and gas industry, quickly climbing the ranks to a senior site supervisor position."I kind of grew up with the idea of you’re responsible for yourself and you’re never going to get anywhere if you don’t do it yourself. You have to work hard. Oil and gas very much fit into that hard work mentality," Straughen said in an interview with The Gazette. "It was the closest thing to going back to combat, but without having to pull the trigger. You had to be really good and on your game to stay safe.”
Effort to End Colorado Natural Gas and Oil Development Going Nowhere, Says Civitas CEO - Another attempt to phase out natural gas and oil drilling in Colorado is ramping up, but it’s unlikely to advance, Civitas Resources Inc. CEO Christopher Doyle said Wednesday. Doyle helmed a conference call with analysts to discuss fourth quarter results and the outlook for 2024. Most of the discussion centered on the Denver-Julesburg (DJ) Basin in Colorado, as well as the recently acquired assets in the Permian Basin. However, talk turned to whether the latest attempt to end natural gas and oil development in the state could succeed. Colorado is one of the nation’s top producing states. Democratic state Sens. Sonya Jaquez Lewis and Kevin Priola earlier in February advanced legislation that could require new drilling permits to be phased out beginning in 2030.
Oneok Capitalizing on Flood of Bakken Natural Gas - Rising gas-to-oil ratios (GOR) and a mandate to stamp out flaring in the Bakken Shale mean opportunity for the Williston Basin’s leading natural gas processor, Oneok Inc., management said Tuesday. During a call with analysts to discuss the midstreamer’s fourth quarter 2023 earnings, CEO Pierce Norton II and his executive team highlighted that GORs in the Williston have risen by about 90% since 2016, while statewide flaring in North Dakota fell from 36% of gas production in 2014 to around 5% as of December 2023. All of that captured gas needs to be processed and transported, which bodes well for a company like Oneok.
‘Stable’ Natural Gas Still Seen Critical to California Energy Mix Despite Hydro Power Rebound - As California utilities prepare their systems for upcoming summer demand, hydro-electric generation and other renewable resources remain important tools in the state’s energy resource toolbox. However, natural gas is crucial to the stabilization of the power grid, particularly during extreme events, according to state regulators. The California Energy Commission (CEC) is anticipating more robust hydro generation this spring and summer thanks to wetter weather, agency staff told NGI. Still, CEC expects natural gas to be counted on throughout the summer season as renewable energy output fluctuates. California continues to transition away from fossil fuels. Nongreenhouse gas and renewable resources have eaten away at the share of the market once significantly belonging to natural gas...
U.S. oil and natural gas production hits record highs - Despite a 4.6% reduction in U.S. drilling activity on an average yearly basis, U.S. crude production climbed to an all-time high of 12.93 MMbopd in 2023, an 8.8% increase compared to the 11.88 MMbopd average of 2022. The increased output was augmented by U.S. operators completing a large backlog of DUCs in three major oil shale plays. WTI started 2023 at $78.12/bbl, then climbed steadily throughout the year, due to restricted Russian supply caused by the war in Ukraine, tensions in the Middle East, and OPEC+ production cuts. WTI crude prices hit a yearly high in September 2023 at $89.43/bbl, before falling back down to $71.90/bbl in December. As noted, U.S. oil production increased during 2023, with noticeable gains in New Mexico, up 16% to average 1.82 MMbopd (+251,700 bopd), North Dakota, up 12% to 1.19 MMbopd (+129,600 bopd), Texas up 8.6% to 5.86 MMbopd (+464,000 bopd) and Louisiana (including federal waters), which jumped 8.4% to 1.62 MMbopd (+126,200 bopd) as renewed activity in the GOM started to come on-line. The inverse correlation, i.e. a reduction in drilling activity but higher crude output, is due to improved efficiencies in U.S. shale operations and companies completing wells in their extensive DUC inventory in North Dakota, New Mexico and Texas. In the Bakken region, operators completed 208 mothballed wells (-39%), while the Eagle Ford play saw a reduction of 156 archived wellbores (-31%), both on a y-o-y basis. Operators working the Permian basin reduced the number of temporarily abandoned boreholes by 22%, completing 239 wells. . Despite Colorado’s multiple green initiatives, crude output jumped 5.2% in 2023, increasing to 454,300 bopd, while Wyoming posted a 6.7% gain, up to 265,700 bopd, 16,600 bopd more than reported in 2022. In California, waning drilling activity, which first started in 2015, continues to negatively impact the state’s production, which dropped to 315,600 bopd in 2023, a decline of 7.9% after a 7.3% drop in 2022. A 21.4% increase in Utah pushed that state up to 153,400 bopd, 27,000 bopd more than averaged in 2022. Production in Alaska declined 2.8% in 2023, down to 425,500 bopd, after averaging 437,500 bopd in 2022. In the Mid-continent, production in Oklahoma was up 3.8%, with several operators completing high-flow oil wells in the state’s SCOOP and STACK plays. These highly commercial producers pushed the state’s output to 430,800 bopd, up from 415,100 bopd in 2022. Despite virtually no shale activity, operators working in Kansas managed to maintain crude production at 75,300 bopd in 2023, a 3.1% reduction in output. Drilling and footage in Kansas should be up 18% and 16%, respectively, with 90% of the new wells (1,200) targeting oil. In Ohio, which produces more liquids than its neighbors, the number of new drilling permits issued to companies exploring the Utica shale increased substantially in 2023, compared to the previous two years. The increased activity drove production in the state up a whopping 39.9% in 2023 to 84,200 bopd after a 22% gain in 2022 (60,200 bopd), making the Buckeye state the largest oil producer in the Appalachia region, 60% more output than West Virginia (52,700 bopd). Henry Hub spot prices averaged just $2.54/MMBtu in 2023, 60% less than in 2022 ($6.42/MMbtu) due to excessive casing head gas from U.S. shale fields. Even robust LNG exports to Europe could not help lift depressed commodity prices. Prices peaked at $3.27/MMbtu in January before plummeting to $2.15/MMBtu in May before recovering to $2.52/MMbtu in December. EIA predicts the annual average U.S. benchmark Henry Hub spot price will remain under $3.00/MMBtu in 2024 and 2025. Record natural gas production and storage inventories mean that natural gas prices are less than half the relatively high annual average price in 2022. EIA forecasts HH spot prices to average $2.70/MMBtu in 2024. The agency expects HH price to climb to $2.90/MMBtu in 2025, as LNG exports increase. The EIA predicts U.S. dry natural gas production will grow between 1% and 2% or 1.5 Bcfd in 2024 and 1.3 Bcfd in 2025, down from growth of 4.0 Bcfd in 2023. The slowing growth reflects a drop in natural gas production associated with oil output in the Permian basin. U.S. natural gas production should reach 105 Bcfd in 2024 and 106 Bcfd in 2025—both would be record highs. EIA estimates that the U.S. began 2024 with 14% more natural gas in storage than the previous five-year average. Although demand growth is forecast to outpace supply growth by 0.7 Bcfd this year, inventories will remain high enough to limit significant upward pressure on prices. EIA expects U.S. LNG gross exports to rise 5% in 2024 to 12.4 Bcfd, up from 11.8 Bcfd in 2023.
Oil and gas profits triple under Joe Biden even as industry decries him - Profits for the biggest US oil and gas producers have almost tripled under President Joe Biden, even as the industry berates his administration’s “hostile” policies and warns that a second term would be “disastrous” for the sector. The country’s top-10 listed operators by value, which will finish reporting their 2023 earnings this week, are on track to have amassed combined net income of $313bn in the first three years of theBiden administration, up from $112bn during the same period under Donald Trump.The collective market capitalisation of the group — comprising ExxonMobil, Chevron, ConocoPhillips, EOG, Pioneer Natural Resources, Occidental Petroleum, Hess, Devon Energy, Diamondback Energy and Coterra Energy — jumped 132 per cent over the period to more than $1.1tn, compared with a 12 per cent drop in Trump’s first three years. Their 2023 profit figures are based on earnings reports except for Devon, due to release fourth-quarter results on Tuesday, whose latest quarterly profit figures are consensus estimates.US production has smashed records in recent years: in November, oil output hit an unprecedented 13.3mn barrels a day, while natural gas topped 105bn cubic feet a day for the first time. The nation overtook Qatar to become the largest exporter of liquefied natural gas in the world last year.The outperformance under Biden underlines the limited role of the White House in dictating the sector’s fortunes. The recent profit bonanza was driven in part by Russia’s full-scale invasion of Ukraine, which pushed up oil and gas prices. A strong rebound in global energy demand from the depths of the Covid-19 shock in 2020 also supported prices. West Texas Intermediate, the US crude benchmark, averaged about $80 a barrel during Biden’s first three years compared with $58/b in Trump’s. It also flies in the face of Republican arguments that the Biden administration has suffocated the industry and dire warnings that a Democratic victory in November’s presidential election would put American energy security at risk. “Since his first day in office, President Biden has targeted our domestic energy producers and actively undermined America’s efforts to be energy independent,” said Republican Speaker of the House Mike Johnson this month. Biden campaigned on the most ambitious climate platform of any US president in history, vowing to lead a “transition from oil”. On taking office he implemented a suite of policies that enraged the industry — from temporarily suspending new leasing for fossil fuel development on public lands to scuppering the Keystone XL pipeline. During his time in office, however, he has dialled back some of that initial rhetoric, urging the industry to drill more to counter high prices at the pump and encouraging liquefied natural gas exports to stem an energy crisis in Europe. “To quell inflation, Biden has supported record production to keep oil and gas prices down, even while favouring greater gas exports to help the EU,” said Paul Bledsoe, a lecturer at American University and former climate adviser to the Bill Clinton administration. “You can’t do better than that from a Democratic president.” Yet the Biden campaign has been reluctant to tout the industry’s success for fear of blowback from the progressive wing of the Democratic party and has been quick to criticise operators. Mike Sommers, chief executive of the American Petroleum Institute, said oil and gas producers’ success over the past three years had occurred in spite of the president’s “hostile” policy agenda, which would undermine the nation’s energy security if left unchecked. “While you’re not seeing an impact right now, they are sowing the seeds I think for decreased production into the future. Every week we’re seeing another regulation under this administration that I think could be very detrimental,” said Sommers. This month API sued the Biden administration over its decision to restrict offshore leasing, highlighting a growing industry backlash against its climate and energy policies. Trump and his proxies have made support for the oil and gas industry a core part of his re-election campaign, arguing the sector’s recent success is bedded in the deregulatory agenda of the previous administration. “We know profits trail policy. The energy industry is reaping the benefits of the Trump administration,” said Carla Sands, a prominent Trump donor and former ambassador to Denmark. In reality, analysts said, incumbent presidents have little impact over the short-term performance of the industry. “I think that the consequences of an election in the United States for energy and climate policy are likely to be overstated and overblown.”
Canada Officials See American LNG Export Freeze as ‘An Opportunity for Us’ - for competing projects in Canada to gain ground after years of lagging behind. Canadian officials this month have been playing up their lower emission bonafides in the wake of their southern neighbor’s pause on licenses, in a bid to push for Canada’s liquefied natural gas export projects that have long been stymied by the hurdles of building in remote, rugged areas and the competing economics of abundant U.S. gas supply. “I note, with interest, that the Americans have said that they might be pausing on their LNG export,” Alberta Premier Danielle Smith said on Bloomberg TV earlier this month. “I look at that as an opportunity for us. If we can be an additional supplier to the world of...
Husky Oil Sentencing April 26 for Involvement in Major Offshore Oil Spill - Husky Oil is facing fines of $2.5 million in connection with the largest oil spill in this province’s history. That was the joint recommendation by the Crown and company in provincial court yesterday. It took less than three hours for 250,000 litres to spill into the Atlantic Ocean in November of 2018. It happened when an underwater flow line became disconnected due to a series of technical issues near the SeaRose FPSO. And while a lawyer for Husky insisted that couldn’t have been foreseen, he acknowledged there were missteps following signs of a problem. Namely, a premature re-start of production, and less-than-thorough checks of the ocean surface for any signs of a spill. The Atlantic VP of Cenovus—which has since acquired Husky—looked on as a company lawyer pled guilty to three charges in exchange for three others being withdrawn. The parties landed on a $2.5 million fine, most of it involving offences under the Migratory Birds Act, with proceeds going toward an environmental fund. A total of 17 oiled birds were spotted near the spill, with seven captured. Two of them were released, two were dead, while the other three either died or were put down. As for the ocean, rough weather prevented an immediate clean up, and within two days the spill had dispersed and nothing could be recovered.. The judge will take some time to decide whether to accept the proposed fine or impose her own.
Oil spill spreads across Caribbean from Tobago to Bonaire --Oil leaking from a capsized barge off the coast of Tobago has spread hundreds of miles to reach the Caribbean island of Bonaire. Officials on Bonaire, which is located 50 miles (80km) north of the Venezuelan coast, said the oil posed a "serious threat to both humans and nature". The island is the latest to have been contaminated with oil from the barge which ran aground earlier this month. It is still unclear who owns the barge and what may have caused it to sink. The authorities on Bonaire, which is a special municipality of the Netherlands, said the island's east coast, including Sorobon, Lac and Lagun, had been polluted. They also warned that the island's mangrove, fish and coral ecosystems were at risk. The oil leak was first spotted by the Trinidad and Tobago Coast Guard on 7 February. They traced it to a barge which had become lodged on a reef about 150m (500 ft) off Tobago's southern coast. There was no crew on board the barge and the Coast Guard said it had not received any distress signals. They did, however, spot the name "Gulfstream" painted on the side of the vessel. Trinidad and Tobago authorities said the barge had originated in Panama and had been towed by a tugboat. They said it appeared "to have been bound for Guyana".
Atlantic LNG freight rates drop below $50,000 per day, European prices down - Atlantic spot LNG freight rates dropped below $50,000 per day this week, while European and Asian prices also decreased compared to the week before. Last week, charter rates were almost flat after they rose in the week before for the first time since mid-November 2023. “The Spark30S Atlantic spot 174,000 cbm 2 Stroke LNG freight rate fell to the lowest level in 8 months, falling $4,750 this week to close at $49,750 per day as the spot fixing window moves into the seasonally softer Q2 period,” Henry Bennett, Spark’s COO, told LNG Prime on Friday. He said the Spark25S Pacific spot rate was almost unchanged on the week at $58,250 per day. Atlantic LNG freight rate drops below $50,000 per day, European prices down Image: Spark LNG carriers are still avoiding the Suez Canal due to the situation in the Red Sea. Since January, LNG carriers, including Qatari vessels delivering LNG shipments to Europe, are favoring the Cape of Good Hope for safer passage. Kpler said previously that the Suez Canal has witnessed no LNG transits since January 17. On the other hand, due to a drought situation impacting the Panama Canal, LNG transits through the waterway keep declining. Official data shows that LNG transits dropped to 326 in fiscal 2023 from 374 in 2022 and 537 in 2021. European and Asian prices decline In Europe, the SparkNWE DES LNG front month dropped compared to the last week. The NWE DES LNG for March delivery was assessed last week at $7.339/MMBtu and at a $0.535/MMBtu discount to the TTF. “The SparkNWE DES LNG price is hovering just above the low from June 2023 and is sitting at $6.858/MMBtu, down $0.481 week on week,” Bennet said.
Ongoing Freeport LNG Outage Helps Lift European Natural Gas Prices – LNG Recap - Freeport LNG Development LP said Tuesday the third train at its export facility on the upper Texas coast would be offline for another two weeks, extending a month-long outage and providing support for European natural gas prices. Spokesperson Heather Browne told NGI on Tuesday that the company is working to finish motor repair work after freezing temperatures in January caused electrical issues and knocked the train offline. At the time, Freeport said it expected the unit to be down for at least one month. The news reversed declines seen earlier in the day for European benchmark Title Transfer Facility (TTF) prices. The April contract finished Tuesday 2% higher and held onto gains made Monday. However, weak global gas fundamentals have TTF trading below $8/MMBtu at prices not seen since 2020...
Denmark closes probe into Nord Stream blasts saying there's not enough grounds for a criminal case (AP) — Denmark on Monday joined Sweden in closing its investigation into the 2022 explosions that damaged the Nord Stream gas pipelines, with authorities saying they concluded there was deliberate sabotage but "not the sufficient grounds" to pursue a criminal case. Danish authorities said the probe “has been both complex and comprehensive." Copenhagen police, which carried out the investigation jointly with the Danish security service, said they were not able to provide further comments. The underwater detonations on the Nord Stream gas pipelines, which were built to carry Russian natural gas to Germany, occurred in international waters but within Swedish and Danish economic zones. Sweden earlier said that a state actor was the most likely culprit. Denmark’s investigation was one of three into the explosions. Sweden ended its probe on Feb. 7 on the grounds that it has no jurisdiction. It said the investigation's primary purpose was to establish whether Sweden or its citizens somehow were involved. Swedish officials also said they handed over to Germany "material that can be used as evidence in the German investigation." Denmark's decision to close the investigation was expected, Kenneth Øhlenschlæger Buhl of the Royal Danish Defense College told The Associated Press. “The Swedes said they had a fairly good idea of who was behind it but have no jurisdiction over those they wanted to talk to,” Øhlenschlæger Buhl said. The Danes are saying “the same, just slightly different words.” “I believe that the Germans cannot reach any other conclusion,” he said. "They may open the lid a little more, but not much.” The German federal prosecutor’s office said Monday that its investigation continues and that it won't provide more information. The source of the explosions has been a major international mystery. The blasts happened as Europe attempted to wean itself off Russian energy sources following the Kremlin’s full-scale invasion of Ukraine, and contributed to tensions that followed the start of the war. The undersea explosions ruptured the Nord Stream 1 pipeline, which was Russia's main natural gas supply route to Germany until Russia cut off supplies at the end of August 2022. They also damaged the Nord Stream 2 pipeline, which never entered service because Germany suspended its certification process shortly before Russia invaded Ukraine in February of that year. The explosions at the pipelines took place about 80 meters (260 feet) underwater on the ocean floor in the Baltic Sea. Seismic measurements indicated that the explosions occurred shortly before the leaks were discovered. Months after the detonations, there is no accepted explanation. Russia has accused the U.S. of staging the explosions, a charge Washington denies. In Moscow, Kremlin spokesman Dmitry Peskov said that “the situation is close to absurd.” “On the one hand, there was a deliberate act of sabotage and on the other hand there has been no progress” in the investigation. “The situation is so obvious that one can only express absolute astonishment,” he said. The pipelines were long a target of criticism by the U.S. and some of its allies, who warned that they posed a risk to Europe's energy security by increasing dependence on Russian gas. In March 2023, German media reported that a pro-Ukraine group was involved in the sabotage using a vessel and setting off from the German port of Rostock. Ukraine rejected suggestions it might have ordered the attack and German officials voiced caution over the accusation. Swedish prosecutors earlier hinted that the identity of the perpetrator was likely to remain unclear.
Russia's LNG Cargoes Bound For China Avoid The Red Sea - Russia has started diverting its LNG cargoes away from the Suez Canal and is using the longer route to China via the Cape of Good Hope in Africa, amid a higher risk of Houthi attacks in the Red Sea, according to LSEG data cited by Reuters on Wednesday. The longer route from Russia’s Yamal LNG project to China via Africa instead of the Suez Canal adds around 10 days to the travel time for LNG cargoes to reach their destinations in China and return to Russia, tying up more LNG tankers for longer periods at sea. This adds to recent struggles of Russia’s top LNG exporter, Novatek, which has yet to begin shipments from its new export project, Arctic 2 LNG, due to a lack of ships amid tightened U.S. sanctions on the project. Two of the world’s biggest LNG exporters, the United States and Qatar halted shipments via the Red Sea and the Suez Canal earlier this year.Qatar paused LNG cargo journeys through the Suez Canal in the middle of January, but it assured customers and the market that its LNG output is uninterrupted and Europe should expect longer delivery times.“While the ongoing developments in the Red Sea area may impact the scheduling of some deliveries as they take alternative routes, LNG shipments from Qatar are being managed with our valued buyers,” QatarEnergysaid in January.Now Russia is also avoiding the Red Sea, per LSEG data quoted by Reuters. Several tankers have already used the longer route to China, while vessels that delivered in December LNG to China from Yamal via the Suez Canal are now heading back to Russia via the Cape of Good Hope, according to the data.Last month, some tankers transporting Russian fuels started to avoid the Suez Canal route to Asia as ship-tracking data showed operators of vessels carrying Russian oil products may have reached the risk tolerance for passing close to Houthi missiles in the Red Sea and the Gulf of Aden.
Qatar Takes Another Leap to Expand North Field Project, Boost LNG Output by 85% - Qatar on Sunday advanced plans to increase the country’s LNG production capacity by 85% from current levels, upping a bet that more natural gas will be needed as progress at other liquefaction projects appears to slow. CEO Saad Sherida Al-Kaabi, of state-owned QatarEnergy, said an appraisal program had determined that the productive layers of the country’s massive North Field extend towards the west. Testing confirmed that 240 Tcf of additional gas reserves are present, boosting Qatar’s overall gas reserves to more than 2,000 Tcf. “These are very important results of great dimensions that will take Qatar’s gas industry to new horizons,” Al-Kabbi said. He added that the additional reserves would allow the company to move forward with the 16 million metric tons/year...
Pakistan Mulls Completion Of Iran Gas Pipeline Stalled By US Sanctions Pakistan is mulling over completing a much-delayed pipeline project with Iran, which has been stalled for years and has failed to move forward due to US sanctions. Islamabad is considering finalizing the first phase of the 80-kilometer pipeline, according to Pakistani news site The Nation. "Islamabad is contemplating to kick-off construction work on the 80 kilometers portion of Iran-Pakistan gas pipeline project… to escape a potential penalty of $18 billion," the report said. Associated Press "Pakistan will submit an application to seek a waiver of US sanctions for the IP project. Initially, it has been decided that in the first phase of the IP project, work on the 80 km portion from the Pak–Iran border to Gwadar will be started," a source in the Pakistani energy ministry told the outlet. The project, which aims to connect the Pakistani port city of Gwadar to the Iranian border, was launched in 2013. It required Pakistan to complete the construction of its end of the pipeline by 2014. Iran said it has already completed its side of the pipeline and has invested $2 billion in the project. Pakistani officials warned in May last year that Islamabad could face an $18 billion fine if it fails to complete the Iran–Pakistan Gas Pipeline project. Islamabad suspended its participation in the project a few months later, in August, due to the threat of US economic sanctions. At the time, Pakistani Minister of State for Petroleum, Dr Musadik Malik, said in written testimony to the country’s National Assembly that Pakistan "issued a Force Majeure and Excusing Event notice to Iran under the Gas Sales and Purchase Agreement (GSPA), which resultantly suspends Pakistan’s obligations under the GSPA." "The matter will be finally settled through arbitration, should Iran take this matter to arbitration," the minister said back in August. "The exact amount of penalty, if any, is subject to the outcome of the arbitration to be determined by the arbitrators."
India's Russian oil imports rise in February - ship tracking data – (Reuters) -India’s daily crude oil imports from its top supplier Russia are expected to rise in February from the previous month, helped by resumption of the light sweet Sokol grade, preliminary ship tracking data showed. However, India’s Russian oil imports are expected to slow in the coming months as the United States steps up shipping sanctions, forcing refiners to look for alternatives. The latest sanctions target Russia’s leading tanker group Sovcomflot, which Washington accuses of being involved in violating the G7 price cap, as well as 14 tankers tied to the shipping company. Discounts on Russian oil, which have already declined to around $3.5-$4 per barrel, are also expected to fall further as sanctions are seen as driving up freight costs.
India's Oil Supply From Russia Threatened by New US Sanctions -- Indian refiners are concerned that the latest U.S. sanctions against Russia could further impact their ability to import cheap Russian crude as freight rates are set to rise and dent refining margins, industry sources in India have told Reuters.The U.S. levied new sanctions against Russia last week, on the second anniversary of the Russian invasion of Ukraine and in response to the death of opposition politician and anticorruption activist Alexey Navalny.Among the 500 targets of the new sanctions, the U.S. Treasury and State are targeting Russia’s tanker operator Sovcomflot and more than a dozen crude oil tankers linked to the Russian state firm.Refiners in India are now concerned that the new sanctions would make it more difficult to have oil shipped from Russia on non-sanctioned vessels, which would raise shipping costs and eat into the refining margins, according to Reuters’ sources.India will still buy crude from Russia but only if it is sold below the G7 price cap of $60 per barrel and is shipped on non-sanctioned vessels, an Indian government source told Reuters.Even before the latest U.S. sanctions, Refining margins for India’s biggest state-owned refiners had dropped amid more difficult access to Russian crude and soaring freight rates due to the Red Sea disruption to shipments, analysts and traders told Bloomberg last week.For most of 2023, Indian refiners enjoyed high refining margins and profits as they imported cheap Russian crude at $20 a barrel and more below international benchmarks. The decline in refining margins is due to higher costs for Indian refiners because of higher competition for Russian supply in Asia, increased freight costs, and tougher U.S. sanctions enforcement, which has limited India’s access to very low-priced crudes from Russia.
Mindoro oil spill damage valued at P41.2B — report — The sinking of oil tanker MT Princess Empress in Oriental Mindoro last year caused at least P41.2 billion worth of damage to the environment and coastal communities, according to a report by a sustainability think tank. MT Princess Empress was carrying 800,000 liters of industrial fuel oil when it sank off Naujan town on Feb. 28, 2023, causing a massive oil spill that reached the coasts of provinces around the resource-rich Verde Island Passage (VIP). The report of the Center for Energy, Ecology, and Development (CEED) released Monday estimated that the oil spill's environmental damage amounted to around P40.1 billion. Meanwhile, socio-economic losses totaled P1.1 billion. The total cost of damage was 800% higher than the government's estimate, according to CEED. "Catastrophic oil spills like the one in the Verde Island Passage (VIP) are deadly, costly, and can forever change sensitive ecosystems," CEED executive director Gerry Arances said. "The oil spill has also impoverished the people not just of Mindoro but other surrounding communities that depend on the resources of VIP for their survival," he added. The study looked into the oil spill's damage 39 weeks after it happened. It used two methods to estimate the impact: how much coastal families in several Oriental Mindoro towns lost because of the incident, and how much people are willing to pay to fishing areas and applied it to those who do not live near the coast in the affected provinces. According to the study, fishers continued to suffer income losses from July to November even after the lifting of the fishing ban. It cited reports indicating that fishers' yields had not returned to their usual pre-oil spill levels, with only around a third of their normal catch being obtained. Arances called on the government to produce a comprehensive study detailing the full extent of the oil spill's impact on the environment and livelihood to address the immediate and long-term needs of affected residents. Fr. Edwin Gariguez, lead convenor of Protect VIP, pointed out that the marine corridor "will never be safe" as long as it is not legally protected under the Expanded National Integrated Protected Areas System. Verde Island Passage, dubbed by scientists as the "center of the center" of the world's marine biodiversity, faces threats from pollution from liquefied natural gas plants and terminals, illegal and unreported fishing, commercial shipping, and climate change. "One year is ample time for meaningful progress towards protecting the VIP and ensuring its preservation for future generations, time which the government did not use properly," Gariguez said. Environment officials said last year that the agency was pushing for the declaration of VIP as a legally protected seascape. A separate report by CEED found out that oil and grease levels remained high in several protected areas in Oriental Mindoro nearly a year after the oil spill.
Oil Demand Outlook in China Gets Holiday Boost -- The outlook for Chinese oil markets is looking a little brighter after a boom in travel over the Lunar New Year, raising hopes of a more sustained recovery in demand. China has set a brisk pace in snapping up cargoes of crude from across the world since the mid-February holiday, according to traders, as well as increasing its term supplies from Saudi Arabia for March. While traders said the volumes bought are steady compared to the previous month, the purchases are being made ahead of maintenance work, when refiners normally reduce imports. “Some refineries may be raising run rates or postponing maintenance plans because of strong demand momentum following higher-than-expected Lunar New Year travel,” analysts at Energy Aspects Ltd. including Jianan Sun wrote in note last week. “Chinese spot crude buying has been slightly stronger than our expectations.” The lunar holiday, a festive period when much of the population travels far and wide, is a pivotal time for the Chinese economy, which has struggled since reopening over a year ago. This year, travel and spending exceeded levels from before the pandemic despite the financial stresses weighing on households. For crude refiners, that translates to improved demand for fuels like gasoline. It’s a welcome boost to oil markets that had been pricing in softer Chinese consumption this year. Moreover, the purchases are being made even though refiners have planned more maintenance halts than usual, which should keep run rates elevated at the plants that aren’t affected. Refining capacity taken offline in 2024 is expected to rise 18 percent to a three-year high, according to a forecast from Mysteel OilChem earlier this month. Most of that is due to fall in the second and fourth quarters, while the majority of crude cargoes bought this month would arrive in May. Those purchases have spanned the globe, from the Middle East and Africa, to the US, Brazil and the North Sea, according to traders. As the world’s biggest importer, Chinese oil consumption is an important determinant of global prices. Still, there are nuances in the holiday data that might cool some of the excitement around what it might mean for commodities demand. Daily spending per traveler, for instance, was actually lower than during a number of major holidays since the economy reopened, according to Bloomberg Economics.
OPEC oil output rises by 90,000 bpd in February, survey finds (Reuters) - The following table shows crude output by the Organization of the Petroleum Exporting Countries (OPEC) in millions of barrels per day (bpd) in February and January, according to a Reuters survey published on Thursday. OPEC and allies, together known as OPEC+, announced a new round of voluntary cuts on Nov. 30 to be made in the first quarter of 2024. As part of this, Saudi Arabia extended its own 1 million bpd cut - first made in July 2023 - until the end of the first quarter. The figures in the first and second columns of the table are in millions of barrels per day. Totals are rounded. January output was not revised.
Oil Spreads Soar As Physical Market Screams Tightness While Hedge Fund Press Shorts - Something odd is taking place in the oil market. While on one hand "data" dissembled by Biden's Dept of Energy and specifically its statistical arm, the Energy Information Administration, has done everything it could to indicate there is a glut of oil, which is understandable - there is nothing Biden's handlers fear more than an inflationary surge in oil and gasoline prices ahead of the November elections and will do everything in their power to mandate a dataset that has the most adverse impact on oil prices, the physical market is sending just the opposite signal, with spreads showing screaming physical tightness. Consider the Brent prompt spread which after tumbling to a multi-year low in late December, has exploded higher to a backwardation around 90 cents... ... entrenching its strongest position since late October, while several other timespreads also the firmest since last September. The comparable WTI April-May spread was trading around 50 cents after hitting 75 cents last week. Commenting on the surge in time-spreads, Citi strategist Max Leyton - who is far less bearish than oil permabear Ed Morse who recently left the bank - says they strengthened on the “perfect storm” of Atlantic Basin supply issues, and notes that supply issues include “ongoing Red Sea vessel diversions, US freeze-offs hitting oil output, worker protests disrupting Libyan supply, UK oil terminal logistics limiting North Sea Forties supply, and buying up of crude cargoes at the Nigerian Dangote refinery." “Most of these issues could ease,” and the second quarter “still looks like a surplus quarter for total oil balances, meaning current strength could pause.” Of course, the current strength could very well accelerate if there is even one small geopolitical hiccup in the middle east where nobody expects any surprises, and where all eyes remain on how much more of its bitch Iran can make Biden, before even the US president is forced to retaliate even if it means 4mm barrels taken off the daily market. The dramatic spikes in prompt timespreads across the crude complex was the Goldman chart of the week just a few days ago, and shows just how dramatically and rapidly the market has tigthened up as a result of sudden scarcity of physical which, however, has barely received any mention in daily discussions about the energy market. Below we share some more charts from Goldman looking at the most recent indicators in physical markets, starting with supply where Goldman is seeing distinct "firmness"... ... while on the demand side of the equation, recent unseasonaly warm weather has lowered global oil demand by some 300kb/d. As a result of the tightness in supply, Goldman calculates that total OECD inventories are now about 21mb lower than the company's end of February balance forecast of 2,765 mb, with estimates pointing to further tightness. Yet despite this continued decline in supply and inventories, oil prices remain rangebound and seem unable to breakout solidly about the low 80s. Why is that? In a word: financialization, aka "paper oil", because while the physical oil market is screaming higher, financial players (managed money) continue to aggressively sell and short the sector as shown in the chart below. This desperate attempt by financial players to keep their underwater positions from getting stopped out and sparking a cascade of margin calls has also translated into a ravenous shorting of energy stocks which as we pointed out a week ago, are the most shorted sector in Goldman's prime brokerage.
Oil prices slip amid interest rate outlook and Middle East tension; Brent crude at $81.42/bbl - Oil prices experienced a slight decline amid speculation that unexpectedly robust inflation figures might postpone reductions in high interest rates, which have been restraining global fuel demand growth. Brent crude futures saw a decrease of 20 cents, marking a 0.3% drop to $81.42 per barrel by 1415 GMT. Similarly, U.S. West Texas Intermediate crude futures (WTI) declined by 13 cents, representing a 0.2% decrease, settling at $76.36. This downward trend follows last week's losses, with Brent experiencing a decline of approximately 2%, while WTI dropped by over 3%, influenced by indications suggesting that the U.S. Federal Reserve intends to maintain interest rates without immediate adjustments. Since November, oil prices have fluctuated within the range of $70 to $90 per barrel. This fluctuation can be attributed to several factors, including increasing U.S. supply and apprehensions regarding subdued demand from China. These influences have counteracted the impact of supply cuts by the OPEC+ alliance, despite ongoing conflicts in regions like Ukraine and Gaza. -Jake Sullivan, White House national security adviser, informed CNN on Sunday that negotiators from the United States, Egypt, Qatar, and Israel have reached preliminary agreements on a hostage deal amidst the ongoing Israel-Hamas conflict in the Middle East. Talks held in Paris outlined the basic framework, although negotiations are ongoing. -Goldman Sachs analysts noted a modest geopolitical risk premium of $2 per barrel on Brent crude due to attacks by Yemeni Houthis on ships in the Red Sea. Despite disruptions, they raised their summer peak price projection for oil to $87 per barrel, up from $85, citing larger-than-expected draws in stocks held by developed countries. -While Goldman Sachs anticipates a 1.5 million barrels per day (bpd) increase in oil demand by 2024, they've adjusted their forecasts. They lowered projections for China but raised them for the United States and India.
The Oil Market on Monday Rallied Higher as Houthi Rebel Attacks Increased Concerns of Disruptions to Supply - The oil market on Monday rallied higher as Houthi rebel attacks increased concerns of disruptions to supply. The U.S. Central Command said Houthi rebels in Yemen narrowly missed hitting a U.S.-flagged tanker on Saturday. The Houthi fired a missile that likely targeted the Torm Thor in the Gulf of Aden on Saturday but missed the U.S.-flagged oil tanker. In overnight trading, the market sold off to a low of $75.84 after talks on the Gaza-Israel ceasefire appeared to progress. On Sunday, White House national security adviser Jake Sullivan said negotiators for the United States, Egypt, Qatar and Israel had agreed on the basic contours of a hostage deal during talks in Paris but added that they are still in negotiations. However, the market bounced off its low and retraced most of its previous losses as it rallied over $1.50 to a high of $78.03 in afternoon trading on the possible shipping disruptions in light of the attack on a U.S.-flagged tanker over the weekend. The April WTI contract later erased some of its gains and settled up $1.09 at $77.58. The April Brent contract settled up 91 cents at $82.53. Meanwhile, the product markets ended the session higher as well, with the heating oil market settling up 7.3 cents at $2.7627 and the RB market settling up 2.89 cents at $2.3056.The U.S. Department of Energy said it was soliciting up to 3 million barrels of sour crude oil for delivery in August 2024.Israeli troops and Palestinian gunmen clashed throughout the Gaza Strip over the weekend, as mediators held talks on a possible ceasefire to free hostages held by Hamas and bring a measure of Ramadan respite to the enclave. However, prospects for securing any truce looked uncertain, with Israel saying it was planning to expand its sweep to destroy Hamas, while the Islamist faction stood firm on its demand for a permanent end to the nearly five month old war. Israeli Prime Minister Benjamin Netanyahu told CBS' "Face the Nation" it was not clear yet whether a hostage deal would materialize from the talks, declining to discuss specifics but saying Hamas needed to make more reasonable demands. Senior Hamas official Sami Abu Zuhri said Netanyahu's comments cast doubt over Israel's willingness to secure a deal. Meanwhile, White House national security adviser Jake Sullivan said that negotiators for the United States, Egypt, Qatar and Israel "came to an understanding" on the basic contours of a hostage deal during talks in Paris. He said that the deal is still under negotiation and added there will have to be indirect discussions by Qatar and Egypt with Hamas.The U.S. Central Command said Yemen's Houthis fired a missile that likely targeted the Torm Thor in the Gulf of Aden on Saturday but missed the U.S.-flagged oil tanker. In the latest attack, the missile impacted the water causing no damage nor injuries. On Sunday, the Iran-aligned group said that they had launched an attack on the tanker. The Torm Thor is being used as part of the U.S. government's Tanker Security Program, which has aimed to increase oil shipping options for its armed forces in times of crisis. CENTCOM said the U.S. military also shot down in "self-defense" two one-way unmanned aerial attack vehicles over the southern Red Sea on Sunday.The U.S. has taken the top spot as Europe’s supplier of crude oil, diesel and liquefied natural gas in recent months. According to Kpler data, the U.S. shipped 2.17 million bpd of crude oil to Europe so far this month. Exports of diesel stood at 207,000 bpd in the same period, outpacing Saudi imports of about 201,000 bpd. No LNG cargoes are currently in the Red Sea.
Oil price news: Oil rises on U.S. physical market’s strength, China demand hopes - Oil rose as physical markets in the U.S. strengthened and demand from China showed signs of picking up. West Texas Intermediate futures climbed 1.4 per cent to settle above US$77 a barrel, while Brent advanced to top $82. Trading volumes were muted as several market participants attend International Energy Week in London, a major industry gathering, where they are set to weigh the outlook for oil this year. US physical crude prices strengthened in recent weeks to the highs of the year as refineries benefiting from strong margins snapped up barrels and foreign buyers turned to American crude to avoid Red Sea shipping issues. Prices also got support from a brief shutdown in exports from an oil field in western Libya during the weekend and stepped-up US and allied strikes on Houthi targets to combat commercial shipping disruptions in the Red Sea region. Some positive signals on demand also are emerging. In China, a boom in travel during the Lunar New Year holidays has raised hopes of a more sustained recovery in consumption. Local refiners have been snapping up cargoes from across the world since the mid-February holiday, according to traders, as well as having increased term supplies from Saudi Arabia for March. Traders are awaiting US inflation data that will shape expectations for when the Federal Reserve will start cutting interest rates. In wider markets, a gauge of the US currency was steady, while most other commodities, including copper, were weaker. Oil has traded in a narrow band for the past two weeks, with tensions in the Middle East and OPEC+ supply curbs offsetting the impact of higher production from outside the group, including the US. “Oil prices should stay anchored near term” amid “substantial non-OPEC+ supply growth over the next few years,” Francisco Blanch, commodity strategist at Bank of America Corp., said in a report. The cartel and allies including Russia are widely expected to prolong their current cutbacks into the next quarter at their meeting early next month. Prices: WTI for April delivery rose 1.4 per cent to settle at $77.58 a barrel. Brent for April settlement was up 1.1 per cent at $82.53 a barrel.
The Market Focused on Uncertainty Over a Potential Gaza Ceasefire and Expectations That OPEC+ Will Extend Voluntary Supply Cuts -- The crude market on Tuesday traded higher as the market focused on uncertainty over a potential Gaza ceasefire and expectations that OPEC+ will extend voluntary supply cuts in March. Israel, Hamas and Qatari mediators remained cautious about the progress towards a truce in Gaza, after U.S. President Joe Biden said he believed a ceasefire could be reached by Monday to halt the war ahead of Ramadam, which is expected to start on March 10th. The market traded lower in overnight trading and posted a low of $77.17 on the prospect of a ceasefire between Israel and Hamas. However, the market bounced off its low and retraced its previous losses. It extended its gains to over $1.40 as it posted a high of $79.00. The market was well supported by expectations that OPEC+ will announce a rollover of voluntary production quotas into the second quarter and even for the rest of the year. The April WTI contract settled up $1.29 at $78.87 and the April Brent contract settled up $1.12 at $83.65. The product markets ended the session in mixed territory, with the heating oil market settling down 1.67 cents at $2.7460 and the RB market settling up 3.88 cents at $2.3444. Israel and Hamas as well as Qatari mediators were all cautious about the progress towards a truce in Gaza after U.S. President Joe Biden said he believed a ceasefire could be reached in under a week to halt the war for the Muslim holy month of Ramadan. Hamas is considering a proposal, agreed by Israel at talks with mediators in Paris for a ceasefire that would suspend fighting for 40 days, which would be the first extended truce. A senior source close to the talks said that the Islamist group was studying a draft proposal that includes allowing in a significant amount of humanitarian aid, as well as swapping Palestinian prisoners in exchange for hostages captured in the Hamas attack that triggered the war. The proposal is the most serious attempt in weeks to halt the fighting, and comes ahead of the Muslim fasting month of Ramadan and with international pressure mounting on Israel to stop the killing of Palestinian civilians. Ramadan this year is expected to begin on the evening of March 10th. Delegations from Hamas and Israel are both in Qatar this week for so-called proximity talks, held in the same city through mediators. However, Qatar said a breakthrough had yet to be reached. Two senior Hamas officials said that President Joe Biden’s remarks appearing to suggest that an agreement had already been reached in principle were premature.Yemen's Houthis said they could only reconsider their missile and drone attacks on international shipping in the Red Sea once Israel ends its "aggression" in the Gaza Strip. Houthi spokesman, Mohammed Abdulsalam, said the situation would be reassessed if the siege of Gaza ended and humanitarian aid was free to enter.On Tuesday, Russia ordered a six-month ban on gasoline exports starting March 1st to keep prices stable amid increasing demand from consumers and farmers and to allow for maintenance of refineries.According to sources, OPEC+ will consider extending voluntary oil output cuts into the second quarter to provide additional support for the market and could keep them in place until the end of the year. The Chairman of Libya’s National Oil Corporation, Farhat Bengdara, said the country’s oil output has reached about 1.25 million bpd.
Oil Rallies as OPEC+ Considers Extending Cuts to Year's End -- West Texas Intermediate and Brent crude advanced more than 1% on Tuesday in reaction to media reports indicating Organization of the Petroleum Exporting Countries (OPEC) and Russia-led producers are considering extending 2.2 million barrels per day (bpd) in output cuts to the end of the year to prevent oil inventories from building. International crude benchmark Brent for April delivery moved higher after testing support at the $82.17 per barrel (bbl) 200-day moving average as investors reacted to the prospect of a longer-than-expected extension to OPEC+ production cuts. Citing several sources, Reuters reported that the 22-member coalition is not only considering extending current curbs through the end of June but is likely to keep them intact until the end of the year, signaling a shift towards a long-term strategy of supply management against a backdrop of lackluster global oil demand and surging U.S. shale production. The physical oil market in recent weeks has been flashing signs of rapid tightening, with prompt-month Brent contract currently trading with a $0.64 bbl premium against the next-month contract. Tuesday's move higher in the oil complex also follows an announcement by Russian officials that the country will impose a six-month ban on gasoline exports beginning March 1 to halt price increases and alleviate fuel shortages in its domestic market. The restriction could have also been triggered by unplanned refinery outages across Russia amid intensifying drone attacks by the Ukrainian military. Moscow in recent months has gradually reduced petroleum product flows to international markets because of operational disruptions at some of the country's largest refineries. According to official figures, gasoline and diesel exports in January were reduced by 37% and 23%, respectively, from the same month in 2023. Following an EU ban on Russian fuel imports from February 2023, most of Russia's gasoline and diesel flows have been redirected to Asia and the Middle East with China, United Arab Emirates and Türkiye emerging as major buyers of Russian oil products. Also on Tuesday, oil traders await the release of weekly inventory report from the American Petroleum Institute, scheduled for a 4:30 p.m. ET release, followed by official data from the U.S. Energy Information Administration on Wednesday morning. Consensus of analysts and traders surveyed by the Wall Street Journal revealed commercial crude oil inventories in the United States likely rose for a fifth consecutive week, while gasoline and distillate stocks were expected to have declined. Commercial crude stockpiles are seen to have risen by 1.5 million bbl to 444.5 million bbl in the week ended Feb. 23. Gasoline inventories are estimated to have fallen 1.3 million bbl, while stocks of distillates, mostly diesel fuel, are expected to have drawn down 2 million bbl. Refinery capacity use likely rose 1.1% to 81.7%, according to the survey. At settlement, NYMEX WTI for April delivery rallied $1.29 to $78.87 bbl, while front-month Brent futures jumped $1.12 to $83.65 bbl. NYMEX March RBOB futures gained $0.0388 to $2.3444 gallon. Moving in the opposite direction, NYMEX March ULSD futures retreated $0.0167 to $2.7460 gallon.
WTI Retraces Gains After Crude Build; Spreads Signal Physical Market Tightening Further -Oil prices are extending gains this morning, reversing earlier losses, as reports suggest OPEC+ will rollover its production cuts. This will pressure supply as Red Sea disruptions are triggering widely tracked gauges of the physical market to point to tighter conditions.Last night's big crude build, reported by API, was shrugged off (helped by a bigger than expected gasoline draw). Bulls will be hoping to see a smaller crude build API
- Crude +8.428mm (+1.5mm exp)
- Cushing +1.825mm
- Gasoline -3.27mm(-1.3mm exp)
- Distillates -523k (-2.0mm exp)
DOE
- Crude +4.199mm (+1.5mm exp)
- Cushing +1.458mm
- Gasoline -2.83mm (-1.3mm exp)
- Distillates -510k (-2.0mm exp)
Official data showed a smaller Crude build than API (but still more than expected) as well as a decent build at Cushing. The Biden administration has added to the SPR for 12 of the last 14 weeks (+743k last week)
Oil prices mixed as U.S. crude inventories rise, OPEC+ considers extending production cuts -- Crude oil futures were mixed Wednesday as U.S. crude inventories rose while OPEC+ is considering extending its production cuts into the second quarter. The West Texas Intermediate contract for April dropped 33 cents, or 0.42% to settle at $78.54 a barrel. April Brent futures gained 3 cents, or 0.04%, to settle at $83.68 a barrel.U.S. commercial crude stocks rose by 4.2 million barrels last week, according to the Energy Information Administration. The inventory increase recorded by the federal government was lower than the 8.4 million barrel jump reported by the American Petroleum Institute.Inventories have been rising in the U.S. as the rate at which refineries process crude into finished products has declined in recent weeks.U.S. crude and the global benchmark are poised for a gain of 6.3% for the month. First month futures contracts are trading at premium to later months. A premium for immediate over later delivery is typically a sign of a tightening crude market. OPEC+ is considering extending its voluntary production cuts into the second quarter, sources told Reuters. The cartel and its allies agreed last November to slash 2.2 million barrels per day in the first quarter.OPEC's cuts are expected to limit downside risk to crude prices while the spare capacity the cartel is holding back will limit upside risk, effectively keeping Brent in a $70 to $90 range, according to a research note from Goldman Sachs published this week.Crude prices have also found support this month from the ongoing conflict in the Middle East with tensions rising on the Israel-Lebanon border and Houthi militants continuing their attacks on commercial shipping in the Red Sea.Goldman, however, views the geopolitical risk premium in oil prices as modest with crude production unaffected by the current conflict.
Builds in U.S. Crude Stocks Offset its Gains From a Potential Extension to the OPEC+ Output Cuts - The oil market ended the session mostly sideways after posting the day’s trading range by mid-morning as larger than expected builds in U.S. crude stocks offset its gains from a potential extension to the OPEC+ output cuts. The crude market posted a low of $77.78 in overnight trading amid a large build in U.S. crude stocks of 8.4 million barrels reported by the API on Tuesday evening and the hopes for a Gaza ceasefire deal in the coming day. The market later bounced off its low and retraced its losses as it posted a high of $79.62 ahead of the release of the EIA’s weekly petroleum stocks report. However, the market erased its gains and traded back towards the $78.00 level following the inventory report, which showed a larger than expected build in crude stocks of over 4 million barrels. The market traded sideways during the remainder of the session, with the April WTI contract settled down 33 cents at $78.54. The April Brent contract settled up 3 cents at $83.68. However, the product markets ended the session lower, with the heating oil market settling down 8.77 cents at $2.6583 and the RB market settling down 7.34 cents at $2.2710.The EIA reported that U.S. crude stocks increased while gasoline and distillate inventories fell last week as refiners ran at below seasonal lows due to planned and unplanned outages. Crude oil inventories built for the fifth consecutive week, increasing by 4.2 million barrels to 447.2 million barrels in the week ending February 23rd. Stocks at Cushing, Oklahoma increased by 1.5 million barrels to 31 million barrels. Meanwhile, gasoline stocks fell for a fourth consecutive week, falling by 2.8 million barrels to 244.2 million barrels.Russia’s Deputy Prime Minister, Alexander Novak, said that Russia is not considering a ban on diesel exports and that a ban on gasoline exports may be lifted at any moment if the market becomes saturated. On Tuesday, Russia ordered a six-month ban on gasoline exports from March 1st to keep prices stable amid increasing demand from consumers and farmers and to allow for maintenance of refineries.IIR Energy reported that U.S. oil refiners are expected to shut in about 1.9 million bpd of capacity in the week ending March 1st, increasing available refining capacity by 418,000 bpd. Offline capacity is expected to fall to 1 million bpd in the week ending March 8th.Trans Mountain Corp said it successfully removed a pipe from the final section of an expansion project that will nearly triple the flow of crude oil from Alberta to the Pacific Coast. The expanded pipeline’s anticipated in-service date continues to be in the second quarter of 2024.The U.S. economy grew at a solid rate in the fourth quarter amid strong consumer spending. The Commerce Department's Bureau of Economic Analysis said in its second estimate of fourth-quarter GDP growth that GDP increased at a 3.2% annualized rate in the fourth quarter, revised slightly down from the previously reported 3.3% pace. The economy grew at a 4.9% pace in the July-September quarter. It expanded 2.5% in 2023, up from 1.9% in 2022 and is growing above what Federal Reserve officials regard as the non-inflationary growth rate of 1.8%.
Oil inches down as US inflation data, rising OPEC output weigh (Reuters) - Oil prices edged lower on Thursday as U.S. inflation data implied a softening of the world's biggest economy that could weaken crude demand, with rising OPEC production also weighing on prices. Brent futures for April delivery settled at $83.62 a barrel, down 6 cents. U.S. crude settled at $78.26 a barrel, losing 28 cents. The Federal Reserve's preferred inflation gauge, the U.S. personal consumption expenditures (PCE) index, showed January inflation in line with economists' expectations, keeping a June interest rate cut on the table. "The economic data, which is mixed, is helping to argue for interest rate cuts for the Fed, which is supportive of oil demand," "At the same time, those cuts are going to come because the economy is slowing and that impacts oil demand." Reports on consumer and producer prices earlier in February signalled sticky inflation and a guarded approach from Fed policymakers, which prompted investors to push back expectations of rate cuts to June from March. Euro zone inflation dipped further this month, strengthening the case for the European Central Bank to start easing interest rates later this year, data from some of the region's biggest economies showed. High interest rates have served many major Western economies to curb inflation, potentially reducing economic growth and oil demand. On the supply side, crude inventories in the U.S., the world's top producer, have risen for a fifth consecutive week, increasing by 4.2 million barrels, official data showed on Wednesday, exceeding forecasts of a 2.7 million-barrel build. . An extension to voluntary oil output cuts from the OPEC+ producer group was also on the table. "With the demand outlook remaining uncertain, we think OPEC will extend the current supply agreement to the end of the second quarter," ANZ analysts said in a note. A Reuters survey showed the Organization of the Petroleum Exporting Countries (OPEC) pumped 26.42 million barrels per day (bpd) this month, up 90,000 bpd from January, the survey found. Libyan output rose month-on-month by 150,000 bpd. Meanwhile, global benchmark Brent has hovered comfortably above the $80 mark for three weeks, with the Middle East conflict having only a modest impact on crude flows. However, the conflict shows few signs of abating, with both Israel and Hamas playing down prospects for a truce in their war in Gaza. Qatari mediators have said the most contentious issues remain unresolved. President Joe Biden said the U.S. was checking reports of Israeli troops firing on people waiting for food aid in Gaza and that he believed the deadly incident will complicate talks on a ceasefire. A Reuters survey of 40 economists and analysts forecast an average price of $81.13 a barrel for the front-month contract this year.
Oil Posts Second Monthly Gain on Signs of Tighter Global Market - West Texas Intermediate futures on the New York Mercantile Exchange and Brent traded on the Intercontinental Exchange softened in choppy trading Thursday, although both crude benchmarks registered their second consecutive monthly gain in February on speculation Organization of the Petroleum Exporting Countries and Russia-led allies would extend 2.2 million bpd in production cuts through the end of the year, further tightening the physical oil market amid strengthening demand fundamentals. A combination of upbeat demand projections and steep production cuts from OPEC+ sent crude prices to their highest level in 3-1/2 months in February. Expectations that OPEC+ will roll over current output targets into the second quarter and could potentially extend those cuts into year's end spurred another leg of buying in the oil complex this week. The 22-member coalition first announced 2.2 million bpd in voluntary supply cuts on Nov. 30, 2023, to backstop a slide in oil prices against softer demand fundamentals over the winter months. As the physical market moves into a seasonally stronger period of oil consumption over the second and third quarters, OPEC+ production cuts will likely spur global oil stock drawdowns, according to analysts. Wood Mackenzie on Thursday revised higher its demand projection growth this year to 1.9 million bpd, driven by stronger fuel consumption in India and China. International crude benchmark Brent for April delivery expired little changed at $83.62 bbl, with prompt-spread with the May contract widening to $1.71 bbl, reflecting a backwardated market structure. U.S. crude benchmark WTI softened $0.28 to settle at $78.26 bbl. Both benchmarks posted better than 5% gains in February. NYMEX March RBOB futures advanced $0.0333 to expire at $2.3043 gallon, with the next-month April RBOB futures settling the session with a $0.2767 premium. NYMEX March ULSD futures added $0.0255 for a $2.6838 gallon expiration, expanding the premium to the April contract to $0.0339 gallon. In financial markets, the U.S. dollar index advanced 0.19% against a basket of foreign currencies, and stocks on Wall Street extended February's gains after the Personal Consumption and Expenditure Index for January, the Federal Reserve's favored inflation gauge, precisely matched market expectations. On a monthly basis, the headline PCE index increased 0.3% following a downwardly revised 0.1% gain in December. From a year earlier, PCE rose 2.4%, a step down from the 2.6% reading reported at the end of 2023. Overall, the inflation report showed prices stabilized slightly above the Fed's 2% target amid ongoing demand rotation from goods into the service side of the economy. Prices for services increased 0.6% in the month while goods fell 0.2%. Interestingly, January mixed inflation results were realized as personal income unexpectedly jumped by a much larger than expected 1% last month after a 0.3% gain reported for December. Following inflation data, investors assigned a better than 50% likelihood that the Federal Open Market Committee will reduce rates by 25 basis points in June from their current 5.25%-5.5% target range. Other economic data releases this week included the third estimate of U.S. gross domestic product for the fourth quarter of 2023, which was revised down by 0.1% to 3.2%. While slower than the 4.9% annualized growth rate for the third quarter last year. Still, the reading shows ongoing strength in the U.S. economy that was unexpected by most analysts having expected inflation and rising interest rates would slow consumer spending and economic growth.
WTI Briefly Tops $80 as USD Retreats on Soft US Macros -- Oil futures nearest delivery on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange settled the first trading session of March sharply higher, with the U.S. crude benchmark briefly topping $80 bbl, boosted by a retreat in the U.S. dollar index after domestic manufacturing activity contracted at a faster rate in February, spurring optimism for a sooner-than-anticipated start to a rate-cutting cycle by the Federal Reserve. Friday's macroeconomic data releases offered some evidence that pockets of the U.S. economy could be under stronger pressure from the high-rate environment than previously thought. Domestic manufacturing activity, which closely corresponds with interest rates, contracted for the 16th straight month in February, and at a faster rate compared with the December-January period. U.S. manufacturing index, released by the Institute of Supply Management, declined to 47.8% last month, down 1.3% from the 49.1% reported in January. Readings below 50 indicate contraction. Interestingly, the Employment Index registered 45.9%, down 1.2% from January's 47.1% figure, meaning labor market conditions worsened on a monthly basis. Concerns about the labor market were front and center on consumers' minds at the start of the year, with the pair of macroeconomic reports revealing a developing softness in consumer sentiment. "Assessments of the present conditions weakened in February, as consumers' views of both business conditions and the employment situation became less favorable. Furthermore, consumers' assessments of their personal financial situation (a measure not included in calculating the Present Situation Index) also weakened," the Conference Board said earlier this week. Internationally, China's manufacturing purchasing managers' index also remained in contraction for the fifth straight month in February, falling towards 49.1 from December's 49.2 reading, showed data from the Bureau of Labor Statistics. The softer reading was due, in part, to the Lunar New Year holiday season, which typically weighs on the country's manufacturing activity. Non-manufacturing PMI, which measures business activity in the services and construction sectors, climbed to 51.4 from 50.7 in January, thanks to booming travel and consumer spending patterns during the first two months of the year. The rebound in consumer spending might have been fueled by Beijing's efforts to improve credit access and partial stimulus measures aimed at revamping economic growth. China will release its annual Gross Domestic Product growth target on Tuesday (3/5). Underlying gains in the oil complex are expectations that OPEC+ will extend voluntary 2.2 million bpd in production cuts through the end of the second quarter along with some indication that the group could continue with curbs until the end of the year. The 22-member coalition first announced 2.2 million bpd in voluntary supply cuts on Nov. 30, 2023, to counter a slide in oil prices amid softer demand fundamentals over the winter months. As the physical market moves into a seasonally stronger period of oil consumption during the second and third quarters, OPEC+ production cuts will likely spur global oil stock drawdowns, according to analysts. At settlement, the new front-month May Brent futures on ICE rallied $1.64 to $83.55 bbl, while U.S. crude benchmark WTI for April delivery jumped $1.71 to $79.97 bbl. NYMEX April RBOB futures advanced $0.0334 to $2.6144 gallon after gapping $0.2632 higher on the spot continuous chart following the March contract's expiration Thursday, reflecting the transition to stricter fuel volatility specifications. New front-month April ULSD futures on NYMEX added $0.0543 to $2.7042 gallon.
Oil Climbs 2%, Notches Weekly Gains Ahead of OPEC+ Decision (Reuters) -Oil prices rose 2% on Friday and posted weekly gains as traders awaited an OPEC+ decision on supply agreements for the second quarter while also weighing fresh U.S., European and Chinese economic data. Brent futures for May settled $1.64 higher, or 2%, at $83.55 a barrel. The April Brent futures contract expired on Feb. 29 at $83.62 a barrel. U.S. West Texas Intermediate (WTI) for April rose $1.71, or 2.19%, to $79.97 a barrel. For the week, Brent added around 2.4% following the switch in contract months, while WTI gained more than 4.5%. "The expectation that OPEC+ is going to continue with their voluntary production cuts well into the second quarter of 2024 is the main focus on the market," said Andrew Lipow, president of Lipow Oil Associates. A decision on extending OPEC+ cuts is expected in the first week of March, sources have said, with individual countries expected to announce their decisions. "Sticking to the voluntary production cuts until the end of the year would be a strong signal and should therefore be seen as price-positive," A Reuters survey showed the Organization of the Petroleum Exporting Countries pumped 26.42 million barrels per day (bpd) in February, up 90,000 bpd from January. Strong expectations of Saudi Arabia keeping term prices of crude it sells to Asian customers little changed in April from March levels also underpinned the market on Friday. Meanwhile, geopolitical tension in the Red Sea also lifted prices on Friday, said Tim Snyder, an economist at Matador Economics. The leader of Yemen's Houthis said on Thursday the group would introduce military "surprises" in the region. U.S. energy firms added oil and natural gas rigs for a second straight week, energy services firm Baker Hughes said in its closely followed report on Friday. The oil rig count, an early indication of future output, rose by three to 506 this week, the highest since September. On the demand side, Chinese manufacturing activity shrank for the fifth straight month in February, an official survey showed. Euro zone inflation fell in February according to Eurostat, but both the headline figure and core inflation, which strips out volatile food and fuel prices, just missed analysts' expectations. Supporting prices, the U.S. personal consumption expenditures (PCE) index showed January inflation in line with economists' expectations on Thursday, reinforcing market bets for a June interest rate cut. Money managers raised their net long U.S. crude futures and options positions in the week to Feb. 27, the U.S. Commodity Futures Trading Commission (CFTC) said.
Rubymar: Houthi-damaged ship awaits towing to Saudi amid oil slick -- A vessel impaired in a mid-February Houthi attack offshore Yemen remains abandoned at sea awaiting towing to safe harbor amid growing concerns of an oil spill. The Iran-backed militant group claimed it dealt "catastrophic damage" during a Feb. 18 offensive against the Belize-flagged general cargo vessel Rubymar, which the Houthis said was "at risk of potential sinking in the Gulf of Aden." The tanker's crew abandoned ship. The attack caused "an 18-mile oil slick," the U.S. Central Command said in a social media update on Feb. 24, adding that the tanker is anchored, but taking on water. "The M/V Rubymar was transporting over 41,000 tons of fertilizer when it was attacked, which could spill into the Red Sea and worsen this environmental disaster," Centcom said. Roy Khoury, CEO of the Rubymar's shipping broker Blue Fleet Group, told CNBC that the vessel is now awaiting the assistance of the U.S. navy to tow the ship to Saudi port Jeddah, as neither Aden nor the authorities of Djibouti, located opposite of Yemen, have accepted to receive the tanker on their grounds. The Saudi foreign ministry, U.S. navy and U.S. defense department did not immediately respond to a CNBC request for comment on whether they will accept or facilitate delivery of the tanker.Khoury added that, as the Rubymar's crew has deserted the ship, his company has no information on the status of a possible oil leak.A spokesperson for the International Maritime Organization told CNBC that the organization is aware of the incident and closely monitoring the situation. As the IMO lacks operational facilities such as satellites, it also did not independently verify the oil slick. Houthi forces have been assailing ships in the Red Sea with increasing frequency since the end of last year, disrupting marine traffic through a key route that accounts for around 12% of global maritime transit. Several shipping firms and oil companies have consequently suspended journeys through the Red Sea or redirected voyages around Africa. U.S. and U.K. authorities have engaged Yemeni positions in response to the offensives, which the Houthis claim to undertake out of solidarity with Palestinian civilians harmed in the ongoing war between Israel and Palestinian militant group Hamas in the Gaza Strip.The Rubymar's casualty has erupted concerns over the environmental impairment of such attacks. Oil spills are widely feared for their broad and long-lasting environmental impact on marine habitats, including toxic exposure for vulnerable wildlife. "Oil being a highly toxic substance means that any oil spill has adverse impacts on the surrounding environment and communities, the degree of which depends on several factors such as the quantity released and the sea current," Julien Jreissati, MENA program director for Greenpeace, told CNBC.
Houthis Have Knocked Out Several Undersea Internet Cables: Report -There are new reports saying Yemen's Houthis have knocked out several underwater telecommunications cables linking Europe and Asia, however, some of the accounts of the extent of damage remain conflicting.Multiple Israeli publications are reporting Monday that four underwater communications cables between Saudi Arabia and Djibouti have been damaged in recent months - the result of Houthi sabotage. The reporting appears to have originated in Israel's financial daily outlet Globes.But one industry publication cautions, "One cable operator has confirmed damage to a cable in the region, but said it didn’t know the cause yet." Reportedly only the Seacom operator has issued confirmation that it has had cable issues at Djibouti. According to the Israeli media report:Three months after the Houthis began attacking merchant ships, the Yemenite rebels have carried out another one of their threats. "Globes" has learned that four submarine communication cables have been damaged in the Red Sea between Jeddah in Saudi Arabia and Djibouti in East Africa.According to the reports, these are cables from the companies AAE-1, Seacom, EIG and TGN. This is causing serious disruption of Internet communications between Europe and Asia, with the main damage being felt in the Gulf countries and India.Other impacted cables are operated by the companies Tata, Ooredoo, Bharti Airtel, and Telecom Egypt, but these did not issue immediate comment or confirmation as to the reported damage or outages. But the Seacom outage is now being confirmed by NetBlocks...
Houthis Say They'll Reassess Red Sea Attacks If Israel's Onslaught in Gaza Ends - A spokesman for Yemen’s Houthis reaffirmed to Reuters that the group’s attacks on commercial shipping in the Red Sea and Gulf of Aden would only be reassessed if Israel’s brutal campaign in Gaza comes to an end.“There will be no halt to any operations that help Palestinian people except when the Israeli aggression on Gaza and the siege stops,” said Houthi spokesman Mohammed Abdulsalam.A ceasefire in Gaza would bring regional calm as Hezbollah has also said it would stop launching rocket attacks against targets in northern Israel if Hamas and Israel agreed to a truce. However, Israeli Defense Minister Yoav Gallant has threatened a ceasefire in Gaza would mean an escalation in southern Lebanon.During the seven-day Gaza ceasefire in November that facilitated the exchange of hostages and prisoners, there was calm along the Lebanon-Israel border, and Houthi attacks on shipping largely subsided. US officials recently told CNN that they believe a new ceasefire would likely bring an end to the Houthi operations.The Houthis, officially known as Ansar Allah, have been clear since they started targeting Israel-linked commercial shipping that the only way they would stop is if Israel stopped slaughtering Palestinians in Gaza and allowed humanitarian aid to flow unimpeded.Instead of pressuring Israel to agree to a ceasefire, the US and the UK launched a new bombing campaign against the Houthis in January, which only escalated the situation. The Houthis responded by targeting American and British commercial shipping and have successfully hit several vessels.The US and the UK have launched four major rounds of airstrikes, and the US has been launching unilateral strikes on a near-daily basis. President Biden launched the new war without authorization from Congress.Senators grilled Biden administration officials on Tuesday over the lack of authorization and said the president has no authority to claim “self-defense” under Article II of the Constitution since the campaign was launched in defense of foreign ships.“Article II self-defense means you can defend US personnel, you can defend US military assets, you probably can defend US commercial ships, but the defense of other nations’ commercial ships in no way, and it’s not even close, that’s not self-defense,” said Sen. Tim Kaine (D-VA).
Report: Hezbollah Would Halt Fire on Israel If Ceasefire Reached in Gaza - Hezbollah would halt fire on Israel if Hamas agrees to a hostage deal that includes a ceasefire unless Israel continues to bomb southern Lebanon, Reuters reported on Tuesday.During the previous hostage deal that resulted in a seven-day truce in Gaza, there was calm across the Lebanon-Israel border. But in recent months, the situation has been escalating, and Israel has been hitting targets deeper inside Lebanon.“The moment Hamas announces its approval of the truce, and the moment the truce is declared, Hezbollah will adhere to the truce and will stop operations in the south immediately, as happened the previous time,” a source close to Hezbollah told Reuters.Israel has sent the opposite message, with Israeli Defense Minister Yoav Gallant threatening an escalation of strikes if a hostage deal is reached.“In the event of a temporary truce in Gaza – we will increase the fire in the north independently, and will continue until the full withdrawal of Hezbollah and the return of the residents to their homes,” Gallant said over the weekend.France has been trying to mediate a deal between Hezbollah and Israel and submitted a written proposal that would involve Hezbollah withdrawing six miles from the Israeli border. But Hezbollah has said it would only enter talks once there was a ceasefire in Gaza.According to AFP, Israeli strikes on Lebanon have killed 284 people, including 44 civilians. The Israeli military has said Hezbollah’s attacks have killed 10 Israeli soldiers and six civilians.
Israeli Officials Downplay Prospect of New Hostage Deal With Hamas - Israeli officials are downplaying the prospects of a new hostage deal with Hamas even as Israeli negotiators head to Qatar to discuss the details, The Times of Israel reported on Monday. According to media reports, the deal presented on Friday during talks between Qatar, Egypt, the US, and Israel would involve the release of 40 Israeli hostages in exchange for a six-week ceasefire and the release of hundreds of Palestinian prisoners. An Israeli official told the Times that the deal still hasn’t been presented to Hamas and is only being discussed with mediators. “We need to be careful,” the official said. “We’re still talking to ourselves.” Hamas has been seeking a permanent ceasefire, and a second Israeli official told the Times that the main gap is “the end of fighting, the IDF leaving the Gaza Strip.” Israeli Prime Minister Benjamin Netanyahu has made clear that the Israeli slaughter in Gaza would continue after any truce and said a hostage deal would only delay an Israeli invasion of Rafah, the southern Gaza Strip city that’s packed with 1.5 million Palestinians. According to Haaretz, Netanyahu has also complicated the negotiations by adding a demand for the freed Palestinian prisoners to be deported to a third country, possibly Qatar or Turkey. He added the demand after Qatar, Egypt, and the US presented the new outline for a hostage deal.
Netanyahu Says Hostage Deal Will Only Delay Attack on Rafah - Prime Minister Benjamin Netanyahu explained that if Tel Aviv agrees to a new hostage deal with Hamas, it will only “delay” the Israeli attack on Rafah. International aid organizations have warned that an attack on the city of 1.5 million will be devastating to the civilian population of Gaza.On Friday, the US, Egypt, and Qatar presented a new hostage deal that would see the release of 40 Israeli captives in exchange for a six-week pause in fighting. The deal was negotiated without the input of Tel Aviv and Hamas. While US and Israeli officials have presented the hostage release proposal as progress, neither Tel Aviv nor Hamas have signed on to it.Hamas’ top priority is ending the Israeli onslaught. Netanyahu’s remarks signal Israel is unwilling to end the war until every city in Gaza is destroyed. “Once we begin the Rafah operation, the intense phase of the fighting is weeks away from completion. Not months,” Netanyahu told CBS. “If we don’t have a deal, we’ll do it anyway.”From north to south, Israel’s operations have systematically annihilated the Strip. The operations have killed over 30,000 Palestinians and driven 1.5 million to the southernmost city of Rafah. Aid organizations that operate in Gaza warn an assault on Rafah will be catastrophic as there is no other place for the Palestinian people to flee.“Rafah is the end of the line. There is nowhere else to flee. Even if displaced people return north, they will find no homes to go back to, and no supply lines to bring in food, water, medicines, or any other essentials,” Avril Benoit, executive director of Doctors Without Borders, said. “The consequences of a full-scale assault on Rafah are truly unimaginable. We cannot stand by and wait for this to unfold.”
Israeli DM: Ceasefire in Gaza Would Mean Escalation in Lebanon - Ongoing fighting on the Lebanon-Israel border may well get much worse, according to Israeli Defense Minister Yoav Gallant. Commenting on the ongoing ceasefire talks looking to at least temporarily stop the open-ended offensive against the Gaza Strip, Gallant says that Israel will “increase the fire in the north independently” if there was a pause. Interestingly, the only thing that was holding up Hezbollah in supporting their own ceasefire with Israel was the ongoing war in Gaza. If somehow that war came to an end, a deal in the north should be much more possible even if Israel sees it as a license to escalate. Gallant says the fighting will continue until Hezbollah is forced from the border and displaced Israelis are able to return home to the north. He also said Hezbollah isn’t able to replace commanders that Israel has killed. This comes after an explosion on the Syrian side of the Syria-Lebanon border left at least three Hezbollah members killed, and it is widely expected it was the result of Israeli airstrikes against a pair of trucks in the area. Saturday saw a flurry of Hezbollah missile strikes against northern Israel, and reports from Hezbollah said the attacks targeted at least six military bases and other gatherings of Israeli military personnel. The Saturday missiles were near several Israeli towns along the border, though the Israeli military reported that most of the missiles fired had been intercepted. Either way, there was no report of damage or injuries. Israel responded with fire against southern Lebanon, claiming again to attack a “weapons depot” belonging to Hezbollah. There was similarly no report of any such damage or casualties inside Lebanon.
Israel Hinders Humanitarian Assistance in Gaza By Delaying Visas for Aid Workers - Israel is using bureaucratic red tape to delay the entry of aid workers into the West Bank and Gaza. The policy has led to fewer humanitarian aid workers providing services to Palestinians, as many children are on the brink of starvation. According to Haaretz, the Population and Immigration Authority is refusing to grant visas for employees of international aid agencies that operate in Gaza and the West Bank. Officials in Tel Aviv claim the visas had not been issued due to bureaucratic rearrangement. However, aid workers told Haaretz they believe the denials are politically motivated. The Israeli outlet reports that as well as not approving new visas, it is refusing to extend visas for aid workers already in Gaza and the West Bank. The lack of workers has disrupted the activities of several aid organizations operating in the Strip. Tel Aviv has taken several steps to block and slow aid transfers to Gaza. Israel has blocked US-funded flour from reaching Gaza, Tel Aviv has established an inspection regime that prevents live-saving aid from entering the Strip, and Israeli forces have targeted the Gazan police force that helps secure aid as it is distributed in the besieged enclave. The Israeli onslaught in Gaza has created a humanitarian crisis that American officials have compared to the horrific situation that once plagued Somalia’s capital, Mogadishu. Children in Gaza have starved to death, including a two-month-old boy who died on Friday. In addition to hindering aid operations in Gaza, the visa restrictions have also impacted international organizations that assist Palestinians in the West Bank. After Israel began its onslaught in Gaza, Tel Aviv stepped up military raids in the West Bank.The Israeli raids in the West Bank have resulted in thousands of arrests. Many of the Palestinians are detained without charges. Additionally, Israeli forces have often stood by while Israeli settlers in the West Bank have killed, harassed, and chased Palestinians from their homes. Nearly 400 Palestinians in the West Bank have been killed by Israeli forces over the past four and a half months, including over 100 children.
Israel Escalates Demolitions of Palestinians’ Homes in Occupied East Jerusalem - Under the cover of the Israeli genocide and ethnic cleansing campaign against the Gaza Strip, which has killed nearly 30,000 Palestinians including more than 12,000 children, Tel Aviv is drastically ramping up home demolitions in occupied East Jerusalem.According to Al Jazeera, in the eastern side of the city, the Jerusalem municipality has been escalating home demolitions since the brutal Israeli onslaught in Gaza began last year. East Jerusalem, where 362,000 Palestinians live, has been illegally occupied by the Israeli military for almost sixty years along with the rest of the West Bank. Tel Aviv’s pseudo justification for their organized destruction of Palestinian homes is the claim that these residences are built without permits, which the municipality usually only issues to exclusively Jewish neighborhoods. Therefore, Palestinians are left without options and must build their homes in the absence of these permits, making 28% of their East Jerusalem homes “illegal.” Municipal elections will be held at the end of the month, in a bid to appeal to their Jewish constituencies, activists fear candidates are demanding more Palestinian homes be bulldozed.The far-right deputy mayor of Jerusalem, Arieh King, is running for mayor and calling to prevent Palestinians from building homes in order to maintain Jewish demographic dominance over the indigenous population. King has previously referred to Palestinians as “subhuman.”“If King becomes the next mayor in the coming elections, the situation will become quite difficult. He has openly threatened to demolish Palestinian homes and kill Palestinians,” says Fakhri Abu Diab, a prominent Palestinian human rights activist and elected spokesperson of the Silwan district.Abu Diab’s home was recently bulldozed after 20 or 30 officers stormed his house. He is now homeless along with his children and grandchildren. To have a place to sleep, they are currently relying on friends and relatives.Moreover, Abu Diab may not be able to afford the cost of his home’s demolition which Israel forces Palestinians to finance in addition to t he salaries of the officers who take part in the destruction and evictions. Abu Diab expects to be charged at least $20,000 or $30,000.
Israeli Airstrikes Hit Syria, Causing 'Material Losses' - Israeli airstrikes were launched against Syria on Wednesday, targeting an area outside of Damascus, Syria’sSANA news agency reported.The SANA report said that Syrian air defenses intercepted some of the Israeli missiles, and a military source said the strikes only caused material damage, with no casualties reported.A correspondent for Lebanon’s Al Mayadeen reported missiles targeted al-Sayyeda Zeinab, an area to the south of Damascus. Loud explosions were also heard further south.Israel has bombed Syria with impunity for years but has significantly escalated its airstrikes in the country since October 7. The Israeli bombing campaign has killed several members of Iran’s Islamic Revolutionary Guard Corps (IRGC) over the past few months, raising the risk of a major regional war.The last suspected Israeli airstrike in Syria hit an area near the Lebanon border over the weekend, killing three Hezbollah members. Before that, an Israeli airstrike hit a residential building in Damascus, killing at least two.Israel also continues to launch airstrikes in Lebanon as the risk of a full-blown war in southern Lebanon grows. Hezbollah has said it would stop firing on northern Israel if a ceasefire is reached in Gaza, but Israel is threatening it will escalate in Lebanon.
Egypt Accused of Threatening Rights Group That Reported on Construction of Camp in Sinai for Palestinian Refugees - Egypt has been accused of threatening a human rights group that first reported on the construction of a walled camp for Palestinian refugees in the Sinai Desert on the border with Gaza. Eighteen civil society groups, including Amnesty International and Human Rights Watch, said Egyptian officials have been engaged in a smear campaign against the Sinai Foundation for Human Rights (SFHR) and its director, Ahmed Salem.The SFHR was the first to report on the construction of the walled camp and said it was being built to prepare for an influx of Palestinian refugees as Israel is threatening to invade Rafah, the southern Gaza city that’s on the Egyptian border and is packed with 1.5 million Palestinians.Egypt has denied the report, but The Wall Street Journal also published a story on the construction and cited unnamed Egyptian officials who said the camp would be able to house 100,000 Palestinians but that Cairo would like to keep the number between 50,000 and 60,000. According to the civil society groups, since mid-February, Egyptian government officials and pro-government figures “have engaged in an aggressive smear campaign against the Sinai Foundation and Salem on television, in newspapers, and social media.”The statement also alleges Salem, who is based in the UK, has been threatened that he “would be brought back to Egypt” if he didn’t stop what he was doing and was warned that he was “not far from reach even abroad.”Salem has said that in order to prevent the news of the construction being made public, the Egyptian military has “increased patrols and checkpoints in the area, stopping residents and construction workers, and looking into the contents of their mobile phones in an attempt to intimidate locals and prevent reporting about the construction work of the fortified zone.”Israeli government officials have not been shy about their desire to expel Palestinians from the Gaza Strip, and a document prepared by Israel’s Intelligence Ministry that was leaked back in October said the best-case scenario for Israel would be to send all 2.3 million Palestinians living in Gaza into Egypt. So far, Cairo has strongly resisted the plan, but the SFHR report indicates Egypt might cave to Israeli pressure to allow some refugees in if Rafah is invaded.
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