US oil prices finished the week a bit higher for the 2nd time in three weeks after the Saudis increased prices to Europe and Asia and US oil supplies unexpectedly fell….after falling 6.8% to a seven week low of $78.11 a barrel last week as ongoing Israeli-Hamas peace talks reduced geopolitical risk and us oil supplies grew more than expected, the contract price for the benchmark US light sweet crude for June delivery rose in Asian trading early Monday after Saudi Arabia announced higher prices for its crude sold to Europe and Asia, then climbed again as prospects for a Gaza ceasefire appeared slim after Israel ordered an evacuation of Palestinian civilians from Rafah ahead of a threatened assault, and settled 37 cents higher at $78.48 a barrel after Israel confirmed that there was no ceasefire agreement with Hamas…oil prices continued higher in overnight trading after Israel rejected the latest ceasefire deal with Hamas and stepped up its attacks in Gaza’s southern city of Rafah, but were little changed during the Tuesday session as the U.S. moved to replenish the strategic petroleum reserve and a potential cease-fire in Gaza remained uncertain, and settled 10 cents lower at $78.38 a barrel on signs of easing supply concerns as traders shifted their focus to U.S. inventory data releases due that evening & the next day…oil prices dipped further in thin post-settlement trading Tuesday after data from the American Petroleum Institute showed across the board increases in U.S. crude and fuel stocks, and opened lower on Wednesday amid strength in the US dollar, but rallied after the EIA report showed an unexpected draw of over 1.3 million barrels from crude stocks as refiners increased their throughput, and settled 61 cents higher at $78.99 a barrel as a stronger dollar capped the gains seen from falling inventories…oil prices continued to move higher early Thursday in follow through strength from the unexpected draw from crude stocks reported by the EIA, and held those gains as data showing a rise in Chinese imports last month supported higher demand expectations for the world's largest crude importer, and settled 27 cents higher at $79.26 a barrel as a jump in initial filings for unemployment insurance improved the odds that the Fed would lower interest rates…oil prices rose to top $80 early Friday as signs of a weakening U.S. labor market supported the case for Federal Reserve rate cuts later this year, but erased those gains to tumble to a settlement $1.00 lower at $78.26 a barrel as comments from U.S. central bank officials indicated higher-for-longer interest rates and related threats to demand, but still managed to finish 15 cents or 0.2% higher for the week...
at the same time, natural gas prices finished higher for the third time in four weeks, boosted by lower production and an inventory increase that was lower than expected….after rising 11.4% to a 13 week high of $2.142 per mmBTU last week on ongoing production cuts, higher LNG demand, and a bullish storage report, the contract price for natural gas for June delivery opened six cents higher and ccontinued rising Monday morning, as increased LNG exports and reduced downtime at the Freeport facility provided bullish support, but moved lower in afternoon trading to settle the day 5.3 cents higher at a 14 week high of $2.195 per mmBTU amid supply curtailments, improving LNG levels and forecasts for late-May heat….prices for June natural gas opened two cents higher Tuesday and held steady throughout the session, supported by pipeline maintenance induced production declines and above average temperatures in the South, and settled 1.2 cents higher at aanother new 14 week high of $2.207 per mmBTU, as traders mulled a fundamental outlook headlined by falling supply estimates…natural gas prices started Wednesday’s session 4 cents higher and rose to a three-month intraday high of $2.257 within minutes of the open in a carry over from the previous day’s fundamentals, but slid from there to settle 2.0 cents lower at $2.187 per mmBTU on profit taking and on worries that the tremendous oversupply of gas in storage would increase….but natural gas prices opened a penny higher on Thursday, then jumped to a fresh three-month intraday high of $2.313 following the weekly storage report’s release, as the injection into storage landed on the low side of expectations, before settling with an 11.4 cent gain at another new 14 week high of $2.301 per mmBTU on lower-than-expected inventories, stronger-than-expected demand forecasts over the next two weeks, and continued output declines...while the price of June natural gas slid 4.9 cents or more than 2% to $2.252 per mmBTU on Friday on forecasts for milder weather over the next two weeks than had been expected, and on worries it will take weeks or even months for utilities to use up the tremendous oversupply of gas in storage, it still finished with a 5.1% gain on the week…
The EIA’s natural gas storage report for the week ending May 3rd indicated that the amount of working natural gas held in underground storage rose by 79 billion cubic feet to 2,563 billion cubic feet by the end of the week, which left our natural gas supplies 444 billion cubic feet, or 21.0% above the 2,119 billion cubic feet that were in storage on May 3rd of last year, and 640 billion cubic feet, or 33.3% more than the five-year average of 1,923 billion cubic feet of natural gas that had typically been in working storage as of the 3rd of May over the most recent five years…the 79 billion cubic foot addition to US natural gas working storage for the cited week was less than the 85 billion cubic foot addition to storage that was forecast in a Reuters poll of analysts, but was more than the 71 billion cubic feet that were added to natural gas storage during the corresponding bridge week of April to May 2023, while a bit less than the average 81 billion cubic foot injection into natural gas storage that has been typical for the same spring 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 May 3rd indicated that after increases in our oil exports and in our refinery throughput, we needed to pull oil out of our stored commercial crude supplies for the fourth time in fifteen weeks and for the 10th time in the past 29 weeks, as demand for oil that the EIA could not account for was also a factor….Our imports of crude oil rose by an average of 198,000 barrels per day to an average of 6,969,000 barrels per day, after rising by an average of 274,000 barrels per day over the prior week, while our exports of crude oil rose by 550,000 barrels per day to 4,468,000 barrels per day, which when used to offset our imports, meant that the net of our trade in oil worked out to a net import average of 2,501,000 barrels of oil per day during the week ending May 3rd, 352,000 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, from natural gasoline, from condensate, and from unfinished oils averaged 411,000 barrels per day, while during the same week, production of crude from US wells was unchanged at 13,100,000 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 16,012,000 barrels per day during the May 3rd reporting week…
Meanwhile, US oil refineries reported they were processing an average of 15,948,000 barrels of crude per day during the week ending May 3rd, an average of 307,000 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 an average of 59,000 barrels of oil per day were being pulled out of the supplies of oil stored in the US… So, based on that reported & estimated data, the crude oil figures provided by the EIA for the week ending May 3rd appear to indicate that our total working supply of oil from storage, from net imports, from transfers, and from oilfield production was 123 barrels per day more than what what 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 [-123,000 ] 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 indicating there must have been an error or omission of that magnitude in the week’s oil supply & demand figures that we have just transcribed...Moreover, since 413,000 barrels of oil supply per day could not be accounted for in last week’s EIA data, that means there was a 536,000 barrel per day difference between this week's oil balance sheet error and the EIA's crude oil balance sheet error from a week ago, and hence the changes to supply and demand from that week to this one that are indicated by this week's report are off by that much, and therefore useless... 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….and 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 average 59,000 barrel per day decrease in our overall crude oil inventories came as an average of 194,000 barrels per day were being pulled out of our commercially available stocks of crude oil, while an average of 135,000 barrels per day were being added to our Strategic Petroleum Reserve, the twenty-second SPR increase in twenty-nine weeks, following nearly continuous withdrawals from the SPR 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 6,675,000 barrels per day last week, which was 8.4% more than the 6,155,000 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 13,100,000 barrels per day because the EIA’s rounded estimate of the output from wells in the lower 48 states was unchanged at 12,700,000 barrels per day, while Alaska’s oil production was 8,000 barrels per day lower at 421,000 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 just matches that of our pre-pandemic production peak, while it's also 35.1% 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 88.5% of their capacity while processing those 15,948,000 barrels of crude per day during the week ending May 3rd, up from their 87.5% utilization rate of a week earlier, but a below normal operating rate for early May, as US refineries have lagged normal operating rates since arctic cold penetrated to the Gulf Coast in mid January and froze off some operations… the 15,948,000 barrels of oil per day that were refined this week were 1.3% more than the 15,745,000 barrels of crude that were being processed daily during week ending May 5th of 2023, but 2.8% less than the 16,405,000 barrels that were being refined during the prepandemic week ending May 3rd, 2019, when our refinery utilization rate was also at a lower than normal 88.9%..
With the increase in the amount of oil being refined this week, gasoline output from our refineries was also higher, increasing by 99,000 barrels per day to 9,495,000 barrels per day during the week ending May 3rd, after our refineries’ gasoline output had increased by 254,000 barrels per day during the prior week. This week’s gasoline production was still 3.3% less than the 9,823,000 barrels of gasoline that were being produced daily over week ending April 28th of last year, and 6.3% less than the gasoline production of 10,129,000 barrels per day during the prepandemic week ending May 3rd, 2019….at the same time, our refineries’ production of distillate fuels (diesel fuel and heat oil) increased by 275,000 barrels per day to 4,783,000 barrels per day, after our distillates output had decreased by 271,000 barrels per day during the prior week. After eight production increases in the past twelve weeks, our distillates output was 3.8% more than the 4,606,000 barrels of distillates that were being produced daily during the week ending May 5th of 2023, but 6.0% less than the 5,089,000 barrels of distillates that were being produced daily during the week ending May 3rd, 2019…
With this week’s increase in our gasoline production, our supplies of gasoline in storage at the end of the week rose for the fourth time in fourteen weeks, increasing by 915,000 barrels to 228,002,000 barrels during the week ending May 3rd, after our gasoline inventories had increased by 344,000 barrels during the prior week. Our gasoline supplies rose again this week even as the amount of gasoline supplied to US users rose by 179,000 barrels per day to 8,797,000 barrels per day, and even as our imports of gasoline fell by 258,000 barrels per day to 977,000 barrels per day, as our exports of gasoline fell by 113,000 barrels per day to 807,000 barrels per day.…Even after thirty-four gasoline inventory withdrawals over the past fifty-five weeks, our gasoline supplies were still 3.8% above last May 5th’s gasoline inventories of 219,711,000 barrels, but were about 2% below the five year average of our gasoline supplies for this time of the year…
With this week’s increase in our distillates production, our supplies of distillate fuels rose for the fifth time in sixteen weeks, following eight consecutive prior increases, increasing by 560,000 barrels to 116,410,000 barrels over the week ending May 3rd, after our distillates supplies had decreased by 732,000 barrels during the prior week. Our distillates supplies rose this week because the amount of distillates supplied to US markets, an indicator of our domestic demand, fell by 189,000 barrels per day to 3,480,000 barrels per day, while our exports of distillates rose by 288,000 barrels per day to 1,326,000 barrels per day, and while our imports of distillates rose by 8,000 barrels per day to 111,000 barrels per day.…Even with 30 inventory decreases over the past fifty-four weeks, our distillates supplies at the end of the week were 9.7% above the 106,153,000 barrels of distillates that we had in storage on May 5th of 2023, but were still about 7% below the five year average of our distillates inventories for this time of the year…
Finally, after the increases in our exports of crude oil and in refinery throughput, our commercial supplies of crude oil in storage fell for the 8th time in twenty-six weeks and for the 29th time in the past year, decreasing by 1.362,000 barrels over the week, from 460,890,000 barrels on April 26th to 459,528,000 barrels on May 3rd, after our commercial crude supplies had increased by 7,265,000 barrels over the prior week… With this week’s decrease, our commercial crude oil inventories remained about 3% below the most recent five-year average of commercial oil supplies for this time of year, and they were also about 30% above the average of our available crude oil stocks as of the first weekend of May 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 due to higher exports relating to the onset of the Ukraine war, only to jump again following the Christmas 2022 refinery freeze offs, our commercial crude supplies as of this May 3rd were 0.7% less than the 462,584,000 barrels of oil left in commercial storage on May 5th of 2023, but were 8.3% more than the 424,214,000 barrels of oil that we still had in storage on May 6th of 2022, while still 5.2% less than the 484,691,000 barrels of oil we had in commercial storage on May 7th of 2021, after refinery damage from winter storm Uri left even more crude oil remaining after 2020’s pandemic precautions had left a glut 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 May 10th, the second column shows the change in the number of working rigs between last week’s count (May 3rd) and this week’s (May 10th) count, the third column shows last Friday’s May 3rd 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 12th of May, 2023…
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Drillers Nominate 2 More OH Wildlife Areas to Frack Under, Not On | Marcellus Drilling News - Two more tracts of Ohio public lands designated as “wildlife areas” have been nominated by shale companies to be drilled and fracked under (not on), which has the anti-fossil fuel group Save Ohio Parks up in arms. The tagline for Save Ohio Parks is “No fracking on public lands.” The thing is, there isn’t any fracking on public lands in Ohio. It’s UNDER, not ON. Well pads and equipment would be erected on PRIVATE land adjacent to the public land. There is no disturbance of any kind on top of Ohio’s public lands. The new parcels nominated include 84 acres in the Keen Wildlife Area in Washington Township (Harrison County). A second parcel of 30 acres has also been nominated for the Egypt Valley Wildlife Area in Flushing Township (Belmont County).
Ohio AG Asks Court to Jail AMS CEO Overnights Until Mess Cleaned - Marcellus Drilling News - Last Thursday, MDN brought you the news that Ohio Attorney General Dave Yost asked a Belmont County judge to find Austin Master Services (AMS) and Brad D. Domitrovitsch, who is in control of the company (both CEO and CFO), in contempt for “failing to meet the court’s deadline to clean up the illegal levels of fracking waste stored at its recycling facility in Martins Ferry” (see OH AG Asks Court to Find Austin Master Services, CFO in Contempt). AMS is a radiological waste management solutions company handling shale cuttings and frack wastewater. It operates in Belmont County, OH, close to the Ohio River. The Pittsburgh Post-Gazette reports new information — in addition to Yost requesting a contempt ruling, Yost wants Domitrovitsch to spend his nights in the Belmont County jail until the cleanup is done.
Plain Dealer Alleges Political Strings at ODNR re Injection Wells - Marcellus Drilling News - The Cleveland Plain Dealer has the long knives out for Ohio State Senator Brian Chavez (Republican) and Ohio Gov. Mike DeWine (also a Republican). The Plain Dealer is accusing DeWine’s Ohio Department of Natural Resources (ODNR) of corruption in not charging an injection well company owned by Chavez called DeepRock Disposal $1.3 million for cleaning up wastewater that migrated from a DeepRock injection well to a nearby conventional production well in Noble County. Instead, says the Plain Dealer, the ODNR sent the bill to the conventional well operator!
Strengthen opposition to gas rate hike – Warren Tribune Chronicle (editorial) --Opposition in the Mahoning Valley to a proposed 30% increase in consumer gas rates from Enbridge Gas Ohio has begun to trickle in.But given the shocking, unreasonable, excessive and downright unconscionable size of the request to the Public Utilities Commission of Ohio, opposition to the proposal should gush uncontrollably from all corners of Enbridge’s Ohio service area.The fight may well resemble the David vs. Goliath model as Enbridge rises as a behemoth in the multinational energy industry.How behemoth? Enbridge Inc., a Canadian pipeline and energy company headquartered in Calgary, Alberta, Canada, owns and operates pipelines throughout Canada and boasts the longest pipeline system in North America. It recently reported 2023 earnings of $5.8 billion. Its acquisition of Dominion Energy Ohio became official in March.To be sure, the excessive rate hike serves as a fine hello to the former Dominion’s 1.2 million customers even though Dominion originally proposed it.Fortunately, the proposed surge in costs must go through a long and tedious regulatory route in the PUCO before it can be enacted. That is not expected until autumn at the earliest. As a result, there’s plenty of time to mount a campaign of robust resistance against this misguided proposal.That campaign of opposition already has begun. On the state level, the Ohio Consumers Counsel, the statewide watchdog agency for residential consumers in matters tied to their electric, natural gas, telephone, and water services, already has sprung into action.A recent OCC consumer alert argues this proposed increase is excessive. “We believe it unreasonably burdens Dominion customers who are already grappling with inflation and high energy prices,” the alert states.The increase, according to OCC, would cost a typical residential consumer more than $100 per year. But that’s not all. The utility also is seeking approval to add extra fixed monthly charges that would start at $8.78 this year and gradually rise to $29.69 per month by 2032. Fixed charges are billed to customers before they use any natural gas and can’t be reduced by conserving gas.Comments from OCC Agency Director Maureen Willis recently reported by News 5 Cleveland underscore the excessive nature of a 30% hike “I’ve been at the agency for probably 25 years. I don’t think I’ve seen a 30% increase. I’ve said I don’t want to see another one,” Willis told the television news organization in April.Here in the Mahoning Valley, organized opposition to the proposal has begun to take shape. City councils in Warren and Niles in recent days have unanimously passed resolutions of opposition to the increase that will be forwarded to the PUCO. Warren Mayor Doug Franklin joined his city’s legislators in a show of unity. “This is, in my opinion, extremely excessive,” Franklin said. “We don’t often have many opportunities, communities don’t, to say that we oppose some of these public utilities that are raising rates … I see unanimous council sponsorship of this (resolution), that means a lot.”Those voices can ring louder with additional support from public bodies across the Mahoning Valley. That’s why we strongly urge city councils, boards of trustees and boards of education in Mahoning, Trumbull and Columbiana counties to compose and enact their own resolutions of opposition and forward them promptly to the PUCO.
EOG: Utica Oil Can 'Compete with the Best Plays in America' --EOG Resources is taking its 3-mile-lateral tack in Ohio’s Utica oil play to a company-record 3.7-mile test, finding the rock’s output and costs “compete with the best plays in America,” EOG executives told investors May 3.The seven laterals in its first multi-well pads, Timberwolf and Xavier, have produced more than 200,000 bbl of oil each since turned into sales—the former, in August; the latter, in October.A third pad, the four-well White Rhino in Noble County, Ohio, is cleaning up currently, but it is “meeting our expectations during [their] first few weeks of production,” said Keith Trasko, EOG’s senior vice president of E&P. Well spacing is 1,000 ft.The 3.7-miler is in its Sable pad, which is currently underway and is also in Noble County.On the three-well Xavier, first-180-day production averaged nearly 450,000 boe per well; from the older and four-well Timberwolf, more than 350,000 boe per well.The Xavier wells were landed with 800-ft spacing; Timberwolf, 1,000-ft spacing. The exact lateral length was not provided for each, however, EOG reported that it is consistently drilling three-mile laterals in the Utica. Xavier’s first-six-month barrels of oil per lateral foot is 14.8. When including NGL and gas, boe per foot per well is 25.1, EOG reported. The Xavier pad IP’ed an average of 3,250 boe/d from each of the three wells. Its first-30-day production was 55% oil and 75% total liquids, including NGL. In Timberwolf, the first-six-month barrels of oil per lateral foot from each well is 11.3. When including NGL and gas, boe per foot per well is 20.3. Timberwolf IP’ed an average of 2,150 boe/d from each of its four wells, 55% oil and 85% liquids. Timberwolf and Xavier “are fantastic,” said Ezra Yacob, EOG chairman and CEO. “They're exceeding what we initially had in our type curves and they're more than confirming some of our early thoughts on spacing.” Trasko said, “We see that these compete with the best plays in America—very comparable to the Permian on a production-per-foot basis, both in oil and equivalent.” Yacob added that the Utica “will be competitive with the premier unconventional plays across North America.” White Rhino is EOG’s first pad in the southern portion of its 140-mile north-south leasehold focus, totaling 435,000 net acres. In the southern part of the Utica, it also owns 135,000 net acres of minerals. The southern fairway has a slightly higher liquids ratio than Timberwolf in the north and Xavier in the middle, Trasko said.The Utica is thicker in the north and in the middle of the fairway, while “the southern area has better geomechanical properties,” Trasko said.Yacob added, “It's a bit of a different geologic environment down [south]. It is also an area where we own the minerals, which is very exciting. You guys know the economic uplift that can have.” “So overall, I would say that everything's right on pace.” In addition to the three pads’ 11 wells, EOG also owns 18 legacy wells that came with its leasehold and drilled four stand-alone delineation wells.EOG plans 20 net wells in the Utica this year throughout the leasehold, north to south. It has one full-time rig in the play. In 2023, it had one rig drilling half-time. EOG’s drilling activity has focused on the volatile-oil window, which is flanked on the west by the black-oil window.Before drilling it, though, “the first thing we need to do on the west is … acquire seismic data. We're in the process of doing that,” Yacob said.“We need to see the degree of structural complexity before we start developing. But geologically, in general, we don't see significant changes in thickness or pay from east to west.”The lower thermal maturity of the black-oil phase will mean less pressure, which typically “reduces the well productivity a little bit,” Yacob said.“But it also reduces costs. So your economics are still really comparable to all the other portions of the play.” Understanding the resource in Ohio’s Utica oil window is “around where the Permian was in the 2012-2013 timeframe,” he added. Trasko said, “We like that, generally in the area, it's an easier operating environment compared to a lot of our other plays: [It’s] consistent geology [and] it's a little bit shallower depth.”Trasko said the south’s higher quality geomechanics and rock properties have to do with frac barriers and keeping the frac energy more contained near the wellbore.Thus, type curves will differ from north to south, Trasko said. As for going full-field with laterals longer than three miles, “we’re in the very early innings,” said Jeff Leitzell, the company’s COO.But, Leitzell added, “the Utica sets up almost perfectly.”EOG is aiming to push lateral length “just because we can do one-runs in the laterals and stay on bottom longer and not have to trip out of the hole,” he said.“We really have no problems operationally [with] completing the well.”So “yes, we'll continue to push the limits there,” Leitzell said. Eventually, “we will be drilling longer and longer there in the Utica.” Another upcoming pad, according to Utica state permit records, is the Shadow (seven wells) in Carroll County, Ohio.Of EOG’s Ohio leasehold, more than 90% is HBP by legacy wells. The leasehold and minerals were reportedly bought in 2022 from Encino Energy and Artex Energy Group for some $500 million.
Can Utica Shale Really Compete With the Permian? - The Utica shale has for years been known as a gas-producing play. But this may be about to change as one company reports promising results from its oil well offensive in the area.EOG has been drilling in the Utica shale for months now, and it just reported that the play can “compete with the best plays in America.” The production figures EOG reported for its wells there support this: over the first 180 days since drilling, a three-well pad dubbed Xavier produced an average of 450,000 barrels of oil equivalent in total. Another pad in the area yielded 350,000 barrels of oil equivalent. Perhaps more importantly, however, a substantial portion of that oil equivalent was crude oil, EOG said in its first-quarter results presentation. The Xavier pad, for instance, yielded 55% crude oil, with the total liquids output at 75%. The Timberwolf pad produced 55% crude oil out of a total 85% liquids production.“Well results continue to demonstrate consistent performance with significant oil contribution across multiple areas of our acreage position,” EOG’s chief executive Ezra Yacob said at the release of the company’s first-quarter results earlier this month. “Combined with emerging operating efficiencies, we are confident that the Utica will further improve our low-cost, high quality premium portfolio.”Yacob went on to point out that this recent success in Utica suggests the play could compete with the best shale plays in the U.S., most likely meaning the Permian, which remains the focus of oil drillers’ attention even as they run out of untapped resources there and turn to acquisitions to grow their presence in the play. The potential importance of the Utica shale as an oil play was highlighted last month as well when KeyBanc raised its price target on EOG from $147 to $157 based on reports about its drilling results in the shale play.EOG’s results are part of a trend, in fact. Last year saw crude oil production in the Utica play hit a record of 27.8 million barrels. While nowhere near the production rate of the Permian, the figure was a 41% increase on the 2022 total, data from Ohio State University showed. In December last year, the data also said, Utica oil production averaged 93,000 barrels per day, which was 33% higher than a year earlier.“We always thought it was a gas play,” Mike Chadsey, spokesman for the Ohio Oil & Gas Association, told the Columbus Dispatch. “Now it may very well become an oil play.” Last year, oil production accounted for a modest 7% of total hydrocarbons production in the Utica play, which also produced 2.2 trillion cubic feet of natural gas. But based on EOG’s latest update, this may be about to change gradually. Higher prices are helping, the Columbus Dispatch reported recently, helping to drive more investment into oil exploration in the area.
16 New Shale Well Permits Issued for PA-OH-WV Apr 29 – May 5 - May 10, 2024 Two weeks ago, during the week of April 22 – 28, there were 26 new permits issued to drill in the Marcellus/Utica. Last week, for April 29 – May 5, there were just 16 new permits issued. Encino Energy was the top receiver of permits with 7 permits between two counties: Carroll and Harrison, both in Ohio. EQT (mainly under its Rice Drilling name) received 5 permits between Fayette and Greene counties in Pennsylvania. INR picked up 2 new permits in Guernsey County, OH. Both LOLA Energy and Chesapeake Energy picked up 1 new permit for Butler and Sullivan counties in Pennsylvania. BUTLER COUNTY | CARROLL COUNTY | CHESAPEAKE ENERGY | ENCINO ENERGY | EQT CORP | FAYETTE COUNTY | GREENE COUNTY (PA) |GUERNSEY COUNTY | HARRISON COUNTY | INR | LOLA ENERGY | SULLIVAN COUNTY
Exclusive: Italy's Snam seeks U.S. footprint with bid for Midwest gas pipeline - sources (Reuters) - Italy's Snam is working on a bid for a stake in a $6 billion natural gas pipeline in the United States in what would be the gas group's first foray outside Europe, four sources told Reuters. The Milan-based company, controlled by state lender Cassa Depositi e Prestiti, is carrying out due diligence to buy a 33% stake sold by Energy Transfer LP in its Rover pipeline, one of the sources said. The 713-mile Rover pipeline can carry 3.25 billion cubic feet of gas daily from the Marcellus and Utica shale plays in Appalachia. It is backed by Energy Transfer with a 33% stake and two private equity firms - Energy & Minerals Group (EMG) and Blackstone Group - who have the remaining 67%. Snam, Europe's biggest gas pipeline operator which makes most of its money from gas transmission in Italy, is working with JPMorgan on the deal, the sources said. Snam and JPMorgan declined to comment while Energy Transfer was not immediately available for comment. Snam wants to build an international presence and sees potential to grow in the United States which has seen a boom in natural gas production as part of the shale revolution. Pipelines and other midstream infrastructure in the U.S. have consistently drawn interest from private equity firms as well as infrastructure and pension funds as they produce stable returns. Additionally, returns on pipeline investments in the United States are generally higher than in Europe where many grids are run with regulated tariffs. The Rover pipeline moves the natural gas from Ohio, West Virginia and Pennsylvania to other parts of the U.S. Midwest and up into Michigan where it can also be piped into Canada. The auction process for Energy Transfer's stake in Rover is at an advanced stage, according to three sources, and other bidders have also shown interest in the asset. Snam, led by Chief Executive Marco Alverà , may submit a joint bid with some financial investors to boost its firepower, one of the sources said. It previously teamed up with Abu Dhabi state investor Mubadala and EIG Global Energy Partners to bid for Petrobas' TAG gas pipeline in October but lost out to a consortium led by France's Engie. The Italian company is also sounding out whether EMG and Blackstone would be willing to sell their shares in the Rover pipeline and cash out with Energy Transfer. Blackstone declined to comment while EMG was not immediately available for comment.
Coterra Curtailing Marcellus Completions, Cautiously Awaiting Stronger Natural Gas Prices - Houston-based Coterra Energy Inc. is shifting its near-term capital spending in the Lower 48 to focus on oil and liquids-rich plays, but optionality is still in play to take advantage of a “structural change in the natural gas macro” later this year, CEO Tom Jorden said. During the first quarter conference call, Jorden said caution is the watchword because the market can quickly change “as LNG exports grow and electricity demand increases.” Coterra works in the Marcellus Shale, as well as the Anadarko and Permian basins. The company earlier this year had indicated it would throttle back activity in the Marcellus. Until the gas macro improves, the oily Permian is likely to draw the most attention.
'Everything's on fire': Inside the nation's failure to safeguard toxic pipelines - The inspectors warned for months that the construction crew was burying the pipeline on unstable ground. In at least a dozen reports, they described soupy soil, landslides and failed efforts to contain runoff. But the crew kept working as the problems mounted. In September 2018, just below a neighborhood outside Aliquippa, Pennsylvania, the muddy hillside gave way. The landslide severed the pipe, and the dense gas inside erupted into a roaring inferno. The blaze incinerated a house. The family inside escaped with just the clothes they were wearing and one of their dogs. Their other pets, a dog and several cats, died in the fire. Karen Gdula, who lives nearby on Ivy Lane, raced through the neighborhood shouting, “It’s the pipeline. Everything’s on fire. Get out now!” “The flames were higher than the ancient pines,” she recalled. A grand jury would later home in on the inspections, finding construction flaws went unfixed while the inspectors’ “punch list” of problems grew. The disaster might have been prevented if the pipeline developer had acted on those reports or regulators had stepped in to demand fixes. But that’s not the system that exists, based on a year-long investigation by POLITICO’s E&E News. On jobs like Revolution, the inspectors report to the pipeline companies themselves. Regulators at the Federal Energy Regulatory Commission, the Department of Transportation and state agencies leave the monitoring of pipeline construction almost exclusively to this network of private inspectors paid by the developers. When inspectors identify safety lapses, it’s often left to the companies themselves to decide when to make fixes, or whether to make fixes at all. Eight inspectors who’ve worked on pipeline projects in states across the country, some granted anonymity to discuss safety hazards, told E&E News that their warnings were often ignored by the pipeline companies. And if they refuse to be ignored, they say, they can be fired. It’s a potentially deadly gap in the regulatory apparatus at a time when President Joe Biden is investing billions of dollars to bury carbon dioxide emissions in the earth — which requires a new network of pipelines. Success of so-called “carbon capture” technology could limit the greenhouse gas emissions responsible for global warming while reducing the pain for an economy built around fossil fuels. Former President Donald Trump’s plans may differ from Biden’s, but Trump has vowed to increase drilling and lay more oil and gas pipelines. Pipeline companies point to the inspectors at their construction sites as evidence that the projects will be safe and environmentally sound. But many farmers and other landowners, across huge swathes of rural America, are unpersuaded. They worry about a rupture in a pipeline carrying toxic gases. New pipeline projects have met fierce resistance, as farmers from Illinois to North Dakota insist they don’t trust the companies or their safety inspectors. Fearful landowners and skeptical regulators in South Dakota and Illinois have already tanked a large-scale carbon dioxide storage project in the Midwest that would have required 1,300 miles of pipeline running from South Dakota to Illinois. Federal investigations, third-party analyses of pipe failures, formal complaints and interviews with more than a dozen people involved in pipeline construction reveal a system rife with lapses. Oil spills in Kansas and damage to farms in Oklahoma have been linked to flawed inspections. Inspection failures were cited by federal investigators seeking a $40 million fine for the spilling of toxic drilling fluid in Ohio. And on the Mountain Valley gas pipeline project in Virginia and West Virginia, federal appeals court judges say inspectors “failed to prevent” widespread erosion problems. “The inspectors are like a smokescreen,” said Frank Chamberlin, a pipeline inspector from Upstate New York. “They put them on the project as a scapegoat.” A federal watchdog agency found FERC’s process for selecting inspection companies and environmental reviewers creates a “potential appearance of improper influence” — in part because pipeline companies are given too much control over the process, including the power to decide which inspection companies can submit bids.“No industry is going to police itself very well,” said Bill Caram, executive director of the Pipeline Safety Trust, a national advocacy group pushing for increased protections. “We need an independent regulator to be the one that does that.”Conflicts in the system of self-regulation have been largely ignored by lawmakers, who are focused on streamlining the permitting process for energy companies. And state and federal regulators say they don’t have the resources to scrutinize construction as closely as they might like. Instead, they often defer to the judgment of private companies, even those with poor safety and environmental records.
The sometimes-deadly gap in US pipeline safety - The nation has a pipeline safety problem. The country’s system for safeguarding against toxic and deadly pipeline accidents largely relies on inspectors who work for the pipeline companies themselves, which has led to poor oversight and leaks, landslides, and even explosions, according to a yearlong investigation by POLITICO’s E&E News reporter Mike Soraghan. Eight inspectors Mike interviewed for the story said safety warnings and recommendations are often ignored, and those who push back risk termination.“The inspectors are like a smokescreen,” Frank Chamberlin, a pipeline inspector from upstate New York, told Mike. “They put them on the project as a scapegoat.”New pipeline projects often face fierce opposition, with farmers and landowners insisting they don’t trust the safety of such projects.That could be a major problem for the next president, whether it’s President Joe Biden or former President Donald Trump. Biden is investing billions of dollars to encourage the capturing and burying of carbon emissions, which requires a network of new pipelines. And Trump has pledged to increase drilling and lay more oil and gas pipelines.Industry officials defend the privatized inspection system, where federal regulators rely on pipeline companies to hire and oversee inspectors. They compare it to the internal quality-control processes in factories and construction sites — and maintain there are plenty of safety backstops.That includes oversight by the federal Pipeline and Hazardous Materials Safety Administration. PHMSA has about 200 inspectors on its staff who work with another 450 inspectors at state agencies to monitor the safety of the country’s more than 3 million miles of pipe.But the agency says it devotes only 7 percent of its safety staff to inspecting new pipelines. That means overseeing the nation’s rapidly expanding pipeline network is largely left to a small cadre of inspectors hired by the companies themselves.To many farmers across large swaths of rural America, that’s not enough to allow pipelines under their property.“They’re all in the same club,” said Steve Hickenbottom, who regrets allowing the Dakota Access pipeline to cross his farm. “They’re not going to crap on the guys they work with every day. It means zero to me.”
MVP Mainline Releases Water During Testing as In-Service Target Nears - As Mountain Valley Pipeline LLC (MVP) seeks to conclude a protracted construction phase and enter service this month, the developer recently experienced a setback in Virginia when a section of pipe ruptured during hydrostatic testing. The incident, which occurred last Wednesday on the MVP mainline in Roanoke County, VA, saw water escape through the rupture; sediment was discharged into a nearby stream and wetland, a Virginia Department of Environmental Quality (DEQ) spokesperson told NGI. “MVP has removed the sediment, and disturbed areas have been stabilized,” the DEQ spokesperson said. “DEQ is working to determine the extent of impacts, which will inform next steps. This unauthorized impact does not affect the status of existing DEQ approvals.”
One natural gas transport plan killed in New Jersey as another forges ahead - — A major pipeline that would have moved natural gas through New Jersey and under two bays to New York has been killed, but another plan to transport liquefied gas from Pennsylvania by tanker truck is moving forward. Environmentalists who had fought both projects reacted Monday to the mixed bag they were handed on Friday when the two proposals took differing pathways with federal regulators. That was the day that Tulsa, Oklahoma-based Williams Companies, which owns a nearly 10,000-mile (16,000-kilometer) expanse of pipelines called Transco, allowed its Northeast Supply Enhancement pipeline project to end. Williams told the Federal Energy Regulatory Commission it was allowing a key construction application to expire, saying it would not seek an extension for it. The decision heartened a wide group of environmental and community groups who had fought the proposal for eight years, saying it would further the burning of fossil fuels and contribute to climate change, while also degrading air and water quality and creating safety concerns in communities along its route. Cindy Zipf, executive director of Clean Ocean Action, called the development "an extraordinary victory, a David and Goliath moment." Using the project's acronym, she said, “NESE has gasped its last gassy breath. It means the project has died, and we won!” In a statement to The Associated Press on Monday, Williams confirmed it is no longer pursuing a certificate from the federal agency that would allow it to continue the project. “While Williams continues to believe in the fundamentals of the Northeast Supply Enhancement project and its ability to provide a cleaner and more affordable alternative to costly heating oil for consumers, at this time, we have decided not to pursue an extension of the certificate," it said. It would have included a gas-fired compressor station in Franklin Township, and the installation of more than 23 miles (37 kilometers) of pipeline through the Raritan and Lower New York bays en route to the Rockaway section of Queens in New York City. Also on Friday, two companies said they remain committed to their proposed project to liquefy natural gas and transport it through Pennsylvania and New Jersey. Delaware River Partners and Bradford County Real Estate Partners told the same agency that they do not intend to cancel a facility in Wyalusing, Pennsylvania, to liquefy natural gas and transport it to an export facility in Gibbstown, New Jersey, by tanker truck instead of by rail as originally proposed. Last September, federal regulators suspended authorization to transport liquefied natural gas by rail. “The last thing we need is even more dangerous methane gas extracted from Pennsylvania, shipped through our communities by truck, and exported overseas," said Patrick Grenter, a campaign director with the Sierra Club. "This decision is unnecessary and reckless, and the Sierra Club is prepared to continue fighting this project until it is officially canceled.” The companies did not immediately respond to a request for comment Monday. But in a filing to the agency on Friday, Bradford said its Wyalusing, Pennsylvania, facility is designed to not need rail cars, and is “unimpacted” by the federal moratorium on such transport. For that reason, the company is proceeding with its plans, it wrote.
Former FERC Chairman Chatterjee Sees LNG Permit Pathways Improving, but DOE Pause Clouds Outlook - While regulatory uncertainty from the Department of Energy (DOE) hangs over U.S. LNG development, former FERC Chairman Neil Chatterjee sees the pathway for permitting at the Commission improving. The liquefied natural gas industry’s focus has largely been pulled to the DOE since January, when the Biden administration ordered the agency to study the impact of new U.S. export facilities on the domestic market and environment. However, the rate of LNG permit decisions from the Federal Energy Regulatory Commission also has slowed over the last several years. Chatterjee told NGI’s Jamison Cocklin, managing editor of LNG, the long wait times for LNG facility approvals largely can be attributed to a deadlock on the Commission that was broken with the departure of Commissioner James Danly...
BP Playing Contrarian on Low Natural Gas Prices, as Haynesville Output ‘Hedged Out’ through 2024 - BP plc will continue to pump out “prolific” natural gas volumes from the Haynesville Shale as hedges are in place pricing the supply at around $4.00/Mcf through this year, CEO Murray Auchincloss said Tuesday. Auchincloss discussed first quarter performance during a conference call. He was asked why domestic gas volumes continue to be high in light of low commodity prices. BPX Energy, the U.S. onshore division, produced 1,596 MMcf/d during the first quarter, weighted to the Haynesville. In 1Q2023, U.S. gas production was 1,196 MMcf/d. During the fourth quarter, domestic gas output was 1,515 MMcf/d. [Inside the Political Firestorm: NGI sits down with Neil Chatterjee, a former FERC chairman and commissioner, to discuss the impacts of President Biden’s LNG pause on..
TC Energy Nears Commercial Start-Up of Coastal GasLink, Advances Southeast Gateway Offshore Pipeline - TC Energy Corp. has completed the northern portion of its Southeast Gateway and is moving to start commercial operations of its Coastal GasLink (CGL) supplying feed gas to LNG Canada. Management for the Calgary-based pipeline giant provided updates on major projects during a first quarter earnings call. In Mexico, TC has installed more than 70% of the offshore pipe for the Southeast Gateway pipeline project. The 1.3 Bcf/d, 444-mile long pipeline (with 416 miles offshore) remains on schedule to come online by mid-2025 and within its $4.5 billion budget, CEO François Poirier said. [Inside the Political Firestorm: NGI sits down with Neil Chatterjee, a former FERC chairman and commissioner, to discuss the impacts of President Biden’s LNG pause on authorizing new liquefied gas exports...
More Construction Issues Reported at Golden Pass – The Zachry Group told its hourly construction workers in an email this week not to show up at the Golden Pass LNG site in Texas until further notice. The company said in a statement it was working through “temporary constraints” at the site, while media reports said there was a fuel shortage for work. The plant is being built by a joint venture that includes Chiyoda Corp., McDermott and the Zachry Group. Reports surfaced last month that a shortage of skilled workers and other construction issues could push the start of liquefied natural gas production at the 18 million metric tons/year (mmty) facility further into 2025. ExxonMobil, which is developing the project with QatarEnergy, said late last year exports would begin in early 2025 instead of 2024 as the partners..
Golden Pass LNG Expects ‘Near Term’ Construction Impacts Amid Possible EPC Changes - Golden Pass LNG confirmed interruptions on the Texas export project could be coming after reported worker furloughs, citing ongoing negotiations between its engineering, procurement and construction (EPC) contractors. San Antonio-based Zachry Group informed hourly subcontractors Thursday not to come to the Sabine Pass, TX, site until further notice and referenced a “fuel shortage” issue, according to an internal email. The EPC firm later told local news station 12News the dismissals were part of “temporary constraints on the Golden Pass LNG project” and it was working through the issues “with all parties.” A Golden Pass LNG spokesperson told NGI that the EPC joint venture partners, which include Chiyoda Corp. and McDermott, were in “ongoing discussions regarding...
Sempra Doubling LNG Export Capacity Ahead of Forecast Demand Surge - Sempra is betting on substantial growth in global LNG demand over the coming years despite regulatory uncertainty over the future of U.S. exports, management said. CEO Jeffrey Martin hosted a conference call to discuss first quarter 2024 earnings for the San Diego, CA-based energy firm. Through its Sempra Infrastructure unit, the company has nearly 40 million metric tons/year (mmty) of liquefied natural gas export projects under development, including on the U.S. Gulf Coast and Mexico’s Pacific Coast.
Targa Looking Past Natural Gas Price Volatility, Planning Infrastructure for Rising Permian Production - Targa Resources Corp. is moving forward with two major projects based on its outlook for increasing Permian Basin natural gas production and resulting natural gas liquids (NGL) supply growth. High utilization rates at the 250 MMcf/d Pembrook processing facility in the Permian’s Midland sub-basin “necessitates moving forward with Pembrook II,” CEO Matt Meloy said during the first quarter earnings call. The new facility could begin operations in the fourth quarter of 2025, he added. “We’re already looking at when we’ll need the next plant after Pembrook II.”
EIA Maintains 2024 Natural Gas Price Forecast, Sees Modest Production Decline Leading to 2025 Record - The U.S. Energy Information Administration (EIA) is projecting a Henry Hub natural gas spot price average at $2.20/MMBtu for 2024, unchanged from the average price the agency modeled a month earlier. In the May release of its Short-Term Energy Outlook (STEO), published Tuesday, EIA said it expects Henry Hub spot prices to average $3.10 for full-year 2025, creating an incentive for more drilling in dry natural gas production regions. After starting the year at $2.560, NGI’s Henry Hub next-day natural gas cash price dropped to $1.435 by the end of March. Prices have since recovered some ground, but remain well below year-ago levels around $2, according to NGI’s Daily Historical Data.
US natgas prices up 3% to 14-week high on rising demand for LNG feedgas (Reuters) - U.S. natural gas futures gained about 3% to a 14-week high on Monday on forecasts for higher demand over the next two weeks than previously expected as feedgas to liquefied natural gas (LNG) export plants increased with the return of Freeport LNG in Texas. Prices were also supported by an ongoing decline in output. Front-month gas futures for June delivery on the New York Mercantile Exchange rose 5.3 cents, or 2.5%, to settle at $2.195 per million British thermal units (mmBtu), the highest close since Jan. 29 for a second day in a row. U.S. gas production was down about 9% so far in 2024 after several energy firms, including EQT and Chesapeake Energy delayed well completions and cut back on other drilling activities after prices fell to 3-1/2-year lows in February and March. In the spot market, meanwhile, analysts said upcoming gas pipeline maintenance on U.S. energy company Kinder Morgan's Permian Highway Pipeline from May 7-12 and Gulf Coast Express from May 14-21 could push average next-day gas prices at the Waha Hub in West Texas back into negative territory for the first time since mid-April. Reductions on those and other pipes in Texas over the past month or so trapped gas in the Permian Shale and helped push Waha prices below zero for several days last month. Financial firm LSEG said gas output in the Lower 48 U.S. states fell to an average of 96.9 billion cubic feet per day (bcfd) so far in May, down from 98.1 bcfd in April. That compares with a monthly record of 105.5 bcfd in December 2023. Meteorologists projected weather across the Lower 48 states would go from warmer than normal from May 6-9 to near-normal from May 10-17 before switching back to warmer than normal from May 18-21. LSEG forecast gas demand in the Lower 48, including exports, would slide from 93.4 bcfd this week to 91.0 bcfd next week. Those forecasts were higher than LSEG's outlook on Friday. Gas flows to the seven big U.S. LNG export plants rose from an average of 11.9 bcfd in April to 12.4 bcfd so far in May with the slow return of Freeport. That compares with a monthly record of 14.7 bcfd in December. The amount of gas flowing to the 2.1-bcfd Freeport hit a two-month high of 1.4 bcfd on Sunday, up from 1.2 bcfd on Saturday and an average of 0.4 bcfd in April. The U.S. became the world's biggest LNG supplier in 2023, ahead of recent leaders Australia and Qatar, as much higher global prices fed demand for more exports due in part to supply disruptions and sanctions linked to Russia's war in Ukraine. Gas was trading around $10 per mmBtu at both the Dutch Title Transfer Facility (TTF) benchmark in Europe and the Japan Korea Marker (JKM) benchmark in Asia .
U.S. Power and NatGas Prices Plummet to Below Zero --U.S. spot power and natural gas prices plummeted into negative territory across Texas, California, and Arizona on Tuesday, signaling a surplus in production amidst subdued demand and ample hydropower reserves. At the Waha hub, next-day gas prices plummeted to a three-week low of negative $2.72 per million British thermal units (mmBtu) on May 6. Next-day power prices at hubs in Arizona and Southern California plunged to one-week lows. The dynamics driving negative prices suggest energy firms are grappling with excess power and gas production. As a result, producers find themselves in the precarious position of either reducing output, paying others to absorb surplus energy, or resorting to flaring. Forecasts preceding this plunge had already hinted at potential downturns in gas prices at the Waha hub in West Texas. These predictions materialized as Kinder Morgan initiated seasonal maintenance on pipelines connecting the Permian to the Gulf Coast. Reductions in pipeline flows, coupled with ongoing maintenance activities, compounded the downward pressure on prices. These developments come against the backdrop of typically subdued power and gas prices in the spring, fueled by mild weather and enhanced hydropower supplies. As market participants grapple with these unprecedented developments, attention now turns to upcoming meetings of OPEC+ and the Federal Reserve. These pivotal events are expected to provide insights into global oil supply dynamics and interest rate trajectories, respectively, further shaping the trajectory of energy markets in the coming months. Back in March, the oversupply in the U.S. natural gas market was thought to be easing, with operators expected to cut production in response to the February price slump as prices hit a three-decade low. Despite these multi-year low natural gas prices, domestic producers in the United States continued to be optimistic about the long-term prospects of gas as a fuel.
US natgas prices ease 1% on oversupply of fuel in storage (Reuters) - U.S. natural gas futures eased about 1% on Wednesday as the market took a break after hitting a 14-week high on worries the tremendous oversupply of gas in storage will increase. Analysts forecast gas stockpiles were about 34% above normal for this time of year. Prices eased despite another decline in output, forecasts for higher demand over the next two weeks than previously expected, an increase in the amount of gas flowing to liquefied natural gas (LNG) export plants and as hot weather in Texas boosted the amount of gas power generators burn to keep air conditioners humming. Front-month gas futures for June delivery on the New York Mercantile Exchange fell 2.0 cents, or 0.9%, to settle at $2.187 per million British thermal units (mmBtu). On Tuesday, the contract closed at its highest since Jan. 29. The front-month remained in technically overbought territory for a fourth day in a row for the first time since January. Traders noted that if U.S. crude prices continue to decline - crude futures were down about 9% over the past five weeks - some drillers could cut back on oil production in shale basins that also produce a lot of associated gas, like the Permian in Texas and New Mexico and the Bakken in North Dakota. Any reduction in associated gas could cause overall gas output to decline since high crude prices enable energy firms to keep making money by drilling for oil even when gas prices are negative like they have been at the Waha hub in West Texas in recent days. In Texas, the Electric Reliability Council of Texas (ERCOT) issued a Weather Watch for Wednesday "due to unseasonably high temperatures, high levels of expected maintenance outages during the spring shoulder months, and the potential for lower reserves." That heat caused next-day power prices at the ERCOT North hub , which includes Dallas, to soar to an eight-month high of $400 per megawatt hour for Wednesday, up from $37 for Tuesday. Financial firm LSEG said gas output in the Lower 48 U.S. states fell to an average of 96.8 billion cubic feet per day (bcfd) so far in May, down from 98.1 bcfd in April. That compares with a monthly record of 105.5 bcfd in December 2023. On a daily basis, output was on track to drop by around 3.5 bcfd over the past four days to a preliminary 16-week low of 94.3 bcfd on Wednesday. LSEG forecast gas demand in the Lower 48, including exports, would slide from 93.7 bcfd this week to 90.9 bcfd next week. Those forecasts were higher than LSEG's outlook on Tuesday. Gas flows to the seven big U.S. LNG export plants rose from an average of 11.9 bcfd in April to 12.4 bcfd so far in May with the return of Freeport LNG's plant in Texas from maintenance and inspection work. That compares with a monthly record of 14.7 bcfd in December. The amount of gas flowing to the 2.1-bcfd Freeport plant was on track to hold near a two-month high of 1.4 bcfd for a fourth day in a row on Wednesday, up from an average of 0.4 bcfd in April. U.S. energy company New Fortress Energy said it expects to produce first LNG at its Altamira export plant in Mexico, which will source much of its gas from the U.S., later in May and export the first cargo in June.
Natural Gas Prices Rise to 14-Week High - What's Next? -- Natural gas shipments rose more than five percent yesterday. Natural Gas Prices rose to a 14-week high on lower-than-expected inventories, stronger-than-expected demand over the next two weeks and continued output declines. The demand forecasts were mostly higher on forecasts for hotter-than-normal weather in mid- to late-May that should boost the amount of gas power generators burn to keep air conditioners humming. An increase in the amount of gas flowing to liquefied natural gas (LNG) export plants on rising feedgas to Freeport LNG’s plant in Texas was also behind the expected demand increase. The U.S. Energy Information Administration (EIA) said utilities added 79 billion cubic feet (bcf) of gas into storage during the week ended May 3. That was smaller than the 85-bcf build analysts forecast in a Reuters poll and compares with an increase of 71 bcf in the same week last year and a five-year (2019-2023) average rise of 81 bcf for this time of year. That increase left gas stockpiles around 33% above normal levels for this time of year.Front-month gas futures NG1! for June delivery on the New York Mercantile Exchange rose 11.4 cents, or 5.2%, to settle at $2.301 per million British thermal units (mmBtu), their highest close since Jan. 29. MCX natural gas prices touched 193.20, and settled at 191.1 up 4.71%. That kept the contract in overbought territory for a fifth day in a row for the first time since October 2023. In the past, Exxon said Golden Pass was on track to produce first LNG in the first half of 2025. Officials at the plant were not immediately available for comment. Demand for gas is projected to rise in 2025 with several LNG export plants expected to enter service, including Golden Pass, Venture Global’s Plaquemines in Louisiana, Cheniere’s Corpus Christi expansion in Texas and Sempra’s Costa Azul in Mexico. The delay of any of those would reduce the growth expected in gas demand next year. In the spot market, U.S. power and gas prices turned negative this week in Texas, California and Arizona as pipeline maintenance trapped gas in the Permian Shale in West Texas amid low demand for energy and ample hydropower in the West.
Is FTC Scrutiny of ExxonMobil, Pioneer Natural a Warning Sign? Sheffield Responds - ExxonMobil on Friday clinched its $65 billion tie-up with Permian Basin heavyweight Pioneer Natural Resources Co., but the merger has not come without drama. The transaction, announced last October, moves ExxonMobil to the top of the heap in the Permian, with control of 1.4 million-plus net acres in the Delaware and Midland sub-basins. Estimated output today is 16 billion boe. Oil and gas volumes are set to more than double to 1.3 million boe/d. Based on initial estimates by ExxonMobil, production could reach 2 million boe/d in 2027.
Biden Ready To Use SPR Again If Oil Prices Rise -Several weeks after we reported that - very unsurprisingly - the Biden admin had halted its laughable attempts to refill the SPR as oil prices soared (having missed its entire window to do so when WTI was trading in the low $70s), we speculated that it may be only a matter of time before the senile president decides to start draining the strategic reserve all over again to keep gas prices low ahead of the election. Now we get confirmation of just that: as OilPrice reports, President Biden will use crude oil from the strategic petroleum reserve should the need arise, energy adviser Amos Hochstein has said, noting there was enough oil in the reserve, which of course is true but what it misses is that under Biden the SPR has already been drained by half."We have been replenishing into the SPR for the last several months. I think we have sufficient supply in the SPR to address any kind of concern in the economy if we need it," Hochstein said, speaking at the Milken Institute Global Conference, as quoted by Reuters. And by "replenishing" he meant refilling 15 million barrels after draining almost 300 million for purely political purposes.The U.S. saw the stockpiles of crude oil in the SPR fall from 638 million barrels at President Joe Biden’s inauguration to just 347 million barrels by the summer of 2023 as the administration tried to bring down gasoline prices for consumers by releasing over 180 million barrels from the SPR.Recently, talk has restarted about the possibility of using the SPR to bring down retail fuel prices in case the conflict between Israel and Hamas escalates, leading to higher oil prices and, consequently, higher gasoline and diesel prices for U.S. drivers.Since rising fuel prices are the last thing a president running for a second term wants to experience in an election year, SPR releases were seen by many as the most likely course of action. This, in turn, prompted questions about whether there is enough oil in the SPR since the federal government’s replenishment efforts have been quite sporadic due to prices. Several offers for the purchase of 3 million barrels have been canceled already because prices got too high for the Department of Energy, which had set itself a ceiling of $79 per barrel.As of January, the DoE had bought back some 32.3 million barrels out of the more than 180 million barrels that were released in 2022. In addition to those volumes, the Department of Energy is getting back some 4 million barrels that were lent to energy companies. The volume in the SPR as of January was about 364 million barrels.
Trump seeks $1 billion from oil CEOs, vows to limit EVs - The Washington Post - Donald Trump has pledged to scrap President Biden’s policies on electric vehicles and wind energy, as well as other initiatives opposed by the fossil fuel industry.As Donald Trump sat with some of the country’s top oil executives at his Mar-a-Lago Club last month, one executive complained about how they continued to face burdensome environmental regulations despite spending $400 million to lobby the Biden administration in the last year.Trump’s response stunned several of the executives in the room overlooking the ocean: You all are wealthy enough, he said, that you should raise $1 billion to return me to the White House. At the dinner, he vowed to immediately reverse dozens of President Biden’s environmental rules and policies and stop new ones from being enacted, according to people with knowledge of the meeting, who spoke on the condition of anonymity to describe a private conversation.
‘A little bold and gross’: Oil industry writes executive orders for Trump to sign - The U.S. oil industry is drawing up ready-to-sign executive orders for Donald Trump aimed at pushing natural gas exports, cutting drilling costs and increasing offshore oil leases in case he wins a second term, according to energy executives with direct knowledge of the work.The effort stems from the industry’s skepticism that the Trump campaign will be able to focus on energy issues as Election Day draws closer — and worries that the former president is too distracted to prepare a quick reversal of the Biden administration’s green policies. Oil executives also worry that a second Trump administration won’t attract staff skillful enough to roll back President Joe Biden’s regulations or craft new ones favoring the industry, these people added.Six energy industry lawyers and lobbyists interviewed by POLITICO described the effort to craft executive orders and other policy paperwork that they see as more effective than anything a second Trump administration could devise on its own. Those include a quick reversal of Biden’s pause on new natural gas export permits and preparations for wider and cheaper access to federal lands and waters for drilling.The initiative is just one example of the efforts underway from multiple advocacy groups with strong policy agendas — including abortion-rights opponents — to fill in the gaps for Trump’s potential return to the White House. The presumptive Republican nominee has been a vocal supporter of the oil and gas industry, but the companies often chafed at the effects of his policies as president, including his trade wars and the legal challenges that thwarted some of his pro-fossil-fuel actions.Trump, who is spending many of his days facing trial in a Manhattan courtroom, has had little time to delve into policy issues with industry officials. In his absence, oil industry officials said they’re not sure who speaks for him on the issues they want to address. And while generally unhappy with Biden’s attempts to rein in their industry, some haveexpressed nervousness about what policies Trump might pursue.“Other than what Donald Trump says off the cuff, I don’t think they’re taking much advice on energy strategy,” Frank Maisano, senior principal at the government relations firm Bracewell, said of the ex-president’s campaign. “He’s going to complain about gas prices, he’s going to complain about [natural gas], but only in the general sense because the details are complex.”So oil industry lawyers have decided to fill the breach. Industry representatives have already prepared some executive orders for Trump to sign if he reaches the White House, said Stephen Brown, director of energy consulting firm RBJ Strategies and a former refining industry lobbyist. Undoing Biden’s actions would be a major target.
420 gallons of crude oil spilled near Medora — On April 28, Cobra Oil & Gas Corporation notified state agencies of a crude oil release from a pipeline they operate located approximately seven miles southwest of Medora. Cobra estimates the pipeline malfunction released approximately 10 barrels (420 gallons) of crude oil, impacting an unnamed Garner Creek tributary and range land. Personnel from the North Dakota Department of Environmental Quality are working with the responsible party on cleanup and will continue to monitor the investigation and remediation. Federal and state laws require that operators report the spillage of any materials that may pollute water, air or soil.
Mexico Natural Gas Imports Seen Breaking Records During Next Administration - Mexico’s dependency on the United States for natural gas supplies is expected to continue to rise and hit record levels during the country’s next presidential administration from 2024-2030, according to Adrián Duhalt, a research scholar at Columbia University’s Center on Global Energy Policy. Mexico’s natural gas imports via pipeline have averaged 6.08 Bcf/d year-to-date through April 24, up 497 MMcf/d from the same period last year, Wood Mackenzie data show. That trend is expected to continue during Mexico’s next presidential administration, which will take office on Oct. 1. The country is expected to hold elections on June 2 and is poised to elect its first female president, either Claudia Sheinbaum of the Morena Party or Xóchitil Gálvez of the opposition...
NFE Expects First Cargo From Offshore Mexico LNG Project in June - New Fortress Energy Inc. (NFE) expects its floating LNG (FLNG) platform offshore Altamira, Mexico to produce first volumes later this month after experiencing a mechanical issue in April. NFE management in the first quarter earnings report said that the first cargo could be loaded at the liquefied natural gas facility in June. The company previously expected to achieve its first shipment in April. CFO Chris Guinta confirmed reports of a late April malfunction with the facility’s cold box that resulted in some minor injuries and released perlite that was being used during system testing. [Inside the Political Firestorm: NGI sits down with Neil Chatterjee, a former FERC chairman and commissioner, to discuss the impacts of President Biden’s LNG pause on authorizing new...
Oil spill at Churchill Falls in October released roughly 45,000 litres of oil: Nalcor 0 An oil spill at the Nalcor Energy Churchill Falls switchyard in late October released roughly 45,000 litres of oil, the company said in a media release on Thursday, as it continues to work on clean up. The spill was caused by a transformer failure and fire, the company maintains, but while Nalcor at the time said the transformers hold 53,000 litres of oil, they actually hold 111,400 litres, according to Thursday's release. Nalcor said 65,000 litres of oil were recovered in tankers in the switchyard, and an unknown amount of the oil spilled was consumed by the fire. "Priority continues to be employee safety and the safe containment, control, and recovery of oil. Absorbent materials, booms, and vacuum trucks are being utilized for containment and collection," reads the company's statement. "We continue to see no visible evidence of oil in the Churchill River." In October, Nalcor said the oil used in the failed transformer was voltesso — an oil that is inherently biodegradable as opposed to readily biodegradable, meaning it will break down over time but the timeline is indefinite. However, Nalcor says now the oil spilled was actually luminol, which is readily biodegradable. "Luminol is more environmentally friendly and has a higher rate of biodegradability than voltesso," says Nalcor's statement. "Significant efforts continue to be made by the Churchill Falls team who has been safely working together in these recovery and collection efforts with dedication and commitment since the onset."
More than 1,000 gallons of diesel removed from sunken vessel - Early in the day on Friday May 3rd, a 48-foot commercial fishing vessel ran aground and sank at the south end of Henry Island. The single occupant on board was safely rescued by the US Coast Guard. The boat is reported to have had a maximum of approximately 400 gallons of diesel on board. The Islands’ Oil Spill Association (IOSA) and Tow Boat US out of Friday Harbor were on scene this morning to assess pollution impacts and pinpoint the site of the sinking. In addition, Washington Department of Ecology responders are on scene and performed an overflight with San Juan County Department of Emergency Management to assess the situation. IOSA has been conducting initial air monitoring and has not found any measurable air quality impacts. Wildlife responders have been activated to assess for any potential impacts, and to work to proactively minimize impacts going forward. On Saturday May 4th crews from Global Diving and Salvage pumped all accessible fuel off of the vessel. Initial estimate is that more than 1,000 gallons of diesel were removed. While residual pollution is still possible, the majority of the pollution risk has been mitigated. Crews will be on the water on Sunday to assess for any shoreline or wildlife impacts, but none have been reported to date. A tentative plan to remove the vessel from the water once weather improves on Tuesday or Wednesday is being developed at this time.
EU Proposes First Batch Of Sanctions On Russian LNG -Over the past two years, the U.S. and its Western allies have imposed a raft of sanctions on Russian energy commodities, including a $60-a-barrel cap on Russia's seaborne exports of crude oil. Europe has, however, shied away from placing limitations on Russian gas, hardly surprising considering that the share of Russia's pipeline gas in EU imports exceeded 40% before Russia invaded Ukraine. Since then, the continent has been largely successful in weaning itself off Russian energy, with gas imports from Russia falling dramatically. And, now Europe is getting ready to pull the trigger: Politico has reported that the European Commission has proposed sanctions on Russia's LNG sector as part of Brussels’ 14th sanctions package against Russia.The proposed sanctions would prevent EU countries from re-exporting Russian LNG after receiving it and also ban EU involvement in upcoming LNG projects in Russia. However, the measures wouldn’t directly bar Russian LNG imports to the EU. Similar to previous sanctions, the import ban is intended to disrupt Putin’s ability to continue financing his war in Ukraine. Although Russian LNG accounted for just 5% of the bloc’s energy consumption in 2023, it still netted the Kremlin ~$8 billion in revenues. The proposal also suggests prohibiting the use of EU ports, finance and services to re-export Russian LNG, essentially meaning that Russia would have to overhaul its LNG export model. Currently, Russia supplies LNG to Asia through Europe, where Spain, Belgium and France are major hubs. “If they can't transship in Europe, they might have to take their ice-class tankers on longer journeys,” Laura Page, a gas expert at the Kpler data analytics firm, has told Politico, adding that Russia “may not be able to get out as many loadings from Yamal because their vessels can’t get back as quickly.”Norway and the U.S. have replaced Russia as Europe’s biggest gas supplier: Last year, Norway supplied 87.8 bcm (billion cubic meters) of gas to Europe, good for 30.3% of total imports while the U.S. supplied 56.2 bcm, accounting for 19.4% of total.
EU Parliament Exploring Ban on Re-Exporting Russian LNG from Bloc’s Ports - The European Commission (EC) this week is considering a ban on transshipments or re-exports of Russian LNG through European Union (EU) ports as part of Brussels’ latest sanctions package. The UK, Poland, Estonia, Latvia, Lithuania, and Germany have banned Russian liquified natural gas imports, but an EU-wide ban on Russian LNG imports is not included as part of the proposed sanctions. The focus remains on stopping the transhipment of LNG and its re-export to other countries using European ships. “All decisions on sanctions are taken unanimously by member states in the council,” a spokesperson for the EC told NGI, saying they could not confirm the contents or timing of upcoming packages.
Israel Explores Diversifying Natural Gas Exports with LNG Facility - Israel is exploring options for building an onshore or floating LNG (FLNG) facility offshore, potentially expanding the country’s lucrative natural gas exports and its foothold in the global market. Over the past several years, the Israeli Energy Ministry has taken steps to use two of the country’s massive gas discoveries, the Tamar and Leviathan fields, to become a regional gas hub in the Eastern Mediterranean. However, without a liquefied natural gas facility of its own, Israel is currently dependent on pipeline exports to Egypt’s two terminals to deliver its volumes to global buyers. Israeli news media reported that Energy Minister Eli Cohen had ordered a study of the country’s options for building its own LNG export terminals, citing sources within the...
Scorching Weather in Southeast Asia Boosting Demand for Spot LNG - Southeast Asia’s recent heatwave is leading to a jump in power demand for air conditioning, increasing demand and competition for May and June spot LNG cargoes in the region. Southeast Asia has been suffering a repeat of last summer’s scorching weather as temperatures in Cambodia, Thailand and India soared above 105 F and are expected to continue through June. “We definitely see some upside potential in southeast Asia for liquefied natural gas demand if the current heat waves persist into May and June,” EnergyAspects Min Na, head of Asia LNG, told NGI.
Crack in Tanker’s Hull Causes Largest Oil Spill in Ceuta Port History (video, in Spanish) Spanish authorities at the port of Ceuta on the southern side of the Strait of Gibraltar declared contained what they believe was the largest oil spill in the port’s history. The spill came from a crack in the hull of a Turkish-owned product tanker that is now being detained and facing stiff fines. The port captain for Ceuta, one of only two Spanish ports in Africa and a vital link in Mediterranean traffic, told reporters they received a report of an oil leak from the product tanker K Onset (12,900 dwt) on Tuesday evening, April 30, and they immediately mobilized a containment effort. Within about two hours he said the leak had been contained. They deployed two containment booms and one absorbent boom. The Liberia-flagged tanker managed by Chemfleet of Turkey arrived on April 30 from the Spanish port of Vilagarcia and was conducting a fueling operation. The latest estimate is that the vessel leaked between 25,000 and 30,000 liters of a light marine fuel from a crack that measured 32 centimeters (approximately 12.5 inches) in one of the fuel tanks. Westerly winds helped to contain the spill and throughout the day on Wednesday, teams could be seen with absorbents mopping up the fuel. The port captain believes at least 85 percent of the spill was recovered. The K Onset is now being detained at the port and it has been ordered to pump all the fuel from the cracked tank. The port captain said the tank would be vented and then examined and that they would require repairs before the vessel departs. In addition, the port is demanding a deposit of €72,000 ($77,000) consisting of €60,000 in fines and €12,000 toward the clean-up costs. The final fine is yet to be determined but media reports said it will be at least €200,000 to €250,000, ($214,000-$267,000) with one report saying it could reach a half million euros. The vessel was cited in December 2023 for 18 deficiencies during a Port State inspection in the UK. Among the items identified were hull corrosion as well as issues with propulsion and other structural condition issues. However, the vessel was not detained. Port officials in Ceuta acknowledged that this was the third incident this year although noting the prior two events were much smaller. Media reports said in mid-February, a Panama-flagged Ro-Ro cargo vessel, Lider Trabzon (7,225 dwt) had to pay €136,000 ($145,000) after another oil spill. Last week, a general cargo ship registered in Gibraltar, Schillplate (3,175 dwt) also caused a small spill in the port.
Greek Naval Drills See Oil Tankers Depart Key Transfer Area - Tankers that transfer Russian oil off the southern coast of Greece sailed further out into the Mediterranean after naval exercises were announced in the area where the cargo switching normally takes place. The activities, which began on May 1, will continue through May 9, the Hellenic Navy Hydrographic Service said in a notice on its website. The activity takes place almost exactly a month after Denmark briefly closed a shipping lane through which Russian oil flows on tankers while similar activity took place. When sanctions were placed on Russian oil sales following the war in Ukraine, the Laconian Gulf became a key spot for switching cargoes between vessels. It enabled some ships to shuttle to and from Russian ports, and others to do the long-distance voyages to buyers in Asia. However, it also sparked environmental concerns about the risk of an oil spill in a picturesque European bay. Since the start of this month, vessels have left the gulf and are instead clustered just to its south, according to TankerTrackers.com Inc. Away from the gulf, one tanker also flipped a cargo of crude onto another vessel in the Red Sea in April. The Panta Rei 1 transferred its cargo onto the Odysseus, which then transported its consignment to India. That’s the first ever switch observed in that location in ship tracking data compiled by Bloomberg. The Laconian Gulf has hills all around it, offering some protection from the wind, and calm waters. That has made it a useful spot for transferring cargoes and helps to reduce environmental risks. On a trip to the Port of Piraeus this week, Greek Shipping Minister Christos Sylianides said the safety of the country’s shipping is above all other things.
Russian Fuel Cargos Pile Up at Sea as South Korean Buyers Grow Cautious -Russian oil product cargos are piling up at sea as their South Korean buyers grow reluctant to go through with their deals amid a government crackdown on sanction evasion, Bloomberg has reported, citing unnamed sources. According to Kpler data, there are over 2 million barrels of Russian naphtha sitting off the coast of Oman, which is significantly higher than the weekly average for January and February, which came in at some 790,000 barrels. The Bloomberg sources said that the buildup was caused by the South Korean government’s closer scrutiny of incoming fuel cargos, which has made local refiners and petrochemical producers wary of buying Russian naphtha. The tightening sanctions on Russia's oil exports are raising freight costs for moving Russian crude. The estimated direct cost to deliver Russian cargoes now is around 6-8% of the price of a barrel of crude leaving the western ports in Russia for Asia, according to data from commodity price reporting agency Argus crunched by Bloomberg. Argus estimated in March that shipping a barrel of Russian crude from a port in the Baltic Sea to China has cost around $14.50 since December, with more than half of this per-barrel cost attributable to the Western sanctions. The likely directly related-to-sanction cost to hire tankers to transport Russian oil is estimated at about $773 million since the end of December 2023, based on shipments tracked by Bloomberg. Before the war in the Ukraine Russia was the top supplier of naphtha for South Korean petrochemicals makers but the war has changed this, per the Bloomberg report. Now South Korean plastics producers are importing more naphtha from places such as the UAE, Malaysia, Singapore, and Tunisia. South Korean processors are also importing more naphtha from Kuwait and Oman. Russia, for its part, is shipping more naphtha to China, according to Kpler, as well as Taiwan. Last month, Russian imports accounted for more than half of the total naphtha shipments that Taiwan took in.
Russia Ready To Alter OPEC+ Production if Necessary -The OPEC+ group is still studying whether to raise oil production but it would act on supply if necessary, Russian Deputy Prime Minister Alexander Novak said on Tuesday. The possibility to raise supply is still being reviewed, Russia’s top oilman said, as carried by Russian news agency Interfax.“It always depends on the current situation, the balance of supply and demand,” Novak said.“Everything is being analyzed. Right now, you don’t need to predict anything, you just need to see how the market feels,” he said. Novak added that OPEC+ participants “are constantly monitoring the situation, and this is our plan for the second quarter, we agreed with our colleagues that these voluntary cuts can be adjusted to boost supply if necessary.”“This is a constant process,” Novak stressed.The OPEC+ group is meeting on June 1 to decide how to proceed with the current production cuts in the second half of the year. The current supply agreement which removes around 2.2 million barrels per day (bpd) off the market now including Saudi Arabia’s 1 million voluntary cut, expires at the end of June.As of the end of last week, OPEC+ had yet to start formal talks on the alliance’s production policy, sources from producers part of the deal told Reuters.If oil demand fails to accelerate, the group could keep the oil production cuts in place, the sources added.“We think there's a good chance that OPEC+ will extend beyond June - but we aren't yet putting a firm view because we don't think they've actually got into the real period of discussion and decision-making,”Richard Bronze of consultancy Energy Aspects told Reuters.
Why the IEA is Wrong About Peak Oil Demand - It is fairly common nowadays to see relatively near-term estimates for a point at which demand for petroleum-based fuels begins to decline. The term often used to describe this “tipping point” is Peak Oil Demand. When I say “near term,” I mean right around the corner if you look at an estimate published last year by the International Energy Agency-IEA, an intergovernmental agency headquartered in Paris, France, and originally established after the Oil Embargo of 1973 to help cushion against future oil shocks. This agency has expanded its mission to a fairly broad remit over the years since, and it is not the purpose of this article to detail all its endeavors. One role we will highlight is that of the one it plays in gauging and advising member governments on energy security and energy sources for the coming years. In that capacity, the IEA in a report entitled, Oil 2023, and published last year settled on 2028 as the year past which the use of petroleum fuels will begin to decline.“Growth in the world’s demand for oil is set to slow almost to a halt in the coming years, with the high prices and security of supply concerns highlighted by the global energy crisis hastening the shift towards cleaner energy technologies, according to a new IEA report released today.”This view is largely shared, particularly with respect to liquid motor fuels, by other agencies and organizations that produce long range estimates. The U.S. Energy Information Agency-EIA, Rystad, and Det Norske Veritas- DNV, all show this category tailing off rapidly in the 2030s as electric vehicles assume larger shares of passenger vehicles. We will call this the “Bear Case” for liquid fuels.As you might expect the Organization of Petroleum Exporting Countries-OPEC, disagrees with this view. In fact in their recent report on oil demand outlook, published in Nov 2023, they see oil demand of all kinds, except for electricity generation, rising from ~105 mm BOPD in 2025, to 116 mm BOPD in 2045. This forecast show use of oil as a road fuel continuing to be the largest source of demand increase for this period.The report notes that “the divergence between the IEA and OPEC outlooks is largely due to assumptions regarding the speed at which internal combustion engine vehicles will be replaced by electric vehicles.”What is interesting is that it is very difficult, if not impossible, to see a production trend being established that would support the bear case. In the U.S., we are pumping at a rate of over 13.2 mm BOPD and still importing ~6.7 mm BOPD to feed our nearly 22 mm BOPD daily habit. The U.S. Energy Information Agency-EIA forecasts in their monthly Short-Term Energy Outlook-STEO that by the end of 2025, global production and demand fall into a fairly tight balance at 105 mm BOPD. That certainly isn’t a long-term trend, but as is often said, the long-term trend is made up of a bunch of short-term ones. For my part, I would say that the trend line in the STEO graph below matches the OPEC estimate more closely than the other three.Both of these notions cannot be true. Which is the correct assumption about future oil demand? Or are they both wrong? What are two factors these two disparate views of oil demand are not taking into account?The first answer lies in how you interpret the growth of the middle class in China, India, and Africa in terms of energy demand and the final form it will take. The second is the advent of energy demand for Artificial Intelligence (AI), an entirely new source of demand that is just now starting to appear in energy demand forecasts. I discussed one possible outcome of this demand for U.S. natural gas in an article in March 2024.To be clear, I am not arguing that AI demand will directly impact crude oil demand as a primary source. Most analysts are factoring renewables and natural gas to meet AI demand. What will impact demand for WTI and other baskets of crude is the relationship to light oil production in the U.S. and the associated gas that’s produced along with it. We will leave that discussion for a future article and refocus on our basic topic. What could oil demand actually be when accounting for growth in currently underserved but upwardly aspiring lower classes?Then there is the Bull Case for oil. Arjun Murti, a well-known energy commentator and partner at energy analyst firm Veriten, as well as a former Goldman Sachs energy analyst, discussed future energy demand in a recent podcast on his Super-Spiked blog. In the episode titled, “Everyone is Rich,” Arjun posits what the impact on world energy demand would be if everyone was as energy-rich as the “Lucky,” 1.2 billion people that live in the Western World. More specifically, Arjun asks what it would mean for the other 7 billion people in China, India, Asia, and Africa to have the lifestyle that Americans, Canadians, Europeans, and a few other countries enjoy. The answer he comes up with on an absolute basis, 250 mm BOPD, using a reference point of 10 bbls a year!Where are we now? The U.S consumes ~22 bbls of oil annually per capita while China consumes 3.7 bbls per capita. Indians use just 1.3 bbls per annum. That’s a pretty wide gap, and as Arjun notes, “economic growth and energy growth are one and the same. You do not get economic growth without adequate energy.”
Crude Oil Price Rises As Saudi Hikes Price For Asia, Europe -- Due to market reactions to failed cease-fire attempts in Gaza and uncertainty about the date of the US Federal Reserve’s (Fed) interest rate announcement, oil prices increased early on Monday. Moreover, Saudi Arabia decided to raise the price at which crude oil is sold. The closing price of the previous trading session, which was $82.96 per barrel, was increased by 0.72% to $83.56 per barrel for international benchmark Brent crude. At the same moment, the U.S. benchmark West Texas Intermediate (WTI) was trading at $78.72 a barrel, up 0.78% from the previous session’s closing price of $78.11 per barrel. Fears of the violence spreading throughout the Middle East were stoked by the improbable possibility of a cease-fire in Gaza, which helped oil prices begin the week higher. The Israeli army issued urgent evacuation orders Monday morning to Palestinian residents and displaced individuals in several areas of eastern Rafah to immediately relocate to the town of al-Mawasi. ‘The army will continue working to achieve the objectives of the war, including dismantling Hamas and returning all Israeli hostages,’ army spokesperson Avichay Adraee wrote on X. The escalating tensions in the region, where the majority of global oil reserves are located, fueled supply concerns, lending upward support to oil prices. Saudi Arabia, the world’s largest oil exporter, raised the official selling price of crude oil for June for Asia, Northwest Europe and the Mediterranean regions. This move boosted expectations of strong market demand over the summer period, putting upward pressure on oil prices. Meanwhile, uncertainties over when the Fed will start interest rate cuts continue to influence oil prices. Financial market pricing is starting to reflect predictions that the Fed will decrease interest rates this year, with September being the most likely month to do so.
Oil gains as technicals provide support amid cease-fire progress - Oil edged higher as technical levels supported prices, even after Hamas said it agreed to a cease-fire proposal by Qatar and Egypt. West Texas Intermediate pared earlier gains to settle above US$78 a barrel, after a statement about the proposal moved on the militant group’s telegram channel. While Israel’s Channel 12 said Israel was studying the proposal, the nation’s government didn’t immediately provide an official comment. Traders said an acceptance of the proposal could trim crude prices by $2 to $3 a barrel. “Traders are awaiting confirmation from Israel before trading on the headline,” said Rebecca Babin, a senior energy trader at CIBC Private Wealth. “Over $7 of geopolitical risk premium has been unwound over the past two weeks as the conflict avoided additional escalation.” Still, bullish tailwinds are supporting crude. Saudi Arabia recently demonstrated confidence in demand by hiking prices for Asia, and technical measures are signaling that last week’s plunge was overdone. Oil is up almost 10 per cent this year, with spillover from the war in Israel and Gaza, most notably disruptions to shipping in the Red Sea, among the key drivers. Earlier, Israel’s military began moving civilians out of Rafah, a possible prelude to a long-expected attack on the Gazan city. Hamas and Israel have been negotiating indirectly via Qatar, Egypt and the U.S. on an agreement that would see the release of Israeli hostages held in Gaza in exchange for Palestinians detained in Israeli jails. It would also include a pause in fighting. Meanwhile, OPEC and its allies are widely expected to press on with supply cuts in the second half of this year in an attempt to prevent a surplus. Group laggards Iraq and Kazakhstan have outlined plans on how they will curb flows to compensate for producing above their quotas earlier in the year. WTI for June delivery rose 37 cents to settle at $78.48 barrel in New York. Brent for July settlement climbed 37 cents to settle at $83.33 a barrel.
Saudi Arabia Signaled Confidence in Demand By Increasing its Prices for Asia and Israel's Moves in t | Sprague --The oil market ended the session higher after Israel confirmed that there was no ceasefire agreement with Hamas. The crude market traded mostly sideways in overnight trading as it retraced some of Friday’s losses after Saudi Arabia signaled confidence in demand by increasing its prices for Asia and Israel’s moves in the Gaza Strip. Saudi Aramco increased its official selling prices of all its grades bound for Asia for June. The market was also well supported by the news that Israel’s military had started moving civilians out of Rafah, a possible prelude to an assault in the southern Gaza Strip. The oil market traded to a high of $79.09 early the morning amid the supportive news. The market later gave up some of its gains and settled in a sideways trading range before it sold off sharply to a low of $77.91 early in the afternoon on news that Hamas agreed to a ceasefire, reducing the geopolitical premium. However, the market bounced off its low and retraced its earlier losses on the news that an Israeli official said no ceasefire had been agreed to in Gaza. The June WTI contract settled up 37 cents at $78.48 and the July Brent contract settled up 37 cents at $83.33. The product markets ended the session in positive territory, with the heating oil market settling up 1.8 cents at $2.4614 and the RB market settling up 3.31 cents at $2.5882. Militant group Hamas on Monday agreed to a ceasefire proposal in the seven-month-old war with Israel in Gaza, hours after the Israeli military told residents to evacuate some parts of Rafah. Hamas chief Ismail Haniyeh informed Qatari and Egyptian mediators that the group accepted their ceasefire proposal. The agreement, should it take effect, would be the first truce since a week-long pause in the fighting in November, and follows months of failed attempts at pausing the fighting to free hostages and allow more aid into Gaza. However, in response an Israeli official said no ceasefire had been agreed in Gaza. The Israeli official said the proposal that Hamas accepted was a “softened” version of an Egyptian proposal, which included “far-reaching” conclusions that Israel could not accept.Earlier, Israel urged Palestinians to evacuate parts of the Gaza city of Rafah in possible preparation for an assault on Hamas units. Israeli Defense Minister, Yoav Gallant, said Israeli military action in Rafah is required due to Hamas' refusals of mediated proposals for a Gaza truce under which the Palestinian Islamist group would free some hostages. On Sunday, prospects for a Gaza ceasefire were dissipating as Hamas reiterated its demand for an end to the war in exchange for the freeing of hostages, and Israeli Prime Minister Benjamin Netanyahu flatly ruled that out.IIR Energy reported that U.S. oil refiners are expected to shut in about 724,000 bpd of capacity in the week ending May 10th, increasing available refining capacity by 289,000 bpd. Offline capacity is expected to fall to 545,000 bpd in the week ending May 17th.Alaskan North Slope oil production in April averaged 475,165 b/d, down from the 479,462 b/d produced in March and from the average 480,462 b/d produced in April 2023.
The Market Weighed the Geopolitical Developments in the Middle East Against Supply and Demand Fundamentals - The oil market on Tuesday posted an outside trading day as the market weighed the geopolitical developments in the Middle East against supply and demand fundamentals. The market was well supported in overnight trading after Israel rejected the latest ceasefire deal with Hamas and stepped up its attacks in Gaza’s southern city of Rafah. The crude market rallied to $79.02 on the geopolitical tensions. However, the market gave up its gains and traded lower as the market turned its attention to the uncertainties about global economic growth and the impact on demand. The market was also pressured by comments made by Russia’s Deputy Prime Minister Alexander Novak, who stated that OPEC has the option of increasing its oil production. The market sold off to a low of $77.55 by mid-morning. The oil market later bounced off its low and rallied higher in afternoon trading on the news that the U.S. Energy Department was seeking to purchase up to 3.3 million barrels to replenish the SPR. The market rallied to a high of $79.17 only to give up those gains ahead of the close. The June WTI contract settled down 10 cents at $78.38 and the July Brent contract settled down 17 cents at $83.16. The product markets settled in mixed territory, with the heating oil market settling up 42 points at $2.4656 and the RB market settling down 4.48 cents at $2.5434. The EIA, in its Short Term Energy Outlook, cut its 2024 world oil demand growth forecast by 30,000 bpd to 920,000 bpd. However, it increased its oil demand growth estimate for 2025 by 70,000 bpd to 1.42 million bpd. Total world oil demand is forecast to increase to 102.84 million bpd in 2024 and to 104.26 million bpd in 2025. The EIA estimates that world oil output in 2024 will increase by 970,000 bpd, up from a previous forecast of 850,000 bpd, to 102.76 million bpd and output in 2025 is forecast to increase by 1.89 million bpd, down from a previous forecast of 1.96 million bpd, to 104.65 million bpd. U.S. oil output in 2024 is expected to increase by 270,000 bpd to 13.2 million bpd, compared with a previous forecast of a 280,000 bpd increase and output in 2025 is expected to increase by 530,000 bpd to 13.73 million bpd, up from a previous forecast of a 510,000 bpd increase. Meanwhile, U.S. petroleum demand in 2024 is expected to increase by 200,000 bpd to 20.4 million bpd and demand in 2025 is expected to also increase by 200,000 bpd to 20.6 million bpd.The U.S. Energy Department said it is seeking to purchase up to 3.3 million barrels of oil to replenish the SPR. On Monday, Amos Hochstein, President Joe Biden's energy adviser, said the U.S. has sufficient supply of oil in the Strategic Petroleum Reserve to address any supply concerns and is monitoring markets on how to use it.Israel’s Prime Minister Benjamin Netanyahu said the latest truce proposal from Hamas falls far short of Israel’s essential demand, adding military pressure remains necessary to return hostages held in Gaza. Earlier, the Israeli military said it had taken operational control of the Palestinian side of Gaza's southern Rafah Crossing, which borders Egypt and has been pivotal for the delivery of aid and exit of injured people in the Gaza war. Later, Israel’s Defense Minister, Yoav Gallant, said Israel will continue its operation in Rafah until Hamas forces in the area are destroyed or the Islamist movement hands over the Israeli hostages it still holds.
Oil settles lower on signs of easing supply tightness (Reuters) - Oil prices closed slightly lower on Tuesday on signs of easing supply concerns, while market participants shifted their focus to U.S. stockpiles data due later today and Wednesday. Brent crude futures settled 17 cents lower at $83.16 a barrel, and U.S. West Texas Intermediate crude futures closed 10 cents lower at $78.38. Prices fell further in thin post-settlement trading after market sources said that data from the American Petroleum Institute showed a jump in U.S. crude and fuel stocks last week. Rising inventories, typically a sign of weak demand, have defied analysts' expectations in recent weeks. Analysts polled by Reuters forecast a decrease in U.S. oil and fuel stockpiles, and official data from the U.S. Energy Information Administration (EIA) is due at 10:30 a.m. ET (1430 GMT) on Wednesday. Brent crude futures traded at $82.98 a barrel by 4:48 p.m. ET, 35 cents lower than Monday's closing price, and WTI futures were down 23 cents to $78.26 a barrel. U.S. gasoline futures and ultra-low sulfur diesel futures also fell in extended trading. "If EIA shows less barrels are going into the refineries, then that is a problem for crude oil here,". "Heading into peak summer driving season we should be drawing, not building," Current global inventory data shows crude oil and petroleum supplies are running 1.1 million barrel per day above forecasts in developed economies, "Global inventories remain in a building phase and has accelerated recently," . The EIA on Tuesday raised its forecasts for this year's world oil and liquid fuels output and lowered its demand expectations, pointing to a well-supplied market as opposed to prior forecasts that showed under-supply. The premium of the first-month Brent contract to the six-month contract slipped to $2.90 a barrel on Tuesday, the lowest since mid-February, another sign of market participants betting on easing supply tightness. Last week, Brent and WTI had their steepest weekly losses in three months as weak U.S. jobs data fueled hopes for interest rate cuts. Oil prices found some support in Tuesday's session from a U.S. government solicitation to buy more than 3 million barrels of oil for the Strategic Petroleum Reserve (SPR). Oil traders largely looked past escalating tensions in the Middle East, where the Israeli military seized control of the Rafah border crossing between the Gaza Strip and Egypt and its tanks pushed into the southern Gazan town of Rafah, as mediators struggled to secure a ceasefire agreement. "Instead, their focus appears directed towards the uncertainties surrounding global economic growth prospects and the anticipated impact of sluggish growth on oil demand,"
WTI Dips After API Reports Across-The-Board Inventory Builds - Oil prices ended the day flat today (after touching the lowest level in almost two months on news reports said Russian Deputy Prime Minister Alexander Novak indicated OPEC+ could move to raise crude production). Novak told Russia's Interfax news agency that the possibility of increasing oil production within the OPEC+ framework was still being analyzed. "It always depends on the current situation; the balance of supply and demand. Everything is analyzed. Now there is no need to forecast anything. We need to look at how the market is feeling," he said, according to Interfax. OPEC+ has largely been expected to roll over existing voluntary cuts of 2.2 million barrels a day beyond the second quarter. But crude recovered, finding technical support ahead of tonight's API inventory data.
- Crude +509k (-1.40mm exp)
- Cushing +1.339mm
- Gasoline +1.46mm
- Distillates +1.713mm
Inventories rose across the whole complex according to API.Graphs Source: Bloomberg WTI tested its 100DMA for the third day in a row, and rejected it (for the third day in a row)... And dipped after the inventory builds... Overall, "oil is lower because a renewed battle between Israel and Hamas, in isolation, does not really affect oil-producing nations," Stewart Glickman, energy equity analyst at CFRA Research, told MarketWatch. If Iran is "subsequently encouraged to do more direct attacks on Israel, it may be different," he said, but the market is "discounting this possibility." Finally, President Biden will use crude oil from the strategic petroleum reserve should the need arise, energy adviser Amos Hochstein has said, noting there was enough oil in the reserve.
Builds of Over 1 Millions Barrels Each in Distillate Stocks and Gasoline Stocks The oil market settled higher on Wednesday after the market once again posted an outside trading day. In overnight trading, the crude market sold off sharply to a low of $76.89, pressured by the mostly bearish APIs late Tuesday that showed a build of 509,000 barrels in crude stocks and builds of over 1 million barrels each in distillate stocks and gasoline stocks. The market also traded lower amid the strength in the dollar. The oil market later retraced some of its losses ahead of the release of the EIA report. The market was well supported by the EIA report, which showed an unexpected draw of over 1.3 million barrels in crude stocks as refiners increased their output. The crude market rallied higher, breaching its previous high and posted a high of $79.27 ahead of the close. The June WTI contract settled up 61 cents at $78.99 and the July Brent contract settled up 42 cents at $83.58. The product markets ended the session mixed, with the heating oil market settling up 1.05 cents at $2.4761 and the RB market settling down 1.16 cents at $2.5318. The EIA reported that U.S. crude oil stocks fell as refiners increased production, while fuel inventories increased unexpectedly last week. Crude inventories fell by 1.4 million barrels to 459.5 million barrels in the week ending May 3rd. The draw came as refinery crude runs increased by 307,000 bpd and refinery utilization rates increased by 1% to 88.5% of total capacity. The EIA data showed that U.S. gasoline and diesel demand are the lowest seasonal level since the 2020 coronavirus pandemic. The four-week average demand for gasoline stood at 8.63 million bpd in the week ending May 3rd, the lowest reading for the beginning of May since 2020. The four-week average demand for distillate fuels stood at 3.6 million bpd, also the weakest seasonal level since the pandemic. An Israeli official said Israel sees no sign of a breakthrough in Egyptian-mediated talks on a truce with Hamas that would free some Gaza hostages, but is keeping its delegation of mid-level negotiators in Cairo for now. A U.S. official said the U.S. has halted a shipment of powerful bombs to Israel, as Washington puts pressure on its ally to avoid a full-scale invasion of the Gaza Strip's southern city of Rafah and give more time for ceasefire talks. The White House said talks aimed at reaching a Gaza ceasefire for hostages deal are ongoing and added that Israel and Hamas militants are close enough to an agreement that they should be able to close the gaps. On Tuesday, Israeli forces seized the main border crossing between Gaza and Egypt in Rafah, cutting off a vital route for aid. Despite the latest Israeli assault in Rafah and fighting elsewhere in Gaza, the United States said it believes a revised Hamas ceasefire proposal may lead to a breakthrough in the ceasefire impasse, with talks resuming in Cairo on Wednesday. CIA Director Bill Burns was in Israel meeting Israeli Prime Minister Benjamin Netanyahu and Israeli officials about a possible suspension of the Israeli operation in Rafah in return for a hostage release. IIR Energy reported that U.S. oil refiners are expected to shut in about 800,000 bpd of capacity in the week ending May 10th, increasing available refining capacity by 205,000 bpd. Offline capacity is expected to fall to 683,000 bpd in the week ending May 17th.
Oil ends slightly firmer after US crude stock draw, firmer dollar (Reuters) - Oil prices edged higher on Wednesday after data showed U.S. crude stockpiles fell last week as refiners slowly ramped up output ahead of the summer driving season, while a stronger dollar capped gains. Brent crude oil futures settled 42 cents, or 0.5%, higher at $83.58 a barrel. U.S. West Texas Intermediate crude futures rose 61 cents, or 0.8%, to $78.99 a barrel. U.S. crude inventories fell by 1.4 million barrels to 459.5 million barrels last week, government data showed, compared with a 1.1 million-barrel draw that analysts forecast and industry data that showed a 509,000-barrel increase. [EIA/S] "Stronger refining activity and exports have encouraged a minor draw to crude inventories, helping unwind some of last week's large build," Refinery utilization rates rose by 1 percentage point to 88.5% of total capacity, but was still lower than rates of 91% a year ago ahead of the Memorial Day weekend at the end of May that kicks off the peak season for gasoline demand. "Gasoline demand is still below 9 million barrels (per day) ahead of the start of the summer driving season. That is a pretty grim situation here," A strengthening dollar , which gained as investors bet on the U.S. economy outperforming peers, weighed on crude oil prices. A stronger greenback dampens oil demand by making the dollar-denominated commodity more expensive for investors holding other currencies. Hopes of a ceasefire in Gaza have put some downward pressure on oil prices in recent trading sessions, with some analysts saying the risk premium on oil had declined in tandem. "Taking away the current geopolitical trigger leaves the market staring into a world of sticky inflation in the U.S. that is countered by interest rates that not only keep the U.S. dollar elevated but make any sort of commodity trading more expensive," The U.S. believes negotiations on a Gaza ceasefire should be able to close the gaps between Israel and Hamas. U.S. Central Intelligence Agency Director William Burns traveled to Israel on Wednesday and met with Israeli Prime Minister Benjamin Netanyahu, an Israel official said.
Oil Ekes Out Gain as Jobless Claims Lift Odds for Rate Cut -- Oil futures notched gains on Thursday on improving expectations for lower interest rates following a jump in initial filings for unemployment insurance. June RBOB futures rallied to a $2.5655 gallon intraday high following the release of the first-time claim filings by the Labor Department Thursday morning, which rose 22,000 to 231,000 during the week ended May 4. Job losses are typically bearish for gasoline demand, weighing on consumer sentiment and discretionary spending. However, the market looked at today's report as a sign of a softening economy that would lead to lower interest rates after data released in April showed expanding inflationary pressure, diminishing the likelihood of rate cuts. Those factors weighed on consumer sentiment in April, with gasoline supplied to the U.S. market during the four weeks ended May 4 down 363,000 barrels per day (bpd) or 4% at 8.625 million bpd against the comparable year-ago period, according to data from the Energy Information Administration. June RBOB futures reversed higher from Wednesday's $2.4826 10-week low on the spot continuation chart to settle $0.01 higher at $2.5418 gallon. June ULSD futures firmed, inching 15 points higher to a $2.4776 gallon settlement. While up modestly, it was the fifth consecutive positive close for the diesel contract, edging higher after testing technical support at the trendline for the downtrend from the April 2022 high now at $2.3920 gallon. The U.S. dollar weakened with the boost in unemployment filings, settling down 0.3% at 105.104 in index trade against a basket of foreign currencies, with the CME FedWatch Tool showing a 60% probability the federal funds rate will end the year at 5% or less. Currently, the policy rate is in a 5.25% by 5.5% target range. The weaker dollar lent upside support for June West Texas Intermediate futures, which settled $0.27 higher at $79.26 a barrel (bbl), paring gains after testing resistance at the $79.54 50% Fibonacci retracement point for the February-April uptrend. July Brent futures settled $0.30 higher at $83.88 bbl after finding technical support at the $83.42 50-day moving average.
Oil holds near one-week high on rising demand hopes after China, US data - Oil prices held near a one-week high on Thursday as data from China and the U.S. that signalled demand in the world’s two biggest crude-consuming nations could climb offset weak current U.S. distillates and gasoline demand. Brent futures rose 15 cents, or 0.2%, to $83.73 a barrel by 1:28 p.m. EDT (1728 GMT), while U.S. West Texas Intermediate (WTI) crude rose 16 cents, or 0.2%, to $79.15. That put both crude benchmarks on track for their highest closes since April 30. U.S. gasoline and diesel demand were at their weakest seasonal level since the 2020 coronavirus pandemic, according to weekly data from the U.S. Energy Information Administration. In China meanwhile, crude oil imports rose on the previous year in April and exports and imports returned to growth last month, signalling improvement in demand at home and overseas as Beijing moves to shore up a shaky economy. “The improved China trade balance data added to the upside momentum,” In the U.S., the number of new claims for unemployment benefits rose last week to the highest in more than eight months, further evidence that the labor market was cooling. Analysts projected that ebbing labor market momentum puts two interest rate cuts from the U.S. Federal Reserve this year back on the table. Lower rates would reduce borrowing costs and could spur economic growth and demand for oil. The Bank of England took another step towards lowering interest rates as a second official backed a cut and Governor Andrew Bailey said he was “optimistic that things are moving in the right direction”. Israeli tanks and warplanes bombarded areas of Rafah, Palestinian residents said, after President Joe Biden said the U.S. would withhold weapons from Israel if its forces mount a major invasion of the southern Gaza city. “If the Biden boycott spurs the Israelis to sign a ceasefire deal with Hamas, then WTI crude oil could potentially squeeze another $10 (a barrel) of geopolitical risk premium out of the market, “However, if Iran becomes emboldened by the U.S. stance and jumps back into the fray after keeping (a) low profile for weeks, then the market could rally back to multi-month highs,” In response to Israel’s latest operation, the leader of the Houthis in Yemen said the Iran-backed group, which has already disrupted shipping in the Red Sea, would target ships of any company related to supplying or transporting goods to Israel.
European and African Oil Prices Fall as U.S. Exports Soar - U.S. crude oil exports are rebounding this month, dragging down the prices of physical crude grades in Europe and Africa amid a relatively tepid market, traders told Bloomberg on Friday.After a temporary dip in April, U.S. crude flows to Europe have rebounded so far in May, according to vessel-tracking data that Bloomberg has compiled.In the first three weeks of May, observed U.S. crude oil exports to Europe are estimated to be on the rebound and to average at least 2.1 million barrels per day (bpd), up by a third compared to the average shipments in April, the data showed.Higher exports are also driven by a decline in the price of the WTI Midland grade from the United States. The differentials of WTI Midland have fallen to the lowest levels in more than a year. WTI Midland was added to the Brent basket in June 2023 and has been a major driver of the surging U.S. crude oil exports over the past year, especially to Europe. The WTI crude oil included in determining the Dated Brent price is delivered into Rotterdam, a large crude oil storage and trading hub in the Netherlands. As a result, the Netherlands received more U.S. crude oil exports than any other country in 2023, averaging 652,000 bpd, per EIA estimates.In total, U.S. crude oil exports to Europe averaged 1.8 million bpd last year, slightly more than U.S. exports to Asia and Oceania of 1.7 million bpd. American crude has replaced a large portion of Russian crude, which Europe imported before 2022.As U.S. oil output rose by 9% on the year to a record-high 12.9 million bpd in 2023, and as many American refineries are designed to use heavier and sour crude, the excess light sweet crude from the shale plays found more buyers abroad.
Oil falls on prospect of higher-for-longer US rates, stronger dollar (Reuters) - Oil prices fell by nearly $1 a barrel on Friday as comments from U.S. central bank officials indicated higher-for-longer interest rates, which could hinder demand from the world's largest crude consumers. Brent crude futures settled at $82.79 a barrel, down $1.09, or 1.3%. U.S. West Texas Intermediate crude settled at $78.26 a barrel, down $1.00, or 1.3%. For the week, Brent logged a 0.2% loss, while WTI recorded a rise of 0.2%. Dallas Federal Reserve President Lorie Logan on Friday said it was unclear whether monetary policy was tight enough to bring down inflation to the U.S. central bank's 2% goal. Higher interest rates typically slow economic activity and weaken oil demand. Atlanta Fed President Raphael Bostic also told Reuters he thought inflation was likely to slow under current monetary policy, enabling the central bank to begin reducing its policy rate in 2024 - though perhaps by only a quarter of a percentage point and not until the final months of the year. "The two Fed speakers certainly seemed to put the kibosh on the prospect of rate cuts," The U.S. dollar strengthened after the Fed officials' comments, making greenback-denominated commodities more expensive for buyers using other currencies. Higher-for-longer U.S. interest rates could also dampen demand. Oil prices were also under pressure from rising U.S. fuel inventories approaching the typically robust summer driving season, "Given the price decline of the past month and the weaker-than-expected demand trends for U.S. gasoline and diesel, some bearish demand adjustment would appear likely," Next week, U.S. inflation data could influence Fed decisions on rates. Oil drew little support from the U.S. oil rig count, which is an indicator of future supply, despite energy services firm Baker Hughes data showing the number of oil rigs fell by three to 496 this week, their lowest since November. Money managers, meanwhile, cut their net long U.S. crude futures and options positions in the week to May 7 by 56,517 contracts to 82,697, the U.S. Commodity Futures Trading Commission said. Data on Thursday showing China imported more oil in April than the same month last year also helped keep oil prices from moving lower. China's exports and imports returned to growth in April after contracting the previous month. The European Central Bank, meanwhile, looks increasingly likely to start cutting rates in June. In Europe, a Ukrainian drone attack set an oil refinery in Russia's Kaluga region on fire, RIA state news agency reported on Friday, the latest salvo from Kyiv in what has become a series of tit-for-tat attacks on energy infrastructure. Conflict in the Middle East also continues after Israeli forces bombarded areas of the southern Gaza city of Rafah on Thursday, according to Palestinian residents, after a lack of progress in the latest round of negotiations to halt hostilities in Gaza.
Colombia cuts ties with Israel over Gaza genocide - Colombia’s Foreign Ministry announced last Thursday the severing of diplomatic relations with Israel over the ongoing genocide in Gaza. Bogota plans to remove all its diplomatic personnel from Israel, according to an official statement that cites the “indescribable human suffering” inflicted upon Palestinians since last October. The communiqué stresses that the measure is aimed not at Israeli citizens or the Jewish population, but strictly at the government of Prime Minister Benjamin Netanyahu. Gustavo Petro delivers May Day speech in Plaza BolÃvar, Bogotá, Colombia [Photo: Juan Diego Cano/Presidencia] The decision was first announced by President Gustavo Petro during a May Day speech on Wednesday, in front of tens of thousands of supporters in Bogota. He said that one word summarizes “the necessity of life, rebellion, the raised flag and resistance. That word is called Gaza. It is called Palestine, the girls, the boys, the babies who have died dismembered by bombs... If Palestine dies, humanity dies, and we will not let it die.” The breaking of relations with Tel Aviv, which predictably responded by calling Petro an “antisemite full of hatred,” takes place in the context of the massive crackdown against peaceful anti-genocide protests at universities across US and indications that Israel will proceed with a devastating invasion of Rafah in southern Gaza, which harbors over 1 million refugees. Hundreds of millions around the world have watched for seven months images of the mass killings in Gaza and are now being further enraged by the brutal violence against students and faculty on US campuses. The danger of a regional or even global conflict has also become increasingly apparent, with Petro himself responding to the exchange of air strikes between Israel and Iran by warning of an imminent “World War III.” At the time, he tweeted: “US support, in practice, for a genocide, has set the world ablaze.” With a few exceptions—most notably the fascist Argentine President Javier Milei—the biggest diplomatic backlash against Israel and the US for the slaughter in Palestine has taken place in Latin America, even more than among Muslim-majority countries. Petro had recalled his ambassador from Israel hours after an Israeli airstrike flattened much of the Jabalia refugee camp in Gaza and killed dozens on October 31. On the same day, Bolivian President Luis Arce cut all diplomatic ties with Israel, while President Gabriel Boric recalled Chile’s ambassador from Tel Aviv.
World Food Programme Director Cindy McCain Says Northern Gaza Experiencing 'Full-Blown' Famine - The head of the UN’s World Food Programme has said northern Gaza is experiencing a “full-blown famine” that is moving south, which is a result of the US-backed Israeli blockade and bombing campaign.“Whenever you have conflicts like this, and emotions rage high, and things happen in a war, famine happens,” Cindy McCain, the widow of Senator John McCain, told NBC News.“What I can explain to you is — is that there is famine — full-blown famine — in the north, and it’s moving its way south. And so, what we’re asking for, and what we’ve continually asked for, is for a ceasefire and the ability to have unfettered access,” she added.Humanitarian organizations have not officially declared famine, but McCain reaffirmed her view that there was already a “full-blown famine” when asked by the host, saying it was based on what the WFP has seen on the ground. “It’s horror. It’s – You know, it’s so hard to look at and it’s so hard to hear, also,” she said.McCain is the second notable aid official to say that famine is already occurring in Gaza. Last month, Samantha Power, head of the US Agency for International Development (USAID), said she believed famine was already occurring in parts of northern Gaza.Despite the admission from a high-level US official, the US has continued to back the Israeli slaughter and starvation of Palestinians, and President Biden is refusing to call for a ceasefire that’s not attached to a hostage deal.Israel has said it’s taken some steps to increase the flow of aid into Gaza, but aid officials say it’s not nearly enough. The restrictions on aid violate US law that prohibits military assistance to countries that block deliveries of humanitarian assistance, but that has not stopped Biden from continuing to ship weapons.
Hamas Says It Accepted Proposal for Ceasefire But Israel Hasn't Approved the Terms -Hamas said on Monday that it accepted a proposal for a ceasefire and hostage deal from Qatari and Egyptian mediators, but Israeli officials say they have not approved the terms.According to Al Jazeera, the Palestinian group said in a statement that Ismail Haniyeh, Hamas’s political chief, spoke with Qatari and Egyptian officials and “informed them of the Hamas movement’s approval of their proposal regarding the ceasefire agreement.”According to The Times of Israel, Israeli officials have said the proposal Hamas said it accepted was an offer made unilaterally by Egypt and is not being taken seriously by Israel until details are clarified.State Department spokesman Matt Miller said the US was reviewing the proposal Hamas has approved. “I can confirm that Hamas has issued a response. We are reviewing that response now and discussing it with our partners in the region,” he said.Details of the proposal are unclear, but recent media reports said the deal that was on the table was for Hamas to release 33 Israeli hostages in exchange for a 40-day ceasefire and the release of Palestinian prisoners.The main obstacle to an agreement is the fact that Hamas has also been for a commitment from Israel to work toward a permanent ceasefire while Israeli Prime Minister Benjamin Netanyahu has been threatening an invasion of Rafah “with or without” a hostage deal.Netanyahu has been accused of sabotaging the negotiations with Hamas, and a US official told Reuters on Monday that the Israeli leader and his war cabinet “have not appeared to approach the latest phase of negotiations in good faith.”
Israel-Hamas Ceasefire Talks at Impasse, Netanyahu Blamed for Sabotage - Egyptian and Qatari-mediated ceasefire talks between Israel and Hamas are expected to fail as the two sides are at an impasse.The main obstacle is Hamas’s demand for a deal to lead to a permanent ceasefire and Israeli withdrawal from Gaza and Israeli Prime Minister Benjamin Netanyahu’s insistence that any truce would only be temporary.There were signs over the past week that progress was being made in the talks, but an Israeli official told The New York Times that Netanyahu’s repeated threats to invade Rafah “with or without” a deal hardened Hamas’s demands to ensure Israeli forces wouldn’t enter the city.According to media reports, the deal that was on the table would have involved Hamas releasing 33 Israeli hostages in the initial phase in exchange for a 40-day ceasefire and commitments to work toward a longer truce. Hamas still insisted on a permanent ceasefire, and Netanyahu’s threats made it clear that wasn’t going to happen.Ismail Haniyeh, Hamas’s political chief, accused Netanyahu of “sabotaging” the negotiations and said the Israeli leader was trying to “invent constant justifications for the continuation of aggression, expanding the circle of conflict.”Yossi Verter, an Israeli journalist who writes for Haaretz, said in an analysis piece that Netanyahu likely thought Hamas would reject Israel’s latest proposal, and when the group didn’t, he turned to sabotage.“Netanyahu is fleeing from a hostage deal. The closer it gets, the faster he runs to avoid it. At least twice in recent months he has sabotaged the sensitive moves toward a deal, whether through public statements or covert messages, or by curbing the mandate of the negotiating team. It was no different this time,” Verter wrote.
IDF issues evacuation order to 100,000 in Rafah as looming assault sparks fear of bloodbath in Gaza - Amid mounting global alarm and a looming ground assault, the Israel Defense Forces (IDF) ordered roughly 100,000 people living in Rafah to evacuate the southern Gaza city. This mass relocation directive has caused terror among already displaced families and intensified international warnings of an imminent humanitarian disaster. Rafah, a border city in southern Gaza, has become a refuge for nearly 1.4 million displaced Palestinians following the outbreak of violence in October. The city, which lies along Gaza’s southern border with Egypt, has been characterized by Israel as the last significant Hamas stronghold after seven months of hostilities. On Monday, the IDF dropped leaflets ordering some of Rafah’s residents to move to Al-Mawasi, a narrow strip along Gaza’s coast. This move signals the long-feared ground assault is imminent. These evacuation orders come after months of escalating conflict, which began on October 7 when Hamas launched an attack on Israel. The IDF aims to secure Rafah to prevent Hamas from regrouping, despite vocal opposition from international humanitarian organizations and governments. The United States, Israel’s primary arms supplier, has warned against an attack without a credible evacuation plan, citing the absence of genuinely safe locations for Gazans to find shelter. The IDF’s directive has left Rafah’s residents, especially families with children, grappling with chaos and fear. Jan Egeland, Secretary-General of the Norwegian Refugee Council, denounced the orders as “beyond alarming,” stating that the region is overstretched and lacks adequate infrastructure to provide shelter or safety. The IDF’s evacuation instructions amount to forcible transfer, a serious violation of international humanitarian law, according to Egeland. Catherine Russell, Executive Director of UNICEF, expressed concerns over the impact of the assault on children, noting that up to 600,000 are currently sheltering in Rafah. She emphasized that these children face not only the physical threat of violence but also the psychological trauma of panic and chaos after enduring months of conflict. UNRWA, the United Nations agency responsible for providing relief in Gaza, remains committed to its humanitarian mission, rejecting the evacuation orders and pledging to continue operations. The organization condemned the evacuation push, noting that any assault on Rafah will only exacerbate the suffering of already vulnerable civilians. The United States, which was notified of the IDF’s orders overnight, dispatched CIA Director William Burns to Israel for discussions. Efforts to broker a ceasefire have been ongoing, but the IDF’s imminent offensive in Rafah could complicate these negotiations. Qatar, which has played a role in mediation, warned that an invasion would derail negotiations. Despite this, the Israeli government under Prime Minister Benjamin Netanyahu remains resolute, characterizing the operation as crucial to defeat Hamas, which Israel blames for initiating the conflict. Human Rights Watch also criticized the orders, with Director Omar Shakir calling the evacuation push “unlawful and catastrophic.” He urged the international community to intervene to prevent further atrocities, emphasizing that “there’s nowhere safe to go in Gaza.”
Israeli Ground Forces Enter Rafah - Israeli tanks have entered Rafah and appear to be pushing to capture the Palestinian side of the Rafah border crossing that connects to Egypt, several media outlets have reported.Heavy airstrikes have been reported in the city as well, with some media reports describing it as a “carpet bombing,” although the scale of destruction and death toll is unclear at this time.An Egyptian official told The Associated Press that the Israeli operation could be limited and that Israeli forcescould soon withdraw. But Egypt is also preparing for the possibility of a major influx of Palestinian refugees entering its territory. According to Middle East Eye, Cairo estimates between 50,000 and 250,000 Palestinians could flee toward Sinai.A source told Axios that Israel plans to take control of the Rafah border crossing and monitor all aid that enters Gaza, a sign that it’s seeking long-term control of the area. The military activity near the Rafah crossing will further disrupt aid shipments into the Strip as Palestinians in northern Gaza are facing a “full-blown famine,”according to the UN’s World Food Programme.Israel’s move on Rafah comes after Hamas said it accepted an Egyptian and Qatari proposal for a ceasefire. Israeli officials quickly rejected the idea that there was a deal and said the proposal included terms Israel did not agree to.The office of Israeli Prime Minister Benjamin Netanyahu said the proposal didn’t meet its “core demands” and said Israel would go ahead with military operations in Rafah. “The War Cabinet unanimously decided this evening Israel will continue its operation in Rafah, in order to apply military pressure on Hamas so as to advance the release of our hostages and achieve the other objectives of the war,” the office said.
Israel Captures Rafah Border Crossing, Cutting Off Aid - The Israeli military announced on Tuesday that its ground forces captured the Palestinian side of the Rafah border crossing, cutting off a vital aid route as Palestinians are facing starvation.Israeli tanks and troops entered Rafah late Monday, and Israeli strikes pounded the city throughout the night, hitting residential homes. According to AP, hospital records show that at least 23 Palestinians were killed in the bombardment, including six women and five children.The Israeli military claimed that it killed about 20 Hamas fighters in exchanges of gunfire. The Israeli military also claimed that the Rafah crossing had been used for “terrorist operations” but did not provide evidence.The Rafah border crossing has been the main hub for aid deliveries into Gaza and was the only crossing not controlled by Israel. The UN’s World Food Program (WFP) said the nearby Kerem Shalom crossing still remains closed.The cutting off of vital aid channels comes after WFP chief Cindy McCain said northern Gaza was already experiencing a “full-blown famine.” James Elder, the head of the UN’s children’s relief agency, said on Tuesdaythat if the Rafah crossing is closed for an extended period of time, it would be “hard to see how famine in Gaza can be averted.”Also on Tuesday, Israeli Prime Minister Benjamin Netanyahu rejected a ceasefire proposal that was accepted by Hamas. He accused the Palestinian group of trying to “sabotage the entry of our forces into Rafah” by announcing it accepted the ceasefire deal.Netanyahu said the deal Hamas accepted was “very far from Israel’s vital demands” and he vowed Israel would not allow “Hamas to restore its wicked rule in the Strip.”The US has claimed it’s opposed to an Israeli assault on Rafah since the city is packed with 1.4 million civilians, and they have nowhere to go. But the US appears to have accepted the Israeli decision to attack, as the White House said Israel informed the US that the operation would be limited.
Aid Agencies Are Running Out of Food as Israel Expands Assault on Rafah - As Israeli troops are expanding their operations in Rafah, civilians report food is running out, and at least 100,000 have fled the city. Al-Qassam, the armed faction of Hamas, says it has engaged the Israel Defense Forces (IDF) around the city. At least one million internally displaced Palestinians were taking refuge in Rafah before the assault began.Georgios Petropoulos, an official for the UN Office for the Coordination of Humanitarian Affairs (OCHA) working in Rafah, said that 110,000 Palestinians have now fled the city. He slammed the Israeli attack for causing “even more unprecedented levels of emergency.” Rafah had a pre-war population of 250,000, but absorbing the internally displaced in Gaza has increased the population to around 1.5 million Palestinians.Most other cities in Gaza have been reduced to rubble by the IDF, causing widespread starvation and famine in northern Gaza. While the situation in Rafah was desperate before the Israeli attack, Palestinians in the city had access to some food and other assistance.Al-Qassam says it has inflicted some casualties on the IDF. A statement from the group claimed it killed and wounded several Israeli soldiers in a “complex and simultaneous” operation in Rafah. The IDF stated in turn it killed several Palestinian gunmen.On Monday, the IDF seized control of the border crossing between Egypt and Gaza near Rafah. That crossing has been used to bring most aid into Gaza since October 7. Since Israel gained control of the Rafah crossing, aid trucks have been unable to deliver food and other lifesaving assistance into Gaza.Petropoulos said the attack left the World Food Program (WFP) without a way to bring additional assistance into Gaza, and it will run out of food to distribute on Saturday. Sam Rose, an official for the UN Palestinian Aid Agency (UNRWA), explained, “No aid has come into Gaza now since Sunday. No aid, no fuel, no supplies, nothing. And we really are now down to our last reserves.”
Two More Palestinians Killed By Aid Drops on Gaza - Two more Palestinians were killed by airdrops of aid in Gaza this week when a parachute failed, and a pallet smashed into a warehouse, prompting the head of Gaza’s Government Media Office to renew his call for an end to the practice.Several countries, including the US, Jordan, and the UK, have been dropping pallets of aid on Gaza as Israel is restricting humanitarian assistance through border crossings.According to Gaza’s Media Office, at least 21 Palestinians have been killed during aid drops, including 12 who drowned while trying to retrieve aid that went into the sea, eight who were killed by falling pallets or stampedes, and one who was shot by Israeli forces.Last month, a 13-year-old Palestinian boy who survived an Israeli airstrike in November was killed by an aid drop.“We reiterate that airdrops pose a real danger to the lives of citizens and do not provide a real solution to alleviate the food crisis plaguing northern Gaza,” said Salama Marouf, the head of the Media Office. “We call for an immediate halt to the delivery of aid in this ineffective and erroneous manner, and we call for the full activation of the land crossings to deliver humanitarian aid to northern Gaza.” The US began aid drops over Gaza and built a $320 million pier off the coast instead of pressuring Israel to allow more deliveries to enter border crossings, a far more efficient way to get assistance to starving Palestinians. The first aid shipment bound for the US-built pier has left Cyprus, but it’s unclear when the deliveries will actually reach Gaza.
Hamas Says There Will Be No Ceasefire Deal If Israel Continues Rafah Operation - Osama Hamdan, a Hamas political official, said on Tuesday that there will be no ceasefire and hostage deal if Israel continues its military operations in Rafah.“The occupation army’s storming of the Rafah crossing, and its barbaric and criminal bombing, at the insistence of Netanyahu and his extremist warlords, is an open attempt to sabotage all the efforts of the mediators to achieve an agreement to stop the aggression against our people, and at the same time it is a desperate attempt to create an image of an illusion of victory to save face,” he said at a press conference in Beirut.“If his aggression continues, he will only suffer more defeats and disgrace,” Hamdan said. He also mentioned the Israeli capture of the Rafah border crossing, which cut off aid deliveries, saying the crossing “was and will remain a purely Egyptian-Palestinian crossing.”Before Israel launched its ground assault into Rafah late Monday, Hamas said that it agreed to a ceasefire proposal from Egyptian and Qatari mediators. But Israeli officials quickly threw cold water on the idea that a deal could be reached and said the proposal included terms Israel had not agreed to.Israeli Prime Minister Benjamin Netanyahu reaffirmed Israel’s rejection of the deal on Tuesday, saying the proposal was “very far from Israel’s vital demands.” According to media reports, the proposal included working toward a permanent ceasefire and Israeli withdrawal, an idea Netanyahu has repeatedly rejected.While rejecting the deal, Netanyahu still sent a low-level delegation to Egypt for negotiations. Egyptian mediareported that all parties have agreed to “return to the negotiating table.” CIA Director William Burns had been involved in discussions with Qatari and Egyptian officials before Hamas said it accepted the ceasefire proposal, signaling the US was aware of the contents of the offer. According toAxios, Israeli officials were unhappy with the Biden administration because they thought the US was aware of the proposal and didn’t give Israel a heads up.
Biden Gave Netanyahu the Green Light To Capture Rafah Crossing - President Biden and Israeli Prime Minister Benjamin Netanyahu discussed Israel’s plans to capture the Rafah border crossing in southern Gaza before the Israeli military launched the operation, Axios reported on Tuesday.The report said that the operation didn’t cross Biden’s “red line,” although it’s unclear if the US has actually set red lines for Israel. US officials have said they’re opposed to a “major operation” in Rafah since it would incur huge civilian casualties. But the capturing of the border crossing will have a devastating impact on civilians since it cut off vital aid deliveries, and it’s unclear when or if they will resume.A senior Israeli official told Axios that during the call with Netanyahu, Biden didn’t “didn’t pull the hand break on the capture of the Rafah crossing during the call.” Two US officials said Biden didn’t view the current Israeli operations as a “breaking point” in relations.On Tuesday, White House National Security Council spokesman John Kirby said that the US was not opposed to the operation.“We’ve been very consistent about our concerns of a major ground operation in Gaza that would put at great risk the refugees that are still there, and nothing’s changed about that,” Kirby said. “The Israelis have told us … that that’s not what this is.” He said that Israel assured the US that the operation was “of limited scope, scale, and duration, and aimed at cutting off Hamas’ ability to ship arms across the Rafah border.”Israeli tanks and soldiers took the border crossing as Israeli strikes pounded the city of Rafah, killing at least 23 Palestinians, including five women and six children.
Report: Private US Security Firm To Take Control of Rafah Border Crossing - Haaretz reported on Tuesday that the US, Israel, and Egypt have agreed that control of the Rafah border crossing that connects Egypt and Gaza will be handed over to a private American security firm.The report came after Israel captured the border crossing in an operation that was approved by the Biden administration. The private American firm was not named, but Haaretz said that it employs veterans of elite US Army units and has been employed in several Middle Eastern and African countries to guard sensitive sites.State Department spokesman Matt Miller was asked about the report and said he wasn’t aware of any plan for Israel to transfer control of the border crossing.Under the reported arrangement, American mercenaries would take responsibility for overseeing the border crossing, which would include monitoring goods coming into Gaza and preventing Hamas from taking control. Vital deliveries have been cut off since Israel took control of the crossing early Tuesday.The Haaretz report said the arrangement was part of an effort by Israel to “win agreement” from the US and Egypt for a Rafah operation. The report said Israel had given assurances that it would limit its attack on Rafah to securing the border crossing, although Israeli bombs have been pounding the city.
Rafah Border Crossing Remains Closed as Israel Tightens Starvation Blockade - The Rafah border crossing into Gaza remained closed on Wednesday following its capture by Israeli forces, cutting off vital aid deliveries after the UN’s World Food Program warned Palestinians in northern Gaza are already facing a “full-blown famine.”Israeli sources told The Times of Israel that the Rafah crossing with Egypt will remain closed amid Israeli military operations on the Palestinian side, and it’s unclear how long that will be. The US claims it’s opposed to Israel restricting aid shipments into Gaza, but President Biden backed Israel’s operation to capture the crossing, which has tightened the starvation blockade.Israel claimed on Wednesday that the nearby Kerem Shalom crossing that connects Gaza and Israel was re-opened. But both the US and the UN said no aid entered Gaza via Kerem Shalom since there is no one to distribute it and there are active military operations in the area. Gaza border officials said six of their employees came under fire when trying to approach the Kerem Shalom crossing.Only the northern Erez border crossing remains open, and only a small number of trucks have entered. Israeli authorities said 60 aid trucks came through the Erez crossing on Tuesday, just a fraction of the 500 aid groups say is needed at a minimum, a level that has not been reached since October 7.Rafah has been the only entry point for fuel, which is needed to deliver aid, power hospitals, and for other humanitarian purposes. The UN’s child relief agency, UNICEF, said the closure of the Rafah crossing threatens the entire humanitarian relief effort.“With that crossing now being closed, our whole humanitarian operation on the ground is compromised,” said UNICEF spokesman Ricardo Pires, according to The Washington Post. “If the crossing is not urgently re-opened, the entire civilian population in Rafah and in the Gaza Strip will be at greater risk of famine, disease and death.”
