Sunday, May 15, 2022

SPR at a 21 year low, distillates supplies at a 17 year low; 300,000 bpd global oil surplus in April, despite Russian loss

Strategic Petroleum Reserve at a 21 year low, distillates supplies at a 17 year low; 300,000 bpd global oil surplus in April, despite loss of 1.2 million bpd from Russia & Kazakhstan; natural gas rigs at a 32 month high..

oil prices ended higher for the fourth time in five weeks after first falling over 10%, as fears of product shortages outweighed concerns about slowing demand... after rising 4.9% to a six week high of $109.77 a barrel last week after the EU advanced a plan to phase out imports of Russian oil, the contract price for US light sweet crude for June delivery briefly traded higher early Monday as China’s crude oil imports grew nearly 7 percent in April from the same month a year earlier, but tumbled more than 2% in early trading after Saudi Aramco, the world's largest oil producer, slashed its official selling prices for next month deliveries for Asian and European buyers and then fell hard in afternoon trading to end down $6.68 or more than 6% at $103.09 a barrel as the US dollar hit a 20 year high on rate hike fears and as Covid lockdowns in China continued to eat away at demand....oil prices extended Monday's losses into early trading Tuesday as traders re​assessed​ economic growth prospects in light of the Fed's aggressive rate hike plan, while use of public transport declined 22% from a week earlier across 11 large Chinese cities in the clearest sign yet of deteriorating mobility, and settled $3.33 lower at $99.76 a barrel​,​ as burgeoning US inflation fueled concerns it would force moves that would risk pushing the economy into a recession...oil prices fell again in overnight trading after the American Petroleum Institute reported a 1.6 million bpd inventory build, compared to analyst predictions of a 1.2 million bpd withdrawal, and opened lower on Wednesday, but turned positive in early morning trading after the dollar pulled back from a 20 year high and traders positioned themselves ahead of the release of the Consumer Price Index, and then rallied in afternoon trading after inventory data from the EIA revealed fuel inventories fell by a larger-than-expected margin, and then jumped near the close to settle $5.95 higher at $105.71 a barrel after flows of Russian gas to Europe through a key transit point in Ukraine were​ ​shut off.....but oil prices resumed their decline early Thursday as markets were pressured by stubbornly high US inflation, bolstering the case for aggressive Fed interest rate hikes and traded as much as 3% lower at $102.66 after the International Energy Agency downgraded its 2022 global demand projections for the second month in a row, citing expanded lockdowns in China and economic slowdown in the US, before staging a late rally and ending with a gain of 42 cents at $106.13 a barrel, as the IEA also warned of an “almost universal product shortage,” in its monthly Oil Market Report....the oil price rally continued into Friday, as fears of an acute supply shortage outweighed concerns over a slowdown in global economic growth​,​ and accelerated after​ ​noon to settle up $4.36, or more than 4% higher at $110.49, after US gasoline prices jumped to a record high, China looked ready to ease pandemic restrictions and traders worried supplies would further tighten if the EU banned Russian oil...with the late Friday rally, US crude for June managed to post a 0.7% gain on the week, even as London-traded Brent, the international benchmark, settled up 3.8% on the day but down 0.7% on the week...

on the other hand, natural gas prices finished lower for the second time in nine weeks as domestc production recovered and weather forecasts moderated.... after rising 11% to $8.043 per mmBTU and trading at a 13 year high all last week, the contract price of natural gas for June delivery opened 3% lower on Monday on a forecast reprieve from the late-season cold snaps that had kept northern US demand elevated, and plunged $1.017 to $7.026 per mmBTU, as production showed signs of recovery, easing concerns about inadequate supplies to meet the extreme heat-driven demand in the South...but prices rebounded 35.9 cents or 5% to $7.385 per mmBTU on Tuesday, as traders reassessed choppy domestic production levels and new threats to global supplies amid reports of Russian forces interrupting flows to Europe. and then rose another 25.5 cents to $7.640 per mmBTU on Wednesday on a big drop in output over the prior three days, amid expectations ​that summer production​ would trail demand, potentially pressuring storage supplies...after erratic early trading on Thursday, natural gas prices rallied for a third straight session on the heels of a moderately bullish storage print, and forecasts for ongoing heat in near-term,  and settled 9.9 cents higher at $7.739 per mmBTU..​.​.but gas prices slipped 7.6 cents or 1% to $7.663 per mmBTU in ​a ​less volatile ​session on Friday​,​ on forecasts for milder weather in two weeks and on a 5% drop in European gas prices​,​ despite the shutdown of a pipeline in Ukraine, and thus ended 4.7% lower on the week, thus recovering most of the 20% loss​ hit​ in interday trading ealier in the week​...​.

The EIA's natural gas storage report for the week ending May 6th indicated that the amount of working natural gas held in underground storage in the US rose by 76 billion cubic feet to 1,643 billion cubic feet by the end of the week, which still left our gas supplies 376 billion cubic feet, or 18.6% below the 2,019 billion cubic feet that were in storage on May 6th of last year, and 312 billion cubic feet, or 16.0% below the five-year average of 1,955 billion cubic feet of natural gas that have been in storage as of the 6th of May over the most recent five years....the 76 billion cubic foot injection into US natural gas working storage for the cited week was a bit more than the average forecast for a 74 billion cubic foot injection from an S&P Global Platts survey of analysts, but it was less than the average injection of 82 billion cubic feet of natural gas that have typically been added to our natural gas storage during the same week over the past 5 years, while​ on the other hand​ it was more than the 70 billion cubic feet that were added to natural gas storage during the corresponding week of 2021... 

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 6th indicated that after another drop in our oil exports, another oil withdrawal from the SPR, and an increase in oil that could not be accounted for, we again had oil to add to our stored commercial crude supplies, for the 10th time in 24 weeks and for the 19th time in the past forty-nine weeks…our imports of crude oil fell by an average of 62,000 barrels per day to an average of 6,269,000 barrels per day, after rising by an average of 397,000 barrels per day during the prior week, while our exports of crude oil fell by 695,000 barrels per day to 2,879,000 barrels per day during the week, which together meant that our trade in oil worked out to a net import average of 3,390,000 barrels of oil per day during the week ending May 6th, 633,000 more barrels per day than the net of our imports minus our exports during the prior week…over the same period, production of crude oil from US wells was reportedly 100,000 barrels per day lower at 11,800,000 barrels per day, and hence our daily supply of oil from the net of our international trade in oil and from domestic well production appears to have totaled an average of 15,190,000 barrels per day during the cited reporting week…

Meanwhile, US oil refineries reported they were processing an average of 15,696,000 barrels of crude per day during the week ending May 6th, an average of 230,000 more barrels per day than the amount of oil than our refineries processed during the prior week, while over the same period the EIA’s surveys indicated that a net of 214,000 barrels of oil per day were being added to the supplies of oil stored in the US….so based on that reported & estimated data, this week’s crude oil figures from the EIA appear to indicate that our total working supply of oil from net imports and from oilfield production was 719,000 barrels per day less than what what was added to storage plus what our oil refineries reported they used during the week…to account for that disparity between the apparent supply of oil and the apparent disposition of it, the EIA just inserted a (+719,000) barrel per day figure onto line 13 of the weekly U.S. Petroleum Balance Sheet in order to make the reported data for the daily supply of oil and for the consumption of it balance out, a fudge factor that they label in  their footnotes as “unaccounted for crude oil”, thus suggesting there must have been an error or omission of that magnitude in this week’s oil supply & demand figures that we have just transcribed.....however, since most everyone treats these weekly EIA reports as gospel, and since these figures often drive oil pricing, and hence decisions to drill or complete oil wells, we’ll continue to report this data just as it's published, and just as it's watched & believed to be reasonably accurate by most everyone in the industry...(for more on how this weekly oil data is gathered, and the possible reasons for that “unaccounted for” oil, see this EIA explainer)….

This week's 214,000 barrel per day rounded increase in our overall crude oil inventories came as 1,212,000 barrels per day were being added to our commercially available stocks of crude oil, while 999,000 barrels per day of oil were being pulled out of our Strategic Petroleum Reserve at the same time....that draw on the SPR now appears to include the initial emergency withdrawal under Biden's "Plan to Respond to Putin’s Price Hike at the Pump", that is expected to supply 1,000,000 barrels of oil per day to commercial interests from now up to the midterm elections in November, in the hope of keeping gasoline and diesel fuel prices from rising further up until that time, as well as the previous 30,000,000 million barrel release from the SPR to address Russian supply related shortfalls, and the administration's earlier plan to release 50 million barrels from the SPR to incentivize US gasoline consumption....since both the press releases from the administration on the SPR releases and the news coverage of them has been less than clear, we'll include here a copy of the SPR release schedule that the Congressional Research Service prepared for members of Congress, so that they'd be able to front-run Energy Department oil releases in their own trading accounts...

the Biden administration's releases from the SPR fall under 3 categories, as shown above...the initial Biden SPR release was a combination of a mandatory sale and an exchange, wherein the oil companies receiving oil from the SPR would be expected to pay it back, while the most recent SPR release was categorized as an emergency sale, meant to accompany sanctions we had imposed on Russian oil in the wake of the Ukraine situation....including other withdrawals from the Strategic Petroleum Reserve under recent release programs, a total of 113,155,000 barrels of oil have now been removed from the Strategic Petroleum Reserve over the past 22 months, and as a result the 542,994,000 barrels of oil still remaining in our Strategic Petroleum Reserve is now the lowest since May 4th, 2001, or at a 21 year low, as repeated tapping of our emergency supplies for non-emergencies or to pay for other programs has already drained those supplies considerably over the past dozen years....so now, the total 180,000,000 barrel drawdown over the next six months will remove almost a third of what remains in the SPR, and leave us with what would be less that a 20 day supply of oil at today's consumption rate, as the following graph illustrates...

The above graph comes from a post by oil and gas researcher Rory Johnston at Substack, wherein he discusses the implications of the million barrel per day SPR release, and it shows the historical quantity of oil held in our Strategic Petroleum Reserve, beginning from its inception following the Arab Oil Embargo of 1973-74 to the present day...the graph is further annotated to indicate the reasons for major additions to and withdrawals from the SPR, most of which were due to disruptions to oil supplies following hurricanes in the Gulf (you can get a better view of those annotations by clicking on the graph, or even better yet, view the enlarged original at substack.com....on the far right, Rory has projected where the strategic petroleum Reserve will end up after the Biden withdrawals are complete, which will take the SPR back to its level of 1983, while it was still being filled...based on an estimated average daily US oil consumption of 18,000,000 barrels per day, the US will have roughly 18 1/2 days of oil supply left in the Strategic Petroleum Reserve this November, after all three of the Biden administration's SPR withdrawal programs have run their course ...

Further details from the weekly Petroleum Status Report (pdf) indicate that the 4 week average of our oil imports rose to an average of 6,093,000 barrels per day last week, which was 6.2% more than the 5,740,000 barrel per day average that we were importing over the same four-week period last year….this week’s crude oil production was reported to be 100,000 barrels per day lower at 11,800,000 barrels per day even though the EIA's rounded estimate of the output from wells in the lower 48 states was unchanged at 11,400,000 barrels per day, because Alaska’s oil production fell by 7,000 barrels per day to 447,000 barrels per day and subtracted 100,000 barrels per day from the final rounded national total (that's the EIA's math, not mine)....US crude oil production had reached a pre-pandemic high of 13,100,000 barrels per day during the week ending March 13th 2020, so this week’s reported oil production figure was 9.9% below that of our pre-pandemic production peak, but was 40.0% above the interim low of 8,428,000 barrels per day that US oil production had fallen to during the last week of June of 2016...

US oil refineries were operating at 90.0% of their capacity while using those 15,696,000 barrels of crude per day during the week ending May 6th, up from the 88.4% utilization rate of the prior week, but still below the historical utilization rate for early May refinery operations…the 15,696,000 barrels per day of oil that were refined this week were 4.5% more barrels than the 15,020,000 barrels of crude that were being processed daily during week ending May 7th of 2021, when refineries were still recovering from winter storm Uri, and 21.0% more than the 12,976,000 barrels of crude that were being processed daily during the week ending May 8th, 2020, when US refineries were operating at what was then a much lower than normal 70.5% of capacity during the first wave of the pandemic, but still 4.3% less than the 16,405,000 barrels that were being refined during the prepandemic week ending May 3rd 2019, when refinery utilization was also at a somewhat below normal 88.9% for the first weekend of May...

With the increase in the amount of oil being refined this week, gasoline output from our refineries was a bit higher, increasing by 27,000 barrels per day to 9,716,000 barrels per day during the week ending May 6th, after our gasoline output had increased by 175,000 barrels per day over the prior week.…this week’s gasoline production was 1.3% more than the 9,588,000 barrels of gasoline that were being produced daily over the same week of last year, but 4.1% below our gasoline production of 10,129,000 barrels per day during the week ending May 3rd, 2019, ie, the year before the pandemic impacted gasoline output....at the same time, our refineries’ production of distillate fuels (diesel fuel and heat oil) increased by 163,000 barrels per day to 4,882,000 barrels per day, after our distillates output had decreased by 63,000 barrels per day over the prior week…after that increase, our distillates output was 4.9% more than the 4,655,000 barrels of distillates that were being produced daily during the week ending May 7th of 2021, but 4.1% less that the 5,089,000 barrels of distillates that were being produced daily during the week ending May 3rd, 2019...

Even with the recent increases in our gasoline production, our supplies of gasoline in storage at the end of the week fell for the thirteenth time in fourteen weeks, decreasing by 3,607,000 barrels to 224,968,000 barrels during the week ending May 6th, after our gasoline inventories had decreased by 2,230,000 barrels over the prior week....our gasoline supplies decreased again this week even though the amount of gasoline supplied to US users decreased by 154,000 barrels per day to 8,702,000 barrels per day, because our imports of gasoline fell by 432,000 barrels per day to 695,000 barrels per day while our exports of gasoline rose by 106,000 barrels per day to 942,000 barrels per day....but even with 13 inventory drawdowns over the past 14 weeks, our gasoline supplies were still only 4.8% lower than last May 7th's gasoline inventories of 236,189,000 barrels, and 5% below the five year average of our gasoline supplies for this time of the year…

Even with this week's increase in our distillates production, our supplies of distillate fuels decreased for the 14th time in seventeen weeks and for the 26th time in thirty-six weeks, falling by 913,000 barrels to a seventeen year low of 104,029,000 barrels during the week ending May 6th, after our distillates supplies had decreased by 2,344,000 barrels to a 14 year low during the prior week….our distillates supplies fell again this week even though the amount of distillates supplied to US markets, an indicator of our domestic demand, fell by 179,000 barrels per day to 3,777,000 barrels per day, because our exports of distillates rose by 168,000 barrels per day to 1,357,000 barrels per day, and while our imports of distillates rose by 31,000 barrels per day to 122,000 barrels per day.....after forty-one inventory withdrawals over the past fifty-seven weeks, our distillate supplies at the end of the week were 22.9% below the 136,153,000 barrels of distillates that we had in storage on May 7th of 2021, and about 23% below the five year average of distillates inventories for this time of the year…

The depressed level of our distillate supplies has led to diesel fuel and heat oil prices that have been $1 per gallon more than the already elevated price of gasoline, and both gasoline and diesel hit new record highs on NYMEX this week...supplies of diesel and pricing of it are also elevated in Europe and globally, leading to economic restrictions and power outages in countries that cant afford it, such as Sri Lanka, Pakistan, and now India...because price of diesel for immediate delivery versus the next month widened to the largest ever gap last week, Gulf refiners found it more profitable to sell immediately to Europe than wait weeks for pipeline delivery to the US east coast, with those exports to Europe exacerbating domestic shortages....although those diesel shortages had developed over time, the loss of Russian oil has compounded the problem, because refineries get more diesel per barrel oil out of a heavy crude than they do from a light one, and most Russian oil exports are medium heavy sour crudes....that global shortage of diesel also explains the thinking behind the 1 million barrel per day SPR release better than the administration's political messaging about gasoline prices...for US Gulf Coast and European refineries that were built to use a medium heavy crude like Russian Urals, they need to find an equivalent grade of crude to replace it, or do some expensive blending of other grades to match it…remember that the administration’s first frantic moves after the Russian oil ban were to try to get Venezuelan oil and even Iranian oil back on the market to replace it?…since the US Strategic Petroleum Reserve is 60% heavier grades of crude, it appears that they’re pulling it out to partially replace embargoed Russian oil globally…most oil we get from shale is light and sweet, typically more expensive, but worthless when one is trying to replace Russian oil  losses...

Meanwhile, with this week's decrease in our oil exports and the big withdrawal from the SPR, our commercial supplies of crude oil in storage rose for the 17th time in 41 weeks and for the 20th time in the past year, increasing by 8,487,000 barrels over the week, from 415,727,000 barrels on April 29th to 424,214,000 barrels on May 6th, after our commercial crude supplies had increased by 1,303,000 barrels over the prior week…with this week’s increase, our commercial crude oil inventories rose to about 13% below the most recent five-year average of crude oil supplies for this time of year, and were still 19.3% above the average of our crude oil stocks as of the first weekend of May over the 5 years at the beginning of the past decade, with the disparity between those comparisons arising because it wasn’t until early 2015 that our oil inventories first topped 400 million barrels....since our crude oil inventories had jumped to record highs during the Covid lockdowns of spring 2020, and then jumped again after last year's winter storm Uri froze off US Gulf Coast refining, our commercial crude oil supplies as of this May 6th were 12.5% less than the 484,691,000 barrels of oil we had in commercial storage on May 7th of 2021, and were also 20.2% less than the 531,476,000 barrels of oil that we had in storage on May 8th of 2020, and 9.1% less than the 466,604,000 barrels of oil we had in commercial storage on May 3rd of 2019…

Finally, with our inventories of crude oil and our supplies of all products made from oil remaining near multi year lows, we are also continuing to keep track of the total of all U.S. Stocks of Crude Oil and Petroleum Products, including those in the SPR....the EIA's data shows that the total of our oil and oil product inventories, including those in the Strategic Petroleum Reserve and those held by the oil industry, and thus including everything from gasoline and jet fuel to propane/propylene and residual fuel oil, rose by 2,898,000 barrels this week, from 1,696,420,000 barrels on April 29th to 1,699,318,000 barrels on May 6th, after our total inventories had fallen by 479,000 barrels to a 13 1/3 year low during the prior week, and leaving our total liquids inventories still down by 89,115,000 barrels over the first 18 weeks of this year....

OPEC's Report on Global Oil for April

Thursday of this week saw the release of OPEC's May Oil Market Report, which includes details on OPEC & global oil data for April, and hence it gives us a picture of the global oil supply & demand situation ​at a time when major cities in China were under restrictive Covid lockdowns, while ​at the same time ​exports of Russian oil were curtailed by sanctions imposed by the West..​.​.in the face of those circumstances, OPEC and aligned oil producers ​had ​agreed to increase their output by 400,000 barrels per day for a ninth consecutive month, ie the 9th such increase from the previously agreed to July 2021 level, which was in turn part of the fifth production quota policy reset that they've made over the past twenty-three months, all in response to the pandemic-related slowdown and subsequent irregular recovery....note that with the course and impact of the Ukraine war and the pandemic still uncertain, we consider the demand projections made herein to be pretty speculative, and hence will not address any projections beyond the April estimates..

The first table from this month​'s report that we'll review is from the page numbered 45 of this month's report (pdf page 55), and it shows oil production in thousands of barrels per day for each of the current OPEC members over the recent years, quarters and months, as the column headings below indicate...for all their official production measurements, OPEC uses an average of production estimates by six "secondary sources", namely the International Energy Agency (IEA), the oil-pricing agencies Platts and Argus, ‎the U.S. Energy Information Administration (EIA), the oil consultancy Cambridge Energy Research Associates (CERA) and the industry newsletter Petroleum Intelligence Weekly, as a means of impartially adjudicating whether their output quotas and production cuts are being met, to thereby avert any potential disputes that could arise if each member reported their own figures...

As we can see on the bottom line of the above table, OPEC's oil output increased by 153,000 barrels per day to 28,648,000 barrels per day during April, up from their revised March production total that averaged 28,495,000 barrels per day....however, that March output figure was originally reported as 28,557,000 barrels per day, which therefore means that OPEC's March production was revised 62,000 barrels per day lower with this report, and hence OPEC's April production was, in effect, just 91,000 barrels per day higher than the previously reported OPEC production figure (for your reference,here is the table of the official March OPEC output figures as reported a month ago, before this month's revision)...

According to the agreement reached between OPEC and the other oil producers at their Ministerial Meeting on July 18th, 2021, the oil producers party to that agreement were to raise their output by a total of 400,000 barrels per day each month through December 2021, which was subsequently renewed at monthly meetings to include further 400,000 barrel per day production increases in January, February, March, April​, ​May ​and now June ​of 2022, and which would indicate an increase of 254,000 barrels per day each month from the OPEC members listed above, with the rest of the 400,000 bpd supplied by other producers. including Russia....but as we can see from the above table, OPEC's increase of 153,000 barrels per day fell far short of that​ commitment​...the production decreases in Nigeria, which has ongoing pipeline theft and leakage problems, and in Libya, with their repeated bouts of civil strife, were obviously the reason for the April shortfall, but several other OPEC members continue to be short of what they were expected to produce, as we'll see in the next table...

The adjacent table was originally included as a downloadable attachment to the press release following the 26th OPEC and non-OPEC Ministerial Meeting on March 2nd, 2022, which set OPEC's and other aligned producers​'​ production quotas for April... since war torn Libya and US sanctioned producers Iran and Venezuela are exempt from the production cuts imposed by the joint agreement that governs the output of the other OPEC producers, they are not shown here, and OPEC's quota is aggregated under the total listed for the 'OPEC 10', which you can see was to be at 25,315,000 barrels per day in March....therefore, the 24,464,000 barrels those 10 OPEC members actually produced in April were 851,000 barrels per day short of what they were expected to produce during the month, with Nigeria and Angola accounting for most of this month's shortfall, while only Kuwait and the UAE were able to produce what was expected of them.....

* * *

Recall that the original 2020 oil producer's agreement was to jointly cut their oil production by 23%, or by 9.7 million barrels per day, from an October 2018 baseline for just two months early in the pandemic, during May and June of 2020, but that initial 9.7 million bpd production cut agreement was extended to include July 2020 at a meeting between OPEC and other producers on June 6th, 2020....then, in a subsequent meeting in July of that year, OPEC and the other oil producers agreed to ease their deep supply cuts by 2 million barrels per day to 7.7 million barrels per day for August 2020 and subsequent months, which thus became the agreement that governed OPEC's output for the rest of 2020...the OPEC+ agreement for their January 2021 production, which was later extended to include February and March and then April's output, was to further ease their supply cuts by 500,000 barrels per day to a ​reduction of 7.2 million barrels per day from that original 2018 baseline...then, during a difficult meeting on April 1st of last year, OPEC and the other oil producers that are aligned with them agreed to incrementally adjust their oil production higher each month by a pre-set amount for each country over the following three months, thus extending their joint output cut agreement through July....production levels for August and the following months of last year were to be determined by a July 1st OPEC meeting, but that meeting was adjourned on July 2nd due to a dispute between the UAE and the Saudis over the 2018 reference production levels, and a subsequent attempt to restart that meeting on July 5th was called off....so it wasn't until July 18th 2021 that a tentative compromise addressing August 2021's output quotas was worked out, allowing oil producers in aggregate to increase their production by 400,000 barrels per day in August, and again by that amount in each of the following months, and also to boost reference production levels for the UAE, the Saudis, Iraq and Kuwait beginning in April 2022, which is now reflected in the OPEC production quota table you see above​, and which makes the effective monthly increase 432,000 barrels per day​....OPEC and other producers then agreed to increase their production in January 2022 by a further 400,000 barrels per day in a meeting concluded on the 2nd of December, 2021, and reaffirmed their intention to continue that policy with another 400,000 barrel per day increase in February at a meeting concluded January 4, 2022, and then agreed to stick to that 400,000 bpd oil output increase in March, despite pressure from the US to raise output more quickly, at a meeting on February 2nd....then, at a meeting on March 2nd, OPEC and its oil-producing allies, which included Russia, decided to hold their production increase at that level thru April in an OPEC+ meeting that only lasted 13 minutes, their shortest meeting ever...then on March 31, OPEC and aligned producers agreed to reaffirm the decisions of the prior Ministerial meetings and again limit their production increase ​for May ​to the agreed 400,000 barrels per day, because "the current [oil market] volatility is not caused by fundamentals, but by ongoing geopolitical developments"...most recently, in an OPEC and non-OPEC Ministerial Meeting held on May 5th, they again reaffirmed the decision of the July18th 2021 meeting to increase production by 432,000 barrels per day in June of this year..

Hence OPEC arrived at the production quotas for August 2021 through April of this year by repeatedly readjusting the original 23%, or 9.7 million barrel per day production cut from the October 2018 baseline that they first agreed to for May and June 2020, first to a 7.7 million barrel per day output reduction from the baseline for the remainder of 2020, then to a 7.2 million barrel per day production cut from the baseline for the first four months of this year, which was subsequently raised to an 8.2 million barrel per day oil output reduction after the Saudis unilaterally committed to cut their own production by a million barrels per day during the Covid surge of February, March, and then later during April of last year....under the agreement prior to the current one affecting this month, OPEC's production cut in April 2021 was set at 4,564,000 barrels per day below the October 2018 baseline, which was lowered to a cut of 3,650,000 barrels per day from the baseline with the prior comprehensive agreement, which thus set the July production quota for the "OPEC 10" at 23,033,000 barrels per day, with war torn Libya and US sanctioned producers Iran and Venezuela exempt from the production cuts imposed by thiat agreement....for OPEC and the other producers to increase their output by 400,000 barrels per day from that July 2021 level, each producer would be allowed to initially increase their production by just over 1% per month since that time...for OPEC alone, a 254,000 barrel per day increase each month since, begining with the July 2021 quota of 23,033,000 barrels per day, is how they arrived at the 25,​315,000 barrels per day quota for OPEC for ​April that you see on the table above..

The next graphic from this month's report that we'll look at shows us both OPEC's and worldwide oil production monthly on the same graph, over the period from May 2020 to April 2022, and it comes from page 48 (pdf page 58) of OPEC's May Oil Market Report....on this graph, the cerulean blue bars represent OPEC's monthly oil production in millions of barrels per day as shown on the left scale, while the purple graph represents global oil production in millions of barrels per day, with the metrics for global output shown on the right scale....

Including this month's 153,000 barrel per day increase in OPEC's production from their revised production of a month earlier, OPEC's preliminary estimate is that total global liquids production decreased by a rounded 770,000 barrels per day to average 98.74 million barrels per day in April, a reported decrease which came after March's total global output figure was apparently revised down by 150,000 barrels per day from the 99.66 million barrels per day of global oil output that was estimated for March a month ago, as non-OPEC oil production fell by a rounded 920,000 barrels per day in April after that downward revision, largely due to the loss of ~1,200,000 barrels per day from Russia and Kazakhstan, even as the US and Norway were able to increase their production by​ a combined​ ~300,000 barrels per day

Even after that decrease in April's global output, the 98.74 million barrels of oil per day that were produced globally during the month were 6.70 million barrels per day, or 6.​1% more than the revised 93.​04 million barrels of oil per day that were being produced globally in April a year ago, which was the fourth month that OPEC and their allied producers had reduced their output cuts by 500,000 barrels per day from the 7.7 million barrels per day production cut that they applied to the last 5 months of 2020, but also the third month that the Saudis had unilaterally decreased their own production by a million barrels per day in response to the pandemic's hit to demand (see the May 2021 OPEC report (online pdf) for the originally reported April 2021 details)...with this month's modest increase in OPEC's output while global output was falling, their April oil production of 28,648,000 barrels per day amounted to 29.0% of what was produced globally during the month, up from their revised 28.6% share of the global total in March....OPEC's April 2021 production was reported at 25,083,000 barrels per day, which means that the 13 OPEC members who were part of OPEC last year produced 3,515,000 barrels per day, or 14.2% more barrels per day of oil this April than what they produced a year earlier, when they accounted for 27.0% of global output...

Even after the decrease in global oil output that we've seen in this report, the amount of oil being produced globally during the month was still a bit more than the expected global demand, as this next table from the OPEC report will show us....

The above table came from page 27 of the April Oil Market Report (pdf page 37), and it shows regional and total oil demand estimates in millions of barrels per day for 2021 in the first column, and then OPEC's estimate of oil demand by region and globally quarterly over 2022 over the rest of the table...on the "Total world" line in the third column, we've circled in blue the figure that's relevant for April, which is their estimate of global oil demand during the second quarter of 2022....OPEC is estimating that during the 2nd quarter of this year, all oil consuming regions of the globe will be using an average of 98.44 million barrels of oil per day, which is a downward revision of 670,000 barrels per day from their estimate for 2nd quarter demand of a month ago (that revision is circled in green)...but as OPEC showed us in the oil supply section of this report and the summary supply graph above, OPEC and the rest of the world's oil producers were producing 98.74 million barrels per day during April, which would imply that there was a surplus of around 300,000 barrels per day of global oil production in March, when compared to the demand estimated for the month...

Note that in green we have also circled an upward revision of 330,000 barrels per day to OPEC's previous estimates of first quarter demand...for March, that means that that the 710,000 barrels per day global oil output surplus we had previously figured for March would be revised to a surplus of 230,000 barrels per day, after the downward revision of 150,000 barrels per day to March's global oil output that's implied in this report is also taken into account... similarly, the upward revision to first quarter demand means that the global oil surplus of 340,000 barrels per daywe had previously figured for February would now be revised to a surplus of just 10,000 barrels per day, but that the 410,000 barrels per day global oil output shortage we had previously figured for January would be revised to a shortage of 740,000 barrels per day, in light of the 330,000 barrel per day upward revision to first quarter demand....

Also note that in orange we've also circled an upward revision of 100,000 barrels per day to 2021's demand, which also means that the supply shortfalls that we previously reported for last year would have to be revised....a separate table on page 26 of the March Oil Market Report (pdf page 36) indicates the revisions to 2021 demand included an an upward revision of 180,000 barrels per day to 4th quarter 202​1​ demand, and upward revisions of 70,000 barrels per day to oil demand for the 1st quarter, the 2nd quarter and the 3rd quarters of 2021...we're not inclined to go back and recompute the shortages for each month of 2021, but we do have adequate totals for the year from our prior reports such that we can estimate an aggregate revision​ for the year​...

With the release of OPEC's January Oil Market Report four months ago, we had complete and revised data for all of 2021, and found that the world was short 527,910,000 barrels of oil during the year, which worked out to a shortage of 1,446,300 barrels of oil per day....OPEC's February​ 2022​ Oil Market Report then revised aggregate global demand for 2021 higher by 10,000 barrels per day, OPEC's March Oil Market Report revised 2021​'s​ demand higher by 90,000 barrels per day, OPEC's ​April Oil Market Report revised 2021 demand higher by 70,000 barrels per day, and now this month's report has revised that demand higher by another 100,000 barrels per day....that means our original estimate of 2021's oil shortage now needs to be revised a total 270,000 barrels per day higher, or to 1,716,300 barrels per day...that would therefore revise the total shortage total shortage of oil for last year up to 537,765,000 barrels....we're still far from running out, however, because the quantities of oil being produced globally during the pandemic of 2020 still averaged over 1.1 trillion barrels, or over 3 million barrels per day more than anyone wanted...

This Week's Rig Count

The number of drilling rigs running in the US rose for the 73rd time over the prior 85 weeks during the week ending May 13th, but it still remained 10.0% below the prepandemic rig count.....Baker Hughes reported that the total count of rotary rigs drilling in the US increased by nine to 714 rigs this past week, which was also 261 more rigs than 453 rigs that were in use as of the May 14th report of 2021, but was still 1,215 fewer rigs than the shale era high of 1,929 drilling rigs that were deployed on November 21st of 2014, a week before OPEC began to flood the global market with oil in an attempt to put US shale out of business….

The number of rigs drilling for oil was up by 6 to 563 oil rigs during this week, after rigs targeting oil had increased by 5 during the prior week, and there are now 211 more oil rigs active now than were running a year ago, even as they still amount to just 35.0% of the shale era high of 1609 rigs that were drilling for oil on October 10th, 2014, and as they are still down 17.6% from the prepandemic oil rig count….at the same time, the number of drilling rigs targeting natural gas bearing formations rose by 3 to 149 natural gas rigs, which was the most natural gas rigs deployed since September 13th, 2019, up by 49 natural gas rigs from the 100 natural gas rigs that were drilling during the same week a year ago, even as they were still only 9.3% of the modern high of 1,606 rigs targeting natural gas that were deployed on September 7th, 2008…in addition to rigs targeting oil and gas, Baker Hughes continues to show two "miscellaneous" rigs active; one is a rig drilling vertically for a well or wells intended to store CO2 emissions in Mercer county North Dakota, and the other is also a vertical rig, drilling 5,000 to 10,000 feet into a formation in Humboldt county Nevada that Baker Hughes doesn't track; a year ago, there was only one such "miscellaneous" rig running...

The offshore rig count in the Gulf of Mexico increased by one to seventeen this week, with all of this week's Gulf rigs drilling for oil in Louisiana waters....that's two more than the count of offshore rigs that were active in the Gulf a year ago, when all 15 Gulf rigs were drilling for oil offshore from Louisiana…in addition to rigs drilling in the Gulf, there's also an offshore rig drilling in the Cook Inlet of Alaska, where natural gas is being targeted at a depth greater than 15,000 feet....a year ago, there were no offshore rigs other than those deployed in the Gulf of Mexico....

This week also saw the startup of a water based directional rig, drilling for oil at a depth between 10,000 and 15,000 feet, inland in the Galveston Bay area, and during the same week of a year ago, there was also one such "inland waters" rig deployed...

The count of active horizontal drilling rigs was up by 5 to 651 horizontal rigs this week, which was also 238 more rigs than the 408 horizontal rigs that were in use in the US on May 14th of last year, but still 52.6% less than the record 1,374 horizontal rigs that were drilling on November 21st of 2014....at the same time, the directional rig count was up by 4 to 38 directional rigs this week, and those were up by 10 from the 28 directional rigs that were operating during the same week a year ago…meanwhile, the vertical rig count was unchanged at 25 vertical rigs this week, while those were also up by 10 from the 15 vertical rigs that were in use on May 14th of 2021….

The details on this week’s changes in drilling activity by state and by major shale basin are shown in our screenshot below of that part of the rig count summary pdf from Baker Hughes that gives us those changes…the first table below shows weekly and year over year rig count changes for the major oil & gas producing states, and the table below that shows the weekly and year over year rig count changes for the major US geological oil and gas basins…in both tables, the first column shows the active rig count as of May 13th, the second column shows the change in the number of working rigs between last week’s count (May 6th) and this week’s (May 13th) count, the third column shows last week’s May 6th active rig count, the 4th column shows the change between the number of rigs running on Friday and the number running on the Friday before the same weekend of a year ago, and the 5th column shows the number of rigs that were drilling at the end of that reporting week a year ago, which in this week’s case was the 14th of May, 2021...

Once again, it appears most of the activity was outside the major oil basins this week, with the two oil rigs added to Oklahoma's Cana Woodford a notable exception...Oklahoma also saw the addition of a natural gas rig to the Arkoma Woodford, and the removal of an oil rig from the Ardmore Woodford...since that nets out to an addition of two rigs ​in the state ​and Oklahoma's rig count was up by four, we have to figure two more rigs were added elsewhere in the state in a basin that Baker Hughes doesn't track...likewise, the rigs added in both Colorado and Wyoming were in basins that Baker Hughes doesn't track, since the rig count in the Denver-Julesburg NIobrara chalk of the Rockies front range was unchanged, and while we can assume that the rig added in Utah was in the Uintah basin by its county location, that's also a basin that Baker Hughes doesn't track...meanwhile, the rig added in the Gulf of Mexico accounts for the increase in Louisiana, and as usual, the rig added in North Dakota was in the Williston basin, while the rig pulled out of Kansas had been drilling in the Mississippian shale, with the Mississippian rig that remains across the state line in Oklahoma....

checking the Rigs by State file at Baker Hughes for the changes in Texas, we find that two rigs were added in Texas Oil District 1, but that a rig was pulled out of Texas Oil District 2, which accounts for the Eagle Ford shale ​one rig ​increase, and that a rig was pulled out of Texas Oil District 10, which accounts for the rig lost in the Granite Wash basin in the panhandle region....remarkably, rig activity in all four Permian basin Districts remained unchanged...meanwhile, for natural gas rigs, we had the one added in Oklahoma's Arkoma Woodford, and two added in "other basins" that Baker Hughes doesn't track, which could have been in any of those we've previously mentioned, or even not, if a gas rig addition somewhere had been masked by the removal of an oil rig in the same location...

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More Inflation: Natural Gas Up Sharply, Summer Electricity Bills to be Impacted - – Even Ohio’s own natural gas is feeling inflationary pressures. Prices are up 150-percent or around four dollars per mcf from a year ago. And electricity bills will be impacted because more and more electrical power is produced by burning natural gas. An Ohio industry association says there are the usual culprits like COVID recovery, the war and overall inflation. But gas producers are also uncertain about what the Biden administration might do next, with canceled pipelines, delayed permits and more. For example, the Mountain Valley Pipeline from northwest West Virginia to Virginia is 95-percent complete, awaiting permitting for the remainder of it. When the oil and gas industry started tapping the Utica Shale here in Ohio over ten years ago, we thought we’d never complain about the price of natural gas again.

Earnings report released by Ascent Resources – Oklahoma Energy Today - Oklahoma City-based Ascent Resources Utica Holdings, LLC released its first quarter 2022 financial report on Tuesday showing a net loss of $1.6 billion and adjusted net income of $81 million. The company’s adjusted EBITDAX was $280 million while the net loss was reported to have been largely driven by a $1.6 billion unrealized commodity derivative fair value loss primarily due to an increase in the forward strip for natural gas. Ascent incurred $240 million of total capital expenditures in the first quarter of 2022 including $199 million for well costs, $31 million for acquisition and leasehold costs and another $10 million for capitalized interest.

Ascent 1Q – Drills 17 Ohio Wells, Loses $1.5B on Bad Derivatives | Marcellus Drilling News - Ascent Resources, originally founded as American Energy Partners by gas legend Aubrey McClendon, is a privately-held company that focuses 100% on the Ohio Utica Shale. Ascent is Ohio’s largest natural gas producer and the 8th largest natural gas producer in the U.S. The company issued its first quarter update earlier this week. Ascent averaged production of 2.0 Bcfe/d for the quarter, a 9% increase over 1Q21. Nearly all of Ascent’s production (93%) was natural gas, while the rest was oil and NGLs. Ascent generated -$2 million of free cash flow (yes, negative free cash flow) and lost $1.5 billion during 1Q based on bad bets on derivatives/hedging.

`Riverbend Energy Shops Non-Operated Wells in Ohio Utica, Elsewhere - Riverbend Energy Group is, according to its website, “a multi-faceted investment firm, utilizing risk-weighted deal evaluation processes to deploy capital into a variety of investment theses in the U.S. energy sector.” Which is gobbledegook for “we invest in oil and gas wells.” The company mainly invests in non-operated oil and gas wells, although it also has some operated wells in its portfolio (and investments in renewables too). Riverbend is, according to sources speaking with Reuters, working with an unnamed investment bank to shop three portfolios of non-operated oil and gas assets–with one of them containing Utica Shale assets.

Preparing for petrochemicals - Chemical & Engineering News - On Sept. 22, 2021, people living along the Ohio River in Beaver County, Pennsylvania, were alarmed by a peculiar odor that many likened to the smell of maple syrup. “I thought it was one of my neighbors cooking something.” But the smell was too strong to be a cooking odor. Another neighbor told her she’d heard that the Shell plant had an accident of some sort. Matt Stewart of Brighton Township, a community uphill from Beaver, also experienced the smell. “As I recall it lasted a couple of days,” says Stewart, a city planner for a nearby town. “It didn’t quite smell like maple syrup. Kind of a good smell, but kind of weird.” In the days that followed, a flurry of posts on local social media news pages called out the strange odor. Speculation focused on the Shell ethylene cracker and polymerization plant, which is scaled to manufacture 1.6 million metric tons of polyethylene pellets annually. Shell responded on its Facebook page on Sept. 26, confirming an odor from the plant that the company said may have been associated with a procedure that prevents cooling-tower corrosion. The next day, Shell received a notice of violation from the Pennsylvania Department of Environmental Protection (DEP) for the emission of a malodorous air contaminant. The department had received 16 complaints about the smell from area residents. “In at least one instance, the complainant was a local official contacting DEP on behalf of more than one constituent,” Lauren Fraley, community relations coordinator for the department, says in an email response to queries. Shell informed the DEP that sodium tolyltriazole, a copper corrosion inhibitor, caused the odor. On its website, the company describes an accidental mixture of the chemical with bleach, causing the odor. Shell agreed to pay a civil penalty of $4,313. A Sept. 24 post on “The News Alerts of Beaver County” page on Facebook noted the smell, asking if anyone knew where it came from. “Cracker plant!” Debbie Sunny Cline commented. Many in the 95-comment thread agreed. Nearly everyone smelled it. “It’s been unbearable for the last three days in Vanport,” commented Jessica Kunca, referring to a town across the river from the plant. Stewart notes a groundswell of concern among friends and neighbors. “When we found out the smell was because of the Shell plant, it bothered a lot of people,” he says. “We have friends who were like, ‘That’s the last step. This is a harbinger of what’s to come.’ It really freaked out a lot of people.” Opponents of the plant view the advent of chemical production based on ethane extracted via hydraulic fracturing (fracking) as a giant step backward for southwest Pennsylvania. The stage is set, they say, for one economic monoculture, steel from coal and iron ore, to be replaced by another, chemicals and plastics from fossil fuels.

Mariner East Pipeline has sparked a boom in fracked gas exports from Philly region - Nearly once a day last year, a large tanker sailed up the Delaware River and docked at Marcus Hook Terminal to take on a cargo of liquid fuel, produced mostly from the Marcellus and Utica Shale formations in Western Pennsylvania and neighboring states. The fuels — propane, butane, and ethane — were destined for markets in Europe, the Caribbean, Asia, Africa, and South America, where they’re used for heating, motor fuel, and as raw material for petrochemical manufacturing. Almost all the products were piped into Marcus Hook via the controversial Mariner East Pipeline system, the fuel transportation network whose protracted construction was hugely disruptive along its 350-mile route but finally seems to be delivering on its promise as an economic engine. For all of 2011, when shale gas extraction was picking up momentum in Pennsylvania, only one vessel departed Delaware Bay loaded with gas liquids, according to data supplied by the Maritime Exchange for the Delaware River and Bay, a trade group for the shipping industry. Gas liquids are a byproduct of natural gas production, as well as oil refining. By last year, 328 tankers left Delaware River terminals carrying shipments of gas liquids, or nearly one out of four of the 1,346 cargo vessels that set sail from the region (container vessels accounted for the majority). While other industrial sectors stalled during the pandemic, the number of vessels loaded with propane, butane, and ethane at Philadelphia-area wharves jumped 61% in the last two years. It’s a similar story nationwide, where exports of gas liquids steadily climbed in the last decade, linked to the expansion of shale exploration and hydraulic fracturing, or fracking. Exports of natural gas liquids increased exponentially from 164,000 barrels per day in 2010 to 2.3 million barrels per day last year, according to the U.S. Energy Information Administration. Most of the export traffic originates from Texas and Louisiana ports on the Gulf of Mexico.| Environmentalists have opposed the expansion of shale oil and gas production because of harmful climate impacts and believe exporting the products only prolongs the use of fossil fuels over alternatives. But supporters of fuel exports say they are vital to generating foreign exchange and jobs, and in some cases, displace dirtier fuel like coal. Propane, the bottled fuel associated in America with backyard barbecues, is widely used overseas for heating, cooking, and in some petrochemical production. It’s also an alternative fuel in Europe for piped Russian gas. Butane is blended into gasoline. And ethane is the raw material in the production of ethylene, a building block for plastics, and is considered a cleaner and more efficient alternative to petroleum products. About 90% of the 328 ships last year loaded with gas liquids on the Delaware River came from one location: the Marcus Hook Terminal, a former Sunoco refinery that shut down in 2011 and has been rebuilt by its new owner, Energy Transfer LP of Dallas, as a facility for processing, storing, and transloading gas liquids onto ships. Few projects have caused as much uproar as Mariner East. Sunoco Pipeline, the Energy Transfer subsidiary that built the project, drew $24 million in fines from Pennsylvania regulators during construction, according to a tally by the PA Environment Digest blog. And last year Pennsylvania Attorney General Josh Shapiro announced a criminal indictment of Energy Transfer related to spills and leaks of drilling mud at nearly two dozen locations across Pennsylvania, including Marsh Creek State Park in Chester County.

MVP's prospects improve, but will it be enough? Production bottlenecks and global energy security concerns stemming from the Ukraine war have flipped the script on various aspects of the U.S. energy markets. One of them is the softening of Wall Street and regulatory resistance to investment in new hydrocarbon infrastructure. That’s been particularly good news for the swarm of LNG export projects looking to move forward. It’s also improved somewhat the prospects for the embattled Mountain Valley Pipeline (MVP), the last major greenfield project for moving natural gas out of the Northeast from the Appalachian Basin. A court vacated three of the project’s key federal authorizations earlier this year, but the project recently got a greenlight when the Federal Regulatory Energy Commission (FERC) approved MVP’s amendment certificate application. Equitrans Midstream said last week that it would pursue new permits and target in-service in the second half of 2023. But the prospect of more legal challenges looms, and the question is, will it get across the finish line before severe constraints arise? In today’s RBN blog, we provide an update on the Appalachian gas market.The Appalachia production basin has long been bedeviled by midstream constraints, often leading to deep price discounts vs. the national gas benchmark Henry Hub. There have been brief respites when new capacity has come online, allowing more gas to flow out, but if you've been reading our blogs and natural gas reports lately, you know we've been sounding the alarm about the growing specter of constraints reemerging (see our Headed for Heartbreak series). The boom in pipeline reversals, greenfield projects, and pipeline expansions out of Appalachia that characterized much of the 2010s is pretty much over, with just one major takeaway newbuild left in the region: MVP, the 2-Bcf/d greenfield pipeline from northern West Virginia to south-central Virginia.The Ukraine war, bans on Russian energy supplies, and the related energy security concerns have all renewed political and regulatory support for U.S. gas supply and infrastructure to some extent. But environmental opposition — and the resulting legal actions against new gas infrastructure — haven’t abated, and generally speaking, it’s gotten much harder in recent years for projects offering additional capacity to gain traction, especially in the Northeast. Given that reality, in the latest round of earnings calls over the past few weeks, Appalachian producers have stuck to their disciplined stance, even in the face of the highest gas prices in years — largely opting to stay in maintenance mode until there are clear signals that the infrastructure will be there to support supply growth. That means that as constraints in getting gas out of the Northeast worsen, Appalachian production growth and outflows to growing demand markets, like LNG exports, will be largely paced by new takeaway capacity out of the basin (see Up Around the Bend, Part 3).,Suffice it to say, there’s a lot riding on MVP, as the last approved takeaway project that could at least defer severe constraints for a bit longer and facilitate production growth. There’s also a good deal of skepticism about the likelihood of the project being completed, given the dismal track record of natural gas pipelines in the region that faced similar environmental opposition as MVP.

FERC extends construction deadlines for two US LNG projects despite protests | S&P Global Commodity Insights - Over objections from environmental groups, the Federal Energy Regulatory Commission agreed to extend construction deadlines for two US Gulf Coast LNG projects and signed off on more construction activites for a pipeline serving a third. The actions could be a positive sign for US LNG export-related projects awaiting action from the regulator, amid uncertainties over how presures to strengthen environmental reviews might affect project timelines. FERC May 5 gave Cheniere Energy's 10 million mt/year Corpus Christi Liquefaction Stage 3 project in Texas and related pipeline projects another 31 months, until June 30, 2027, to complete construction and enter service (CP18-512, CP18-513). Notably, the commission rejected Sierra Club and Public Citizen arguments that the delay was driven by market prices rather than a response to unforseeable difficulties associated with the coronavirus pandemic. The commission reasoned that while it may deny an extension when a project is no longer commercially viable, the record did not back that conclusion in this case. "The companies continue to pursue the project and remain optimistic that the COVID-19 pandemic's impact on LNG market conditions is waning," FERC said. It also cited evidence of rising demand, which it said was supported by the recent US-EU partnership to increase US LNG supplies to Europe by at least 15 Bcm in 2022, with expectations of increased demand going forward. The companies have shown there is a continued interest in the project, the order said. A turnabout in LNG prices in Europe and Asia since record lows in 2020 has spurred renewed interest in US LNG supplies. Offering relatively low fixed fees and destination flexibility for cargoes, US LNG exporters and project developers including Cheniere, Venture Global LNG, NextDecade and Energy Transfer have announced new long-term deals in recent months. The swings in delivered prices also present opportunities in the prompt market for US FOB cargoes. Platts DES NWE for June, the delivered price of LNG into Northwest Europe, was assessed May 9 at $18.710/MMBtu. While that was down sharply from a record high of $60.925/MMBtu March 8, the current price is still more than double what it was on the same day a year ago. Across the Atlantic, the Platts Gulf Coast Marker for US FOB cargoes loading 30-60 days forward was assessed at $18.100/MMBtu May 9. The current GCM value also is more than double what it was a year ago. Similarly, FERC gave the Lake Charles LNG project and Trunkline Gas' related pipeline modifications project another three years, until Dec. 16, 2028, complete construction and start service (CP14-119, CP14-120). The applicants also cited pandemic-related disruptions to the global LNG market as a source of delay, and were countered by Sierra Club, Healthy Gulf and Louisiana Bucket Brigade. The environmentalists urged FERC to reexamine public benefits of the project in light of climate change and growth in renewable energy adoption. New information requires FERC to undertake an analyses to account for endangered species and environmental justice, the environmental groups argued. The commission disagreed, saying the companies requested only to change the timing, not the nature of the projects. FERC again cited evidence of increased demand for LNG. In addition, FERC determined the listing of additional species did not conflict with the extension decision. Should it become necessary based on consultation with the National Marine Fisheries Service or the US Fish and Wildlife Service, FERC will supplement its environmental review under the National Environmental Policy Act before allowing construction to start, the commission said. It described Sierra Club's argument that FERC did not adequately consider impacts on environmental justice communities as "an improper collateral attack" on the authorization order.

Chesapeake Energy wants to make LNG deals, invest in export terminal --Shale gas producer Chesapeake Energy will try to capitalize on its enlarged Haynesville Shale position along the US Gulf Coast by cutting more deals for LNG exports priced at global indexes, executives said. The company might take a stake in an LNG terminal in the future and is already looking for direct contracts with overseas consumers, all in an effort to get higher prices, Chesapeake CEO and President Nick Dell'Osso said on a May 5 call to discuss first-quarter earnings. Chesapeake is joining its shale gas competitors in pressing for pipeline improvements and new LNG export terminals to ship gas to Europe and break the continent's dependence on Russian natural gas after the invasion of Ukraine. "If the deal is linked to Henry Hub [in the US], that is not as attractive to us," "What we are trying to diversify into is some sort of LNG index deal" at, for example, the Dutch Title Transfer Facility, or TTF. Singh said Chesapeake's natural gas production in the Haynesville, certified as lower in emissions, will attract European companies and other buyers interested in low-carbon gas. Observers said deals are in the works. . "Chesapeake expects to have an announcement this year — stay tuned." Dell'Osso said he doubts US natural gas prices, currently at 14-year highs above $8/MMBtu, will remain elevated for long. "The prompt month prices are so far above break-evens for supply in the US that we just don't expect that to be a persistent price environment. ... There are ample resources in this country to drive prices below $4 at the long end of the curve." Chesapeake raised its estimate of 2022 adjusted free cash flow to $2.7 billion, with $532 million of free cash reported in the first quarter, a company record. Chesapeake kept first-quarter capital spending to $344 million, below its guidance, while producing 60,000 barrels of oil per day and 3.2 Bcf/d of natural gas, slightly above guidance. Chesapeake is under pressure from activist shareholder Kimmeridge Energy Management Company to increase the value of its shares by shedding shale oil operations in Texas and focus on natural gas alone. "Chesapeake trades at one of the lowest valuation multiples and highest [free cash flow] yields in the sector despite the company's high quality assets in the core of the Marcellus and Haynesville," Kimmeridge said in an email May 5. "The stock has materially underperformed its gas-weighted peers, which we believe is a direct result of the lack of strategic clarity coming out of bankruptcy."

US Midstreamers Using Expansions as 'Quick Market Solutions' for Rising Production - U.S. midstream operators are focusing on incremental additions to their natural gas infrastructure in the Haynesville Shale, Permian and Appalachia basins as quicker and lower-risk solutions to rising production growth. DCP Midstream LP is in “advanced discussions” with its partners on the Gulf Coast Express Pipeline (GCX) to bring “quick and efficient” capacity to the market via an expansion, according to management. CEO Wouter van Kempen last week said an open season was set to be launched “in the coming days” for the 2 Bcf/d Permian conduit. The pipeline is co-owned and operated by Kinder Morgan Inc., whose management team discussed the potential expansion with investors last month. Altus Midstream Co. also is an owner in the 530-mile pipeline, while Targa Resources Corp. sold its 25% stake earlier this year to an undisclosed buyer. “The good thing about GCX…you don’t have to go through a lot of right-of-way. There’s not a lot of uncertainty. It’s a fairly quick market solution,” van Kempen said on DCP’s first quarter 2022 earnings call. Management also is considering taking an additional equity investment in the pipeline. “In general, we like the asset,” the CEO said. “It’s a great strategic fit with our asset base. It’s fee-based; it complements the portfolio.” Van Kempen said that with a strong long-term outlook for U.S. production, opportunities across DCP’s footprint are increasing, “and we’re positioned to respond.” He noted, however, that DCP recognizes that a key component to taking advantage of these opportunities is ensuring downstream natural gas liquids and natural gas takeaway options for its customers. “Over the last 10 years, DCP has built a solid track record of developing and driving downstream solutions as residue takeaway has become a focal point for the Permian and a potential bottleneck to growth,” he said. To that end, DCP is adding large-diameter gathering lines and compression to optimize and enhance its gathering system in the Permian’s Midland sub-basin. Utilization is expected to increase in the second half of the year given increased activity among private producers, according to management. “Currently, we benefit from having available capacity, and we’re positioned to invest as necessary to fill it,” van Kempen said. DCP also is prioritizing investments in the Delaware sub-basin. The midstreamer is expanding the pipeline network and adding compression in order to align with its customers’ production schedules. Management reiterated its expectations for production in the region to grow between 5 and 7% year/year in 2022. “We’re seeing a number of opportunities in these growing areas, but we will continue to take a disciplined approach when deploying capital,” van Kempen said. The company spent $9 million in expansion capital expenditures (capex) and equity investments during the first quarter. Sustaining capex totaled $13 million. DJ Assets Filled To The Max

Energy Transfer Building Export Options Via Haynesville, Permian for LNG and Lots of Liquids -With customer demand growing, Energy Transfer LP’s management team is confident that the Lake Charles, LA, natural gas export project will be sanctioned before the end of the year. During the recent first quarter conference call, Co-CEO Tom Mason said “we’re really excited about where we are today” regarding the pending liquefied natural gas (LNG) facility in Louisiana. “We’ve got really strong demand from really high-quality customers.” Mason told analysts. “We’re really confident” about making a positive final investment decision (FID) by year’s end. “Of course, the marketing and the offtake agreements are key to getting a deal done.”An application to extend the construction deadline has been extended to 2028 by the Federal Energy Regulatory Commission. A bid process is underway to secure engineering, procurement and contracting. “So I think things are going well, and we’re really excited about it,” Mason said of Lake Charles. The world’s kind of gone upside down with what’s going on in Ukraine” and accelerated the demand for more gas. That in turn has led to “good progress” on netting contracts.COO Mackie McCrea said interest in the Lake Charles facility had “really taken off” following Russia’s invasion into Ukraine.“It’s sad it took a travesty like what’s going on in Ukraine to wake up the world,” Mackie said. “It certainly has woken up Europe and Asia and China. Hopefully, they’ll wake up some of our administrators,” he said of the federal government.“We’ve got an enormous amount of interest, as you can imagine, and we would be shocked if we don’t get to FID by the end of this year…”With the FID, management is “also looking forward to all the upstream pipeline transportation business that will come with that project.”Asked if Energy Transfer was getting inquiries from European utilities about obtaining natural gas supply, Mason demurred.“It’s an interesting question because the utilities are kind of struggling with trying to satisfy their immediate and near-term demand for gas, as you could imagine. But for long-term contracts, they’re still interested. I think there’s been some issues with financial matters based on the high price of demand for natural gas currently. And so there could end up being some government guarantees for some of the longer-term offtake contracts, so we’re certainly in contact with them.”For now, there’s been “a lack of real commitments for long-term contracts at this point,” Mackie said.Energy Transfer’s original partner for Lake Charles was Shell plc, but the supermajor pulled out in 2020 as the market faltered.Energy Transfer continues to look for partners, though, Mason explained. The plan is “to do some portion of equity sell down to primarily infrastructure funds. There’s lots of money that is looking for high-quality, long-term cash flow from a project like this. So, we think that’s going to be a really good way of financing it. We expect that we keep at least 25% of the project.“We haven’t made final decisions on that yet, but…there’s just a lot of interest in the equity side of this project.”

Why EPA might make new gas plants catch carbon - It has been seven years since EPA finalized a rule requiring new coal-fired power plants to capture and store a share of their carbon emissions. Despite litigation and a proposed repeal by the Trump administration, it is still in place. Now EPA is preparing to demand that newly built natural gas-fired generators do more to limit their own emissions. And environmentalists hope the new rule, expected later this year, will also rely on an aggressive technology like carbon capture, utilization and storage, or CCUS, to deliver deep cuts in climate pollution. No gas-fired generators currently use that technology. A draft white paper that EPA released last month and is now taking public comment on lays out technical options for CO2 abatement at new gas power plants. Its section on CCUS cites a combined-cycle gas plant in Massachusetts that captured up to 95 percent of its CO2 for use in carbonated beverages — until it shuttered in 2005. A power plant with CCUS is slated to come online in Scotland in 2026. Industry advocates, including some who back the development of CCUS for gas plants, have suggested EPA would struggle to show that the technology is ready to be the basis of a rule. Jeff Holmstead, a partner at Bracewell LLC, said that EPA might have released the white paper to signal to industry that it would eventually promulgate a rule requiring steeper carbon cuts through a technology like CCUS, which is currently a focus of Energy Department research and development. DOE received more than $2.5 billion for a CCUS demonstration program in the infrastructure law last year. The spending will support at least two pilot projects at natural gas generators. “By talking about CCS and hydrogen, they show that they’re thinking about the longer-term question of what ultimately are we going to do with gas plants that will be needed to maintain reliability for many years,” said Holmstead, who headed the EPA air office under President George W. Bush. “But I wouldn’t read that as saying that CCS or hydrogen are really on the table for the rulemaking they have to do in the next year.” Holmstead said the paper makes it clear that those technologies aren’t adequately demonstrated yet.

NYMEX Henry Hub, US spot gas prices plunge, production gains ease tight supply | S&P Global Commodity Insights - Prices for US natural gas spot and futures plunged in May 9 trading amid higher US gas production and a forecast reprieve from the late-season cold snaps that have kept residential-commercial demand elevated. The NYMEX Henry Hub prompt-month contract fell $1.017 to $7.026/MMBtu on May 9, preliminary settlement data from the CME Group showed. The pricing movement was the prompt-month's largest single day movement since late January, with daily swings of more than $1 in either direction rare even as volatility has increased in recent months. May 9 marked a second consecutive trading session of downward momentum for the NYMEX Henry Hub June, as the contract stepped back from the 13-year high of $8.783/MMBtu reached on May 5. Spot gas prices across the United States also tumbled in May 9 trading for next-day flows, with the historic futures rally pulling physical prices along for the ride in recent weeks. Daily decreases ranged from 30 cents to more than $1/MMBtu, with most pricing locations in all regions remaining in a range of $7-$8/MMBtu, preliminary settlement data from S&P Global Commodity Insights showed. US gas production has increased over the last week to average 94.3 Bcf/d May 7-9, up from averaging 93.2 Bcf/d in the seven days prior from April 30-May 6, according to data from S&P Global. Gas production crossed the 94 Bcf/d threshold on only eight occasions during the first four months of 2022, with year-to-date production averaging 93.1 Bcf/d. The recent production increases largely came from the Permian, SCOOP/STACK, and Bakken – all associated natural gas basins. Platts has assessed its US Gulf Coast benchmark American Gulf Coast Select above $100/b month-to-date, with the price rising above $110/b on some days this month. Even as US gas production has risen, the unseasonably cold temperatures that have struck the Northeast and Central IS regions in recent weeks were forecast to thaw over the next seven days. So far this May, Northeast res-comm demand has come in 510 MMcf, or 10%, higher than the same time last year. Similarly, local demand for gas in the Midcontinent and Midwest has come in around 940 MMcf, or 7%, higher month-to-date compared to the year prior. A forecast heat wave could keep a floor under gas prices over the next week, with gas-fired power demand absorbing some of the higher production. The Midcontinent and Texas are forecast to bear the brunt of the above-average temperatures through May 14, CustomWeather forecasts showed. The average Midcontinent temperature is expected to come in 17 degrees higher than normal during May 10-12 and 10 degrees higher on May 13. Similarly, Texas was forecast to see the average temperature come in seven to 11 degrees above normal May 9-12.

Natural Gas Futures Rebound as Supply Worries Smolder Natural gas futures on Tuesday bounced back from punishing losses the two previous sessions, as traders assessed choppy domestic production levels and new threats to global supplies amid reports of Russian forces interrupting flows to Europe. The June Nymex gas futures contract settled at $7.385/MMBtu, up 35.9 cents day/day. It marked a stark reversal after the prompt month dropped nearly $2.00 over the two prior regular sessions. July advanced 36.1 cents on Tuesday to $7.467. NGI’s Spot Gas National Avg., however, posted a hefty loss for a third straight day, falling 72.5 cents to $6.510. A combination of threats to economic growth – soaring inflation and rising interest rates – and uncertainty imposed by the war in Ukraine raised the specter of recession and rattled equity and commodity markets in recent days. Signs of increased production also boosted the bear case for natural gas prices early this week. But futures bounced back as spring maintenance work hampered production again heading into Tuesday, forcing estimate reductions. After hovering around 96 Bcf to start the week –approaching 2022 highs– Wood Mackenzie lowered its estimate Tuesday by roughly 1.2 Bcf/ to 94.9 Bcf/d. Northeast production was most heavily impacted, with volumes down around 660 MMcf/d, Wood Mackenzie analyst Laura Munder said. Broadly, “declines are in areas where there is some maintenance underway,” she said. Producers have struggled to maintain steady levels of output this spring because of a combination of planned shoulder season maintenance and severe weather interruptions. The output challenges continue as summer cooling demand arrives and global calls for U.S. exports hold at elevated levels amid the war in Ukraine. European countries are moving aggressively to sever ties with Russian natural gas in opposition to the Kremlin’s invasion of Ukraine. They are turning to the United States to help fill the void, fueling near-record levels of demand for American liquefied natural gas (LNG). A new catalyst emerged on that front Tuesday, when Gas TSO of Ukraine (GTSOU) reported a force majeure affecting key hubs in Ukraine through which Russian gas flows to Europe. GTSOU blamed disruptions caused by Russian military forces. While Europe is working to wean itself from Russian supplies, it still counts on Kremlin-backed energy sources for about one-third of its natural gas needs heading into summer.

U.S. natgas rises 4% on lower daily output, higher demand this week - (Reuters) - U.S. natural gas futures gained about 4% on Wednesday on a big drop in daily output over the past three days and forecasts for more demand this week than previously expected. The shutdown of a pipeline carrying Russian gas through Ukraine also helped support U.S. gas futures after temporarily lifting European prices. European futures, which were actually down about 2% on Wednesday, have stabilized in recent weeks at what are still very high levels relative to U.S. prices. That is because European stockpiles were filling fast as Russia kept supplying fuel via pipelines and high European prices continued to attract liquefied natural gas (LNG) from the United States and elsewhere. U.S. front-month gas futures for June delivery rose 25.5 cents, or 3.5%, to settle at $7.640 per million British thermal units (mmBtu). That leaves the U.S. contract down about 13% from a 13-year closing high on May 5 but up about 106% so far this year as higher global prices keep demand for U.S. LNG exports strong since Russia's Feb. 24 invasion of Ukraine. Gas was trading around $29 per mmBtu in Europe and $23 in Asia. Data provider Refinitiv said average gas output in the U.S. Lower 48 states climbed to 94.7 billion cubic feet per day (bcfd) so far in May from 94.5 bcfd in April. That compares with a monthly record of 96.1 bcfd in November 2021. On a daily basis, however, output was on track to drop about 2.5 bcfd over the past three days to a preliminary two-week low of 93.5 bcfd on Wednesday due mostly to declines in Texas. Preliminary data is often revised. Refinitiv projected average U.S. gas demand, including exports, would slide from 90.5 bcfd this week to 89.9 bcfd next week. The forecast for this week was higher than Refinitiv's outlook on Tuesday, while its outlook for next week was lower. The amount of gas flowing to U.S. LNG export plants rose to 12.3 bcfd so far in May from 12.2 bcfd in April. That compares with a monthly record of 12.9 bcfd in March. The United States can turn about 13.2 bcfd of gas into LNG. Russia exported about 9.0 bcfd of gas to Europe on Tuesday on the three mainlines into Germany - North Stream 1 (Russia-Germany), Yamal (Russia-Belarus-Poland-Germany) and the route from Russia-Ukraine-Slovakia-Czech Republic-Germany - down from an average of around 11.9 bcfd in May 2021. Gas stockpiles in Northwest Europe - Belgium, France, Germany and the Netherlands - were about 16% below the five-year (2017-2021) average for this time of year, down from 39% below the five-year norm in mid-March, according to Refinitiv. Storage was currently about 34% of full capacity. U.S. inventories, meanwhile, were also around 16% below their five-year norm.

Weekly US gas storage injection tops analyst forecast at 76 Bcf | S&P Global Market Intelligence - Natural gas storage operators deposited a net 76 Bcf into Lower 48 inventories during the week ended May 6, below the five-year-average build of 82 Bcf, the U.S. Energy Information Administration reported. The injection, which topped the 74 Bcf forecast by an S&P Global Platts analyst survey, brought total working gas supply to 1,643 Bcf, or 376 Bcf below the year-ago level and 312 Bcf below the five-year average. By region:

  • * In the East, storage levels grew 21 Bcf on the week at 274 Bcf, down 21% from a year earlier.
  • * In the Midwest, inventories were up 18 Bcf at 342 Bcf, 25% under the year before.
  • * In the Mountain region, stockpiles were up 4 Bcf at 96 Bcf, 26% under a year earlier.
  • * In the Pacific region, stockpiles grew 7 Bcf at 183 Bcf, down 21% from a year earlier.
  • * In the South Central region, stockpiles were up 28 Bcf at 749 Bcf, 12% below the year before. Of that total, 241 Bcf was in salt cavern facilities and 507 Bcf was in non-salt-cavern facilities. Working gas stocks were up 3.4% in salt cavern facilities from the week before and were up 3.7% in non-salt-cavern facilities.

U.S. natgas up on small storage build, soaring European prices (Reuters) - U.S. natural gas futures rose about 1% on Thursday on a smaller than normal weekly storage build and a jump in European gas prices on Russian supply concerns. European gas futures soared by as much as 22% after gas flows from Russia declined following the shutdown of a pipe in Ukraine and on worries Russian sanctions on some European energy firms could lead to further gas supply disruptions. The U.S. Energy Information Administration (EIA) said utilities added 76 billion cubic feet (bcf) of gas to storage during the week ended May 6. That was a little less than the 79-bcf build analysts forecast in a Reuters poll and compares with an increase of 70 bcf in the same week last year and a five-year (2017-2021) average increase of 82 bcf. U.S. front-month gas futures for June delivery rose 9.9 cents, or 1.3%, to settle at $7.739 per million British thermal units (mmBtu). Since the start of the year, U.S. gas futures have more than doubled, as higher global prices kept demand for U.S. LNG exports strong since Russia's Feb. 24 invasion of Ukraine. Gas was trading around $31 per mmBtu in Europe and $24 in Asia. The U.S. contract rose to a 13-year high near $9 on May 6. The U.S. gas market remains mostly shielded from those higher global prices because the United States is the world's top gas producer, with all the fuel it needs for domestic use while capacity constraints inhibit exports of more LNG no matter how high global prices rise.

U.S. natgas futures slide 1% on lower demand forecasts, price drop in Europe (Reuters) - U.S. natural gas futures eased about 1% on Friday on forecasts for milder weather and lower demand in two weeks and a 5% drop in European gas futures even though exports from Russia declined due to sanctions and the shutdown of a pipe in Ukraine. Supporting U.S. prices, Texas was bracing for another heatwave next week that should boost power demand for air conditioning to a monthly record high. U.S. front-month gas futures for June delivery fell 7.6 cents, or 1.0%, to settle at $7.663 per million British thermal units (mmBtu). That put the contract down about 5% for the week after rising about 11% last week. U.S. gas futures remained up about 106% since the start of the year as higher global prices kept demand for U.S. liquefied natural gas (LNG) exports strong since Russia's Feb. 24 invasion of Ukraine. Gas was trading around $30 per mmBtu in Europe and $23 in Asia. The U.S. contract rose to a 13-year high near $9 on May 6. Data provider Refinitiv said average gas output in the U.S. Lower 48 states climbed to 94.8 billion cubic feet per day (bcfd) so far in May from 94.5 bcfd in April. That compares with a monthly record of 96.1 bcfd in November 2021. Refinitiv projected average U.S. gas demand, including exports, would slide from 90.5 bcfd this week to 89.8 bcfd next week and 89.5 bcfd in two weeks. The forecast for next week was higher than Refinitiv's outlook on Thursday. The amount of gas flowing to U.S. LNG export plants held at 12.2 bcfd so far in May, the same as April. That compares with a monthly record of 12.9 bcfd in March. The United States can turn about 13.2 bcfd of gas into LNG.

Colonial Pipeline facing $1,000,000 fine for poor recovery plans – If you were in the US this time last year, you won’t have forgotten, and you may even have been affected by, the ransomware attack on fuel-pumping company Colonial Pipeline.The organisation was hit by ransomware injected into its network by so-called affiliates of a cybercrime crew known as DarkSide.DarkSide is an example of what’s known as RaaS, short for ransomware-as-a-service, where a small core team of criminals create the malware and handle any extortion payments from victims, but don’t perform the actual network attacks where the malware gets unleashed.Teams of “affiliates” (field technicians, you might say), sign up to carry out the attacks, usually in return for the lion’s share of any blackmail money extracted from victims.The core criminals lurk less visibly in the background, running what is effectively a franchise operation in which they typically pocket 30% (or so they say) of every payment, almost as though they looked to legitimate online services such as Apple’s iTunes or Google Play for a percentage that the market was familiar with.The front-line attack teams typically:

  • Perform reconnaissance to find targets they think they can breach.
  • Break in to selected companies with vulnerabilities they know how to exploit.
  • Wrangle their way to administrative powers so they are level with the official sysadmins.
  • Map out the network to find every desktop and server system they can.
  • Locate and often neutralise existing backups.
  • Exfiltrate confidential corporate data for extra blackmail leverage.
  • Open up network backdoors so they can sneak back quickly if they’re spotted this time.
  • Gently probe existing malware defences looking for weak or unprotected spots.
  • Turn off or reduce security settings that are getting in their way.
  • Pick a particularly troublesome time of day or night…

…and then they automatically unleash the ransomware code they were supplied with by the core gang members, sometimes scrambling all (or almost all) computers on the network within just a few minutes.

Widespread US Diesel Shortages Send Crack Spreads To Mindblowing Highs - Global stocks of refined petroleum products have fallen to critically low levels as refineries prove unable to keep up with surging demand especially for the diesel-like fuels used in manufacturing and freight transportation. The result has been a surge in prices refiners receive for selling fuels compared with prices they pay for buying crude and other feedstocks, boosting their profitability significantly.In the United States, refiners currently receive roughly an average of more than $150 per barrel from the sale of gasoline and diesel at wholesale prices, while paying only around $100 to purchase crude.The indicative 3-2-1 margin of $50 per barrel is based on the assumption a refinery produces two barrels of gasoline and one barrel of diesel from refining three barrels of crude. The margin is meant to be representative for an “average” refinery and is a gross figure out of which refiners have to pay for labor, electricity, gas, hydrogen, catalysts, pipeline transport and the cost of capital.Net margins are narrower and refinery costs have been rising rapidly as result of widespread inflation ripping through the economy following the coronavirus pandemic. Nonetheless, even allowing for rising input costs, gross margins have more than doubled from $20 at the end of 2021, ensuring refiners have a strong financial incentive to maximize crude processing and fuel production.Gross margins are currently higher for making diesel (almost $60 per barrel) than for gasoline ($45 per barrel) reflecting the relative shortage of middle distillates.U.S. distillate fuel oil stocks are 31 million barrels (23%) below the pre-pandemic five-year average compared with a deficit of only 6 million barrels (3%) in gasoline.The squeeze on fuel inventories and refinery capacity is compounding already high prices for crude caused by sanctions on Russia and output restraint by OPEC+ and U.S. shale producers. The resumption of international passenger aviation as quarantine restrictions are lifted is tightening the fuel market even further because jet fuel is broadly similar to diesel and gas oil.The effective wholesale price of diesel has climbed to over $160 per barrel while gasoline is trading at over $150, based on futures for delivery in New York Harbor.Once distributors’ and retailers’ margins and taxes are included, the average price at the pump paid by motorists has climbed to $236 per barrel for diesel and $186 per barrel for gasoline.The refining margins and fuel prices cited in this column are all for the United States but the same shortage of refining capacity and fuel inventories is boosting diesel prices in Europe, and dragging up gasoline prices with them. There is scope for refiners to increase fuel production by postponing non-essential maintenance and running refineries flat out into the early autumn. And some room to adjust the output mix by switching from maximum gasoline to maximum diesel mode in downstream processing units. But any increase in diesel production is unlikely to be able to reverse the depletion of inventories fully and return them to pre-pandemic levels. Prices will therefore have to continue rising until they begin to restrain consumption or the economy enters a cyclical downturn.

Louisiana legislator pushes bills benefiting the oil and gas industry — and her husband - More than 300 people were evacuated from their homes and 49 hospitalized when a carbon dioxide pipeline run by an oil and gas company ruptured in a rural community in Mississippi. People were described as wandering around “like zombies” in the aftermath of the February 2020 incident.Less than a week later, Sharon Hewitt, a Louisiana state senator who has considered running for governor, filed a bill drafted by the operator of that pipeline, Denbury Resources, into her own state’s legislature.The law, passed in 2020, could make it more difficult for Louisiana landowners to dispute CO2 pipelines, which are used to transport carbon pollution captured from fossil fuel projects. The bill was introduced and signed into law the same year that Hewitt’s husband, Stan, earned up to $4,999 in royalties from Denbury, according to Hewitt’s 2020 financial disclosure statement.. There have been other instances when Sharon Hewitt, who previously worked at Shell, has pushed for laws that would benefit her husband’s company, according to public records shared with Floodlight. Stan Hewitt has worked as an engineer for nearly a decade at LLOG Exploration. The firm is among more than 200 oil and gas companies that are embroiled in lawsuits brought by seven parishes, including New Orleans, over damage to Louisiana’s wetlands, which protect coastal communities from storms and store carbon – the primary greenhouse gas driving climate change. Hewitt sponsored two bills and one resolution aimed at negating the lawsuits brought by the coastal communities against oil and gas companies – including LLOG. In the past three years, she has introduced, co-sponsored and voted on at least four other pieces of legislation that would benefit the oil company her husband works for or his fossil fuel investments. Sharon Hewitt, her husband, Stan, and Denbury Resources, which is now called Denbury Inc, did not respond to multiple requests for comment. “It’s so brazenly personal,” There is a long history in the Louisiana state capitol of legislators passing laws that profit their respective industries, but public policy experts point to Hewitt’s record as evidence of the oil and gas industry’s outsized influence at the legislature, despite its diminishing role in the state’s economy. Louisiana is experiencing more intense storms, coastal flooding and tornadoes that strike at night because of climate change, and lawmakers like Hewitt are digging in to protect industry. While introducing the bill Denbury drafted, Senate Bill 353, Hewitt in a May 2020 legislative committee hearing described the measure as a “great example of collaboration between the department and the industry”. Public documents shared with Floodlight by EPI show that Hewitt worked closely with the oil and gas industry in multiple instances, including drafting legislation, writing testimony supporting it and sorting out legal problems.

Biden nixes three offshore oil lease sales, curbing new drilling this year - The Interior Department confirmed Wednesday that it will not hold three oil and gas lease sales in the Gulf of Mexico and off the coast of Alaska that had been scheduled to take place, taking millions of acres off the auction block.The decision, which comes as U.S. gas prices have reached record highs, effectively ends the possibility of the federal government holding a lease sale in coastal waters this year. The Biden administration is poised to let the nationwide offshore drilling program expire next month without a new plan in place.While President Biden has spoken in recent weeks about the need to supply oil and gas to Europe so those nations can stop importing energy from Russia in light of the ongoing war in Ukraine, the move would mark a victory for climate activists intent on curbing U.S. fossil fuel leasing.Barring unexpected action, the current five-year offshore drilling program will lapse at the end of June. Interior cannot hold any new oil and gas lease sales until it has completed a replacement plan. But though the federal government is legally obligated to prepare one, the administration has not released its proposal, nor have officials said when it might be coming.The program’s looming expiration means the government doesn’t have enough time left to hold the three remaining oil and gas lease sales scheduled under the current plan. Interior spokeswoman Melissa Schwartz cited a lack of interest from oil companies, as well as legal obstacles and a time crunch, as reasons for nixing the planned auctions.In an email Wednesday evening, Schwartz said the department “will not move forward” with a roughly 1 million-acre sale in Alaska’s Cook Inlet “due to lack of industry interest in leasing in the area.”She added that the department will not hold “lease sales 259 and 261 in the Gulf of Mexico region as a result of delays due to factors including conflicting court rulings that impacted work on these proposed lease sales.”Environmentalists praised the move, but the oil and gas industry and Republicans voiced dismay. Offshore drillers have sought to raise the alarm for months about the leasing program’s June 30 expiration date, saying that a lapse in the program would cost thousands of jobs and billions in lost tax revenue.Erik Milito, president of the National Ocean Industries Association, which represents offshore energy companies, said in an interview Thursday that the expiration of the offshore leasing program will chill investment in the Gulf of Mexico.“Over the past few years, there have been several announcements of new projects coming online, so it’s very positive," he said. “However, we’re not going to be able to continue with that trend if we can’t get new leases.”

U.S. Shale Swings From Losses To Record Cash Flows After years of plowing money into boosting production and thus depressing oil prices, the U.S. shale patch emerged from the pandemic-inflicted slump with unwavering capital discipline which, combined with $100+ oil, is paying off with record cash flows for American oil producers. The largest shale producers have left years of bleeding cash behind, focusing on returning capital to shareholders from the record cash flows they have been generating for several months now. As they report first-quarter figures these days, public companies vow continued disciplined spending and only modest production growth as “drill, baby, drill” is no longer shale’s primary goal. Investors, in turn, are rewarding the discipline—most of the 20 top-returning firms in the S&P 500 year to date are oil companies, including Occidental, Coterra Energy, Valero, Marathon Oil, APA, Halliburton, Devon Energy, Hess Corporation, Marathon Petroleum, ExxonMobil, ConocoPhillips, Chevron, Schlumberger, EOG Resources, and Pioneer Natural Resources. As a result of the highest oil prices since 2014 and capex discipline, the shale patch is on track for massive free cash flows of a combined $172 billion in 2022 alone, per Deloitte estimates cited by Bloomberg. By 2020, the shale industry had booked $300 billion in net negative cash flow in the 15 years since the first shale boom, Deloitte estimated back then.Unlike in the previous upcycles, U.S. producers are now directing a large part of the record cash flows to boost shareholder returns with higher dividends, special dividends, and share buybacks. U.S. producers do not plan to abandon the newly-found capital discipline and will grow production only modestly, the top executives at most public shale producers said during the Q1 earnings calls this week. Many firms acknowledged the supply chain, inflationary, and labor constraints that could result in slower American oil production growth than the increase the EIA and analysts expect. Producers are also wary of the Biden Administration’s calls for only a short-term ramp-up in production amid otherwise negative comments on the oil industry, which undermines the firms’ visibility and willingness to plan higher investments in the medium term. “To say bluntly, the administration's comments are certainly causing a lot of uncertainty in the market, both in the terms of regulatory taxation, legislation, and negative rhetoric toward our industry. And that creates uncertainty in our owners', our shareholders' minds about what the future of this industry really is,” Diamondback Energy’s CEO Travis Stice said on the earnings call this week. Diamondback Energy will keep its current oil production levels of 220,000 net barrels of oil per day, Stice said. Another producer, Devon Energy generated $1.3 billion of free cash flow for the first quarter, its highest-ever quarterly FCF. Continental Resources “delivered a record quarter of adjusted earnings per share and exceptional free cash flow generation,” CFO John Hart said as the shale giant announced a fifth consecutive increase to quarterly dividend.Chesapeake Energy, which went through a bankruptcy during 2020, reported $532 million in adjusted free cash flow for Q1, its highest quarterly FCF ever, and launched a $1-billion share and warrant repurchase program. Pioneer Natural Resources, for its part, will be returning 88% of its first-quarter free cash flow of $2.3 billion to shareholders, while keeping disciplined oil growth of up to 5%, CEO Scott Sheffield said.

Fracking Boom Turns Texas Into the Earthquake Capital of the U.S. - Earthquakes were never anything people in West Texas thought much about. Years would pass in between tremors that anybody felt. Even after the shale revolution arrived in force a decade ago and oil crews started drilling frantically in the region’s vast Permian Basin, there seemed to be no impact on the land.But then, suddenly, in 2015, there were six earthquakes that topped 3.0 on the Richter scale. And then six again the next year. And then the numbers just exploded: 17 became 78 became 181. And in the first three months of 2022 alone, there were another 59, putting the year on pace to set a fresh record. Lower the threshold to include tiny tremors and the numbers run into the thousands.All of which means that West Texas, the proud oil-drilling capital of America, is now also on the cusp of becoming the earthquake capital of America. Even California and Alaska, home to massive fault lines and a never-ending series of tremors, appear bound to be overtaken soon at the current pace of things.There’s little doubt that there is a link between the drilling and the jump in seismic activity. Huge quantities of wastewater spew out of wells as the oil gushes out, and injecting that water back into the ground—the cheapest disposal option—puts stress on the Earth’s fault lines. Industry insiders even acknowledge as much.That none of the quakes so far has been big enough to do much damage—just a cracked wall here and a loosened skylight there—is of little comfort to those who watched a similar pattern develop in the oil towns of neighboring Oklahoma a few years ago. What followed there was a gradual pickup in size that eventually gave the tremors enough force to start ripping walls off homes and buildings. Oklahoma only broke the cycle and steadied the ground after regulators forced drillers to slow the pace of water disposal in the area and haul some of it miles away.For now, regulators in Texas, a famously hands-off bunch, are mostly just asking, rather than demanding, companies to dump less water in the ground. With Russia’s invasion of Ukraine sending oil prices skyrocketing over $100 a barrel, that approach will almost certainly prove insufficient, industry observers say.The Permian contains more easy-to-tap reserves than any other spot in the world, and Chevron, Exxon and scores of smaller outfits are ramping up output to take advantage of those higher prices. Half of all drilling rigs in operation in the U.S. today can be found here. Even the Biden administration has grudgingly begun to urge companies to drill more wells.And more wells will produce more wastewater, which will produce more earthquakes. “We need to be listening to what the Earth is telling us,” says Roddy Hughes, senior campaign representative for Sierra Club’s Beyond Dirty Fuels movement. The tremors, he says, just add another layer of urgency to the climate group's battle against the fossil fuel industry. “We need to be slowing production.”

Oil Giants Sell Dirty Wells to Buyers With Looser Climate Goals, Study Finds - When Royal Dutch Shell sold off its stake in the Umuechem oil field in Nigeria last year, it was, on paper, a step forward for the company’s climate ambitions: Shell could clean up its holdings, raise money to invest in cleaner technologies, and move toward its goal of net zero emissions by 2050.As soon as Shell left, however, the oil field underwent a change so significant it was detected from space: a surge in flaring, or the wasteful burning of excess gas in towering columns of smoke and fire. Flaring emits planet-warming greenhouse gases, as well as soot, into the atmosphere.Around the world, many of the largest energy companies are expected to sell off more than $100 billion of oil fields and other polluting assets in an effort to cut their emissions and make progress toward their corporate climate goals. However, they frequently sell to buyers that disclose little about their operations, have made few or no pledges to combat climate change, and are committed to ramping up fossil fuel production.New research to be released Tuesday showed that, of 3,000 oil and gas deals made between 2017 and 2021, more than twice as many involved assets moving from operators with net-zero commitments to those that didn’t, than the reverse. That is raising concerns that the assets will continue to pollute, perhaps even at a greater rate, but away from the public eye.“You can move your assets to another company, and move the emissions off your own books, but that doesn’t equal any positive impact on the planet if it’s done without any safeguards in place,” said Andrew Baxter, who heads the energy transition team at the Environmental Defense Fund, which performed the analysis.Transactions like these expose the messy underside of the global energy transition away from fossil fuels, a shift that is imperative to avoid the most catastrophic effects of climate change.For the four years before the Umuechem sale in Nigeria, satellites had spotted no routine flaring from the field, which Shell, together with the European energy giants Total and Eni, operated in the Niger Delta. But immediately after those companies sold the field to a private-equity backed firm, Trans-Niger Oil & Gas, an operator with no stated net zero goals, levels of flaring quadrupled, according to data from the VIIRS satellite collected by EDF as part of the analysis. Trans-Niger said last year it intends to triple production at the field.

Civitas Builds Natural Gas, Oil Drilling Inventory in Colorado’s DJ -Denver-based Civitas Resources Inc., the largest producer in the Denver-Julesburg (DJ) Basin, has already secured most planned drilling permits for 2022, the management team said recently. “We’re over 90% permitted for the year,” Civitas’ COO Matt Owens told analysts during the earnings call to discuss first quarter results. Civitas last year completed its takeover of DJ rivals Crestone Peak Resources, Extraction Oil & Gas Inc. and HighPoint Resources Corp. Civitas has since added 38 permitted locations in the DJ through its purchase of Bison Oil & Gas II LLC. [Want to know how global LNG demand impacts North American fundamentals? To find out, subscribe to LNG Insight.] Civitas on average produced 159,007 boe/d (43% oil, 31% natural gas, 26% NGL) in 1Q2022, up nearly seven-fold year/year from 20,850 boe/d. Full-year production guidance assumes 156,000-167,000 boe/d, 68-70% liquids-weighted. Civitas has filed two oil and gas development plan (OGDP) locations with the Colorado Oil and Gas Conservation Commission (COGCC). A hearing date is “set in the near future that we expect to be approved unanimously.” Chairman Ben Dell said. Owens said the company is “working right now on 12 other OGDPs internally. We have submitted six of those also to the state and that includes just over 100 wells.” Two are in technical review, slated for a final hearing in June. The capital spending plan this year earmarks $825-950 million for drilling and completions, running 3.5 rigs and using three hydraulic fracturing crews. Capital spending for 1Q2022 totaled about $235 million, said Dell. Civitas plans to drill 190-210 horizontal wells (82% stake) this year using a 2.1-mile average lateral length. It plans to complete 165-175 gross wells and bring 155-165 online.

U.S. oil output slips as higher costs hit drillers— Weekly U.S. crude oil production declined for the first time in three months, signaling that soaring costs across the oil fields may be preventing drillers from expanding output. The decline hits as the oil-consuming nations are scrambling for additional supplies to reduce reliance on Russia and bring down the skyrocketing crude prices. President Joe Biden has urged the industry to raise supply to help battle historically high fuel inflation. Domestic crude output last week fell 100,000 barrels to 11.8 million barrels a day, after holding steady over the previous three weeks, according to data from the Energy Information Administration. The decline stems from a small drop in Alaskan volumes. Output from the rest of the US, including prolific Permian shale basin, held steady. In its Short-Term Energy Outlook report this week, the EIA lowered its production forecast through 2023. Drillers have said they are experiencing spiraling prices on everything from rigs and workers to diesel fuel and frac sand.

US oil, gas rig count gains three, totaling 806 on week; Bakken highest since April 2020: Enverus - The US oil and natural gas rig count gained another three rigs on the week, for a total 806 rigs which is well within shouting distance of pre-coronavirus pandemic levels, energy analytics and software company Enverus said May 12. Moreover, the giant Bakken oil reservoir in North Dakota/Montana has now reached its highest rig level since early April 2020. That was just a month after the pandemic struck the energy industry forcefully and oil prices dropped due to low global demand. "We do foresee continued headwinds in the form of labor shortages among the service sector, specifically on the completions crews side of things," said Taylor Cavey, senior analyst-supply and production for S&P Global Commodity Insights. Both oil-weighted and natural gas-driven plays in the eight largest domestic unconventional basins posted rig gains during the week ended May 11, Enverus figures showed. Oil rigs gained two for a total 623, while the gas rig count rose one to 183. This week's 806 rigs is inching closer to the pre-pandemic level of 838 rigs working in US domestic basins for the week ended March 4, 2020. Only a few days later, the price of oil was in the low $30s and the pandemic – which was already ongoing outside the US – had effectively settled into the energy industry. The oil and gas patch entered April 2020 at 721 rigs, a drop of 117 rigs or 14% in less than a month. After hitting bottom in early July 2020 at 279 rigs, the US fleet began to rise and has been inching forward ever since. Total US rigs crossed the 400-mark by the first week of January 2021 and numbered just over 700 in early January 2022. During the week ended May 11, the Permian Basin posted the most change with a four-rig gain, making 329. While the West Texas/New Mexico basin has seen its upticks and setbacks since then and has been mostly rangebound since mid-March, it has gained 30 rigs or 10% this year. The Permian has also led permitting activity, which in April 2022 was up by 244 or 16% on the month, according to James West, an analyst for Evercore ISI Group, a boutique energy investment bank. The giant oil and natural gas play, which is the largest oil reservoir in the US with production of just under 5.2 million b/d of oil and 15 Bcf/d of gas, led "strong activity across all basins" in April, West said. "Besides slight decreases in the Utica (-7, -100% m/m) and in other smaller plays (-6, -2% month on month), permitting activity grew in all basins," he said. "Relevant increases occurred in the Permian, the Marcellus (+148, +157%), the Powder River Basin (+87, +32%) and the DJ-Niobrara (+84, +138%)." The Marcellus Shale is sited mostly in Pennsylvania/West Virginia; the Powder River Basin in Wyoming and the DJ-Niobrara largely in Colorado.

Feds to pause fracking on 45000 acres near Chaco - Responding to a lawsuit by environmentalists, the Bureau of Land Management has agreed to reconsider a Trump-era action that had opened up fracking on 45,000 acres in the Chaco Canyon area. The settlement, which will pause all oil and gas activities on the federal parcels until the BLM makes a decision, is a victory for conservationists and tribal advocates who seek greater protections around a UNESCO World Heritage Site that Indigenous people in the region hold as sacred. The agreement comes several months after the Biden administration announced a move toward barring federal oil and gas leasing in a 10-mile zone around the Chaco Culture National Historical Park. The land that the Trump administration had approved for fracking lies at the southern edge of the proposed buffer zone, with the leased parcels overlapping the Sisnaateel Mesa Complex, which is considered important to Diné heritage and cosmology. . “Ultimately what I hope is all the leases are canceled,” said Kyle Tisdel, senior attorney with the Western Environmental Law Center. “And that the agency realizes after doing the type of analysis it should’ve done the first time that this is an incredibly sacred area — and it is an area that is incompatible with oil and gas leasing and development.” The fossil fuel industry has expressed opposition to policies that severely restrict or bar oil and gas operations in the Chaco region. Industry representatives couldn’t be reached Wednesday for comment. The BLM won’t approve any new wells, roads, pipelines or other infrastructure as it reviews the fracking leases.

Komatsu Mining leaked 400 gallons of oil into Milwaukee waterways, claims cleanup obligation met - In early December of 2021 as many were celebrating the holiday season, a major event happened in Milwaukee. 400 gallons of oil drained into the Menomonee River, after an accident at Komatsu Mining Corp on the city’s south side. The oil began to saturate the water, ending up in the Milwaukee River before anyone from the city was made aware of what happened. "Initially it was thought to be a minor spill of some waste oil on the property. It was learned, not long after, that it was a major oil spill. 400 gallons into a sewer drain that led directly into the Menomonee River. Komatsu did what it was required by law to do, immediately contacting the Wisconsin Department of Natural Resources and the U.S. Environmental Protection Agency, but it didn't go beyond that and that's the issue here," says Rich Rovito, who wrote about the spill for Milwaukee Magazine. The City of Milwaukee wasn't made aware of the spill until residents noticed a thick oil sheen on top of the water and reported it to the city. Rovito explains, "The lack of immediate communication allowed this oil spill to travel from the Menomonee River downstream to the Milwaukee River, into the KK [Kinnikinnick] River and into the tributaries leading to Lake Michigan." Rovito says that since the revelation of the spill, Komatsu has been "relatively upfront" about what happened and has admitted they failed to properly communicate with the city. Since then, Komatsu claims to have completed their cleanup obligation, by attempting to clean up as much of the oil as possible. Wildlife has been damaged, injuring at least a few birds which became coated in oil. But the extent of the problem remains unknown at this time and may emerge in the water life, like fish and plants, this spring. Furthermore, Rovito is unaware of any attempt by the company to inform the surrounding communities of the possible dangers posed by the oil leak. "At this point, I've not been informed that any [public awareness campaign] has gone on. Most of the communication that Komatsu did was on their website and it took a little bit - even for a seasoned reporter like myself - to find these statements on their website," says Rovito.

Indigenous women leaders say Line 5 reroute project would be cultural, environmental ‘genocide’ ⋆ Indigenous water protectors from Great Lakes tribes and their supporters are calling on a federal agency to fully review and reject a Line 5 project in northern Wisconsin, which they say would be “an act of cultural genocide” if permitted by the U.S. Army Corps of Engineers (USACE).The embattled Line 5 pipeline originates at the tip of northwest Wisconsin and continues for 645 miles into Michigan’s Upper Peninsula, under the Straits of Mackinac and out into Canada near Detroit.Enbridge, the Canadian pipeline company that owns the oil infrastructure, is seeking to remove a 12-mile section of Line 5 from the Bad River reservation and replace it with a 41-mile section outside of the reservation.Though it would be off the reservation itself, the Bad River Band of the Lake Superior Tribe of Chippewa Indians argues that the new route would still “cut through more than 900 waterways upstream” of their reservation and thereby threaten treaty lands and waters that belong to both them and the Red Cliff Band of Lake Superior Chippewa.The Indigenous leaders say the project places the tribes at “massive risk.”Both are rooted in land directly adjacent to Michigan’s western U.P. area.“Both the current Line 5 and the proposed Line 5 expansion threaten to irreversibly damage our drinking water, our ecosystems, and manoomin,” the Apr. 27 letter reads.Manoomin, or wild rice, has long served as an essential part of Anishinaabe cultural and spiritual identity. It is also a major food source and economic staple for tribes.Running an oil pipeline through major tributaries of the Bad River Watershed “would have severe long-term consequences for the unique ecology of this watershed,” the letter continues. “We consider this an act of genocide.”The nine Indigenous women leaders co-signing the letter are: Jannan J. Cornstalk, citizen of the Little Traverse Bay Bands of Odawa Indians (LTBB); Rene Ann Goodrich and Aurora Conley of the Bad River Ojibwe; Gwenn Topping and Carolyn Goug’e of the Red Cliff Band; Jaime Arsenault and Dawn Goodwin of the White Earth Ojibwe; Nookomis Debra Topping of Fond du Lac (Nagajiwanaang); and Carrie Chesnik of the Oneida Nation.More than 200 endorsing organizations are listed on the letter, including the Sierra Club, Michigan Environmental Justice Coalition, West Michigan Environmental Action Council, Indigenous Environmental Network, Honor the Earth and Center for Biological Diversity.

Line 5 developer says tribal lawsuit violates 1977 treaty The decades-old oil pipeline is the focus of high-level discussions between U.S. and Canadian officials. The developer of the Line 5 pipeline last week urged a federal court to deny a tribe's efforts to shut down the aging conduit over concerns that it poses a threat to the Bad River Reservation in Wisconsin. Enbridge Inc. argued that a federal pipeline safety law barred the Bad River Band of the Lake Superior Tribe of Chippewa Indians from suing to stop the flow of western Canadian petroleum products through Wisconsin to Ontario. The effort to halt the lawsuit comes as the company faces a separate legal challenge in Michigan over the continued operation of the decades-old pipeline that has sparked high-level talks between U.S. and Canadian officials. In its motion for summary judgment Friday, Enbridge said that Congress had passed the Natural Gas Pipeline Safety Act to ensure that interstate pipelines would be subject to uniform federal safety standards, rather than having to comply with various state, local or tribal requirements. The company also pointed to a decades-old international treaty protecting the project's operation. ...

ConocoPhillips Investors Reject Plan for Stricter Climate Goals - ConocoPhillips shareholders rejected a proposal for the oil explorer to set more rigorous targets for greenhouse-gas emissions. More than 60% of shareholders voted against the plan during its annual meeting on Tuesday, according to preliminary results issued by the company. The vote was another blow to environmental activists who have been pressuring major oil companies to lay out more concrete plans to combat climate change. A similar proposal at Occidental Petroleum Corp. failed to garner enough votes this month. Dutch investor group Follow This urged ConocoPhillips and several other oil companies to set short-, medium- and long-term targets to reduce carbon emissions, including those of its customers, in line with the Paris Agreement. ConocoPhillips’ board opposed the measure, arguing in its proxy statement that producers that don’t refine or distribute oil and gas shouldn’t be responsible for customer emissions. The company also said its investors are not clamoring for more emissions targets, and that it’s investing in carbon capture and hydrogen to help the world decarbonize. Shareholders also rejected a proposal by nonprofit ethics group National Legal and Policy Center that urged ConocoPhillips to disclose its lobbying communications and payments in an annual report. Oil companies have faced mounting pressure in recent years to disclose lobbying efforts on a variety of climate legislation.

Congress passes legislation in effort to improve oil spill response in Western Alaska -- Legislation by Congress was passed on March 29 with the goal of improving oil spill response in Western Alaska. The Alaska Chadux̂ Network issued a press release praising the passage of House Resolution 6865, which was named the “Don Young Coast Guard Authorization Act of 2022.” President and CEO of the Alaska Chadux̂ Network Buddy Custard said believes that the bill will have a positive impact by enacting clear rules for the standards of response in Western Alaska. The release said that oil spill response standards in Western Alaska are currently administered on a need by need basis, which allows vessel owners and operators to operate under their own standards. The passage of the legislation establishes measurable standards, which include vessel tracking, monitoring, requirements to preposition oil spill resources at strategic locations; and preventing double-counting of equipment that is used for other response purposes.“The oil spill response system in Western Alaska is broken, and Section 510 of H.R. 6865 is an excellent start on a solution to fix it,” Custard said in the release. “Standards for oil spill response that work in the Lower 48 don’t translate well to Alaska. The vast distance challenges, lack of infrastructure, and harsh weather call for a different set of criteria appropriate to meet the demands of our unique environment and protect it long-term.”Custard said in an interview that he feels oil spill rules for the Western portion of the state have become inconsistent, and said that he wants to see the same standards in the Lower 48 applied to Alaska, but catered to the unique landscape. “Living up here, the vast distances, I mean it’s huge and then the lack of infrastructure, and then the other challenge we have is the weather, as you know. In the marine environment it’s very unforgiving out there so we just want to make sure that the standards that we want to see developed can meet these challenges that are fitted for Alaska,” said Custard.

OPEC Antitrust Effort Revived by USA Senate - Oil prices at historic highs are bolstering a decades-long effort to subject OPEC to U.S. antitrust laws. A key Senate committee is expected to approve legislation allowing the U.S. to sue the Organization of Petroleum Exporting Countries for manipulating energy markets. The vote by the Senate Judiciary Committee on Thursday would pave the way for full Senate consideration. While the so-called Nopec bill has been introduced many times over the past two decades -- never to any avail -- it now comes as record pump prices stoke already historic inflation. “Its prospects for passage look better than they have in 15 years,” said Kevin Book, managing director of ClearView Energy Partners. Whether such a measure could actually rein in runaway prices is another matter. The oil market has been upended since the bill last gained traction in 2019, reshaped by a global pandemic that briefly destroyed demand and supply war between Saudi Arabia and Russia that flooded the market with crude and helped send oil futures below zero for the first time ever. Now, the world is short on oil, with Russia frozen out of international trade and OPEC and its allies contending with capacity constraints that limit their ability to raise output. The U.S., as the world’s No. 1 oil producer, has the most power to tame prices by raising production, but companies enjoying historic profits are reluctant to accelerate growth. It’s unclear when, or if, Senate Majority Leader Chuck Schumer will bring the measure, authored by Iowa’s conservative Republican Chuck Grassley, to the floor. “Obviously OPEC is a problem,” Schumer said last week, adding that he’s more focused on forthcoming legislation to beef up the Federal Trade Commission’s authority to go after gasoline price manipulation. One path forward would be to incorporate the bill into a broader supplemental spending package being considered by Congress to provide aid to war torn Ukraine, according to Clearview. “If that were to occur, the bill could become law within a matter of weeks,” the firm said in a note. It’s also unclear whether President Joe Biden, who has appealed to OPEC to raise production in response to high prices, would sign a bill targeting the cartel. When Congress passed a version of the bill in 2007, it died under veto threat from President George W. Bush who said it could lead to oil supply disruptions as well as “retaliatory action against American interests.”

UAE, Saudi Arabia energy ministers hit back at NOPEC bill --Top OPEC ministers have hit back at new U.S. legislation intended to regulate its output, saying such efforts would bring greater chaos to energy markets. UAE Energy Minister Suhail Al Mazrouei told CNBC Tuesday that OPEC was being unfairly targeted over the energy crisis, and moves by U.S. lawmakers to disrupt its established system of production could see oil prices shoot up by as much as 300%. "If you hinder that system, you need to watch what you're asking for, because having a chaotic market you would see … a 200% or 300% increase in the prices that the world cannot handle," Al Mazrouei told CNBC's Dan Murphy during a panel at the World Utilities Congress in Abu Dhabi. The U.S. Senate Committee on Thursday passed a new bipartisan No Oil Producing and Exporting Cartels (NOPEC) bill with a 17-4 majority, marking a significant step forward in the decades-old proposal. The bill, which aims to protect U.S. consumers and businesses from engineered spikes in energy prices, would see the alliance open to antitrust lawsuits for orchestrating supply cuts that raise global crude prices. To take effect, it would now need to be passed by the full Senate and the House, before being signed into law by the president. OPEC and its partners have faced pressure from consuming countries, including the U.S. and Japan, for not producing more crude oil amid rising prices and surging inflation. As of Tuesday, Brent oil was trading at around $102 a barrel. Al Mazrouei acknowledged that some members were falling short of their production quotas, but added that the alliance was doing its part to meet global demand amid ongoing geopolitical pressures, namely the war in Ukraine. "We, OPEC+, cannot compensate for the whole 100% of the world requirement," he said. "How much we produce, that is our share. And, actually, I would bet that we are doing much more."

The NOPEC Bill Could Send Oil Prices To $300 -If the U.S. passes the NOPEC bill, a bill designed to pave the way for lawsuits against OPEC members for market manipulation, the oil market could face even more chaos. OPEC’s most influential energy ministers warned against passing the legislation, suggesting it could send oil prices soaring by 200% or 300%. “The last thing we want is someone trying to hinder that system,” the UAE’s Energy Minister Suhail al-Mazrouei said at a conference in Abu Dhabi, referring to the system OPEC has had in place for decades to ensure supply to the market is adequate (adequate according to OPEC’s view). “If you hinder that system, you need to watch what you’re asking for, because having a chaotic market you would see … a 200% or 300% increase in the prices that the world cannot handle,” al-Mazrouei said at a panel at the World Utilities Congress hosted by CNBC’s Dan Murphy. As gasoline prices in America hit record highs, some lawmakers are looking to resurrect the NOPEC legislation that would allow the U.S. Attorney General to sue OPEC or its member states for antitrust behavior. Forms of a NOPEC bill have been considered in Congress committees for nearly two decades, but they have never moved past committee discussions. Now OPEC is warning of greater market chaos if NOPEC becomes law. But it’s not only OPEC that has been warning about the implications for America in setting a precedent to remove sovereign immunity. The most powerful oil lobby in the United States, the American Petroleum Institute (API), is also against such legislation, arguing it would bring unintended harm to America’s oil and gas industry and American interests in the world. So is the U.S. Chamber of Commerce, while the White House expressed “concerns” about the potential implications of such a law.Last week, the U.S. Senate Judiciary Committee approved the so-called No Oil Producing and Exporting Cartels Act (NOPEC). Forms of antitrust legislation aimed at OPEC were discussed at various times under Presidents George W. Bush and Barack Obama, but they both threatened to veto such legislation.This time, it’s unclear if the bill would be moved for discussion at the Senate, or then to President Joe Biden’s desk, and it’s unclear whether he would sign such legislation into law.

Canadian Natural Increases Natural Gas Output by 25%, as Commodity Prices Roar - Record natural gas production and stronger commodity prices propelled Canadian Natural Resources Ltd. (CNRL) in the first three months of this year, enabling returns to shareholders and corporate debt reduction. Natural gas production jumped by 25% in 1Q2022 from a year earlier to 2 Bcf/d, management noted. Liquids production hovered at 945,809 b/d, off from 979,352 because of plant maintenance and processing limits. The gas gains followed a move last year to oboost production from the Montney Shale, following a series of transactions that increased its holdings to 1.3 million acres. “We are resilient through the commodity price cycle while generating substantial returns in today’s environment.” The northern Alberta mainstay oilsands operations produced 691,569 b/d in the quarter, down from 736,333 b/d in 1Q2021. The flows were 62% upgraded synthetic crude oil (SCO) and 38% lower grade bitumen. CNRL fetched an average natural gas price of to $5.26/Mcf in 1Q2022, versus $3.42 a year earlier. The price average for all grades of liquids nearly doubled to $93.54/bbl from $52.68. The jump in liquids prices more than offset increased costs for the natural gas used in thermal oilsands processes, management noted. SCO production costs rose by 24% to $24.60/bbl, while bitumen costs grew by 26% to $14.35.

Pembina Says Montney Shale Liquids, Natural Gas in High Demand - Rising prices and producer demand for delivery service in the gassy Montney Shale of northern Alberta and British Columbia (BC) ignited a “tremendous start” to the year for Pembina Pipeline Corp., management said. The Calgary operator, which reports in Canadian dollars (C$1.00/US 80 cents) said highlights of the first quarter included relaunching construction of the $530 million, 150-kilometer (90 miles) Phase VIII Peace Pipeline Expansion.The project, which had been deferred, would add capacity to transport 235,000 b/d of Montney natural gas liquids (NGL) by early 2024, said the Calgary firm.On the Alliance natural gas pipeline, Pembina said more than 90% of capacity is contracted for the current gas year, with 75% contracted for the next gas year. Alliance supplies gas from the Western Canadian Sedimentary Basin and the Williston Basin to Chicago.“Recent contracting success continues to highlight the value of Alliance’s reliable and highly competitive access to Midwestern U.S. gas markets, and as a conduit to the Gulf Coast and its robust liquefied natural gas market,” management said. In addition to an announced 20-year midstream services deal with ConocoPhillips Canada for transportation and fractionation of NGLs, Pembina highlighted a recent take-or-pay offtake agreement with a second producer in northeastern BC (NEBC).“The agreement provides the producer with certainty of transportation egress from this key area for their future development and access to the remainder of Pembina’s integrated value chain,” management said.Commercial terms have also been reached with a third Montney producer regarding “significant” long-term NEBC volume commitments, with final signatures expected by mid-2022.

More Oil From U.S. Strategic Petroleum Reserve Heads To Europe --Europe is set to receive more cargoes of U.S. crude from the Strategic Petroleum Reserve (SPR) as the European Union discusses an oil embargo on Russia and looks to reduce reliance on Russian oil, Bloomberg reported on Thursday, citing tanker-tracking data and sources with knowledge of the shipments.In recent weeks, Europe has increased purchases of U.S. crude as it considers the details of a ban on imports of Russian crude and refined products.A week after the European Commission officially proposed a full ban on Russian crude and oil product imports by the end of the year, the EU is still scrambling to find a common position, trying to persuade Hungary and some other central European countries to drop their opposition to an embargo.“We made progress, but further work is needed,” European Commission President Ursula von der Leyen said late on Monday following a meeting with Hungarian Prime Minister Viktor Orban.Meanwhile, U.S. crude is flowing to Europe at rates never seen before.Two cargoes of high-sulfur crude from the U.S. strategic reserve are headed to Italy and the Netherlands, according to tanker-tracking data and sources briefed by Bloomberg. The tankers have loaded crude at terminals connected to storage caverns of the SPR in Texas and Louisiana.According to Matt Smith, oil analyst at commodity data firm Kpler, these would not be the last crude exports out of the U.S. SPR to Europe.In April, some 1.6 million barrels of U.S. crude from the strategic reserve made its way to Europe, Smith told Bloomberg, adding: “That’s the largest amount of SPR crude that’s been shipped to the continent based on historical monthly data.”Although the EU is still working out the details of an embargo on Russia’s oil, many buyers in Europe are generally staying away from Russian crude and products, while May 15 is the deadline for European buyers to wind down and halt transactions with Russian oil firms, including Rosneft.

European refiners ramp up runs on strong margins despite high gas costs - European refiners are ramping up runs, boosted by strong distillate and gasoline cracks and a dearth of diesel supply, despite the high natural gas and hydrogen costs. According to S&P Global Commodity Insights, benchmark refining margins in Europe are robust amid very strong distillate and gasoline cracks. ARA gasoline and ULSD cracks reached $26/b and $57/b, respectively, on April 29, while jet fuel cracks led the barrel at $69.37/b. The FOB Rotterdam jet fuel barge crack versus Dated Brent was assessed by S&P Global at $59.26/b on May 5, with the ULSD barge crack at $46.08/b. "There's a decent incentive to turn the black stuff into white stuff," a Med-based trader said. "Runs are being maximized across [Northwest Europe] at the moment," another source said. "There's a huge amount of downstream product demand and distillates and gasoline cracks necessitate it." French oil major TotalEnergies reported 74% utilization rates across all of its refineries in the first quarter. However, CEO Patrick Pouyanne said during an earnings call that in view of the diesel tightness it was "even more important that our refineries in Europe are running," adding that all of TotalEnergies' refineries in Europe would be "running at full capacity" during the second quarter. The company's Donges refinery restarted at the end of April after being shut for almost one-and-a-half years for economic reasons. Spain's Repsol said first-quarter throughput rose 9% year on year due to improved margins and differentials between heavy and light crudes, which offset increased energy costs. The company's Spanish refineries ran at 83% distillation rate in the first quarter, affected by planned maintenance, but still up from 76% in Q4 2021.

LNG ship arrivals to Europe rises over 20% on month in April - The number of LNG ships arriving into Europe rose more than 20% in April compared with the previous month, as continued uncertainty about Russian pipeline gas supplies amid the war in Ukraine lured cargoes to the region. There were 114 LNG ships that arrived in Europe in April, versus 94 in the previous month, vessel-tracking data from S&P Global's cFlow trade-flow analytics software showed. The Mediterranean saw the biggest increase, a rise of 24.4%, while Northwest Europe saw a month-on-month growth of 18.4%. In April, Spain imported the largest number of LNG ships in the Mediterranean. It imported 35 ships, an increase of 25% from 25 ships in March. Italy also increased the number of LNG ships imported by 25%; its imports grew to 15 in April, from 12 in the previous month. In Northwest Europe, France imported the largest number of LNG ships, 26 in April compared with 24 in March, an increase of 8.3%. The UK experienced the highest growth over the same period, where the number of ships increased to 19 from 13, a rise of 46.2%. Following the invasion of Ukraine by Russia on Feb. 24, European LNG outright prices increased significantly in March. They reached their highest level on March 8 at $60.925/MMBtu for DES NWE and have been on a downward trend since then, but are still up sharply from the same time a year ago. Higher prices in Europe attracted an increased flow of LNG cargoes resulting in limited slot availability across the continent. Lower LNG prices in April followed a higher number of LNG ship arrivals. According to data from S&P Global Commodity Insights, the monthly average for April DES NWE was $31.24/MMBtu, down from $37.33/MMBtu in March. The higher inflow of LNG into Europe also contributed to the upward trend in European gas inventories which were at 34.6% in the latest reading of Gas Infrastructure Europe, up from 26.3% at the end of March.

Lighting The Gas Under European Feet: How Politicians & Journalists Get Energy So Wrong - Human civilization is powered by combustion; human beings are a fossil fuel–burning civilization. You can take away the civilization part, which seems to be the end goal for some environmentalists, but bar that, you can’t take away the fossil fuel part.If we listened only to our energy overlords’ preaching, we would get a very different impression of what the world is like. Wind turbines powering all those electrified vehicles on our roads, solar panels and batteries of immense capacities light and heat our homes. Dirty oil and polluting coal are out; green, clean, and smart machines on the way in.Nothing could be further from the truth. Renewables don’t power our societies, they’re not about to any time soon, and the fact that they’re not isn’t a policy choice—or “greedy capitalism” preventing this utopian (dystopian) vision. Dreams of a green revolution, per the energy theorist Vaclav Smil, were always mirages:We are a fossil-fueled civilization whose technical and scientific advances, quality of life, and prosperity rest on the combustion of huge quantities of fossil carbon, and we cannot simply walk away from this critical determinant of our fortunes in a few decades, never mind years.Instead, suddenly facing an adversary rich in raw materials and fossil fuels, the West’s talking heads doubled down on their green dreams. From behind comfortable newspaper desks, heated and electrified by natural gas, it’s remarkably easy to say things like: “The new reality is that we have to go all the way to universal electrification even faster, powered by 100% renewable energy with green hydrogen filling the gaps” (Andreas Kluth, at Bloomberg). For the New Yorker, John Cassidy recently told us that we must “prevent future Putins from trying to hold the world to energy ransom—at least one worthy outcome of the tragedy that is Ukraine.” In a powerful speech in the middle of the Russia flurry in March, Isabel Schnabel of the Executive Board at the European Central Bank rallied for renewable power: Every solar panel installed, every hydropower plant built and every wind turbine added to the grid are taking us a step closer to energy independence and a greener economy….Our dependence on fossil energy sources is not only considered a peril to our planet, it is also increasingly seen as a threat to national security and our values of liberty, freedom and democracy.Luckily, Schnabel is in control of nothing less than the Eurozone’s printing press. One-upped by a fellow German, the reality-challenged finance minister Christian Lindner taught us that renewable electricity is “the energy of freedom.”What he failed to understand is that renewable electricity generation in Germany requires boatloads and pipe loads of Russian gas, Russian oil, and Russian commodities: the steel and cement to construct their precious wind towers are made from coal, not even counting the extreme heat needed to shape the steel and iron that makes up its body.A single wind turbine uses thousands of kilograms of nickel in its shaft and gear, plus some rare earth minerals from some pretty unclean sources. The gigantic structures, hundreds of meters tall and much too clunky to easily transport, are erected and moved there by machines that swallow diesel by the gallon.Fossil fuels are machine food, as Alex Epstein is fond of saying, and nothing drinks petrol like the machines that power a thirsty wind energy industry. When renewable sources are added to the electricity grid in large quantities, the cost of electricity goes up, not down, because their fickle reliance on weather requires them to be backstopped by thermal plants that run on coal or natural gas. The more renewables you add, the more natural gas you need.

Natural gas prices in Europe jump after Ukraine blocks Russian flows - European natural gas prices jumped after Ukraine's state-owned grid operator suspended Russian flows through a key entry point. Gas TSO of Ukraine on Tuesday announced force majeure – unforeseeable circumstances that prevent the fulfilment of a contract – the first declaration of its kind since Russia invaded Ukraine on Feb. 24. It said it would not accept flows through its Sokhranivka entry point, which delivers Russian gas to Europe, from Wednesday. The operator has also blocked gas transport through its border compressor station Novopskov, through which almost a third of gas (up to 32.6 million cubic meters per day) from Russia to Europe is moved. TTF European natural gas prices were up more than 6.4% by around 9:15 a.m. London time on Wednesday, according to Refinitiv data. Both the Sokhranivka gas metering station and Novopskov are situated in Russian-occupied areas of eastern Ukraine, and GTSOU blamed "the actions of the occupiers" for the interruption to gas transit. "As a result of the Russian Federation's military aggression against Ukraine, several GTS facilities are located in territory temporarily controlled by Russian troops and the occupation administration," GTSOU said in a statement. "Currently, GTSOU cannot carry out operational and technological control over the CS 'Novopskov' and other assets located in these territories. Moreover, the interference of the occupying forces in technical processes and changes in the modes of operation of GTS facilities, including unauthorized gas offtakes from the gas transit flows, endangered the stability and safety of the entire Ukrainian gas transportation system." The operator said it would still be able to fulfill its transit obligations to European partners by rerouting gas to the Sudzha interconnection point, which is located in Ukrainian-controlled territory. "The company repeatedly informed Gazprom about gas transit threats due to the actions of the Russian-controlled occupation forces and stressed stopping interference in the operation of the facilities, but these appeals were ignored," GTSOU added.

Russia may completely redirect gas exports from Europe to Asia, says expert - Russian gas deliveries to Europe can be entirely redirected to the Asia-Pacific region where gas demand is rising, but it would require prompt infrastructure modernization, an energy expert at the Russian company Vygon Consulting, Ivan Timonin, told Sputnik on Sunday. "Russian exports now flowing to Europe could potentially be diverted to the Asia-Pacific region in full. It requires, however, active development of export infrastructure, construction of new gas pipelines and liquefied natural gas (LNG) plants, which is also time-consuming," Timonin said. Russia's drive to redirect gas flows to Asia is stemming not only from Europe's quest to stop buying Russian energy, particularly oil products, but is also market-driven, the expert said. Current trends show that Asian countries will account for over a half of natural gas demand by 2025, with consumption increasing by 160 billion cubic meters, primarily in China and India, according to Timonin. At the same time, construction of the Power of Siberia pipeline supplying gas to China took five years and the same time is needed to build large-scale gas liquefaction plants. "To keep gas exports at the same level, Russia should already start developing new projects and take investment decisions," Timonin added. The supplies via the Power of Siberia pipeline have started at the end of 2019, and amounted to 4.1 billion cubic meters in 2020. It is planned to increase the volume of supplies until reaching the design annual capacity of 38 billion cubic meters by 2025. Taking the new February agreement into account, the total capacity of supplies along the Far Eastern route to China could amount to 48 billion cubic meters per year. Furthermore, the Power of Siberia 2 project is currently under consideration, which aims to deliver up to 50 billion cubic meters of gas annually to China via Mongolia.

G7 Leaders Pledge to Ban Imports of Russian Oil - Leaders of the Group of Seven most industrialized countries pledged to ban the import of Russian oil in response to President Vladimir Putin’s war in Ukraine. The heads of the leading economies made the commitment after holding a video call with Ukraine President Volodymyr Zelenskiy on Sunday, the eve of Russia’s May 9 Victory Day, which commemorates Russia’s victory over Nazi Germany in World War II. The date has become a touchstone of the Kremlin’s campaign to whip up public support for the invasion. Several G-7 countries have already pledged to diversify away from Russian supplies. The U.S. and U.K. have already announced bans on Russian oil imports and Germany, the European Union’s biggest economy, has backed a proposal for the EU to get rid of it by January. The pledge is also the furthest that Japanese Prime Minister Fumio Kishida has gone in committing his country to halting Russian oil purchases. The leaders will “commit to phase out our dependency on Russian energy, including by phasing out or banning the import of Russian oil,” the G-7 statement says. “We will ensure that we do so in a timely and orderly fashion, and in ways that provide time for the world to secure alternative supplies.” The G-7 leaders also said they would take measures to prohibit or otherwise prevent the provision of key services on which Russia depends. “This will reinforce Russia’s isolation across all sectors of its economy,” according to the statement. They are also set to work together with partners “to ensure stable and sustainable global energy supplies and affordable prices for consumers, including by accelerating reduction of our overall reliance on fossil fuels and our transition to clean energy in accordance with our climate objectives.” The statement includes pledges to continue actions “against Russian banks connected to the global economy and systemically critical to the Russian financial system,” pursue efforts to fight Moscow’s propaganda, and “continue and elevate our campaign against the financial elites and family members” who support Putin. The meeting comes as the EU struggles to agree on its own ban on Russian oil imports, with Hungary delaying a proposal that would phase out crude oil over the next six months and refined fuels by January. A ban on shipping Russian oil to third countries may also be delayed until G-7 countries commit to similar measures, according to people familiar with the matter.

EU Push to Ban Russian Oil Stalled | Rigzone --Hungary continued to block a European Union proposal that would ban Russian oil imports, holding up the bloc’s entire package of sanctions meant to target President Vladimir Putin over his war in Ukraine, according to people familiar with the talks. A meeting of the EU’s 27 ambassadors ended on Sunday without an agreement, with talks expected to resume in the coming days, said the people, who asked not to be identified because the discussions were private. A ban on shipping Russian oil to third countries may also be delayed until Group of Seven countries commit to similar measures. The EU’s proposal seeks to ban crude oil over the next six months and refined fuels by early January. The EU had offered Hungary and Slovakia until the end of 2024 to comply with the sanctions and the Czech Republic until June of the same year since they are heavily reliant on Russian crude. The exemption failed to convince Hungary, which continued to block the plan on Sunday over the oil ban as well as how to fund the transition away from Russian energy, the people said. “We have voted for all the sanctions packages so far, but this latest one would destroy the security of the Hungarian energy supply,” Hungarian Foreign Minister Peter Szijjarto said in a statement on Sunday. “As long as there is no solution to the problem caused by the Brussels’ proposal, we will not vote for this package.” The EU had been pushing to have the sanctions concluded by Russia’s May 9 Victory Day, which marks Russia’s victory over Nazi Germany in World War II. Under an EU plan circulated to member states in the past week, European companies and individuals would be banned from providing vessels and services, such as insurance, needed to transport oil to third countries. Greece and Cyprus want the vessels portion of that proposal delayed until after G-7 countries adopt similar measures, according to the people. The EU is also proposing to:

  • Cut three more Russian banks off the international payments system SWIFT, including Russia’s largest lender Sberbank.
  • Restrict Russian entities and individuals from purchasing property in the EU.
  • Ban providing consulting services to Russian companies and trade in a number of chemicals.
  • Sanction Alina Kabaeva, a former Olympic gymnast who is “closely associated” with Putin, according to an EU document; and Patriarch Kirill, who heads the Russian Orthodox Church and has been a vocal supporter of the Russian president and the war in Ukraine.
  • Sanction dozens of military personnel, including those deemed responsible for reported war crimes in Bucha, as well as companies providing equipment, supplies and services to the Russian armed forces.

Hungary's Orban — a longtime Putin ally — stalls Europe's Russian oil embargo - The European Union is struggling to approve a sixth round of sanctions against Russia with a few nations pushing back on a proposed oil embargo. The European Commission, the executive arm of the EU, EU, has presented a six-month phase-out period from Russian oil as part of broader measures looking to hurt President Vladimir Putin's regime. Hungary and Slovakia — two EU nations with a high dependence on Russian energy — were given until the end of 2023 to abide by the new set of rules. However, this extended period was not enough and both nations are demanding more. The impasse is preventing the EU from approving the broader package of sanctions. Hungary has been the EU's most vocal opponent on the oil ban. Prime Minister Viktor Orban — a longtime ally of Putin — has said that ending Russian oil purchases would be an "atomic bomb" on Hungary's economy. "The proposal on the table now creates a Hungarian problem, and there is no plan to solve it," he said last week, according to a press statement. Budapest is also a buyer of Russian natural gas, having increased its imports from Moscow in recent years. Over the last decade, Hungary has increased its imports of Russian natural gas from 9.070 million cubic meters in 2010 to a high of 17.715 million cubic meters in 2019, according to Eurostat. Orban had, until now, largely supported EU sanctions on Russia for its invasion of Ukraine. This despite Orban forming strong economies ties with Russia over the last decade and often boasting of his close relationship with Putin. Their close links were seen during the coronavirus pandemic, for example. Hungary became the first EU nation to buy a Russian-made Covid vaccine — even though it wasn't approved by European regulators. One EU official, who did not want to be named due to the sensitive nature of the talks, described Hungary's "stubbornness" as a "sad thing," speaking to CNBC Monday. A second EU official, who also did not want to be named due to sensitive negotiations currently underway, told CNBC that EU ambassadors would be looking to solve the impasse again on Tuesday. More broadly, the difficulty in passing through these sanctions raises questions about what would happen if there was a proposed ban on Russian natural gas as well, with the EU being even more reliant on that commodity. "I can assure you that Europe will move out from Russian oil and Europe will move out from Russia gas. The only thing is it cannot be done overnight," Alexander Schallenberg, the Austrian minister for foreign affairs, told CNBC Saturday.

Germany warns EU to expect economic cost from Russian oil embargo -Germany has warned that EU consumers should brace for a big economic hit and higher energy prices as Berlin said it was willing to back an embargo of Russian oil to punish Moscow for its war on Ukraine.Europe was prepared to bear the strain of cutting its use of Russian crude, said Robert Habeck, Germany’s economy minister and deputy chancellor. But he said the move should be properly prepared and should consider the high dependency of some EU countries on Russian supplies.“We will be harming ourselves, that much is clear,” he said ahead of an emergency meeting of EU energy ministers that is debating an embargo on Russian oil.“It’s inconceivable that sanctions won’t have consequences for our own economy and for prices in our countries,” he said. “We as Europeans are prepared to bear [the economic strain] in order to help Ukraine. But there’s no way this won’t come at a cost to us.”Habeck said it was important for Europe not to be “faced with economically unmanageable scenarios”. Germany had made “great progress” in finding alternatives to Russian coal and oil, “but other countries may need more time”.EU energy ministers met on Monday to discuss an expected sixth package of sanctions against Russia that Brussels is drafting.Diplomats say it will include a phased-in oil embargo to take full effect by the end of the year.EU ambassadors, who meet on Wednesday, would need to agree unanimously to any commission plan for it to take effect.Member states are still split over the idea of a Russian oil ban. Hungary said it would block a deal unless it could be guaranteed supplies from elsewhere.Hungary and Slovakia have infrastructure built to handle Russian crude and without ports have few alternative sources.Germany would need time to adapt its own infrastructure before stopping all Russian crude shipments, Habeck said.In contrast Poland and the Baltic states want an immediate ban on Russian oil, while Italy has suggested a price cap or tariff on Russian imports. Russia supplies around a quarter of the EU’s oil, and two-thirds of Hungary’s.Energy ministers also addressed Russian state-owned gas company Gazprom’s decision to cut gas supplies to Poland and Bulgaria after the two countries refused to comply with a Kremlin order to settle payments in roubles via Gazprombank. Brussels has told member states that to use the system established by Moscow would breach EU sanctions.Several companies, as well as Hungary’s government, have said they would obey Moscow’s demand because a cut-off would damage the economy.Speaking at a press conference after the conclusion of the energy ministers’ meeting, Kadri Simson, the EU’s energy commissioner, said Brussels would in the coming days release further, more detailed guidance on what companies can and cannot do when it comes to payments to Gazprom. She warned that paying in roubles according to the procedure set out by Russia would constitute a breach of EU sanctions.The decision by Gazprom to stop supplies to Poland and Bulgaria last week was, she added, “an unjustified breach of existing contracts and a warning that any member state could be next”.“The member states and the companies should not have any illusions that they can rely on the good faith of Gazprom and the Russian regime in this matter,” she said.Anna Moskwa, Polish climate minister, urged countries not to comply with Moscow’s demands. “We appeal to countries not to support [Russian president Vladimir] Putin’s decree. We should not support Gazprombank. We should not support the Russian economy,” she told reporters before the meeting, calling for an immediate block on Russian oil and gas.Poland’s gas storage was 80 per cent full and could soon be fully independent from Russian supplies, she said.The Czech Republic and Slovakia told the FT they wanted clearer guidance before making a commitment on not using the Kremlin’s system. They wanted guaranteed supplies from other EU countries. Prague and Bratislava are also seeking assurances in return for backing an oil embargo. “We will not say no but we need to know what will be the solidarity afterwards,” said Karol Galek, state secretary of the Slovak economy ministry. “Slovakia is only able to use the heavy oil from Russia.”

Novak: Russia’s Crude Production Up In May -Russia’s crude oil production is on the rise so far in May, Deputy Prime Minister Alexander Novak told TASS news agency on Monday.Russia’s crude oil production slipped by half a million bpd in March, by a full million bpd in April, with many analysts stating concern that those barrels may never return to the market. April’s OPEC+ production quota was set at 10.436 million bpd.But according to Novak, the picture isn’t quite so bleak, with Russian crude oil production now stabilizing despite sanctions.“Looking at the figures of early May, they are better than in April. The situation is stable, the output increased in comparison to April. We are counting on partial recovery of data in May and that it will be better,” Novak told TASS, without quantifying the increased production figures.According to Interfax, Russia’s crude oil production slipped to 10.05 million bpd in April, a decline of about 4% year over year, but for the first few days in May, this had edged up 2% over April figures, to an average of 10.28 million bpd.But even that increase is a far cry from Russia’s May output quota set by the OPEC+ group, which is 10.549 million barrels per day.In April, Russia’s economy ministry had estimated that it could shed some 17% of its pre-war oil production this year—an estimation that is widely shared, if not conservative, in the industry.The fear of Russia’s “lost” oil production is, in part, what triggered the United States and other IEA members to agree to release millions of barrels of crude oil from emergency stockpiles to stabilize the market. And while crude oil prices were trading down on Monday, Brent was still trading at more than $106 per barrel, with WTI still over $103 per barrel.

Russia oil revenue up 50% this year despite boycott, IEA says— Russia’s oil revenues are up 50% this year even as trade restrictions following the invasion of Ukraine spurred many refiners to shun its supplies, the International Energy Agency said. Moscow earned roughly $20 billion each month in 2022 from combined sales of crude and products amounting to about 8 million barrels a day, the Paris-based IEA said in its monthly market report. Russian shipments have continued to flow even as the European Union edges towards an import ban, and international oil majors such as Shell Plc and TotalEnergies SE pledge to cease purchases. Asia has remained a keen customer, with China and India picking up cargoes no longer wanted in Europe. The IEA, which advises major economies, kept its outlook for world oil markets largely unchanged in the report. Global fuel markets are tight and may face further strain in the months ahead as Chinese demand rebounds following a spate of new Covid lockdowns, it said. Reduced flows of Russian refined products such as diesel, fuel oil and naphtha have aggravated tightness in global markets, the agency noted. Stockpiles have declined for seven consecutive quarters, with reserves of so-called middle distillates at their lowest since 2008. But for all the disruption, Moscow has continued to enjoy a financial windfall compared with the first four months of 2021. Despite the EU’s public censure of the Kremlin’s aggression, total oil export revenues were up 50% this year. The bloc remained the largest market for Russian exports in April, taking 43% of the country’s exports, the IEA said.

Russian Oil Production May Fall To 18-Year Low On EU Oil Embargo -Russia’s crude oil production could drop to its lowest level since 2004 if the EU imposes an embargo on imports of Russian oil, according to estimates from the International Energy Agency (IEA) and The Wall Street Journal.The tightening screws on Russian oil exports and the self-sanctioning of buyers in the West could see oil production plummeting by more than 1 million barrels per day (bpd) this year compared to 2021, to 9.6 million bpd, the Journal notes, citing data from the IEA’s monthly market report published today. This would be the lowest level of Russian crude production in 18 years.In the closely watched Oil Market Report today, the IEA estimated that Russia already shut in nearly 1 million bpd in April, driving down global oil supply by 710,000 bpd to 98.1 million bpd.“Russia’s isolation following its invasion of Ukraine is deepening as the EU and G7 contemplate tougher sanctions that include a full phase out of oil imports from the country. If agreed, the new embargoes would accelerate the reorientation of trade flows that is already underway and will force Russian oil companies to shut in more wells,” the IEA said. So far, Russian exports have held up, but as of May 15, the major international trading houses will have to halt all transactions with state-controlled Rosneft, Gazprom Neft, and Transneft, the agency noted. “Following a supply decline of nearly 1 mb/d in April, losses could expand to around 3 mb/d during the second half of the year,” the IEA said, referring to Russia’s oil supply. Russia’s oil production is already falling and will continue dropping in the coming months and years as Moscow will not be able to redirect to China and India all the volumes it is losing in Europe—its biggest oil market before the invasion of Ukraine. Restrictions, combined with the lack of access to Western technology to pump harder-to-recover oil and enhance production from maturing wells will hit Russia’s oil industry not only in the near term but also in the long term, analysts say.

Russia Announces Initial Retaliatory Sanctions Targets; Waiting for the Other Shoe to Drop by Yves Smith - Russia published its initial list of parties subject to its “retaliatory special economic measures.” Putin established the program by decree on May 3, designed to address the unlawful taking of property and property rights by unfriendly parties. The order tasked officials to come up with targets in ten days and develop additional criteria.We speculated that Germany’s seizure of Gazprom operations, which included storage facilities, would be a prime initial target. We were correct. We’ve embedded a machine translation1 of the May 11 document describing the implementation measures at the end of the post. TASS gives an overview: The list includes 31 companies from Germany, France and other European countries, as well as from the USA and Singapore. In particular, it includes former European subsidiaries of Gazprom, traders and operators of underground gas storage facilities.In particular, Russian authorities, legal entities and citizens will not be able to conclude transactions with the sanctioned entities and organizations under their control, fulfill obligations to them under completed transactions, and conduct financial transactions in their favor. This includes the concluded foreign trade contracts. These bans were earlier established by a decree of Russian President Vladimir Putin.The resolution sets additional criteria for transactions that are prohibited from being performed with companies from the sanctions list. These are transactions concluded in favor of the sanctioned persons, or providing for the making of payments, transactions with securities with the participation or in favor of such companies, or transactions involving the entry of ships owned or chartered by sanctioned persons, in their interest or on their behalf, into the Russian ports.If you look at the list, 12 of the 31 entities bear the Gazprom name. TASS lists some of the others:Gazprom Germania is an international group of companies that, through its subsidiary Gazprom Marketing & Trading, is engaged in natural gas trading in the UK spot markets, as well as the sale of liquefied natural gas in Southeast Asia. Through its subsidiary Gazprom Schweiz AG, it trades natural gas in countries Central Asia and the former Soviet Union, as well as in Austria, Italy and Serbia. Natural gas is traded in Germany mainly through Wingas and in the Czech Republic and Slovakia through Vemex Gazprom Germania.Gazprom Germania is also the operator of several large gas storage facilities in Germany and has several projects in Serbia, Austria and the Czech Republic.EuRoPol GAZ is a joint venture between Gazprom and Poland’s PGNiG, which owns the Polish section of the Yamal-Europe gas pipeline. So even though the first paragraph in the extract above is ambiguous, one can assume that Wingas entities, along with Vemex (per Vemex Gazprom Germania) and EuRoPol, are Gazprom ventures. Adding all those names brings the list of Gazrpom-related businesses to 21.

Nigeria’s oil output drops 13.3% to 1.3 mbpd - THE Organisation of Petroleum Exporting Countries, OPEC, has put Nigeria’s oil output at 1.3 million barrels per day, bpd, in April 2022. This showed a decrease of 13.3 percent compared to 1.5 million bpd recorded in the corresponding period of 2021. Despite the low output, Nigeria remains the highest producer in Africa, while Equatorial Guinea is the least with 94,000 bpd, according to the May 2022 Monthly Oil Market Report, MOMR, of OPEC obtained by Vanguard, yesterday. However, the Nigeria’s figure excluded condensate, which the country has the capacity to produce between 300,000 and 400,000 bpd, but it is not clear if the actual output matches the capacity as the Nigerian National Petroleum Corporation, NNPC, does not give regular information on the product line. OPEC expects Nigeria to produce 1.773 million bpd in June 2022, as part of measures targeted at achieving market stability. But in an interview with Vanguard, the Chairman of International Energy Services, Dr. Diran Fawibe, said Nigeria might not be able to meet the target. He said: “The market might continue to record increased instability as Nigeria will not be able to meet its quota, apparently because of increased pipeline vandalism, oil theft and illegal refining in the Niger Delta. “Overtime, the oil and gas companies have not been investing much, partly because of the delay associated with the passage of the nation’s Petroleum Industry Bill, PIB, which has now become an Act. Consequently, a lot of investments went to other nations, leading to the low production capacity of the country.

TotalEnergies may exit Nigeria’s onshore oilfields - Indications are that TotalEnergies may exit the country’s onshore oil fields in the shortest possible time. Available information showed that TotalEnergies has joined the list of international oil corporations that has hinted of plans to exit Nigeria’s troubled onshore oil fields, a decision that will further impact Nigeria’s dwindling oil revenue. Bloomberg reported that the French energy giant announced it will put up for sale its minority stake in a Nigerian oil joint venture. The implication is that TotalEnergies will no longer be part of the exploration and production of crude oil in the onshore Niger Delta. This move by TotalEnergies also aligns with that of Shell and ExxonMobil, who are now focusing on deep-water fields away from the difficulties of operating in close proximity to local communities.

Petroleum demand forecast 5.2 million m3 in Q2 - — Demand for gasoline in the second quarter is forecast at about 5.2 million cubic metres (m3). The Ministry of Industry and Trade has informed the situation of the petroleum market in the second quarter, after supply uncertainties in the first quarter. Total petroleum demand for the domestic market is about 20.6 million m3 this year. Meanwhile, the Ministry of Industry and Trade said that the supply would reach about 6.7 million m3 this quarter. The Ministry of Industry and Trade affirmed that the above supply would meet the consumption demand in the second quarter. The inventory will be about 1.5 million m3 in the third quarter. To ensure the domestic petroleum supply, the Ministry of Industry and Trade said it would continue to direct petroleum dealers in allocating total sources and additional minimum import quotas, which the Ministry of Industry and Trade assigned in the second quarter. The ministry also asked dealers to report on specific plans for petroleum production and supply from domestic production sources in balance with domestic consumption demand and adjust the allocation of petrol and oil import quotas to traders in the last six months. At the same time, the ministry requested coordination with the Ministry of Finance to manage gasoline prices in close contact with world gasoline price movements, in line with domestic petroleum supply and demand to ensure harmonisation of interests among petroleum market participants. The ministry also directed the market management force nationwide to continue strengthening the inspection and control of the market. In particular, it requested the Committee for State Capital Management at Enterprises to direct Việt Nam Oil and Gas Group to urgently work and negotiate with relevant parties to quickly resolve the internal problems in the joint venture at the Nghi Sơn refinery.

OPEC Kingpins Sound Alarm - The oil ministers of Saudi Arabia and the United Arab Emirates warned that spare capacity is decreasing in all energy sectors, as products from crude to diesel and natural gas trade near record highs in the wake of Russia’s invasion of Ukraine. “I am a dinosaur, but I have never seen these things,” Saudi minister Prince Abdulaziz bin Salman, who’s been attending OPEC meetings since the 1980s, said Tuesday at a conference in Abu Dhabi, referring to the recent surge in prices for refined products. “The world needs to wake up to an existing reality. The world is running out of energy capacity at all levels.” The comments came in the same week that retail U.S. gasoline prices rose to a record. The minister made similar remarks on Monday, saying that a lack of investment in energy production and refining was leading to costlier fuel. The prince’s UAE counterpart, Suhail al Mazrouei, said on the same panel that without more investment across the globe, OPEC+ wouldn’t be able to guarantee sufficient supplies of oil when demand fully recovers from the coronavirus pandemic. Saudi Arabia and the UAE are among the few producers investing in greater output. They’re spending billion of dollars to raise their crude capacity by 2 million barrels a day between them by the end of this decade. Most others are struggling to get funding as shareholders and governments encourage a shift from fossil fuels to renewable energy. Still, for now there’s no shortage of oil and thus no need for OPEC+ to accelerate its gradual production increases, according to Mazrouei. “The market is balanced,” he said. The Organization of Petroleum Exporting Countries and its partners, a 23-nation group led by the Saudis and Russia, has been under pressure from the U.S., Europe and other major importers to boost supply more quickly. Crude has jumped more than 35% this year to around $105 a barrel, mostly due to Russia’s attack. The European Union is moving closer to a formal ban on Russian energy imports in a bid to punish Moscow for the war. OPEC+ rubber-stamped a 432,000 barrel-a-day increase for June at its last meeting on May 5. It’s struggling to reach even that modest monthly target, with many members pumping below their quotas. Prince Abdulaziz reiterated that OPEC+ would not allow geopolitics to affect its decisions. The U.S. has tried to get Saudi Arabia and the UAE to distance themselves from Russia since the attack on Ukraine. Mazrouei said prices had been pushed up by the “politicization” of the oil market.

Saudis Say Low Refining Capacity Causing Fuel Price Jump - A lack of refining capacity across the world is leading to a surge in the gap between the price of crude oil and fuels, according to Saudi Arabia’s energy minister. The difference “is in some cases 60%,” Prince Abdulaziz bin Salman said at a conference in Riyadh on Monday. “If the signals of the market are not conducive, people will refrain from investing,” he said. Crude and refined-fuel markets are strongly backwardated, a bullish pattern marked by near-term futures commanding a premium to those further out. The downward-sloping curve means the long-term price assumptions companies use are much lower than current levels, which can discourage investment in production and refining. Crude prices have surged to around $110 a barrel in the past year, first as demand recovered from the coronavirus pandemic and then after Russia invaded Ukraine. Refined products have risen significantly more than crude since Russia’s attack, with diesel trading at record highs in the U.S.

OPEC+ April crude oil output tumbles as sanctions hit Russian output: Platts survey | S&P Global Commodity Insights -- Crude oil production by OPEC and its partners fell to a six-month low of 41.58 million b/d in April as Russian production took a battering from Western sanctions, the latest Platts survey by S&P Global Commodity Insights found. OPEC's 13 members raised output by 70,000 b/d to 28.80 million b/d, led by gains in Saudi Arabia and Iraq, but production by key ally Russia fell by 900,000 b/d, and Kazakhstan also registered significant losses. This meant the glaring gap between OPEC+ production and quotas rose to a record-high 2.59 million b/d as 13 out of the 19 countries with quotas struggled to hit their output targets, the survey found. The shortfall propelled the group's quota compliance to 220.3% -- illustrating how the sanctions on Russia, along with capacity constraints faced by several members, have eroded the alliance's ability to balance the market even as it keeps raising its production targets every month. The latest OPEC+ meeting on May 5 resulted in another 432,000 b/d collective quota increase for June. Crude prices, which were already climbing as global oil demand has recovered from the pandemic, have largely remained above $100/b since Russia launched its invasion of Ukraine in late February, though tempered somewhat by widespread COVID-19-related lockdown measures in China.Russia's output plunged to 9.14 million b/d in April, far below its quota of 10.44 million b/d, the survey found, and is expected to fall further with the EU preparing to impose an embargo on oil supplies from the country to choke its income. Its alliance with OPEC, forged in late 2016, has helped the producer group boost its influence in global oil markets, but the war is leaving the Kremlin increasingly isolated. Fellow non-OPEC producer Kazakhstan saw its output fall 220,000 b/d to 1.33 million b/d following damage to offshore loading facilities at the Russian port of Novorossiisk, from which its CPC Blend crude is exported. The outage lasted almost a month before loadings returned to normal towards the end of April. Politically unstable Libya's production also tumbled, with various factions blockading ports and key oil fields, while Nigeria remains hampered by issues to several of its key oil streams, according to the survey.

Oil falls on China demand worries, possible EU ban on Russia oil eyed -Oil prices slipped on Monday, along with stock markets in Asia, sparked by weak China data and fears a global recession could dampen oil demand, with investors eying European Union talks on a Russian oil embargo that could tighten global supplies.“The broader risk-off sentiment sparked by the recession fears, and China’s lockdowns are the major factors that pressure the oil price,” CMC Markets analyst Tina Teng said. Global financial markets have also been spooked by concerns over interest rate hikes and recession worries as tighter and wider COVID-19 lockdowns in China led to slower export growth in the world’s No. 2 economy in April. Crude imports by China, the world’s top oil importer, rose nearly 7% in April from a year earlier although imports for the first four months fell 4.8% on year. A price cut by Saudi Arabia also reflected worries over global oil demand, Teng said. Saudi Arabia, world’s top oil exporter, lowered crude prices for Asia and Europe for June on Sunday.Last week, the European Commission proposed a phased embargo on Russian oil as part of its toughest-yet package of sanctions over the conflict in Ukraine, boosting Brent and WTI prices for the second straight week. However, the proposal requires a unanimous vote among EU members this week. The EU proposal was followed by a pledge by G7 nations on Sunday to ban or phase out Russian oil imports. Washington also imposed new sanctions against Gazprombank executives and other businesses. Japan, part of G7 and one of the world’s top five crude importers, will ban Russian crude imports “in principle,” Prime Minister Fumio Kishida said on Sunday. “It seems inevitable that both the EU and Japan will be competing for more non-Russia supplies in the future, and this is underpinning prices,”

Oil Falls as Saudis Cut OSPs, Russian Embargo Hits Snag -- Oil futures nearest delivery on the New York Mercantile Exchange and Brent crude traded on the Intercontinental Exchange fell more than 2% in early trade Monday after Saudi Aramco, the world's largest oil producer, slashed its official selling prices for next month deliveries for Asian and European buyers, signaling stalled demand growth amid lockdowns in China and rattled industries in the Eurozone, where a proposed ban on Russian oil imports has been stalled by opposition from Hungary. Talks between the bloc's 27 countries fell into deadlock Sunday, according to wire services, after Hungarian Prime Minister Viktor Orban reiterated his objection to an all-out embargo on Russian oil imports, citing what would be devastating impacts for the Hungarian economy. On Friday, Orban compared the proposed legislature to a "nuclear bomb" being thrown at the Hungarian economy. Under the proposed legislation, the European Commission would give Hungary and Slovakia an extended period of time, until the end of 2023, to end purchases of Russian oil, while the other 25 members would phase-out all imports by October. According to reports, the Hungarian government now wants a total opt-out from the ban, while two other member states in Central and Eastern Europe -- Czech Republic and Bulgaria -- have also requested an extended period to transition away from Russian energy trade. The ongoing challenges on reaching a viable agreement on a Russian embargo reflect the fact that the measures being proposed would be deeply painful for some countries to absorb. In 2021, almost two-thirds of the bloc's crude oil imports came from Russia, with Russian oil satisfying more than 60% of Slovakia and Hungary's fuel demand, with similar dependencies in neighboring Czech Republic and Bulgaria. This comes as leaders from G7 countries "committed to phase out dependency on Russian energy, including by phasing out or banning the import of Russian oil." Underlining Monday's move lower in the oil complex is Saudi Aramco's cut to most of its selling prices across Asia, Europe and the Mediterranean for June loadings which reflects flagging demand in Asia and Europe. Aramco slashed its Asian selling price differential by the most for June, down to $4.95 barrel (bbl) from over $9 in May, as lockdowns cut through mobility in China's largest cities. For Northwest Europe-bound crude, Aramco dropped its OSPs by $2.50 bbl to a $5.60 bbl premium to ICE Brent, and its Light grade was down $2.50 bbl to $2.10 bbl. For U.S.-bound crudes, Aramco maintained pricing for all grades from May. Near 7:45 a.m. EDT, NYMEX June West Texas Intermediate dropped by more than $3 to trade near $106.37 bbl and Brent crude fell below $110 bbl, down $3.16. NYMEX June RBOB futures retreated from an all-time high settlement $3.7590 gallon, down more than 4 cents, and the front-month ULSD contact declined 10.91 cents to $3.8452 gallon.

Oil Ends Down 6% as Dollar Flies on Rate Hike Fears — Crude prices fell 6% on Monday as the dollar hit 20-year highs on U.S. rate hike fears that hammered the value of not just commodities priced in the currency but also other risk assets such as equities and cryptocurrencies. Brent crude, the London-traded global benchmark for oil, settled down $6.45, or 5.7%, at $105.94 a barrel. New York-traded West Texas Intermediate, or WTI, the benchmark for U.S. crude, settled down $6.68, or 6.1%, at $103.09. The drop wiped out last week’s near 6% gain in both the Brent and WTI after the OPEC+ oil exporters alliance agreed at its monthly meeting to a nominal output hike of 432,000 barrels per day that fell well short of the projected summer demand for oil. The slump in crude prices came as central bank officials at the Federal Reserve debated on whether the next US rate hike should be 75 basis points, with some saying that would be excessive while others argued it might be necessary to stop runaway inflation. The last time the Fed raised rates by 75 basis points was in 1994. Money markets traders have already priced in a 79% probability of a 75-bps hike at the Fed’s upcoming June 14-15 meeting — after last week’s 50-bps increase at its May meeting, which in itself was the largest increase in 20 years. The Fed insists that its regime of high rate hikes will not tip the US economy into recession, but the markets aren’t buying that argument for now. “The Fed looks increasingly belligerent where rates are concerned and this could spook sentiment across, beginning with stocks right through to oil,” “Wall Street remains uninspired to ‘buy the dip’ as inflation seems poised to remain stubbornly high, which will force the Fed to tighten policy to levels that will jeopardize the soft landing most traders were expecting,” “Oil prices are dropping fast as crude demand destruction fears grow given China’s COVID situation and the de-risking event happening with U.S. stocks.”

Oil Futures Fell Hard on Monday, Marking the Largest One-Day Percentage Drop Since March 31 - Oil futures fell hard on Monday, marking the largest one-day percentage drop since March 31. Crude oil prices plummeted on news that Saudi Arabia lowered the official selling price of their crude oil by the most ever, as COVID lockdowns in China continued to eat away at demand and as the U.S. dollar hit a three-year high. Oil prices are still succumbing to pressure after the U.S. Federal Reserve raised its interest rate, raising concern about demand. West Texas Intermediate crude for June delivery dropped $6.68, or 6.1%, to end at $103.09 a barrel. June Brent settled at $105.94 a barrel, down $6.45, 5.74%. Heating oil for June delivery lost 11.94 cents per gallon, or 3.02% to $3.8349, while June RBOB lost 11.71 cents per gallon, or 3.12% to $3.6419. The exports of gasoline from northwest Europe to the U.S. were estimated to be around 282,000 tons this week, slightly lower than the previous week. Saudi Arabia's Energy Minister, Prince Abdulaziz bin Salman, said that the gap between crude oil prices and prices for jet fuel, diesel and gasoline is around 60% in some cases because of the lack of refining capacity. Speaking at an aviation summit in Riyadh, he said the world needed to look at energy security, sustainability and affordability as a whole. An EU source said the European Commission is considering offering landlocked eastern European Union states more money to upgrade oil infrastructure in a bid to convince them to agree to an embargo on Russian oil. Separately, European Commission President, Ursula von der Leyen, said she had made progress in talks with Hungarian Prime Minister, Viktor Orban, on a possible EU-wide ban on Russian fossil fuels. She said she would convene a video conference with other countries in the region to strengthen regional cooperation on oil infrastructure. IIR Energy reported that U.S. oil refiners are expected to shut in about 946,000 bpd of capacity in the week ending May 13th, increasing available refining capacity by 109,000 bpd. Offline capacity is expected to decline to 729,000 bpd in the week ending May 20th. Venezuela’s PDVSA has started importing Iranian heavy crude to feed its domestic refineries, a deal that widens a swap agreement signed by both countries last year.

Oil Extend Losses on US Growth Concerns, China's Lockdowns - With the U.S. dollar trading near a 20-year high, oil futures extended Monday's losses into early trading Tuesday as investors rethink economic growth prospects in the United States amid the worst inflation in 40 years and an aggressive rate hike path laid out by the U.S. Federal Reserve that has raised doubts the central bank can avert recession in the world's largest economy. In the world's No. 2 economy, China's growth outlook decelerated sharply in April under pressure from unprecedented lockdown measures slapped on the country's major cities of Beijing and Shanghai. Chinese car sales plummeted 35.7% last month -- the biggest decline in over two years, while use of public transport declined 22% from a week earlier across 11 large cities in the clearest sign yet of deteriorating mobility. Further evidence of economic turmoil can be found in China's home sales data that collapsed by more than 50% compared to a year earlier, according to the government data released this week. Moving forward, China's Communist Party shows no signs of abandoning their brutal tactics of combating COVID-19 resurgence that is clearly taking the country backwards. Chinese President Xi Jinping recently urged officials to "unswervingly adhere to the general policy of dynamic zero-Covid," and warned against any criticism or doubting of the policy. Authorities just expanded the criteria for close contacts in Shanghai, with people living in the same building with a positive COVID case are at risk of being removed to government-run isolation facilities. According to various estimates, demand for gasoline, diesel and aviation fuel in China slid 20% last month, accounting for a 1.4 million bbl decline in daily consumption. It marked the largest hit to demand since the lockdown of Wuhan -- the epicenter of COVID-19 pandemic more than two years ago. In the United States, equity futures on Wall Street bounced higher on Tuesday after a three-day selloff that sent S&P 500 to its lowest level since March of last year. The volatility in the markets was triggered, in part, by comments from Atlanta Federal Reserve Chairman Rafael Bostic who suggested that two or even three 50-basis point increases in the federal funds rate are needed this year to quell inflation. Near 7:30 a.m. ET, NYMEX June West Texas Intermediate dropped $1.50 to trade at $101.70 bbl, and Brent crude fell below $105 bbl, down $1.58. NYMEX June RBOB futures retreated further from an all-time high settlement $3.7590 gallon reached on Friday, down 5.12 cents Tuesday morning to $3.5907 gallon, and the front-month ULSD contract declined 1.22 cents to $3.8227 gallon.

Oil falls to below $100 a barrel as US inflation fuels concerns -Oil continued its retreat into a second session as galloping US inflation fueled concerns it would force moves that risk pushing the economy into a recession. West Texas Intermediate fell 3.2% to settle below $100 a barrel for the first time since late April. The dollar advanced amid worries over tighter monetary policy, making commodities priced in the currency less attractive. Meanwhile, French President Emmanuel Macron and Hungarian Prime Minister Viktor Orban discussed energy security on Tuesday as the European Union seeks to persuade Budapest to drop its opposition to proposed sanctions on Russian oil imports. “Crude oil may have finally topped out,” The market has swayed in recent weeks as interest rates rise, and China’s fight against Covid-19 threatens demand. At the same time, Saudi Arabia’s oil minister warned that the entire energy market is running out of capacity, a concern that could potentially drive prices higher. His United Arab Emirates counterpart added that without more global investments, OPEC+ wouldn’t be able to guarantee sufficient oil supplies when demand fully recovers from the pandemic. Even as oil prices have dipped, US retail gasoline and diesel prices rallied to a record just ahead of the nation’s summer driving season. Meanwhile, US crude output growth appears to be slowing, leading the Energy Information Administration to cut its forecast for domestic oil production to 11.9 million barrels a day this year, compared with a previous estimate of 12.01 million, according to a monthly report. WTI for June delivery fell $3.33 to settle at $99.76 a barrel in New York. Brent for July settlement declined $3.48 to settle at $102.46 a barrel. A broader market sell off on Monday pushed oil down by the most since the end of March. Oil options markets were also caught up in the downturn, with bearish put options fetching a premium to bullish calls for the first time since the outbreak of the war in Ukraine in late February. China’s Covid-19 resurgence has further added to volatility. Virus lockdowns have strained the economy, while Chinese Premier Li Keqiang warned of a “complicated and grave” employment situation as Beijing and Shanghai tightened curbs in a bid to contain outbreaks.

U.S. oil settles below $100 a barrel on economic worries, strong dollar --U.S. crude oil price settled below $100 a barrel on Tuesday to its lowest level in two weeks as the demand outlook was pressured by coronavirus lockdowns in China and growing recession risks, while a strong dollar made crude more expensive for buyers using other currencies. U.S. West Texas Intermediate crude settled down $3.33, or 3.2%, to $100.11 a barrel, while Brent crude was down $3.48, or 3.28%, at $102.46 a barrel. Both benchmarks were down for a second straight day and fell by more than $4 a barrel earlier on Tuesday. Wall Street's main indexes also turned lower in volatile trading on concerns over aggressive monetary policy tightening and slowing economic growth. Early in the session, comments from the Saudi and UAE energy ministers boosted Brent and WTI up by more than $1 a barrel. "As the EU continues to dither over whether or not they are going to embargo that Russian oil, that changes the calculus very much as well in both directions," The European Union Commission has delayed acting on the proposal. Unanimity is required to ban oil imports from Russia, and while a French minister said EU members could reach a deal this week, Hungary has dug in its heels opposing an embargo. Also, some European economies could suffer distress if Russian oil imports were curtailed further. If Russia retaliated by cutting off gas supplies, economies in emerging Europe, Central Asia and North Africa might slide back to pre-pandemic levels, the European Bank for Reconstruction and Development (EBRD) warned. In addition to the recent G7 gradual import ban on Russian oil, Japan, which obtained 4% of its oil imports from Russia last year, has agreed to phase out those purchases. The timing and method have yet to be decided. With a steep fall in demand in China due to the lockdowns and discounted Russian barrels in the market, China gets to be more selective in the crude oil it buys, said Robert Yawger, executive director of energy futures at Mizuho. Cleveland Federal Reserve President Loretta Mester said raising U.S. interest rates in half-percentage-point increments "makes perfect sense" for the next couple of U.S. central bank policy meetings, while Bundesbank chief Joachim Nagel said the European Central Bank should raise interest rates in July. The dollar held near a two-decade high ahead of a reading on inflation that could hint at the outlook for Fed policy. On the supply side, the U.S. Energy Information Administration trimmed its U.S. crude oil production forecasts for 2022 and 2023. It now expects output in 2022 to average 11.9 million barrels per day (bpd) compared with its previous estimate of 12 million bpd. European refiners' crude and oil products stocks stood at about 1 billion barrels in April, down 10.3% on a year-on-year basis but nearly the same level as in March, Euroilstock data showed. Middle distillate stocks fell by 15.4% on the year in April, and by almost 3% from March, the data showed.

Oil Prices Fall On Rising Crude, Product Inventories - The American Petroleum Institute (API) reported a build this week for crude oil of 1.618 million barrels, compared to analyst predictions of a 1.2 million barrel draw. U.S. crude inventories have shed some 73 million barrels since the start of 2021 and about 16 million barrels since the start of 2020, according to API data. In the week prior, the API reported a larger-than-expected draw in crude oil inventories of 3.479 million barrels after analysts had predicted a draw of 1.167 million barrels. Oil prices were down on Tuesday after Monday's brief selloff, as China's central bank promised to provide monetary policy support to its economy after the lockdown. The price moves remain a testament to the hyper volatility that exists in the market post covid and post-Russian invasion. WTI was trading down 3.40% at $99.58 per barrel on the day at 1:18 p.m. ET—down roughly $3 per barrel on the week. Brent crude was trading down 3.40% on the day at $102.30 per barrel on the day—and down nearly $4 per barrel on the week. U.S. crude oil production stayed at 11.9 million bpd for the third week in a row for the week ending April 29. Crude production in the United States is still down 1.2 million barrels per day from pre-pandemic times. This week, the API reported a build in gasoline inventories at 823,000 barrels for the week ending April 29—after the previous week's 4.50-million-barrel draw. Distillate stocks saw a build in inventory of 662,000 barrels for the week compared to last week's 4.457-million-barrel decrease. Cushing saw a 92,000-barrel build this week. Cushing inventories rose to 28.829 million barrels as of April 29, according to EIA data—down from 59.2 million barrels at the start of 2021, and down from 37.3 million barrels at the end of 2021. At 4:35 pm, ET, WTI was trading at $100 (-2.97%), with Brent trading at $102.70 (-3.07%).

Oil Prices Extend Gains As Distillate Inventories Plunge To 17 Year Lows -Oil prices are surging this morning, after COVID infections in Shanghai and Beijing dropped on Tuesday, providing some cautious optimism of improvement after lockdowns sparked growth scares... but that also comes as IIF tweets about global recessions and US inflation prints hotter than expected, prompting fears of a more aggressive Fed stomping on growth.The oil market hasn’t been “consistent at all as of late, which has turned many away from trading the commodity,” “Trading crude right now is like trying to figure out the mood swings of a teenager. It can feel like a futile endeavor.”Traders continue to monitor the EU’s efforts to agree sanctions on Russian oil imports. On Wednesday, Hungary said it will only agree if shipments via pipelines are excluded.And all of this is happening as US retail gasoline prices peak even before the start of the summer driving season.API

  • Crude +1.161mm (-457k exp)
  • Cushing +92k
  • Gasoline +823k
  • Distillates +662k

DOE

  • Crude +8.487mm (-457k exp)
  • Cushing -587k
  • Gasoline -3.607mm
  • Distillates -913k

Official data showed a huge US Crude inventory build last week, dramatically different from the small draw expected (and far larger than the API-reported build). Cushing saw stocks reduced and products saw notable draws.The headline build in crude stockpiles was largely offset by the withdrawal of nearly 7 million barrels of crude from the Strategic Petroleum Reserve last week. Total nationwide crude inventories (including commercial stockpiles and oil held in the SPR) rose by 1.5 million barrels in the week to May 6, with commercial inventories jumping by 8.4 million barrels. Withdrawals from the SPR hit the Biden Administration’s supply goal last week.

NYMEX WTI Futures Add to Gains Despite Large Crude Build - -- Oil futures nearest delivery on the New York Mercantile Exchange continued higher in late-morning trade Wednesday after inventory data from the Energy Information Administration revealed petroleum product inventories in the United States fell by a larger-than-expected margin during the week ended May 6 and domestic producers reduced output, offsetting a supersized build in commercial oil inventories. U.S. commercial crude oil inventories spiked 8.5 million barrels (bbl) from the final week of April to 424.2 million bbl which is still 13% below the five-year average. Analysts estimated crude stockpiles would fall by 300,000 bbl. A surprise build came despite domestic refiners processing 230,000 barrels per day (bpd) more crude last week and domestic producers unexpectedly cut output by 100,000 bpd. At the current rate, U.S. production stands at 11.8 million bpd, still 1.1 million bpd below the pre-pandemic high set in February 2020. The refining capacity utilization rate increased by 1.6% from the previous week to 90.0% compared with a consensus by analysts for a 0.5% increase. Oil stored at the Cushing, Oklahoma, stock hub, the delivery point for West Texas Intermediate futures, decreased 587,000 bbl from the previous week to 28.2 million bbl, the EIA said in its report. Higher refinery activity came even as demand for refined fuels softened in the first week of May, with gasoline demand in the United States sliding 154,000 bpd from the previous week to 8.702 million bpd and distillate demand decreasing 179,000 bpd to below 4 million bpd. Distillate stocks fell in line with expectations, down 913,000 million bpd to 104 million bbl to near the lowest level in 14 years and some 21% below the five-year average. Gasoline inventories also dropped by a larger-than-expected 3.6 million bbl margin to 225 million bbl compared with analyst expectations for inventories to have decreased by 1.7 bbl. Total products supplied over the last four-week period averaged 19.4 million bpd, up 1.6% from the same period last year. Over the past four weeks through May 6, motor gasoline product supplied averaged 8.8 million bpd, down by 1.4% from the same period last year. Distillate fuel product supplied averaged 3.8 million bpd over the past four weeks, down 5.5% from the same period last year. Near 11:30 a.m. EDT, NYMEX WTI June futures rallied more than $5 to near $105 bbl, and the international crude benchmark Brent contract advanced $4.70 to more than $107 bbl. NYMEX June RBOB futures gained 11.05 cents to $3.6497 gallon, with front-month ULSD futures advancing about 8.75 cents to $4.0205 gallon.

Oil up as Russia gas flow to Europe falls, EU Russian oil ban looms - Oil prices jumped on Wednesday after plunging nearly 10% in the previous two sessions, buoyed by supply concerns as flows of Russian gas to Europe fell and the European Union worked on gaining support for a Russian oil embargo. Russian gas flows to Europe via Ukraine fell by a quarter after Kyiv halted use of a major transit route blaming interference by occupying Russian forces. It was the first time exports via Ukraine have been disrupted since the invasion. Brent crude rose $5.63, a 5.5% increase, to $108.09 a barrel by 1:13 p.m. EDT. U.S. West Texas Intermediate crude climbed $6.47 to $106.23. The EU has proposed an embargo on Russian oil, which analysts say would further tighten the market and shift trade flows. A vote, which needs unanimous support, has been delayed as Hungary has dug in its heels in opposition. U.S. crude stocks rose by more than 8 million barrels in the most recent week, due to another large release from strategic reserves, the Energy Information Administration said. Commercial crude inventories have been growing as the White House has elected to flood the market with oil to offset the rise in prices. However, fuel prices have kept rising on the decline in refining capacity and surging demand for products worldwide - just as Russia's exports have been curtailed. That has driven refining margins to near-record levels in the United States. Despite the build in crude stocks, gasoline inventories fell by 3.6 million barrels in the latest week. "These draws are occurring across products - we are seeing refiners not able to keep up with demand for gasoline," Oil was also supported by hopes of Chinese economic stimulus, after China's factory-gate inflation eased and investors took comfort in signs of lower domestic Covid-19 infections. The price of crude has surged in 2022 as Russia's invasion of Ukraine added to supply concerns, with Brent reaching $139, the highest since 2008, in March. Worries about growth caused by China's Covid curbs and U.S. interest rate hikes have prompted this week's slump. A backdrop of tight supply because of what major producers say is partly a result of inadequate investment remains supportive for oil. The United Arab Emirates energy minister highlighted these concerns on Tuesday.

Oil slips on fears recession may hit demand - Oil prices fell on Thursday in a volatile week as recession fears dogged global financial markets, outweighing supply concerns and geopolitical tensions in Europe. Brent crude was down $1.92, or 1.8%, to $105.59 a barrel at 1202 GMT. WTI crude fell $1.79, or 1.7%, to $103.92 a barrel. Oil prices are under pressure this week, along with global financial markets, amid jitters over rising interest rates, the strongest U.S. dollar in two decades, concerns over inflation and possible recession. Prolonged COVID-19 lockdowns in the world's top crude importer, China, have also impacted the market. U.S. headline CPI for the 12 months to April jumped 8.3%, fueling concerns about bigger interest rate hikes, and their impact on economic growth. "Soaring pump prices and slowing economic growth are expected to significantly curb the demand recovery through the remainder of the year and into 2023," the International Energy Agency (IEA) said on Thursday in its monthly report. "Extended lockdowns across China ... are driving a significant slowdown in the world’s second largest oil consumer," the agency added. The Organization of the Petroleum Exporting Countries (OPEC) cut its forecast for growth in world oil demand in 2022 for a second straight month, citing the impact of Russia's invasion of Ukraine, rising inflation and the resurgence of the Omicron coronavirus variant in China. A pending European Union ban on oil from Russia, a key EU supplier of crude and fuels, could further tighten global supplies. The EU is still haggling over the details of the Russian embargo. The vote needs unanimous support, but it has been delayed as Hungary opposes the ban because it would be too disruptive to its economy. "The proposed oil embargo ... is expected to make the underlying oil balance even tighter than it already is, especially on the product front. Implementing these sanctions, however, is an arduous task," On Wednesday, oil prices jumped 5% after Russia sanctioned 31 companies based in countries that imposed sanctions on Moscow following the Ukraine invasion. That created unease in the market at the same time that Russian natural gas flows to Europe via Ukraine fell by a quarter. It was the first time exports via Ukraine have been disrupted since the invasion. Price gains have been limited by worries about demand destruction in China, as it attempts to curb the spread of the coronavirus. In the United States, commercial crude inventories rose last week because of a record release of oil from the U.S. strategic reserves, but gasoline stockpiles declined ahead of the peak summer driving demand season, the Energy Information Administration said on Wednesday.

Oil Managed Slight Gain Emphasizing Tight Supply | Rigzone -- Oil managed a slim gain with the IEA highlighting the precariously tight state of global fuel stockpiles, while the EU signalled its members may not yet be able to agree on a Russian oil ban. West Texas Intermediate settled near $106 after fluctuating for most of the session on Thursday. European Union nations say it may be time to consider delaying a push to ban Russian oil if the bloc can’t persuade Hungary to back the embargo. A report by the International Energy Agency demonstrated how critical Russian supplies are to maintaining global fuel balances. There is currently an “almost universal product shortage,” it said in its monthly Oil Market Report. “The products story is starting to be the tail that is wagging the dog in crude,” said Rebecca Babin, senior energy trader at CIBC Private Wealth Management. “It simply can’t be ignored.” Oil has advanced more than 40% this year as Russia’s invasion of Ukraine upended an already tight supply-demand balance. The war is rerouting global crude flows, with the US and UK moving to ban the import of Russian barrels, while some Asian buyers take extra cargoes. As the war drags on, there’s mounting pressure on the European Union to curb its imports. US distillate stockpiles -- a category that includes diesel -- fell to the lowest level since 2005 last week, while gasoline supplies declined for a sixth week, according to the Energy Information Administration. The IEA says diesel inventories in the OECD are the lowest since 2008. WTI for June delivery rose 42 cents to settle at $106.13 a barrel in New York. Brent for July settlement was little changed falling 6 cents to settle at $107.45 a barrel. “Diesel drama is dominating the price action once again,” analysts at wholesale-fuel distributor TACenergy wrote in a note to clients. Gasoline stocks are also facing “logistical challenges as the world struggles to deal with the supply chain going from bad to worse over the past 3 months just in time to reach our peak demand season.” With concerns growing about dwindling fuel stockpiles, Bank of America this week said that oil product cracks -- the profits from turning crude into fuels -- will continue to rise in the near-term as refiners try to meet summer travel demand. It sees US gasoline trading at a $34 premium to Brent for the rest of the year.

Oil rises 4% as US gasoline prices jump to record high - Oil prices rose about 4 percent on Friday as United States gasoline prices jumped to a record high, China looked ready to ease pandemic restrictions and investors worried supplies will tighten if the European Union bans Russian oil. Brent futures rose $4.10, or 3.8 percent, to settle at $111.55 a barrel. US West Texas Intermediate (WTI) crude rose $4.36, or 4.1 percent, to settle at $110.49. That was the highest close for WTI since March 25 and its third straight weekly rise. Brent fell for the first time in three weeks. US gasoline futures soared to an all-time high after stockpiles fell last week for a sixth straight week. That boosted the gasoline crack spread – a measure of refining profit margins – to its highest since it hit a record in April 2020 when WTI finished in negative territory. “There has not been an increase in (US) gasoline storage since March,” The US 3:2:1-crack spread, another measure of refining margins that includes gasoline and diesel, rose to a record, according to Refinitiv data going back to May 2021. Automobile club AAA said US prices at the pump rose to record highs on Friday of $4.43 per gallon for gasoline and $5.56 for diesel. Oil prices have been volatile, supported by worries a possible EU ban on Russian oil could tighten supplies but pressured by fears that a resurgent COVID-19 pandemic could cut global demand. “An EU embargo, if fully enacted, could take about 3 million bpd (barrels per day) of Russian oil offline, which will completely disrupt, and ultimately shift global trade flows, triggering market panic and extreme price volatility,” said Rystad Energy analyst Louise Dickson. This week, Moscow slapped sanctions on several European energy companies, causing worries about supplies. In China, authorities pledged to support the economy and city officials said Shanghai would start to ease coronavirus traffic restrictions and open shops this month. “Crude prices rallied on optimism that China’s COVID situation was not worsening and as risky assets rebounded,” said Edward Moya, senior market analyst at data and analytics firm OANDA. Global shares rose after a volatile week of trading, pushing up stock indexes in the United States and Europe. Pressuring oil prices during the week, inflation and rate rises drove the US dollar to a near 20-year high against a basket of currencies, making oil more expensive when purchased in other currencies. The EU said there was enough progress to relaunch nuclear negotiations with Iran. The US said it appreciated the EU’s efforts but said there was no agreement yet and no certainty that one might be reached. Analysts said an agreement with Iran could add another 1 million bpd of oil supply to the market.

Oil Mixed on Week: Brent Falls Slightly, U.S. Crude up Amid Record Pump Prices -- Crude prices were mixed on the week as Friday's trading oil closed, with global benchmark Brent showing a slight weekly loss amid a continued holdout by Europe on a Russian oil ban, while U.S. crude rose on strong summer demand bets and supply tightness that have pushed pump prices to record highs. Both Brent and U.S. crude’s West Texas Intermediate benchmark rose about 4% in Friday’s trade, extending their recovery from a near 10% loss in the first two days of the week sparked by fears that America might be tipped into recession from aggressive rate hikes by the Federal Reserve trying to beat the worst inflation in 40 years. London-traded Brent settled at $111.55 a barrel, up $4.10, or 3.8%, on the day. For the week, it was down 0.7%. New York-traded WTI settled at $110.49, up $4.36, or 4.1%. For the week, it rose 0.7%. The divergence between Brent and WTI is "a story of two oils,” said John Kilduff, partner at New York energy hedge fund Again Capital. “The holdout on an European embargo of Russian oil, particularly by Hungary, is limiting Brent’s upside, while WTI is basking in bullish glory from the refining crunch in fuels that’s sent U.S. pump prices to record highs,” Kilduff said. Some European Union nations said on Friday that the push to ban Russian oil should probably be delayed to prioritize other sanctions against Moscow, particularly if the bloc could not win immediate consensus from Budapest for an embargo. Saudi Arabia’s Energy Minister Abdulaziz bin Salman, meanwhile, tried to avert any blame on OPEC+ for the record high pump prices in the United States, saying it was a lack of U.S. refining capacity that was responsible for the crisis rather than supply from the global oil exporters alliance. OPEC+ has managed to push crude prices up from their lows whenever it meets each month, by offering a meager production hikes at well below the market’s needs. “The bottleneck [in U.S. fuel supply] now [has] to do with refining,” Abdulaziz told Bloomberg in an interview on Friday. “I did warn this was coming back in October. Many refineries in the world, especially in Europe and the US, have closed over the last few years. The world is running out of energy capacity at all levels.” Record-high fuel prices are testing the mettle of U.S. consumers, with gasoline at above $4.50 per gallon at some US pumps while diesel retails at above $6. The International Energy Agency cautioned on Thursday that soaring pump prices and slowing economic growth are expected to significantly curb the demand recovery through the remainder of the year and into 2023. Economists, meanwhile, warn that the US economy, finally on the path to resilience after the damage wrought by the two-year-long coronavirus pandemic, could head for recession again from a one-two punch delivered by record-high fuel prices and Fed rate hikes.

Saudi Aramco becomes world’s most valuable stock as Apple drops— Saudi Aramco overtook Apple Inc. as the world’s most valuable company, stoked by a surge in oil prices that is buoying the crude producer while adding to an inflation surge throttling demand for technology stocks. Aramco traded near its highest level on record on Wednesday, with a market capitalization of about $2.43 trillion, surpassing that of Apple for the first time since 2020. The iPhone maker fell 5.2% to close at $146.50 per share, giving it a valuation of $2.37 trillion. Even if the move proves short-lived and Apple retakes the top spot again, the role reversal underscores the power of major forces coursing through the global economy. Soaring oil prices, while great for profits at Aramco, are exacerbating rising inflation that is forcing the Federal Reserve to raise interest rates at the fastest pace in decades. The higher rates go, the more investors discount the value of future revenue flows from tech companies and push down their stock prices. “You can’t compare Apple to Saudi Aramco in terms of their businesses or fundamentals, but the outlook for the commodity space has improved. They’re the beneficiaries of inflation and tight supply,” said James Meyer, chief investment officer at Tower Bridge Advisors. Earlier this year, Apple boasted a market value of $3 trillion, about $1 trillion more than Aramco’s. Since then, however, Apple has fallen nearly 20% while Aramco is up 28%.

UN says 'imminent' Yemen oil spill would cost $20 bn to clean up - The United Nations warned Monday that it would cost $20 billion to clean up an oil spill in the event of the "imminent" break-up of an oil tanker abandoned off Yemen. "Our recent visit to (the FSO Safer) with technical experts indicates that the vessel is imminently going to break up," the UN humanitarian coordinator for Yemen, David Gressly, said ahead of a conference, hosted by the UN and The Netherlands, to raise funds for an emergency operation to prevent an oil spill. The 45-year-old FSO Safer, long used as a floating oil storage platform with 1.1 million barrels of crude on board, has been moored off the rebel-held Yemeni port of Hodeida since 2015, without being serviced. "The impact of a spill will be catastrophic," Gressly continued at a briefing in Amman. "The effect on the environment would be tremendous... our estimate is that $20 billion would be spent just to clean the oil spill." The UN official had earlier announced on Twitter that the Netherlands would host on Wednesday a pledging conference for the international body's plan to avert the crisis. Last month, the UN said it was seeking nearly $80 million for its operation. It warned of "a humanitarian and ecological catastrophe centred on a country already decimated by more than seven years of war". It said that the emergency part of a two-stage operation would see the toxic cargo pumped from the storage platform to a temporary replacement vessel at a cost of $79.6 million. Gressly estimated that a total of $144 million would be needed for the full operation, reiterating that $80 million was needed "to secure the oil safely in the initial phase". Hundreds of thousands of people have been killed directly or indirectly in Yemen's seven-year war, while millions have been displaced in what the UN calls the world's biggest humanitarian crisis.

UN leads £65m plan to stop huge oil spill off Yemen during first ceasefire in six years --The UN is to stage a rare donor conference on Wednesday in a bid to raise the $80m (£65m) necessary to prevent an ageing oil tanker off the west coast of Yemen exploding and causing an environmental disaster potentially four times worse than the Exxon Valdez spill near Alaska in 1989.The money is needed to offload more than 1.14m barrels of oil that have been sitting in the decrepit cargo ship, Safer, for more than six years because of an impasse between Houthi groups and the Saudi-backed government over ownership and responsibility. Previous UN mediation efforts over the potentially lethal byproduct of Yemen’s civil war have failed, partly because the Houthi rebels that now control the capital, Sana’a, have not been able to agree terms for UN-commissioned engineers to board the ship. The Houthis have regarded the ship and its lucrative cargo as their possession and a bargaining chip in the negotiations with the Saudi- and Emirati-backed forces. Expert engineers and environmentalists have warned the ship is an unexploded timebomb capable of causing an ecological disaster. UN estimates suggest that if the ship’s cargo is unleashed into the Red Sea, more than 200,000 fishermen would lose their jobs and $20bn would be required for a clean-up operation. But under a new agreement, laboriously negotiated over six months by the UN and Dutch diplomats, an international donor conference will aim to raise the required $80m to offload the light crude oil. The plan is the brainchild of the UN resident coordinator and humanitarian coordinator for Yemen, David Gressly, who claims it has the support of the Saudi-backed and Houthi-backed governments. A memorandum of understanding was signed by the Houthis on 5 March that allows the UN to transfer about 1.1m barrels of oil from the vessel, which is stranded 8km off Ras Isa port on Yemen’s Houthi-held west coast. The oil would be transferred to a secure vessel which would remain in place. A new tanker would be purchased for the Houthis within 18 months to replace Safer, thus providing them with the insurance that they would be able to operate a profitable oil export industry when the civil war ends. The Safer vessel would be towed and sold for scrap. The Houthis would have no legal or commercial liability.

Yemen: $33 million pledged to address decaying oil tanker threat - The FSO Safer, which is holding more than a million barrels of oil, has been described as a “time bomb” because it is at risk of causing a major spill, either from leaking, breaking apart or exploding. The commitments were made at a pledging conference in The Hague, co-sponsored by the UN and the Netherlands, marking the start of efforts to raise the $144 million required for the plan. “We are grateful to the donors that committed funding today at very short notice and look forward to receiving further commitments from those that have not yet pledged. When we have the funding, the work can begin,” said David Gressly, the UN Resident and Humanitarian Coordinator for Yemen. The FSO Safer was constructed in 1976 as an oil tanker and converted to a floating storage and offloading (FSO) facility a decade later. At 376 metres long, it is among the largest oil tankers in the world. The crude oil it holds is four times the amount spilled by the Exxon Valdez, the tanker that caused one of the greatest environmental disasters in the history of the United States. The ship has been anchored off Yemen’s Red Sea coast for more than 30 years. Production, offloading, and maintenance stopped in 2015 due to the war between a pro-Government Saudi-led coalition, and Houthi rebels. The vessel is now beyond repair and at imminent risk of spilling oil, which would have far-reaching consequences. Fishing communities on the Red Sea coast would be devasted, and the nearby ports of Hudaydah and Saleef would close. Both are critical for the entry of food, fuel and lifesaving supplies in a country where some 17 million people depend on humanitarian aid. Any oil spill would also have an environmental impact on water, reefs and mangroves, and also disrupt shipping through the Bab al-Mandab strait to the Suez Canal. Clean-up alone would cost an estimated $20 million.

Al Jazeera Accuses Israel Of 'Blatant Murder' After Its Star Reporter Shot Dead In West Bank Raid - The media outlet Al Jazeera accusedIsraeli forces of "deliberately targeting and killing our colleague" on Wednesday after Palestinian journalist Shireen Abu Akleh was shot in the face while covering a raid on the Jenin refugee camp in the occupied West Bank.In a statement, the Al Jazeera Media Network said that Abu Akleh—who worked as the publication's Palestine correspondent—was wearing a press jacket that clearly identified her as a journalist when Israeli forces shot her "with live fire.Al Jazeera, which is based in Qatar, called the attack "a blatant murder," saying Abu Akleh, 51, was "assassinated in cold blood."The statement continued:Al Jazeera Media Network condemns this heinous crime, which intends to only prevent the media from conducting their duty. Al Jazeera holds the Israeli government and the occupation forces responsible for the killing of Shireen. It also calls on the international community to condemn and hold the Israeli occupation forces accountable for their intentional targeting and killing of Shireen.The Israeli authorities are also responsible for the targeting of Al Jazeera producer Ali al-Samudi, who was also shot in the back while covering the same event, and he is currently undergoing treatment.Al Jazeera extends its sincere condolences to the family of Shireen in Palestine, and to her extended family around the world, and we pledge to prosecute the perpetrators legally, no matter how hard they try to cover up their crime, and bring them to justice.Footage from the scene shows the moments after Abu Akleh was shot.(Warning: The video is disturbing)Footage shows the moments of Al Jazeera’s senior reporter Shireen Abu Aqla’s death.In appearance, Israeli footage that says there was a Palestinian cross fire doesn’t fit with this location.She is also wearing a helmet and body armour. pic.twitter.com/fYCMQqxlxf

Watch: Chaos In Jerusalem As Israeli Police Attack Slain Al Jazeera Journalist's Funeral Procession -Jerusalem's old city erupted in chaos and violence on Friday as thousands of Palestinians descended on the Christian quarter to pay their final respects to slain Al Jazeera journalist Shireen Abu Akleh. "Israeli police on Friday moved in on a crowd of mourners at the funeral of Al Jazeera journalist Shireen Abu Akleh, beating demonstrators with batons and causing pallbearers to briefly drop the casket," The Associated Press describes.The Qatar-based network has accused Israeli forces of shooting her in the face when two days ago she was covering a West Bank raid, and had a press flak jacket and helmet on. An Al Jazeera statement alleged that it was an intentional "assassination".Horrible scenes as Israeli security forces beat the funeral procession for slain journalist Shireen Abu Akleh and the crowd momentarily lose control of her casket pic.twitter.com/DEJF5Ty9tZMourners of the 51-year-old Palestinian-American Christian had draped her casket in a Palestinian flag, and that's reportedly what triggered the beefed up Israeli security presence from allowing her funeral procession to pass."The funeral procession began at the hospital in east Jerusalem, with last respects then to be paid at a church in the Old City before her body was laid to rest alongside her parents in a nearby cemetery," CBS News reports. "But the violence began as soon as Abu Akleh's casket was carried out of the hospital gates, where Israeli security forces had gathered."The report continues, "Video showed them surging t oward the funeral procession before grabbing and roughing up some of the mourners, including those carrying the coffin." Indeed the footage shows a brutal attack with batons and kicking, which even targets the pallbearers...

Islamic Emirate Announces Rules for Women’s Covering |-The Islamic Emirate announced new rules regarding women’s covering or hijab on Saturday, saying it will be implemented in two steps -- encouragement and punishment – and defining the types of dress that women will need to wear when stepping out of home. The plan was confirmed by Mawlawi Hibatullah Akhundzada, the supreme leader of the Islamic Emirate. “If a woman doesn't wear a hijab, first, her house will be located and her guardian will be advised and warned. Next, if the hijab is not considered, her guardian will be summoned. If repeated, her guardian (father, brother or husband) will be imprisoned for three days. If repeated again, her guardian will be sent to court for further punishment, the plan reads,” said Akif Mahajar, a spokesman for the Ministry of Vice and virtue. A statement from the Vice and Virtue Ministry of the Islamic Emirate reads that hijab is an obligation in Islam and that any dress that covers the body can be considered as hijab given that it is not “thin and tight.” When it comes to the type of the covering or hijab that women will need to wear, the statement says that burka is the best type of hijab/covering “as it is part of Afghan culture and it has been used for ages.” It adds that another preferred type of hijab is a long black veil and dress that “should not be thin or tight.” The statement, called “the descriptive and accomplishable plan on legitimate hijab,” also instructs women not to step out of home unless it is necessary, calling it one of the best ways of observing hijab. The plan was announced by the Ministry of Vice and Virtue on Saturday at a press conference in Kabul.

Tadamon massacre exposé lifts veil of secrecy over Syrian war atrocities -- Forty-one civilians in all were murdered in a single coldblooded incident in 2013. One by one, the blindfolded detainees were brought to the edge of a freshly dug pit in the Damascus suburb of Tadamon and systematically shot. The bodies, piled one on top of the other, were later set on fire. Footage of the massacre, carried out by Syrian militia members loyal to President Bashar Assad, emerged only in April this year following an expose by the UK’s Guardian newspaper and the online New Lines Magazine. The amateur video, taken by the killers themselves, was discovered by a militia recruit in the laptop of one of his seniors. Sickened by what he had seen, the rookie passed the video on to researchers, who later confronted one of the killers identified in the footage. A Syrian woman holds images of victims of the Assad regime outside a German courtroom. (AFP) Journalists and activists from southern Damascus, speaking to Arab News following online circulation of the video, said that the Tadamon massacre was unlikely to have been the only atrocity committed in the area during that period. Throughout 2012 and 2013, pro-regime militias would shoot random passers-by at checkpoints in Tadamon, Yalda and the Yarmouk camp, and also gun down people in their homes. Bodies of the victims were often left to rot, according to local residents. “We would hear about these massacres and the burning of corpses,” Rami Al-Sayed, a photographer from the Tadamon neighborhood, told Arab News. “We knew that anyone arrested by the shabiha of Nisreen Street would be disappeared and, in most cases, executed.”