US oil production at a record high; oil prices highest in nearly 4 years; September natural gas supplies lowest in 15 years

US oil prices rose for a third week running while global prices repeatedly tested 4 year highs this past week, as US imposed sanctions against Iran threatened to shut in more than 2% of global oil production...after increasing $2.01 a barrel, or nearly 3% to $70.78 a barrel on global supply concerns last week, US oil contract prices for November delivery jumped nearly $2 more in early trading Monday, after OPEC said it wouldn't raise its output to replace sanctioned Iranian oil, before easing back to close $1.30 higher at $72.08 a barrel...prices then rallied to as high as $72.78 a barrel Tuesday before sliding back to $78.28 a barrel at the close, after Trump once again called on OPEC to pump more oil and stop raising prices...however, oil prices retreated on Wednesday and closed 71 cents lower at $71.57 a barrel after the EIA reported the first increase in US crude supplies in six weeks...but the oil price rally resumed on Thursday, with US crude prices up 55 cents to $72.12 a barrel, as oil traders bet that the loss of Iranian exports due to Trump sanctions was not going to be made up...US crude rose another $1.13 to $73.25 a barrel on Friday, while Brent, the international benchmark, rose to a four-year high at $82.72 a barrel, on news that even China’s Sinopec, under intense pressure from Washington, was halving their loadings of crude oil from Iran this month...US oil prices thus ended 3.5% higher for the week and 4.9% higher for September, their second straight monthly gain...meanwhile, the impact of Iran sanctions was even more pronounced on grades of oil which might be seen as substitutes for Iranian crude; Omani oil, for instance, a low-quality crude which usually trades at a discount to the better known international grades, traded as high as $90.90 a barrel on the Dubai Mercantile Exchange on Wednesday, before closing at $88.96 a barrel, $16.60 a barrel more than the US price at the time...

front month contract natural gas prices, meanwhile, traded at their highest level since February this week, with natural gas for November moving 5.5 cents higher on Monday and 2.9 cents higher on Tuesday on forecasts of a large storage deficit to the start of winter heating season...however, after trading as high as $3.111 per mmBTU on Thursday after the EIA storage report, natural gas prices fell back 4.8 cents on Friday to end the week at 3.008 per mmBTU, just 3.4 cents higher than where they started...surprisingly natural gas for January, which regularly trade at higher prices than warmer months, didn't do much better, rising just 3.8 cents over the week to end at 3.169 per mmBTU, which is actually lower than that contract was trading for in August...

the week's natural gas storage report from the EIA for week ending September 21st indicated that natural gas in storage in the US rose by 46 billion cubic feet to 2,768 billion cubic feet during that week, which left our gas supplies 690 billion cubic feet, or 20.0% below the 3,458 billion cubic feet that were in storage on September 22nd  of last year, and 621 billion cubic feet, or 18.3% below the five-year average of 3,389 billion cubic feet of natural gas that are typically in storage after the third week of September....this week's 46 billion cubic feet increase in natural gas supplies was far short of the 61 billion cubic feet increase that a S&P Global Platts' analysts survey had predicted, and it was barely half of the 81 billion cubic foot average of natural gas that have typically been added to storage during the third week of September in recent years, and thus the tenth below average inventory increase in the past twelve weeks...natural gas storage facilities in the Midwest saw a 30 billion cubic feet increase this week, still leaving their supplies 15.1% below normal, while supplies in the East increased by 20 billion cubic feet and are now 11.6% below normal for this time of year...on the other hand, the South Central region saw a 11 billion cubic foot withdrawal from storage as their natural gas storage deficit increased to 26.0% below their five-year average, while just 4 billion cubic feet cubic feet of gas were added to storage in the Pacific region, where natural gas supplies are 21.8% below normal for this time of year....

comparing this week's 2,768 billion cubic feet of natural gas in storage to equivalent dates in the natural gas storage historical record (xls) for those years when we began the heating season with a deficit, we find that natural gas in storage in the lower 48 states was at 2,988 billion cubic feet on September 19th, 2014, at 3,023 billion cubic feet on September 19th, 2008; at 2,885 billion cubic feet on September 23rd, 2005, and at 2,719 billion cubic feet September 19th 2003, so it appears that we're still on track to begin the winter with supplies at a 15 year low...and no sooner than i completed digging those data points out of the historical record than i opened an email from John Kemp of Reuters in which was included a graph showing just that, which we will therefore include here below...

again, the above graph comes from a package of natural gas graphs assembled by John Kemp of Reuters, which is available as an online pdf here...as the graph heading indicates, each bar shows the amount of natural gas in storage after the third week in September for each of the past 25 years...as you can clearly see, supplies this year are the lowest since 2003, and then 2000 before that...the difference is that the supplies we go into winter with now don't have to just heat our homes, they also have to cover several LNG export contracts as well as meet demand for almost one-third of US electrical generation...

The Latest US Oil Data from the EIA

this week's US oil data from the US Energy Information Administration, covering the week ending September 21st, showed that despite lower oil imports and higher oil exports, we were able to add oil to our commercial crude supplies for the first time in six weeks because of a sharp pullback in oil refining... our imports of crude oil fell by an average of 222,000 barrels per day to an average of 7,802,000 barrels per day, after rising by an average of 433,000 barrels per day the prior week, while our exports of crude oil rose by an average of 273,000 barrels per day to an average of 2,640,000 barrels per day during the week, which meant that our effective trade in oil worked out to a net import average of 5,162,000 barrels of per day during the week ending September 21st, 495,000 fewer barrels per day than the net of our imports minus exports during the prior week...over the same period, field production of crude oil from US wells was reportedly up by 100,000 barrels per day to 11,100,000 barrels per day, which means that our daily supply of oil from the net of our trade in oil and from wells totaled an average of 16,262,000 barrels per day during the reporting week... 

meanwhile, US oil refineries were using 16,514,000 barrels of crude per day during the week ending September 21st, 901,000 barrels per day less than the amount of oil they used during the prior week, while over the same period 265,000 barrels of oil per day were reportedly being added to the oil that's in storage in the US....hence, 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 517,000 fewer barrels per day than what refineries reported they used during the week plus what oil was added to storage....to account for that disparity between the supply of oil and the consumption of it, the EIA needed to insert a (+517,000) barrel per day figure onto line 13 of the weekly U.S. Petroleum Balance Sheet to make the reported data for the daily supply of oil and the consumption of it balance out, essentially a fudge factor that is labeled in their footnotes as "unaccounted for crude oil"...(for more on how this weekly oil data is gathered, and the possible reasons for that "unaccounted for" oil, see this EIA explainer).... 

further details from the weekly Petroleum Status Report (pdf) show that the 4 week average of our oil imports rose to an average of 7,783,000 barrels per day, now 9.8% more than the 7,090,000 barrel per day average that we were importing over the same four-week period last year....the 265,000 barrel per day increase in our total crude inventories was added to our commercially available stocks of crude oil, while the amount of oil in our Strategic Petroleum Reserve still remained unchanged, even as a sale of 11 million barrels from those reserves to Exxon et al closed three weeks ago....this week's crude oil production was reported as being up by 100,000 barrels per day to 11,000,000 barrels per day because a rounded 100,000 barrels per day increase to 10,600,000 barrels per day in the output from wells in the lower 48 states combined with a 2,000 barrels per day increase in oil output from Alaska was only enough to raise the national total, which is now being rounded to the nearest 100,000 barrels per day, by 100,000 barrels per day to 11,100,000 barrels per day....US crude oil production for the week ending September 22nd 2017 had recovered to 9,547,000 barrels per day after Hurricane Harvey, so this week's rounded oil production figure was 16.3% above that of a year ago, and 31.7% more than the interim low of 8,428,000 barrels per day that US oil production fell to during the last week of June of 2016...

with preliminary US oil production figures thus at a new high, we'll include a graph of that and the confirmed monthly data to show what that looks like...

the above graph, from this week's OilPrice Intelligence Report, shows the history of confirmed oil production data monthly from January 2016 to July 2018 in blue, and then the weekly estimates of US oil production up until the current week in yellow after that period, with both metrics in thousands of barrels per day...above the graph, OilPrice also supplies the rounded weekly estimates of oil production in thousands of barrels per day for the weeks ending August 17th through September 21st, as reported by the EIA...as we've pointed out on several previous occasions, the weekly oil data from the EIA that we cover each week is preliminary, and it is typically more than 2 months before the final confirmed figures, published monthly, are released...despite the likelihood of some inaccuracy in the weekly data, we follow it because it's what the oil traders follow, and hence it moves oil prices and ultimately the decisions on the part of exploitation companies to start drilling for oil...the confirmed oil production figures for July were released this week and showed our crude production at a higher than expected 10,964,000 barrels per day, up from 10,695,000 barrels per day in June, which more than likely changed the models for the rounded weekly estimates, which then came in 100,000 barrels per day higher than in the prior week...

meanwhile, US oil refineries were operating at 90.4% of their capacity in using 16,514,000 barrels of crude per day during the week ending September 21st, down from 95.4% the prior week, but still a refinery utilization rate higher than any in September over the prior 14 years....even with the big drop in refinery throughput, the 16,514,000 barrels per day of oil that were refined this week were again at a seasonal high, for the 16th out of the past 17 weeks, 2.1% higher than the 16,174,000 barrels of crude per day that were processed during the week ending September 22nd 2017, when US refineries were operating at 88.6% of capacity....

with the big drop in the amount of oil being refined this week, gasoline output from our refineries was likewise much lower, decreasing by 432,000 barrels per day to 9,832,000 barrels per day during the week ending September 21st, after our refineries' gasoline output had decreased by 114,000 barrels per day during the week ending September 14th...as a result, our gasoline production during the week was fractionally lower than the 9,855,000 barrels of gasoline that were being produced daily during the same week last year...meanwhile, our refineries' production of distillate fuels (diesel fuel and heat oil) fell by 462,000 barrels per day to 4,995,000 barrels per day, after that output had fallen by 79,000 barrels per day the prior week....but even after the large drop, this week's distillates production was still nearly 7.7% higher than the 4,639,000 barrels of distillates per day that were being produced during the week ending September 22nd 2017, as refineries have been producing more distillates vis a vis gasoline than usual in recent weeks in order to catch up with the distillates shortfall.... 

however, even with the decrease in our gasoline production, our supply of gasoline in storage at the end of the week still rose by 1,530,000 barrels to a seasonal high of 235,680,000 barrels by September 21st, the 14th increase in the past 31 weeks, through the spring and summer periods of higher consumption when gasoline supplies usually trend lower....our supplies of gasoline rose this week primarily because the amount of gasoline supplied to US markets fell by 547,000 barrels per day to 8,987,000 barrels per day, after falling by 200,000 barrels per day the prior two weeks, and because our imports of gasoline rose by 302,000 barrels per day to 863,000 barrels per day, while our exports of gasoline rose by 265,000 barrels per day to 961,000 barrels per day...hence, after this week's increase, our gasoline inventories are again at a seasonal high, 8.5% higher than last September 22nd's level of 217,292,000 barrels, and roughly 9.3% above the 10 year average of our gasoline supplies for this time of the year...

meanwhile, with the decrease in our distillates production, our supplies of distillate fuels were also lower, decreasing by 2,241,000 barrels to 137,881,000 barrels during the week ending September 21st, in their first decrease in nine weeks...our distillates supplies decreased as the amount of distillates supplied to US markets, a proxy for our domestic demand, rose by 139,000 barrels per day to 4,291,000 barrels per day, after rising by 864,000 barrels per day the prior week, and as our imports of distillates fell by 17,000 barrels per day to 124,000 barrels per day, while our exports of distillates fell by 178,000 barrels per day to 1,148,000 barrels per day....this week's decrease means that our distillate supplies are now fractionally lower than the 138,045,000 barrels that we had stored on September 22nd, 2017, and still roughly 4.8% below the 10 year average of distillates stocks for this time of the year...     

finally, with the pullback in refinery crude processing, our commercial supplies of crude oil increased for the 17th time in 2018 and for the 20th time over the past year, rising by 1,852,000 barrels during the week, from 394,137,000 barrels on September 14th to 395,989,000 barrels on September 21st...however, even though our crude oil inventories remain below the five-year average of crude oil supplies for this time of year, they are nonetheless roughly 18.6% above the 10 year average of crude oil stocks for the third week of September, because it wasn't early 2015 that our oil inventories first rose above 400 million barrels...but since our crude oil inventories have now been falling through most of the past year and a half, our oil supplies as of September 21st were 15.9% below the 470,986,000 barrels of oil we had stored on September 22nd of 2017, 16.1% below the 472,084,000 barrels of oil that we had in storage on September 23rd of 2016, and 7.0% below the 425,988,000 barrels of oil we had in storage on September 25th of 2015...  

This Week's Rig Count

US drilling rig activity saw a small increase for the second time in 3 weeks during the week ending September 28th, but still remains slower than at the end of May, as the steady increases in drilling for oil we saw with higher oil prices during the first part of this year have stalled, with oil futures' prices remaining in backwardation and the backlog of uncompleted wells increasing monthly....Baker Hughes reported that the total count of rotary rigs running in the US increased by 1 rigs to 1054 rigs over the week ending on Friday, which was still 114 more rigs than the 940 rigs that were in use as of the September 29th report of 2017, but was down from the shale era high of 1929 drilling rigs that were deployed on November 21st of 2014, the week before OPEC began their attempt to flood the global oil market...  

the count of rigs drilling for oil was down by three rigs to 863 rigs this week, which was still 113 more oil rigs than were running a year ago, while it was well below the recent high of 1609 rigs that were drilling for oil on October 10, 2014...at the same time, the number of drilling rigs targeting natural gas formations increased by three rigs to 189 rigs, which is the same number of natural gas rigs that were drilling a year ago, but way down from the modern high of 1,606 natural gas rigs that were deployed on August 29th, 2008...in addition, another rig that was categorized as "miscellaneous" began drilling this week, with that count of two now up from the one such "miscellaneous" rig that was deployed a year ago...

offshore drilling in the Gulf of Mexico was unchanged from last week at 18 rigs, which was down from the 22 Gulf of Mexico rigs active a year ago...however, two rigs continued to drill offshore from Alaska this week, so the total national offshore count remains at 20 rigs, still down from last year's total of 22 offshore rigs, as a year ago there was no offshore drilling other than in the Gulf.....

the count of active horizontal drilling rigs was up by 3 rigs to 922 horizontal rigs this week, which was also 128 more horizontal rigs than the 795 horizontal rigs that were in use in the US on September 29th of last year, but down from the record of 1372 horizontal rigs that were deployed on November 21st of 2014...on the other hand, the vertical rig count was down by 2 rigs to 63 vertical rigs this week, which was also down from the 64 vertical rigs that were in use during the same week of last year...meanwhile, the directional rig count was unchanged at 69 directional rigs this week, which was still down from the 82 directional rigs that were operating on September 29th of 2017... 

the details on this week's changes in drilling activity by state and by shale basin are included in our screenshot below of that part of the rig count summary pdf from Baker Hughes that shows those changes...the first table below shows weekly and year over year rig count changes for the major producing states, and the second table 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 September 28th, the second column shows the change in the number of working rigs between last week's count (September 21st) and this week's (September 28th) count, the third column shows last week's September 21st active rig count, the 4th column shows the change between the number of rigs running on Friday and those on the equivalent 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 on Friday the 22nd of September, 2017...   

while it appears from the table above that there was a sudden jump of 7 rigs in Oklahoma's Cana Woodford, most of that is actually just a reversal of last week's drop of 6 rigs in that basin, so we'd judge that last week's drop just represented a half dozen rigs that were idled between jobs, which thus show up as new startups this week...however, since all those Cana Woodford rigs were oil rigs, we can just about figure every other reduction we see above is likely an oil rig, in order to end with a minus three count for oil rigs this week...natural gas rig start ups, on the other hand, were in the Haynesville and Oklahoma's Ardmore Woodford, with one of the Haynesville rigs in northwestern Louisiana and the other across the border in eastern Texas...we should also note that other than the changes shown for the major producing states above, Nevada also saw its only active rig idled this week, ending the drilling that began there in mid-March; a year ago, there were no rigs in Nevada...

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Local leaders lobby for more control over fracking brine disposal wells - (WKBN) - Local leaders are still lobbying the state to have more control over fracking brine disposal wells. Hubbard township officials are bitterly opposed to a plan to bring a waste brine disposal well to the township. Brine from Pennsylvania operations would be transported to an area near 62 and route 80 for disposal. Pa. has concerns over geology and contamination from the brine. "The irony is Pennsylvania doesn't allow them to put them in the ground because of that, but they will put it in the ground in Ohio. If it's poisonous and toxic in Pa., it's poisonous and toxic in Ohio," Trustee Tom Jacobs said.State law gives the Ohio Department of Natural Resources sole jurisdiction over the wells. "State law gives ODNR division of oil and gas sole and exclusive authority over all oil and gas operations throughout the state. So whether its an injection well or a producing well that all falls under our purview," said Steve Irwin of ODNR.The state does gather public opinion before permitting wells. But state Representative Glen Holmes says that's not enough. "It's very important. And they want the taxing structure, the regulations to stay similar throughout the state. But to do that without any local control is, not to embellish the situation, a social injustice," Holmes said.Holmes is currently lobbying his fellow lawmakers. He wants to see more regulation on where the wells can be located and more weight given to local opinion. Most of all, he wants to see fewer of the wells, there are dozens of them in his district.  "I'd love to incentivize other technologies to deal with this fluid. It's not ecologically friendly," Holmes said.

Eliza Griswold, Journalist - The Oberlin Review - Award-winning journalist and poet Eliza Griswold visited Oberlin Sunday, Sept. 23 to discuss her book Amity and Prosperity: One Family and the Fracturing of America, which focuses on the impact of fracking on a small community in southwestern Pennsylvania. In addition to her work on fracking, Griswold has reported from the field on the “War on Terror,” written about the Christian-Muslim divide, and published a book of poetry. She spoke at Oberlin at a time when northeast Ohio — similar to the Pennsylvania communities in her recent book — is grappling with the impacts of fracking on public health, family life, and the economy. This interview has been edited for length and clarity.

Pennsylvania Lawmakers File to Intervene in DRBC Drilling Moratorium Lawsuit - Three Pennsylvania state senators who want the Delaware River Basin Commission’s (DRBC) moratorium on hydraulic fracturing eliminated have again filed to intervene in a federal lawsuit challenging the de facto drilling ban.*The motion comes after a federal appeals court in Philadelphia vacated the U.S. District Court for the Middle District of Pennsylvania’s 2017 decision to throw out the lawsuit that was filed by a small exploration and production company. The senators' previous effort to intervene was denied by the lower court after it found they had no standing. The Wayne Land and Mineral Group (WLMG) filed a lawsuit against the DRBC in 2016, arguing that the commission lacks authority under the Delaware River Basin Compact to review and approve natural gas development. The senators filed to intervene after a three-judge panel of the U.S. Court of Appeals for the Third Circuit remanded the case to the lower court for further fact-finding about exactly what projects the commission has authority to review under the 1961 compact that established it.Sens. Lisa Baker, Gene Yaw and Joseph Scarnati -- all Republicans that represent the north-central and northeast parts of the state where unconventional natural gas development has been heavy, or where it hasn’t been allowed to occur due to the moratorium -- want the court to invalidate the ban and prevent the DRBC from enforcing it. They argue the commission is violating the U.S. Constitution by preventing landowners from profiting from private property. They also claim the state is being thwarted in earning revenue from public land that could be leased for natural gas drilling in the basin. The senators said in their motion that the General Assembly, not the DRBC, has the authority to oversee and regulate such development.

Only 11 percent of Pennsylvania's natural gas pipelines are mapped for the public - Last week, a pipeline exploded in Beaver County, destroying one home and forcing dozens of people to evacuate. And much like the majority of natural gas pipelines in Pennsylvania, a map of it was not readily available to the public, according to reports from WESA.Of the three types of natural gas pipelines — large transmission lines, medium-sized gathering pipelines and small distribution lines — transmission lines are the only ones mapped and disclosed to the public by the federal government, WESA reports.   And that makes up only 11 percent of the total pipelines in the commonwealth. Nils Hagen-Frederikson, press secretary for the Pennsylvania Public Utility Commission, told WESA that pipeline companies know where gathering and distributions lines are, but that information isn't required to be made publicly available on a map. "There were recommendations made several years ago by the state's Pipeline Infrastructure Task Force, recommendations that the [PUC] supported, in terms of developing a more centralized system in Pennsylvania for public access to mapping," Hagen-Frederickson said. "That's still a work in progress."  To learn what the executive director of the Pipeline Safety Coalition had to say about the matter, click here.

Radioactive Wastes Come From the Action of “Slick Water” on Black Shale - Radioactivity in fracking wastewater comes from the interaction between a chemical slurry and ancient shale during the hydraulic fracturing process, according to Dartmouth College research.  The study, detailed in twin papers appearing in Chemical Geology, is the first research that characterizes the phenomenon of radium transfer in the widely-used method to extract oil and gas. The findings add to what is already generally known about the mechanisms of radium release and could help the search for solutions to challenges in the fracking industry.  As a result of fracking, the U.S. is already a net exporter of gas and is poised to become a net exporter of oil in the next few years. But the wastewater that is produced contains toxins like barium and radioactive radium. Upon decay, radium releases a cascade of other elements, such as radon, that collectively generate high radioactivity. “The stuff that comes out when you frack is extremely salty and full of nasties,”  “The question is how did the waste become radioactive? This study gives a detailed description of that process.” In seeking to discover how radium is released at fracking sites, the research team combined sequential and serial extraction experiments to leach radium isotopes from shale drill core samples. For the study, the research team focused on rocks taken from Pennsylvania and New York locations of the Marcellus Shale. The geological feature is one of the major rock formations in the U.S. where fracking is being carried out to extract natural gas.The first research paper found that radium present in the Marcellus Shale is leached into saline water in just hours to days after contact between rock and water are made. The leachable radium within the rock comes from two distinct sources, clay minerals that transfer highly radioactive radium-228, and an organic phase that serves as the source of the more abundant isotope radium-226.The second study describes the radium transfer mechanics by combining experimental results and isotope mixing models with direct observations of radium present in wastewaters that have resulted from fracking in the Marcellus Shale. Taken together, the two papers show that the increasing salinity in water produced during fracking draws radium from the fractured rock. Prior to the Dartmouth study, researchers were uncertain if the radioactive radium came directly from the shale or from naturally-occurring brines present at depth in parts of the Marcellus Shale in Pennsylvania.

Study ties fracking to radioactive wastewater - The Dartmouth --Two Dartmouth studies recently established a link between fracking and the production of radioactive wastewater. Lead researcher and senior research scientist Josh Landis and his team found that the prevalent radioactive material in wastewater after hydraulic fracking comes from the interaction between slick water and black shale.“Prior to our work, everyone was assuming that the radium was from pre-existing [briny water] found underground,” Landis said.However, Landis added the study points to the controversial oil and gas extraction method as the cause of this radioactive waste.“We are able to argue pretty vigorously that the fracking itself is producing the fluid,” he said. “[This] shows that the frackers are responsible for its creation, and if you want to minimize its production, you have to do that through their process.” According to Sharma, radioactive wastewater cannot currently be treated. It is either mixed with fresh water and used to frack again, or it is sent away to be buried into the ground. For example, radioactive wastewater from fracking locations in Pennsylvania may be sent to Ohio, Sharma said. The team of researchers carried out experiments on rock samples taken from the Marcellus shale in Pennsylvania and New York. They found that the radium came from the rock, not pre-existing brine as previously thought, and the experiments focused on understanding the conditions needed for radium to be released from the rock itself.

NY Pension Chief Cashes in on Natural Gas  - New York State’s former top pension investment officer was appointed to the board of a natural gas conglomerate after the pension system bought up the company’s bonds, rejected demands to divest from fossil fuels and supported multimillion-dollar pay packages for the company’s executives after the firm’s stock price had dropped. Vicki Fuller was appointed as a director of The Williams Companies on July 31st — the same week she left her position as the chief investment officer of the New York State Common Retirement Fund.  The CIO job — appointed by State Comptroller Thomas DiNapoli — is considered one of the world’s most powerful financial positions, directing $207 billion of investments for a system responsible for safeguarding the retirement savings of more than a million current and former state employees and their beneficiaries. Fuller will be granted $275,000 worth of salary and company stock every year for the part-time position serving on Williams’ board. The move comes during an increasingly bitter policy debate between the comptroller’s office and environmental groups over whether the pension fund should divest itself from fossil fuel companies that contribute to climate change. In correspondence with DiNapoli over the last two months, major environmental groups have asked whether Fuller’s new position is a reward for her and DiNapoli’s ongoing opposition to selling off the fund’s fossil fuel holdings.

EQT Midstream Increases Mountain Valley Pipeline's Cost --EQT Midstream Partners recently announced that the Mountain Valley Pipeline project will likely cost more than what was expected earlier. The partnership bumped overall cost estimates of the project to $4.6 billion from prior expectation of $3.5 billion due to extended work stoppages in August, as well as prolonged and heavy rainfall. Recent preparations for hurricanes also hampered the project schedule, which eventually reflected in the cost.Work stoppages in the project were primarily caused by strong opposition from environmentalists, which resulted in increased costs. The partnership also had to incur costs related to enhancement and repairing of the devices that control erosion and sediment, owing to heavy rainfall in Virginia and West Virginia during summer. The proposed underground 303-mile pipeline connects northwestern West Virginia to southern Virginia. The pipeline, with 42-inch diameter, will collect natural gas from Marcellus and Utica shale plays and deliver it to the Mid-Atlantic and Southeast areas of the country, where demand for clean-burning natural gas is on the rise. Pittsburgh, PA-based EQT Midstream has lost 27% in the past year compared with 12.3% collective decline of its industry

MVP's latest cost increase -- a big one -- expected to eat into operator's returns — EQT Midstream Partners boosted the expected cost of its Mountain Valley Pipeline again, this time by about $1 billion, in the latest example of how bad weather, regulatory hurdles, schedule delays and environmental mitigation measures are affecting the US natural gas sector. The operator said late Monday that it has increased its overall project cost estimate to $4.6 billion. A spokeswoman said Tuesday that is up from the most recent estimate in July of $3.5 billion to $3.7 billion. When the project was announced in fall 2015, EQT Midstream had estimated the 2 Bcf/d pipeline would cost $3 billion to $3.5 billion to build. The cost overruns come as the market awaits more takeaway capacity out of the US Northeast's prolific Appalachian Basin. The approximately 300-mile pipeline is seen as a key conduit to serve downstream markets, including LNG exports. During an investor conference call at the time of the previous cost estimate, executives said expenditures above $3.5 billion would start to eat into expected investment returns. "The halting of construction due to court challenges from environmental opponents have caused lengthy project delays, material cost increases, and burdens for local communities and agencies; and have also impeded the delivery of low-cost energy resources to consumers and other end-user markets." the operator said in a statement. Approximately half of the latest cost increase is due to extended periods of work stoppage during August that triggered ongoing contractual charges and schedule changes, the operator said. MVP also blamed significant rainfall throughout the summer and recent hurricane preparedness actions that interrupted full-construction activities, as well as certain unanticipated construction cost overruns. Earlier this month, Hurricane Florence battered a large swath of the East Coast. MVP maintained its current target of full in-service during the fourth quarter of 2019.

Federal Court Again Stops Some ACP Construction -  Work on the Atlantic Coast Pipeline (ACP) has again been delayed after the U.S. Court of Appeals for the Fourth Circuit on Monday stayed federal authorizations that could continue to slow a project that would move 1.5 Bcf/d of natural gas from Appalachian shale fields. The court’s decision prevents work that was poised to restart along 20 miles of the 600-mile route.  It’s the third time in four months that the Fourth Circuit has vacated or stayed federal authorizations for the project. This time, the appeals court stayed decisions by the U.S. Forest Service (USFS) allowing tree clearing, blasting and trenching in the George Washington National Forest and the Monongahela National Forest in Virginia and West Virginia. The court stayed the authorizations to review a challenge filed in February by the Southern Environmental Law Center (SELC) and the Sierra Club on behalf of several regional environmental organizations.  The stay was granted on Monday, a week after FERC lifted a stop worker order for the entire project that had been in effect for more than a month. The Federal Energy Regulatory Commission stopped all work in August after the Fourth Circuit vacated key permits issued by the U.S. Fish and Wildlife Service and the National Park Service. The Commission lifted the order once those agencies issued revised permits. Given the Fourth Circuit’s latest decision, ACP could face a similar situation affecting the entire project. The SELC filed at FERC on Tuesday asking the Commission to again suspend work along the entire route, noting that the project is no longer in compliance with its certificate because it does not have all authorizations required under federal law. Reaching for a possible precedent set by the first stop work order, the center pointed out that the court found that the environmental groups are likely to succeed on the merits of their challenge. SELC’s filing evoked FERC’s language, included in the August stop work order justifying the decision, to say that if its challenge were to be successful, the project’s backers may need “to revise portions of the ACP route after additional review by the Forest Service.” As FERC did last month, the SELC suggested that continued construction would unnecessarily expend resources for facilities that might ultimately be relocated.

Dominion does not expect US court order to hold up Atlantic Coast pipe (Reuters) - Dominion Energy Inc said on Tuesday it does not expect a court decision to stay a federal permit for part of its Atlantic Coast natural gas pipeline to delay construction of the $6-$6.5 billion project from West Virginia to North Carolina, which the company aims to complete by the end of 2019. On Monday, the U.S. Court of Appeals for the Fourth Circuit issued an order staying implementation of a permit from the U.S. Forest Service for the pipeline. That Forest Service permit authorized construction and operation of Atlantic Coast on national forest lands in Virginia and West Virginia. "While we respectfully disagree with the Court's ruling, it will not have a significant impact on our construction schedule," Dominion spokesman Aaron Ruby said in an email. "We will continue working in all other areas of West Virginia and North Carolina, where we are making significant progress," Ruby said. The Southern Environmental Law Center, which opposes the pipeline, asked the U.S. Federal Energy Regulatory Commission (FERC) on Tuesday to stop work on the entire project due to the court's latest ruling. The Fourth Circuit decision was the third time in four months the court has vacated or stayed federal authorizations for Atlantic Coast, the Southern Environmental Law Center said in its FERC filing. FERC regulates construction of interstate gas pipelines and has temporarily stopped work on parts of the Atlantic Coast project in the past due to prior Fourth Circuit court rulings. "Opponents' delay tactics will not stop this project. They will only drive up consumer energy costs, delay the transition to cleaner energy, and make it harder for public utilities to reliably serve their customers," Ruby said, noting "We will complete this project." 

Mass. Gas Grid Blows Up, and Answers Are Elusive - The recent gas line explosions and fires in Massachusetts triggered a state of emergency, and a federal investigation into the behavior of the company at the center of the chaos. But no one, especially the utility provider-at-fault, seems to have an answer for what — or perhaps even who — caused this vital service to fail so spectacularly. The news was certainly attention-grabbing — 70 explosions, fires, and gas leaks across three Boston suburbs within the space of an afternoon, leaving one dead, 30 injured, and 8,500 evacuated. The event hit the national evening news; and cable news services like Fox News and MSNBC halted their usual programming and covered the explosions. The utility company whose customers were affected, Columbia Gas, was clearly overwhelmed with the scope of the disaster. Massachusetts Gov. Charlie Baker (R) said the company seemed to disappear — shirking its responsibility to update the public on the situation through press conferences; this dereliction of duty caused fear, uncertainty, and doubt to grow.  Even the emergency services had little clue as to what caused the disaster and what Columbia Gas was doing about it. As a result, Gov. Baker initiated a state of emergency, taking control away from Columbia Gas and handing it to a larger utility player, Eversource. Three long days later, there was an announcement from Robert Sumwalt, the chairman of the federally operated National Transportation Safety Board (NTSB) — an “over pressure situation” had caused the disaster. That was the “how” answered, but “the real question for this investigation is to answer why this occurred,” Sumwalt continued. He has said that the NTSB’s probe will concentrate on the company culture at Columbia Gas, and their policies with regard to these kinds of black swan events — highly improbable yet very disruptive situations. It didn’t take long during this period of confusion for some to consider the possibility of sabotage. In a statement released in the confusing hours after the gas leaks, Allison McDowell-Smith, a professor at Nichols College in Dudley, MA, and director of the school’s counterterrorism studies graduate program, wrote, “We have to be aware that as a society, acts of terrorism can impact our utilities.”  “If it was a utility worker who over-pressured the gas line, was it intentional?”

FERC Authorizes Service on Gulf Coast Expansion Project - FERC authorized service to commence on the first phase of Natural Gas Pipeline Company of America LLC's (NGPL) Gulf Coast Southbound Expansion Project. The project is designed to transport an additional 460,000 Dth/d on NGPL's Gulf Coast Mainline System to serve growing industrial and export demand via delivery points in South Texas [CP16-488].NGPL filed an application for the project with the Federal Energy Regulatory Commission two years ago, proposing constructing a 15,900 hp compressor station (CS 394) in Cass County, TX, along with a 4,000-foot, 30-inch diameter pipeline lateral connecting the station to NGPL's Amarillo to Gulf Coast Pipeline. NGPL would also abandon two existing compression units at its CS 301 compressor station, totaling roughly 5,600 hp, according to FERC. FERC issued a favorable environmental assessment for Phase 1 of the project in April 2017.  The Gulf Coast expansion would transport natural gas from points in Illinois, Arkansas, Oklahoma and Texas to delivery points on the Cheniere Corpus Christi Pipeline (serving Cheniere Energy Inc.'s Corpus Christi Liquefaction project) in San Patricio County, TX, and on the NET Mexico Pipeline in Nueces County, TX.NGPL is targeting an October 2018 in-service date for Phase 1 of the Gulf Coast Southbound expansion.  A second phase, which would provide an additional 300,000 Dth/d of firm southbound capacity, is under contract with a third party, according to NGPL. The projected in-service date for Phase 2 is mid-2021. NGPL is seeking non-binding solicitations of interest for a third phase of the project, which would provide 260,000 Dth/d of incremental firm southbound transportation service from existing or new interconnects on NGPL's system in Illinois and Iowa to growing markets along the Texas and Louisiana Gulf Coast. 

Bayou Bridge pipeline threatens the riches of Louisiana's Atchafalaya Basin - Construction of the pipeline has cleared a path through one of the most environmentally sensitive areas of the state and created a vortex of controversy in the process.“They’re completely devastating this area,” They’re digging deep trenches, piling up mounds of dirt and grinding down our ancient cypress and tupelo trees, all of which is drastically altering the ecosystem.”  Meche’s family has lived off the water for generations, but that lifestyle is becoming more difficult as the Army Corps of Engineers has greenlighted a network of pipelines now crisscrossing the swamps. The latest is the Bayou Bridge pipeline, which has been under construction since February. Its corporate parent, Energy Transfer Partners, will use it to carry up to 480,000 barrels of oil a day through the Atchafalaya Basin to crude oil refineries and export terminals, according to the permit application. When finished, the pipeline will stretch 162 miles, connecting to Energy Transfer Partner’s equally controversial Dakota Access pipeline. The project is estimated to cost $670 million. The Army Corps of Engineers is charged with examining the effects of projects that can potentially harm certain waterways. The permits and authorizations for the Bayou Bridge pipeline were signed by Col. Michael Clancy, the Corps’ New Orleans District commander. Earthjustice, a nonprofit environmental legal group, first filed a challenge in January to the project and the Corps in federal district court in Louisiana. The group is also representing the Standing Rock Sioux in their opposition to the Dakota Access pipeline and argues that the Corps, in regard to the Bayou Bridge pipeline, did not adequately consider the potential threat to wildlife and the environment that a spill or a catastrophic failure might cause.“In issuing these authorizations, the Corps declared that the Pipeline would not have a significant impact on the environment, and did not require a full environmental impact statement as mandated by the National Environmental Policy Act for federally permitted projects with significant environmental impacts,” reads the court filing by Earthjustice.

US PetroChemical Industry Becoming Dependent on Shale Fracking Activities - U.S. chemical and plastics industry investment linked to natural gas has now surpassed $200 billion, the American Chemistry Council (ACC) announced in September. Since 2010, 333 chemical industry projects cumulatively valued at $202.4 billion have been announced, with 53% of the investment completed or under construction and 41% in the planning phase. Fully 68% of the total is foreign direct investment or includes a foreign partner. Project types include new facilities and capacity expansions. “This is an exciting milestone for American chemistry and further evidence that shale gas is a powerful engine of manufacturing growth,” said ACC President and CEO Cal Dooley. “The U.S. remains the most attractive place in the world to invest in chemical manufacturing. We look forward to continuing to transform energy into a stronger economy and new jobs.” ACC analysis shows that $202.4 billion in capital spending could lead to $292 billion per year in new chemical and plastics industry output and support 786,000 jobs across the economy by 2025. A note of caution is in order however, the ACC warns. U.S. manufacturers often rely on inputs that are not available or made in the U.S. to create products that cost less yet perform at the high level downstream customers expect. “Protectionist trade policies such as tariffs and quotas unnecessarily raise the costs of those inputs, deter innovation and economic growth, and could ultimately weaken our country’s competitive advantage,” the ACC said.

Deepwater's Happy Days Almost Here Again  -- Deep-sea oil drillers are once again riding the wave of investor enthusiasm that next year will be better for profits. But this time there seems to be a bigger chance it will actually happen, according to analysts at Credit Suisse Group AG and Morgan Stanley. Some of the world's biggest owners of rigs that drill oil wells in more than two miles of water, including Transocean Ltd., Ensco Plc and Diamond Offshore Drilling Inc., saw rallies in their shares near the end of 2016 and 2017, only to see their stocks tumble by the start of the following year as reality set in. "So here we are in mid-September and the trade beckons again," James Wicklund, analyst at Credit Suisse, wrote Monday in a note to investors. "This time, however, we are one year closer to a recovery after 4 1/2 years of decline, with the drilling contractors sounding more optimistic than in years, with small, light green shoots being seen." Offshore drillers have been among the most beaten-up names from the worst crude-market crash in a generation, due to an oversupply of their vessels and high operating costs. This year marks the lowest in projected offshore spending since oil prices first fell in 2014, according Morgan Stanley. Explorers are expected to boost spending 45 percent to $188 billion by 2022, the bank wrote Sept. 18 in a note to investors. Meanwhile, major oil trading houses are predicting the return of $100 crude for the first time since 2014. The rise of offshore drilling is also coming as shale work back on land is hitting a speed bump, according to Rystad Energy. The renewed interest in offshore is driven by a "steep reduction" in offshore costs that's allowing explorers to turn a profit at lower oil prices, Audun Martinsen, head of oilfield research at Rystad, said earlier this month in a statement. Shale spending is expected to reach $120 billion this year, short of Rystad's $160 billion estimated spending globally offshore. With more unused rigs still left to be scrapped around the globe, though, the higher utilization of deep-water vessels won't translate into significantly higher rental prices until late next year, Wicklund wrote.

EPA approved $292 million for Florida's oil spill cleanup -- — After five years of work, the Gulf Coast Consortium has approval from the Environmental Protection Agency to move forward with spending restore act funds.The EPA is directing $292 million to 69 projects across the 23 Florida counties affected by the Gulf oil spill.Officials say, the clean up projects were required to address environmental and economic impacts from the spill.   In Escambia County, Florida work will be done to remove contamination from Bayou Chico.  Santa Rosa County will also see improvement in the water quality at the Santa Rosa Sound.  Officials will tackle five projects along the Okaloosa County waterways.

US to offer all available Gulf of Mexico waters for oil, gas leasing in March — The Trump administration this March will again offer 78 million acres in the Gulf of Mexico for oil and gas leasing, the Interior Department announced Tuesday. The lease sale will include all available unleased areas in the Gulf's federal waters, the agency said. It does not include eastern Gulf waters currently under congressional moratorium. The sale follows a Gulf sale in August which also offered all 78 million acres in the Gulf. That sale resulted in about $178 million in high bids on 144 tracts covering over 801,000 acres. The sale will include terms for a 12.5% royalty rate for leases in less than 200 meters of water depth and a royalty rate of 18.75% for all other leases. The 12.5% royalty rate is "in recognition of current hydrocarbon price conditions and the marginal nature of remaining Gulf of Mexico shallow water resources," Interior said in a statement. -

US to hold area-wide Gulf of Mexico lease sale- The US Bureau of Ocean Energy Management plans to offer 78 million acres in the Gulf of Mexico in a region-wide oil and gas lease sale, Deputy US Interior Sec. David Barnhart and BOEM Acting Director Walter D. Cruickshank jointly announced. The sale will include all available unleased areas there, they said on Sept. 25. OCS Sale No. 252, which will be streamed live from New Orleans, will be the fourth offshore sale under the 2017-22 Outer Continental Shelf Oil and Gas Leasing Program. Under the program, 10 region-wide sales are scheduled for the gulf, where resource potential and industry interest are high, and oil and gas systems are well established. Two gulf lease sales will be held each year and include all available blocks in the combined western, central, and eastern planning areas.  The portion of the gulf, covering about 160 million acres, is estimated to contain about 48 billion bbl of undiscovered technically recoverable crude oil and 141 tcf of undiscovered technically recoverable natural gas, BOEM said. Sale No. 252 will include 14,696 unleased blocks, 3-231 miles offshore and in 9-11,115 ft of water. Excluded from the sale are blocks subject to the congressional moratorium established by the 2006 Gulf of Mexico Energy Security Act, blocks adjacent to or beyond the US Exclusive Economic Zone in the area known as the northern portion of the Eastern Gap, and whole blocks and partial blocks within the current boundaries of the Flower Garden Banks National Marine Sanctuary.  All terms and conditions for Sale No. 252 are detailed in the Proposed Notice of Sale information package, which will be available on Sept. 26 at www.boem.gov/Sale-252/.

The Return of Fracking in the Barnett Shale? - Fewer natural gas wells are being drilled in North Texas today, but it doesn't mean they're not coming back. "It's in hibernation," Steinsberger added. "There's over 20,000 Barnett wells drilled in the last 20-something years, but if the gas prices went up significantly, those rigs would start coming back." Today the price of natural gas is $2.83 per million BTU. Back in 2005, the price was $13.42. The returns just aren't worth the millions of dollars it takes to drill new wells. But down the road, new technology could lead to even bigger gains."I think the Barnett could come back and I could conceivably see where another 21,000 wells are drilled at some point in the future," Steinsberger added. "I think re-fracks in America, there will be a lot of them over the next 10 to 20 years, going back and re-fracking Barnett."

Texas Oil Output in July Nears 3 Million B/d, Natural Gas Production Chases 20 Bcf/d - Texas crude oil in July averaged nearly 2.90 million b/d, compared with 2.43 million b/d a year ago, while natural gas output averaged 19.76 Bcf/d, versus a year-ago average of about 17.25 Bcf/d, according to a preliminary tally by the Railroad Commission of Texas. The total volumes are based on production figures likely to be updated as late and corrected reports are received, the state’s oil and gas regulator noted. In July, operators said they produced about 90.026 million bbl of crude oil and nearly 612.513 Bcf of natural gas, the preliminary figures indicated. Reported oil production in July 2017 initially totaled 75.312 million bbl, which has since been updated to a current figure of 93.229 million bbl. Gas production preliminarily totaled for July 2017 was nearly 534.778 Bcf, since updated to a current figure of 692.430 Bcf. Between August 2017 and July, total reported output was 8.1 Tcf of natural gas and 1.164 billion bbl of crude oil. Crude oil production reported to state officials is limited to oil produced from oil leases and does not include condensate, which is reported separately by the commission. Texas production in July came from 180,434 oil wells and 91,025 gas wells, the commission said. As of last Friday (Sept. 21), the oil and gas rig count in Texas had risen to 531 from 453 a year ago, according to Baker Hughes, a GE company.

As pipeline shortage slows Permian output, sand miners take hit - Houston Chronicle - An influx of West Texas sand mines, coupled with a production slowdown in the booming Permian Basin resulting from pipeline shortages, has led to two companies suddenly idling five sand mining plants in the Midwest, eliminating hundreds of jobs, at least temporarily.The sand mining services hydraulic fracturing, or fracking, in oil and gas wells. However, the demand for sand is weakening as companies delay fracking operations until more pipeline capacity is built to bring their oil and gas to Gulf Coast markets.  With pipeline projects unlikely to be completed until next year, many companies are drilling but not completing wells, opting to leave the oil and gas in the ground for now. The federal government estimates the number of drilled but uncompleted wells — known as DUCs — in the Permian has jumped more than 40 percent, from 2,500 at the beginning of this year to more than 3,600 at the end of August. The fracking slowdown coincides with companies opening several new sand mines within the Permian, creating an oversupply that led sand companies this summer to slash prices by almost 40 percent, energy analysts said. The ripple effects are now cutting jobs as far away as Wisconsin and Michigan. “I think there’s more idling and shut-ins to come,” s “The Permian is just now starting to crack.” On Wednesday, the Houston company Hi-Crush Partners said it is idling one of its Wisconsin sand mining plants. Thursday morning, Ohio’s Covia Corp. said it is temporarily shuttering four plants in four states — Minnesota, Missouri, Michigan and Illinois. Covia also is reducing its activity at its East Texas mine in Cleburne, and at two other plants in Missouri and Wisconsin. The sand, known in the industry as proppant, props open the fissures in fractured shale rock, helping oil and gas flow into the wells. Nationwide, the demand for frac sand skyrocketed from roughly 40 million tons in 2016 to about 100 million tons this year as oil prices rebounded and the volumes of sand per well continued to rise. Analysts initially projected that demand this year would rise to about 110 million tons, but Permian pipeline shortages led that estimate to be revised downward, O’Leary said. In addition, fracking activity has slowed in natural gas shale plays in the Northeast. That demand compares to about 150 million tons in U.S. sand production capacity by the end of this year.

Stakes High in New Mexico’s Permian as BLM Prepares Draft Resource Plan - The future of oil and gas development in New Mexico's portion of the Permian Basin hangs in the balance as the Bureau of Land Management (BLM) wraps up two weeks of public hearings to discuss a draft blueprint for resource development and environmental mitigation covering millions of acres in the state.Even if it hadn't been 30 years since federal land managers last wrote a new resource management plan (RMP) and accompanying draft environmental impact statement, the 1,500-page tome now being scrutinized in a series of eight public hearings ending Friday would command the oil and gas industry's attention. Comments will be taken until Nov. 5."The changes are in part due to continuing fluid and solid mineral extraction and energy developments in the area and new technologies being used to extract those resources," BLM officials said. "Concurrent extraction of both fluid and solid mineral reserves presents a management challenge not addressed adequately in the 1988 RMP and its amendments."More than 2.8 million acres of federal land and subsurface minerals are at stake, mostly in Lea and Eddy counties, the same jurisdictions that recently pulled in nearly $1 billion in a BLM oil and gas lease sale."We are currently reviewing the RMP and will be preparing comments for the BLM," said New Mexico Oil and Gas Association (NMOGA) spokesman Robert McEntyre. "The RMP is an important component of energy development in southeast New Mexico, and any plan should focus on allowing growth in the economy and energy production to continue." Oil and gas operators in the Permian have been waiting a long time for a new RMP from BLM's office in Carlsbad, NM, and the detailed document will be closely reviewed by the industry, "Companies and organizations like ours are combing through the document, paying great attention to details of different management scenarios, before providing official comments to the BLM,"

The Fracking Industry’s Water Nightmare: Injection Wells Damage Production Wells, Rising Disposal Costs Will Increase Industry Losses -- The U.S. Environmental Protection Agency (EPA) has clearly documented the multiple risks — despite repeated dismissals from the oil and gas industry — that hydraulic fracturing (fracking) poses to drinking water supplies. However, the tables may be turning: Water itself now poses a risk to the already failing financial model of the American fracking industry, and that is something the industry won’t be able to ignore.The U.S. is setting new oil production records as horizontal drilling and fracking open up shale deposits in places like North Dakota and Texas.  One sign that the fracking industry is becoming concerned about water is that there are now societies and conferences dedicated to the topic of “produced water.” Produced water is the term for the toxic water that is “produced” over the life of a fracked oil or gas well.  Gabriel Collins is a fellow in energy and the environment at Rice University, and in August he gave a presentation at the Produced Water Society Permian Basin 2018 event in Midland, Texas. There, Collins presented a business case for starting a large water processing company to service the fracking industry.  In a story by Bloomberg News, Collins said he didn’t believe investors were aware of the risks that water poses to the fracking industry in the Permian Basin.  “[Investors] aren’t as well apprised of some of the other risks and challenges that could be just as material, if not more so,” he told Bloomberg News. “I’d put water right at the top of that list.” Why should water top the list of potential financial challenges facing the fracking industry? According to a study by Wood MacKenzie and reported by the Wall Street Journal, the costs of water disposal for the fracking industry could add another $6 per barrel of oil produced.For the U.S. shale oil and gas industry, which has consistently lost money over the past decade, adding another $6 per barrel in costs represents a grim outlook.

Oklahoma Lawsuits Claim Link Between Fracking and Earthquakes - A group of lawsuits that link a cluster of earthquakes in Oklahoma to the disposal of wastewater from hydraulic fracturing are moving forward. On Sept. 11, Oklahoma District Judge Phillip Corley lifted a hold that had been placed on two class-action lawsuits involving a 5.0-magnitude earthquake in November 2016 near Cushing, Okla., pending federal action on related cases.On August 31, Steadfast Insurance Co., a subsidiary of Zurich Holding Company of America, sued seven oil companies in the U.S. District Court for the Northern District of Oklahoma.Meanwhile, members of the Pawnee nation filed a similar lawsuit in August. Tribal members claimed they had suffered nerve damage and other physical ailments as a result of a 5.8-magnitude September 2016 earthquake. According to Scott Poynter, attorney for the Pawnee litigants, Steadfast’s lawsuit marks the first time an insurance company has sued oil companies for earthquake-related damages. Steadfast paid $325,000 in claims related to the September quake. Now, it is trying to recover the funds from the energy companies. Oil and gas companies maintain that their methods of oil and gas extraction are safe.

Market shrugs as natural gas storage lags in US Midwest  (podcast) S&P Global Platts senior pricing specialists John DeLapp and Veda Chowdhury discuss the changing natural gas storage picture in the Midwest. Listen now...

FERC Orders Northern Natural to Secure Kansas Wells, Allows Southern Star to Expand Gas Storage - FERC has given Northern Natural Gas Co. one month to secure access to several open or unplugged producing wells that could threaten a natural gas storage field in Kansas, and granted Southern Star Central Gas Pipeline Inc. permission to expand a separate gas storage field in Oklahoma.In an order issued Thursday, the Federal Energy Regulatory Commission said Northern Natural must file within 30 days a plan to avoid a loss of gas stored in the Cunningham storage field, which it operates [CP09-465]. Cunningham, which underlies about 40,320 surface acres in the Kansas counties of Kingman and Pratt, is authorized to store 62 Bcf in depleted oil and gas fields in the Simpson and Viola formations. In the field, the company operates 52 injection wells, 28 observation wells and a water disposal well."The plan shall include a near-term proposal to temporarily secure the wells within six months and a long-term plan to gain control of the wells and prevent access to the storage formations," FERC said.The order comes in response to an incident in April 2017, when a piece of farming equipment struck a gas well owned by Nash Oil & Gas Inc., and the well began venting gas. The Kansas Corporation Commission hired a Houston-based well control company to stop the leak after representatives for Northern Natural and Nash each denied responsibility for regaining control of the well. FERC authorized Northern Natural to expand a buffer zone around the Cunningham field by 12,320 acres in 2010, but as part of that authorization, the Commission ordered the company to maintain the integrity of the storage field. A federal district court judge granted access to Northern Natural to more than 9,000 acres and several producing oil and gas wells around the field in March 2012, allowing it to implement a 2011 plan to stop gas migration from the storage facility.

Could Fracking Industry Debt Trigger a Financial Crisis? -  Fracking companies are hot destinations for investors chasing yields and growth industries, especially private equity companies, in part because of the large appetite the capital intensive industry has for debt. However, several warning signs suggest the fracking industry not only may fall short of investor expectations, but also could actually help to precipitate the next financial crisis.  Bethany McLean, a contributing editor at Vanity Fair magazine, explores those fears in her newly published book, Saudi America: The Truth About Fracking and How It’s Changing the World. She delved into those issues also in a recent op-ed article in The New York Times titled, “The Next Financial Crisis Lurks Underground.” The International Energy Agency earlier this year captured the significance of the U.S. shale industry in a report. “Global oil production capacity is forecast to grow to reach 107 million barrels per day by 2023,” it noted. “Thanks to the shale revolution, the United States leads the picture. Growth is led by the Permian Basin [in Texas], where output is expected to double by 2023.”“Fracking is a business built on attracting ever-more gigantic amounts of capital investment, while promises of huge returns have yet to bear out,” says an introduction to McLean’s book. In fact, North American exploration and production companies saw their net debt balloon from $50 billion in 2005 to nearly $200 billion by 2015, according to a recent research paper by Amir Azar, fellow at Columbia University’s Center on Global Energy Policy.Beyond the debt overhang, the fracking industry’s fortunes directly impact oil prices and the rest of the economy, while also being a significant job creator, according to McLean and Jyoti Thottam, The New York Times opinion editor for business and economics. McLean and Thottam drew parallels between the fracking industry’s lofty projections and the Enron scandal of 2001, which both of them had covered extensively as reporters. McLean warned that “at some point, investors want to see real profits and real returns,” while Thottam called for fracking industry watchers to look for early signs of danger. (McLean and Thottam discussed the fracking industry’s fortunes on the Knowledge@Wharton radio show on SiriusXM. Listen to the podcast at the top of this page.)

Fracking showdown heats up in Colorado --VOTERS IN COLORADO NEXT month will weigh in on what's shaping up to be the environmental showdown of the 2018 election cycle: whether to approve larger setbacks for oil and gas facilities that would make most of the state off limits to new fracking operations. The measure is one of a handful of environmental questions on state ballots this year, from a new carbon fee in Washington to higher renewable energy standards in Arizona and Nevada. But the Colorado proposal is the one that most directly pits residents against the oil and gas industry, potentially roping off 85 percent of non-federal land in Colorado from new drilling operations. It reflects a fundamental clash between an industry that's transformed Colorado into a top-10 oil producer in the U.S. and a booming residential population whose homes, schools and hospitals have crept ever closer to oil and gas sites.  "Industry is hitting saturation point, and people are saying, 'This is good, but why are you putting this next to a school?" says Jim Alexee, director of the Colorado Sierra Club. "People are just getting fed up and are genuinely concerned. So oil and gas has a right to be worried." If approved, the measure would mark the first time in the U.S. that voters – not a legislature or governor – green-light statewide curbs on fracking operations, which use mixtures of water, chemicals and other materials to extract oil and gas from porous shale rock formations.  The blow to the oil and gas sector, meanwhile, would be considerable, threatening – or promising, depending on one's view – to galvanize similar grassroots efforts across the U.S. Three states in the U.S. have banned fracking: New York and Vermont did so in 2012, and Maryland followed suit last year. The Colorado referendum, Proposition 112, would require new wells be at least 2,500 feet from occupied buildings such as houses and schools, as well as parks, fresh water sources and other green spaces "designated for additional protection." It would also grant state and local governments new powers to set yet more stringent setback requirements. Oil and gas sites are presently required to be at least 500 feet from residential buildings and 1,000 feet from high-occupancy buildings such as schools and hospitals. Those setbacks, however, were only instituted in 2013 – meaning Colorado residents may live as close as 150 feet to a well, compressor station, or other oil and gas site.

Sierra Club contests fracking development on Boulder County open space – The Colorado Oil and Gas Conservation Commission has decided it will allow the Sierra Club to submit written comment contesting Crestone Peak Resource's application to build a 140-well development on Boulder County open space.While the environmental advocacy group will not be able to call witnesses or cross-examine anybody during the Colorado Oil and Gas Conservation Commission's hearing at the end of October, the Sierra Club will be allowed to enter reports regarding the acute and chronic health impacts of the project."I think it's a very positive development because we get to put evidence in front of the commission showing just how serious the environmental and health impacts of this project are," said Eric Huber, the senior managing attorney with the Sierra Club's Environmental Law Program. "I'm glad that the record is finally going to get made and we look forward to our day in court."As of Thursday, the Sierra Club has three expert witnesses ready to submit reports. According to Huber a petroleum engineer will address concerns regarding the sheer size of the 140-well project, highlighting the fact that it will require more water, fracking chemicals, and solid fracking materials than used previously in all the existing 779 wells in the county and that the wells also will produce more flowback waste than all previous wells in the county combined. A hydrologist will attempt to show that the wells need more casing to protect the aquifers under the project, and an epidemiologist will address the acute and chronic health impacts of the project.

BLM Advances First Oil Shale Project in Utah - The U.S. Bureau of Land Management’s Utah office on Wednesday authorized the American unit of an Estonia-based company to build infrastructure needed to open an oil shale production plant in Uintah County. The project was originally proposed six years ago, and its backers told NGI's Shale Daily that construction is still "several years off." BLM Utah's record-of-decision (ROD) will allow Salt Lake City-based Enefit American Oil to create up to seven right-of-way corridors for pipelines, power lines and roads necessary for the extraction and processing of the oil shale, which has long been opposed by environmental groups. "This approval allows for industrial-scale utilities to cross federal land to the site of Enefit's planned oil shale project," said company spokesperson Brian Wilkinson. "We're in the engineering and permitting phase for what is a long-lead time greenfield project. The cost estimate for the project is not publicly available yet as it’s subject to final engineering review." BLM officials stressed that the project is consistent with President Trump's goal of U.S. energy independence."Right-of-way projects are tremendous economic drivers that involve critical coordination with our neighbors and stakeholders," said BLM Deputy Director Brian Steed. BLM's ROD enables Enefit to build 13.7 miles of water supply pipeline, 5.8 miles of buried natural gas pipe, 7.18 miles of buried oil product line, and two 138-kV power lines. It would also include upgrading five miles of a major road on public lands in the Vernal, UT, field office.

Keystone XL pipeline route would not harm environment: State Department --(Reuters) - The U.S. State Department on Friday issued an environmental assessment of a revised route for the Keystone XL crude pipeline that concluded it would not harm water or wildlife, clearing a hurdle for the project that has been pending for a decade. Even if the pipeline spilled crude oil along its revised route through Nebraska, a top concern of environmentalists, there would likely be no impact to groundwater, the nearly 340-page draft review said. “Prompt cleanup response would likely be capable of remediating the contaminated soils before the hazardous release reaches groundwater depth,” the review said. Last month a federal judge in Montana had ordered the State Department to conduct the review of a revised route of the project to take into account new information relevant to a permit it issued for the pipeline last year. The review also said implementing the revised route would have “no significant direct, indirect or cumulative effects on the quality of the natural or human environments.” U.S. President Donald Trump is eager to see the building of the pipeline, which was axed by former President Barack Obama in 2015 on environmental concerns relating to emissions that cause climate change. The project has galvanized environmentalists, tribal groups and ranchers in opposition to the $8 billion 1,180 mile (1,900 km) pipeline that would carry heavy crude from Canada’s oil sands in Alberta to Steele City, Nebraska. From there the crude would be sent to refineries and potentially for export. Canadian oil producers, who face discounts for their crude due to transport bottlenecks, U.S. refineries and pipeline builders, support the project. TransCanada Corp plans to start construction in 2019, spokesman Matthew John said. The company’s Chief Executive Russ Girling said last month that it could make a final investment decision on the project late this year or in early 2019, pending some regulatory approvals and court challenges. 

KXL Pipeline Developer Plans to Start Construction in 2019 - Construction on the long-delayed Keystone XL (KXL) pipeline is planned for 2019, developer TransCanada said Monday. "Keystone XL has undergone years of extensive environmental review by federal and state regulators," TransCanada spokesman Matthew John told Omaha World-Herald. "All of these evaluations show that Keystone XL can be built safely and with minimal impact to the environment." The move comes after President Trump's State Department—in response to a judge's order—released a nearly 340-page draft review on Friday that said the pipeline's alternative route approved by Nebraska regulators in November will have "no significant direct, indirect or cumulative effects on the quality of the natural or human environments." "Prompt cleanup response would likely be capable of remediating the contaminated soils before the hazardous release reaches groundwater depth," the report also said. The KXL has been at the center of a contentious fight for a decade. If built, the $8 billion, 1,184-mile pipeline will transport heavy crude oil from Alberta's tar sands through Montana and North and South Dakota to connect with an existing Keystone pipeline in Nebraska. President Obama rejected the KXL in 2015 partly due to concerns about its contribution to climate change, but President Trump reversed the decision shortly after taking office.

US government might use counterterrorism tactics against Keystone pipeline protesters, documents show -The federal government is preparing an aggressive tactical response in anticipation of renewed Keystone XL Pipeline protests—similar to the response to direct action in Standing Rock, where activists fought efforts to construct the Dakota Access Pipeline—documents obtained by the American Civil Liberties Union and the ACLU of Montana show. In Standing Rock, camps set up to resist the pipeline were heavily surveilled and law enforcement used concussion grenades, tear gas, and rubber bullets against activists. Last year, leaked documents revealed that Energy Transfer Partners, the company building the Dakota Access Pipeline, hired a security firm called TigerSwan to oppose water protectors in collaboration with police in at least five states, The Intercept reported. Now, it appears activists are preparing for a similar, aggressive response if the Keystone Pipeline moves forward. One document showed the Department of Homeland Security and the Federal Emergency Management Agency organized a “field force operations” training to prepare for “riot-control formations” and “mass-arrest procedures.”The Trump administration renewed orders last year allowing construction of the Keystone Pipeline to continue. The pipeline would carry more than 800,000 barrels of oil daily, running near a number of Native American reservations.  Remi Bald Eagle, who is the intergovernmental affairs coordinator of the Cheyenne River Sioux tribe, told the Guardian that based on “the level of [law enforcement] violence” residents saw at Standing Rock, “There’s a level of anxiety and fear because we don’t know what’s going to happen.” “Terrorism” and “extremism” have long been used by the US government to criminalize different forms of protest. In the past year, leaked FBI documents labeled anarchists as “domestic terrorists” and black leftists as “Black Identity Extremists.” Just this month, the president suggested in an interview with the Daily Caller—Fox TV anchor Tucker Carlson’s conservative outlet—that protests should be illegal.

'Treating protest as terrorism': US plans crackdown on Keystone XL activists - Angeline Cheek is preparing for disaster. The indigenous organizer from the Fort Peck reservation in Montana fears that theproposed Keystone XL pipeline could break and spill, destroy her tribe’s water, and desecrate sacred Native American sites.But environmental catastrophe is not the most immediate threat.The government has characterized pipeline opponents like her as “extremists” and violent criminals and warned of potential “terrorism”, according to recently released records.  The documents suggested that police were organizing to launch an aggressive response to possible Keystone protests, echoing the actions against the Standing Rock movement in North Dakota. There, officers engaged in intense surveillance and faced widespreadaccusations of excessive force and brutality.“We have to stay one step ahead at all times,” said Cheek, a Hunkpapa and Oglala Lakota activist and teacher. “History is repeating itself.”The proposed TransCanada project would carry a daily load of 830,000 barrels of oil over 1,204 miles – from Alberta, Canada to Montana, South Dakota and Nebraska, linking to the existing Keystone pipeline and Texas refineries. The path of the project, which was revived by Donald Trump last year, would cross dozens of rivers and streams and run near a number of Native American reservations, sparking legal challenges and a judge’s recent order for a full environmental review. If the pipeline gets final approvals and construction advances in the coming months, some are anticipating massive demonstrations similar to the fight against the Dakota Access pipeline (Dapl). That conflict galvanized a global movement, but also led to FBI monitoring and the prolonged prosecution of hundreds of activists. Documents obtained by the ACLU of Montana and reviewed by the Guardian have renewed concerns from civil rights advocates about the government’s treatment of indigenous activists known as water protectors.  Notably, one record revealed that authorities hosted a recent “anti-terrorism” training session in Montana. The Department of Homeland Security (DHS) and the Federal Emergency Management Agency also organized a “field force operations” training to teach “mass-arrest procedures”, “riot-control formations” and other “crowd-control methods”.

Trump Repeals Rule Meant to Prevent Oil-Carrying 'Bomb Trains' From Derailing and Exploding - In a move that outraged environmentalists and increased the chances of deadly and destructive accidents, the Trump administration's Department of Transportation (DOT) has repealed an Obama-era rule that mandated safety upgrades for "dangerous" oil tanker trains to reduce the possibility of derailments, explosions and spills.  "This commonsense rule was put in place in response to a series of deadly accidents, and this shameless decision to repeal it will mean more workers and communities are put at risk," declared Sierra Club Beyond Dirty Fuels campaign director Kelly Martin.The rule required trains carrying oil and other flammable materials—sometimes called "bomb trains"—to install electronically controlled pneumatic (ECP) brakes that decrease the likelihood of derailment by 2021. While it was initially criticized by green groups that said it did not go far enough to protect communities, the Monday reversal was regarded as yet another move by the administration to appease polluters at the expense of the public."Apparently there's no limit to the lengths the Trump administration will go," Martin said, "to prioritize the desires of polluting industries over the health and safety of the American people."The repeal was initially proposed in December of 2017, but finalized by the DOT's Pipeline and Hazardous Materials Safety Administration (PHMSA) on Monday. PHMSA claimed that a congressionally-mandated analysis concluded "that the expected costs of requiring ECP brakes would be significantly higher than the expected benefits of the requirement." The change does not prevent railroads from using ECP brakes but the safety upgrade is no longer mandated."The electronically controlled brakes would have been a long-awaited safety improvement," Fred Millar, an independent consultant specializing in chemical safety and transport, told BuzzFeed News. By repealing the safety requirement, Millar added, "the cost will be borne by the people who die or are injured or who have terrible property damage."

Trump Rolls Back Train-Braking Rule Meant to Keep Oil Tankers from Exploding Near Communities - Trains that carry oil and other flammable material won’t have to install electronically controlled brakes that reduce the risk of train derailments and explosions after the reversal by Trump officials of an Obama-era safety rule.The Pipeline and Hazardous Materials Safety Administration (PHMSA) posted the rule change today at its Web site, arguing that the cost of installing these more sophisticated brakes outweighs the benefit. The reversal was first proposed in December 2017, around the time of a deadly Amtrak derailment in Washington State, and finalized today. The improved brakes had a 2021 deadline for installation until the industry-supported change. About 20 derailments of trains carrying oil and ethanol that have led to spills, fires, and, in some cases, evacuations have occurred since 2010 in the U.S. and Canada. Riverkeeper, a clean-water advocacy group, compiled video reports from many of the accidents.U.S. trains rely on pneumatic braking technology first invented in the 1860s, in which continuous air pressure linked from the front of the train keeps a brake from engaging on wheels on each car. When an engineer applies braking, it can take several seconds for pneumatic pressure to drop to the end of a 100-car train, and trains can be longer.Electronically controlled pneumatic (ECP) brakes still use air pressure, but each car has an individual braking control which receives an electronic signal simultaneously, reducing the danger of derailment when cars slam into the preceding ones before braking themselves. The seconds’ difference between regular and ECP brakes is where the battle lies for this regulations. The railroad industry claims it would cost more than $3 billion to install necessary ECP on trains used for flammable liquids, while the Federal Railroad Administration under President Barack Obama said it would be about half a billion.

Bakken operators facing shift to less prolific geography: study— North Dakota oil producers have broken output records already twice this year, with state regulators expecting further record-shattering output into late 2018. But as acreage within the Bakken Shale's core drilling areas in McKenzie, Mountrail, Williams and Dunn counties nears depletion, operators will move on to wells in what are now fringe areas, with outputs averaging a fraction of the play's more currently prolific wells, according to a study from the North Dakota Pipeline Authority.The study shows an epic shift in Bakken well performance could be nearing, as the majority of Bakken wells go from geology with a peak monthly performance of at least 1,000 b/d of crude to a majority of wells in geology that produces a peak monthly performance of less than 500 b/d, even in the study's higher case outcome.And while an output decline may still be decades away, producers may need to develop two or three times as many wells compared with current efforts in order to keep up the current production pace, the study indicates. Among the study's findings:

• Of the nearly 8,000 existing Bakken wells, 49% are located in geology with a peak monthly performance of over 1,000 b/d, with 18% in geology with peaks over 1,500 b/d. Just 14% of existing wells are located within geography with peak monthly performance below 500 b/d.
• Of the remaining, more than 31,100 Bakken wells, only 20% are located within geography with peaks above 1,000 b/d in the study's low case, which assumes that four wells will be drilled within a 1,280 acre spacing unit, and 23% in the study's high case, which assumes drilling eight wells in a spacing unit.
• Of the remaining Bakken wells, 44% are located in geography with peak performance below 500 b/d in the low case and 41% in the high case.
• While the majority of existing wells are located in geography with well performance of 1,000 b/d or more, the majority of remaining wells will likely be located in geography with well performance below 500 b/d.

Is The Bakken Close To Breaking- - While the Permian has experienced a drilling boom and has received tons of media attention, a lesser-known but still remarkable revival has been underway in the Bakken this year. At the same time, the increased rates of drilling in North Dakota are starting to reveal signs of strain on the basin, as drillers are increasingly forced into less desirable locations.The Bakken was hit harder than the Permian during the oil market downturn that began in 2014, with rigs and capital diverted away from North Dakota and rerouted to West Texas. Oil production hit a temporary peak in late 2014 at 1.26 million barrels per day (mb/d), declining for much of the next two years. However, production began to rise again in early 2017 before accelerating this year. In October, the EIA expects Bakken production to hit 1.33 mb/d, a new record high. The Bakken took over as the most profitable place for shale drillers on average this summer, at least temporarily surpassing the Permian. That may not last as the steep discounts for WTI in Midland drags down the profitability of the Permian, a situation that will resolve itself over the next few years as pipelines come online. But the improved outlook for the Bakken is notable nonetheless.However, despite the resurgence in the Bakken, the basin is starting to suffer from its own strains. Production is still rising, but the crowded field is increasingly pushing shale E&Ps onto the periphery. The result is that the average well in the Bakken is producing less oil at its peak performance, as fringe areas are dragging down the average.  S&P Global Platts reported on the findings, noting that absolute decline is not necessarily likely in the near-term, but that the shale industry will have to ramp up drilling activity by two or three-fold to keep growing production.

Move Over, Permian. Bakken's Making a Comeback - North Dakota oil production reached a record high in July and the Bakken is primed for growth.After months of being the red-headed stepchild to the Permian, the Bakken shale play is getting a resurgence.  Crude oil production in North Dakota reached an all-new high for the second time this year in July, averaging 1.27 million barrels per day, according to the most recent figures available. Monthly oil production in July was 39.35 million barrels.Wood Mackenzie broke down some key factors that are attracting investments to the Bakken and nearby Three Forks formation (located just below the Bakken).“Operators are planning to spend $5 billion in planned CAPEX this year in these areas,” Pablo Prudencio, research analyst for WoodMac’s Lower 48 region, told Rigzone. “Operators are expected to spend more than $40 billion in the play over the next five years.”In August, shale producer Continental Resources said it was allocating $200 million this year to increased drilling and completion activity, with a third of that focused on the Bakken, Reuters reported.Prudencio said the investments will be significantly less than the Permian due in part to activity levels and rig count.  WoodMac’s analysis further included the following:

• Rise in Gas Production: Operators are focusing on the core of the play, which tends to be gassier. Gas production is also continuing to rise, and gas processing plants are being built to meet North Dakota’s flaring limits.
• Oil Production: Bakken and Three Forks production contributes an average of 13 percent to the U.S. Lower 48 production outlook.
• Crude Takeaway: Long-term oil production growth is slowed by pipeline takeaway capacity. Oil production is expected to peak at about 1.5 million barrels per day and plateau after.
• Sluggish M&A: Recent years have shown lackluster M&A activity relative to the size of the play. Key themes include Private equity-backed operators entering the play and public E&Ps selling Bakken assets to focus on other plays such as the Permian.

Kinder Morgan Unit Eyeing Natural Gas Capture Pipe for Bakken Flaring - In the heart of the prolific Bakken Shale in the far northwest corner of North Dakota, a unit of Kinder Morgan Inc. is pursuing a natural gas pipeline link between existing compression and gathering infrastructure that may offer compelling economic benefits despite the system’s relatively small scale.  Kinder's Hiland Partners Holdings LLC’s Bakken Missouri River Crossing Project would be a 10-mile gas pipeline from the Brogger compressor station in Williams County to its gas gathering system in McKenzie County.  "It is important for their system to capture the gas north of the river, move it south and get it to its processing plants," said North Dakota Pipeline Authority Director Justin Kringstad.  "It is a small length compared to numerous other projects, but it is still very important for their particular system," Kringstad told NGI's Shale Daily. He said for all of the gas gathering systems in the Bakken there is a "tremendous amount" of intra-state pipeline work.Williams County this year has been experiencing "a lot of tension" in takeaway capacity to keep up with increased production, he said. Higher oil prices have increased a return to drilling in noncore areas of the county."The amount of takeaway capacity up there is not adequate for the amount of drilling activity and new completion technologies that is now focused on that area," Kringstad said.Projects like the river crossing would help alleviate some of the congestion and aid in gas capture needs in Williams County, he said.A roughly 2.5-mile portion of the new pipeline would be run under part of the Missouri River and the man-made Lake Sakakawea. Kinder plans to use horizontal directional drilling to continue the linkage. According to Kinder's analysis, construction of the crossing project would spawn up to 80 jobs during peak construction activities next spring and provide "positive economic impacts" for the region.

OGCI Sets First Collective Methane Target - The Oil and Gas Climate Initiative (OGCI) has set its first collective methane target for member companies. The new target aims to reduce, by 2025, the collective average methane intensity of the group’s aggregated upstream gas and oil operations by one fifth to below 0.25 percent. Achieving the agreed intensity target of 0.25 percent by the end of 2025 would reduce collective emissions by 350,000 tons of methane annually, compared to the baseline of 0.32 percent in 2017. To reduce the OGCI’s collective methane emissions intensity, member companies will target “key emissions sources,” according to an OGCI statement. “OGCI members are also engaging with other companies in the industry to help ensure that methane emissions are addressed across the full gas value chain,” the statement added. In a statement on its Twitter page, OGCI said the commitment to its joint methane target relays its collective and unwavering commitment to reduce methane emissions in alignment with the Paris Agreement. The announcement of the new methane target follows OGCI’s news last week that it had welcomed Chevron Corporation, Exxon Mobil Corporation and Occidental Petroleum into its international membership. These three companies together represent five percent of global oil and gas production, OGCI highlighted. In addition to the announcement of the new methane target, OGCI revealed that China National Petroleum Corporation (CNPC) and OGCI Climate Investments (Climate Investments) had announced a partnership to create an investment fund focused on China. The major founding investors of the fund will be CNPC Assets Management and Climate Investments. The OGCI aims to increase the ambition, speed and scale of the initiatives undertaken by its individual companies to help reduce manmade greenhouse gas emissions, in particular from the production and use of oil and gas in power, heating, industry and transport. Launched in 2014, OGCI is now made up of 13 oil and gas companies comprising BP, Chevron, CNPC, Eni, Equinor, ExxonMobil, Occidental, Pemex, Petrobras, Repsol, Saudi Aramco, Shell and Total. 

EIA reports first weekly U.S. crude supply climb in six weeks - The Energy Information Administration reported that domestic crude supplies rose by 1.9 million barrels for the week ended Sept. 21. The EIA had reported declines in each of the previous five weeks. That defied expectations for a fall of 2.2 million barrels from analysts surveyed by S&P Global Platts, but the increase was smaller than the climb of 2.9 million barrels reported by the American Petroleum Institute on Tuesday, according to sources. Gasoline stockpiles rose 1.5 million barrels for the week, while distillate stockpiles fell by 2.2 million barrels, according to the EIA. The S&P Global Platts survey had shown expectations for supply increases of 256,200 barrels in gasoline and 667,000 barrels in distillates. November crude fell 48 cents, or 0.7%, to $71.80 a barrel on the New York Mercantile Exchange. That's little changed from $71.78 before the supply data.

U.S. crude oil stocks build as refiners sharply cut runs (Reuters) - U.S. crude oil stockpiles rose last week as refineries sharply reduced output for seasonal maintenance, while gasoline stocks increased and distillate inventories fell, the Energy Information Administration said on Wednesday. After five consecutive weeks of drawdowns to the lowest levels since February 2015, crude inventories rose 1.9 million barrels to 396 million barrels in the week to Sept. 21. The build was unexpected as analysts forecast a decrease of 1.3 million barrels. Refinery crude runs fell by 901,000 barrels per day, EIA data showed. Refinery utilization rates fell by 5 percentage points to 90.4 percent, the lowest since May, driven by seasonal declines in Midwest and East Coast refining activity. “The drop in refinery runs was pretty substantial, which shows maintenance season is kicking into high-gear. The drop in distillates is very supportive because that is the soft spot that people are focused on,” said Phil Flynn, an analyst at Price Futures Group in Chicago. Oil prices held relatively steady following the data. U.S. crude oil futures were down 35 cents to $71.93 a barrel, while Brent dropped 27 cents to $81.60 a barrel. The two benchmarks have been on the rise of late due to swifter-than-expected declines in Iranian exports and notable declines in U.S. crude inventories. Distillate stockpiles, which include diesel and heating oil, fell 2.2 million barrels, versus expectations for a 752,000-barrel increase, the EIA data showed. In response to the data showing the drawdown in diesel and heating oil stocks, distillate cracks, an indication of refining margins, rose 1 percent to $15 a barrel. Net U.S. crude imports fell last week by 495,000 bpd. Crude stocks at the Cushing, Oklahoma, delivery hub rose by 461,000 barrels, EIA said. Gasoline stocks rose by 1.5 million barrels, compared with analyst expectations in a Reuters poll for a 788,000-barrel gain. 

US petroleum demand in August reached 20.8 million b/d - According the latest monthly statistics report from the American Petroleum Institute, US petroleum demand in August, led by motor gasoline, distillate, and refinery feedstocks, increased to 20.8 million b/d, up 250,000 b/d from July. This was the strongest demand for any month since August 2007 and reflected solid economic growth, industrial activity, and consumer confidence, API said. Year-to-date through August, petroleum demand averaged 20.3 million b/d. This was an increase of nearly 500,000 b/d over the first 8 months of 2017. Consumer gasoline demand, as measured by total motor gasoline deliveries, was 9.7 million b/d in August. This was 0.8% below that of August 2017 but the third-highest demand for the month of August on record since 1945. “The two highest years were 2016 and 2017, which suggests the increase in crude oil and gasoline prices this year may have suppressed some demand growth despite the strong economy,” API said. The average price of regular-grade gasoline was $2.91/gal in August, which was down by 1.4¢/gal from July, but up by 42¢/gal compared with August 2017 and 63¢/gal vs. August 2016. In August, distillate deliveries of 4.1 million b/d increased by 3.4% from July and 2% from August 2017. This was the highest distillate demand since 2007, both for the month of August and cumulatively through the first 8 months of the year. About 96% of distillate demand in August was for ultralow-sulfur distillate (ULSD), which is driven by road freight transportation activity. The US Bureau of Labor Statistics’ Producer Price Index for freight trucking increased 8.4% year-over-year in August at the same time as discussion has increased about America’s shortage of truck drivers. [Native Advertisement] The remaining demand was high-sulfur distillate fuel (HSD), which is a heating fuel in the residential and commercial sectors and a marine fuel when blended to upgrade heavy fuel oil.

U.S. gasoline consumption stalls as higher prices take toll: Kemp (Reuters) - The volume of traffic on U.S. highways has stopped growing, and with it gasoline consumption, as rising prices curb driving behaviour.  Traffic volumes in July were 0.3 percent lower than a year earlier, after seasonal adjustments, according to the Federal Highway Administration.Traffic growth has been negative in two months so far this year, the first readings below zero since the start of 2014, ("Traffic volume trends", FHWA, September 2018).Volumes were up by less than 0.3 percent in the three months from May to July compared with the same period a year earlier, down from annual growth of 2-3 percent throughout 2015 and 2016.There has been a correlation between traffic volumes and the cyclical rise and fall in oil and gasoline prices since at least the early 1990s (https://tmsnrt.rs/2MZsg2d).The sharp decline in oil prices between the middle of 2014 and early 2016 provided a tremendous fillip to vehicle use.But as oil prices recovered over the last 30 months, that stimulus has faded and traffic growth has slowed to a crawl.The average cost of gasoline purchased by U.S. motorists surged by more than 55 percent between February 2016 and September 2018. U.S. government data on gasoline consumption shows a similar stabilisation as higher prices encourage motorists to curb their fuel use.Gasoline consumption rose by just 18,000 barrels per day in the first half of 2018 compared with the same period a year earlier, despite strong economic growth and substantial job creation. The U.S. Energy Information Administration predicts consumption will decline by around 10,000 barrels per day this year ("Short-Term Energy Outlook", EIA, September 2018).

U.S. will not tap oil reserve as Iran sanctions loom: Perry (Reuters) - The Trump administration is not considering a release from the U.S. emergency oil stockpile to offset the impact of looming Iran sanctions, and will instead rely on big global producers to keep the market stable, Energy Secretary Rick Perry said on Wednesday. “If you look at the Strategic Petroleum Reserve and you were to introduce it into the market, it has a fairly minor and short-term impact. The numbers I’ve seen do anyway,” Perry told reporters at the Department of Energy, explaining the administration’s thinking. Oil analysts have speculated for months that the Trump administration could tap the U.S. Strategic Petroleum Reserve (SPR) in an effort to tame rising prices ahead of the Nov. 6 midterm elections. High oil prices are a political risk for President Donald Trump and his fellow Republicans. The SPR currently holds about 660 million barrels of mostly sour grade crude in underground caverns in Texas and Louisiana. Under U.S. law, the government can sell up to 30 million barrels of oil, or about the amount of petroleum the United States uses in 36 hours, from the reserve over a number of weeks. Perry said that, while price spikes are possible in the short-term, “I’m comfortable that the world supply can absorb the sanctions that are coming.” Up to 300,000 barrels per day (bpd) of oil could reach markets if Iraq allows it to flow from the Kurdistan region in the north, Perry said. He also said up to an additional 300,000 bpd could soon come to market from an oilfield in the Neutral Zone that Saudi Arabia and Kuwait share, if they come to agreement.

Crude oil tops petrol exports in first half of 2018 - Crude oil took over the top spot in national petroleum exports during the first half of 2018, a spot that was most recently held by hydrocarbon gas liquids, which includes natural gas. According to the U.S. Energy Information Administration, 1.76 million barrels of crude oil were exported per day between January and June, with China importing 376,000 barrels of crude oil per day from the U.S. Other notable importers of American crude were: Canada, 334,000 barrels per day; Italy, 165,000 barrels per day; the United Kingdom, 138,000 barrels per day; the Netherlands, 122,000 barrels per day; and South Korea with 111,000 barrels per day. Hydrocarbon gas liquids, including natural gas, totaled 1.57 million barrels per day exported in the first half of 2018. While being surpassed by crude oil, that figure still represents an increase over the second half of 2017. Canada was the largest importer of American hydrocarbon gas liquids with an estimated 316,000 barrels imported per day. Japan imported just over 200,000 barrels a day, with Mexico importing 136,000 barrels per day and South Korea importing 118,000 barrels per day. The Marcellus and Utica Shale areas of the Appalachian Basin represented 29 percent of the nation's total production of natural gas in July, with the Appalachia region showing the greatest increase in natural gas production since July 2016, more than double the increase of region with the second largest increase.

Crude oil was the largest U.S. petroleum export in the first half of 2018 -  Crude oil surpassed hydrocarbon gas liquids (HGL) to become the largest U.S. petroleum export, with 1.8 million barrels per day (b/d) of exports in the first half of 2018. U.S. crude oil exports increased by 787,000 b/d, or almost 80%, from the first half of 2017 to the first half of 2018 and set a new monthly record of 2.2 million b/d in June. Much of this crude oil went to destinations in Asia and Oceania such as China, South Korea, and India. Europe was the second-largest market for U.S. crude oil exports, led by Italy, the United Kingdom, and the Netherlands. Canada was the only major U.S. crude oil export destination where exports decreased, down slightly in the first half of 2018 compared with the same period in 2017.  The United States exported 7.3 million barrels per day (b/d) of crude oil and petroleum products in the first half of 2018, the largest amount of crude oil and petroleum product exports ever for the first six months of a year. During this period, exports of crude oil and HGL set record monthly highs. U.S. exports of crude oil, HGLs, and motor gasoline grew in the first half of 2018 compared with the same period in 2017, while distillate exports decreased. HGLs—including propane, ethane, butanes, and natural gasoline—were the second-largest petroleum export from the United States in the first half of 2018 at 1.6 million b/d. As with crude oil, destinations in Asia and Oceania such as Japan, South Korea, China, and India were also the primary recipients of U.S. HGLs. These countries have expanded petrochemical facilities that import U.S. HGLs as a feedstock. Overall U.S. HGL exports set a new monthly record at 1.7 million b/d in May. In the first half of 2018, the United States exported 1.3 million b/d of distillate, primarily to destinations in Central and South America. The decline in U.S. distillate exports in the first half of 2018 compared with the first half of 2017 was mostly the result of lower exports to a number of destinations in Central and South America and in Europe. However, U.S. distillate exports are typically higher in the second half of the year. Compared with other petroleum exports, U.S. distillate exports go to the most destinations: 49 different destinations received at least 1,000 b/d of U.S. distillate in the first half of 2018.

U.S. shale on track to deliver 1.5 million bbl/d oil growth in 2018 - Tight oil production in the United States has been growing steadily over the past years, and the volumes from horizontal wells are projected to reach over 8 million bbl/d by the end of next year. This article examines the fundamental drivers behind this growth: well performance improvements and breakeven price trends, focusing on the top U.S. oil plays. Figure 1 shows historical and forecasted U.S. light oil production from horizontal wells by month and life cycle. Reporting visibility is sufficient until June 2018, while production growth is estimated for the subsequent months based on expected well performance and drilling and completion activity trends. As of June 2018, U.S. shale light oil production has increased by 1.85 million bbl/d year-over-year. The current activity levels are sufficient to achieve additional growth of 0.5 million bbl/d between June and December 2018. Moreover, the current inventory of drilled uncompleted wells secures production growth through the end of the year, while strong contribution from new drilling is needed from the first half of 2019. The Permian Basin tight oil plays, both on the Delaware and Midland side, show the highest additions since 2016, while the more mature Bakken and Eagle Ford shale plays show stable production profiles. Total U.S. shale light oil production from horizontal wells is estimated to reach 8.3 million bbl/d by December 2019, 1.5 million bbl/d higher than the current level. Figure 2 depicts the development in average 30-day production rate for horizontal wells during 2015-2018 for key U.S. shale basins: Bakken, Permian, Eagle Ford, DJ Basin, and Mid-Continent. The values are based on well-by-well reported production data, and thus the well results for 2018 are subject to change based on more production data becoming available as we progress through the year. Since 2015, we have seen a notable increase in well performance across all major shale plays. U.S. shale producers transitioned to drilling longer laterals, enhanced completion techniques (e.g. increased average proppant loading per perforated lateral foot) and focused more of the activity in the core areas of the acreage. In our selection, Bakken stands out as the play that exhibited the highest IP rates historically and so far in 2018.

OPEC Believes US Shale Boom Won’t Last Long --  OPEC is predicting that competition with the U.S. will drop significantly in less than five years, allowing members of the world’s largest oil cartel to keep dominating the market. During a meeting in Algiers, Algeria, members of the Organization of the Petroleum Exporting Countries (OPEC) predicted Sunday that U.S. shale growth would “slow significantly” after 2023, triggering renewed demand for their own oil. OPEC, according to The Wall Street Journal, expects U.S. output to top off at 14.3 million barrels a day around 2027 and then drop to an average of 12.1 million barrels a day by 2040. The oil cartel predicted in a report published Sunday global appetite for OPEC oil will grow as American supply steadily declines. “Thereafter, a gradual decline in non-OPEC liquids supply, coupled with moderate, but sustained global demand growth, leads to a steady increase in demand for OPEC crude, which rises to nearly 40 million barrels a day by 2040,” the report forecasted. The cartel, however, also acknowledged how explosive growth in the U.S. has currently upended the global market. “Declining demand for OPEC crude is a result of strong non-OPEC supply in the 2017–2023 period, most notably from U.S. tight oil,” OPEC said of its long-term outlook. “The U.S. remains by far the most important source of medium-term supply growth, contributing … two-thirds of new supply, driven by surging tight oil output.” American oil producers have experienced unprecedented growth in recent years, largely thanks to the implementation of hydraulic fracturing, which has unlocked fossil fuel reserves long believed as uneconomical to extract. The U.S. has now surpassed both Saudi Arabia and Russia in becoming the world’s largest producer of crude oil. However, this has not shielded U.S. consumers from OPEC’s manipulation of oil price. In a coordinated effort to keep prices up in the face of strong U.S. output, OPEC has worked to keep production low.

OPEC Sees Competition With U.S. Shale Oil Subsiding After 2023 - —U.S. shale oil production will peak by the late 2020s, triggering renewed demand for OPEC crude after an expected decline and stagnation, the oil cartel said Sunday. In its latest forecast on the global oil landscape, the Organization of the Petroleum Exporting Countries said it expects U.S. shale growth to “slow significantly” after 2023, before peaking at 14.3 million barrels a day between 2027 and 2028. Output should then fall to an average of 12.1 million barrels a day by 2040, according to OPEC.  Shale was largely behind a glut of American oil that flooded the market over four years ago, leading oil prices to fall to $30 a barrel from more than a $100 a barrel in late 2014. In 2018, U.S. shale production is growing faster than it did during the boom years of 2011 to 2014, the International Energy Agency said earlier this year. The IEA has forecast that U.S. shale oil production will plateau in the late 2020s, while total non-OPEC production should decline.  OPEC projects that “the strongest annual increases are seen in the near-term, in which total U.S. tight oil increases by an average of 1.4 million barrels a day” annually from this year to 2020.  The world’s appetite for OPEC crude, meanwhile, should fall to 31.6 million barrels a day in 2023, compared with 32.6 million barrels a day in 2017, before again rising to current levels when U.S. shale supply peaks, the cartel said.  “Thereafter, a gradual decline in non-OPEC liquids supply, coupled with moderate, but sustained global demand growth, leads to a steady increase in demand for OPEC crude, which rises to nearly 40 million barrels a day by 2040,” the OPEC report noted.  More broadly, OPEC on Sunday also said it expects global demand for oil to increase by an average of 1.2 million barrels a day in the medium-term, reaching 104.5 million barrels a day by 2023. But the cartel said it expects growth to “decelerate over time,” reaching 111.7 million barrels a day in 2040. That’s up from its forecast last year for 2040 of demand of roughly 107.5 million barrels a day. The cartel has said it doesn’t expect global demand for oil to peak before 2040. That’s largely in line with the forecast of the International Energy Agency, which has argued that global oil demand will grow slowly past 2040. However some international oil majors, including Royal Dutch Shell PLC and Norway’s Equinor, predict demand could reach its high as soon as 2025 or 2030.

Analysis: SoCal Gas system restrictions could lead to winter price spikes — The Southern California Gas Company's system has been heavily restricted all summer and continues to cause price volatility in Southern California. The volatility is likely to continue this winter if capacity restrictions continue along with the lower-than-normal levels of gas in storage in the region, according to S&P Global Platts Analytics. Recent notifications have impacted both the short-term and longer-term dynamics of the system. Not only has SoCal Gas announced the Aliso Canyon storage facility will limit injections this week due to full inventories, but it has also implemented further Southern Zone restrictions that will limit flows through the zone by an additional 156 MMcf/d. In early July, the California Public Utilities Commission allowed SoCal Gas to increase the Aliso Canyon storage field's working gas capacity by 10 Bcf, bringing the facility's total capacity to 34 Bcf. Platts Analytics expects SoCal Gas in storage will enter the winter season close to its total capacity of 84 Bcf. Prior to the leak at the facility from October 2015 to February 2016, the Aliso Canyon field by itself had a working gas capacity of 86 Bcf and was the largest storage facility in the US Energy Information Administration's Pacific region. This winter, storage inventories will be roughly 17 Bcf more than the start of last winter. Despite levels being slightly higher year over year, current pipeline receipt capacity is about 600 MMcf/d below what it was entering last winter. This will cause SoCal Gas -- if no changes occur to the current restrictions -- to rely much more heavily on storage withdrawals through the winter in order to meet on-system demand, which has averaged 2.8 Bcf/d over the last five years. SoCal Gas' restriction on the Southern Zone line 2001, which will cut capacity in the zone by an additional 156 MMcf/d, is slated to end on October 3. Total Southern Zone capacity was previously limited to 729 MMcf/d and the additional restriction reduces total capacity to 572 MMcf/d. SoCal Gas cited "necessary remediation due to safety related conditions" for the restriction. Current flows through the Southern Zone have averaged 760 MMcf/d this September prior to the restriction.  Volatile prices can be expected to continue through October 3, especially if on-system demand reaches more than 2.3 Bcf/d, which is the current pipeline receipt capacity on the SoCal Gas system.

Canada ordered to fix spill plan for Washington state oil line - The Canadian government as owner of the Trans Mountain Pipeline has been ordered to correct deficiencies in the oil spill contingency plan for a 64-mile crude oil pipeline on Puget Sound in Washington state, Kallanish Energy reports. The order came Monday from the Washington Department of Ecology. “We expect Canada to adhere to the high standards Washington has worked so hard to achieve that protect our environment, economy and the health of our communities,” said state spokesman Dale Jensen, in a statement. Trans Mountain Corp., a newly formed Crown corporation, said it will respond in a timely way, The Canadian Press reported. Ottawa is involved because the federal government paid C$4.5 billion ($3.45 billion) to Kinder Morgan to purchase the Trans Mountain Pipeline that runs from Edmonton, Alberta, to Burnaby, British Columbia. The Puget Sound leg of the pipeline transports crude oil to four refineries in Washington state. It has been in service since the 1950s. In 2017, the pipeline moved 2.6 billion gallons of crude oil in Washington state, moving 180,000 barrels per day. The state regulatory agency said the Canadian government must correct “deficiencies in critical areas” of the oil spill contingency plan. The pipeline operator, Trans Mountain Pipeline (Puget Sound) LLC had submitted a plan to the state for review. The state agency has given the company and Ottawa 60 days to provide more information on topics including endangered killer whales, salmon and other natural resources that could be harmed by oil spills. It also wants the parties to detail how each would respond to a spill of heavy oils that may sink to the seafloor, initial steps that would be taken after a spill is discovered and procedures to notify emergency contacts after a spill occurs.

Prices Surge On Bullish Physical Pipeline Data And Low Storage Levels -  Kyle Cooper - Highlights of the Natural Gas Summary and Outlook for the week ending September 21, 2018 follow. The full report is available at the link below.

• Price Action: The October surged 21.0 cents (7.6%) to $2.978 on a 21.9 cent range ($2.991/$2.772).
• Price Outlook: Prices surged despite a larger than expected EIA storage injection as physical data turned very bullish and suggested a very low injection next week. While some of the increase was power related as nuclear output fell, there was also a longer term structural component that has longer lasting bullish implications. . CFTC data indicated a (25,024)contract reduction in the managed money net long position as longs liquidated and shorts added. This is the lowest long position since January 5, 2016. This is the largest short position since July 31, 2018 . Total open interest rose 83,522 to 3.937 million as of September 18. Aggregated CME futures open interest fell to 1.650 million as of September 21. The current weather forecast is now cooler than 6 of the last 10 years. Pipeline data indicates total flows to Cheniere’s export facility were at 3.0 bcf. Cove Point is net exporting 0.0 bcf.
• Weekly Storage: US working gas storage for the week ending September 14 indicated an injection of +86 bcf. Working gas inventories rose to 2,722 bcf. Current inventories fall (686) bcf (-20.1%) below last year and fall (575) bcf (-17.4%) below the 5-year average.
• Supply Trends: Total supply fell (0.3)bcf/d to 79.8 bcf/d. US production rose. Canadian imports fell. LNG imports fell. LNG exports rose. Mexican exports fell. The US Baker Hughes rig count fell (2). Oil activity decreased (1). Natural gas activity was unchanged +0. The total US rig count now stands at 1,053 .The Canadian rig count fell (29) to 197. Thus, the total North American rig count fell (31) to 1,250 and now exceeds last year by +95. The higher efficiency US horizontal rig count fell (2) to 919 and rises +129 above last year.
• Demand Trends: Total demand fell (2.6) bcf/d to +68.0 bcf/d. Power demand fell. Industrial demand rose. Res/Comm demand fell. Electricity demand fell (7,119) gigawatt-hrs to 79,597 which exceeds last year by +4,346 (5.8%) and exceeds the 5-year average by 722 (0.9%%).

The cooling season is now entering its final stretch. With a forecast through October 5 the 2018 total cooling index is at 5,568 compared to 4,779 for 2017, 5,483 for 2016, 4,322 for 2015, 3,420 for 2014, 4,807 for 2013, 7,205 for 2012 and 6,706 for 2011.

Shell CEO Considers New Natural-Gas Bet – WSJ -- Shortly after Ben van Beurden took over as chief executive of Royal Dutch Shell, he bet the company on natural gas, with a roughly $50 billion takeover of rival BG Group PLC and its global LNG business, focused on shipping the fuel around the globe.The acquisition, made at the depths of an energy price crash in early 2016, made Shell the world’s dominant competitor in LNG, and gave it a big position in the nascent business of delivering U.S. shale gas overseas.  Now he is preparing to double down. Mr. van Beurden said Tuesday that a consortium led by the Anglo-Dutch energy giant will decide before year-end whether to move forward with a $30 billion, liquefied-natural-gas export terminal in western Canada. “We postponed the decision previously when the project wasn’t ready in terms of economic fortunes,” he told The Wall Street Journal on the sidelines of the Oil and Gas Climate Initiative’s meeting in New York. “But there are only so many times you can postpone and recycle and revisit. The moment of truth will come in the next few months.” The export terminal is intended to gather cheap natural gas extracted from remote parts of western Canada, chill it to liquid form known as LNG and load the fuel into special tankers to transport it to Asia where it fetches much higher prices. Shell holds the largest stake in the project alongside partners PetroChina , Mitsubishi Corp. of Japan, Korea Gas Corp. and Malaysia’s Petroliam Nasional Bhd. .The Canadian LNG project could take five years to construct should the consortium move forward with its final investment decision, Mr. van Beurden said.  President Trump’s trade wars are having unintended consequences on another of Shell’s gas plays, however. Steel bound for a multibillion-dollar petrochemical plant that Shell is building outside of Pittsburgh was held by U.S. Customs and Border Protection at a California port in June after quotas for Brazilian steel were filled. Shell only received the steel recently after getting Mr. Trump to sign a presidential proclamation ordering the shipment released. The Pennsylvania chemical complex, which converts ethane extracted from the nearby Marcellus and Utica shales into polyethylene, a component of plastics, is ahead of schedule and within budget, Mr. van Beurden said. But there could be lengthy delays and added costs if steel parts ordered years ago are unable to be delivered. “It’s not fatal but it is something that can really disrupt the flow of construction and the continuity of employment and it can bring significant costs in the project itself if it is not managed properly,” he said. 

Natural Gas Surges Past $3 As Traders Focus On Low Storage Levels - We expect a +62 Bcf change in the storage report for the week ended September 21. A storage report of +62 Bcf would compare with +58 Bcf last year and +81 Bcf for the five-year average.  It doesn't matter until it matters. That's how one trader described the current natural gas set-up to us. For the natural gas bulls, the breakout above $3/MMBtu came on the heels of lower and lower injection estimates that pushed the natural gas storage forecast for the start of winter heating season to 3.27 Tcf. For the most part of the summer gas trading period, natural gas traders ignore the low EOS as elevated production levels kept the market amply supplied, but as one trader quipped to us this week, "It doesn't matter until it matters." Now that the injection season is just six weeks away from ending, natural gas traders are once again reassessing what the low storage means for natural gas fundamentals. For us, the increase in lower 48 production presented a bear case on fundamentals, but following our exit yesterday at the open due to a stop-loss being triggered, traders warned that the market may be re-pricing the trading band once again before the start of heating season. This comes at a time where natural gas storage is expected to finish at 3.27 Tcf at the start of November. And even though lower 48 production is just inches away from breaking above ~85 Bcf/d, the market does not care about that at the moment. Looking ahead, the market is going to become very volatile again with the weather models dominating a large part of the daily moves. For the time being, the ECMWF-EPS long-range outlook shows cooler than normal temperatures across lower 48 by the third week of October. This would give heating demand an early start and suppress natural gas storage builds even more. For now, we are not trading the market and will be waiting on the sidelines. Our current winter gas band is $2.50 to $3.50/MMBtu.

Survey calls for below-average US gas storage build — Analysts expect a natural gas storage injection of 61 Bcf to have been made last week, which would push the deficit versus the five-year average back above 600 Bcf as the typically larger builds of the shoulder season are not showing up this year.  According to a survey of analysts by S&P Global Platts, the US Energy Information Administration is expected to report the 61 Bcf build on Thursday morning for the week ended September 21. Responses to the survey ranged from builds of 55 Bcf to 71 Bcf. A 61 Bcf injection would be less than the 64 Bcf build in the corresponding week last year and less than the five-year average build of 81 Bcf. S&P Global Platts Analytics forecast larger builds over the next two weeks, but they still measure at or below the five-year average as only about seven more injections remain before the flip to withdrawal season. An injection within analysts' expectations of 61 Bcf would increase stocks to 2.783 Tcf. The deficit versus the five-year average would expand to 606 Bcf while the deficit versus last year would increase slightly to 675 Bcf. Warm weather returned after average US temperatures the week prior hit the lowest levels since at least June. The high volatility in temperatures -- particularly during the time of year when people fluctuate between heating and cooling their homes -- makes the offsetting errors in residential and commercial demand and gas-fired power generation difficult to nail down. The week also featured the effects of Hurricane Florence, which adds further difficulty in predicting this week's build as it could lead to an overestimation in demand by up to 300 MMcf/d, according to Platts Analytics. While most storage regions in the US sit below the five-year minimum, north of the border, inventory levels at the Dawn Hub in Ontario are on track to exceed historical maximums as early as mid-October. The arrival of incremental volumes reaching the Dawn Hub, primarily from TransCanada Pipeline Mainline and to some extent from Rover Pipeline and the impending startup of flows on NEXUS Gas Transmission, mean Dawn storage may be on track to not only enter October with higher-than-normal inventories but also to continue to see above-average injections through the end of the injection season.

Natural Gas Price Jumps After Small Storage Addition - The U.S. Energy Information Administration (EIA) reported Thursday morning that U.S. natural gas stockpiles increased by 46 billion cubic feet for the week ending September 21. Analysts were expecting a storage injection of around 62 billion cubic feet. The five-year average for the week is an injection of 81 billion cubic feet, and last year’s storage increase for the week totaled 58 billion cubic feet. Natural gas inventories rose by 86 billion cubic feet in the week ending September 14. Natural gas futures for November delivery traded up about six cents in advance of the EIA’s report, at around $3.02 per million BTUs, and rose to nearly $3.06 after the report was released. For the period between September 27 and October 3, NatGasWeather.com predicts “moderate” demand and offers the following outlook: High pressure will dominate the West and Southeast with highs of 80s and 90s. A cool front extends from the east-central US to the South, with heavy showers. A stronger cool front will push into the north-central US the next few days with lows of 30s and 40s, locally 20s. Much of the US will return above normal next week with highs of 80s to lower 90s over the southern US and upper 60s to lower 80s across the northern US. Locally cooler exceptions next week will be near the Canadian border.  Earlier this week the EIA reported that U.S. energy-related carbon dioxide emissions fell by 0.9% last year. That’s a drop of 476 million metric tons, from 5,189 million in 2016 to 5,142 million in 2017. The agency attributed the decline to a 1.1% drop in the carbon intensity of the nation’s energy supply, a 2% decline in energy intensity, and a 3.1% decline in overall carbon intensity of the U.S. economy. Carbon dioxide emissions have declined for seven of the past 10 years, and energy-related carbon dioxide emissions are now 14% below 2005 levels. Total U.S. stockpiles dipped week over week to 20% below last year’s level and fell to 18.3% below the five-year average. The EIA reported that U.S. working stocks of natural gas totaled about 2.768 trillion cubic feet at the end of last week, around 621 billion below the five-year average of 3.389 trillion cubic feet and 690 billion below last year’s total for the same period. Working gas in storage totaled 3.458 trillion cubic feet for the same period a year ago.

U.S. Rig Count Steady as Natural Gas Drilling Activity on the Rise -- The U.S. natural gas rig count climbed three units to 189 for the week ended Friday (Sept. 28) as a decline in oil drilling kept the overall domestic count steady, according to data from Baker Hughes, a GE Company (BHGE).The United States ended the week with 1,054 total rigs, with the three natural gas rigs that returned to the patch offsetting the exit of three oil rigs. The addition of one “miscellaneous” rig helped tip the balance, leaving the domestic tally up one unit week/week and up 114 rigs from 940 running a year ago.Three horizontal units were added to offset the loss of two vertical rigs. Land drilling saw a small net gain for the week as activity held steady in the Gulf of Mexico, which finished with 18 rigs (down from 22 a year ago).Canada’s rig count, meanwhile, saw a sharp decrease for the second straight week, falling by 19 units (13 oil and six gas) to 178, down from 213 active rigs in the year-ago period. The combined North American rig count ended the week at 1,232 rigs, versus 1,153 rigs a year ago, according to BHGE. Among plays, BHGE’s latest weekly report saw the prior week’s declines in the Cana Woodford quickly reverse, as the Oklahoma play picked up seven rigs to end at 67, beating its year-ago tally of 62. A detailed breakout of BHGE data by NGI’s Shale Daily shows the STACK (aka, the Sooner Trend of the Anadarko Basin, mostly in Canadian and Kingfisher counties) picking up six rigs, and the SCOOP (South Central Oklahoma Oil Province) added one rig for the week. Also among plays, the Haynesville Shale added two rigs to make it an even 50 (up from 44 a year ago), while the Denver Julesburg-Niobrara and Ardmore Woodford added a rig a piece. The Permian Basin -- the most active U.S. onshore play by far but also one dealing with some nasty basis differentials this shoulder season -- saw two rigs pack up for the week, dropping its count to 486 (385 a year ago). The Granite Wash dropped one rig to finish flat year/year at 13.

The Next Cycle of LNG Investments Is Set to Start - Royal Dutch Shell Plc and its partners are set to announce a final investment decision on their C$40 billion ($31 billion) liquefied natural gas terminal in western Canada as early as next week, Bloomberg reported Wednesday. This would be the first FID for a greenfield, onshore project since Corpus Christi LNG in May 2015, according to Fauziah Marzuki, an analyst at Bloomberg NEF. “We think 2019 could be the biggest year of LNG FIDs ever,” Nicholas Browne, an analyst with Wood Mackenzie Ltd., said by email. The decision may be the start of a wave of investments for major gas export projects after a supply glut and a price collapse forced the three-year hiatus. Booming demand growth means that 11 projects, including LNG Canada, are likely to receive FID by the end of 2019, according to BNEF. “The sanctioning of LNG Canada would mark a potential turning point in the LNG market, signaling the industry’s appetite to invest has returned,” Saul Kavonic, Credit Suisse Group AG’s director of Asia energy research, said by email. “Even new large scale greenfield projects are back on the agenda, after a dearth of project FIDs over the last few years.” LNG Canada’s decision was put off twice in 2016, but the outlook for LNG has brightened. Demand is expected to grow rapidly due to an uptick in consumption from Asian nations, led by China. The market, which had been oversupplied for the last few years, is seen flipping to a deficit as soon as 2022 absent new projects, according to Sanford C. Bernstein & Co. The LNG Canada investors -- Shell, Mitsubishi Corp., Malaysia’s Petroliam Nasional Bhd., PetroChina Co. and Korea Gas Corp. -- are set to make a final decision soon, and preparations are underway for an Oct. 5 announcement and event in Kitimat, British Columbia, the site of the proposed project, said people with direct knowledge of the activities, who asked not to be identified.

Is LNG impacted by the trade war? --- CNBC–video interview  -- Chinese and American tariffs haven't made an impact yet but supply side issues are more of a problem, explains Janet Kong of BP.

Canadian Shale Is Hitting The Wall  - Plunging Canadian prices have been depressing oil producers’ realized prices and revenues, even though the U.S. benchmark and the international Brent Crude prices have rallied year to date.But it’s not only oil sands producers that have been coping with wide price differentials between Canadian crude oil prices and WTI this year.Canada’s shale drillers have also started to facewidening differentials between the Canadian benchmark for light oil delivered at Edmonton and WTI, due to—unsurprisingly—insufficient pipeline infrastructure to transport the light oil to the market.The Edmonton sweet crude discount to WTI slumped to US$16 a barrel earlier this month—the widest spread since Bloomberg began compiling the data in June 2014.Not that Western Canadian Select (WCS)—the benchmark price of oil from Canada’s oil sands delivered at Hardisty, Alberta—has been doing any better. The WCS discount to WTI has been more than US$20 this year, and even US$30 at one point. This resulted in Canada Natural Resources saying in early August that it was allocating capital to lighter oil drilling and is curtailing heavy oil production as the price of Canadian heavy oil tumbled to a nearly five-year-low relative to the U.S. benchmark price.Higher oil prices this year have encouraged more Canadian light tight oil and condensate drilling and production, but takeaway capacity—the weakest link of Canada’s oil industry—is maxed and has already started to affect the realized prices of shale drillers, similar to the widening discount for Midland crude from the Permian in the United States.To be sure, Canadian shale producers are still making money, even with a wider discount, because WTI is now at $70 a barrel, analysts tell Bloomberg. Yet, signs have begun to emerge that a glut has started to pile up, as shale and condensate production has been growing when pipeline infrastructure has not.

'Dumbest Policy in the World': Report Details How Canada's Massive Fossil Fuel Subsidies Undermine Climate Action - "What's the dumbest policy in the world? Public cash for oil and gas!"That's according to Patrick DeRochie, Climate & Energy program manager for the Canadian group Environmental Defence, who wrote Monday about a new report that aims to shed light on the Canadian government's hundreds of millions dollars in subsidies to the fossil fuel industry."Actually, the final figure is likely much higher, but a lack of transparency from the federal government makes many subsidies to climate polluters difficult to quantify," DeRochie added, calling on the Canadian government to disclose just how much it's doling out to polluters. Public Cash for Oil and Gas (pdf), produced by the #StopFundingFossils coalition—which includes the International Institute for Sustainable Development (IISD), Environmental Defence, Climate Action Network, Équiterre, and Oil Change International—emphasizes that Canada's "handouts" of taxpayer money to oil and gas producers "undermine" actions that aim to address the human-caused global climate criss. Pointing to "strong evidence that the federal government's plan to meet Canada's 2030 climate target is 'highly inefficient' (Climate Action Tracker, 2018), necessitating greater efforts in the oil and gas sector," the report explains: On the supply side, fossil fuel companies are most likely to react to international market price signals, such as the current upward trend in the value of WCS, and to the option to claim deductions of several of their current and past expenses now and in the future as long as their activities are profitable. Subsidies serve to promote the production of fuels at the same time that carbon pricing and climate action programs and policies are designed to reduce demand. To put it another way, combining carbon pricing and fossil fuel subsidies is like trying to bail water out of a leaky boat. If you don't fix the leak (the subsidies) you are never going to fix the problem (growing GHG emissions from the oil and gas sector. While the report details hundreds of millions of dollars in tax breaks, fiscals supports, and direct grants for oil and gas production, it does not include the government's recent—and widely ridiculed—purchase of Kinder Morgan's Trans Mountain Pipeline.

Canada orders new regulatory review of Trans Mountain oil pipeline (Reuters) - The Canadian government on Friday directed its National Energy Board (NEB) regulator to conduct a new review of its application to nearly triple the capacity of the Trans Mountain oil pipeline, taking into account the impact of additional marine traffic. Expansion of the pipeline, which the government bought last month from Kinder Morgan Canada Ltd, has become a political liability for Prime Minister Justin Trudeau and Alberta Premier Rachel Notley, ahead of federal and provincial elections next year. Delays have frustrated Albertans, prompting Notley to withdraw from Trudeau’s national plan to curb carbon emissions. The NEB must report to cabinet within 22 weeks, Natural Resources Minister Amarjeet Sohi said in Halifax, Nova Scotia. Canada’s Federal Court of Appeal last month overturned the Liberal government’s 2016 approval for expanding the pipeline, which runs from Alberta’s oil heartland to the British Columbia coast. The timeline for the review, stretching to late February 2019, allows the government to potentially restart construction before the expected spring election in Alberta. Sohi declined to say when construction could resume. “We are not focused on election cycles. We are focused on what needs to be done right,” he said. Trans Mountain expansion faces opposition from the British Columbia government, environmental groups and some municipalities and aboriginal communities, who fear the impact of spills and expanding oil production. Canada’s oil producers say the expanded pipeline is critical to addressing bottlenecks that have led to steeply discounted prices for their crude. Sohi said the government would appoint a marine adviser to the NEB, and will ask the regulator to consider its actions to protect killer whales. The government will announce shortly whether it will appeal the appellate court’s decision to Canada’s Supreme Court, and how it will consult indigenous people

First Nations leader suggests moving Trans Mountain pipeline terminal to Delta — The national chief of the Assembly of First Nations says the federal government would find it easier to get the Trans Mountain pipeline built if it moves the route and the marine shipping terminal to avoid Indigenous communities that are oppose the project. Perry Bellegarde said many Indigenous communities believe in the need to diversify export markets for Canadian resources through work to transition to a clean energy economy. However, he acknowledged there are some communities along the coast, notably the Squamish First Nation and the Tsleil-Waututh Nation, that will never support the pipeline, which in its current format affects a marine terminal in the traditional territory of the Tsleil-Waututh, and would bring additional oil tankers through traditional waters of the Squamish. “So why not move (the terminal)? Why don’t you move it to Tsawwassen?” Bellegarde said in a wide-ranging interview Monday with The Canadian Press. “They’re not going to change their mind, so why not find a different outlet? It might take a little longer, but it’s a win-win-win.” Bellegarde said he spoke to chiefs who support of the idea of a terminal near Tsawwassen — but Tsawwassen First Nation Chief Bryce Williams said Monday he is not one of them. His community neither supports the pipeline nor the idea of moving the terminal to land that abuts his community, Williams said. In 2015, Alberta Premier Rachel Notley pushed the idea of the Tsawwassen terminal in Delta, B.C., arguing it might get more local support than the plan to expand the existing Westridge Marine Terminal in Burnaby, B.C. The latter would see another six or seven oil tankers each week try to navigate the tricky Burrard Inlet and Vancouver Harbour, while the Tsawwassen location poses environmental risks from those additional tankers to the Fraser River Estuary. 

Pemex Signs Landmark Offshore Deal -- Petróleos Mexicanos (Pemex) and a three-way joint venture (JV) have struck what is reportedly the first pre-unitization agreement (PUA) ever signed in Mexico. The two-year PUA that Pemex signed with the Block 7 Consortium – comprising U.S.-based Talos Energy LLC, Mexico-based Sierra Oil and Gas and UK-based Premier Oil Plc – clears the way for both parties to form a working group of legal and technical personnel, Talos said in a written statement Friday. The working group will share information tied to the JV’s offshore Zama discovery, located in Block 7 in the Southeast Basin in the Bay of Campeche, and Pemex’s neighboring Amoca-Yaxche-03 allocation, the company explained. The PUV “also sets a clear path for the signing of a Unit Agreement and Unit Operating Agreement in the event a shared reservoir is confirmed, as it establishes a defined process based on international practices to determine the resulting participation of each party in the potential overall development,” Talos stated Friday. On its website, Premier describes Zama-1 – drilled in 2017 – as a “world class oil discovery.” According to the company, initial estimates of the gross oil-in-place volumes for the Zama structure range from 1.2 to 1.8 billion barrels and the gross oil-bearing interval in Zama-1 exceeds 1,100 feet (335 meters). In addition, it states that estimated recoverable reserves – including volumes in Pemex’s neighboring block – range from 400 to 800 million barrels. 

UK Jails First Environmental Activists in 86 Years Over Fracking Protest --Environmental activists were sentenced to prison Wednesday for their anti-fracking demonstrations in northwest England.Roscoe Blevins, 26, and Richard Roberts, 36, were given 16 months in prison. Richard Loizou, 31, was given 15 months. The three were found guilty of public nuisance offense by a jury in August, The Guardianreported. A fourth protester, Julian Brock, 47, received a 12-month suspended custodial sentence. He pleaded guilty for the same offense at a separate hearing.In July 2017, the four men—also known as theFrack Free Four—climbed on top of trucks carrying drilling equipment in order to block the convoy from entering a fracking site in Lancashire operated by UK shale gas firm Cuadrilla Resources. The men camped on the vehicles for roughly 100 hours between and had supporters aiding them with food, water and blankets.Judge Robert Latham of Preston Crown Court ruled that the protests "caused costs and disruption" to Cuadrilla "but their other victims were the many members of public who were nothing to do with Cuadrilla," according to the BBC.While the judge noted that environmental matters are to be taken seriously, he believes that the men "provide a risk of re-offending.""Each of them remains motivated by unswerving confidence that they are right. Even at their trial they felt justified by their actions," he said. "Given the disruption caused in this case, only immediate custody can achieve sufficient punishment." The men are likely the first environmental activists in 86 years to receive jail sentences, the Guardian reported. Back in 1932, five men were jailed for their part in the mass trespass of Kinder Scout in Derbyshire over their "right to roam" on private land.

Fracking protesters saw public as collateral damage, says judge -- Three protesters jailed for causing “significant” disruption when they clambered on to lorries during a four-day protest outside a fracking site saw members of the public as “collateral damage”, a judge said.Judge Robert Altham told Simon Blevins, 26, from Sheffield; Richard Roberts, 36, from Putney, London; and Rich Loizou, 31, originally from Devon, they remained “motivated by unswerving confidence that they are right” about the perils of fracking.He explained he could not suspend the 16-month jail terms for Blevins and Roberts, and the 15–month sentence for Loizou, because the length of their stand-offs with police at Preston New Road in Little Plumpton, Lancashire, had “vastly increased” their culpability and the harm caused.They were all convicted by a jury of causing a public nuisance but a fourth defendant, Julian Brock, 47, from Torquay, did walk free from court after he pleaded guilty at an earlier hearing to the same offence and received a 12-month jail term, suspended for 18 months.The protest cost energy firm Cuadrilla an estimated £50,000 but the judge said it heavily impacted on local residents and businesses who depended on using the surrounding busy main road.Jailing the trio at Preston Crown Court, he said: “In this case the defendants caused costs and disruption to Cuadrilla but their other victims were the many members of public who were nothing to do with Cuadrilla… and were viewed by these defendants as necessary and justified collateral damage.”

Jailed anti-fracking activists release defiant video message --Three environmental activists jailed for their part in an anti-fracking protest have released a video message promising they will win the battle against fracking.The men became the first to receive a custodial sentence for environmental protests against shale gas extraction this week. Simon Roscoe Blevins, 26, and Richard Roberts, 36, were given 16 months in prison and Richard Loizou, 31, was sentenced to 15 months in jail on Wednesday after being convicted of causing a public nuisance by a jury at Preston crown court in August.In a message that has been released as the men wait in Preston prison to be moved to jails elsewhere in the country, Loizou said he would miss everything about his life outside while serving his sentence. But he added: “I think we will win, because this is a last-ditch attempt to squeeze the remaining fossil fuels from the earth. It is like industry clinging on to an old paradigm of the way things operate.” In the message, Roberts recounted his part in a four-day protest that blocked a convoy of trucks carrying drilling equipment from entering the Preston New Road fracking site near Blackpool. He said he was wearing shorts and a T-shirt when he climbed on to a truck, where he remained for four days. “The only reason I was able to stay up there for three days and nights was because local people handed up clothing, sleeping bags, food…”

German industry defends Nord Stream 2 gas pipeline Business --The Federation of German Industry (BDI) on Monday defended the controversial Nord Stream 2 project that will expand Russia's natural gas supplies to Germany while bypassing Poland and Ukraine.In July, US President Donald Trump accused Germany of being a "captive" of Russia due to its energy reliance and urged Berlin to halt work on the $11 billion (€9.4 billion), Russian-led gas pipeline to be built in the Baltic Sea."I have a big problem with a third country interfering in our energy policy," BDI President Dieter Kempf told the German daily Süddeutsche Zeitung on Monday, adding that establishing a link between dropping the project and buying US liquefied gas instead was unacceptable."German industry needs Nord Stream 2 to enhance energy supply safety," Kempf argued, saying that liquefied gas from the US was not competitive on the German market right now and would simply cost too much. German business leaders have frequently rejected charges of their country being too dependent on Russian energy. Kempf said Germany was open to diversifying its sources, but added that purchases "would ultimately be determined on economic grounds."Despite the current row, US companies said earlier this month they expected to begin delivering liquefied natural gas (LNG) to Germany in four years at the latest and would challenge Russia which now accounts for 60 percent of German gas imports. "US liquefied natural gas is coming to Germany — the question is not if, but when," Deputy US Energy Secretary Dan Brouilette told Germany's Bild newspaper in mid-September.

Analysis: Yamal LNG cargoes set to stay in Europe on high hub prices, firm shipping rates— LNG produced from Russia's Yamal LNG project look set to stay in Europe in the short term on the back of high European natural gas hub pricing allied to firmer shipping rates due to tight Atlantic tonnage, an analysis by S&P Global Platts Analytics showed. The key NBP October contract broke above the $10/MMBtu mark on Monday, the first time the rolling month-ahead contract had done so since March 2014, Platts data showed, slightly more than $1/MMBtu below the JKM November period. Atlantic basin spot shipping rates jumped at the end of last week, rising to $110,000/day in the Atlantic, as assessed by Platts, having been at $45,000/day this summer, making transporting LNG volumes from Europe to Asian markets much more expensive for players without sunk shipping costs. That was the highest the Atlantic shipping rate has been assessed since it hit similar levels in September 2013. With rates that high, delivery costs into Northeast Asia from Northwest Europe transshipment or reload ports have been hovering around the $3.50/MMBtu mark. Yamal project vessels are also unable to deliver further than the Spanish port of Bilbao when the North Sea Route is closed in the winter, increasing the likelihood that cargoes could remain in Europe. However, Yamal volumes could face competition from other Atlantic production for as long as the arbitrage to Northeast Asia remains closed. At current shipping rates, the netback for deliveries from Nigeria into the UK's NBP November contract stood at $9.341/MMBtu, while the netback against November JKM was $8.30/MMBtu, making deliveries into Northwest Europe more attractive.

Gina Rinehart-backed Lakes Oil loses bid to have Victorian fracking ban overturned   A company part-owned by Australian mining magnate Gina Rinehart has failed to have the Victorian government’s fracking ban overturned or to be awarded $2.7bn in damages. Between 2002 and 2013 two subsidiaries of Lakes Oil, of which Rinehart is the second-largest shareholder, obtained four exploration permits and two retention leases under Victoria’s Petroleum Act 1998. A retention lease grants the right to any petroleum discovered during the permit period. Some of the petroleum exploration intended by the Lakes Oil involved hydraulic fracking, a technique used to extract unconventional gas found in coal seams, shales and tight sandstones. The companies also planned to explore for conventional gas. In August 2012 the Victorian government announced a moratorium on hydraulic fracking with immediate effect, and this was implemented through government policy rather than through changes to the Petroleum Act. But in 2014 the government widened the moratorium to include conventional onshore exploration, and in 2017 amended the Petroleum Act to enforce the ban to 2020. Lakes Oil argued that the fracking ban did not prevent its subsidiaries from carrying out minimum work requirements to prepare for fracking once the moratorium was lifted. The permits applied to sites in south-western Victoria and Gippsland. Lakes Oil also argued the government’s moratorium before the 2017 legislative change was unlawful. The government should not have pre-emptively refused to consider or accept operation plans for petroleum gas exploration from Lakes Oil before the legislation had taken effect, the company argued. In its 2017 Annual Report, Lakes Oil asserted that the then resources minister was “with one hand, granting exclusive rights and obligations to carry out exploration operations but, with his other hand, taking away the means of doing so”. The damages Lakes Oil sought included $92m in past expenditure at the sites and $2.6bn of lost future earnings. But on Friday afternoon in Victoria’s supreme court Justice Cameron Macaulay rejected Lakes Oil’s claims. He found the legislation banned all petroleum exploration work, including preparatory work.

Charges laid over Darwin oil spill -- Charges have been laid against the master and the owners of a cargo ship, which is alleged to have spilled oil into Darwin Harbour in 2016. The Department of Environment and Natural Resources says the legal action follows a complex, two-year investigation of the incident which resulted in a large spill of heavy, dark fuel oil. The master of the cargo ship Antung has been charged with two counts of discharging oil into coastal waters, with failing to notify authorities and with failing to record the event in the oil record book. The owners of the vessel face two counts of discharging oil. "We will allege that the master and owners of the Antung caused or permitted oil to be discharged into Darwin Harbour as it was departing East Arm Wharf," the department’s director of environmental operations Peter Vasel said in a statement on Thursday. "In line with expert evidence no other vessel could have been responsible for the oil spill into Darwin Harbour on this particular day, and this will be laid out further in the Northern Territory Local Court." The department said the parts of the environment exposed to the oil included mangroves, intertidal mudflats and coastal zones that provided habitat for various marine and bird species such as turtles, mud crabs, spawning fish and the critically endangered Far Eastern Curlew. 

Shell CEO says $80 oil supports energy infrastructure investment, even as steel quotas raise costs -- The Trump administration's steel quotas present a challenge to building new oil and gas infrastructure in the United States, but rising crude prices help fuel investment, Royal Dutch Shell CEO Ben van Beurden tells CNBC.International benchmark Brent crude hit a nearly four-year high above $81 a barrel on Monday as the market braces for U.S. sanctions on Iran that threaten to wipe about 1 million barrels a day off the market. Brent's multiyear high came after OPEC, Russia and other oil producers declined to boost output to tackle rising prices. While van Beurden says the market is not running out of oil, he believes supplies are getting tight as crude stockpiles fall to normal levels after several years of oversupply and as oil producers get closer to pumping at maximum capacity.  Oil buyers typically lament rising prices, but van Beurden says $80 oil is not "unreasonable" and could benefit the market in the long run.  "I think we need to have slightly elevated prices, to bring new supply on, which is going to be the main challenge," van Beurden said in an interview with CNBC's Brian Sullivan."We should be able to balance the market at that sort of oil price level, but of course bringing on new production is not a short-term event," he said. "It takes years to bring on new production."Energy companies sharply pulled back capital spending in recent years during a prolonged oil price downturn. The lack of investment has raised concerns about supply shortfalls that will lead to another cycle of boom and bust for oil prices.Van Beurden said the Trump administration's decision to impose tariffs on steel and aluminum imports are "generally not a good thing." According to the CEO, quotas limiting imports of steel from Brazil, South Korea and Argentina are beginning to impede some of Shell's construction projects in the United States. However, he said the trade barriers have not forced Shell to cancel any future investments yet.

$11 Trillion Needed in Oil Sector to 2040 - In the period to 2040, the required global oil sector investment is estimated at $11 trillion. That’s according to the latest OPEC World Oil Outlook report, which was launched on September 23 in Algiers, Algeria. The report outlines that total required upstream capital expenditure related to oil amounts to $8.3 trillion. It is projected that downstream capacity additions will require another $1.5 trillion and midstream investments will require another $1 trillion of investment globally, according to the report. “Given the demand and supply outlook, there is evidently the need for significant investments across the entire industry,” Mohammad Sanusi Barkindo, OPEC secretary general, said in the report’s foreword. “While investments picked up slightly in 2017 compared to the previous two years, and the expectations are for higher levels again in 2018, it is vital that as an industry we ensure there is timely and adequate investment so as not to lead to a supply shortage in the future,” he added. Oil is expected to remain the fuel with the largest share in the energy mix throughout the forecast period to 2040, according to the report, which highlighted that there is no expectation for peak oil demand over the period. The report also outlined that demand for OPEC crude is projected to increase from 32 million barrels per day (MMbpd) in 2018 to around 40MMbpd in 2040 and that long-term oil demand has been revised upward for the second consecutive year, with total demand at over 111.7MMbpd in 2040. 

Asia's Oil Market Torrid Amid Iran Sanctions and Mega-Refineries (Bloomberg) -- When the Navarin, an oil supertanker carrying 2 million barrels of Middle East crude, docks at the Malaysian port of Pengerang on Monday, the arrival will signal the start of a torrid time for Asia's oil market. The ship is delivering the first cargo to a new mega-refinery, one of three scheduled to come on line in the region in the next few months. They'll add a total of 1.1 million barrels a day of processing capacity, enough to swallow the entire output of OPEC member Libya. The extra demand comes just as physical oil supplies are made scarcer by U.S. sanctions on Iran. "Refiners will have to buy whatever crude they can get their hands on," The first plant to start up is the 300,000 barrel-a-day Refinery and Petrochemicals Integrated Development, or Rapid, a venture between the state-owned companies of Saudi Arabia and Malaysia in Pengerang, less than 15 miles from Singapore. Rapid will be followed by two giant 400,000 barrel-a-day projects in China: Rongsheng Petro Chemical Co.'s plant in Zhejiang, and the Hengli Petrochemical Co.'s refinery in Dalian. The two refineries will come online between the first and second quarters of next year. All three refineries have started buying crude, both under long-term contracts and on the spot market, traders familiar with the matter said, asking not to be named because the information isn't public. In the process, they're helping to send premiums for low-quality, highly sulfurous oil -- known as heavy, sour crude -- in Asia sharply higher. It's exactly the type of oil Iran had supplied in abundance. On top of the new refiners, the Asian market is already contending with a plant that just came on-stream over the last few weeks after several delays: the 200,000 barrel-a-day Nghi Son Refinery and Petrochemical facility in Vietnam. The refinery is consuming a diet of mostly Kuwaiti crude. As oil refiners from India to South Korea scramble to find alternative supplies to Iranian crude, they are pushing up the prices of crudes that can substitute for lost shipments. For many in the physical trade in Asia, the regional market is on fire.

South Korea's Iranian crude imports tumble in August but more US barrels arrive— South Korea's crude oil imports from Iran tumbled in August with the November deadline for US sanctions on Tehran approaching fast, while shipments from the US and Algeria rose sharply as Seoul continues to seek alternative sources, industry officials said Thursday.  Asia's fourth-biggest energy consumer has imported 2 million barrels of crude from Iran last month, down 84.2% from 12.63 million barrels received a year ago, latest data from state-run Korea National Oil Corp. showed.This marks the 10th consecutive decline since November last year when imports from Iran fell 26.8% year on year to 10.37 million barrels. The August imports were also down 67.7% from 6.2 million barrels received in July.The August shipment of 2 million barrels was the smallest monthly import volume since December 2015 when South Korea received 1.78 million barrels from the Persian Gulf producer during the previous US-led sanctions on Tehran.Over January-August, Iranian imports fell 42.1% year on year to 58.2 million barrels, compared with 100.44 million barrels in the year-ago period. Following the US decision to re-impose sanctions on Tehran in May, South Korea has since been trying to pare back crude oil shipments from Iran in a bid to secure US exemption.  In order to make up for the loss of Iranian barrels, South Korean refiners and petrochemical companies have sharply increased their feedstock intakes from the US and Algeria.South Korea's imports of US crude jumped almost sixfold to 7.31 million barrels in August, compared with just 1.28 million barrels a year ago, which made the US South Korea's fourth-biggest crude supplier last month overtaking traditional Middle Eastern sources such as the UAE, Iran and Qatar. South Korean end-users' US crude purchases mostly consisted of light sweet grades like WTI Midland, Bakken, Eagle Ford crude and condensate.South Korean refiners seem to have purchased more US condensate in August to help fill the loss of Iranian South Pars condensate supply, industry sources said.

Russia's Biggest Oil Producers Enjoy Record Production and Ruble Rally -- Russia’s oil and gas companies are living through the best of times, simultaneously enjoying record production and the highest prices ever in the local currency. An index of the companies this month hit an all-time high in rubles and reached levels not seen since June 2014 in dollars. Russian crude producers are raking in cash as the rally in dollar-denominated oil prices is amplified by a weakening ruble, helping the industry achieve record-breaking revenues and shrink debts. But there’s a cloud on the horizon. There’s a risk that the U.S. could toughen sanctions on Russia in connection with this year’s chemical weapons attack in the U.K or continued allegations of election interference. "All investors are asking themselves -- OK, the Russian companies look attractive right now, but what about the next six months, what about the next 12 months?" said Alexandre Dimitrov, head of Emerging Europe EQ Funds at Erste Sparinvest Kap Mbh. "Everyone is looking at November, when we have mid-term U.S. Congress elections and the new sanctions against Russia." An agreement between the Organization of Petroleum Exporting Countries and its allies in June to relax output curbs has allowed Russian oil companies to resume production growth. They’re doing it so actively that the industry is said to have set a new post-Soviet record this month. 

Russia says it has 'significant potential' to hike oil production after Iran sanctions -- Russia stands ready to hike its oil output after the implementation of U.S. sanctions on Iran, the country's energy minister told CNBC on Sunday.President Donald Trump's administration is set to impose fresh sanctions on Iran targeting the country's crude industry on November 4. The U.S. is reimposing sanctions on the Middle Eastern nation as part of its withdrawal from the 2015 Iran nuclear deal."I don't think we can discuss the exact number at this point but what I can tell you for sure is that we have significant potential to increase our production," Russian Energy Minister Alexander Novak told CNBC's Steve Sedgwick at the Joint Ministerial Monitoring Committee (JMMC) in Algiers on Sunday. "So we can restore production to October 2016 levels and we cannot go above that but we would be looking at the overall supply-demand balance before we take any decisions." Earlier in the month, Novak criticized U.S. sanctions on Iran as "unproductive" and "wrong," and said there "will be consequences." Companies that rely on access to Iran's oil market have been steadily cutting off their buying of Iranian crude as the State Department has warned firms to cease purchases by early November. Europe has been calling for concessions to exempt certain industries from the wide-ranging levies. But U.S. Secretary of State Mike Pompeo and Treasury Secretary Steven Mnuchin have rejected these pleas, saying the sanctions are aimed at maximizing economic pressure on Iran..

Russia Looks to Shore Up New Role as Oil Heavyweight – WSJ - Since joining forces two years ago with Saudi Arabia and other members of the Organization of the Petroleum Exporting Countries, Russia has helped the group re-establish its once-powerful hold on global oil prices. The cartel for decades has raised or lowered output to balance supply and demand, and support prices. That hold was challenged several years ago, when U.S. shale flooded global markets, sending prices hurtling. OPEC, which pumps more than one of every three barrels the world consumes, appeared powerless to lift markets. That is, until it enlisted Russia and a group of non-OPEC producers including Azerbaijan and Mexico to join in output cuts two years ago. “It has been a surprise to see Russia up there, shaping the oil markets, but changing times are resulting in new alliances and new leaders,” said Andrew Lipow, a veteran oil analyst in Houston. “The Russians are using their diplomacy and their swing production capacity to keep prices high.” In June, the same group opened up the spigot again, adding production to keep prices from getting too high. Russia took on a key negotiating role across from Saudi Arabia. Of the 600,000 barrels a day of new crude that OPEC and the Russia-led group agreed to pump, about 200,000 barrels has come from Russia. That Russia was so quickly able to add production—and theoretically shut it all off again—lifts Moscow’s credibility as a global oil markets heavyweight, a role it hasn’t held for decades. Saudi Arabia, which exports far more than any other country, is still essentially the central bank of oil, but Russian oil policy now matters to the rest of the world.

Iran Truck Drivers Go On Strike, Crippling Oil Infrastructure - Oil truck drivers in Iran have started a new strike demanding improved working conditions, and the industrial action has resulted in large lines forming at gasoline stations in Iran, The Middle East Monitor reports, quoting the Anadolu Agency and local media. The strike is the second that truck drivers in Iran have staged this year, after a prolonged strike actionin May in which they protested against rising costs for insurance, repairs, spare parts, and tolls, while their wages were stagnant. Back in May, the government has reportedly agreed to raise the pay for truckers by 15 percent, VOA reported. According to The Middle East Monitor, nothing has been done yet to meet the truckers’ demands from May.The latest industrial action by oil truckers in Iran comes less than two months after the first set of U.S. sanctions on Iran snapped back, and just six weeks before the second round of sanctions, including on Iran’s key revenue source—oil exports—kick in. Over the past few months, Iran’s economy has faltered, and its currency, the rial, hit a new low this week against the U.S. dollar on the unofficial exchange rate. According to data compiled by U.S. economist Steve Hanke of Johns Hopkins University, Iran’s annual inflation rate as of Monday was 293 percent—an all-time high. The economic hardships are causing a surge in the price of goods, including diapers. Shortages of goods also abound, with Iranian authorities conducting raids to confiscate illegal hoards of rare and costly items such as diapers.   The sanctions on Iran’s oil are now expected to remove more than 1 million bpd from the oil market, compared to earlier projections of around a 500,000-bpd loss, before the United States started to show signs that waivers would be given sparingly, if at all. Although Iran’s oil exports are unlikely to drop to zero, they could halve to 1 million bpd-1.3 million bpd, Ben Luckock, co-head of oil trading at commodity trader Trafigura, told S&P Global Platts this week.

Iran sends out ghost tankers as US oil sanctions loom - A supertanker called Happiness is carrying 2m barrels of trouble for Iran. The crude vessel filled up at a terminal operated by Iran’s national oil company on Kharg Island at the start of this month, before setting off on a journey for Asia, according to ship tracking data. But it was sailing into a global market where Iranian oil is acquiring pariah status. When Happiness I — its official name — exited the Strait of Hormuz the tanker turned off the system that allows traders to track its movements. As the US prepares to reimpose sanctions on Tehran’s energy sector in November, the vessel joins a fleet of ghost ships that symbolises the pressure growing on Iran to hide the identity of its buyers. Following President Donald Trump’s withdrawal from a nuclear deal Iran signed with world powers, he is seeking to cripple the Iranian economy with sanctions that impose severe financial penalties on any party involved in trading its crude. Iran cannot easily abandon the lucrative export business that generates much needed government revenues. There are growing signs of the country reverting to an old playbook of selling in secret. Happiness I is one of at least seven tankers carrying Iranian oil that are no longer broadcasting their position. The tanker “has not sent a signal since” turning off its transponder on September 16, said Matt Smith, director of commodity research at ClipperData, which is tracking the vessels filled with Iranian oil.

EU and Iran agree on new payment system to skirt US sanctions -- In a major snub to the United States, the European Union has decided to set up a new mechanism to enable legal trade with Iran without encountering US sanctions. The EU will create new payment channels to preserve oil and other business deals with Iran, Federica Mogherini, the bloc's foreign policy chief said late on Monday, in a bid to evade US punitive measures.US President Donald Trump withdrew from a 2015 nuclear deal in May and re-imposed sanctions on the country. Mogherini's announcement came after a meeting with foreign ministers from Britain, France, Germany, Russia, China, and Iran on the sidelines of the United Nations General Assembly in New York. "In practical terms this will mean that EU member states will set up a legal entity to facilitate legitimate financial transactions with Iran and this will allow European companies to continue to trade with Iran in accordance with European Union law and could be open to other partners in the world," she told reporters after the closed-door meeting. The EU, along with Russia and China, said in a joint statement that the so-called "Special Purpose Vehicle" will "assist and reassure economic operators pursuing legitimate business with Iran". The statement added that the six countries signatory to the 2015 nuclear agreement "reconfirmed their commitment to its full and effective implementation in good faith and in a constructive atmosphere".

Trump's Blow to Iranian Oil Sparks Curious Price Divergence -- The relationship between two major oil benchmarks is charting an unexpected course as U.S. sanctions take Iranian crude out of the market. As demand for alternative Middle Eastern supply increases, regional marker Dubai crude has reason to strengthen. Yet it’s weakening against London’s Brent -- an oil grade with very different chemical characteristics that’s used to price barrels from Europe to Africa. Brent’s gaining more because futures and derivatives linked to it are accessible to an array of financial investors and traders via a highly liquid market, compared with relatively niche over-the-counter and clearing-house platforms for Dubai. So broader concerns over a potential supply crunch are being reflected to a greater extent in the London marker. “With the disappearance of Iranian oil, Dubai should be stronger but Brent is outperforming,” said John Driscoll, the chief strategist at JTD Energy Services Pte. “Speculators such as funds, index managers, traders and even oil majors could be taking positions in the Brent complex that includes physical and derivative instruments. If you’re going to play big, this is the market to do it.” Investors’ bullish bets on Brent have risen more than 35 percent over the past month in the lead up to the U.S. renewal of sanctions on Iran’s crude exports, according to ICE Futures Europe exchange data. Prices are up about 40 percent in the past year and are near $80 a barrel. While U.S. measures targeting Iranian exports will go into effect only on Nov. 4, the impending restrictions are already succeeding in forcing buyers to curb purchases. That’s creating demand for similar-quality medium- sour crudes, which have a relatively high sulfur content and lower API gravity. Dubai has traditionally been the benchmark for such supply. 

Hedge funds bet on shortage of Brent oil: Kemp (Reuters) - Hedge fund managers made only minor adjustments to their overall position in petroleum futures and options in the latest week but continued their rotation out of West Texas Intermediate into Brent. Hedge funds and other money managers raised their combined net long position in the six most important petroleum contracts by just 3 million barrels to 1.049 billion barrels. Fund managers boosted their net position in Brent (+28 million barrels) and U.S. gasoline (+4 million) but cut positions in U.S. heating oil (-4 million), European gasoil (-9 million) and WTI (-16 million barrels). Diverging attitudes towards Brent and WTI have become the most notable short-term trend among hedge funds (https://tmsnrt.rs/2xBIs4T ). Portfolio managers have boosted their net position in Brent by 143 million barrels in the last four weeks, an increase of 44 percent, including by 51 million barrels in the two most recent weeks. At the same time, fund managers have trimmed their net position in NYMEX and ICE WTI by 44 million barrels in the last fortnight. Hedge funds hold nearly 16 bullish long positions in Brent for every bearish short one, up from a ratio of 6:1 at the end of May, and far ahead of the ratio of 9:1 in WTI. Fund managers are betting the introduction of sanctions on Iran will result in a shortage of seaborne crude on international markets even while the landlocked U.S. inland market remains plentifully supplied.

OPEC raises forecast based on US oil production - The OPEC oil cartel raised its global production forecast this weekend based on higher-than-predicted US output in a report outlining a long-term rise in net demand, particularly in developing countries. In its annual World Oil Outlook, the Organisation of Petroleum Exporting Countries forecast world supply of all hydrocarbons (primarily oil and liquified natural gas) would rise from a current 98.4 million barrels per day (mbd) to 104.5 million by 2023, and 111.9 million by 2040. The figures are higher than last year's forecast, with rising production in non-cartel states led by the United States a major factor. Non-member production overall is forecast to rise by 8.6 mbd to 66.1 mbd by 2023 on higher global demand, the report added, but a relative tapering off from 2020 will see cartel members' crude production shrug off a medium-term trend fall, OPEC predicted. The body said demand would continue rising despite electric-powered vehicles taking an increasing market share and political moves to champion renewable energy. Even so, OPEC predicted a dip in demand growth between 2035 and 2040. While viewing high demand as healthy, the organisation noted that the trend was fuelled by developing countries undergoing major demographic and general economic expansion. In contrast, OPEC said demand for oil in OECD countries would fall from the early 2020s, but would still be the number one source of energy through to 2040. 

Saudi Arabia Worries Oil Crunch Could Push Up Prices -—Saudi Arabia is running low on its most prized grade of crude, people familiar with the matter said, a development that could push oil prices higher. After coming under pressure from the Trump administration over rising oil prices, Saudi Arabia is set to use an oil-producers’ summit in Algiers on Sunday to reassure oil markets that it can fill any shortages that arise as U.S. sanctions restricting Iranian oil sales begin in November. But state-run oil giant Saudi Arabian Oil Co., known as Aramco, is telling potential buyers that its most highly prized crude will be in short supply in October after it underestimated the demand in advance of Iranian sanctions. And in the longer term, officials estimate Aramco wouldn’t have the capacity to meet future demand if Iran is no longer delivering oil, according to people familiar with the matter. The scarcity could push prices above $80 a barrel, potentially putting a strain on U.S. consumers as they decide whether President Trump’s Republican Party will remain in control of both houses of Congress in November’s midterm elections.With the combination of Iran sanctions and Saudi Arabia’s supply limitations, “we are heading to a price spike, likely $90 to $100” per barrel, one oil trader said. “It’s not just Iran that will suffer. It’s going to have a boomerang effect with rising gasoline prices” in the U.S. Aramco’s Arab light crude has been in high demand from buyers ahead of Iran sanctions, one potential buyer said he was told this week, and as a result, supplies have been fully allocated for October. The buyer says he was offered Aramco’s less popular medium and heavy oil.

Putting a dollar value on one of oil’s biggest subsidies: military protection-  Vox - One of the pretenses of right-wing energy policy is that conservatives support a “level playing field,” upon which energy sources can compete without subsidies. Let the market decide!  As I have written many times, this is a juvenile notion. Markets are powerful tools for directing private capital and innovation, useful in the right circumstances. But the idea that there ever has been, or ever can be, an open, unbiased, “free” market for energy sources is a fantasy that should stay in the college library with the Ayn Rand novels. It is analytically inert; it does nothing to illuminate whether current markets are working or help us decide how best to use markets to serve our greater goals. The fundamental reason the “free market” ideal is unhelpful in energy is that it’s impossible to ever truly settle what is and isn’t a market-distorting subsidy. Some subsidies, like explicit cash grants or tax breaks, are easy enough to identify, but beyond that there is a whole complex world of implicit subsidies.If an energy source has negative impacts that are not incorporated in its market price (negative “externalities,” in the jargon), that means other people are paying for those impacts. The source is implicitly subsidized.Here’s the thing: Every energy source and energy industry has both positive and negative externalities. Deciding which ones “distort markets,” which ones count as implicit subsidies (or implicit taxes) virtually always comes down to a subjective judgment.And the implicit subsidies dwarf the explicit subsidies, so arguing about the latter while unable to agree on the former is uniquely pointless. In practice, most political disputes over subsidies just end up obscuring values-based arguments about what kind of future we want behind a veil of pseudo-objective economic jargon. One’s own favored energy sources receive commonsense support; the other side’s energy sources are on corporate welfare. And so it goes. Various oil subsidies that oil fans don’t consider subsidies. (OSI) This week brought an excellent example, in the form of a new paper from Securing America’s Future Energy (SAFE), a clean-energy advocacy group composed of retired military and business leaders. It attempts to put a number on one of the great, neglected implicit subsidies for oil: the costs to the US military of defending oil supplies, everything from guarding shipping lanes to maintaining troop commitments in key oil-producing nations.The number, it turns out, is high: $81 billion a year at the low end, which is almost certainly conservative.But is that a subsidy for oil? It is certainly one way oil dependence has shaped the country, its history, and its institutions — one of countless ways — but does putting a dollar figure on it and calling it a “market distortion” clarify anything or convince anyone? We will ponder those questions in a moment, but first, a quick look at the study.

Analysis: Saudi Arabia's untested claims of spare capacity may be put to the test — Saudi Arabia has tried to dispel any fears of a coming supply squeeze by touting its spare production capacity. The kingdom says it holds the ability to pump 1.5 million b/d above its current output of some 10.4 million b/d -- crude that could be needed with US sanctions set to cripple Iranian supplies starting in November and Venezuela continuing on its economic freefall. But many market watchers are skeptical that Saudi Arabia has the full amount of its claimed spare capacity actually available, casting doubt on whether OPEC's largest producer can prevent a price spike from a supply shortage. The country, OPEC's largest producer by far, has never produced above 10.7 million b/d and state oil company Aramco has not allowed a full audit of its capabilities to be made public. "If we define spare capacity as available in 30 days and sustainable and definitely without reserve damage, which is our definition, then we think there is well below 1.5 million b/d today," said Bob McNally, president of consultancy Rapidan Energy. The US Energy information Administration, using the definition described by McNally, estimates that all 15 of OPEC's members hold a combined spare production capacity of 1.42 million b/d. Other assessments are more generous. The International Energy Agency defines spare capacity as production that can be "reached within 90 days and sustained for an extended period." As such, it estimates Saudi spare capacity at 1.62 million b/d and total production capacity at 12.04 million b/d. The figures are being closely watched, as 1 million b/d or more of Iranian crude could be shut in by US sanctions and Venezuela's production is expected to decline by some 300,000 b/d by the end of the year, according to some forecasts. Even if Saudi Arabia and other producers are able to offset those losses, their ability to respond to any other market disruptions would be severely limited. "If Saudi production enters uncharted territory in Q4 18, markets could react nervously, especially if further supply outages take place," Saudi energy minister Khalid al-Falih insisted that Saudi Aramco is able to produce 12 million b/d at will, and once negotiations with Kuwait are complete, fields in the Neutral Zone shared by the two countries could add another 500,000 b/d. "Show me the customer that needs [oil] and I assure you we will bring the production that is needed," he said. Already the kingdom's output in September will be higher than August's 10.4 million b/d, he said, and October "will be even higher." If Saudi Arabia is unable to pump the volumes needed, it will have to draw barrels from storage. Domestic inventories have been falling sharply in the past year, with Saudi crude stocks in July standing at 229 million barrels, the lowest since October 2009, according to figures the country reported to the Joint Organizations Data Initiative. But Falih said Saudi Arabia has been building crude inventories in Aramco storage tanks in Japan, Egypt and the Netherlands to better address customer needs, though he did not provide any statistics.

OPEC, Russia rebuff Trump's call for immediate boost to oil output  - (Reuters) - OPEC’s leader Saudi Arabia and its biggest oil-producer ally outside the group, Russia, ruled out on Sunday any immediate, additional increase in crude output, effectively rebuffing U.S. President Donald Trump’s calls for action to cool the market. “I do not influence prices,” Saudi Energy Minister Khalid al-Falih told reporters as OPEC and non-OPEC energy ministers gathered in Algiers for a meeting that ended with no formal recommendation for any additional supply boost. Benchmark Brent oil LCOc1 reached $80 a barrel this month, prompting Trump to reiterate on Thursday his demand that the Organization of the Petroleum Exporting Countries lower prices. The price rally mainly stemmed from a decline in oil exports from OPEC member Iran due to fresh U.S. sanctions. “We protect the countries of the Middle East, they would not be safe for very long without us, and yet they continue to push for higher and higher oil prices! We will remember. The OPEC monopoly must get prices down now!” Trump wrote on Twitter. Falih said Saudi Arabia had spare capacity to raise output but such a move was not required at the moment and might not be needed next year as, according to OPEC’s projections, a stellar rise in non-OPEC production could exceed global demand growth. “The markets are adequately supplied. I don’t know of any refiner in the world who is looking for oil and is not able to get it,” Falih said, adding that Saudi Arabia could raise output by up to 1.5 million barrels per day (bpd) if needed. “Given the numbers we saw today, that (an output increase in 2019) is highly unlikely unless we have surprises on the supply and demand,” Falih added. The statement from Trump, meanwhile, was not his first criticism of OPEC. Higher gasoline prices for U.S. consumers could create a political headache for Republican Trump before mid-term congressional elections in November. Iran, OPEC’s third-largest producer, has accused Trump of orchestrating the oil price rally by imposing sanctions on Tehran and accused its regional arch-rival Saudi Arabia of bowing to U.S. pressure.

Pressed by Trump, OPEC Fears Oil Glut’s Return – WSJ - Crude rose to $80 a barrel days after President Trump chastised OPEC delegates in a tweet about “higher and higher oil prices.” But in the aftermath of the cartel’s gathering in Algiers this past weekend, Mr. Trump—along with the rest of the world—may have to live with somewhat high prices. That is because producers are expressing a new worry: fear of a glut. If the Organization of the Petroleum Exporting Countries and its nonmember allies including Russia pump too much oil into the marketplace to make up for expected shortfalls from coming sanctions on Iran, those actions could bring back the same oversupply problem the cartel just conquered in April. Many in OPEC also fear it could also expose the real limitations of the group’s production capacity. At the Algiers meeting, OPEC decided not to act—committing only to hold output caps steady. Most OPEC delegates don’t want prices above $80 a barrel, one OPEC official said. But the group “is worried about over edgingsupply” because it expects demand for its oil to fall in the first half, he added. The reason for this cautious attitude, according to people who attended the consultations over the weekend, is mounting concern that Iranian oil losses may be offset by lower demand for the cartel’s oil early next year. During the meeting, the group’s secretariat gave a gloomy picture of the first quarters of 2019. .With consumption weaker than expected because of economic uncertainty and U.S. shale production still rising, the group also sees demand for its own oil declining sharply in the first half in 2019, OPEC secretariat officials told delegates. Data from the group’s latest report show the world will need 600,000 barrels a day less of its crude in the first half of 2019 than it pumped in August. The International Energy Agency, which advises energy consumers and tends to have a more optimistic view of OPEC’s requirements, sees demand for its crude falling by 100,000 barrels a day during the same period. From its data, OPEC drew a clear warning to delegates: “If you start ramping up too fast, the glut could return,” one attendee said, raising fears of a new price crash.

Brent crude surges to $80.72/b after OPEC fails to reassure market; WTI at $72.09/b— Crude oil futures continued to surge during the European morning session Monday, approaching the highs of late 2014, with the market questioning whether OPEC and its partners have done enough to keep the market well supplied and with impending Iranian sanctions still spurring sentiment. At 1024 GMT Monday, the November ICE Brent crude futures contract was up $1.92/b from Friday's settle to $80.72/b, while the NYMEX November light sweet crude contract was up $1.31 at $72.09/b. The last time the front-month ICE Brent contract crossed $80/b during intraday trading was in late May, data from S&P Global Platts showed. The front-month contract was last assessed higher at the 16:30 London time close on November 12, 2014, when it reached $81.16/b. "This is the oil market's response to the 'OPEC+' group's refusal to step up its oil production," analysts at Commerzbank said in a note Monday. OPEC and its non-OPEC partners gathered in Algiers over the weekend for a meeting of their Joint Ministerial Monitoring Committee, although talk of keeping the market well supplied remained thin on detail. US President Donald Trump called on OPEC to help curtail the rise in oil prices in a tweet last week. Saudi energy minister Khalid al-Falih said Sunday that the oil market is balanced, thanks to efforts by OPEC and its partners in boosting production over the last few months. "Whatever takes place between now and the end of the year in terms of supply changes will be addressed," he told reporters. "The market is reasonably steady, and we should just be dynamic and responsive and responsible." Further output increases could be seen, though he declined to commit to any explicit volumes nor to any firm timeline.

Oil prices at highest levels in 4 years after OPEC says it won't raise output - Oil prices were at their highest levels since 2014 in trading Monday, after the Organization of Petroleum Exporting Countries decided not to raise output. In a meeting Sunday in Algiers, OPEC rejected U.S. President Donald Trump's call to open the taps, with both Saudi Arabia and Russia saying they won't produce significantly more oil. For consumers, that could mean higher gas prices on the way, but it's good news for Canadian oil producers. On Monday morning, Brent crude, the main European futures contract, rose 3.3 per cent to $81.42 US a barrel at the close of trading. WTI crude, the benchmark North American contract, was up 2.1 per cent at $72.26 US a barrel. Those are the highest prices since December of 2014, just before oil began its slide that took it down to $40 US a barrel in 2015, discouraging investment in the oil patch. Oil prices have risen 20 per cent this year alone, pushing up the cost of gasoline and home heating oil. JPMorgan predicts they will go even higher, perhaps above $90 US a barrel, in the near term. U.S. sanctions against Iran, the OPEC member that most wants to boost production, take effect Nov. 1 and could further tighten supply. But Todd Hirsch, chief economist at ATB Financial, says he believes the price spike is short-term and could sink back by the end of the year. "It's a bit of concern over global supply," he told CBC News. "I don't think it will stay in that range for long."

Oil rises as markets tighten ahead of Iran sanctions -- Oil prices jumped more than 2 percent to a four-year high on Monday after OPEC declined to announce an immediate increase in production despite calls byU.S. President Donald Trump for action to raise global supply.Benchmark Brent crude hit its highest since November 2014 at $80.94 per barrel, up $2.14 or 2.7 percent, before easing back to around $80.65.U.S. light crude was $1.25 higher at $72.03."This is the oil market's response to the OPEC+ group's refusal to step up its oil production," said Carsten Fritsch, commodities analyst at Commerzbank in Frankfurt.OPEC leader Saudi Arabia and its biggest oil-producer ally outside the group, Russia, on Sunday ruled out any immediate extra increase in output, effectively rebuffing a call by Trump for action to cool the market."I do not influence prices," Saudi Energy Minister Khalid al-Falih told reporters as OPEC and non-OPEC energy ministers gathered in Algiers for a meeting that ended with no formal recommendation for any additional supply boost.Trump said last week that OPEC "must get prices down now!", but Iranian Oil Minister Bijan Zanganeh said on Monday OPEC had not responded positively to Trump's demands."It is now increasingly evident, that in the face of producers reluctant to raise output, the market will be confronted with supply gaps in the next 3-6 months that it will need to resolve through higher oil prices," BNP Paribas oil strategist Harry Tchilinguirian told Reuters Global Oil Forum.Commodity traders Trafigura and Mercuria said on Monday that Brent could rise to $90 per barrel by Christmas and pass $100 in early 2019, as markets tighten once U.S. sanctions against Iran are fully implemented from November. J.P. Morgan said U.S. sanctions on Iran could lead to a loss of 1.5 million bpd, while Mercuria warned that as much as 2 million bpd could be knocked out of the market.

JP Morgan sees Brent at $85 by Q4 -- CNBC–video interview --Oil markets are tight due to a combination of geopolitical risk and supply-side issues, according to Abhishek Deshpande of J.P. Morgan.

Lower for Longer's Days May Be Numbered  -- The commitment to live with "lower for longer" oil might not last that long after all. The ubiquitous mantra during life after the price crash hasn't been uttered once this quarter on analyst or earnings call for 22 major energy companies, according to a Bloomberg analysis of company transcripts. That's the first time since early 2015, shortly after the phrase was coined. Its demise, not surprisingly, coincides with a rally to the highest in almost four years as production cuts, geopolitical tensions and U.S. infrastructure issues drained a global glut. The disappearance, though certainly a frivolous detail, underscores something serious about the oil industry. It's suffered more than a century of boom and bust cycles and "lower for longer" was a promise that this time executives had learned their lessons and would keep spending in check to survive, or even thrive, at reduced prices. After cratering below $28 a barrel in early 2016, prices of global benchmark Brent have rallied, recently popping back above $80 as fresh sanctions on Iranian crude loom and members of OPEC hesitate to increase output. Leaders of top oil traders Trafigura Group and Mercuria Energy Group Ltd. said Monday at an energy conference in Singapore that within the next few months prices could rise to $100 a barrel for the first time since 2014. Trafigura's co-head of oil trading, Ben Luckock, called the end of the lower-for-longer period at the same conference last year and said Monday that he's been proven correct. "Is the era of "˜lower for longer' over? I think it is,'' Luckock said. "It's really now just a question of how high do we go, and what does that mean and when does it happen." The saying appears to be first used by Total SA's Chief Executive Officer Patrick Pouyanne in October 2014, when Brent was trading at $87 a barrel: "So to share the situation today, it is clearly not business as usual," he said in the French firm's quarterly earnings call. "And in the event that oil prices remain lower for longer, we'll have to adapt."  

Oil demand remains high despite tariff woes: S&P Global Platts --- CNBC–video interview - Oil demand is unlikely to be impacted by trade tariffs, unless they spur a wider economic downturn, according to Martin Fraenkel, President at S&P Global Platts.

Return of $100 Oil Seen by Top Traders  -- Major oil trading houses are predicting the return of $100 crude for the first time since 2014 as the market braces for the loss of Iranian supplies because of U.S. sanctions.  Mercuria Energy Group Ltd. co-founder Daniel Jaeggi said prices may spike to over $100 a barrel in the fourth quarter because the market doesn’t have much capacity left to replace more than 2 million barrels a day of Iranian exports that could be lost to sanctions. Trafigura Group co-head of oil trading Ben Luckock sees $90 oil by Christmas and $100 in early 2019.  Key Takeaways:

• Such a price rally would mark the first time since the summer of 2014 that oil would return to the $100-a-barrel level that became the norm in the early part of this decade.
• Such prices made oil companies like Exxon Mobil Corp. the world’s most valuable firms and spurred investment in risky billion-dollar oil projects.
• The talk of $100 crude comes just hours after OPEC and its allies rebuffed pressure from U.S. President Donald Trump to immediately boost production to lower oil prices.
• It could prompt Washington to consider extraordinary measures, including the use of the Strategic Petroleum Reserve, to cool down fuel prices ahead of the U.S. mid-term elections.

“The market does not have the supply response for a potential disappearance of 2 million barrels a day in the fourth quarter,” Jaeggi said in a speech at the S&P Global Platts Asia Pacific Petroleum Conference (APPEC) in Singapore. “In my view, that makes it conceivable to see a price spike north of $100 a barrel.” When Trump in May announced plans to reimpose sanctions on Iran’s oil exports, the market estimated a cut of about 300,000 to 700,000 barrels a day, according to Trafigura’s Luckock. However, the consensus has now moved to as much as 1.5 million barrels daily as the U.S. is “incredibly serious” about its measures, he said.“It’s going to be significantly less than it was, and probably lower than most people expected when the sanctions were announced -- hence the higher prices,”

What Will Trigger The Next Oil Price Crash? Are we nearing another financial crisis? The supply-side story for oil prices is heavily skewed to the upside, with production losses from Iran and Venezuela causing a rapid tightening of the market. But the demand side of the equation is much more complex and harder to pin down. The Trump administration just took its trade war with China to a new level, adding $200 billion worth of tariffs on imported Chinese goods. That was met with swift retaliation. Trump promised another $267 billion in tariffs are in the offing. JPMorgan said that after scanning through more than 7,000 earnings transcripts, the topic of tariffs was widely discussed and feared. Around 35 percent of companies said tariffs were a threat to their business, JPMorgan said, as reported by Bloomberg.  The Federal Reserve is steadily hiking interest rates, making borrowing more expensive around the world and upsetting a long line of currencies.  Currency problems could morph into bigger debt crises, as governments struggle to repay debt, and companies and individuals get crushed by dollar-denominated liabilities. Finally, the economic expansion is very mature, now about a decade old. Another downturn is only a matter of time.  The icing on the cake could be high oil prices. The supply losses from Iran and Venezuela are tightening the market, draining inventories and forcing Saudi Arabia to cut into spare capacity levels. High prices could trim demand growth, but that hasn’t happened in a big way just yet. “[B]y 2020, the conditions will be ripe for a financial crisis, followed by a global recession,” Nouriel Roubini and Brunello Rosa wrote in a recent piece for Project Syndicate. JPMorgan mostly agreed, arguing recently that another financial crisis is possible by 2020, and the lack of monetary and fiscal firepower to respond to such a crisis creates a “wildcard” on how severe the downturn might be. Roubini and Rosa worry that backed against a wall, politically-endangered Trump administration might lash out against Iran in order to “wag the dog,” a scenario that would have catastrophic consequences. “By provoking a military confrontation with that country, he would trigger a stagflationary geopolitical shock not unlike the oil-price spikes of 1973, 1979, and 1990,” they argue. “Needless to say, that would make the oncoming global recession even more severe.”

Brent Crude Tops $80, Closes at Highest Level Since 2014 – WSJ - Global oil prices surged to their highest close in nearly four years on Monday after OPEC left production steady over the weekend, fueling fresh bets that U.S. sanctions against Iran and outages in Venezuela will lead to supply shortages. The decision by members of the Organization of the Petroleum Exporting Countries and major producers like Russia to hold supply constant comes amid a rebound in investor confidence in the global economy. Analysts said that combination, with many anticipating compromises on global trade policy and a stabilization in emerging-market assets, lifted oil prices after months of rangebound trading. .“The supply issues are real,” said Chris Kettenmann, chief energy strategist at New York–based Macro Risk Advisors. “The U.S.-Iran economic sanctions are only compounding the fact that buyers need to look elsewhere for delivery of barrels.” Oil’s surge marks a reversal after Brent crude wobbled in recent months, as President Trump pressured OPEC to ramp up output and traders worried about a possible slowdown in demand. Brent futures rose $2.40, or 3%, to $81.20 a barrel Monday, piercing $80 for the first time since May and logging their highest settle since November 2014. U.S. crude futures closed up $1.30, or 1.8%, at $72.08 a barrel at their highest level since early July. Despite this summer’s volatility, oil has been one of the market’s best-performing assets this year, with Brent prices now up 21% in 2018. Shares of energy producers around the world also climbed Monday, with the S&P 500 energy sector adding 1.5%. Exxon Mobil closed up 1.7%, while French oil giant Total SA rose 1.1% in a fifth straight session of gains. 

Brent Oil Breaks Its Post-Crash High -  Oil prices burst out of the gates on Monday with strong gains, pushing WTI over $70 and Brent over $80 per barrel. Over the weekend, OPEC+ decided to take no further action to increase production even as Iran continues to lose supply at a torrid pace. Saudi Arabia said it would likely increase output in October but declined to offer specifics. The inaction was met with fears of a supply crunch from the market, pushing Brent up to its highest level in years. A growing number of analysts see higher prices as likely, perhaps even as high as $100 per barrel.  The European Union said on Monday that it would setup a special financial vehicle to allow Iran to evade U.S. sanctions. The “special purpose vehicle” would allow European companies to continue to do business with Iran while insulating them from the wrath of the U.S. Treasury. The announcement comes as U.S. President Trump will address the UN General Assembly this week, and the EU decision will put the two sides at odds. Iran’s oil supply losses are mounting, and it is unclear to what extent the EU financial vehicle will stem the tide. A group of the world’s largest oil companies agreed to lower methane emissions from their operations over the coming years. The Oil and Gas Climate Initiative (OGCI) calls for a reduction of methane emissions by a fifth by 2025. ExxonMobil and Chevron recently joined the initiative and said they would limit methane emissions to 0.25 percent of total production, compared to 0.32 percent in 2017. The OGCI pledge calls for a reduction to 0.20 percent. The OGCI consists of companies accounting for a third of global oil and gas production, and includes BP, Royal Dutch Shell, Total and national oil companies in China, Mexico, Brazil and Saudi Arabia.  The Trump administration is in the midst of rolling back limits on methane emissions from the oil and gas industry, a move that could boost small marginal wells. Stripper wells, which produce less than 15 barrels of oil equivalent per day, could be one of the biggest beneficiaries from the deregulation, according to S&P Global Platts. While miniscule on their own, stripper wells collectively account for around 10 percent of U.S. oil production.

OPEC is 'ripping off' US, rest of world: Trump — In a speech before the United Nations, US President Donald Trump took aim at OPEC for increasing global oil prices while benefiting from US military security. "OPEC and OPEC nations are, as usual, ripping off the rest of the world and I don't like it, nobody should like it," Trump said, claiming that the US defends many OPEC nations "for nothing." "We want them to stop raising prices, we want them to start lowering prices and they must contribute substantially to military protection from now on," Trump said. Brent crude briefly touched $82.55/b, but pulled back to around $82.18/b soon after in the wake of the strong language from Trump calling on OPEC to lower prices. WTI, which had been trading as high as $72.78/b during morning US trade, briefly fell back below Monday's settle following Trump's remarks, trading as low as $72.05/b before recovering slightly. Trump also touched on sanctions on Venezuela, Iran and North Korea. "The Iran deal was a windfall for Iran's leaders," Trump said. The US continues to press Iran's oil customers to halt their crude and condensate imports before sanctions resume November 5. Trump said the US was working with these customers to "cut their purchases substantially." Crude futures moved to intra-day highs on the back of Trump's remarks calling for continued isolation of Iran. In his speech, Trump stressed American sovereignty and US energy security. "In America we believe strongly in energy security, for ourselves and for our allies," Trump said. "The United States stands ready to export our abundant, affordable supply of oil, clean coal and natural gas."

Oil firm as OPEC, Russia resist calls to raise output as Iran sanctions loom -- Crude oil prices shot to a four-year high on Tuesday, catapulted by imminent U.S. sanctions on Iranian crude exports and the apparent reluctance of OPEC and Russia to raise output to offset the potential hit to global supply. Brent crude futures were up 81 cents, or 1 percent, at $82.01 a barrel by 9:46 a.m. ET (1346 GMT), having touched a session peak of $82.20, the highest price since November 2014.  The oil price is on course for its fifth consecutive quarterly increase, the longest stretch of gains since early 2007, when a six-quarter run led to a record high of $147.50 a barrel. U.S. West Texas Intermediate crude futures were up 50 cents at $72.58 a barrel, close to their highest since mid-July.The United States will target Iran's oil exports with sanctions from Nov. 4, with Washington applying pressure on governments and companies around the world to fall into line and cut their purchases."Iran will lose sizeable export volumes, and given OPEC+ reluctance to raise output, the market is ill-equipped to fill the supply gap,"  Mohammad Barkindo, secretary general of the Organization of the Petroleum Exporting Countries (OPEC), said in Madrid on Tuesday that it is important for OPEC and its partners, including Russia, to cooperate to ensure they do not "fall from one crisis to another." The International Energy Agency forecasts strong oil demand growth of 1.4 million barrels per day (bpd) this year and 1.5 million bpd in 2019, and said in its most recent report that the market was tightening.U.S. President Donald Trump has demanded that OPEC and Russia increase oil supplies to make up for the expected fall in Iranian exports. Iran is the third-largest producer in OPEC. OPEC and Russia, however, have so far rebuffed such calls. The so-called "OPEC+" group, which includes the likes of Russia, Oman and Kazakhstan, met at the weekend to discuss a possible increase in crude output, but the upshot of the gathering was that the group was in no rush to do so.

Oil jumps, then pares gains as Trump pressures OPEC again (Reuters) - Oil prices rose Tuesday on global supply concerns following U.S. sanctions on Iran’s oil exports, with benchmark Brent surging to a four-year high, then retraced gains to settle just slightly higher after U.S. President Donald Trump called again on OPEC to boost crude output. In a speech before the United Nations, Trump reiterated calls on the Organization of the Petroleum Exporting Countries to pump more oil and stop raising prices. Earlier, oil prices had surged on worries about global supply after U.S. sanctions on Iran’s oil exports take effect Nov. 4. Brent LCOc1 hit $82.55 per barrel, its highest since Nov. 10, 2014. “It’s hard to believe that the Saudis won’t answer the call at some point, especially if prices tick much higher,” said John Kilduff, a partner at Again Capital in New York. “He’s going to be unrelenting in pressuring them.” The so-called “OPEC+” group, which includes Russia, Oman and Kazakhstan, met over the weekend to discuss a possible increase in crude output, but the group was in no rush to do so. Mohammad Barkindo, OPEC secretary general, said in Madrid on Tuesday OPEC and its partners should cooperate to ensure they do not “fall from one crisis to another.” Brent crude futures settled up 67 cents at $81.87 a barrel. U.S. crude futures CLc1 rose 20 cents to $72.28 a barrel, close to the highest since mid-July. Global benchmark Brent is on course for its fifth consecutive quarterly increase, the longest stretch since early 2007, when a six-quarter run led to a record high of $147.50 a barrel. Trump also said in his speech that Washington will put more sanctions on Iran following oil sanctions in November. The sanctions are expected to have an immediate impact on exports from OPEC’s third largest producer. “Iran will lose sizeable export volumes, and given OPEC+ reluctance to raise output, the market is ill-equipped to fill the supply gap,” 

WTI Drops After Surprise Crude, Gasoline Build - WTI extended gains today after OPEC signaled it may not replace Iranian oil that’s disappearing from global markets as U.S. sanctions loom, but slumped off its highs of the day after Trump slammed OPEC for "ripping off the world."As Bloomberg noted, OPEC shrugged off the threat to Iranian supplies over the weekend, spurring some of the world’s most-sophisticated traders to forecast a return to $100-a-barrel oil. At such prices, crude demand “will be annihilated,” Petromatrix GmbH’s Olivier Jakob said. “The market is assuming that OPEC will behave as they claimed they will at this meeting, but I don’t think that’s necessarily something that will be long-lived,” . A big reduction in Iranian exports “will cause the market to tighten up.” Trump said OPEC is "ripping off the world," in an address to the United Nations today. API

• Crude +2.903mm (-1.5mm exp)
• Cushing +260k (-150k exp)
• Gasoline +949k
• Distillates -944k

A surprise crude build and Cushing stocks rose... . “Brent and WTI have been some of the better performing commodities over the last week, so you’re definitely going to have fund managers jumping on board trying to ride that wave a little bit higher.” The bulls are levering up too, as Bloomberg notes that the total number of options traded on Brent crude surged on Monday to about 274,000 contracts, the highest ever, data showed.

Art Berman- Don't Believe The Hype - Oil Prices Aren't Going Back To $100 - The breakout in Brent crude prices above $80 this week has prompted analysts at the sell side banks to start talking about a return to $100 a barrel oil. Even President Trump has gotten involved, demanding that OPEC ramp up production to send oil prices lower before they start to weigh on US consumer spending, which has helped fuel the economic boom over which Trump has presided, and for which he has been eager to take credit.But to hear respected petroleum geologist and oil analyst Art Berman tell it, Trump should relax. That's because supply fundamentals in the US market suggest that the recent breakout in prices will be largely ephemeral, and that crude supplies will soon move back into a surplus. Indeed, a close anaysis of supply trends suggests that the secular deflationary trend in oil prices remains very much intact. And in an interview with MacroVoices, Berman laid out his argument using a handy chart deck to illustrate his findings (some of these charts are excerpted below).As the bedrock for his argument, Berman uses a metric that he calls comparative petroleum inventories. Instead of just looking at EIA inventory data, Berman adjusts these figures by comparing them to the five year average for any given week. This smooths out purely seasonal changes. And as he shows in the following chart, changes in comparative inventory levels have precipitated most of the shifts in oil prices since the early 1990s, Berman explains. As the charts below illustrate, once reported inventories for US crude oil and refined petroleum products crosses into a deficit relative to comparative inventories, the price of WTI climbs; when they cross into a surplus, WTI falls.

Even the people with the most to gain from $100-a-barrel oil have a lot to lose: analyst - Brent crude was pushing $82 a barrel early Tuesday, extending its climb to a four-year high from Monday. Gains came after a weekend meeting of major oil producers failed to yield any promises on higher production, something POTUS has been pounding the table over lately. Helping out prices is the fact an oil-supportive Iran embargo also grows closer by the day. Amid the fresh enthusiasm, some have even been talking about a return to $100-a-barrel oil.Careful what you wish for, says our call of the day from Fitch Solutions Macro Research. They warn that sentiment for crude right now is so bullish it could leave the market “heavily exposed should risk-off sentiment spill over into oil.”Fitch analysts explain that while there are plenty of reasons for oil to move higher tied to further tightening on the supply side,” that comes amid more challenging macroeconomic conditions. “Much of this revolves around the escalating U.S.-China trade dispute and fears of contagion among emerging markets (EMs), but also ties into underlying trends in oil prices, the dollar, and global liquidity,” explain the analysts.Here’s a chart from Saxo Bank’s Ole Hansen showing that net long positions on oil have just reached a 10-week high. Further caution was heard this morning from Commerzbank analysts, who noted a couple of pretty bullish calls from commodities traders laying out the case for $100-a-barrel oil by early 2019, driven by the loss of up to 2 million barrels of oil a day from Iran once November sanctions kick in.“We regard this as the extreme scenario, which would require all countries apart from China to completely stop buying Iranian oil, which we believe is unlikely,” said a team of Commerzbank analysts led by Eugen Weinberg, who say China could respond to U.S. tariffs by buying even more Iran oil. More cold water: “If the price were to surge to such an extent, the U.S. would probably grant exemptions to the sanctions and/or release strategic oil reserves, as such a high price would hardly be in its interests given the development of its own economy,” says Commerzbank, noting that emerging market demand would take a hit and U.S. producers probably couldn’t boost production fast enough in response.

Don't Underestimate The Trade War Impact On Oil Demand -A squeeze on oil demand is looming as a result of the U.S.-China trade war, a senior BP executive told Reuters. Acknowledging the bullish effect of U.S. sanctions on Iran in the short term, Janet Kong, BP’s chief executive of oil trading operations in Asia, said this effect will be short-lived as the market absorbs the shock and moves on to other concerns.“Going into 2019, I worry about the impact of the U.S.-China trade war, manifesting itself slowly,” the executive said. “The trade war impact has not really shown up in the data anywhere, but it will show up gradually over time. So the supply shock is very sharp and prompt, while the impact from trade war is boiling over slowly.”There have been voices warning that the trade war will affect oil demand as it affects economic growth in China, but official oil demand forecasts have yet to factor it in, it seems. OPEC’s latest Monthly Oil Market Report, however, did revise the cartel’s forecasts for oil demand in 2019 down by 20,000 bpd to 1.41 million bpd, warning that global economic growth may slow.The International Energy Agency, on the other hand, has kept its 2019 demand forecast unchanged in the latest fundamentals update, at 1.5 million bpd, up from this year’s projected 1.4 million bpd. Yet the agency noted that demand could be stronger were it not for the trade war and signs of stalling economic growth in emerging economies.  While general economic growth patterns are dependent on a host of different factors, the U.S.-China trade war is outside the normal course of events and, according to Kong, likely to drag on for quite a while, which would extend the duration of its negative effect on oil prices.

Oil prices drop, Brent moves further away from 4-year high -- Oil prices eased on Wednesday after U.S. data showed a surprise build in domestic crude inventories, but an impending drop in Iranian exports kept Brent futures above $80 a barrel and on track for a fifth straight quarterly gain.Brent crude futures were down 39 cents at $81.48 a barrel by 2:26 p.m. ET, after rising to its highest since November 2014 in the previous session. U.S. crude futures ended Wednesday's session down 71 cents, or 1 percent, at $71.57 a barrel.U.S. crude inventories rose by 1.9 million barrels in the week to Sept. 21, according to U.S. Energy Information Administration (EIA) data. Analysts had expected a decrease of 1.3 million barrels.Refinery crude runs fell by 901,000 barrels per day, EIA data showed."A renewed rise in Cushing, Oklahoma, inventories and a rise in domestic crude oil production added to the bearish tone of the report," said John Kilduff, a partner at Again Capital in New York.Still, the oil market is bracing for a hit to global supplies from renewed U.S. sanctions on Iran. Brent remains on course for its fifth consecutive quarterly increase, the longest stretch since early 2007 when a six-quarter run led to a record-high price of $147.50 a barrel.Several big buyers of Iranian crude, such as a number of Indian refiners, have signaled they will wind down their purchases, yet the exact impact of the loss of Iranian barrels on the global market balance is not clear.U.S. officials, including President Donald Trump, are trying to assure consumers and investors that enough supply will remain in the oil market while requesting producers raise their output."We will ensure prior to the re-imposition of our sanctions that we have a well supplied oil market," Washington's special envoy for Iran, Brian Hook, told a news conference at the United Nations General Assembly on Tuesday evening. In an earlier speech at the UN, Trump reiterated calls on OPEC to pump more oil and stop raising prices. He also accused Iran of sowing chaos and promised further sanctions on the country.

Trump is relying on OPEC to tame oil prices, but analysts say that's a mistake - President Donald Trump has repeatedly ordered OPEC to tamp down rising oil prices, but his Twitter barbs might be wasted on the world's oil cartel.Analysts say OPEC's ability to drive down the cost of crude will be limited until it gets the opportunity to prove it can fill the gap left by falling Iranian exports. Shipments from OPEC's third largest producer are widely expected to fall by roughly 1 million barrels a day in the coming months as U.S. sanctions bite.The upshot is that no matter what OPEC does, prices may keep bubbling up ahead of two major events: Trump's Nov. 4 deadline for oil buyers to stop importing Iranian crude and U.S. midterm elections two days later.This week, OPEC and its allies rebuffed Trump's latest demand to hike output. The 15-nation cartel, Russia and several other producers opted instead to stick to their earlier decision to only gradually increase supply.@realDonaldTrump: We protect the countries of the Middle East, they would not be safe for very long without us, and yet they continue to push for higher and higher oil prices! We will remember. The OPEC monopoly must get prices down now!On Tuesday, Trump told the UN General Assembly OPEC is "ripping off the rest of the world" by pushing up prices.Trump blames OPEC for the rally because the cartel has been limiting its output since January 2017 in order to balance the market after a punishing oil price downturn. In June, OPEC and its allies agreed to increase output by about 1 million barrels day after cutting more than they intended.However,  prices have remained elevated since then and the national average gasoline price remains stuck near $2.85 per gallon as the market braces for the impact of sanctions on Iran.

Iran sanctions to cut oil supply by 1.7 million barrels per day by year-end: Platts -- Jeff Mower of S&P Global Platts discusses the outlook for crude oil production and prices as fresh sanctions against Iran are coming into effect.

Oil Price Spike Could be Short-lived-- Oil bulls cheered by the prospect of $100 oil beware. A rally in prices may be short-lived. That's according to Janet Kong, who heads energy giant BP Plc's trading business in Asia. Any spike on the loss of Iranian supply due to U.S. sanctions probably won't be sustainable in the long run, she said. That's because the negative impact on demand from a trade war between the world's two biggest economies hasn't been priced into crude yet. Kong's comments stand in contrast to views from officials at major oil-trading firms Trafigura Group and Mercuria Energy Group Ltd., who see a looming supply crunch driving global benchmark Brent crude to $100 a barrel for the first time in four years. In recent weeks, prices have largely shrugged off escalating U.S.-China trade tensions, with speculation over the impact of American sanctions on Iran dominating investor sentiment. "The market is very fixated on the loss of barrels on the supply side," said Kong, the chief executive officer of Eastern Hemisphere integrated supply and trading at BP. "The market has overlooked the results of the U.S.-China trade war, how that might impact the global economy, China's growth and the regional economy in Asia," she said in an interview in Singapore on Monday. Brent climbed above $80 a barrel on Monday after OPEC and its allies signaled less urgency to boost output despite pressure from U.S. President Donald Trump to temper prices. Crude's recent rally has spurred a divergence from other commodities like copper, which have been dragged down on fears that global growth will be eroded by a trade war that's showing no signs of easing. Brent futures for November settlement traded at $81.41 a barrel on the ICE Futures Europe exchange, up 21 cents, at 6:48 a.m. in London. Some $200 billion of Chinese products became subject to increased U.S. tariffs from noon Beijing time on Monday, on top of $50 billion in goods imposed earlier this year. The Asian nation said it won't hold trade talks with America unless Trump stops his threats.

Oil Falters as Trump Ups Pressure-- Oil traded near $82 a barrel after President Donald Trump resumed his attack on OPEC while Goldman Sachs Group Inc. poured cold water on forecasts for $100 crude. Brent futures in London were little changed. In a speech at the United Nations, Trump ratcheted up pressure on OPEC nations with a threat to demand payment for U.S. military protection after they ignored his call last week to reduce prices. In contrast to trading-giant bulls, Goldman Sachs said catalysts beyond Iranian sanctions are needed for a meaningful rally. A surprise gain in American crude inventories also weighed on sentiment. Oil prices rose on Monday after the Organization of Petroleum Exporting Countries signaled it won’t rush to release more oil into the market, shrugging off pressure from Trump who has been calling on the group to do more to temper gains. The prospect of tightening supplies due to a steep drop in Iran’s exports, Venezuela’s slumping output, and production bottlenecks in U.S. prompted trading giants Mercuria Energy Group Ltd. and Trafigura Group to warn oil could surge back above $100 a barrel. “Trump demanded in a very strong tone at the United Nations that OPEC push down crude prices, triggering profit taking,” said Takayuki Nogami, chief economist at Japan Oil, Gas and Metals National Corp. Still, “as investors aren’t convinced Trump’s latest call can force OPEC to change its course, prices will unlikely keep falling.” Brent for November traded at $82.03 a barrel, up 16 cents, on the ICE Futures Europe exchange at 3:59 p.m. in Tokyo, after settling Tuesday at the highest level in almost four years. The global benchmark traded at a $9.74 premium to West Texas Intermediate. 

Oil Down, Snapping Rally, After Surprise Rise in US Crude Stockpiles - Crude prices fell on Wednesday after weekly data showed a build in U.S. stockpiles as the summer driving season came to a close, tripping up market bulls who had bet on an inventory drop and an uninterrupted price rally on fears over sanctions placed on Iranian oil. Brent crude, the U.K.-traded global benchmark for oil on the Intercontinental Exchange, saw its December contract drop by 0.6%, or $0.47, to $80.79 a barrel . On Tuesday, Brent hit its highest level since November 2014, reaching $82.55. Crude oil WTI futures for November slid 0.9 %, or $0.66, to $71.62. The U.S. Energy Information Administration (EIA) said in its weekly report that domestic crude oil inventories rose by 1.852 million barrels during the week ended Sept. 21. Market analysts had expected a decline of 1.279 million barrels instead. The American Petroleum Institute, which collects data independently from the industry, reported on Tuesday an increase of 2.903 million barrels for the week in review. Closer examination of the EIA data showed the build in crude stocks came amid a huge drop of 901,000 barrels per day (bpd) in refining demand as the end of summer signaled less need for gasoline and time for refineries to get maintenance done. Gasoline stocks jumped by 1.5 million barrels, vs. forecasts for a rise of 788,000 barrels. “A meteoric drop in refining activity … as refinery maintenance season gets into full swing,” said Matthew Smith, director of commodity research at Clipper Data, a New York-headquartered tracker of oil cargoes. Smith said the inventory build came despite oil imports into the U.S. falling during the week in review and U.S. crude exports rising to 2.6 million bpd. International demand for U.S. crude has been on the rise due to WTI’s widening discount to Brent, now at around $10 per barrel. The EIA said that supplies at Cushing, Oklahoma, the key delivery point for delivery of WTI, increased by 461,000 barrels last week. While gasoline stockpiles rose, inventories of distillates, which included diesel, unexpectedly fell by 2.24 million barrels vs. forecasts for a rise of 752,000 barrels. That indicated that trucking and other commercial transportation activity remained strong despite a drop in leisure road travel.

Oil Surges on Prospects of Supply Crunch -- Oil surged on prospects of a supply crunch after the U.S. ruled out the release of emergency crude reserves, adding to concerns over potential losses in Iranian supplies. Futures in New York climbed as much as 1.4 percent. Prices on Wednesday pared declines after U.S. Energy Secretary Rick Perry said releasing oil from the nation’s Strategic Petroleum Reserve to prevent a price spike would have “a fairly minor and short-term impact.” That helped the market shrug off a surprise gain in American crude inventories, which rose for the first time in six weeks. The U.S. benchmark is nearing four-year highs after the Organization of Petroleum Exporting Countries signaled they are in no rush to boost output to counter output losses in Iran and elsewhere, drawing repeated criticism from President Donald Trump. The outlook for tightening supplies prompted top trading houses to predict the return of higher oil prices last seen in 2014, and banks including Bank of America Corp. and JPMorgan Chase & Co. lifted their forecasts. “The U.S. using the strategic reserves as an emergency-response tool to control oil prices was a bit of a stretch, given the history of how it was released in the past for war or hurricanes,” said Stephen Innes, Singapore-based head of trading for Asia Pacific at Oanda Corp. “While the U.S. oil inventory data counts, the fact that the markets could still be underestimating the supply crunch from Iran sanctions has many oil investors running with the bulls.” West Texas Intermediate crude for November delivery rose as much as 98 cents to $72.55 a barrel on the New York Mercantile Exchange and traded at $72.43 at 2:21 p.m. in Singapore. The contract settled 71 cents lower at $71.57 on Wednesday. Total volume traded was 4 percent below the 100-day average. Brent for November settlement gained as much as 93 cents to $82.27 a barrel on the London-based ICE Futures Europe exchange before trading at $82.21. The global benchmark crude was at a $9.78 premium to WTI. The U.S. government isn’t considering a release from the country’s emergency oil stockpiles to prevent prices from surging when American sanctions on Iranian crude are implemented in early November. Other producers can offset losses from the Persian Gulf state, he said.

Oil prices rise 1 percent ahead of US sanctions against Iran - Oil prices rose towards four-year highs on Thursday, driven by the prospect of a shortfall in global supply once U.S. sanctions against major crude exporter Iran come into force in just five weeks' time. U.S. President Donald Trump last week demanded that OPEC raise production to prevent further price rises ahead of key congressional elections in early November. Analysts say the Organization of the Petroleum Exporting Countries and partner Russia appear unlikely at this point to respond immediately to Trump's demands, while U.S energy secretary Rick Perry has also ruled out using U.S. strategic crude reserves as a means of lowering the price. The most-active December Brent crude futures contract was up 59 cents at $81.96 a barrel at 8:49 a.m. ET (1249 GMT, just off Tuesday's four-year high of $82.55. The front-month November contract expires on Friday. U.S futures were up 84 cents, or 1.2 percent, at $72.41 a barrel. "On paper, you could argue that the technical and fundamental perspective points to higher prices, so I think that will carry on into next week and further out," Saxo Bank senior manager Ole Hansen said. "$100 dollars barrel, I am struggling to see that. Already at $80, we are seeing emerging-market local oil prices pretty close to where we peaked a few years ago ... the race to protect consumers from further price rises from here could potentially impact demand growth sooner than would otherwise have been expected." Estimates of how much Iranian crude could disappear from the market once U.S. sanctions come into force on Nov. 4 vary widely among the analyst community, from anywhere from 500,000 barrels per day (bpd) all the way to 2 million bpd. At its 2018 peak in May, Iran exported 2.71 million bpd of crude oil, equivalent to nearly 3 percent of daily global consumption.

High oil prices after the United States refused to release its oil reserves -- Oil prices rose on Thursday, even after weekly data from the US Energy Information Administration (EIA), which unexpectedly showed an increase in US stocks. But the United States' exclusion of the release of the crude oil reserves in emergency situations has raised fears of potential losses in Iranian supplies Where the US government is not thinking of releasing emergency oil stocks in the country to prevent prices from rising when US sanctions are applied to Iranian crude in early November after the US Energy Secretary said that the reserve will not have a significant impact.  The United States is close to a four-year high after the Organization of the Petroleum Exporting Countries (OPEC) said it was not rushing to increase production to counter production losses in Iran and Venezuela, which announced it may announce force majeure to postpone some of its oil exports.  Earlier this week, Trump accused OPEC of "dismantling the rest of the world" after the group stopped providing additional crude oil. The US Energy Information Administration (EIA) said in its weekly report that domestic crude inventories rose by 1.852 million barrels during the week ending on September 21. as such . The US Petroleum Institute, which collects data independently of the industry, reported Tuesday an increase of 2.903 million barrels during the week under review.

Saudi Arabia in short-term oil fix, fears extra U.S. supply next year (Reuters) - Saudi Arabia will quietly add extra oil to the market over the next couple of months to offset a drop in Iranian production but is worried it might need to limit output next year to balance global supply and demand as the United States pumps more crude. The kingdom, OPEC’s top producer, came under renewed pressure last week from U.S. President Donald Trump to cool oil prices ahead of a meeting in Algiers between a number of OPEC ministers and allies including Russia. Two sources familiar with OPEC policy said Saudi Arabia and other producers discussed a possible production increase of about 500,000 barrels per day (bpd) among the Organization of the Petroleum Exporting Countries and non-OPEC allies. But Riyadh decided against pressing for an official increase now as it realized it would not secure agreement from all producers present at the talks, some of which lack spare production capacity and would be unable to boost output quickly. Such a move would have unsettled relations among producers, the sources said, with the Saudis keen to maintain unity among the so-called OPEC+ alliance in case Riyadh wants to change course in future and seek their collaboration on an output cut. “There are only two months left until the end of the year, so why create tensions now between Saudi Arabia, Iran and Russia?” one source familiar with the Algiers discussions said. Saudi Energy Minister Khalid al-Falih said on Sunday he was concerned that oil production gains, mainly from the United States, could outstrip a projected increase in oil demand and result in an inventory overhang globally. Oil prices rose to their highest since 2014 above $80 per barrel this week on fears that a steep decline in Iranian oil exports because of new U.S. sanctions will deepen an oil deficit, along with production declines in Venezuela. However, OPEC’s latest report released at the weekend forecast that its non-OPEC rivals led by the United States would increase output by 2.4 million bpd in 2019 while global oil demand should grow by just 1.5 million bpd. That, Saudi thinking goes, could create a large surplus of crude next year, especially if a stronger dollar and weaker emerging market economies reduce global demand for oil. 

Saudi Aramco to have more oil output capacity from two fields in fourth quarter: source (Reuters) - State oil giant Saudi Aramco will bring new crude output capacity of some 550,000 barrels per day (bpd) online in the fourth quarter from two fields - Khurais and Manifa - giving it the ability to boost production if there is demand, a source said. The expansion of crude output capacity from Khurais field, which produces light sour crude, will add around 250,000-300,000 barrels per day boosting the field potential to 1.5 million bpd, one source familiar with the matter said. The resumption of production from the giant Manifa field, which pumps heavy sour oil, after resolving some maintenance issues will add another 300,000 bpd to Aramco’s crude output capacity, the source said. Saudi Aramco declined to comment. Saudi Arabia, the world’s largest oil exporter, is the only major producer with oil output capacity of about 12 million bpd. The additional output increase will not raise Aramco’s capacity above the current 12 million bpd. But that would give the company more flexibility to boost supplies and reach higher production levels sooner than before. Saudi Arabia currently pumps around 10.5 million bpd and will quietly add extra oil to the market over the next couple of months to offset a drop in Iranian production. Saudi Energy Minister Khalid al-Falih said last week that production from Manifa would return to 900,000 bpd soon after a pipeline issue has been resolved which has caused output decline from the field over the past months. The Khurais expansion project is crucial to help Saudi Arabia sustain its spare capacity and help reduce pressure on ageing fields, long seen by the market as a crucial cushion that can balance the market during times of oversupply or shortage. Spare capacity is the kingdom’s tool to allow it to raise output quick enough in case of any sudden supply outage or to keep oil prices in check. 

Oil prices edge up amid uncertainty over fallout from Iran sanctions - Oil prices rose on Friday as U.S. sanctions on Tehran squeezed Iranian crude exports, tightening supply even as other key exporters increased production.Global crude oil benchmark Brent was up 86 cents, or 1.1 percent, at $82.58 a barrel by 10:35 a.m. ET (1435 GMT), hitting a new a four-year high. It has gained around 4 percent this quarter.U.S. light crude was $1.03, or 1.4 percent, higher at $73.15 a barrel, rising above the $73 level for the first time since July. It is up about 4.5 percent this month, but down about 1.5 percent since the end of June.A new round of U.S. sanctions on Iran, the third-largest producer in the Organization of the Petroleum Exporting Countries, kick in on Nov. 4. Washington is demanding that buyers of Iranian oil cut imports to zero to force Tehran to negotiate a new nuclear agreement and to curb its influence in the Middle East."The fall in Iranian production is set to intensify once the second round of U.S. sanctions come into effect in November," said Abhishek Kumar, senior analyst at Interfax Europe Ltd.Other OPEC countries have been increasing production in recent months but global inventories have been falling as supply tightens, analysts say.Saudi Arabia is expected to add extra oil to the market over the next couple of months to offset the drop in Iranian production. Two sources familiar with OPEC policy told Reuters Saudi Arabia and other producers had discussed a possible production increase of about 500,000 barrels per day (bpd) among OPEC and non-OPEC producers.

The upward march of oil prices shows few signs of stopping -- Brent oil, the world standard, relentlessly climbed from a low of $30 per barrel early in 2016 to above $80 per barrel today. A year ago, when Brent was around $55 barrel, some pundits foresaw a return to the 2016 lows; others saw the price languishing in the $50-$60 per barrel range. Bearish forecasts reflected a tepid outlook for the world economy and expectations of fracking on an ever-larger scale coupled with new finds from deep-water drilling. Few observers reckoned that Brent might again exceed $100 per barrel, as it did between 2011 and 2014, or even reach $80. Several factors combined to upset these bearish forecasts. On the demand side, massive tax cuts, taking effect in 2018, sparked the U.S. economy with global spillovers. Meanwhile, easy monetary policy in all advanced countries further promoted global growth. On the supply side, the fracking rig count dropped dramatically when oil prices plunged in 2015 and has recovered only slowly since then. Fracking makes a much larger contribution to natural gas than to oil supply. U.S. oil production continues to grow, but at a modest pace. Meanwhile, the major oil producers have been cautious about betting $3 billion or more on deep-water drilling off the coast of Brazil or Africa. President Trump’s renewed sanctions may reduce Iranian oil exports by as much as 1 million barrels a day as European buyers reluctantly cut their purchases. This shock gives Russia and Saudi Arabia even stronger control of world oil supply.Make no mistake: Higher oil prices bring joy to multiple influential actors. Russia and Saudi Arabia, obviously, but also Texas, Oklahoma and other energy states, plus all the conventional oil and fracking firms. Even Iran has reason to be happy: Its oil exports will perhaps be cut from 3 million to 2 million barrels per day, but the 50-percent rise in Brent means that Iran is just as well off financially.

US crude sanctions against Iran could push oil prices above $100 a barrel, strategists say - President Donald Trump's sustained bid to sanction Iranian crude exports could trigger a dramatic shortfall in global supply, strategists told CNBC on Thursday, amid renewed worries oil prices could soon rally up to triple digits. Earlier this week, Trump urged OPEC to ramp up production levels in order to prevent further price rises ahead of the mid-term elections in November. But OPEC and non-OPEC producers were thought to be unlikely to immediately respond to Trump's demands, after Saudi Arabia and its allies decided against pressing for an official increase at a meeting in Algeria last week."The unwillingness of the 25 producing nations to declare their intention to ramp up production in their effort to replace Iranian barrels all of the sudden produced a very tight supply and demand balance for the fourth quarter of this year," Tamas Varga, senior analyst at PVM Oil Associates, said in a research note published Thursday."As a result, the talk is now (of) Brent reaching $100 a barrel this year," he added.International benchmark Brent crude traded at around $81.87 on Thursday, up around 0.65 percent, while U.S. West Texas Intermediate (WTI) stood at $72.32, more than 1 percent higher.The U.S. is scheduled to impose targeted crude sanctions against OPEC's third-largest oil producer in just five weeks' time. And the sanctions are widely expected to have an immediate impact on Iran's oil exports, although estimates of exactly how much of the country's oil could disappear from November 4 vary widely.Some energy market analysts expect around 500,000 barrels per day (bpd) to disappear once U.S. sanctions against Iran come into force, while others have warned as much as 2 million bpd could come offline over the coming months. At its 2018 peak earlier this summer, Iran exported around 2.7 million bpd of crude oil — that's the equivalent to almost 3 percent of daily global consumption.

The $100 Oil Debate - WTI and Brent held onto their gains during early trading on Friday and look set to close out the week strongly up. The tension between dwindling Iranian supply and the extent to which Saudi Arabia will increase production is sure to dominate the market narrative over the next few weeks. The mood at the Asia Pacific Petroleum Conference (APPEC) in Singapore was highly bullish on oil prices in the short-term, largely because of the supply losses from Iran. Bloomberg also noted that the number of Brent options has surged to its highest ever, “driven by record call trading, including bets on $100.” Oil traders Mercuria and Trafigura see global production losses of about 2 million barrels per day and 1.5 mb/d, respectively, mostly related to Iran. . The “special purpose vehicle” to help Iran continue to do business with European companies may not have much of an impact on the oil trade. Buyers are not likely to be entirely protected from U.S. secondary sanctions. “I think it is a welcome development,” Daniel Martin, a partner and sanctions expert at Holman Fenwick Willan in London, told Bloomberg. “But oil is not the arena it is going to be tested and used first.”. Total CEO Patrick Pouyanne says $100 oil is possible but isn’t excited about it. “I’m not sure it’s a good news” he told Bloomberg. “Even for the oil industry, because you know, when price goes too high then you open the door to your competitors” while demand will likely decline, he said.. OPEC+ decided against further production gains last weekend, although Saudi Arabia has indicated it would increase production in September and October. However, Saudi Arabia is also wary about creating a new supply glut, as the market will see a seasonal dip in demand in the winter. Riyadh is running the risk of a supply crunch in the fourth quarter, but Saudi officials fear the opposite problem if they increase production too much.

'Show me the barrels': Oil prices set to spike as OPEC and Trump go head-to-head, analysts say -- OPEC producers and President Donald Trump are both embracing a "show me" attitude to energy market uncertainty, analysts told CNBC on Friday, as traders speculate about the possibility of $100 a barrel before year-end."The market and certainly the U.S. president is saying to OPEC and Saudi Arabia: 'Show me the barrels,'" Herman Wang, OPEC specialist at S&P Global Platts, told CNBC's "Street Signs" on Friday."And Saudi Arabia and OPEC have kind of turned around and said: 'Well, show me the demand,'" he added.Earlier this week, Trump urged OPEC to ramp up production levels to prevent further price rises ahead of the mid-term elections in November.Trump's calls for the Middle-East dominated cartel to raise global production levels comes as the U.S. prepares to impose targeted crude sanctions against Iran in around five weeks' time. Further to this, Washington is also asking buyers of Iranian oil to slash imports to zero to force Tehran to negotiate a new nuclear agreement.OPEC and non-OPEC producers were initially expected to be reluctant to immediately respond to heightened pressure from the Trump administration, but Saudi Arabia is now expected to quietly add additional barrels of oil to the market over the next couple of months.When asked whether OPEC and non-OPEC producers were likely to have the capacity to ramp up production levels in order to offset any potential supply disruptions, Wang replied: "That is the big question in the market right now."Saudi Arabia has claimed to have around 1.5 million barrels per day (bpd) that they can add to the market if required.Yet, external observers warn Riyadh's claim has never been tested before and even if the kingdom was able to significantly ramp up production, the OPEC kingpin could then be in a weaker position to offset any further other disruptions in the market.U.S. sanctions against Tehran are widely expected to have an immediate impact on Iran's oil exports, although the estimates of exactly how much of the country's oil could disappear from November 4 vary widely.Some energy market analysts expect around 500,000 bpd to disappear once U.S. sanctions against Iran come into force, while others have warned as much as 2 million bpd could come offline over the coming months.

Baffling Surge In Oman Crude Price Sends Oil Market Into Turmoil - While oil traders have been generally punting to the "November Iran sanctions" as the reason why in recent weeks a bevy of $100 oil forecasts have emerged (even if Goldman disagrees), a more immediate cause for the prevailing oil price bullishness has emerged in recent days and it has to do with Oman oil - a low-quality crude - which this week turned into the world’s costliest oil benchmark, "confounding traders and throwing the market into turmoil" according to Bloomberg. Traditionally an obscure, little used benchmark, Oman oil which trades on the Dubai Mercantile Exchange and which will play a key role when Saudi Arabia sets the cost of its shipments to Asia next month, is now more expensive than New York’s West Texas Intermediate and London’s Brent. In fact, earlier this week, the Oman futures contract rose above $90 a barrel making it one of the costliest grades in the world.On Wednesday, Oman briefly traded as high as $90.90 a barrel on the DME., although after some profit taking by the end of Singapore trading at 4:30 p.m., it was at $88.96 a barrel, still materially higher compared to $82.15 for Brent, and $72.36 for WTI.According to Bloomberg's Javier Blas, the dramatic 2-day gain of 11% reverberated around the annual Asia Pacific Petroleum Conference in Singapore -- one of the biggest gatherings of the global oil-trading industry. “Have you seen Oman?” replaced “Good evening” for many in the cocktail circuit.  Adding to the mystery is that Oman is considered a sour crude due to its high sulfur content, making it more difficult to refine into petroleum products such as gasoline and diesel. That means it usually trades at a discount to lower-sulfur, or sweet benchmarks Brent and WTI. But not this week. Here, again, Iran emerges as a key culprit because among the reasons suggested to justify the price surge includes lower supply of similar-quality barrels from Iran due to U.S. sanctions, coupled with growing purchases by top crude importer China.

EU, UK, Russia, & China Join Together To Dodge US Sanctions On Iran  - The UN General Assembly (UNGA) in New York is a place where world leaders are able to hold important meetings behind closed doors. Russia, China, the UK, Germany, France, and the EU seized that opportunity on Sept. 24 to achieve a real milestone. The EU, Russia, China, and Iran will create a special purpose vehicle (SPV), a “financially independent sovereign channel,” to bypass US sanctions against Tehran and breathe life into the Joint Comprehensive Plan of Action (JCPOA), which is in jeopardy. "Mindful of the urgency and the need for tangible results, the participants welcomed practical proposals to maintain and develop payment channels, notably the initiative to establish a Special Purpose Vehicle (SPV) to facilitate payments related to Iran's exports, including oil," they announced in a joint statement. The countries are still working out the technical details. If their plan succeeds, this will deliver a blow to the dollar and a boost to the euro.The move is being made in order to save the 2015 Iran nuclear deal. According to Federica Mogherini, High Representative of the European Union for Foreign Affairs and Security Policy, the SPV will facilitate payments for Iran’s exports, such as oil, and imports so that companies can do business with Tehran as usual. The vehicle will be available not just to EU firms but to others as well. A round of US sanctions aimed at ending Iranian oil exports is to take effect on November 5. Iran is the world's seventh-largest oil producer. Its oil sector accounts for 70% of the country's exports. Tehran has warned the EU that it should find new ways of trading with Iran prior to that date, in order to preserve the JCPOA. The SPV proposes to set up a multinational, European, state-backed financial intermediary to work with companies interested in trading with Iran. Payments will be made in currencies other than the dollar and remain outside the reach of those global money-transfer systems under US control. In August, the EU passed a blocking statute to guarantee the immunity of European companies from American punitive measures. It empowers EU firms to seek compensation from the United States Treasury for its attempts to impose extra-territorial sanctions. No doubt the move will further damage the already strained US-EU relationship. It might be helpful to create a special EU company for oil exports from Iran.

Oil Market Shocked As China’s Top Refiner Halves Iranian Oil Imports -- China’s top refiner Sinopec is halving its oil imports from Iran as of September, bowing to pressure from the United States, which is seeking to bring Iranian oil exports down to zero with the sanctions returning in November, Reuters reported on Friday, quoting people familiar with the issue.Sinopec will reduce its imports from Iran to around 130,000 bpd, based on Reuters calculation on the prevailing supply contracts between the Chinese company and the National Iranian Oil Company (NIOC).China has previously stated that it would not stop buying Iranian oil despite U.S. efforts to have the Iranian exports down to zero. But Beijing is also said to have agreed not to increase its oil purchases from Iran. Iran, for its part, is keen to keep its single biggest oil customer—China—when U.S. sanctions on Iranian oil exports kick in.Analysts have so far assumed that China will keep buying Iranian oil and be pretty much the only certain meaningful customer of Iran, because the other major buyer, India, is even more hard-pressed by the United States to wind down purchases from Tehran.Sinopec—listed in Hong Kong, but more importantly, also in New York—is now facing direct pressure from the United States to curtail Iranian oil imports. According to one of Reuters’s sources, U.S. officials visited Sinopec in Beijing in August and demanded steep reductions of oil imports from Iran.

US Rig Count Sees Modest Increase Amid Soaring Oil Prices - Baker Hughes reported an increase of a single oil and gas rig in the United States this week, bringing the total number of active oil and gas rigs to 1,054 according to the report, with the number of active oil rigs decreasing by three to reach 863 and the number of gas rigs increasing by three. The miscellaneous rig count increased by one rig.The oil and gas rig count is now 114 up from this time last year.At 12:22pm. EDT on Friday, WTI Crude was trading up 1.72 percent at $73.36—up over $3 per barrel up from this time last week, while Brent Crude was trading up on the day by 1.98 percent at $82.99—up more than $5 per barrel from this time last week.Prices climbed this week as OPEC failed to agree to a production increase at their weekend meeting juts days ago, intensifying fears that the oil market may find itself undersupplied in the wake of Iranian and Venezuelan supply disruptions.Japan and South Korea have both ceased all oil trading with Iran, and India and even China’s Sinopec have drastically reduced oil volumes from the country that finds itself on the wrong end of US sanctions. Reports that Saudi Arabia, Iraq, and a handful of OPEC members have unofficial plans to increase production have done little to assuage the fears that the market may slip to a deficit. Russia has hit a new oil production high for the month of September, Reuters sources say, averaging 11.347 million bpd, but this, too, has failed to cut the oil price increases.Canada’s oil and gas rigs for the week lost 19 rigs this week after losing 29 rigs last week, bringing its total oil and gas rig count to 178, which is 35 fewer than this time last year, with a 13-rig decrease for oil for a second week in a row, and a 6-rig decrease for ga s.On the production side, the EIA’s estimates for US production for the week ending September 21 were for an average of 11.10 million bpd—a new high for the United States.

Oil prices tally a second straight monthly gain - Oil futures rallied Friday on signs of tightening supplies, tallying a second monthly gain in a row, with global crude prices settling at another four-year high. “Until sizable supply is offered up by OPEC and with pandemic market chatter raging about the $100 per barrel market, its hard [not] be blatantly bullish,” said Stephen Innes, head of trading at Oanda, in emailed comments. November West Texas Intermediate crude the U.S. benchmark, climbed $1.13, or 1.6%, to settle at $73.25 a barrel on the New York Mercantile Exchange, the highest since July 10. Global benchmark November Brent picked up $1, or 1.2%, to expire at $82.72 a barrel on the ICE Futures Europe exchange. The December Brent contract which is now the front month, added $1.35, or 1.7%, to $82.73. For the week, based on the front-month contracts, Brent crude was up 5%. It saw a monthly gain of around 6.8% and a quarterly advance of 4.1%, according to Dow Jones Market Data. U.S. WTI oil saw a weekly climb of 3.5% and a monthly rise of roughly 4.9%. For the quarter, however, based on the settlement of $74.15 for the front-month contract at the end of June, it ended down 1.2%.  Prices saw a sudden, late-morning jump to intraday highs. Phil Flynn, senior market analyst at Price Futures Group, attributed that climb to technical trading. He also said prices seemed to find support from reports that China is cutting back on Iranian oil purchases, as well as talk that the U.S. has no plans to tap its Strategic Petroleum Reserve to make up for Iranian oil barrels lost amid U.S. sanctions.Overall, the market has been bolstered by declining Iranian crude exports ahead of U.S. economic sanctions against the Islamic Republic’s oil industry, set to take effect Nov. 4, analysts say.

The Biggest Wildcard In The Iran Sanctions Saga - In the last 24 hours there have been two fascinating media reports about the Iran sanctions: one is a Bloomberg story saying Indian refiners will not buy any Iranian crude in November; the other is a Reuters story quoting a government official as saying New Delhi has not told refiners to stop buying Iranian crude. These two stories don’t just offer two different perspectives. They demonstrate exactly how confusing the situation is and how much more confusing it could become. And meanwhile, the truth remains out there. Bloomberg’s sources from several of India’s largest refiners—and biggest Iranian crude buyers—may be telling the truth or they may be saying something that the United States wants to hear. If they are telling the truth, shipping data would support this soon enough: if they stop buying Iranian crude they will have to find a replacement for those 577,000 bpd that they had been importing from Iran as per Bloomberg shipping data.There is no mention of alternative supplies in the story. What there is, however, is the caveat that it is basically too early to say if these refiners will import Iranian crude: final decisions are only due early next month. Put simply, these statements from refinery officials could be nothing more than much ado about nothing. Shipping data will tell.Reuters’ story comes from a government official who has remained unnamed but who has made a point of telling the agency there has been no decision by New Delhi to halt imports. That shouldn’t be a surprise. An earlier statement from another government official had this to say: "We want to make the point that India is heavily reliant on oil imports for its consumption needs and 83 percent of its oil comes from external sources." hAnd here’s another statement from last week: Indian refiners may start paying for Iranian crude in rupees from November on as the sanctions kick in.

Iran Starts Air Force Drills Near The World’s Crucial Oil Chokepoint -- Iran’s Air Force and the Islamic Revolution Guards Corps began on Friday fighter jet drills over the waters near the world’s most important oil chokepoint, the Strait of Hormuz, Iran’s IRNA news agency reported on Friday.Aircraft including nine F-4, six Sukhoi, and four Mirage started the war games in the Persian Gulf and the Sea of Oman waters, IRNA said.The maneuver is a warning that Iran’s enemies will face a “stern response” if they show ill-will toward Tehran, the AP quoted the official Iranian news agency as saying.Earlier this year, Iran threatened to close the Strait of Hormuz for all tanker traffic if the U.S. drives Iranian oil exports to zero.As the first round of U.S. sanctions on Iran kicked in last month and the second round of sanctions—including on Iranian oil exports—is set to snap back in early November, the Islamic Republic has recently stepped up rhetoric about controlling the most vital oil flow chokepoint in the world.  U.S. Secretary of State Mike Pompeo rebuffed Iran’s claims saying in a statement posted on Twitter: “The Islamic Republic of Iran does not control the Strait of Hormuz.” The Strait of Hormuz is the world’s most important chokepoint, with an oil flow of 18.5 million bpd in 2016, the EIA estimates. The Strait connects the Persian Gulf with the Gulf of Oman and the Arabian Sea and is the key route through which Persian Gulf exporters—Saudi Arabia, Iran, Iraq, Kuwait, Qatar, the UAE, and Bahrain—ship their oil. Only Saudi Arabia and the UAE have pipelines that can ship crude oil outside of the Persian Gulf with additional pipeline capacity to bypass the Strait of Hormuz, which is a route of more than 30 percent of the daily global seaborne-traded crude oil and petroleum products and more than 30 percent of the liquefied natural gas (LNG) flows.

Iran’s Rouhani fumes at US after Ahvaz parade attack - Iranian President Hassan Rouhani has fiercely criticised the US following a deadly attack on a military parade. Gunmen opened fire at Revolutionary Guard troops in the south-western city of Ahvaz on Saturday, in an attack claimed by both an anti-government Arab group, and Islamic State militants. Mr Rouhani said the "bully" US and the Gulf states it backed had enabled the attack. The US has denied this and says it condemns "any terrorist attack". Mr Rouhani will face Donald Trump at the UN General Assembly this week. Saturday's attack killed 25 people, including 12 soldiers, civilians watching the parade, and a four-year-old girl. Ahvaz National Resistance, an umbrella group that claims to defend the rights of the Arab minority in Iran's Khuzestan Province, said the group was behind the bloodshed, while IS also claimed the attack. Neither group provided evidence to show it was involved.

Iran’s Revolutionary Guard vows to avenge Ahvaz attack - Iran's Revolutionary Guard has vowed to revenge the attack on a military parade that killed 29 people, including the four attackers, and wounded 70 others.The Iranian elite force, in a statement on Sunday, said that those behind Saturday's attack will face a "deadly and unforgiving revenge in the near future".Iranian officials blamed two Gulf states and the United States for the attack, accusing them of backing the Arab separatist al-Ahvaziya armed group which claimed responsibility for the attack.President Hassan Rouhani vowed to deliver a "crushing response", while Iran's Supreme Leader Ayatollah Ali Khamenei linked the attack with the US and its "allies in the region".The country's foreign minister, Mohammad Javad Zarif, said "regional terror sponsors" were responsible for the attack, adding he held "their US masters accountable". While Iranian officials have not directly named the Gulf states, their comments are believed to be directed at Saudi Arabia, the UAE andIsrael, which all have hostile relations with Iran and have promised to counter its influence in the region, including inside the country.

Saudi, UAE officials call for regime change in Iran at US summit -  The foreign minister of Saudi Arabia, the ambassador of the United Arab Emirates to Washington, and the director of Israel's Mossad spy agency have joined ranks in pushing for regime change in Iran. Speaking alongside US National Security Adviser John Bolton and US Secretary of State Mike Pompeo, Saudi Arabia's Foreign Minister Adel al-Jubeir called for the overthrow of the Iranian government, saying the Islamic Republic was unlikely to change on its own volition. "Unless the pressure internally is extremely intense, I don't believe they will open up," al-Jubeir said at the United Against Nuclear Iran (UANI) conference in New York City, which was attended by states that opposed the 2015 nuclear deal with Iran. "How can we negotiate with a state that wants to kill us," Jubeir said in remarks carried by UAE newspaper The National.Saudi and Emirati officials welcomed Washington's decision to abandon the 2015 Iran deal - known as the Joint Comprehensive Plan of Action (JCPOA) - under which Iran agreed to curb its nuclear programme in exchange for sanctions relief, it reported.But Yousef al-Otaiba, the UAE's ambassador to the US, said external pressure was needed and would be key in changing Iran's course. "I think any recalibration of Iranian foreign policy will come from external policy," said Otaiba, who added the isolation of Tehran must be backed up by European powers, Asian nations, as well as the United States."If a missile is launched at Saudi Arabia and the UAE what will the reaction be and how will we be defended?" he said.

Iran Warns Saudis Of Red Lines And Threatens US Bases Will Not Be Safe - Iran has issued a number of threats on Friday following official charges made by leaders in Tehran that Saudi Arabia and the UAE funded a terrorist attack on a military parade in a southwest district last Saturday which killed 25 people, including members of the elite Iran’s Revolutionary Guards (IRGC).Iranian military officials declared "red lines" against the two Gulf countries, threatening war, while in a separate statement a senior cleric said US regional bases will not be safe if "America does anything wrong". "If America does anything wrong, their bases around Iran would not remain secure," Ayatollah Mohammadali Movahedi Kermani was quoted as saying by Mizan news agency while leading Friday prayers in Tehran.  And simultaneously the Fars news agency quoted Brigadier General Hossein Salami, deputy head of the IRGC, as saying in reference to the Saudis and Emirates: “If you cross our red lines, we will surely cross yours. You know the storm the Iranian nation can create.”

US Evacuating Consulate In Iraq, Citing Threats From Iran - On Friday the State Department announced it is evacuating all non-essential personnel from the US consulate in Basra, Iraq. The drastic move comes after a month of heavy anti-Iran and anti-Iraqi government protests that have gripped the southern city, which has led to sectarian rioting and the burning of Shia militia buildings, as well as the torching of the Iranian consulate early this month. During the first week of September the US embassy in Baghdad's green zone also came under attack by mortar fire, which US officials and military analysts blamed on Iran-backed militias.  Secretary of State Mike Pompeo cited threats from Iran as the reason for ordering the Basra consulate evacuation, and in a separate statement a senior US official confirmed to CNN that the "ordered departure" was due to "security threats from Iran." "US Embassy Baghdad will continue to provide consular services to US citizens in Basra," the State Department said in its statement referencing the massive and highly fortified US compound in Iraq's capital, which the Basra consul staff will evacuate to. It also issued an updated travel advisory for Iraq noting the removal of non-essential personnel from Basra.  Pompeo explained the evacuation order further as, "Threats to our personnel and facilities in Iraq from the Government of Iran, the Islamic Revolutionary Guard Corps Quds Force, and from militias facilitated by and under the control and direction of the Quds Force leader Qasem Soleimani have increased over the past several weeks."

Once Iraq's Venice, Basra's waters have now turned deadly (Reuters) - Once dubbed the “Venice of the Middle East” for its canals, Iraq’s crumbling port city of Basra is slowly dying of thirst. Crisscrossed waterways that earned it comparisons with the Italian city are now filthy pools of stagnant water. Its vibrant freshwater lifeline, the Shatt-al-Arab river that runs through it, is now so polluted it threatens the lives of the more than 4 million inhabitants of Iraq’s second city. “It now causes death. It is highly polluted. Different pollutants can be found in the river, including germs, chemicals, toxic algae coupled with unprecedented concentrations of salt almost like that of seawater, rather, it is indeed seawater,” said Shukri al-Hassan, Marine Science lecturer at Basra University. According to Hassan, contamination levels of Shatt-al-Arab have increased four-fold over the past 10 years and are increasing, putting more and more people at risk. L Daily life also features open sewers and streets filled with fetid piles of garbage. In response, furious residents recently staged some of the biggest protests in years. Many contrast their impoverishment with the oil wealth the province provides to the federal government’s coffers. State officials blame a public funding crisis wrought by years of low oil prices for the hardship in a city that was a magnet for Middle Eastern tourists until the early 1980s. Located where the Euphrates and Tigris rivers merge near the Gulf at Iraq’s marshy southern tip, Basra is one of the few cities in the Middle East without an effective water treatment system. It had an advanced sanitary infrastructure in the 1960s but that broke down decades ago, turning waterways into cesspools whose stench is compounded by the hot desert climate.  Basra residents say salt seeping into the water supply has made it undrinkable and sent hundreds to hospital. Some 90,000 people have been admitted to hospital, according to the head of Basra’s health department, Riyadh Abdull Amir, with as many as 4,000 a day seeking treating this month. 

Libya Urges United Nations To Take Concrete Action To Halt Chaos In Tripoli - More than seven years after NATO launched a regime change war in Libya on the side of anti-Gaddafi rebels, the West is again being asked to intervene as the country further descends into civil war.  Except this time it's the internationally recognized government since installed in Tripoli that is at war with itself, and the death toll from inter-factional fighting since August has now reached over 100 and is growing as street battles in Tripoli suburbs rage, causing leaders to urge the United Nations to act.  The UN-backed Government of National Accord (GNA) issued a statement late Friday calling on the U.N. to take "concrete and effective" action to protect civilians and halt fighting near the capital. The GNA urged the UN mission to "present the Security Council with the reality of the bloody events in Libya so that it can... protect the lives and property of civilians". On Friday alone clashes in Tripoli left 15 dead and dozens more wounded, according to officialhealth ministry statements.  According to international reports, some of the feuding militias have come mostly from Libya's third city Misrata and the town of Tarhouna southeast of the capital; however, the early weeks of fighting were driven mostly by rival factions within the GNA itself.  Since fresh fighting again erupted in Tripoli on August 26 (there's been internecine battles in the capital for years), whole sections of the city have been shut down, especially the southern suburbs where initial street battles began, which has witnessed  the shelling of residential areas, street-to-street fighting, and tanks in the streets — allreminiscent of the 2011 war which eventually led to a NATO air campaign and forcible removal and assassination of Libya's longtime leader Muammar Gaddafi.

Deadly Yemen famine could strike at any time, warns UN boss - A famine inflicting “huge loss of life” could strike at any time in Yemen, as food prices soar and the battle rages over the country’s main port, the UN humanitarian chief, Mark Lowcock, has warned. Lowcock said that by the time an imminent famine is confirmed, it would be too late to stop it. Accelerating economic collapse has caused prices of staples to increase by 30% at a time many millions of Yemenis were already finding it hard to feed their families. Meanwhile, fighting over the port of Hodeidah has limited its capacity, shut down its grain mills and closed the main road inland towards the capital, Sana’a, threatening a lifeline that has allowed aid agencies to reach 8 million people and stave off famine so far this year. “One of the things about what happens in famines is there’s a sudden collapse of which you get no notice,” Lowcock, the UN under-secretary for humanitarian affairs, told the Guardian on the eve of a UN general assembly meeting on Monday to discuss the Yemeni crisis. “When the collapse happens, it’s too late to do anything. There’s a huge loss of life very, very quickly. So that’s the issue we’re flagging.” The offensive on Hodeidah is being led on the ground by forces from the United Arab Emirates (UAE) with Saudi air support. They are fighting Houthi rebels who have held the port since 2014. Before the latest offensive, Hodeidah’s population was about 600,000, but Lowcock said it was unclear how many were still in the heavily bombed port city. UN agencies recently delivered food aid for 42,000 families in danger, which Lowcock estimated represented about a quarter of a million people. The veteran British aid official said he thought it unlikely there would be a direct assault on the city centre but was concerned about the impact of the battle on supplies reaching further inland, in a country that is 90% dependent on food imports.

Yemen is undeniably the world's worst humanitarian crisis: WFP- The World Food Programme (WFP) has said there "very well could be" famine in remote areas of Yemen where the UN's food agency does not have access, painting a bleak picture of the hunger crisis gripping the country."Yemen is a disaster and I don't see any light at the end of the tunnel right now," WFP's Executive Director David Beasley told reporters at a closed briefing during the UN General Assembly in New York City on Thursday.The WFP has warned that Yemen is on the brink of a full-blown famine, with 18 million of its 29 million population food insecure, 8.4 million severely so.The country's civil war further worsened in the wake of Saudi-led military intervention in 2015, which has ravaged the country's economy and caused the Yemeni riyal to collapse, depreciating 180 percent.The cost of food has increased by 35 percent in the last 12 months and if trends continue the riyal will reach an exchange rate of 1,000 to the US dollar, putting 12 million at risk of starvation, UN officials have warned. "Yemen is undeniably the world's worst humanitarian crisis by far," said Beasley

US military document reveals how the West opposed a democratic Syria - US military documents from 2011 and 2016 reveal that although officials wanted a Syrian regime change in theory, they thought it was highly unlikely to actually happen — and hoped that if President Bashar al-Assad was overthrown, he would not be replaced by an opposition-led Syrian democracy but, rather, the same Alawite-Baathist ruling structure would continue. The end result was to be the decimation of the democratic opposition, the consolidation of Islamist forces and regime preservation.‘The US has given up on the overthrow of Assad in Syria’, wrote Robert Fisk this summer. Indeed, as the Russian-backed Syrian army prepared to execute its final offensive on Idlib, western governments appeared to signal their acceptance of a bloody victory for Assad, despite the ritual denunciations.But at the last minute, Russia and Turkey agreed a truce to ward off a Russian-led attack for at least a month, and establish a buffer zone to protect 3 million civilians. The deal will involve hashing out how to remove extremist rebels from the buffer zone, and Turkey has announced it will send more troops into Idlib.As the Idlib offensive loomed, the West, curiously, did little of substance in any particular direction. According to two newly uncovered US military documents, western reticence might be because that the US was never really committed to overthrowing Assad, due to a self-serving strategy that has been wildly misunderstood. The documents suggest that both early on and toward the later phase of the conflict, senior US military officials had not given any credence to the democratic aspirations of Syrian protestors, but had merely sought to use them as a tool to sideline expanding Iranian influence. Toppling the regime was dismissed as a highly improbable scenario, with officials indicating they believed the survival of an authoritarian Baathist governing structure — with or without Assad — was inevitable.

The ceasefire agreed by Russia and Turkey proves how far Putin has come out on top in Syria -  Patrick Cockburn - Pundits are predictably sceptical about the agreement reached by Russian president Vladimir Putin and Turkish president Recep Tayyip Erdogan in Sochi on Monday to head off an imminent offensive by President Bashar al-Assad’s forces directed againstrebels in Idlib province. This is the last enclave of the armed opposition in western Syria which has lost its strongholds in Aleppo, Damascus and Daraa over the past two years. Doubts about the accord are understandable because, if it is implemented, the anti-Assad groups in Idlib will be defanged militarily. They will see a demilitarised zone policed by Russia and Turkey eat into their territory, “radical terrorist groups” removed, and heavy weapons ranging from tanks to mortars withdrawn. The rebels will lose their control of the two main highways crossing Idlib and linking the government held cities of Aleppo, Latakia and Hama. There is a striking note of imperial self-confidence about the document in which all sides in the Syrian civil war are instructed to come to heel. This may not happen quite as intended because it is difficult to see why fighters of al-Qaeda-type groups like Hayat Tahrir al-Sham should voluntarily give up such military leverage as they still possess. The Syrian government has said that it will comply with the agreement but may calculate that, in the not so long term, it will be able to slice up Idlib bit by bit as it did with other rebel enclaves. What is most interesting about the agreement is less its details than what it tells us about the balance of forces in Syria, the region and even the world as a whole.  Implementation of the Putin-Erdogan agreement may be ragged and its benefits temporary, but it will serve a purpose if a few less Syrians in Idlib are blown apart. The Syrian civil war long ago ceased to be a struggle fought out by local participants. Syria has become an arena where foreign states confront each other, fight proxy wars and put their strength and influence to the test.The most important international outcome of war so far is that it has enabled Russia to re-establish itself as a great power. Moscow helped Assad secure his rule after the popular uprising in 2011 and later ensured his ultimate victory by direct military intervention in 2015.

Trump claims credit for halting Assad regime’s attack on Syria’s Idlib, after learning about province from a rally - President Donald Trump has claimed credit for saving “millions” of lives in Idlib, Syria despite only learning about the area recently, because he said he successfully halted a brutal regime offensive via a tweet.Mr Trump said Wednesday he convinced Syria and its main allies, Russiaand Iran, to hold off an anticipated attack on the northwestern province, home to 3 million people and one of the last rebel strongholds in the country. Speaking on the sidelines of the United Nations General Assembly, Mr Trump explained that a message to his top team to “not let it happen” and a 4 September tweet, declaring Syria would be making a "grave humanitarian mistake”, saved the day. However, he also admitted he had only recently heard about the province because a woman brought it up at a rally last month. The US president said the woman had told him that Iranians, Russians and Syrians had surrounded Idlib and were going to “kill millions of people in order to get rid of 25,000 or 30,000 terrorists.”. "I said that's not going to happen. I didn't hear of Idlib province. I came back and picked up the Failing New York Times and opened it up,” he continued.  Mr Trump said the story had indicated the offensive could start in the coming days and so he wrote his Twitter post. He gave orders to top officials, including Secretary of State Mike Pompeo and White House national security adviser John Bolton, to "not let it happen." “Nobody is going to give me credit but that's OK because the people know,” Mr Trump added.

Russia Beefs Up Syria’s Air Defenses – Tells “Hotheads” To Cool Down The Russian Minister of Defense today announced some of the measures to be taken in Syria in response to last weeks destruction of its electronic warfare plane with 15 airmen on board. Yesterday the Russian MoD held Israel responsible for the incident. Shortly after the event happened we noted: On Netanyahoo's personal request Russia had stopped the delivery of original Russian S-300 long range air-defense missiles to the Syrian military. These would have been less likely to veer off towards the wrong target. In consequence an Iranian 747 was damaged and 15 Russian soldiers were killed. Netanyahoo can forget about any further such 'favors' from Moscow. Yesterday we added: The incident will have consequences on several levels. For one - the airspace along the Syrian coast will now be off limits for Israeli flights ...  The Syrian air defense will be further strengthened and modernized. Its personal will get more specialist training. But the probably worst issue for Israel's military will be cooled down relations with the Russian forces. There will be no more freebies, no more looking aside and direct Russian fire on Israeli forces should they again try such stunts. These predicted measures are exactly the ones Defense Minister Shoigu announced today. Syria will get the S-300, its air defense will be further updated, Syria's coast will be more heavily defended:  MOSCOW, September 24. TASS - Within two weeks, the Syrian army will get from Russia S-300 air-defense missiles to strengthen its combat capabilities following the downing of a Russian Ilyushin Il-20 aircraft in Syria, Defense Minister Sergei Shoigu said on Monday

Bolton Warns Russian Missile Sale To Syria Would Be Significant Escalation-  It appears Israel has paid a huge price for last week's attack on Syria which led to the accidental "friendly" fire downing of a Russian reconnaissance plane with 15 personnel on board as the door could now be forever shut on striking targets in Syria with impunity. The Russian Ministry of Defense (MoD) has announced plans to deliver its advanced S-300 air defense system to Damascus within two weeks. Prior plans to deliver the system, which is considered vastly more effective and can strike at a greater range than Syria's current S-200 and others, were nixed after Israeli threats that delivery would constitute a "red line" for which Israel must act. The Russian MoD acknowledged this and said the situation has "changed" upon announcing its intent to follow through on what Syria has already purchased: “In 2013 on a request from the Israeli side we suspended the delivery to Syria of the S-300 system, which was ready to be sent with its Syrian crews trained to use it,” the MoD statement said.  Defense Minister Sergei Shoigu said early Monday, "A modern S-300 air defense missile system will be supplied to the Syrian Armed Forces within two weeks. It is capable of intercepting air assault weapons at a distance of more than 250 kilometers and hit simultaneously several air targets."U.S. National Security Adviser John Bolton said on Monday that the Russian plans to supply Syria with a S-300 missile system would be a “significant escalation” by Moscow and hopes it will reconsider. His statement follows the Russian announcement from early Monday that Russia will supply the surface-to-air missile system to Syria in two weeks, one week after Moscow blamed Israel for indirectly causing the downing of a Russian military plane in Syria, despite strong Israeli objections.

Russia moves S-300 missiles, jamming gear to Syria - - MOSCOW has rejected outright Israel’s argument that its combat jets were nowhere near the reconnaissance plane shot down by Syrian air defences last week. Now it says it will deliver — and deploy troops for — an advanced new missile system to the war-torn region, and shoot down any attackers.Defence Minister Sergei Shoigu said President Vladimir Putin ordered new security measures to protect its military in Syria, including supplying the Syrian army with an S-300 air defence system and jamming radars following the downing of a Russian plane last week.A Syrian Soviet-era S-200 missile shot down the Russian surveillance plane by mistake, killing 15 in an accident Moscow blames on Israel’s fighter jet having used the surveillance plane to ‘hide’ behind.But the new moves make the likelihood of similar events much greater — with the all-encompassing threat by Russia to jam the navigation and communications systems of all foreign combat aircraft flying over Syria, and to shoot on anything it perceives as a threat. “This has pushed us to adopt adequate response measures directed at boosting the security of Russian troops” in Syria, Shoigu said in a televised statement. “(Russia will) transfer the modern S-300 air defence system to the Syrian armed forces within two weeks.”

Leaked Photos Show Russian Military Likely Delivered Advanced S-300 To Syria Already - On Tuesday a series of leaked photos were posted online showing that the S-300 missile defense system may have already been delivered to Syria despite the Russian Ministry of Defense previously suggesting a roughly two week timeline. As Al Masdar News reports, at least three photos were posted by Uralinform.Ru, showing the arrival of the Krasukha 4 electronic suppression of navigation and communication systems, touching down via Russian transport aircraft inside Syria on Monday night. According to the author of the Russia-based publication, the Russian military has already delivered the S-300 hardware to Syria via a Russian-made aircraft from Mozdok Airport in the North Ossetian region. Likely the "leaked" photos are intentionally meant as public signalling to Israel that advanced S-300 deterrence is already fast being established. 

Russia’s S-300 Play in Syria Is Creating Geopolitical Waves - The National Interest Russia says it will supply Syria with a version of the S-300 air and missile-defense system, despite objections from Washington and Tel Aviv. The Kremlin made the decision to supply Damascus with the potent air-defense system after a Syrian S-200 surface-to-air missile battery mistakenly shot down a Russian Ilyushin Il-20M Coot-A intelligence, surveillance, and reconnaissance (ISR) aircraft during an Israeli raid on Assad regime forces on September 17.“A modern S-300 air defense missile system will be supplied to the Syrian Armed Forces within two weeks,” Russian defense minister Sergei Shoigu said on September 24, as reported by the state-owned TASS news agency . “It is capable of intercepting air assault weapons at a distance of more than 250 kilometers and hit simultaneously several air targets.” The Kremlin has decided to supply the Syrian regime with the potent S-300 because Moscow blames Israel for the downing of its Il-20M despite the fact that it was a Syrian-operated weapon that brought the four-engine turboprop down. The Russians accuse Tel Aviv of using the lumbering ISR plane as cover during an air raid by four Israeli F-16 fighters on a Syrian regime target. “I will underscore—at the request of the Israeli side, in 2013 we suspended the delivery of S-300 systems that were ready for the dispatch, while the Syrian military had undergone training,” Shoigu said. “Now the situation has changed, and we are not to blame.”Indeed, while Russian president Vladimir Putin initially put the blame for the incident on the fog of war, more recently the Kremlin has said that it blames Israel for the loss of its aircraft. “The information presented by the Israeli military on the operation of their aircraft over Syrian territory differs from the conclusions of the Russian Defence Ministry,” the Kremlin said in a statement . “Russia proceeds from the premise that the actions of the Israeli Air Force were the main cause of the tragedy.”

U.S. Pulling Some Missile-Defense Systems Out of Mideast - The Pentagon is removing some U.S. missile systems from the Middle East in October, U.S. military officials said, a move that will leave American allies with fewer defenses as the White House ramps up its rhetoric against what it says are threats posed by Iran. Defense Secretary Jim Mattis is pulling four Patriot missile systems out of Jordan, Kuwait and Bahrain next month in a realignment of forces and capabilities as the military steps up its focus on threats from China and Russia, multiple senior military officials said. The relocation of the systems out of the Middle East, which hasn’t been previously disclosed, is one of the most tangible signs of the Pentagon’s new focus on threats from Russia and China and away from the long-running conflicts in the Middle East and Afghanistan. Two Patriot missile systems will be redeployed from Kuwait, and one each from Jordan and Bahrain, officials said. Patriots are mobile missile systems capable of shooting down missiles and planes. .The four systems have been taken offline and will be redeployed by next month, officials said. There are no plans for any of them to be replaced, and they are being returned to the U.S. for refurbishing and upgrades, an official said. Although some Patriot systems will remain in the region, officials said the removal of the four batteries amounts to a major drawdown of the capability Patriots provide in the region. Patriots are designed as a missile-defense system, but can be used offensively if needed to protect not only U.S. bases and installations in those countries but also as an effective defense for allies. Their removal comes as the White House intensifies its rhetoric against Iran and amid an increasingly complex battlefield in Syria. The State Department on Tuesday issued a 48-page report that detailed threats posed by Iran, including its missile programs. The report said Iran maintains “a stockpile of hundreds of missiles that threaten its neighbors in the region.”

Netanyahu claims Israel has found Iran’s ‘secret atomic warehouse’ -  Benjamin Netanyahu has claimed that Israel had identified a “secret atomic warehouse” in Tehran, containing nuclear equipment and radioactive material.Israel’s prime minister called for new sanctions against Iran and accused European leaders of “appeasement” for opposing them.In a speech to the UN general assembly on Thursday, Netanyahu said he was revealing the existence of the “atomic warehouse” for the first time in public.As he has in past presentations, Netanyahu brought visual aids to illustrate his claims.He held up a satellite image which he said showed where the warehouse was located in Tehran, and a photograph of a nondescript wall and metal gate, which he said showed of the exterior of warehouse.Netanyahu described the facility as a “secret atomic warehouse for storing massive amounts of equipment and  materiel from Iran’s secret nuclear weapons programme”, but gave no further details, other than to allege that government officials had spread 15kg of the radioactive material around the streets of Tehran in an attempt to dispose of it. He said a nearby rug cleaning business should check its wares for radioactivity.Tehran is party to a 2015 agreement curbing its nuclear activities in return for sanctions relief. As part of the Joint Comprehensive Programme of Action (JCPOA) it dismantled uranium-enriching centrifuges and a reactor and exported most of its stockpile of enriched uranium. It is not clear, even if some surplus equipment was stored in a Tehran warehouse, whether it would represent a violation of the JCPOA. Dismantled centrifuges were to be stored in specified locations under international monitoring, but there not specific stipulations on the storing of other ancillary pieces of hardware.

Official Israeli Document Denies Existence of Palestinian Refugees– IMEMC News - “Israel Hayom” newspaper, on Wednesday, unveiled an official Israeli document, issued by the Israeli Ministry of Foreign Affairs, which denies the existence of millions of Palestinian refugees.The document affirms the need for settling the refugees residing in Jordan. It also claims that there are links between the UN Relief and Works Agency for Palestine Refugees (UNRWA) and Hamas, saying that the agency is exaggerating the number of refugees and blurring the facts, in order to keep the refugee issue instead of resolving it.According to the PNN, the document considers that the “refugee” classification applies to a very limited number of Palestinians, the same position expressed by the US administration in a report, recently, which states that there are only “tens of thousands of Palestinians refugees” only, instead of the 5.3 million refugees registered with UNRWA.The document referred to UN General Assembly Resolution 149, which states that refugees should be returned, claiming that the resolution is non-binding and that the General Assembly does not have the capacity to commit to decisions, but only recommendations. Through the document, Israel called on the European countries to amend what it called  a “historical mistake” of granting UNRWA a mandate related to Palestinian refugees and their attachment to the United Nations refugee agency.

After meeting Bedouins whose homes are being destroyed, I can’t see how a Palestinian state can ever happen -- Robert Fisk - Abu Yussef Abu Dahuk is 60 years old. But of course he looks around 75 or 80, because he is a Bedouin and lives under a corrugated iron roof and sheets tied together with string, and because he owns just 120 goats which belong to his 17 children. And because the Israeli cops and soldiers a couple of hundred feet away are ready to demolish his little slum and drive him away. The Palestinian had two wives – the first died 18 years ago, and the second serves us the usual scalding hot tea on this scalding hot morning – and has been expelled from his grazing lands three times; first from Tel Arad near the Israeli town of Beersheva and then again after the 1967 Israeli occupation of the West Bank; and then in 1974. Now the Israeli High Court of Justice – and yes, let justice indeed be its name – has decided that the 180 members of the Bedouin Jahalin tribe should be dispossessed once more. They must be moved to an area in Abu Dis not far, as the residents point out, to a garbage dump. Not that you can be dispossessed of rags and a mud school or bits of rusting metal that prop up a plastic roof over shacks. But it’s not that simple. We all know – the Israelis know, the EU which has given €315,000 to Khan al-Ahmar knows, and the Palestinians know – that this is no chance demolition. Just over the hills to the north peep the red rooftops of the Kfar Adumim Jewish colony, and the destruction of Khan al-Ahmar will give its Israeli inhabitants room to move – high court permitting, needless to say – down to the highway and thus destroy the last of the Palestinian villages beside the road to Jerusalem. Another circle of Israeli concrete around the city will be complete. Abu Yussef Abu Dahuk knows all too well what this means. “The settlement continues to be built and so they must move us out. Now we are not allowed to cross the valley behind us with our goats or the settlers will take our goats. We are not allowed to build proper homes and so we have to use these metal structures. The settlers can build a villa, with electricity and a water source and a garden – and for us in the winter, we can build nothing. We put plastic on top of the metal to stop the water falling on us when we are sleeping.”

UN says 21 Afghan civilians killed in separate air strikes - Two separate air strikes over the weekend killed at least 21 civilians in Afghanistan, including 14 children, the UN said. In a statement late on Tuesday, the UN Assistance Mission in Afghanistan (UNAMA) said the 21 dead included 12 members of a family, as US and Afghan forces ramp up aerial bombings against armed groups.Citing "preliminary findings", UNAMA said the 12 family members were killed on Sunday in an air strike in the eastern Maidan Wardak province during an Afghan military operation. "Ten of those killed were children whose ages ranged from six to 15," including eight girls, it said, adding it was unclear whether the air strikes were carried out by Afghan or NATO forces.The latest civilian deaths were reported after UNAMA said it had "credible" reports of nine members of a family killed in an air raid at the home of a teacher in Tagab district in the Kapisa province on Saturday.Afghan defence ministry spokesperson Ghafor Ahmad Jawed said the operation in Maidan Wardak freed eight Afghan soldiers allegedly abducted by the Taliban and killed 11 fighters.He said the ministry is investigating both the incidents. There was no immediate comment from Afghan officials on the reported air strike in Kapisa province, according to The Associated Press.

In western Afghanistan, villagers are fleeing not just war but drought - Between a sandy cliff and cracked riverbed on the edge of this small provincial capital, 380 families are camped in a cluster of hand-sewn, sun-bleached tents, waiting for rain and peace to let them return to their ancestral villages. But across drought-stricken, war-torn Badghis province in far-western Afghanistan, the wait will not end soon. Chronic drought, the result of a severe lack of rain and snowfall in many recent years, has now spread to 20 of the country’s 34 provinces, where nearly 15 million people depend on agriculture. This year, aid officials said, nearly 45 percent of Afghans are facing food shortages due to drought and other factors, a sharp increase from 33 percent last year. Close to a half-million have been receiving emergency food aid since July, and officials plan to assist at least 1.4 million as winter approaches. The worst-hit areas are five northwestern provinces, where more than 300,000 people received extra food aid last month, and conditions in Badghis are especially desperate. “This is the epicenter of food insecurity and drought,” Zlatan Milisic, country director for the World Food Program, said during a recent visit to the camps outside Qaleh-ye Now, where the agency is providing wheat flour, cooking oil and other food staples. He noted that poor farmers in this desolate region of low brown hills depend almost exclusively on rain to irrigate their crops. Last winter, aid officials reported, precipitation was so low in Badghis that the wheat harvest this spring fell by 60 percent. Aid officials hope to persuade some of the displaced families to return to their villages by offering to send extra aid there. They worry that the newcomers will overwhelm towns with no facilities for them and become too dependent on donations at a time of dwindling foreign support.

US To Start Disrupting North Korean Oil Smuggling -- An international coalition of American allies will start “detecting and disrupting” North Korean oil smuggling operations at sea, reports the Washington Examiner.“The United States has deployed aircraft and surface vessels to detect and disrupt these activities,” State Department spokeswoman Heather Nauert said in a news release.Japan, Australia, and New Zealand, announced Friday they would aid “monitoring and surveillance activities against illicit maritime activities,” with a particular focus on ship-to-ship transfers of oil.Make no mistake these are the neocons at work in the Trump administration.According to the Examiner, Anthony Ruggiero, who joined the White House National Security Council’s Korea desk in July, said at the time that “more aggressive” measures should include a plan to “start to interdict these vessels” at sea.Ruggiero, before joining the White House, was a senior fellow at the Foundation for Defense of Democracies.The leadership council of the FDD includes crazed neocon warhawk Joseph Lieberman and Gen. Michael Hayden, a former Director of the CIA and former Director of the NSA. This, by the way, will also increase tensions with Russia and China, since both are likely providing oil to North Korea.