US gasoline supplies fell 2.3% on return of demand and gasoline exports at 3 1/2 year high; Strategic Petroleum Reserve at new 37 year low; 670,000 barrels per day of excess oil were produced worldwide in July, even with OPEC output 1,231,000 barrels per day short of quota
oil prices rose for the second week in three this week, supported by weak US inflation data, suggesting that monetary policy might not need to be as economically restrictive going forward...after falling 9.7% to $89.01 a barrel last week on weak economic reports from China and Europe and lower US demand for fuel, the contract price for the benchmark US light sweet crude for September delivery edged up from last week's 6 month lows in early trading on Monday, as positive economic data from China and the US fed hopes for rising demand, despite nagging fears of a recession, and then further rallied after China surprised markets by reporting a greater-than-expected growth in oil purchases over the last month to settle $1.75 higher at $90.76 a barrel, as the drawdown of U.S. Strategic Petroleum Reserves to a fresh 37-year low underscored tight market fundamentals....oil's rally extended into early trading on Tuesday, following reports that Russia's Transneft had suspended oil exports to Hungary, the Czech Republic, and Slovakia due to transit payment issues, but then dropped over $1 a barrel following reports on progress in talks to revive the Iran nuclear accord, which would allow Tehran to boost oil exports, and settled 26 cents lower at $90.50 a barrel after the U.S. EIA revised lower its world oil demand forecast for the fourth consecutive month, citing protracted economic weakness and rising inflation across the wealthy industrialized OECD countries...oil prices dipped in evening trading after the API reported a bigger than expected build of US crude inventories, and then edged lower early Wednesday on expectations that the Druzhba pipeline flows to central Europe would resume shortly as traders took to the sidelines ahead of US inflation and oil inventory data, but then rebounded on renewed gasoline demand and higher crude inventories, and as lower-than-expected U.S. inflation data drove investors into riskier assets, and finished $1.43 higher at $91.93 a barrel, supported by a sharp drop in the U.S. dollar after inflation data for July surprised markets to the downside, with the first month-on-month decrease since April 2020...oil prices moved 1% higher early Thursday, after the International Energy Agency boosted its forecast for global demand growth this year, and accelerated in afternoon trading to close $2.41 higher at $94.34 a barrel, as high natural gas prices in Europe were forcing power generators to switch to oil for electricity production....however, oil prices moved lower in Asian trading amid mild profit taking early Friday, and then tumbled in early New York trading on a stronger dollar following cautious comments from key Federal Reserve officials that softer U.S. inflation data wouldn't necessarily slow the aggressiveness of further rate increases, and settled $2.25 lower at $92.09 a barrel on easing worries about a supply disruption in the U.S. Gulf of Mexico, and lower oil demand forecasts from OPEC...but oil prices still finished 3.5% higher on the week, as better-than-expected inflation data reset expectations of how aggressively the Fed would have to raise interest rates...
natural gas prices also finished higher on the week, on weaker well output and on signs that Freeport LNG was on track to resume exports by early October... after falling 2.0% to $8.064 per mmBTU last week on milder forecasts and on an inventory increase that exceeded expectations, the contract price of natural gas for September delivery opened 5% lower on Monday on weekend forecasts for lighter cooling demand in the coming weeks, and settled 47.5 cents, or 5.9% lower at $7.589 per mmBTU, their lowest close since mid-July, on record output and on forecasts for cooler weather and lower air conditioning demand over the next two weeks than had been expected...however, natural gas prices opened 20 cents higher on Tuesday and recovered more than half of their Monday drop to settle 24.4 cents higher at $7.833 per mmBTU, as well production took a tumble and drove a swift rebound for natural gas futures...continued lower output and a warmer shift in the forecast drove prices higher Wednesday, as they finished with a 36.9 cent gain at $8.202 per mmBTU, and then they jumped 67.2 cents or 8% to $8.874 on Thursday on talk of increased gas flows to the Freeport LNG export plant in Texas, another drop in gas output, and forecasts for more demand over the next two weeks than had been expected...after an initial 5% drop on Friday on forecasts for cooler weather and lower demand for next week, natural gas prices clawed back from the day's lows to settle at $8.768 per mmBTU, down 10.6 cents on the day, but still 8.7% higher on the week...
The EIA's natural gas storage report for the week ending August 5th indicated that the amount of working natural gas held in underground storage in the US rose by 44 billion cubic feet to 2,501 billion cubic feet by the end of the week, which still left our gas supplies 268 billion cubic feet, or 9.7% below the 2,769 billion cubic feet that were in storage on August 5th of last year, and 338 billion cubic feet, or 11.9% below the five-year average of 2,839 billion cubic feet of natural gas that have been in storage as of the 5th of August over the most recent five years....the 44 billion cubic foot injection into US natural gas working storage for the cited week was higher than the average 40 billion cubic foot injection forecast from both Bloomberg's and Reuters' surveys of analysts, but matched the 44 billion cubic feet that were added to natural gas storage during the corresponding week of 2021, and almost matched the average injection of 45 billion cubic feet of natural gas that had typically been added to our natural gas storage during the same week over the past 5 years....
The Latest US Oil Supply and Disposition Data from the EIA
US oil data from the US Energy Information Administration for the week ending August 5th indicated that after another big drop in our oil exports, another big withdrawal of crude from the SPR, and a shift from oil demand that could not be accounted for to oil supplies that could not be accounted for, we were able to add oil to our stored commercial crude supplies for the 4th time in 8 weeks, and for the 16th time in the past 37 weeks....Our imports of crude oil fell by an average of 1,171,000 barrels per day to average 6,171,000 barrels per day, after rising by 1,178,000 barrels per day to a 2 year high during the prior week, while our exports of crude oil fell by 1,402,000 barrels per day to 2,110,000 barrels per day, which meant that our trade in oil worked out to a net import average of 4,061,000 barrels of oil per day during the week ending August 5th, 231,000 more barrels per day than the net of our imports minus our exports during the prior week. Over the same period, production of crude from US wells was reportedly 100,000 barrels per day higher at 12,200,000 barrels per day, and hence our daily supply of oil from the net of our international trade in oil and from domestic well production appears to have totaled an average of 16,261,000 barrels per day during the August 5th reporting week…
Meanwhile, US oil refineries reported they were processing an average of 16,581,000 barrels of crude per day during the week ending August 5th, an average of 728,000 more barrels per day than the amount of oil than our refineries processed during the prior week, while over the same period the EIA’s surveys indicated that a net average of 23,000 barrels of oil per day were being added to the supplies of oil stored in the US. So, based on that reported & estimated data, the crude oil figures from the EIA for the week ending August 5th appear to indicate that our total working supply of oil from net imports and from oilfield production was 343,000 barrels per day less than what what was added to storage plus what our oil refineries reported they used during the week. To account for that disparity between the apparent supply of oil and the apparent disposition of it, the EIA just inserted a (+343,000) barrel per day figure onto line 13 of the weekly U.S. Petroleum Balance Sheet in order to make the reported data for the daily supply of oil and for the consumption of it balance out, a fudge factor that they label in their footnotes as “unaccounted for crude oil”, thus suggesting there must have been an omission or error of that magnitude in this week’s oil supply & demand figures that we have just transcribed...moreover, since last week’s EIA fudge factor was at (-109,000) barrels per day, that means there was a 452,000 barrel per day difference between this week's balance sheet error and the EIA's crude oil balance sheet error from a week ago, and hence the net of the week over week supply and demand changes indicated by this week's report are Inaccurate by that much....however, since most everyone treats these weekly EIA reports as gospel, and since these figures often drive oil pricing, and hence decisions to drill or complete oil wells, we’ll continue to report this data just as it's published, and just as it's watched & believed to be reasonably accurate by most everyone in the industry...(for more on how this weekly oil data is gathered, and the possible reasons for that “unaccounted for” oil, see this EIA explainer)….
This week's rounded 32,000 barrel per day increase in our overall crude oil inventories came as 780,000 barrels per day were being added to our commercially available stocks of crude oil, while 757,000 barrels per day of oil were being pulled out of our Strategic Petroleum Reserve at the same time.. That draw on the SPR was part of the emergency withdrawal under Biden's "Plan to Respond to Putin’s Price Hike at the Pump" (sic), that was expected to supply 1,000,000 barrels of oil per day to commercial interests over a six month period up to the midterm elections in November, in the hope of keeping gasoline and diesel fuel prices from rising further, at least up until that time. The administration's previous 30,000,000 million barrel release from the SPR to address Russian supply related shortfalls wrapped up in June, and his earlier release of 50 million barrels from the SPR to incentivize US gasoline consumption was completed in May...Including those, and other withdrawals from the Strategic Petroleum Reserve under recent release programs, a total of 191,589,000 barrels of oil have now been removed from the Strategic Petroleum Reserve over the past 24 months, and as a result the 464,558,000 barrels of oil still remaining in our Strategic Petroleum Reserve is now the lowest since April 26th, 1985, or at a new 37 year low, as repeated tapping of our emergency supplies for non-emergencies or to pay for other programs had already drained those supplies considerably over the past dozen years, even before the Biden administration's SPR releases. Now the total 180,000,000 barrel drawdown expected during the current six month release program to November will remove almost a third of what remained in the SPR when the program started, and leave us with what would be less than a 20 day supply of oil at today's consumption rate...
Further details from the weekly Petroleum Status Report (pdf) indicate that the 4 week average of our oil imports fell to an average of 6,549,000 barrels per day last week, which was 0.9% less than the 6,608,000 barrel per day average that we were importing over the same four-week period last year. This week’s crude oil production was reported to be 100,000 barrels per day higher at 12,200,000 barrels per day because the EIA's rounded estimate of the output from wells in the lower 48 states was 100,000 barrels per day at 11,800,000 barrels per day, while Alaska’s oil production was 4,000 barrels per day lower at 433,000 barrels per day but had no impact on the final rounded national total. US crude oil production had reached a pre-pandemic high of 13,100,000 barrels per day during the week ending March 13th 2020, so this week’s reported oil production figure was 6.9% below that of our pre-pandemic production peak, but was 25.8% above the pandemic low of 9,700,000 barrels per day that US oil production had fallen to during the third week of February of 2021...
US oil refineries were operating at 94.3% of their capacity while using those 16,581,000 barrels of crude per day during the week ending August 5th, up from their 91.0% utilization rate during the prior week, and back to a refinery utilization rate that's now near normal for mid summer. The 16,581,000 barrels per day of oil that were refined this week were 2.4% more than the 16,197,000 barrels of crude that were being processed daily during week ending August 30th of 2021, but 4.2% less than the 17,302,000 barrels that were being refined during the prepandemic week ending August 9th, 2019, when our refinery utilization was at 94.8%, typical for mid summer...
With the big increase in the amount of oil being refined this week, gasoline output from our refineries was also much higher, increasing by 858,000 barrels per day to 10,150,000 barrels per day during the week ending August 5th, after our gasoline output had decreased by 366,000 barrels per day during the prior week. This week’s gasoline production was 1.9% more than the 9,961,000 barrels of gasoline that were being produced daily over the same week of last year, but 0.5% less than our gasoline production of 10,203,000 barrels per day during the week ending August 9th, 2019, ie, a comparable week during the year before the pandemic impacted US gasoline output. Meanwhile, our refineries’ production of distillate fuels (diesel fuel and heat oil) increased by 189,000 barrels per day to 5,122,000 barrels per day, after our distillates output had decreased by 76,000 barrels per day during the prior week. With that increase, our distillates output was 4.9% more than the 4,885,000 barrels of distillates that were being produced daily during the week ending July 30th of 2021, and 0.9% more than the 5,077,000 barrels of distillates that were being produced daily during the week ending August 9th 2019...
Even with the big increase in our gasoline production, our supplies of gasoline in storage at the end of the week fell for the 3rd time in eight weeks; but for the 21st time out of the past twenty-seven weeks, decreasing by 4,978,000 barrels to 220,316,000 barrels during the week ending August 5th, after our gasoline inventories had increased by 163,000 barrels during the prior week. Our gasoline supplies decreased this week because the amount of gasoline supplied to US users increased by 582,000 barrels per day to 9,123,000 barrels per day, and because our exports of gasoline rose by 286,000 barrels per day to 3 1/2 yr high of 1,126,000 barrels per day, while our imports of gasoline fell by 14,000 barrels per day to 595,000 barrels per day. After 21 inventory drawdowns over the past 27 weeks, our gasoline supplies were 3.1% lower than last August 6th's gasoline inventories of 227,469,000 barrels, and about 6% below the five year average of our gasoline supplies for this time of the year…
After the increase in our distillates production, our supplies of distillate fuels increased for the 2nd time in 9 weeks and for the 19th time in forty-nine weeks, rising by 2,166,000 barrels to 111,490,000 barrels during the week ending August 5th, after our distillates supplies had decreased by 2,400,000 barrels during the prior week. Our distillates supplies rose this week because the amount of distillates supplied to US markets, an indicator of our domestic demand, decreased by 153,000 barrels per day to 3,724,000 barrels per day, and because our exports of distillates fell by 341,000 barrels per day to 1,293,000 barrels per day, while our imports of distillates fell by 30,000 barrels per day to 204,000 barrels per day.. After forty-six inventory withdrawals over the past sixty-nine weeks, our distillate supplies at the end of the week were 20.7% below the 140,511,000 barrels of distillates that we had in storage on August 6th of 2021, and about 24% below the five year average of distillates inventories for this time of the year...
Meanwhile, after this week's big decrease in our oil exports, our commercial supplies of crude oil in storage rose for the 6th time in 13 weeks and for the 22nd time in the past year, increasing by 5,457,000 barrels over the week, from 426,553,000 barrels on July 29th to 432,010,000 barrels on August 5th, after our commercial crude supplies had increased by 4,467,000 barrels over the prior week. After those increases, our commercial crude oil inventories were still about 5% below the most recent five-year average of crude oil supplies for this time of year, but roughly 24% above the average of our crude oil stocks as of the first week of August over the 5 years at the beginning of the past decade, with the disparity between those comparisons arising because it wasn’t until early 2015 that our oil inventories first topped 400 million barrels. Since our commercial crude oil inventories had jumped to record highs during the Covid lockdowns of the Spring of 2020, and then jumped again after last year's winter storm Uri froze off US Gulf Coast refining, our commercial crude supplies as of this August 5th were still 1.5% less than the 438,777,000 barrels of oil we had in commercial storage on August 6th of 2021, and were 16.0% less than the 514,084,000 barrels of oil that we had in storage on August 7th of 2020, and 1.9% less than the 440,510,000 barrels of oil we had in commercial storage on August 9th of 2019…
Finally, with our inventories of crude oil and our supplies of all products made from oil near multi-year lows in recent months, we are continuing to keep track of the total of all U.S. Stocks of Crude Oil and Petroleum Products, including those in the SPR. The EIA's data shows that the total of our oil and oil product inventories, including those in the Strategic Petroleum Reserve and those held by the oil industry, and thus including everything from gasoline and jet fuel to propane/propylene and residual fuel oil, rose by 7,709,000 barrels this week, from 1,678,775,000 barrels on July 29th to 1,686,484,000 barrels on August 5th, after our total inventories had fallen by 1,164,000 barrels during the prior week. That still left our total liquids inventories down by 101,949,000 barrels over the first 30 weeks of this year, and less than nine million barrels from a 13 1/2 year low...
OPEC's Report on Global Oil for July
Thursday of this week saw the release of OPEC's August Oil Market Report, which includes details on OPEC & global oil data for July, and hence it gives us a picture of the global oil supply & demand situation at a time when China was reopening from its most restrictive Covid lockdowns, and when global refining actively was picking up with the summer driving season, while at the same time the supply of Russian oil was still curtailed by sanctions imposed by the West....in light of those circumstances, OPEC and aligned oil producers agreed to increase their output by the usual 400,000* barrels per day for a twelfth consecutive month, ie the 12th such increase from the previously agreed to July 2021 level, and to also increment that increase with half of the production increase they had originally scheduled for September...that was the sixth production quota policy reset that they had made over the past twenty-six months, all by way of responding to the pandemic-related demand slowdown and subsequent irregular recovery....note that with the course and impact of the Ukraine war and the future course of the pandemic largely unknown, the demand projections made in this report will have a much greater degree of uncertainty than they would have during normal, more stable times..
The first table from this month's report that we'll review is from the page numbered 48 of this month's report (pdf page 58), and it shows oil production in thousands of barrels per day for each of the current OPEC members over the recent years, quarters and months, as the column headings below indicate...for all their official production measurements, OPEC has used an average of production estimates by six "secondary sources", namely the International Energy Agency (IEA), the oil-pricing agencies Platts and Argus, the U.S. Energy Information Administration (EIA), the oil consultancy Cambridge Energy Research Associates (CERA) and the industry newsletter Petroleum Intelligence Weekly, as a means of impartially adjudicating whether their output quotas and production cuts are being met, to thereby avert any potential disputes that could arise if each member reported their own figures....with the June report, the consultancy Wood Mackenzie and the research and intelligence firm Rystad Energy were also added to OPEC's secondary sources.....
As we can see on the bottom line of the above table, OPEC's oil output increased by 234,000 barrels per day to 28,716,000 barrels per day during July, up from their revised June production total that averaged 28,482,000 barrels per day....however, that June output figure was originally reported as 28,716,000 barrels per day, which therefore means that OPEC's June production was revised 36,000 barrels per day lower with this report, and hence OPEC's July production was, in effect, just 180,000 barrels per day higher than the previously reported OPEC production figure (for your reference, here is a copy of the table of the official June OPEC output figures as reported a month ago, before this month's revision)...
According to the agreement reached between OPEC and the other oil producers at their Ministerial Meeting on July 18th, 2021, the oil producers party to that agreement were to raise their output by a total of 400,000 barrels per day each month through December 2021, (later bumped up to 432,000 bpd) which was subsequently renewed at monthly meetings to include further 400,000+ barrel per day production increases in January, February, March, April, May, and June of 2022, and which would indicate an increase of 254,000 barrels per day each month from the OPEC members listed above, (later bumped up to 286,000 barrels per day) with the rest of the current 432,000 barrel per day cartel increase to supplied by other aligned oil producers. including Russia...with the OPEC agreement reached on June 3rd, they agreed to further increase their July output by half of the 432,000 barrels per day they had scheduled as an increase in September...hence, the July production increase for the extended cartel was to expected to be 648,000 barrels per day, with 429,000 barrels of that coming from OPEC...hence, OPEC's actual July increase of 216,000 barrels per day was barely half of the increase they had commited to....and while the production decreases in Venezuela, Angola, Iran and in Libya contributed to their July production shortfall, several other OPEC members continued to be well short of what they were expected to produce, as we'll see in the next table..
The adjacent table was originally included as a downloadable attachment to the press release following the 29th OPEC and non-OPEC Ministerial Meeting on June 2nd, 2022, which set OPEC's and other aligned oil producers' production quotas for July... since war torn Libya and US sanctioned producers Iran and Venezuela are exempt from the production cuts imposed by the joint agreement that governs the output of the other OPEC producers, they are not shown in this list, and OPEC's quota excluding them is aggregated under the total listed for the 'OPEC 10', which you can see was expected to be at 26,276,000 barrels per day in July....therefore, the 25,045,000 barrels those 10 OPEC members actually produced in June were 1,231,000 barrels per day short of what they were expected to produce during the month, with Nigeria and Angola accounting for a large part of this month's shortfall, while only Kuwait, the UAE and Gabon were able to produce what was expected of them...
+ + +
* Recall that the original 2020 oil producer's agreement was to jointly cut their oil production by 23%, or by 9.7 million barrels per day, from an October 2018 baseline for just two months early in the pandemic, during May and June of 2020, but that initial 9.7 million bpd production cut agreement was extended to include July 2020 at a meeting between OPEC and other producers on June 6th, 2020....then, in a subsequent meeting in early July of that year, OPEC and the other oil producers agreed to ease their deep supply cuts by 2 million barrels per day to 7.7 million barrels per day for August 2020 and subsequent months, which thus became the agreement that governed OPEC's output for the rest of 2020...the OPEC+ agreement for their January 2021 production, which was later extended to include February and March and then April's output, was to further ease their supply cuts by 500,000 barrels per day to a reduction of 7.2 million barrels per day from that original October 2018 baseline...then, during a difficult meeting on April 1st of last year, OPEC and the other oil producers that are aligned with them agreed to incrementally adjust their oil production higher each month by a pre-set amount for each country over the following three months, thus extending their joint output cut agreement through July 2021....production levels for August and the following months of last year were to be determined by a July 1st OPEC meeting, but that meeting was adjourned on July 2nd due to a dispute between the UAE and the Saudis over the 2018 reference production levels on which the cuts are based, and a subsequent attempt to restart that meeting on July 5th was called off....so it wasn't until July 18th 2021 that a tentative compromise addressing August 2021's output quotas was worked out, allowing oil producers in aggregate to increase their production by 400,000 barrels per day in August, and again by that amount in each of the following months, and also to boost reference production levels for the UAE, the Saudis, Iraq and Kuwait beginning in April 2022, and which made the cartel's effective monthly production increase 432,000 barrels per day since that time....OPEC and other producers then agreed to increase their production in January 2022 by a further 400,000 barrels per day in a meeting concluded on the 2nd of December, 2021, and reaffirmed their intention to continue that policy with another 400,000 barrel per day increase in February at a meeting concluded January 4, 2022, and then agreed to stick to that 400,000 bpd oil output increase in March, despite pressure from the US to raise output more quickly, at a meeting on February 2nd....then, at a meeting on March 2nd, OPEC and its oil-producing allies, which included Russia, decided to hold their production increase at that level thru April in an OPEC+ meeting that only lasted 13 minutes, their shortest meeting ever...then on March 31, OPEC and aligned producers agreed to reaffirm the decisions of the prior Ministerial meetings and again limit their production increase for May to the agreed 400,000 barrels per day, because "the current [oil market]volatility is not caused by fundamentals, but by ongoing geopolitical developments"...following that, in an OPEC and non-OPEC Ministerial Meeting held on May 5th, they again "reaffirmed, reconfirmed, and reinterated" the decision of the July 18th 2021 meeting to increase production by 432,000 barrels per day in June...however, in a meeting held on June 2nd, they agreed to bring forward the 432,000 barrel per day increase they had already scheduled for September, with that increase to be split evenly between July and August...hence, the production quota increase for both July and August was set at 648,000 barrels per day, which should then leave each member's production back to the October 2018 baseline...
Hence OPEC arrived at the production quotas for August 2021 through July & Augst of this year after repeatedly readjusting the original 23%, or 9.7 million barrel per day production cut from the October 2018 baseline that they first agreed to for May and June 2020, first to a 7.7 million barrel per day output reduction from the baseline for the remainder of 2020, then to a 7.2 million barrel per day production cut from the baseline for the first four months of this year, which was subsequently raised to an 8.2 million barrel per day oil output reduction after the Saudis unilaterally committed to cut their own production by a million barrels per day during the Covid surge of February, March, and then later during April of last year....under the agreement prior to the July 18th 2021 pact affecting the recent months since then, OPEC's production cut in April 2021 was set at 4,564,000 barrels per day below the October 2018 baseline, which was lowered to a cut of 3,650,000 barrels per day from the baseline with the subsequent comprehensive agreement, which thus set the July 2021 production quota for the "OPEC 10" at 23,033,000 barrels per day, with war torn Libya and US sanctioned producers Iran and Venezuela exempt from the production cuts imposed by that agreement....for OPEC and the other producers to increase their output by 400,000 barrels per day from that July 2021 level, each producer would be need to initially increase their production by just over 1% per month since that time...for OPEC alone, that meant a 254,000 barrel per day increase for each month from July 2021 to April 2022, at which time the incremental 32,000 barrels per day adjustment they arrived at in July 2021 kicked in....adding together those monthly quota increases since last July, when the quota was at 23,033,000 barrels per day, and then adding the 216,000 barrel per days brought forward from September's increase, is how they arrived at the 26,276,000 barrels per day quota for OPEC for July that you see on the table above..
The next graphic from this month's report that we'll look at shows us both OPEC's and worldwide oil production monthly on the same graph, over the period from August 2020 to July 2022, and it comes from page 49 (pdf page 59) of OPEC's August Oil Market Report....on this graph, the cerulean blue bars represent OPEC's monthly oil production in millions of barrels per day as shown on the left scale, while the purple graph represents global oil production in millions of barrels per day, with the metrics for global output shown on the right scale....
After this month's 216,000 barrel per day increase in OPEC's production from their revised production of a month earlier, OPEC's preliminary estimate is that total global liquids production increased by a rounded 1,700,000 barrels per day to average 100.6 million barrels per day in July, a reported increase which came after June's total global output figure was apparently revised down by 920,000 barrels per day from the 99.82 million barrels per day of global oil output that was estimated for June a month ago, as non-OPEC oil production rose by a rounded 1,500,000 barrels per day in July after that downward revision, with 1.100,000 barrels per day of July's production growth coming from the OECD Europe, "Other Eurasia", and Latin America...
After that 1.7 million barrel per day increase in July's global output, the 100.6 million barrels of oil per day that were produced globally during the month were 4.88 million barrels per day, or 5.1% more than the revised 95.72 million barrels of oil per day that were being produced globally in July a year ago, which was the third month after OPEC and their allied producers began their program of monthly production increases from the 7.2 million barrels per day production cut that had governed their output over the first four months of last year (see the August 2021 OPEC report (online pdf) for the originally reported July 2021 details)...with this month's increase in OPEC's output fairly modest compared to the big global increase, their June oil production of 28,896,000 barrels per day amounted to 28.7% of what was produced globally during the month, down from their revised 29.0% share of the global total in June....OPEC's July 2021 production was reported at 26,657,000 barrels per day, which means that the 13 OPEC members who were part of OPEC last year produced 2,239,000 barrels per day, or 8.4% more barrels per day of oil this July than what they produced last July, when they accounted for 27.9% of global output...
With the increases in both OPECs and global oil output that we've seen in this report, the amount of oil being produced globally during the month was significantly more than the expected global demand, as this next table from the OPEC report will show us....
The above table came from page 26 of the August Oil Market Report (pdf page 36), and it shows regional and total oil demand estimates in millions of barrels per day for 2021 in the first column, and then OPEC's estimate of oil demand by region and globally quarterly over 2022 over the rest of the table...on the "Total world" line in the fourth column, we've circled in blue the figure that's relevant for July, which is their estimate of global oil demand during the third quarter of 2022....OPEC is estimating that during the 3rd quarter of this year, all oil consuming regions of the globe will be using an average of 99.93 million barrels of oil per day, which is an downward revision of 720,000 barrels per day from their estimate 100.65 million barrels per day for 3rd quarter demand of a month ago (that revision is circled in green)...but as OPEC showed us in the oil supply section of this report and the summary supply graph above, OPEC and the rest of the world's oil producers were producing 100.6 million barrels per day during July, which would imply that there was a surplus of around 670,000 barrels per day of global oil production in July, when compared to the demand estimated for the month...
Note that in green we have circled an upward revision of 220,000 barrels per day to OPEC's previous estimates of second quarter demand...so, in addition to figuring July's global oil supply shortfall that's evident in this report, that upward revision of 220,000 barrels per day to second quarter demand, combined with the 920,000 barrel per day downward revision to June's total global supply figure that's implied in this report, means that the 1,490,000 barrels per day global oil surplus we had previously figured for June would now be revised to a surplus of just 350,000 barrels per day...in addition, the 160,000 barrels per day global oil output surplus we had previously figured for May, in light of the 220,000 barrels per day upward revision to second quarter demand, would now be revised to a shortage of 60,000 barrels per day...in like manner, the 560,000 barrels per day global oil output previously figured for April would now be revised to a surplus of 340,000 barrels per day....
note that in green we have also circled an upward revision of 30,000 barrels per day to OPEC's previous estimates of first quarter demand....for March, that means that the global oil output surplus of 170,000 barrels per day we had previously figured for March would be revised to a surplus of 140,000 barrels per day, and that the 50,000 barrels per day global oil output shortage we had previously figured for February would now be revised to a shortage of 80,000 barrels per day, and that the global oil output shortage of 800,000 barrels per day we had previously figured for January would now be revised to a shortage of 830,000 barrels per day, in light of that 30,000 barrel per day upward revision to first quarter demand...
This Week's Rig Count
The number of drilling rigs running in the US decreased for only the 9th time over the previous 98 weeks during the week ending August 13th, and decreased for 2 weeks in a row for the only time in that 23 month span; however, the rig count was still 3.8% below the prepandemic rig count....Baker Hughes reported that the total count of rotary rigs drilling in the US decreased by 1 to 763 rigs this past week, which was still 262 more rigs than the 501 rigs that were in use as of the August 13th report of 2021, and was 1,166 fewer rigs than the shale era high of 1,929 drilling rigs that were deployed on November 21st of 2014, a week before OPEC began to flood the global market with oil in an attempt to put US shale out of business….
The number of rigs drilling for oil increased by 3 to 601 oil rigs during the past week, after the number of rigs targeting oil had decreased by 7 during the prior week, but there are still 203 more oil rigs active now than were running a year ago, even as they now amount to just 37.4% of the shale era high of 1609 rigs that were drilling for oil on October 10th, 2014, and as they are also down 12.0% from the prepandemic oil rig count….at the same time, the number of drilling rigs targeting natural gas bearing formations decreased by 1 to 160 natural gas rigs, which was still up by 58 natural gas rigs from the 102 natural gas rigs that were drilling during the same week a year ago, even as they were still only 10.0% of the modern high of 1,606 rigs targeting natural gas that were deployed on September 7th, 2008…
Other than those rigs targeting oil and natural gas, Baker Hughes reports that three of the five "miscellaneous" rigs that were active the prior week were shut down this week; those idled this week included a horizontal rig drilling into the Permian basin in Dawson county Texas, the vertical rig drilling a well or wells intended to store CO2 emissions in Mercer county North Dakota, and the vertical rig targeting the Marcellus shale at a depth of between 5,000 and 10,000 feet in Tompkins County, New York..."miscellaneous" rigs that remain active this week include a directional rig drilling to between 5,000 and 10,000 feet on the big island of Hawaii, and a vertical rig drilling more than 15,000 feet into a formation in Humboldt county Nevada that Baker Hughes doesn't track....a year ago, there were was only one such "miscellaneous" rig running...
The offshore rig count in the Gulf of Mexico was up by 2 to 16 rigs this week, with all of this week's Gulf rigs drilling for oil in Louisiana's offshore waters....that's now three more than the number of offshore rigs that were active in the Gulf a year ago, when 12 Gulf rigs were drilling for oil offshore from Louisiana and one rig was deployed for oil offshore from Texas...in addition to rigs drilling in the Gulf, we still have two offshore directional rigs drilling for natural gas in the Cook Inlet of Alaska; one is indicated to be drilling to between 10,000 and 15,000 feet, while the other one is indicated to be drilling to between 5,000 and 10,000 feet...a year ago, there were was only one rig drilling offshore from Alaska...
In addition to rigs running offshore, there are now 3 water based rigs drilling through inland bodies of water...the one added this week was a directional rig drilling to between 10,000 and 15,000 feet, inland in Galveston Bay. Texas; legacy inland waters rigs include a directional rig targeting oil at a depth greater than 15,000 feet drilling through a lake on Grand Isle, Louisiana, and a directional rig drilling for oil in Terrebonne Parish, Louisiana, also at a depth greater than 15,000 feet...
The count of active horizontal drilling rigs was down by 5 to 693 horizontal rigs this week, which was still 237 more rigs than the 442 horizontal rigs that were in use in the US on August 13th of last year, but barely over half of the record 1,374 horizontal rigs that were drilling on November 21st of 2014....on the other hand, the vertical rig count was up by 2 to 31 vertical rigs this week, and those were also up by 13 from the 18 vertical rigs that were operating during the same week a year ago…at the same time, the directional rig count was also up by 2 to 39 directional rigs this week, while those were also up by 12 from the 27 directional rigs that were in use on August 13th of 2021….
The details on this week’s changes in drilling activity by state and by major shale basin are shown in our screenshot below of that part of the rig count summary pdf from Baker Hughes that gives us those changes…the first table below shows weekly and year over year rig count changes for the major oil & gas producing states, and the table below that shows the weekly and year over year rig count changes for the major US geological oil and gas basins…in both tables, the first column shows the active rig count as of August 12th, the second column shows the change in the number of working rigs between last week’s count (August 5th) and this week’s (August 12th) count, the third column shows last week’s August 5th active rig count, the 4th column shows the change between the number of rigs running on Friday and the number running on the Friday before the same weekend of a year ago, and the 5th column shows the number of rigs that were drilling at the end of that reporting week a year ago, which in this week’s case was the 13th of August, 2021....
checking the Rigs by State file at Baker Hughes for the changes in Texas Permian, we first find there was one rig pulled out of Texas Oil District 1, while there was a rig added in Texas Oil District 2 at the same time, which were most likely offsetting changes in the Eagle Ford shale...checking next for changes in the Texas Permian, we find there were 7 rigs added in Texas Oil District 7C, which covers the southern counties of the Permian Midland, but that there were six rigs pulled out of Texas Oil District 8, which covers the core Permian Delaware, and that there were two oil rigs pulled out of Texas Oil District 8A, which includes the northern counties of the Permian Midland...one of the Permian rig additions was a natural gas rig, while the removals include the miscellaneous rig that was pulled out of Dawson county, leaving the Permian basin with 343 oil rigs and 3 natural gas rigs...also in Texas, there was a rig pulled out of Texas Oil District 5, which would account for the oil rig removed from the Barnett shale...
in Oklahoma, there were two oil rigs added in the Cana Woodford, but there were two oil rigs pulled out of the Ardmore Woodford at the same time...there was also a natural gas rig removed from the Arkoma Woodford, and since the state count was up by one, that also means two rigs were added in an Oklahoma basin that Baker Hughes doesn't track....in Louisiana, the two oil rigs added offshore account for all the state's changes; everything onshore remained unchanged...in Alaska, we find that the rig that was removed had been drilling for oil in Sagavanirktok, in the North Slope Borough...
in Appalachia, there were three natural gas rigs pulled out of the Marcellus shale in Pennsylvania, but a natural gas rig added in the Utica shale in the state at the same time....there was also a miscellaneous rig pulled out of the Marcellus shale in New York state, but a natural gas rig added in the Marcellus in West Virginia at the same time...hence, natural rigs netted down by one in the Marcellus, and down by one in the Arkoma Woodford, but up by one in the Permian, and hence down by just one nationally...
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Ohio Bill Creates Tax Breaks for Natural Gas Infrastructure Projects | Marcellus Drilling News -Last week two Ohio state House members, Reps. Jon Cross, R-Kenton, and Jay Edwards, R-Nelsonville, introduced House Bill (HB) 685 to promote the use of the state’s natural gas energy resource. The bill would create “ENERGIZEOhio Zones” to attract new investment in areas that are disadvantaged due to lack of energy resources. The designation allows natural gas infrastructure projects (like pipelines) to receive tax abatements and speed up depreciation to lower the overall cost of development.
Legislation on Additional Infrastructure to Address 'Energy Deserts' – State Representatives Jon Cross (R-Kenton) and Jay Edwards (R-Nelsonville) have introduced House Bill 685, the ENERGIZEOhio bill, to promote the use of Ohio’s abundant natural gas energy resource. Ohio is a leader in the production of natural gas. Unfortunately, too many communities across the state have been locked out of future job growth and economic development opportunities due to limited energy infrastructure to deliver Ohio’s natural gas to them. Modeled after successful economic development programs already used in Ohio, ENERGIZEOhio will create a series of programs and incentives geared toward lowering energy costs and growing energy infrastructure in the state. “We’ve been hearing from communities that are locked out of future job growth because of the high cost of energy infrastructure in the state,” Cross said. “These ‘energy deserts’ see limited job growth because there just isn’t the infrastructure in place to deliver energy at a reasonable price. House Bill 685 is a step in the right direction to address the problem and bring jobs and affordable energy to every corner of the state.” “I’ve heard from communities that are really suffering because they don’t have the energy they need, even though there is robust supply in the state and strong local demand,” Edwards said. “Energy infrastructure construction costs have just gone through the roof due to inflation. We can’t wait for Washington to solve our problems. The General Assembly needs to pass this legislation to help deal with these increases in costs.” House Bill 685 would permit the creation of locally led “ENERGIZEOhio Zones,” which will serve as designated areas in need of investment. Within the ENERGIZEOhio Zone, natural gas infrastructure projects would receive tax abatements and accelerated depreciation to lower the overall cost of the development. In addition, House Bill 685 would permit the State of Ohio to offer low-cost financing to support projects and provide a revolving loan fund to allow local officials to facilitate pipeline easements. Finally, the bill provides financial incentives to gas companies to encourage the development of natural gas pipelines in ENERGIZEOhio zones..
Hilcorp Seeks New Utica Permits in Columbiana County - Business Journal Daily – Houston-based Hilcorp Energy Co. has applied for four new permits to enhance its exploration efforts in Columbiana County, according to the Ohio Department of Natural Resources. Hilcorp has applied for three permits to deepen existing wells and a single permit to drill a new horizontal well along Fairmount Road in Elk Run Township, records show. According to the most recent data, energy companies have drilled 97 wells across the county that target the Utica/Point Pleasant shale formation. Hilcorp’s wells in Elk Run Township are some of the most productive in the county, according to oil and gas production data that energy companies provide to ODNR. During the first quarter of 2022, Hilcorp’s Elk Run Baker 7H well produced the most natural gas among wells drilled in Columbiana. Over a period of 90 days, the well yielded a total of 697.9 million cubic feet of gas, according to data. Other nearby wells on the Elk Run Baker pad also proved strong gas and oil producers. The Baker 4H produced 578.5 million cubic feet, records show, while the Baker 2H yielded 500 million cubic feet of gas for the quarter. The Baker 3H produced 466.9 million cubic feet of gas during the quarter. None of the wells produced significant amounts of oil. Data show that Hilcorp has drilled 27 wells across Columbiana County targeting the Utica/Point Pleasant formation. EAP Ohio, also based in Houston with local offices in Louisville, Ohio, has 58 active wells in the county. Wells in Mahoning and Trumbull counties produced little oil and gas during the quarter, data show. The most productive gas well in Mahoning County was Hilcorp’s Poland CLL2 6H well with 56.9 million cubic feet produced over 90 days. Pin Oak Energy Partners’ Kibler 2-3H well in Lordstown, Trumbull County, yielded the most gas in that county with 80.6 million cubic feet. These results pale in comparison to the strong oil and gas wells found in the southeastern portion of the state, according to ODNR. Gulfport Appalachia boasted the most productive gas well in Ohio during the first quarter – the Angleo well in Jefferson County, which produced more than four billion cubic feet of gas during the quarter. Ascent Resources’ Betts 7H well in Guernsey County yielded the most oil during the three-month period, with 103,438 barrels produced.
Ascent Resources Turns Profitable, Drills 22 New Wells in 2Q | Marcellus Drilling News - Ascent Resources, originally founded as American Energy Partners by gas legend Aubrey McClendon, is a privately-held company that focuses 100% on the Ohio Utica Shale. Ascent is Ohio’s largest natural gas producer (337,000 leased acres) and the 8th largest natural gas producer in the U.S. The company issued its second quarter update yesterday. Ascent averaged production of 2.0 Bcfe/d for the quarter, the same as 1Q22 and virtually the same as 2Q21. By the end of June, Ascent was producing 2.2 Bcfe/d. Nearly all of Ascent’s production (93%) was natural gas, while the rest was oil and NGLs.
Ascent Closes on 27K Utica Acres for $270M – Finally Names Seller -- Marcellus Drilling News - On July 1, just as everyone was heading out the door for summer vacation, Ascent Resources announced it is buying another 26,800 acres in the Ohio Utica for $270 million (see Ascent Resources Buys Another 27K Utica Acres for $270 Million). The announcement withheld the identity of the seller but did say Ascent was buying *all* of the seller’s Ohio Utica shale assets, which touched off speculation about who is doing the selling. We now know. On Friday, Ascent announced it has closed on the deal. The seller was XTO Energy, an ExxonMobil subsidiary…
Why Ascent Resources moved up some of next year's fracking to this year - Inflationary pressures and higher gas prices are leading a Utica Shale driller to move up some of the hydraulic fracturing and well completions that it was planning for next year.Ascent Resources Utica Holdings LLC, one of the biggest privately held natural gas producers in the United States, said it was adding a frack crew late in this quarter to finish pads and turn on the gas spigot instead of in 2023 like previously scheduled. Ascent has production of about 2 billion cubic feet per day and 708 wells in the Utica in Ohio. The move doesn't mean that Ascent will veer from the industry's strategy of so-called maintenance capital, which is the amount of drilling and hydraulic fracturing that leads to a steady state of gas production and the corresponding, so far this year, higher free cash flow. Utica and Marcellus Shale producers say that even with the higher prices for natural gas, until pipelines are built to carry away gas outside the region, production isn't likely to skyrocket. Gas was $8.01 per million British Thermal Unit on the Henry Hub spot market as of Aug. 2, compared to $3.74 per million BTU at the beginning of the year,according to the Energy Information Administration. Instead, it's all about inflation and a tight market for service providers, particularly hydraulic fracturing, as the demand for oil and natural gas in the U.S. and around the world skyrockets. "We think it's a prudent decision given commodity prices and more importantly the relative scarcity of goods and services in the field," said EVP/COO Keith Yankowsky. The crews will be working to complete bigger and more complex well pads that have already been drilled.CEO Jeff Fisher told investors in a conference call Thursday that the company was moving the money it would have spent next year into this year's capital expenditures amid higher expected costs and tight market for service providers next year. "This is simply an acceleration of capital from 2023 and is not a permanent increase to our development plan," Fisher said. In fact, the four drilling crews that Ascent has working right now is expected to drop to three by the fourth quarter and will remain that way in 2023. Executives said they weren't providing any further details about their drilling plans for 2023 but said that it was likely going to continue to be maintenance capital level. Ascent is planning to start drilling between 80 and 85 wells for the full year, about the same it forecast. But it will turn inline — bring into full production — between 85 and 90 wells in 2022, compared to the 75-80 it had expected it would in January. It turned inline 31 wells in the second quarter, half in June alone. The move will bump up Ascent's capital spending from $710 million to $770 million forecast in January 2022 to between $920 million and $950 million now foreseen. Most of that is in drilling and completions operations and also includes the impact of inflation in places like fuel costs, tubular steel and labor and service-related expenses.Fisher said that production in 2022 will end up at the higher end of the previous guidance of 2 billion to 2.1 billion cubic feet of production a day.
BP to shed interest in Toledo refinery - Cenovus Energy Inc. has agreed to purchase partner bp PLC’s 50% ownership interest in jointly held BP-Husky Refining LLC’s 160,000-b/d refinery in Toledo, Ohio.As part the proposed deal, Cenovus will pay $300 million in cash for bp’s stake in the refinery, plus the value of inventory, bp and Cenovus said in separate releases on Aug. 8.Upon finalizing the transaction, Cenovus—which has held the other 50% interest in the BP-Husky Refining partnership since merging with Husky Energy Inc. in 2021—will take 100% ownership of the venture, as well as assume operatorship of the refinery from bp (OGJ Online, Oct. 26, 2020).In addition to the refinery sale, the parties confirmed signing a multi-year product supply agreement, further details of which were not revealed.Pending customary closing conditions, the companies said they expect to complete the deal by yearend 2022.bp said it expects more than 580 bp employees currently employed at the Toldeo refinery to become Cenovus employees upon the deal’s closing.For Cenovus, the proposed acquisition will provide an additional 80,000 b/d of downstream throughput capacity, including 45,000 b/d of heavy oil refining capacity, enabling the operator to further optimize its heavy oil value chain through integration with its upstream assets, particularly the ability to run advantaged Canadian crude feedstock, the company said in an Aug. 8 presentation to investors.“Fully owning the Toledo refinery provides a unique opportunity to further integrate our heavy oil production and refining capabilities,” said Alex Pourbaix, Cenovus’ president and chief executive officer.“Operating the refinery will open up additional synergies and capital efficiency opportunities, including connectivity with our nearby [175,000-b/d refinery in Lima, Ohio]. This transaction solidifies our refining footprint in the US Midwest and increases our ability to capture margin throughout the value chain,” Pourbaix added.The company is also eyeing potential turnaround efficiencies via sequencing maintenance events between the Lima and Toledo refineries, the latter of which completed a major turnaround and feedstock optimization project this year to increase the site’s capacity to run high-TAN crude volumes to about 55,000 b/d from 28,000 b/d, Cenovus told investors.Regarding divestment of its stake in the bp-Husky Toledo refinery, bp said the sale will support the operator’s strategy to instead focus investment on its remaining two US refineries—including the fully owned 152,000-b/d refinery in Whiting, Ind., and 238,450-b/d Cherry Point refinery in Blaine, Wash.—both of which are strategically positioned to serve customers in the US Midwest and Pacific Northwest. Including the Toledo refinery, bp presently operates seven refineries that include 800,000 b/d of net capacity in the US and 1.6 million b/d internationally.
Energy Transfer held criminally responsible for damage from Mariner East pipeline construction -- The state attorney general says Texas-based pipeline builder Energy Transfer is “accepting criminal responsibility” for dozens of charges related to construction of its Mariner East pipeline project and the 2018 explosion of the Revolution pipeline in Beaver County.Pennsylvania Attorney General Josh Shapiro announced the company waived its preliminary hearing scheduled for Friday. Energy Transfer pleaded no contest to the charges, meaning the company will have a permanent criminal record for causing damage to drinking water, wetlands and waterways across the state during five years of construction on the liquified natural gas pipeline system.“Every time Energy Transfer bids for a new project here in the Commonwealth of Pennsylvania or somewhere across this country their criminal conduct will stick with them forever,” Shapiro said at a news conference announcing the plea.Energy Transfer did not contest the evidence, and Shapiro said the company agreed their case would lead to a conviction. In October 2021, the Attorney General released a grand jury presentment dozens of pages long that detailed sinkholes, drilling mud spills, and drinking water contamination at 22 sites in 11 counties across Pennsylvania. Those 48 charges included a felony count of failing to report pollution. In February, the AG charged the company with nine additional criminal charges related to the 2018 explosion of the Revolution Pipeline in Beaver County.The plea includes the charges related to the Revolution pipeline. It does not include the felony count related to Mariner East. The AG’s office did not say why that charge was not included in the plea.From the outset, the Mariner East project faced roadblocks when its initial permit applications to the Department of Environmental Protection weredeemed deficient and challenged by environmental groups. Almost immediately after the construction began, it created damage and further galvanized communities who had initially opposed the eminent domain takings required to build the 350-mile pipeline project that contains two new lines and a reconfigured third line.Construction caused dozens of drilling mud spills into wetlands and waterways across the state, led to dangerous sinkholes in Chester County, and polluted drinking water supplies across the length of the project. The company purchased at least five homes in Chester County after its work damaged the aquifer and left gaping holes in resident’s backyards.“After many years of deceiving the public, Energy Transfer is finally being brought to justice for criminal conduct,” said Clean Air Council executive director Joe Minott, whose organization led litigation efforts challenging pipeline permits issued by the DEP. “A pipeline that has had so many criminal violations of the law should not even be allowed to operate.”Shapiro acknowledged that much of the damage would not have been known without documentation by local residents. “We have reached this achievement in large part because of citizens, because of the good people of Pennsylvania,” he said. “The women and men who served on these grand juries and the many neighbors who brought us evidence from their backyards and from nearby streams. To every member of the public who helped us bring about this conviction I want to truly say ‘Thank you.'”
Energy Transfer Affiliates Convicted of Environmental Crimes for Pennsylvania Pipeline Incidents - Energy Transfer LP (ET) affiliates have reached a plea deal and accepted criminal charges related to the Mariner East 2 (ME2) and Revolution pipeline projects in Pennsylvania, resolving cases brought by state Attorney General (AG) Josh Shapiro since last year. ET affiliates pleaded no contest to 23 counts against both pipelines without admitting guilt. Another 34 counts were dropped. Under the plea deal, ET agreed to pay for independent evaluations of potential water quality impacts for homeowners affected by ME 2 construction. The company has also offered to restore or replace private water supplies. Shapiro, a Democratic candidate for governor, said Friday ET would pay an additional $10 million to improve “the health and safety” of water sources along the pipeline routes. ET said in a statement that the $10 million fund was a voluntary collaboration with the state, noting that the fines levied against it related to the cases were limited to $57,500. The AG’s office last October filed 48 counts of environmental crimes for misconduct during construction of the ME 2 natural gas liquids pipeline, which crosses the entire state. Earlier this year, Shapiro filed nine counts of environmental crimes against the company for failing to properly oversee construction of the Revolution natural gas pipeline in Western Pennsylvania, which ruptured and exploded in 2018. A statewide grand jury investigation determined that ET repeatedly allowed thousands of gallons of drilling fluid to escape underground during ME 2 construction. The project was completed earlier this year, five years after work started. It was stymied by regulatory, legal and construction delays. Sinkholes, leaks and water well problems disrupted neighborhoods and prompted state regulators to periodically halt work on the project. The company paid millions in fines. The grand jury investigation also found that an ET affiliate allegedly ignored environmental protocols and custom plans that were created to minimize erosion and the possibility of a landslide, which ultimately led to the Revolution explosion. The incident in Beaver County’s Center Township scorched nearby forests, destroyed a home, barn and vehicles, and caused six high voltage electric transmission towers to collapse. There were no injuries. The pipeline returned to service last year.
Williams, PennEnergy Move Certified Appalachian Natural Gas to Growing Domestic, LNG Markets - Williams is partnering with PennEnergy Resources LLC to market and deliver certified natural gas from the Appalachian Basin to meet growing demand in the United States and beyond. Through its Sequent business unit, purchased from Southern Co. in 2021, Williams is building a marketing portfolio to sell the low-carbon natural gas to utilities, LNG export facilities and other clean energy users. Sequent was among North America’s largest natural gas marketers by sales volumes, and now Williams secures a top spot. It ranked No. 7 on NGI’s first-quarter ranking of top North America natural gas marketers. The PennEnergy gas supplies included in the agreement would come from the company’s 378 production wells in southwest Pennsylvania that have achieved Project Canary’s TrustWell certification. Every well pad inspected achieved platinum status, the highest rating available, according to PennEnergy. The certification covers operational, environmental, social, and governance data points on a per-well and midstream asset basis.Earlier this year, the Appalachia-based exploration and production (E&P) company said it had deployed monitoring units to detect and measure methane and other emissions in real time. Focused on the Marcellus and Utica shales and Upper Devonian formation, PennEnergy’s operations span three Southwest Pennsylvania counties. Williams’ Chad Zamarin, senior vice president of Corporate Strategic Development, said the partnership with PennEnergy builds on its multifaceted strategy to grow the delivery of “next-gen gas” to markets across the United States and overseas.“With our large-scale gathering and processing footprint in the best U.S. production basins, our connectivity to the nation’s biggest natural gas customers and our industry-leading Sequent marketing platform, we are extremely well-positioned to facilitate the efficient gathering, marketing and transportation of responsibly sourced natural gas,” he said. PennEnergy CEO Rich Weber added, “PennEnergy welcomes higher standards in the marketplace, which play to our strengths, highlighting our dedication and investments made over many years to ensure the safety of our employees, the community and the environment.”The E&P is one of several that have pursued gas production certification, including Chesapeake Energy Corp., PureWest Energy LLC, Vermilion Energy Inc. and EQT Corp. and Seneca Resources Corp.
Marcellus Activity Slows as U.S. Drilling Total Falls in Latest Baker Count - Driven in part by a slowdown in Marcellus Shale activity, the U.S. rig count eased one unit lower to finish at 763 for the week ended Friday (Aug. 12), according to updated figures from oilfield services provider Baker Hughes Co. (BKR). Net changes domestically for the week included a three-rig increase in oil-directed drilling. However, declines of one natural gas-directed rig and three miscellaneous units drove the overall domestic tally lower, according to the BKR numbers, which are based partly on data from Enverus. The 763 active U.S. rig count as of Friday is up from 501 rigs active in the year-earlier period. Land drilling declined by four rigs for the week, partially offset by a two-rig increase in the Gulf of Mexico and the addition of one rig operating in inland waters. Horizontal rigs fell by five overall, while directional and vertical rigs each increased by two. The Canadian rig count dropped two units to end the week at 201, versus 164 in the year-ago period. Net changes there included a decline of three oil-directed rigs, partially offset by a one-rig increase in natural gas-directed drilling. Broken down by major drilling region, the Marcellus dropped three rigs from its total week/week, ending with 35 active rigs. That’s up from 29 in the year-earlier period. Elsewhere among plays, the Ardmore Woodford dropped two rigs week/week, while one-rig declines were recorded in the Arkoma Woodford, the Barnett Shale and the Permian Basin. Two rigs were added in the Cana Woodford, while the Utica Shale picked up one rig week/week, the BKR data show. In the state-by-state count, Louisiana added two rigs for the period, while Oklahoma and West Virginia each added one. Pennsylvania saw a two-rig decrease week/week, while Alaska and Texas each dropped one from their respective totals, according to BKR.
With Seneca Resources Shift, NFG Foresees Appalachian Natural Gas Growth - A sizable boost in quarterly output from the exploration arm, as well as stronger midstream volumes, have helped fuel Appalachian Basin-focused National Fuel Gas Co. (NFG) as it shifts focus to undeveloped acreage in the Marcellus and Utica shales. Management told investors during a third quarter conference call the firm’s performance reflected its approach to balanced spending. That approach is helping the company maintain momentum as it prepares for the energy environment of the future, management said. New York-based NFG operates across four different segments: exploration and production through its Seneca Resource Co. subsidiary, pipeline and storage, gathering and utility services in western New York and northwestern Pennsylvania. NFG combined production for the quarter was 92 Bcfe, compared with 83 Bcfe year/year. Midpoint production guidance has been increased for the year by 2.5 Bcfe to a range of 350-355 Bcfe. NFG attributed most of the growth to Seneca’s development program in the Appalachian Basin, boosting natural gas volumes. NFG’s natural gas production totaled 89,293 MMcf for 3Q2022 from 79,745 MMcf in the year-ago period. Seneca is running two rigs in the Appalachian. NFG CEO Dave Bauer said that plan will largely continue, but the activity is shifting in 2023 to Tioga County, PA, acreage in the Utica. “We’ve had great success on the initial development of the acreage we acquired there, so it makes sense to overweight that area,” Bauer said. The strategy change wouldn’t substantially increase upstream spending levels, Bauer said, but would be an emphasis of its capital plan for the next two years as NFG builds out infrastructure to the interstate pipeline system. Bauer said NFG’s midpoint guidance for Fiscal Year 2023 capital spending was $830-940 million, a 10% increase year/year. Oil production volumes dropped slightly when compared year/year, which the firm attributed to a “natural production decline in California.” Oil volumes totaled 526,000 bbl in 3Q2022, compared with 558,000 in 3Q2021. NFG recently closed the sale of Seneca’s California assets, reportedly netting $241 million.
Southwestern Energy Boosts Spending to Fight Inflation, Prepare for 2023 - Southwestern Energy Co. said Friday it would increase both production and spending this year in response to inflation. The company also plans for a 2023 maintenance program, and free cash flow would be strengthened by the move. COO Clay Carrell said a second company-operated fracture fleet would be added in Appalachia by the end of September, displacing a third-party crew. It also plans to reposition a Southwestern-owned rig to the Haynesville later this year, “which we expect to further improve performance, compress cycle times and reduce costs,” he said. The company-owned fleet and equipment are expected to help control ballooning oilfield costs. Southwestern is now guiding for 1.715-1.745 Tcfe of production this year, up from its previous range of 1.683-1.723 Tcfe. Spending for the full year was increased toto $2.1-2.2 billion from a previous range of $1.9-2.0 billion. The company is spending about 55% of this year’s capital in the Haynesville Shale and 45% in the Appalachian Basin, a split that isn’t likely to change much next year, said CEO Bill Way. Longer-term the company is continuing efforts to gain more exposure to growing U.S. LNG exports. “The U.S. natural gas market continues to move from structural oversupply to a more balanced market, with the potential for further excess demand, especially in the Gulf Coast region,” Way said. Southwestern is among the nation’s largest natural gas and natural gas liquids producers. It is the largest producer in the Haynesville, and “with complimentary firm transportation from Appalachia,” around 65% of the company’s production reaches the Gulf Coast market, he added. The company produced 438 Bcfe in the second quarter, well above the 276 Bcfe for the same period last year. The jump came after the company acquired GEP Haynesville and Indigo Natural Resources LLC last year, boosting its assets significantly in Louisiana.
R.I. reaches $1.8m settlement with gas companies over contamination - – Three energy giants will pay a combined $1.8 million to Rhode Island to resolve the state’s lawsuit over soil and groundwater pollution caused by a gasoline additive, Attorney General Peter Neronha announced Thursday.The settlement from Chevron, Irving, and Valero will go toward emergency response and ongoing remediation of contamination by methyl tertiary-butyl ether, or MTBE. Rhode Island settled with other energy companies earlier this year for $17 million. “MBTE contamination of public water supplies poses a significant public health and safety risk, one which oil and gas companies knew about well before the public did,” Neronha said in a news release announcing the settlements, which were entered in Rhode Island federal court. “The work to remediate contaminated water supplies continues, and the funds recovered to date, including today, will be exclusively dedicated to doing that work. In the meantime, this Office remains strongly committed to ensuring that the remaining oil and gas defendants are held responsible for the damage they have caused to the people of Rhode Island and the environment.”
Why Is Inflation Reduction Act a Big Deal for Natural Gas, Oil Industries? - The U.S. Senate on Sunday passed a massive spending bill that would invest hundreds of billions of dollars to reshape the energy sector and try to slow climate change, creating far-reaching implications for oil and natural gas, as well as the economy broadly. The bill moves to the Democrat-controlled House, which convenes on Friday, and “looks to be on track for passage,” policy analysts at ClearView Energy Partners LLC said Monday. Tax credits in the bill include $30 billion to hasten the production of solar panels and wind turbines, among other renewable energy infrastructure. It would spend another $10 billion on facilities to manufacture electric cars and future innovations. The legislation also calls for $60 billion to develop clean energy sources in poor communities. The bill would also roll back former President Trump’s 10-year moratorium on offshore wind leasing. Tax incentives in the bill would enable consumers to receive subsidies for energy-efficient products, as well as a $7,500 tax credit to buy electric vehicles. Notably, the legislation would reward natural gas and oil companies that address methane leaks and penalize with fines those that do not. In addition to a new minimum 15% corporate tax, it also establishes a 1% excise tax on company stock buybacks. Energy companies have rewarded shareholders with multiple rounds of buybacks over the past several quarters. That noted, Democrats allowed key fossil fuel provisions to win the support of West Virginia Sen. Joe Manchin, whose state’s economy is driven in large part by natural gas and coal production. The bill ensures oil and gas drilling leases in the Gulf of Mexico and Alaska’s Cook Inlet. It also would require that the federal government continue to hold regular auctions for oil and gas leases alongside any new plans for wind or solar projects on federal land. Companies also would be rewarded for investing in carbon capture technology with tax credits. In doing so, the legislation would enable plants that burn gas or coal to remain open if they use the evolving technology. It also encourages alternative forms of energy such as hydrogen. The American Petroleum Institute (API) said the package falls short of addressing U.S. energy needs. “While we’re encouraged that the bill will likely open the door to more federal onshore and offshore lease sales and will expand and extend tax credits for carbon capture, we remain opposed to policies that raise taxes and discourage investment in U.S. oil and natural gas,” CEO Mike Sommers said Monday.
Manchin’s Donors Include Pipeline Giants That Win in His Climate Deal - The New York Times— After years of spirited opposition from environmental activists, the Mountain Valley Pipeline — a 304-mile gas pipeline cutting through the Appalachian Mountains — was behind schedule, over budget and beset with lawsuits. As recently as February, one of its developers, NextEra Energy, warned that the many legal and regulatory obstacles meant there was “a very low probability of pipeline completion.”Then came Senator Joe Manchin III of West Virginia and his hold on the Democrats’ climate agenda.Mr. Manchin’s recent surprise agreement to back the Biden administration’s historic climate legislation came about in part because the senator was promised something in return: not onlysupport for the pipeline in his home state, but also expedited approval for pipelines and other infrastructure nationwide, as part of a wider set of concessions to fossil fuels.It was a big win for a pipeline industry that, in recent years, has quietly become one of Mr. Manchin’s biggest financial supporters.Natural gas pipeline companies have dramatically increased their contributions to Mr. Manchin, from just $20,000 in 2020 to more than $331,000 so far this election cycle, according to campaign finance disclosures filed with the Federal Election Commission and tallied by the Center for Responsive Politics. Mr. Manchin has been by far Congress’s largest recipient of money from natural gas pipeline companies this cycle, raising three times as much from the industry than any other lawmaker.NextEra Energy, a utility giant and stakeholder in the Mountain Valley Pipeline, is a top donor to both Mr. Manchin and Senator Chuck Schumer, Democrat of New York, who negotiated the pipeline side deal with Mr. Manchin. Mr. Schumer has received more than $281,000 from NextEra this election cycle, the data shows. Equitrans Midstream, which owns the largest stake in the pipeline, has given more than $10,000 to Mr. Manchin. The pipeline and its owners have also spent heavily to lobby Congress.The disclosures point to the extraordinary behind-the-scenes spending and deal-making by the fossil fuel industry that have shaped a climate bill that nevertheless stands to be transformational. The final reconciliation package, which cleared the Senate on Sunday, would allocate more than $370 billion to climate and energy policies, including support for cleaner technologies like wind turbines, solar panels and electric vehicles, and put the United States on track to reduce its emissions of planet-warming gases by roughly 40 percent below 2005 levels by the decade’s end.
Virginia says no to anti-gas ban bill, still aims to protect gas users -The Virginia General Assembly took steps to prevent a sudden shutdown of municipal natural gas utility service in cities combating climate change, but lawmakers opted against joining at least 20 other states that have prohibited local governments from restricting gas use in buildings.The passage of Virginia House Bill 1257 was the latest sign that the push to adopt gas ban preemption bills, known as fuel choice laws among supporters, may have plateaued. While these bills have attracted some bipartisan support, Republican proponents have suffered a series of defeats in politically divided states over the past year.Still, Virginia's bill showed that some gas stakeholders are seeking assurances as building electrification mandates spread and cities in purple states like Virginia consider how to implement climate action plans. An overhaul of House Bill 1257 balanced opposition to preempting local authority over climate policy with concerns about suddenly halting service to Virginia businesses and manufacturers that depend on gas.The attempt to preempt local gas bans in Virginia was short-lived. On Feb. 14, the Republican-controlled House of Delegates passed House Bill 1257, which sought to protect customer access to natural gas and propane. The bill would have prohibited the state, counties, cities and towns from adopting an ordinance, resolution or building code that would restrict access to gas utility service and propane.Another provision in the bill would establish guidelines for a municipal utility that plans to terminate natural gas distribution service. The provision was a direct response to the Richmond City Council's September 2021 climate resolution, which committed to phasing out gas use, according to Brett Vassey, president and CEO of the Virginia Manufacturers Association. In the resolution, the council said the city's operation of Richmond Gas Works was an obstacle to achieving its climate goals. Charlottesville and Danville also operate municipal utilities in Virginia.The prospect of the cities suddenly winding down municipal gas distribution service presented an "existential threat" to dozens of Virginia manufacturers that rely on natural gas, Vassey said in an interview. Meanwhile, environmentalists and Democrats opposed the gas ban preemption provision, which they said would strip local governments of their ability to set climate policy. While HB 1257 received unanimous support among House Republicans, just 6% of voting Democrats cast their ballots in the bill's favor. This ranks among the lowest levels of Democratic support in 46 statehouse votes on gas ban preemption bills across the country as reviewed by S&P Global Commodity Insights.
U.S. natural gas drops 6% on record output, less hot forecasts U.S. natural gas futures fell about 6% to near a three-week low on Monday on record output and forecasts for cooler weather and lower air conditioning demand over the next two weeks than previously expected. Also weighing on prices was a drop in pipeline exports to Mexico from Texas and the ongoing outage at the Freeport liquefied natural gas (LNG) export plant in Texas, both of which leaves more gas in the United States for utilities to inject into stockpiles for next winter. Freeport LNG, the second-biggest LNG export plant in the United States, was consuming about 2 billion cubic feet per day (bcfd) of gas before it shut on June 8. Freeport expects to return the facility to at least partial service in early October. Front-month gas futures fell 47.5 cents, or 5.9%, to settle at $7.589 per million British thermal units (mmBtu), their lowest close since July 19. So far this year, the front-month is up about 103% as much higher prices in Europe and Asia feed strong demand for U.S. LNG exports. Global gas prices soared this year as several countries around the world cut their use of Russian energy after Moscow invaded Ukraine on Feb. 24. Gas was trading around $57 per mmBtu in Europe and $44 in Asia. Data provider Refinitiv said average gas output in the U.S. Lower 48 states has risen to 97.9 bcfd so far in August from a record 96.7 bcfd in July. With the weather expected to be less hot, Refinitiv projected average U.S. gas demand, including exports, would fall from 100.5 bcfd this week to 97.7 bcfd next week. Those forecasts are lower than Refinitiv’s outlook on Friday. The average amount of gas flowing to U.S. LNG export plants has slid to 10.8 bcfd so far in August from 10.9 bcfd in July. That compares with a monthly record of 12.9 bcfd in March. The seven big U.S. export plants can turn about 13.8 bcfd of gas into LNG. The reduction in U.S. exports from Freeport is a problem for Europe, where most U.S. gas exports have gone this year as countries there wean themselves off Russian energy.29dk2902l Russia, the world’s second-biggest gas producer, has provided about 30% to 40% of Europe’s gas, totaling about 18.3 bcfd in 2021. The European Union wants to cut Russian gas imports by two-thirds by the end of 2022 and refill stockpiles to 80% of capacity by Nov. 1 and 90% by Nov. 1 each year beginning in 2023. Gas stockpiles in Northwest Europe – Belgium, France, Germany and the Netherlands – were about 4% below the five-year (2017-2021) average for this time of year, according to Refinitiv. Storage was currently about 67% of capacity. That is much healthier than the situation for U.S. inventories, which were about 12% below their five-year norm.
Natural Gas Futures, Cash Prices Recover as Production Nosedives -- After holding steady for several days, production took a tumble on Tuesday and drove a swift rebound for natural gas futures. The Nymex September gas futures contract settled 24.4 cents higher day/day at $7.833/MMBtu. October futures climbed 24.7 cents to $7.825. Cash prices also recovered some of the prior days’ losses despite thunderstorms set to ease temperatures across large swaths of the country. NGI’s Spot Gas National Avg. picked up 5.5 cents to $7.900. Just as natural gas traders had started to gain some confidence that production levels would hold near all-time highs, output plunged 2 Bcf day/day amid maintenance activities in multiple supply basins. Wood Mackenzie said its top day estimates showed production falling to around 96 Bcf/d on Tuesday. About 850 MMcf/d of the decline was seen in Texas, with about 590 MMcf/d off in the Northeast, roughly 150 MMcf/d down in the New Mexico portion of the Permian Basin and around 120 MMcf/d off in the Rockies. In East Texas, a one-day event Tuesday on Gulf South along Index 129 was impacting East Texas/North LA receipts by up to 100 MMcf/d. A force majeure on Natural Gas Pipeline Co. of America also was restricting about 495 MMcf/d on the Gulf Coast #3 mainline between compressor stations (CS) 304 and 303 until Friday (Aug. 12). In the Texas portion of the Permian, decreases were concentrated along El Paso Natural Gas with maintenance on Line 110 and at the Afton CS that was restricting about 50 MMc/fd until Friday. These events are also impacting Permian New Mexico, according to Wood Mackenzie. In the Northeast, the declines were concentrated in Pennsylvania, split equally between the Northeast and Southwest portions of the state. In Northeast Pennsylvania, the decreases were along Transcontinental Gas Pipe Line Co. and Millennium Pipeline, but Wood Mackenzie said there were no posted notices of maintenance. In Southwest Pennsylvania, the declines were along the Texas Eastern Transmission and Eastern Gas Transmission and Storage system, but again, no maintenance events were posted. “However, there is maintenance along Equitrans Midstream on the Cain Ridge Compressor Station in the Eureka Lean Gathering System that is expected to conclude on Aug. 11,” Wood Mackenzie analyst Laura Munder. Meanwhile, weather models saw little change overnight but the midday data did confirm a cooling trend on the horizon. NatGasWeather said weather patterns for beginning Wednesday through Aug. 22 have gone from “solidly bullish” to now “only neutral.” This is most apparent in the European Centre model, which shows comfortable temperatures arriving in the Great Lakes and eastern third of the country. “When combined with strong production and soft LNG exports due to Freeport remaining offline, weekly storage builds have potential to print larger than normal for the second half of August,” NatGasWeather said. Of course, the background state remains bullish for now with storage deficits near 335 Bcf, according to the forecaster. Conditions also remain hot in Texas where strong power burns are being aided by light wind energy generation in the state.
U.S. natgas jumps 5% on forecasts for higher demand, lower output (Reuters) - U.S. natural gas futures jumped about 5% to a one-week high on Wednesday with output on track to drop for a second day in a row and forecasts for more demand this week than previously expected. That price increase came despite forecasts for less hot weather through mid August and the ongoing outage at the Freeport liquefied natural gas (LNG) export plant in Texas, which has left more gas in the United States for utilities to inject into stockpiles for next winter. Freeport LNG retracted the force majeure it initially declared after the explosion in June, a development that could cost its buyers billions of dollars in losses. Freeport LNG, the second-biggest U.S. LNG export plant, was consuming about 2 billion cubic feet per day (bcfd) of gas before it shut on June 8. Freeport expects the plant to return to at least partial service in early October. Front-month gas futures rose 36.9 cents, or 4.7%, to settle at $8.202 per million British thermal units (mmBtu), their highest since Aug. 3. So far this year, the front-month is up about 121% as much higher prices in Europe and Asia feed strong demand for U.S. LNG exports. Global prices soared this year as several countries cut their use of Russian energy after Moscow invaded Ukraine on Feb. 24. Gas was trading around $62 per mmBtu in Europe and $45 in Asia. Data provider Refinitiv said average gas output in the U.S. Lower 48 states rose to 97.8 bcfd so far in August from a record 96.7 bcfd in July. On a daily basis, however, output was on track to drop by a preliminary 2.2 bcfd over the past couple of days since hitting a record 98.3 bcfd on Monday. Preliminary data is often revised later in the day. With less hot weather expected, Refinitiv projected average U.S. gas demand, including exports, would fall from 101.5 bcfd this week to 97.2 bcfd next week. The forecast for this week was higher than Refinitiv's outlook on Tuesday. The average amount of gas flowing to U.S. LNG export plants held at 10.9 bcfd so far in August, the same as July. That compares with a monthly record of 12.9 bcfd in March. The seven big U.S. export plants can turn about 13.8 bcfd of gas into LNG.
Natural Gas Futures Slip, then Pop After EIA’s Near-Average Storage Injection - The Energy Information Administration (EIA) reported a larger-than-expected 44 Bcf injection into natural gas storage facilities for the week ending Aug. 5. The build ultimately had little bearing on prices. Futures were trading sharply higher ahead of the EIA report because of further day/day declines in production. Choppy price action was seen after the data was published. The September Nymex futures contract was trading 14.0 cents higher day/day at around $8.340/MMBtu in the minutes before the EIA’s storage data was published. As the print hit the screen, the prompt month slid to about $8.30. By 11 a.m. ET, however, it was at $8.390, up 19.0 cents from Wednesday’s close. By region, the South Central delivered the biggest surprise to the market with a net 9 Bcf increase in inventories, according to EIA. This included a 10 Bcf build in nonsalt stocks and a 2 Bcf withdrawal from salts. Storage inventories elsewhere rose by 20 Bcf in the Midwest and by 15 Bcf in the East, according to EIA. The Mountain region picked up 1 Bcf, while the Pacific lost 1 Bcf. Participants on the online energy discussion platform Enelyst noted that wind generation was much stronger during the reference week when compared to the current week. Enelyst managing director Het Shah said wind production averaged 44 GWh for the week ending Aug. 5. He expects wind to average 32 GWh for the current week ending Friday (Aug. 12). Production also hit fresh highs at around 98 Bcf/d last week before succumbing to maintenance in recent days. Bloomberg data showed output down to around 96.5 Bcf/d on Thursday.
Freeport LNG Plant in Texas Still Pulling in Natgas to Produce Power (Reuters) -U.S. liquefied natural gas (LNG) company Freeport LNG said on Thursday it was still pulling in small amounts of natural gas from pipelines at its shuttered LNG export plant in Texas to fuel a power plant. The company has said it expects the liquefaction plant, which shut due to a fire on June 8, to return to at least partial service in early October. U.S. gas futures jumped about 8% on Thursday on talk of increased gas flows to the Freeport LNG plant, a drop in gas output and forecasts for more demand for the fuel over the next two weeks than previously expected. [NGA/] Freeport LNG started to pull in small amounts of pipeline gas to feed a power plant that sold electricity to the Texas grid in mid-July. Meanwhile, Freeport LNG retracted the force majeure it initially declared after the explosion in June, a development that could cost its buyers billions of dollars in losses. "Freeport LNG is currently drawing a small amount of gas off pipeline connections ... to fuel a gas-turbine generator at its natural gas pretreatment facility in order to generate and export about 50 (megawatts) of power to the state’s electricity grid," Freeport LNG spokesperson Heather Browne said in an email. Data provider Refinitiv said about 22 million cubic feet per day (mmcfd) of gas flowed to the plant from July 19 until earlier this week. That compares with an average of 2.0 billion cubic feet per day (bcfd) during the month before the plant shut. Gas markets in the United States and Europe have swung wildly on developments at the Freeport LNG plant. Prices in Europe jumped about 40% in the week after the plant shut because the world was already short on gas supplies due to Russia's invasion of Ukraine in February.
Natural Gas Futures Finish Lower After Wild Ride; Power Burns Boost Cash - After plunging close to $8.50/MMBtu just before the open, natural gas futures clawed most of the way back throughout Friday’s session despite little day/day change in fundamentals. The September Nymex gas futures contract settled at $8.768/MMBtu, down 10.6 cents from Thursday’s close. October fell a steeper 11.9 cents to $8.744. Spot gas prices continued to strengthen despite the typical demand lull seen during the three-day delivery period. NGI’s Spot Gas National Avg. ticked up 3.0 cents to $8.360. No doubt it’s been an interesting week in the gas market. Futures have flown higher much of this week in the face of cooler weather. Early Friday, it appeared the continuingly cooling outlook was finally starting to bring futures prices back down to earth. The September Nymex contract touched an $8.516 low ahead of the open but then rallied all the way back to $8.919. NatGasWeather said there were no major day/day changes for natural gas traders to cling to and potentially explains why prices were choppy on Friday. Of course, there were three straight days of “impressive” gains, too, it noted. The overnight European weather model held a seasonal national demand pattern for much of the next 15 days as weather systems are forecast to track across the eastern half of the United States. The midday Global Forecast System model lost a little demand for the eight- to 15-day forecast, but it is still much hotter than the European model and is expected to shed demand in time since it has been running much too hot in recent weeks. “Essentially, the natural gas markets made it clear this week they were moving higher despite cooler trending and less impressive weather patterns,” NatGasWeather said. “History suggests when this occurs, bears best not fight it.” At the same time, hefty storage deficits remain with only 12 reporting periods left in the traditional injection season. Mobius Risk Group noted that with total inventories still trailing far behind historical levels, for there to be any chance of reaching the 3.5 Tcf mark ahead of winter, there would have to be a string of triple-digit builds in October.
Oil and gas built Port Fourchon; now the seaport is finding its role in a future without it - Travel south to where Louisiana’s land gives way to the sea, and then keep going. It might feel like you’re driving to the end of the world, traveling across a tall, winding bridge above broken marsh to reach the state’s southernmost port. Beyond that lies the industry, the port’s customers. Massive warehouses and wide slips hold large ocean-faring ships. Towering storage tanks hold fuel and water for the vessels to carry to oil and gas platforms miles offshore.As one of the country’s premier oil and gas seaports, Port Fourchon plays an essential role in maintaining one-sixth of the nation's oil supply. Its clients service 95% of the Gulf of Mexico’s fossil fuel production. But the port is also increasingly threatened by global warming, driven in large part by the industries it serves. That was evidenced by Hurricane Ida. Nearly a year later, the storm’s fingerprints remain visible. Some warehouses have yet to be repaired and wooden wharves sit broken. The port’s 1,700 acres sit right on the Gulf of Mexico, making it the first to feel the effects of worsening hurricanes and accelerated sea level rise. That’s on top of coping with the state’s ongoing land loss crisis. The environment surrounding the oil and gas port is personal to Chiasson and much of the port staff. It’s where they grew up. Chiasson himself is a Larose native, who now lives about 30 miles north of Fourchon in Cut Off. He’s witnessed the coast erode.“I'm 45. I've watched it, for 45 years, wash away,” Chiasson said. “Although we are very pro-industry and pro-energy, we're environmentalists because we grew up that way.”Their connection to the local wetlands drove them to build more with sediment they dredged to maintain the port, bolstering the habitat around for local species and flood protection. Now, for the first time, they’ve begun thinking about their industry’s role in climate change, and they’re reimagining the port’s future as the world looks to transition away from fossil fuels.That starts with being transparent about greenhouse gas emissions, reports that have long been lacking in the maritime industry.Globally, the maritime industry is responsible for about 3% of all planet-warming emissions, according to estimates from the International Maritime Organization. But industry experts said greenhouse gas emissions weren’t a consideration on ships, something that’s only begun to change in the past decade. Port Fourchon is one of the first seaports in the U.S. to begin filling in the information gaps. Four months ago, the staff installed sensors across the port to conduct real-time air monitoring, track emissions at different locations and see their origin.Chiasson said they’re still gathering that data and have yet to set any firm decarbonization goals. A plan will come in time, and SailPlan, the same company that installed the sensors, will also look to help the port strategize after establishing a baseline.The monitoring represents a break from the past. Dan Hubbell, who focuses on shipping emissions for the Ocean Conservancy, said air monitors still aren’t widely used. Instead, companies rely on estimates based on how much fuel their ships use, which often leads to undercounting. Ruytenbeek said the maritime industry faces increasing pressure to lower emissions after neglecting for decades to do any tracking. And the oil and gas industry that Port Fourchon’s clients serve is in the same boat.
Coast Guard: Thousands of gallons of crude oil spilled into Louisiana Gulf Coast on Monday --Recovery crews were on-site on the Louisiana Gulf Coast after officials say an oil tank platform collapsed near Terrebonne Bay, dumping thousands of gallons of oil into the water on Monday.According to the Coast Guard 8th District Heartland the district was notified by the National Response Center about the platform, which encountered a structural failure at the Hilcorp Caillou Island facility, located about 25 miles south of Houma. The collapse then caused a tank to enter the water, spilling fuel into the Gulf.While officials with Hilcorp are unsure exactly how much crude oil entered the water, they believe the total is less than 14,000 gallons. No reports of wildlife impact have been made so far. The company Environmental Safety & Health Consulting Services has been hired to help mitigate the hazard, which includes spreading 4,500 feet of containment boom to restrain and absorb the oil. Eight vessels have also been dispatched to the area to skim the area and help clear the water.
Cleanup underway of oil spill in a Louisiana bay - An oil spill cleanup is underway at a site where an oil tank platform collapsed in a Louisiana bay, the Coast Guard said. The spill of crude oil occurred at Hilcorp’s Caillou Island facility in Terrebonne Bay, Louisiana, according to a news release emailed late Monday. Hilcorp estimates that less than 14,000 gallons (53,000 liters) spilled, and no wildlife had been affected as of late Monday, the statement said. The cause of the collapse is being investigated. The Coast Guard said 4,500 feet (1,370 meters) of containment boom have been deployed and three skimming vessels and five response vessels were on scene. Environmental Safety & Health Consulting Services has been hired to clean up the spill. Hilcorp said people affected by the spill may call a claims line at 281-486-5511, according to the news release. The Houston-based company did not immediately respond to a request for comment sent through its website.
Oil residue from Deepwater Horizon spill still detectable along Louisiana coast: Study -Traces of oil spilled in the 2010 Deepwater Horizon explosion remained in areas along the Gulf Coast, beyond the reach of cleanup efforts, a decade later, according to research published in the journal Frontiers in Marine Science. Researchers, led by retired Louisiana State University environmental chemist Edward Overton, analyzed about a decade of research on the aftereffects of the spill combined with their own data. The research was funded by the Gulf of Mexico Research Initiative, an independent research program created with BP funds in the wake of the spill. They determined that while about 90 percent of the oil degraded, evaporated or was broken down by bacteria in the first few months following the spill, 10 percent remained as solid residue that does not dissolve in water. Much of this sank as marine snow, the term for organic material that descends to the deeper ocean from near the surface. Meanwhile, a portion of the residue also washed up on shore. While the residue washing up on the beach could be cleaned up, the same was not true of the portion that ended up in wetlands, which are inaccessible by the equipment used for cleanup. Coastal marshes comprise about 10,700 square miles of the coastline, and the state has the most salt-marsh acreage of any state. While most of the residue stayed within the first 30 meters (about 98 feet) of marsh coastline, events such as hurricanes moved it farther into marshlands in some cases, Overton and his team found. “Most environmental consequences from oil spills are caused by hydrocarbon material whose composition has changed, to lesser or greater degree, when compared to the initial spilled material,” researchers added. “In many cases, the alterations represent significant compositional alterations affecting the residue material’s chemical, physical, toxic properties and affecting routes of exposure, and thus their potential for environmental impacts and remediations.”
Climate bill backs oil leasing: How much of a CO2 problem? - The Democrats’ massive climate deal is catching heat from environmental activists for guaranteeing years of oil and gas leasing on federal lands and off the nation’s coast. But is the oil trade-off such a bad compromise in the larger fight to reduce emissions and slow climate change? While the “Inflation Reduction Act” brokered by pro-oil Democratic Sen. Joe Manchin of West Virginia and Chuck Schumer, the Democratic Senate majority leader from New York, would entrench oil’s footprint on public lands and waters for years, some climate experts say the benefits of the $369 billion commitment to expand clean energy and electric vehicles, the emergent hydrogen space, and nuclear energy far outweigh the downside of more fossil fuel leasing. That’s partly because leasing on federal lands is a preliminary step that doesn’t guarantee companies will drill for oil and gas, or that those hydrocarbons will be burned up in cars, planes and power plants contributing to global warming. “We find that the oil and gas leasing provisions have a negligible impact on emissions and are far outweighed by the emissions reductions in clean energy, clean vehicle, and energy efficiency deployment,” Ben King, Rhodium Group’s associate director, said in a statement. Samantha Gross, energy security and climate initiative director at the Brookings Institution, said the trade-offs in the bill have been overstated. The legislation is primarily focused on reducing society’s demand for oil by offering alternatives — the critical shift that needs to take place to truly reduce emissions — while the lease sales it would mandate represent an extension of the status quo. “This isn’t like some giant giveaway of a completely new size and scope,” she said. The controversial provisions would force the administration to hold oil and gas lease sales if it wants to also lease for renewable energy, like President Joe Biden’s push for offshore wind. Additionally, the bill would reinstate an oil sale vacated last year by a federal judge and order the administration to hold three other offshore oil sales that it had canceled, kneecapping the Interior Department’s ability to thwart new offshore leasing in a five-year oil and gas plan currently under consideration. The bill also includes several reform measures, such as increasing oil and gas royalty payments and beefing up cleanup regulations, which oil and gas reform activists have long pushed for. Hailed as a great compromise by many Democrats, the bill passed the Senate on a 50-50 party-line split Sunday, with the tie broken by a vote from Vice President Kamala Harris (E&E Daily, Aug. 7). It now heads to the House, where the Democratic majority is expected to pass the bill and send it to the president for his signature. Activists who’ve lobbied the Biden administration to retire the federal oil program expressed disappointment in the landmark deal. “This bill should not be considered a climate victory,” Jim Walsh, policy director for Food & Water Watch, said in a statement last week. Erich Pica, president of Friends of the Earth, praised the renewable aspects of the bill but also said in a statement that “communities and the climate continue to be sacrificed to Sen. Manchin’s fossil fuel demands.” Nina Turner, a progressive political activist and former Ohio state senator, panned the agreement on Twitter last week as a false sell: “A climate bill that requires expanding oil drilling if you expand green energy isn’t a climate bill.” Jean Su, energy justice program director at the Center for Biological Diversity, said the administration should now declare a climate emergency, which would allow Biden to “confront the deadly fossil fuel industry head on.” “The bill’s commitment to massive federal oil and gas expansion is dangerously at odds with scientific reality,” she said
The Inflation Reduction Act promises new oil leases. Drillers might not want them. --The U.S. Senate passed the largest climate action bill in American history on Sunday, clearing the path for hundreds of billions of dollars for clean energy and other climate-related measures (in addition to billions for other Democratic Party priorities). But because the so-called Inflation Reduction Act bears the imprint of swing-vote Senator Joe Manchin, it also includes numerous provisions that support oil and gas producers. The fossil-fuel policy that has drawn the most attention in the weeks since Manchin and Senate Majority Leader Chuck Schumer unveiled their deal is a provision that requires the federal government to auction oil and gas leases on federal land and in the Gulf of Mexico. Though presidential administrations of both political parties have historically leased this territory for drilling, the Biden administration has attempted to halt the federal leasing program; recent lease auctions have also been delayed by litigation from environmental groups. The reconciliation bill reinstates old auctions that the Biden administration has tried to cancel and forces the administration to hold several new auctions over the coming years. The legislation also requires that the government auction millions of acres of oil and gas leases before it can auction acreage for wind and solar farms. The Center for Biological Diversity, one of many environmental organizations to oppose these provisions, said they turned the bill into a “climate suicide pact,” since they have the potential to prolong the lifespan of the domestic oil industry. However, energy and climate experts who spoke to Grist said that the provisions may not add significantly to U.S. emissions — in part because the fossil fuel industry may not be all that interested in what the government has to offer. That’s for one simple reason: Even if the government does keep auctioning off federal territory, it’s far from certain that oil and gas companies will want to build new drilling operations on that territory. The industry has shifted resources away from federal lands and the Gulf of Mexico in recent years, and there’s currently less capital available than ever for new production in these areas The issue with Manchin’s lease provision is not so much that it will open up a bonanza of new oil production, but instead that it won’t do anything to make energy more available or affordable in the short term — and may even slow down the buildout of renewables in the long run. The American oil industry was built on federal land and water. Massive companies like Exxon, Chevron, and Hess rose to prominence in the twentieth century by drilling the Gulf of Mexico for all it was worth, and further expansion of so-called “conventional” production took place on federal lands across the West. Over the past 20 years, though, the industry has shifted its capital elsewhere. The fracking revolution unlocked massive shale oil reserves in the Bakken Formation of North Dakota and the Permian Basin of Texas, where almost all land is in private hands; most analysts now expect that the future of American oil production hinges on the Permian, which accounts for around 40 percent of U.S. oil production. Meanwhile, large companies like Exxon have cultivated young oil fields in countries like Guyana, where production could surpass U.S. offshore production in just a few years, and Suriname, which is expected to start exporting oil in 2025. These basins are far less developed than the Gulf of Mexico, which means the cheapest-to-drill oil in them still hasn’t been tapped as thoroughly as it has in the Gulf. The only producers who still have any appetite for offshore acreage, according to LeBlanc, are the largest oil majors, like Hess and Shell, who can afford to spend hundreds of millions of dollars on rig projects that may take as long as a decade to build. These offshore rigs are far costlier to start up than new shale drilling rigs, and they come with significant legal and environmental liabilities.“[New production sites] are going to be in deep water, they’re going to be high-tech, high-capital, and there’s only really a handful of players that have chosen to play in the deep water,” said LeBlanc. “It’s not like the onshore [auctions], where you may have a party and nobody shows up, but people are also not crazy for this.” LeBlanc added that many companies are expecting oil demand to decline as a result of the energy transition, and therefore may not want to commit to decades-long projects.
Oil Supermajors Continue to Hold Back on Investment - Oil supermajors continue to hold back on investment as mid-year guidance remains mostly firm, a new report from Fitch Solutions Country Risk & Industry Research has noted. Overall, the group will raise annual capital expenditure by 19 percent in 2022 versus earlier guidance growth of 17 percent, the report, which was sent to Rigzone recently, revealed. “The mild rise in investment is coming from Shell, the sole exception in the group, who have boosted 2022 capital expenditure guidance by 17 percent since our previous report,” analysts at Fitch Solutions stated in the report. “Brent crude prices have averaged $105 per barrel for the first half of 2022, a gain of 48 percent over 2021’s annual average price. However, the sharp gains in Brent have failed to spur similar increased investment across the supermajors peer group,” the analysts added in the report. “On the downstream side record refining margins have helped boost the profits significantly as the global contraction in refining capacity during pandemic supercharged fuel prices as post lockdown economies boomed,” the analysts continued. In the report, the analysts noted that the record earnings should be the catalyst for increased long-term investment but added that the current guidance from the supermajors “leaves little hint of capital expenditure excess”. “The difficulty in making multi-billion-dollar investments over the long-term term continues to be dogged by uncertainty raised by the energy transition and most majors have chosen to exercise caution and remain balanced in guidance for capital expenditure in 2022,” the analysts added. The lack of increased investment is another strong indicator for tight supply in the coming years, according to the Fitch Solutions analysts. “After years of low investment and threats to Russia’s access to global trade, markets remain on edge in fear of supply shortages helping to keep the price outlook elevated,” the analysts stated in the report. “Although higher interest rates from hawkish central banks have raised near-term concerns for oil demand the outlook for supply remains muted supporting the case for high oil prices,” the analysts added. Fitch Solutions’ report examined BP, Chevron, ExxonMobil, Shell, and TotalEnergies. In its second quarter results, BP reported an underlying replacement cost profit of $8.5 billion, compared to $2.8 billion during the same period last year, while Chevron reported a net income of $11.6 billion, compared to $3 billion during the same period last year. Exxon Mobil Corporation announced estimated second-quarter 2022 earnings of $17.9 billion, compared to $4.69 billion in 2Q 2021, Shell posted adjusted earnings of $11.4 billion in 2Q, compared to adjusted earnings of $5.5 billion in 2Q 2021, and TotalEnergies reported adjusted net income of $9.8 billion in 2Q, which was 2.8 times higher than the same period last year.
Pioneer CEO Says Tax Bill May Crush USA Mom-N-Pop Oil Drillers - The proposed new minimum tax on corporations and fees for methane emissions, both of which are in a sweeping bill passed by the US Senate this week, could make life impossible for many small US oil and gas producers, according to one of the country’s biggest independent producers. The ultimate impact of Democrats’ landmark climate bill on the roughly 15,000 small oil and natural gas explorers in the US could be fewer wells being drilled in the future, Scott Sheffield, chief executive officer at Pioneer Natural Resources Co., said Tuesday in a Bloomberg TV interview. “There’ll be more pressure on that small mom-and-pop independent,” Sheffield said. “It may put a lot of them out of business.” While some energy industry groups have protested at the Biden administration’s tax, health and climate bill, some of the largest US oil and gas companies have been supportive, particularly on the steps to mitigate methane, a powerful greenhouse gas. Pioneer along with Devon Energy Corp. and ConocoPhillips last month announced its commitment to reduce methane emissions by joining the Oil and Gas Methane Partnership 2.0 Initiative. Pioneer expects to not pay a tax on emissions as a result of its plan to ban routine flaring by 2025, Sheffield said.
Would the climate bill slash methane? It depends - -- “Inflation Reduction Act” provisions aimed at cutting methane emissions would be a boon for the high-tech companies that sell detection equipment, but it may not have a big effect on the broader oil and gas industry’s emissions, analysts say.The bill — which passed the Senate last Sunday — includes $1.5 billion to promote methane detection and measurement in the oil and gas sector. Those funds could help the growing group of companies, many of them supported by the Department of Energy, that are deploying lasers, drones, satellites and other technology to help producers spot fugitive methane emissions (Energywire, Oct. 25, 2021). But another provision — a fee of up to $1,500 per ton on emissions from oil and gas producers, pipeline operators and others — may have a muted effect on the industry. The charge wouldn’t apply to the entire oil and gas sector, and would miss roughly 60 percent of the industry’s emissions, noted Robert Kleinberg, a researcher at Columbia University’s Center on Global Energy Policy. EPA’s pending regulations on methane from the oil and gas industry, along with pressure from investors, is likely to remain the main factor that pushes companies to cut their emissions, according to several observers. “There are a whole bunch of loopholes” in the methane fee’s structure, Kleinberg said. Some of the best-known companies, like Exxon Mobil Corp. and pipeline giant Energy Transfer LP, also were already working on ways to curb their methane emissions before the bill moved through Congress. “All the big operators, they understand that this is the reality,” said Dan Katz, CEO of Orbital Sidekick, which provides satellite-based monitoring systems for pipeline operators and other energy companies. “Even if it wasn’t going to come in the form of hard regulation, the entire industry is moving in this direction” of cutting emissions, he added. The oil and gas industry is one of the biggest sources of methane pollution — the gas is produced alongside oil and frequently leaks from wells, pipelines, compressors and other equipment. Methane traps more than 20 times more heat than carbon dioxide when it’s released into the atmosphere. Separately, EPA has been developing regulations to control methane leaks from existing oil and gas fields, which are expected to be finalized sometime next year. If implemented, the methane fee in the climate bill would be the first federal tax on a greenhouse gas (Climatewire, Aug. 3). At the same time, environmentally sensitive investors have been pushing oil producers and other companies to cut their emissions as a way to protect their bottom line. Exxon Mobil announced last year that it will cut its greenhouse gas emissions to the equivalent of zero by the end of the decade in its Permian Basin operations, which cover parts of Texas and New Mexico. Energy Transfer, which operates 120,000 miles of gas, crude oil and other pipelines around the country, has promoted its own plans to cut its emissions, including replacing outdated equipment and installing electric pumps.
Elder questions Red Valley oil spill cleanup effort - Navajo Times --A pipeline owned by Capitol Operating Group that helps transport oil and its byproduct, saltwater, has broken, causing a spill. The mixture of oil and saltwater, known as brine in the oil industry, according to Navajo EPA worker Dariel Yazzie, was being pumped to a storage tank. Yazzie said he and his team were told about 50 barrels, or about 2,500 gallons, spilled into a ravine that traveled nearly four miles down the mountain and into the valley. When they arrived to the spill site, Yazzie said he immediately smelled oil, which prompted them to request the company to provide a sample of what was being pumped in the pipeline. Yazzie assessed the amount spilled and estimated that possibly more than 80 barrels, or 4,000 gallons, might have been released into the fragile environment of cedar trees and other vegetation. Signs of oil soaked into the ground and dark-colored liquid could be seen in the ravine among sagebrush and the roots of cedar trees. Lifelong resident, Richard Lee, 88, whose family alerted Delegate Amber Crotty of the spill, said the damage could be permanent. Lee said he was told a chemical agent would be sprayed that would help the oil spill biodegrade. “Díídí akʼah kǫ́ǫ́dí chʼínʼaʼígíí, Diné tó ndeiłkaahígíí, jóʼ éí yinéełʼį́į́ʼo anóo éí, ‘Tʼóó spray ádoolnííł, tʼááleʼé bikʼijįʼ ndoozoł,’” Lee explained. Lee wasn’t convinced the spray would thoroughly clean the spill. “Shí éí doodahshį́į́,” he said, disagreeing with the company’s decision to use a spray to clean up the spill. “Díí akʼah éí nilǫǫ kʼad daatsʼí Damóo daatsʼí dóó yíwohjįʼ ákó ałtsxo łeehíínaʼ.” Lee said the brine probably already soaked deep into the ground and underneath the rocks where the spray would not reach. Yazzie explained the process of how brine is extracted from deep within the earth when fracking for oil. “If you’re going to extract oil, you’re going to pump up your crude oil, and it’s not going to be one hundred percent oil,” Yazzie said. “What you’re going to get is you’re going to get a mixture of oil as well as saltwater. “They extract the saltwater,” he said. “They have two options – they can discharge it or they can inject it back. And that’s what this operation is, they inject the water back.” Yazzie and his team obtained a sample from the company, which he said they’d test so they can have a clearer idea of what was spilled in the valley. Crotty said the Lee family notified her and the Navajo EPA of the spill on Sunday. When she arrived at the area, she used a stick and prodded the dark-colored liquid in the ravine. “That looks like oil,” she told the family.
North Dakota intervening in oil and gas leasing lawsuit - A federal judge is allowing North Dakota to intervene in a lawsuit by environmental groups that challenges the government's resumption of oil and gas lease sales on federal lands. The Biden administration announced in April that it was resuming oil and gas lease sales on federal lands after a pause of more than a year. The Bureau of Land Management ordered a sale in late June offering 23 parcels in eastern Montana and the western North Dakota counties of McKenzie, Mountrail and Williams. Environmental groups believe the sales are climate-harming; the state maintains the sales are important to North Dakota's economy. President Joe Biden in January 2021 halted oil and gas lease sales on the nation’s public lands and waters during his first days in office, and issued an executive order announcing a review of the program “to restore balance on America’s public lands and waters to benefit current and future generations.” Oil- and gas-producing states including North Dakota sued to try to force leasing to continue, and scored a victory in June 2021 when a court ordered the government to resume sales. The federal review concluded a few months later, with the U.S. Interior Department recommending the government raise royalty rates. Several climate and conservation groups are suing over the resumption of oil and gas leasing, including one lawsuit in the U.S. District Court for the District of Columbia that challenges approval of lease sales in several states including North Dakota. The groups including the Dakota Resource Council and the Sierra Club maintain that the sales will result in social and environmental harm. The North Dakota Attorney General's Office in late July filed a motion to intervene in the case. Special Assistant Attorney General Paul Seby wrote that the state seeks "to protect its significant sovereign rights and economic interests." State officials have argued that North Dakota's situation is unique due to the checkerboard nature of mineral ownership in the state. They say that prohibiting drilling through federal minerals could prevent the development of private minerals and state-owned minerals in the surrounding area. North Dakota also receives a portion of revenue from oil and gas leasing on federal lands.
Idaho-Wyoming natural gas pipeline needs environmental study (AP) — U.S. officials won’t approve a natural gas pipeline from Idaho to Wyoming until additional environmental studies are completed. A U.S. District Court on Wednesday approved an agreement between the U.S. Forest Service and two environmental groups that filed a lawsuit to stop the 50-mile (80-kilometer) Crow Creek Pipeline Project. The Forest Service agreed to complete a supplemental environmental impact statement before authorizing the project that partially crosses Forest Service land. The timeline for completing the environmental study isn't clear. Wyoming-based Lower Valley Energy wants to build the pipeline that would start near Montpelier, Idaho, and run to Afton, Wyoming. But the Alliance for the Wild Rockies and Yellowstone to Uintas Connection say it will harm protected grizzly bears and other wildlife. "The ruling is a huge victory for the climate as well as free-roaming endangered species like grizzly bears, wolverines, and lynx,” said Mike Garrity, executive director of the Alliance for the Wild Rockies. A lawsuit the groups filed in 2020 contended an 18-mile (29-kilometer) portion of the pipeline would cut a corridor through Caribou-Targhee National Forest and create a road through six roadless areas. The 2001 Roadless Rule prevents road construction and timber harvest in designated roadless areas, which are typically 5,000 acres (2,000 hectares) or larger. The environmental groups argued the pipeline corridor would be a permanent motorized trail through the roadless areas. "This unique area that links the Northern and Southern Rocky Mountains must be protected and managed as a wildlife corridor for our endangered wildlife species,” said Jason Christensen, director of Yellowstone to Uintas Connection. Lower Valley Energy — which intervened in the case on the side of the Forest Service, as did the state of Wyoming — has previously said it has been trucking natural gas to Afton, but that delivery has been unreliable and the town has sometimes nearly run out. Lower Valley Energy spokesman Brian Tanabe didn’t immediately return a call Wednesday from The Associated Press. The Forest Service, before the lawsuit, approved building the pipeline through the forest with a temporary 50-foot (15-meter) wide right-of-way for construction and then a 20-foot (6-meter) utility corridor as a permanent right-of-way. In all, the construction phase would use about 110 acres (45 hectares) of forest land and the permanent right-of-way about 45 acres (18 hectares). About 26 miles (40 kilometers) of the pipeline crosses private land and about 4 miles (6 kilometers) crosses state land.
U.S. oil refiners, pipeline companies expect strong demand for rest of 2022 (Reuters) - U.S. oil refiners and pipeline operators expect energy consumption to be strong for the second half of 2022, even though analysts and industry watchers have worried that demand could falter if the global economy enters a recession or high fuel prices deter travelers. The company outlooks suggest a stronger view than recent data showing weakness in U.S. fuel demand, particularly in gasoline, where consumption recently hit its lowest level since February even though this is the middle of the peak summer driving season. U.S. gasoline product supplied over the past four weeks recently fell below 2020's level for the same time of year, when the United States was in the depths of the pandemic. Energy companies including Energy Transfer LP and PBF Energy Inc say energy demand will be strong in the second half of 2022, according to a Reuters review of company earnings calls. "Management sees what's going on on the ground so any time they're calling out positivity when demand data has been showing otherwise, we find that interesting," said Kian Hidari, an analyst at Tudor, Pickering, Holt and Co. "It's still a strong environment for gasoline compared to historical levels." U.S. refiners are also benefiting from high exports of transportation fuels to Latin America, and plants are expected to run at high utilization rates to restock inventories that were drawn down when fuel supply cratered earlier this year. Refiner exports of finished petroleum products were largely in line with five-year seasonal averages at 3.02 million barrels per day (bpd) in May, the latest data available, according to the U.S. Energy Information Administration. That was nearly 65% higher than the pandemic low reached in May 2020. U.S. oil output has recovered to 12.1 million bpd, helping boost pipeline and terminal volumes for many midstream companies for the second quarter from a year ago. Energy Transfer reported a stronger-than-expected second quarter performance and boosted its guidance for the rest of the year, said Co-Chief Executive Thomas Long. Of the 16 midstream companies that reported earnings last week, more than half revised guidance higher, said James Mick, Portfolio Manager at Tortoise Capital Advisors. The four-week average of implied demand for gasoline fell to just under 8.6 million barrels per day (bpd) in the week to July 29, lowest since February, according to EIA data, though the weekly figures can be volatile.
Interior Department backtracks on public comment period for Willow Project - For more than three weeks, the Alaska Native Village of Nuiqsut, Congressional Democrats, and conservation groups have been urging the Department of the Interior to extend the public comment period on a draft environmental impact statement for one of the largest proposed onshore oil and gas development projects in the United States. If approved, the ConocoPhillips venture, known as the Willow Project, would allow for construction of up to 250 wells, a network of gravel roads and pipelines, and a new central processing facility in the government-managed National Petroleum Reserve, about 35 miles west of Nuiqsut.Democrats in the House of Representatives had asked for a response to their letter requesting an extension by July 22, but the Interior Department missed that deadline, Grist reported last week. Environmental groups hoped for an answer in advance of several public meetings on the draft environmental statement, the first of which took place Monday evening. They also still haven’t heard back. The city of Nuiqsut, however, got an answer from the Interior Department on Friday. According to three sources with direct knowledge of the correspondence, the Bureau of Land Management’s Alaska office told the city that the comment period would be extended until the end of September. City officials were also informed that a public meeting in Nuiqsut scheduled for Thursday, August 11 would be moved to the middle of next month, giving residents more time to balance the seasonal demands of the summer subsistence harvest with having to comment on a project that will have a dramatic effect on the region for decades to come. According to two Interior employees who were not authorized to speak on the record, the agency had begun to prepare a federal register notice to announce the new schedule.Over the weekend, though, the department reversed course. On Monday morning, Mayor Rosemary Ahtuangaruak received a phone call, she told Grist, from the Willow Project manager, Stephanie Rice, telling her that the public comment period would not be extended. The Interior Department was reverting to the minimum 45-day public comment period required by law, despite telling Nuiqsut officials just days before that it would honor requests for an extension.According to one source in the Biden administration briefed on the latest decision, who asked not to be identified for fear of retribution, political considerations regarding the passage of the Democrats’ major climate and energy bill contributed to the abrupt reversal. The legislation, which was unexpectedly unveiled by Senators Chuck Schumer and Joe Manchin on July 27, passed the Senate on Sunday by a narrow party-line vote. It is expected to be voted on in the House by the end of this week. Manchin has not publicly discussed Willow in connection with the new bill, but the West Virginia Democrat explicitly tied his support for the legislation to the fast-tracking of some fossil fuel infrastructure projects, including the Mountain Valley Pipelinein his home state. The Willow Project is a top priority for Manchin’s Republican ally, Alaska Senator Lisa Murkowski, who faces a tough reelection fight this year. Interior officials did not respond to specific questions from Grist about why the department reversed course over the weekend. But in a written statement, an agency spokesperson did confirm that the comment period would end on August 29 — the original deadline. “We intend to hear from the public and people on the North Slope during that time,” the Bureau of Land Management spokesperson wrote. “We also are committed to continuing government-to-government consultations.”
88 Energy Makes 1 Billion Barrel Oil Announcement | Rigzone -88 Energy Limited has reported a maiden, independently certified prospective resource estimate of 1.03 billion barrels of oil - on a gross mean, unrisked basis - for the Project Icewine East development, which the business holds a 75 percent net working interest in. According to the company, significant prospective resources have been estimated across all the recently mapped Shelf Margin Delta (SMD), Slope Fan System (SFS), Basin Floor Fan (BFF) and Kuparuk (KUP) play fairways on the Icewine East acreage. The maiden independent prospective resource report was completed by Lee Keeling and Associates, Inc (LKA). The initial total prospective resource follows a period of review of an extensive data suite that included seismic data, well logs from Icewine-1 and nearby wells adjacent to the Icewine East acreage, recent petrophysical analysis and mapping, 88 Energy highlighted. LKA is an independent U.S. based expert petroleum geoscience and engineering consulting firm which has significant and recent experience in providing resource estimates globally, as well as more specifically in Alaska. “Importantly, it is worth noting that the Icewine East acreage has been significantly de-risked by the recent Pantheon drilling and flow tests on their adjacent acreage, as well as data from the Icewine-1 well logs, and more recently the leased Franklin Bluffs 3D data set. This work substantially increases our confidence in unlocking the potential of the Icewine East acreage and is by far, the most compelling data suite the company has analyzed ahead of drilling any well,” 88 Energy Managing Director Ashley Gilbert said in a company statement. The managing director went on to note that full interpretation of the recently licensed FB3D data is ongoing, including AVO analysis, to define “sweet spots” for each play and determine optimal future exploration and appraisal drilling locations, the first of which Gilbert said is planned for 2023. Back in June, 88 Energy announced that a licensing agreement had been signed with SAExploration, Inc. for use of its Franklin Bluffs 3D seismic survey data (FB3D), which 88 Energy noted covers a “significant area over the Project Icewine East leases”. In May, 88 Energy revealed that a third-party evaluation of the Icewine East mapping was complete. 88 Energy’s Icewine project is one of several the company has on the Alaska North Slope. Others include the Peregrine, Umiat, and Yukon projects, all of which 88 Energy has a 100 percent interest in.
Cuban oil facility on fire, leaves 1 dead, 17 missing and 121 injured --A fire set off by a lightning strike at an oil storage facility raged uncontrolled in the Cuban city of Matanzas, where four explosions and flames injured 121 people and left 17 firefighters missing. Cuban authorities said a unidentified body had been found. Firefighters and other specialists were on Saturday still trying to quell the blaze at the Matanzas Supertanker Base, where the fire began during a thunderstorm Friday night, the Ministry of Energy and Mines tweeted. Authorities said about 800 people were evacuated from the Dubrocq neighbourhood closest to the fire. The government said it had asked for help from international experts in friendly countries with experience in the oil sector. Deputy Foreign Minister Carlos Fernndez de Cosso said the US government had offered technical help to quell the blaze. On his Twitter account, he said the proposal is in the hands of specialists for the due coordination. Minutes later, President Miguel Daz-Canel thanked Mexico , Venezuela, Russia, Nicaragua, Argentina and Chile for their offers of help. A support flight from Mexico arrived on Saturday night. The official Cuban News Agency said lightning hit one tank, starting a fire, and the blaze later spread to a second tank. As military helicopters flew overhead dropping water on the blaze, dense column of black smoke billowed from the facility and spread westward more than 100 kilometers toward Havana. Roberto de la Torre, head of fire operations in Matanzas, said firefighters were spraying water on intact tanks trying to keep them cool in hopes of preventing the fire from spreading. Cuba's Health Ministry reported that 121 people were injured with five of them in critical condition. The Presidency of the Republic said the 17 people missing were firefighters who were in the nearest area trying to prevent the spread. Later on Saturday, the Health Ministry said in a statement that a body had been found and officials were trying to identify it. The accident comes as Cuba struggles with fuel shortages. There was no immediate word on how much oil had burned or was in danger at the storage facility, which has eight giant tanks that hold oil used to fuel electricity generating plants.
Cuba's Largest Thermoelectric Power Plant Offline Amid Depot Blaze - Cash-strapped Cuba was forced to take its largest thermoelectric power plant offline due to a multi-day blaze at a fuel depot in the northern part of the country. Bloomberg reported the Ministry of Energy and Mines said the 200 MW Antonio Guiteras thermo plant was disconnected from the grid because of a water shortage. A local media outlet said the fire at the nearby Matanzas industrial storage complex had used up the water delivery to the power plant as firefighters battled the blaze, affecting four of the facility's eight storage tanks. We noted Monday that the communist country's worst fear about the 2.4-million-barrel Matanzas terminal would be realized if the thermo power plant was shuttered. That's because its generators, fed by heavy crude oil from the Matanzas complex, provide a fifth of the country's power needs. It remains to be seen if crude flows from the damaged storage facility to the power plant have been affected. This disaster comes as power grid failures have been rampant due to fuel shortages, forcing grid operators to impose widespread energy blackouts in some areas of the country for up to 12 hours since May. The Union of Electrical Workers said the new power failure indicates only half the island's 3,000 MW peak energy demand can be met on Monday. About 1,223 MW of generation is offline. Cuba struggled to keep the lights on even before the fuel depot fire amid power plant breakdowns and fuel shortages. Rolling blackouts have sparked protests. Compound the risk of more power blackouts with annual inflation soaring to 29% in June, and it's a perfect recipe for more social unrest. Reuters said Cuban officials could expand floating storage capacity to handle imports that would normally be offloaded at the Matanzas complex. The fire at the fuel depot has exposed a critical bottleneck. Matanzas is Cuba's only terminal that can handle fuel shipments from large crude tankers piped to power plants across the country.
Fire at Cuba oil facility spreads as 3rd tank ignites — A deadly fire that began at a large oil storage facility in western Cuba spread Monday after flames enveloped a third tank that firefighters had tried to cool as they struggle to fight the massive blaze.At least one person has died and 125 are injured, with dozens of firefighters reported missing ever since lighting struck one of the facility’s eight tanks on Friday night. A second tank caught fire on Saturday, triggering several explosions.“The risk we had announced happened, and the blaze of the second tank compromised the third one,” said Mario Sabines, governor of the western province of Matanzas where the facility is located.Firefighters had sprayed water on the remaining tanks over the weekend to cool them and try to stop the fire from spreading.The governments of Mexico and Venezuela have sent special teams to help extinguish the fire, with water cannons, planes and helicopters fighting the fire from several directions as military constructions specialists erected barriers to contain oil spills. Local officials warned residents to use face masks or stay indoors given the billowing smoke enveloping the region that can be seen from the capital of Havana, located more than 65 miles (100 kilometers) away. Officials have warned that the cloud contains sulfur dioxide, nitrogen oxide, carbon monoxide and other poisonous substances.
Fire spreads at Cuba oil storage facility as fourth tank erupts - Flames have engulfed a fourth tank at an oil storage facility in western Cuba as a raging fire consumes critical fuel supplies on an island grappling with a growing energy crisis. Firefighters and specialists from Mexico and Venezuela helped fight the blaze in the province of Matanzas with boats, planes and helicopters as they sprayed foam on the containers, a first for crews since broiling temperatures had prevented them from doing so earlier.The fire at the Matanzas supertanker base has killed at least one person and injured 125 others, with another 14 firefighters still missing. It also forced officials to shut down a thermoelectric plant on Monday after it ran out of water, sparking concerns about additional blackouts.Those injured were treated mostly for burns and smoke inhalation. More than 20 remain hospitalized, with five of them in critical condition.The eight-tank facility plays a crucial role in Cuba’s electric system: it operates an extensive oil pipeline that receives Cuban crude oil that is then ferried to thermoelectric plants that produce electricity. It also serves as the unloading and transshipment center for imported crude oil, fuel oil and diesel.The facility caught on fire late on Friday after lightning struck one of its tanks,sparking several explosions as it spread over the weekend. The first tank was at 50% capacity and contained nearly 883,000 cubic feet (25,000 cubic meters) of fuel. The second tank was full.Officials have yet to provide an estimate of damages. The blaze comes just days after the government announced scheduled blackouts for the capital of Havana amid a sweltering summer.
A raging fire consumes a fourth tank at a Cuban oil storage facility : NPR— Flames engulfed a fourth tank at an oil storage facility in western Cuba on Tuesday as the raging fire consumes critical fuel supplies on an island grappling with a growing energy crisis.Firefighters and specialists from Mexico and Venezuela helped fight the blaze in the province of Matanzas with boats, planes and helicopters as they sprayed foam on the containers, a first for crews since broiling temperatures had prevented them from doing so earlier. 17 missing, 121 hurt, 1 dead in fire at Cuban oil facility Cuban President Miguel Díaz-Canel said crews have taken control of the area where the fire is burning and are taking further steps to quell it."They are not easy tasks," he said. "It is an intense and complex incident."The fire at the Matanzas Supertanker Base has killed at least one person and injured 125 others, with another 14 firefighters still missing. It also forced officials to evacuate more than 4,900 people and shut down a key thermoelectric plant on Monday after it ran out of water, sparking concerns about additional blackouts.Those injured were treated mostly for burns and smoke inhalation. More than 20 remain hospitalized, with five of them in critical condition."This situation has us very worried at the moment because there are problems with electricity, with the environment, with the people who are still living here," said Adneris Díaz a 22-year-old cafe owner.The eight-tank facility plays a crucial role in Cuba's electric system: it operates an extensive oil pipeline that receives Cuban crude oil that is then ferried to thermoelectric plants that produce electricity. It also serves as the unloading and transshipment center for imported crude oil, fuel oil and diesel.The facility caught on fire late Friday after lightning struck one of its tanks, sparking several explosions as it spread over the weekend. The first tank was at 50% capacity and contained nearly 883,000 cubic feet (25,000 cubic meters) of fuel. The second tank was full.Officials have yet to provide an estimate of damages.The blaze comes just days after the government announced scheduled blackouts for the capital of Havana amid a sweltering summer."The economic effects are clear," said Tahimi Sánchez, a 48-year-old cafe owner. "They are there, we will notice them and we will see them, but we are confident, and we are going to come out of all this well."
Cuba Supertanker Blaze Under Control -The fire at the supertanker base of Matanzas has been controlled and work is being done to extinguish small outbreaks, Manuel Marrero Cruz, the prime minister of Cuba, announced in a Twitter statement late Wednesday. “There is total control and reduction of smoke emission, without danger to people,” Cruz said in the statement. In a follow up Twitter statement, Cruz outlined that damage assessment had started “to plan the recovery”. “The dumping of water, via land and air, continues, with the aim of cooling the surface and being able to start the search for the disappeared,” Cruz noted. In a separate Twitter statement made earlier in the day, Miguel Díaz-Canel Bermúdez, the president of Cuba, said, “we made progress in confronting the terrible fire in the Industrial Zone of Matanzas”. “Yesterday was a day of victory, but we cannot trust ourselves. The danger is still latent. My hug and deep respect for those who are there in the fight,” he added in the statement. As of August 10, 128 people have been treated and one person has died as a result of the supertanker fire, the official Cuba Presidency Twitter page highlighted late Wednesday. On the same day, the Cuba Presidency Twitter page outlined that air force helicopters had flown more than 240 flights, with each carrying two tons of water, in response to the supertanker blaze. The Cuba Presidency Twitter page also noted the work of the builders and hydraulic resources in the creation of dikes that prevented the spread of flames. On August 6, Susely Morfa González, the first secretariat of CPPCC in the provincial committee of Matanzas, announced in a Tweet that a fire had been caused by an electrical discharge at the base of the Matanzas supertanker.
Pollution teams continue work to reduce oil slick off east Kent coast – The Isle Of Thanet News --- Pollution response teams continue work to reduce an oil slick first reported 12 nautical miles off the east Kent coast at the end of July. Aerial surveillance flights continue to report reduced areas of sheen and vessels continue to work to collect and capture any visible surface oil. The Maritime Coastguard Agency, which is the lead organisation on the clean up operation says reports and surveillance work demonstrates that the slick is reducing and the risk to the shoreline diminishing. Reports have been received of minor spots of oil on the beaches at Deal and both HM Coastguard and pollution response contractors are undertaking regular patrols of the beaches. Oil found so far – which is confirmed to be from the same source as the slick – is of minor amounts and sparsely spread. The remotely operated underwater vehicle is continuing to survey the potential source but investigations are ongoing. Any oil found is being cleaned up by the Maritime and Coastguard Agency’s pollution response teams. A spokesperson for the Maritime and Coastguard Agency said: “We continue our work to do all we can to prevent oil from reaching the shore.” Work continues off the east Kent coast to keep an oil spill contained and prevent it from reaching the shore. The first report of the oil slick was made to the Maritime and Coastguard Agency by a Royal Navy vessel. The Agency is working with local partners to ensure a coordinated response.
This map shows where Europe gets its natural gas - and why economic disaster is looming if Russia cuts off its fuel supply - Russia is choking off Europe's natural gas supply in a bid to hit back against western sanctions.It cut the capacity of the Nord Stream 1 pipeline to Germany to just 20% last month, contributing to the continent's energy crisis.Key gas benchmarks have soared since the start of June, with TTF Dutch natural gas futures surging 129% to 194 euros ($198) per-megawatt-hour."European gas prices are soaring again, approaching record highs, as a result of Nord Stream 1 flows falling to just 20% of capacity due to ongoing maintenance," Rystad energy analyst Karolina Siemieniuk said in a recent research note. "If Russian flows halt entirely, which is not out of the question, prices will skyrocket further."But Nord Stream 1 isn't the only pipeline that provides Europe with its natural gas.Gas fields in Azerbaijan, the North Sea, and northern Africa are also key sources of energy for the continent.Many European countries also import liquefied natural gas by ship - and the US now sends more super-cooled gas by boat than Russia does by pipeline.Russia has the capacity to ship gas to Germany at a rate of 1.76 million GigaWatt hours a day, according to the European Network of Transmission System Operators for Gas. Key routes include the Gazela pipeline, which runs through the Czech Republic, and the Yamal-Europe pipeline that runs from Western Siberia to Germany.But the European Union has also worked on initiatives to reduce its dependency on Russian gas. The Trans-Anatolian and Trans Adriatic pipelines, finished in 2018 and 2020 respectively, supply gas from Azerbaijan's Shah Deniz gas field to Greece, Italy, and Turkey.The EU also imports gas from the North Sea gas fields, which are the territory of Norway and the UK. Belgium, France, Germany, the Netherlands, and Ireland all receive gas via networks including Europipe-II and the Forties pipeline system.Lastly, Italy and Spain both import gas from key northern African sites including the Algerian natural gas hub of Hassi R'Mel.
Deadlock with Russia over Nord Stream gas turbine is not our fault, Siemens Energy CEO says - Siemens Energy CEO Christian Bruch said Monday that there is no technical justification for Russia to refuse the delivery of a turbine for the key Nord Stream 1 gas pipeline. His comments come amid a standoff between Germany and Russia over a piece of equipment that the Kremlin claims is holding back gas supplies to Europe. Germany's Siemens Energy, which provides equipment to the power industry, says it is ready to return the turbine to Russia after carrying out maintenance work in Canada. Moscow, however, says economic sanctions imposed by Canada, the European Union and Britain following the Kremlin's onslaught in Ukraine have prevented the turbine from being shipped back. Russia says it needs documentation to confirm the turbine is not subject to Western sanctions. Germany has contested this reasoning, saying the equipment is not affected by sanctions and accused Russia of not honoring its contracts for political reasons. Russia recently cut gas supplies to Europe via the Nord Stream 1 pipeline, the EU's single largest piece of gas infrastructure, to just a fifth of its capacity. Moscow has repeatedly denied it is weaponizing fossil fuel supplies. It is not yet known when or if Nord Stream 1 gas flows will return to normal levels.
Egypt Curbs Electricity to Export More Natural Gas to Europe – Egypt’s prime minister has said the country is curbing electricity use so that it can export more natural gas and generate foreign currency. Egypt will reduce street lighting, lights in public squares and large sports facilities, and illuminations outside government buildings will be switched off after working hours. Cairo is struggling to cope with the fallout of the conflict in Ukraine which has pushed the price of wheat up dramatically. Russia and Ukraine are the largest exporters of wheat worldwide whilst Egypt is the world’s biggest importer, with 80 percent of its supply coming from the two countries. Earlier this week Egypt met with delegates from the World Bank to discuss a $500 million food security loan to help the struggling country. As well as wheat, electricity, petrol and the price of other basic commodities have soared, causing huge problems in a country where a third of the population already live below the poverty line. In June the European Union signed a memorandum of understanding with the Zionist regime and Egypt to boost natural gas imports to Europe, in an effort to replace imports from Russia. Last year Russia accounted for 40 percent of the EU’s natural gas imports but since the war, Europe has said it will cut imports by two thirds in one year. Russia has reduced and cut off supplies of gas to several European countries in what analysts say is a punitive measure against sanctions in response to the war on Ukraine. In 2020 Egypt and the occupying regime of Israel signed a deal under which the regime exports roughly 20 million cubic meters of gas per day to Egypt where it is liquefied and shipped to European countries.
Potential curb on Australian LNG exports is another blow to Asia-Pacific gas markets -The Asia-Pacific gas market has suffered another blow after major natural gas producer Australia signaled it could potentially cut down liquified natural gas exports as the region battles tight gas supplies, high prices and competition from gas-short European buyers. Australia is looking to trim its overseas sales in favor of domestic consumption ahead of a projected shortfall in local supplies next year As energy protectionism takes hold globally, last week, the Australian Competition and Consumer Commission called on Canberra to protect domestic gas supplies and curb LNG — cooled natural gas — exports after projecting the east coast of the country could face a shortfall of 56 petajoules of gas next year. For months, Asia-Pacific region has faced competition for fuel from European buyers looking to replace restricted Russian gas. These European countries, in scrambling for LNG to mitigate a shortage of pipeline gas ahead of the northern winter, have outbidded some less developed Asian countries. "To protect energy security on the east coast we are recommending the Resources Minister initiate the first step of the Australian Domestic Gas Security Mechanism (ADGSM)," ACCC Chair Gina Cass-Gottlieb said last week. "We are also strongly encouraging LNG exporters to immediately increase their supply into the [local] market." Most of the gas used on Australia's east coast is produced by companies that are also LNG exporters to Asia-Pacific and other countries. The ADGSM stops these producers from exporting LNG if there is a shortfall domestically. While most LNG sales to overseas buyers are made through long-term contracts, Australian LNG producers also sell ad-hoc and non-contracted LNG on the spot market. Countries without the ability to strike competitive long-term contracts are forced to buy them on the spot market. It is this LNG supply that the ACCC says producers should avoid selling to the overseas market — currently flushed with gas-starved buyers — and save it for local consumers.
Europe Set to Start Winter Seriously Short of Diesel - Northwest Europe is forecast to begin a perilous winter with historically low amounts of diesel, a fuel that powers vast swaths of the economy. The region’s stockpiles of road diesel, heating oil and other diesel-type fuel are set to shrivel this November to the lowest level in data that goes back to the start of 2011, according to Wood Mackenzie Ltd. That means there’s a smaller-than-usual supply cushion as the continent braces for a potentially severe winter energy crisis. “We’re expecting stocks to draw at a seasonal rate, but we’re starting from this very low base,” said James Burleigh, the consultancy’s principal analyst of European oil markets, on why November inventories are expected to be so low. “On the demand side, we have the usual seasonal increase.” Diesel is vital for cars and trucks in Europe, where its use has historically been financially encouraged. Such fuels are also consumed by ships, and used by the construction and manufacturing sectors. Stockpiles in independent storage in the Amsterdam-Rotterdam-Antwerp oil-trading hub are at the lowest level for the time of year since at least 2008, according to data from Insights Global. Europe is structurally short of diesel-type fuel, regularly receiving cargoes from overseas. That natural shortage could become more of a problem early next year, when an EU ban on seaborne imports from Russia -- currently the continent’s single-biggest external supplier -- is set to take effect. It’s just one part of a broader energy crisis that’s engulfed the continent following Russia’s invasion of Ukraine, sending the prices of natural gas and electricity soaring and fanning inflation. Even now, a time of year when Europe’s stockpiles typically build, there are signs of supply constraints. Oil refiner OMV Germany reported a “run” on heating oil and diesel. Austria, Switzerland and Hungary have also said they will release oil from reserves in recent months. Low water levels on the Rhine -- an important river for the shipment of fuels -- aren’t helping. When the water is shallow, barges are limited in how much they can load. That makes it harder to ship fuel into inland Europe from the continent’s oil trading hub, especially past the key waypoint of Kaub, which lies to the west of Frankfurt. Part of the problem in building stockpiles is that it’s not being incentivized by the market. Currently, fuel for delivery in the winter months is pricing at a discount to the August diesel futures contract. This structure, known as backwardation, signals a tight market and discourages traders from putting fuel into storage tanks. More recently, that structure has been fading, due to a combination of high refinery runs, healthy imports -- including Russian barrels still finding their way into Europe -- economic data and recessionary fears, according to industry analysts. Still, compared to historical norms, it remains strong.
Russia resumes oil supplies to Slovakia and Hungary but imports to Czechia remain halted - The Druzhba [Friendship] pipeline is resuming the transfer of oil to Slovakia and Hungary following MOL Group’s payment to Ukraine for the Russian oil transit. However, imports are still halted to Czechia, local media report, after Russian oil company Transneft cut the oil flow westwards, blaming sanctions for blocking transit payments. Slovnaft and its parent company Hungarian MOL Group announced on Tuesday they had initiated talks to make payments to Ukrainian operator Ukrtransnafta; news followed on Wednesday that Ukraine had received transit payments that Slovnaft and MOL Group had made on behalf of the Russian Transneft. Russian oil pipeline operator Transneft said it had restarted pumping oil through the southern branch of the Druzhba pipeline on August 10, after the pipeline was closed down a day earlier in a payment dispute, the spokesman for the company Igor Dyomin told PRIME. The oil flow was stopped because Transneft claimed that its Ukrainian counterpart Ukrtransnafta had been unable to receive transit fees due to Western sanctions. Transneft sent the fees, but Ukrtransnafta sent it back. Dyomin now confirms that Ukraine had confirmed having received the payment for Russian oil transit. Slovak Minister of Industry Richard Sulik described the situation as an administrative glitch unrelated to politics. “It is not a fault of Ukrainians or Russians”, said Sulik and cited a decision made in “a smaller office of a bank in Portugal or Belgium where they did not administer the payment” because this office considered administering the Transneft payment a breach of sanctions. Sulik said that this was the fourth time a disruption like that had occurred since the Russian invasion of Ukraine, and that the current payments by Slovnaft to enable the transit are a temporary solution to maintain the flow during August. Flow further west to Czechia has not been resumed, however. “Disruption of the imports from the Druzhba pipeline does not limit the operations of Czech refineries”, said Czech Minister of Industry and Trade Josef Sikela on Twitter, adding that reserves contain oil for several days and that the country is working with Poland to begin imports into Czechia. In Czechia, Druzhba’s client is a Czech company Unipetrol controlled by Polish group PKN Orlen. Other alternative options of oil imports to Czechia include the use of the TAL pipeline from the Italian port city of Trieste, informed the Czech state pipeline operator Mero, a shareholder in TAL Group. Head of Mero Jaroslav Pantucek said the situation is not as serious as it looks. “Transneft confirmed supplies for the coming months. I think we are witnessing a negotiation game between individual parties”, he told Czech daily DenikN. The EU agreed to halt imports of Russian oil by December 5, 2022, but Czechia, Hungary and Slovakia were exempted from the embargo due to their limited options to find alternatives for Russian imports, effectively keeping Druzhba operations in place.
IEA: Russian oil production to fall by a fifth on EU import ban - Russian oil production is set to drop by 20% next year as the European Union’s import ban on Russian oil-product shipments kicks in, according to the International Energy Agency (IEA). The Paris-based agency said on Thursday that gradual monthly declines in output will start as soon as this month as the Kremlin cuts back oil refining, and will quicken as the embargo comes into force. The IEA expects to see close to 2 million barrels a day shut in by the start of 2023, despite a healthy recovery in production in recent months. Read more: Oil prices sink as IEA warns worst of energy crisis 'yet to come' Brent crude was up 1.1% to $98.43 a barrel, while US West Texas Intermediate crude (CL=F) also rose 1.1% to $92.96. From 5 December, the EU is set to halt most crude purchases from Russia in a bid to cut off revenue streams that Russia uses to finance its war in Ukraine, before the restriction takes effect on 5 February 2023. In the past three months, Russia’s oil output has risen, reaching nearly 10.8 million barrels a day last month amid higher domestic oil-processing and robust exports as the country redirects crude flows away from the EU to Asia. It estimates some 1 million barrels per day of Russian products and 1.3 million barrels per day of crude would have to find new homes due to the planned EU bans. In July, Russian oil output was just 310,000 bpd below prewar levels, while total crude exports were down 580,000 bpd. That saw the country generate oil export revenues of $19bn, down from $21bn the month before, thanks to lower prices and slightly reduced volumes. The agency also raised its oil demand growth forecast for this year as surging gas prices were spurring "substantial" gas-to-oil switching among consumers. "Natural gas and electricity prices have soared to new records, incentivising gas-to-oil switching in some countries," the IEA said in its monthly oil report. Earlier this week, a European emergency gas plan to cut consumption came into force, asking EU member states to voluntarily cut gas use by 15% this winter to prepare for a potential Russian cut-off. The move will affect all households, power producers and industry. While the measures would initially be voluntary, the proposal includes a mandatory trigger should the supply situation deteriorate significantly.
Exxon in talks with unnamed party for Sakhalin--- US oil producer Exxon Mobil is in the process of transitioning its 30% stake in a Russian oil development "to another party," according to a filing with the US Securities and Exchange Commission on Wednesday. Hundreds of energy and consumer goods companies including BP, Equinor, Pepsico, Shell and Starbucks have left the country or transferred assets as a result of Russia's Feb. 24 invasion of Ukraine. Exxon did not name the other party in its filing. It was the operator of Sakhalin-1, a large oil and gas development in Russia's Far East, which produced 220,000 barrels of oil and gas per day as recently as 2021. Earlier this year, Exxon took a $4.6 billion impairment charge for exiting the development, its largest investment in Russia. A senior Russian lawmaker said on July 8 that Moscow would take control of the Sakhalin-1 oil and gas project that included Exxon Mobil, Japan's SODECO, India's ONGC Videsh as well as Russian energy giant Rosneft. Its output fell to just 10,000 bpd following Western sanctions on Russian commerce. Exxon declined to say what company or companies would take over its Russia assets. However, it has made significant progress exiting the Sakhalin-1 venture, spokesperson Casey Norton said. "As operator of Sakhalin-1, we have an obligation to ensure the safety of people, protection of the environment and integrity of operations," he added. "It's a complex process." A shift of assets to Rosneft would follow a path taken by others. France's TotalEnergies transferred a stake in Russia's Kharyaga oil field to Russian state producer Zarubezhneft.
Japan intends to keep stake in Sakhalin-1 oil project: industry minister -- Japan intends to keep a stake in the Sakhalin-1 oil and gas project in Russia, industry minister Koichi Hagiuda said on Monday, after Russia temporarily banned Western investors from selling shares in key energy projects. The project contributed to diversifying Japan's energy supply, Hagiuda told a news conference. "Sakhalin-1 is a valuable non-Middle East source for Japan, which depends on the Middle East for 90 per cent of its crude oil imports," said Haguida, the minister for economy, trade and industry. "There is no change in maintaining the interests of Japanese companies in it," he said. Russia has banned investors from so-called unfriendly countries from selling shares in banks and key energy projects, including Sakhalin-1, until the end of the year, stepping up pressure in a sanctions stand-off with the West. Sakhalin Oil and Gas Development, a Japanese consortium, owns 30 per cent of Sakhalin-1. Separately, an Aug. 2 Russian government decree gave foreign investors at the Sakhalin-2 liquefied natural gas (LNG) project a month to claim their stakes in a new entity that will replace the existing one. The foreign investors include Royal Dutch Shell and Japanese trading houses Mitsui & Co and Mitsubishi Corp. Hagiuda reiterated that Japan intended to have the Japanese trading houses maintaining stakes in Sakhalin-2. "We'll need to consider specific measures after confirming details of Russia's decision," he said. "The public and private sectors will work together to ensure a stable supply of LNG to Japan," Hagiuda said. They shared a basic policy on maintaining the stakes, and he hoped the trading houses would start the procedure for converting to the new entity if they could meet Russia's conditions. Mitsui & Co has a 12.5 per cent stake in Sakhalin-2. Mitsubishi Corp holds 10 per cent.
Eni South Coral FLNG Aims To Reboot Mozambique’s Rovuma --Eni has proposed that its partners in the Rovuma LNG project construct a second floating liquefied natural gas processing facility to circumvent political risks that have disrupted ExxonMobil from building an onshore megaplant. Italy’s Eni is aiming to construct a second floating liquefied natural gas (FLNG) processing facility offshore Mozambique to fast-track monetization of the ultradeepwater gas reserves it is developing with its partners ExxonMobil and China National Petroleum Co. (CNPC) in the Mozambique Rovuma Venture SpA (MRV). No final investment decision (FID) has been made, but Eni CEO Claudio Descalzi told analysts during a 2Q earnings call on 29 July that Eni’s partners “are positive” and view the option as a temporary fix to work around political risk that has stalled ExxonMobil’s movement on the $30-billion onshore LNG facility originally planned. In late 2020, an Islamic militant insurgency that had been building over 3 years intensified attacks along the Cabo Delgado coast, home to not only ExxonMobil’s Rovuma LNG facility but also TotalEnergies’ $20-billion Mozambique LNG development. The attacks prompted the French major to declare force majeure in late April 2021 and ExxonMobil to postpone its FID to 2022 or even 2023. Rovuma isn’t having to wait to produce LNG from its upstream operations in Mozambique’s Area 4 block, however, thanks to the decision in 2017 to construct the $7-billion Coral-Sul FLNG facility which arrived at its mooring site 50 km (31 miles) offshore of the north coast of Mozambique in January. In June it took on its first feedstock from the ultradeepwater Coral South reservoir from connections to six subsea production wells.
NOSDRA Confirms Fresh Oil Leakage In Rivers Community – National Oil Spill Detection and Response Agency (NOSDRA) has confirmed a fresh oil spillage in Bodo community, Rivers state. The Director-General of the agency, Idris Musa, said in a text to Channels Television that the leak took place on the Trans-Niger Pipeline, operated by Shell Petroleum Development Company joint venture in the riverine area. An eyewitness had told TheCable that the underground pipeline had been discharging crude oil into the environment and spreading to farmlands since Tuesday night. The community had in 2008 experienced two large-scale oil spills from SPDC’s facilities with the Niger Delta Development Commission (NDDC) making efforts to tackle the problem of spillage in the oil-rich state.
Nigeria's oil production decreased to 1.08m b/d in July -Nigeria’s crude oil production decreased in July to an average of 1.08 million barrels per day (bpd) from 1.16 million the previous month.The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) said this in its latest crude oil and condensate production data for July 2022.The report shows a 6.42 percent decrease from June’s production figures.With the addition of condensate, oil output in July grew to a total of 1.31 million bpd from 1.40 million posted last month. 
Nigeria loses N891bn to gas flaring --Nigeria lost N891bn to gas flaring in 18 months, according to data from the Nigerian Oil Spill Monitor, an arm of the Nigerian Oil Spill Detection and Response Agency, NOSDRA, released on Sunday. The data revealed that the country lost a total of N707bn in 2021 and N184bn in the first half of 2022, totaling N891bn. According to the NOSDRA report, oil and gas companies operating in the country flared a total of 126 billion standard cubic feet, SCF, of gas in the first half of 2022, leading to a loss of $441.2 million, (about N183.54 bn) in the six-month period. On the other hand, in 2021, about 23,862.271 barrels of oil (3,770,238.864 litres/119 tanker trucks) were spilled. Brent International was sold for an average of $71 per barrel in 2021, bringing total revenue loss in that year to $1.7m. The estimation put the equivalent of the volume of gas flared in the first half of 2022 to carbon dioxide, CO2 emission of 6.7 million tonnes in the oil producing areas, 4.56 per cent higher than the 120.5 billion SCF of gas flared in the second half of 2021, and capable of generating 12,600 gigawatts hours of electricity. On the other hand, the quantity of gas flared in the first six months of 2021 was capable of generating 14,000 gigawatt-hour of electricity, and an equivalent of 7.4 million tonnes of CO2 emission.Giving a breakdown of the gas flared in the country in the first six months of 2022, the agency disclosed that while companies operating in the offshore oilfields flared 62.2 billion SCF of gas, companies operating onshore flared 63.9 billion SCF of gas, valued at $223.6 million. In 2021, there were around 382 publicly available oil spill records. Out of the 382 occurrences, a total of 33 of these oil spill sites were not visited by a joint investigation team, and 122 of these had no estimated quantity of oil spilled provided by the companies involved.
Petrobras wraps up sale of shallow-water fields off Brazil - In an update last week, the Brazilian giant informed that it has finalised the sale of all its stakes in the producing fields of Peroá and Cangoá and the Malombe discovery to the company 3R Petroleum Offshore, previously known as OP Energia. The company explained that this sale was concluded with a payment of $8.07 million with the adjustments provided for in the contract. The firm elaborated that this amount was received in addition to the $5 million paid when the purchase and sale contract was signed. Aside from this amount, Petrobras is expected to receive up to $42.5 million in contingent payments, depending on future Brent prices and asset development. Petrobras held 100 per cent interest in the Peroá and Cangoá fields, located in shallow waters, whose average production from January to June 2022 was about 572 thousand m3/day of non-associated gas. In addition, the firm had a 100 per cent stake in the BM-ES-21 exploratory block, situated in deep waters, where the Malombe discovery is located. Petrobras wraps up sale of shallow-water fields off Brazil PPER-1 platform; Source: Petrobras The fields’ production system is based on up to six wells connected to the unmanned offshore platform PPER-1, which sits at 67 meters of water depth. Among the wells connected to the platform, three are operational in Peorá and one is operational in Cangoá while another well is directly tied to the gas pipeline connecting the platform to the UTGC processing facility onshore. On the other hand, the Malombe discovery was made in 2011 with the drilling of the 1-ESS-206 exploration well in the BM-ES-21 concession, which was acquired during ANP’s 6th bidding round in 2004. Petrobras explained that the development concept for this discovery consisted of a subsea tie‐back to the PPER-1 platform. The Brazilian player pointed out that this transaction is in line with its portfolio management strategy and the improved allocation of its capital, aiming to maximise value and provide a greater return to society. In line with this, the company is increasingly concentrating its resources on assets in deep and ultradeep waters, where it has “shown a great competitive edge over the years.”
Refined Products: India's Russian refined product imports treble - Not only crude oil but also cheaper refined fuels from Russia are gaining ground in the Indian market since the outbreak of the Ukraine war in February. Imports of Russian refined products have tripled in recent months from the preceding three-year average, according to energy cargo tracker Vortexa. India's imports of Russian crude slowed a bit in July, dropping 5% to 917,000 barrels per day (bpd), according to Vortexa. With 1.06 million barrels per day (mbd), China remained the biggest importer of sea-borne Russian crude in July. Europe imported below 1.9 mbd of sea-borne Russian crude oil in July, marginally less than in the previous three months but took in 13% more diesel over the previous month. Russian oil made up 19% of India's total crude imports in July compared with 20% in June. Rising Russian imports have displaced supplies from the Mideast Gulf, US and West Africa, with imports from these regions falling by nearly 20% in May-July over the first quarter of 2022, according to Vortexa analyst Serena Huang. Indian imports of Russian refined products have risen close to 100,000 bpd over recent months, with fuel oil making up 70% of these, followed by biofuels and secondary refinery feedstocks. The average import was 30,000 bpd over the last three years. In comparison, the average Chinese imports of Russian products have been stable over time between 50,000 and 60,000 bpd. India is a net exporter of refined products. In April-June, it exported nearly 60% more products in volume terms than it imported, with the biggest export items being diesel, petrol, jet fuel and naphtha. LPG, fuel oil and pet coke are the biggest imports. Fuel oil makes up a fifth of the total products' imports. Its domestic consumption rose 14% year-on-year in April-June in part due to industries' shift from pricey natural gas to cheaper liquid fuel.
SPRC faces B39m suit over oil spill -- Restaurant and hotel entrepreneurs at Mae Ramphueng beach and Koh Samet yesterday filed a lawsuit against Star Petroleum Refining Public Co Ltd (SPRC) to demand 38.8 million baht in compensation for recent oil spills that have harmed the area. Representatives of 38 plaintiffs -- all entrepreneurs -- gathered at Rayong Provincial Court on Tuesday. They said they lodged the civil lawsuit because the spill in January affected their businesses. The entrepreneurs said that they had discussed compensation with SPRC for over seven months, however, no progress had been made. .
Chinese oil giant Sinopec likely to enter Lankan fuel market amid Beijing's debt-trap – As Sri Lanka continues to remain in the Chinese debt trap, the biggest petrochemical company in China, Sinopec, is likely to start retail operations in the Lankan fuel market, local media said citing sources. The sources said that Sinopec is likely to enter Sri Lankan market for importing, distributing and selling petroleum products, reported Daily Mirror. This comes as Sri Lankan Cabinet Ministers in the month of June approved a proposal to allow more companies from oil-producing nations to import oil and start retail operations in Sri Lanka. The proposal was tabled by Power and Energy Minister Kanchana Wijesekera. It is pertinent to note that the economic crisis which is the worst in Sri Lanka’s history has prompted an acute shortage of essential items like fuel. Long queues at fuel stations in Sri Lanka are the new normal and prices fluctuate subject to availability. The economy of the country is bracing for a sharp contraction due to the unavailability of basic inputs for production, an 80 percent depreciation of the currency since March 2022, coupled into a lack of foreign reserves, and the country’s failure to meet its international debt obligations. This recent decision to let the Chinese enter in Sri Lanka’s fuel retail operations is prompted by a severe foreign exchange shortage. At present, 90 percent of Sri Lanka’s fuel supply is through the State-owned Ceylon Petroleum Corporation, and the remaining 10 percent by Lanka Indian Oil Corporation (IOC). Sinopec is already present at the Port of Hambantota where it operates an oil depot.
Iran’s key gas pipeline near Azerbaijan near completion - The National Iranian Gas Company (NIGC) authorities say a major gas pipeline project that is being constructed along the Caspian Sea is near completion amid Iran’s plans to increase gas supply to Azerbaijan under a swap deal with Turkmenistan. NIGC’s head of dispatching operations Mohammad Reza Joulayi said on Sunday that the Rasht- Chelavand pipeline will be ready for gas transfer within the next few days. Joulayi told the Iranian Oil Ministry’s news service Shana that the 42-inch, 150-kilometer gas pipeline will play a major part in Iran’s gas supply arrangements with Azerbaijan. The NIGC started the construction of Rasht-Chelavand gas pipeline in 2019 with the aim of expanding its gas transfer network in colder regions in north of the country. However, the project accelerated in November after Iran signed a major deal for swap of gas with Turkmenistan for delivery to Azerbaijan. Iraq is negotiating with Iran to secure increased supply of natural gas for its power plants. The deal allows Iran to receive 5-6 million cubic meters per day of gas from Turkmenistan for use in its northeastern regions while it delivers the same amount of gas to Azerbaijan through its pipeline facilities near Astara. Iran’s Oil Minister Javad Owji said in June that he had reached agreements with Turkmen and Azerbaijani officials to double the amount of gas agreed for swap between the three neighbors. The new gas pipeline from Rasht to Chelavand, which is located near Astara and is home to a major pressure bosting station, will enable the NIGC to significantly increase its gas supply to Azerbaijan. The pipeline also boosts NIGC’s capacity to respond to the gas demand in the Ardabil province where gas consumption reaches record highs during cold winter months.
OPEC’s Oil Exports Are Rising In August - Crude oil exports from OPEC producers rose by 223,000 barrels per day (bpd) in the first week of August, compared to the average shipments for the full month of July, according to data from trade flow intelligence firm Petro-Logistics cited by commodity analyst Giovanni Staunovo on Wednesday. In the first seven days of August, OPEC’s crude oil exports averaged 21.325 million bpd, per Petro-Logistics data. Libyan crude oil exports rebounded, after the African producer, exempted from the OPEC+ deal, lifted a force majeure in the middle of July. Libyan crude oil shipments jumped by 333,000 bpd to 927,000 bpd, according to Petro-Logistics. Last week, Petro-Logistics said that Saudi Arabia, OPEC’s top producer and de facto leader, raised its crude oil exports in July to the highest level in 26 months. “The Kingdom is finally supplying volumes in line with its #OPEC quota after restraining supply in the first-half of 2022,” Petro-Logistics said. Despite raising its crude oil production in July by 500,000 barrels per day, the OPEC+ group was still well below its collective quota, pumping 2.75 million bpd below targeted output, an Argus survey found on Wednesday. OPEC+ saw its combined crude oil production at 38.70 million bpd last month, with Saudi Arabia, OPEC’s top producer and de facto leader, raising its supply to the market the most. Still, the 500,000-bpd July increase of the collective OPEC+ oil production was lower than the 648,000-bpd rise the alliance had set for each of the months of July and August, after which it will have rolled back all the cuts from May 2020. Last week, OPEC+ gave the go-ahead to raise the collective oil production target for September by 100,000 bpd. The increase for the entire group means less than a 30,000 bpd rise for Saudi Arabia, and less than a 10,000 bpd increase for the UAE. Those two countries are believed to be the only two producers in OPEC+ and in the world currently holding enough spare capacity to raise their oil production.
OPEC’s Oil Production Rises But Still Well Below OPEC+ Target -OPEC’s total crude oil production rose by 216,000 barrels per day (bpd) in July compared to June, but combined production from the 10 OPEC members part of the OPEC+ pact continued to lag the targets in the agreement, OPEC’s monthly report showed on Thursday.Total OPEC-13 crude oil production averaged 28.90 million bpd last month, according to secondary sources in OPEC’s Monthly Oil Market Report. The 10 members in the OPEC+ pact, with Libya, Iran, and Venezuela exempted, pumped just over 25 million bpd in July, figures from OPEC’s secondary sources showed.To compare, per the OPEC+ deal, the 10 OPEC members with quotas had acollective target crude oil production of 26.276 million bpd. As usual and as per the agreement, top OPEC producer Saudi Arabia raised its production the most, by 158,000 bpd to 10.714 million bpd in June. This compares with a Saudi target of 10.833 million bpd. The Kingdom self-reported to OPEC production that was 100,000 bpd higher than secondary sources’ estimates and in line with its quota, 10.815 million bpd.Elsewhere within OPEC, the United Arab Emirates (UAE) and Kuwait boosted their respective production by nearly 50,000 bpd each, according to secondary sources, and pumped in line with their quotas. Iraq also increased its output, but was below its target.African producers Nigeria and Angola continued to severely lag behind their quotas amid a lack of investment and capacity. Angola’s production even fell by 19,000 bpd to 1.165 million bpd, compared to a July target of 1.502 million bpd. Nigerian production was nearly flat month over month and averaged 1.183 million bpd in July, according to OPEC’s secondary sources. Nigeria’s target for July was much higher—at 1.799 million bpd.Earlier this week, an Argus survey found that despite raising its crude oil production in July by 500,000 barrels per day, the OPEC+ group was still well below its collective quota, pumping 2.75 million bpd below targeted output.
Opec+ added 500,000 b/d in July, remained below target =Opec+ deal participants raised collective crude output by 500,000 b/d in July, when the group began the final unwinding of its Covid-19 supply cuts. But Argus' survey finds the group's production of 38.70mn b/d was still 2.75mn b/d below its quotas in the month. Dwindling spare capacity, underinvestment and sabotage have crippled the coalition's ability to return the roughly 10mn b/d it removed from the oil markets in May 2020. Opec+ will nominally complete that process this month, when its collective ceiling will rise by 648,000 b/d as it did in July. It has agreed to lift production by a further 100,000 b/d, shared pro rata, in September. Among Opec members, Saudi Arabia saw the highest monthly output increase in July, made possible by firm export levels and a seasonal rise in domestic crude burn for air conditioning. Saudi seaborne exports surged by over 550,000 b/d on the month to around 7.37mn b/d in July, including its half of shipments from the Neutral Zone shared with Kuwait, according to preliminary Argus tracking. Analysts said that between 60,000 b/d and 120,000 b/d of these may have emerged from stocks. Saudi Arabia can take its production up to 11mn b/d this month — a level it has reached only twice, according to its self-reported submissions to the Joint Oil Data Initiative (Jodi) covering January 2002-May 2022. After months of prioritising refinery run increases, neighbouring Kuwait also sharply boosted exports to 1.86mn b/d, including the Neutral Zone. Libya, which is exempt from the Opec+ deal, raised output by 70,000 b/d after lifting force majeure restrictions at all oil field and terminals in mid-July. Output has been recovering since, with export shipments resuming from the Es Sider, Ras Lanuf, Mellitah and Zueitina terminals, although lingering fractures in the political landscape continue to cast a shadow over the long-term stability of Libya's oil sector. Underperforming in July was Nigeria, whose output stood 570,000 b/d under the month's quota. Oil minister Timipre Sylva in late June said Abuja hoped to meet its production target by the end of August, but made no headway in July when force majeure was in place at the Bonny Light export terminal and output reduced of the Forcados and Bonga crude streams. Venezuelan production declined by 60,000 b/d, after a fire knocked out a natural gas pipeline key to the Jose refining and petrochemical complex. Caracas has been struggling to process recent shipments of Iranian crude sent to state-owned PdV's 140,000 b/d El Palito refinery, which have had to be rerouted. Analysts said sanctioned Venezuelan and Iranian grades are starting to suffer from competition with heavily discounted Russian sour crude, which is making its way towards refiners in Asia-Pacific. Non-Opec output rose by 220,000 b/d in July. Kazakhstan restored production at the offshore Kashagan field in mid-July, pushing the country's output to near 1.4mn b/d, and the return of Azerbaijan's ACG field from maintenance in late June added 40,000 b/d. Kashagan's return was cut short when a gas leak was discovered on 3 August, reducing output by more than 200,000 b/d. The field resumed production on the night of 9-10 August. Kazakhstan, the non-Opec group's second-largest producer, has been falling sharply behind its quota since March.
IEA Sees Little Chance OPEC+ Will Supply More Oil -- OPEC+ is unlikely to increase output in the coming months because of limited spare capacity, according to the International Energy Agency. Furthermore, the “largely symbolic” 100,000 barrel-a-day hike promised for September may actually turn into a cut as Russian production declines, the IEA said. “Comparatively low levels of operational spare production capacity, held mainly by Saudi Arabia and the United Arab Emirates, may thus all but rule out substantial further OPEC+ output increases in the coming months,” the IEA said in its monthly report on Thursday. The outlook from the Paris-based organization that advises major developed economies on energy policy suggests the burden of satisfying global oil demand growth in the latter part of the year will fall on countries outside the Organization of Petroleum Exporting Countries and its allies. Non-OPEC+ supply is projected to rise by 1.7 million barrels a day this year and 1.9 million next year, according to the IEA. That’s a significant acceleration compared with last year, but still falls short of 2.1 million barrels a day of demand growth expected in 2022 and 2023.
Dodgy Demand Data? The Oil Price Collapse Conspiracy - WTI crude oil prices fell to their lowest point since early February on Thursday, giving up virtually all gains since Russia invaded Ukraine. WTI crude has lost ~9.5% over the course of the week, marking the largest one-week percentage decline since Aprilamid growing fears that oil demand will collapse when western nations descend into a full-blown recession.While oil producers are certainly beginning to feel the heat, it’s refiners like Valero Energy (NYSE: VLO), Marathon Petroleum Corp.(NYSE: MPC), and Phillips 66 (NYSE: PSX) who have been hardest hit by the pullback thanks to a sharp decline in their refining margins aka crack spreads.For months, refiners have been enjoying historically high refining margins, with the profit from making a barrel of gasoil, the building block of diesel and jet kerosene, hitting a record $68.69 in June at a typical Singapore refinery. The margin later settled in the high 30s a few weeks later, a level still nearly four times higher than the $11.83 at the end of last year, and some 550% above the profit margin at the same time in 2021.But crack spreads have now gone into full reverse: according to Refinitv data, Asian gasoline margins plunged more than 102% in July to a discount of 14 cents a barrel to Brent crude, a far cry from a premium of $38.05 a barrel they reached in June. Asian refining margins have now crashed to just 88 cents a barrel over Dubai crude, from a record $30.49 in June.The effect: a sharp rise in inventories from the United States and Singapore to Amsterdam-Rotterdam-Antwerp.Refiners are being forced to cut gasoline output to minimize losses and switch to producing more profitable fuels.Indeed, Taiwan’s Formosa Petrochemical Corp. (6505.T), Asia’s top fuel exporter, is planning to reduce operating rates at its residue fluid catalytic cracking (RFCC) units by 5% in the coming weeks, with a Formosa spokesman telling Reuters that the company plans to sell more very low sulphur fuel oil (VLSFO) due to higher margins for those products.The collapse in oil prices has been so epic and unexpected that some oil pundits are now accusing the Biden administration of fabricating low gas demand data in a bid to hammer oil prices.To wit, in late June the EIA shut down reporting for several weeks, ostensibly due to a server malfunction. But as ForexLive has pointed out, gasoline demand data has been consistently bad ever since the EIA returned: “Maybe there’s an issue with reporting or maybe it’s a conspiracy“, ForexLive has declared.
Oil prices edge up as strong economic data feeds hopes for demand (Reuters) - Oil prices edged up on Monday, hovering near their lowest levels in months in volatile trading as positive economic data from China and the United States fed hopes for demand despite nagging fears of a recession. Brent crude futures were up 93 cents, or 0.9%, at $95.85 a barrel by 11:20 a.m. ET (1520 GMT). U.S. West Texas Intermediate crude was at $89.68 a barrel, up 67 cents, or 0.8%. Last week, fears that a recession could dent energy demand pushed front-month Brent prices down 13.7% to their lowest since February. It was Brent's biggest weekly drop since April 2020, and WTI lost 9.7%. Both contracts recouped some losses on Friday after jobs growth in the United States, the world's top oil consumer, unexpectedly accelerated in July. On Sunday, China also surprised markets with faster-than-expected growth in exports. China, the world's top crude importer, brought in 8.79 million barrels per day (bpd) of crude in July, up from a four-year low in June, but still 9.5% less than a year earlier, customs data showed. In Europe, Russian crude and oil products exports continued to flow ahead of an impending embargo from the European Union that will take effect on Dec. 5. Last week, the Bank of England warned of a protracted recession in Britain. In terms of U.S. production, energy firms last week cut the number of oil rigs by the most since September in the first drop in 10 weeks. Analysts at Goldman Sachs said they believe the case for higher oil prices remains strong, with the market remaining in a larger deficit than they expected in recent months.
Oil: U.S. Crude Back at $90 on China Buying; CPI Worries Restrain Rally -- The same China that drove oil prices to six-month lows last week helped shore them above the $90-per-barrel zone on Monday as commodity markets were mixed ahead of this week’s much anticipated Consumer Price Index report for July. China surprised markets with faster-than-expected growth in oil purchases for last month. The world's top crude importer took in 8.79 million barrels per day in July, up from a four-year low in June, but still 9.5% less than a year earlier, customs data released at the weekend showed. U.S. West Texas Intermediate oil, which serves as the benchmark for U.S. crude, settled up $1.75, or almost 2%, at $90.76 per barrel. WTI dropped about 10% last week after striking a six-month low of $87.03. Sunil Kumar Dixit, chief technical strategist at SKCharting.com, said a trade above $96.60 could change WTI’s short-term momentum and set it up for a rally towards $99 and $101. Otherwise, WTI could stumble again, resuming its journey south, toward the support cluster of $88-$85-$82, he said. Brent, the London-traded global benchmark for crude, settled up $1.73, or 1.8%, at $96.65. On Friday, Brent struck a six-month low of $92.79. Brent also lost 14% last week in its worst weekly loss since the COVID-19 outbreak of April 2020 that virtually destroyed energy demand. Whatever rebound oil sees over the next 48 hours could be capped by concerns over what the CPI report for July -- due on Wednesday -- could be. Pump prices of U.S. gasoline — one of the biggest components of CPI — have fallen from June record highs of $5 a gallon to under $4 now. That could certainly take some heat off the headline CPI number when the July update is released on Wednesday. Despite that, core CPI, stripped off volatile gasoline and food prices, is expected to increase by 0.5% month-over-month and 6.1% year-on-year. The FOMC has already hiked interest rates four times since March, bringing key lending rates from nearly zero in February to as high as 2.5% last month, in an attempt to curb inflation. The committee has another three rate revisions left before the year is over, with the first of that due on Sept. 21. As of Monday afternoon, Investing.com’s Fed Rate Monitor Tool showed a 67% chance that the September rate hike will be 75 basis points — the same as in June and July. The 75-basis point hike, incidentally, was the highest in 28 years when it was introduced two months back.
Crude oil prices rise as Russia suspends exports to Europe through pipeline - Russia announced it is suspending crude oil exports through its Druzhba pipeline, leading to price increases. The move cuts off the flow of oil to Hungary, Slovakia, and the Czech Republic. Russian pipeline operator Transneft blamed the situation on its counterpart in Ukraine, telling Russian state-owned news agency RIA Novosti that the Ukrainian company stopped the oil transport because of a problem with Russia's ability to pay. Insider reported that Russia's failure to pay was a result of Western sanctions., and that a Transneft spokesperson said the pipeline's northern section will continue to function normally. That section of the pipeline provides oil to Poland and Germany via Belarus. Soon after the announcement that the Ukrainian part of the pipeline would be halted, crude oil prices jumped, with Brent crude increasing 1.36% to nearly $98 a barrel, Insider reported. WTI crude went up 1.22%, reaching almost $92 a barrel. The situation arose just two over weeks after Russian state-owned energy company Gazprom cut natural gas flow to Germany, reducing supplies through the Nord Stream 1 pipeline to just 20%. The pipeline had reopened at 40% capacity a week earlier after being down for 10 days for scheduled maintenance. Gazprom blamed that situation on sanctions that held up the return of a turbine that had been sent to Canada for repairs in June. Europe is heavily reliant on Russian energy, importing about 40% of its gas and 30% of its oil from Russia.
Oil prices slip amid chance of Iran nuclear deal supply boost (Reuters) - Oil dropped over $1 a barrel on Tuesday, approaching a multi-month low hit last week, pressured by the latest progress in talks to revive the 2015 Iran nuclear accord, which would eventually allow Tehran to boost exports in a tight market. The European Union on Monday put forward a "final" text to revive the deal. A senior EU official said a final decision on the proposal, which needs U.S. and Iranian approval, was expected within "very, very few weeks". Brent crude 1fell $1.34, or 1.4%, to $95.31 a barrel at 0815 GMT. U.S. West Texas Intermediate (WTI) crude dropped $1.25, or 1.4%, to $89.51. Talks have dragged on for months without a deal. Still, Iran's crude exports, according to tanker trackers, are at least 1 million barrels per day below their rate in 2018 when then U.S. President Donald Trump exited the nuclear agreement, so an agreement could allow a sizeable boost in supply. Oil soared earlier in the year as Russia's invasion of Ukraine added to supply concerns, with Brent hitting $139 in March, close to its all-time high, in March. Concern of economic slowdown have since weighed. Brent fell as low as $92.78 on Friday, its lowest since February, as the Bank of England's warning on Thursday of a drawn-out downturn intensified fears of slowing fuel use. In another bearish sign, China's crude oil imports in July fell 9.5% from a year earlier, customs data showed. China is the world's largest crude importer.
Oil Softens after EIA Downgrades 2022, 2023 Demand Outlook -- West Texas Intermediate futures nearest delivery slipped in market-on-close trade Tuesday after U.S. Energy Information Administration revised lower its world oil demand forecast for the fourth consecutive month in August, citing protracted economic weakness and rising inflation across industrialized countries that are part of Organization for Economic Cooperation and Development. In its Short-term Energy Outlook released this afternoon, Washington-based energy watchdog forecasted global oil demand would rise by 2.08 million barrels per day (bpd) this year, down from a 2.23 million bpd growth rate seen in its previous forecast, to 99.43 million bpd. The downward revision was mostly attributed to consumption weakness in OECD industrialized countries. "Although supply disruptions have kept crude oil prices around $100 a barrel, crude oil prices have come down slightly in July as concerns of slower economic growth or a recession become more prevalent," said EIA its monthly outlook. These concerns are reflected in the University of Michigan's survey of consumer sentiment, which recorded its lowest reading on record in June, with data going back to November 1952. Likewise, consumer sentiment in the Euro Area has decreased, reaching record lows in July. On the supply side, EIA downgraded its 2022 production forecast to 100.21 million bpd this year, down 210,000 bpd from July outlook, mostly driven by output losses within Organization of the Petroleum Exporting Countries. U.S. crude oil production in seen growing to 11.9 million bpd this year and 12.7 million bpd in 2023, which would set a record for most U.S. crude oil production in a year. The current record is 12.3 million bpd set in 2019. Earlier in the session, both the U.S. and international crude benchmarks got a leg up on media reports suggesting Russia suspended oil shipments through the southern leg of the Druzhba pipeline, effectively cutting supplies to three Central European countries - Hungary, Czech Republic, and Slovakia. Transneft, a sanctioned energy giant that controls transit through much of the Druzhba network, claimed on Tuesday that a transit fee for August was returned to buyers after European sanctions blocked the company's access to the funds. Hungary's major refiner MOL said it had initiated talks for alternative payment schemes aimed at restarting crude flows. At settlement, nearby month delivery WTI slipped $0.26 to $90.50 bbl, and the ICE Brent contract for October delivery fell $0.34 to $96.31 bbl. NYMEX September RBOB gained 7.4 cents to $2.9602 gallon, while NYMEX September ULSD contract rallied 15.47 cents to $3.3338 gallon.
Brent-WTI Oil Price Spread at Highest Point Since 2014 - The price spread between Brent and West Texas Intermediate (WTI) oil increased to a high of $13.26 per barrel on July 29, the highest price spread since January 14, 2014, the U.S. Energy Information Administration (EIA) highlighted in its latest short term energy outlook (STEO). This wide Brent-WTI spread reflects supply and demand dynamics in Northwest Europe, according to the EIA, which outlined in the STEO that the difference had come down in the first few trading days of August but remained high. “Russia’s full-scale invasion of Ukraine has resulted in shifting trade patterns, leaving Europe to find substitutes for Russia’s oil,” the EIA noted in the STEO. “This change has driven up the price of Brent contracts to a level high enough to reduce Asia’s imports of Brent crude oil and to retain more oil in Europe. The Brent-WTI spread has also increased enough to attract more imports of crude oil from the United States into Europe,” the EIA added. In the STEO, the EIA highlighted that, from March through July, the Brent-WTI spread averaged $6.05 per barrel, which it said was an almost $2.50 per barrel increase from the first two months of the year. The organization forecasted in the STEO that the Brent-WTI spread will average $6 per barrel in 2023, up $2 per barrel from the EIA’s July STEO forecast. “This high spread will keep exports from Europe to Asia subdued and encourage higher imports from the United States, both of which will likely be necessary as the EU reduces crude oil imports from Russia by 90 percent by the end of the year,” the EIA stated in the August STEO. “Although supply disruptions have kept crude oil prices around $100 per barrel, crude oil prices have come down slightly in July as concerns of slower economic growth or a recession become more prevalent,” the EIA added. “These concerns are reflected in the University of Michigan’s survey of consumer sentiment, which recorded its lowest reading on record in June, with data going back to November 1952. Likewise, consumer sentiment in the Euro Area has decreased, reaching record lows in July,” the EIA continued. In its August STEO, the EIA raised its Brent crude oil price forecast for 2022 and 2023 but lowered its WTI forecasts for the same period. According to the August STEO, the EIA now sees Brent spot prices averaging $104.78 per barrel this year and $95.13 per barrel next year. The organization’s previous forecast saw Brent spot prices averaging $104.05 per barrel in 2022 and $93.75 per barrel in 2023. As for WTI, the EIA now sees WTI spot prices averaging $98.71 per barrel this year and $89.13 per barrel next year. In its July STEO, the EIA saw WTI spot prices averaging $98.79 per barrel in 2022 and $89.75 per barrel in 2023.
WTI Dips After Bigger Than Expected Crude Build - --Crude prices were marginally lower today after early gains were erased on indications that Russian crude shipments via the southern leg of a major pipeline to Europe may resume in a few days after being suspended.“Energy traders faded the rally that stemmed from the halting of oil shipments because it wasn’t triggered by an escalation from the Russians,” said Ed Moya, senior market analyst at Oanda Corp. "Europe is going to figure out how to allow the payments that were behind that disruption," he added.Also weighing on trading is the potential return of Iranian oil to the market. The US and Iran have just weeks to decide whether they want to revive their nuclear deal, after European Union diplomats presented parties with a final draft accord.But for now, the inventory issues remain top of mind... API
- Crude +2.156mm (-400k exp)
- Cushing -627k
- Gasoline +910k
- Distillates 1.376mm
For the 2nd straight week, API reports a crude inventory build (despite expectations of a small draw)...WTI was hovering around $90.60 ahead of the API data and dipped on the crude draw...
Oil Slides Ahead of US Inflation Data, Inventory Report-- Oil futures nearest delivery on the New York Mercantile Exchange and Brent crude traded on the Intercontinental Exchange moved lower early Wednesday after the American Petroleum Institute late Tuesday reported large builds in domestic crude and distillate inventories during the first week of August, fueling concerns over weak demand this summer. In addition, investors await the release of closely watched inflation data in the United States that is expected to show the first month-on-month decrease in the headline inflation since April, easing pressure on the Federal Reserve. Economists expect annualized rate of inflation in the U.S. to have decelerated from 9.1% in June to 8.7%, bringing monthly increase to 0.2%, which would be the smallest monthly gain since January 2021. Gasoline prices likely brought notable relief for headline inflation, with global supply chain pressures further easing from the spring lockdown across China. What's more, core inflation, excluding volatile food and energy prices, is seen to have fallen to 0.5% month-on-month, which should suggest inflation in the broader economy has peaked. A slight decline in headline inflation in July could fuel speculation that the Federal Reserve will raise interest rates by only 50 basis points at its next meeting in September, less than the last two decisions that saw an increase of 75 basis points each. Heading into the data's release, U.S. equity futures edged higher and the U.S. Dollar Index lost some ground against its global peers to trade below 106 but failed to lend support for the oil complex in early trading. Nearby-month delivery West Texas Intermediate dropped $1.56 to $88.91 barrel (bbl), and the ICE Brent contract for October delivery declined $1.69 to $94.62 bbl. NYMEX September RBOB fell 2.93 cents to $2.9399 gallon, while NYMEX September ULSD contract pulled back 7.83 cents to $3.2539 gallon. Separately, API reported Tuesday afternoon that commercial crude oil stocks rose 2.156 million bbl last week, well above calls for a 200,000 bbl increase. If confirmed by U.S. Energy Information Administration data Wednesday morning, this would be the second consecutive weekly build in domestic crude oil inventories. Stocks at the Cushing, Oklahoma, tank farm, the New York Mercantile Exchange delivery point for WTI futures, also rose 910,000 bbl. Gasoline stocks fell 627,000 bbl in the week reviewed compared with estimates for a 500,000 bbl downturn. API data show distillate inventories rose 1.376 million bbl as of Aug. 5, missing calls for a draw of 500,000 bbl. Further weighing on the complex, EIA on Tuesday forecast global oil demand would rise by 2.08 million barrels per day (bpd) this year, down from a 2.23 million bpd growth rate seen in its previous forecast, to 99.43 million bpd.
WTI Rebounds Despite Big Crude Draw & Production Increase; Gasoline Demand Jumped- Oil prices extended losses this morning - amid some notable volatility around US CPI - after a bigger than expected crude build reported by API, the imminent reopening of crude flows to Europe from Russia through Ukraine, and continued weakness in real wages."Crude oil prices rose on Tuesday on news pipeline flows of crude oil from Russia via Ukraine to Europe had been halted over a payment dispute of transit fees. The line, however, is expected to reopen within days but it nevertheless highlights and supports the current price divergence between WTI futures stuck around $90, amid rising US stockpiles and slowing gasoline demand, and Brent," Saxo Bank said in a note on its website. For now, all eyes are the official data to confirm (or deny) the API report... DOE
- Crude +5.457mm (-400k exp)
- Cushing +723k
- Gasoline -4.978mm
- Distillates +2.166mm
After the prior week's surprise build, analysts expected a small draw this week (while API reported another sizable build). However, analysts were seriously wrong with crude inventories rising by 5.457mm. Cushing stocks are also up for the 6th straight week... (Graphics Source: Bloomberg) Total crude stockpiles were virtually unchanged for a second week, with a 5.5 million barrel build in the commercial crude inventory almost entirely offset by a draw of 5.3 million barrels from the Strategic Petroleum Reserve. US Crude production rose to a new cycle high while the rig count dipped last week...Gasoline demand picked up notably last week - back to normal...
Oil Above $90 as Soft CPI Takes Down Dollar; U.S. Crude and Gasoline Offset -- Crude advanced firmly into the $90-per-barrel territory as investors celebrated a weaker-than-expected U.S. consumer price reading that dragged rate hike expectations and the dollar lower. Oil prices initially tumbled as much as 2% on the day as the flow of oil reportedly resumed on the Russian-owned Druzhba pipeline, after a brief blockade. The market went deeper into the red after the U.S. Energy Information Administration reported a second straight weekly build of five million barrels in crude balances. But the agency also cited a drop of about five million barrels in gasoline inventories, and that helped offset the bearish sentiment hanging over the market. The weak dollar was the clincher for those seeking direction in crude. The Dollar Index, which pits the greenback against six majors led by the euro, hit a one-month low of 104.51. The dollar tumbled after the Labor Department reported that the Consumer Price Index rose by 8.5% during the year to July versus a 9.1% annual expansion in June that marked its most in 41 years. Economists polled by U.S. media had expected an 8.7% growth in the annual CPI reading for last month. For July itself, the index posted zero growth, versus an expansion of 1.3% in June. Money market traders immediately priced in a higher probability for a 50-basis point, or half percentage point, hike at the Federal Reserve’s next rate revision meeting on Sept. 21. Prior to this, bets had been heavy for a 75-basis point, or three quarter percentage point, increase. West Texas Intermediate, the benchmark for US crude, settled up $1.43, or 1.6%, at $91.33 per barrel. It rose just over $1.90 at the day’s peak for a session high of $92.42, and slid more than $2.80 later to reach an intraday bottom of $87.67. Brent, the London-traded global benchmark for crude, settled up $1.09, or 1.1%, at $97.40. It rose almost $2.10 for a session high of $98.40, and tumbled nearly $2.70 for an intraday bottom of $93.64. Both WTI and Brent were up about 3% on the week. That was after last week’s slump that wiped 10% off the U.S. benchmark and nearly 14% off the London-based crude gauge. WTI also hit a six-month low of $87.03 last week while Brent slumped to $92.79, its lowest since February. Crude oil inventories jumped by 5.458 million barrels during the week ended August 5 against a build of 73,000 barrels forecast by analysts tracked by Investing.com In the previous week to July 29, crude stockpiles had also risen nearly five million barrels, or by 4.467 million to be precise. The latest surge in crude stockpiles came as exports of crude fell almost 40% last week to 2.11 million barrels from a previous 3.51 million. Production of crude also ticked higher, to an estimated 12.2 million barrels per day from 12.1 million. In the case of gasoline, the top automobile fuel in America, inventories declined by 4.978 million barrels last week, against expectations for a drop of 633,000 barrels. In the previous week, gasoline balances rose by 163,000 barrels. The drop in gasoline stockpiles came as the United States exported 1.13 million barrels of the fuel last week, the most in a week since December 2018. Domestic demand for gasoline was also strong as per seasonal trends. Last week’s demand was 9.123 million barrels, just slightly lower than year-ago levels of 9.43 million. U.S. consumption of gasoline dipped last month as pump prices hit record highs of $5 per gallon, prompting Americans to conserve on fuel. Prices have fallen since to just above $4 per gallon, encouraging demand again. The EIA also reported an outflow of 5.3 million barrels from the US emergency oil reserve last week, bringing the balance in the so-called Strategic Petroleum Reserve to 464.6 million barrels — its lowest since April 1985. In the case of distillates, stocks surprisingly grew by 2.166 million barrels last week. The expectation had been for a decline of 667,000 barrels. In the previous week, distillates had fallen by 2.4 million barrels. Known as middle-of-the-barrel oil, distillates are refined into the diesel that runs trucks, buses, trains and ships, as well as the fuel needed to fly airplanes.
Crude Oil Higher; IEA, OPEC Disagree Over 2022 Demand Growth -- Oil prices rose Thursday, boosted by the International Energy Agency lifting its forecast for crude demand growth, adding to the week’s gains on the back of weaker-than-expected U.S. inflation data. By 09:05 ET (13:05 GMT), U.S. crude futures traded 1.8% higher at $93.55 a barrel, while the Brent contract rose 1.6% to $98.94. U.S. Gasoline RBOB Futures were up 0.9% at $3.0969 a gallon. The Paris-based intergovernmental organization raised its outlook for 2022 demand by 380,000 barrels per day, citing steep price rises in competing energy sources. "Natural gas and electricity prices have soared to new records, incentivising gas-to-oil switching in some countries," the agency said in its monthly oil report. This news has been received positively even though OPEC took a contrary view, cutting its forecast for growth in world oil demand in 2022 for a third time since April. The Organization of the Petroleum Exporting Countries said, in its monthly report Thursday, it expects oil demand to rise by 3.1 million barrels per day in 2022, down 260,000 barrels per day from the previous forecast. "Global oil market fundamentals continued their strong recovery to pre-COVID-19 levels for most of the first half of 2022, albeit signs of slowing growth in the world economy and oil demand have emerged," OPEC said in the report. On the supply side, the IEA said Russia’s oil output is set to fall roughly 20% by the start of next year as a European Union import ban comes into force, with close to two million barrels a day shut in by the start of 2023. Oil prices are up around 5% this week, rebounding from the largest weekly drop since April 2020 last week, helped by a reassessment of the Federal Reserve’s likely monetary tightening path in the wake of the softer-than-expected U.S. CPI release. Still, the rise in U.S. oil inventories last week and the resumption of crude flows on a pipeline supplying central Europe capped further price gains. U.S. crude oil stocks rose by 5.5 million barrels in the most recent week, the U.S. Energy Information Administration said Wednesday, more than the expected increase of 73,000 barrels. “Lower crude oil exports helped with the inventory build,” said analysts at ING, in a note. “U.S. crude oil exports fell by 1.4MMbbls/d to 2.11MMbbls/d over the week- the lowest weekly export number since January.”
OPEC Downgrades Crude Demand Outlook; IEA Says Gas-to-Oil Switching Impacts Forecast - Oil demand shows signs of waning as the global economy slows, bringing the world crude market close to balance, OPEC officials said Thursday in a new outlook. The Saudi Arabia-led cartel cut its world oil demand outlook by 260,000 b/d from an earlier forecast to about 100 million b/d for 2022. It held its expectation for next year to 102.7 million b/d.OPEC cited slowing economic conditions across the globe, notably including the United States. The U.S. government earlier this month reported that gross domestic product shrank in both the first and second quarters of 2022. OPEC last month had downgraded its global economic growth forecasts for 2022 to 3.1% from 3.5%. The growth outlook for the United States, the world’s largest economy, was slashed by OPEC in July to 1.8% this year from 3%, and to 1.7% in 2023 from 2.1%.China, the second-largest economy in the world, is expected to grow by 4.5% this year, according to OPEC, down 60 basis points. The 2023 forecast for China was unchanged at 5.0% A combination of the 40-year high inflation in the United States, war in Ukraine that fueled an energy crisis in Europe, and lingering pandemic woes in Asia intersected to fan recession fears and dimmish OPEC’s outlook.“Downside risks remain, stemming from the ongoing geopolitical tensions, the continued pandemic, ongoing supply chain issues, rising inflation, high sovereign debt levels in many regions, and expected monetary tightening by central banks in the U.S., the UK, Japan and the Euro-zone,” OPEC researchers wrote in the organization’s monthly oil market assessment.Still, the researchers emphasized, they continue to expect both economic and oil demand growth overall this year, with momentum continuing into 2023, albeit at a more moderate level than previously forecast. They said 2022 demand would average a “healthy” 3.1 million b/d above 2021 levels, putting consumption on par with pre-pandemic levels. OPEC noted “the recently observed trend of burning more crude in power generation.”Meanwhile, the International Energy Agency (IEA) on Thursday lifted its 2022 global oil demand forecast by 380,000 b/d, yet it only expects growth of 2.1 million b/d.The global energy watchdog pegged world oil demand at 99.7 million b/d in 2022 and 101.8 million b/d in 2023.“Natural gas and electricity prices have soared to new records, incentivizing gas-to-oil switching in some countries,” the Paris-based agency said in its monthly oil report. “These extraordinary gains, overwhelmingly concentrated in the Middle East and Europe, mask relative weakness in other sectors.” IEA’s researchers noted ebbing use of travel fuels in developed countries, “aligning with more negative economic sentiment.”IEA said world oil supply hit a post-pandemic high of 100.5 million b/d in July, following maintenance season and increases in output this year by both OPEC countries and the United States. If the world market can maintain the higher pace through the year – offsetting lower levels in the first half of 2022 — it could roughly align supply with expected demand yet this year.OPEC and an allied group of oil-producing nations this month agreed to lift output by 100,000 b/d in September. That would bring the OPEC-plus total production target back to pre-pandemic levels after a long recovery from the depths of virus outbreaks in 2020. The group has embarked on more sizable increases over the summer months.In the United States, production for the week ended Aug. 5 climbed by 100,000 b/d to 12.2 million b/d, marking a 2022 high, the U.S. Energy Information Administration (EIA) said Wednesday in its Weekly Petroleum Status Report. U.S. demand over the last four-week period averaged 20.1 million b/d, down 2.4% from the same period last year, EIA reported. In the same span, gasoline consumption averaged 8.9 million b/d, down 6%.
OPEC, in Contrast to IEA, Sees Lower 2022 Oil Demand Growth (Reuters) -OPEC on Thursday cut its 2022 forecast for growth in world oil demand for a third time since April, citing the economic impact of Russia's invasion of Ukraine, high inflation and efforts to contain the coronavirus pandemic. The view from the Organization of the Petroleum Exporting Countries contrasts with that of the International Energy Agency, the adviser to industrialised countries, which earlier on Thursday raised its 2022 demand growth outlook. [IEA/M] OPEC in a monthly report said it expects 2022 oil demand to rise by 3.1 million barrels per day (bpd), or 3.2%, down 260,000 bpd from the previous forecast. The IEA raised its forecast by 380,000 bpd to 2.1 million bpd. Oil use has rebounded from the worst of the pandemic and is set to exceed 2019 levels this year even after prices hit record highs. However, high prices and Chinese coronavirus outbreaks have eaten into OPEC's 2022 growth projections. "Global oil market fundamentals continued their strong recovery to pre-COVID-19 levels for most of the first half of 2022, albeit signs of slowing growth in the world economy and oil demand have emerged," OPEC said in its report. OPEC cut its 2022 global economic growth forecast to 3.1% from 3.5% and trimmed next year to 3.1%, saying that the prospect of further weakness remained. "This is, however, still solid growth, when compared with pre-pandemic growth levels," OPEC said. "Therefore, it is obvious that significant downside risk prevails." Oil prices held on to an earlier gain after the OPEC report was released, finding support from the IEA's view on demand and trading above $98 a barrel [O/R] OPEC and allies, including Russia, known collectively as OPEC+, are ramping up oil output after record cuts put in place as the pandemic took hold in 2020. In recent months OPEC+ has failed to fully achieve its planned production increases owing to underinvestment in oilfields by some OPEC members and by losses in Russian output. The report showed OPEC output in July rose by 162,000 bpd to 28.84 million bpd, a smaller increase than pledged. OPEC's take on the outlook for 2023 suggests that the market could remain tight. OPEC left its 2023 world demand growth projection unchanged at 2.7 million bpd and expects supply from non-member countries to rise by 1.71 million bpd, meaning OPEC will need to pump around 900,000 bpd more to balance the market. While the 2023 outlook for overall non-OPEC supply was left steady, OPEC sees a slight acceleration in U.S. shale growth.
ICE Brent briefly Tops $100 on Global Oil Demand Optimism -- Oil futures settled Thursday's session higher after International Energy Agency lifted its global demand projections for this year and next by 500,000 bpd to 99.7 million bpd and 101.8 million bpd, respectively, citing growing oil consumption in European Union as high natural gas prices force power generators to switch to oil for electricity production. "Natural gas and electricity prices have soared to new record highs, incentivizing gas-to-oil switching in some countries," said Paris-based energy watchdog in its August Oil Market Report released this morning. Gas-to-oil switching in power generation is likely to offset weakness in other sectors triggered by economic slowdown and a partial shutdown of industrial capacities across the EU. Similar sentiment was echoed in the Monthly Oil Market Report released this morning by OPEC economists that pointed to a trend of burning more crude in European power generation as one of the reasons for demand to remain strong this year. Despite this expectation, OPEC revised its demand projections downward from the previous month's assessment but still shows healthy growth of 3.1 million bpd this year and 2.7 million bpd in 2023. OPEC expects total oil demand to average around 100 million bpd in 2022. For 2023, the forecast for world oil demand growth remains unchanged at 2.7 million bpd, with total oil demand averaging 102.7 million bpd. On the supply side, OPEC estimates the 13-member cartel increased crude production by 162,000 bpd last month to 28.84 million bpd, with Saudi Arabia leading production gains with 136,000 bpd. Kingdom's direct communication indicated a July production gain of 169,000 bpd and output at 10.815 million bpd. The Saudi's quota for July was 10.833 million bpd. Kuwait and United Arab Emirates crude oil production increased 48,000 bpd for both countries to 2.773 million bpd and 3.13 million bpd, respectively. Both countries produced at their July production quotas. Iraq crude production increased 24,000 bpd to 4.49 million bpd in July according to secondary sources, while the country reported a 69,000-bpd monthly increase and output at 4.584 million bpd, which was their quota for last month. Only three of the 10 OPEC countries met their July production quotas, with the biggest laggard Nigeria, where July crude output at 1.17 million bpd was little changed on the month while 629,000 bpd or 35% below a 1.799 million bpd quota. Angola, with output slipping 23,000 bpd in July to 1.161 million bpd, was 341,000 bpd or 23% less than quota. The three countries that are not part of the OPEC+ accord -- Iran, Libya, and Venezuela, all saw production declines in July. Iranian crude production slipped 16,000 bpd to 2.553 million bpd, Libyan output declined 23,000 bpd to 621,000 bpd, and Venezuelan production was down 45,000 bpd to 665,000 bpd. In financial markets, the U.S. dollar index suffered steep losses for a second straight session Thursday after a key measure of U.S. producer prices unexpectedly fell in July for the first ti
Oil settles up as IEA hikes 2022 demand growth forecast – Oil prices settled up more than $2 on Thursday after the International Energy Agency raised its oil demand growth forecast for this year as soaring natural gas prices have some consumers switching to oil. Brent crude futures gained $2.20, or 2.3%, to settle at $99.60 a barrel. U.S. West Texas Intermediate crude futures settled up $2.41, or 2.6%, to $94.34. “Natural gas and electricity prices have soared to new records, incentivising gas-to-oil switching in some countries,” the Paris-based agency said in its monthly oil report. It raised its outlook for 2022 demand by 380,000 barrels per day (bpd). By contrast, the Organization of the Petroleum Exporting Countries (OPEC) cut its 2022 forecast for growth in world oil demand, citing the impact of Russia’s invasion of Ukraine, high inflation and efforts to contain the pandemic. [OPEC/M] OPEC expects 2022 oil demand to rise by 3.1 million bpd, down 260,000 bpd from the previous forecast. It still sees a higher overall global oil demand figure than the IEA for 2022. Prices were also boosted as the U.S. dollar extended losses against other major currencies after a report showed U.S. inflation was not as hot as anticipated in July, prompting traders to dial back expectations for rate hikes by the Federal Reserve. A rise in U.S. oil inventories last week and resumption of crude flows on a pipeline supplying central Europe capped price gains. U.S. crude oil stocks rose by 5.5 million barrels in the latest week, the U.S. Energy Information Administration said, more than the expected increase of 73,000 barrels. Gasoline product supplied rose to 9.1 million barrels per day, though that figure shows demand down 6% over the last four weeks from a year earlier. The premium for front-month WTI futures over barrels loading in six months was pegged at $4.38 a barrel, the lowest in four months, indicating easing tightness in prompt supplies. Top U.S. Gulf of Mexico oil producer Shell said a pipeline leak prompted it to halt production at three U.S. Gulf of Mexico deepwater platforms designed to produce up to 410,000 barrels of oil per day combined. Resumption of flows on the southern leg of the Russia-to-Europe Druzhba pipeline further calmed global supply worries. On Tuesday, Russian state oil pipeline monopoly Transneft said Ukraine had suspended flows to parts of central Europe since early this month because Western sanctions prevented it from receiving transit fees from Moscow. Meanwhile, physical oil prices around the world have begun to sag, reflecting easing concerns over Russian-led supply disruptions and heightened worries about a possible global economic slowdown.
Oil Falls 2% on Expectations That U.S. Gulf Supply Disruption Will Ease - (Reuters) -Oil prices plunged around 2% on Friday, on expectations that supply disruptions in the U.S. Gulf of Mexico would be short-term, while recession fears clouded the demand outlook. Futures, however, were still on track for a weekly gain. Brent crude futures fell $1.45, or 1.5%, to settle at $98.15 a barrel, while U.S. West Texas Intermediate (WTI) crude fell $2.25, or 2.4%, to settle at $92.09 a barrel. Both contracts gained more than 2% on Thursday. Brent gained 3.4% this week after last week's 14% tumble on fears that rising inflation and interest rates will hit economic growth and demand for fuel. WTI rose 3.5%. Crews were expected to replace a damaged oil pipeline piece nL1N2ZO154 by the end of the day on Friday, a Louisiana port official said, allowing for the resumption of production at seven offshore U.S. Gulf of Mexico oil platforms. [nL1N2ZO154] On Thursday, top U.S. Gulf of Mexico oil producer Shell said it halted production at three deepwater platforms in the region. The three platforms are designed to produce up to 410,000 barrels of oil per day combined. The Amberjack pipeline, one of two stopped by the leak, has restarted at reduced capacity, Shell spokesperson Cindy Babski said. The Mars pipeline remained offline but is expected to resume operation later on Friday, she said. The market also absorbed contrasting demand views from the Organization of the Petroleum Exporting Countries (OPEC) and the International Energy Agency (IEA). "We are seeing an economic slowdown, but its unclear if it's as big a slowdown as some of the recent outlooks have been predicting," European sanctions on Russian oil are due to tighten later this year while a six-month coordinated energy release agreed by the United States and other developed economies is due to run its course by the end of the year. On Thursday OPEC cut its forecast for growth in world oil demand in 2022 by 260,000 barrels per day (bpd). It now expects demand to rise by 3.1 million bpd this year. The IEA, meanwhile, raised its demand growth forecast to 2.1 million bpd, citing gas-to-oil switching in power generation The IEA also raised its outlook for Russian oil supply by 500,000 bpd for the second half of 2022 but said OPEC would struggle to boost production. In the United States, import prices fell for the first time in seven months in July, helped by a strong dollar and lower fuel and nonfuel costs, while consumers' one-year inflation outlook ebbed in August, the latest signs that price pressures may have peaked. U.S. oil rigs rose three to 601 this week, energy services firm Baker Hughes Co said. The rig count, an indicator of future output, has been slow to grow with oil production only seen recovering to pre-pandemic levels next year.
Crudes Fall 2% as Russian Oil Supply Resumes, USD Rebounds -- While the front month ULSD contract advanced for a fourth session, West Texas Intermediate and RBOB futures settled Friday's session with losses between 1% and 2.5% triggered by a sharp rebound in the U.S. dollar index and a resumption of Russian oil exports to several Central European countries after a problem over transit payments with Ukraine was resolved. Slovakia's economy minister Richard Sulik said on Friday oil shipments through a critical pipeline that delivers Russian crude and refined products have resumed at about 50% of capacity, with additional volumes expected to come back online in coming days. Earlier this week, Russian state pipeline operator Transneft halted shipments through the southern branch of the Druzhba pipeline, which runs through Ukraine to the Czech Republic, Slovakia, and Hungary, citing European Union sanctions and issues with processing payment. Slovakia, Hungary, and Czech Republic receive practically all their oil imports through the Druzhba pipeline. EU leaders agreed in May to embargo most Russian oil imports shipped by sea but allowed for Druzhba flows to landlocked countries in Central Europe. Earlier this month, Russian state-owned energy giant Gazprom limited natural gas flow through the Nord Stream pipeline to just 20% of capacity, also citing issues with sanctions, delivering only 33 million cubic meters a day. Protracted disruption to European energy supplies have already pushed several large EU economies to the brink of recession, with Germany reporting no growth in nominal gross domestic product for the second quarter. The economic slowdown is likely to intensify as winter approaches and energy prices rise further in Europe, with several countries on the continent vulnerable to Russia completely cutting off gas flow. Underpinned by uncertainty over Russian supplies and elevated demand in the EU from scorching hot summer weather, spiking natural gas prices are prompting more gas-to-oil switching in power generation. This dynamic is underpinning support for ULSD futures. In its monthly oil market report, International Energy Agency revised higher its global oil demand projections for the remainder of the year, citing accelerated gas-to-oil switching for power generation in the EU, Middle East, and parts of Asia amid inadequate supplies and sky-high gas prices. "With several regions experiencing blazing heatwaves, the latest data confirm increased oil burn in power generation, especially in Europe and the Middle East but also across Asia. Fuel switching is also taking place in European industry, including refining," said IEA. At settlement, nearby-month delivery WTI fell $2.25 to $92.09 bbl, and the ICE Brent contract for October delivery dropped $1.45 to $98.15 bbl. NYMEX September RBOB settled 2.55 cents lower at $3.0460 gallon, while the NYMEX September ULSD contract advanced 3.38 cents to $3.5178 gallon.
Israeli airstrikes massacre Palestinian children in Gaza . - For three days, Israel has bombarded the densely populated and impoverished coastal enclave of Gaza, targeting leaders of Palestinian Islamic Jihad (PIJ), civilians and their property in the worst flare-up since May 2021. As of Sunday evening, Israel’s “surgical” air strikes have killed at least 43 Palestinians, including Taysir al-Jabari and Khalid Mansour, senior PIJ military leaders in northern and southern Gaza. Fifteen children and four women have been killed since Friday. At least 300, more than half of them women and children, have been injured and at least 31 families made homeless. One Israeli civilian and two soldiers have been lightly wounded by shrapnel. The Israel Defence Forces (IDF) said its aerial bombardment was a preemptive operation aimed at preventing rocket attacks planned by Palestinian Islamic Jihad against Israel. It warned that its operation could last up to a week. The continuous outbreaks of violence—Israel has launched at least eight murderous assaults on the besieged enclave since 2005 when it “withdrew” from Gaza—flows inexorably from the 15-year-long Israeli siege of Gaza that has been aided by the butcher of Cairo, General Abdel Fattah el-Sisi of Egypt, and Palestinian Authority President Mahmoud Abbas. The blockade, an act of collective punishment banned under international law, has turned the enclave into an open-air prison for its two million inhabitants. Most lack even the most basic essentials of life, clean water, sanitation and electricity, while more than half the population is unemployed and the vast majority live in appalling poverty. At the same time as waging war on Gaza, the caretaker government under Yair Lapid, who heads an eight-party coalition that includes one of Israel’s Arab parties and several Jewish parties ostensibly committed to a Palestinian state alongside Israel, gave free rein to the far right to incite violence against the Palestinians in Jerusalem. Under the protection of armed Israeli security forces, 1,000 religious bigots, far right nationalists and settlers stormed the Al-Aqsa Mosque compound in East Jerusalem on Sunday morning. They waved Israeli flags, prayed and chanted anti-Muslim and anti-Arab slogans, breaching long-standing agreements with Jordan, the official custodian of the site, whereby non-Muslims are not allowed to pray within the compound or display Israeli symbols. Israeli police have allowed settlers and far right activists entry to the site on a near-daily basis. The authorities allowed this latest provocation to go ahead as Israel’s military onslaught on Gaza entered its third day, amid concerns that this would incite Palestinian protests and clashes. In May 2021, similar provocations at the al-Aqsa Mosque compound coinciding with Ramadan led to Israel’s 11-day assault on Gaza that killed 256 Palestinians and extensive riots in Israel’s mixed cities of Haifa, Acre, Lod and Ramla. The latest conflict started on Monday with the storming by Israeli special forces of the Jenin refugee camp in the occupied West Bank. They fired live and rubber-coated bullets as well as tear gas at Palestinians and arrested senior Islamic Jihad leader Bassam al-Saadi, and his son-in-law, Ashraf al-Jada, at his home in Jenin. Pictures of al-Saadi being dragged across the ground accompanied by an attack dog provoked a storm of protest, amid fears for his life, from PIJ supporters. Islamic Jihad vowed revenge.
Israel kills second Islamic Jihad leader, Gaza death toll mounts -An Israeli airstrike killed a second senior commander in the Palestinian militant group Islamic Jihad, the fighters said Sunday as the death toll from violence in Gaza rose to 31, including six children, according to Palestinian health officials. As Israel pressed on with its assault, Palestinian militants retaliated with barrages of rockets fired at Israel. The killing late Saturday of Khaled Mansour, who led the Iran-backedIslamic Jihad's operations in the southern Gaza Strip, came a day after another Israeli strike killed the militant's commander in the north.Egypt's President Abdel Fattah al-Sisi has said officials were talking with both sides "around the clock" to ease the violence. A security source in Cairo said that Israel "has accepted" a ceasefire, adding that Cairo was waiting for the Palestinian response.A source from Islamic Jihad said that "discussions are under way at the highest levels towards calm", but warned that "the resistance will not stop if the occupation's (Israel) aggression and crimes do not stop".The death toll from violence in Gaza since Israel launched its latest strikes Friday rose to 41, including 15 children, the health ministry in the Palestinian enclave said on Sunday. More than 311 others were wounded in the attacks. Meanwhile in the West Bank, Israel pressed on with its operation against the Islamic Jihad group, arresting 20 suspects in overnight raids, the army announced on Sunday. Palestinian militants retaliated with rockets fired toward Israel, triggering air raid sirens in Jerusalem, the Israel army said Sunday. The Islamic Jihad later confirmed the group had fired rockets at Jerusalem. The hundreds of rockets fired by Islamic Jihad in response is why the operation continues, said Israeli Justice Minister Gideon Saar, a member of the decision-making security cabinet. Another potential flashpoint loomed on Sunday as Jews commemorating two ancient temples visited a major Jerusalem mosque compound that they revere as vestige of those shrines. Palestinians deem such visits a religious and political affront. The fighting began with Israel’s killing of a senior Islamic Jihad commander in a wave of strikes Friday that Israel said were meant to prevent an imminent attack.The militants said the strike also killed five civilians, including a child and three women, as it flattened several homes. Hamas, the larger militant group that rules Gaza, appeared to remain on the sidelines of the conflict for now, keeping its response limited. Israel and Hamas fought a war barely a year ago, one of four major conflicts and several smaller battles over the last 15 years that exacted a staggering toll on the impoverished territory’s 2 million Palestinian residents.Daily life in the strip has come to a standstill, while the electricity distributor said the sole power station shut down due to a lack of fuel after Israel closed its border crossings.
The names and faces of the 15 children killed in Gaza | Israel-Palestine conflict News By Al Jazeera Staff -Israel and the Palestinian armed group Islamic Jihad declared a truce late Sunday after three days of heavy Israeli bombardment on the besieged Gaza Strip.According to the latest official information from the Palestinian health ministry, 44 Palestinians, including 15 children, were killed and at least 350 civilians wounded.Since 2008, Israel has waged four wars on the Palestinian territory, killing nearly 4,000 people – one-quarter of them children.According to data compiled by Defense for Children International, at least 2,200 children have been killed by the Israeli military and Israeli settlers across the Occupied Palestinian Territory since 2000 – the beginning of the second intifada.Here are the names and faces of the 15 children aged 18 and under killed by Israeli air strikes over the past three days:
Ceasefire Holds In Gaza After 44 Killed In 3-Day Israeli Bombardment -- Following the major flare-up in fighting between Israel and Palestinian Islamic Jihad (PIJ), which saw Israel launch days of airstrikes on Gaza starting Friday, a delicate ceasefire appears to be holding Monday. "An Egypt-brokered ceasefire between Israel and Palestinian factions came into effect at 11:30pm local time (8:30pm GMT) on Sunday," Middle East Eye reports. "Israel’s assault on Gaza, which began on Friday, has left 44 Palestinians dead, including 15 children, and injured hundreds more."On the Israeli side, three civilians have been reported injured by shrapnel from rockets fired from the Gaza Strip, after hundreds were launched by PIJ and Hamas through the weekend."Twelve hours in, the ceasefire appeared to holding, as residents of the besieged Palestinian enclave began to clear rubble and continued to mourn the dead," Middle East Eye continues.The Israel Defense Forces (IDF) said that over 350 rockets were launched from the strip within merely the first two days of the conflict. Israel's response, dubbed 'Operation Breaking Dawn', reportedly took out at least two top Islamic Jihad commanders. By the time Sunday's ceasefire took effect, the IDF updated its tally to a whopping 1,100+ rockets fired by PIJ over the prior three days. Many of these fell short, landing in Gaza itself, but others were intercepted by the Iron Dome defense system. Central Israel came under threat along with southern towns, causing emergency alarms to blare in Tel Aviv through much of the weekend.Like with past Israeli air assaults on the densely populated Gaza Strip, the past 48 hours have seen widespread reports of the deaths of small children as well as women. Additionally some 300 Gazans have been reported wounded, while the IDF is stressing that it takes great care to avoid civilian casualties as it attacks the small strip of land that includes some 2.3 million Palestinians living there.
Israel cheers its wins, Gaza mourns its dead as cease-fire holds - — — A cease-fire between Israel and Islamic Jihad militants in Gaza brought a tense calm to both territories Monday, ending a three-day conflict that killed 44 Palestinians and showcased the precision of Israel’s U.S.-backed antimissile defense system, known as Iron Dome, which kept the Israeli casualty count at zero. “The United States is proud of our support for Israel’s Iron-Dome, which intercepted hundreds of rockets and saved countless lives,” President Biden said in a statement Sunday. Biden welcomed the Egyptian- and Qatari-brokered cease-fire, which began Sunday at 11:30 p.m. local time, and commended Israeli Prime Minister Yair Lapid for his “government’s steady leadership throughout the crisis.” Though both sides claimed victory, the cease-fire promised no long-term fix for the 15-year-long standoff between the militant-controlled Gaza Strip and Israel — which, along with Egypt, has blockaded the coastal enclave since 2007, effectively trapping more than 2 million people in an area roughly twice the size of the District of Columbia. Besides a handful of cross-border firings in the minutes after the cease-fire’s start, the agreement held into Monday and enabled humanitarian aid to reach Gaza for the first time since Israel cut off outside supplies early last week. Dwindling electricity threatened to shutter hospitals as staff continued to treat the more than 350 people wounded in the fighting. Although the first fuel trucks crossed into Gaza at 7:30 a.m. Monday, officials said it would take time to restart the 75-megawatt generator that provides much of the strip’s eight hours of electricity a day. Gazans filled the streets Monday, many coming out of their houses for the first time since Friday afternoon, when surprise airstrikes shattered what had been a day of prayers and beach trips. Retail blocks were bustling, but pockets of despair were not hard to find. Just off Mansoura Street, Riyad Qaddoum, 65, relived the moment Friday when he heard a loud explosion around the corner from his house. Running to investigate, he found the bodies of three people killed when two missiles struck a motorcycle ridden by a suspected Islamic Jihad militant. Among the dead was his 5-year-old granddaughter, Alaa Qaddoum. She had been standing outside her aunt’s house waiting for a walk to the park. Blood spots and shrapnel marks still speckled the wall. “Why couldn’t they have waited until [the motorcycle] was away from the kids?” Riyad Qaddoum said above the music from two crowded funeral tents on his street, one for Aala, another for a 60-year-old man who had been sitting on the stoop of a mosque when the strike killed him. “She was excited to start kindergarten.” Fifteen of the 44 killed in Gaza were children, according to the Gaza Health Ministry. Palestinian officials in Gaza said Israel was responsible for all the deaths..
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