US oil prices fell for the third time in four weeks on weak European economic data after central banks in the UK and across the EU raised interest rates....after rising 2.3% to $71.78 a barrel last week after the Fed left US interest rates unchanged and OPEC successfully implemented its promised round of voluntary production cuts, the contract price for the benchmark US light sweet crude for July delivery fell over 1% in overseas trading while US markets were closed for the holiday on Monday, as economic uncertainties in China outweighed OPEC+'s output cuts and the ongoing drop in the number of rigs operating in the US...fears of weakening Chinese demand continued to weigh on prices early Tuesday, as oil gave up its overnight gains and sold off to a low of $69.65 by mid-morning, as traders positioned ahead of the July contract’s expiration at the close and then followed U.S. stock markets lower to settle down $1.28 at $70.50 a barrel amid a strengthening U.S. dollar after data showed the US housing rebound continued for a second straight month in May, while at the same time the contract price for the US benchmark oil for August delivery settled 74 cent lower at $71.19 a barrel....now quoting that August contract. oil prices were little changed early on Wednesday as traders stayed on the sidelines ahead of a two day congressional briefing by Fed Chairman Powell, then rallied as the dollar tumbled to a six-week low after Powell assured lawmakers that pausing rate increases at the June 14 Federal Open Market Committee meeting was nevertheless consistent with lifting them later this year, depending on incoming inflation data. and finished the session $1.34 higher at $72.53 a barrel as U.S. corn and soybean prices raced to multi-month highs, raising expectations that crop shortfalls around the globe could lower biofuels blending and increase oil demand...however, oil prices fell more than 1 percent in early overseas trading on Thursday as inflation and interest-rate worries returned to the fore, raising concerns about the outlook for fuel demand, then sold off sharply in New York after the Bank of England raised interest rates by half a percentage point and Fed Chairman Powell said two more quarter point interest rate hikes by the end of the year was “a pretty good guess" for the US, and settled $3.02 lower at $69.51 a barrel as traders reacted more to the market stunning sticker shock of the Bank of England rate hike than they did to bullish US oil supply data....oil prices inched up briefly in Asian markets early Friday, on a weaker dollar after a report that China's oil refinery production reached record high levels, but resumed the slide in London trading on recession fears driven by concerns of flagging demand and settled Friday's New York session 35 cents lower at $69.16 a barrel, with all petroleum contracts registering steep weekly losses, amid a one-two punch of continued increases in interest rates by hawkish central banks and a sharp slowdown in manufacturing activity in the US, the European Union, and other major economies, which left the benchmark US crude down 3.7% for the week, while the August oil contract, which had finished the prior week at $71.93 a barrel, settled 3.9% lower....
Natural gas prices, on the other hand, finished higher for the eighth time in eleven weeks, as traders continued to bet on hotter weather and increasing power demand...after rising 16.8% to a three month high of $2.632 per mmBTU last week on forecasts for record heat and air conditioning demand in the Southern US, the contract price of US natural gas for July delivery opened higher on Tuesday and rose to one-month intraday high of $2.650 per mmBTU shortly thereafter, as there had been no significant weekend changes in expected cooling demand, but turned lower amid profit-taking in the wake of the prior week’s robust rally, while festering concerns about stout storage supplies also permeated markets. and settled with a session loss of 14.0 cents at $2.492 per mmBTU on forecasts for less hot weather and gas demand over the next two weeks than had been expected, while the amount of gas flowing to U.S. LNG export plants declined due to maintenance outages....natural gas prices slumped to $2.448 per mmBTU by 9:15AM Wednesday, but then rose steadily through the rest of the session as the previous day’s profit-taking had come to an end, to settle 10.5 cents higher at $2.597 per mmBTU on an ongoing drop in gas production, and on forecasts for hot weather through at least early July, especially in Texas....natural gas prices were little changed before the storage report on Thursday, then rallied briefly before stalling and settling with a 1.1 cent gain at $2.608 per mmBTU, as bets on higher cooling demand in the coming days and weeks offset a bearish inventory increase...natural gas prices slumped early on Friday, but ultimately gained ground again, extending their winning streak to three days as traders assessed a favorable but uncertain weather outlook and choppy production estimates, and settled 12.1 cents higher at $2.729 per mmBTU, despite forecasts for less demand next week due to a decline in the amount of gas flowing to LNG export plants and a drop in European gas prices. and thus logged a 3.7% gain on the week...
The EIA's natural gas storage report for the week ending June 16th indicated that the amount of working natural gas held in underground storage in the US had increased by 95 billion cubic feet to 2,729 billion cubic feet by the end of the week, which left our natural gas supplies 571 billion cubic feet, or 26.5% above the 2,158 billion cubic feet that were in storage on June 16th of last year, and 362 billion cubic feet, or 15.3% more than the five-year average of 2,367 billion cubic feet of natural gas that were in working storage as of the 16th of June over the most recent five years… however, natural gas supplies are still 23.3% below normal for this date across the Pacific states, while 24.9% and 21.4% above normal in both the East and Midwest regions of the country at the same time...this week's 95 billion cubic foot injection into US natural gas working storage for the cited week was higher than the 91 billion cubic feet addition to supplies that was expected by industry analysts surveyed by Reuters, and was considerably more than the 76 billion cubic feet that were added to natural gas storage during the corresponding week of 2022, and also more than the average of 86 billion cubic feet addition to natural gas storage that has been typical for the same June 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 June 16th showed that after a second big weekly jump in our oil exports, we had to pull oil out of our stored commercial crude supplies for the 8th time in thirteen weeks, and for the 17th time in the past 43 weeks, even after another big release of oil from our strategic reserves. Our imports of crude oil fell by an average of 220,000 barrels per day to 6,181,000 barrels per day, after falling by an average of 19,000 barrels per day the prior week, while our exports of crude oil rose by an average of 1,273,000 barrels per day to average 4,543,000 barrels per day, which combined meant that the net of our trade in oil worked out to a net import average of 1,618,000 barrels of oil per day during the week ending June 16th, 1,493,000 fewer 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 200,000 barrels per day lower 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 averaged a total of 13.818,000 barrels per day during the June 16th reporting week…
Meanwhile, US oil refineries reported they were processing an average of 16,470,000 barrels of crude per day during the week ending June 16th, an average of 116,000 fewer barrels per day than the amount of oil that our refineries were processing during the prior week, while over the same period the EIA’s surveys indicated that an average of 793,000 barrels of oil per day were being pulled out of the supplies of oil stored in the US. So, based on that reported & estimated data, the crude oil figures provided by the EIA for the week ending June 16th appear to indicate that our total working supply of oil from net imports, from storage, and from oilfield production was 1,859,000 barrels per day less than what our oil refineries reported they used during the week. To account for that obvious disparity between the apparent supply of oil and the apparent disposition of it, the EIA just inserted a [ +1,859.000 ] 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 was an error or that magnifturd in the week’s oil supply & demand figures that we have just transcribed...However, since most oil traders respond to these weekly EIA reports as if they were accurate, and since these weekly figures therefore 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 reliable by most everyone in the industry...(for more on how this weekly oil data is gathered, and the possible reasons for that “unaccounted for” oil, see this EIA explainer)….(NB: there is also a more recent twitter thread from an EIA administrator addressing these errors, and what they hope to do about it)
This week's 793,000 barrel per day decrease in our overall crude oil inventories came as an average of 547,000 barrels per day were being pulled out of our commercially available stocks of crude oil, while 246,000 barrels per day of oil were being pulled out of our Strategic Petroleum Reserve at the same time, the eleventh straight draw on the SPR this year, wherein government owned oil is being sold into the domestic markets as part of an earlier budget balancing withdrawal mandated by congress....as a result of that withdrawal, the 349,968,000 barrels of oil that still remain in our Strategic Petroleum Reserve is now the lowest since August 26th, 1983, or at a new 39 1/2 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 big SPR releases of last year. However, those Biden administration releases amounted to about 42% of what was left in the SPR when they took office, and that left us with what is now less than a 19 day supply of oil at the current consumption rate.
Further details from the weekly Petroleum Status Report (pdf) indicate that the 4 week average of our oil imports rose to an average of 6,540,000 barrels per day last week, which was 2.3% more than the 6,396,000 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 200,000 barrels per day lower at 12,200,000 barrels per day because the EIA's rounded estimate of the output from wells in the lower 48 states was 200,000 barrels per day lower at 11,800,000 barrels per day, while Alaska’s oil production was 3,000 barrels per day lower at 425,000 barrels per day, but still added the same 400,000 barrels per day to the rounded national total as it did last week...US crude oil production had reached a pre-pandemic high of 13,100,000 barrels per day during the week ending March 13th 2020, so this week’s reported oil production figure was 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 93.1% of their capacity while using those 16,470,000 barrels of crude per day during the week ending June 16th, down from their 93.7% utilization rate during the prior week, but a utilization rate that's fairly normal for the 3rd week of June... The 16,470,000 barrels per day of oil that were refined this week were 1.3% more than the 16,263,000 barrels of crude that were being processed daily during week ending June 17th of 2022, but 4.6% less than the 17,264,000 barrels that were being refined during the prepandemic week ending June 14th, 2019, when our refinery utilization rate was at 93.9%, also close to normal for this time of year...
With the decrease in the amount of oil being refined this week, gasoline output from our refineries was also lower, decreasing by 352,000 barrels per day to 9,819,000 barrels per day during the week ending June 16th, after our gasoline output had increased by 106,000 barrels per day during the prior week. This week’s gasoline production was still 5.0% more than the 9,354,000 barrels of gasoline that were being produced daily over the same week of last year, but 5.8% less than the gasoline production of 10,423,000 barrels per day during the prepandemic week ending June 14th, 2019. On the other hand, our refineries’ production of distillate fuels (diesel fuel and heat oil) increased by 89,000 barrels per day to 5,077,000 barrels per day, after our distillates output had decreased by 255,000 barrels per day during the prior week. With that increase, our distillates output was 0.5% more than the 5,051,000 barrels of distillates that were being produced daily during the week ending June 17th of 2022, but was still 5.5% less than the 5,371,000 barrels of distillates that were being produced daily during the week ending June 14th, 2019...
Even with this week's decrease in our gasoline production, our supplies of gasoline in storage at the end of the week rose for the fifth time in eighteen weeks, increasing by 479,000 barrels to 221,402,000 barrels during the week ending June 16th, after our gasoline inventories had increased by 2,108,000 barrels during the prior week. Our gasoline supplies rose by less this week because the amount of gasoline supplied to US users rose by 182,000 barrels per day to 9,375,000 barrels per day and because our imports of gasoline fell by 129,000 barrels per day to 925,000 barrels per day, while our exports of gasoline fell by 98,000 barrels per day to 859,000 barrels per day. Even after thirteen gasoline inventory decreases over the past eighteen weeks, our gasoline supplies were 1.1% above last June 17th’s gasoline inventories of 218,963,000 barrels, but were still about 7% below the five year average of our gasoline supplies for this time of the year…
Meanwhile, with this week's increase in our distillates production, our supplies of distillate fuels increased for the sixth time in fifteen weeks, rising by 434,000 barrels to 114,288,000 barrels during the week ending June 16th, after our distillates supplies had increased by 2,123,000 barrels during the prior week. Our distillates supplies rose by less this week because the amount of distillates supplied to US markets, an indicator of our domestic demand, increased by 404,000 barrels per day to 3,978,000 barrels per day, while our exports of distillates fell by 66,000 barrels per day to 1,181,000 barrels per day, and while our imports of distillates rose by 8,000 barrels per day to 144,000 barrels per day.... with 32 inventory increases over the past fifty-seven weeks, our distillate supplies at the end of the week were 4.0% above the 109,842,000 barrels of distillates that we had in storage on June 17th of 2022, but were still about 14% below the five year average of our distillates inventories for this time of the year...
Finally, with the big increase in our oil exports, our commercial supplies of crude oil in storage fell for the 8th time in 25 weeks and for the 24th time in the past year, decreasing by 3,831,000 barrels over the week, from 467,124,000 barrels on June 9th to 463,293,000 barrels on June 16th, after our commercial crude supplies had decreased by 452,000 barrels over the prior week. Even after several large oil supply increases in the weeks following the Christmas refinery freeze offs, our commercial crude oil inventories are now back to the most recent five-year average of commercial oil supplies for this time of year, but are still around 26% above the average of our available crude oil stocks as of the third weekend of June over the 5 years at the beginning of the past decade, with the apparent disparity between those comparisons arising because it wasn’t until early 2015 that our oil inventories first topped 400 million barrels. After our commercial crude oil inventories had jumped to record highs during the Covid lockdowns of the Spring of 2020, then jumped again after February 2021's winter storm Uri froze off US Gulf Coast refining, but then fell in the wake of the Ukraine war, our commercial crude supplies as of this June 16th were 10.7% more than the 418,328,000 barrels of oil we had in commercial storage on June 17th of 2022, and were 0.9% more than the 459,060,000 barrels of oil that we still had in storage in the wake of winter storm Uri on June 18th of 2021, but are 14.3% less than the record 540,722,000 barrels of oil we had in commercial storage on June 19th of 2020, after early pandemic precautions had left a lot of oil unused…
This Week's Rig Count
The number of drilling rigs active in the US decreased for the fifteenth time in the past nineteen weeks during the week ending June 23rd, and is now 14.0% below the prepandemic rig count, despite increasing ninety-nine times during the 142 weeks of post pandemic recovery... Baker Hughes reported that the total count of rotary rigs drilling in the US fell by 5 rigs to 682 rigs over the past week, which was 71 fewer rigs than the 753 rigs that were in use as of the June 24th report of 2022, and was also 1,247 fewer rigs than the shale era high of 1,929 drilling rigs that were deployed on November 21st of 2014, a week before OPEC began to flood the global market with oil in an attempt to put US shale out of business. .
The number of rigs drilling for oil was down by six to 546 oil rigs during the past week, after the number of rigs targeting oil had decreased by four rigs during the prior week, leaving 48 fewer oil rigs active now than were running a year ago, as they now amount to just 34.0% of the shale era high of 1609 rigs that were drilling for oil on October 10th, 2014, and while they are now down 20.1% from the prepandemic oil rig count of 683….at the same time, the number of drilling rigs targeting natural gas bearing formations was unchanged at 130 natural gas rigs, which was still down by 27 natural gas rigs from the 157 natural gas rigs that were drilling during the same week a year ago, as they now amount to just 8.1% of the modern high of 1,606 rigs targeting natural gas that were deployed on September 7th, 2008….
In addition to those rigs specifically targeting oil and natural gas, Baker Hughes now reports that six rigs they've labeled as "miscellaneous" are drilling this week....the new miscellaneous rig is a directional rig targeting the Mississippi Canyon offshore from Louisiana at a depth of greater than 15,000 feet, coincidentially in an area where 6 other similar rigs are already targeting oil...legacy miscellaneous rigs include a vertical rig targeting the Marcellus at between 10,000 and 15,000 feet in Monongalia county West Virginia; a directional rig drilling to between 10,000 and 15,000 feet into a formation in Beaver county Utah, a directional rig drilling to between 5,000 and 10,000 feet on the big island of Hawaii, a directional rig drilling to between 5,000 and 10,000 feet into a formation in Lake county California that Baker Hughes doesn't track, and a directional rig drilling to between 5,000 and 10,000 feet into a formation in Pershing county Nevada, also into a formation unnamed by Baker Hughes. While we haven't seen any details on any of those wells, in the past we've identified various "miscellaneous" rig activity as being for exploration rather than production, for carbon dioxide storage, and for utility scale geothermal projects....Six such "miscellaneous" rigs operating at once is quite unusual; the last time that happened was mid-November of 2013... a year ago, there were two such "miscellaneous" rigs running...
The offshore rig count in the Gulf of Mexico was down by one to 18 rigs this week, and included the aforementioned miscellaneous rig, 15 rigs drilling for oil in Louisiana's offshore waters, and two drilling for oil in Texas waters....the Gulf rig count is still up by 3 from the 15 Gulf rigs running a year ago, when all 15 Gulf rigs were drilling for oil offshore from Louisiana…we also have a directional rig drilling for oil to a depth of 5,000 to 10,000 feet offshore from Los Angeles California this week, which began drilling offshore from California last week for the first time since March 2016....since there was a rig drilling offshore from Alaska during the same week a year ago, the national total of 19 rigs drilling offshore is also up by 3 rigs from the national offshore count of 16 a year ago..
In addition to rigs running offshore, there are still two inland water based deployed this week...one is a vertical rig drilling for natural gas to between 10,000 and 15,000 feet on a lake in Jefferson Parish Louisiana, while the other is a directional rig drilling for oil at a depth of between 10,000 and 15,000 feet through an inland body of water in Lafourche Parish, Louisiana...a year ago, there were three such rigs drilling on inland waters...
The count of active horizontal drilling rigs was down by 2 to 613 horizontal rigs this week, which was 72 fewer rigs than the 685 horizontal rigs that were in use in the US on June 17th of last year, and only 44.6% of the record 1,374 horizontal rigs that were drilling on November 21st of 2014….at the same time, the directional rig count was also down by 2 to 50 directional rigs this week, but those were up by 9 from the 41 directional rigs that were operating during the same week a year ago....meanwhile, the vertical rig count was down by one to 19 vertical rigs this week, while those were down by 8 from the 27 vertical rigs that were in use on June 17th of 2022…
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 June June 23rd, the second column shows the change in the number of working rigs between last week’s count (June 16th) and this week’s (June June 23rd) count, the third column shows last week’s June 16th 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 24th of June, 2022...
Louisiana's drop of three rigs included an offshore rig that had been drilling in the state's waters, and two rigs in the northern tier of the state, one of which accounts for the Haynesville shale natural gas rig that was shut down....to determine what happened in New Mexico, we'll first check the Rigs by State file at Baker Hughes for the changes the Texas Permian basin....there we find that there was one rig pulled out of Texas Oil District 7C, which includes the counties overlying the southern Permian Midland, and that.were three rigs pulled out of Texas Oil District 8, which includes the counties overlying the core Permian Delaware, while there was a rig added in Texas Oil District 8A, which includes the counties of the northern Permian Midland....since the Texas Permian rig count was thus down by three while the national Permian count was down by just one, we can therefore conclude that the two rigs that were added in New Mexico were set up to drill in the far western Permian Delaware in the southeast corner of that state...note that while the Permian basin was down a rig, oil rigs in the basin fell by two to 335, while natural gas rigs in the Permian increased by one to six, thus offsetting the Natural gas rig removal from the Haynesville, and leaving the US gas rig total unchanged...the Texas count was down by two after the addition of a rig in Texas Oil District 5, targetting a basin that Baker Hughes doesn't track....meanwhile, even as the Eagle Ford shale rig count remained unchanged, there was a rig added in Texas Oil District 1, while there was a rig pulled out of Texas Oil District 2, likely indicating a relocation of a rig within the Eagle Ford...
in other states, the rig removed from Alaska had been targeting oil on the North Slope, the rig pulled out of North Dakota had been targeting oil in the Bakken shale of the Williston basin, the pulled out of West Virginia had been targeting natural gas in the Marcellus shale, but the Marcellus count remained unchanged because a natural gas rig was added in Pennsylvania's at the same time...
DUC well report for April
Monday of the past week saw the release of the EIA's Drilling Productivity Report for June, which included the EIA's May data on drilled but uncompleted (DUC) oil and gas wells in the 7 most productive shale regions (click tab 3)....that data showed an decrease in uncompleted wells nationally for the 33rd time out of the past 35 months, as both drilling of new wells and completions of drilled wells fell in May, and remained well below the average pre-pandemic levels...for the 7 sedimentary regions covered by this report, the total count of DUC wells decreased by 30 wells, falling from a revised 4,864 DUC wells in April to 4,834 DUC wells in May, which was also 8.4% fewer DUCs than the 5,278 wells that had been drilled but remained uncompleted as of the end of May of a year ago...this month's DUC decrease occurred as 971 wells were drilled in the 7 regions that this report covers (representing 87% of all U.S. onshore drilling operations) during May, down by 49 from the 1,020 wells that were drilled in April, while 1,001 wells were completed and brought into production by fracking them, down from the 1,068 well completions seen in April, but up by 190 from the 942 completions seen in May of last year....at the May completion rate, the 4,834 drilled but uncompleted wells remaining at the end of the month represents a 4.8 month backlog of wells that have been drilled but are not yet fracked, up from the 4.6 month DUC well backlog of a month ago, and up from the 7 1/2 year low of 4.4 months of seven months ago, despite a completion rate that is now about 15% below 2019's pre-pandemic average...
Oil basin DUCS fell in May while natural gas basin DUCs were higher, as two out of the seven basins covered by this report saw DUCs increase....the number of uncompleted wells in the Permian basin of west Texas and New Mexico decreased by 29, from 909 DUC wells at the end of April to 880 DUCs at the end of May, as 466 new wells were drilled into the Permian basin during May, while 495 already drilled wells in the region were being fracked....at the same time, DUC wells in the Bakken of North Dakota were down by 10 to 539 by the end of May, as 74 wells were drilled into the Bakken during May, while 84 of the drilled wells in the Bakken were being fracked.....in addition, DUCs in the Eagle Ford shale of south Texas decreased by 8, from 491 DUC wells at the end of April to 494 DUCs at the end of May, as 99 wells were drilled in the Eagle Ford during May, while 107 of the already drilled Eagle Ford wells were fracked...on the other hand, DUC wells in the Niobrara chalk of the Rockies' front range increased by 6, rising from 711 at the end of March to 717 DUC wells at the end of May, as 111 wells were drilled into the Niobrara chalk during May, while 105 Niobrara wells were completed....Meanwhile, the number of uncompleted wells remaining in Oklahoma's Anadarko basin remained at 744 DUC wells at the end of May, as 58 wells were drilled into the Anadarko basin during May, while 58 Anadarko wells were completed....
among the natural gas producing regions, the drilled but uncompleted well count in the Appalachian region, which includes the Utica shale, decreased by five wells, from 715 DUCs at the end of April to 710 DUCs at the end of May, as 97 new wells were drilled into the Marcellus and Utica shales during the month, while 102 of the already drilled wells in the region were fracked....on the other hand, the uncompleted well inventory in the natural gas producing Haynesville shale of the northern Louisiana-Texas border region rose by 16, from 745 DUCs in April to 761 DUCs by the end of May, as 62 wells were drilled into the Haynesville during May, while just 50 of the already drilled Haynesville wells were fracked during the same period....thus, for the month of May, DUCs in the five major oil-producing basins tracked by this report (ie., the Anadarko, Bakken, Niobrara, Permian, and Eagle Ford) decreased by 41 to 3,363 DUC wells, while the uncompleted well count in the major natural gas basins (the Marcellus, the Utica, and the Haynesville) increased by 11 to 1,471 DUC wells, although as this report notes, once into production, more than half the wells drilled nationally will produce both oil and gas...
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EOG Plans Less Drilling in TX Permian, More Drilling in OH Utica - Marcellus Drilling News -- EOG Resources CEO Lloyd “Billy” Helms spoke at the J.P. Morgan Energy, Power and Renewables Conference in New York City yesterday. Helms had some very interesting comments on his company’s strategy moving forward–a strategy of keeping drilling activity in the Permian about even (not expanding), but increasing drilling activity in other plays, including the Ohio Utica.
EOG Resources COO Helms Says On Target To Keep Well Costs Rising More Than 10% This Year; Expects To Drill Offshore Australia In 2024; Expects To Drill And Complete 15 Wells In The Utica Shale This Year And Increase Activity In 2024 - This headline only article is a sample of real-time intelligence Benzinga Protraders use to win in the markets everyday.
EOG Resources Reveals Plans for Offshore Expansion and Utica Shale Drilling - As of June 21, 2023, EOG Resources‘ COO has revealed the company’s plans to expand its drilling operations offshore Australia by 2024. This move is expected to bolster the company’s presence in the region and further strengthen its position as a leading player in the global energy market.Moreover, EOG Resources has set its sights on drilling and completing 15 wells in the Utica Shale by the end of this year, with plans to ramp up activity in 2024. This ambitious undertaking is a testament to the company’s commitment to maximizing its resources and driving growth in the industry.In keeping with its focus on efficiency and cost-effectiveness, EOG Resources is also aiming to keep well costs from increasing by more than 10% this year. This is a critical factor in ensuring the company’s profitability and sustainability in the long run. Overall, EOG Resources’ strategic vision and innovative approach to energy production make it a force to be reckoned with in the ever-evolving landscape of the global energy industry.
Encino Donating $100K to Muskingum Watershed Conservancy Foundation | Marcellus Drilling News -Encino Energy, now Ohio’s biggest oil producer, has agreed to donate $100,000 over the next five years to the Muskingum Watershed Conservancy Foundation to help fund community projects in Tuscarawas, Harrison, Carroll, and Belmont counties. The donation was announced at a press conference on Tuesday at Tappan Lake Marina in Harrison County. The Muskingum Watershed Conservancy District (MWCD) is an agency formed in 1933 to help control flooding and promote water conservation in the Muskingum River watershed area of Ohio, an area that covers 8,000 square miles. Over the years, MWCD has leased thousands of acres for Utica Shale drilling and cut deals to sell water to drillers for fracking. The result has been well over $100 million in revenue for MWCD–a true game-changer for the agency and the Ohio residents who live in that region.
Encino Energy to donate $100,000 to MWCD to fund community projects -‒ Encino Energy has agreed to donate $100,000 over the next five years to the Muskingum Watershed Conservancy Foundation to help fund community projects in Tuscarawas, Harrison, Carroll and Belmont counties. The donation was announced at a press conference Tuesday at Tappan Lake Marina in Harrison County. "We're excited about this historic partnership. We think this comprehensive approach is a model for public-private partnerships," said Hardy Murchison, CEO of Houston-based Encino Energy. Added Sheila Hurley, executive director of the Muskingum Watershed Conservancy Foundation, "The support the foundation will receive from Encino Energy will provide the opportunity to impact new and important programs, projects and activities throughout the Muskingum Watershed District." The foundation's goal is to support the mission of the Muskingum Watershed Conservancy District (MWCD) by providing financial resources that enhance facilities, programs and conservation efforts on or adjacent to district lands and waters. Recently, the organization helped fund a playground at the Tuscarawas County YMCA in Dover and the new outdoor entertainment venue at Sally Buffalo Park in Cadiz. The foundation was started in the mid-1990s and has about $2.5 million on hand. "To have this additional $100,000 over the next five years in partnership with Encino Energy to work on projects that align with both our mission and goals is just really incredible," Hurley said following the announcement. "We'll be focusing on youth development, we'll be focusing on health and safety, the environment and just a variety of different types of projects." Murchison noted he was unaware of any other public-private agreements like this in the United States. "Most of these relationships between a lessor and lessee are just purely commercial," he said. "To have the alignment of missions and to formalize that in a MOU (Memorandum of Understanding) like this is either rare or maybe unique." Encino Energy has been operating in Ohio for the past five years. In 2022, the company signed an oil and gas lease with the MWCD for Utica Shale development on nearly 7,300 acres at Tappan Lake. The conservancy district will receive about $40 million in payments from Encino over 5 years from the lease.
Punxsutawney Phil Getting a New Neighbor – Shale Injection Well | Marcellus Drilling News - In the future, when everyone’s favorite groundhog Punxsutawney Phil pokes his head out of his hole in February to tell us whether or not there are another six weeks of winter, he may be looking at shale wastewater trucks coming and going on their way to a new underground injection well just outside of town. Yesterday the federal EPA issued a permit to G2 STEM LLC based in Fairfax, Virginia, to build a Class IID oil and gas wastewater underground injection well in Young Township, Jefferson County, PA. You may know the area by its famous boro, Punxsutawney.
Washington County family takes 2 corporations to court over fracking health concerns - CBS Pittsburgh -- A Washington County family has taken two major corporations to court, claiming that fracking contaminated their wells and jeopardized their health. It's been a matter of debate: can fracking contaminate the groundwater and cause serious health impacts? The case in Washington aims to prove it can and does. Bryan Latkanich and his son Ryan arrived at court Tuesday morning flanked by supporters from the environmental community aiming at last to prove that fracking at their property had contaminated their wells, undermined their home and resulted in serious health impacts, including skin rashes Ryan says he suffered after bathing. "I've had blisters from water, my skin rashing up," Ryan said. "It's been a nightmare," Bryan said. In their sights are two large corporations -- Chevron and its subsidiary Chevron USA, which initially drilled their property, and the Pittsburgh-based EQT Corporation, which purchased the Chevron leases two years ago. Tuesday at an initial hearing, their attorney, Kathy Condo, argued again that hydraulic fracturing is not inherently dangerous and that an investigation by the Pennsylvania Department of Environmental Protection found no elevated chemicals and no linkage between the fracking and the Latkanich's health problems. The complaint stems back to 2011 and 2012 and since then a Pennsylvania grand jury found that DEP had failed to adequately protect citizens. The family's attorney cites new evidence about radioactivity and PFAS -- so-called forever chemicals in the frack water, which she says spilled from retainer ponds into their wells and their home. "There's no debate about the harm that fracking causes. We've proven that. It's time for the industry to tell the truth and it's time for this administration to tell the truth," said attorney Lisa Johnson. The Latkanich family hopes theirs is a test case. "Hopefully that we can become whole and get on with life again and close this chapter, and also we can protect the environment and other people going through this," Bryan said.
Secretive State Climate Talks Stir Discontent With Pennsylvania Governor -- Three weeks after he was elected governor of Pennsylvania last fall, Josh Shapiro held a press conference at the county courthouse in Montrose, Pa., to announce what he called a “historic” settlement with the oil and gas company Coterra Energy. Coterra would pay $16.29 million to build a public water line in Dimock, a small town where Coterra’s fracking operations were blamed for contaminating the water, and would plead no contest to a misdemeanor charge under the Clean Streams Law. He saluted the people of Dimock who had testified in his investigation of Coterra as “good friends.” “When big corporations are not held accountable,” he said. “then the people suffer.” Standing at his side at the courthouse was Victoria Switzer, a Dimock resident and longtime advocate for the community. Taking the microphone, she was emphatic in her praise for him. The next day, the Pennsylvania Department of Environmental Protection, or DEP, declared that it would lift a 12-year ban on drilling in Dimock, allowing Coterra to operate there once again. Shapiro must have known about DEP’s decision at the time of the press conference even though he was not yet governor; they see the settlement and the lifting of the ban as part of a larger deal with Coterra. “If he didn’t know about it, where’s the outrage?” For Switzer and others who have fought for years for access to clean local water, the news from DEP was a betrayal of everything Shapiro had promised them. “Had we known about that, do you think I ever would have stood there with him in a public forum in front of all these news reporters and said it was the ‘people’s lawyer’ that got this done?” Switzer said in an interview. “I am so mortified that I was paraded and made a puppet.” Six months later, it’s not just the homeowners of Dimock—still lacking safe running water—who feel the sting of those two days in November. For many environmentalists and climate campaigners in Pennsylvania, the reversal was both a turning point in their hopes for the Shapiro administration and an omen of a worrying new development: secretive state climate talks. A “climate working group” appointed by the governor is now convening privately, its members unidentified and the minutes of its meetings unreleased. The group’s existence came to light because of reporting by the Associated Press, and there appears to be no mention of the group or its agenda on the governor’s website. All of this secrecy is fueling suspicion about other deal-making and skepticism about the administration’s dedication to reducing greenhouse gas emissions.
Capstone Receives More Business from Marcellus E&P - A Capstone Green Energy Corp. subsidiary will supply a Marcellus Shale E&P microturbines that generate electricity from piped gas, according to a June 15 press release. Capstone did not name the E&P. Capstone’s distributor, E-Finity Distributed Generation, will supply 10 additional C65 microturbines to be deployed in the Marcellus after the E&P submitted a follow-on order, Capstone said. The order will be commissioned this summer. The microturbines are fueled by wellhead natural gas that has been extracted directly from the pipeline. The turbines, upon installation, will provide electrical power at a variety of wellhead sites where it is now unavailable. In addition, because the C65 microturbines will be the primary source of power for these wellhead sites, related emissions will be “ultra-low,” Capstone said in the news release. Jeff Beiter, president and CEO Capstone’s E-Finity, said the company’s returning Marcellus and Utica shale customers demonstrates the company’s proficiency and reliability in “delivering power where it is need.” “These microturbine units will significantly enhance production and facilitate the efficient extraction of clean-burning, abundant natural gas from one of the world's largest natural gas fields,” Beiter said.
21 New Shale Well Permits Issued for PA-OH-WV Jun 12-18 | Marcellus Drilling News - New shale permits issued for Jun 12-18 in the Marcellus/Utica gained one. There were 21 new permits issued, up from 20 the previous week. Last week’s permit tally included 12 new permits in Pennsylvania, 6 new permits in Ohio, and 3 new permits in West Virginia. Snyder Brothers scored the most new permits, with 9 issued in Armstrong County, PA. INR had the second most new permits, with 4 permits issued in Carroll County, OH. ANTERO RESOURCES | ARMSTRONG COUNTY | CARROLL COUNTY | CNX RESOURCES | EQT CORP | FAYETTE COUNTY | INR | MONONGALIA COUNTY| NOBLE COUNTY | SNYDER BROTHERS
Tree-sitter despondent over MVP deal — Theresa “Red” Terry never wanted shades on the windows of her white clapboard farmhouse perched on the side of 2,600-foot Bent Mountain. Such coverings, she insisted, would only mar the 360-degree view of nature’s bounty she so relished. Three years ago, however, she relented. By then, crews with chainsaws, bulldozers and other heavy equipment had already spent two years devouring broad strips of hardwood forests as a passageway to truck in and bury the hotly contested Mountain Valley Pipeline. In all, pipeline investors claimed 14 acres of Terry property via eminent domain. If completed, the mainline of the 42-inch pipe would move 2 billion cubic feet of hydraulically fractured gas daily from the shale formations in West Virginia to the Virginia-North Carolina border 303 miles away. From there, it’s likely destined for export by way of a 72-mile extension into North Carolina. Of course, the blinds Terry’s three grown children had installed in a room adjacent to the back porch couldn’t halt the carnage. But, drawn, they at least offered her a temporary shield. It was in that sheltered space where a distraught Terry, 66, huddled at a table with her neighbor Mary Beth Coffey on a rainy afternoon just a week after President Joe Biden signed into law the debt ceiling relief pact on June 3. The mood was funereal as the two friends lamented a deal that included a provision — long sought by fossil fuel booster Sen. Joe Manchin, D-West Virginia — to greenlight the completion of the Mountain Valley Pipeline by deep-sixing any and all remaining permit barriers. “I feel like we’re in grief,” said Coffey, 65, who retired early from her school speech pathology job to devote more time to confronting the pipeline, known as MVP. “We’re dealing with the death of many things on many different levels.” The Manchin measure, the friends agreed, has squelched the voices of protesters long convinced their poorer part of the state is a sacrifice zone. “We’ve been resisting this pipeline a long time,” Coffey said. “With this deal, our rights have been taken away. Who do we report MVP’s missteps to now? It’s a human injustice.” “People wonder why I’m a wreck. Well, it’s all enough to make anyone sick,” said Terry, who retired in 2021 as a forklift driver at a distribution center in nearby Salem. “MVP has taken enough. They took away my happiness, my security … and my trees.” She was especially heartbroken when the pipeline excavators uprooted a backyard orchard of roughly a dozen old apple trees and a nearby scarlet oak that she had staked out as a sapling and nurtured for 22 years. The loss of that prized oak — followed by dismissive words from an MVP spokesperson — fired up Terry, nicknamed Red as a teenager. In the spring of 2018, that fierceness guided her to yet another scarlet oak on a nearby but separate piece of Terry property adjacent to Bottom Creek. The down-to-earth, then 61-year-old Roanoke native became a local celebrity — and a global sensation — when she ate, slept and lived in a family-built, plywood tree stand for 34 straight days to draw attention to the environmental havoc MVP was wreaking in Southwest Virginia.
White House adviser Podesta says controversial pipeline was ‘inevitable’ - White House adviser John Podesta said Tuesday that the approval of the controversial Mountain Valley Pipeline (MVP) was “inevitable” — defending President Biden’s signing of legislation that advanced the pipeline. “MVP was on its way to being permitted anyway,” Podesta said Tuesday following an event announcing funds for sustainable upgrades to federal buildings. “I think MVP was inevitable.” Democrats first agreed to pass legislation approving the pipeline, a 303-mile project that would carry natural gas from West Virginia to Virginia, as part of their deal with Sen. Joe Manchin (D-W.Va.) in exchange for his vote on their climate, tax and healthcare bill. Their initial attempts to pass it as part of a permitting reform package flopped last year, but efforts to legislate the pipeline’s approval were recently revived in a deal between the White House and House Republican leadership to lift the debt ceiling. The passage of the provision has rankled climate activists, who say the administration should not be bolstering additional fossil fuel infrastructure.
New England Needs More Natural Gas, Renewables Infrastructure to Avoid Shortfalls, Say Experts -Industry and government experts said to ensure New England has the energy resources available to ensure reliability in the winter, more natural gas infrastructure and transmission for renewables must be built. During the Federal Energy Regulatory Commission’s second New England Winter Gas-Electric Forum earlier this week, half of the discussions centered around the potential closure of the Everett Marine Terminal (EMT). The facility is one of only three LNG terminals that delivers liquefied natural gas supply to New England during the winter. “Most, if not the supermajority” of the region’s natural gas-fired generators rely on EMT fuel supply, said Levitan & Associates Inc. President Richard Levitan. The firm has assisted the Independent Systems Operator for New...
Oil spill in Buzzards Bay causes Coast Guard response — A mile-long oil spill in Buzzards Bay mobilized multiple fire departments Sunday morning. Reports said that the U.S. Coast Guard was joined by the Mattapoisett Fire Department, Mattapoisett Harbor Master, and Marion Harbor Master. A Coast Guard source told ABC 6 that a Air Station Cape Cod helicopter came across the sheen off of Buzzards Bay around 10:30 am Sunday and relayed the sighting to the command center. The helicopter saw the spill in the area of Cleveland Ledge and said it was approximately one mile long and 150 to 300 feet wide. The Coast Guard said the spill was “non-recoverable,” meaning it will dissipate on its own. There were no debris is the area and the cause of the spill is still unknown, and the Coast Guard said it will continue to monitor the situation. The Marion Fire Department said the spill should have no environmental impact.
Maryland files lawsuit against 2 companies over oil spill that happened in 2021 - An oil spill was reported on Dec. 7, 2021 in Frederick County, Md. Maryland is now suing the two companies responsible for more than 7,000 gallons of oil that was spilled. The Maryland Department of the Environment and the State’s Attorney General’s Office has filed a lawsuit against a trucking company, D.M. Bowman, Inc. and Day and Sons, Inc., a construction company. According to the state, the diesel oil spill happened when drilling work that was being done by Day and Sons Inc. struck underground diesel lines at the D.M. Bowman Inc. facility. The state wants to hold the companies responsible by repairing and restoring Maryland’s natural resources. “The negligence displayed by these two companies demonstrate a complete disregard for our environment and the well-being of our communities,” Maryland’s Attorney General, Anthony Brown said. “Their actions will not go unanswered.” “We expect businesses to operate responsibly, and when they don’t, MDE will hold them accountable,” Maryland Department of the Environment Secretary Serena said. The incident is still being investigated.
Lake Charles LNG Appeal Denied, Setting Stage for Legal Battle Over Export Extensions -- The U.S. Department of Energy (DOE) will not reconsider its decision denying an Energy Transfer LP (ET) affiliate’s request to again extend the deadline to begin exports from the proposed Lake Charles LNG facility in Louisiana. In a 48-page order, DOE denied a request for rehearing filed in May, in which ET claimed the agency’s decision was arbitrary and capricious. The proceeding has previewed the legal arguments both sides could make in a court challenge, which could have broader implications for other U.S. liquefied natural gas projects attempting to advance. It’s not certain, though, if ET will challenge DOE’s latest decision. Spokesperson Cassidy Lamb said ET was disappointed with DOE’s order, but it plans to continue developing the project given “significant...
Texas Upstream Employment Surges as Natural Gas Takeaway Set to Expand - The Texas upstream oil and gas sector added 6,900 jobs in May versus April, bringing the job count above 200,000 for the first time in more than three years, according to the Texas Upstream Oil and Gas Association (TXOGA). The month/month growth in jobs to 206,000 was the highest sequential jump in the 33 years for which data is available, said TXOGA, citing data compiled by the Texas Workforce Commission. “Texas remains a powerhouse of production and all sectors of our economy benefit from robust activity,” said TXOGA President Todd Staples. “These numbers reported for May are the highest in decades and push upstream employment numbers above the 200,000 mark for the first time since 2020.
US natgas prices drop 5% on lower demand forecasts, less heat - (Reuters) - U.S. natural gas futures dropped about 5% on Tuesday on forecasts for less hot weather and demand over the next two weeks than previously expected as the amount of gas flowing to U.S. liquefied natural gas (LNG) export plants declines due to maintenance outages. The price decline came despite a drop in gas output in recent weeks and even though the weather will still be hotter than normal in late June and early July, especially in Texas. The Texas power grid operator urged homes and businesses to conserve electricity on Tuesday evening to prevent power reserves from falling short as consumers crank up air conditioners to escape the first heat wave of the summer season. That will boost the amount of gas burned by power generators as Texas gets most of its power from gas. In 2022, about 49% of the state's power came from gas-fired plants, with most of the rest from wind (22%), coal (16%), nuclear (8%) and solar (4%), according to federal energy data. After rising for five days in a row, front-month gas futures for July delivery on the New York Mercantile Exchange fell 14.0 cents, or 5.3%, to settle at $2.492 per million British thermal units (mmBtu). On Friday, ahead of the Juneteenth holiday on Monday, the contract closed at its highest level since March 7. Data provider Refinitiv said average gas output in the U.S. Lower 48 states fell to 101.6 billion cubic feet per day (bcfd) so far in June, down from a monthly record of 102.5 bcfd in May. Meteorologists forecast the weather would turn from mostly near-normal from June 20-23 to hotter than normal from June 24-July 5. The forecasts, however, were not as hot as previously expected. The U.S. National Hurricane Center (NHC) projected Tropical Storm Bret would remain a tropical storm as it moves west from the Atlantic Ocean over the next several days before dissipating in the Caribbean Sea around Saturday. The NHC projected another system in the Atlantic had an 80% chance of strengthening into a cyclone over the next five days as it moves west toward the Caribbean. With hot weather coming, Refinitiv forecast U.S. gas demand, including exports, would rise from 94.0 bcfd this week to 98.9 bcfd next week. Those forecasts were lower than Refinitiv's outlook on Friday. U.S. exports to Mexico rose to an average of 6.6 bcfd so far in June, up from 6.2 bcfd in May. That compares with a monthly record high of 6.7 bcfd in June 2021. Gas flows to the seven big U.S. LNG export plants fell to an average of 11.5 bcfd so far in June from 13.0 bcfd in May.
Natural gas prices rock steady as demand bets offset storage build - The bulls in natural gas are surviving one odd after another. Total inventories of the fuel in storage rose by 95 billion cubic feet last week, the U.S. Energy Information Administration, or EIA, reported in an update on Thursday. That was above the 88-bcf build for the week ended June 16 that was forecast by industry analysts tracked by Investing.com. The highest estimate by most analysts was 91 bcf. In the prior week to June 9, utilities injected just 84 bcf into storage after burning the gas needed to meet power and cooling needs. “This number came in much more bearish than the market was anticipating with a 95-bcf injection being on the upper end of survey range,” Gas futures initially tumbled on the larger-than-expected storage build, hitting a session low of $2.532 per mmBtu, or million metric British thermal units, versus Wednesday’s close of $2.597. By Thursday’s settlement though, front-month gas futures on the New York Mercantile Exchange’s Henry Hub settled up 1.1 cent at $2.608 per mmBtu. One possible reason for the market's comeback: Higher anticipation of cooling demand in the coming days and weeks as the U.S. summer season slowly and surely brings higher temperatures. “Power burn demand has decreased to 37.9 bcf/day today, the Gelber note said. ”As weather warms over the coming weeks, power burn is likely to increase back to previous levels and push higher.” With a near 15% gain for June, gas futures on the Henry Hub are headed for their best performance since August — the month they hit a 14-year high of $10 per mmBtu. While summer weather hasn’t hit its typical baking point across the country, cooling demand is inching up by the day, particularly in Texas. This has sparked realization in the trade that higher price lows might be more common than new bottoms.The lowest Henry Hub’s front-month got to this week was $2.448, versus the $2.136 bottom seen at the start of June. Notwithstanding the optimism of gas bulls, last week’s 95-bcf build in gas storage compared with a 76-bcf injection during the same week a year ago and a five-year (2018-2022) average increase of 86 bcf. With the latest stockpile increase, the EIA reported that total gas in underground caverns in the United States stood at 2.729 trillion cubic feet, or tcf — up 26.5% from the year-ago level of 2.158 tcf and 15.3% higher than the five-year average of 2.367 tcf.
US natgas jumps 5% on lower output, hot forecasts for Texas (Reuters) - U.S. natural gas futures jumped about 5% to a 16-week high on Friday on a drop in U.S. output in recent weeks and forecasts for the weather to remain hot through early July, especially in Texas. That price increase came despite forecasts for less demand next week than previously expected due in part to a decline in the amount of gas flowing to liquefied natural gas (LNG) export plants and a drop in European gas prices. The Electric Reliability Council of Texas (ERCOT), the state's power grid operator, again projected electric use would break records, this time Monday-Tuesday, June 26-27. ERCOT also projected power use would reach record highs this week but demand fell short of the record after storms and storm-related power outages reduced usage and consumers heeded the grid operator's June 20th call to conserve energy. Regardless of when demand sets a new all-time high, the heat should boost the amount of gas generators burn to produce power for air conditioning since Texas gets most of its electricity from gas-fired plants. Front-month gas futures for July delivery on the New York Mercantile Exchange rose 12.1 cents, or 4.6%, to settle at $2.729 per million British thermal units (mmBtu), their highest close since March 3. That price jump pushed the front-month into technically overbought territory with a relative strength index (RSI) above 70 for the first time since last week. For the week, the contract gained about 4%, putting it up for a third week in a row for the first time since April. Around the world, gas prices at the Dutch Title Transfer Facility (TTF) benchmark in Europe plunged about 12% to a one-week low near $10 per mmBtu. Data provider Refinitiv said average gas output in the U.S. Lower 48 states fell from a record 102.5 billion cubic feet per day (bcfd) in May to 101.5 bcfd so far in June due in part to ongoing pipeline maintenance in the Haynesville shale in Arkansas, Louisiana and Texas, and other basins. Meteorologists forecast the weather in the Lower 48 states would turn mostly hotter than normal from June 24-July 8. With hot weather coming, Refinitiv forecast U.S. gas demand, including exports, would rise from 94.7 bcfd this week to 97.8 bcfd next week and 101.5 bcfd in two weeks. The forecast for next week was lower than Refinitiv's outlook on Thursday. U.S. exports to Mexico rose to an average of 6.6 bcfd so far in June from 6.2 bcfd in May. That compares with a monthly record high of 6.7 bcfd in June 2021. Gas flows to the seven big U.S. LNG export plants fell to an average of 11.4 bcfd so far in June from 13.0 bcfd in May. That is well below the monthly record high of 14.0 bcfd in April due to maintenance at several facilities, including Cheniere Energy Inc's Sabine Pass in Louisiana and Freeport LNG in Texas. This week marks the first time that Sabine Pass was not receiving the most feedgas of all U.S. LNG plants since October 2020.
Limited U.S. output gains, OPEC cuts will mean higher crude prices, EOG exec says - Small gains in U.S. oil production and cuts by some OPEC+ members will limit crude supply in the months ahead and inevitably push up prices, an EOG Resources executive said Wednesday, according to Reuters."We're a short term away from seeing the market tighten even further," EOG COO Lloyd Helms reportedly told a J.P. Morgan energy conference. "We are more constructive on where oil prices could go."U.S. natural gas prices also could be supported this year by fewer drilling rigs in shale gas basins at a time when liquefied natural gas demand is expected to peak, Helms said.The Energy Information Administration has forecast U.S. oil production growth of just 1.3% to 12.77M bbl/day in 2024, after a 6.1% gain this year. Helms said EOG does not expect to expand activity in the Permian Basin, citing labor and service constraints, saying the company sees flat drilling there while turning more to Ohio's Utica shale and Wyoming's Powder River Basin.
Carbon Credit Market Seizes On a New Opportunity: Plugging Oil and Gas Wells - Tyler Crabtree was working in the oil and gas industry in North Dakota, trying to prevent methane leakage from well sites, when he started “soul searching” for a better way to address climate change. Crabtree went on to found CarbonPath, a Houston-based company offering a new class of carbon credits, or offsets, that come from plugging oil and gas wells. He realized that most of the wells in the United States produce relatively little oil and saw an opportunity to incentivize shutting them down early, locking fuel under the Earth’s surface to halt methane emissions that heat the atmosphere at 80 times the rate of carbon dioxide.CarbonPath is part of an emerging industry that pairs carbon market financing with oilfield service providers to plug wells and generate carbon credits, which it then sells to corporations trying to meet emissions reduction goals and individuals seeking to offset their own negative climate impacts. The new companies are promising to bring verified, high-quality credits into a carbon marketplace that has been fraught with calculation errors and unresolved ethical questions. “What we’re seeing particularly in the voluntary carbon market is a lot of questions about ‘how can we trust that these carbon credits are real,’” said Martijn Dekker, chief executive of ZeroSix, another Houston-based company offering carbon credits for the “early retirement of oil and gas wells.” CarbonPath has two different methodologies for generating a carbon credit. The first is for verified plugging of what Crabtree, the company’s CEO, refers to as marginal wells, which produce a small but economically significant amount of oil or gas and typically leak methane. The credit value is determined by an estimation of the potential carbon emissions of fuel left in the ground. Other companies, including ZeroSix and Austin-based ClimateWells, have developed similar methodologies.“It’s a market-driven solution,” Crabtree said. “If you put a price on carbon that’s acceptable and use the voluntary carbon market, you can incentivize the shutdown of these wells earlier in their lives.”CarbonPath’s other methodology is for orphaned wells that are inactive, have no legally responsible owner, pose a threat to groundwater, and in many cases are also leaking methane and toxic chemicals. As with the marginal wells, methane emissions from the sites are measured or estimated, and the offset is based on how much methane is prevented from leaking into the atmosphere.More than 120,000 orphan wells are documented in the United States, according to a study from the Environmental Defense Fund, or EDF, but as many as 800,000 more are thought to exist.
Judge orders Enbridge to shut down part of Wisconsin oil pipeline in 3 years - A federal judge is ordering a Canadian energy firm to pay $5.1 million for trespassing on a northern Wisconsin tribe’s reservation and remove its oil and gas pipeline from lands it’s illegally operating on within three years. The decision comes nearly four years after the Bad River Band of Lake Superior Chippewa filed a federal lawsuit against Enbridge Inc. to shut down and remove its Line 5 pipeline from the reservation. The company’s easements on a dozen parcels of land expired in 2013, and the tribe refused to renew them. Last fall, U.S. District Judge William Conley ruled Enbridge has been trespassing on the Bad River reservation, entitling the tribe to a financial remedy. The nearly 70 year-old Line 5 carries up to 23 million gallons of light crude oil and natural gas liquids each day over a 645-mile span from Superior across northern Wisconsin and Michigan to Sarnia, Ontario. The tribe sued Enbridge over fears that erosion could threaten to expose and rupture the pipeline, and concerns over the line’s safety have only heightened in recent weeks as spring flooding increased erosion on the Bad River’s banks near Line 5. The pipeline is now only 11 feet from the river at an area known as the meander. In an order issued Friday, Conley said a rupture of the pipeline at the meander is a public nuisance and that current conditions create an unreasonable risk of failure. However, he said the threat of rupture is not imminent enough to require an immediate shutdown. Conley ordered Enbridge to adopt its plan with minor changes within 21 days that would require preparation to purge the pipeline of product if two markers within 10 feet of Line 5 are lost due to erosion. The pipeline would be purged and shut down if a 60-foot span of pipe became unsupported. The company would also have to pay a portion of its profits to the tribe for as long as the pipeline continues to operate in trespass. An Enbridge spokesperson said in a statement Saturday that it agreed with the court’s decision that Line 5 should not be immediately shut down, but the company disputed that it is trespassing on the tribe’s lands. Enbridge also disagreed that the pipeline must stop operating on the reservation within three years.
Tribe has mixed reaction to federal judge’s Line 5 shutdown order - Leaders of the Bad River Band of Lake Superior Chippewa on Monday welcomed a federal judge’s order to Enbridge Energy Co. to shut down its line 5 in Northern Wisconsin, but criticized the order’s three-year timeline. “The Band appreciates the Court putting an end to Enbridge’s flagrant trespass and disregard for our rights,” said Mike Wiggins, chairman of the Bad River Band, in a statement that the tribe released Monday. “Tribal sovereignty prevailed over corporate profits.” Ruling in Madison on Friday, U.S. District Judge William Conley reaffirmed his September 2022 ruling upholding the tribe’s claim that Enbridge has been trespassing on its land for the last 10 years. Conley ordered the company to shut down the Line 5 pipeline within three years and pay more than $5 million in profits to the Bad River Band. The tribe sued Enbridge in 2019 for continuing to operate the pipeline after an agreement expired in June 2013 that gave the energy company an easement where 12 miles of pipeline passes through tribal land. While expressing appreciation for the ruling, Wiggins called it “just one step in protecting our people and water” and predicted the legal dispute would continue. “We are under no illusion that Enbridge will do the right thing,” he stated. “We expect them to fight this order with all of their corporate might.” In his Friday ruling, Conley stated that while the risk of pipeline rupture is not immediate, evidence from flooding events this spring and subsequent erosion made the prospect of a rupture “a real and unreasonable risk” in the next five years. The 60-foot-wide Line 5 runs from far Northwest Wisconsin 645 miles into Michigan’s Upper Peninsula, under the Straits of Mackinac and out into Canada near Detroit. It transports about 23 million gallons of crude oil and natural gas liquids daily. The pipeline is currently underground where it passes near a bend in the Bad River on the tribe’s reservation. While Line 5 remains buried and well supported more than 6 feet underground at the bend, or meander, flooding this spring and subsequent erosion pointed to the risk that the line could be exposed and rupture, contaminating the local watershed, the judge noted in his order. The band’s attorney, Erik Arnold, said in a statement that while the ruling was encouraging, the band disagreed with elements of the court order. Instead of ordering the line to be shut down promptly, “the three-year timeline leaves the Bad River vulnerable to catastrophe, and there is no warrant for allowing Enbridge’s trespass to continue for that long,” Arnold said.
Wisconsin Line 5 shutdown order may disrupt pipeline fight in Michigan - mlive.com Those in Michigan who want the Line 5 oil and gas pipeline shut down believe a recent ruling from a federal judge in Wisconsin could impact a pending legal case against Enbridge and disrupt company plans.U.S. District Judge William Conley in Wisconsin last week gave Enbridge three years to shut down a section of its Line 5 oil and gas pipeline that crosses tribal lands and ordered the company to pay the Bad River Band of Lake Superior Chippewa more than $5 million for trespassing.The tribe argued extensive erosion along a riverbank near the pipeline created an emergency risk of the infrastructure rupturing on and harming reservation land; Enbridge officials said they intend to appeal the ruling and may seek a stay of the judge’s decision.Tribal authorities celebrated this new Line 5 shutdown order – even with a three-year wait.Bad River Band Chairman Mike Wiggins said they appreciate the court ending Enbridge’s trespass and disregard for tribal rights. “Tribal sovereignty prevailed over corporate profits,” he said.Enbridge officials said that while the three-year timeline is “arbitrary,” the goal to reroute the pipeline 41 miles around tribal land is achievable if government regulatory agencies grant work permits in a timely fashion. The project, once permitted, would take less than one year to complete, said Ryan Duffy, Enbridge spokesperson.Regardless, the clock is now ticking toward that three-year deadline.Conley sided with the Wisconsin tribe in September, saying Enbridge was trespassing and must compensate the tribe for illegally using its land. Yet just last month, the judge said he was “uncomfortable” placed in a position to potentially shut down the pipeline, an “extraordinary request” when the tribe hadn’t allowed the company to do on-site erosion prevention work.Tribal leaders in Michigan are among those closely watching the Wisconsin case for implications at home.“I was very happy because it creates a timeline now for Line 5 to be shut down,” said Whitney Gravelle, president at Bay Mills Indian Community in the Upper Peninsula.“Ultimately, I think that the ruling is a clear signal to Enbridge as well as to state and federal regulators that there is no point investing further into risky and expensive projects for a pipeline that will inevitably be shut down. And that includes not investing in the Great Lakes tunnel project. I think the writing is on the wall that Line 5 is on life support, and that eventually it will be decommissioned altogether. Where Line 5 crosses between the Upper and Lower peninsulas beneath Great Lakes waters at the Straits of Mackinac has been the crux of the fight in Michigan.
Donnie Creek wildfire: what happens when fires, fracking collide? -Doug Smith, deputy incident commander for the Donnie Creek wildfire in B.C., had sobering news to share June 11 on a daily call with oil and gas companies and other critical infrastructure operators. The out-of-control fire had amassed so much energy it was hurling pinecones and small branches into the air and tossing the flaming debris outside its perimeter to gain ground like an advancing army. “We are seeing a solid fire front, where you have fire from the ground to the treetops and flames above the treetops, perhaps 50, 60 feet or higher,” Smith explained. The height of the fire, combined with its “spawning” activity, indicated significant spread, threatening properties, the Alaska Highway, the CN railway and fracking operations in northeast B.C. Usually wildfires calm down at night. But unseasonably hot temperatures and low humidity drove the Donnie Creek wildfire to rage on that night, sending thick and gritty smoke far and wide. By Wednesday, the fire, abetted by high winds, had engulfed an area approaching the size of Prince Edward Island. By June 18, it became thelargest ever wildfire recorded in the province. Even with 188 firefighters, 28 pieces of heavy equipment and 11 helicopters, Smith said there is little hope of stopping the lightning-sparked blaze from spreading over the next few months, given its expanding 300-kilometre perimetre. “We really need to expect that the fire is going to persist in the area indefinitely,” he told The Narwhal from the fire’s command centre in trailers at an oil and gas camp at Mile 147 on the Alaska Highway, where he and other supervisors are working from seven in the morning until nine at night.Most of the fire can’t be contained, Smith said, so the priority is to protect people, communities and critical infrastructure — chiefly the railway, the highway and fracking operations.The area burned by the Donnie Creek wildfire over the past four weeks, roughly halfway between Fort Nelson and Fort St. John, sits in the north part of the Montney basin, a vast hydrocarbon-rich region. Tens of thousands of fracking wells crisscross the Montney, with plans to drill tens of thousands more to supply LNG Canada, the country’s first liquefied natural gas (LNG) export project, through the Coastal GasLink pipeline.The fast-moving fire in B.C.’s Peace Region raises some troublesome questions: what happens when fire meets fracking? Are there human health concerns? And what impact could increasingly intense and frequent wildfires expected with climate change — and drought that restricts access to water for fracking operations — have on the BC NDP government’s gambit to promote LNG?
Train clips fuel tanker spilling 25,000 litres of diesel in Golden - Residents of Golden are speaking out with concern after thousands of litres of diesel spilled in a rail yard. On the morning of June 15, a Canadian Pacific Rail train clipped the back of a Trimac fuel tanker. According to the B.C. Ministry of Environment and Climate Change, up to 25,000 litres of diesel spilled because of the incident. The Rail Occurrence Database System, with numbers reported from Canadian Pacific, estimated that the breach caused “between 17,000 and 19,000 litres of diesel fuel to spill.” Both Canadian Pacific Rail and the Ministry of Environment and Climate Change have said that no waterways were impacted because of the breach, despite the rail yard’s proximity to the Columbia River and nearby wetlands. Some parts of the rail yard are less than 100 metres away from wetlands. The Columbia River is less than 500 metres away. According to the Rail Occurrence Database System, no one was injured as a direct result of the incident. On social media, concerned residents of the town have claimed that the volume of the spill is close to 30,000 litres. Diesel is easier to clean than other types of oil such as bunker or crude oil as it will evaporate by about 40 per cent within 48 hours in cold weather, according to a study by the provincial government. In active water, such as the Columbia River, diesel disperses quickly and becomes diluted, minimizing the threat to wildlife.
Canada Natural Gas, Oil Pipelines to See Increased Cleanup Costs - Compulsory abandonment savings that Canadian natural gas and oil pipelines must raise to shut, safely seal and clean up their operations after flows end are forecast to jump by 79%, according to a national regulatory decision.The Canada Energy Regulator (CER) set the increase (C$1.00/US 76 cents) to $18.6 billion from a previous requirement of $10.4 billion for 43,800 miles of conduits under its jurisdiction.“Continued refinement” of mandatory cleanup expense projections led to the change in the Abandonment Cost Estimate (ACE) by the regulatory agency. The original polluter-pay rule survives.“The future cost of abandoning CER-regulated facilities is paid for by companies with CER-regulated pipeline systems and not borne by indigenous peoples, landowners, or future...
Hartshead submits plan for UK gas field development Australia-based Hartshead Resources has submitted its Phase I field development plan (FDP) for the Anning and Somerville gas fields, offshore UK. The FDP, which includes a detailed description of the subsurface interpretation, planned development wells, production forecasts and facilities, has been submitted to the North Sea Transition Authority (NSTA). The fields are located within the Seaward production licence P2607 in the Southern Gas basin. Planned to be developed in phases, the P2607 licence comprises five blocks in Quads 48 and 49 on the UK Continental Shelf. The first phase of the P2607 licence comprises the Somerville and Anning Gas Fields while the second phase consists of the Hodgkin and Lovelace Gas Fields. The third phase will comprise 14 prospects. Hartshead and its joint venture partner RockRose Energy plan to finalise project debt funding and make final investment decision (FID) for the Anning and Somerville gas fields Phase 1 development upon seeking technical feedback from the NSTA. The development plan of the Somerville and Anning Gas Fields includes six production wells from two wireline-capable normally unmanned installation platforms. The gas fields are due to start production in 2025.
NATO to Build Center for Pipeline Protection - The North Atlantic Treaty Organization (NATO) has agreed to establish a center to protect critical undersea infrastructure such as pipelines citing risks of attack by Russia. The Maritime Centre for the Security of Critical Undersea Infrastructure will rise in London “to bring together different Allies to share information, share best practices, and to be able to react if something abnormal happens”, NATO Secretary-General Jens Stoltenberg told a press conference Friday after a meeting of the coalition’s defense ministers in Brussels. Though not explicitly blaming Russia for last year’s apparent Nord Stream sabotage, NATO has warned of a strong response against attacks on allies’ critical maritime assets. “So we know that Russia has the capacity to map, but also potentially to conduct actions against critical infrastructure… This is about gas pipelines, oil pipelines, but not least thousands of kilometers of Internet cables, which is [sic] so critical for our modern societies - for financial transaction, for communications, and this is in the North Sea, in the Baltic Sea, but across the whole Atlantic, the Mediterranean Sea”, Stoltenberg said. Besides pooling government efforts, the center also seeks to boost cooperation with the private sector on safeguarding undersea infrastructure. Most of the infrastructure “is owned and operated by the private sector and they also have a lot of capabilities, to protect, to do repair and so on”, Stoltenberg said. The United Kingdom, which will host the center at the NATO Maritime Command in Northwood, said in a press release, “The center will result in better coordination between allies and with industry to share expertise, creating a NATO-wide picture of the threat and best way to tackle the challenges including best practice and innovative technologies, such as the UK’s two Multi-Role Ocean Surveillance (MROS) ships – the first of which, HMS Proteus, is due to sail shortly”. NATO early this year launched the so-called Critical Undersea Infrastructure Coordination Cell. To rise at NATO’s headquarters in Brussels, the cell will “enable better coordination between key military and civilian stakeholders and with industry, on an issue that is vital to our security”, Hans-Werner Wiermann, former director-general of NATO’s International Military Staff, said in a NATO media release February 15. That announcement said the “Nord Stream sabotage has highlighted the vulnerability of undersea energy pipelines and communication cables”. “In response, NATO Allies have significantly increased their military presence around key infrastructure, including with ships and patrol aircraft”, it added. “In January, NATO and the EU also set up a joint task force to protect critical infrastructure.”
Eastward gas flows resume on Yamal-Europe pipeline -- -Eastward natural gas flows on the Yamal-Europe pipeline to Poland from Germany resumed on Thursday,data from operator Gascade showed.Exit flows at the Mallnow metering point on the German border stood at 802,800 kWh/h between 0300 CET and 0400 CET, from zero in the previous hour, the data showed.
Japans Mitsui says no plans to exit Russias Sakhalin-2 LNG project (Reuters) - Japanese trading house Mitsui & Co has no plans to withdraw from the Sakhalin-2 liquefied natural gas (LNG) project in Russia, a senior executive said on Wednesday, adding the operation was continuing super-chilled fuel exports to Japan. "We have decided last year to keep our stake in the Sakhalin-2 after consulting with the Japanese government as the project supplies about 9% of Japan's LNG imports," Toru Matsui, Mitsui's senior executive managing officer, told an annual general meeting. The National Gas Company of Trinidad and Tobago Limited (NGC) NGC’s HSSE strategy is reflective and supportive of the organisational vision to become a leader in the global energy business. "We have no plan to exit the project at the moment," he said, while adding that Mitsui would make an appropriate change if and when the situation changed because of the Japanese company's policy of complying with any government sanctions. Asked by a shareholder whether Mitsui was under pressure or had received unreasonable requests from the Russian government, Matsui said the project was experiencing no issues with operations and was continuing to export LNG to Japan. Mitsui and its peer Mitsubishi Corp retained their 22.5% combined stakes in Sakhalin-2 after the Kremlin ordered the establishment of a new locally-based operating company in retaliation for Western sanctions imposed on Moscow after it sent troops to Ukraine last year. Their former partner Shell quit Sakhalin-2 as one of the many Western firms that pulled out of Russia after Moscow's invasion of Ukraine. In April, the Russian government approved the sale of Shell's 27.5% stake to local natural gas producer Novatek. Sakhalin-2 is one of the world's largest LNG projects, supplying about 4% of the global market. Russia's Gazprom holds a 50%-plus-one-share stake in the operation.
Beetaloo Station owners lose Supreme Court appeal for fracking compensation - Northern Territory cattle station owners have lost a Supreme Court appeal to receive compensation for future damages from gas exploration in the Beetaloo Basin. The owners of Beetaloo Station — the property from which the gas-rich basin gets its name — argued in court they should receive compensation from gas company Tamboran Resources' subsidiary Sweetpea Petroleum, over its proposal to clear land for seismic testing on the property. Seismic exploration involves clearing corridors of vegetation in a grid format so heavy equipment can survey the geological structure beneath the ground. Justice Peter Barr has upheld a NT Civil and Administrative Tribunal (NTCAT) decision in February 2022 which ruled Beetaloo Station's owners were not entitled to compensation before exploration activity had taken place. The 1.05-million-hectare property, 750 kilometres south-east of Darwin, is owned by billionaire Brett Blundy and the Armstrong family, and is currently on the market, with expectations it could sell for more than $300 million. an aerial photo of road trains lined up next to a set of cattle yards, with yellow grasslands behind. The pastoralist's lawyer told the court that station staff would need to monitor Sweetpea's clearing for weeds, increasing management costs. Justice Barr ruled that compensation to the landholders could only be considered after the exploration activity had taken place. "Damage to land or improvements may be temporary, and one would not normally expect compensation to be assessed until such time as Sweetpea had carried out the rehabilitation and remediation measures required," Justice Barr said in his judgement.
2023 Offshore Exploration Spending to Rise Over 20 Percent: SLB --Offshore oil and gas exploration spending will rise by more than 20 percent in 2023, according to oilfield technology company SLB. SLB CEO Olivier Le Peuch said in a presentation at the J.P. Morgan Energy, Power & Renewables Conference offshore exploration “from shallow to deepwater, is experiencing a broad resurgence”. “Offshore is experiencing a renaissance, with significant breadth and anticipated durability”, Le Peuch said, as quoted in a transcript on the SLB website. “Driven by the imperative of energy security, regionalization, and North American shale supply discipline, operators across the world are looking to hasten discovery to renew supply, accelerate development cycle times, and increase the productivity of their offshore assets.” “Today, offshore is the fastest growing market globally driven by long-cycle developments, production capacity expansions, the return of exploration and appraisal in brownfields, and new frontiers, and the criticality of gas as a long-term fuel for energy security”, Le Peuch continued. SLB said there are currently over 400 active offshore rigs, predicting an increase in the “low to mid-teens” in 2023 and “further double-digit growth” in 2024. The outlook beyond 2024 will continue to be strong, SLB noted. Between 2022 and 2025, the company projects more than $500 billion in global final investment decisions (FIDs) across over 30 countries, with more than $200 billion attributable to deepwater exploration. In total, the expected offshore investment in this period will see a 90 percent jump compared to the period of 2016 to 2019, the presentation said. The resurgence in offshore is supported by infill and tie-back activity accelerating in mature basins such as in Africa; large oil and gas development projects being scaled up in Guyana, Brazil, and the Middle East; and return of exploration and appraisal, notably in new frontier offshore provinces such as Namibia, Tanzania, Colombia, India, and East Mediterranean, Le Peuch said. SLB sees “a long tail of activity with 65 lease rounds concluding globally, in addition to several countries awarding leases through open door policies”, Le Peuch said. Further, 348 subsea trees were awarded in 2022, the most since 2013, and there will be approximately 300 awarded in 2023, according to the presentation.
Iran supply glut could weigh down oil prices, predict experts - An unexpected influx of oil supplies from Iran could help further weigh down prices, with expectations for global consumption constrained by slower growth forecasts in China. Both major benchmarks are down in this evening’s trading, with Brent Crude sliding 1.27 per cent to $75.12 per barrel, while WTI Crude tumbled 2.19 per cent to $70.21 per barrel over the same time period.This follows China’s fuel oil imports dipping last month after hitting a decade high in April, with its retail and factory sectors also struggling to sustain momentum from earlier this year. While OPEC+ has committed to 3.7m barrels per day of output cuts, the gloomy economic data from China, alongside long-standing factors such as hawkish rate hikes from the US Federal Reserve has overpowered their attempts to prop up prices. Iran’s crude production could put even more pressure prices, with the International Energy Agency reporting last week that the country’s output has risen to 2.87m barrels – around three per cent of global supplies. Flows data provider Kpler has further calculated that Iranian crude exports exceeded 1.5m barrels per day (bpd) over the same month, the highest monthly rate since 2018, despite sanctions. Exports had risen to around 2.5m bpd in 2018, before the US withdrawal from the nuclear deal during the Trump administration. Rystad Energy argues that “opaque exports from sanctioned countries” included will “further contribute to supply uncertainty.” “Surprisingly, while expectations suggested a drop in Iranian crude exports, they have remained stronger than anticipated due to Russia’s reduced reliance on the dark fleet tanker market,” the energy specialist argued. Iranian supplies potentially even mitigate expectations of a deficit later this year when demand is expected to rebound. nAs we can see from the price currently and the limited impact of Saudi cuts recently, the market is currently well supplied. While some of this may be priced in, depending on volumes it could push the price lower. That said, there is an expectation that the market could move into deficit later in the year, but again additional Iranian supply could alleviate that.”
Oil prices down on China's economic uncertainties | Al Bawaba – Global oil prices slid more than 1 percent Monday, after significant gains last week, over economic uncertainties in China outweighing oil production cuts. Brent crude was down $0.78 to $75.83 a barrel, Reuters reported. Meanwhile, United States (US) West Texas Intermediate (WTI) crude was down $0.76 to $71.02. Concerns over China’s economic growth surpass the impact of output cuts by members of the Organization of Petroleum Exporting Countries and their allies (OPEC+). It even outweighed production cuts in Canada and the US, with the seventh straight drop in oil and gas rigs operating in the United States. "China's economic uncertainties may have caused the selloff after a two-day rebound in oil markets ahead of The People's Bank of China's (PBOC) decision on its loan prime rates (LPR) this week," Tina Teng, an analyst at CMC Markets, told Reuters. A number of major banks have cut their 2023 gross domestic product growth forecasts for China after May data last week showed China’s post-COVID recovery was faltering.
Oil Prices Fall On Chinese Demand Fears | OilPrice.com -Oil prices fell on Tuesday morning as uncertainty around Chinese oil demand continues to grow - particularly in the near-term. Chinese refiners added some 1.77 million b/d of crude to their inventories in May, equivalent to 53 MMbbls, the most since July 2020, making it unlikely that China would go on a buying spree anytime soon. The inventory build-up stemmed from a period of lower refinery runs in April-May, just as spring maintenance was peaking, taking the aggregate amount of crude in Chinese storage to almost 1 billion barrels. Despite refineries being offline and diesel demand still far from expected levels, oil imports into China hit the third-highest reading on record with 12.11 million b/d as buyers doubled down on Iranian and Russian barrels. Even though Chinese private refiners received 62.3 million tons of volume allotments in the 3rd oil import quotas of 2023, high stocks might temporarily bar them from tapping the market for immediate deliveries. QatarEnergy signed another megadeal with China, this time clinching a 27-year term agreement with China’s CNPC for the purchase of 4 million tons LNG per year once the North Field expansion is online. - US oil producer Civitas Resources announced it is buying oil and gas assets operated by private equity firm NGP Energy Capital Management for $4.7 billion, adding some 100 kboepd in the Delaware and Midland basins. After a rather uneventful start to the week, with the US markets out on Monday, oil prices fell on Tuesday morning. While China's decision to cut its one- and five-year lending rates should help to bolster economic activity, there is growing uncertainty around the country's oil demand. China’s huge build-up in stocks these past weeks and the CNPC’s recent downgrading of Chinese oil demand growth in 2023 poured cold water on immediate expectations of strong demand. Early on Tuesday morning, WTI had fallen below $70 and Brent was trading below $75.
WTI Oil Slides Below $70 in Intraday Trading on Rallying US Dollar -- New York Mercantile Exchange oil futures and Brent crude on the Intercontinental Exchange declined Tuesday, with July West Texas Intermediate pressing below $70 during intraday trade. The decline came amid a strengthening U.S. dollar index after federal data showed a housing market rebound continued for a second straight month in May, with new home construction surging by the most since 2016, suggesting residential construction could be fueling economic growth. The housing market is thought to be the most interest rate sensitive sector of the economy and serve as a "canary in the coalmine" for the rest of the economy when the housing index fell into contraction earlier in the year. However, figures released Tuesday morning by the U.S. Census Bureau show that while existing home sales fell in April and are expected to have again eased in May when new data is released on Thursday, new home construction starts jumped 21.7% month-over-month to a 1.63 million annualized rate compared to median estimates of just 10%. Applications to build, a proxy for future construction, also climbed 5.2% to an annualized rate of 1.49 million units. After the report, the Atlanta Fed GDPNow forecast residential investment will add slightly to the gross domestic product estimates for the second quarter. Homebuilding last contributed to growth in the first quarter of 2021. This might be good news for the economy but not for the Federal Reserve that has tried to pour cold water on the economy with the most aggressive rate hiking campaign in decades. On June 14, the Federal Open Market Committee paused increases in the federal funds rate at a 5% to 5.25% target range but signaled more hikes are needed to slow the red-hot labor market along with aggregate demand. Prospects of higher interest rates in the United States and European Union amid stubborn inflation have diminished buying interest for commodity space in recent weeks. Global crude benchmark Brent has fallen about 11% so far this year despite forecasts for a growing supply deficit following production cuts from OPEC+ and expectations for a post-COVID rebound in China's economy that has faltered. At the recent G7 meeting in Japan, leaders of rich and industrialized nations stressed the importance of "de-risking" commercial ties with China, albeit stopped short of calling for "de-coupling." Chinese authorities in recent weeks stepped up surveillance of foreign firms in connection to data privacy and intellectual property, deterring global business and undermining its own interests. As foreign business leaves China's shores, youth unemployment spiked to a record-high 20.8% in May, highlighting structural issues in China's labor market. Against this backdrop, China's move to cut two key interest rates by a modest 10 basis points fades in comparison to mounting problems the economy is now facing. China's growth has consistently been downgraded throughout this year, with the latest revision coming from Goldman Sachs, which cited turbulence in property markets and high unemployment when cutting its 2023 GDP forecast to 5.4% from 6%. While the investment bank sees further stimulus to come, it notes that the measures will not be enough to overcome the greater problem that it faces: weakened sentiment. NYMEX July West Texas Intermediate futures expired $1.28 lower at $70.50 per barrel (bbl) before sliding to $69.65 per bbl in intrasession low, while next-month August contract settled the session at $71.19 per bbl. International crude benchmark Brent for August delivery declined to $75.90 per bbl, down a modest $0.19 per bbl. NYMEX July ULSD futures dropped back $0.0760 to $2.4754 per gallon, and NYMEX July RBOB futures fell to $2.6092 per gallon, down $0.0713 per gallon.
The Oil Market on Tuesday Sold Off, Giving Up All of Last Week's 2.3% Gain - The oil market on Tuesday sold off, giving up all of last week’s 2.3% gain as the market continues to experience choppy, rangebound trading. The market traded to a high of $72.02 during Monday’s shortened trading session in observance of Juneteenth. It continued to trade mostly sideways when it reopened overnight and rallied to a high of $72.09 on Tuesday morning. However, the market gave up its gains and sold off to a low of $69.65 by mid-morning, ahead of the July contract’s expiration at the close. The market was pressured by forecasts for slower growth of oil demand in China. The oil complex also followed the U.S. stock indexes lower as hawkish comments from U.S. Federal Reserve officials last week kept traders concerned about interest rate increases and its impact to oil demand. The market later retraced some of its losses ahead of the close. The July WTI contract, which posted an outside trading day, went off the board down $1.28 at $70.50, while the August WTI contract settled down 74 cents at $71.19. The August Brent contract settled down 19 cents at $75.90. Meanwhile, the product markets also sold off and settled in negative territory, with the heating oil market settling down 76 points at $2.4754 and the RB market settling down 7.13 cents at $2.6092. Tech Iraqi Kurdish Prime Minister Masrour Barzani arrived in Turkey on Tuesday for talks with President Tayyip Erdogan, including discussion of halted oil exports. Turkey halted Iraq's 450,000 bpd of exports through the northern Iraq-Turkey pipeline on March 25th after an arbitration ruling by the International Chamber of Commerce. A Kurdish official said the visit by the Iraqi Kurdish Prime Minister is aimed at finding ways to accelerate the resumption of those exports. According to Reuters estimates, the Iraqi Kurdish region has lost more than $2.2 billion over the 87 days the pipeline has been shut. A researcher at China National Petroleum Corporation's research arm said China's 2023 crude oil demand is expected to reach 740 million metric tons or 14.86 million bpd, up 3.5% on the year. Wang Lining, head of markets at the Economic & Technology Research Institute said gasoline demand in 2023 will increase 0.8% above 2019 levels, while its diesel demand is seen reaching 98.8% of the 2019 level and kerosene demand is seen reaching about 95% of 2019 levels. China's oil imports from Russia increased to a record high in May, as private refiners continue to import sanctioned ESPO and Urals shipments at discounts. According to data from the General Administration of Customs, arrivals from Russia totaled 9.71 million metric tons in May or 2.29 million bpd. This represented the highest level on record and a 32.4% increase on April's figure of 1.73 million bpd. Phillips 66 reported a unit upset at its 356,000 bpd Wood River, Illinois refinery. Colonial Pipeline Co is allocating space for Cycle 37 on Line 1, its main gasoline line from Houston, Texas to Greensboro, North Carolina. The current allocation is for the pipeline segment north of Collins, Mississippi.
Oil Prices Flat Ahead Of Powell's Brief To Congress Oil prices were flat early on Wednesday as Fed Chair Jerome Powell is set to brief Congress on the U.S. economy today and tomorrow. As of 7:57 a.m. ET on Wednesday, the U.S. benchmark, WTI Crude, was up 0.01% at $71.16, and the international benchmark, Brent Crude, traded at $75.83, slightly down by 0.04% on the day. Prices have been seesawing today as the market expects Powell to give a detailed rationale of last week’s Fed decision to hold interest rates unchanged after 10 consecutive Fed meetings that ended with rate hikes. Powell’s comments on the U.S. economy will be closely watched by the market on Wednesday afternoon and on Thursday for clues about the chances of the U.S. managing a soft landing after the recent rate hikes. In Europe, inflation in the UK continues to be high, with May inflation stuck at an annual 8.7%, flat compared to April and higher than expectations. The lack of easing of the consumer price pressure could give the Bank of England more reasons to raise the key UK interest rate again when it meets on Thursday. “Countries are struggling to rein in inflation – the UK this morning a prime example of that – and that’s going to dampen growth and threaten recessions across the globe,” “There are so many moving parts at this stage but at this point in time, there’s more negative than positive as far as the crude price is concerned,” Erlam added. Observed higher supply from Iran is undermining the Saudi efforts “to desperately manipulate prices higher with production cuts,” the analyst also noted. China’s much-awaited economic stimulus has also been underwhelming, further weighing on oil prices and the prospects of oil demand, analysts say. “China’s demand outlook is crucial for the global market, given that the bulk of global demand growth this year is expected to be driven by China. Significantly weaker Chinese demand would also mean that the global oil balance would not be as tight as currently expected over the second half of 2023,”
Oil Pushes Higher as US Dollar Nosedives on Powell's Testimony -- New York Mercantile Exchange oil futures and Brent crude traded on the Intercontinental Exchange powered higher in the afternoon session Wednesday. The gains came as investors parsed through comments from Federal Reserve Chairman Jerome Powell to the House Financial Services Committee amid concerns over the impact of tighter monetary policy on oil demand. U.S. dollar index fell 0.44% against global peers to finish the session at a 101.676 six-week low after Powell assured lawmakers on Capitol Hill that pausing rate increases at the June 14 Federal Open Market Committee meeting is nevertheless consistent with lifting them later this year depending on incoming inflation data. Investors judged the comments could signal that the central bank is still data dependent and could pause rates altogether should the data warrant such a move. .. The Fed last week left the federal funds rate unchanged in a 5% to 5.25% target range but indicated that more rate hikes are likely needed before the end of the year to cool excessive demand. Government figures released Tuesday showed new home construction starts jumped 21.7% month-over-month to a 1.63 million annualized rate, while applications to build, a proxy for future construction, also climbed 5.2% to an annualized rate of 1.49 million units. After the report, the Atlanta Fed GDPNow forecast residential investment would add slightly to U.S. gross domestic product estimates for the second quarter. Homebuilding last contributed to growth in the first quarter of 2021. Also Wednesday afternoon, oil traders positioned ahead of the weekly release of inventory data from the American Petroleum Institute scheduled for 4:30 p.m. EDT, delayed one day due to observance of the Juneteenth holiday in the United States. The U.S. Energy Information Administration will release official inventory data 11 a.m. EDT Thursday. On the session, NYMEX August West Texas Intermediate futures advanced to $72.53 per bbl, up $1.34, and international crude benchmark Brent for August delivery gained to $77.12 per bbl. NYMEX July ULSD futures rallied $0.0888 to $2.5642 per gallon, and NYMEX July RBOB futures gained $0.0149 to $2.6241 per gallon.
Oil rallies as grain markets tighten, dollar falls on Fed Chair comments - Oil prices gained a dollar a barrel on Wednesday as U.S. corn and soybean prices raced to multi-month highs, raising expectations that crop shortfalls around the globe could lower biofuels blending and increase oil demand. Brent futures rose $1.22, or 1.6%, to settle at $77.12 a barrel, while the U.S. West Texas Intermediate (WTI) crude futures rose $1.34, or 1.9%, to settle at $72.53 a barrel. Both contracts hit two-week highs earlier in the session. Chicago Board of Trade corn futures rose 5.2% on Wednesday after a government report showed much of the U.S. crop being stressed by dry conditions as it neared key development phases, traders said. CBOT November soybeans hit their highest since March 9. "The grain markets are starting to wake up to the fact that inventories are low and it'll only be a matter of time before the oil market wakes up to that fact," Also supporting oil prices, the U.S. dollar fell against a basket of global currencies on Wednesday after Federal Reserve Chair Jerome Powell suggested that the central bank is nearing its policy destination. A cheaper greenback makes dollar-denominated oil more attractive for investors holding other currencies, raising demand. Meanwhile, some analysts polled by Reuters said they expected U.S. crude oil and product inventories to have declined last week, indicating stronger demand. However, an expanded poll now predicts a small build in crude oil stockpiles. Oil price gains were capped after data showed on Wednesday that British inflation defied expectations of a slowdown. The rate held at 8.7% in May, boosting expectations the Bank of England will raise interest rates by a hefty half a percentage point on Thursday. "Countries are struggling to rein in inflation ... and that's going to dampen growth and threaten recessions across the globe,"
WTI Extends Losses After Biden Admin Drains SPR For 12th Straight Week -- Oil pries are tumbling back to earth today after some early week exuberance as a cavalcade of hawkish central bank action and FedSpeakAs Bloomberg reports, de-stocking is the main reason why the physical crude market isn’t reflecting the significant draws to come in the third quarter, Energy Aspects said in a note.“Stocks are drawing, but due to rising cost of capital, refiners want to hold less inventory than before and so are not bidding for crude in earnest yet,” they said.The market will tighten in 2H, with or without the extra OPEC cuts.The question is - will stocks continue to rise at Cushing, and will recent product builds continue to point to demand ebbing? DOE
- Crude -3.83mm (-4.31mm exp)
- Cushing -98k
- Gasoline +479k
- Distillates +434k
Small product builds and a tiny drop in stocks at Cushing (the first in 9 weeks) combined with a smaller than expected crude draw do not help bullish sentiment... Of course, it's all bullshit since the adjustment factor remains extremely high... Despite ongoing chatter about 'refilling' the SPR, the Biden admin drained crude for the 12th straight week (-1.719mm barrels). Added to the commercial draw,m that is the biggest overall drop in US inventories in 4 weeks...
Oil Futures Plummet on Global Monetary Policy Actions -West Texas Intermediate tumbled more than 4% to its lowest close in a week as risk-off sentiment in wider markets overshadowed data showing a drop in US crude inventories. US crude inventories declined by about 4 million barrels last week, government date showed, but it was still not enough to counteract the negative mood, traders said. Federal Reserve Chair Jerome Powell’s comments Wednesday that further rate increases were likely warranted to quell inflation were followed by rate hikes Thursday in England and Norway. The global tightening heightened investor concerns that the quest to slow inflation could result in an economic slowdown as consumers pull back on spending in a high interest rate environment. “The continued central bank tilt toward a more hawkish monetary policy stance, growing demand concerns amid Chinese weakness and signs the US economy may soon record negative growth numbers has prompted {commodity trading advisors,} other systematic funds and discretionary traders to convincingly reduce length,” Bart Melek, global head of commodity strategy at TD Securities, said in a note. The price collapse also extended to timespreads. Brent crude’s prompt spread slumped to the weakest since late May, signaling robust supplies in the short term. Prices have been largely rangebound since early May as pressure from higher interest rates and robust supplies vie with efforts by OPEC+ to support crude. Traders are now keenly focused on the outlook for the second half of the year, which could be tight even with sluggish Chinese growth, according to the International Energy Agency. “The current negativity may very well be based on fears of the worst-case scenario, rather than the likely facts on the ground for the balance of the year,” Melek said. TD Securities still expects US crude futures to approach $90 a barrel in the latter part of the year, he said. WTI for August delivery declined 4.2% to settle at $69.51 a barrel at 1:40 p.m. in New York. Brent for August settlement fell 3.9% to settle at $74.14 a barrel.
Oil Prices Fall On Fuel Demand Concerns --Oil prices fell more than 1 percent on Thursday as inflation and interest-rate worries returned to the fore, raising concerns about the outlook for fuel demand. Benchmark Brent crude futures fell 1.4 percent to $76.06 a barrel, while WTI crude futures were down 1.3 percent at $71.56.After Federal Reserve Chair Jerome Powell signaled more interest rate hikes to tame inflation, investors in the Treasury bond market are betting that additional rate hikes will drive the U.S. economy into recession. Elsewhere in Europe, some European Central Bank (ECB) policymakers said on Wednesday that euro zone inflation is stubborn and may require a protracted period of high interest rates.Earlier today, the Swiss National Bank continued its policy tightening with yet another hike to its interest rates and said more such moves are likely to counter rising inflationary pressure. The Norges Bank also turned hawkish and raised its benchmark interest rate by 50 bps to a 15-year high.Traders are divided over the possibility of a big interest rate move by the Bank of England later in the day after inflation data came in higher than expected.On the positive side, inventory data from the American Petroleum Institute showed that U.S. crude oil inventories fell by about 1.2 million barrels in the week ended June 16, defying forecasts for a build.
Oil Plunges 4% on Hawkish Central Banks, USD Gains -- New York Mercantile Exchange oil futures and Brent crude traded on the Intercontinental Exchange settled Thursday's session with steep losses, with the international crude benchmark pressured below $75 bbl after the Bank of England and Norwegian Central Bank among others sharply raised interest rates to fight relentless inflation, signaling central banks are not seeing sufficient progress in slowing rising consumer prices. The United Kingdom, the world's sixth largest economy, is largely seen in recession this year after BOE shocked markets with another 50-basis point rate hike on Thursday, a further blow to homeowners struggling with skyrocketing mortgages. "We took this decision today because unfortunately inflation is still way too high. Recent data have shown us that further decisive action is needed. Many people with mortgages and loans are now rightfully worried about what it means for them. But if we don't raise rates right now, higher inflation will stay with us for longer," said BOE Governor Andrew Bailey. Inflation in the UK remained stuck last month at 8.7%, with prices paid for recreation and cultural activities rising at a faster pace than in April and, although food inflation eased, it remained in a double-digit vicinity at more than 18%. . What's more, inflation in the United States appears to have infected the labor market and wage-setting to a greater extent than elsewhere, with average earnings rising at a faster pace over the past three months even as payrolls are falling. This doesn't bode well for other central banks that are struggling with second-round effects of rising consumer prices in the service sector and high energy costs in Europe. Norway's central bank and Swiss National Bank also raised interest rates on Thursday while signaling more tightening is needed to bring inflation under control. Against this background, Federal Reserve Chairman Jerome Powell concluded the second day of Congressional testimony on Thursday where he reiterated that the central bank is aiming for a higher terminal rate at the end of the current tightening cycle, albeit, ready to go slower than in prior months. Powell reiterated that the pace and the extent of rate increases are two separate variables for the central bank that continues to be data-dependent in setting rate policy. Separately, the weekly U.S. inventory report released by the U.S. Energy Information Administration late morning was mixed-to-bearish, showing refined fuel stocks jumped even as refiners pulled back on runs. U.S. refiners scaled back run rates for the second straight week through June 16 to 93.1% of capacity, down 0.6% from the prior week. U.S. refiners processed 16.5 million bpd of crude oil, which was 116,000 bpd less than the previous week. In the gasoline complex, commercial inventories rose by 479,000 bbl to 221.4 million bbl compared with analyst expectations for a 500,000 bbl decrease. Demand for gasoline gained 182,000 bpd to 9.379 million bpd, bringing the four-week average consumption rate to 9.2 million bpd, up 3.1% from the same period last year. Diesel stockpiles, meanwhile, built by 434,000 bbl to 114.3 million bbl, and are now about 15% below the five-year average, the EIA said. Analysts expected distillate inventories rose 600,000 bbl last week. At settlement, NYMEX August West Texas Intermediate futures declined to $69.51 bbl, down $3.02 on the session, and international crude benchmark Brent for August delivery retreated $2.98 to $74.14 bbl. NYMEX July ULSD futures pulled back $0.0987 to $2.4655 gallon and NYMEX July RBOB futures dropped $0.0740 to $2.5501 gallon.
Oil tumbles 4%, with U.S. crude below $70, as BoE shocks markets By Investing.com The weekly reading on supply-demand for U.S. oil came on the positive side Thursday. But crude prices tumbled 4% instead, with New York-traded West Texas Intermediate, or WTI, breaking below the key $ 70-per-barrel support as traders reacted more to the sticker shock of the latest Bank of England rate hike that stunned global markets. The BoE raised interest rates by half a percentage point — twice more than forecast — saying it needed to act against "significant" indicators that British inflation would take longer to fall. U.K.’s main interest rate is now at 5%, the highest since 2008 after the largest rate increase since February. The U.K. central bank has raised rates for 13 consecutive times to trail just behind the Federal Reserve, which has brought U.S. rates to a peak of 5.25% with 10 straight rounds of tightening. Fed Chair Jay Powell, testifying before the Senate on Thursday, reinforced expectations that the U.S. central bank will hike rates at least twice more this year. “It’s bad macro versus good data,” John Kilduff, partner at New York energy hedge fund Again Capital said, referring to the market reaction to surging rates that usurped any feel-good impact from the positive weekly reading on oil inventories from the U.S. Energy Information Administration, or EIA. Ed Moya, analyst at online trading platform OANDA, concurred, saying: “Oil prices are going to remain heavy as central bank tightening will kill the global growth outlook." WTI settled down $3.02, or 4.2%, at $69.51 per barrel, overwriting Wednesday’s near 3% rally. The U.S. crude benchmark has had a volatile month, finishing last week up 2.3% after a net 3.5% tumble over two prior weeks. London-traded Brent settled down $2.98, or 3.9%, at $74.14, versus Wednesday’s gain of 1.6%. Like WTI, the global crude benchmark has had a rocky June, finishing last week up 2.4%, after a net slump of nearly 2% over two previous weeks. The U.S. crude inventory balance fell by 3.831 million barrels during the week ended June 16, the EIA said in its Weekly Petroleum Status Report as market participants tried to discern demand in what is typically the busiest time of the year for travel. Industry analysts polled by Investing.com had only expected a build of 1.873M barrels in the latest week. In the previous week to June 9, crude stockpiles rose by 7.919M barrels. The crude build reported by the EIA, however, came with a usual caveat: The release of 1.7M from the U.S. Strategic Petroleum Reserve, without which the inventory drop would logically have been 5.5M. Highest weekly demand for fuels since December; Crude exports up 40% On the gasoline inventory side, the EIA reported a build of 0.479M barrels. Analysts had expected the agency to cite a build of 1.091M barrels instead, after the previous week’s rise of 2.108M barrels. Automotive fuel gasoline is the No. 1 U.S. fuel product. In the case of distillate stockpiles, the EIA reported a build of 0.433M barrels. Analysts had forecast a draw of just 1,000 barrels last week, against a previous build of 2.123M. Distillates are refined into heating oil, diesel for trucks, buses, trains and ships, and fuel for jets. The latest weekly EIA reading for total fuel products supplied to the market was 20.925M barrels versus 20.408M the prior week. That, based on historical data maintained by the agency, was the highest since December. U.S. crude exports also surged during the week, rising to 4.543M barrels, or almost 40% above the previous week’s tally of 3.27M
The Impact of a Larger Than Expected Rate Hike by the Bank of England Outweighed a Larger Than Expected Draw in Crude Stocks - The oil market fell over 4% on Thursday as concerns over the impact of a larger than expected rate hike by the Bank of England outweighed a larger than expected draw in crude stocks. The market opened down 10 cents at $72.43 and posted a high of $72.65 in overnight trading. However, the market erased its previous gains and sold off sharply as the Bank of England raised interest rates by half a percentage point. The oil market was further pressured as Federal Reserve Chair, Jerome Powell, said two more U.S. interest rate hikes of 25 basis points each by the end of the year was “a pretty good guess.” The market extended its losses to $3.60 as it sold off to a low of $68.93 despite the EIA report showing a draw in crude stocks of close to 4 million barrels. The market later retraced some of its losses ahead of the close, with the August WTI contract settling down $3.02 at $69.51. The August Brent contract settled down $2.98 at $74.14. The product markets settled sharply lower, with the heating oil market settling down 9.87 cents at $2.4655 and the RB market settling down 7.4 cents at $2.5501. The EIA reported that U.S. crude oil output fell by 200,000 bpd to 12.2 million bpd last week, the largest decline since September 2021. It reported that U.S. crude stocks in the SPR fell by 1.7 million barrels in the latest week to 350 million barrels, the lowest level since August 1983.A Refinitiv analyst said European diesel imports in June look set to reach 6.02 million metric tons and are likely to exceed May’s total imports of 6.1 million tons. Diesel exports from Asia and the Middle East to Europe are expected to increase in July and August as refining margins in Europe continue to strengthen. According to the latest survey of energy executives by the Federal Reserve Bank of Dallas, oilfield activity slowed further this quarter, with declines in oil production and gas output indices. The overall business activity index fell to zero in the second quarter from 2.1 in the previous quarter. U.S. oilfield executives polled this quarter expect crude oil and natural gas prices to continue rising through the end of this year. A survey of energy executives at 152 firms found they expect U.S. crude oil prices to reach by year-end about $77/barrel and natural gas at $2.97/mmBtu.In his second day of hearings before the U.S. Congress, Federal Reserve Chair, Jerome Powell, defended the likely need for further interest rate increases despite the possible impact on jobs. He said the test for the Federal Reserve interest rate cuts down the road is confidence that inflation is moving lower and any reduction will need to wait until policymakers are confident inflation is moving down to the central bank’s 2% target. He said the central bank would move interest rates at a “careful pace”. Valero’s 195,000 bpd McKee, Texas refinery reported emissions from a fluid catalytic cracking unit stack vent on Wednesday. Marathon Petroleum Corp reported unplanned flaring due to mechanical/electrical malfunction at its Wilmington, California refinery.Exxon Mobil Corp reported emissions at its 564,440 bpd Baytown, Texas refinery on Wednesday. It said an unplanned opening of a feed valve to pipestill 8 resulted in a unit upset at the refinery.A fire was extinguished at Pemex’s Dos Bocas refinery in Mexico.
Oil prices rise with heightened demand hopes in China --Oil prices increased on Friday with optimism surrounding an increase in energy demand in China and the weaker dollar index. International benchmark Brent crude traded at $75.80 per barrel at 9.54 a.m. local time (0654 GMT), a 0.17% rise from the closing price of $75.67 a barrel in the previous trading session on Wednesday. The American benchmark West Texas Intermediate (WTI) traded at the same time at $70.70 per barrel, up 0.11% from the previous session's close of $70.62 per barrel. The expectation of a Chinese economic recovery, which some market participants predict would drive crude demand to record highs, was further buoyed by a series of interest rate reductions this week. Also, China's oil refinery production reached record high levels with an increase of 15.4% in May compared to the same month last year. Analysts expect oil demand in the world's largest crude oil importer to continue to increase in the second half of the year. Such positive economic growth statistics are fueling expectations of a spike in Chinese demand. The US dollar index, which measures the value of the American dollar against a basket of currencies, including the Japanese yen, British pound, Canadian dollar, Swedish krona and Swiss franc, fell 0.05% to 101.668 early Friday. This declining dollar is reflected in cheaper dollar-indexed crude for buyers holding other currencies, encouraging more trade and ultimately pushing prices higher. Meanwhile, the possibility of further interest rate increases later in the year by the US Federal Reserve and other global central banks continues to weigh on oil prices.
Oil Posts Weekly Losses on Global Manufacturing Slowdown -- New York Mercantile Exchange oil futures and Brent crude traded on the Intercontinental Exchange settled Friday's session lower, with all petroleum contracts registering steep weekly losses. The declines came amid a one-two punch of continued increases in interest rates by hawkish central banks in their fight against sticky inflation and a sharp slowdown in manufacturing activity in the United States and European Union among other major economies. Friday's macroeconomic data out of the U.S. and EU revealed manufacturing activity across the two sides of the Atlantic fell into deeper recession this month. In Germany, the EU's largest economy, manufacturing PMI plummeted to a 37-month low at 41, with the broader economy losing considerable momentum at the end of the second quarter. "In manufacturing, all signs point to a contraction in the second quarter, while a slowdown in growth is also evident in the services sector," commented Dr. Cyrus de la Rubia, chief economist at Hamburg Commercial Bank, on the reading. The slowdown doesn't bode well for distillate fuel demand that is mostly used in industrial production, agriculture, and long-haul trucking. Domestically, the economy still holds to its post-pandemic momentum in the services sector, but manufacturing industries suffer from insufficient consumer demand and a high interest rate environment. Manufacturing PMI in the U.S. slid this month to 46.9, the lowest index since January, with a reading of 50 separating growth from contraction. "The overall rate of expansion of business activity in the U.S. remained robust in June, consistent with GDP rising at a rate of 1.7% to put second-quarter growth in the region of 2%," commented Chris Williamson, chief business economist at S&P Global Market Intelligence. Against this backdrop, central banks in the United Kingdom, Norway and Switzerland hiked interest rates by a larger-than-expected margin this week, citing insufficient progress in slowing a relentless rise in consumer prices. "We took this decision [in raising interest rates] today because unfortunately, inflation is still way too high. Many people with mortgages and loans are now rightfully worried about what it means for them. But if we don't raise interest rates right now, higher inflation will stay with us for longer," said Bank of England Governor Andrew Bailey in a news conference Thursday following BOE's decision to lift rates by another 50-basis points. Inflation in the United Kingdom appears to have infected the labor market and wage-setting to a greater extent than elsewhere, with average earnings rising at a faster pace over the past three months even as payrolls are falling. This economic phenomenon, sometimes called stagflation, led to a protracted recession and price volatility across Western economies in the 1970s. At settlement, NYMEX August West Texas Intermediate futures declined to $69.16 per barrel (bbl), down $0.35, and international crude benchmark Brent for August delivery slipped $0.29 to $73.85 per bbl. NYMEX July ULSD futures pulled back $0.0584 to $2.4071 per gallon, and NYMEX July RBOB futures dropped $0.0329 to $2.5172 per gallon.
Middle East Oil Prices Soar Amid Chinese Trading Frenzy - At a time when global recession concerns have depressed global oil prices to pre-Ukraine war levels, prices of Middle Eastern oil have skyrocketed on soaring demand from Asian refiners in China to Japan as the market takes stock of heavy trading by the industry’s biggest names this month. According to Bloomberg, spot differentials for August-loading Oman crude have jumped to more than $2 a barrel against the Dubai benchmark as of Wednesday, compared with 60-70 cents last week; premiums for Abu Dhabi’s Murban grade also rose - it’s rare for spot differentials to move more than 10-to-20 cents a barrel between days and deals. The soaring regional prices have been underpinned by Asian refiners snapping up barrels over the past couple of days, including China’s Rongsheng Petrochemical, Taiwan’s Formosa Petrochemical and processors in Japan and Thailand, according to traders. A surge in activity on a normally sedate Middle Eastern crude-trading window has also sparked the interest of market participants. For those asking where is all that pent up oil demand out of a post-covid China, here is your answer: Unipec - a unit of China’s top refiner Sinopec - TotalEnergies SE and Shell Plc have been going head-to-head with aggressive bids and offers of Dubai crude partial contracts on the so-called Platts trading window this month, an activity that goes into pricing a benchmark of the same name. As Bloomberg explains, cargoes of crude including Oman, Murban and other Middle Eastern grades can be delivered from seller to buyer following the transaction of a set number of Dubai partials. Shipments are typically 500,000 barrels and Oman is one of the easiest to handle due to its high export volume and large pool of buyers and sellers. So far this month, almost 40 Oman cargoes and two Upper Zakum shipments from the United Arab Emirates have been delivered, according to data compiled by Bloomberg, which is the most activity seen on the Platts window in years. However, the number of Oman shipments equates to almost 70% of the grade’s exported volume in recent months. That’s led traders to consider whether sellers on the Platts window such as Unipec may curtail offers should physical cargoes become scarce. These concerns have contributed to a rise in prices, and may give room for more increases if sellers find it hard to get their hands on window-deliverable cargoes. The sharp increase in sentiment (and price) is a dramatic turnaround from earlier in the month when traders were unsure about the market’s direction following contrasting trading on the window. Companies may also actively buy and sell on the window due to associated positions in Brent and Dubai paper markets. The backwardation in prompt Dubai swaps also strengthened to the widest in six weeks Wednesday, while the premium of London’s Brent to the Middle Eastern benchmark — also known as Brent-Dubai EFS — was narrow at under $1 a barrel. Earlier this month, Saudi Arabia surprised the market with additional output cuts that were followed by a spike in official prices to all regions. Bloomberg notes that last month cargoes of Oman, Upper Zakum and Murban crude for July loading were transacted for Europe and the US, shipments considered unusual, as Asian demand was soft at the time but that has since reversed notably. A US major sold Murban into the US west coast, traders said, while a trading company supplied Upper Zakum to Italy. Western buyers considered spot Middle Eastern crude as affordable due to muted demand from Asia, where many refiners were undergoing seasonally planned maintenance work on plants, according to traders. It now appears that China is fully back in the market.
China Stimulus Fails To Spark A Commodity Price Rally -- Major commodities remained unimpressed by the latest Chinese move to prop up its slowing economic recovery, with crude oil prices rising on Wednesday but returning to losses early on Thursday.On Tuesday, China cut its key lending rates, for the first time in 10 months. China’s one-year loan prime rate (LPR) and the five-year LPR were both lowered by 10 basis points, as the world’s second-largest economy and top crude oil importer looks to bolster the post-lockdown economy showing signs of slower growth this quarter.However, the monetary stimulus was seen as insufficient by the markets, a sentiment reflected in the price of key commodities, including crude oil, copper, and iron ore.Crude oil futures rose on Wednesday as the U.S. dollar declined. Brent Crude prices settled at $77.12, the highest finish in almost a month.“WTI crude prices are finally stabilizing above the $70 level as energy traders anticipate the start of summer should keep demand steady over the next few months. Oil got a boost from a weaker dollar and optimism that the economy will remain strong throughout the summer,” “Oil was getting near the bottom of its recent trading range and it could continue rebounding if the headlines for China remain upbeat.”In early Asia trade on Thursday, Brent was falling again to below $77, as was the U.S. benchmark WTI Crude, which traded at just above $72 per barrel.“The somewhat surprising return of an upward momentum in the previous trading session appeared to have been exhausted, opening the door to some profit-taking selling,” Vanda Insights said in a Thursday note.Copper prices rose following the Chinese monetary easing and amid signs of a tighter copper market in China. The Shanghai copper futures settled at a two-month high of 68,930 yuan ($9,582) per metric ton, Reuters columnist Clyde Russell noted.Iron ore prices, however, declined as traders and analysts believe that the Chinese stimulus so far will not be enough to boost the property sector in China.
Saudi Arabia Signals Openness to Naval Alliance With Iran - Saudi Foreign Minister Prince Faisal bin Farhan met with his Iranian counterpart in Tehran on Saturday and signaled Riyadh is open to a naval alliance with Tehran, an idea recently put forward by Iran’s navy chief.“I would like to point out the importance of cooperation between our two countries concerning the regional security, especially the security of maritime navigation and waterways,” Prince Faisal said at a joint press conference with Iranian Foreign Minister Hossein Amir-Abdollahian.Iranian Navy Commander Shahram Irani said earlier this month that Iran was working to form a naval alliance with regional countries, including Saudi Arabia, the UAE, Bahrain, Qatar, and Iraq. The potential maritime coalition goes against US and Israeli plans for the region, which involve forming an anti-Iran alliance between Israel and Gulf Arab states.Amir-Abdollahian said Saturday that the two foreign ministers discussed increasing cooperation in all areas, including security. He stressed Iran’s view that “regional security will be ensured by regional actors only” without external interference, a clear reference to the US.The increased cooperation between Iran and Saudi Arabia comes after a China-brokered deal that saw the two nations normalize diplomatic relations, which were suspended since 2016. “Our relations are based on a clear foundation of full and mutual respect for independence, sovereignty, and non-interference in internal affairs,” Prince Faisal said.
Western Official Says US Goal in Deal With Iran Is to Avoid Israeli Attack - An unnamed Western official speaking to Reuters said one of the US’s main objectives in recently engaging with Iran and reaching some sort of agreement on its nuclear program is to prevent an Israeli attack on the Islamic Republic.“If (the) Iranians miscalculate, the potential for a strong Israeli response is something that we want to avoid,” the official said.So far, the US has denied that any deal with Iran is in the works. But Iran has confirmed indirect negotiations have recently taken place in Oman, and a deluge of media reports have said an agreement between the two sides is close.The Reuters report said the US wants to portray the potential deal as an “understanding” rather than an agreement that would need congressional approval. The majority of Congress is very hawkish on Iran and would likely oppose any formal deal.A potential understanding that’s on the table would involve Iran either ceasing 60% uranium enrichment or vowing not to go above that level in exchange for access to frozen funds or more general sanctions relief. The US is also looking to secure the release of Americans detained in Tehran.While Israel is always sounding the alarm about Iran’s nuclear program, it’s opposed to agreements that would restrict Tehran’s uranium enrichment. Israeli Prime Minister Benjamin Netanyahu said Sunday that Israel is opposed to any “mini agreement” between the US and Iran.Despite Israel’s claims, there’s no sign Iran wants to build a nuclear weapon, and it has never enriched uranium at the 90% level needed for weapons-grade. Iran has also been very cooperative with the International Atomic Energy Agency (IAEA) recently, unlike Israel, which has a secret nuclear weapons program and is not a signatory to the Non-Proliferation Treaty.
West Bank Settlers Rampage In Palestinian Villages, Killing 1 And Injuring Dozens - One Palestinian is dead and dozens injured after Jewish settlers went on fiery rampages in several West Bank villages, with Israeli security forces reportedly siding with the assailants and thwarting Palestinian attempts to defend themselves and their property. The attacks were said to be acts of vengeance for the killing of four settlers by Palestinian gunmen. However, those gunman had already been shot to death shortly after they carried out their attack at a roadside restaurant near the Eli settlement. That incident, in turn, followed major Israeli military attacks on the Jenin refugee camp that have killed at least seven including two children. In an escalation not seen in the occupied West Bank since 2006, Israel used helicopter gunships, followed by a drone strike that killed three on Wednesday. Lafi Adeeb, mayor of Turmusaya, told Middle East Eye that hundreds of Jews descended upon her town in a midday onslaught, setting fire to some 30 houses and 60 vehicles as well as agricultural land. “This is genocide, this is a war against us," said Adeeb. "Settlers carrying weapons and canisters full of fuel attack our small village and set fire to houses over the heads of their inhabitants.”
UN Chief Ripped for Leaving Israel Off Child-Killing 'List of Shame' --Human rights defenders on Thursday condemned United Nations Secretary-General António Guterres' omission of Israel from a "list of shame" of countries that kill and injure children during wars and other armed conflict.The Secretary-General Office's annual Children and Armed Conflictreport—which is likely to be released publicly on June 30, according to one U.N. official—reportedly leaves Israel off the list of grave violators who harm children, despite Israeli forces' killing and wounding over 1,000 Palestinian minors over the past two years. The report states that 42 Palestinian children were killed and 933 others wounded by Israeli forces in 2022 alone.Yet, according to one journalist who saw the report, Guterres noted "a meaningful decrease in the number of children killed by Israeli forces, including by airstrikes," in 2022.That's because Israel conducted a major bombing campaign against Gaza in 2021 in which 67 children were among the 256 Palestinians killed. The report says Israeli forces killed a total of 78 children in 2021.Guterres did say that "I remain deeply concerned by the number of children killed and maimed by Israeli forces" and by Israel's "use of live ammunition during law enforcement operations" as well "the persistent lack of accountability for these violations."Noting that 2022 was the deadliest year for Palestinian children in the West Bank in 15 years, Jo Becker, advocacy director for children at Human Rights Watch, said Guterres' "unwillingness year after year to hold Israeli forces accountable for their grave violations against children has backfired, only emboldening Israeli forces to use unlawful lethal force against Palestinian children.""From 2015-2020, the U.N. attributed over 6,700 child casualties to Israeli forces. He has just verified 975 more in 2022. Yet he still omits Israel from his 'list of shame,'" Becker tweeted.Criticism of the Children in Armed Conflict report comes after seven Palestinians including two children—Ahmed Youssef Saqr and Sadeel Ghassan Naghniyeh Turkman, both 15 years old—died during and after a Monday raid by Israeli troops on the Jenin refugee camp in the illegally occupied West Bank. Turkman, who was shot in the head while recording the raid, succumbed to her injuries on Wednesday.Another Palestinian child, 15-year-old Ashraf Morad Mahmoud Al-Sa'di, was killed Wednesday in an Israeli drone strike on a vehicle in which he was traveling north of Jenin, according to the charity Defense for Children International-Palestine.Palestinian journalist Leila Warah discussed the youths' killings in a video for Mondoweiss:
Syria and the Arab League: The Reunification of the Arab Family -- On June 20, 2023, the Valdai Club held an expert discussion, titled “Syria: Halfway Home,” dedicated to the country’s return to the Arab League after twelve years. The moderator of the discussion, Andrey Sushentsov, programme director of the Valdai Club, noted that the decision taken in May by the Arab League Council to resume Syria’s suspended membership in the organisation looks like a significant diplomatic victory for Damascus.Bashar al-Jaafari, Ambassador Extraordinary and Plenipotentiary of the Syrian Arab Republic to the Russian Federation, stressed that Syria has never completely left the Arab League and now it is only concerned with resuming its activities in the organisation. Expressing gratitude to Russia for the assistance it provided to the Syrian Arab Republic from the very beginning of the crisis, the ambassador called Russian-Syrian relations an example of partnership and brotherhood. Ramzy Ezzeldin Ramzy, UN Deputy Special Envoy for Syria (2014-2019), added that no one in the Arab world believed that Syria had truly abandoned the Arab family. He noted with joy that the issue had finally been resolved and expressed his hope that in the future, the Arab League would not try to ostracize any of its members. Analysing the role of the Arab states in resolving the crisis, the diplomat pointed out that for a long time they had tried to distance themselves from this process, but gradually realized that the situation should not be left to chance. Their priorities now, according to Ramzy, include the return of refugees, the fight against terrorism and the reconstruction of the country.Maria Khodynskaya-Golenishcheva, Professor at the Department of Applied Analysis of International Problems of the Moscow State Institute of International Relations (MGIMO University) and Deputy Director of the Foreign Policy Planning Department of the Russian Foreign Ministry, called the return of Syria to the Arab League a big event, including from the standpoint of geopolitics. In her opinion, what is happening illustrates centripetal tendencies within the Arab community, and within the framework of the civilizational approach adopted in the updated Foreign Policy Concept of Russia. Centripetal tendencies within civilizational communities are a positive factor from the point of view of the prospects for the formation of a global world order. The more consolidated civilizational communities are, the more opportunities they will have to speak with one voice and express the aspirations of their peoples, and the more significant their contribution to the formation of a multipolar system will be, Khodynskaya-Golenishcheva believes. Igor Matveev, senior researcher at the Institute of Oriental Studies of the Russian Academy of Sciences, considers what is happening to be the return of historical justice. “The Syrian people have shown resilience,” the expert believes. “It was primarily because of that resilience that what happened, happened.” He considers the stalwart and consistent defence of the interests of the country to be an important element. In the context of the normalisation of Syria's relations with its neighbours, Matveev pointed to the increasing talk of creating a regional platform for the reconstruction of Syria, and this platform should not necessarily be limited to the Arab world.
