US oil prices rose for the second time in the past five weeks on a series of stronger than expected economic reports and on the 2nd largest drop in US crude supplies since Thanksgiving… after falling 3.9% to $69.16 a barrel last week on weak European economic data and after central banks in the UK and across the EU raised interest rates, the contract price for the benchmark US light sweet crude for August delivery rose in Asian trading on Monday in the wake of an aborted revolt by Russian mercenaries over the weekend, on concerns over further disruption of the global oil supply chain, but then see-sawed through the New York session as traders weighed concerns about global demand growth against potential supply disruptions that could be exacerbated by political instability in Russia before settling 21 cents higher at $69.37 a barrel as a weaker dollar supported prices after the market shrugged off the short-lived rebellion inside Russia ...oil prices extended their gains to over $70 early Tuesday as commodities and stocks in Asia were swept up in optimism around the potential for Chinese stimulus measures, but erased those gains and sold off to $67.73 in early New York trading after European Central Bank President Christine Lagarde said that high inflation would require the bank to forgo declaring an end to rate hikes and settled $1.67 or 2.4% lower at $67.70 a barrel on worries that central banks might not be done with interest rate hikes....however, oil prices moved higher overnight following an inventory report from the American Petroleum Institute showing U.S. commercial crude and gasoline stockpiles fell by a larger-than-expected margin during the week ended June 23, and gained further support from reports that US orders for key manufactured capital goods unexpectedly rose and sales of new single-family homes surged in May then rallied as a bigger-than-expected drop in U.S. crude inventories offset worries that further interest rate hikes could slow economic growth and settled $1.86 or 2.8% hgher at $69.56 per barrel as the four week average for gasoline demand rose to the highest since December 2021...oil prices eased early Thursday, paring some of the prior day’s gains, as traders took profits on concerns that further interest rate hikes by central banks could dampen economic growth and global fuel demand, then traded in a narrow range as traders assessed stronger-than-expected U.S. macroeconomic indicators and settled 30 cents higher at $69.86 per barrel as the day's data showed a resilient economy and jobs market, signaling strong demand for crude, but also raising the likelihood that the Fed would keep boosting interest rates...oil prices further extended their gains in Asian trading Friday as lackluster data on China's factory activity spurred hopes for more policy stimulus. then continued higher in New York amid a slow downtrend in core inflation and better-than-anticipated performance of the services sector, and settled with a 78 cent or 1.1% gain to $70.64 a barrel on the day, and thus also posted a 2,1% gain for the week and a 3.7% gain for June, but ended the 2nd quarter down 6.7%, the fourth quarterly decline in a row...
Meanwhile, natural gas price quotes finished higher for the ninth time in twelve weeks as the higher priced August contract moved to the fore, but both the July contract and the August contract prices finished this week lower than they did last week...after rising 3.7% to $2.729 per mmBTU last week as traders continued to bet on hotter weather and increasing power demand, the contract price of US natural gas for July delivery opened 3 cents higher on Monday in a continuation of last week’s cooling-demand induced rally and settled the day 6.2 cents, or 2.3% higher, at a three month high of $2.791 per mmBTU as robust cooling demand in Texas and surrounding states and increased gas flowing south into Mexico supported prices...natural gas traded in a narrow band near that level on Tuesday, as cooling demand persisted and the settlement of the July contract loomed closer. but settled 2.8 cents lower at $2.763 per mmBTU on forecasts for weaker demand for LNG feedgas than had been expected....the July gas contract opened a penny higher on its last day of trading on Wednesday, but then trended continuously lower throughout the day as key demand areas of the country experienced more comfortable temperatures and expired 16 cents lower at $2.603 per mmBTU on technical selling and on forecasts for less hot weather next week than had been expected, while the contract price of US natural gas for August delivery settled 12.1 cents lower at $2.668 per mmBTU.....now quoting August gas as the front month, Thursday saw that price slide to a low of $2.616 within minutes of the opening bell, but then surge to an intraday high of $2.746 at 10:50 AM. after a bullish storage report hit the wire, and settled the day's trading 3.3 cents higher at $2.701 per mmBTU after a smaller-than-expected storage build helped steady a market that lost 8% of its value over just 48 hours...after opening lower Friday, natural gas prices rose on further tightening of gas supplies in the important U.S. South Central region, and on falling gas drilling activity and settled 9.7 cents higher at $2.798 per mmBTU on rising LNG feedgas demand and hot weather, and was hence apparently up 2.5% on the week...however, the quoted August contract had finished the prior week at $2.843 per mmBTU, and thus ended 1.6% lower on the week..
The EIA's natural gas storage report for the week ending June 23rd indicated that the amount of working natural gas held in underground storage in the US had increased by 76 billion cubic feet to 2,805 billion cubic feet by the end of the week, which left our natural gas supplies 566 billion cubic feet, or 25.3% above the 2,239 billion cubic feet that were in storage on June 23rd of last year, and 358 billion cubic feet, or 14.6% more than the five-year average of 2,447 billion cubic feet of natural gas that were in working storage as of the 23rd of June over the most recent five years… however, natural gas supplies are still 20.3% below normal for this date across the Pacific states, while 22.9% and 20.2% above normal in both the East and Midwest regions of the country at the same time...this week's 76 billion cubic foot injection into US natural gas working storage for the cited week was lower than the 82 billion cubic feet addition to supplies that was expected by industry analysts surveyed by Reuters, and was less than the 81 billion cubic feet that were added to natural gas storage during the corresponding week of 2022, and also less than the average of 80 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 23rd showed that after a third big weekly jump in our oil exports and a decrease in new oil supplies that the EIA could not account for, we had to pull oil out of our stored commercial crude supplies for the 8th time in fourteen weeks, and for the 18th time in the past 44 weeks, even after another release of oil from our strategic reserves. Our imports of crude oil rose by an average of 418,000 barrels per day to 6,181,000 barrels per day, after falling by an average of 220,000 barrels per day the prior week, while our exports of crude oil rose by an average of 795,000 barrels per day to average 5,338,000 barrels per day, which combined meant that the net of our trade in oil worked out to a net import average of 1,242,000 barrels of oil per day during the week ending June 23rd, 377,000 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 unchanged 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 13.442,000 barrels per day during the June 23rd reporting week…
Meanwhile, US oil refineries reported they were processing an average of 16,254,000 barrels of crude per day during the week ending June 23rd an average of 215,000 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 1,565,000 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 23rd appear to indicate that our total working supply of oil from net imports, from storage, and from oilfield production was 1,248,000 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 [ +1,248.000 ] 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 magnitude in the week’s oil supply & demand figures that we have just transcribed....Moreover, since last week’s “unaccounted for crude oil” figure was at [+1,859,000] barrels per day, that means there was a 611,000 barrel per day difference between this week's oil balance sheet error and the EIA's crude oil balance sheet error from a week ago, and hence the changes to supply and demand from that week to this one that are indicated by this week's report are off by that much and therefore useless...However, since most oil traders 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 1,565,000 barrel per day decrease in our overall crude oil inventories came as an average of 1,372,000 barrels per day were being pulled out of our commercially available stocks of crude oil, while 193,000 barrels per day of oil were being pulled out of our Strategic Petroleum Reserve at the same time, the twelfth 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 348,617,000 barrels of oil that still remain in our Strategic Petroleum Reserve is now the lowest since August 19th, 1983, or at a new 39 1/2 year low, as repeated tapping of our emergency oil 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 fell to an average of 6,385,000 barrels per day last week, which was still 1.2% more than the 6,308,000 barrel per day average that we were importing over the same four-week period last year. This week’s crude oil production was reported to be unchanged at 12,200,000 barrels per day because the EIA's rounded estimate of the output from wells in the lower 48 states was unchanged at 11,800,000 barrels per day, while Alaska’s oil production was 2,000 barrels per day higher at 427,000 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 92.2% of their capacity while using those 16,254,000 barrels of crude per day during the week ending June 23rd, down from their 93.1% utilization rate during the prior week, but a utilization rate that's within the normal range for the 3rd week of June... The 16,254,000 barrels per day of oil that were refined this week were 1.3% less than the 16,666,000 barrels of crude that were being processed daily during week ending June 24th of 2022, and 7.2% less than the 17,337,000 barrels that were being refined during the prepandemic week ending June 21st, 2019, when our refinery utilization rate was at 94.2%, also within the normal range for this time of year...
Even with the decrease in the amount of oil being refined this week, the gasoline output from our refineries was higher, increasing by 298,000 barrels per day to 10,117,000 barrels per day during the week ending June 23rd, after our gasoline output had decreased by 352,000 barrels per day during the prior week. This week’s gasoline production was 6.5% more than the 9,497,000 barrels of gasoline that were being produced daily over the same week of last year, but 3.8% less than the gasoline production of 10,512,000 barrels per day during the prepandemic week ending June 21st, 2019. On the other hand, our refineries’ production of distillate fuels (diesel fuel and heat oil) decreased by 368,000 barrels per day to 4,709,000 barrels per day, after our distillates output had increased by 89,000 barrels per day during the prior week. With that big decrease, our distillates output was 8.3% less than the 5,136,000 barrels of distillates that were being produced daily during the week ending June 24th of 2022, and was 11.2% less than the 5,305,000 barrels of distillates that were being produced daily during the week ending June 21st, 2019...
With this week's increase in our gasoline production, our supplies of gasoline in storage at the end of the week rose for the sixth time in nineteen weeks, increasing by 603,000 barrels to 222,005,000 barrels during the week ending June 23rd, after our gasoline inventories had increased by 479,000 barrels during the prior week. Our gasoline supplies rose again this week as the amount of gasoline supplied to US users fell by 69,000 barrels per day to 9,306,000 barrels per day and as our imports of gasoline fell by 68,000 barrels per day to 857,000 barrels per day, while our exports of gasoline rose by 8,000 barrels per day to 867,000 barrels per day. Even after thirteen gasoline inventory decreases over the past nineteen weeks, our gasoline supplies were 0.2% above last June 24th’s gasoline inventories of 221,608,000 barrels, but were still about 7% below the five year average of our gasoline supplies for this time of the year…note that even as our demand for gasoline slipped a bit this week, the four week average for gasoline supplied rose to 9,273,000 barrels per day, the highest since December 24, 2021...
Meanwhile, even with this week's big decrease in our distillates production, our supplies of distillate fuels managed to increase for the seventh time in sixteen weeks, rising by 123,000 barrels to 114,411,000 barrels during the week ending June 23rd, after our distillates supplies had increased by 434,000 barrels during the prior week. Our distillates supplies rose this week because the amount of distillates supplied to US markets, an indicator of our domestic demand, decreased by 664,000 barrels per day to a 2023 low of 3,314,000 barrels per day, and even though our exports of distillates rose by 315,000 barrels per day to 1,496,000 barrels per day while our imports of distillates fell by 25,000 barrels per day to 119,000 barrels per day.... with 33 inventory increases over the past fifty-eight weeks, our distillates supplies at the end of the week were 1.8% above the 112,401,000 barrels of distillates that we had in storage on June 24th of 2022, but were still about 14% below the five year average of our distillates inventories for this time of the year...
Finally, with another big increase in our oil exports, our commercial supplies of crude oil in storage fell for the 9th time in 26 weeks and for the 24th time in the past year, decreasing by 9,603,000 barrels over the week, from 463,293,000 barrels on June 16th to 453,690,000 barrels on June 23rd, after our commercial crude supplies had decreased by 3,831,000 barrels over the prior week. With that big decrease, our commercial crude oil inventories are now about 1% below the most recent five-year average of commercial oil supplies for this time of year, but are still 29.6% above the average of our available crude oil stocks as of the fourth 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, only to jump again following the Christmas 2022 refinery freeze offs, our commercial crude supplies as of this June 23rd were 9.2% more than the 415,566,000 barrels of oil we had in commercial storage on June 24th of 2022, and were 0.3% more than the 452,342,000 barrels of oil that we still had in storage on June 25th of 2021, but are 15.0% less than the record 533,527,000 barrels of oil we had in commercial storage on June 26th 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 sixteenth time in the past twenty weeks during the week ending June 30th, and is now 15.0% below the prepandemic rig count, despite increasing ninety-five times over the 122 weeks of the post pandemic recovery... Baker Hughes reported that the total count of rotary rigs drilling in the US fell by 8 rigs to 674 rigs over the past week, which was 76 fewer rigs than the 750 rigs that were in use as of the July 1st report of 2022, and was also 1,255 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 one to 545 oil rigs during the past week, after the number of rigs targeting oil had decreased by six rigs during the prior week, leaving 50 fewer oil rigs active now than were running a year ago, as they now amount to just 33.9% of the shale era high of 1609 rigs that were drilling for oil on October 10th, 2014, while they are now down 20.2% from the prepandemic oil rig count of 683….at the same time, the number of drilling rigs targeting natural gas bearing formations fell by six to 124 natural gas rigs, which was also down by 29 natural gas rigs from the 153 natural gas rigs that were drilling during the same week a year ago, as they now amount to just 7.7% 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 is reporting that five rigs they've labeled as "miscellaneous" continue to drill this week, down by one from last week....those miscellaneous rigs still running 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...note that the directional rig targeting the Mississippi Canyon offshore from Louisiana that was described as a miscellaneous rig last week is now shown as an oil rig..
The offshore rig count in the Gulf of Mexico was unchanged at 18 rigs this week, and included16 rigs drilling for oil in Louisiana's offshore waters, and two drilling for oil in Texas waters....the Gulf rig count is now up by 2 from the 16 Gulf rigs running a year ago, when all 16 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 two weeks ago 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 2 rigs from the national offshore count of 17 a year ago..
In addition to rigs drilling 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 7 to 606 horizontal rigs this week, which was 76 fewer rigs than the 682 horizontal rigs that were in use in the US on July 1st of last year, and only 44.1% of the record 1,374 horizontal rigs that were drilling on November 21st of 2014….at the same time, the vertical rig count was down by one to 18 vertical rigs this week, while those were down by 7 from the 25 vertical rigs that were operating during the same week a year ago....meanwhile, the directional rig count was unchanged at 50 directional rigs this week, and those were up by 7 from the 43 directional rigs that were in use on July 1st 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 30th, the second column shows the change in the number of working rigs between last week’s count (June 23rd) and this week’s (June 30th) count, the third column shows last week’s June 23rd 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 1st of July, 2022...
All four rigs pulled out of Louisiana had been drilling for natural gas in the Haynesville shale in the northwestern corner of the state, while at the same time the Haynesville shale also saw two natural gas rigs pulled out of Texas, one each from Texas Oil District 5 and from Texas Oil District 6...Texas also saw another rig pulled out of District 5 that was targeting a basin not tracked by Baker Hughes, and two rigs pulled out of Texas Oil District 8, which overlies the core Permian Delaware, while at the same time a rig was added in Texas Oil District 10, also targeting a basin not tracked bt Baker Hughes...Since the Texas Permian was down by two rigs while the national Pemain count was unchanged, 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...meanwhile, even as it's obvious that the Eagle Ford saw an oil rig increase, the rig counts in all 4 Texas Districts that include parts of the Eagle Ford were unchanged, which only could have happened if the District that saw the Eagle Ford increase also saw a rig pulled out of another basin not tracked by Baker Hughes at the same time...in other states, there was an oil rig pulled out of the Bakken shale in the Williston basin of North Dakota, while the two rigs that were pulled out of Oklahoma came from a basin or basin not tracked by Baker Hughes....and while the rigs removed from the Haynesville shale account for 6 of our seven rig natural gas decrease, the last one also came from one of those "other" basins not tracked by Baker Hughes, which could have been any of the unidentified rig removals we've previously mentioned..
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Environmental experts warn fracking on state lands in Ohio is dangerous, economically dubious - The Ohio Oil and Gas Land Management Commission heard from three environmentally-minded experts Wednesday skeptical of opening state lands to exploration. They argued the industry is downplaying risks and the strain on resources while offering an overly optimistic outlook. Silverio Caggiano spends a lot of time thinking about worst case scenarios. The retired Youngstown Fire battalion chief has nearly four decades of experience as a firefighter and spent more than 30 years dealing with hazardous materials. He argues the emergency response plans fracking companies offer are “paper tigers.” “They’ll list fire service is XYZ fire department,” Caggiano said. “They neglect to put in there that XYZ fire department is a volunteer fire department and it may be an extended response time before those people actually get there to help solve your problem.” He pointed to the Eisenbarth well fire and the Powhatan gas leak as two recent examples. In both cases, he said, the company had emergency response plans that checked all the boxes but fell apart when tested. Caggiano also criticized the lack of information companies make available to first responders. He showed a Material Safety Data Sheet, or MSDS, for a Halliburton chemical marketed as GasPerm 1000. In the row where it would normally have a unique ID number for the compound, instead it says “proprietary.”“They’re giving you information, but it’s useless,” And while he worries about the brand name chemicals companies put in, he’s also concerned about substances like radium that fracking pulls out of the ground. He described how a company that tried to clean that contaminated water went out of business. “You can get the suspended solids you can get some of the chemicals out with filtration just couldn’t seem to get the radium out,” Caggiano said. “So is there a recyclability of this water? No. Not with the radium in it, no way. Radium 226 has a half-life of 1,600 years.” Meanwhile, Ted Auch an environmental scientist with the FracTracker Alliance, contends fracking isn’t the commercial success story the industry often portrays. Auch acknowledges drillers can point to graphs showing year-over-year production increases. But that looks like a sugar rush when you consider what’s happening on a per-well basis, Auch argued. “The fracking revolution was promised to bring about 20 to 30 year plus lifespans for wells,” Auch explained. “But the truth is productivity falls off a cliff at an exponential rate at the tune of 85% declines from year one to year two. That’s what the data says. And then from year to year three, it’s even more by year five. We’re not even talking about production.” Oil and gas companies stay in the black by drilling more and more wells, but Auch noted they’re getting a lot of public support too.In particular, he brought up the cost of water — crucial to the hydraulic fracturing process. In 2012, the Muskingum Watershed Conservancy District sold water at $9 per 1,000 gallons. But now, Auch said, a Tappan Lake deal has water going for just $3 per 1,000 gallons. Auch said the current rate represents only about 0.25% to 0.75% of operating costs. Adding in the average cost of fines only moves that needle to about 1%. “They don’t blink,” he said. “We don’t make them blink. They don’t blink when we don’t actually scold them.” Cheap water, light fines, access to public lands — in the end Auch contends it all amounts to a public subsidy for an industry “that was never a beacon of resource use efficiency.” Environmental scientist Randi Pokladnik argued the areas around well pads face death by a thousand cuts. In the literal sense, pipelines to service drilling operations reduce habitats by dicing up forested areas. But even small spills, she argued, can have significant impacts. “There was an actual study where they deliberately sprayed fracking fluid waste into an experimental forest in West Virginia,” she described. “And they showed that within 10 days, all the understory plants had died and then in less than a year all the tree species had succumbed.” Auch argued the commission can’t make an honest assessment of costs and benefits without taking all of that into account.
One Ohio family's fight could shape future farmland preservation efforts - The Statehouse News Bureau -Three generations of the Bailey family are working to clean out 9,000 bushels of corn kernels stored in their grain bin. But first, they’ve got to repair a piece of farm equipment: a bin sweep auger.Don Bailey tests the equipment. He smiles when he hears it give a roar.“We’re back in business. Won’t take long now,” he said. Twenty years ago, Don’s uncle, Arlo Renner, entrusted this land to Don and Patrick to keep in production. Renner donated it to the Ohio Department of Agriculture, or the ODA’s, agricultural easement program. It's a contract with the state that requires the around 230 acres to be used solely for agricultural production – protecting it as farmland forever.But, the Bailey family had to fight the state for the right to farm their land. Their recent court case could have big implications for farmland preservation across the state.Don said his uncle Renner saw Union County’s farmland slowly disappear over the course of his life. Renner wanted to protect the farm, 30 miles northwest of Columbus, from urban development.“I'm trying to live up to what he wants to do, and do what's best for the future of the farm,” Don said.That has proved difficult. Since the Bailey’s acquired the property, multiple companies have applied to put pipelines through parts of the land. The first two times, the ODA stepped in to put a stop to those requests. But, in 2019, the Baileys received a letter from Columbia Gas. It wanted to put a natural gas pipeline on the land, cutting through 13 miles of the farm.Patrick and his wife Whitney passed along the request to the ODA, expecting the same result as the first two pipeline requests. The ODA instead sided with Columbia Gas.“We made the mistake of trusting our government,” Patrick said. “We thought they'd do what was statutorily required and morally required, and they didn't do it.” The department contended that building a pipeline through the land wouldn’t be a violation of the easement. They supported Columbia Gas in its argument that the pipeline wouldn’t impact the ability to farm.The family disagreed.“We couldn't put up a livestock barn or a greenhouse, we couldn’t have fences, we couldn't have an orchard,” he said. “Lots of things that qualify as agriculture in the state of Ohio we would not be able to do on land that has a pipeline easement on it.”The Baileys decided to fight the decision in court. It was costly. They had to dip into the college funds of their five kids to afford it. But Patrick and Whitney felt like they had a huge obligation on their shoulders.“Every single easement that the ODA held would be in jeopardy. Because, if Columbia Gas had come through here, that would set a precedent that easements could have pipelines across them, even though they say that they can't.”In April, their efforts paid off: the Ohio Third District Court of Appeals ruled Columbia Gas couldn’t use Bailey's land. The next month, Columbia Gas officially abandoned their case.
House Speaker Kevin McCarthy Tours Encino Utica Well Pad in Ohio - Marcellus Drilling News - Yesterday U.S. House of Representatives Speaker Kevin McCarthy, who is in Ohio for several days, toured Encino Energy’s Sanor Farm Well Pad near Damascus (Columbiana County), where Encino is drilling four Utica wells. McCarthy said this: “We just don’t want to be energy independent, we want to be dominant.” Love it! This is a home run by McCarthy, showing up to support shale energy in the Ohio Utica.
Injection rejection: Indiana County community pushes back against fracking residue well - As the Wanchisns sit on their back porch in Grant Township, Indiana County, something small and bright red peeks just over the treeline about a mile away. It’s the top of the injection well proposed in 2013 by Warren-based Pennsylvania General Energy. After a decade of legal battles — some of which are ongoing — Wanchisn and other residents got some welcome news last month: The energy company notified state environmental officials that they intend to plug the well. “They’re plugging it right now,” Wanchisn’s daughter and township supervisors Chair Stacy Long said of the Yanity well, located along Mill Run Road amidst a small community of less than 700 people. Part of a May 16 filing in a federal court case involving Grant Township included a notice that PGE intended to plug the well after gas was discovered leaking into the well during a routine inspection. Plugging work on the well began June 1, according to the state Department of Environmental Protection. Indiana County has a long history of resource extraction in the form of salt, coal, natural gas and timber. But when Long and others heard about PGE’s plan to seek permits for an injection well in 2013, they took action. “It was just a tiny little legal notice in the paper, about the EPA and this injection well permit,” said Wanchisn, 79. “One of the former township supervisors brought it to me, and I started doing some research.” Wanchisn didn’t like what she read about the wells, which accept the wastewater, brine and byproducts of unconventional drilling operations, releasing the fluid into porous underground rock formations, according to the EPA.. “We went to our local League of Women Voters because we wanted to appeal the permits for the well.” The residents group formed into the state-certified nonprofit East Run Hellbenders Society, and connected with another nonprofit, the Mercersburg-based Community Environmental Legal Defense Fund. CELDF staff convinced Wanchisn and the society that appealing the permits would not help them oppose the well. As a second-class township, Grant was beholden to the pre-existing laws of the state Township Code. So we began working to become a home-rule municipality in order to develop our own laws and not have to rely on the ‘cookie-cutter’ second-class township code.” After residents approved a ballot measure to institute a community bill of rights that prohibited injection wells, in 2014 PGE filed a lawsuit against them. In 2015, a federal judge invalidated parts of the ordinance because they violated the Second Class Township Code or were ruled unlawfully exclusionary. Three weeks later, the township’s residents approved a new home-rule charter by a 2-1 margin, changing the township’s form of government and reinstating the ban on injection wells. “The Home Rule Charter is rights-based. It’s only eight pages long,” Wanchisn said. “It did an end-run around the federal judge’s ruling, and it passed with 60% of the township supporting it.”
Pa. fracking fees come in at $279 million for 2022, PUC says - The Pennsylvania Public Utility Commission announced Tuesday that it will be distributing nearly $279 million in fracking impact fees charged to shale gas drillers in 2022, a bump over $234 million collected in 2021.The lion’s share of the impact fees – established by Act 13 of 2012 – are paid either to counties and municipalities to offset the adverse impact of gas drilling and pipelines in their communities, or into the state’s Marcellus Legacy Fund, which the state uses to fund environmental and infrastructure projects.The increase in revenue for 2022 is driven primarily by the rise in natural gas prices last year, according to the PUC, as well as by new wells drilled.Pennsylvania’s fee is charged per well, but varies each year based on prices; the average natural gas price in 2022 was $6.64 per Metric Million British Thermal Units, as opposed to $3.84 in 2021, according to the PUC.Additionally, 574 new horizontal wells were drilled last year – although this is a decline in drilling relative to prior years, according to Department of Environmental Protection data tracked by the Independent Fiscal Office.This has accompanied a slowdown in Pennsylvania gas production overall, according to IFO and DEP numbers, despite a large number of unexplored gas leases outstanding.With the distribution of 2022 funds next month, the state will have handed out over $2.5 billion to local governments since the inception of the fee system 11 years ago, according to the PUC.Pennsylvania’s fee structure on drillers who extract natural gas and other chemicals by hydraulic fracturing – often called ‘fracking’ - has been a subject of debate, albeit not this budget year.
Former Gov. Tom Wolf repeatedly proposed changing the per-well fee to a true tax, charged by the volume of gas extracted. As far back as 2016, Wolf was projecting that a 6.5% fracking tax would bring in over a half a billion dollars annually while shifting the tax burden toward higher-intensity operators.But this change never made it through budget negotiations with the legislature, and current Gov. Josh Shapiro did not propose changing the fracking fee system in his budget request for the upcoming fiscal year.“Pennsylvania natural gas development has delivered national energy security, cleaner air, consumer and economic gains here at home and abroad,” David Callahan, president of the Marcellus Shale Coalition, an industry trade group, said in a press release. “The impact tax is yet another example of how the industry supports better quality of life for all Pennsylvanians.”
How M-U NGLs Get Exported – ET's Mariner Pipelines & Marcus Hook - Marcellus Drilling News - NGLs, or natural gas liquids, are an essential revenue stream for Marcellus/Utica drillers in the “wet gas” regions of the play. Those regions are found in southwestern Pennsylvania, the northern panhandle of West Virginia, and eastern Ohio. There are several pipelines that flow M-U NGLs to other regions or to export facilities. Among them is Enterprise Products Partners’ 1,230-mile Appalachia to Texas Express (ATEX) pipeline to the Gulf Coast, and Kinder Morgan’s 270-mile Utica-to-Ontario-Pipeline-Access (UTOPIA) pipeline from Harrison County, Ohio, to Windsor in Canada’s Ontario province. However, most M-U NGLs travel through Energy Transfer’s Mariner East and West pipelines, with Mariner East flowing to the Marcus Hook export terminal near Philadelphia.
Keynote Speakers Announced For August 2023 Marcellus Shale Water Conference Include Susquehanna River Basin Commission-- Today, Oilfield Water Connection is pleased to announce that Andrew Dehoff P.E., Executive Director at the Susquehanna River Basin Commission, will deliver the opening keynote address at the 2nd Annual Marcellus Shale Water Business Update Conference on August 9, 2023.Mr. Dehoff will share thoughts on Appalachian water trends and sustainability in his remarks, kicking off a productive day of discussion and networking about water management by leading Appalachian natural gas producers and service providers.The Susquehanna River Basin Commission is an interstate agency that coordinates the management of water resources in the region. The mission of the Commission is to enhance public welfare through comprehensive planning, water supply allocation, and management of the water resources of the Susquehanna River Basin.As Executive Director at the Commission, Mr. Dehoff has a deep understanding of regional water trends, regulation, risks, and opportunities. The big picture perspective he shares will be valuable to conference attendees and a great way to begin the day.Following Mr. Dehoff’s remarks, Ryan Hassler, Senior Analyst at Rystad Energy, will deliver the event’s second keynote presentation, sharing data and forecasts on Northeast E&P trends. Attendees can expect to receive a data download on Northeast shale drilling, completion, and production themes as well as an outlook for what’s coming next that will impact the natural gas industry's water requirements in the Marcellus and Utica shale plays.From there, the agenda will move into a series of informative panel discussions featuring thought leaders from these companies and more:
- EQT Corporation
- Chesapeake Energy
- Gulfport Energy
- Diversified Production
- Equitrans Midstream
Panel topics will cover produced water regulatory trends, the future of regional water management, E&P perspectives on water management, sustainability, as well as the latest trends in treatment, disposal and logistics.
Marcellus-Utica Shale E&P Operator Majority To Speak At Appalachian Shale Water Conference In July -- The first Marcellus-Utica Shale Water Business Update conference will be held July 29th at the Pittsburgh Westin. Online registration is open here.At this event, the majority of northeastern shale gas producers (as measured by well completions activity) will share their views on water management.Specifically, E&P operator representatives from top producers that together comprise more than half of the total active frac crews working in the Marcellus Shale and Utica Shale natural gas plays will take the stage to discuss their latest thoughts and efforts in full-cycle shale water management.Some of the E&P companies that will have delegates speaking at the event include: EQT, Range Resources, Chesapeake, Southwestern Energy, Coterra, Gulfport, Repsol, and more…Joining these E&P speakers on stage will be thought leaders from midstream, service, transportation, advisory, and data firms rounding out a tremendous agenda and learning / networking opportunity.In addition to the excellent speaker lineup, some of the most highly respected firms in the Marcellus Shale / Utica Shale water business have joined the event as sponsors including: Gemini Shale Solutions, Energy Water Solutions, Keystone Clearwater Solutions, CORE Linepipe, DHI, CDX Energy Services, and CSR Services. Media partners and supporting organizations include Marcellus Drilling News, Shale Directories, and MUG. Link To Conference Website>
Opposition continues on proposed Yough river power plant A proposed natural gas-fueled power plant a few miles north of West Newton would pump more pollution into a region that already has poor air quality, environmentalists and activists said at a community meeting this week. More than 100 people attended the meeting organized by the Environmental Health Project of Pittsburgh, which detailed some of the concerns posed by residents about the plant proposed for Elizabeth Township. Invenergy of Chicago, through its subsidiary Allegheny Energy Center, wants to build a 639-megawatt power plant on 17 acres of farmland in Smithdale, across the Westmoreland County border from Collinsburg. Nathan Deron, an environmental data scientist for the Environmental Health Project of Pittsburgh, said the plant could spew more harmful pollutants such as nitrogen oxide, sulfur dioxide and volatile organic compounds into an area where air has been impacted by plants such as U.S. Steel Corp.’s Clairton coke works and the Tenaska Westmoreland Generation Station natural gas-fueled power station in South Huntingdon. Invenergy has not responded to requests for comment on its proposed plant. “It’s not for our needs. How many power plants do we need,” former state Rep. David Levdansky of Forward Township said after the meeting. Levdansky was referring to Pennsylvania being the second-largest net supplier of total energy to other states, behind only Texas, according to the U.S. Energy Information Administration. The power generated by Invenergy plant will be placed on the PJM Interconnection electrical grid for distribution to 13 states and Washington, D.C., said Levdansky, who served in the state House for 25 years before losing a reelection bid in 2010. Within the past decade, two plants along the Monongahela River in Washington County have been decommissioned — the former Duquesne Light Co. plant at Elrama and the former West Penn Power Co. Mitchell Generation Station near New Eagle. Scott Taylor, president of the Protect Elizabeth Township citizens group, said the group will appeal the township’s decision to rezone the proposed site from rural to light industrial. Environmental groups such the Clean Air Council, Mountain Watershed Association in Champion, Protect Elizabeth Township and Yough Communities C.A.R.E. (Conserving our Air, Rivers, Environment) in West Newton have joined forces in attempt to block approval for the plant and an appeal has been filed on the Allegheny County Health Department’s decision in October 2021 to issue Invenergy an installation permit, but not an operating permit.
11 New Shale Well Permits Issued for PA-OH-WV Jun 19-25 | Marcellus Drilling News -New shale permits issued for Jun 19-25 in the Marcellus/Utica took another nosedive. There were 11 new permits issued last week, down from 21 the previous week. There’s just no denying that the trend in permits is generally down. Last week’s permit tally included 6 new permits in Pennsylvania, 2 new permits in Ohio (both permits in the Marcellus layer!), and 3 new permits in West Virginia. Olympus Energy scored the most new permits, with 4 issued in Allegheny County, PA. Southwestern Energy had the second most new permits, with 3 permits issued in Marshall County, WV. ALLEGHENY COUNTY | BELMONT COUNTY | BRADFORD COUNTY | CHESAPEAKE ENERGY | GULFPORT ENERGY | MARSHALL COUNTY |OLYMPUS/HUNTLEY & HUNTLEY | SOUTHWESTERN ENERGY
M-U Drillers Learn How to “Walk the Line” When/Not to Drill | Marcellus Drilling News - In the early days of the shale revolution, Marcellus/Utica drillers (all shale drillers) were incentivized by shareholders to drill at any cost. The philosophy was “drill baby drill,” believing pipelines would somehow get built to handle the increasing production volume. Over the past three years or so, since about the time the pandemic began, things have changed. Instead of “drill baby drill,” the rallying cry is now “curtail volumes,” “delay completions,” and “game-time decisions.” M-U producers have learned to “walk the line” of matching production with local demand, storage, and firm pipeline capacity.
Mountain Valley Pipeline gets final permit needed to resume construction - A final permit issued Friday may be enough to get the Mountain Valley Pipeline across the remaining rivers, streams and wetlands that have long blocked the project’s path to completion. The U.S. Army Corps of Engineers gave its approval for construction through hundreds of water bodies in Southwest Virginia and West Virginia, as it was required to do by a recently passed federal law that fast-tracks the controversial project. Mountain Valley has previously said that it has completed more than half of the nearly 1,000 water body crossings along the pipeline’s 303-mile route. But on Friday, company spokeswoman Natalie Cox wrote in an email that there are “approximately 643 total water resources to be crossed, including water bodies and wetlands, some of which may be crossed more than once.” A number of factors — including multiple crossings of a single water body in some cases and a single crossing that includes multiple water bodies in others — make it difficult to come up with a precise number. But one thing seemed clear Friday: Mountain Valley now has approval to complete a natural gas pipeline delayed for more than four years by permitting complications and legal challenges. “This announcement that the Mountain Valley pipeline finally has all permits needed to resume construction is great news,” said U.S. Sen. Joe Manchin, D-West Virginia, a champion of a project that starts in his home state. The $6.6 billion project was bailed out of its legal and permitting woes by a law, pushed by Manchin and passed by Congress three weeks ago, that includes a provision green-lighting the pipeline’s completion in broader legislation that suspended the federal debt ceiling and averted a disastrous government default.
They Fought a Pipeline on Their Land. Then Congress Got Involved – WSJ -Debt-ceiling law gave a green light to the Mountain Valley Pipeline backed by Sen. Joe Manchin. —Mary Beth Coffey has spent almost a decade trying to keep a natural-gas pipeline from cutting across her Southwest Virginia mountaintop property. Mary Beth Coffey points to the path of the Mountain Valley Pipeline project that she has fought for almost a decade and that will soon cut through her Southwest Virginia property.
'Out there rotting': Mountain Valley neighbors fear aging pipe - — The developer of the Mountain Valley pipeline now has a clear path to finishing the project. But it also has, literally, tons of aging pipe that has been sitting out in the elements for as long as six years. That’s a potential safety problem, according to experts, manufacturers, safety advocates and opponents of the pipeline. Sunlight and rain degrade the epoxy coating on the pipes that prevents corrosion. Damage to the coating increases the risk of ruptures and explosions. “There’s pipe sitting out there rotting,” said Roberta Bondurant of Bent Mountain, near Roanoke, one of the most outspoken opponents of the project known as MVP. She called the current situation “a promise of random explosion … somewhere along the 300 miles of this ticking pipe bomb.” Officials with Equitrans Midstream Corp., which is developing the 303-mile line, say not to worry. During the years of construction delays, their crews have been monitoring the pipe segments in the field and in pipe yards, and each one will be inspected and tested before being added. Pipe that fails, they say, will be replaced. “First and foremost, the safe construction and operation of the MVP project remains our top priority,” Natalie Cox, a spokesperson for the pipeline and Equitrans, said in an email. “The pipes will continue to be checked to identify any issues that need to be addressed prior to the pipe being placed into the ditch and backfilled.” Questions about the pipe come on top of landslide dangers inherent in building a long project across mountainous terrain. The pipe is to carry gas under 1,400 pounds of pressure up steep mountainsides and terrain prone to erosion. Equitrans has been cited by regulators for construction violations and sued by the state over hundreds of erosion-related problems. The safety of the pipe could be the new battleground for Mountain Valley now that President Joe Biden and Congress have cleared away the legal and regulatory stalemate that had jeopardized the project as part of a deal to raise the debt limit. Opponents say the pipe should be replaced or recoated in a secure facility before it gets put in the ground. That could add considerable expense and delays for a project already over budget and years behind schedule.
Federal regulators give permission for Mountain Valley Pipeline to restart construction - The Federal Energy Regulatory Commission (FERC) has approved permits allowing construction of the Mountain Valley Pipeline to restart.The 300-mile pipeline is designed to move natural gas from West Virginia to Pittsylvania County. Construction began in 2018, but since then, a series of legal battles stalled the project. Recently, Congress voted to expedite construction, as part of negotiations on raising the debt ceiling.Congress included language in the Fiscal Responsibility Act to fast track the project, limit judicial review and order federal regulators to grant all permits within a few weeks.FERC cleared the way for construction to resume after the US Army Corps of Engineers issued a key permit Friday for water crossings.Pipeline opponents have challenged the constitutionality of the recent action by Congress, arguing it violates the separation of powers between the judicial and legislative branches of government. But a quick hearing isn’t guaranteed. MVP has asked the federal appeals court in Richmond to give it until July 10 to respond. So we could see work resume, before the court takes up that constitutional question.
Mountain Valley pipeline gets OK to resume construction -The lead agency overseeing construction of the Mountain Valley Pipeline authorized work to resume Wednesday. As expected, the Federal Energy Regulatory Commission’s order came after last week’s approval of the final permit needed by Mountain Valley, an approval by the U.S. Army Corps of Engineers to cross streams and wetlands in the pipeline’s path. Long delayed by legal challenges that cited its poor environmental track record, Mountain Valley was jump-started earlier this month when Congress passed a law that suspended the federal debt ceiling — and included a surprise provision declaring the project was in the national interest. Company spokeswoman Natalie Cox said crews will begin work “shortly” on the unfinished portions of the 303-mile pipeline. “Mountain Valley looks forward to flowing domestic natural gas this winter for the benefits of reliability and affordability in the form of lower natural gas prices for consumers,” Cox wrote in an email, “while also benefiting national energy security and helping to achieve state and national goals for lowering carbon emissions.” Pipeline opponents blasted a deal struck by President Joe Biden and Democratic leaders to push the pipeline to completion even while legal challenges were pending. “The Biden administration just green lit a reckless, unnecessary fossil fuel project during a deadly heat wave caused by climate change,” Russell Chisholm, the managing director of the Protect Our Water, Heritage, Rights coalition, said in a statement. “The gas from the pipeline is unnecessary, the permanent local jobs provided are minimal, the endangerment to precious species is irreversible, water sources will be polluted, and earthquake and landslide prone areas stand in its wake,” Chisholm said. “We are devastated but we will never give up on protecting our home.”
Company says Manchin-backed pipeline could bring fuel this winter after federal approval The controversial Mountain Valley Pipeline could carry natural gas as soon as this winter, the company behind it said after the pipeline secured federal approval. On Wednesday, the Federal Energy Regulatory Commission issued an order stating Mountain Valley is “authorized to proceed with all remaining construction associated with the project.” Natalie Cox, a spokesperson for Equitrans Midstream, one of the companies behind the pipeline, sent an emailed statement to The Hill on Thursday that said the vessel’s construction could be completed by the end of the year. “Mountain Valley looks forward to flowing domestic natural gas this winter,” the statement said. The Mountain Valley Pipeline would stretch across 303 miles and carry gas from West Virginia to Virginia. The latest order comes after the passage of a bill to lift the debt limit that also included language to approve “all authorizations, permits … and any other approvals or orders“ needed for the pipeline’s construction, effectively ensuring that it will be okayed. The commission cited the law in its order, stating that “all issued Federal authorizations for the Mountain Valley Pipeline Project have been ratified by Congress.” The vessel was backed by lawmakers from West Virginia including Sen. Joe Manchin (D-W.Va.), who was a key swing vote in the evenly divided Senate last year. Manchin, who could face a tough reelection fight in the state if he chooses to run again, last year made a deal with Democratic leaders to pass legislation approving the pipeline in exchange for his vote on the Democrats’ climate, tax and health care bill. Last year, his effort ultimately flopped as most Senate Republicans and some left-wing Democrats pushed back against the pipeline’s passage. But its approval was included in the bill raising the debt ceiling that President Biden signed earlier this month. Proponents of the pipeline say it would bolster the nation’s energy by transporting natural gas. Opponents have objected to the completion of more fossil fuel infrastructure, which they say will contribute to climate change, and have also raised concerns about local environmental impacts. Manchin, on Twitter, celebrated the latest development.
Fate of Mountain Valley Pipeline’s N.C. extension still unclear -While U.S. Department of Energy Secretary Jennifer Granholm defended the controversial Mountain Valley Pipeline this week, North Carolina Gov. Roy Cooper raised concerns about its planned extension into the state. The 300-mile natural gas project through the Virginias may be best known as the priority of U.S. Sen. Joe Manchin, the West Virginia Democrat who struck a deal with the White House to unblock its long-delayed permits as part of the recent debt ceiling law. Granholm, whose agency has no role in permitting pipelines, reiterated her earlier endorsement of the project on Monday, even when asked about recent reports that the project is only slated to run at 35% capacity. “The administration has supported the MVP on the grounds of energy security,” Granholm said, during a brief sit-down interview with reporters in Charlotte, part of her tour this week to promote federal clean energy initiatives. “We know that there’s a lot of opposition out there,” Granholm added. “This is the balance that the administration is trying to seek overall. We’ve spent the vast majority of time on the acceleration to clean [energy], while recognizing that there needs to be some fossil available for a period of time until we get to the goal of 100% clean energy.”Pipeline opponents continue to challenge the project, most recently in lawsuits filed this week arguing that Congress’ interference in executive branch permits is unconstitutional. But no matter what happens with the longer leg, its short extension into North Carolina remains in question. Proposed to stretch 40 miles through Rockingham and Alamance Counties, the Southgate project has drawn opposition from two local governments and numerous elected officials, many of them Republicans, who argue it interferes with private property rights and local tourism efforts. Slated to skirt the Haw River, cross the Dan River, and impact dozens of their tributaries, the pipeline extension has also been twice denied a necessary water quality permit from the state Department of Environmental Quality and has yet to reapply. Southgate also needs reapproval from the Federal Energy Regulatory Commission — permission that U.S. Reps. Kathy Manning and Valerie Foushee, both Democrats, urged the agency this week to reject. Asked about the project on Monday, Cooper focused on how new natural gas infrastructure could become obsolete in light of the state’s plan to transition to zero-carbon energy by midcentury.
From Fracking Well to Landfill: Tracing Plastic's Toxic Lifecycle -- Plastic is everywhere, and much of it spends just a few weeks, days, or moments fulfilling its intended purpose. Globally, 44% of it is used for packaging, tossed almost as soon as we get our hands on it. But plastic has a long life before it becomes a product on a shelf — and an even longer life after it’s tossed. Every step of this lifecycle takes a toll on our health, environment, and climate. Not only does plastic drive demand for fossil fuels; our oversupply of fracked gas is leading to yet more long-lived plastic. From beginning to end, these are the costs of plastic’s lifecycle. Making plastic is a huge contributor to climate change, as globally, more than90% of plastics come from fossil fuels. Moreover, making plastic involves high heat and lots of electricity — both generated using fossil fuels. In the U.S., the plastic lifecycle typically starts with natural gas processing or natural gas liquids. And the country’s natural gas largely comes from fracking. We’ve known for years that fracking is poorly regulated and dangerous, especially for those living closest to its operations. Researchers have linked fracking to a variety of health problems, including cancer. From poisoning drinking water, to causing earthquakes, to leaking climate-wrecking methane, fracking has endangered our communities for far too long. Processing crude oil produces naphtha, and processing natural gas results in natural gas liquids like ethane. Naphtha and ethane can then be “cracked” to produce ethylene, a main ingredient in many plastics, as well as other plastic building blocks. This cracking process depends on lots of steam or heat, typically generated by burning fossil fuels, which adds to plastic’s climate impact. Moreover, cracking releases huge amounts of climate pollutants and air pollutants, including smog-forming nitrogen oxides and volatile organic compounds. After cracking comes polymerizing — converting ethylene and other molecules into plastic polymers. This results in small plastic resin pellets, commonly called “nurdles.” Manufacturers then melt and shape those nurdles into plastic products; another energy-intensive process. Additionally, at this stage companies add fillers and additives, which can make up as much as 85% of the final product’s volume. Many of these additives are toxic; some even disrupt our hormones. They can also leak out of plastic as it ages, seeping into our food and the environment, where they accumulate over time. Hundreds of millions of tons of plastic enter our lives and our environment each year. And with time and use, that plastic gradually wears down, shedding little pieces. In fact, these microplastics* make up an estimated third of the plasticthat enters the environment. We now find microplastics literally everywhere: our oceans, our food, and even the air we breathe. Synthetic carpets shed plastic into the air inside our homes, and this plastic can accumulate in our lungs with every breath.
Sulfur smell covering northwest Indiana believed to be caused by BP Whiting Refinery – Indiana Public Radio --Severe weather caused BP’s Whiting Refinery to send more pollution into the air Sunday night. Local emergency management officials believe that could be what’s causing a sulfur smell in several counties in northwest Indiana.Officials in La Porte County first thought it was a gas leak, but the utility didn’t find any. And later nearby Porter County also started getting overwhelmed with 911 calls about the smell. Lance Bella directs the Porter County Emergency Management Agency. “It smelled like sulfur, didn’t smell like natural gas and almost smelled like an oily smell. So I started checking with our local industry,” he said. Power outages disrupted operations at the Whiting Refinery causing unplanned gas flaring. That’s where excess natural gas produced during oil refining is burned off into the atmosphere.Flares are supposed to reduce most of the pollutants in natural gas, but they can still release things like sulfur dioxide — which can harm your lungs and make breathing difficult, especially for people with lung conditions. Flaring can also release carbon dioxide and some methane — greenhouse gasses that contribute to climate change. BP has said the community is safe, but local health officials and the Indiana Department of Environmental Management haven’t confirmed that. The company said no injuries have been reported.Bella said once Porter County EMA learned about BP’s excess flares, it contacted IDEM and the local health department. He said so far, officials with northwest Indiana counties haven’t found any other evidence of industrial leaks or spills that could have caused the smell.In a statement Monday morning, BP said it was monitoring the situation and it expects it to resolve itself in a few hours.Last month, the refinery received the largest federal penalty ever imposed for industrial air pollution in U.S. history.
Cheniere And China’s ENN Energy Lock In 20-Year LNG Deal -- The United States largest producer of LNG, Cheniere Energy, has signed a long-term liquefied natural gas (LNG) sale and purchase agreement with China’s ENN Energy Holdings. ENN will purchase ~1.8M metric tons/year of LNG on a free-on-board basis at Henry Hub prices for a 20-year term, with deliveries to commence mid-2026 ramping up to 0.9 million tonne per annum (mtpa) in 2027. The deal is subject to the completion of Cheniere’s Sabine Pass project, which is being developed to include up to three liquefaction trains with an expected total production capacity of ~20M tons/year of LNG. Current;y, Sabine Pass has six fully operational liquefaction units aka ?“trains”, each capable of producing ~5 mtpa of LNG for an aggregate nominal production capacity of ~30 mtpa. Cheniere processes more than 4.7 billion cubic feet per day of natural gas into LNG. Sabine Pass has multiple pipeline connections to interstate and intrastate pipelines, and is located less than four nautical miles from the Gulf of Mexico thus providing easy access to seafaring vessels. Last week, Cheinere entered another long-term liquefied natural gas sale and purchase agreement with Equinor ASA (NYSE:EQNR) that will see the Norwegian national oil company purchase 1.75M metric tons/year of LNG on a free-on-board basis for a purchase price indexed to the Henry Hub price, for a 15-year term.Last year, ENN signed a 13-year deal with Cheniere to purchase 900K metric tons/year, again based on Henry Hub prices.
Biden Seeks to Shield Taxpayers from Aging Offshore Oil Well Cleanup Costs -A new Biden administration plan for ensuring oil companies have enough money set aside to clean up old offshore platforms is being panned as a potential blow to domestic energy production as well as dozens of independent companies extracting crude from the Gulf of Mexico. The proposed rule advanced by the Interior Department’s Bureau of Ocean Energy Management marks the latest attempt to ensure taxpayers aren’t on the hook to pay for more than $40 billion in estimated decommissioning expenses, even if current and past owners file for bankruptcy protection. The federal government has struggled for years to set financial assurance requirements for aging offshore oil and gas infrastructure that may date back to the 1950s and has passed through many hands since. The new plan would help insulate major oil companies from decommissioning costs tied to the leases they once owned — a potential benefit for BP Plc, Shell Plc and other companies that have sold long-ago-drilled assets in the Gulf of Mexico. Overall, the measure would force companies to earmark an extra $9.2 billion in financial assurance to cover decommissioning costs, up from about $3.3 billion today. Those requirements would be tied to company credit ratings and the value of reserves — with the bulk of the burden expected to fall on non-integrated developers that collectively produce more than a third of Gulf of Mexico oil and gas. Potentially affected companies include smaller firms such as Kosmos Energy Ltd., and Talos Energy Inc., as well as larger producers, such as Murphy Oil Corp. and Hess Corp. It’s not clear there is a sufficiently large market to obtain an extra $9.2 billion in additional bonding. Opponents of the approach also argue the requirements would siphon capital from new drilling and development.
US natgas futures drop 6% on less hot forecasts, technical selling (Reuters) - U.S. natural gas futures dropped about 6% to a one-week low on Wednesday on forecasts for slightly less hot weather next week than previously expected, technical selling and as the amount of gas flowing to liquefied natural gas export (LNG) remains low due to maintenance outages at several facilities. That price decline came despite a drop in output in recent weeks and forecasts for the weather to remain hotter-than-normal through mid-July, especially in Texas. Power demand in Texas set a new record peak on Tuesday and was expected to break that all-time high on Wednesday as a heat wave bakes the state, according to preliminary data from the state's grid operator, the Electric Reliability Council of Texas (ERCOT). "Burgeoning Texas wind generation drove supply higher and actually reduced the call on power sector gas burns despite record temperatures - reflecting the growing importance of wind generation to ERCOT natural gas consumption," Extreme heat boosts the amount of gas generators burn to produce power for air conditioning, especially in Texas, which gets most of its electricity from gas-fired plants. . On its last day as the front-month, gas futures for July delivery on the New York Mercantile Exchange fell 16.0 cents, or 5.8%, to settle at $2.603 per million British thermal units (mmBtu), their lowest close since June 21. That price drop, the biggest one-day percentage decline since late May, pushed the contract out of technically overbought territory for the first time in four days. August futures, which will soon be the front-month, were down about 12 cents to $2.67 per mmBtu. Data provider Refinitiv said average gas output in the U.S. Lower 48 states fell to 101.5 billion cubic feet per day (bcfd) so far in June from a record 102.5 bcfd in May. Meteorologists forecast that weather in the Lower 48 states would remain hotter than normal June 28-July 13. With hotter weather coming, Refinitiv forecast that U.S. gas demand, including exports, would rise from 97.2 bcfd this week to 102.7 bcfd next week. The forecast for next week was higher than Refinitiv's outlook on Tuesday. U.S. exports to Mexico rose to an average of 6.4 bcfd so far in June from 6.0 bcfd in May. That compares with a monthly record high of 6.5 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 Corpus Christi in Texas.
Natural gas snaps 2-day loss on smaller-than-forecast storage build -- Natural gas prices rose on Thursday for the first time in three sessions after a smaller-than-expected storage build for last week helped steady a market that lost 8% of its value over just 48 hours. August gas, the most-active contract on the New York Mercantile Exchange’s Henry Hub, rose 3.3 cents, or 1.2%, to settle at $2.701 per mmBtu, or metric million British thermal units. The hub’s benchmark gas futures lost 18.8 cents over Tuesday and Wednesday on concerns about insipid demand for gas-driven cooling since the official start of the U.S. summer on June 21. Thursday’s rebound, however, came after the Energy Information Administration, or EIA, reported that U.S. gas storage rose by just 76 bcf, or billion cubic feet, during the week ended June 23. Weekly gas build comes just below forecast Industry analysts tracked by Investing.com had a consensus for a build of 83 bcf instead for the week. The 76-bcf injection into storage compared with the 81-bcf build seen during the same week a year ago and the five-year (2018-2022) average increase of 80 bcf. With the latest build, total gas held in inventory across the United States stood at 2.239 tcf, or trillion cubic feet. That was 25.3% above the same week a year ago and about 14.6% above the five-year average. It has been an interesting time for natural gas, with bulls managing to keep the market in the positive for most of the month despite the mixed heat trends across the country. With a gain of just over 18% for June, futures on the Henry Hub are headed for their best month in almost a year. The last time the market rallied more in a month was in July 2022, when it gained 46%.
US natgas prices up 4% to 17-week high on rising LNG feedgas, hot weather (Reuters) - U.S. natural gas futures gained about 4% to a 17-week high on Friday on a daily rise in the amount of gas flowing to liquefied natural gas (LNG) export plants, amid signs of lower U.S. inflation and forecasts for hotter-than-normal U.S. weather to continue through mid-July, especially in Texas. In Texas, power use remained high after setting a record on Tuesday as a heat wave continues to bake the state, according to the state's grid operator, the Electric Reliability Council of Texas (ERCOT). Extreme heat boosts the amount of gas generators burn to produce power for air conditioning, especially in Texas, which gets most of its electricity from gas-fired plants. 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. "A major factor at play today is the release of new inflation data suggesting that the (U.S.) Federal Reserve (Fed) may be less inclined to continue rate hikes than previously expected," analysts said, noting the rally began at 8:30 a.m. EDT (1230 GMT) after the U.S. Commerce Department released personal income data for May. The Commerce Department's report showed annual inflation rising last month at its slowest pace in more than two years. Signs of lower inflation could delay interest rate hikes by the Fed. Higher interest rates increase borrowing costs, which can slow the economy and reduce demand for energy. Front-month gas futures for August delivery on the New York Mercantile Exchange rose 9.7 cents, or 3.6%, to settle at $2.798 per million British thermal units, their highest close since March 3. For the week, the U.S. contract was up about 3%, putting it up for a fourth week in a row for the first time since April 2022. For the month, the U.S. contract was up about 23% after falling about 6% in May. For the quarter, the U.S. contract was up about 26% after dropping by a record 50% in the first quarter. Data provider Refinitiv said average gas output in the U.S. Lower 48 states fell to 101.5 billion cubic feet per day (bcfd) so far in June from a record 102.5 bcfd in May. On a daily basis, however, output was on track to rise 1.8 bcfd over the past three days to a preliminary two-week high of 102.0 bcfd on Friday.
Texas Oil and Gas Employment Growth in May Highest in 33 Years -- Data from the Texas Workforce Commission (TWC) has shown that upstream oil and natural gas employment in the state surged by 6,900 jobs in May, the highest single month reported job growth in the 33 years of data available on TWC’s website, the Texas Oil & Gas Association (TXOGA) highlighted. The addition of these jobs in May brings the total upstream oil and natural gas job count in Texas above 200,000 for the first time in over three years, TXOGA noted. Single month-to-month data points typically reflect job market variations that even out over longer periods, such as three to six months, TXOGA added in its comment on the figures. “Texas remains a powerhouse of production and all sectors of our economy benefit from robust activity,” said Todd Staples, President of the Texas Oil & Gas Association. “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. Despite a slowdown in rig count and concerns about the global economy, the world remains dependent on the tremendous resources produced every day by dedicated men and women in the oil patch,” he added. Since the Covid-low point of September of 2020, industry has added 49,000 Texas upstream jobs, TXOGA pointed out. At 206,000 upstream jobs, compared to the same month in the prior year, May 2023 jobs were up by 22,700, or 12.4 percent, over May of 2022, the organization said, adding that months with an increase in upstream oil and natural gas employment have outnumbered months with a decrease by 28 to 4. Oil and natural gas jobs pay among the highest wages in Texas with employers in oil and natural gas paying an average salary of approximately $115,000 in 2022, TXOGA highlighted. The Texas Independent Producers and Royalty Owners Association (TIPRO) previously noted that there were 13,779 active unique jobs postings for the Texas oil and natural gas industry in May, including 4,366 new job postings added during the month by companies. In comparison, the state of California had 5,100 unique job postings last month, followed by Louisiana (2,390), Oklahoma (2,037), and Pennsylvania (1,649), TIPRO revealed.
The wife of Supreme Court Justice Samuel Alito leased a plot of land to an oil and natural gas company while the judge was weakening the powers of the Environmental Protection Agency, report says -- In June 2022, the wife of Supreme Court Justice Samuel Alito filed a lease for a plot of land in Oklahoma which would give her partial revenue from any oil or gas obtained from the designated area, according to The Intercept. In the lease, Martha Ann Bomgardner Alito came to an agreement with Citizen Energy III — an oil and natural gas company — which would give her 3/16ths of the revenue generated from potential oil and gas sales if the plot that she inherited from her late father could produce any fossil fuels. There are thousands of oil and gas leases across Oklahoma, where the energy sector is a critical economic driver. And Citizen Energy III isn't part of any specific cases in front of the Supreme Court, so there doesn't appear to be a clear conflict of interest regarding Bomgardner Alito's land in Oklahoma. But the oil and gas lease troubles many environmentalists given Justice Alito's role in weakening the scope of the Environmental Protection Agency in several cases that have come before the court. Jeff Hauser, the founder and director of the Revolving Door Project, told The Intercept that there is a broader issue of what the land could reap financially — even if a company involved in a lease wasn't tied to a specific case in front of the court. "There need not be a specific case involving the drilling rights associated with a specific plot of land for Alito to understand what outcomes in environmental cases would buttress his family's net wealth," he told the outlet. "Alito does not have to come across like a drunken Paul Thomas Anderson character gleefully confessing to drinking our collective milkshakes in order to be a real life, run-of-the-mill political villain." In May, the Supreme Court limited the ability of the EPA to regulate wetlands in Sackett v. Environmental Protection Agency, which will affect the agency's ability to enforce the Clean Water Act. The decision frustrated President Joe Biden and served as a major blow to environmentalists.
Alito Ruled to Curb EPA’s Power After His Wife Leased Land to Oil and Gas Firm - Supreme Court Justice Samuel Alito has ruled multiple times over the past year to slash climate regulations and aid the fossil fuel industry and developers — and new reporting finds that he may have an indirect personal financial stake in those rulings.As The Intercept reported on Monday, Samuel Alito’s wife Martha Ann Alito struck a deal with oil and gas company Citizen Energy III last year: She would lease the company a plot of land she inherited from her father, and in return, she would get a fraction of the sales of the oil and gas it would potentially extract from the land.The 160-acre plot is located in Grady County, Oklahoma, one of the most active counties in the U.S. for oil and gas production. As part of the agreement, dated June 27, 2022, Martha Ann Alito gets paid 3/16ths of the sales of the fossil fuels from the land.Later that same week, the Supreme Court issued a ruling in West Virginia v. Environmental Protection Agency (EPA) that represented a major setback in the climate movement. Justice Alito joined the majority in the 6-3 decisionin which the Court ruled that the EPA doesn’t have the authority to implement limits on greenhouse gas emissions on power plants — a decision that climate groups decried as devastating and dangerous.On financial disclosures last year, the justice listed “mineral interests” valued between $100,001 and $250,000. As The Intercept notes, Samuel Alito has often recused himself from cases involving his investment portfolio, and Citizen Energy III isn’t currently involved in cases before the Supreme Court.Though there may not be a direct conflict of interest, however, the fact that the justice has a personal financial interest in the oil and gas industry and its ability to make profits without threat of regulation raises concerns over how he may rule in fossil fuel-related cases.“There need not be a specific case involving the drilling rights associated with a specific plot of land for Alito to understand what outcomes in environmental cases would buttress his family’s net wealth,” Revolving Door Project director and founder Jeff Hauser told The Intercept.“Alito does not have to come across like a drunken Paul Thomas Anderson character gleefully confessing to drinking our collective milkshakes in order to be a real life, run-of-the-mill political villain,” Hauser continued.Justice Alito is a longtime climate denier. In a speech at a conservative think tank’s event in 2017, he delivered a stunningly false speech in which he claimed that carbon dioxide isn’t a pollutant that’s harmful to life on earth — despite, of course, the gas’s major role in the climate crisis.“Carbon dioxide is not a pollutant. Carbon dioxide is not harmful to ordinary things, to human beings, or to animals, or to plants,” the justice said. “All of us are exhaling carbon dioxide right now.”
New Mexico regulators fine oil producer $40 million for burning off vast amounts of natural gas (AP) — New Mexico oilfield and air quality regulators on Thursday announced unprecedented state fines against a Texas-based oil and natural gas producer on accusations that the company flouted local pollution reporting and control requirements by burning off vast amounts of natural gas in a prolific energy-production zone in the southeast of the state. The New Mexico Environment Department announced a $40.3 million penalty against Austin, Texas-based Ameredev, alleging the burning caused excessive emissions in 2019 and 2020 at five facilities in New Mexico’s Lea County near the town of Jal. Regulators raised concerns about the excess release of several pollutants linked to climate warming or known to cause serious health issues, including sulfur dioxide. The agency alleged that Ameredev mined oil and natural gas without any means of transporting the gas away via pipeline, as required by state law. The company instead is accused of burning off the natural gas in excess of limits or without authorization in 2019 and 2020 — with excess emissions equivalent to pollution that would come from heating 16,640 homes for a year, the agency said in a statement. The open-air burning, or “flaring,” of natural gas is often used as a control measure to avoid direct emissions into the atmosphere, with permit requirements to estimate burning. “They simply were not following what they had represented in their permits. ... They represented that they would capture 100% of their gas, send it to the sales pipeline,” said Cindy Hollenberg, compliance and enforcement section chief at the air quality bureau of the New Mexico Environment Department. Representatives for Ameredev and a parent company could not immediately be reached for comment Thursday by phone or email. Separately, state oilfield regulators issued a violation notice and proposed a $2.4 million penalty against Ameredev for a series of regulatory infractions at one of the company’s wells. It accused Ameredev of failing to file required production and natural gas waste reports. “Such reports are critical for operators to demonstrate compliance with (New Mexico) waste rules, which themselves are a key component of New Mexico’s climate change policy,” the Energy, Minerals and Natural Resources Department said in a statement. “Other required reports were submitted but were unacceptably late.” Energy, Minerals and Natural Resources Department Secretary Sarah Cottrell Propst said her agency was pursuing the maximum penalty available.
Some oil field violations linger for years in Kern —Serious oil field violations flagged as many as four years ago by state regulators in Kern County remain unresolved, according to a new analysis of publicly available data that raises questions about California's commitment or ability to address leaky wells and other problems of concern to local communities. Data posted by the California Geologic Energy Management Division shows 14 violations cited by the agency in 2019 — petroleum leaks, spills, unauthorized releases and the like — are still active. Forty-nine more remain unsettled since 2020, along with 88 from 2021, an analysis by Los Angeles-based CJM Petroleum Consulting Inc. indicates. The totals do not include lesser citations for things like missing signage. Counting those, CJM found, the county total from 2019 alone rises to 223, excluding violations attributed to oil field operators that are either bankrupt or inactive. Industry representatives emphasize that violations are the exception for oil field operators that, as a whole, work closely with regulators to resolve leaks and other problems. But the data is a reminder of difficulties the state faces in ensuring compliance about a month after state and regional inspectors found methane leaking from 27 oil wells in the Arvin-Lamont area, or 40% of those tested. About half those leaks were repaired by their operators almost immediately. To address the rest, CalGEM issued notices of violations to two companies deemed responsible for wells that continued to emit methane, one of which has reportedly fixed both its leaks. The other, Los Gatos-based Sunray Petroleum Inc., has denied responsibility for the facilities because it no longer owns them, even as CalGEM insists the company is not relieved of its responsibility for them "until the wells are safely plugged and sealed to protect public health and the environment." Assemblywoman Jasmeet Bains, D-Bakersfield, raised concern about the well leaks earlier this month, telling Gov. Gavin Newsom in a June 9 letter their repair must become top priority for the sake of local residents worried about health and safety implications. She said by email Friday that notices of violations issued by CalGEM "are only useful if they cause violations to be corrected." "There are good actors and bad actors in every industry," Bains wrote, adding, "The bad actors are dragging their feet, refusing to take responsibility, and making excuse after excuse." "It is ridiculous that bad actors like Sunray can repeatedly ignore CalGEM's notices and warnings to fix their old oil wells, while at the same time, CalGEM is approving permits for them to drill new wells. ... We need the governor to give CalGEM clear direction that it is time to hold bad actors accountable for illegal pollution and willful noncompliance."
Saudi Arabia Could Slash Oil Supply To The U.S. - Saudi Arabia could be looking to slash crude oil shipments to the United States from next month to effect a tightening of the world’s most transparent oil market. As the Kingdom prepares to cut unilaterally 1 million barrels per day (bpd) from its crude oil production in July, its crude shipments to the west could be much more affected than exports to its primary market, Asia, which lacks transparent oil inventory reporting like the U.S. does, Bloomberg Opinion columnist Javier Blas argues. On several occasions in recent years, Saudi Arabia has significantly lowered crude shipments to the United States in attempts to tighten the U.S. market, which reports oil and products data on a weekly basis, unlike China and India, which rarely – if at all – report commercial or strategic oil stockpiles.Early this month, the OPEC+ producers decided to keep the current cuts until the end of 2024, but OPEC’s top producer, Saudi Arabia, said it would voluntarily reduce its production by 1 million bpd in July, to around 9 million bpd. The cut could be extended beyond July, Saudi Energy Minister Prince Abdulaziz bin Salman said. The production level in July would be Saudi Arabia’s lowest since 2011, excluding the initial cuts after the Covid outbreak in 2020 and the lowered production after the attack on Aramco’s facilities in September 2019.Even after the production cut Saudi Arabia announced for July 2023, Aramco, the world’s largest crude oil exporter, reportedly assured at least five North Asian refiners they would get the full crude volumes they had asked for in July.
Gulf of Mexico Sees Piracy Increase -- The Gulf of Mexico saw an increase in piracy incidents in 2022 compared to 2021. That’s according to Dryad Global Analyst Andrea Peniche Cobo, who told Rigzone that these incidents mainly occurred within the Bay of Campeche. When asked why this trend occurred, Cobo said the Covid-19 period caused an increased level of insecurity within Mexico. “While this took many forms throughout Mexico, along the Gulf of Mexico this meant a decreased level of security personnel within Mexican waters and around platforms, a decline in socio-economic conditions, and increased arming of organized crime groups,” Cobo said. “Therefore, not only did a decline in socio-economic conditions likely drive an increase in piracy, but the lack of security personnel also expanded the opportunity to do so,” Cobo added. “While this has not greatly affected the actual drilling and output of oil, piracy incidents interrupt personnel and put their lives at risk,” Cobo continued. Increased attacks can affect the willingness of companies to operate within the Gulf of Mexico, affect personnel willing to work those platforms, and cause interruptions in the traffic of support vessels to platforms, the Dryad Global analyst told Rigzone. Looking at what’s happening this year, Cobo said, so far in 2023, there has been a sharp decrease in reported incidents of piracy. “Yet, it is highly likely that this absence of reporting does not mean absence of incidents,” Cobo warned. “This is an area that has always suffered from severe underreporting, especially when it comes to attacks on platforms or supply vessels,” Cobo added. “Although reports indicate that platforms have increased their security, it is unlikely this has yet had much effect on the rate of incidents as onshore root motivators for piracy activity have not been ameliorated,” Cobo continued. The Dryad Global analyst also stated that corruption levels in Mexico have not decreased. “Therefore, law-enforcement remain likely to exercise delayed responses and incomplete reporting,” Cobo said. “Nevertheless, as pirates within the Gulf of Mexico are likely associated with local crime groups rather than cartels and usually commit robberies of valuable equipment and materials, it remains unlikely that they will target tankers and much larger vessels,” Cobo added.
Europe’s LNG Imports Surpass Pipeline Gas Imports For First Time Ever Europe’s LNG imports rose last year to levels that surpassed its imports of natural gas via pipeline, according to new data from the Energy Institute. Europe scrambled last year to distance itself from Russian pipeline gas after Russia invaded Ukraine and threatened to cut off gas shipments to several European nations. As Bloomberg noted on Monday, the Energy Institute’s data also showed that global natural gas production was fairly stable last year compared to 2021 levels—so the fact that Europe’s LNG imports had overtaken its Russian nat gas imports via pipeline is of particular note. The Energy Institute’s data shows that Europe’s natural gas imports via pipeline in 2022 were 35% lower than the previous year, coming in at 150.8 bcm—most of which still came from Russia. Meanwhile, Europe’s LNG imports rose to more than 170 bcm. To achieve this level of LNG imports, Europe had to construct import terminals for LNG. Asia increased its imports of LNG also, while Russia’s overall share of the world’s nat gas pipeline exports fell to 29% last year, compared to about 43%, where it’s hovered for the last decade. Asia, however, isn’t too concerned about locking in long-term deals to secure LNG supplies—something Europe has been loathed to do as it sets its sights on cutting its emissions by 55% by 2030—and then net-zero by 2050. Asia has no such reservations, and therefore has a leg up on Europe when it comes to securing LNG supplies. This leg-up for Asia has caused some to question Europe’s energy positioning in the run up to next winter, particularly if it turns out to be a rather cold winter. Norway is now the single-largest gas supplier to Europe.
European Natural Gas Consumption Continues to Plummet - The European Union’s (EU) independent energy regulator reported the bloc’s natural gas consumption has continued to drop even as trade liquidity and imports from the United States are still on the rise. The EU’s gas consumption has dropped 20.3% year-to-date, according to the latest market report from the European Union Agency for the Cooperation of Energy Regulators (ACER). ACER analysts wrote that the voluntary gas cuts industrial users made last year at the start of Europe’s energy crisis have continued despite improving supply stability. Consumption from Europe’s power sector has also declined, adding to the drop in demand. “Gas-fired power generation started to drop in November 2022 in view of improving renewable and nuclear production and lower electricity demand...
Turkey Forging Ahead With Plans for Natural Gas Hub Less Reliant on Russia Turkey is moving forward with plans for a regional LNG hub that could potentially exclude Russia as a partner. Reduced European gas demand, a recent offshore gas discovery and new liquefied natural gas supplies have helped reduce Russian pipeline imports – a sign that the Turkish government may have an alternative gas strategy. During the first five months of the year, Turkey received one LNG reload from Belgium and purchased cargoes originally destined for other European destinations from Norway, Trinidad & Tobago, and Mozambique, Kpler analyst Ana Subasic told NGI. Turkey imported 6.75 million tons (Mt) of the super-chilled fuel from ten countries from January to May, up from 5.44 Mt during the same period in 2022, according to Kpler data. The United States was the...
Eni chief executive says plan for pipeline to move gas to Cyprus 'part of our discussion' — The chief executive of energy company Eni said Tuesday that Cyprus-Israeli plans for a pipeline to move offshore natural gas from the two countries to Cyprus is “part of our discussion” with the Cypriot government. The gas would be processed for electricity generation and possible exportation. Eni CEO Claudio Descalzi said after talks with Cyprus President Nikos Christodoulides that any plan to develop gas deposits discovered off Cyprus’ southern coast “must have economic value.”Descalzi said talks focused primarily on Eni’s plans to drill by the end of the year an additional well in Block 6 — one of seven areas inside Cyprus’ exclusive economic zone where the Italian company along with partner Total of France hold licenses for hydrocarbon exploration.“We always support the government because they asked us, we work with them and clearly everything must have an economic value, but clearly we are working together. So it’s part of our discussion,” Descalzi said in response to an Associated Press question.Cyprus Energy Minister George Papanastasiou said talks also revolved around how quickly discovered gas deposits can be developed as part of the Cypriot-Israeli two-pronged plan.Eni views the pipeline project in combination with a processing plant to liquefy natural gas for export by ship “favorably,” Papanastasiou said, on condition that more deposits are discovered to make the construction of such infrastructure economically viable.The Cypriot energy minister said the plan is in two phases. The first foresees a pipeline to bring Israeli and Cypriot gas to the island nation for electricity generation to be consumed domestically with excess supply conveyed back to Israel via an undersea electricity cable.The second phase foresees construction of a plant to convert natural gas to liquid so it can be exported to Europe and elsewhere at a time when the continent seeks to diversify its supply in the wake of Russia’s invasion of Ukraine.Papanastasiou said Cypriot authorities will meet again with Eni officials in the near future for a more in-depth discussion on expediting development plans.
Shell, BP line up to buy NT shale gas as fracking gets green light - Global energy majors BP and Shell are considering buying shale gas from the Northern Territory’s environmentally and culturally sensitive Beetaloo Basin within the next decade if an ambitious new gas export project goes ahead. Tamboran Resources, an ASX-listed junior gas developer, said on Friday that it had signed non-binding initial agreements with BP and Shell over the potential purchase of liquefied natural gas (LNG) from its proposed production project at Middle Arm. Tamboran owns assets in the Beetaloo Basin, believed to be one of the world’s biggest untapped gas reserves, and is preparing to begin drilling works as soon as next month. “BP and Shell are two of the world’s largest LNG portfolio trading and energy companies and provide important and credible counterparties for Tamboran to progress financing discussions to support the sanctioning of the NTLNG project, capable of producing up to 6.6 million tonnes per annum,” Tamboran chief executive Joel Riddle said. Tamboran is aiming for first gas from the Beetaloo Basin from as early as 2025, and a potential LNG export plant from 2030. The memoranda of understanding come after the NT government this year cleared the way for companies to resume fracking, a process involving injecting high-pressure fluid into bedrock to force the extraction of gas, after a moratorium was lifted five years ago. The move to develop what could be a vast new gas production sub-basin has been welcomed by the oil and gas sector, which says extra volumes of the fossil fuel will provide a lucrative economic opportunity for the nation and help shore up east-coast energy security later this decade, when the Australian Energy Market Operator (AEMO) is bracing for an increased threat of domestic shortfalls. However, fracking plans in the region have met a wave of opposition from environmentalists who fear it will drive up Australia’s carbon footprint and add to the worsening climate crisis. Some traditional owners have also objected to fracking in the region amid concerns about its impacts on their ancestral waters and lands. In May, a coalition of 96 leading Australian scientists, co-ordinated by the Australia Institute think tank, published an open letter in national newspapers warning of the climate damage it could inflict.“Opening up new fossil fuel extraction projects of this scale is at odds with the government’s plan for net-zero by 2050,” said Matthew England, a professor at the University of New South Wales Climate Change Research Centre. Also on Friday, Tamboran told shareholders it had selected gas pipeline company APA Group to connect its Beetaloo Basin assets to the existing east-coast gas transmission network via the South West Queensland Pipeline, and to Tamboran’s proposed Middle Arm development.
Eastward gas flows stop on Yamal-Europe pipeline (Reuters) -Eastward natural gas flows on the Yamal-Europe pipeline to Poland from Germany stopped on Friday, data from operator Gascade showed. Exit flows at the Mallnow metering point on the German border fell to zero between 0600 and 0700 CET, from 1,030,135 kWh/h in the previous hour, the data showed.
Oil spill from Shell pipeline fouls farms and a river in a long-polluted part of Nigeria A new oil spill at a Shell facility in Nigeria has contaminated farmland and a river, upending livelihoods in the fishing and farming communities in part of the Niger Delta, which has long endured environmental pollution caused by the oil industry. The National Oil Spill Detection and Response Agency, or NOSDRA, told The Associated Press that the spill came from the Trans-Niger Pipeline operated by Shell that crosses through communities in the Eleme area of Ogoniland, a region where the London-based energy giant has faced decadeslong local pushback to its oil exploration. The volume of oil spilled has not been determined, but activists have published images of polluted farmland, water surfaces blighted by oil sheens and dead fish mired in sticky crude. While spills are frequent in the region due to vandalism from oil thieves and a lack of maintenance to pipelines, according to the UN Environmental Programme, activists call this a “major one.” It is “one of the worst in the last 16 years in Ogoniland," said Fyneface Dumnamene, an environmental activist whose nonproft monitors spills in the Delta region. It began June 11. “It lasted for over a week, bursts into Okulu River — which adjoins other rivers and ultimately empties into the Atlantic Ocean — and affects several communities and displaces more than 300 fishers,” said Dumnamene of the Youths and Environmental Advocacy Centre. He said tides have sent oil sheens about 10 kilometres (6 miles) further to creeks near the nation's oil business capital, Port Harcourt. Shell stopped production in Ogoniland more than 20 years ago amid deadly unrest from residents protesting environmental damage, but the Trans-Niger Pipeline still sends crude from oil fields in other areas through the region's communities to export terminals. The leak has been contained, but treating the fallout from the spill at farms and the Okulu River, which runs through communities, has stalled, NOSDRA Director General Idris Musa said. “Response has been delayed,” Musa said, blaming protesting residents. “But engagement is going on.” The apparent deadlock stems from mistrust and past grievances in the riverine and oil-abundant Niger Delta region, which is mostly home to minority ethnic groups who accuse the Nigerian government of marginalisation. Africa's largest economy overwhelmingly depends on the Niger Delta's oil resources for its earnings, but pollution from that production has denied residents access to clean water, hurt farming and fishing, and heightened the risk of violence, activists say. The communities “are very angry because of the destruction of their livelihoods resulting from the obsoleteness of Shell's equipment and are concerned the regulator and Shell will blame sabotage by the residents,” Dumnamene said. Often oil companies blame pipeline vandalism by oil thieves or aggrieved young people in affected communities for spills, which could allow the companies to avoid liability. London-based Shell said it is working with a joint investigatory team, consisting of regulators, Ogoniland residents and local authorities, to identify the cause and impact of the spill. Shell's response team “has been activated, subject to safety requirements, to mobilize to the site to take actions that may be necessary for the safety of environment, people and equipment,” a company statement said. NOSDRA confirmed the joint investigation, but a cause of the spill — whether sabotage or equipment failure — has not yet been revealed. Hundreds of farmers and fishermen who have been cut off from their livelihoods would insist on restoration of the environment and then compensation, Dumnamene said. At the request of the Nigerian government, the UN Environment Programme conducted an independent environmental assessment of Ogoniland, releasing a report in 2011 that criticised Shell and the Nigerian government for 50 years of pollution and recommended a comprehensive, billion-dollar cleanup.
Nigeria investigates Shell's Trans Niger pipeline spill (Reuters) - Nigerian authorities and Shell's local subsidiary were on Monday investigating the cause of a spill on the Trans Niger pipeline that lasted several days. The 180,000-barrel-per-day pipeline is one of two conduits to export Bonny Light crude. The spill at Eleme in Rivers state was detected on June 11 and four days later, Shell Petroleum Development Company of Nigeria Limited (SPDC) confirmed it in a statement. Advertisement · Scroll to continue Environmental rights groups said the spill lasted a week before it was contained. A team comprising SPDC, Nigerian Oil Spill Detection and Response Agency and local communities were at the site on Monday to gather information, analyse data, examine physical evidence, and assess the causes of the leak, said Youths and Environmental Advocacy Centre which monitors spills in the Niger Delta. A Shell spokesperson confirmed Monday's visit to the site. The investigation will determine the volume of oil spilt. Shell has over the years faced several legal battles over oil spills in the Niger Delta, a region blighted by pollution, conflict and corruption related to the oil and gas industry. The oil major blames most of the spills on pipeline vandalism and illegal tapping of crude. Thandile Chinyavanhu, Greenpeace Africa climate and energy campaigner, said the latest spill compounded Shell's record in one of Africa's leading oil producers.
New Oil Spill from Shell Pipeline Triggers Major Environmental Crisis in Niger Delta Nigeria's Niger Delta region, already plagued by long-standing environmental pollution caused by the oil industry, is facing further devastation as a new oil spill at a Shell facility contaminates farmland and a river. According to the reports, the spill originated from the Trans-Niger Pipeline operated by Shell, which passes through communities in the Eleme area of Ogoniland. Described by activists as a "major one," the spill has polluted water surfaces, damaged farmland, and resulted in the death of fish. While the precise volume of the oil spill is yet to be determined, the incident is deemed one of the worst in the last 16 years in Ogoniland. The spill began on June 11 and lasted for over a week, affecting multiple communities and displacing more than 300 fishermen, with the oil sheens resulting from the spill spreading for about 10 kilometers to creeks near Port Harcourt, Nigeria's oil business capital. Shell ceased production in Ogoniland over 20 years ago due to violent protests against environmental damage, but the Trans-Niger Pipeline still transports crude oil from other regions through these communities to export terminals. While the leak has been contained, the response to the fallout, including the cleanup of affected farms and the Okulu River, has been delayed due to mistrust and past grievances. The Niger Delta region, home to minority ethnic groups, has accused the Nigerian government of marginalization, with residents angry about the destruction of their livelihoods, which they attribute to the outdated equipment of Shell. Shell has initiated a joint investigation involving regulators, Ogoniland residents, and local authorities to identify the cause and impact of the spill. Meanwhile, a response team has been mobilized to take necessary actions for the safety of the environment, people, and equipment. However, the cause of the spill, whether sabotage or equipment failure, has not been revealed yet. The Niger Delta, which heavily relies on oil resources, has suffered severe pollution that has denied residents access to clean water, harmed farming and fishing activities, and increased the risk of violence, with a 2011 report by the U.N. Environment Program criticized Shell and the Nigerian government for 50 years of pollution, recommending a comprehensive billion-dollar cleanup. However, community protests and lawsuits by local activists have hindered the cleanup efforts, according to the government's claims. Local environmental activists, however, argue that the promised cleanup is a cover-up with no tangible impact.
Nigeria oil spill: Authorities investigate dayslong leak from a Shell pipeline in a region already blighted by pollution — Nigerian authorities and Shell’s local subsidiary were on Monday investigating the cause of an oil spill on the Trans Niger pipeline that lasted several days. The spill from the 180,000-barrel-a-day, which happened at Eleme in Rivers State in south Nigeria, was detected on June 11. Four days later it was confirmed by Shell Petroleum Development Company of Nigeria Limited in a statement. Environmental rights groups said the spill lasted a week before it was contained. Representatives from Shell, the Nigerian Oil Spill Detection and Response Agency, and local communities were at the site on Monday to gather information, analyze data, examine physical evidence, and assess the causes of the leak, said Youths and Environmental Advocacy Centre, which monitors spills in the Niger Delta. A Shell spokesperson confirmed Monday’s visit to the site. Inhabitants of Nigeria's Niger Delta, Africa's largest oil-producing region face high poverty rates and a largely degraded environment, owing to hundreds of spills every year. The investigation will determine the volume of oil spilled. Shell has, over the years, faced several legal battles focused on oil spills in the Niger Delta, a region blighted by pollution, conflict and corruption related to the oil and gas industry. The oil major blames most of the spills on pipeline vandalism and illegal tapping of crude. Thandile Chinyavanhu, a climate and energy campaigner at Greenpeace Africa, said the latest spill compounded Shell’s record in one of Africa’s leading oil producing nations. “Shell must be held accountable and financially responsible for this spill and for its neocolonial role in causing climate loss and damage,” Chinyavanhu said. She added, “as we approach global climate talks, COP28, world leaders must be prepared to make polluters pay.”
2 major oil spills discovered in Rivers communities in one week - A nonprofit organization, Oilwatch Africa, yesterday, raised alarm over two major oil spills in Rivers communities within one week by an international oil company operating in the area. This was made known in a statement issued by Oilwatch Africa, where it lamented the devastation caused by the spills from oil pipelines crisscrossing the communities. The statement accused oil companies of not showing seriousness about the issue by ensuring their facilities are in good condition. The statement reads in part, “With two major oil spills within a week in Rivers State, Nigeria, it is obvious that the oil companies are yet to show seriousness about ensuring that their facilities are in good working conditions, it is quite alarming that rather than remediating the harms, more investments are being made to expand the areas of threat. “New investments in the fossil fuels sector and incessant new oil spills threaten to push the world into climate catastrophe and expose the wrong headed pathway taken by nations when they gather at COPs for climate negotiations. “One oil spill was reported from a pipeline owned by Shell in Eteo community on June 13 2023 while another occurred at Eleme Local Government Area of Rivers State on Sunday, June 18 2023 in Oke-Olebo stream which is the only source of fresh water for the community.” The statement quoting the Director, Health of Mother Earth Foundation, HOMEF, and member of Oilwatch steering committee, Arc Nnimmo Bassey, saying, “We have always advocated for a cleaner environment and we charge the Hydrocarbons Pollution Remediation Project, HYPREP, to take into account the new oil spills that threaten to derail the ongoing cleanup process. “Steps should be taken to ensure accountability by offending parties”.
Aramco, TotalEnergies Award Contracts for $11B Saudi Petrochemicals Project - Saudi Arabian Oil Co. (Aramco) and TotalEnergies SE have awarded the rights for the building of an $11-billion petrochemicals complex in Saudi Arabia they tout as the Gulf’s biggest mixed-load steam cracker. The Amiral complex will be integrated with the SATORP refinery on the kingdom’s eastern coast to enable the already operational plant to convert off-gases and naphtha it produces, as well as ethane and natural gasoline from Aramco, to higher value chemicals, according to the announcement of the final investment decision December 15, 2022. It is targeted to start operation 2027. Hyundai Engineering & Construction Co. Ltd. has received the contract for “a mixed feed cracker and utilities, with a nameplate capacity of 1,650 kta [kilo tons per annum] of ethylene and related industrial gases, and utilities, flares and interconnecting systems that support main packages within the facilities”, the partners said in a press release Saturday. Another contract has gone to Maire Tecnimont SPA “for two polyethylene units using Advanced Dual Loop technology, with a nameplate capacity of 500 kta each, and the derivative units”. Sinopec Engineering Group Saudi Co. Ltd. has been picked for the complex’s tank farm, while Gulf Consolidated Contractors Co. has been signed for the transfer pipelines. Mohammed Ali Al-Suwailem Trading & Contracting Co. has been chosen for industrial support facilities. Mofarreh Marzouq Al Harbi & Partners Co. Ltd. will prepare the site, while Mobarak M. Al Salomi & Partners for Contracting Co. has been selected for temporary construction facilities. “Integrated with the SATORP existing refinery in Jubail, the new petrochemical complex will house the largest mixed-load steam cracker in the Gulf, with a capacity to produce 1.65 million tons of ethylene and other industrial gases per year”, the media statement said. Aramco and TotalEnergies expect the petrochemicals complex to support manufacturers of automotive parts, carbon fibers, detergents, drilling fluids, food additives and lubes, the partners. Some of the hydrogen that will be produced by the complex will also replace the methane used to fuel SATORP furnaces, according to a project profile on TotalEnergies’ website. The December announcement also noted, “In July 2022, SATORP was the first MENA [Middle East and North Africa region] refinery to be certified ISCC+, an international recognition towards its circular initiatives, such as the recycling of plastic and used cooking oil”. Aramco and its French partner project about 7,000 direct and indirect jobs to be offered for the project.
OPEC says oil demand will hit 110 million barrels per day in 2045— Global oil demand will rise to 110 million barrels a day in about 20 years, pushing the world's energy demand up by 23%, said OPEC on Monday. "Oil is irreplaceable for the foreseeable future," Secretary General Haitham Al Ghais of the Organisation of the Petroleum Exporting Countries said while addressing the inaugural Energy Asia conference held in the Malaysian capital of Kuala Lumpur. "In our worldwide outlook, we see global oil demand rising to 110 million barrels a day by 2045," he said, adding that oil will still comprise about 29% of the energy mix by then. hide content The forecast contradicts the International Energy Agency's predictions of annual demand growth thinning down from 2.4 million barrels per day in 2023 to 400,000 barrels per day in 2028. Two weeks ago, the IEA projected that global oil demand will increase 6% from 2022 to 105.7 million barrels per day in 2028 on the back of petrochemical and aviation sectors. OPEC's secretary general added that underinvestment in the oil industry will only challenge the viability of current energy systems and lead to an "energy chaos." From now till 2030, Al Ghais predicted another half a billion people will move to cities across the world as the global economy continues to expand. The world will need more oil — not less, he said. Gas hydro, nuclear hydrogen and biomass will expand. But it is clear that oil remains an integral part of the mix. Global growth is estimated to fall to a three-decade low of 2.2% a year between now and 2030, down from 2.6% for the period between 2011-2021, according to the World Bank. Al Ghais acknowledged that renewables will play a greater role in the world's energy mix going forward, and affirmed that some OPEC member countries are "already investing significantly" in the area. "We see global energy demand increasing by 23% through 2045," he said. "Gas hydro, nuclear hydrogen and biomass will expand. But it is clear that oil remains an integral part of the mix." Brent crude was trading about 0.92% higher at $74.53 during Asia's afternoon trade. West Texas Intermediate futures were up marginally by about 0.78%, trading at $69.70 per barrel.
Executives Predict Where WTI Oil Price Will End Up in 2023 -- Executives from 151 oil and gas firms have predicted where the West Texas Intermediate (WTI) price will end up this year as part of the latest Dallas Fed Energy Survey. When asked in the second quarter survey what they expected the WTI crude oil price to be at the end of 2023, the average survey response was $77.48 per barrel. The low forecast in the survey came in at $60 per barrel, while the high forecast came in at $100 per barrel. The price of WTI during the survey was $69.89 per barrel, the survey highlighted. In the previous first quarter Dallas Fed Energy Survey, which was released back in April, the average survey response to the same question, from executives from 145 oil and gas firms, was $79.64 per barrel. The low forecast in that survey was $50 per barrel and the high forecast came in at $160 per barrel. The WTI price during that survey was $68.51 per barrel, the first quarter Dallas Fed Energy Survey pointed out. In its latest short term energy outlook (STEO), which was released in June, the U.S. Energy Information Administration (EIA) projected that the West Texas Intermediate spot price would average $74.60 per barrel this year. The EIA projected in this STEO that the WTI spot average would come in at $74.16 per barrel in the second quarter of the year, $73.32 per barrel in the third quarter, and $74.97 per barrel in the fourth quarter. The WTI spot price averaged $94.91 per barrel in 2022, the EIA’s latest STEO highlighted. “We estimate West Texas Intermediate crude oil prices will average $83 per barrel over the three years from 2022 to 2024, while annual growth in U.S. crude oil production over the same period will average 0.4 million barrels per day,” the EIA said in its latest STEO. “That compares to average crude oil production growth of 1.1 million barrels per day during the three-year period from 2017 to 2019, when the WTI price averaged only $58 per barrel,” the EIA added. “The changing response to crude oil prices by U.S. producers may reflect a combination of the use of capital to increase dividends and repurchase shares instead of investing in new production, the effects of tighter labor markets and higher costs, and increased pressure on oilfield supply chains,” the EIA continued. The EIA’s previous STEO, which was released in May, projected that the WTI spot price would average $73.62 per barrel in 2023. In this STEO, the WTI spot average was projected to come in at $72.50 per barrel in the second quarter, and $73 per barrel in both the third and fourth quarters of 2023. A market report sent to Rigzone on June 27 showed that Standard Chartered expects WTI to come in at $88 per barrel in 2023. In another report sent to Rigzone on June 22, the Macquarie Macro Strategy team projected that WTI would average $75.37 per barrel in 2023. In a report sent to Rigzone back in May, BMI, a Fitch Solutions company, predicted that the WTI crude price would come in at $81 per barrel in 2023. Also in May, BofA Global Research highlighted in a report on U.S. oil and gas that it had a base case of $75 per barrel WTI.
China's Top Traders Set Oil Spinning in Middle East Play -- Two giants in China’s oil and refining sector have taken the biggest opposing positions in Middle East crude trading in years, transforming global cargo flows and puzzling oil traders the world over. Throughout this month, Dubai crude has fluctuated heavily, largely due to aggressive bidding and offering from the trading units of Chinese oil refiners, PetroChina Co and Sinopec. They’re respectively the nation’s biggest oil company and its top refiner. This has only intensified with time, overshadowing other players. Public clashes between China’s state-owned behemoths are uncommon, and in this instance the firms’ activity in the main Middle East oil price benchmark is particularly peculiar because both are big refiners who should, in theory, be eager to obtain crude as cheaply as possible. Instead, PetroChina’s Hong Kong entity has been bidding — and purchasing cargoes as a result of its bids — while Sinopec’s Unipec has been offering and selling shipments. Nobody replied to emails sent to PetroChina and Sinopec’s media departments seeking comment. This month, more than a thousand derivatives contracts have traded in the vital pricing window that sets the Dubai price — close to triple the monthly average in 2023 and the biggest volume for years. At least 10 other traders said the activity — surprising to all, given normal patterns for Chinese entities — made it harder to ascertain the true strength of the Middle East oil market, a pivotal part of the petroleum supply chain, as well as China’s state of recovery. The price of Dubai oil forms the basis of almost all exports from the Middle East, including Saudi Arabia. That means any strength or weakness in the price of the grade translates directly to the affordability of oil purchases from across the region, and how many barrels flow from elsewhere in the world to Asia. The surge has also likely helped to boost markets for oil that is similar to the types found in the Middle East. Norway’s Johan Sverdrup jumped by about $1 a barrel after Unipec purchased the grade. Traders said changes in global cargo flows might not have taken place without the spike in Chinese activity. In the futures market, Dubai is a far smaller contract than the likes of Brent and West Texas Intermediate. But in recent months Dubai open interest has picked up significantly — a sign of more position-taking. Window Shopping Normally, bids and offers on the Platts Dubai window are a reflection of companies’ view on the Middle East market. Traders can buy and sell partial contracts of Dubai crude on the window and get physical delivery of grades including Oman, Upper Zakum and Dubai after 20 transactions. Unipec is aggressively offering partial Dubai contracts, derivatives that when combined allow traders to sell full cargoes of oil from the region. So far the company has delivered 37 cargoes — or 18.5 million barrels — to various buyers. PetroChina HK has bought 11.5 million barrels. France’s TotalEnergies SE was previously the most active bidder, but has now been overtaken by PetroChina. Total has also been selling cargoes in a parallel North Sea pricing window for much of this month. Two Chinese giants previously went head-to-head in 2015 when a unit of China National United Oil Corp., parent company of PetroChina, bought 36 million barrels of Middle East Crude, mostly from Unipec. Platts, a unit of S&P Global which operates the Dubai pricing window, said the trading activity is the biggest since 2015 and that the buying and selling of cargoes has been between a broad range of market participants. It added that Dubai prices have been boosted by a host of factors including OPEC production cuts and official selling price increases from Saudi Arabia, citing traders. The impact of the trades on the rest of the world is already clear. In early-June, Unipec’s aggressive selling signaled the company was reluctant to buy big volumes from the Middle East. Instead, it purchased supplies from the North Sea and US, lifting the cost of some grades priced against the Brent benchmark. With Middle Eastern barrels now looking cheaper, it’s possible that Asian refiners may consider nominating less crude from Saudi Arabia next month, seeking more affordable alternative barrels instead, traders said. Cheaper spot cargoes have already prompted interest from China’s Rongsheng Petrochemical Co. and Taiwan’s Formosa Petrochemical Corp.,, underscoring the wide-reaching impact of the window battle.
Oil prices up on possible turmoil in Russia | Al Bawaba – Oil prices rose Monday in the wake of an aborted revolt by Russian mercenaries over the weekend on concerns over further disruption of the global oil supply chain, news agencies reported. Also Read Wagner forces leave Voronezh Wagner forces leave Voronezh Brent crude futures were up 0.8 percent, to $74.41 per barrel, by 7:25 a.m. GMT, according to Reuters. Whereas United States (US) West Texas Intermediate (WTI) crude was up 0.6 percent, settling at $69.44 per barrel. In the Asian market, both crudes gained up to 1.3 percent in early trades. Russia is a major oil producer and an ally of the Organization of Petroleum Exporting Countries (OPEC). The coalition of OPEC members and non-member oil producers and exporters is often referred to as OPEC+. For years, US and Western sanctions on Russia have complicated the process of Russian oil exportation. However, more recently, in the wake of the Russia-Ukraine war, tighter sanctioning has affected Russia’s ability to export oil directly. Russian exporters have been selling through intermediaries, such as India and other countries. The Russian national currency, the Ruble, also sank on Monday, according to Agence France-Presse (AFP). It slipped to 87 to the dollar, reaching its lowest level since March last year, shortly after Russia's invasion of Ukraine Over the weekend, mercenary group Wagner launched a revolt against Russian President Vladimir Putin, which was quickly put to bed, with the intervention of Putin’s allies. Members of Wagner group prepare to pull out from the headquarters of the Southern Military District to return to their base in Rostov-on-Don late on June 24, 2023 – Source: Roman ROMOKHOV / AFP Concerns over further turmoil in Russia affecting the supply of Russian oil drove oil prices, according to Bloomberg. Weak economic data in China and other leading world economies, combined with rising interest rates, have effectively offset production cuts by OPEC+, preventing a strong surge in oil prices. Nonetheless, the challenge posed by the Wagner group raised questions about Putin’s grip on power. Consultancy Rystad Energy said in a note late on Sunday that it did not expect to see a significant increase in oil prices as a result of the "short-lived event", Reuters reported. "We do, however, believe that the geopolitical risk amid internal instability in Russia has increased," Rystad added. That said, oil prices lost a significant part of the gains from earlier, Bloomberg underscored. “This weekend’s developments will not be an immediate game changer,” Keshav Lohiya told Bloomberg, founder of consultant Oilytics. “Russia’s resilient oil production has been a big surprise and one of the significant bearish overhangs in the market,” he underlined West Texas Intermediate traded near $69 a barrel, while Brent futures were also little changed, according to Bloomberg’s latest on oil prices.
Oil, Equities Wobble After Russia's Military Insurrection -- New York Mercantile Exchange oil futures and Brent crude traded on the Intercontinental Exchange settled Monday's session with tepid gains. The moves came as investors assessed the fallout from an attempted military insurrection led by Evgeny Prigozhin, head of Russia's Wagner mercenary group, on political stability and oil supplies in one of the world's largest nuclear countries and suppliers of energy to global markets. Russia produces more than 10 million barrels per day (bpd) of oil or one in 10 barrels globally. Despite Western sanctions imposed on Moscow in the wake of its full-scale invasion of Ukraine in February 2022, Russia exports roughly 80% of produced volumes, with countries like India, China and Turkey emerging as major buyers of Russian oil. Disruptions to those flows on the global market could trigger Asian buyers of Russian oil to compete with Western nations for supplies from other producers. Typically, geopolitical uncertainty in major oil-producing nations over the past 35 years -- ranging from civil unrest to coup attempts and changes of governments -- have, on average, added 8% to the price of oil in the immediate aftermath of the triggering event. In the days following Russia's invasion of its neighbor Ukraine, the international crude benchmark Brent contract surged more than 40% to $139 per barrel (bbl) on March 7, 2022. In this case, however, the market's reaction to the military insurrection has so far been muted, with investors apparently seeking more clarity on the events unfolding in Russia. So far, there have been no reports or data points suggesting that Russian oil production or refining capacity has been affected by the disturbances. Speaking at a government meeting this afternoon, Russian Deputy Prime Minister Alexander Novak said the country's oil industry is operating normally and is preparing for the autumn and winter season, accumulating stocks, and carrying out necessary maintenance. On Friday night, Wagner Chief Prigozhin released a video where he accused Russia's senior leadership of corruption and incompetence and questioned the rationale behind the invasion of Ukraine, a direct challenge to Russian President Vladimir Putin. The warlord, his voice seething with anger, said his men who numbered 25,000 would start moving from their base camps in eastern Ukraine toward Moscow. Stunned officials in Moscow scrambled to respond. Late on Friday, the Federal Security Service or FSB announced it had opened a criminal case against Prigozhin for "organizing an armed insurrection." The focal point of the insurrection quickly became Rostov-on-Don in southern Russia, the army's Southern Command Center, which oversees the war in Ukraine. By midday on Saturday, the column was heading through Voronezh region hours away from Moscow. However, on Saturday night, Prigozhin halted his march and reports of a deal brokered by Belarussian President Alexander Lukashenko emerged. As of Monday afternoon, the criminal case against Prigozhin has resumed and Putin gave a televised address to the nation, condemning the insurrection and its leader. Prigozhin, for his part, released an audio message on Monday defending the "march of justice" as a popular protest against the war in Ukraine and corrupt officials. Unofficial polls in Russia suggest Prigozhin's popularity is quickly soaring among the public. The situation remains fluid. At settlement, NYMEX August West Texas Intermediate futures gained $0.21 to finish at $69.37 per bbl, and international crude benchmark Brent for August delivery advanced to $74.18 bbl. NYMEX July ULSD futures added $0.0317 to $2.4388 per gallon, and NYMEX July RBOB futures gained $0.0203 to $2.5375 per gallon.
Oil advances as China stimulus optimism filters across markets - Oil extended gains as commodities and stocks in Asia were swept up in optimism around the potential for China stimulus measures. West Texas Intermediate climbed near $70 a barrel after a choppy session on Monday following a short-lived uprising in Russia over the weekend. Chinese Premier Li Qiang said at a forum Tuesday the government would roll out more practical, effective measures to boost domestic demand, but those promises were largely reiterations of prior statements made by officials. Oil in New York remains on track for its first back-to-back quarterly loss since 2019, in part due to headwinds from China’s lackluster economic recovery and aggressive monetary tightening from the US Federal Reserve. Resilient Russian crude exports have added to the pressure on prices. Russian President Vladimir Putin condemned leaders of the Wagner mercenary group as “traitors,” although his comments did little to clarify the mystery of the weekend’s events or the fate of mutiny leader Yevgeny Prigozhin. Any prolonged turmoil would impact global oil markets. “The aborted mutiny fizzled,” said Vishnu Varathan, the Asia head of economics and strategy in Singapore, referring to the uprising in Russia. “But this has not expunged geopolitical risks, not by a long shot.”
Oil prices fall ahead of US stocks data - Markets - Oil prices slipped on Tuesday ahead of data shedding light on U.S. appetite for fuel during the summer driving season, with the Brent benchmark’s price structure indicating bulls are retreating. By 1143 GMT, Brent crude futures were down $1.36, or 1.8%, at $72.82 a barrel, while U.S. West Texas Intermediate (WTI) futures fell $1.31, or 1.9%, to $68.06 a barrel, erasing earlier gains. Both contracts are trading broadly in the middle of a $10 a barrel range traced since early May. Oanda analyst Craig Erlam said prices were mainly at the mercy of “the ever-changing expectations for interest rates.” European Central Bank President Christine Lagarde said on Tuesday that stubbornly high inflation will require the bank to avoid declaring an end to rate hikes. Higher rates can weigh on economic activity and thus oil demand. European equities were also down. U.S. inventory data from the American Petroleum Institute industry group is expected after 2000 GMT, followed by government data on Wednesday. A Reuters poll indicated U.S. inventories probably fell in the week to June 23. Brent’s six-month backwardation - a price structure whereby sooner-loading contracts trade above later-loading ones - is at its lowest since December and barely positive, indicating shrinking concern about supply crunches. For the two-month spread, the market is in shallow contango, the opposite price structure, indicating traders are factoring in a currently slightly oversupplied market. The oil market has shrugged off a clash between Moscow and Russian mercenary group Wagner which was averted on Saturday. Russian oil loadings have kept on schedule. “The latest geopolitical flare-up quickly pales into insignificance compared to persistent macroeconomic considerations,” This is the case despite Saudi Arabia’s pledge to slash output from July. Much depends on whether Chinese oil demand picks up in the second half. Premier Li Qiang said China will take steps to invigorate markets, without giving details.
The Market's Gains Were Limited by Signals that the European Central Bank is Not Done with Interest Rate Hikes - The oil market on Tuesday posted an outside trading day as the market’s gains were limited by signals that the European Central Bank is not done with interest rate hikes. The market breached its previous high and posted a high of $70.15 in overnight trading. However, it erased its gains and sold off to $67.73 in early morning trading. The market was pressured as European Central Bank President, Christine Lagarde, said that high inflation will require the bank to avoid declaring an end to rate hikes. The crude market traded sideways for much of the day as it awaited the release of the weekly petroleum stock reports. However, further selling ahead of the close pushed the market to a low of $67.55. The August WTI contract settled down $1.67 at $67.70 and the August Brent contract settled down $1.92 at $72.26. The WTI contract continued to trend lower in the post settlement period and posted a new low of $67.50. The product markets also retraced its previous losses and settled in negative territory, with the heating oil market settling down 3.98 cents at $2.3990 and the RB market settling down 2.07 cents at $2.5168. OPEC said it has not invited Guyana to become a member. OPEC has invited Guyana’s Minister of Natural Resources, Vickram Bharrat, to participate in the 8th International OPEC Seminar scheduled for July 5th-6th in Vienna. On Monday, The Wall Street Journal had reported that Saudi Arabia's Energy Minister, Abdulaziz bin Salman, and Haitham al-Ghais, OPEC's Secretary-General, had invited Guyana to join the group.Russia’s seaborne crude shipments fell by about 980,000 bpd to 2.55 million bpd in the week ending June 25th. Lower shipments were seen from all regions but the largest decline was seen in the Baltic region, where fewer than half the normal number of tankers were loaded at Primorsk.Goldman Sachs said interest rates are persistent headwind to oil time spreads. It estimates higher interest rates are reducing front-to-back time spreads by $8/barrel versus two years ago.Shell Plc’s 227,900 bpd Norco, Louisiana refinery is scheduled to resume normal operations by Thursday. The refinery’s production was shut on Saturday following a power outage caused by a malfunction at an Entergy Corp substation. A brief fire was triggered by the power outage.BP said operations were stabilized at its 435,000 bpd refinery in Whiting, Indiana after it experienced disruption caused by severe weather.Marathon’s Galveston Bay, Texas refinery is currently flaring.Citgo Petroleum Corp reported that operating conditions at its 167,500 bpd Corpus Christi, Texas East plant have made flaring necessary.Despite the announcement by Saudi energy minister Prince Abdulaziz bin Salman earlier this month that Saudi Arabia would reduce its crude output by an extra 1 million b/d for at least July under the latest OPEC+ agreement, Japan’s trade group Petroleum Association of Japan noted that Japanese refiners had not received any cuts from Saudi Arabia for their term crude nominations for July loading allocations. Platts is reporting that it appears refiners in South Korea and Taiwan were also receiving nominated full term volumes as well.
A Larger Than Expected Draw in Crude Stocks Offset Concerns Over Further Interest Rate Hikes Slowing Economic Growth and Global Oil Demand - The oil market traded higher as a larger than expected draw in crude stocks offset concerns over further interest rate hikes slowing economic growth and global oil demand. The market retraced some of Tuesday losses in overnight trading following the release of the API weekly petroleum report, which showed a draw of about 2.4 million barrels on the week. However, the market erased its gains as the market refocused on further interest rate hikes and slowing demand and sold off to a low of $67.05. The crude market later traded mostly sideways before it bounced higher and extended its gains to over $2 as it rallied to a high of $69.73 following the release of the EIA report, which showed a larger than expected draw of 9.603 million barrels on the week. The August WTI contract settled up $1.86 at $69.56 and the August Brent contract settled up $1.77 at $74.03. The product market also ended the session higher, with the heating oil market settling up 77 points at $2.4067 and the RB market settling up 8.66 cents at $2.6034. The EIA reported that U.S. crude oil stocks held at Cushing, Oklahoma increased by 1.209 million barrels to 43.2 million barrels, the highest level since June 2021. It also reported that U.S. crude stocks in the SPR fell by 1.4 million barrels on the week to 348.6 million barrels, the lowest level since August 1983. It also reported that U.S. refinery utilization in the Midwest increased last week to the highest level since July 2021. Refinery utilization in the Midwest increased to 97.1%. Meanwhile, product supplied of jet fuel increased to 1.94 million bpd, the highest level since December 2019. Oil traders' concerns have shifted from under-supply to over-supply, as expectations of weak economic growth outweigh Saudi Arabia's output cuts. For the first time since December, the six-month spread for Brent shows contracts for earlier loading are trading below those for later loading, a structure known as contango. This encourages traders to pay for storing oil so it can be sold at higher prices when supplies are expected to have declined. The same structure for the U.S. benchmark WTI crude oil contract fell into contango for the first time since March on Tuesday. JP Morgan said global oil demand will likely reach 106.9 million bpd in 2030, up 7.1 million bpd from 2022 levels. It sees oil supply increasing from 99.1 million bpd in 2022 to a peak of 104.5 million bpd in 2027 before falling back to 102.6 million bpd in 2030. IIR Energy reported that U.S. oil refiners are expected to shut in about 1,082,000 bpd of capacity in the week ending June 30th, cutting available refining capacity by 209,000 bpd. Offline capacity is expected to fall to 129,000 bpd in the week ending July 7th. Colonial Pipeline Co is allocating space for Cycle 39 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 Rebounds on Falling Inventory, Fading Recession Fears -- Oil futures nearest delivery on the New York Mercantile Exchange and Brent crude traded on the Intercontinental Exchange settled Wednesday's session sharply higher. The gains followed inventory data from the U.S. Energy Information Administration showing domestic crude oil stockpiles declined by a massive 9.6 million barrels (bbl) last week in a sign that OPEC+ production cuts engineered by Saudi Arabia are tightening the global oil market. The 9.6-million-bbl crude draw was about nine times above market expectations and the largest weekly decline in domestic crude oil inventories since the beginning of the year. The outsized drop came despite a 1.4-million-bbl transfer of oil last week from the nation's Strategic Petroleum Reserve and a sharp reduction in refinery run rates. U.S. refiners processed an average 16.3 million barrels per day (bpd) of crude oil, 215,000 bpd less than in the prior week. Demand for refined fuels also picked up slightly, with four-week average gasoline consumption in the United States jumping to the highest level since December 2021 at 9.3 million bpd. The bullish inventory report reignited buying interest in the oil complex driven by the outlook for a tighter physical oil market in the second half of the year. Following the OPEC+ announcement on June 4 to extend production cuts through the end 2024 joined with Saudi Arabia's decision to unilaterally cut output by 1 million bpd in July, some analysts forecast global oil inventories will begin gradually falling in each of the next five quarters, putting upward pressure on oil prices. At settlement, West Texas Intermediate August futures advanced $1.86 per bbl to $69.56 per bbl, and international crude benchmark Brent for August delivery gained $1.78 to $74.03 per bbl. The next-month delivery September Brent contract settled the session with a $0.21-per-bbl premium to the expiring contract, as Brent's backwardation along the forward curve continues to unwind. NYMEX RBOB July futures advanced $0.0866 to $2.6034 per gallon, with next-month August futures finishing the session at $2.4971 per gallon. NYMEX ULSD July contract edged higher to $2.4067 per gallon, and the August contract gained to $2.3948 per gallon. ICE Brent August, NYMEX RBOB and ULSD July futures expire the afternoon of Friday, June 30. Further supporting the oil complex was the latest macroeconomic data for the U.S. that showed the economy still has momentum heading into the second half of the year supported by improving consumer sentiment and continued demand for services. The consumer confidence index released by the Confidence Board came in stronger than expected in June, jumping to its highest level since January 2022, as both the present situation and expectations components rose. Meanwhile, U.S. durable goods orders climbed for the third straight month in May, up 1.7% from the prior month. The recent increase in orders might be a sign that manufacturers have found a bottom, at least temporarily, after slumping in 2022. Orders rise in an expanding economy and shrink in a contracting one. In reaction to better-than-expected data released this week, Goldman Sachs raised its U.S. economic growth estimate for the second quarter by 0.4% to 2.2%.
Oil Slips After EIA-Fueled Gains as Traders Gauge US Data - -- Following Wednesday's rally fueled by the outsized draw in U.S. commercial crude oil inventories, oil futures nearest delivery on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange softened in morning trade Thursday as investors assessed stronger-than-expected U.S. macroeconomic indicators. Government data released this morning showed U.S. gross domestic product expanded 2% during the first three months of the year, far exceeding expectations for a 1.4% growth. U.S. Department of Commerce previously estimated first quarter GDP at 1.3%. "The updated estimate primarily reflected upward revisions to exports and consumer spending," said the department in a report, adding that this was partly offset by downward revisions in other areas such as non-residential fixed investment. The revision comes as the labor market in the United States remains extraordinarily tight heading into the second half of the year, with weekly unemployment claims showing little sign of layoffs picking up pace. In the week ending June 24, initial jobless claims came in at 239,000, a decrease of 26,000 from the previous week's revised figure. This is the first weekly drop in initial claims in the past six weeks. The consumer confidence index released earlier this week by the Conference Board also came in stronger than expected, jumping to its highest level since January 2022, as both the present situation and expectations components rose. Wednesday's inventory report released by the U.S. Energy Information Administration was mostly supportive for the oil complex, showing a massive drop in commercial crude oil inventories as exports surged to the second-strongest weekly pace on record. Further details of the report revealed commercial crude stocks plunged 9.6 million bbl in the week ending June 23 -- the largest weekly draw in commercial crude oil inventories so far this year. This leaves U.S. commercial crude stocks 9.2% or 38.1 million bbl above year-ago levels. The outsized crude draw offset modest builds to gasoline and distillate fuel oil, leading total commercial petroleum stocks 5.2 million bbl lower on the week. The outsized drop also came despite a 1.4-million-bbl transfer of oil last week from the nation's Strategic Petroleum Reserve and a sharp reduction in refinery run rates. U.S. refiners processed an average 16.3 million bpd of crude oil, 215,000 bpd less than in the prior week. Demand for refined fuels also picked up slightly, with four-week average gasoline consumption in the United States jumping to the highest level since December 2021 at 9.3 million bpd. The bullish inventory report reignited buying interest in the oil complex driven by the narrative of a tighter physical oil market in the second half of the year. Following the OPEC+ announcement on June 4 to extend production cuts through the end 2024 joined with Saudi Arabia's decision to unilaterally cut output by 1 million bpd in July, some analysts forecast global oil inventories will begin gradually falling in each of the next five quarters, putting upward pressure on oil prices. Near 9 AM ET, West Texas Intermediate August futures traded near $69.63 bbl and international crude benchmark Brent for August delivery gained $0.12 to $74.17 bbl. The next-month delivery September Brent contract is trading at a $0.21 bbl premium to the expiring contract, as Brent's backwardation along the forward curve continues to unwind. NYMEX RBOB July futures slipped $0.0102 to $2.5932 gallon, with next-month August futures trading at $2.5932 gallon. NYMEX ULSD July contract edged higher to $2.4256 gallon, and the August contract gained to $2.4097 gallon. ICE Brent August, NYMEX RBOB and ULSD July futures expire Friday (6/30) afternoon.
Oil Rises in Choppy Trading on Mixed Signals - Oil inched higher in a choppy session as a traders weighed a hawkish rate outlook from central banks against positive signals from the world’s largest economy.US data on Thursday showed a resilient economy and jobs market, signaling potentially strong demand for crude. But the reports also raise the likelihood that the Federal Reserve will keep boosting interest rates. Fed Chair Jerome Powell added to the hawkish overhang on prices by saying that at least two interest-rate increases are likely necessary this year to keep bringing inflation lower.US benchmark crude is on track for its first back-to-back quarterly decline since 2019 on China’s lackluster economic recovery and the Federal Reserve’s aggressive monetary tightening. Supply has also been plentiful, bolstered by resilient exports from Russia, despite sanctions.US crude inventories shrank by 9.6 million barrels last week, the largest drawdown in more than a month, according to the Energy Information Administration. Gasoline demand averaged over a four-week period surged to the highest since 2021.WTI for August delivery rose 30 cents to settle at $69.86 a barrel in New York. Brent for August settlement climbed 31 cents to $74.34 a barrel.
Oil nudges up as crude draw levels with rate hike fears -- Rate hikes are a clear and present danger to oil — market action showed Thursday even as crude prices rose a second day in a row after a large weekly drawdown in U.S. crude stocks that signaled an encouraging start to summer demand for travel. Crude prices spent a good part of the day in negative territory as Federal Reserve Chair Jay Powell, in more comments during his European travels, showed the central bank’s determination in using rate hikes to subdue inflation running at more than twice its appetite. In the final two hours of trade, however, both U.S. crude and global oil benchmark Brent rebounded as market participants fell back on Monday’s bullish sentiment that rode on the crude draw for the week ended June 23. New York-traded West Texas Intermediate, or WTI, settled up 30 cents, or 0.4%, at $69.86 a barrel, adding to Wednesday’s 2.8% rally. London-traded Brent crude finished its New York session up 31 cents, or 0.4%, at $74.34 per barrel. In the previous day’s trade. Brent rallied 2.4%. Oil prices have had a disquieting June on worries about the economy, with WTI on course to finish up 0.9% after an 11% slump in May. Brent is headed for a 3% gain versus last month’s 9% drop. “The gradual consolidation that we're seeing in crude doesn't appear to be nearing an end, with the price simply fluctuating between the range highs and lows over the last couple of months,” “The uncertainty around inflation, interest rates, and therefore the economy may well be behind that as investors have frequently been caught out by just how stubborn price pressures have been and how much central banks will need to do in order to contain them. Until we get more clarity on that, this range trading may continue.” A panel discussion on Wednesday hosted by the European Central Bank and including the heads of the Federal Reserve, Bank of England and Bank of Japan, showed nearly all on board with higher interest rates. Fed Chair Powell followed that up on Thursday by telling a banking event in Madrid that the U.S. central bank was trying to find a level for rates that will restrain economic activity and inflation without causing unnecessary weakness. Latest U.S. gross domestic product data also showed more resilience than thought in the economy that could put more winds behind the Fed’s rate hike sails. U.S. GDP grew by an annualized 2% in the first quarter of this year, the Commerce Department said Thursday in a revelation likely to add to the Federal Reserve’s relief that its rate hikes had not weighed too much on growth. The Commerce Department’s prior growth estimate for the quarter was just 1.3%. The Fed has been seeking instead for a “soft landing” of the economy, which translates to slower but not negative GDP growth. The latest quarterly result indicates that the central bank might just get its wish. The Consumer Price Index, the broadest gauge for U.S. inflation, grew by 4% in the year to May, expanding at its slowest pace in more than two years. The Personal Consumption Expenditures Index, the Fed’s preferred inflation gauge, meanwhile, grew by 4.4% in the year to April. Both are, however, at least twice above the Fed’s 2% target for annual inflation. The Fed, in response, has raised rates by 5% since the end of the coronavirus outbreak in March 2022, bringing them to a peak of 5.25%. The central bank’s next decision on rates will be on July 26. Many economists predict the Fed will add another quarter percentage point at that meeting, lifting rates to a peak of 5.5%, as it tries to further tame inflation.
Oil Gains as Markets See Cooling Inflation, Solid Services -- New York Mercantile Exchange oil futures and Brent crude traded on the Intercontinental Exchange settled the last trading day of June and second quarter with tepid gains spurred by expectations for a delayed slowdown in U.S. and Eurozone economies amid a gradual but slow downtrend in core inflation and better-than-anticipated performance of the services sectors at the end of the first half of 2023. The Personal Consumption Expenditures index -- the Federal Reserve's preferred inflation measure, showed consumer prices last month rose at the slowest pace since April 2021. The stickiness of core inflation however hints at persistent price pressure. Headline PCE index eased to 3.8% year-on-year in May, a significant drop from 4.3% a month earlier, revealed data released this morning from the Bureau of Economic Analysis. Much of the slowdown was due to a sharp drop in energy price prices, and food prices to a lesser extent. But core PCE, which excludes volatile food and energy prices, slowed only marginally to an annualized rate of 4.6% from 4.7% a month earlier, indicating that inflation remains stubbornly high in many areas. Fresh inflation data raises the question of how high the Fed will need to hike rates to tame inflation. The Federal Open Market Committee left the federal funds rate unchanged at a 5% to 5.25% target range following their June policy meeting. During the post-meeting news conference, however, Chairman Jerome Powell explained that the pause in rate hikes did not necessarily mean that they have reached the terminal rate. As of Friday, investors see an 85% chance of a 25-basis point hike in July and a nearly 50% chance of another hike in November. The latest economic data releases in the United States, Eurozone, and the United Kingdom have been consistent with the view that the global economy will either avoid a recession altogether or suffer a delayed slowdown unless there is an exogenous shock or a policy mistake from central banks. U.S. Gross Domestic Product confounded economists with a 2% annualized growth rate in the first quarter, far exceeding expectations for a 1.4% expansion. The U.S. and other major economies in the Organization for Economic Cooperation and Development inherited a tight post-pandemic labor market that, in turn, supports aggregate demand in the economy leading to sustained job gains. For context, the latest jobless claims in the United States showed no meaningful rise in layoffs despite expectations for the labor market to soften into the summer months. While speaking at the European Central Bank's Forum on Central Banking in Sitra, Portugal, this week, heads of all major central banks, including the Federal Reserve, Bank of Japan, Bank of England, and ECB pushed back against a narrative of inevitable recession, citing resilient labor markets and consumer confidence. At settlement, West Texas Intermediate August futures advanced $0.78 bbl to $70.64 bbl and international crude benchmark Brent for August delivery expired at $74.90 bbl. The September Brent contract finished the session with a $0.51 bbl premium to the expiring contract. NYMEX RBOB July futures expired at $2.6340 gallon, adding $0.0163 on the session, with next-month August futures settling at $2.5449 gallon. NYMEX ULSD July contract expired at $2.4482 gallon, and the August contract increased to $2.4476 gallon.
Oil settles higher but posts fourth straight quarterly decline -Oil prices settled higher on Friday but posted their fourth straight quarterly loss as investors worried that sluggish global economic activity could crimp fuel demand. Benchmark Brent crude futures for August delivery which expires on Friday, settled up 56 cents, or 0.8 per cent, at $74.90. In the three months to the end of June, the contract finished down 6 per cent. US West Texas Intermediate crude (WTI) settled up 78 cents, or 1.1 per cent at $70.64 a barrel. It posted its second straight quarterly drop, down about 6.5 per cent in the latest three months. Prices have been under pressure from rising interest rates in key economies and a slower than expected recovery in Chinese manufacturing and consumption. Signs of strengthening US economic activity and sharp declines in US oil inventories last week offered some support. For the day, crude was bolstered by a US Commerce Department report showing annual inflation rising last month at its slowest pace in two years. Signs of moderating inflation "could hold the Federal Reserve off rising interest rates again," The market was also supported by upward revisions in demand for crude oil and refined products in the United States. Demand for crude and petroleum products fell slightly to 20.446 million bpd in April but remained seasonally strong, EIA data showed. Prices also drew support from Saudi Arabia's plans to cut output by a further 1 million barrels per day in July in addition to a broader OPEC+ deal to limit supply into 2024. "Despite the announcements of two fresh rounds of cuts from OPEC+/Saudi Arabia, crude prices have largely remained below $80 a barrel as the market has been driven less by fundamentals and more by macroeconomic concerns," HSBC analysts said in a note. "We think this will continue to be the case for part of the summer, although the deep deficit of around 2.3 million barrels forecast for 2H23 should help to spur some upwards price momentum." A Reuters survey of 37 economists and analysts showed oil prices will struggle for traction this year as global economic headwinds linger. US energy firms this week cut the number of oil and natural gas rigs operating for a ninth week in a row for the first time since July 2020, energy services firm Baker Hughes said on Friday..
Iranian victims of chemical weapons suing Dutch manufacturers - The two companies, Melchemie (now Otjiaha) and Forafina Beleggingen (formerly KBS Holland), provided Iraq with chemicals between 1982 and 1984 while being aware that their products were being used to produce mustard gas, according to the five victims. Dutch newspaper de Volkskrant revealed that the corporations dispute the accusations and maintain that the chemicals were meant for use as agricultural pesticides. The previous owner of Melchemie, billionaire Hans Melchers, was required to appear in court in The Hague on June 22. Melchers is charged with actively taking part in the wartime delivery of 1,850 tons of thionyl chloride, a component of mustard gas, to Iraq. He rejected the charges, but in 1987, his company was punished with a fine and conditional closure for “intentionally” flouting a Dutch government embargo intended to stop the transfer of materials to Iraq that could be used to make weapons. In addition, KBS Holland is being sued for providing TDG to Iraq, which is another element required to make mustard gas. Attacks with mustard gas have caused long-lasting damage to the five complainants. Due to injury to their lungs, eyes, and skin, they have respiratory problems and incapacity. The victims’ attorney Liesbeth Zegveld stated that “these people’s lives were destroyed at the time,” adding that “these Dutch companies share a part of the responsibility for that.” Hundreds of Iranian soldiers and civilians were killed instantly and many more endured life-long years of misery as a result of the Iraqi army’s use of chemical weapons during the 1980–88 war.
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