US oil prices finished lower for a second straight week and are now down 11.4% since April 5th, as most of the geopolitical risk premium has come off the price... after falling 2.3% to $77.72 a barrel last week on an unexpected build of US crude inventories and on indications from Fed officials that interest rates would remain high for longer than was widely assumed, the contract price for the benchmark US light sweet crude for July delivery jumped well over 1% in thin overseas trading on Monday while US markets were closed for Memorial Day, on optimism that the European Central Bank might move towards a rate cut when they meet on June 6, then rallied higher in US trading on Tuesday amid expectations that OPEC+ would maintain crude supply cuts at its June 2nd meeting and amid increasing tension in the Middle East, and settled $2.11 or 2.7% higher at $79.83 a barrel, as the start of U.S. summer driving season and a weaker dollar also boosted the commodity….oil prices climbed further in overseas trading Wednesday, due to escalating tensions in the Middle East following the killing of an Egyptian soldier in a clash with Israeli forces, but erased its early strength in US trading on concerns over economic data that could cause the U.S. Federal Reserve to keep interest rates higher for a longer time, and settled 60 cents lower at $79.23 a barrel amid worries over weak U.S. gasoline demand and concern that higher interest rates would weigh on economic growth and reduce demand for oil… oil prices continued to trend lower early Thursday in follow through selling from the previous day, then came under further pressure on news that the U.S. economy grew slower than initially estimated in the first quarter, largely due to softer consumer spending, then extended their losses despite a huge draw from crude supplies on bearish increases in gasoline and diesel inventories, and settled $1.32 lower at 77.91 a barrel as US demand for fuel weakened even as output rose….oil prices held steady early Friday as traders awaited U.S. inflation data for clues on the demand outlook, then turned lower as traders indulged their bearish sentiments about higher interest rates, and settled down 92 cents at $76.99 a barrel, as traders awaited the OPEC+ meeting on Sunday that will determine the fate of the producer group's output cuts, and thus finished 0.9% lower for the week…
meanwhile, even though natural gas prices ended the week higher for the 4th time in five weeks, that was due to the midweek switch to quoting the higher priced July contract, as both contracts that traded as the front month this week actually fell in price…after falling 4.0% to $2.520 per mmBTU last week on signs that the recent price rally had prompted producers who had cut their output due to lower prices to restart operations, the contract price for natural gas for June delivery began a gradual ascent just ahead of midday Tuesday, as steady exports and healthy cooling demand lent support, and continued to rally to settle 7.0 cents higher at $2.590 per mmBTU, as revised forecasts indicated more demand over the next two weeks than had previously been expected…..however, natural gas prices pulled back 4.5 cents early on Wednesday, on the last day of trading for the June gas contract, as traders assessed shifts in the supply outlook with idled production returning, and the June contract expired 9.7 cents lower at $2.493 per mmBTU as the prognosis for supply and demand had shifted slightly with cooler weather and a production boost, while the more actively traded contract for natural gas for July delivery settled 15.9 cents lower at $2.666 per mmBTU…the price of that July gas contract opened 4 cents lower on Thursday, as traders anticipated a bearish storage injection, and settled 9.4 cents lower at $2.572 per mmBTU, on a larger than expected inventory increase, as producers appeared to be hiking output ahead of the summer…natural gas prices continued to slide early Friday, as traders mulled a larger-than-expected inventory build and signs of returning production volumes, but recovered to settle 1.5 cents higher at $2.587 per mmBTU on forecasts for more demand next week than had been expected, and on a continuing increase in the amount of gas flowing to LNG export plants…while natural gas prices appeared to have increased 2.7% over the week, the contract price for July natural gas, which had closed the prior week priced at $2.773 per mmBTU, ended 6.3% lower....
The EIA’s natural gas storage report for the week ending May 24th indicated that the amount of working natural gas held in underground storage rose by 84 billion cubic feet to 2,795 billion cubic feet by the end of the week, which left our natural gas supplies 380 billion cubic feet, or 15.7% above the 2,415 billion cubic feet that were in storage on May 24th of last year, and 586 billion cubic feet, or 26.5% more than the five-year average of 2,209 billion cubic feet of natural gas that had typically been in working storage as of the 24th of May over the most recent five years…the 84 billion cubic foot addition to US natural gas working storage for the cited week was more than the 78 billion cubic foot addition to storage that analysts in a Reuters poll had forecast ahead of the report, but was less than the 106 billion cubic feet that were added to natural gas storage during the corresponding 4th week of May 2023, and also less than the average 104 billion cubic foot injection into natural gas storage that has been typical for the same spring 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 May 24th indicated that after an increase in our refinery demand was offset by a decrease in our oil exports, we had to pull oil out of our stored commercial crude supplies for the sixth time in eighteen weeks and for the 12th time in the past 32 weeks, with the change from last week largely due to a decrease in oil supplies that the EIA could not account for….Our imports of crude oil rose by an average of 106,000 barrels per day to an average of 6,769,000 barrels per day, after falling by an average of 81,000 barrels per day over the prior week, while our exports of crude oil fell by 505,000 barrels per day to 4,225,000 barrels per day, which when used to offset our imports, meant that the net of our trade of oil worked out to a net import average of 2,544,000 barrels of oil per day during the week ending May 24th, 611,000 more barrels per day than the net of our imports minus our exports during the prior week. At the same time, transfers to our oil supply from Alaskan gas liquids, from natural gasoline, from condensate, and from unfinished oils averaged 479,000 barrels per day, while during the same week, production of crude from US wells was unchanged at 13,100,000 barrels per day. Hence our daily supply of oil from the net of our international trade in oil, from transfers, and from domestic well production appears to have averaged a rounded total of 16,123,000 barrels per day during the May 24th reporting week…
Meanwhile, US oil refineries reported they were processing an average of 17,083,000 barrels of crude per day during the week ending May 24th, an average of 601,000 more barrels per day than the amount of oil that our refineries reported they were processing during the prior week, while over the same period the EIA’s surveys indicated that a net average of 524,000 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 May 24th appear to indicate that our total working supply of oil from storage, from net imports, from transfers, and from oilfield production was 436,000 barrels per day less than what our oil refineries reported they used during the week…To account for that difference between the apparent supply of oil and the apparent disposition of it, the EIA just plugged a [+436,000] barrel per day figure onto line 16 of the weekly U.S. Petroleum Balance Sheet, in order to make the reported data for the 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 indicating there must have been an error or omission of that magnitude in the week’s oil supply & demand figures that we have just transcribed...Moreover, since 1,376.000 barrels of oil supply per day could not be accounted for in the prior week’s EIA data, that means there was a 940,000 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, rendering the week over week changes we have cited nonsense... However, since most oil traders react to these weekly EIA reports as if they were accurate, and since these weekly figures therefore often drive oil pricing (as is obvious to anyone who watches oil prices), 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….and there is also an aging twitter thread from an EIA administrator addressing these ongoing weekly errors, and what they had hoped to do about it)
This week’s average 524,000 barrel per day decrease in our overall crude oil inventories came as a rounded average of 594,000 barrels per day were being pulled out of our commercially available stocks of crude oil, while an average of 69,000 barrels per day were being added to our Strategic Petroleum Reserve, the twenty-fifth SPR increase in thirty-two weeks, following nearly continuous withdrawals from the SPR over the prior 39 months… Further details from the weekly Petroleum Status Report (pdf) indicate that the 4 week average of our oil imports fell to 6,524,000 barrels per day last week, which was 2.2% more than the 6,386,000 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 13,100,000 barrels per day because the EIA’s rounded estimate of the output from wells in the lower 48 states was unchanged at 12,700,000 barrels per day, while Alaska’s oil production was 6,000 barrels per day higher at 422,000 barrels per day, but still added the same 400,000 barrels per day to the EIA’s 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 just matches that of our pre-pandemic production peak, while it's also 35.1% above the pandemic low of 9,700,000 barrels per day that US oil production had fallen to during the third week of February of 2021.
US oil refineries were operating at 94.3% of their capacity while processing those 17,083,000 barrels of crude per day during the week ending May 24th, up from their 91.7% utilization rate of a week earlier, and the highest operating rate since last August, after US refineries had lagged normal operating rates since arctic cold in mid January had froze off some operations… the 17,083,000 barrels of oil per day that were refined this week were the most refined since the last week of December 2019, 5.7% more than the 16,165,000 barrels of crude that were being processed daily during week ending May 26th of 2023, and 1.9% more than the 16,767,000 barrels that were being refined during the prepandemic week ending May 24th, 2019, when our refinery utilization rate was at a slightly below normal 91.2% for late May...
Even with the increase in the amount of oil being refined this week, gasoline output from our refineries was a tad lower, decreasing by 38,000 barrels per day to 10,011,000 barrels per day during the week ending May 24th, after our refineries’ gasoline output had increased by 351,000 barrels per day during the prior week. This week’s gasoline production was still 0.4% more than the 9,971,000 barrels of gasoline that were being produced daily over week ending May 26th of last year, and 1.5% more than the gasoline production of 9,863,000 barrels per day during the prepandemic week ending May 24th, 2019….at the same time, our refineries’ production of distillate fuels (diesel fuel and heat oil) decreased by 34,000 barrels per day to 5,030,000 barrels per day, after our distillates output had increased by 260,000 barrels per day during the prior week. After ten production increases in the past fifteen weeks, our distillates output nearly matched the 5,040,000 barrels of distillates that were being produced daily during the week ending May 26th of 2023, but was 2.9% less than the 5,182,000 barrels of distillates that were being produced daily during the week ending May 24th, 2019…
Even with this week’s decrease in our gasoline production, our supplies of gasoline in storage at the end of the week rose for the fifth time in seventeen weeks, increasing by 2,022,000 barrels to 228,844,000 barrels during the week ending May 24th, after our gasoline inventories had decreased by 945,000 barrels during the prior week. Our gasoline supplies rose this week because the amount of gasoline supplied to US users fell by 167,000 barrels per day to 9,148,000 barrels per day, and because our imports of gasoline rose by 319,000 barrels per day to a 103 week high of 1,092,000 barrels per day, while our exports of gasoline rose by 184,000 barrels per day to 954,000 barrels per day.…But even after twelve gasoline inventory withdrawals over the past seventeen weeks, our gasoline supplies were still 5.9% above last 26th’s gasoline inventories of 216,070,000 barrels, while about 1% below the five year average of our gasoline supplies for this time of the year…
Even with this week’s decrease in our distillates production, our supplies of distillate fuels rose for the seventh time in nineteen weeks, increasing by 2,544,000 barrels to 119,288,000 barrels over the week ending May 24th, after our distillates supplies had increased by 379,000 barrels during the prior week. Our distillates supplies increased by more this week because the amount of distillates supplied to US markets, an indicator of our domestic demand, fell by 88,000 barrels per day to 3,795,000 barrels per day, and because our exports of distillates fell by 188,000 barrels per day to 1,036,000 barrels per day, and because our imports of distillates rose by 67,000 barrels per day to 165,000 barrels per day.…Even with 31 inventory decreases over the past fifty-seven weeks, our distillates supplies at the end of the week were 11.8% above the 106,657,000 barrels of distillates that we had in storage on May 26th of 2023, but were still about 6% below the five year average of our distillates inventories for this time of the year…
Finally, after the big increase in the amount of oil being refined, our commercial supplies of crude oil in storage fell for the 12th time in twenty-six weeks, and for the 27th time in the past year, decreasing by 4,156,000 barrels over the week, from 458,845,000 barrels on May 17th to 454,689,000 barrels on May 24th, after our commercial crude supplies had increased by 1,825,000 barrels over the prior week… With this week’s decrease, our commercial crude oil inventories were about 4% below the most recent five-year average of commercial oil supplies for this time of year, while they were still about 28% above the average of our available crude oil stocks as of the fourth weekend of May over the 5 years at the beginning of the past decade, with the big difference between those comparisons arising because it wasn’t until early 2015 that our oil inventories had 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 due to higher exports relating to the onset of the Ukraine war, only to jump again following the Christmas 2022 refinery freeze offs, our commercial crude supplies as of this May 24th were 1.1% less than the 459,657,000 barrels of oil left in commercial storage on May 26th of 2023, while they were 9.6% more than the 414,733,000 barrels of oil that we had in storage on May 27th of 2022, but were still 5.1% less than the 479,270,000 barrels of oil we had left in commercial storage on May 28th of 2021, after refinery damage from winter storm Uri left even more crude oil remaining after 2020’s pandemic precautions had left a glut of oil unused at year end…
This Week’s Rig Count
In lieu of a detailed report on the rig count, we are again just including a screenshot of the rig count summary from Baker Hughes…in the table below, the first column shows the active rig count as of May 31st, the second column shows the change in the number of working rigs between last week’s count (May 24th) and this week’s (May 31st) count, the third column shows last Friday’s May 24th 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 period a year ago, which in this week’s case was the 2nd of June, 2023…
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Ohio moving forward with bids to frack under public lands including state parks | Ideastream Public Media (live radio video) Interview with Melinda Zemper, Save Ohio Parks, et al - A recently approved state law opened Ohio's public lands, including its parks, to fracking. To date, bids to drill under Salt Fork State Park near Cambridge and two wildlife areas in Columbiana and Carroll counties have received the greenlight from a state panel.A law passed by the legislature and signed by Governor Mike DeWine last year helped speed up the leasing process for companies to obtain rights to use hydraulic fracturing or fracking to extract oil and gas under state-owned lands including state parks. This week, the Oil and Gas Land Management Commission approved two bids for companies to drill for oil and gas under state-owned lands in Noble and Monroe counties.Back in February, the commission awarded bids for exploration under Ohio's largest state park, Salt Fork, as well as two wildlife areas in Columbiana and Carroll counties.State lawmakers who supported the law and leasing public lands for fracking say it will bring in revenue. Opponents say they are concerned about the environmental impact from fracking, especially in the pristine park lands.We will begin Wednesday’s “Sound of Ideas” discussing the fracking of public lands, including Ohio’s state parks with a representative from the Ohio oil and gas industry as well as a member of a grassroots group fighting to preserve the parks.
Supreme Court Of Ohio Holds Lease Language On Lessee's Right To Develop Point Pleasant Interval To Be Ambiguous -- Yesterday, in a 4-3 decision, the Supreme Court of Ohio reversed the decision of the Seventh District Court of Appeals in Tera, L.L.C. v. Rice Drilling D, L.L.C., 2024-Ohio-1945, and held that there are triable issues of fact regarding (i) whether the oil and gas lease at issue included the right to drill wells into the “Point Pleasant” interval and, if not, (ii) whether the appellant Rice Drilling D, LLC engaged in a bad faith trespass by doing so.The case centered on the proper interpretation of an oil and gas lease that granted certain mineral rights “in the formations commonly known as the Marcellus Shale and the Utica Shale” and reserved all rights not specifically granted in the lease, including the rights in “all formations below the base of the Utica Shale.” After Rice drilled six wells into the Point Pleasant, its lessor, Tera, LLC, sued alleging bad-faith trespass and conversion. The trial court granted summary judgment in favor of Tera on liability and a jury found that Tera was entitled to over $40 million in damages. In a 2-1 decision, the appellate court affirmed after concluding that the lease language unambiguously reserved the Point Pleasant formation to the lessors.The Supreme Court rejected the lower courts' interpretation of the lease, finding the lease language to be ambiguous on whether it granted Rice the right to drill into the Point Pleasant. First, the Court noted that the phrase “Point Pleasant” did not appear within the four corners of the lease and, as a result, the plain language of the lease did not answer the question whether the parties intended to include the Point Pleasant in what the lease referred to as “the[] formation commonly known as the *** Utica Shale.” Next, the Court concluded that the plain language of the lease was unclear regarding whether the phrase “Utica Shale” referred to its common meaning or its technical, stratigraphic meaning or whether the common meaning and the technical, stratigraphic meaning were the same. Because the plain language could not answer these questions, the Court then turned to the extrinsic evidence offered by the parties. But even then, the Court was unable to give the phrase “Utica Shale” a definite legal meaning. Thus, the Court held that the lease was ambiguous, creating an issue of fact issue could not be resolved on summary judgment. The Court also reversed the judgment of the appellate court as to Tera's claim for bad-faith trespass, finding that the trial court and appellate court improperly relied upon the lease language instead of conducting a fact-driven analysis that considered all relevant material evidence. Based on these errors, the Court reversed and remanded the case for further proceedings.
Austin Master Services Claims It is “Effectively a Dead Company” - Marcellus Drilling News - We have been tracking and reporting on the drama surrounding Austin Master Services (AMS), a radiological waste management solutions company in Martins Ferry ( Belmont County), Ohio, located close to the Ohio River (see our AMS stories here). Last week, a Belmont County Common Pleas Court judge ordered AMS to be fined $200 per day for failing to meet its permitted requirements for the amount of frack drill cuttings and other frack waste products housed at the Martins Ferry site. If the company fails to meet the order by July 22, AMS’ (and parent company American Environmental Partners’) CEO Brad Domitrovitsch will be required to serve a 30-day sentence in the Belmont County jail. Paperwork filed with the court by AMS claims the company is out of money, deep in debt, and is “effectively a dead company” that will not be able to meet the court’s order … unless it gets sold (quickly) to someone else who can do the cleanup work.
Environmental group calls on conservancy district to halt water sales to energy industry - ‒ The FreshWater Accountability Project is calling on the Muskingum Watershed Conservancy District (MWCD) to halt the sale of water to the oil and gas industry over environmental concerns.John Stolz, director of the Center of Environmental Research and Education at Duquesne University in Pittsburgh, speaks at a press conference held by the FreshWater Accountability Project in New Philadelphia.The group aired its concerns at a press conference Friday in front of the Tuscarawas County Courthouse in New Philadelphia as the Conservancy Court, the MWCD's governing body, met at the courthouse. The FreshWater Accountability Project had asked to testify at the annual meeting of the Conservancy Court but was denied.The organization is calling for a halt in water sales because of what it says is growing evidence of harm caused by hydraulic fracturing, or fracking, a process used by the energy industry to extract gas and oil. The process has been used extensively in east central Ohio. The group wants sales stopped until a full assessment of current and projected impacts caused by fracking's water impacts is completed by independent experts."We have asked them (MWCD) to do a better job of protecting our water in the face of fracking," said Lea Harper, managing director of the organization. "I don't like to say, but I've said this many times, fracking is not as bad as I thought it would be at first. It's much worse than I could have ever imagined."She talked about how her family planned on retiring in Guernsey County, but then she learned that fracking was planned there."It was not just the truck traffic and the headaches and the smell of benzene, but for us it was the heartbreak of seeing the water taken from Seneca Lake and Wills Creek, knowing that water that was taken would never glisten in the sun again, at least we hope it doesn't, because after water is fracked, there's forever chemicals, there's proprietary chemicals, there's radioactive radium 226-228, and we know that sooner or later, when there's migratory pathways under our reservoirs, that it will be very difficult if not impossible and extremely costly to ever clean it up after it's been fracked."Over the past decade, the MWCD has spent around $160 million on projects throughout the 18-county district, including activity centers, visitors centers and improvements to campgrounds using money from oil and gas revenue."Someday, even the MWCD will be unable to deny the damage," Harper said. "We will continue to plead for protection and document the damage, so those who profited from fracking will be held accountable for those costs, and not the taxpayers, not the water rate payers, not the people who live here. The money is not worth it."The FreshWater Accountability Project is calling on the MWCD to:
- Continuously monitor fracking contamination incursions into stream and reservoirs.
- Install additional steam gauges as needed to determine if water quality is adequately protected.
- Require that no Per- and polyfluoroalkyl substances (PFAS) chemicals be used to frack in areas near reservoirs it has leased in the region. PFAS are a health and environmental concern because they are known as forever chemicals.
- Set aside all revenue gained through leases and water sales for future remediation of water and soil contamination.
Anti-Shale Group to Hold Presser Outside Muskingum Watershed Mtg -- Marcellus Drilling News - For more than a decade, MDN has brought you stories about shale development on and under land controlled by the Muskingum Watershed Conservancy District (MWCD), an agency formed in 1933 to help control flooding and promote water conservation in the Muskingum River watershed area of Ohio, an area that covers 8,000 square miles (see our Muskingum Watershed stories here). Over the years, MWCD has leased tens of thousands of acres for Utica Shale drilling and cut deals to sell water to drillers for fracking. It has been one of the biggest success stories in the Buckeye State in the last decade, generating more than $1 billion in economic stimulus (see Muskingum Watershed Generated $1B in Econ Impact from Utica Drilling). Yet anti-fossil fuelers are *still* trying to shut down this success story!
Case over frozen-to-death Ohio woman should be heard by utility regulators, court holds (Reuters) - Ohio's top court ruled on Friday that the brother of a woman who froze to death after her gas service was cut off by a utility now owned by Enbridge must pursue wrongful death claims before the state's utility commission, not a trial court. The Ohio Supreme Court held that the case over 81-year-old Virginia Vigrass' 2022 death must first go before the Public Utilities Commission of Ohio since it relates to actions that are normally authorized as a part of ordinary utility services. The unanimous seven-justice court said Ohio law requires people to first file complaints with the commission alleging that a public utility's services have violated the law, if the actions relate to a utility’s rates and services. Since the decision to shut off the Lakewood woman's gas falls under that umbrella, the utility commission must first hear the case filed against the utility, East Ohio Gas Company, before deciding whether to send it to a court, the justices held. The underlying lawsuit claims the utility disconnected natural gas service to the residence of Vigrass in January 2022 after the company repeatedly asked for access to her meter over months, despite her accounting being paid in full. Vigrass refused access because she was immunocompromised and susceptible to the risks of COVID-19, but had sent some letters to the company in response to their requests, according to the lawsuit. Frigid temperatures inside the residence after the gas shutoff caused water pipes to burst. Water then flooded the residence and froze. Police found Vigrass dead and frozen to the floor 19 days after the gas was disconnected. Her brother sued the utility on behalf of her estate in Cuyahoga County Court of Common Pleas Judge Peter Corrigan rejected a motion to dismiss the complaint for lack of jurisdiction, reasoning that he has jurisdiction over the complaint because the complaint asserted common-law claims of negligence, destruction of property and wrongful death. The utility on appeal argued Corrigan incorrectly asserted jurisdiction in the case. The case is East Ohio Gas Company DBA Dominion Energy Ohio v. Corrigan, Judge, Ohio Supreme Court, No. 2024-Ohio-1960.
Two people missing after building explosion in Ohio's Youngstown: Officials | World News - Two people were missing and seven were injured when a natural gas explosion caused extensive damage to a building in downtown Youngtown, Ohio, authorities said.The blast, which occurred around 2:45 pm Tuesday blew off the faade of Realty Tower. Firefighters helped some people get out of the building, which houses a Chase Bank on the ground floor and has apartments in upper floors.Youngstown Fire Chief Barry Finley said a man and a woman were missing following the blast. One is a Chase employee, he said.The blast collapsed the first floor into the basement, Finley said, and the building's structural integrity is in question so no firefighters were being allowed in to conduct a search.The seven injured people were taken to Mercy Health Hospital in Youngstown. A hospital spokesperson said one person was in critical condition, but did not release further details.A social media post by the Mahoning County Emergency Management Agency said there was a natural gas explosion and the situation is fluid but under control. The blast shook the downtown area of the city of about 60,000 residents. Bricks, glass and other debris littered the sidewalk.
Damaged gas line found at site of deadly Ohio explosion, NTSB says -A cut natural gas line was found in a basement area of an Ohio building which was severely damaged by a massive explosion this week, the National Transportation Safety Board reported Thursday, but it’s not yet known if that played a role in the blast.The line was not supposed to have gas in it, NTSB board member Tom Chapman said during a news conference, but it was found to be pressurized. He said the line came off the main service line and led to the building in downtown Youngstown but did not service the structure.Chapman said investigators would try to determine whether third-party work to clear out old infrastructure in the basement may have led to the line cut and explosion and why it was pressurized. Chapman said he did not believe there was anything suspicious about the cut line.The explosion Tuesday afternoon blew out much of the ground floor of Realty Tower, killing a bank employee and injuring several other people. It collapsed part of the ground floor into its basement and sent the façade across a street where both sides had been blocked off by orange construction barriers. Bricks, glass and other debris littered the sidewalk outside the 13-story building, which had a Chase Bank branch at street level and apartments in upper floorsThe NTSB said pipeline and hazardous materials investigators were at the scene in Youngstown on Thursday to see the damage, which Chapman described as “devastating — really stunning.” He said the team would remain on the scene for about a week and likely issue a preliminary report within 30 days.
Cut gas line at center of NTSB investigation into deadly Ohio explosion - ABC News The National Transportation Safety Board said a cut to an inactive but still pressurized gas line will be a central focus of their investigation into what caused a devastating explosion that rocked downtown Youngstown, Ohio.The blast occurred near Central Square on Tuesday afternoon and impacted a building that contains a Chase bank and apartments. One person was killed and seven others injured in the explosion, officials said.The NTSB sent a team of pipeline and hazardous materials investigators to Youngstown on Wednesday to investigate the natural gas explosion.The preliminary investigation suggests that work crews were in the basement of the building to reportedly clear out old utility infrastructure prior to the explosion, according to NTSB board member Tom Chapman."A possible third-party cut to the pressurized service line is a central focus of our investigation to determine the cause of the gas release and subsequent explosion," Chapman told reporters during a press briefing Thursday.Following the explosion, the Public Utilities Commission of Ohio and Enbridge Gas, the service provider for the area, gained access to the basement and discovered a cut to the pressurized but inactive below-ground service line, Chapman said.Part of the investigation "will determine exactly why that apparently abandoned service line was still pressurized," Chapman said.Chapman said there is no evidence to suggest anything "nefarious" in the incident."Part of what we'll be looking at is what are the proper procedures and were those proper procedures followed," he said.
Ohio building explosion caused by crew cutting gas line they thought was off, NTSB says — A crew working in the basement area of an Ohio building intentionally cut a gas line not knowing it was pressurized before a deadly explosion this week, the National Transportation Safety Board said Friday.NTSB board member Tom Chapman said workers were in the basement to clear out piping and other outdated infrastructure. He said workers smelled no gas before they started cutting the pipe and knew there was a problem when they made the third cut. At that point, workers pulled the fire alarm and alerted residents and bank employees to evacuate. Chapman said the explosion happened six minutes after that cut. Investigators will try to determine why the pipe was pressurized.The explosion Tuesday afternoon blew out much of the ground floor of Realty Tower, killing a bank employee and injuring several other people. It collapsed part of the ground floor into its basement and sent the façade across the street. Bricks, glass and other debris littered the sidewalk outside the 13-story building, which had a Chase Bank branch at street level and apartments in upper floors.
Punxsutawney Phil’s New Neighbor – Shale Wastewater Injection Well - Marcellus Drilling News - Nearly a year ago, MDN brought you the news that the federal EPA had issued a permit to G2 STEM LLC based in Fairfax, Virginia, to build a Class IID oil and gas wastewater underground injection well in Young Township, Jefferson County, PA (see Punxsutawney Phil Getting a New Neighbor – Shale Injection Well). You may know the area by its nearby boro, Punxsutawney, along with its most famous resident, Punxsutawney Phil. We have great news! The Pennsylvania State Dept. of Environmental Protection (DEP) has issued a permit for the project, allowing it to move forward.
Researchers make massive lithium discovery in Pennsylvania natural gas wells -- Scientists from the University of Pittsburgh have discovered a large amount of lithium located in Pennsylvania, saying it could eventually supply more than a third of America’s needs for the mineral. Researcher and study lead author Justin Mackey told CBS Pittsburgh in an article published Wednesday that the wastewaters of the Marcellus Shale gas wells could cover “somewhere between 30 and 40 percent of the current U.S. national demand.” “This study estimates that Marcellus Shale related Li yields have potential to make a significant contribution to US domestic consumption with a set of reasonable, conservative assumptions,” says the research, published in the Nature Journal last month. “If you can extract value out of materials, and specifically lithium from this, then you reduce the cost of remediating and handling this waste,” Mackey said. The researchers analyzed compliance data from the Pennsylvania Department of Environmental Protection to determine their results. The study noted that as decarbonization efforts across the U.S. grow more popular, the demand for lithium increases despite rising supply chain concerns. The researchers also said lithium is “considered essential to the US economy due to domestic consumption in energy, manufacturing and defense.” The U.S. Geological Survey labels lithium as a critical mineral; its biggest uses include rechargeable batteries, including in cellphones and electric vehicles. Speaking with CBS News, Mackey acknowledged that fracking is a highly controversial topic. “I do hope that it sheds light on creative remediation and reuse of these fluids. There’s a lot of materials that are embodied in the water,” he said.
As Production Returns, Natural Gas Forwards Sink, Appalachian Basis Diffs Widen - Regional natural gas forwards sold off heavily during the May 23-29 trading period as the unofficial start of summer – and the ramp up in prices during the month of May – brought a shift in the production outlook. June fixed prices at benchmark at Henry Hub tumbled 34.4 cents for the period to finish at $2.501/MMBtu, paralleling the sell-off in Nymex futures over the same time frame, according to NGI’s Forward Look. Most other Lower 48 hubs followed the national benchmark lower, with fixed price discounts across the balance of 2024 widespread during the period, Forward Look data show. EQT Bringing Production Back? The May 23-29 trading period brought with it rumblings of a bump in output from EQT Corp. The largest U.S. natural gas producer began curtailing 1 Bcf/d in March...
18 New Shale Well Permits Issued for PA-OH-WV May 20 – 26 - Two weeks ago, 16 new permits were issued to drill in the Marcellus/Utica region. Last week, May 20-26, the number increased by two to 18. Two drillers tied for the top prize for most new permits. Chesapeake Energy received five new permits, all of them for drilling in Sullivan County, PA. Ascent Resources also received five new permits, with four of them to drill in Jefferson County, OH, and one in Guernsey County, OH. Antero received three permits for drilling in Wetzel County, WV. EQT Corporation got two permits to drill in Washington County, PA. Range Resources, Olympus Energy, and INR each got a single new permit (see below for where). ALLEGHENY COUNTY | ANTERO RESOURCES | ASCENT RESOURCES | CHESAPEAKE ENERGY | EQT CORP | GUERNSEY COUNTY | INR | JEFFERSON COUNTY (OH) | OLYMPUS/HUNTLEY & HUNTLEY | RANGE RESOURCES CORP | SULLIVAN COUNTY | WASHINGTON COUNTY | WETZEL COUNTY
MVP Protest Arrest --The Virginia State Police were called to remove an individual which was blocking pipeline access on Yellow Finch Road this morning. State Police responded at 6:21 a.m. for a protestor suspended on a tripod in the roadway.Elsa McLaughlin Schlensker, 25, of Cleveland, OH. was taken into custody without incident and transported to the Montgomery County Jail and charged with Obstructing the Free Passage of Another.
Southeast Natural Gas Summer Price Premiums Rise as Transco Constraint Crimps Flows Regional natural gas forwards continued to soar during the May 16-22 trading period in parallel to the recent bullish momentum lifting summe0r Nymex futures to new heights, data from NGI’s Forward Look show.Fixed prices at Henry Hub rallied 42.3 cents week/week to finish at $2.845/MMBtu for June delivery. Gains at the benchmark were strongest toward the front of the curve. January 2025 prices at Henry rose 20.9 cents for the period to $4.037, Forward Look data show. Fixed price gains across the curve were the norm for much of the Lower 48 during the May 16-22 period, with increases especially pronounced in the Southeast and Mid-Atlantic.
Comment Period Opened for Enbridge's Tennessee Gas Pipeline Expansion - The Federal Energy Regulatory Commission (FERC) has issued a staff-level draft environmental impact statement (EIS) on a proposed 122.2-mile gas pipeline in Tennessee, opening the public comment period. Enbridge Inc’s Ridgeline Expansion Project would build a 30-inch-diameter pipeline and associated facilities across the counties of Trousdale, Smith, Jackson, Putnam, Overton, Fentress, Morgan and Roane, the FERC said in a statement. The project expands Enbridge’s existing East Tennessee Natural Gas pipeline system. The existing system and the proposed project are under East Tennessee Natural Gas LLC (ETNG). “For most resources, the construction and operation of the Project would result in limited adverse environmental impacts”, said the statement on the FERC website. “Most adverse environmental impacts would be temporary or short-term during construction, but some long-term and permanent environmental impacts would occur on some forested lands, including forested wetlands”. “We conclude that impacts would be less than significant with implementation of East Tennessee’s proposed avoidance, minimization, and mitigation measures as well as the environmental conditions we recommend the Commission include in any Project authorization it may issue to East Tennessee”, the statement added. The staff’s comments will be taken into consideration when FEFC commissioners decide on the project. The Ridgeline Expansion Project aims to add a daily transport capacity of 300,000 dekatherms of firm natural gas and up to 95,000 dekatherms of customized delivery service from multiple providers to the Tennessee Valley Authority’s Kingston Fossil Plant, according to the FERC. Enbridge says on its website, “Replacing coal-fired generation at the Kingston Fossil Plant with natural gas would provide Tennesseans with a lower-carbon, cleaner-burning energy source as we transition toward the future”. The mainline would measure 118.2 miles, according to the FERC. Associated facilities would include a 14,600-horsepower, electric-driven compressor and an associated solar array in Trousdale to provide some of the needed power; a meter and regulating station to receive gas from Columbia Gulf Transmission LLC in Trousdale; and a delivery meter station to measure gas delivered to the Kingston Fossil Plant in Roane. Two existing meter and regulating stations would also be modified to receive gas from Texas Eastern Transmission LP and Midwestern Gas Transmission Co. in Trousdale. ETNG is also proposing to remove about 24 miles of pipe segments along its existing 22-inch-diameter Line 3100-1. ETNG wants to relay the 30-inch-diameter mainline of the proposed pipeline to the same trench, the FERC said. The public has until July 15 to submit comments. Calgary, Canada-based Enbridge plans to start construction next year. It expects to put the Ridgeline Expansion Project onstream in the fall of 2026.
securing America's liquified natural gas future by Brett Guthrie, who represents the 2nd District of Kentucky and is a member of the Energy and Commerce Committee. American national security has increasingly been tested by those who wish to do our nation harm. From the Chinese spy balloon that flew across the country last year, to Russia’s war in Ukraine, to Iran funding terrorist organizations that attack Israel, our nation has been under near-constant threats from foreign adversaries that wish to threaten our way of life.America’s status as the world’s leading democracy, military superpower and a leading energy exporter has been key to protecting our homeland and to defending our allies abroad. America’s leadership as an energy exporter has been crucial to ensuring our NATO allies’ security in an increasingly uncertain and dangerous geopolitical environment. The Biden administration is squarely to blame for many of the challenges the U.S. and the world face today. Since Day One of his administration, President Biden has undermined our energy independence, instead prioritizing his green new deal agenda.On his first day in office, Biden cancelled the Keystone XL pipeline, eliminating American energy jobs and preventing hundreds of thousands of barrels of oil from reaching the American public each day.The Biden administration also cancelled leases in the Arctic National Wildlife Refuge as well as in the Gulf of Mexico in order to fulfill a campaign promise to “end all fossil fuels.” Meanwhile, Biden used our own Strategic Petroleum Reserve, an emergency tool to use in national security events, as a gimmick to lower gas prices that had skyrocketed because of their own misguided environmental policies.
Memorial Day Jet Fuel Demand Outshines Gasoline -- Summer markets for refined oil products are anticipating big numbers, with the AAA teasing the potential for a 4.8% surge in Memorial Day weekend air travelers and rising demand for jet fuel as opposed to gasoline for the busiest driving period of the year, Bloomberg reports. AAA is expecting a two-decade record high number of travelers flying for Memorial Day weekend, further supported by global crude oil consumption that analysts at JPMorgan Chase said on Friday would soar by 2.8 million barrels a day from May through August. The analysts also predicted an increase of 430,000 barrels per day in jet fuel demand during that same time period. Bloomberg NEF is projecting that flying passengers will continue to increase in number in the coming weeks, with jet fuel demand already at its highest seasonally since 2019. “We see jet as our fastest-growing fuel globally,” Bloomberg cited Wood Mackenzie analyst Austin Lin as saying on Monday, adding that we could see U.S. jet fuel demand increase another 5% this year amid strong American consumer spending. At the same time, gasoline demand is rather duller by comparison, up this week but still hovering around two-year seasonal lows, according to JPMorgan, which sees global demand for gasoline declining next year by around 100,000 bpd. AAA also indicated that post-COVID changes in how Americans view international air travel could be contributing to increasing jet fuel demand, with the association seeing less reluctance to spend on big trips to Europe and Asia. Just over a month ago, Reuters reported that global flight activity had managed to crawl past its pre-pandemic levels for the “first time in four years” but that jet fuel demand growth was not yet keeping pace. Still, citing the IEA, Reuters reported that jet fuel had been the largest contributor to oil-positive performance in the post-pandemic period.
US LNG exports drop to 23 shipments - US liquefied natural gas (LNG) exports dropped in the week ending May 22 compared to the week before, according to the Energy Information Administration. The agency said in its weekly report that 23 LNG carriers departed the US plants between May 16 and May 22, five shipments less compared to the week before. Citing shipping data provided by Bloomberg Finance, the EIA said the total capacity of these LNG vessels is 84 Bcf. Natural gas deliveries to US terminals slightly up Average natural gas deliveries to US LNG export terminals increased less than 0.1 Bcf/d from last week to 12.8 Bcf/d, according to data from S&P Global Commodity Insights. Natural gas deliveries to terminals in South Louisiana increased by 1.7 percent (0.1 Bcf/d) to 7.5 Bcf/d, while natural gas deliveries to terminals in South Texas decreased 2.4 percent (0.1 Bcf/d) to 4 Bcf/d. The agency said that natural gas deliveries to terminals outside the Gulf Coast increased 0.5 % (less than 0.1 Bcf/d) to 1.2 Bcf/d. Cheniere’s Sabine Pass plant shipped seven cargoes and the company’s Corpus Christi facility sent four shipments during the week under review. The Freeport LNG terminal shipped five cargoes while Venture Global LNG’s Calcasieu Pass facility, Sempra Infrastructure’s Cameron LNG terminal, and the Elba Island facility each shipped two cargoes during the period. Also, the Cove Point facility sent one cargo during the week under review. Freeport LNG, the operator of the 15 mtpa liquefaction plant in Texas, told LNG Prime last week it has resumed operations at all of its three liquefaction trains. The LNG terminal operator said on March 20 that only the third liquefaction train was operating. Since then, the plant has been shipping about one LNG cargo per week. Compared to the week before, Freeport LNG sent one cargo more while the Sabine Pass LNG plant shipped three cargoes less and the Calcasieu Pass plant sent two cargoes less. Henry Hub highest since January This report week, the Henry Hub spot price rose 36 cents from $2.15 per million British thermal units (MMBtu) last Wednesday to $2.51/MMBtu this Wednesday. The agency said this price is the highest price at the Henry Hub since January of this year and two cents below the 2023 annual average. Moreover, the price of the June 2024 NYMEX contract increased 42.6 cents, from $2.416/MMBtu last Wednesday to $2.842/MMBtu this Wednesday. According to the agency, the price of the 12-month strip averaging June 2024 through May 2025 futures contracts climbed 27.7 cents to $3.326/MMBtu. Bloomberg Finance reported that weekly average front-month futures prices for LNG cargoes in East Asia increased $1.04/MMBtu to a weekly average of $11.50/MMBtu. Natural gas futures for delivery at the Dutch TTF increased 69 cents to a weekly average of $10.20/MMBtu. In the same week last year (week ending May 24, 2023), the prices were $9.73/MMBtu in East Asia and $9.27/MMBtu at TTF, the agency said.
Kinder Morgan secures more time for Gulf LNG export project - US energy company Kinder Morgan and its partners have secured more time from the US FERC to add liquefaction and export facilities at the existing Gulf LNG import terminal in Mississippi. According to a filling dated May 23, Gulf Liquefaction and Gulf Energy won an extension of time, until July 16, 2029, to construct and make available for service the Gulf LNG liquefaction project. “The Commission has found that good cause exists for an extension of time where the authorization holder has made a good faith effort to complete authorized actions within the time allotted but encountered circumstances that prevented it from doing so,” the FERC said. Back in July 2019, the regulator granted approval to the two companies to construct and place into service the liquefaction project in Jackson County, Mississippi, by July 16, 2024. In February this year, the companies requested a five-year extension of time to construct the project and place it into service, saying that the Covid-19 pandemic and a litigation with the import customers had affected the project to meet its deadline. Kinder Morgan owns 50 percent in the project through its unit, Southern Gulf LNG Company, the operator of the Gulf LNG terminal, according to its website. Thunderbird Resources Equity, partially owned by Blackstone’s GSO Capital Partners, owns 30 percent, while other partners include Zenith Energy, controlled by Warburg Pincus and Kelso, and Chatham Asset Management. The existing import terminal has a single jetty that is currently permitted to receive up to 170,000 cbm LNG vessels and designed to handle vessels with capacities of up to 250,000 cbm. As part of the liquefaction project, the permitted limit will be increased to 208,000 cubic meters, according to Kinder Morgan. The import facility has two LNG storage tanks, each with a capacity of 160,000 cbm, and a storm surge protection wall. Kinder Morgan said that KBR has previously completed FERC FEED engineering for two liquefaction trains and associated facilities based on its design using APCI C3MR technology. The project will enable the receipt, treatment, liquefaction, and export of up to 10.85 mtpa per year of LNG. Also, the project has received authorization from the US Department of Energy to export to both free trade agreement and non-free trade agreement countries, Kinder Morgan said. Gulf LNG said in its filling in February that it had been involved in “complex litigation with its existing import customers over the scope and status of their terminal use agreements.” The import customers are not bringing in ships to the LNG import facility, which was placed in-service in October 2011. Gulf LNG said this litigation has progressed and “only a small remaining piece remains on appeal at the NY Appellate Division”. “The litigation has hampered GLLC’s ability to execute commercial liquefaction off-take contracts with commercially manageable contingencies because the existing GLE facilities are tied up in litigation,” it said.
Texas LNG Looks to Push In-Service to 2029 After ‘Protracted’ Legal Challenges - The developer of the proposed Texas LNG project has asked FERC for an additional five years to build and place the 4 million metric ton/year (mmty) export terminal into service. Texas LNG Brownsville LLC, a unit of Glenfarne Energy Transition LLC, reported to Federal Energy Regulatory Commission staff in a recent filing that the “protracted legal battle” over its authorization order has made it impossible to meet its in-service deadline of Nov. 22, 2024. “These legal challenges and the various uncertainties the challenges caused delayed the project from multiple perspectives including commercial and marketing, regulatory and construction and constitute extenuating circumstances outside of Texas LNG’s control,” Texas LNG’s Oscar Lopez, regulatory and permitting...
US natgas prices climb 3% on higher demand forecasts, rising LNG feedgas - (Reuters) -U.S. natural gas futures climbed about 3% on Tuesday on forecasts for more demand over the next two weeks than previously expected and as more gas flowed to liquefied natural gas (LNG) export plants. Prices rose despite signs that some drillers were starting to pull more gas out of the ground and the tremendous oversupply of gas still in storage. Analysts forecast gas stockpiles were about 27% above normal levels for this time of year. On its second to last day as the front-month, gas futures NGc1 for June delivery on the New York Mercantile Exchange rose 7.0 cents, or 2.8%, to settle at $2.590 per million British thermal units (mmBtu). Futures for July NGN24, which will soon be the front-month, were up about 2.0% at $2.83 per mmBtu. Power demand in Texas hit records for the month of May four times in a row over the long Memorial Day weekend as homes and businesses cranked up their air conditioners to escape a brutal heat wave. The heat was finally broken by storms that then left over 939,000 homes and businesses without power from Texas to West Virginia. In the spot market, next-day gas prices in Southern California fell to a record low, while power in Arizona and California remained in negative territory amid low energy demand and ample cheap hydropower and other renewable supplies. Gas output in the Lower 48 U.S. states fell to an average of 97.7 billion cubic feet per day (bcfd) so far in May, down from 98.2 bcfd in April, according to financial firm LSEG. That compares with a monthly record of 105.5 bcfd in December 2023. On a daily basis, output was up about 1.5 bcfd since hitting a 15-week low of 96.3 bcfd on May 1. Energy traders said that increase was a sign that the 56% gain in futures prices over the past four weeks prompted some drillers to start producing more gas. Overall, however, U.S. gas production remained down around 8% so far in 2024 as several energy firms, including EQT EQT.N and Chesapeake Energy CHK.O, delayed well completions and cut other drilling activities after prices fell to 3-1/2-year lows in February and March. LSEG forecast gas demand in the Lower 48, including exports, would hold near 93.7 bcfd over the next two weeks. Those forecasts were higher than LSEG's outlook on Friday. Gas flows to the seven big U.S. LNG export plants rose from an average of 11.9 bcfd in April to 12.8 bcfd so far in May with the return of Freeport LNG's 2.1-bcfd plant in Texas. That LNG feedgas, however, remained down from the monthly record of 14.7 bcfd in December due to ongoing spring maintenance at Kinder Morgan's Elba Island in Georgia and several plants in Louisiana, including Cameron LNG, Cheniere Energy's LNG.N Sabine Pass and Venture Global's Calcasieu Pass. U.S. exports to Mexico rose to an average of 7.2 bcfd so far in May, up from 6.5 bcfd in April and the current monthly record of 7.0 bcfd in August 2023. Analysts said that signaled that U.S. energy firm New Fortress Energy NFE.O was preparing to turn U.S. gas into LNG at its export plant in Altamira, Mexico.
US natgas prices fall 4% on bigger-than-expected storage build (Reuters) -U.S. natural gas futures fell about 4% on Thursday on signs some drillers were starting to pull more gas out of the ground and on worries about the tremendous oversupply of gas still in storage with a bigger than expected storage build last week. Lending some support to prices were lifted demand forecasts for next week and an increase in gas flowing to liquefied natural gas export plants. The U.S. Energy Information Administration (EIA)said utilities added a bigger-than-expected 84 billion cubic feet of gas into storage during the week ended May 24. That was bigger than the 78-bcf build analysts forecast in a Reuters poll and compares with an increase of 106 bcf in the same week last year and a five-year (2019-2023) average rise of 104 bcf for this time of year. Analysts noted last week's build was small for this time of year after producers cut output over the past few months due to a drop in futures prices to 3-1/2-year lows in February and March. The build left gas stockpiles about 27% above normal for this time of year. On its first day as the front-month, gas futures NGc1 for July delivery on the New York Mercantile Exchange fell 9.4 cents, or 3.5%, to settle at $2.572 per million British thermal units (mmBtu). Gas output in the Lower 48 U.S. states fell to an average of 97.7 billion cubic feet per day (bcfd) so far in May from 98.2 bcfd in April, according to financial firm LSEG. That compares with a monthly record of 105.5 bcfd in December 2023. But on a daily basis, output was up about 1.4 bcfd since hitting a 15-week low of 96.3 bcfd on May 1. Energy traders said that increase was a sign that the 56% gain in futures prices over the past four weeks prompted some drillers to start producing more gas. LSEG forecast gas demand in the Lower 48, including exports, would rise from 93.6 bcfd this week to 95.1 bcfd next week. The forecast for next week was higher than LSEG's outlook on Wednesday. Gas flows to the seven big U.S. LNG export plants rose from an average of 11.9 bcfd in April to 12.8 bcfd so far in May with the return of Freeport LNG's 2.1-bcfd plant in Texas. That compares with a monthly record high of 14.7 bcfd in December 2023. On a daily basis, LNG feedgas was on track to rise to a preliminary 12-week high of 13.8 bcfd on Thursday, up from 13.6 bcfd on Wednesday and an average of 13.1 bcfd over the prior seven days. That daily feedgas increase came with small increases in flows to several plants in Louisiana, including Cameron LNG, Cheniere Energy's LNG.N Sabine Pass and Venture Global's Calcasieu Pass. Flows to Freeport were on track to reach a six-month high of 2.1 bcfd. U.S. exports to Mexico rose to an average of 7.1 bcfd so far in May, up from 6.5 bcfd in April and the current monthly record of 7.0 bcfd in August 2023. Analysts said U.S. exports to Mexico rose as power generators in Mexico burned more gas to produce electricity to meet record power demand earlier this week and as U.S. energy firm New Fortress Energy NFE.O prepares to start producing LNG at its Altamira export plant.
The ‘Necessary Evil’ of Four-mile Laterals - Not that long ago, Diamondback Energy President and CFO Kaes Van't Hof was skeptical, to put it mildly, about drilling a 21,000-ft lateral well. “A few years ago, I said we'll never drill four mile laterals,” Van’t Hof said at Hart Energy’s SUPER DUG Conference & Expo. Now, “here we are, saying we should be drilling four-mile laterals, you know, almost as much as we can.” Technological advances in the oil patch have come a long way, and drilling has been a less mysterious process than the early days of the shale boom. Despite the ease of development when compared to wellbores of yesteryear, operators are still picky when choosing which areas to develop and how far out their lateral wellbores should stretch. Ultimately, drilling three- or four-mile laterals is about profitability. “If the land is available and the opportunity to drill the well is there, it comes down to economics,” Jim Jacobsen, drilling manager for IPT Solutions, said during a conference panel after Van’t Hof spoke. “You need to make sure that you drill a well that the completion team can complete and we can make money doing it.”Jacobsen’s fellow panelists concurred. Their consensus: one way of increasing the viability of a development is by drilling long laterals, particularly as fewer above ground vertical wells are needed on a pad. “There is a lot of room to save on building a pad and drilling the well,” Sola Oluwadare, drilling engineer forSLB, told the audience. “The ability to extend the length of the lateral right away eliminates all those additional costs. As technology becomes available for us to be able to extend those laterals and deliver to completion safely, those savings go directly to bottom line.”And as Van’t Hof noted, lateral wells are getting extremely long.“To me, these four mile laterals are a necessary evil,” Jacobsen said. “If you are doing these four mile laterals and you are seeing a linear production increase with each extra section of land that you drill, then it’s worth the time and money, but if you’re seeing diminished recovery with longer laterals, then at some point it’s going to become more cost effective and enable more recovery if you just drill another well.”
Energy Transfer Snapping Up Permian Assets in $3.25B Deal for WTG Midstream - Energy Transfer LP is expanding its access to Permian Basin natural gas and natural gas liquids (NGL) in a $3.25 billion deal to acquire WTG Midstream Holdings LLC from a subsidiary of independent Diamondback Energy Inc. and investment firm Stonepeak. (Energy Transfer and WTG combined pipeline asset map) Private midstreamer WTG primarily operates in the Permian’s prolific Midland sub-basin. Through the deal, Energy Transfer would gain more than 6,000 miles of natural gas gathering pipelines spanning some of the most active areas of West Texas. “The addition of WTG assets is expected to provide Energy Transfer with increased access to growing supplies of natural gas and NGL volumes enhancing the partnership’s Permian operations and downstream businesses,” Energy Transfer said.
ConocoPhillips to buy Marathon Oil in $22.5 bln deal in latest energy merger (Reuters) - Top U.S. independent oil and gas producer ConocoPhillips on Wednesday agreed to buy Marathon Oil for $22.5 billion, the latest in a series of mega-deals in the energy industry. The U.S. oil and gas industry has been riding a consolidation wave over the last two years as companies look to bolster reserves and create economies of scale. Last year was one of the most active, with some $250 billion in deals struck. The momentum has carried over into this year as the stock market continues to boom and as U.S. shale oil production scales new records."We're heading into a period of kind of Shale 2.0, which is more about using technology and efficiencies, data analytics and some of the refrack potential that allows us to extend some tier one inventory," said ConocoPhillips CEO Ryan Lance.The all-stock offer equates to $30.33 per Marathon share, a premium of nearly 15% to the stock's Tuesday close, according to Reuters calculations. The transaction, which includes $5.4 billion of Marathon's debt, is expected to close in the fourth quarter of 2024.Shares of Marathon Oil rose 9% to $28.85, while ConocoPhillips fell 3.8% to $115.10 in morning trading."The deal makes sense operationally given the asset overlap most meaningfully in the Eagle Ford and Bakken in L48," . Marathon Oil's international gas assets fit well with the Conoco's global gas footprint, ConocoPhillips expects cost savings of $500 million within the first full year after the closing of the transaction. The acquisition adds over 2 billion barrels of reserves to its portfolio.
ConocoPhillips, Marathon Oil Join Mega Merger Parade to Create Giant in U.S. Onshore - Houston-based ConocoPhillips, the world’s largest independent producer, is moving to become even bigger in an estimated $22.5 billion all-stock takeover of crosstown rival Marathon Oil Corp. The transaction, which includes $5.4 billion net debt, would add “complementary acreage to ConocoPhillips’ existing U.S. onshore portfolio,” CEO Ryan Lance said. The transaction includes more than 2 billion boe of resources, weighted to the Bakken and Eagle Ford shales and Permian Basin – regions where ConocoPhillips already works. It also would increase opportunities in the Montney Shale in Western Canada and the Anadarko Basin of Oklahoma.
Crude oil spill reported near Cow Bayou Bridge — The Texas General Land Office along with Orange County Emergency Services District 2 and Orange County Sheriff's Office responded to a crude oil spill near the Cow Bayou Bridge at TX-105 in Orange County. Bridge City Fire Department reported that around 11 a.m. Thursday morning, Orange County ESD 2 and other local and state agencies responded to the incident in the Orangefield and Bridge City area. When emergency crew arrived, they discovered an undetermined amount of crude oil in the Cow Bayou, which is considered coastal water. A tank, located in the Railroad Commission's jurisdiction, was breached and suffered damage that caused a release into Cow Bayou, according to the Texas General Land Office. In response to the spill, containment booms were placed approximately 2500 feet downstream from the Highway 105 bridge to prevent further spread of the oil. The GLO is overseeing the cleanup portion that concerns oil in coastal waters. Cow Bayou is currently closed in the area from the boom location to upstream, including the boat ramp. The GLO oil spill team is currently on scene and will work to ensure that Cow Bayou is cleaned of the discharged oil.
Two companies plead guilty to environmental crimes - According to U.S. Department of Justice, two related companies that operated the motor tanker PS Dream – Prive Overseas Marine LLC and Prive Shipping Denizcilik Ticaret – pleaded guilty.As explained the companies pleaded guilty to conspiracy, knowingly violating the Act to Prevent Pollution from Ships (APPS) and obstruction of justice related to the falsification of the tanker’s Oil Record Book, which is a required log.The guilty pleas were entered in federal court in New Orleans before Chief U.S. District Court Judge Nannette Jolivette Brown. If the court approves the plea agreement, the companies will be fined a total of $2 million and serve four years of probation. Separate charges have been filed against Captain Abdurrahman Korkmaz, a Turkish national who was the ship’s master.The criminal case stems from the report of a crew member who, on Jan. 11, 2023, contacted the Coast Guard in New Orleans, which was the next port-of-call, and shared a video showing oil being pumped overboard and trailing behind the tanker. When the ship arrived in New Orleans two weeks later, this individual and another crew member blew the whistle and provided evidence to the Coast Guard. Video and photographic images were filed in court today by the prosecutors.“Deliberate pollution from ships, intentional falsification of records and obstruction of justice are serious environmental crimes that will be vigorously prosecuted to the full extent of the law.”…said Assistant Attorney General Todd Kim of the Justice Department’s Environment and Natural Resources Division. “This case involved deceit and willful pollution, and this prosecution is intended to hold both the corporations and individuals accountable.”..said U.S. Attorney Duane A. Evans for the Eastern District of Louisiana. According to court documents, the ship’s master ordered crew members to pump overboard from the residual oil tank, which contained oily waste. A portable pump placed inside the tank and connected to a long flexible hose was used to discharge directly into the ocean without any required pollution prevention equipment or monitoring.The waste oil, including sludge, originated in the engine room and had been improperly transferred into the residual oil tank on the deck of the ship by a prior crew. Senior managers at Prive Shipping were aware that the oil-contaminated waste remained in the tank and were informed by the ship’s master that it had been dumped overboard.The proposed $2 million criminal penalty includes $500,000 in organizational community service payments that will fund various maritime environmental projects in the Eastern District of Louisiana. Those projects will be managed by the congressionally established National Fish & Wildlife Foundation. The court also has authority to award up to $500,000, half of the APPS portion of the fine, to the whistleblowers that provided evidence leading to conviction.
Texas petrochemical giant fined $30 million for plant explosions in 2019 - On Tuesday, Texas Petrochemical Company (TPC Group) pleaded guilty to one criminal count of violating the Clean Air Act before the US District Court for Eastern Texas for its criminal negligence that led to its Port Neches plant experiencing two explosions in November 2019. The devastating blasts, occurring 13 hours apart, left three workers injured and necessitated an emergency evacuation of more than 50,000 residents from the surrounding area. The impact of the blasts were reportedly felt as far as 30 miles away. The TPC Group’s Port Neches petrochemical facility is one of three plants the Houston-based corporation operates along the coast of the Gulf of Mexico. The company’s other facilities are located in Houston and Lake Charles, Louisiana. According to an investigation into the industrial disaster by the US Department of Justice, the explosions released more than 11 million pounds of extremely hazardous chemical substances, caused more than $130 million in offsite property damage, and inflicted enormous impacts to human and environmental health. The Port Neches facility is responsible for 20 percent of butadiene production in the US, a central ingredient in the manufacture of rubber. Butadiene is a colorless gas with a gasoline odor that is extremely flammable and known to cause respiratory illnesses and cancer if one is exposed to it for long periods without proper equipment. For more than three months leading up to the explosions at the facility, a dangerous chemical material began to build up inside of a 16-inch diameter steel pipe critical to the facility’s production, forming a highly pressurized and toxic “popcorn” that pushed against the pipe’s walls. Finally, the pipe gave way to tremendous pressure and exploded. The fierce explosions blasted from the plant after igniting 6,000 gallons of the highly flammable butadiene, stored in liquid form, in less than one minute, engulfing a large section of the facility in flames.
Crews work together to clean up Lake Superior diesel spill - Efforts to clean up the almost 400 gallons of diesel that spilled in Lake Superior Wednesday morning are still underway. Officials said the incident that happened near Silver Bay was caused by a transfer of fuel between a privately owned barge and tugboat. Joseph McGinnis with the U.S. Coast Guard said on Thursday the Oil Spill Recovery Association put up booms around the vessel in an effort to move it into a different spot so they can clean up the surrounding area. After that, they’ll start cleaning along the shore. McGinnis said they’re continuing to monitor the situation and that this is an ongoing effort. As of right now there’s no definite timeline for how long the cleanup will take. Bevery Godfrey with the Minnesota Pollution Control Agency said that a vacuum truck has been on site since Thursday morning to recover the fuel. Godfrey said U.S. Coast Guard and Minnesota Pollution Control Agency will continue to work on-site with local officials on the cleanup efforts. The Coast Guard and MPCA said the investigation into potential impacts to the environment, wildlife, and marine life will be a priority as the cleanup progresses. The Coast Guard said the spill is contained, so there is no water emergency.
Alberta's Surge Energy Makes Crude Discovery in Hope Valley Calgary-based Surge Energy Inc. has drilled three successful multi-leg oil wells in Hope Valley, Alberta, which it calls “an exciting new crude oil discovery” in the Sparky formation. Surge said in a news release it has identified the potential for up to 100 multi-lateral drilling locations at Hope Valley. The company’s technical interpretation of its recent 46 square-kilometer 3D seismic program has allowed it to de-risk these future drilling locations in Hope Valley, it added. Over the last four years, Surge assembled a 32.5 net section block of land on the Sparky play trend, called Hope Valley. As part of the recent Alberta Crown sale, Surge strategically acquired 7.0 net sections of prospective land on the Hope Valley Sparky play trend. Production from Surge's latest Hope Valley well, the first well drilled incorporating the new 3D seismic data, has exceeded management's type curve with an IP60 day production average of 255 barrels of oil production, the company noted. For the remainder of the year, Surge is planning six additional multi-lateral wells targeting the Sparky formation at Hope Valley. In addition, Surge is building a multi-well oil battery to accommodate planned future growth in the area. Meanwhile, Surge also closed the sale of two non-core assets at Shaunavon and Westerose for total net proceeds of $27.42 million (CAD 37.4 million). The non-core Assets have associated production of 1,100 barrels of oil equivalent per day (boepd). The net proceeds have been applied against the company's outstanding debt on its revolving first lien credit facility, it said. As a result of the non-core asset sale, Surge updated its 2024 exit rate production guidance to 24,000 boepd, consisting of 86 percent light/medium oil, down from 25,000 boepd previously. Its capital expenditures for 2024 remain unchanged at $139.32 million (CAD 190 million). In its most recent earnings release, Surge said it posted first-quarter average daily production of 24,903 boepd, consisting of 86 percent liquids. The company said the strong quarterly production levels were achieved even when it drilled four less net wells than originally budgeted for the first quarter, as it reacted to earlier than anticipated spring break up conditions in both SE Saskatchewan and Sparky core areas. Surge also reported that it reduced its Scope 1 greenhouse gas emissions intensity by 18 percent in 2023 year over year. Surge has now reduced its Scope 1 emissions intensity by 28 percent since 2021. The results demonstrate the company's continued commitment to reducing the emissions intensity of its operations, it said. Surge said it has assembled “dominant operational positions” in two of the top four crude oil plays in Canada in its Sparky and SE Saskatchewan core areas, with over 11,500 boepd and approximately 8,000 boepd, respectively.
Mexico’s Nearshoring Opportunity Said Threatened by Insufficient Energy Infrastructure - Natural Gas Intelligence - Mexico’s reliance on U.S natural gas to meet national electricity needs would continue to represent a short-term risk for the country in the event of extreme climate conditions, according to the credit rating agency Moody’s Ratings. Throughout early May, Mexico experienced a nationwide heatwave that drove a surge in electricity demand across the country. The national electricity grid was unable to support the increased demand, leading the power system operator, known as Cenace, to issue critical alerts for inadequate supply on 11 of the first 18 days of the month. The grid’s inability to meet national power needs led to blackouts in 21 of Mexico’s 32 states on May 7. The natural gas system held up during the heatwave, but a lack of sufficient power generation supply...
Mexico Appetite for Financing Energy Said Strong Amid Nearshoring Boom - Improving Mexico’s energy and natural gas fortunes may be as simple as changing the regulatory environment, experts said recently in San Antonio, TX. Share of US natural gas imports by country of origin “Between banks and the capital markets, there is an infinite capacity to finance needs” in Mexico’s natural gas and energy sector, said Société Générale SA’s Adolfo Villareal, Energy Project Finance director of Corporate and Investment Banking. “But the right regulation needs to be in place. The debt financing is there, the appetite is there.” Experts at the Mexico Gas Summit who spoke at the event said recent power outages in Mexico were a reflection of underinvestment in the sector. There was a dearth of regulatory permits handed out by the government to proceed with infrastructure projects.
Mexico Natural Gas Production Hits Three-Year Low as Heat Dome Strains Power Grid - Mexico’s natural gas production averaged 3.76 Bcf/d in April, versus 4.40 Bcf/d in the same month a year ago. Last month’s production was the lowest amount recorded since April 2021, data from upstream regulator Comisión Nacional de Hidrocarburos (CNH) show. State oil company Petróleos Mexicanos (Pemex) supplied 3.57 Bcf/d or 95% of the total, down from 4.18 Bcf/d a year earlier. Private sector operators accounted for the remainder. Only a fraction of the gas produced by Pemex reaches Mexico’s internal market – which is the world’s eighth-largest – as Pemex consumes most of its own output for use in enhanced oil recovery and refining, among other applications. As a result, Mexico is increasingly dependent on pipeline gas imports from the United States to meet its needs...
Mexico's Pemex crude oil exports drop 31% in April from year earlier, data shows (Reuters) -Mexican state energy company Pemex exported 681,000 barrels per day (bpd) of crude oil in April, a year-on-year decrease of 31%, company numbers showed, as production has been declining for the past few months. Pemex's sales to its biggest export market, "America", which mainly consists of the United States, amounted to 484,000 bpd in April, 16% lower year-on-year. Meanwhile, sales to Europe amounted to 99,000 bpd that month, 54% lower over the same time period. Pemex, which published the figures late on Friday, gave no reason for the lower export numbers. It did not immediately respond to a request for comment. Crude oil exports have been declining for decades from an all-time height of 1.8 million bpd in 2004, when the company pumped some 3.4 million bpd. Over the past decades, large fields have been depleted and new discoveries have failed to compensate for the decline. The government has previously said that crude oil exports would decline as Pemex uses more for its domestic refineries and the Olmeca refinery in Dos Bocas. However, Reuters revealed last week that the new refinery only started taking in 16,300 bpd in mid-May. President Andres Manuel Lopez Obrador's Olmeca refinery in the port of Dos Bocas, in the southern state Tabasco, has been running over budget and behind schedule. Startup has been pushed back repeatedly over the past two years. Pemex officials have in the past said that production had taken a hit after several fields declined. Last week, two sources at the company said it was also affected by oil service companies that partially or completely started operating after they did not get paid. To be sure, Pemex's six local refineries substantially increased local processing during the six-year term of Lopez Obrador that will end in October. In April, these refineries processed on average 950,699 bpd, almost 4% more year-on-year. This compares to an average of 611,000 bpd at the end of the past government in late 2018. Together, they have a capacity to process 1.6 million bpd. Pemex has said that it expects to process around 1.45 million bpd by the end of 2024 in all its Mexican refineries, including the new Olmeca refinery. In April, Pemex pumped 1.5 million bpd of crude oil, the numbers showed, a 6.7% decline from a year earlier, and continuing a downward trend it started in May 2023. Including condensate, a very low-density, very low-viscosity liquid hydrocarbon that usually comes to the surface with natural gas, Pemex produced 1.78 million bpd in April, a 6.3% decline from a year earlier.
Panama & Suez Canals Fall Out of Favor for LNG Exports to Asia - LNG (liquefied natural gas) that is exported from the U.S. to Asia takes one of three routes to get there. One route is via the Panama Canal, crossing into the Pacific Ocean and on from there. Another is via the Atlantic Ocean to the Suez Canal and from there via the Red Sea, which connects to the Indian Ocean. The third way is sailing through the Atlantic Ocean and around the Cape of Good Hope off the southern tip of Africa. In the past, both the Panama Canal and the Suez Canal were the preferred routes, shaving weeks from the journey. However, given recent events, the dynamic has completely changed. Now, the preferred route is the longest route — around the Cape of Good Hope.
Panama Canal Completes Clean-Up from MSC Boxship Oil Spill --The Panama Canal Authority was working to complete the clean-up of one of the locks at the southern end of the waterway near Balboa after an oil spill. The incident happened on Sunday, May 26 while an MSC vessel was transiting the locks bound for Ecuador. According to the report, the authority suspended operations in one lane at the Miraflores locks after they discovered the oil during the locking operation. Crews were able to contain the spill to the one lock chamber and began a cleaning and recovery operation. The MSC Kataya R. (63,259 dwt) was held in the lock chamber during the cleanup. The vessel, built in 2002, is approximately 922 feet (281 meters) in length with a capacity of 4,100 TEU. She is owned by SFL and has been operating for MSC on charter since 2015. The containership is registered in Liberia. The lock remained closed all day on Monday, May 27, with pictures showing crews washing down the vessel and collecting the oil from the lock water. The authority said the vessel would remain in the upper chamber of the lock until the clean-up operation was completed and inspections were completed. No reason was given for the oil discharge. As of Wednesday, the vessel has been moved into the Panama Anchorage and the canal was reporting that the Miraflores center was reopening. The temporary delay comes as the Panama Canal is working to increase the number of daily transits. The authority reported this week that water levels in the main reservoirs had for the first time exceeded levels of a year ago. With increased rain and waterflow the authority plans to restore transits. By June 1, the authority expects to be back to 32 daily transits and they are planning to begin increasing the draft levels to ease the transit for more vessels. Panama begins its rainy season in June which is expected to contribute to further improvements after severe restrictions due to the lack of rain in 2023.
Vessel tied to $23m Caribbean oil spill detained off Africa | TradeWinds -A tug believed to be responsible for a $23m oil spill in Trinidad and Tobago has been held in Angola. The Caribbean nation started a clean-up operation after a barge called Gulfstream washed up on its shores in February, leaking fuel across beaches, coral reefs and mangroves. The barge was being towed by a vessel identified by the government as the Tanzania-flagged Solo Creed. Information released by the Angolan Navy has revealed the Solo Creed was seized off Luanda on 11 May for an unauthorised breach of the offshore security perimeter of oil extraction blocks 17 and 18. The exclusive zones are operated by subsidiaries of BP and TotalEnergies. The tug has broadcast no AIS data for 112 days, but investigative website Bellingcat verified its location off Angola using satellite imagery. Angola Press News Agency quoted Angolan Navy commander Divaldo Fonseca as saying the crew claimed they had intended to load water and other supplies. Fonseca reiterated the commitment of the navy to continue developing actions to guarantee the “inviolability of national waters”. The identities of the two vessels involved in the Caribbean spill were unknown for more than a week. The national security ministry said the tug and barge were heading to Guyana. TankerTrackers said the Gulfstream was seen in Pozuelo Bay, Venezuela, during the entire final week of January. The Gulfstream may have been carrying as much as 35,000 barrels of fuel oil. The 38-metre tug was operating out of Panama, according to the Trinidad and Tobago Coast Guard. Its ownership is not known.
Tug behind Trinidad and Tobago oil spill arrested in Angola - Bellingcat has provided an update on the tug boat involved in the oil spill which occurred in Trinidad and Tobago a few months ago, saying that it was detained in Angola for breaching security parameters. In February 2024, an oil spill occurred in Trinidad and Tobago, despite efforts to locate the tug involved in the incident, the tug Solo Creed disappeared until May 11, 2024, when it was detained by the Angolan Navy off Luanda for breaching security perimeters near oil extraction blocks 17 and 18.The vessel claimed it was seeking supplies without authorization. This incident came amidst disputes over maritime borders between Angola and the Democratic Republic of the Congo, Bellingcat reports.According to Bellingcat, satellite imagery confirmed the Solo Creed’s presence in Luanda, Angola, matching its appearance prior to the spill. The vessel, now labeled “SC,” arrived between May 9 and May 16 and was still present as of May 25.Despite local media coverage of its detainment, there was no mention of its involvement in the Tobago oil spill. However, on May 23, Trinidad and Tobago’s government acknowledged the connection and sought communication with Angola. The oil spill’s cleanup cost is estimated at $23.5 million USD, with no identified insurer for the Solo Creed.
Norway Raises Projected Oil and Gas Investments for 2025 to $21B - Statistics Norway has increased the country’s forecast oil and gas investments next year by 5.2 percent to NOK 216 billion ($20.5 billion) compared to the previous quarterly survey. The upward adjustment was driven by higher growth estimates for field development and exploration, the government agency reported on its website. The projection for 2025 indicates a nominal growth of 19 percent against the corresponding estimate for 2024, given in the second quarter of 2023. The previous growth estimate from 2024 to 2025 was 15 percent. Extraction and pipeline are forecast to account for 19 percent of oil and gas investments in the Nordic country in 2025. Producing fields are estimated to have an 11 percent share, followed by field development with three percent and exploration and concept studies with two percent. Onshore activities are projected to contribute one percent, similar with shutdown and removal. “There will also be high investment activity next year on the many field developments that were started at the end of 2022”, Statistics Norway said. “New pipelines are also being built in connection with some of these developments, which increases investments in pipeline transportation. “In addition, clearly higher activity within fields on stream is planned for next year”. Meanwhile the new estimate for 2024 climbed from NOK 244 billion ($23.2 billion) in the previous survey, given in the first quarter of this year, to NOK 247 billion ($23.5 billion), the highest nominal estimate since this statistic started. Last year’s second quarter forecast for 2024 was NOK 182 billion ($17.3 billion). Compared to actual oil and gas investments in 2023, investments in 2024 are expected to grow 14.7 percent, Statistics Norway said. “Investments in all investment areas are expected to increase compared to the corresponding estimates given for 2023, but it is a marked increase in field development that contributes the most to the projected increase in 2024”, it said. “The many field developments for which a plan for development and operation was delivered late in 2022 will overall have higher investment activity in 2024 than in 2023. It is common for development projects to have higher investments in the second year of development than in the first”. On April 22, 2024, Aker BP ASA said it started production in the Hanz field on the Norwegian side of the North Sea. The subsea development, which has an estimated investment of nearly NOK 5 billion ($475 million), holds reserves of about 20 million barrels of oil equivalent, according to Aker BP, which operates the field with a 35 percent stake. In the Norwegian Barents Sea, three fields are expected to start producing by the end of 2024, according to a press release by the Norwegian Offshore Directorate April 17, 2024. “Forecasts indicate that production on the Norwegian shelf will peak in 2025”, the directorate said at the time. “Johan Castberg coming on stream is one of the contributing factors”, it said. The field is operated by Norway’s majority state-owned Equinor with a 50 percent interest.
Equinor, Troll Partners Plan $1B Natural Gas Production Expansion to Meet European Demand - Equinor ASA and its partners in Norway’s Troll field plan to invest more than $1.1 billion in the western part of the production area to sustain high levels of natural gas exports to Europe beyond 2030. Norway’s largest oil and gas producer plans to present to Norway’s Ministry of Energy a plan from the Troll partnership that could boost annual peak production from the prolific offshore field to 7 billion cubic meters (Bcm), or roughly 247 Bcf/y. “We have been working alongside our partners, Gassco and the Norwegian authorities to maximize energy deliveries from the Norwegian Continental Shelf since 2022,” Equinor’s Kjetil Hove, executive vice president of Norwegian Exploration and Production, said. “This project will allow Troll and Kollsnes to continue their...
Turkey, Azerbaijan Ink Deal for Turkmenistan Natural Gas to Flow to Europe - As negotiations with Russia for regional export projects have failed, Turkey is working with other partners and moving forward on plans to form a regional natural gas export hub. Turkey and Azerbaijan’s recent agreement to enable delivery of Turkmenistan natural gas to Europe displayed the two countries’ commitment to help Europe replace Russian pipeline imports with alternative supplies. The agreement excluded Iran from the planned transit route. Turkey and Azerbaijan would expand capacity of several natural gas pipelines to facilitate Turkmen fuel transit into Turkey and then to Europe.
Qatar Bullish on More LNG Supply Contracts Despite Growing Global Natural Gas Competition - Worldwide demand for LNG has driven buyers to sign more than 25 million metric tons/year (mmty) in supply contracts in the last year for Qatar’s next generation of export projects. Looking into the rest of 2024, QatarEnergy CEO and Energy Minister Saad-al-Kabbi said in early May he is “confident” the state-owned firm would sign more contracts later this year. Qatar’s expansion plan outlines a boost in liquefied natural gas production volumes by 85% from current levels to 142 mmty by 2030 from its North Field expansion projects.
EU Weighs Proposal to Sanction Russian Oil Tanker Insurer - The European Union’s executive arm is examining the feasibility of a proposal by one of its member states to sanction Russia’s Ingosstrakh Insurance Co., as part of efforts to choke revenue generating streams that Moscow needs to finance its war against Ukraine. The proposal, which may require the EU to expand its listing criteria, aims to target one of the main providers of insurance to tankers hauling Russian oil after the Group of Seven introduced price caps on most Russian seaborne crude and fuels in late 2022 and early 2023, according to people familiar with the matter. Were it to go through, the idea would create sprawling and hard-to-quantify risks and costs — not just for Russia’s oil trade but for wider international commodities shipments that Ingosstrakh provides coverage for. The evaluation is still at an early stage and Moscow-based Ingosstrakh is currently not included in the latest draft of a new sanctions package the bloc is currently negotiating, the people said on condition of anonymity. Even if the proposal gets a nod from the European Commission, it would still face numerous hurdles given that several member states, including Hungary, have opposed most measures targeting Russia’s energy sector, the people said. EU sanctions require the backing of all member states. The listing criteria is aimed at people and entities operating in economic sectors that are providing the Russian government with substantial sources of revenue — something that would need to be demonstrated in the case of Ingosstrakh. “Listings are discussed and decided by the member states in a procedure that is confidential,” said Peter Stano, lead spokesperson for the EU’s foreign affairs and security policy. Ingosstrakh, a top-five Russian insurance provider, said it “operates in strict compliance with all applicable legislation, and follows strict compliance procedures.” The firm “follows the recommendations found in relevant Sanctions Guidance for Entities Operating in the Maritime Shipping Sector published by OFAC and other relevant guidelines, as applicable,” it said in emailed comments. The EU, US and other allies have imposed several rounds of sanctions on Russian exports, companies and officials following the invasion of Ukraine. Kyiv’s allies are especially focused on cracking down on Moscow’s ability to circumvent sanctions and on curbing its future revenue to reduce Vladimir Putin’s ability to finance and sustain Russia’s war. The G-7 price cap on Russian crude oil and petroleum products bans western shipowners, insurers and intermediaries from providing vessels and services for cargoes priced above the thresholds. The restrictions prompted a pivot away from western insurance and a need for alternatives. In April, the International Group of P&I Clubs, a London-based umbrella organization for clubs providing coverage of shipowners’ liability against risks including spills and collisions, provided services for just 16 percent of all tankers shipping Russian oil. That’s the lowest since at least the start of 2023, according to shipping data compiled by Bloomberg. Moscow has been able to skirt much of the impact of the price cap by assembling a fleet of tankers operating in difficult-to-trace jurisdictions and turning to non-western service providers to ship its barrels to new markets such as India. Ingosstrakh said in the months that followed the invasion that it would not fill the void if sanctions forced western firms to stop covering the nation’s petroleum shipments. It is known to be the provider of at least some protection and indemnity cover, but the full extent of its involvement is not clear and there is no suggestion the company has breached sanctions. It also provides P&I to some other commodity trades.
Asian Natural Gas Prices Continue Climb Amid Spot Buying, Supply Concerns – Asian buyers are seeking more LNG spot cargoes and shoring up long-term supply while Europe awaits the impacts from further cuts of Russian natural gas imports and global terminal outages. Prices in east Asia rose to the mid-$12/MMBtu range to start off the week amid a fresh wave of spot purchases and tenders. Korea Middle Power Co. Ltd. (KOMIPO) purchased a cargo for delivery in mid-July, according to data from Kpler. Thailand’s PTT LNG Co. Ltd. also is seeking three liquefied natural gas cargoes through July. One of South Korea’s largest LNG buyers, Korea Gas Corp. (Kogas) also opened a short-term and long-term tender for up to 2.1 million metric tons/year (mmty) each. Meanwhile, supply in the Pacific has been limited by several outages at key facilities in Australia,
Atlantic LNG shipping rates, European and Asian prices climb - Atlantic spot liquefied natural gas (LNG) freight rates rose this week, while European and Asian prices also increased compared to the previous week.Last week, charter rates were almost flat compared to the week before.“Freight rates in the Atlantic experienced the largest week-on-week increase of the year thus far, with the Spark30S Atlantic spot rate increasing by $5,500 per day to $48,250 per day” Qasim Afghan,” Spark’s commercial analyst told LNG Prime on Friday.He said this is the “highest Atlantic freight rate since the end of March, ending the almost two-month period where freight rates were extremely steady, remaining within a $2,000 range.”The Spark25S Pacific rate decreased by $1,250 per day to $44,500 per day this week, Afghan said.Flex LNG’s CEO Øystein Kalleklev said during the company’s first quarter conference call on Thursday that a “lot of ships” are scheduled for delivery in 2024 and 2025, while the new LNG volumes to the market are coming at the end of 2025 and into 2026 and onwards.He said there are currently “numerous” ships in the “weak” spot market.Looking at rates today, with spot rates for modern tonnage at around $50,000, he said that this means the “steam ships are making rates in the low $20,000, which means that when you take in the cost of docking these ships, these are very expensive ships to dock because they are old.”“It means that these ships are running at OpEx level. So if you add installment and interest cost on top of that, these ships are not making any money at all,” he said.So that together with a lot of ships coming off long-term contracts would result in more steam ships being scrapped in the coming years, he said.“And that together with more growth, will rebalance the market sometime from the end of 2025, 2026, and 2027 onwards,” he said.In Europe, the SparkNWE DES LNG front month increased compared to the last week.“SparkNWE DES LNG prices have hit a yearly high for 2024, with the front month price for June delivery assessed at $11.003/MMBtu and at a $0.175/MMBtu discount to the TTF,” Afghan said.He said this is a $1.552/MMBtu increase in DES LNG price, the largest week-on-week increase since October 2023.European prices rose this week following an announcement by Austria’s OMV indicating a potential disruption in gas supplies from Russia’s Gazprom to Austria due to a court ruling.OMV said it would “still be able to supply its contractual customers with gas from alternative, non-Russian sources, through its extensive diversification efforts over the last several years.”This includes long-term LNG supply contracts, which are imported into Europe via OMV’s LNG regasification capacities at the Gate terminal in Rotterdam.Data by Gas Infrastructure Europe (GIE) shows that volumes in gas storages in the EU continued to rise and were 67.72 percent full on May 22.Gas storages were 66.06 percent full on May 15, and 66.34 percent full on May 22 last year.In Asia, JKM, the price for LNG cargoes delivered to Northeast Asia, for July settled at $12.255/MMBtu on Thursday, rising from the previous week.The data shows that this is the first time that the JKM rose above $12/MMBtu since December last year.JKM for July settled at 11.160/MMBtu on Friday last week, rising from the previous week.State-run Japan Organization for Metals and Energy Security (JOGMEC) said in a report earlier this week that JKM rose in the latter half of the last week due to the shift in delivery months from June to July, as well as supply concerns caused by troubles at Gorgon LNG, Bintulu LNG, and Nigeria LNG.Spot LNG prices also rose due to heatwaves in Southeast Asia and South Asia, and demand for summer season.US LNG exports dropped to 23 shipments in the week ending May 22 compared to 28 shipments in the prior week, with the Freeport LNG terminal shipping five cargoes during the period, according to the EIA.Freeport LNG, the operator of the 15 mtpa liquefaction plant in Texas, told LNG Prime on Wednesday last week it has resumed operations at all of its three liquefaction trains.Malaysian energy giant Petronas also said this week it has resumed full operations on May 19 at its giant Bintulu LNG plant.
LNG imports may hit record in 2024 -- Fueled by strong demand from the industrial sector amid an economic recovery and industrial decarbonization, China's liquefied natural gas imports could hit a record in 2024, company executives and experts said. China, the world's top importer of the super-chilled fuel, is on course to import around 80 million metric tons of LNG this year, driven by increased demand from the industrial and commercial sectors, said Zhang Yaoyu, global head of LNG and new energies for PetroChina International under China National Petroleum Corporation. China's LNG imports rose 12.6 percent year-on-year in 2023 to 71.32 million tons, overtaking Japan as the world's largest LNG importer. This was a significant rise compared to 63.44 million tons of LNG imported in 2022. China has shipped nearly 20 million tons of LNG already during the first three months, with the chemicals, paper, steel and cement industries driving growth in demand, making the estimated 80 million tons achievable, said Zhang. Li Ziyue, an analyst with BloombergNEF, said China has become the dominant force in LNG worldwide amid the country's energy transition. Gas consumption in the transport sector, seen as a relatively clean bridge fuel, is projected to experience the fastest growth due to the cost-effectiveness of natural gas commercial vehicles, she said. The country's State-owned enterprises have also led China's expansion of its capacity to handle LNG, while private companies are playing an increasingly active role in building LNG terminals, she said. About 60 percent of the LNG facilities under construction are by State-owned enterprises and the rest by private domestic companies, she said. BloombergNEF said it expects China's base-case natural gas demand in 2024 to increase 8 percent year-on-year to 421 billion cubic meters, while LNG imports are estimated to rise 17 percent annually to 81 million tons this year. The transportation sector is expected to see the largest increase in gas consumption during the warmer months (April to September) due to the good economics of natural gas commercial vehicles, it said. Chinese companies are on course to buy more LNG on a long-term basis than any single nation, as it is looking to sign more deals to avoid possible shortages and reduce dependence on spot deliveries. Of all global long-term liquefied natural gas volumes last year, 33 percent is going to China, according to Bloomberg. According to Shell's LNG Outlook 2024, the global LNG market will continue to grow into the 2040s, mostly driven by China's industrial decarbonization. The development of China's gas infrastructure has been accelerating in recent years and the long-term gas and LNG demand outlook in China remains strong as the country has been also diversifying its import destinations, it said. "China is likely to dominate LNG demand growth this decade as its industry seeks to cut carbon emissions by switching from coal to gas," said Steve Hill, executive vice-president for Shell
RIL: Reliance Industries signs deal with Rosneft to buy Russian oil in roubles - Times of India -- Reliance Industries, operator of the world’s biggest refining complex, has signed a one-year deal with Russia’s Rosneft to buy at least 3 million barrels of oil a month in roubles, four sources aware of the matter said.Shift to rouble payments follows Russian President Vladimir Putin’s push for Moscow and its trading partners to find alternatives to Western financial system to facilitate trade despite US and European sanctions.A term deal with Rosneft also helps privately run Reliance to secure oil at discounted rates at a time when the Opec+ group of oil producers is expected to extend voluntary supply cuts beyond June. reuters
Court dismisses N143b oil spill claims against Mobil - --The Federal High Court in Uyo, Akwa Ibom State, has dismissed four oil spill suits instituted against Mobil with a claim of over N143 billion. The plaintiffs are: Unwon Ama Oyorkoto Unity Fishing Cooperative Society, Mgbambop Otako Fishing Cooperative Investment and Credit Society Limited, Oyorokoto Unity Fish Farming Cooperative, and Mr. Dimkpa Ataukot), represented by Kingsley Uzoukwu, Esq. They sued Mobil in November 2022, alleging that the oil company caused an oil spill to occur in their communities in 2012, which severely impacted the livelihood and sources of income of the plaintiffs. Mobil, represented by Prof. Fabian Ajogwu (SAN) of Kenna Partners, filed preliminary objections challenging the court’s jurisdiction to entertain the suits. Read Also: The Most Popular Games in Nigeria Ajogwu argued that the suits were statute-barred as they were initiated beyond the limitation period stipulated under Section 16 of the Akwa Ibom State Limitation Laws, 2000. The court, in its verdict yesterday, agreed with the submissions of Mobil’s counsel that the plaintiffs commenced their suits more than 10 years after the cause of action arose, and as a result, the suits were held to be statute-barred. The court upheld Mobil’s argument that even if there were indeed oil spill incidents, the plaintiffs’ cases were at best hinged on the continuing effect of the alleged spills, as against the continuation of the oil spill incidents. Justice Onnah dismissed all the claims by the plaintiffs.
Iran Concludes Oil Spill Cleanup at Chabahar Port - Deputy Director of the General Administration of Ports and Maritime Affairs of Sistan and Balouchestan province Seyed Ahmad Hashemi said that an oil spill caused by an unknown source off the coast of Iran’s Southeastern Chabahar port has been cleaned up. “Oil pollution, without a clear source, was contained and collected in the sea and on the coast of Chabahar, with the timely action of the anti-pollution team,” Hashemi said. “After the discovery of oil pollution on the coast of Chabahar, four pollution control and sea cleanup teams were immediately sent to the polluted area,” he added. Noting that the exact origin of the pollution is being investigated, Hashemi said, “The operation to contain and clean up the oil pollution in Chabahar was completed with the 72-hour and non-stop efforts of the pollution control teams.” Cleanup and recovery from an oil spill is difficult and depends on different factors, including the type of the material spilled, the temperature of the water, and the types of shorelines and beaches involved. Chabahar is a free port on the coast of the Gulf of Oman, situated on the Makran Coast of the Southeastern Sistan-Baluchestan Province. It is located 700 km South of provincial capital Zahedan.
Iranian Knowledge-Based Firm Launches Domestic Production of Thermoplastic Polyurethane (ANA)- Researchers at an Iranian knowledge-based company have managed to produce thermoplastic polyurethane which is a highly advanced and complicated polymer used in the automobile industry, shoe making, sportswear, adhesives and other industrial parts. “Thermoplastic polyurethanes, known in the industry as TPU, are a versatile elastomer with unique properties,” Nima Eskandari, a board member of the Iranian knowledge-based company told ANA correspondent in an interview. He said that the TPU produced in their company offers optimal performance in the most demanding industries. “Thermoplastic polyurethanes have high elasticity, high mechanical strength, and very high abrasion resistance; Due to its high mechanical properties, this product has many applications in various industrial fields, including automotive, military, electrical, industrial and health,” Eskandari said. “This product had not been produced in the country due to the complicated process of its production and its time-consuming nature. It was only produced in the region by a company in Turkey, and fortunately, we have now been able to be the second producer of this product in the region,” he further asserted. “TPU is composed of an alternating sequence of hard and soft segments, and its production requires reactive extrusion and complicated reactors in order to first combine polyols (soft segment) and then combine it with the hard part in a reactive extruder and convert it into granules,” added the company’s member of board of directors. According to him, the production of the TPU is highly dependent on the stoichiometric ratio of the raw materials, and any slightest deviation in its production will result in gelation or a polymer with unflavored properties. Given the specifications of the product, its production is highly expensive compared to other polymers. “Different grades of this product have been imported from countries such as China, Italy, Turkey and Germany for various applications in recent years, including high pressure hoses (pneumatic), auto parts (dust collector), industrial adhesives and many other industrial applications,” said Eskandari, stressing, “But now consumers in the country can easily replace these previously imported foreign-made products with the domestically-made ones at a 20% lower prices.” “The granules produced in this company are competitive with similar foreign models. For example, the soles of sneakers are cracked due to high abrasion, but this product is very elastic due to wear resistance and comes out with no problems that the old products used to have.”
Oil Prices Jump as Europe Hints at June Rate Cuts -- Brent crude and U.S. benchmark crude oil prices gained well over 1% in thin Monday trading, with international inflation data and the potential for rate cuts globally taking center stage on Memorial Day weekend, with U.S. and London markets closed for the holiday. At 12:48 p.m. ET on Monday, Brent crude was trading at $83.07, up 1.16% on the day, while West Texas Intermediate (WTI) was trading at $78.68, up 1.24% on the day. Asian and European stock markets also benefited on Monday, with some renewed optimism about rate cuts after the U.S. Federal Reserve last week dulled markets by seeking more time to make sure that inflation was really on track for the 2% target. Strengthening optimism that the European Central Bank, which meets on June 6, could make positive moves towards a rate cut have also buoyed stocks and oil prices. The governor of the Bank of Finland, Olli Rehn, who is also the European Central Bank (ECG) governor, helped matters on Monday by suggesting that rate cuts could begin in June because inflation was closing in on its 2% target across the euro zone and that the drop in inflation was “sustained”. “Thanks to this disinflationary process, inflation is converging to our 2% target in a sustained way, and the time is thus ripe in June to ease the monetary policy stance and start cutting rates,” Rehn said. “This obviously assumes that the disinflationary trend will continue and there will be no further setbacks in the geopolitical situation and energy prices,” he added. For April, Euro zone inflation was 2.4%, the seventh consecutive month in which it remained below 3%, with May figures due out on Friday this week expected to be highly anticipated by markets.
Expectations That OPEC+ Will Maintain Crude Supply Cuts at its June 2nd Meeting - The oil market rallied higher on Tuesday, following the Memorial Day holiday, amid expectations that OPEC+ will maintain crude supply cuts at its June 2nd meeting and amid increasing tension in the Middle East. The market posted a low of $77.69 and extended a more than 1% increase in prices on Monday that was muted due to the holiday. However, the market continued to trend higher on Tuesday and rallied to a high of $79.90 in afternoon trading as the U.S. dollar fell 0.1% to a more than one-week low. The market later settled in a sideways trading range ahead of the close. The July WTI contract settled up $2.11 at $79.83 and the July Brent contract settled up $1.12 at $84.22. The WTI market rallied higher in the post settlement period and retraced more than 38% of its move from a high of $86.16 to a low of $76.15, as it posted a new high of $80.20. The market was well supported by news of an Israeli strike in Rafah that killed dozens of civilians and a cross border clash between Israeli and Egyptian forces that left an Egyptian officer dead. The product markets ended the session higher, with the heating oil market settling up 5.14 cents at $2.4650 and the RB market settling up 2.48 cents at $2.5090. UBS said oil remains a valid geopolitical hedge and it sees Brent crude oil trading at around $87/barrel by the end of the year. It expects OPEC+ to extend the current production cut for at least another three months. The Buzzard oilfield in the North Sea is experiencing a temporary production outage. Buzzard is linked to the Forties crude oil stream. The North Sea Oseberg crude oil stream will load three cargoes in July, up from two in June. The Troll crude oil stream will load 5 cargoes in July, unchanged from June. Nigeria is set to export five cargoes of Qua Iboe and four cargoes of Bonny Light crude in July. For June, Nigeria is scheduled to export five cargoes of Qua Iboe crude and five cargoes of Bonny, including one cargo deferred from May. Iraq’s Oil Ministry called for a meeting “as soon as possible” with the Kurdish energy ministry and international companies operating in the Kurdish region in an effort to reach a deal on resuming oil exports through the Turkish port of Ceyhan. U.S. consumer confidence unexpectedly improved in May after deteriorating for three consecutive months amid optimism about the labor market. The survey from the Conference Board also showed more consumers believed that the economy could slip into recession in the next 12 months. The Conference Board said that its consumer confidence index increased to 102.0 in May from an upwardly revised 97.5 in April. Consumers' 12-month inflation expectations increased to 5.4% from 5.3% in April.
Oil up on OPEC+ meeting, summer driving season and weaker US dollar (Reuters) - Oil prices gained more than $1 a barrel on Tuesday on the expectation that OPEC+ will maintain crude supply curbs at its June 2 meeting, while the start of U.S. summer driving season and a weaker dollar also boosted the commodity.Brent crude futures for July delivery settled up $1.12, or 1.4% at $84.22 a barrel. U.S. crude ended at $79.83 a barrel, gaining $2.11, or 2.7% from Friday's close, having traded through Monday's U.S. mark Memorial Day holiday without a settlement. For the online meeting of OPEC+ oil producers coming up on Sunday, traders and analysts are predicting 2.2 million barrels per day of voluntary production cuts to stay in place."We expect OPEC+ to extend the current cut for at least another three months at its upcoming meeting," UBS analysts said in a note. "This week's upside follow through is being facilitated by a significant weakening in the dollar and a growing consensus that OPEC+ will extend production cuts at the upcoming weekend meeting," The dollar slipped 0.1% to a more than one-week low.Oil extended a more than 1% rise in trade on Monday that was muted due to the holiday, with hopes of a demand boost from the first tradable day since the start of the U.S. summer driving and vacation season providing support.Worries over U.S. interest rates remaining elevated for a longer period contributed to a weekly loss for crude last week. Higher rates boost the cost of borrowing, which can dampen economic activity and demand for oil.Investors will watch the U.S. core personal consumption expenditures price index (PCE), which is a main inflation gauge for the Federal Reserve, due on Friday. "Despite the indisputably brighter mood seen in the last two days, interest rate concerns will most plausibly act as a (brake) on further attempts to send oil prices meaningfully higher in the immediate future," Air travel data also helped to buoy oil prices, with U.S. seat numbers on domestic flights for May rose by 5% month on month and almost 6% year on year to slightly above 90 million, data from flight analytics company OAG showed, surpassing 2019 levels. Continuing conflict in the Middle East, which on Monday included the death of a Egyptian security service member in an exchange of gunfire with Israeli forces, also helped boost oil prices.
Oil gains as geopolitical tensions rise ahead of OPEC+ meeting - Oil advanced as tensions flared in the Middle East, with a vessel attacked in the Red Sea and reports that Israeli tanks have reached the center of Rafah. Global benchmark Brent traded above $83 a barrel, while West Texas Intermediate topped US$79. Israeli tanks have reached the center of Rafah in southern Gaza, AFP reported, citing witnesses. Elsewhere, a Greek-managed bulk carrier was attacked while sailing through the Red Sea. Oil has risen this year on persistent geopolitical risks and OPEC+’s roughly 2 million barrels a day of output cuts, with the group expected to prolong its curbs into the second half of 2024 at a meeting on Sunday. Still, prices have dipped since early April amid signs of weakening demand from Asia, causing Brent’s prompt spread to get closer to a bearish contango structure that indicates supply is plentiful relative to consumption. The bulk carrier Laax was targeted with three missiles around 54 miles southwest of the Yemeni city of Hodeida, according to maritime security firm Ambrey. Yemen’s Houthis have not been identified as the attackers, but the group has carried out a series of assaults on ships transiting the waterway that is crucial to international shipping over the past few months in retaliation for Israel’s war in Gaza. “A confluence of factors suggest some upside sensitivity in oil — from fraught geopolitics to inventory drawdown to OPEC’s assumed preference to maintain curbs,” said Vishnu Varathan, chief economist for Asia ex-Japan at Mizuho Bank Ltd. However, “the Gaza situation is only a warning not to be aggressively short, but not quite the unbridled bullish trigger.” The death of the Egyptian soldier, which followed Israeli airstrikes on Sunday on a camp for displaced people that were condemned by governments across the world, is an added risk to oil markets, but the conflict has largely stayed contained so far. There has been no major disruption to crude flows from the Middle East — which accounts for about a third of global output — though the Houthis’ attacks in the Red Sea have led to the rerouting of some supply. Investors will also be looking for signs of US fuel demand data after the Memorial Day holiday, which traditionally marks the start of the peak summer driving season. Brent for July was up 0.6 per cent at $83.56 a barrel at 2:40 p.m. in London. WTI for July rose to $79.25 a barrel. There was no settlement on Monday due to a US holiday.
Oil prices ease on US gasoline demand worries, economic data (Reuters) - Oil prices eased about 1% on Wednesday on worries over weak U.S. gasoline demand and economic data that could cause the U.S. Federal Reserve to keep interest rates higher for longer. High interest rates used to tackle lingering inflation can weigh on economic growth and reduce demand for oil. Brent futures fell 62 cents, or 0.7, to settle at $83.60 a barrel, while U.S. West Texas Intermediate (WIT) crude fell 60 cents, or 0.8%, to settle at $79.23. The premium of the Brent front-month over the second month , known in the industry as backwardation, fell to its lowest since January. When a market is in backwardation, energy firms are more likely to pull oil out of storage and use it now rather than wait for prices to decline in the future. If the market switches to contango, with future contracts worth more than the front-month, energy firms could start storing oil for the future, which could depress prices. U.S. consumer confidence unexpectedly improved in May after deteriorating for three straight months amid optimism about the labor market, but worries about inflation persisted and many households expected higher interest rates over the next year. "Hopes of (Fed) rate cuts ... continue to be pushed back further out into the year," Worries about U.S. gasoline demand, meanwhile, have kept gasoline futures prices near a recent two-month low, cutting gasoline and 321- crack spreads, which measure refining profit margins, to their lowest levels since February. "Gasoline demand (is) still surprisingly weak in keeping supplies near normal levels as bullish seasonals diminish," . Looking ahead, investors are waiting for the release on Friday of the U.S. personal consumption expenditures (PCE) price index report for April. The PCE, which is the Fed's preferred inflation barometer, is expected to hold steady on a monthly basis. Expectations for the timing of rate cuts have see-sawed, with policymakers wary of sticky inflation. Traders and analysts also said they expect OPEC+, which includes the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, to keep voluntary production cuts of about 2.2 million barrels per day (bpd) in place at its meeting on Sunday. In China, the world's second biggest economy after the U.S., the economy is set to grow 5% this year after a "strong" first quarter, the International Monetary Fund said, upgrading its earlier forecast of a 4.6% expansion. The IMF, however, said it expects slower growth in China in the years ahead. Heightened tensions in the Middle East also held back the crude price decline. Israel sent tanks on raids into Rafah and predicted its war on Iran-backed Hamas militants in Gaza would continue all year. The Iran-aligned Houthis in Yemen, meanwhile, launched attacks on six ships in three different seas and Iran's semi-official Tasnim news agency said Tehran's sea-launched ballistic missile Ghadr was made available to the Houthis.
WTI Extends Losses After Crude Draw, Production Holds Near Record Highs -Crude prices have given back the brief gains overnight (following API's report of a big crude draw) as US GDP slowed and weighed on demand expectations (offsetting nervousness from another attack on a ship in the Red Sea, and Israeli comments that it probably wouldn’t be able to defeat Hamas before the end of this year). Additionally, traders are anxiously awaiting the OPEC+ meeting over the weekend for more clarity on the supply-demand outlook.“There’s some caution in the market, with attention on slowing consumption just before the high-demand summer season,” “But a surprise from OPEC+ can’t be completely ruled out and that could drive prices immediately higher.”The official inventory data will trigger the next leg if it confirms API's print.API
- Crude -6.49mm (-1.9mm exp)
- Cushing -1.71mm
- Gasoline -452k
- Distillates +2.05mm
DOE
- Crude -4.16mm (-1.9mm exp)
- Cushing -1.76mm
- Gasoline +2.02mm
- Distillates +2.54mm
Crude inventories and stocks at the Cushing Hub tumbled last week, confirming API's overnight report. Inventories built though on the product side... The Biden admin added 485k barrels to the SPR (while drawing down from the gasoline reserve)... US Crude production remained flat near record highs...
The Market Was Pressured by the Release of the U.S. GDP Data - The oil market continued to trend lower on Thursday in follow through selling seen on Wednesday. The market was pressured by the release of the U.S. GDP data and unexpected builds in product stocks, which offset a large draw in crude oil stocks. The market traded mostly sideways in overnight trading and posted a high of $79.42. However, it erased its slight gains, breached its previous low and continued to trend lower throughout the session on news that the U.S. economy grew slower than initially estimated in the first quarter, largely due to softer consumer spending. The market was further pressured following the release of the EIA’s weekly petroleum stocks report, which showed unexpected builds in distillates and gasoline stocks of over 2 million barrels each as demand weakened. The crude market extended its losses to $1.60 as it sold off to a low of $77.63 in afternoon trading. The market later retraced some of its losses ahead of the close, with the July WTI contract settling down $1.32 at $77.91. The July Brent contract settled down $1.74 at $81.86. The product markets also ended lower in light of the build in inventories, with the heating oil market settling down 6.76 cents at $2.3694 and the RB market settling down 5.98 cents at $2.4046. The EIA reported that U.S. refinery net input of crude oil in the week ending May 24th increased to 17.1 million bpd, its highest since Dec 2019. It said net input of crude to U.S. Gulf Coast refineries increased to 9.3 million bpd, its highest since Jan 2020. Goldman Sachs remains selectively bullish on commodities, citing solid demand growth, expectations of more structural upside in industrial metals and gold, and a declining geopolitical risk premium for oil. The bank said it expected Brent to stay in $75 to $90/barrel range. It also said it sees limited further upside to natural gas prices this summer in the U.S. and Europe given the elevated storage levels. Three OPEC+ sources said OPEC+ is working on a complex deal to be agreed at its meeting on Sunday that will allow the group to extend some of its oil production cuts into 2025. The deal may include extending some or all of the current voluntary production cuts of 2.2 million bpd, expiring in June, into the third or fourth quarter of 2024. The deal would also include extending a separate part of cuts of 3.66 million bpd, expiring at the end of 2024 into 2025. Two of the sources stated that the extension of some cuts into 2025 will likely be made conditional on OPEC+ agreeing new individual member output capacity figures later in 2024. Colonial Pipeline Co is allocating space for Cycle 33 shipments on Line 20, which carries distillates from Atlanta, Georgia to Nashville, Tennessee. The Commerce Department reported that the U.S. economy grew more slowly in the first quarter than previously estimated after downward revisions to consumer spending. It reported that U.S. GDP grew at a 1.3% annualized rate from January through March, down from the advance estimate of 1.6% and slower than the 3.4% pace in the final three months of 2023.
Oil falls as US reports surprise fuel build, weak demand (Reuters) - Oil prices fell for the second consecutive session on Thursday, after the U.S. government reported weak fuel demand in the country and a surprise jump in gasoline and distillate fuel stockpiles. Brent crude futures fell by $1.74, or 2.1% to settle at $81.86 a barrel. U.S. West Texas Intermediate crude futures fell by $1.32, or 1.7%, to $77.91 a barrel. U.S. crude stocks fell more than expected last week as refiners ramped up to their highest utilization rates in over nine months, data from the U.S. Energy Information Administration showed. However, there was a surprise jump in gasoline and distillate fuel inventories as demand weakened even as output rose. "Weakness in gasoline markets have continued to drag down the rest of the oil complex," Analysts had expected the U.S. Memorial Day holiday on May 27, the start of the U.S. summer driving season, would boost fuel demand. Yet EIA's measure of gasoline demand slipped about 2% from the prior week to 9.15 million barrels per day. "I was looking for a draw in gasoline, in particular, ahead of the holiday weekend but when refiners are cranking it out, that is too much to drain product inventories," "The gasoline demand is still a good number, even though I would have expected that to be up closer to 9.5 (million bpd) going into the last holiday weekend," U.S. gasoline futures fell more than 2% to a 3-month low of $2.40 a gallon, while ultra-low sulfur diesel futures settled at an over 11 month low. Further pressuring oil prices, investors' risk-appetite has been subdued by the prospect of delayed monetary easing in the U.S. and Europe, "Fear trading" is dominating financial markets ahead of Friday's U.S. consumer price index data. Oil investors are also cautious ahead of an OPEC+ meeting this weekend. The producer group will decide whether to extend, deepen or unwind supply cuts. Soft fuel demand and rising global oil inventories may help convince OPEC+ producers, which include the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, to maintain supply cuts when they meet on June 2, OPEC+ delegates and analysts say.
Oil stabilises ahead of US inflation data and OPEC+ meeting - Oil prices held steady on Friday as investors await U.S. inflation data for clues on the demand outlook before turning attention to Sunday's OPEC+ meeting to determine the state of supply into next year. Brent futures were up 14 cents, or 0.17%, at $82.00 a barrel by 0908 GMT. U.S. West Texas Intermediate (WTI) crude was down 4 cents, or 0.05%, at $77.87. The more liquid August Brent contract was trading at $81.93, up 5 cents from the previous settlement. Brent futures are on track for a monthly loss of almost 7% after dropping 2% in the previous session on a surprise build in U.S. fuel inventories. Higher refinery utilisation brought a deeper than expected draw in crude oil stocks in the week to May 24, Energy Information Administration (EIA) data showed. However, gasoline inventories rose by 2 million barrels, against expectations of a 400,000 barrel draw and higher demand ahead of the Memorial Day weekend. In the euro zone, inflation rose by 2.6% in May, Eurostat data showed, beating the 2.5% expected by economists polled by Reuters. The increase is unlikely to deter the European Central Bank from cutting borrowing costs next week, but it could slow the rate-cutting cycle in the coming months. The oil market has been under pressure in recent weeks over the prospect of borrowing costs staying higher for longer, which ties down funds and can curb oil demand. U.S. inflation data is due to be released at 1230 GMT. Markets are also awaiting the OPEC+ meeting on Sunday, with the producer group working on a complex deal that would allow it to extend some of its deep oil production cuts into 2025, three sources familiar with OPEC+ discussions said on Thursday. "The probable extension of the voluntary production cuts by OPEC+ should cause oil prices to rise again," Commerzbank analysts said. "Ultimately, this would threaten a significant undersupply on the oil market in the third quarter."
Oil settles down ahead of OPEC+ meeting, posts weekly loss – CNA -Oil prices fell on Friday and posted a weekly loss as investors awaited an OPEC+ meeting on Sunday that will determine the fate of the producer group's output cuts. Brent futures for July delivery were down 24 cents, or 0.3 per cent, to $81.62 a barrel, while the more liquid August contract was down 77 cents, or 0.8 per cent, at $81.11. U.S. West Texas Intermediate (WTI) crude futures fell 92 cents, or 1.2 per cent, at $76.99. For the week, Brent settled down 0.6 per cent, with WTI posted a 1 per cent loss. "It's the trepidation ahead of the OPEC meeting over the weekend," , referencing the potential for the group to do something unexpected. "It's widely expected that they'll roll over the cuts," he added. Markets are awaiting the OPEC+ meeting on Sunday, with the producer group working on a complex deal that would allow it to extend some of its deep oil production cuts into 2025, sources told Reuters. Saudi Arabia invited ministers to gather in person in Riyadt for the June meeting in a last minute change of plans, sources said on Friday. The gathering is still officially scheduled as an online meeting. U.S. crude production rose in March to its highest level this year, data from the U.S. Energy Information Administration (EIA) showed on Friday, while fuel product supplied, a proxy for demand, fell 0.4 per cent to 19.9 million barrels per day. The oil market has been under pressure in recent weeks over the prospect of U.S. borrowing costs staying higher for longer, which ties down funds and can curb oil demand. Both oil benchmarks were on course for their biggest monthly declines since December after dropping in the previous session on a surprise build in U.S. fuel inventories. "U.S. summer travel season kicked off with Memorial Day weekend, with initial indications showing strong driving and flying activity — but fuel use looks more muted, implying efficiency gains," Citi analysts wrote in a note. Oil prices rose briefly after U.S. government data showed inflation tracked sideways in April, strengthening traders' bets that the Fed would deliver a long-awaited rate cut in September. Euro zone inflation rose more than expected in May, Eurostat data showed. The increase is unlikely to deter the European Central Bank from cutting borrowing costs next week, but it could slow the rate cutting cycle. U.S. energy firms held oil and gas rig count - an early indicator of future output - steady at 600 in the week to May 31, energy services firm Baker Hughes said in its closely followed report on Friday. Oil rigs fell by one to 496 this week, while gas rigs rose by one to 100. However, the total rig count fell for the third month in a row in May, dropping by 13, the most in a month since August. Money managers raised their net long U.S. crude futures and options positions in the week to May 28, the U.S. Commodity Futures Trading Commission (CFTC) said on Friday.
Analysts Look at Speculative Oil Positioning and OPEC+ As part of their usual due diligence in advance of strategy discussions, key OPEC+ ministers tend to take at least a quick glance at speculative positioning, among a raft of other more fundamental indicators, analysts at Standard Chartered Bank stated in a report sent to Rigzone late Wednesday. The key questions for ministers are usually whether positioning has any unusual features and whether it might represent a source of significant price distortion, the analysts, including Standard Chartered’s Commodities Research Head, Paul Horsnell, added in the report. The analysts went on to note that, had this due diligence taken place in mid-April, they think the examination would not have taken long. “Speculative positioning had moved from bearish to neutral over the first 15 weeks of the year, with net buying across the main Brent and WTI contracts averaging a robust but unspectacular 2.8 million barrels per trading day (mb/td),” they said in the report. However, the position has changed markedly over the past five weeks, the analysts added. “Speculative net selling has averaged 8.8mb/td since mid-April, with 87 percent of the 219.5mb of net selling taking place in Brent,” they said. “Speculative shorts in ICE Brent increased by 28.2mb in the latest week’s data alone; they now stand at 115.7mb, the highest since November 2020,” they warned. “With longs being liquidated in addition to the new shorts, net selling of ICE Brent over the past three weeks has amounted to 174mb, an unusually rapid rate of 11.6mb/td; this is fastest rate over a three-week period since the start of the March 2020 oil price collapse, when net selling averaged 14.6mb/td,” the analysts went on to state. “While recent speculative flows have been more positive in WTI, we think bearish Brent flows stand out enough to represent a target for OPEC+ policy makers,” they continued. The analysts said in the report that they expect the next leg higher in oil prices to be led by short-covering in Brent as producers provide a positive twist in announcements of output targets and timing. The Standard Chartered analysts highlighted in the report that oil prices have started to rally in advance of the June 2 OPEC+ meeting and “the likely imminent series of unilateral announcements by the eight OPEC+ producers who have made additional voluntary cuts”. “Front-month Brent rallied to a four-week high above $85 per barrel in early trading on 29 May, injecting some volatility into a market that has been remarkably stable despite the scale of recent speculative selling,” they said. “The 30-trading day measure of annualized realized Brent volatility fell as low as 16.8 percent at settlement on 24 May; this is in the one percent left tail of the distribution of volatility over the past five years and within the eight percent left tail of all trading days since the launch of the Brent futures contract in 1988,” they added. “We think there is scope for a significant short-covering rally in the wake of OPEC+ announcements, enough to lay a base to challenge the year to date high of $91.17 per barrel,” they continued. The Standard Chartered analysts highlighted in the report that the company’s machine learning oil price model, SCORPIO, expects a week on week fall of $0.41 per barrel at June 3 settlement. “While from a fundamental viewpoint we expect OPEC+ related announcements to be a cathartic event that should push prices higher, SCORPIO, our machine-learning oil price model is a little more cautious in the very short run,” the analysts said. “SCORPIO indicates a week on week fall of $0.41 per barrel to the 3 June Brent settlement. While current short positioning is a positive factor in the SCORPIO model, it is offset by technical trading indicators,” they added.
Spain, Norway, and Ireland Formally Recognize a Palestinian State - Spain, Norway, and Ireland formally recognized a Palestinian state on Tuesday, a move that doesn’t change the situation on the ground for Palestinians but is meant to pile on the international pressure on Israel.The three European countries join over 140 nations that already recognize Palestine as a state. The recognition comes after Israeli Prime Minister Benjamin Netanyahu has repeatedly rejected the idea of Palestinian statehood in any future scenario.Spanish Prime Minister Pedro Sanchez said in a televised address that “this is a historic decision that has a single goal, and that is to help Israelis and Palestinians achieve peace.”Israeli officials are fuming over the move by the three EU countries. In response to Sanchez’s comments, Israeli Foreign Minister Israel Katzaccused the Spanish leader of “being complicit in inciting genocide against Jews and war crimes.”The recognition means that 10 out of 27 EU nations now recognize a Palestinian state, a position that puts them at odds with the US. When Spain, Norway, and Ireland first announced their plans, the Biden administration said President Biden believes “a Palestinian state should be realized through direct negotiations between the parties, not through unilateral recognition.”
US and UK Launch Round of Heavy Airstrikes on Yemen - The US and the UK launched multiple airstrikes in Yemen, the first time the two countries launched a joint heavy bombing on the country in over three months.Yemeni media reported that five airstrikes hit Yemen’s Red Sea province of Hodeida and that a radio building was hit in one of the strikes, and at least two people were killed in the al-Hawk district. A communications network in the neighboring Taiz province was also reported to be targeted.US Central Command said that its forces “alongside UK Armed Forces conducted strikes against 13 Houthi targets” in Houthi-controlled Yemen, which is where most Yemenis live. CENTCOM said that it also conducted unilateral strikes that it claimed destroyed eight Houthi drones in Yemen and over the Red Sea.The British Defense Ministry said that its forces “participated in a joint operation with US forces against Houthi military facilities to degrade their ability to persist with their attacks on international shipping in the Red Sea and Gulf of Aden.”The bombing marks the fifth time that the US and the UK launched joint airstrikes on Yemen since January. The US has also launched hundreds of unilateral strikes, which have done nothing to deter Houthi attacks on shipping that began in response to Israel’s onslaught in Gaza.The latest round of US-UK airstrikes came after the Houthis struck a ship in the Red Sea and said they downed a US MQ-9 Reaper drone for the sixth time since November 2023. The Houthis, officially known as Ansar Allah, have made clear they will not stop their attacks until there is a ceasefire in Gaza and a lifting of the Israeli siege.The US backed a brutal Saudi/UAE war against the Houthis from 2015-2022 that involved heavy airstrikes and a blockade, and the Houthis only became more of a capable fighting force during that time.The war killed at least 377,000 people, with more than half dying of starvation and disease caused by the siege. A ceasefire between the Houthis and Saudis has held relatively well since April 2022, but new US sanctions are now blocking the implementation of a lasting peace deal.
Houthis Say They Downed Another US MQ-9 Reaper Drone - The Houthis said Wednesday that their forces downed another US MQ-9 Reaper drone over Yemen and also claimed attacks on several ships as their campaign in response to Israel’s onslaught in Gaza continues.The Associated Press reported that it analyzed images showing a US MQ-9 on its belly in a desert and noted that the aircraft looked relatively intact. The Houthis said the drone was downed over Yemen’s Maarib province and released footage that showed an aircraft being hit with surface-to-air missiles.A Pentagon official told AP that “the US Air Force has not lost any aircraft operating within US Central Command’s area of responsibility” and did not elaborate further. AP noted that MQ-9 Reaper drones are sometimes operated by the CIA.The incident marks the sixth time the Houthis said they downed a US MQ-9 Reaper drone since November 2023. The drones cost about $30 million a piece, putting the cost for the US at about $180 million, on top of the over $1 billion it spent on munitions in its bombing campaign in Yemen and other operations in the region since October.The Houthis, officially known as Ansar Allah, also claimed that its forces targeted six ships in three different seas: the Mediterranean Sea, the Red Sea, and the Arabian Sea. The only attack that was confirmed was a missile attack on the Laax, a Greek-owned bulk carrier.While the Houthis say they’re targeting Israeli-linked shipping, the Laax’s security company, LSS-SAPU, said the vessel had no connection to Israel, and shipping data showed its destination was Iran. LSS-SAPU said the ship and crew were safe and headed for their destination.
'US Expected To Resume Sale of Offensive Weapons to Saudi Arabia -The US is expected to resume the sale of “offensive” weapons to Saudi Arabia, the Financial Times reported on Sunday.US officials told the paper that President Biden was expected to lift a ban on the sale of offensive weapons to Riyadh that he put in place over three years ago, although US support for Saudi Arabia has continued.In February 2021, President Biden said he would end “offensive” support for Saudi Arabia’s brutal war in Yemen and paused a bomb sale to Riyadh. However, the US continued to support the Saudi bombing campaign, as it was revealed a few months later that the US was still servicing Saudi warplanes.President Biden also continued to push forward arms deals for Saudi Arabia, including a $650 million air-to-air missile deal, which the administration claimed was for defense. Before the Saudis and the Houthis reached a truce at the end of March 2022, Riyadh launched heavy airstrikes in Yemen, and it was one of the deadliest periods of the war for Yemeni civilians.Saudi Arabia and the Houthis have negotiated a peace deal, but it hasn’t been finalized as new US sanctions are blocking it from being implemented. The US has said it would lift the sanctions and stop its new bombing campaign in Yemen if the Houthis halted attacks on commercial shipping, which the group started in response to the Israeli onslaught in Gaza. But the Houthis say they will only stop once there’s a ceasefire in Gaza, which Biden refuses to call for.The US has been in talks with Saudi Arabia about a potential deal that would involve the normalization of Saudi-Israeli ties. In exchange, Saudi Arabia is looking for a mutual defense commitment from the US and assistance in establishing a civilian nuclear program. But there are major impediments to the deal, as the Saudis want Israel to make commitments toward a Palestinian state, and Israeli Prime Minister Benjamin Netanyahu has ruled out the idea of Palestinian statehood in any post-war scenario.
Global shock after Israeli airstrike kills dozens in Rafah tent camp - An Israeli airstrike that caused a huge blaze at a tented area for displaced people in Rafah has killed 45 people, medics have said, with images of charred and dismembered children prompting an outcry from global leaders and putting ceasefire talks in jeopardy.Bombing overnight that the Israel Defense Forces (IDF) said targeted senior Hamas militants in a precision strike appears to have ignited fires that spread quickly through tents and makeshift accommodation, overwhelming a nearby field hospital operated by the International Committee of the Red Cross and overstretched local hospitals.“We pulled out people who were in an unbearable state,” Mohammed Abuassa, who rushed to the scene in the north-western neighbourhood of Tel al-Sultan, told the Associated Press. “We pulled out children who were in pieces. We pulled out young and elderly people. The fire in the camp was unreal.The health ministry in the Hamas-controlled area said about half of the dead were women, children and older adults. Barefoot children wandered around the smoking wreckage on Monday as searches for the dead continued and mourning families prepared to bury their loved ones.Israeli prime minister, Benjamin Netanyahu, said in parliament that “something unfortunately went tragically wrong” with the airstrike. “We are investigating the incident and will reach conclusions, because this is our policy,” he said.The US, Israel’s staunchest ally and weapons supplier, described the images from the aftermath as devastating.The strike, one of the deadliest single incidents in the eight-month war to date, came two days after the international court of justice in The Hague, which arbitrates between states, ordered Israel to stop its operation in Rafah immediately.
Israeli strike on Rafah camp fuels global outrage, calls for cease-fire— An Israeli strike that set fire to a displaced persons camp in Rafah — killing an estimated 45 Palestinians and wounding another 200 — has fueled international outrage toward Israel Prime Minister Benjamin Netanyahu and further divided his country over the war efforts. On top of the global condemnation, Netanyahu is also under attack at home from Israeli officials inside and outside his party calling for a vision to end the war, as he expands a campaign into the southern Gazan city of Rafah despite the U.S. and other allies urging restraint.The Israeli public is largely supportive of the Israeli military and its campaign to ensure the threat from Hamas is eliminated and hostages kidnapped from Israel during Hamas’s attack on Oct. 7 are returned.But they are deeply divided over the conduct of the war, as illustrated by the response following the tragedy in Rafah. Amid grisly images of charred bodies and dead children, some segments of Israeli society put the blame on Hamas for operating near civilian sites. But others said the carnage must stop.Protests against Israel’s war in Gaza took place Tuesday at Jerusalem’s Hebrew University, with Jewish and Arab students protesting against the war, and counterprotesters for it, the Times of Israel reported.This followed protests Monday night in the mixed Jewish and Arab city of Haifa, where Hebrew media reported that about 100 people called for an immediate end to Israel’s military operations. Eight people were arrested in that protest. Some far-right personalities made fun of the fire as part of the Jewish holiday of Lag BaOmer — where bonfires are the traditional custom — that took place on the same night as the Rafah strike.“Toddlers go up in flames, and the public in Israel celebrates, ignores, babbles or yawns – this is what our hell looks like,” Yoana Gonen wrote in an opinion piece for the left-leaning Haaretz newspaper.“Israel is slowly sinking into a dark abyss, hand in hand with the devastated Gaza.” By Tuesday morning, the White House had yet to publicly comment on its assessment of the Israeli strike on Rafah. President Biden had earlier warned he would hold back weapons deliveries for Israel if protection for civilian lives are not prioritized in Rafah.Still, Netanyahu is rejecting calls to halt the war, and on Tuesday Israeli tanks reportedly rolled into central Rafah for the first time. A separate strike killed 21 Palestinians in a cluster of tents near Rafah, in an area where Israel had advised civilians to move for safety, according to Reuters.
Eyewitnesses describe horrific scenes after Israeli strike on Rafah camp - The Washington Post — A deadly Israeli airstrike on a tent camp in Rafah late Sunday drew widespread international condemnation Monday — focusing further scrutiny on Israel’s controversial offensive againstHamas in the south and the desperate plight of Gaza’s civilians.Witnesses described a horrific scene late Sunday as fires tore through the makeshift encampment in the Tal al-Sultan neighborhood, killing at least 45 people, according to the Gaza Health Ministry. Parents were burned alive in their tents while children screamed for help. Doctors recounted struggling to treat gruesome shrapnel wounds with dwindling medical supplies.In an address to parliament Monday, Israeli Prime Minister Benjamin Netanyahu called the Rafah strike a “tragic accident.” It was a departure from public statements by the Israeli military, which had previously referred to a targeted strike on a Hamas compound using “precise munitions” and “precise intelligence.”The Israel Defense Forces said two militants were killed in the attack, including the commander of Hamas operations in the West Bank. “There were many measures taken before the attack to minimize harm to non-involved people,” the IDF said Monday, adding that the incident was under investigation.A spokesperson for the White House National Security Council, speaking on the condition of anonymity to discuss a sensitive matter, said the images from Rafah were “heartbreaking.” “Israel has a right to go after Hamas,” the spokesperson said, noting the killing of the two militants, but “Israel must take every precaution possible to protect civilians.”The United States has yet to weigh in publicly on Friday’s ruling by the International Court of Justice ordering an immediate halt to Israel’s offensive in Rafah. Nearly a million Palestinians have been displaced this month, the vast majority from Rafah, which had been a place of last refuge for tens of thousands of families.On Sunday night it was the site of one of the most horrifying scenes of the war. Mohammad Al-Haila, 35, was headed to buy some goods from a local vendor when he saw a huge flash followed by successive booms. Then he saw the flames.“I saw flames rising, charred bodies, people running from everywhere and calls for help getting louder,” he said. “We were powerless to save them.”Haila lost seven relatives in the attack. The oldest was 70 years old. Four were children.“We were not able to identify them until this morning because of the charred bodies,” he said. “The faces were eroded, and the features were completely disappeared.”
Israel Massacres Children, Which The Western Press Says Is Fine -by Caitlin Johnstone -- Israel has not only completely disregarded the orders of the International Court of Justice to cease its assault on Rafah as we expected it to do, but has actually ramped up its ruthlessness as though trying to make a point. There were reportedly more than 60 Israeli airstrikes on the southernmost city in the Gaza strip in the 48 hours after the ICJ ruling, including a horrifying massacre on a displacement camp full of civilians in tents.The ABC reports:Israeli air strikes have killed at least 35 Palestinians and wounded dozens in an area in the southern Gaza Strip city of Rafah designated for the displaced, Palestinian health and civil emergency service officials said.Gaza’s Health Ministry said women and children made up most of the dead and dozens of wounded.The strike took place in Tel Al-Sultan neighbourhood in western Rafah on Sunday, local time, where thousands of people were taking shelter after many fled the eastern areas of the city where Israeli forces began a ground offensive over two weeks ago.The video footage coming out about this massacre is extremely graphic and will stay with you for the rest of your life if you choose to watch it. It shows charred and dismembered bodies, and small children whose heads are missing and partly missing. On social media I’ve seen numerous people observing that the lies about Hamas beheading babies on October 7 have been used by Israel to justify atrocities in which actual babies are really being beheaded. Electronic Intifada’s Ali Abunimah notes that this was at a camp which just days ago Israel had told civilians was a safe zone that they should move to.The Gaza media office reports that the attack took place next to an UNRWA logistics base, which is about as clear an answer to the UN court’s order to cease its genocidal massacres in Rafah as you could possibly ask for. As Maya Angelou said, when someone shows you who they are, believe them.This happens to have occurred at precisely the same time viral attention is coming to an article The Atlantic published a few days ago which includes the assertion that killing children is legally permissible under certain circumstances. Writing that allowing journalists into Gaza would be a “risk” for Israel because “war is ugly”, The Atlantic’s Graeme Wood uses the phrase “legally killed child” to argue that journalistic footage of dead children which Israel killed lawfully would still be damaging to Israeli PR interests.“To rebut Hamas’s allegations by letting journalists see the war up close would be a calculated risk,” Wood writes. “Even when conducted legally, war is ugly. It is possible to kill children legally, if for example one is being attacked by an enemy who hides behind them. But the sight of a legally killed child is no less disturbing than the sight of a murdered one.”Think about the kind of worldview which could publish something like that. This made it through the entire editing process in a mainstream liberal publication.Anyone who’s been following the Gaza genocide on social media today will be seeing this phrase “legally killed child” alongside footage of children ripped apart by Israeli military explosives in a civilian displacement camp — a pairing which, if you have a beating heart in your chest and a functioning empathy center in your brain, will spark a very special kind of rage inside you.The way these two points dance together just says so much about what we’re dealing with here, when you take a step back and really look at it. It says so much about Israel. It says so much about western civilization. It says so much about the western press in general and liberal war propaganda rags like The Atlantic in particular. It says so much about the kind of mainstream political worldview which could allow for such a thing to exist. And it says we live in a civilization that has gone completely, utterly insane.
Shrapnel from Israeli strike may have ignited fuel tank near Rafah tents – report --Israeli officials have told the US that they believe tents housing displaced Gazans went up in flames after a fuel tank was set alight following an airstrike on top Hamas terrorists nearby, according to a report Monday.The tank was located some 100 meters (330 feet) from the area targeted in the airstrike, but was ignited by shrapnel or something else following the Israeli attack, ABC News reported, citing an unnamed US official.According to the report, the US has no way to validate or reject Israel’s version of events and is awaiting the outcome of a probe into the deadly incident.The official also reiterated the Biden administration’s opposition to a major ground offensive in Rafah, while stressing that’s not what Israel is currently doing.The strike, which is being investigated by an independent military body responsible for investigating unusual incidents amid the war, targeted and killed the commander of Hamas’s so-called West Bank headquarters — charged with advancing attacks against Israel in and from the West Bank — as well as another top member of the unit.Hamas health authorities said some 45 people were killed in the strike, which had also engulfed several tents and shelters where thousands of people were taking shelter in the Tel Sultan area of western Rafah.Palestinians look at the destruction after an Israeli strike adjacent to where displaced people were staying in Rafah, Gaza Strip, May 27, 2024. (AP Photo/Jehad Alshrafi)The strike drew fiercer condemnations from the European Union, the United Nations, Egypt, Qatar, Saudi Arabia, France, and others, who called for an immediate ceasefire in Gaza.The US on Monday lamented the “devastating” and “heartbreaking” images from the strike.
Netanyahu calls civilian deaths in Rafah after latest Israeli attacks ‘tragic mistake’ -- Israeli Prime Minister Benjamin Netanyahu called an Israeli strike that killed at least 45 Palestinians over the weekend a “tragic mistake” and called for an investigation into the civilian deaths Monday.The Israeli strike on the Tal al-Sultan neighborhood of Rafah targeted a humanitarian zone filled with tents, where Israel’s military previously instructed displaced Palestinians to shelter from the ongoing war against militant group Hamas, the Gaza Health Ministry said. The Israeli military claimed the strike killed two senior Hamas leaders.“Despite our utmost efforts not to harm innocent civilians, last night, there was a tragic mistake,” Netanyahu said Monday in an address to Israel’s parliament. “We are investigating the incident and will obtain a conclusion, because this is our policy.”Gaza health officials said most of the dead were women and children, and noted that the death toll is likely to rise as “countless” were trapped in rubble.The strike was widely denounced, as criticism rises on the Israeli military operation in Rafah. A White House National Security Council spokesperson told Axios on Monday that the attack was “heartbreaking.”“Israel has a right to go after Hamas… but as we’ve been clear, Israel must take every precaution possible to protect civilians,” the spokesperson said. “We are actively engaging the IDF and partners on the ground to assess what happened.”The attack comes just days after the United Nations’s International Court of Justice ordered Israel to stop its operations in Rafah, the last remaining major settlement in Gaza that has not been invaded by Israel.
New Israeli strikes kill 16 in Rafah, first responders say --New Israeli strikes killed 16 people in Rafah on Tuesday, first responders said, as an incursion into the southern Gaza city, which once had more than a million Palestinians, expands. The latest attacks occurred in northwest Rafah, according to The Associated Press, citing the Palestinian Red Crescent and the Palestinian Civil Defense. The strikes, which took place overnight in the Tel al-Sultan neighborhood, were conducted in the same area as the deadly Israeli attack over the weekend, which killed at least 45 Palestinians, sparking international outrage.The Sunday attack targeted a humanitarian zone, according to the Gaza Health Ministry. Israeli Prime Minister Benjamin Netanyahu acknowledged Monday that the strike on civilians was a “tragic mistake” and called for an investigation.Tuesday’s strike, which occurred in the Tel al-Sultan neighborhood, presents further escalation in Rafah, an area that was once considered one of the last remaining places for Palestinians fleeing the military operation to shelter.Since the beginning of Israel’s steady incursion toward Rafah, once seen as a place of refuge for displaced Palestinians, around 1 million civilians have fled the southern city, according to the main humanitarian agency providing relief to Palestinians in Gaza, known as UNRWA. Those who have fled the city are scattered around in tents. The U.S. and other Israel allies have cautioned Tel Aviv against executing a full-throttled invasion into Rafah, with President Biden warning he would halt offensive weapons transfers. Israel has argued the operation needs to proceed in order to eradicate militant group Hamas and return the remaining hostages that were taken on Oct. 7, when more than 1,100 Israelis in the south of the country were killed by a Hamas-led attack.
Group Files New ICC Complaint Over Journalists Killed by Israel in Gaza -The press freedom group Reporters Without Borders announced Monday that it has filed a third complaint at the International Criminal Court alleging "war crimes against journalists in Gaza," where over 100 media professionals have been killed by Israeli forces since October 7.Paris-based Reporters Without Borders (RSF) is asking the ICC to investigate the Israel Defense Forces' (IDF) killing of eight Palestinian journalists and wounding of another between December 15 and May 20 and, more broadly, the over 100 media workers slain during the course of Israel's 234-day assault on Gaza.RSF said it "has reasonable grounds for thinking that some of these journalists were deliberately killed and that the others were the victims of deliberate IDF attacks against civilians" and accused Israel of "an eradication of the Palestinian media.""Impunity endangers journalists not only in Palestine but also throughout the world," RSF advocacy and assistance director Antoine Bernard said in a statement. "Those who kill journalists are attacking the public's right to information, which is even more essential in times of conflict. They must be held accountable, and RSF will continue to work to this end, in solidarity with Gaza's reporters."Journalists in RSF's latest complaint include Mustapha Thuraya and Hamza al-Dahdouh, freelancers working for Al Jazeera in Rafah when they were killed by a targeted Israeli drone strike on their vehicle on January 7, and Hazem Rajab, who was injured in the strike.According to RSF:The complaint also cites the cases of Hadaf News website reporter Ahmed Badir, who was killed by an airstrike at the entrance to Shuhada al-Aqsa Hospital in Deir al-Balah on 10 January; Kan'an News Agency correspondent Yasser Mamdouh, who was killed near Al-Nasser Hospital in Khan Yunis on 11 February; Ayat Khadoura, an independent video blogger killed by an Israeli strike on his home on 20 November shortly after posting a video; Yazan Emad Al-Zwaidi, a cameraman with the Egyptian satellite TV news channel Al Ghad, who was killed on 14 January when an Israeli strike hit the group of civilians he was with in Beit Hanoun; Ahmed Fatima, a journalist with the Al Qahera News TV channel, who was killed during a bombardment in Khan Yunis on 13 November; and Rami Bdeir, a reporter for the Palestinian New Press media outlet, who was killed during an Israeli bombardment in Khan Yunis on 15 December.Another advocacy group, the Committee to Protect Journalists, previously condemned what it called an "apparent pattern of targetingjournalists and their families," noting cases in which media workers were killed while wearing press insignia and after being threatened by Israeli officials.
Rough seas damage US-built Gaza pier; deliveries suspended -The U.S.-built pier on the Gaza Strip coast will be removed for repair after it was damaged by rough seas, causing Washington to temporarily suspend aid deliveries to starving Palestinians via the structure, the Pentagon announced Tuesday. The pier, which was damaged earlier Tuesday, will be removed from its anchored position on the coast over the next 48 hours, Pentagon deputy press secretary Sabrina Singh told reporters. The structure will be towed to Ashdod in southern Israel where U.S. Central Command will conduct repairs, which are expected to take “at least over a week” before it can be re-anchored to the coast of Gaza, she said. “I can’t predict weather patterns, I can’t predict that there won’t be high seas again. But from when it was operational, it was working. And we just had sort of an unfortunate confluence of weather storms that made it inoperable for a bit,” Singh added. “Hopefully, just a little over a week, we should be back up and running.” The incident highlights the many difficulties around conducting the humanitarian assistance operation via the quickly built, $320 The pier’s suspension comes after more than 1,000 metric tons of food aid was delivered through the pier, though U.S. officials have stressed that structure won’t make up for the aid that could be getting through land corridors. Only about 500,000 Palestinians could be fed with the supplies from the pier, with the Biden administration pushing for more checkpoints to open for humanitarian trucks so the remaining 1.8 million civilians can be fed. The U.S. has continued to provide airdrops of food, but Singh said there are no current plans to increase the airdrops while the pier is being repaired.
US-Constructed Pier Off Gaza Breaks Apart - The US-constructed pier off Gaza broke apart on Tuesday due to heavy seas, suspending aid deliveries indefinitely, in the latest setback for the disastrous project that was ordered by President Biden.The Pentagon said that the pier, which cost $320 million for the US to build, was damaged and sections of it need to be repaired. According toCNN, it will be removed from the coast of Gaza over the next 48 hours and taken to the Israeli port of Ashdod for repairs.Just a few days earlier, four vessels supporting the pier broke off their moorings due to heavy seas. Two of them washed up ashore, while the other two were able to drop anchor. Before that, the Pentagon said three US troops suffered non-combat injuries on the pier, which were likely also caused by rough seas.CNN previously reported that the pier could only be safely operated in a maximum of 3-foot waves and winds less than approximately 15 miles per hour. Heavier conditions caused a delay in the first aid deliveries through the pier, which only began on May 17, and were suspended for a few days due to distribution issues.Biden ordered the construction of the pier instead of pressuring Israel to open more land border crossings to aid deliveries, which is by far the most efficient way to get humanitarian assistance into Gaza. Barely any aid has been entering the Strip since Israel captured the Rafah border crossing on May 7.Besides being an incredibly expensive and inefficient project, the pier also risks a major escalation of US involvement in Israel’s slaughter of Palestinians in Gaza. About 1,000 troops have been supporting the project just off the coast of Gaza, putting them in range of Hamas rockets. Secretary of Defense Lloyd Austin has acknowledged that there’s a risk of the US troops deployed for the pier mission coming under attack and said they would be able to shoot back.
Israeli Forces Now Operating in Most Areas of Rafah - On Friday, the Israeli military said it had expanded its operations to the central area of Rafah. Before the assault on the city, Rafah served as a refuge for over one million displaced Palestinians.The Associated Press reported that the Israeli military confirmed its forces were now fighting throughout most of Rafah. President Joe Biden claimed that if Israel attacked the population centers in the city without a plan for the civilians living there, it would cross his “red line.”However, as Israeli troops continue to push into the city, killing hundreds in the process and forcing over one million to flee, Biden administration officials have asserted that Tel Aviv has not crossed the red line. After Israel used a US bomb to kill 45 people living in a tent camp in Rafah, White House National Security Council spokesman John Kirby said, “As a result of this strike on Sunday, I have no policy changes to speak to.”The assault on Rafah has pushed the overall death toll to over 36,000, including tens of thousands of women and children. The IDF has also sustained losses in Rafah, increasing the number of soldiers killed to289 since October 7.As Israeli forces are pushing deeper into Rafah, the IDF announced the end of weeks of operations in the Jabalia refugee camp, located in northern Gaza. Tel Aviv initially devastated the city in the early months of the war on Gaza, but its forces returned in May. During the operations, the IDF dropped over 200 bombs.The attacks on Jabalia and Rafah have caused aid deliveries into Gaza to plummet. Trucks crossing into the Strip in May decreased by two-thirds. This week, two Biden administration officials resigned in part because of the Israeli imposed restrictions on aid deliveries into Gaza and the lack of a response from the White House.A letter signed by 19 aid agencies released on Tuesday warned that the lack of aid was increasing the risk of death due to starvation and disease. “As Israeli attacks intensify on Rafah, the unpredictable trickle of aid into Gaza has created a mirage of improved access while the humanitarian response is in reality on the verge of collapse,” it says. “Aid agencies now fear an acceleration in deaths from starvation, disease and denied medical assistance.”While many are on the brink of death, Tel Aviv says it will not sign on to an agreement that would bring the war to a close and Israeli hostages freed. On Thursday, Hamas officials said the group was willing to come to a “complete agreement” that ends the conflict and frees the hostages. On Friday, the Israeli government told the families of the hostages that Tel Aviv was unwilling to end the conflict in exchange for the release of their relatives.
Report: IDF Negotiator Says There Will Be No Hostage Deal Under Netanyahu Govt - An Israeli military officer involved in the indirect hostage deal negotiations with Hamas has expressed frustration with the government of Israeli Prime Minister Benjamin Netanyahu, according to a report from Israel’s Channel 12.The report said that Maj. Gen. Nitzan Alon told Israeli military officials that Israel wouldn’t reach a deal with Hamas under the current government. “We are desperate. With this government formation, there will be no deal,” he said.Alon also explained that it would be possible to restart military operations in Gaza even if Israel agreed to a deal that would include a commitment to a permanent ceasefire, which has been Hamas’s main demand. Netanyahu has repeatedly rejected the idea and continues to vow he will “eradicate” Hamas, a goal the US believes is unrealistic.“The deal I’m pushing for would provide for the return of all the hostages, while Hamas insists that it must provide for an end to the war,” Alson said. “I told the prime minister that it will be possible to return to fighting at any given moment.”In response to the report, the Israeli Defense Forces (IDF) insisted Alon was taken out of context. “Gen. Alon was asked a question by the public about the effect the political leadership has on the talks, and he answered that as one in uniform, he cannot answer such questions,” said IDF spokesman Daniel Hagari. Netanyahu’s office released a statement criticizing Alon’s comments. “The clashes from within the negotiating team only strengthen Hamas’s position, harm the families, and distance the release of our hostages,” the office said.
Israeli Official Says Gaza Slaughter Will Continue for at Least Another 7 Months - Tzachi Hanegbi, head of the Israeli National Security Council, said Wednesday that he expects Israeli military operations in Gaza to continue for at least another seven months into early 2025.“We expect another seven months of fighting in order to deepen the accomplishments and achieve what we have defined as ‘the destruction of the governmental and military capabilities of Hamas,'” Hanegbi said.According to the latest numbers from Gaza’s Health Ministry, at least 36,171 Palestinians have been killed in Israel’s genocidal war, and the Palestinian Red Crescent estimates over 15,000 children have been killed. June 7 will mark eight months since Israel unleashed its campaign after the October 7 Hamas attack on southern Israel.Many more Palestinians could die of starvation and disease caused by the Israeli siege, as barely any aid has entered Gaza since Israel captured the Rafah crossing on the Egyptian border on May 7. Hanegbi said that Israel currently controls 75% of the border between Egypt and Gaza, known as the Philadelphi Corridor.“Inside Gaza, the IDF is now in control of 75% of the Philadelphi Route and I believe it will be in control of it all with time. Together with the Egyptians, we must ensure weapon smuggling is prevented,” Hanegbi said.Later in the day, the Israeli military announced that it had achieved “tactical control” of the Philadelphi Corridor. Israel’s control of the Philadelphi Corridor is technically a violation of the 1979 peace treaty between Israel and Egypt, which was signed following the 1978 Camp David Accords. On Monday, Israeli gunfire killed at least two Egyptian soldiers, risking a major escalation, although Cairo has been quiet about the incident.
Israel DM Warns Hezbollah of Escalation, Vows Lebanese Will 'Pay the Price' - Israeli Defense Minister Yoav Gallant took a tour of command-and-control centers attached to Israeli Northern Command today, holding what officials are describing as an “operational situation assessment.”Gallant praised the precision of the Israeli troops, citing the 320 Hezbollah members who have been killed, and saying Hezbollah leader Hassan Nasrallah is “dragging Lebanon into a very, very different reality.”Although Gallant talking up escalation into Lebanon is nothing new, he ominously added “the ones who will pay the price are the residents of Lebanon. ”Gallant appeared to be most concerned about challenging Hezbollah’s dismissal of his claims in April that half of Hezbollah’s commandershad been killed in military operations. The DM then displayed photos of nine Hezbollah officers killed by the IDF, who were described in the press as equivalent to brigadier generals.At the time, Gallant claimed half of Hezbollah’s commanders were dead and the other half were in hiding. Analysts said this was likely a broad overestimation, as the size and structure of Hezbollah is not well understood.Accusing Nasrallah of claiming there were no casualties at all, Gallant challenged him with these photos asking, “all these people aren’t yours?” and insisting the nine photos were only a partial list.
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