oil prices hit a 17 week low; natural gas prices are at a 21 week high; US refinery utilization rate at a 12 month high, refinery throughput at a 53 month high
US oil prices fell for a 3rd consecutive week and eclipsed a four month low after OPEC reaffirmed their baseline production cuts through 2025 but decided to let their voluntary cuts lapse later this year….after falling 0.9% to $76.99 a barrel last week on concerns that high interest rates would impact economic activity, the contract price for the benchmark US light sweet crude for July delivery fell over 1% in overseas trading on Monday, after an OPEC+ meeting in which members agreed that countries could starting phasing out voluntary output cuts starting in October, then tumbled more than 3% during the New York session as traders digested the implications of the OPEC move, and settled $2.77 lower at a four month low of $74.22 a barrel, as traders worried about the demand outlook and the impact of the decision by OPEC+….oil prices fell by more than $1 a barrel more on Tuesday morning, as more and more signs of lower-than-expected oil demand in OECD countries emerged, and as a potential recovery of U.S. manufacturing seemed to be losing steam, and extended the previous session’s losses by 97 cents to another 4 month low of $73.25 a barrel on skepticism about the OPEC+ decision to boost supplies into a global market where demand had already shown signs of weakness…oil prices continued to decline in early Asian trading on Wednesday, following the American Petroleum Institute report indicating a sizable increase in US crude and fuel inventories, heightening concerns about demand growth, but recovered during the New York session as prices staged an "oversold bounce” after finishing lower for the fifth consecutive day on Tuesday, and settled Wednesday 82 cents higher at $74.07 a barrel, buoyed by hopes of a September interest rate cut by the Federal Reserve…oil prices continued to trend higher early on Thursday after breaking the five-day selling spree, buoyed by growing anticipation of a interest rate cut by the Fed in September, and was further supported by comments made by OPEC+ ministers, who stated that the producer group could tweak its latest output agreement if needed to support the oil market, and settled $1.48 higher at $75.55 a barrel after the European Central Bank opted to cut interest rates, spurring hopes that the Fed would follow suit….oil prices traded higher in Asia on Friday morning as Saudi Arabia and Russia announced that they could pause or reverse voluntary production increases if they find the market is not strong enough, but were comparatively subdued during the New York session after data showed a much stronger than expected increase in U.S. payroll employment in May, sparking concerns the Fed would likely hold interest rates higher for longer, and settled down 2 cents at $75.53 a barrel, as traders weighed OPEC+ reassurances against the latest U.S. jobs data that lowered expectations that the Federal Reserve will cut interest rates soon, and thus ended 1.9% lower in the week....
meanwhile, natural gas prices rose for the first time in three weeks and settled at a 6 month week end high, as forecasts for late June unexpectedly turned hotter…after falling 6.3% to $2.587 per mmBTU last week after July's contract had replaced the lower priced June contract, the price of natural gas contracted for July delivery rebounded sharply higher in early trading Monday as analysts pointed to supportive weekend production trends, then got another boost midday after an unplanned outage in Norway significantly cut into European supplies and jolted the global market higher, and settled 16.9 cents or 7% higher at $2.756 per mmBTU on forecasts for demand to rise as hot weather leads power generators to burn more fuel to run air conditioners, and as flows to LNG export plants increases…natural gas prices were modestly higher in early trading Tuesday, supported by comparatively light June supply readings, but reversed and gave up all of Monday’s gains in settling 17.0 cents lower at $2.586 per mmBTU, as the supply picture improved after a quicker than expected fix of a Louisiana pipeline outage and an upward revisions to Lower 48 gas production….but natural gas prices moved higher again in early trading Wednesday, as new forecasts hinted at widespread summer heat developing later this month, and settled 17.1 cents or 7% higher $2.756 per mmBTU, spiking as late-June forecasts turned even hotter….July natural gas contracts opened another 9 cents higher and traded near $2.850 ahead of the weekly storage report on Thursday, as traders expected a surplus-trimming weekly inventory report and keyed in on a hotter outlook heading into the second half of June, then traded modestly higher through midday even after the latest weekly storage injection overshot estimates and wiped out earlier gains, and settled 6.4 cents higher at 2.821 per mmBTU as price bulls shook off a bearish inventory report to send natural gas futures higher…natural gas prices were modestly higher in early trading again on Friday, as a toasty June temperature outlook helped the market shake off a plump weekly inventory build, and continued rising in late trading to settle 9.7 cents, or 3.4%, higher at $2.918 per mmBTU, on recent declines in daily output and on forecasts that power generators will burn a lot more gas in late June to meet rising electric use, and thus posted a 12.8% gain for the week…
The EIA’s natural gas storage report for the week ending May 31st indicated that the amount of working natural gas held in underground storage rose by 98 billion cubic feet to 2,795 billion cubic feet by the end of the week, which left our natural gas supplies 373 billion cubic feet, or 14.8% above the 2,520 billion cubic feet that were in storage on May 31st of last year, and 581 billion cubic feet, or 25.1% more than the five-year average of 2,312 billion cubic feet of natural gas that had typically been in working storage as of the 31st of May over the most recent five years…the 98 billion cubic foot addition to US natural gas working storage for the cited week was somewhat more than the 86 billion cubic foot addition to storage that the market was expecting 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 103 billion cubic foot injection into natural gas storage that has been typical for the same late 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 31st indicated that after an increase in our oil imports was offset by a decrease in our oil exports, we had surplus oil to add to our stored commercial crude supplies for the thirteenth time in nineteen weeks and for the 21st time in the past 33 weeks, with the change from last week largely due to an increase in oil supplies that the EIA could not account for….Our imports of crude oil rose by an average of 289,000 barrels per day to an average of 7,058,000 barrels per day, after rising by an average of 106,000 barrels per day over the prior week, while our exports of crude oil rose by 276,000 barrels per day to 4,501,000 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 2,557,000 barrels of oil per day during the week ending May 31st, 13,000 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 466,000 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 31st reporting week…
Meanwhile, US oil refineries reported they were processing an average of 17,144,000 barrels of crude per day during the week ending May 31st, an average of 61,000 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 305,000 barrels of oil per day were being added to the supplies of oil stored in the US… So, based on that reported & estimated data, the crude oil figures provided by the EIA for the week ending May 31st appear to indicate that our total working supply of oil from net imports, from transfers, and from oilfield production was 1,326,000 barrels per day less than what was added to storage plus 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 [+1,326,000] 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 436,000 barrels of oil supply per day could not be accounted for in the prior week’s EIA data, that means there was a 890,000 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 just 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 305,000 barrel per day increase in our overall crude oil inventories came as a rounded average of 176,000 barrels per day were added to our commercially available stocks of crude oil, while an average of 128,000 barrels per day were being added to our Strategic Petroleum Reserve, the twenty-sixth SPR increase in thirty-three 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 rose to 6,549,000 barrels per day last week, which was 2.8% 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 95.4% of their capacity while processing those 17,144,000 barrels of crude per day during the week ending May 31st, up from their 94.3% utilization rate of a week earlier, and the highest operating rate since last June 2nd, after US refineries had lagged normal operating rates since the arctic cold outbreak in mid January had froze off some operations… the 17,144,000 barrels of oil per day that were refined during the week were the most refined in one week since the last week of December 2019, 3.0% more than the 16,647,000 barrels of crude that were being processed daily during week ending June 2nd of 2023, and 1.2% more than the 16,938,000 barrels that were being refined during the prepandemic week ending May 31st, 2019, when our refinery utilization rate was at a slightly below normal 91.8% for late May...
Even with the increase in the amount of oil being refined this week, the gasoline output from our refineries was quite a bit lower, decreasing by 527,000 barrels per day to 9,484,000 barrels per day during the week ending May 31st, after our refineries’ gasoline output had decreased by 38,000 barrels per day during the prior week. This week’s gasoline production was 5.8% less than the 10,065,000 barrels of gasoline that were being produced daily over week ending May 26th of last year, and 5.6% less than the gasoline production of 10,049,000 barrels per day during the prepandemic week ending May 31st, 2019….on the other hand, our refineries’ production of distillate fuels (diesel fuel and heat oil) increased by 31,000 barrels per day to 5,061,000 barrels per day, after our distillates output had decreased by 34,000,000 barrels per day during the prior week. Even after eleven production increases in the past sixteen weeks, our distillates output was 3.5% less than the 5,243,000 barrels of distillates that were being produced daily during the week ending June 2nd of 2023, and was 6.3% less than the 5,404,000 barrels of distillates that were being produced daily during the week ending May 31st, 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 sixth time in eighteen weeks, increasing by 2,102,000 barrels to 230,946,000 barrels during the week ending May 31st, after our gasoline inventories had increased by 2,022,000 barrels during the prior week. Our gasoline supplies rose again this week because the amount of gasoline supplied to US users fell by 202,000 barrels per day to 8,946,000 barrels per day, and because our exports of gasoline fell by 63,000 barrels per day to 891,000 barrels per day, while our imports of gasoline fell by 393,000 barrels per day to 699,000 barrels per day.…But even after twelve gasoline inventory withdrawals over the past eighteen weeks, our gasoline supplies were 5.5% above last June 2nd’s gasoline inventories of 218,815,000 barrels, while still about 1% below the five year average of our gasoline supplies for this time of the year…
With this week’s increase in our distillates production, our supplies of distillate fuels rose for the eighth time in twenty weeks, increasing by 3.197,000 barrels to 122,485,000 barrels over the week ending May 31st, after our distillates supplies had increased by 2,544,000 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 428,000 barrels per day to 3,367,000 barrels per day, and even as our exports of distillates rose by 344,000 barrels per day to 1,380,000 barrels per day, and while our imports of distillates fell by 23,000 barrels per day to 142,000 barrels per day.…Even with 31 inventory decreases over the past fifty-eight weeks, our distillates supplies at the end of the week were 9.6% above the 111,731,000 barrels of distillates that we had in storage on June 2nd of 2023, but were still about 7% below the five year average of our distillates inventories for this time of the year…
Finally, after the big increase in oil supplies that the EIA could not account for, our commercial supplies of crude oil in storage rose for the 15th time in twenty-six weeks, and for the 26th time in the past year, increasing by 1,233,000 barrels over the week, from 454,689,000 barrels on May 24th to 455,922,000 barrels on May 31st, after our commercial crude supplies had decreased by 4,156,000 barrels over the prior week… With this week’s decrease, our commercial crude oil inventories remained 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 31st were 0.7% less than the 459,205,000 barrels of oil left in commercial storage on June 2nd of 2023, while they were 9.4% more than the 416,758,000 barrels of oil that we had in storage on June 2nd of 2022, but were still 3.8% less than the 474,029,000 barrels of oil we had left in commercial storage on June 4th 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 June 7th, the second column shows the change in the number of working rigs between last week’s count (May 31st) and this week’s (June 7th) count, the third column shows last Friday’s May 31st 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 9th of June, 2023…
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Ohio Utica 1Q24 Numbers – Encino Dominates with 51% of Oil Prod. -- Marcellus Drilling News - The Ohio Department of Natural Resources (ODNR) released production numbers for the first quarter 2024 yesterday. Oil production, led by Encino Energy wells, is the headline news. Oil production from Encino represented 51.3% of all Ohio Utica oil production in 1Q. Ascent Resources was the next closest oil producer, with 21.8% of Utica oil produced. As for natural gas, Ascent Resources dominated with 42.8% of all Ohio Utica natgas production. In the number two slot was Gulfport Energy with 17.6% of natgas production, followed closely by Encino with 16.0% of natgas production. Below, we have lists of the top 25 gas and oil wells by production in 1Q24, along with charts showing gas and oil production by both drillers and by county. You’ll only find this news (and this level of detail) here on MDN.
ODNR Issues Forced Pooling Order for Encino Well in Harrison County - Marcellus Drilling News - On May 23, the Ohio Dept. of Natural Resources (ODNR) issued a pooling order to Encino Energy that combines a number of properties into a single unit for drilling wells. The total of the surface land pooled is 1,081.076 acres, located in Stock Township, Harrison County, Ohio. There are 121 (!) properties or pieces of property involved, largely due to the unit passing under what appears to be a housing development. This type of thing goes on frequently — the ODNR issuing a pooling order. What’s different and unusual about this one is that the ODRN appears to have denied a request by Encino to raise the penalty against those who refused to sign a lease but ended up being forced to participate anyway.
Wells in Columbiana County Strike More Oil – Youngstown Business Journal – Horizontal wells exploring the Utica/Point Pleasant shale formation in Columbiana County have struck oil once again. According to production results reported by the Ohio Department of Natural Resources, Columbiana County wells owned by EAP Ohio, a subsidiary of Houston-based Encino Energy, produced 457,269 barrels of oil during the first quarter of 2024.Among the most productive was EAP’s Lehwald well pad in Butler Township, records show. Four wells at the site collectively produced 298,249 barrels over a 90-day period.All four of the wells – drilled during the last three months of 2023 – were among the 25 best oil producers in the state during the period out of 3,389 wells reporting results, according to ODNR. The Lehwald 20H well, for example, ranked as the seventh highest producer – yielding 97,274 barrels over the quarter. The Lehwald 3H ranked the 13th best, with production at 79,812 barrels. The pad’s 5H well yielded 61,618 barrels and was the 19th highest oil producer in the state. The Lehwald 1H well ranked 23rd, with 57,545 barrels during the first quarter, data show. In all, EAP’s wells in Ohio produced 3,708,011 barrels of oil during the period – or 51.3% of all the oil production throughout the state. Ohio reported its wells produced 7,227,503 barrels of oil in the first quarter, a 10% gain compared with 6,549,638 barrels produced a year ago during the same period. “Encino produced over half of the entire statewide oil production again this quarter,” Encino spokeswoman Jackie Stewart said in a statement. “The results continue to confirm that the Ohio Utica oil play is real. The continuous significant quarter over quarter growth is undeniable. Encino remains optimistic about the Utica Shale, and we plan to add a fourth rig next month to continue capturing its success.” The No. 1 oil well in the state was EAP’s Burdette 201H well in Harrison County, which produced 139,413 barrels. Four other wells at that location rounded out the top five most productive oil wells in Ohio. Columbiana County’s section of the Utica – traditionally known for its high volumes of natural gas and wet gas – has for the past year delivered skyrocketing oil production that is out of character for the northern tier of the play. First quarter oil numbers for 2024 easily outdistanced previous records achieved in Columbiana County, data show. During the third quarter of 2023, Columbiana County wells yielded a then high of 352,354 barrels. Results for the first three months of 2024 exceed these production figures by more than 100,000 barrels. Compared with year-ago numbers, oil production during the first quarter of 2024 increased by 95%, ODNR records show. According to quarter-over-quarter data, oil production increased by nearly 89% in the county.To place this in perspective, Columbiana wells in 2022 produced just 20,350 barrels of oil throughout the entire year. Northern Utica regions such as Mahoning and Trumbull counties produced little oil during the quarter, ODNR data show. Mahoning wells, for example, yielded 1,094 barrels over a 90-day period, while wells in Trumbull County pumped out just 675 barrels.Three other energy companies with assets in Columbiana County – Hilcorp Energy Co., Geopetro LLC and Pin Oak Energy Partners LLC – reported their wells produced no oil, just natural gas, according to ODNR.The latest report shows that four companies operate 172 wells in Columbiana County. EAP owns 81 wells; Hilcorp operates 73; Pin Oak owns 10; and Geopetro lists eight wells, according to records. Collectively, these wells produced 24.9 billion cubic feet of natural gas during the quarter, according to records. The single largest Columbiana County gas well reported was Hilcorp’s Elk Run Scheel 8H well, which produced 676.5 million cubic feet of gas during the quarter. Ascent Resources boasted the biggest single gas well in the state during the period, according to ODNR. Its Ruth 5H well in Jefferson County piped out 3.7 billion cubic feet of gas during a 91-day period, records show. Ohio’s gas wells produced a total of 534.028 billion cubic feet of gas during the first quarter of 2024, down 3% from the same period in 2023.
Mystery Driller Asks Ohio to Lease More of Salt Fork State Park -- Marcellus Drilling News -- In February, the Ohio Oil & Gas Land Management Commission (OGLMC) met to award contracts to drill under (not on) several Ohio state parks, including 5,700 acres of the 20,000-acre Salt Fork State Park in Guernsey County (see Ohio Awards Drilling Contracts for State Parks – Salt Fork Surprise). The big news for us was that Encino Energy, which has long coveted the Salt Fork State Park property, did NOT win the contract for it. At some point, Encino pulled its proposal for Salt Fork and instead concentrated on several other parcels. The contract for Salt Fork was awarded to Infinity Natural Resources. This just in…The OGLMC has received a new nomination to drill under another 2,300 acres of Salt Fork State Park.
Martins Ferry Council Pressures ODNR to Clean Up AMS Facility…NOW -- 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). Two weeks ago, 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. However, 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 (see Austin Master Services Claims It is “Effectively a Dead Company”). The problem is that nothing is getting done to clean up the mess left by AMS, and the city of Martins Ferry is not happy with the stalemate.
AEP Announces Finding a Buyer for Austin Master Services - 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, since the Ohio Attorney General lodged charges against the company back in March (see our AMS stories here). AMS has stored at least 10,000 tons of fracking waste (drill cuttings with low radioactivity) at the facility. The facility is rated and permitted to hold 600 tons. In March, Ohio AG Dave Yost asked the Belmont County Common Pleas Court to block AMS from receiving more waste and order it to clean up and comply with its rating. That process has been playing out. Meanwhile, the company that owns AMS, American Environmental Partners (AEP), announced yesterday it has found a buyer for AMS.
Radium Found in Mussels Downstream from PA Frack Wastewater Plant - Marcellus Drilling News - Researchers from Penn State analyzed the composition of mussels downstream of a wastewater treatment facility in Western Pennsylvania that had accepted and treated fracking wastewater. A new scientific study published in the June issue of Science of the Total Environment by two Penn State researchers confirms what everyone has known for the last 13 years: Recycling brine (frack wastewater) and releasing that recycled brine into groundwater supplies is not a good idea. The researchers sampled freshwater mussels downstream from a centralized wastewater treatment facility in western Pennsylvania that had accepted and treated fracking wastewater from the oil and gas industry for “two decades.” They found low levels of radium in the mussels, radium that can be attributed to fracking wastewater.
Signs that EQT has Restored Production Previously Cut in February - Marcellus Drilling News - The country’s largest natural gas producer, EQT Corporation, headquartered in Pittsburgh and solely focused on drilling in the Marcellus/Utica, previously announced it had sliced 1 billion cubic feet per day (Bcf/d) of its production as of late February because of the ongoing low price of natgas (see Boom! EQT is Curtailing 1 Bcf/d of Gas Production Effective Now). In late April, as part of its first quarter update for investors, EQT’s top brass said the 1 Bcf/d curtailment would continue until “at least the end of May” (see EQT Disses Haynesville in Jab at Chesapeake/Southwestern Merger). It looks like the curtailment is over, although EQT is not publicly saying so…yet.
IFO 1Q24 Report – PA NatGas Production Increases Slightly YOY - Marcellus Drilling News - Yesterday, the Pennsylvania Independent Fiscal Office (IFO) released its latest quarterly Natural Gas Production Report for January through March 2024 (full copy below). There were 100 new horizontal wells spud (drilled) in 1Q24, a decrease of 20 wells (-16.7%) compared to 1Q23. That number was also down from the 110 wells spud in 4Q23. This was the sixth consecutive quarter with a year-over-year (YOY) decline in new wells spud. Natural gas production volume was 1,881 billion cubic feet (Bcf) in 1Q24, up 36 Bcf (1.9%) from the 1,845 Bcf produced in 1Q23. However, 1Q24’s 1,881 Bcf was down 3.0% from 4Q23’s 1,939 Bcf.
Test Records from March Show 130 Potential Problem Areas Along MVP --Marcellus Drilling News - Newly released information gathered from a Freedom of Information Act (FOIA) request shows that as Mountain Valley Pipeline (MVP) tested its 303-mile pipeline from Wetzel County, WV, to Pittsylvania County, VA, some 130 potential problem areas were located. Running a PIG (pipeline inspection gauge) device through the pipeline to check for dents and other weaknesses found 50 “anomalies” that required further excavation work to check. Another 80 excavations were needed after tests using an electric current to probe for weaknesses in the pipeline’s special anti-corrosion coating.
As MVP nears finish line, some residents call for more scrutiny of pipeline's safety - Last month, builders of the Mountain Valley Pipeline reported they hope to complete construction and go in service in early June. But new records from a federal agency reveal there have been over a hundred instances of potential safety risks along the MVP in recent months, according to records released to the Roanoke Times through a Freedom of Information Act request.Some residents are pushing for more scrutiny over MVP’s safety risks.Last week, activists gathered to protest the pipeline outside the Virginia Department of Environmental Quality office in Salem, chanting "DEQ do you job!" and "When our land is under attack, what do we do? Stand up, fight back."Over 100 people have submitted comments to federal regulators, with concerns about MVP’s plans to go in service soon. 23 Virginia lawmakers and three county governments also submitted letters, asking not to grant authorization until safety can be ensured.Many point to a 2023 consent order with the Pipeline and Hazardous Materials Safety Administration, which requires MVP to do extra testing."There is some comfort in the tests that PHMSA has required them to do on each section of pipe, but we are in a bit of unchartered territory," said Bill Caram, executive director for Pipeline Safety Trust, a nonprofit pipeline watchdog organization that’s raised concerns about MVP for years. PHMSA provided information to The Roanoke Times through a FOIA request last week. The agency reported there have been 130 instances when pipes along MVP needed to be excavated to do more testing or make repairs.MVP said in a letterto the Federal Energy Regulatory Commission in May it will complete all testing to ensure safety before it requests permission from FERC to go in service.
MVP Sues 4 Out-of-State Protesters Who Blocked Access to Work Sites -Marcellus Drilling News - Marcellus Drilling News - Four out-of-state pipeline protesters (two from New Jersey, one each from Vermont and Maryland), all senior citizens who thought it was cutesy to block access to work sites for the almost-done Mountain Valley Pipeline (MVP), are about to learn a hard lesson. They have been sued by MVP for BIG BUCKS — for the costs to compensate for lost time AND for punitive damages. We’ll see if the protesters’ Big Green benefactors will pony up the lawyers and money they need to fight the lawsuits. It’s about time our side begins to play hardball. You play hardball by suing these crazies and making them pay. Kudos to MVP.
FERC Notes ‘Limited’ Environmental Impacts From Ridgeline Natural Gas Pipeline Expansion - East Tennessee Natural Gas LLC’s (ETNG) Ridgeline natural gas pipeline system expansion received a positive draft environmental impact statement (DEIS) that cited the benefits of reducing coal-fired generation. The Enbridge Inc. subsidiary would add a 122-mile pipeline for 300,000 Dth/d of firm transportation capacity along the Ridgeline system through eight Tennessee counties. The additional natural gas supply would flow to Tennessee Valley Authority’s (TVA) Kingston Fossil Plant where the federal public power company plans to retire coal-fired units by 2027. In a DEIS, FERC staff did not characterize the project’s greenhouse gas emissions “as significant or insignificant.” However, staff noted that the net reduction in emissions from TVA’s proposed gas plant...
CorEnergy Infrastructure Aims for June Emergence from Bankruptcy - Pipeline operator CorEnergy Infrastructure Trust, which filed for Chapter 11 bankruptcy protection in February, is on the path to emerging from the process after a court has confirmed the company’s reorganization plan.Chairman and CEO Dave Schulte said the company’s sale of its MoGas and Omega pipelines and full repayment of its secured debt had encouraged stakeholders to vote for recapitalizing the company’s balance sheet.“These transactions were the result of a comprehensive strategic review process in which our board and advisors analyzed all reasonably available alternatives given the challenging market conditions we have faced since 2020,” Schulte said in a press release.In May 2023, the company said it would sell MoGas and Omega for approximately $175 million.Throughout the bankruptcy, CorEnergy’s Crimson midstream assets, which span northern, central and southern California, have continued to operation without interruption.“Crimson Pipeline has operated as usual throughout the company’s restructuring process and is expected to continue doing so,” said Robert Waldron, president of CorEnergy. “We await a decision on our requested San Pablo Bay rate relief before the California Public Utilities Commission to ensure the viability of the Crimson Pipeline assets, which we anticipate in late 2024. We also continue to evaluate potential opportunities to redeploy our assets into energy transition.”Under the reorganization plan, confirmed on May 24, holders of CorEnergy’s 5.875% Unsecured Convertible Senior Notes and existing preferred equity would own the company’s common stock.CorEnergy plans to pursue an over-the-counter listing for the shares of common stock, which will provide “liquidity for its equity owners while reducing overhead expenses to a level commensurate with its smaller size.”The company expects to post an investor presentation about the plan before emergence, which the company expects on June 12.Husch Blackwell LLP served as legal counsel to the company, Teneo Capital LLC as its financial adviser and Miller Buckfire as its investment banker. Faegre Drinker Biddle & Reath LLP served as legal counsel to an ad hoc group of noteholders and Perella Weinberg Partners and TPH&Co., the energy business of Perella Weinberg Partners, as its investment bankers.
Williams seeks to put more of US natural gas project into service - U.S. energy company Williams WMB.N sought permission from a federal energy regulator on Friday to put more of the Regional Energy Access natural gas project already under construction into service by July 1. Williams designed Regional Energy Access to help meet rising gas demand and ease supply constraints affecting customers in Pennsylvania, New Jersey and Maryland. The company said the project, one of the biggest under construction in the U.S. Northeast, will provide enough gas to serve 4.4 million homes annually. Natural gas is used to heat homes and businesses, for cooking and in industrial plants. The company has estimated the project's total cost at around $1 billion. Williams' Transcontinental Gas Pipe Line Co (Transco) unit filed the request with the U.S. Federal Energy Regulatory Commission (FERC) seeking to provide about 0.16 billion cubic feet per day (bcfd) of the roughly 0.83-bcfd project's gas capacity available to customers on an interim basis. The project is already partially in service. FERC said it approved Transco's request to make the first roughly 0.45-bcfd phase of the project available on an interim basis in October 2023. One billion cubic feet of gas is enough to supply 5 million U.S. homes for a day. Williams said on its website that it started construction in the second quarter of 2023 and expects to put the project fully into service in the fourth quarter of 2024.
Renewable Additions Seen Potentially ‘Eating Away’ at Natural Gas-Fired Generation Gains - U.S. natural gas-fired power generation has gotten a demand boost from coal retirements over the past year, but those tailwinds are set to fade in the coming months as a wave of new renewables competes for share of the power stack. Natural gas has gained about 1.7 Bcf/d of power generation demand since mid-2023 as retirements and competitive gas prices have made coal less competitive, according to Enverus senior energy transition analyst Carson Kearl. Those gains have been shown to be “relatively sticky” thus far in 2024, Kearl told NGI. However, additional increases aren’t likely after favorable year/year comparisons run out in June and July and “additional renewable capacity starts to eat away at that bump in gas demand we saw last year,” he said.
Dominion divests Questar Gas and Wexpro for $4.3bn - Dominion Energy has completed the sale of its US natural gas utility Questar Gas and its associated company Wexpro to Enbridge for approximately $4.3bn.The deal consideration includes the assumption of debt and customary closing adjustments.The transaction was signed in September 2023. It forms part of a $14bn agreement signed between Enbridge and Dominion involving two other natural gas distribution companies.Questar Gas’ infrastructure includes more than 33,500km of natural gas distribution and transmission pipelines, and a liquefied natural gas (LNG) storage facility to enhance system reliability. Wexpro supplies natural gas to Questar Gas under a cost-of-service agreement. Questar Gas will operate in Utah under the name Enbridge Gas Utah, in Idaho as Enbridge Gas Idaho and in Wyoming as Enbridge Gas Wyoming.
Enbridge Closes Acquisition of Questar Gas – Rigzone -Enbridge Inc. has completed the acquisition of Questar Gas Company and its related Wexpro companies from Dominion Energy, Inc. Questar will join Enbridge's Gas Distribution and Storage Business Unit. The Questar Gas utility will be doing business in Utah as Enbridge Gas Utah, in Wyoming as Enbridge Gas Wyoming, and in Idaho as Enbridge Gas Idaho, Enbridge said in a news release.Serving 1.2 million customers in service territories with fast growing economies and populations, Questar Gas is a multi-state utility that distributes natural gas in Utah, southwestern Wyoming, and southeastern Idaho. Questar Gas Company has a cost-of-service supply agreement with Wexpro. Questar Gas's asset portfolio includes over 21,000 miles (over 33,500 kilometers) of natural gas distribution and transmission pipelines, a liquefied natural gas storage facility that enhances system reliability, and interconnections to multiple interstate natural gas pipelines, according to the release."Questar Gas and Wexpro enhance the scale and breadth of our existing low risk utility business model and support our long-term dividend growth profile by providing stable, predictable cash flows," Enbridge Executive Vice President and President for Gas Distribution and Storage Michele Harradence said."We welcome Questar Gas and Wexpro employees into the Enbridge family of companies and look forward to building long-term productive relationships with all of their stakeholders in Utah, Wyoming, and Idaho," Harradence remarked.The combined contributions from Questar and the previously closed acquisition of The East Ohio Gas Company, now doing business as Enbridge Gas Ohio, are expected to contribute approximately 80 percent of the total annualized EBITDA from the three gas utilities Enbridge has agreed to acquire from Dominion, Enbridge stated.The closing of the purchase of the Public Service Co. of North Carolina Inc (PSNC) is expected to occur following the receipt of required regulatory approvals for that purchase. The acquisition of PSNC is on track to close within the year, Enbridge added.In September 2023, Enbridge entered into three separate definitive agreements with Dominion Energy Inc. to acquire natural gas distribution companies The East Ohio Gas Company, PSNC, and Questar Gas for an aggregate purchase price of $14 billion (CAD 19 billion), composed of $9.4 billion of cash consideration and $4.6 billion of assumed debt.Enbridge closed the acquisition of (EOG) from Dominion Energy, Inc. in March. The gas utility will be doing business as Enbridge Gas Ohio and will join Enbridge's Gas Distribution and Storage Business Unit, Enbridge said in a news release Thursday.Upon completion of the Dominion transactions, Enbridge will add gas utility operations in Ohio, North Carolina, Utah, Idaho and Wyoming, representing a significant presence in the U.S. utility sector, Enbridge said in an earlier statement. According to Dominion, the three utilities serve about three million homes and businesses and collectively comprise approximately 78,000 miles of natural gas distribution, transmission, gathering, and storage pipelines, as well as more than 62 billion cubic feet (Bcf) of working underground and liquefied natural gas (LNG) storage capacity; and approximately 400 billion cubic feet equivalent of cost-of-service regulated gas reserves as of year-end 2022.
Delfin LNG Permit Expiration Paused as Federal Agencies Review Project - The U.S. Department of Energy (DOE) has agreed to temporarily maintain Delfin LNG’s authorization for worldwide natural gas exports that was set to expire at the beginning of this month while it reviews an extension request. DOE staff told the Houston-based developer it would “toll” its permit to export liquefied natural gas to non-free trade agreement (FTA) countries until it “issues an order on the pending request.” Delfin asked the agency in March to extend its deadline for placing the first phase of the project in service to June 1, 2029. “We emphasize that, during this period, Delfin has no reliance interest on this non-FTA authorization,” DOE staff wrote in a recently published response. “Any actions taken by Delfin prior to the issuance of DOE’s order on...
EPC Issues May Impact Golden Pass Pipeline Progress – - Golden Pass LNG’s feed gas pipeline is expected to be in service during the first half of 2025, but the timeline could be impacted by the Zachry Group’s bankruptcy filing last month, according to a field inspection report by FERC. Zachry was one of three engineering, procurement and construction (EPC) contractors working on the project, but it cited cost overruns and an aggressive timeline as reasons for its bankruptcy. It has exited the project and laid off more than 4,500 people working on it, according to a letter sent to the Texas Workforce Commission. Earlier this year, the Federal Energy Regulatory Commission authorized partial service to start on a small stretch of the 2.5 Bcf/d Golden Pass pipeline. The Commission approved about 600 MMcf/d to move as far
Golden Pass LNG construction turmoil to delay Texas plant's startup – Golden Pass LNG construction turmoil to delay Texas plant's startup Golden Pass LNG construction turmoil to delay Texas plant's startup 6/7/2024 The startup of Golden Pass LNG, the QatarEnergy and ExxonMobil $11-B JV LNG project in Texas, has been delayed by at least six months due to construction turmoil, according to analysts. The project at the Sabine Pass site of a former gas-import terminal that was converted to process natural gas for LNG exports, is one of two large U.S. terminals whose startup had been expected to significantly expand supplies from the world's top exporter of the fuel in the next 12 months. Golden Pass LNG's startup, however, was thrown into doubt last month when lead contractor Zachry Holdings filed for bankruptcy and quit the project. The plant was 75% complete and an updated completion schedule would be disclosed, Exxon then said. On Wednesday, a regulatory filing on a pipeline that will deliver natural gas to the plant said the latest forecast for startup may be revised due to Zachry's bankruptcy, without providing a new date. The filing indicates "train one will be online by the end of June 2025, with trains two and three following in December 2025 and March 2026," analyst Zach Van Everen at energy investment bank Tudor, Pickering, Holt and Co wrote in a note published on Thursday. The first of three processing units was originally expected to begin processing this year, but was pushed back earlier this year into the first half of 2025. The full over 15 MMtpy production was also initially set for 2025, Golden Pass LNG previously said. Golden Pass LNG had warned earlier in May of possible impacts on construction of the first three trains of the project. A company spokesman on Wednesday said he had no update on a revised completion schedule or whether the joint venture owners have identified a new engineering, procurement, and construction contractor.
Freeport LNG Natural Gas Nominations Stabilize After Brief Train 2 Outage - Feed gas flows to Freeport LNG early Monday had returned to nearly 80% of pipeline capacity following a brief slip from another operational issue late last week. Freeport LNG Development LP reported a trip of Train 2 Thursday that temporarily halted liquefied natural gas production for about 16 hours. Freeport staff told the Texas Commission on Environmental Quality the issue was related to a surge valve on a propane compressor. The company reported flaring ended by mid-Friday morning and the train was restarted. Nominations to the LNG facility returned to 78% of capacity by the Friday evening cycle, according to Wood Mackenzie pipeline data. Nominations held near that level through the weekend as ships arrived and departed from the facility carrying shipments to Asia and...
Saudi Aramco holding LNG talks with Tellurian, NextDecade --Oil giant Aramco is in talks with US firms Tellurian and NextDecade on two separate liquefied natural gas (LNG) projects as the Saudi firm seeks to boost its gas trading and production, three sources close to the talks told Reuters. US gas production has boomed over the past decade with oil majors and Aramco’s rivals such as Qatar Energy competing to build several projects to export gas to Europe and Asia. The state energy firm is in talks with Tellurian to buy a stake in its 27.6 million metric ton per annum (mtpa) Driftwood LNG plant near Lake Charles, Louisiana. Aramco officials visited the site three times this year – including together with executives from Australia’s Woodside on one of those occasions, said the sources who declined to be identified as talks are not public. The state-owned firm is also in talks with US LNG firm NextDecade for a long-term gas purchase agreement from a proposed fifth processing unit at its $18bn Rio Grande facility. Aramco declined to comment. Tellurian said it does not comment on market speculation. Woodside said it continuously assesses organic and inorganic growth opportunities but declined further comment. NextDecade did not immediately respond to Reuters’ request for comment. Aramco is seeking to strengthen its position in the LNG market, which is set to grow globally by 50 per cent by 2030, especially in the US, where LNG capacity is set to almost double over the next four years. Tellurian has spent years and hundreds of millions of dollars trying to finance and build the Driftwood plant. Last fall, Tellurian warned investors that within a year the company might not be able to cover operating and debt costs due to continued losses and dwindling cash reserves. An Aramco investment could provide the turnaround that Driftwood LNG needs, said Kaushal Ramesh, Rystad Energy’s vice president for LNG research. Driftwood is not affected by President Biden’s pause on LNG export projects as it already has a Department of Energy permit to export the proposed plant’s super-chilled gas to countries that do not have free-trade agreements with the US. In February, the US Federal Energy Regulatory Commission gave Tellurian a three-year permit extension to complete the construction of Driftwood. Aramco is one of the world’s largest oil producers and the top exporter, pumping nearly 10 per cent of the world’s crude supply. However, its presence in the LNG market is dwarfed by neighbouring Qatar. UAE’s ADNOC Group also has a bigger presence. Aramco made its first LNG investment abroad when it bought a stake in US-based MidOcean Energy for $500m last year. In March, Reuters reported that Aramco was in talks to invest in Sempra Infrastructure’s Port Arthur project in Texas. It is also competing with Shell to buy the assets of Temasek-owned LNG trading firm Pavilion Energy.
A Research Duel Heats up Amid High-Stakes Decision on LNG Exports – DeSmog - Industry and academic groups have launched a research arms race to influence the U.S. Department of Energy’s decision about whether more liquified natural gas exports are in the public interest.In late January, President Joe Biden announced that the agency would temporarily stop processing pending applications to export LNG to countries that don’t have a trade agreement with the U.S., which includes the majority of countries importing U.S. LNG. That pause will lift when the Energy Department updates the climate and economic analysis underpinning its export authorizations. This has not interrupted the seven LNG export terminals currently operating in the U.S. or the eight under construction. But the move could result in a decision limiting more LNG exports in a country that’s already the world’s top LNG exporter — and groups see an opening to sway minds. “There is always a concern that DOE would be influenced by an industry-funded report. That is the very nature of the government’s relationship with the fossil fuel industry, which has a long history of producing misleading and inaccurate information,” said Robin Saha, director of the environmental studies program at the University of Montana and a co-author of a May impact assessment of the LNG buildout in Louisiana and Texas. “It is vital that the DOE also engage and include the data provided by communities living closest to the LNG facilities in operation to provide a comprehensive analysis.” Local fishers and environmental advocacy groups have warned that the LNG export pause didn’t go far enough in addressing concerns raised by Gulf Coast residents. They’re calling for the Biden administration to ban further expansion of the industry. “We’ve seen the destruction just one of these plants has. So for it to be in the public interest to build the other ones is just a ridiculous notion,” said Cameron Parish fisherman Travis Dardar, who wasn’t involved in the research. “We’re fighting this because we have nothing left to lose. They’ve taken everything from us. They’ve taken basically all the docks.”The impact assessment Saha co-authored with academics at the Bullard Center for Environmental and Climate Justice at Texas Southern University found that the LNG buildout disproportionately harms low-income neighborhoods and communities of color. The industry contributes to climate change and has the potential to inflate U.S. electricity prices; people living near these facilities face air pollution on top of that, the study concluded. The Center is submitting the report to the Energy Department, said co-author Liza T. Powers, a postdoctoral fellow at the Bullard Center. “To date, the licensing and application process for LNG facilities have failed to acknowledge or address environmental and climate justice issues,” she said. “We argue that taking into account the cumulative impacts, including climate impact of LNG, leads to the conclusion that LNG does not serve the public interest.”The Biden administration’s pause on LNG export project approvals was initiated after a study by Cornell University professor Robert Warren Howarth found LNG exports could be worse for the planet than coal. Arevised version of that study is undergoing peer review.LNG export companies are pushing back on Howarth’s findings. A study funded by exporter lobbying group LNG Allies and published in April by the consulting firm Berkeley Research Group concluded that U.S. LNG produces less than half the emissions from coal when used for electricity in Europe and Asia, and about 20% less emissions than gas coming from Russia.“I think industry got the result they paid for,” Howarth told DeSmog after reviewing that report. The industry-funded study does not provide the specific data sources used to calculate methane emissions from drilling, fracking, flaring, processing, and transporting natural gas, Howarth pointed out. “The upstream emissions are a big part of the total in my analysis. If we correct their analysis for having low-balled these emissions, then we are not that far off,” he said.
US natgas prices jump 7% to one-week high on rising power, LNG demand (Reuters) -U.S. natural gas futures soared about 7%to a one-week high on Monday on forecasts for demand to rise as hot weather promptspower generators to burn more fuel to run air conditioners and as flows to liquefied natural gas (LNG) export plants increase. Traders saidU.S. prices were also supportedby a 5% jumpin gas prices in Europe TRNLTTFMc1 due to an unplanned shutdown of an offshore production hub in Norway. Front-month gas futures NGc1 for July delivery on the New York Mercantile Exchange rose 16.9 cents, or 6.5%, to settle at $2.756 per million British thermal units (mmBtu), their highest close since May 22. In the spot market, powerprices in California and Arizona turned negative again, while next-day gas prices in northern California fell to their lowest since 2001 amid little demand and ample cheap hydropower and other renewable supplies. Gas output in the Lower 48 U.S. states rose to an average of 98.3 billion cubic feet per day (bcfd) so far in June, up from 98.1 bcfd in May, according to data from financial firm LSEG. That compares with a monthly record of 105.5 bcfd in December 2023. Meteorologists projected weather across the Lower 48 states would remain warmer than normal through June 18 except for some near-normaldays from June 8-12. LSEG forecast gas demand in the Lower 48, including exports, would rise from 94.9 bcfd this week to 95.3 bcfd next week. Those forecasts were lower than LSEG's outlook on Friday. U.S. exports to Mexico rose to an average of 7.1 bcfd so far in June, up from a record 7.0 bcfd in May, as Mexican generators burn more gas to meet growing power demand and New Fortress Energy NFE.O pulls in more U.S. gas for its LNG export plant in Altamira, Mexico. Gas flows to the seven big U.S. LNG export plants rose to 13.3 bcfd so far in June, up from 12.9 bcfd in May. That, however, remains well below the monthly record high of 14.7 bcfd in December 2023 due to ongoing maintenance at several plants, including Cheniere Energy's LNG.N Sabine Pass and Venture Global's Calcasieu Pass in Louisiana. In other LNG news, liquefaction Train 2 at Freeport LNG's export plant tripped on May 30, according to a company filing with state environmental regulators. Data from LSEG showed that feedgas to the three-train 2.1-bcfd Freeport slid from 2.0 bcfd on May 29 to 1.6 bcfd on May 30 before returning to an expected 2.0 bcfd on Monday. Gas was trading at a five-month high of $12 per mmBtu at the Dutch Title Transfer Facility (TTF) benchmark in Europe TRNLTTFMc1 and near a five-month high of $12 at the Japan Korea Marker (JKM) benchmark in Asia JKMc1. NG/EU But no matter how high gas prices rise overseas, U.S. LNG sales will remain limited until all of the export plants complete their maintenance work. The U.S. can turn about 13.8 bcfd of gas into LNG when all plants are operating at full power. The plants, however, can pull in a little more gas since they consume some of the fuel to power operations.
US natgas prices drop 6% on forecasts for less demand over next two weeks — U.S. natural gas futures dropped by about 6% on Tuesday, pressured by lowered demand forecasts for the next two weeks and the tremendous oversupply of gas still in U.S. storage. Trade was volatile after prices soared by about 7% on Monday to its highest close since May 22. Analysts forecast gas stockpiles were about 25% above normal for this time of year. Front-month gas futures NG1! for July delivery on the New York Mercantile Exchange fell 17.0 cents, or 6.2%, to settle at $2.586 per million British thermal units (mmBtu). Energy traders noted prices fell despite a preliminary drop in output to a 19-week low over the past few days. Analysts, however, noted that preliminary production data is often revised later in the day. Gas output in the Lower 48 U.S. states rose to an average of 98.1 billion cubic feet per day (bcfd) so far in June, the same as in May, according to data from financial firm LSEG. That compares with a monthly record of 105.5 bcfd in December 2023. On a daily basis, however, output was on track to drop by about 2.6 bcfd over the past three days to a preliminary 19-week low of 96.4 bcfd. Before this week, energy traders said there were signs output was rising due to a 47% jump in futures prices in April and May. Output hit a six-week high of 99.5 bcfd on May 24. Overall, U.S. gas production was down around 9% so far in 2024 after several energy firms, including EQT EQT and Chesapeake Energy CHK , delayed well completions and cut drilling activities when prices fell to 3-1/2-year lows in February and March. Meteorologists projected weather across the Lower 48 states would remain warmer than normal through June 19 except for some near-normal days from June 9-11.
US natural gas prices jump 7% on hot forecasts, drop in daily output - (Reuters) - U.S. natural gas futures jumped 7% to a two-week high in volatile trade on Wednesday on forecasts for mostly hotter than normal weather over the next two weeks and a decline in daily gas output. So far this week, prices have jumped 7% on Monday, fell 6% on Tuesday and jumped 7% again on Wednesday. Analysts at energy consulting firm EBW Analytics blamed part of that price volatility on forecasts calling for the weather to go from hotter than normal this week to hot in the West and cool in the East next week, before switching to hotter than normal across the entire country in two weeks. "Near-term gas prices are navigating this outlook with volatility likely to extend, as the July contract seeks a new trading range after the May short squeeze," analysts at EBW Analytics said in a note. "The outlook for the back half of June is bullish." Front-month gas futures for July delivery on the New York Mercantile Exchange rose 17.1 cents, or 6.6%, to settle at $2.757 per million British thermal units (mmBtu), their highest close since May 22. The prices increases seen so far this week occurred despite the tremendous oversupply of gas still in U.S. storage. Analysts forecast gas stockpiles were about 25% above normal for this time of year. Gas output in the Lower 48 U.S. states has averaged 98.1 billion cubic feet per day (bcfd) so far in June, the same as in May, according to data from financial firm LSEG. That compares with a monthly record of 105.5 bcfd in December 2023. On a daily basis, however, output was on track to drop by about 2.1 bcfd over the past two days to a preliminary five-week low of 96.7 bcfd on Wednesday. That output, however, was up about 0.2 bcfd from a 15-week low of 96.5 bcfd on May 1. Analysts said the increase since May 1 was a sign output was rising due to a 47% jump in futures prices in April and May. Output hit a six-week high of 99.5 bcfd on May 24. Overall, U.S. gas production is still down around 9% so far in 2024 after several energy firms, including EQT and Chesapeake Energy, delayed well completions and cut drilling activities when prices fell to 3-1/2-year lows in February and March. EQT is the biggest U.S. gas producer and Chesapeake is on track to become the biggest producer after its merger with Southwestern Energy. Meteorologists projected weather across the Lower 48 states would remain warmer than normal through June 20 except for some near-normal days in the June 9-11 period.
US natgas prices climbed about 3% to a 21-week high on lower output, higher demand — U.S. natural gas futures climbed by about 3% to a 21-week high on Friday on recent declines in daily output and forecasts that power generators will burn a lot more gas in late June to meet rising electric use as homes and businesses crank up their air conditioners to escape an expected heat wave. Traders said that price increases would likely have been much higher but for lower spot prices and the tremendous oversupply of gas still in storage. Analysts said current gas stockpiles were around 24% above normal levels for this time of year. "Spotty production during the first week of June helped natural gas power through weak spot pricing," analysts at energy consulting firm EBW said in a note. Front-month gas futures NG1! for July delivery on the New York Mercantile Exchange rose 9.7 cents, or 3.4%, to settle at $2.918 per million British thermal units (mmBtu), their highest close since Jan. 12. For the week, the front-month was up about 13% after gaining about 3% last week. One factor that has helped to keep a lid on futures prices so far this year has been lower spot or next-day prices at the Henry Hub benchmark (NG-W-HH-SNL) in Louisiana. The spot market has traded below front-month futures for 93 out of 109 trading days so far this year, according to data from financial firm LSEG. Next-day prices at the Henry Hub were up about 1% to $2.30 per mmBtu for Friday. Financial firm LSEG said gas output in the Lower 48 U.S. states slipped to an average of 98.0 billion cubic feet per day (bcfd) so far in June, down from 98.1 bcfd in May. That compares with a monthly record of 105.5 bcfd in December 2023. On a daily basis, however, output was on track to drop by about 2.1 bcfd over the past four days to a preliminary four-week low of 96.9 bcfd on Friday. That output, however, was up about 0.3 bcfd from a 15-week low of 96.5 bcfd on May 1. Analysts said the increase since May 1 was a sign output was rising due to a 47% jump in futures prices in April and May. Output hit a six-week high of 99.5 bcfd on May 24. Overall, U.S. gas production is still down around 9% so far in 2024 after several energy firms, including EQT EQT and Chesapeake Energy CHK , delayed well completions and cut drilling activities when prices fell in February and March. Meteorologists projected weather across the Lower 48 states would remain mostly warmer than normal through June 22 except for some near- to below-normal days from June 9-12. LSEG forecast gas demand in the Lower 48, including exports, would ease from 94.0 bcfd this week to 93.3 bcfd with cooler weather next week before rising to 99.2 bcfd in two weeks when the weather turns hot. The forecast for this week were higher than LSEG's outlook on Thursday. Gas flows to the seven big U.S. LNG export plants have risen to 13.3 bcfd so far in June, up from 12.9 bcfd in May. That, however, remains well below the monthly record high of 14.7 bcfd in December 2023 due to ongoing maintenance at several plants, including Cheniere Energy's LNG Sabine Pass and Venture Global's Calcasieu Pass in Louisiana.
U.S. Oil, Gas Activity Declines - The total number of active drilling rigs for oil and gas in the United States fell this week, according to new data that Baker Hughes published on Friday.The total rig count fell by 6 to 594 this week, compared to 695 rigs this same time last year.The number of oil rigs fell by 4 this week, after staying the same in the week prior. Oil rigs now stand at 492--down by 64 compared to this time last year. The number of gas rigs fell by 2 this week to 98, a loss of 37 active gas rigs from this time last year. Miscellaneous rigs stayed the same at 4.Meanwhile, U.S. crude oil production stayed the same for the twelfth week in a row at an average of 13.1 million bpd for the week ending May 31—down 200,000 bpd from the all-time high of 13.3 million bpd.Primary Vision’s Frac Spread Count, an estimate of the number of crews completing wells that are unfinished, fell for the second week in a row—by 4—in the week ending May 31. The frac spread count now stands at 253.Drilling activity in the Permian stayed the same at 310 this week, after falling by 2 in the week prior. The count in the Eagle Ford also stayed the same this week, holding at 51 after increasing by 1 in the week prior.Oil prices began to inch up on Friday after a rough week for prices after OPEC+ laid out its plan for rolling back its production cuts later this year—subject to market conditions. At 9:12 a.m. ET, the WTI benchmark was trading up $0.13 (+0.17%) on the day at $75.68—about $1.40 below last Friday’s price.
House Democrats Accuse Big Oil Of Price Gouging - A group of House Democrats have called on the Department of Justice to launch a probe into the oil industry, accusing the two largest U.S. energy companies of a conspiracy to keep fuel prices high.In a letter sent to the Department of Justice by Rep. Jerrold Nadler and signed by nine more House members, the group claimed that the record profits that Exxon and Chevron reported last year were proof they were conspiring against Americans by keeping fuel prices high.“By any measure, these are good times for oil companies in the United States. Last year, the two largest U.S. oil companies, Exxon Mobil Corp. (“Exxon”) and Chevron Corp. (“Chevron”), both earned their biggest annual profits in a decade,” the House Democrats wrote.“But apparently, instead of passing those profits through to consumers in the form of cheaper products, the oil giants have been lining their own pockets while conspiring to keep prices high.”The letter also accused the U.S. oil industry of colluding with OPEC and OPEC+, with its authors writing that “If U.S. oil companies are colluding with each other and foreign cartels to manipulate global oil markets and harm American consumers who then pay more at the pump, Congress and the American people deserve to know.” The OPEC collusion accusation follows charges leveled at the former CEO of Pioneer Natural Resources by the Federal Trade Commission during Exxon’s takeover of the company.The FTC alleged that Scott Sheffield had colluded with OPEC and OPEC+ members to limit production and increase oil prices in comments on its approval of Exxon’s acquisition of Pioneer. The allegations shook the shale oil world, where several large consolidation deals are awaiting the trade watchdog’s approval.Sheffield hit back by saying there was no merit to the charges and that “Publicly and unjustifiably vilifying me will have a chilling effect on the ability of business leaders in any sector of our economy to address shareholder demands and to exercise their constitutionally protected right to advocate for their industries,”
U.S. Could Accelerate Refill Rate Of Strategic Petroleum Reserve -The United States could accelerate the pace of buying crude to refill the Strategic Petroleum Reserve (SPR), as all four sites would be available by the end of the year after a maintenance period, U.S. Secretary of Energy Jennifer Granholm told Reuters in an interview.“All four sites will be back up by the end of the year, so one could imagine that pace would pick up, depending on the market,” Secretary Granholm said, commenting on the current pace of buying about 3 million barrels of crude for the reserve per month this year.The U.S. saw the stockpiles of crude oil in the SPR fall from 638 million barrels at President Joe Biden’s inauguration to just 347 million barrels by the summer of 2023 as the Administration tried to bring down gasoline prices for consumers. The large sell-off in the country’s safety supply of crude oil was met with criticism. Also met with criticism has been the Administration’s slow response to falling oil prices—a perfect opportunity for any Administration earnestly looking to replenish SPR oil inventories.In March, the U.S. Department of Energy expected only 40 million barrels to be refilled by the end of this year, but another 140 million barrels of crude will stay in the SPR after the cancellation of congressionally mandated sales from 2022, according to Reuters.The Biden Administration could now accelerate the rate of repurchases of crude for the SPR as it views the global oil markets well-supplied and does not expect wild swings in prices or spikes in the “next short while,” Secretary Granholm told Reuters.Earlier this year, the energy secretary said that the Biden Administration aims to have crude in the SPR by the end of the year back up to the levels before the massive sales of 180 million barrels in the past two years. The Administration continues to target purchases of crude for the strategic reserve at a price of $79 per barrel or below. Early on Wednesday, the WTI Crude price was at around $73 a barrel.
1,300 barrels of produced water spilled in NW Mountrail County, contained on-site– Roughly 1,300 barrels of produced water spilled at a well pad in northwest Mountrail County, but were contained on-site, state officials said. A spokesperson for the North Dakota Oil and Gas Division said Liberty Midstream Solutions, LLC, reported the spill Thursday at the Lynn SWD site, saying it was caused by power loss and tank overflow. A release from the agency indicated the spill was contained on-site and had been recovered at the time of the reporting. Produced water is a byproduct of the extraction of oil and gas. A state inspector has been to the site and is monitoring any additional cleanup.
Minnesota Pollution Control Agency cleaned up oil spill in Green Lake near Spicer - — An oil spill at Green Lake in Spicer was discovered and cleaned up by the Minnesota Pollution Control Agency early this week, according to Spicer city administrator Jen Beckler. The oil spill was discovered at Pirrotta Park at around 9 a.m. Monday morning. Once discovered, an MPCA response team out of Morris went to work cleaning up the oil spill, which was cleaned up by Tuesday. "The amount of the spill is unknown, maybe five gallons," Beckler said. "Sorbents were used by the MPCA to clean up the spill." Once the oil is contained, sorbents are used to soak up moisture and thereby get oil out of lakes, according to the MPCA . That's exactly how the oil was cleaned out of Green Lake, according to Beckler. The origin of the spill is unknown and is currently under investigation.
Alaska LNG Developer Shifts Focus to Pipeline After Tentative Feed Gas Supply Agreement - Alaska Gasline Development Corp. (AGDC) aims to build an 800-mile natural gas pipeline for the Alaska LNG project before progressing the terminal as it balances its dual goals of increasing in-state gas supply and completing the export project. The state-backed nonprofit firm disclosed the new phased approach and the decision to undertake a front-end engineering and design process for the 42-inch diameter pipeline after inking a tentative supply agreement. AGDC signed a gas sales precedent agreement with a unit of Pantheon Resources plc to supply up to 500 MMcf/d at $1/MMBtu or lower for the Alaska liquefied natural gas export facility for up to 20 years, with options to extend. Initial volumes could come as early as 2029 and ramp up to full capacity by 2032.
Expansion of Trans Mountain Pipeline will increase oil tanker traffic by three-fold --San Juan Island residents can expect a large increase in oil tanker traffic in the coming months with the completion of the Trans Mountain Pipeline expansion in British Columbia. The project was approved by the Canadian government back in June 2019, despite the reluctance of Washington state leaders, who were largely left out of the conversation. The project will triple the amount of Alberta crude oil that is carried from Burnaby near Vancouver, B.C., aiming to increase the number of tankers sent out, from an average of five per month to one per day. The Journal spoke with leaders in emergency response and environmental advocacy on San Juan Island to learn more about what this increase might mean for the islands.The expansion project is a twinning of the existing 1,150 kilometer pipeline which passes by the west side of San Juan Island and the Olympic Peninsula. According to their website, the pipeline has operated without a single spill since it began loading marine vessels with oil at its Westridge Terminal in 1956. As part of its approval of expansion in 2019, the pipeline is subject to 156 enforced by the Canada Energy Regulator. Additionally, according to an article from the Seattle Times, Trans Mountain has also invested in additional oil spill prevention and response measures at multiple new bases on Vancouver Island near the international shipping lanes, as well has agreed to employ tug escorts all the way to the western entrance of the Strait of Juan de Fuca.Lovel Pratt, Marine Protection and Policy Director at Friends of the San Juans, is still greatly concerned about the increase of oil tanker traffic near the San Juan Islands.“This increase in tanker traffic increases the risk of accidents [and] also increases the risk of oil spills. A major oil spill would be environmentally, culturally and economically devastating,” said Pratt. Pratt cited an estimate based on 2006 numbers given by the Washington Department of Ecology (DOE) that a large oil spill could cost the state $10.8 billion and 165,000 jobs.As for environmental impacts, one species that is particularly vulnerable to potential negative impacts of the pipeline are Southern Resident killer whales. Pratt mentioned that increased traffic could potentially lead to accidents such as ship strikes that kill whales, and that a major oil spill could even cause the extinction of the already critically endangered Southern Residents. Even without a major oil spill, Pratt stated that the increase in noise and presence of tanker traffic still impacts the Southern Residents and other marine creatures.Pratt cited the application for the pipeline expansion project, saying it identified Turn Point, off Stuart Island, as having the “greatest level of navigation complexity” for the entire passage through the Salish Sea, and that Turn Point “also has high environmental values,” adding that a tar sands spill could also include severe air quality impacts.“I have not seen any assurances that Canada is prepared to contain and collect a tar sands oil spill that has submerged and/or sunk to the floor of the Salish Sea, and that will likely happen, especially if the spill occurs in Haro Strait and Boundary Pass,” said Pratt.
THA requests $153m for oil spill clean-up - THE Tobago House of Assembly requested $153 million for the clean-up exercise arising out of the oil spill in Tobago. So said Minister of Finance Colm Imbert as he explained the increase in the allocation to the THA by $50 million. Speaking during yesterday’s meeting of the Standing Finance Committee, Imbert said while the THA submitted a request for reimbursement and additional funding for the clean-up exercise, the technocrats in the Budget division of the Ministry of Finance, after “interrogating” the documents submitted by the THA, “found justification for $50 million”. As a result $50 million has been allocated to the Assembly. In response to questions, Imbert said this expenditure would be included in the Government’s claim with the International Oil Pollution Compensation Fund. Imbert said the costs include clean-up and remediation, lease and rental infrastructure, marine support services and consultancy, security, materials and supplies, catering and refurbishment.
Peru LNG exports remain steady in May - Liquefied natural gas exports from Peru remained steady in May, with five cargoes leaving Peru LNG’s liquefaction plant at Pampa Melchorita. According to the shipment data by state-owned Perupetro, during May the 4.4 mtpa LNG plant sent two shipments each to South Korea and the Netherlands and one shipment to Taiwan. The shipments loaded onboard the LNG carriers Kool Baltic, Gaslog Houston, Gaslog Greece, Orion Bohemia, and LNG Ships Manhattan equal about 352,409 tonnes, the data shows. Kool Baltic’s AIS data provided by VesselsValue shows that the vessel has delivered its shipment to Taiwan, not South Korea. These five LNG cargoes loaded at the Peru LNG plant last month compare to four cargoes (273,339 tonnes) in May last year and five cargoes (373,035 tonnes) in April this year, while the plant shipped five LNG cargoes in March, four cargoes in February, and five cargoes in January.The facility increased its exports last year compared to the year before, and it also expects to boost the number of shipments in 2024.. US-based Hunt Oil holds a 50 percent operating stake in the Pampa Melchorita LNG plant, while MidOcean Energy and Marubeni have 20 percent and 10 percent, respectively. MidOcean Energy, the LNG unit of US-based energy investor EIG, completed in April its previously announced purchase of the 20 percent stake in Peru LNG from a unit of South Korean conglomerate SK.
European Natural Gas Prices Surge After Norwegian Production Outage – LNG Recap - European natural gas prices hit their highest level in six months on Monday after an unplanned outage in Norway significantly cut into supplies and jolted the market. European gas Norwegian grid operator Gassco AS said the Nyhamna natural gas processing plant and the Easington receiving terminal were offline because of issues at the Sleipner field offshore. It was unclear how long it would take to repair. An unplanned outage was also reported at the Troll field offshore Norway, where other assets are undergoing annual maintenance. Nominations to Europe were down by about 25% to 9 Bcf on Monday, according to Gassco. Benchmark Dutch Title Transfer Facility (TTF) prices for July surged 13% to an intraday high of $12.34/MMBtu on Monday before falling to finish 5% higher...
Egyptian fertilizer plants shut down temporarily due to gas supply pressures -Gas supplies will gradually resume flowing as of Thursday to fertilizer factories in Egypt after several chemical and fertilizer companies shut down plants on a temporary basis. The companies said in bourse disclosures that increased consumption-driven pressures on the natural gas network led to fluctuations in supply. Some cited high temperatures as a reason for the disruption, as more gas was used for power generation. On Tuesday, a joint statement by the petroleum and electricity ministries announced an extension of rolling power cuts across the country for an extra hour to allow for preventative maintenance on its regional gas and power networks, and because of increased consumption caused by a heatwave. Temperatures rose to between 38-40 degrees Celsius (100.4°F) across Egypt on Tuesday and Wednesday and are expected to rise further on Thursday and Friday. Egypt Kuwait Holding, Misr Fertilizers Company MFPC.CA and Abu Qir Fertilizers and Chemical Industries said they were shutting down plants for 24 hours until network pressure stabilized. Egyptian Chemical Industries Corp, Sidi Kerir Petrochemicals Co. also announced closures, but did not give a timeline. Supplies of the natural gas that helps Egypt generate electricity have been dwindling at a time when an expanding population and urban development have been pushing up electricity demand. When temperatures rise, air conditioning use drives up power consumption. Scheduled power outages began in Egypt last summer, coming as a shock to Egyptians accustomed to years of reliable power supplies under President Abdel Fattah al-Sisi. The government said they would be temporary but the load shedding continued after temperatures dipped. After a pause earlier this year for the holy month of Ramadan, when many Muslims fast during daylight hours, two-hour daily cuts resumed. The government has heavily subsidized power prices for years and has deferred cuts to the subsidies amid economic pressures on citizens and businesses.
Natural gas consumption increases by 12.8pc - Natural gas consumption went up by 12.8 percent during the fourth quarter of last year ended in December, compared to similar quarter of 2022, fueled by expand of demands by power generation plants. Data by Tanzania Petroleum Development Corporation (TPDC) show that power generating plans, which consume 85.6 percent of produced natural gas, consumed 18,524.8 million standard cubic feet (mscf) during the fourth quarter of last year, compared to 16,150.8 mscf consumed in Q4, 2022. During the reported period, gas production amounted to 21,935.6mscf, an increase of 4.7 percent, compared to 20,948.1 mscf produced in the fourth quarter of 2022. Production by Mnazi Bay fields, which accounts for 49.7 percent of total gas production in Tanzania, increased by 32 percent to 10,896.8 mscf from 8,257.7 mscf, while production at Songo Songo fields, which accounts for 50.3 percent of total production slowed by 13 percent to 11,038.8 mscf from 12,690.4 mscf respectively. The increase in gas production was on account of a rise in demand by Tanzania Electric Supply Company Limited (Tanesco) for the generation of electricity. Power generated by Tanesco increased to 2.2 million megawatt hour at the end of December last year, of which half is produced from natural gas, an increase from 1.9 million megawatts hour generated during the fourth quarter of 2022. Natural gas is the cleanest-burning hydrocarbon, producing around half the carbon dioxide (CO2) and just one tenth of the air pollutants of coal when burnt to generate electricity. The TPDC statistics shows consumption by industries, which account for 14.2 percent of total natural gas consumption slightly increased by 1.7 percent to 3,064.2 mscf at the end of the fourth quarter of last year from 3,011.9 mscf consumed in Q4, 2022. Vehicle consumption of natural gas, which account for 0.2 percent of total consumption, more than doubled to 41.9 mscf from 17.1 mscf respectively. However, households and others consumption declined by 11.6 percent and 1.5 percent to 1.1 mscf and 3 mscf respectively at the end of December 2023, compared to 1.2 mscf and 3 mscf recorded at the end of December 2022. Tanzania's natural gas reserves stood at 57.5 trillion cubic feet, of which over 47 trillion cubic feet were to be found in offshore fields. That same year, natural gas production in the country amounted to some 57 billion cubic feet. Despite of abundant gas reserves, the country accounts for 0.05 percent of global production, making it the world's 14th-largest producer. Plans are underway to construct the US$45 billion Liquefied Natural Gas (LNG) plant.
Scorching heat drives India's gas-fired power use to multi-year highs in May -Sweltering heat and policy measures are fueling a surge in the use of gas-fired power in India, with imports of LNG forecast to rise sharply over the next two years. The country's gas-fired power generation doubled in April and May to 8.9 B kilowatt-hours (kWh) compared with the same period last year, data from Grid India showed, eating into the share of coal-fueled electricity for the first time since the COVID-19 pandemic. More than 75% of India's power generation was from coal in 2023, while gas-fired plants have accounted for only about 2% in recent years, largely because of the high cost of gas relative to coal. In May, coal's share dipped to 74%, compared with 75.2% during the same month last year, while gas's share nearly doubled to 3.1% from 1.6%. An emergency clause invoked to force operation of idle gas-fired power plants to avoid power cuts during the 43-day federal elections that ended last week also drove gas usage, industry officials said, as power outages have historically been a key electoral issue. "The current growth of Indian power demand suggests the rising need for greater availability (of natural gas) and flexibility will remain a fixture in coming years," said Joachim Moxon, LNG analyst at ICIS. LNG imports to rise. India's gas-fired power output is expected to grow by 10.5% in the fiscal year ending in March 2025, following 35% growth the prior year. To meet that demand, LNG imports by the price-sensitive buyer swelled in May to the highest levels since October 2020, data from analytics firms LSEG and Kpler showed, despite global prices up five-fold from the pandemic-hit lows of 2020. Demand for LNG in India, the world's fourth-largest importer of the fuel, is set to increase by 19% in 2024, with imports forecast to reach more than 28 MMt in 2025, up from 22.1 MMt in 2023, according to ICIS. "India's LNG imports will continue to be driven higher by the power sector in at least the next two years," said Victor Vanya, director at Indian power analytics firm EMA Solutions. Industry officials and analysts have argued allocating more domestically produced gas could allow gas-fired generation to better compete with coal, but most local gas has gone to other sectors in recent years. "The insufficient local gas output is increasingly being used to supply the city gas network and fertilizer companies, and power generators will have to import," said a senior executive at a large Indian gas exchange who declined to be named because he was not authorized to speak to media. Despite being cheaper, solar and wind are harder to control and forecast than gas, while coal and nuclear power cannot be ramped up or down as quickly in response to sudden demand spurts or dips. Gas's flexibility and a 2022 federal regulation that provided a policy framework for operating more expensive gas-fired power plants have helped boost the fuel's use, industry officials and experts said. "Until we have optimal, large-scale battery storage solutions in India, peaking requirements such as ramping up and ramping down quickly will be met by thermal sources including natural gas,"
Russia suspends gas to Poland and Bulgaria -- "Gazprom has completely suspended gas supplies to Bulgargaz (Bulgaria) and PGNiG (Poland) due to non-payment in rubles," the Russian state-controlled company said in a statement posted on its Telegram account. Bulgaria and Poland announced on Tuesday that Gazprom would cut off gas to these two countries starting this Wednesday. "At the end of the business day on April 26, Gazprom Export did not receive payments for gas supplies in April from Bulgargaz and PGNiG in rubles as established by the decree of the President of the Russian Federation of March 31," the company noted. However, most European countries have refused to pay Russia in rubles. "Payments for gas supply from April 1 must be made in rubles using the new requirements, about which counterparties were informed in a timely manner," Gazprom stressed in this regard. "In this regard, Gazprom Export notified Bulgargaz and PGNiG of the suspension of gas supplies from April 27 until payment is made in accordance with the procedure established by the decree" of Putin, he added. The Russian gas company also warned Sofia and Warsaw that "Bulgaria and Poland are transit States and in the event of unauthorized withdrawal of Russian gas from the volumes in transit to third countries, supplies for transit will be reduced by this volume." Russian President Vladimir Putin ordered at the end of March that "unfriendly" countries, including the US, Canada, the United Kingdom and all member states of the European Union (EU) - in which Russian gas accounts for 40 % of consumption - pay for supplies in rubles due to Western sanctions on foreign currency transactions with Russia for its military campaign in Ukraine. The mechanism devised by Russia for this establishes that those countries considered hostile must open a special account in rubles and another in foreign currency at Gazprombank. Putin's idea was that the Russian bank would receive payment in the currency specified in the gas supply contract, the euro or the dollar, and then convert it into rubles on the Moscow foreign exchange market, the MICEX, and deposit it on the buyer's ruble account.
Taiwan Inks Deal for Stake in Qatar’s North Field LNG Expansion Project - Taiwan’s CPC Corp. said Wednesday it would purchase more natural gas from Qatar and take a share in the massive North Field LNG expansion project being developed there. The state-owned company signed a sales and purchase agreement (SPA) with QatarEnergy to buy 4 million metric tons/year (mmty) of liquefied natural gas over a period of 27 years. CPC also signed a share SPA for a 5% interest in the equivalent of one 8 mmty liquefaction train at the North Field East (NFE) project, which is currently under construction and expected to come online in 2026. .
Asian LNG Buyers Secure Medium-Term Contracts with TotalEnergies - More Asian buyers have turned to TotalEnergies SE and its massive LNG portfolio bolstered by flexible U.S. supply to meet medium- and long-term natural gas demand. TotalEnergies has signed a 10-year sales and purchase agreement (SPA) with Indian Oil Corp. for 0.8 million metric ton/year (mmty) starting in 2026. The French supermajor also disclosed a tentative five-year deal with Korea South-East Power Co. Ltd. for 0.5 mmty starting in 2027. “These contracts enable us to contribute to the energy security and transition of these countries, to which we have an enduring commitment,” TotalEnergies’ Gregory Joffroy, senior vice president of liquefied natural gas, said.
Iran ramps up oil exports as Nigeria drags - -- While Nigeria, Africa’s largest oil producer, continues to grapple with production and export challenges, Iran is experiencing a significant rebound in its oil exports. Oil production increased by only 18,000 barrels per day in the first quarter of the year to 3.188 million barrels per day (mbd), compared to the last quarter, indicating a mere 0.5percent growth in quarterly production, according to OPEC. The country’s oil production growth has slowed dramatically since last summer. Due to the sale of tens of millions of barrels from floating storage, Iran’s oil exports increased significantly in 1Q24 to 1.5 mbpd, according to estimates by Kpler which provides real-time data on global commodity movements. After the United States imposed sanctions on Iran’s oil exports in 2018, the country’s oil exports declined from 2.6 mbpd to 330,000 barrels by late 2019 – leading to the stockpiling of about 110 million barrels of unsold oil on both water and land. During President Joe Biden’s administration, however, the Islamic Republic was able to increase oil exports to its only customers: China and Syria. Last year for instance, Iran exported about 1.3 mbd of crude oil and gas condensate, 48 percent more than the previous year – of which 95 percent went to Chinese independent small refineries, called “teapots”. A senior expert at Kpler told Iran International that the volume reached 1.5 mb/d in January-March 2024. Kpler’s data indicates a significant increase in Iran’s oil exports during the first half of 2023, followed by a slight decline in the latter half of the year. Export growth then picked up again in the first quarter of 2024, although OPEC data suggested only a marginal increase in production levels. The significant quarterly increase in exports by 140,000 b/d, despite a production growth of only 18,000 barrels in 1Q24, can be attributed to Iran selling more than 16 million barrels from floating storage during January-March 2024.
Iraq's May exports fall as OPEC-plus extends cuts - Iraq Oil Report --Exports declined by about 60,000 bpd as Iraq continues to move toward compliance with recently extended OPEC-plus production caps. Iraq's oil exports averaged 3.350 million barrels per day (bpd) in May, down from 3.413 million bpd in April, according to a senior Iraqi oil official. The declining oil sales reflected the Oil Ministry's ongoing efforts to reduce output as part of its commitment to the OPEC-plus producers group, which decided on June 2 to extend supplemental cuts for another three months, through September.
Saudi Aramco's $12 Billion Share Sale Quickly Sells Out, But Who Is Buying? -Last week, Saudi Arabia’s energy giant Saudi Aramco (ARMCO) confirmed in a filing with the Saudi Exchange plans to sell shares in the state-owned oil company to help the kingdom fund plans to diversify the economy. Well, the sale took place on Sunday and was a resounding success with US$12 billion share sale sold out shortly after the deal opened. The deal offered ~1.545B Aramco shares, or ~0.64% of the company, within the price range of 26.70 riyals to 29 riyals. Buyers of the shares will be looking to cash in on an upcoming ~$124 billion annual payout that Bloomberg Intelligence estimates will give the shares a juicy dividend yield of 6.6%.Although details of the split between local and foreign shareholders are yet to emerge, industry pundits will no doubt be eagerly waiting for the release in a bid to gauge foreign interest in Aramco’s assets. Foreign investors largely sat out the company’s 2019 initial public offering (IPO), with investors concerned about the steep valuation of the shares. ARMCO stock has plunged 14% in the year-to-date to give the company a valuation of $1.8 trillion with daily production estimated at 9.3 million barrels of oil equivalent (boe). For some perspective, America’s largest energy company Exxon Mobil (NYSE:XOM) has a market cap just a quarter of Aramco’s ($451B) despite its daily production clocking in at more than 40% of Aramco’s (3.8M boe per day).Aramco’s share sale comes at a time when oil prices remain depressed mainly due to concerns about weak global demand. Brent crude for July delivery was quoted at $77.50 per barrel in Tuesday's intraday session, a level they last sunk to in early February. The oil price selloff is a serious blow to Saudi Arabia considering that the IMF estimates that Riyadh requires an average oil price of $96.20 a barrel to balance its budget, assuming it holds crude output steady near 9.3 million barrels a day this year.Luckily for Saudi Arabia, low oil prices will not affect the economy nearly as much as they did a decade ago. In recent years, the largest economy in the Arab world has sought to diversify in a bid to cushion itself against wild oil price swings. Three years ago, Saudi Arabia's Crown Prince Mohammed bin Salman unveiled Saudi Vision 2030, the Kingdom’s roadmap for economic diversification, global engagement, and enhanced quality of life. Vision 2023 is all about diversifying Saudi Arabia’s economy and creating dynamic job opportunities for its citizens through privatization of state-owned assets, including partial IPO of Saudi Aramco; unlocking underdeveloped industries such as renewable energy, manufacturing and tourism and modernizing the curriculum and standards of Saudi educational institutions from childhood to higher learning.Well, it appears that Saudi’s Vision 2030 is already bearing fruit: Saudi Arabia’s Ministry of Economy and Planning has revealed that non-oil revenues hit 50% of the Kingdom's gross domestic product (GDP) in 2023, the highest level ever.Last year, Saudi Arabia’s non-oil economy was valued at 1.7 trillion Saudi Riyals (approximately 453 billion U.S. dollars) at constant prices, driven by steady growth in exports, investment and consumer spending. The Kingdom’s private-sector investments expanded 57% to reach a record high of 959 billion Saudi Riyals (254 billion dollars) while arts & entertainment and real service exports grew in triple-digits to the tune of 106% and 319%, respectively, reflecting the Kingdom’s transformation into a global destination for tourism and entertainment. Meanwhile, Saudi Arabia’s food sector recorded 77% growth; transport and storage services increased 29%, health and education recorded growth of 10.8% while, trade, restaurants and hotels grew 7%. In the economic plan, Saudi Arabia has set a target to develop ~60 GW of renewable energy capacity by 2030, multiples higher than the current capacity of 2.8 GW. But make no mistake about it: Saudi Arabia has no plans to ditch its legacy fossil fuel business any time soon. Indeed, Saudi Aramco has unveiled plans to reach net-zero by 2050 without sacrificing oil and gas production. During a rare two-day visit by Fortune in early May, the world’s largest fossil fuel company lifted the curtain on dozens of research projects which the company believes will help it tackle climate change, even while pumping a mammoth 9 million barrels or so of oil a day. Aramco claims its tech breakthroughs have the potential to cut carbon emissions from each barrel of oil it produces by 15% by 2035, equivalent to 51.1 million tons of carbon a year.
OPEC+ to Extend Oil Production Cuts Through End of 2025 in Attempt to Keep Prices High -- OPEC+, the coalition of OPEC member nations and allied oil producers, announced on Sunday it would extend existing overall limits on oil production through 2025, attempting to ensure that prices do not fall below desired levels. Some individual nations would extend their cuts according to a variety of timelines, the cartel announced, while one member, the United Arab Emirates (UAE), would increase crude oil production by 300,000 barrels per day (bpd). Some of the cuts in place were the subject of significant international shock when imposed, particularly an October 2022 decision to cut OPEC+ production by 2 million bpd. The move prompted the administration of leftist President Joe Biden to accuse Saudi Arabia, one of the most influential members of the Organization of Petroleum Exporting Countries (OPEC), of attempting to help Russia finance its invasion of Ukraine. Russia is the leading member of OPEC+, but not an OPEC member state. Saudi Arabia responded with outrage to Biden at the time, and Ukrainian President Volodymyr Zelensky issued a statement thanking Riyadh for its support in an indirect rebuff to the accusation.The decision to extend the cuts has not, at press time, prompted similar ire from the White House. Oil prices also went down on Monday, which analysts attributed to the fact that OPEC+ presented an end in sight for many smaller cuts discussed at its meeting this weekend.According to the Saudi news outlet al-Arabiya, current cuts across the OPEC+ memberships would remain in place through the end of December 2025. Those overall limits stand at around 2 million bpd, as agreed upon in October 2022. “In addition, eight countries said they would also extend voluntary supply cuts made at Riyadh’s request to further support the market,” the network detailed: “Saudi Arabia, Russia, Iraq, United Arab Emirates, Kuwait, Kazakhstan, Algeria and Oman.”In total, OPEC+ is cutting nearly 6 million bpd, including the individual limits. Some of the voluntary cuts are expected to end as recently as September, however.The OPEC+ decisions appeared to drive oil prices down on Monday despite the confirmation of extended limits on production. Brent crude prices fell below $80 a barrel for the first time since February on Monday, the industry site OilPrice.com reported. “On Monday at 11:54 a.m. ET, Brent crude was trading down 3.29% at $78.44, for a loss of $2.67 on the day,” the outlet detailed. “West Texas Intermediate (WTI) was down 3.51% at $74.29 per barrel, for a loss of $2.70 per barrel.” Analysts suggested the explanation for the drop is that at least some of the oil production cuts are now scheduled to end in October and, outside of OPEC, the world expected America’s oil output to continue breaking records. Brent crude is often used to understand the average oil price around the world, while the WTI is a closer estimate of American oil prices. “This deal looks to draw a line under attempts to drive energy prices sharply higher for the time being,” “While it will extend cuts for some key Opec members like Saudi Arabia and Russia well into 2025, it will also start to roll back some measures as soon as October, which is earlier than the market had expected,” another analyst, Kathleen Brooks of XTB, told NBC. “The US, the world’s largest oil and gas producer, is heading for another year of record production,” Emirati newspaper The National observed on Monday, “although with a significantly smaller increase as companies scale back activity following a wave of acquisitions in the industry, analysts have said.” The fall in prices also accounts for expectations that oil demand will continue to increase, particularly in the world’s two most populous nations, China and India. China and India are both members of the BRICS coalition, a growing group of countries attempting to establish independence from the U.S. dollar and distance themselves from America generally. BRICS also features oil heavyweights such as Russia, Iran, and the UAE, and the full membership of Saudi Arabia is pending as of early this year. Both have dramatically increased purchases of Russian and Iranian oil, though they have also leveraged their massive demand to seek the lowest prices – an irritant for Iran in particular, hobbled by decades of sanctions. While enjoying growing demand from allied states, Russia has also lent itself to the Saudi-led effort to keep production of oil low to prevent a significant drop in prices. In December, Russian strongman Vladimir Putin assured Saudi Crown Price Mohammed bin Salman of his commitment to the plan. Visiting Riyadh, Putin signed onto a joint statement that suggested both would oppose any suggestion of increasing oil production too quickly at the OPEC+ forum. “In the field of energy, the two sides commended the close cooperation between them and the successful efforts of the OPEC+ countries in enhancing the stability of global oil markets,” the joint statement read. “They stressed the importance of continuing this cooperation, and the need for all participating countries to adhere to the OPEC+ agreement, in a way that serves the interests of producers and consumers and supports the growth of the global economy.”
Oil Prices Shed Over 3% As Market Digests OPEC+ Move - Brent crude was trading down well over 3% on Monday, marking the first time the global benchmark has been below $80 since February, with the U.S. crude benchmark down over 3.5% following the OPEC+ agreement to start phasing out voluntary cuts in October. On Monday at 11:54 a.m. ET, Brent crude was trading down 3.29% at $78.44, for a loss of $2.67 on the day. West Texas Intermediate (WTI) was down 3.51% at $74.29 per barrel, for a loss of $2.70 per barrel. On Sunday, OPEC+ agreed to extend both voluntary and group-wide production cuts until 2025, with Energy Intelligence’s Amena Bakr noting that the voluntary cuts would be extended until the third quarter of 2024, after which the countries currently cutting would begin to bring back production if the market conditions are right.“We are waiting for interest rates to come down and a better trajectory when it comes to economic growth ... not pockets of growth here and there,” Reuters cited Saudi Arabia’s energy minister Abdulaziz bin Salman as saying. Oil prices have responded in a downward spiral due to the fact that the majority of the total cuts from both categories come from the voluntary scheme. Total cuts are 3.66 million barrels per day, while 2.2 million bpd of that is accounted for by the voluntary scheme. Additionally, the UAE’s production quota was adjusted upwards with a baseline of 300,000 bpd. “Some people read the OPEC statement, particularly the part about the adding barrels back from the voluntary cut, as bearish,” Helima Croft, head of global commodity strategy at RBC Capital Markets, told CNBC. Markets are also being cautioned that the latest OPEC+ decisions could be reversed, depending on market conditions. “They were pretty clear that this is going to be data dependent. As we get to the end of August, if the fundamental picture looks worse than what we have now, they would pause that addition,” Croft added.
Oil hits four-month low as OPEC+ decision fails to allay demand worries (Reuters) - Oil prices tumbled by $3 a barrel on Monday to their lowest in nearly four months, as investors worried that a complicated OPEC+ output decision could lead to higher supplies later in the year even though demand growth has been slow.Brent crude futures fell by $2.75, or 3.4%, to settle at $78.36 a barrel, closing below $80 for the first time since Feb. 7. U.S. West Texas Intermediate crude futures also closed at a near four-month low of $74.22 a barrel, down by $2.77 or 3.6% from Friday.Both contracts were down by $3 a barrel in post-settlement trading. OPEC+ on Sunday agreed to extend most of its oil output cuts into 2025 but left room for voluntary cuts from eight members to be gradually unwound from October onward. Analysts at Goldman Sachs said the outcome was negative for oil prices as the phasing out of voluntary cuts shows a strong desire by several OPEC+ members to bring back output despite recent increases in global oil stocks. "The communication of a surprisingly detailed default plan to unwind extra cuts makes it harder to maintain low production if the market turns out softer than bullish OPEC expectations," Goldman Sachs analysts said. Other analysts also called the group's decision incrementally bearish for oil prices in light of high interest rates and rising output from non-OPEC producers like the United States. "Ultimately, a combination of factors has come into play," "When OPEC+ took the decision it did over the weekend, in a reasonably well-supplied crude market, traders factored in the macro picture alongside a dwindling risk premium (with talk of a ceasefire in Gaza) and went net short," Sharma said. An aide to the Israeli prime minister confirmed on Sunday that Israel had accepted a framework deal for winding down the Gaza war, although the Israeli side called it a flawed deal. Signs of weakening demand growth have also weighed on oil prices in recent months, with data on U.S. fuel consumption in focus. The U.S. government will release estimates of oil stocks and demand on Wednesday, which will show how much gasoline was consumed around the Memorial Day weekend, the start to the U.S. driving season. "The hard numbers are that the market is well-supplied," "If we do not get a spectacular number on Memorial Day in the U.S., that's going to be game over," . U.S. gasoline futures fell more than 3% on Monday to a more than three-month low of $2.34 a gallon. U.S. efforts to replenish the country's Strategic Petroleum Reserve (SPR) could provide some support for oil prices. The United States is buying another 3 million barrels for the SPR at an average price of $77.69 a barrel, the U.S. Department of Energy said on Monday.
Oil prices down to four-month lows amid OPEC+ decision, cease-fire talks -- Oil prices fell to four-month lows on Tuesday following the OPEC+ decision to gradually phase out output cuts until the end of September 2025 and on allayed supply concerns with cease-fire hopes in Gaza. International benchmark Brent crude traded at $77.39 per barrel at 10.23 a.m. local time (0723 GMT), a drop of 1.24% from the closing price of $78.36 per barrel in the previous trading session. The American benchmark West Texas Intermediate (WTI) traded at $73.07 per barrel at the same time, a 1.54% fall from the previous session that closed at $74.22 per barrel. The Organization of Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, declared on Sunday that the group agreed to extend additional voluntary cuts of 2.2 million barrels per day (bpd), announced in November 2023, until the end of September 2024. However, the cuts of 2.2 million bpd will be gradually phased out on a monthly basis until the end of September 2025. Furthermore, the group announced that the 300,000 bpd production increase in the United Arab Emirates (UAE) will be phased in gradually from January 2025 until the end of September 2025. This decision put downward pressure on oil prices by easing supply concerns, despite the output cut decision taken by the OPEC+ group. Meanwhile, growing cease-fire possibilities in the Middle East, home to the vast majority of global oil reserves, alleviated supply angst. US President Joe Biden confirmed Israel's "readiness to move forward" with a cease-fire proposal presented to Hamas last week during a call with Qatari Emir Tamim bin Hamad al-Thani, the White House said Monday. During their conversation, Biden "confirmed that the comprehensive cease-fire and hostage release deal now on the table offers a concrete roadmap for ending the crisis in Gaza," the executive mansion said in a statement. The plan was presented to Hamas on Thursday night. The White House said earlier Monday that it is "awaiting" the Palestinian group's official response. Hamas, for its part, said it will "respond positively to any proposal that includes a permanent cease-fire, a full withdrawal from the Gaza Strip, reconstruction efforts, the return of the displaced, and the completion of a comprehensive hostage exchange deal." On the other hand, uncertainties about when the US Federal Reserve (Fed) will start cutting interest rates continue to raise demand concerns. Analysts consider it more likely that the Fed will cut interest rates this year, following data released by the Institute for Supply Management (ISM) on Monday. The probability of the Fed's first rate cut in September rose to 68%, to 98% for November, and to 58% for December. Low interest rates make the US dollar weaker against other currencies, making oil cheaper. This generates stronger demand, limiting further price falls.
Oil Extends Losses on Oversupply Concerns, US Macros -- Oil futures fell by more than $1 bbl Tuesday morning, extending yesterday's steep losses sparked by amplified demand concerns in the U.S. and OPEC+ plans to raise production beginning in October. Market sentiment turned markedly bearish after a month-long wait-and-see period in which prices traded in a narrow channel as more and more signs of lower-than-expected oil demand in OECD countries emerged and a potential recovery of the U.S. manufacturing seemed to be losing steam. Sunday's surprising announcement by eight OPEC+ members to start unwinding some 2.2 million bpd of voluntary output cuts raised concerns about the market shifting into oversupply by the end of the year. The Institute of Supply Management's Manufacturing PMI for May, released yesterday, slid for a second month in a row, and at 48.7 -- the lowest monthly reading since February -- fell well short of expectations. This was followed by the Atlanta Federal Reserve's fifth consecutive downward revision to their Q2 U.S. GDP growth estimate, which was lowered from 2.7% to 1.8%. Just last Friday, the estimate stood at 3.5%. Calendar spreads having considerably narrowed since early April reflected shifting supply-demand balance expectations, with the Brent prompt spread flirting with contango over the past week and the six-month spread dropping below $1.50 bbl, the smallest since early January. Near 8:00 a.m. EDT, WTI futures for July delivery fell $1.38 to trade near $72.84 bbl, and Brent for August delivery dropped $1.26 bbl to $77.10. RBOB for July delivery traded near $2.3192 gal, down $0.0164, and ULSD for July delivery fell $0.0214 gal to $2.2748.
Crude oil prices drop nearly 8% in just 5 sessions to hit a 4-month low on worries over higher supply - Crude oil prices, which had been buoyed by OPEC+'s production cuts, lost ground after the cartel announced a gradual plan to ease some of its restrictions. This worried traders about supply ticking up, leading to a sharp drop in crude oil prices in the last few sessions. Brent crude futures fell sharply from $83.94 per barrel to a four-month low of $77.60 in today's session, marking a 7.7% drop. Similarly, WTI tumbled by 8% over the last five sessions. Despite this recent decline, crude prices remain higher for the year due to ongoing geopolitical tensions from the Middle East to Ukraine. Also Read: Lok Sabha Election Results 2024: Will Nifty 50 break its record today if Narendra Modi-led NDA retains power? On Sunday, OPEC+ announced an agreement to extend most of their supply cuts through the third quarter, with a plan to gradually phase them out over the next 12 months, earlier than some OPEC watchers had assumed. The accord prolongs roughly 2 million barrels per day of cuts, which have played a key role in supporting crude prices above $80 per barrel this year. By December, an additional 500,000 barrels per day is expected to re-enter the market, with a total of 1.8 million barrels per day anticipated to return by June 2025. Also Read: Stock market today: Investors lose ₹26 lakh crore as election race gets tighter than what exit polls predicted This decision comes even as global oil demand appears dim and robust supply from non-OPEC members persists. The agreement aims to support oil prices while addressing internal pressures from members such as the United Arab Emirates, which has pushed for higher output levels. Goldman Sachs Group Inc. deemed the OPEC decision bearish, whereas UBS Group AG and RBC Capital Markets LLC expressed confidence in the alliance's ability to maintain market control. Most analysts had anticipated OPEC would extend the production curbs through the end of the year, as reported by Bloomberg. Additionally, the U.S. government is set to release inventory and product-supplied data on Wednesday. This data, considered a proxy for demand, will reveal how much gasoline was consumed around Memorial Day weekend, signaling the start of the U.S. driving season. On the demand side, data indicated that U.S. manufacturing activity slowed for the second consecutive month in May, while construction spending fell unexpectedly for the second month in a row in April, driven by declines in non-residential activity. Prices were also impacted by a fragile economic outlook in top consumer China and uncertainties about the pace of interest rate reductions in major industrialized economies. Investors are now awaiting the ADP employment report on Wednesday and the non-farm payrolls data on Friday to assess the health of the U.S. economy and determine whether these figures might influence the Federal Reserve's decision on rate cuts in September. Currently, traders are pricing in about a 60% chance of a Fed rate cut in September, according to the CME FedWatch tool.
Oil prices fall amid increasing U.S. inventories, OPEC+ supply plans --Oil prices continued to decline in early Asian trading on Wednesday, following a report indicating an increase in US crude andfuel inventories, which has heightened concerns about demand growth. Brent crude futures dropped by 14 cents, or 0.2 percent, to USD77.38 per barrel as of 0005 GMT. Similarly, US West Texas Intermediate (WTI) crude futures fell by 18 cents, or 0.3 percent, to USD73.07 per barrel. This followed a drop of about a dollar per barrel in the previous session on Tuesday, and a significant decline of approximately three dollars per barrel on Monday. The recent price pressures stem from the OPEC+ alliance's announcement of plans to increase oil supplies starting in October, despite weak demand growth signals. Data released by the American Petroleum Institute (API) revealed that stocks of crude oil, gasoline, and distillates in the United States rose last week. Typically, high inventories suggest that supply is outpacing demand. Specifically, the API's figures showed an increase of more than four million barrels in crude oil inventories for the week ending May 31, contrary to analysts' expectations of a 2.3 million barrel decline. Additionally, gasoline stocks saw a significant rise of over four million barrels, far exceeding the anticipated increase of two million barrels predicted by analysts. These developments have contributed to the ongoing decline in oil prices, reflecting market concerns over surplus supply and subdued demand growth.
Oil prices see 'oversold bounce' after recent losses as traders weigh a rise in U.S. supply --Oil futures settled higher on Wednesday, with prices recouping a portion of their losses from a five-session decline.Official U.S. data revealing weekly gains in commercial crude, gasoline and distillate inventories, however, helped to limit gains.West Texas Intermediate crude CL00 for July delivery CL.1 CLN24 rose 82 cents, or 1.1%, to settle at $74.07 a barrel on the New York Mercantile Exchange.August Brent crude BRN00 BRNQ24, the global benchmark, added 89 cents, or 1.2%, at $78.41 a barrel on ICE Futures Europe. On Tuesday, both Brent and WTI futures tallied a fifth straight session loss.July gasoline RBN24 edged up by 0.2% to $2.35 a gallon, while July heating oil HON24 tacked on 0.7% to $2.30 a gallon.Natural gas for July delivery NGN24 settled at $2.76 per million British thermal units, up 6.6%, after losing 6.2% Tuesday. Oil prices staged an "oversold bounce after finishing lower for the fifth consecutive day on Tuesday," said Fawad Razaqzada, market analyst at City Index and FOREX.com."It remains to be seen whether this recovery will last, given ongoing concerns over demand and over the OPEC+ decision to eventually phase out voluntary output cuts at a time when non-OPEC supply is on the rise," he told MarketWatch.However, these concerns "might be priced in by now, which should mean that prices could find some support especially now that we are in the middle of the U.S. driving season, when demand tends to pick up," Razaqzada added.Separately, however, state-owned Saudi Aramco (SA:2222) said it will reduce its selling price for Arab Light crude to Asia in July, a move that will likely raise concerns over weakness in demand from its Asian customers.Data from the Energy Information Administration released Wednesday, meanwhile, showed that finished motor-gasoline supplied, a proxy for demand, fell to 8.946 million barrels a day last week, from 9.148 mbd the week before.The EIA also reported that U.S. commercial crude inventories rose by 1.2 million barrels for the week ended May 31.On average, analysts had forecast a crude-supply decline of 2.8 million barrels, according to a poll conducted by S&P Global Commodity Insights. Late Tuesday, the American Petroleum Institute reported a crude-inventory climb of 4.05 million barrels, according to a source citing the data. The EIA report also showed weekly supply gains of 2.1 million barrels for gasoline and 3.2 million barrels for distillates. The S&P Global Commodity Insights survey called for inventory gains of 600,000 barrels for gasoline and 700,000 barrels for distillates.U.S. oil production was unchanged at 13.1 million barrels per day in the latest week, the EIA said, while crude stocks at the Cushing, Okla., Nymex delivery hub rose by 800,000 barrels to 35.4 million barrels.WTI and Brent closed Tuesday at their lowest since early February, extending losses seen after OPEC+ over the weekend announced a plan to begin unwinding a suite of voluntary production cuts totaling 2.2 million barrels a day over 12 months beginning in October, while also extending a program of group cuts totaling 3.66 mbd through the end of 2025.Meanwhile, commodity strategists at ING argued that oil's recent slump in prices may have gone too far. "While the market has been disappointed that OPEC+ will gradually unwind cuts, it is important to remember that this is only from October. Our balance sheet continues to show a tightening in the oil market over the third quarter. Therefore, we believe the scale of the selloff at the front end of the forward curve is overdone," said strategists Warren Patterson and Ewa Manthey, in a note.
Oil prices rebound from four-month lows after OPEC+ decision triggered selloff - Crude oil futures rose more than 1% on Wednesday, bouncing back from four-month lows after a decision by OPEC+ to increase production triggered a selloff this week.U.S. crude and global benchmark Brent are down nearly 4% this week after eight OPEC+ members agreed Sunday to gradually phase out 2.2 million barrels per day in production cuts.The selloff was overdone, said Warren Patterson, head of commodities strategy at ING. OPEC+ won't start increasing production until October, and the global oil balance sheet will tighten beforehand, Patterson said.Here are Wednesday's closing energy prices:
- West Texas Intermediate July contract: $74.07 a barrel, up 82 cents, or 1.12%. Year to date, U.S. crude oil is up 3.3%.
- Brent August contract: $78.41 a barrel, up 89 cents, or 1.15%. Year to date, the global benchmark is up 1.78%.
- RBOB Gasoline July contract: $2.35 per gallon, up 0.17%. Year to date, gasoline futures are up 11.9%.
- Natural Gas July contract: $2.75 per thousand cubic feet, up 6.61%. Year to date, natural gas is up 9.67%.
"The technicals also suggest that the oil market is entering oversold territory," Patterson told clients in a research note Wednesday. U.S. crude oil "has a history of bouncing from oversold territory rather quickly versus camping out in the basement for days on end," Yawger said U.S. oil could rally back to a range of $76.15 to $80.62 per barrel in the coming days as speculators cover short positions, before the market "reverses course and drills lower again."
The Market Broke its Five-Day Selling Spree on Wednesday on Renewed Hopes That the Federal Reserve Would Cut Interest Rates in September - The oil market continued to trend higher on Thursday after the market broke its five-day selling spree on Wednesday on renewed hopes that the Federal Reserve would cut interest rates in September. The market was also supported by comments made by OPEC+ ministers, who stated that the producer group could tweak its latest output agreement if needed to support the oil market. The market was further supported by the European Central Bank cutting interest rates for the first time in five years on Thursday. The crude market posted a low of $74.06 in overnight trading before it bounced off that level and continued to retrace its recent selloff, retracing more than 38% of its move from a high of $80.62 to a low of $72.48 as it rallied to a high of $75.79 in afternoon trading. The July WTI contract later settled in a sideways trading range and ended the session up $1.48 at $75.55, while the August Brent contract ended the session up $1.46 at $79.87. The product markets also ended the session higher, with the heating oil market settling up 5.65 cents at $2.3576 and the RB market settling up 4.39 cents at $2.3975. OPEC+ ministers and officials said OPEC+ could tweak its latest oil output agreement which calls for some output cuts to be reversed later this year if needed to support the market. The ministers and officials, at an economic forum at St Petersburg, also praised the agreement and said the oil demand outlook was positive. Saudi Energy Minister Prince Abdulaziz bin Salman said OPEC+ can pause or reverse oil production increases if the market weakens. He said OPEC+ would provide the market with a “clear path” on how any additional barrels might be supplied. OPEC Secretary General Haitham Al Ghais defended the recent adjustments to the OPEC+ oil output deal, calling it a success. He expressed optimism about continued strong oil demand, citing a rebound in travel. The United Arab Emirates’ Energy Minister, Suhail Al Mazrouei, said the country has been committed to OPEC+, consumers and the market despite some media reports suggesting otherwise. Russia’s Deputy Prime Minister, Alexander Novak, said the current OPEC+ agreement is helping to balance oil supply and demand and provides certainty for energy markets, adding that the group might adjust it if necessary to support the market. He said a decline in oil prices after OPEC+ meeting was caused by “speculative factors” and misinterpretations of the agreement that was reached. He expects oil prices to be around $80-85/barrel by the end of the year. He said Russia is seeing a gradual increase in global oil demand but added that Russia does not expect oil demand to peak in the near future. Separately, Russia’s Deputy Prime Minister said Russia continued to reduce oil production in May under its agreement with OPEC+ partners. He said the exact production volumes will be known in a week. He said that oil production in Russia in 2024 is expected to be 505-515 million tons. Last month, Russia said it had exceeded its OPEC+ production quota in April for “technical reasons” and would soon present to the OPEC Secretariat its plan to compensate for the error.Colonial Pipeline Co is allocating space for Cycle 34 shipments on Line 20, which carries distillates from Atlanta, Georgia to Nashville, Tennessee.
Oil settles higher on hopes Fed will track European Central Bank rate cuts (Reuters) - Oil settled up 2% on Thursday after the European Central Bank opted to cut interest rates, spurring hopes that the Fed will follow suit, and OPEC+ ministers reassured investors the latest oil output agreement could change depending on the market. Brent crude futures settled $1.46 higher or 1.86% at $79.87 a barrel. U.S. West Texas Intermediate crude futures settled up $1.48 or 2% at $75.55. On Thursday, the European Central Bank went ahead with its first interest rate cut since 2019, citing progress in tackling inflation but cautioning the fight was far from over. Denmark's central bank then lowered its benchmark interest rate by 25 basis points to 3.35%. Analysts in the U.S. saw the European rate cuts as a likely precursor to Fed rate cuts. Lower fuel costs and an easing of post-pandemic supply snags have helped drive inflation down to 2.6% in the 20 countries using the euro, from 10% in late 2022. Investors are now less certain than they were a few weeks ago that inflation has retreated enough for the ECB to institute a major easing cycle. In the U.S., economists predict the Federal Reserve will cut rates in September, according to Reuters' May 31-June 5 poll. "Today the ECB rate cuts are helping, and casting a view that the Fed will finally follow suit here in the U.S. as well which is supportive, but both central banks are cutting in the face of a slowing economy which is not necessarily supportive of oil demand,” The number of Americans filing new claims for unemployment benefits rose last week, and first-quarter unit labor costs rose by less than previously thought, the Labor Department said. While this shows a cooling labor market, it is unlikely to push the Fed to start rate cuts. Meanwhile, trading house Trafigura's chief economist Saad Rahim said the OPEC+ decision to phase out some output cuts, combined with strong fuel supplies, has driven oil prices lower. OPEC+, the Organization of the Petroleum Exporting Countries and allies, agreed on Sunday to extend most production cuts into 2025 but left room for voluntary cuts from eight members to be unwound gradually. Saudi Energy Minister Prince Abdulaziz bin Salman said on Thursday that OPEC+ can pause or reverse production increases if it decides the market is not strong enough. And Russian Deputy Prime Minister Alexander Novak said the group might adjust the deal if necessary, adding that the post-meeting price drop was caused by misinterpretation of the agreement and "speculative factors". "Oil markets have over-reacted to the mildly negative OPEC+ meeting outcome. Demand indicators have certainly softened somewhat recently, but are not falling off a cliff," Barclays analyst Amarpreet Singh wrote in a note. Elsewhere, a merchant vessel reported that an explosion took place near it in the Red Sea on Thursday about 19 nautical miles west of the Yemeni port city of Mokha, British security firm Ambrey said. The vessel fit the target profile of Yemeni Houthi militants, Ambrey said in a note. Militants have attacked ships off the country's coast for several months in solidarity with Palestinians fighting Israel in Gaza. The vessel was en route from Europe to the United Arab Emirates. “This puts more risk on top of a market that was already nervous,” “And if it turns out to be an oil tanker, this will probably raise the stakes,” he added.
Crude oil gains as Saudi, Russia clarify stand on output increase - The Hindu BusinessLine -Crude oil futures traded higher on Friday morning as Saudi Arabia and Russia announced that they can pause or reverse voluntary production increases if they find market is not strong enough. At 9.53 am on Friday, August Brent oil futures were at $80.03, up by 0.20 per cent, and July crude oil futures on WTI (West Texas Intermediate) were at $75.75, up by 0.26 per cent. June crude oil futures were trading at ₹6327 on Multi Commodity Exchange (MCX) during initial trading on Friday morning against the previous close of ₹6326, up by 0.02 per cent, and July futures were trading at ₹6323 against the previous close of ₹6322, up by 0.02 per cent. Participating in an event in Russia, Prince Abdulaziz bin Salman, Saudi Arabia’s Energy Minister, said Organization of the Petroleum Exporting Countries and allies, known as OPEC+, can pause or reverse voluntary output increases if it decides the market is not strong enough. The Deputy Prime Minister of Russia, Alexander Novak, who participated in that event, said: “We are ready to react quickly to market uncertainties.” On Sunday, OPEC+ had announced a production output cut of around 5.8 million barrels a day till 2025. This cut included 3.66 million barrels a day of voluntary cuts that were set to expire at the end of 2024. Another round of around 2.2 million barrels a day cuts till September-end were part of this announcement. Though the OPEC+ decided to maintain the production output cut of 3.6 million barrels a day till the end of 2024, it announced its decision to phase out the 2.2 million barrels a day cut between October 2024 and September 2025. This decision had pushed the crude oil prices to four-month lows as the market feared an oversupply from higher production. However, OPEC+ media statement on Sunday had also clarified that the monthly increase can be paused or reversed subject to market conditions. Meanwhile, China’s trade surplus witnessed a growth in May. According to General Administration of Customs of China, trade surplus of that country increased to $82.62 billion in May 2024 from $65.55 billion in May 2023. Market was expecting a trade surplus of $73 billion for May 2024. Exports grew much more than imports in May. Exports advanced by 7.6 per cent, beating forecasts of a 6 per cent growth, and imports increased by 1.8 per cent, below the market expectations of a 4.2 per cent increase. The trade surplus with the US increased to $30.8 billion in May from $27.2 billion in April. China is a major consumer of crude oil in the global market. Also read: Crude oil marginally down as industry data show rise in US inventory The European Central Bank announced interest rate cut on Thursday. This is the first rate cut in five years since 2019. Market is now awaiting the outcome of the meeting of the US Federal Reserve next week, as any reduction in interest rate in that country will help boost the demand for commodities such as crude oil. June mentha oil futures were trading at ₹927.90 on MCX against the previous close of ₹916, up by 1.30 per cent. On the National Commodities and Derivatives Exchange (NCDEX), July jeera contracts were trading at ₹29,325 against the previous close of ₹29,610, down by 0.96 per cent. July castorseed futures were trading at ₹5790 on NCDEX against the previous close of ₹5781, up by 0.16 per cent.
Oil dips on deflated US interest rate cut expectations, OPEC+ decision (Reuters) -Oil prices edged down on Friday and posted a third straight weekly loss as investors weighed OPEC+ reassurances against the latest U.S. jobs data that lowered expectations that the Federal Reserve will cut interest rates soon. Brent crude futures settled 25 cents lower at $79.62 a barrel, while U.S. West Texas Intermediate crude (WTI) (CLc1) fell 2 cents to $75.53. Data showed U.S. jobs growth accelerated far more than expected in May, keeping the Fed on track to hold off starting to cut interest rates until September at the earliest. The European Central Bank went ahead with its first interest rate cut since 2019 on Thursday, despite an increasingly uncertain inflation outlook. High borrowing costs can slow economic activity and dampen demand for oil. "The jobs report indicated higher rates for longer," . "That tends to dampen enthusiasm on the oil market." The dollar rallied 0.8% to a more than one-week high shortly after the release of the jobs report. [USD/] However, oil prices have been buttressed by support from OPEC+ members Saudi Arabia and Russia, indicating readiness to pause or reverse oil output increases. Still, crude fell for a third straight week on demand concerns, with Brent down 2.5% and WTI off 1.9%. Oil slipped earlier this week after analysts saw Sunday's OPEC+ meeting as an indication of rising supply, which is bearish for prices. The U.S. active oil rig count, an early indicator of future output, fell by four this week to 492, the lowest since January 2022, energy services firm Baker Hughes said. Meanwhile, in China, data showed that although exports grew for a second month in May, crude oil imports fell, signalling demand concerns in the world's largest crude oil buyer. "Exports handsomely beat expectations," "But worryingly for oil, overall imports were again down." In Russia, the operations of the Novoshakhtinsk oil refinery in southern Rostov region suffered significant disruptions after a fire following a drone attack on Thursday. Money managers cut their net long U.S. crude futures and options positions in the week to June 4, the U.S. Commodity Futures Trading Commission (CFTC) said.
Oil Posts Weekly Loss as OPEC Plan Triggers Selloff - Oil posted a weekly decline as algorithmic traders accelerated selling pressure after OPEC+ announced a plan to loosen its production curbs. West Texas Intermediate settled below $76 on Friday for a 1.9% weekly decline. Still, prices rebounded from their lows after Saudi Energy Minister Prince Abdulaziz bin Salman led ministers in reiterating that the hike can be paused or reversed, depending on whether markets can take it. Earlier this week, crude slumped to a four-month low, with commodity trading advisers exacerbating the price declines. “OPEC+ members set about a charm offensive yesterday with the big guns of the pact deployed in a show of unison,” said John Evans, an analyst at brokerage PVM Oil Associates Ltd. The “intervention showed decent success as it was very well-timed.” The plan has drawn a mixed reaction from Wall Street. JPMorgan Chase & Co. expressed doubt over its bearish effect because many members already are pumping above their assigned quotas, while Citigroup Inc. predicts full cuts will be maintained into next year. Oil has trended lower since early April due to concerns over demand and the perception that geopolitical risks to crude supplies are ebbing. However, risks surrounding the war in Ukraine and the Middle East have recently reignited, which could spur further price gains. WTI for July delivery settled little changed at $75.53 a barrel in New York. Brent for August settlement fell 25 cents to settle at $79.62 a barrel.
Merchant Ship Off Saudi Coast Reports "Significant Explosion" A "Short Distance" From Port Side - UK Maritime Trade Operations (UKMTO) reports a commercial vessel experienced a "significant explosion ... a short distance from the port side of the vessel." The incident occurred 50 nautical miles southwest of Al Shuqaiq, Saudi Arabia, in the southern Red Sea. "On inspection, no damage was found, vessel and crew are reported safe and is continuing to its next port of call," UKMTO wrote in an advisory on X. Bloomberg said, "There was no immediate claim for the blast but Houthi fighters based in Yemen have carried out multiple attacks on vessels in the Red Sea and have escalated such incidents since the Israel-Hamas war broke out last October." The Houthi's latest attack was on a bulk carrier last week near the Bab al-Mandab Strait. Also, the Houthis have downed six US MQ-9 Reaper drones.The ongoing chaos in the Red Sea comes as the Iranian-backed terror group vowed it will continue its operations until the war in Gaza is brought to an end. One significant consequence of turmoil in the region is soaring containerized freight costs as capacity is stretched thin worldwide. A.P. Moller-Maersk A/S warned about this on Tuesday.
Report: Saudis Still Slaughtering Migrants at the Yemeni Border - On Wednesday, the Mixed Migration Centre (MMC) published a report that said Saudi Arabia is still slaughtering African migrants and Yemenis at its border with Yemen nearly a year after the indiscriminate killings were revealed.In July 2023, MMC issued a report that said Saudi border guards killed nearly 800 Ethiopian migrants and wounded about 1,700 in 2022. Human Rights Watch followed up with a similar report that said the killings could be a “crime against humanity.”After the reports were released, The New York Times reported that the US was aware of the mass killings on the border since 2022 but kept quiet. Around the time the US learned of the massacres, the Biden administration was publicly criticizing Riyadh for OPEC oil cuts.The MMC’s new report says that new evidence “appears to indicate that the Saudi border authorities at their southern border with Yemen are continuing to use live weapons to fire indiscriminately at Ethiopians and Yemenis crossing the border irregularly.”\
UN blacklist: Israel added over violations against children -The United Nations secretary-general is set to describe Israel and Hamas as waging a war that violates children’s rights, moving the country to the body’s “blacklist” in an upcoming report to the Security Council.Spokesman Stéphane Dujarric told reporters Friday that the head of Secretary-General António Guterres’ office informed Israel’s U.N. ambassador, Gilad Erdan, in a phone call that the nation would be in his report when he presents it to the council next week.Hamas and Palestinian Islamic Jihad will also be listed, according to a report by the Associated Press.Israel was outraged by the UN’s decision, reportedly sending news organizations a video of Erdan blasting the head of Guterres’ office during a phone call. Erdan also released a statement after the announcement.“Hamas will continue even more to use schools and hospitals because this shameful decision of the Secretary-General will only give Hamas hope to survive and extend the war and extend the suffering,” Erdan said. “Shame on him!”Prime Minister Benjamin Netanyahu also reacted to the news in a post on X, saying that “the UN put itself on the black list of history today.”On the other side, Palestinian U.N. ambassador Riyad Mansour said adding Israel to the list is “an important step in the right direction,” but made it clear in a statement to AP that the decision “will not bring back tens of thousands of our children who were killed by Israel over decades.”Meanwhile, in a statement shared with Al Jazeera, senior Palestinian official Riad Malki said the move was overdue.“Now, faced with the catastrophe in Gaza that the world sees with its naked eyes with the genocide that specifically targets children and women, the UN secretary general no longer has excuses not to place Israel on the blacklist,” Malki said.Israel has faced strong international criticism over the number of civilian deaths in the eight-month war with Hamas. Questions have been asked about whether the country is doing enough to prevent civilian deaths.An Israeli airstrike at a school in Gaza Thursday left at least 40 people dead and 74 others injured, according to the United Nations, Hamas and Palestinian officials.
Israel Threatening to Take on Hezbollah After Cross-Border Attacks Produce Intense Wildfires by Yves Smith --Israel Prime Minister Netanyahu has just visited the border area in northern Israel and vowed to take “intense action” against Hezbollah, as reported in lead stories in the Jerusalem Post and the Times of Israel. By what some may regard as an odd coincidence of timing, this announcement came the same day that a Syrian who shot at the US embassy in Beirut was injured in return fire and taken captive by the Lebanese army. We have recounted Alastair Crooke some months back describing how Israel has been politically committed to ending Hezbollah strikes into the border area with Lebanon, which has resulted in large scale evacuation, with reports ranging from 60,000 to as many as 100,000. Not as well covered has been that Hezbollah has been making these attacks to create a second mini-front in the Gaza war (as in if Israel would enter into a settlement with Palestinians, the attacks would presumably be dialed back to their former nuisance level) and that Israel has been firing into southern Lebanon, making life similarly miserable for its border town denizens.The displacement of these Israeli settlers has been a festering economic and political wound. Businesses there are shuttered. Israel is providing temporary housing. The settlers say they can’t/won’t go back until Hezbollah has been removed from the border, which Israel treats as meaning Hezbollah must withdraw or be forced to retreat to the Litani River. Mind you, Israel did not get that far in its failed 2006 war with Lebanon.1 By all accounts, Hezbollah is much stronger than then and Israel weaker.2 Hezbollah leader Hassam Nasrallah has said Lebanon will not cede one inch of territory to Israel. So we have a bit of an out-trade. From the Times of Israel in December: War Cabinet Minister Benny Gantz on Friday warned that Israel would be forced to push the Hezbollah terror group away from the Lebanese border if the international community could not do so through diplomatic means. Note that the US and Israel idea of negotiating is Lebanon should cede its border areas because they say so, another element of the out-trade. However, despite the displaced Israeli setlers remaining vocal, not much has happened to advance their cause until perhaps today. One reason is that the IDF has gotten bogged down in Gaza. That underscores a second problem, the IDF has performed much less well against Hamas than officials had expected. But the third and big problem is that Israel is very likely to lose and lose more bigly against Hezbollah than in 2006. As both Scott Ritter and Crooke have explained, Iran, Hezbollah, and Hamas have all organized themselves to fight Israel and the US. Both wage wars the same way: airpower heavy combat, with the plan/preference being to mount intense, overwhelming, but comparatively short conflicts. So all three forces have created deep and extensive tunnel networks so as to be beyond Israel and US fire. They have also worked out how to be effective with lots of relatively cheap weapons. Crooke stresses that they set out to fight attritional wars, which neither the US or Israel can handle well. and to dial up and down intensity of the engagements. So if the failure to get the border town settlers back into their homes is a festering wound, why has Israel not acted? I have no idea, but some commentators have suggested that saner heads in Israel, particularly in the IDF, have warned that a war with Lebanon would be a very bad idea. The only reason Hezbollah has not welcomed it is that Lebanon is an economic basket case. A war, even a comparatively short one where Hezbollah won, would still produce a lot of costs in terms of physical damage. What about the hope that the US would ride in to help Israel if Lebanon were to look like it was winning? Many in Israel keenly desire getting the US involved militarily. The fact that Israel has not (yet) escalated with Lebanon suggests they have doubts about how forcefully and effectively the US could intervene. The US has not been able to check the Houthis. US weapons stocks have been drained in the Ukraine war. Hezbollah’s tunnel systems reportedly dwarf those of Hamas. And they have lots more rockets and missiles too, some of them also more sophisticated. With that high-level overview, things are heating up because they have heated up, literally. The last set of Hezbollah barrages set off wildfires in northern Israel. Israel and Western accounts are depicting this escalation as kicked off by Hezbollah, although that is far from clear:
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