first August natural gas withdrawal from storage on record; gasoline inventories at a 37 week low

US oil prices finished lower for the fifth time in six weeks after US crude inventories unexpectedly increased, and Chinese economic data disappointed…after rising 4.5% to $76.84 a barrel last week on increasing violence in the Middle East, and on the sixth straight weekly drawdown of US oil inventories, the contract price for the benchmark US light sweet crude for September delivery opened higher on Monday and extended its gains from the prior week, as fears of a U.S. recession eased following last week’s better than expected U.S. data. and as concerns over tensions in the Middle East intensified, and settled $3.22, or more than 4% higher at $80.06 a barrel, on expectations that a widening Middle Eastern conflict would tighten global crude oil supplies…oil prices moved lower on Tuesday after failing early to breach the prior day’s high, after the IEA kept its 2024 global oil demand growth forecast unchanged, but cut its 2025 demand estimate by 3%, citing the impact of weaker Chinese consumption, and gave back half the prior days’ gains to settle $1.71 lower at $78.35 a barrel, as traders grew less nervous about the potential for a wider war in the Middle East, with Iran yet to act on its threats to retaliate against Israel for the assassination of a Hamas leader in Tehran…oil prices rose sharply in Asian trading Wednesday as a smaller-than-expected increase in US producer prices fueled hopes for a rate cut, and as the American Petroleum Institute reported a significant drop in US oil inventories, but turned lower in New York trading, following bond yields, bitcoin and big-cap stocks down after an in-line report on US consumer prices, and settled $1.37 lower at $76.98 a barrel on the EIA report that US crude inventories had unexpectedly risen, and as worries that a wider Middle East conflict would threaten global supplies eased slightly…oil prices steadied in Asian trading Thursday. as hopes for U.S. rate cuts to boost fuel demand were balanced by concerns over weaker global demand, unexpected U.S. crude inventory gains, and China’s slowing economic recovery, then bounced higher on the opening in New York as data showed that U.S. retail sales increased more than expected in July, and that the number of Americans filing for unemployment benefits increased less than expected, and settled $1.18 higher at $78.16 a barrel as the upbeat U.S. economic data allayed fears of a recession in the world's biggest consumer…however, oil prices headed lower in Asia on Friday, after Chinese data showed its economy had lost momentum, with industrial output slowing, new home prices falling at the fastest pace in nine years, and unemployment rising in July, and continued to fall in New York to settle $1.51 lower at $76.65 a barrel amid reports that Qatar had told Iran to not attack Israel while the Gaza cease-fire talks were ongoing, which left oil prices down 0.2% for the week…

meanwhile, natural gas prices finished lower for the fourth time in five weeks, as a shift in the forecast to milder temperatures offset a rare summertime withdrawal from natural gas inventories… after rising 8.9% to $2.143 per mmBTU last week on lower production from shut-in gas wells and on another bullish storage report, the price of the contract for natural gas for September delivery opened eight cents higher on Monday in an attempt to extend last week’s rally, but backed off to settle 4.6 cents higher at a near three-week high of $2.189 per mmBTU, supported by the recent drop in output, and by forecasts for hotter weather over the next two weeks, which should boost demand for power for air conditioning….natural gas prices opened 3 cents higher on Tuesday, as forecast for a historically low storage injection more than offset bearish pressure from a potential new storm in the Atlantic and comfortable temperatures in the Northeast, but faded to settle 4.1 cents lower at $2.148 per mmBTU, as traders took profits on LNG feed gas flows that were a billion cubic feet per day off the weekend levels…natural gas prices opened 5 cents higher on Wednesday, as expectations for a historically light storage injection added to the bullish sentiment, and settled 7.1 cents higher at $2.219 per mmBTU, supported by a drop in output and forecasts of hotter weather for the second half of August…natural gas prices rallied to to the $2.250 level ahead of Thursday’s storage report, then jumped to an intraday high of $2.301 as the bullish report hit the wire, but faded in afternoon trading to settle 2.2 cents lower at $2.197 per mmBTU on forecasts for lower demand next week than had been expected…the retreat in natural gas prices accelerated through midday trading Friday, undercut by weakness in physical cash markets and forecasts for milder weather next week, then careened lower to settle down 7.4 cents at $2.123 per MMBTU, as traders focused on milder weather forecasts over the improved pace of storage tightening signaled by Thursday inventory report, which thus left natural gas prices 0.9% lower for the week.

The EIA’s natural gas storage report for the week ending August 9th indicated that the amount of working natural gas held in underground storage fell by 6 billion cubic feet to 3,264​ billion cubic feet by the end of the week, which was the first natural gas withdrawal from storage during the month of August on record, which still left our natural gas supplies 209 billion cubic feet, or 6.8% above the 3,055 billion cubic feet that were in storage on August 9th of last year, and 375 billion cubic feet, or 13.0% more than the five-year average of 2,889 billion cubic feet of natural gas that had typically been in working storage as of the 9th of August over the most recent five years…the 6 billion cubic foot withdrawal from US natural gas working storage for the cited week contrasts with the average 6 billion cubic foot addition to storage that analysts in a Reuters poll were expecting, and also contrasts with the 33 billion cubic feet that were added to natural gas storage during the corresponding week in August of 2023, as well as the average 43 billion cubic foot injection into natural gas storage that had been typical for the same midsummer week over the past 5 years…

The Latest US Oil Supply and Disposition Data from the EIA

US oil data from the US Energy Information Administration for the week ending August 9th indicated that due to a decrease in demand for oil that the EIA could not account for and an increase in oil supply that the EIA could not account for, we were able to add oil to our stored commercial crude supplies for the first time in seven weeks, and for the 16th time in the past 35 weeks...Our imports of crude oil rose by an average of 61,000 barrels per day to 6,285,000 barrels per day, after falling by an average of 729,000 barrels per day over the prior week, while our exports of crude oil rose by 118,000 barrels per day to 3,756,000 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 2,529,000 barrels of oil per day during the week ending August 9th, 57,000 fewer 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 510,000 barrels per day, while during the same week, production of crude from US wells was 100,000 barrels per day lower at 13,300,000 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 16,339,000 barrels per day during the August 9th reporting week…

Meanwhile, US oil refineries reported they were processing an average of 16,467,000 barrels of crude per day during the week ending August 9th, an average of 55,000 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 293,000 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 appear to indicate that our total working supply of oil from net imports, from transfers, and from oilfield production during the week ending August 9th averaged a rounded 420,000 barrels per day less than what was added to storage plus 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 [ +420,000 ] 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 528,000 barrels per day of oil demand could not be accounted for in the prior week’s EIA data, that means there was a 948,000 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, making 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 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” demand, see this EIA explainer….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 293,000 barrel per day increase in our overall crude oil inventories came as an average of 193,000 barrels per day were being added to our commercially available stocks of crude oil, while an average of 99,000 barrels per day were being added to our Strategic Petroleum Reserve, the thirty-sixth SPR increase in the past forty-three weeks, following nearly continuous SPR withdrawals over the prior 39 months… Further details from the weekly Petroleum Status Report (pdf) indicate that the 4 week average of our oil imports fell to 6,584,000 barrels per day last week, which was 2.0% less than the 6,719,000 barrel per day average that we were importing over the same four-week period last year. This week’s crude oil production was reported to be 100,000 barrels per day lower at 13,300,000 barrels per day because the EIA’s rounded estimate of the output from wells in the lower 48 states was 100,000 barrels per day lower at 12,900,000 barrels per day, while Alaska’s oil production was 28,000 barrels per day lower at 387,000 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 was 1.5% higher than that of our pre-pandemic production peak, and it’s also 37.1% 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 91.5% of their capacity while processing those 16,467,000 barrels of crude per day during the week ending August 9th, up from their 90.5% utilization rate of a week earlier, but still below normal utilization for mid-summer… the 16,467,000 barrels of oil per day that were refined this week were 1.7% less than the 16,746,000 barrels of crude that were being processed daily during week ending August 11th of 2023, and 4.8% less than the 17,302,000 barrels that were being refined during the prepandemic week ending August 9th, 2019, when our refinery utilization rate was at a prepandemic normal 94.8% for August…

Even with the increase in the amount of oil being refined this week, gasoline output from our refineries was somewhat lower, decreasing by 318,000 barrels per day to 9,722,000 barrels per day during the week ending August 9th, after our refineries’ gasoline output had increased by 32,000 barrels per day during the prior week.. This week’s gasoline production was still 1.4% more than the 9,722,000 barrels of gasoline that were being produced daily over week ending August 11th of last year, but was 4.7% less than the gasoline production of 10,203,000 barrels per day during the prepandemic week ending August 9th, 2019…. at the same time, our refineries’ production of distillate fuels (diesel fuel and heat oil) decreased by 267,000 barrels per day to 4,769,000 barrels per day, after our distillates output had increased by 56,000 barrels per day during the prior week. After sixteen production increases in the past twenty-four weeks, our distillates output was 0.8% more than the 4,729,000 barrels of distillates that were being produced daily during the week ending August 11th of 2023, but was still 6.1% less than the 5,077,000 barrels of distillates that were being produced daily during the week ending August 9th, 2019…

With this week’s decrease in our gasoline production, our supplies of gasoline in storage at the end of the week fell for the 18th time in twenty-eight weeks, decreasing by 2,894,000 barrels to a 37 week low of 222,203,000 barrels during the week ending August 9th, after our gasoline inventories had increased by 1,340,000 barrels during the prior week. Our gasoline supplies fell this week because the amount of gasoline supplied to US users rose by 78,000 barrels per day to 9,045,000 barrels per day, and even while our exports of gasoline fell by 26,000 barrels per day to 873,000 barrels per day while our imports of gasoline fell by 52,000 barrels per day to 578,000 barrels per day.…Even after eighteen gasoline inventory withdrawals over the past twenty-eight weeks, our gasoline supplies are still 2.8% above last August 11th’s gasoline inventories of 216,158,000 barrels, but are now about 3% below the five year average of our gasoline supplies for this time of the year…

With this week’s decrease in our distillates production, our supplies of distillate fuels fell for the 17th time in thirty weeks, decreasing by 1,673,000 barrels to 126,123,000 barrels over the week ending August 9th, after our distillates supplies had increased by 1,534,000 barrels during the prior week. Our distillates supplies also decreased this week because the amount of distillates supplied to US markets, an indicator of our domestic demand, rose by 80,000 barrels per day to 3,549,000 barrels per day, and because our imports of distillates fell by 34,000 barrels per day to 81,000 barrels per day, while our exports of distillates fell by 6,000 barrels per day to 1,540,000 barrels per day....Even with 17 inventory withdrawals over the past 30 weeks, our distillates supplies at the end of the week were 9.0% above the 115,743,000 barrels of distillates that we had in storage on August 11th of 2023, but are still about 7% below the five year average of our distillates inventories for this time of the year…

Finally, with only small changes in documented supply and demand, our commercial supplies of crude oil in storage rose for the 10th time in twenty-six weeks, and for the 23rd time in the past year, increasing by 1,357,000 barrels over the week, from a 26 week low of 429,321,000 barrels on August 2nd to 430,678,000 barrels on August 9th, after our commercial crude supplies had decreased by 3,728,000 barrels over the prior week… With this week’s increase, our commercial crude oil inventories were about 5% below the most recent five-year average of commercial oil supplies for this time of year, while they were still about 27% above the average of our available crude oil stocks as of the second weekend of August 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 in the Spring of 2020, then jumped again after February 2021’s winter storm Uri froze off US Gulf Coast refining, but then fell sharply 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 August 9th were 2.0% less than the 439,662,000 barrels of oil left in commercial storage on August 11th of 2023, but 1.3% more than the 424,954,000 barrels of oil that we had in storage on August 12th of 2022, while 1.1% less than the 435,544,000 barrels of oil we had left in commercial storage on August 13th of 2021…

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 August 16th, the second column shows the change in the number of working rigs between last week’s count (August 9th) and this week’s (August 16th) count, the third column shows last Friday’s August 9th 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 18th of August, 2023…

notice above that Ohio's Utica shale rig count was down by one this week; that was due to the removal of an oil directed rig which had been drilling in Harrison county...Ohio is thus left with nine rigs still active; those include oil rigs in Harrison and Guernsey counties, 2 additional natural gas rigs in Harrison and Guernsey counties, and natural gas rigs drilling in Jefferson, Monroe, and Carroll counties..

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Ohio opens another wildlife preservation area to fracking for oil and gas - cleveland.com --A panel of state officials on Monday sold rights to drill for oil and gas under a preserved wildlife area in Harrison County. The Oil and Gas Land Management Commission, comprised of a slate of gubernatorial appointees, sold about 85 acres underneath Keen Wildlife Area for nearly $212,000, plus 18% royalties on the oil and gas produced, to Houston-based EOG resources.

EOG Wins Contract to Frack Under OH’s Keen Wildlife Area for $212K -- Marcellus Drilling News --The Ohio Oil and Gas Land Management Commission (OGLMC) continues to do its job. Yesterday, the group held a meeting and awarded five contracts for drilling and fracking UNDER (not on) several state-owned lands, including a contract with EOG Resources to drill under 85 acres in Keen Wildlife Area in Washington Township, Harrison County, for $211,650 ($2,500/acre). Also of interest at yesterday’s meeting was that 40 parcels of land in Salt Fork State Park and Salt Fork Wildlife Area were removed from the committee’s agenda. Apparently, the nominating company withdrew its application for those tracts.

Texas-based energy company picked to lease Ohio Keen Wildlife Area for fracking - Ohio Capital Journal --A Texas-based energy company has been selected as the “highest and best” bidder to lease Keen Wildlife Area for fracking during Monday’s Ohio Oil and Gas Land Management meeting. Four other parts of the state in Belmont, Monroe and Harrison counties — all Ohio Department of Natural Resources and Ohio Department of Transportation properties — were also approved to be fracked by the “highest and best” bidders. These areas were approved for fracking during Monday’s meeting:

• Gulfport Appalachia, LLC had the winning bid for five parcels in Flushing Township, Belmont County for $18,666 ($6,000/acre).
• Gulfport Appalachia, LLC had the winning bid for 1.370 acres in Fisher’s Grove Park in Summit Township in Monroe County for $5,480($4,000/acre).
• Gulfport Appalachia, LLC had the winning bid for 2.846 acres gross acres in Wayne Township in Belmont County for $17,076 ($6,000/acre).
• Texas-based Tiburon Oil and Gas Ohio, LLC had the highest bid for three parcels in Somerset Township in Belmont County for $6,545 ($5,500/acre).
• EOG Resources, Inc — also based in Texas — had the highest bid for 84.66 acres in Keen Wildlife Area in Washington Township, Harrison County for $211,650 ($2,500/acre).

Fracking has been documented in over 30 states, according to the Center for Biological Diversity. The commissioners posted the nominated leasing parcels for bid on July 10 and Friday was the deadline to submit bids. Each lease agreement includes a 12.5% royalty paid to the state for production, per state law, with an additional financial incentive paid by the winning bidder to the state, according to ODNR. The lease bonuses for these nominations chosen by the committee is $47,767 for ODOT properties and $211,650 for ODNR properties, according to ODNR. Notably, 40 parcels of land in Salt Fork State Park and Salt Fork Wildlife Area were removed from the committee’s agenda last week by the nominator. These parcels were up for a vote to move forward in the bidding process. The commissioners disapproved less than an acre of land in Guernsey County from moving forward in the bidding process “due to a condition in the nomination that could render the economic benefits too low to warrant approval pursuant to Ohio Revised Code,” according to ODNR. About a dozen anti-fracking activists held up signs at the back of the room during the meeting that read “Keep parks parks not oil and gas fields,” “Enjoy don’t destroy God’s creation,” and “Hands off our parks.” The activists shouted various phrases and questions at the commissioners during the meeting including “rubber stampers,” “a place that is being fracked is no longer a wildlife area,” and “have you considered all the accidents that happen related to gas and oil?” The commissioners continued with the meeting and didn’t directly address any of the activists’ interjections. There were more than 1,400 fracking incidents associated with oil and gas wells in Ohio between 2018 and September 2023, according to FracTracker Alliance — a nonprofit that collects data on fracking pipelines.About 10% of those incidents were reported as fires or explosions. 64 of those incidents happened in Belmont County, 59 happened in Monroe County and 26 happened in Harrison County. Jenny Morgan with Save Ohio Parks said after the meeting she is fearful for Ohio’s children. “Our children need nature regularly, and they need it to be clean and healthy,” she told the Capital Journal. “I care about our environment that impacts our health and our children’s health, and we need these spaces to be clean.”

HB 562 would require fracking-chemicals disclosure in Ohio - cleveland.com - Recently, I introduced Ohio House Bill 562 requiring companies wishing to conduct fracking under our state parks to disclose the chemicals in the fluids used in the process. HB 562 aims to improve public safety and transparency, which is crucial because fracking involves injecting water, sand, and various chemicals at high pressure to extract natural gas and oil from shale rock.While fracking has the opportunity to impact Ohio’s energy independence, it has also raised substantial environmental and health concerns due to the chemicals involved. In fact, according to the FracTracker Alliance, there were over 1,400 fracking incidents in Ohio between 2018 and 2023, ranging from gas releases to fires and explosions. Studies show that states requiring the disclosure of fracking chemicals experience less pollution, fewer spills of fracking fluids, and fewer hazardous chemicals being used for fracking than states with no disclosure requirements. When taxpayers paid for our parks, there was an implicit contract made with the government that the parks would be protected for posterity so our descendants would be able to experience them in the same way that we can. Please contact your state representative and respectfully ask that they support HB 562.

Encino Energy, Vendors Donate Over $100000 to Local Nonprofits -- Marcellus Drilling News --Encino Energy, which is Ohio’s No. 1 oil producer, and its vendors, recently announced over $105,000 in donations from the 2024 Encino Vendor Charity Classic. This year’s gathering was a two-day event consisting of a clay shoot, golf outing, and awards reception. Vendors came together to sponsor the event at various levels, and proceeds went directly to local nonprofits that impact Encino’s operational area. The $105,000 in donations was split evenly between five nonprofit organizations.

6th Circ. Backs Gulfport, Antero Win In Drilling Royalty Suit – Law360 -- A divided Sixth Circuit panel has said an Ohio federal judge correctly concluded that a rival drilling company is not entitled to royalties from oil and gas wells recently drilled by Gulfport Energy Corp. and Antero Resources Corp. in the Utica Shale. .. In an unpublished opinion filed on Thursday, U.S. Circuit Judges John K. Bush and Eugene E. Siler Jr. affirmed U.S. District ...

Utica Shale Academy adds to Energy Training Center - — The Utica Shale Academy’s Energy Training Center in Salineville has added some more space to offer programming.Superintendent Bill Watson said a 50-foot by 25-foot area previously used as a drive-through for the former Huntington Bank was enclosed and will now serve diesel mechanics and heavy equipment programs. The estimated $650,000 project started in May and was completed this month through CCI Construction of Canton. Watson said costs are being defrayed through an Appalachian Regional Commission grant and capital appropriations through the state legislature.“Students will do maintenance and repairs of heavy equipment and machinery and will also gain Snap-on credentials,” Watson added. “It’s the start of a new program. We already have heavy equipment and we need diesel mechanics so kids can use and work on the equipment. They are two different courses.”The training center also boasts hydraulics, electrical, pneumatics, robotics and PLC courses, as well as a partnership with Youngstown State University for 5G communication and 3-D printing programsWatson added that officials were also reviewing plans to boost lighting, windows and heating within the site and are also looking to make improvements at the Williams Collaboration Building just a stone’s throw away at 10 E. Main St. Meanwhile, plans are also on the drawing board for the welding facility adjacent to the former Hutson Building which houses USA programs for grades 9-12. USA, which has operated for the past decade, is a dropout recovery-and-retention school focusing on career-tech education for at-risk students who have obtained more than 1,100 certifications since 2021. The program currently includes 190 pupils in grades 9-12 and the expansion could potentially triple enrollment to about 350 pupils.

Canada Pension Plan Investing $843M in Tallgrass Energy, REX | Marcellus Drilling News -We spotted some news that, on the surface, may not appear to be connected to the Marcellus/Utica, but we think it is. The Canada Pension Plan Investment Board (CPP Investments) is investing approximately $843 million (CAD 1.2 billion) in Denver, Colorado-based Tallgrass Energy. CPP is a major investor in the Utica Shale (via Encino Energy), and Tallgrass is the owner and operator of the Rockies Express (REX) pipeline that flows Marcellus/Utica gas to the Midwest.

MPLX 2Q – Bullish on the Marcellus and “Now the Utica” - Marcellus Drilling News - In late 2015, MPLX (i.e., Marathon Petroleum) bought out and merged in the Utica Shale’s premier midstream company, MarkWest Energy, for $15 billion (seeMarkWest Energy Investors/Unitholders Approve Merger with Marathon). The “new” MarkWest, aka MPLX, plays on a much larger stage now, including ownership and operation of major assets in the Permian Basin and in the Bakken Shale, in addition to the Marcellus/Utica. Last week, MPLX issued its second quarter 2024 update. During a conference call with analysts, MPLX's COO Greg Floerke said this about the Marcellus and Utica: "...there is room for us to grow, and we're still very bullish on the Marcellus and now the Utica."

PA-Based Frac Sand Co. Opening Ohio Terminal for Utica Sales --- Marcellus Drilling News --- We first told you about a frac sand company called Smart Sand some 12 years ago (seeSmart Sand Lands Big Name for Board of Directors). Smart Sand, headquartered in Yardley, PA, is a supplier of industrial sand, primarily serving customers in the oil and gas industry, including drillers in the Marcellus and Utica Shale region. Sand—the right kind of sand, which is crystalline—is a critical part of the hydraulic fracturing process. The company issued its second quarter update yesterday. The update contained some interesting news that caught our attention…

Earnings call: Smart Sand exceeds Q2 expectations and generated $13.5 million in cash flow Smart Sand Inc . (NASDAQ: NASDAQ:SND), a premier supplier of high-quality Northern White sand, has reported robust financial results for the second quarter of 2024. The company's sales volumes reached nearly 1.3 million tons, surpassing projections, and generated a significant $13.5 million in free cash flow.Despite a decrease in earnings from the previous quarter due to higher costs, Smart Sand showcased improved contribution margins and adjusted EBITDA. The company is making strategic moves to expand its market share and is preparing to reward shareholders with value-returning plans later in the year.Key Takeaways:

• Smart Sand's sales volumes hit just under 1.3 million tons in Q2, exceeding expectations.
• The company reported an improved contribution margin of $19.8 million.
• Adjusted EBITDA increased to $11.8 million for the quarter.
• Smart Sand generated $13.5 million in free cash flow and expects to remain positive for the full year.
• Plans to introduce shareholder value-returning initiatives later this year were announced.
• Expansion efforts are underway in the Bakken and Marcellus basins, and into the Canadian market.
• Two new terminals in Ohio will target the Utica Shale formation market.
• The company is focusing on cost management and efficiency to maintain a strong capital structure.

Convenient Timing: Biden-Harris Promise Pa. Another $152 Million -Marcellus Drilling News --- Many political pundits say the presidential election will come down to Pennsylvania. Whichever candidate wins PA — Trump or The Cackler — will likely win the White House. EVERYTHING that happens between now and then has a political component, including yesterday’s announcement by the Biden-Harris Dept. of Interior that yet another slug of up to $152 million is coming PA’s way for plugging orphaned and abandoned conventional oil and gas wells. This has politics written all over it. Read More

PA DEP Hosting 3 Info Sessions on Scoring Bidenbucks to Plug Wells -- Marcellus Drilling News - With the presidential election only 80 days from now, the money coming from Washington, D.C. to swing states like Pennsylvania is flowing like a river, as we told you yesterday (see Convenient Timing: Biden-Harris Promise Pa. Another $152 Million). The orders have gone out to get this money (or rather, the promise of this money) out there asap. Gotta hang that big old carrot out there. PA Gov. Josh Shapiro snapped a sharp salute and said, “Yes, ma’am.” The PA Dept. of Environmental Protection (DEP) will run three information sessions the week after next on the Orphan Conventional Oil & Gas Well Plugging Grant Program and how companies can grab their bribe piece of the action.

PA Supreme Court Lib Dems Collecting Briefs on RGGI Carbon Tax -- Marcellus Drilling News --- In July, MDN told you about a disappointing (but not surprising) decision from the Democrat leftists on the Pennsylvania Supreme Court (see PA Supreme Court Allows Big Green $$ in RGGI Carbon Tax Lawsuit). The so-called Supremes ruled in favor of allowing three well-financed Big Green groups, including the Sierra Club, PennFuture, and Clean Air Council, to join a lawsuit attempting to force PA to accept the Regional Greenhouse Gas Initiative (RGGI), an obscene carbon tax on coal- and gas-fired plants. With Big Green’s money and attorneys now supporting the state Dept. of Environmental Protection (DEP) in its quest to ram through RGGI, it’s time for the Supremes to solicit briefs in the case.

26 New Shale Well Permits Issued for PA-OH-WV Aug 5 – 11 -- Marcellus Drilling News --For the week of August 5 – 11, a total of 26 permits were issued to drill new shale wells in Marcellus/Utica, with the vast majority issued in Pennsylvania. The Keystone State had 21 new permits, with an eye-popping 19 going to EQT split between Greene and Washington counties (in the southwestern part of the state), and two issued to Range Resources in Beaver County. Ohio issued five new permits last week, with four going to Ascent Resources in Jefferson County and one to Encino Energy (EAP) in Guernsey County. West Virginia’s online data service is currently out of order, and there is no ETA for when it will be fixed, so we have no permits to report for the Mountain State. ASCENT RESOURCES | BEAVER COUNTY | ENCINO ENERGY | EQT CORP | GREENE COUNTY (PA) | GUERNSEY COUNTY | JEFFERSON COUNTY (OH) | RANGE RESOURCES CORP | WASHINGTON COUNTY

Harris Surrounds Herself with Anti-Fracking, Far-Left Advisors - Marcellus Drilling News --- -The Cackler (Kamala Harris) will be in North Carolina today, delivering a speech on her economic views and how she plans to fix the economic mess her administration has made over the past four years. She and her obedient mainstream media lapdogs will try to convince you she has changed. She now loves lower taxes, wants to fight crime, limit illegal immigration, etc. With fracking, she now loves it or at least will tolerate it, even though she has ALWAYS advocated for a full-on ban of fracking across the entire country. One of The Cackler’s policies she will announce today will be to advocate for an anti-capitalist takeover by the government of prices for everything from gas to groceries. Price controls have NEVER worked, not once. Yet she will advocate for it today, and the media will try to convince dull viewers that it’s the best thing since sliced bread. How do we know she’s lying about fracking and other energy issues? Look at who is in her inner circle of economic advisers.

Louisiana utility commission OKs major donor’s plan to buy Entergy gas system --A private equity firm that has given more than $200,000 in campaign contributions to Louisiana Public Service Commission members won unanimous approval from the commission Wednesday to purchase Entergy Louisiana’s gas distribution system. There was little discussion and no opposition to the system’s sale to Bernhard Capital Partners. Bernhard has agreed to pay $484 million for Entergy Louisiana and Entergy New Orleans’ gas systems. The latter is subject to approval by the New Orleans City Council. Floodlight’s analysis of campaign contributions found that Bernhard Capital Partners and its executives donated to all the five Louisiana Public Service commissioners, and one former commissioner, over the past seven years. Most of that money, $149,000 or 71%, went to Commissioner Craig Greene, whose district includes Baton Rouge, where Entergy Louisiana’s gas customers live. Greene, who made the motion to approve the deal at the meeting, told Floodlight before the vote that he thinks Bernhard donated to his campaign because they believed in him. “I have a vision for the state, I’m considered a swing member, and I think they like that I’m agnostic,” on technologies, he told Floodlight before the vote. “Their money doesn’t mean anything more than if you gave me $25 right now.” Other commissioners also said campaign contributions don’t affect their votes. “Hell no, I do what I want,” said Commissioner Foster Campbell, who received $7,500 from Bernhard founders Jeff Jenkins and Jim Bernhard and Bernhard’s wife in 2019. Bernhard did not return requests for comment on this story. Bernhard filed its request with the commission to purchase Entergy’s gas utility late last year, but as early as 2018, the company telescoped its interest in purchasing utilities. Private equity firms often buy companies with the goal of changing them to become more profitable. Such a move can make the company more successful — or weigh it down with massive debt. “We have general concerns when a private equity firm acquires a franchised utility with captive customers, in part because the financial structure of a private equity firm is far more opaque when compared to a publicly-traded companies,” said Tyson Slocum, director of the energy program at Public Citizen, a nonprofit consumer advocacy organization. In addition to Entergy’s gas systems in Louisiana, Bernhard has announced deals to purchase CenterPoint’s gas systems in Louisiana and Mississippi and another system owned by Emera in New Mexico. With those acquisitions, Bernhard’s newly formed gas utility, Delta State Utilities, would have about 1.1 million customers. Currently it has zero.

U.S. appeals court scraps natural gas pipeline safety standards - A U.S. appeals court has tossed out several natural gas pipeline safety standards adopted by President Joe Biden's administration following industry criticism about the massive costs on pipeline operators. The U.S. Court of Appeals for the District of Columbia Circuit said the U.S. Department of Transportation's Pipeline and Hazardous Materials Safety Administration (PHMSA) failed to adequately explain why the revised standards' benefits outweigh their costs. The Interstate Natural Gas Association of America, a trade group, had largely supported the revisions, but sued last year to challenge five that PHMSA adopted over its objections. Those highly technical standards, finalized in 2022, included new requirements for operators to carry out repairs to address pipeline walls thinning or corroding or developing cracks and dents. The trade group welcomed the ruling. The agency did not respond to a request for comment. U.S. Circuit Judge Florence Pan, writing for Friday's three-judge panel, said the PHMSA's analysis of the costs of the new standards were inadequate, inconsistent or missing. "Because the agency imposed a new safety requirement without properly addressing the costs of doing so, the standard cannot stand," Pan, a Biden appointee, said of one of the new requirements. The court upheld a fifth new standard the trade group had challenged, which addressed monitoring for a type of pipe anomaly that occurs when corrosion and high pressure cause cracks.

EnLink Expanding Louisiana Natural Gas Storage as Gulf Coast Export Capacity Climbs --Dallas-based EnLink Midstream LLC has sanctioned its first brownfield natural gas expansion project in Louisiana as it works to add 8 Bcf of capacity to the Jefferson Island Storage & Hub. Enlink Louisiana Natural Gas Pipes Geared for LNG Growth. JISH, as it is known, “received strong commercial interest and is backed by investment-grade credit customers under long-term contracts,” CEO Jesse Arenivas said during the quarterly conference call last week. First injections at JISH, estimated to cost $85 million, are expected in 2028. The expansion would increase working gas storage to 10 Bcf from 2 Bcf.

Venture Global Targets CP2 LNG Construction Start in September -- Venture Global LNG Inc. is expecting to hit a major milestone for its CP2 LNG project in Louisiana next month while it mounts a defense against challenges to the Plaquemines export facility, also nearing a new stage of development. Virginia-based Venture Global, which now has a substantial list of liquefied natural gas projects in various stages of development in Louisiana, indicated to FERC staff this month that it is targeting to begin construction for CP2 in early September. In a timeline filed with the Federal Energy Regulatory Commission, along with a bevy of other implementation plans for the project, Venture Global said starting construction next month would allow it to stay on track to reach the project’s in-service near the end of 2028.

Majors, Middle East NOCs Among Likely Woodside Partners for Driftwood LNG -Woodside Energy Group Ltd. is betting on a big future for LNG and the U.S. Gulf Coast’s role in it after making a bold move last month to acquire Tellurian Inc. and its Driftwood liquefied natural gas export project in Louisiana. The 27 million metric ton/year (mmty) Driftwood project would add to Woodside’s existing 20 mmty portfolio placing it as one of the largest global LNG suppliers, according to Wood Mackenzie. “This is the first time a large portfolio player has taken full strategic control of a U.S. project,’ said Wood Mackenzie’s Daniel Toleman, the firm’s Perth-based research director for Global LNG. “We’ve seen companies take strategic non-operated positions before. But this suggests Woodside wants to control its own destiny by taking control of one of the best remaining LNG development sites on the Gulf Coast.”

NextDecade Sees Risk for All Federally Permitted Infrastructure in Rio Grande Case — Three Things to Know About the LNG Market --NextDecade Corp. CEO Matt Schatzman said this week that the U.S. Court of Appeals for the District of Columbia Circuit’s decision vacating FERC authorization for its Rio Grande LNG project sets a dangerous precedent. The company, he said, is prepared to take “any and all available legal and regulatory actions” to ensure the project isn’t delayed. “The decision reached by the DC Circuit Court has far-reaching implications,” Schatzman said in the company’s second quarter earnings release. “If the ruling stands, the precedent that would be set by the court’s action has the potential to impact viability of all federally permitted infrastructure projects because it will be difficult for these projects to attract capital investments until they receive final unappealable permits.” The court sent the Rio Grande and Texas liquefied natural gas projects’ authorizations back to the Federal Energy Regulatory Commission for further consideration of the projects’ environmental impacts, which could create lengthy delays for the projects.

NextDecade to appeal court's overturning of Rio Grande LNG project authorization -- U.S. liquefied natural gas (LNG) developer NextDecade said on Wednesday it will appeal a court ruling that overturned federal approval for its $18-B Rio Grande LNG project and warned loss of its permits could prevent access to its loans. "Its ability to continue borrowing under such credit facilities could be negatively impacted," Next Decade told the market. The company's stock price has slumped 38% since the judgment, finishing at $4.84 on Wednesday down from its close on Aug. 5. NextDecade said there is no guarantee how long any agency proceedings and judicial challenges will take to be resolved, if there will be delays in construction activities or if Rio Grande will ultimately succeed in maintaining the permits. The judicial decision would not come into effect until the court issued a mandate, which was not expected to occur until the appeals process has been completed, NextDecade said. "If the ruling stands, the precedent set impacts the viability of all federally permitted infrastructure projects because it will be difficult for developers to attract capital investments until projects receive final unappealable permits," CEO Matt Schatzman said. Next Decade's flagship facility has been in development for several years and has already suffered repeated delays. The first phase of the project, with a capacity of 17.61 MMtpy, is due to be completed by early 2029 at an expected cost of about $18 B. The company, backed by the likes of Global Infrastructure Partners and French energy major Total Energies, said that overall project completion of the first two liquefaction units, called trains, stands at 24.1%, as of June. It has received purchase orders of about 92% of total capacity for the first two trains and 88% of the total for the third train. The company was planning to start construction of the fourth train in the second half of 2024 after a final investment decision and said it is assessing the implications of the court ruling with its equity partners and lenders.

U.S. LNG Export Capacity Growth Stalls for Now as Startups Slide into 2025 --While U.S. LNG supply is poised to skyrocket by the end of the decade, little new export capacity will come online this year, and additional volumes are expected to climb slowly through next year and into 2026 as projects work through various setbacks. Chart showing U.S. LNG projects under construction. Currently, the United States has about 14.5 Bcf/d of liquefied natural gas export capacity. By the end of 2024, EnergyAspects expects that to rise to 14.9 Bcf/d. The capacity increase is largely due to the ongoing ramp up in commissioning Plaquemines LNG, which had feed gas flows average about 10 MMcf/d over the last week. Plaquemines is expected to have between four and six of its modular trains in the commissioning phase and potentially its first cargo loaded by the end of this year. That could boost U.S. export capacity by around 300 MMcf/d, said EnergyAspects’ David Seduski, head of North America Gas.

US natgas at near 3-week high on output drop, hotter weather forecasts (Reuters) -U.S. natural gas futures rose more than 2% to a near three-week high on Monday, supported by a drop in output in recent days and forecasts for hotter weather that should boost the amount of gas power generators burn to keep air conditioners humming. Front-month gas futures NGc1 for September delivery on the New York Mercantile Exchange rose 4.6 cents, or about 2.1%, to settle at $2.189 per million British thermal units. "Drilling cutback announcements by major organizations, whether it be Chesapeake or EQT or whomever, everyone seems to be pulling back on their end-of-year production outlooks, and that's definitely giving us support," The market is also getting some boost from "weather shifts, which are showing some heat towards the end of August and into early September" and some European buyers come back into the U.S. market for hedging purposes, Major U.S. natural gas producers were preparing to further curtail production in the second half, after prices sank nearly 40% over the past two months. Financial firm LSEG said gas output in the Lower 48 U.S. states has fallen to an average of 102.8 billion cubic feet per day (bcfd) so far in August, down from 103.4 bcfd in July. That compares with a monthly record high of 105.5 bcfd in December 2023. Meanwhile, LSEG estimated 228 cooling degree days (CDDs) over the next two weeks. The normal for this time of year is 183 CDDs. LSEG forecast average gas demand in the Lower 48 states, including exports, to rise to 105.9 bcfd this week from 104.0 bcfd last week, and then expected it to rise to 107.9 bcfd next week. Dutch wholesale gas prices inched up on Monday morning amid concerns about gas supplies via Ukraine, while British prices rose due to outages in the UK Continental Shelf.

US natural gas futures rise - US natural gas futures rose more than 3% on Wednesday, supported by a drop in output and forecasts of hotter weather for the second half of August that could boost cooling demand and increase gas consumption by power generators to meet air conditioning needs. Front-month gas futures for September delivery on the New York Mercantile Exchange rose 7.1 cents, or about 3.3%, to settle at $2.219 per million British thermal units. “We’ve had some moderation of weather models that have seemed to have reversed. We’re starting to add some cooling degree days to the second half of August. So, that’s been a bit of a help,” Financial firm LSEG estimated 224 cooling degree days (CDDs) over the next two weeks, slightly lower than the 233 CDDs estimated on Tuesday. The normal for this time of year is 186 CDDs. LSEG forecast average gas demand in the Lower 48 US states, including exports, to rise from 105.9 billion cubic feet per day (bcfd) this week to 107.5 bcfd next week. “All data vendors are showing that there has been decline over the past week in production and that has certainly tightened balances for the short term, which will mean that there’s less gas going into the ground during this injection season, and that has helped to create a little bit of upside,” LSEG said gas output in the Lower 48 has fallen to an average of 102.6 billion cubic feet per day (bcfd) so far in August, down from 103.4 bcfd in July. That compares with a monthly record high of 105.5 bcfd in December 2023. While the steady narrowing in the gas surplus will not cause a spike in prices independently on any given day or week, it will provide a bullish backdrop capable of accentuating price response to any unexpected supply disruptions or one more round of broad-based heat before this summer ends, Elsewhere, intense fighting between Ukrainian and Russian forces near a pipeline Russia uses to supply European countries with gas has not disrupted supplies, network operators and gas companies said on Tuesday. Dutch and British gas wholesale prices were little changed on Wednesday morning amid flat demand and steady flows.

US natgas slips over 1% despite surprise storage draw, hotter forecasts (Reuters) -U.S. natural gas futures settled lower on Thursday as prices saw retracement and on lower demand forecasts for next week than previously expected. The price decline came despite forecasts for hotter weather and a federal weekly report showing a surprise draw in inventories. Front-month gas futures NGc1 for September delivery on the New York Mercantile Exchange were down 2.2 cents, or about 1% lower, to settle at $2.197 per million British thermal units. "The market reacted positively to the withdrawal today, but the level of gas in storage is still substantially high and that's the kind of the bearish background in all of this...I think it could be why we might have come off today," The U.S. Energy Information Administration (EIA) said utilities drew 6 billion cubic feet (bcf) of gas from inventories during the week ended Aug. 9. That compared with an injection of 33 bcf during the same week a year ago and a five-year (2019-2023) average increase of 43 bcf for this time of year. Analysts had projected that hotter-than-usual weather last week kept cooling demand high and allowed utilities to add a much smaller-than-usual 6 bcf of gas into storage, according to a Reuters poll. "I think natural gas prices are still partially supported by the August heat in the near and short term. We are still expecting hotter-than-normal weather even at the 30-day horizon," "But the longer-term price movement is largely constrained by the large storage surplus against the five-year average and expected record storage level at the end of the injection season." Financial firm LSEG estimated 227 cooling degree days (CDDs) over the next two weeks, slightly higher than the 224 CDDs estimated on Wednesday. The normal for this time of year is 186 CDDs. LSEG forecast average gas demand in the Lower 48 U.S. states, including exports, to edge up from 105.5 billion cubic feet per day (bcfd) this week to 106.8 bcfd next week. Dutch and British gas wholesale prices were largely flat but still near eight-month highs as well-filled storages balanced concerns over potential supply disruptions ahead of the winter season.

US natgas falls to one-week low on oversupply of fuel in storage (Reuters) -U.S. natural gas futures dropped more than 3% to a one-week low on Friday on forecasts for less hot weather than previously expected and oversupply of gas in storage, even though a federal weekly report showed a surprise draw in inventories this week. Front-month gas futures NGc1 for September delivery on the New York Mercantile Exchange were down 7.4 cents, or about 3.4%, to settle at $2.123 per million British thermal units. "Prices are mainly down because of the high levels of gas in storage and high production volumes. Lowered demand from LNG maintenance has also allowed storage to stay so high," The U.S. Energy Information Administration on Thursday said utilities drew 6 billion cubic feet (bcf) of gas from inventories during the week ended Aug. 9, decreasing stockpiles to 3.264 trillion cubic feet (tcf). However, that was still above 7.2% the same week a year ago and 12.5% above the five-year average for the week. Financial firm LSEG estimated 223 cooling degree days (CDDs) over the next two weeks, slightly lower than the 227 CDDs estimated on Thursday. The normal for this time of year is 186 CDDs. LSEG forecast average gas demand in the Lower 48 U.S. states, including exports, to rise from 104.4 billion cubic feet per day (bcfd) this week to 106.5 bcfd next week. LSEG said gas output in the Lower 48 U.S. has fallen to an average of 102.4 bcfd so far in August, down from 103.4 bcfd in July. That compares with a monthly record high of 105.5 bcfd in December 2023. "This market is sending off some bearish vibes given its inability to advance off of a seemingly bullish EIA report that offered a highly unusual 6 bcf storage withdrawal for early August," Meanwhile, Dutch and British gas wholesale prices were mixed on Friday morning as strong storage inventories helped ease fears of potential supply disruptions due to the war between Russia and Ukraine as well as tensions in the Middle East.

Where Are North American Natural Gas Prices Headed? Storage, Weather and Exports Are Key, Says NGI -Natural gas export capacity could explode within months on the Gulf Coast and in Western Canada, a signal for operators to begin ramping up activity. Still, storage is continuing to rise, and weather demand has remained tepid. What does it mean for prices? NGI’s experts have a few answers. NGI's forward look natural gas prices at select hubs graph. The NGI Thought Leaders team turned the microphone on themselves to answer a few questions about the global gas market, using internal data, research, interviews with industry veterans and quarterly conference call information. What are the biggest factors driving U.S. natural gas prices? How does the global economy factor into the domestic gas market? What challenges need to be addressed? How will the domestic natural gas market evolve to meet Mexico’s proliferating import demand?

Fury Resources Lowers Offer for Permian E&P Battalion by 29% | Hart Energy --Permian producer Battalion Oil is reviewing an amendment to a planned acquisition by Fury Resources that would lower the deal’s purchase price by nearly 29% per share.Battalion said Fury’s amendment to the original merger agreement, announced in December, would reduce the amount of merger consideration payable to Battalion’s stockholders from $9.80 per share to $7 per share, the company reported in second-quarter earnings on Aug. 14.“The modified offer is contingent on the existing holders of the company's Series A through Series A-4 preferred equity rolling 100% of their preferred equity into new preferred equity in the surviving company following the merger in order to help support the transaction,” Battalion wrote in a filing.Under the original merger terms, Fury would pay $9.80 per share in cash for BATL’s common stock, representing a total transaction value of around $450 million. It’s unclear how much of the original $450 million transaction value was attributable to debt.Battalion said its board of directors and special committee were reviewing Fury’s amended proposal. Battalion said its preferred stockholders also reported reviewing the amendment.If the amended terms were adopted, it’s not immediately clear how much the deal’s total value would decline. Hart Energy reached out to Fury Resources and Battalion Oil for more information but did not receive a response by press time.

Texas oil regulator under scrutiny as zombie wells gush back to life (Reuters) - On a sprawling ranch in Pecos County in late July, oil well control specialist Hawk Dunlap used a backhoe to uncover an abandoned or so-called zombie well that had sprung back to life despite being plugged just over a year earlier, hissing gas and bubbling toxic water into the dry Texas dirt.Dressed in bright red coveralls and a silver hard hat, Dunlap hopped off the machine and into the hole to clear away remaining soil with a shovel, and then picked up a brittle chunk of cement that was part of the casing meant to keep fluids and gases underground. He crushed the cement into dust with a light squeeze of his fingers as the Briggs family, who own the ranch, formed a circle around him."This was not plugged properly," Dunlap said. "This is the work of the three stooges of the Railroad Commission."The Railroad Commission (RRC) is the regulatory body that, despite its name, oversees oil and gas operations in Texas. And Dunlap, a three-decade veteran of oil fields around the globe, has become one of its most vocal critics.Armed with a portable gas detector and mobile phone, Dunlap has spent much of the last two-and-a-half years documenting a flurry of oil well blow-outs and leaks across West Texas at the behest of landowners, in an epidemic he says is being caused by low-quality plugging jobs left behind by operators and their contractors and approved by the RRC.He and his partner Sarah Stogner, an oil and gas lawyer who documents their work on social media, say they have now recorded over 100 leaking legacy or "orphan" wells with no responsible owner, which were listed in RRC records as properly plugged, including the one at the Briggs Ranch in Pecos County.Reuters reporting in West Texas, along with interviews with landowners and experts and a review of RRC records show why the state regulator is under increased pressure to step up its oversight. The added scrutiny comes at a time when over the last two years, more and more abandoned wells have started to spill or even gushed geyser-like, formed salt and chemical-laden lakes or caused sinkholes.Making matters worse is the rising pressure pushing up from beneath the ground due to the billions of gallons of wastewater injected back into reservoirs for disposal in latest fracking-led drilling boom in the Permian basin, the largest U.S. oilfield. That pressure, Dunlap says, likely causes the badly plugged wells to burst.The U.S. Environmental Protection Agency said it would investigate whether to revoke the RRC’s permitting authority for waste disposal wells after Texas watchdog group Commission Shift filed a federal complaint alleging mismanagement.RRC spokesperson Patty Ramon said the EPA has not yet contacted them to launch the review, and noted the agency previously commended its underground injection program."We will assist them with any input if they do," Ramon said.Faced with the rising number of calls from worried landowners, Dunlap is running a long-shot campaign to win one of the three RRC seats as a libertarian this autumn, hoping to change the organization from within."It's about seeing that things are done right and not letting oil companies run over the citizens of Texas just because they produce oil and gas and pay some royalties," he told Reuters.Among the changes he would like to see: quicker and better quality plugging of wells, accountability for the oil companies who left them behind, and a new name for the Railroad Commission to make clear it regulates the oil industry. “I spent 27 years roaming the Earth lauding the fact that Texas does it bigger and better than everybody else. So you have to understand that when we started excavating and investigating … it was, quite a bit of a gut punch for me,” said Dunlap, who has worked in 103 countries. Without a solvent owner of record, the responsibility of plugging these orphan wells falls on the RRC, which plans to plug 2,000 wells this year with state funds.While the RRC has documented over 8,500 inactive or unplugged orphan wells in Texas, experts estimate there are thousands more undocumented, the legacy of more than a century of drilling, that are not eligible for closure funding. Meanwhile, oil drillers working new wells in the Permian overlying Texas and New Mexico are accumulating around 24 million barrels daily of "produced water" – the salty mixture that comes up alongside oil and gas, according to Laura Capper with energy advisory EnergyMakers. Between 40-55% of this water is injected in local disposal wells, with much of the rest reused for oil operations, she said.On top of concerns of produced water - laden with chemicals like radium and boron - threatening local aquifers and vegetation, all the drilling, pumping, and reinjection is causing the earth to rise and subside in places and triggering quakes, landowners and activists say.“It is this perfect storm in the Permian with all this produced water, earthquakes and orphan wells,” said Adam Peltz, director of the Environmental Defense Fund’s Energy Program.Deep injections of wastewater have triggered earthquakes, which has led to the RRC restricting new drilling permits in some areas. Shallower injections, however, overpressure the subsurface, causing poorly plugged wells to leak or blow.

Texas earthquakes: Seismologist says people are the main cause — This summer, Texas has registered over 1,000 earthquakes. A few of the stronger ones – Magnitude 4 and above – made headlines in late July.The large number can seem staggering because Texas isn't known for earthquakes. So why have there been so many? In most cases, the earthquakes are small and can't be felt, but as years have passed, higher magnitude quakes have become slightly more common. To unearth the mystery, we spoke with Alexandros Savvaidis, a seismologist, research professor and overseer of the TexNet Earthquake Catalog.“From the tectonic point of view, we don't expect earthquakes in the state of Texas," he said.Savvaidis said Texas is located on the intraplate of the continent, which isn't supposed to see a lot of seismic activity. "But due to the changes in the stress state of the subsurface, we start having earthquakes," he said. "Now, this is happening mostly due to the oil and gas operations."There are two main ways this happens: saltwater disposal and fracking. During oil and gas drilling operations, salt water is produced. To dispose of it, it's put back into the ground by way of a well, which is very deep. Meanwhile, according to the Independent Petroleum Association of America, "hydraulic fracturing (fracking) is the process of injecting liquid and materials at high pressure to create small fractures within tight shale formations to stimulate the production and safely extract energy from an underground well after the drilling has ended."In a nutshell, both practices can disrupt known or unknown fault lines under the surface of the Earth, causing things to shift around.Below is an analysis done by University of Texas researchers, published in 2019:Historical data confirms the recent increase in West Texas earthquakes.Now that this analysis is generally accepted by both scientists and petroleum producers, the job of those at the TexNet Earthquake Catalog is to "provide information about smaller magnitude earthquakes to the public and the industry, so that we can understand the way the seismicity is migrating and that can help us on prevention," according to Savvaidis.The biggest preventative measure he proposed is that Texas may eventually benefit from a "seismic code," or guidelines that protect buildings and people from earthquakes, similar to what California has in place.

Fracking ban starts in Texas city near where technique pioneered (Reuters) - The first ban on new hydraulic fracturing in Texas went into effect on Tuesday in the city of Denton, a month after voters deemed the oil and gas extraction method behind the U.S. energy boom a community nuisance. The Texas Oil & Gas Association, an industry group, and the Texas General Land Office filed a lawsuit shortly after voters in the city of 123,000 approved the ban on Nov. 4. The lawsuit aims to allow the technique known as fracking, widely used in the top crude and natural gas producing state in the country. "Whatever happens next will take place in a courtroom," said Ed Ireland, executive director of the Barnett Shale Energy Education Council, a group aligned with producers. Denton, a college town about 30 miles (50 kms) north of Dallas, sits atop the natural gas-rich Barnett shale formation, which stretches across 24 North Texas counties. Fracking was pioneered in the Barnett and Exxon Mobil's XTO unit has been a significant operator here. Fracking mixes pressurized water, sand and chemicals to release hydrocarbons from rock. Residents in Fort Worth, Denton and other cities above the Barnett, have been at odds with operators, who say the method is safe. Residents and environmental groups says it is noisy, pollutes underground aquifers and is responsible for a series of recent earthquakes to hit the area. The measure in Denton, with about 270 wells, won more than 58 percent of the 25,376 ballots cast, official results showed. Elsewhere, fracking bans met with mixed results in November elections. Voters in three Ohio cities rejected proposed bans while one ban was approved. Proposed bans failed in one California county but passed in two others. Bans approved by voters in some Colorado cities have produced lawsuits. Cathy McMullen, leader of an anti-fracking group that pressed for a vote in Denton, said in a statement: "We're glad our city is listening. We wish we could say the same about our state." After the election, David Porter, senior member of the energy regulatory Texas Railroad Commission, said he is confident that "reason and science will triumph" and the ban will be overturned.

Amid Flagging US Activity, OFS Sector Looks to 2025—and Overseas | Hart Energy -- Oilfield service companies are bracing for a weakened North American market for the remainder of the year as drilling activity fell through the second quarter. But an uptick in international and offshore projects helped much of the sector post strong second quarter financials.The second quarter showed positive momentum across “across the different verticals within the OFS market,” despite a slowdown in U.S. activity, according to an Aug. 10 Evercore ISI report.“The four major oilfield service companies are well-positioned to benefit from the multi-year global upcycle in E&P spending and the increasing demand for energy services and technology,” Evercore analyst James West wrote. “Strong earnings growth and margin expansion are being driven by international and offshore markets.”Jefferies equity research analysts agreed.“Large cap oilfield service companies posted their second quarter earnings with momentum in international activity expected to continue, while North American activity is expected to trend lower in the second half of 2024, as investors look for cycle bottom,” analyst Lloyd Byrne wrote in a July 28 report.Other analysts said that U.S. onshore rig operators may have seen the bottoming of activity in the quarter and many OFS firms are expecting a rebound in 2025.In the second quarter, SLB benefitted from its strong international and offshore exposure, “with significant gains in digital technology adoption and a focus on leveraging its technology leadership,” West said in a report that referred to the sector as “Surfing the Global Upcycle.”Jefferies added that SLB continued its margin expansion, “posting [a] second quarter earnings beat with the company reaffirming expectations of continued strong international outlook, while lowering growth expectations from North America.”SLB EBITDA is projected to grow between 14% and 15% in 2024.Baker Hughes landed $3.5 billion worth of non-LNG equipment contracts during the second quarter, but the company revised its global upstream spending outlook “slightly down” due to North American softness, President and CEO Lorenzo Simonelli said during the company’s July 26 earnings call.Jefferies gave Baker Hughes a “buy” recommendation as “execution at Baker Hughes continues and the company’s stock reacted positively to strong second quarter results and positive revisions to 2024 guidance.” The company’s Industrial & Energy Technology segment continues to outperform with growth expected from LNG and non-LNG operations.Halliburton Co. Chairman, President and CEO Jeff Miller said the company continues to see international markets boosting the company’s bottom line duringthe company’s July 19 earnings call.“Despite lagging North American revenue and strong competition in the pressure pumping business, Miller said Halliburton will allocate capital to the markets and products that drive superior returns and margins.”Jefferies analysts’ bottom line for the company was that “sluggish North American activity impacted Halliburton growth, lowering its price target to $47/share.”“Halliburton’s second quarter revenue missed, but margins were above expectations,” Byrne said.Halliburton’s guidance projects a 2024 decline in North American revenue of 6% to 8% year-over-year and slightly trimmed international revenue outlook.“Our 2024 revenue/EBITDA is revised down by about 3.5% as we incorporate the updated guidance,” Byrne said. Jefferies still rated Halliburton a “buy” recommendation despite the slump.Evercore avoided commenting on the second quarter earnings miss saying, “Halliburton is preparing for a North American land recovery in 2025 and 2026, while its international revenue from Latin America and the Middle East/Asia, shows robust growth.”Rounding out the Big Four OFS firms, Weatherford continued to benefit from international and offshore momentum despite the North American slowdown, according to company executives and analysts’ commentary.Weatherford released its second-quarter financial results on July 24, reporting a 26% increase in adjusted EBITDA margins compared to the first quarter—the company’s highest margins in the past 15 years.For a company threatened by a second bankruptcy in late 2020, President and CEO Girish Saligram called the company quarterly showing a “remarkable turnaround.” As a result, the company’s board authorized its first share buyback program and first quarterly dividend.Evercore sees “favorable growth in the Middle East, Latin America and Asia with a new shareholder return program and improving margins and cash flow” for Weatherford.

Inaugural Mexican LNG Export Cargo Launches from Altamira, NFE Says -After some delays and mixed signals from its vessel, New Fortress Energy Inc. (NFE) has confirmed the first shipment of U.S. natural gas liquefied in Mexico has been loaded and is on the water. In a video published this week, New York-based NFE disclosed it had successfully loaded an LNG cargo at its 1.4 million metric tons/year (mmty) fast liquefied natural gas (FLNG) facility offshore Altamira. Earlier in the month, the company pushed its target for a first cargo shipment in late July to mid-August after a series of delays starting in April. NFE also disclosed its first LNG cargo would be loaded on the Energos Princess and delivered to the Pichilingue liquefied natural gas import terminal in La Paz on Mexico’s Pacific Coast. NFE has a supply agreement with Mexico’s Comisión Federal de Electricidad (CFE) to provide up to 0.3 mmty of LNG to the import terminal in southern Baja California.

Pembina Ramping Up Marketing Efforts for Cedar LNG as Sanctioning Spurs Renewed Interest --Pembina Pipeline Corp. is working to complete contracts this year for the remaining natural gas capacity for the Cedar LNG Partners LP export project in British Columbia, a top executive said last week. Map showing Pembina's midstream assets in Canada. The Calgary-based executive team discussed the marketing efforts for the liquefied natural gas export facility and other projects in the queue during the second quarter conference call. In late June, Pembina and the Haisla Nation sanctioned the 3.3 million metric ton/year floating LNG project, which could begin exports by late 2028.

TTF Rally Ends, but Geopolitical Risks Keep Natural Gas Market on Edge — European natural gas prices declined on Monday, ending a charge higher last week that left the Title Transfer Facility (TTF) to close at its highest level since December. North America LNG Export Flow Tracker. TTF finished near $13 on Friday after Ukrainian troops pushed into Russia, where fighting broke out near key gas infrastructure. The incursion continued Monday, but natural gas continued to flow into Ukraine via the Sudzha intake point at Russia’s western border, and on to Europe. The market also was still bracing for the possibility of a retaliatory strike by Iran against Israel for the assassination of senior Hamas and Hezbollah leaders. For now, however, fundamentals have remained largely unchanged, and TTF fell 2% Monday. Norwegian exports were flowing near capacity to the continent and other supplies remained stable. Storage inventories were at 87.3% of capacity on Monday, compared to the five-year average of 77.2% for this time of year.

Europe’s Russian LNG Imports Again on the Rise -Despite efforts to ban Russian natural gas imports, Europe has been taking in more of it as higher spot prices in the Pacific Basin in recent weeks have drawn more American supplies toward Asia. Europe LNG Imports. Last month, Europe imported nearly 35% of its LNG from the United States and 21% from Russia, according to Kpler. That compared to 39% from the United States and 19% from Russia in June. Over the same time, European LNG imports fell to 6.11 million tons, or a 34-month low amid soft demand. Kpler analyst JP Lacouture told NGI that liquefied natural gas deliveries to Europe from PAO Novatek’s Yamal facility were marginally higher compared to the last few years, with July deliveries to Europe looking similar to 2020 and 2022. However, deliveries from Russia to Europe were up 53% year/year in 2023.

EXPLAINER: Why is natural gas still flowing from Russia to Europe across Ukraine? (AP) — It's one of the more improbable aspects of Russia's invasion of Ukraine: Even after 2 1/2 years of war and repeated rounds of sanctions, Russian natural gas keeps flowing through Ukraine's pipeline network to customers in Europe. That hasn't changed despite Ukraine apparently taking control of a gas measuring station near the Russian town of Sudzha as part of Kyiv’s push into Russia’s Kursk region.Here are key things to know about the transit of Russian gas through Ukraine. Who gets Russian natural gas through Ukraine's pipelines? Natural gas flows from West Siberian gas fields through pipes that pass through Sudzha and cross the Ukrainian border into Ukraine's system. The pipeline enters the European Union at the Ukraine-Slovakia border, then branches off and sends gas to utilities in Austria, Slovakia and Hungary. Natural gas is used to generate electricity, power industrial processes, and in some cases to heat homes. What's the situation at the Sudzha measuring station? Gas is flowing as before. It’s no surprise, since Ukraine could have cut off the flows through their own pipeline system at any time. Actual control over the station is difficult to verify due to military secrecy and lack of access for observers or journalists. On Tuesday, 42.4 million cubic meters of gas were slated to pass through the Sudzha station, according to Ukraine's gas transmission system operator. That's roughly in line with the average for the past 30 days. Why is gas still moving from Russia to Europe? Before the war Ukraine and Russia agreed on a five-year deal under which Russia agreed to send set amounts of gas through Ukraine's pipeline system — set up when both countries were part of the Soviet Union — to Europe. Gazprom earns money from the gas and Ukraine collects transit fees. That agreement runs through the end of this year. Ukraine's energy minister, German Galushchenko, has said Ukraine has no intention of prolonging it or replacing it. Before the war, Russia supplied some 40% of Europe's natural gas through pipelines. Gas flowed through four pipeline systems, one under the Baltic Sea, one through Belarus and Poland, the one through Ukraine, and Turk Stream under the Black Sea through Turkey to Bulgaria. After the war started, Russia cut off most supplies through the Baltic and Belarus-Poland pipelines, citing disputes over a demand for payment in rubles. The Baltic pipeline was blown up in an act of sabotage, but details of the attack remain murky. The Russian cutoff caused an energy crisis in Europe. Germany had to shell out billions of euros to set up floating terminals to import liquefied natural gas that comes by ship, not by pipeline. Users cut back as prices soared. Norway and the U.S. filled the gap, becoming the two largest suppliers. Europe viewed the Russian cutoff as energy blackmail and has outlined plans to completely eliminate Russian gas imports by 2027. Still, Russian gas was never banned — even though the money earned supports Russia's state budget and helps prop up the ruble currency. It's a testimony to how dependent Europe was on Russian energy — and to a lesser extent still is. How important is the gas flowing through Sudzha? About 3% of Europe's gas imports flow through Sudzha, part of the roughly 15% of imports that came from Russia last year. But Europe remains on edge about its energy supply given that it's an energy importer and just suffered an outburst of inflation triggered by high energy prices. The Sudzha flows loom larger for Austria, Slovakia and Hungary, who would have to arrange new supply. What is the future of Russian gas flows to Europe? The European Union has come up with a plan to end imports of Russian fossil fuels entirely by 2027. But progress has been uneven lately. Austria increased its Russian gas imports from 80% to 98% over the past two years. While Italy has cut direct imports, it still gets Russian-origin gas through Austria. And Europe continues to import liquefied gas, which made up 6% of imports last year. Trade data indicate LNG shipments to France more than doubled in the first half of this year. Meanwhile EU members Romania and Hungary have made gas deals with Turkey, which imports gas from Russia. Armida van Rijd, senior research fellow at the Royal Institute of International Affairs in London, says that “Russian gas is being laundered through Azerbaijan and Turkey to meet continued high European demands.” She wrote that European efforts to reduce use of Russian gas are “impressive” so far. But she added that “the political reality is that it is extremely difficult for European countries to fully diversify their energy supplies, when many are already struggling with high inflation and a cost-of-living crisis.”

India imports $2.8 bn crude oil from Russia in July, almost 40% of total oil purchases -India bought USD 2.8 billion worth of crude oil in July from Russia and is the second largest importer, while China remains the largest importer of Russian oil, newswire PTI reported on Friday. India is the world's third-largest oil-consuming and importing nation.Russia became India's biggest supplier of crude oil as Russian oil was given a discount after European nations avoided purchasing it from Moscow following sanctions in the aftermath of Russia's invasion of Ukraine.Before the Russia-Ukraine war, Russian imports were less than one per cent of total oil imports. According to reports, Russian imports now form almost 40 per cent of India's total oil purchases.The report, citing the Centre for Research on Energy and Clean Air (CREA), said that China has 47 per cent of Russian crude exports, followed by India (37 per cent), the EU (7 per cent), and Turkey (6 per cent).Apart from oil, China and India also bought coal from Russia. “From 5 December 2022 until the end of July 2024, China purchased 45 per cent of all Russia's coal exports followed by India (18 per cent). Turkey (10 per cent), South Korea (10 per cent) and Taiwan (5 per cent) round off the top five buyers list,” it said.“India was the second-largest buyer of Russian fossil fuels in July. Almost 80 per cent of India's imports (valued atIndia, which is more than 85 per cent dependent on imports to meet its oil needs, spent USD 11.4 billion in July to import 19.4 million tonnes of crude oil, the PTIreport said citing official data.In July, the discount on Russian Urals-grade crude oil widened by 9 per cent month-on-month to USD 16.76 per barrel compared to Brent crude oil. The discounts on the ESPO grade and Sokol blends remained relatively stable at USD 4.23 per barrel and USD 6.11 per barrel, respectively.According to the PTI report citing CREA, in July, 36 per cent of Russian seaborne crude oil and its products were transported by tankers regulated under the oil price cap. The rest was shipped by 'shadow' tankers and hence was not subjected to the oil price cap policy.The US and Western nations introduced a price cap policy in late 2022 to maintain the prices of Russian oil coming to the global markets, limiting Russia's revenue from crude sales. Russian cargoes could only get Western services such as insurance and shipping for sales below USD 60 a barrel.To avoid the price cap policy, a dark or shadow fleet of oil tankers emerged. The shadow fleet consists of second-hand and old oil tankers with unclear ownership structures to hold them accountable for and follow Western laws.“81 per cent of the total value of Russian seaborne crude oil was transported by 'shadow' tankers, while tankers owned or insured in countries implementing the price cap accounted for 19 per cent,” the report quoted CREA. “Russia's reliance on tankers that are owned or insured in G7 countries has fallen due to the growth of 'shadow' tankers. This subsequently impacts the coalition's leverage to lower the price cap and hit Russia's oil export revenues,” it added.

Why Oil Prices Fell $10 in a Month -- Over the past month, the price of West Texas Intermediate (WTI) has fallen from about $85.00 a barrel to below $75.00 a barrel. Concerns about weaker demand from China have negatively impacted oil prices for a while, and now fears of a U.S. recession have helped further drive prices down. The most recent driver is the negative sentiment pervading the stock market, which has extended its reach into commodities. This heightened volatility has been driven by traders reacting to the fear of a potential U.S. recession, spurred by weaker-than-expected jobs data last Friday. As a result, oil, highly sensitive to economic cycles, has seen a significant downturn in recent weeks. The current decline began with softer U.S. data, including the weaker-than-expected June CPI reading released early in July. “U.S. crude (WTI) pulled back to a 6-month low on Monday as fear took over in markets, with the Japanese Nikkei experiencing the worst performance in 40 years,” notes Daniela Sabin Hathorn, senior market analyst at Capital.com. She adds, “As tends to happen when sentiment takes over, we saw some overreaction in the moves which led to a correction later in the session, supported by stronger ISM non-manufacturing data which helped to calm some of the nerves.” The short-term bias for oil remains to the downside, with further weakness anticipated. The fear of a U.S. recession has dampened future demand expectations, fueling a selling appetite among traders. While ongoing geopolitical risks in the Middle East provide a bullish driver for oil prices, demand concerns currently outweigh the possibility of supply disruptions. On the technical front, WTI faces continued downside pressure. Hathorn highlights that “the price has firmly set below its key moving averages, which now provide some resistance on the topside if a reversal were to happen.” Looking ahead, the lack of impactful economic events on the calendar suggests that sentiment will likely drive market momentum. Hathorn points out that “further commentary from central bankers could drive some of the momentum, especially if there is further talk about an out-of-cycle cut this week, even if it seems highly unlikely.” One critical factor to watch in the coming weeks is the response from OPEC+. The group had planned to start increasing production in October but indicated last week that this decision “could be paused or reversed, depending on prevailing market conditions.” Hathorn explains, “It may be the case that the recent drop in prices won’t allow the cartel to reintroduce higher production as it could drive prices even further. If we were to see the decision to increase production pushed back to a later date, we could see a respite for oil prices.” In summary, while the immediate outlook for oil remains bearish due to recession fears and softer U.S. economic data, the potential actions of OPEC+ and geopolitical risks could still play a crucial role in shaping the market dynamics in the near term.

Oil Market Update: U.S. Recession Fears Eased and Concerns Over Tensions in the Middle East Intensified - The oil market continued to trend higher for a fifth consecutive session, extending gains seen in the previous week as U.S. recession fears eased and concerns over tensions in the Middle East intensified. The market remained supported following last week’s better than expected U.S. data. Last week, three U.S. Federal Reserve officials said that inflation appeared to be cooling enough for the Federal Reserve to cut interest rates as soon as next month. Meanwhile, Iran and Hezbollah have vowed to retaliate for the assassinations of Hamas leader Ismail Haniyeh and Hezbollah military commander Fuad Shukr. The oil market posted a low of $76.70 on the opening and rallied higher throughout the session, extending its gains to $2.85 as it posted a high of $79.69 ahead of the close. It retraced more than 62% of its move from a high of $83.58 to a low of $71.67. The September WTI contract settled up $3.22 at $80.06 and the Brent contract settled up $2.64 at $82.30. The product markets also ended the session in positive territory, with the heating oil market settling up 6.68 cents at $2.4065 and the RB market settling up 5.26 cents at $2.4429. The U.S. Energy Department said the U.S. is seeking another 6 million barrels of oil to help replenish the SPR. OPEC cut its forecast for global oil demand growth in 2024, citing weaker than expected data for the first half of the year and softer expectations for China and also cut its expectation for next year. OPEC, in its monthly report said world oil demand will increase by 2.11 million bpd in 2024, down from growth of 2.25 million bpd expected last month. In the report, OPEC also cut next year’s demand growth estimate to 1.78 million bpd from 1.85 million bpd previously expected. OPEC reported that OPEC+ is pumping 40.9 million bpd in July, up 117,000 bpd on the month, led by an increase from Saudi Arabia. The OPEC report projects demand for OPEC+ crude at 43.8 million bpd in the fourth quarter. The Biden administration said it expects Gaza peace talks to move forward as planned, adding that it believes that a ceasefire agreement is still possible. State Department deputy spokesperson, Vedant Patel, said the department fully expects talks to continue and that it would continue to work with the parties involved, adding that an agreement was still possible. On Sunday, Palestinian militant group Hamas asked mediators to present a plan based upon previous talks instead of engaging in new negotiations for a Gaza ceasefire agreement.According to Axios reporter Barak Ravid, Israeli Defense Minister Yoav Gallant told U.S. Defense Secretary Lloyd Austin on Sunday that Iran was making preparations for a large-scale military attack on Israel.Platts reported that Saudi Aramco has allocated full term volumes to Asian refiners for September crude loadings.IIR Energy U.S. oil refiners are expected to shut in about 308,000 bpd of capacity in the week ending August 16^th, increasing available refining capacity by 354,000 bpd. Offline capacity is expected to fall to 239,000 bpd in the week ending August 23^rd.

Oil prices jump on prospect of widening Middle East war shrinking supply (Reuters) - Oil prices jumped by more than 3% on Monday, rising for a fifth consecutive session on expectations of a widening Middle Eastern conflict that could tighten global crude oil supplies. Global benchmark Brent crude futures settled higher at $82.30 a barrel, gaining $2.64, or 3.3%. U.S. West Texas Intermediate crude futures settled at $80.06 a barrel, up $3.22, or 4.2%. Brent saw its biggest percentage gain for a single trading session this year. The U.S. Defense Department said over the weekend that it will send a guided missile submarine to the Middle East as the region braces for possible attacks on Israel by Iran and allies. "We're piling assets one on top of the other and giving the impression that, if this turns hot, it could also turn ugly," Iran and Hezbollah have vowed to retaliate for the assassinations of Hamas leader Ismail Haniyeh and Hezbollah military commander Fuad Shukr. An attack could widen the Middle Eastern conflict, while tightening access to global crude supplies and boosting prices. Such an assault could lead the United States to place embargos on Iranian crude exports, potentially affecting 1.5 million barrels per day of supply, Yawger said. Meanwhile, Israeli forces continued operations near the southern Gaza city of Khan Younis on Monday following an airstrike over the weekend on a school compound that killed at least 90 people, according to the Gaza Civil Emergency Service. Israel said the death toll was inflated. Hamascast doubt on its participation in new ceasefire talks on Sunday."The market is increasingly concerned about a region-wide conflict there," A broadening war could lead Israel to target Iranian oil and hamper crude output from other significant producers in the area, including Iraq. Brent gained 3.7% last week while WTI rose 4.5%, buoyed by stronger-than-expected U.S. jobs data that fed hopes for an interest-rate cut in the world's biggest consumer of crude oil. "Support is coming from last week's better-than-expected U.S. data, which eased fears of a U.S. recession," Three U.S. central bankers said last week that inflation appeared to be cooling enough for the Federal Reserve to cut interest rates as soon as next month. Rate cuts tend to raise economic activity, which increases the use of energy sources such as oil. Investors were looking ahead to U.S. consumer price index data for July on Wednesday, which is expected to show month-on-month inflation ticked up to 0.2% after a minus-0.1% reading in June. Oil prices drew support when consumer prices in China, the biggest global oil importer, rose faster than expected in July. On Monday Russia evacuated civilians from parts of a second region next to Ukraine after Kyiv increased military activity near the border only days after its biggest incursion into sovereign Russian territory since the start of the war in 2022.

The IEA Kept its 2024 and 2025 Demand Growth Forecasts Below 1 Million Bpd -- The oil market posted an inside trading day as it gave up some of Monday’s sharp gains on concerns over demand. The IEA kept its 2024 and 2025 demand growth forecasts below 1 million bpd. The IEA kept its 2024 global oil demand growth forecast unchanged at 970,000 bpd but cut its 2025 estimate to 950,000 bpd from a previous estimate of 980,000 bpd, citing the impact of Chinese consumption. The crude market posted a high of $80.15 early in the morning. However, as the market failed to breach Monday’s high of $80.16, it erased its gains and sold off to a low of $78.25 in afternoon trading. The market later settled in a sideways trading range ahead of the close. The oil market ended a five day winning streak with the September WTI contract settling down $1.71 at $78.35 and the October Brent contract settling down $1.61 at $80.69. The product markets ended the session lower, with the heating oil market settling down 1.73 cents at $2.3892 and the RB market settling down 6.82 cents at $2.3747. The International Energy Agency kept its 2024 global oil demand growth forecast unchanged at 970,000 bpd but cut its 2025 estimate to 950,000 bpd from a previous estimate of 980,000 bpd, citing the impact of Chinese consumption. The IEA said the end of a post-COVID economic bounce in China was limiting global oil demand, but that advanced economies, specifically the United States, where one-third of global gasoline is consumed, compensated for that loss. The IEA added that the summer driving season in the United States is set to be the strongest since the pandemic and supply cuts by OPEC+ are tightening the physical market. The IEA reported that global observed oil inventories fell by 26.2 million barrels in June following four months of builds.The National Oil Corp said a fire on Libya’s Zaggut-Sidra oil pipeline has been extinguished with no damage or casualties. The fire started during maintenance operations which will continue for a few more hours. Earlier, a port engineer and a Waha company source said the pipeline pumping oil from Libya’s Waha field to Es Sider port was affected by a fire that broke out on the pipeline on Monday, but added that there has been no impact on exports. The source said the incident had no impact on production or exports.Motiva Enterprises began restarting a fluidic catalytic cracker at its 626,000 bpd Port Arthur, Texas refiner on Tuesday. The 81,000 bpd fluid catalytic cracker was shut on July 24^th for repair of a leak. Further leaks were discovered after the initial leak, extending the time the unit was shut to two weeks.Pemex’s Deer Park, Texas facility reported a diesel spill into the Houston Ship Channel on Tuesday. The refinery said it had isolated the site.ExxonMobil on Monday said it has safely restarted its 241,800 b/d refinery in the wake of the July 15^th abrupt plant wide shut down.U.S. producer prices increased less than expected in July as an increase in the cost of goods was tempered by cheaper services, indicating that inflation continued to moderate. The Labor Department’s Bureau of Labor Statistics said the Producer Price Index for final demand increased 0.1% in July after increasing by an unrevised 0.2% in June. In the 12 months through July, the PPI increased 2.2% after increasing 2.7% in June. Excluding food, energy and trade, prices increased 0.3% after increasing 0.1% in June. The core PPI increased 3.3% on the year after increasing 3.2% in June.

Oil prices end lower as Iran attack fears fade and focus turns to demand -- Oil futures ended lower on Tuesday, consolidating after a five-day winning streak, as fears of an imminent Iranian strike on Israel faded and investors turned their attention back to concerns about the outlook for crude demand. West Texas Intermediate crude CL00 for September delivery CL.1 CLU24 fell $1.71, or 2.1%, to close at $78.35 a barrel on the New York Mercantile Exchange. October Brent crude, the global benchmark, settled with a loss of $1.61, or 2%, at $80.69 a barrel on ICE Futures Europe. Back on Nymex, September gasoline dropped 2.8% to end at $2.3747 a gallon, while September heating oil HOU24 shed 0.7% to $2.3892 a gallon.Natural gas for September delivery NGU24 dropped 1.9%, ending at $2.148 per million British thermal units. Crude oil posted a five-day rally, with WTI and Brent scoring August highs on Monday, in a move driven in part by fears of an imminent retaliatory strike by Iran on Israel following the assassination late last month of a top Hamas official in Tehran. "WTI crude is journeying south following a five-day winning streak ... mainly because an expected Middle Eastern escalation hasn't materialized" and, to a lesser extent, because of concerns about the demand outlook, Iran has vowed to retaliate against Israel for the assassination of a top Hamas official in Tehran on July 31. Israel, which has neither confirmed nor denied its involvement in the death of Hamas leader Ismail Haniyeh, put its military on high alert on Monday after observing preparations by Iran and militant group Hezbollah for a potential strike, according to the Wall Street Journal. Reuters on Tuesday reported that Iranian officials said only a ceasefire deal in Gaza stemming from possible talks this week would prevent direct retaliation. In its monthly report, the Paris-based International Energy Agency said it expects demand to rise by less than 1 million barrels a day in both 2024 and 2025, largely unchanged from its July report and far slower than the rise of 2.1 mbd seen last year, due to "comparatively lackluster" macroeconomic drivers. The IEA said that even if the Organization of the Petroleum Exporting Countries and its allies - known as OPEC+ - don't follow through with their plan to begin gradually unwinding some production cuts in the fourth quarter, global inventories could build by an average of 860,000 barrels a day next year as non-OPEC+ supply increases of around 1.5 mbd in 2024 and again in 2025 more than cover expected demand growth. OPEC on Monday slightly lowered its forecast for demand growth for 2024 and 2025, citing softness in China. OPEC's demand-growth forecasts continue to run much higher than the IEA's at 2.11 mbd in 2024 and 1.78 mbd next year. Despite demand concerns, "downside potential in oil prices could be limited as geopolitical tensions persist, contributing to market uncertainty and supporting crude prices. Markets are on edge regarding potential confrontations in the Middle East that could disrupt oil supplies," Crude prices had surged on Monday as worries over a broader Middle East conflict intensified. WTI jumped more than 4%, while Brent rallied 3.3%.

Oil Prices Rise on an Inventory Draw and Hopes of an Interest Rate Cut --Crude oil prices started trade today in Asia with gains following an industry report that saw yet another weekly decline in inventories as well as a smaller-than-expected increase in producer prices that fueled hopes for a rate cut.The American Petroleum Institute reportedan estimated oil inventory decline of 5 million barrels for last week, following a week of a moderate increase. Based on API weekly data, U.S. oil inventories have gained some 400,000 barrels in total since the start of the year. The EIA will report inventory figures later today.Meanwhile, the Bureau of Labor Statistics reported a 0.1% increase in producer prices for July, which was below expectations, with the cost of services declining at the fastest rate in nearly 18 months, Reuters noted in a report. The data seems to have reinforced hopes of a rate cut but such a move by the Fed is far from certain.“Producer price increases cooled this month which is good news for the Fed's inflation fight, but there is no PPI deflation, so Fed officials do not have to rush to judgment and bring rate cuts forward because the economy is headed downhill,” The price jump today follows a 2% drop in prices on Tuesday, which in turn followed the release of the International Energy Agency’s outlook for oil, which featured a warning about slowing demand growth next year. The IEA saw oil demand growing by a modest 950,000 bpd in 2025—a 30,000-bpd downward revision from earlier estimates.The IEA also expected oil markets to swing into a surplus in the final quarter of this year but only if OPEC started unwinding its production cuts, which the cartel has said repeatedly it would only do if the market conditions are conducive to such a move.While the IEA maintained its outlook for global oil demand growth, OPEC lowered its demand growth forecast earlier in the week. The cartel justified the alteration by pointing to disappointing Chinese demand, a factor that has been driving bearish sentiment in markets all year.While oil prices have fallen dramatically over the past month, there has been a relatively strong recovery of late as U.S. recession fears fade, with WTI now moving toward the $79 mark and Brent trading comfortably above $81.

WTI Extends Losses Despite Cushing Stocks Tumbling To 6-Month Lows - Oil prices are lower this morning - following bond yields, bitcoin and big-cap all lower post-CPI - erasing the small gains overnight following API's reported big crude draw. "Macroeconomic eyes remain very much glued on the state of inflation in the United States this week. With US PPI coming in 0.1% softer-than-expected yesterday, any such replication in the CPI reading today will hear not only a clamour of calls for the US Federal Reserve to cut interest rates but see another bout of speculative equity buying," PVM Oil Associates noted. For now, the official DOE data will likely decide the next leg.API

• Crude: -5.2mm
• Cushing: -2.277mm
• Gasoline: -3.689mm
• Distillate: +612k

DOE

• Crude: +1.36mm
• Cushing: -1.665mm
• Gasoline: -2.894mm
• Distillate: -1.673mm

Bucking the API reported draw, DOE official data reports that crude stocks rose last week, ending a six-week streak of draws, but Cushing stockpiles continued to sink as did product inventories... Stocks at the Cushing hub fell to their lowest since Febr The Biden admin added 694k barrels of oil to the SPR... For context, there's a long way to go.. US Crude production dipped off record highs... WTI is extending its losses for now... Graphs Source: Bloomberg

Oil prices fall after Biden says Iran could refrain from attacking Israel if cease-fire reached - Oil futures fell Wednesday with U.S. crude closing below $77 per barrel, after President Joe Biden said Iran might refrain from attacking Israel if a cease-fire deal is reached in Gaza. Biden told reporters Tuesday afternoon his "expectation" is Iran would not strike Israel if a deal is clinched to stop the fighting in Gaza, though he said efforts to broker a cease-fire are "getting hard."A new round of cease-fire talks is scheduled to begin Thursday in Qatar, though Hamas told Reuters that the militant group does not plan to take part in the negotiations.Here are Wednesday's closing energy prices:

• West Texas Intermediate September contract: $76.98 per barrel, down $1.37, or 1.75%. Year to date, U.S. crude oil has gained 7.4%.
• Brent October contract: $79.76 per barrel, down 93 cents, or 1.15%. Year to date, the global benchmark is ahead 3.53%.
• RBOB Gasoline September contract: $2.32 per gallon, down more than 5 cents, or 2.26% Year to date, gasoline is up 10.4%.
• Natural Gas September contract: $2.22 per thousand cubic feet, up 7 cents, or 3.31%. Year to date, gas is down 11.7%.

Iran had vowed to retaliate against Israel after a Hamas leader was assassinated in Tehran two weeks ago. Israel has put its military on high alert, and the U.S. is dispatching a carrier strike group and guided-missile submarine to the region to help defend its ally.U.S. crude oil prices jumped more than 4% on Monday on escalating tensions between Iran and Israel, but have sincepulled back as softening demand in China has weighed on the market."There is still a prevailing view in Washington that Iran does not want a regional war, preferring a grey-zone, proxy conflict," Helima Croft, head of global commodity strategy at RBC Capital Markets, told clients in a research note Tuesday.But the White House efforts to contain the conflict may prove difficult, with a cease-fire deal in Gaza still elusive, according to Croft. Delaying an attack by Iran beyond this week "seems precarious," she wrote.U.S. crude inventories rose by 1.9 million barrels in the week ended Aug. 9, while gasoline stocks fell by 2.9 million barrels, according to data released by the Energy Information Administration Wednesday.Matt Smith, lead oil analyst for the Americas at Kpler, said a modest increase in demand and lower production led to draws for gasoline and diesel. Summer driving season is nearing its end, while hurricane activity will likely ramp up this month before peaking in early September, Smith said.

Oil prices settle 1% lower after surprise rise in US crude stockpiles - Oil prices settled 1% lower on Wednesday after U.S. crude inventories rose unexpectedly and as worries eased slightly that a wider Middle East conflict could threaten supplies from one of the world's major regions for crude production.Brent crude futures closed 93 cents lower, or 1.15%, at $79.76 a barrel. U.S. West Texas Intermediate crude futures fell $1.37, or 1.8%, to $76.98 per barrel. U.S. crude inventories rose by 1.4 million barrels, compared with estimates for a 2.2 million barrel drop, data from the U.S. Energy Information Administration showed. The build was the first after six straight weeks of draws. "That six week draw was a pretty impressive but that's in the rearview mirror." Gasoline and distillate inventories fell more than expected.American Petroleum Institute figures on Tuesday had pointed to a 5.21 million barrel drop last week.Brent had risen more than 3% on Monday to cap a five-day run of gains, closing at $82.30 a barrel, after hitting a seven-month low of $76.30 at the beginning of last week.Iran had vowed a severe response to the killing of the leader of Hamas late last month. Three senior Iranian officials have said that only a ceasefire deal in Gaza would hold Iran back from direct retaliation against Israel for the assassination. Israel has neither confirmed nor denied its involvement, but it is fighting in Gaza against Hamas after the group attacked Israel in October. To counter Iran, the United States Navy has deployed warships and a submarine to the Middle East. "Tighter supplies (from geopolitical tensions) are well priced in," DEMAND WOES Also hindering oil price gains, the International Energy Agency on Tuesday trimmed its 2025 estimate for oil demand growth, citing the impact of a weakened Chinese economy on consumption. That came after OPEC cut expected demand for 2024 for similar reasons. A recent string of dismal indicators have dulled expectations for July economic performance in China, feeding worries about the world's second-largest economy. Globally, jet fuel demand is also poised to soften as a slowdown in consumer spending hits travel budgets, a shift that could weigh on oil prices in coming months."Summer driving season is having its last hurrah, with schools returning and Labor Day fast approaching." U.S. consumer prices rose moderately in July and the annual increase in inflation slowed to below 3% for the first time since early 2021, strengthening expectations the Federal Reserve will cut interest rates next month. Lower interest rates can boost economic activity and oil demand. British consumer price inflation picked up less than expected in July, boosting rate cut bets. Providing a floor for crude prices, Libya's Waha oil company's production was reduced by 115,000 barrels per day due to maintenance on the pipeline pumping oil from the Waha field to Es Sider port, a company source told Reuters on Wednesday.

Oil Prices Rise Amid Hopes of US Interest Rate Cuts | Sada Elbalad - Oil prices rose in early Thursday trading, recovering some of the losses from the previous session. The market was buoyed by hopes that a potential cut in U.S. interest rates could stimulate economic activity and fuel demand. However, ongoing concerns about a global demand slowdown capped the gains. Brent crude futures climbed 17 cents, or 0.2%, to $79.93 per barrel by 00:29 GMT. Meanwhile, U.S. West Texas Intermediate (WTI) crude increased by 23 cents, or 0.3%, to $77.21 per barrel. Both benchmarks had fallen by over 1% on Wednesday following the unexpected rise in U.S. crude inventories and a reduction in fears about the escalation of conflict in the Middle East. Yuki Takashima, an economist at Nomura Securities, commented, "We witnessed a correction in Asian trading, as Wednesday's oil market sell-off was excessive." He added that investors are betting on the Federal Reserve beginning to cut interest rates next month. He continued, "However, oil prices are expected to remain under pressure in the coming period as global demand concerns persist, particularly in China." He predicted that WTI crude could head toward the $72 mark in early August. Data from the U.S. Energy Information Administration on Wednesday revealed that U.S. crude oil inventories rose by 1.4 million barrels in the week ending August 9, compared to estimates of a 2.2 million barrel decline. This marks the first increase in inventories since late June. Earlier this week, the International Energy Agency reduced its 2025 oil demand growth estimates, citing the impact of a weakening Chinese economy on consumption. This followed a similar move by OPEC, which cut its demand forecast for 2024 for similar reasons. Amid demand concerns, oil prices were also supported by investor anxiety over Iran's potential response to the killing of a Hamas leader last month. Three senior Iranian officials stated that only a ceasefire agreement in Gaza would prevent Iran from retaliating directly against Israel for the assassination. On Wednesday, Hamas announced it would not participate in a new round of ceasefire talks in Gaza scheduled for Thursday in Qatar, dampening hopes for a negotiated truce.

Oil rises nearly 2% on upbeat US economic data, geopolitical tension (Reuters) - Oil prices gained more than $1 a barrel on Thursday after U.S. economic data allayed fears of recession in the world's biggest economy, although the rally was limited by concerns of slower global demand. Brent crude futures settled up $1.28, or 1.6%, at $81.04 a barrel. U.S. West Texas Intermediate crude futures rose by $1.18, or 1.53%, to $78.16. Data showed U.S. retail sales rose more than expected in July. Another report showed a smaller-than-expected increase in the number of Americans filing for unemployment benefits."The positive economic data serve as an indicator that we're heading towards a soft landing," Data from the Labor Department on Wednesday showed U.S. consumer prices rose moderately in July. This reinforced expectations the Federal Reserve will cut interest rates next month, which could boost economic activity and oil consumption. Oil prices also drew support from worries about how Iran would respond to the killing of the leader of the Palestinian militant group Hamas last month."Geopolitics and the risk of an expanding conflict in the Middle East are propping up prices, as the threats of retaliation continue to grow louder," A new round of Gaza ceasefire talks was underway in the Qatari capital Doha, as Palestinian health authorities said the death toll from the war surpassed 40,000 and pressure to end the war in the Palestinian enclave mounted. The Russia-Ukraine conflict also kept prices elevated. Russia said on Thursday it would beef up border defenses, improve command and control and send in additional forces, days after Ukraine made the biggest attack on its sovereign territory since World War Two. Both main oil benchmarks had fallen more than 1% on Wednesday after U.S. crude inventories increased unexpectedly.U.S. crude oil stockpiles rose by 1.4 million barrels in the week ended Aug. 9, compared with estimates for a 2.2 million barrel draw, building for the first time since late June. China's factory output growth slowed in July, while refinery output fell for a fourth month, underscoring the country's spotty economic recovery and limiting the upside for crude markets on Thursday.

Oil sits 2% lower after China data fuels demand concerns amid US Fed rate cut hopes; Brent slips below $80/bbl - Global crude oil prices settled down nearly two per cent in the previous session, with Brent crude below $80 a barrel, as investors tempered expectations of demand growth from top oil importer China. Crude oil prices were little changed on the week after Wall Street lifted US Fed's interest rate cut bets. Brent crude futures fell $1.36, or 1.7 per cent, to settle at $79.68 per barrel. US West Texas Intermediate crude futures declined by $1.51, or 1.9 per cent, to $76.65. Last week, Brent crude ended at $79.66 a barrel, and WTI closed at $76.84. Regarding domestic prices, crude oil futures settled 0.6 per cent lower at ₹6,448 per barrel on the multi-commodity exchange (MCX).

• -On Thursday, data from China showed its economy lost momentum in July, with new home prices falling at the fastest pace in nine years, industrial output slowing, and unemployment rising. That has stoked worries among traders about a slump in demand from the top oil importer, where refineries sharply cut crude processing rates last month on tepid fuel demand.
• -The Organization of the Petroleum Exporting Countries (OPEC) cut its forecast for this year's oil demand growth on Monday, citing softness in China. The Paris-based International Energy Agency (IEA) also cited weak demand in China when it slashed its 2025 forecasts on Tuesday.
• -Analysts said that it had been a volatile week in oil markets. On the one hand, there were fears of supply disruptions from a wider Middle East war. Still, slowing growth in China forced revisions of demand forecasts. Analysts added that low liquidity likely fed price volatility this week as many European and North American investors were still on holiday.
• -Oil futures rallied at the start of the week as traders braced for retaliation by Iran against Israel over the slaying of a Hamas leader in Tehran last month. However, some of that risk was priced out because Iran has not struck yet. Analysts said that supply disruptions in the oil market have been more theoretical than actual, allowing the market to focus on demand.
• -A fresh round of Gaza ceasefire talks began on Thursday in Qatar. They have been paused until next week, with involved parties sending mixed signals on progress. Analysts said that provided the situation in the Middle East does not escalate further, the oil price is likely to tread water.
• -A string of data releases from the US kept a floor under oil prices: retail sales beat analysts' expectations, and fewer Americans filed new jobless claims last week, sparking renewed optimism around economic growth in the biggest oil market. Oil prices could lack direction until the US Federal Reserve decides whether to cut interest rates at its September meeting.

‘’Oil prices slipped to $76.83/bbl on Wednesday due to expectations that Iran might refrain from attacking Israel, coupled with an unexpected 1.4 million-barrel increase in US oil inventories,'' ‘’Markets are closely monitoring the Israel-Iran situation, with reports that US President Biden has dispatched three top Middle East advisers to the region this week to help delay potential Iranian and Hezbollah military retaliation against Israel,'' Analysts said that prospects of possible Federal Reserve rate cuts in upcoming policy meetings also bolstered crude oil prices. However, gains are capped by an unexpected build in US oil inventories and mixed economic data from China. ‘’Chinese industrial production grew at a slower pace than anticipated, while the unemployment rate climbed to 5.2 per cent last month, up from five per cent in the previous month. We anticipate that crude oil prices will remain volatile. Crude oil has support at $76.30-75.60 and resistance at $77.50-78.20. In INR, crude oil has support at ₹6,410-6,350 and resistance at ₹6,555-6,610,' said Rahul Kalantri, VP Commodities, Mehta Equities Ltd.

U.S. crude oil falls more than 1% as Gaza cease-fire talks, global demand weigh on market --U.S. crude oil futures fell more than 1% on Friday amid reports that Qatar told Iran to not attack Israel while Gaza cease-fire talks are ongoing.Qatar's prime minister told Iran's leaders in a phone call after the first day of Gaza cease-fire talks in Doha Thursday that they should de-escalate, warning of the consequences of attacking Israel when progress is being made in the negotiations, two diplomats told The Washington Post.The U.S. benchmark ended the week slightly down, 0.25%, while Brent marginally gained 0.03%.Here are Friday's closing energy prices:

• West Texas Intermediate September contract: $76.65 per barrel, down $1.51, or 1.93%. Year to date, U.S. crude oil has gained 6.98%.
• Brent September contract: $79.68 per barrel, down $1.36, or 1.68%. Year to date, the global benchmark is ahead 3.43%.
• RBOB Gasoline September contract: $2.31 per gallon, down more than 4 cents, or 2.03%. Year to date, gasoline is up 9.87%.
• Natural Gas September contract: $2.12 per thousand cubic feet, down 7 cents, or 3.37%. Year to date, gas is down 15.5%.

The cease-fire talks were paused Friday, with negotiations expected to resume next week. Hamas did not participate in the talks, but was briefed by mediators. A senior official with the militant group told Reuters that Israel "did not abide by what was agreed upon" in earlier round of negotiations. Daniel Ghali, senior commodity strategist at TD Securities, said the risk premium appears to be "seeping out of energy markets once again, suggesting traders are curiously disregarding the risk of geopolitical aggressions ahead of the weekend." The U.S. benchmark jumped more than 4% on Monday on fears that an attack by Iran on Israel was drawing closer. Iran has vowed to retaliate over the assassination of a Hamas leader in Tehran in late July. Prices have subsequently pulled back as an assault has not yet materialized. Worries about softening oil demand in China have also weighed on the market, with OPEC lowering its forecast for 2024. Phil Flynn, senior market analyst with the Price Futures Group, said the market appears to be "buying into the thought that global demand growth might not be as strong as some people had originally thought." "The pendulum of price influence keeps swinging between fundamentals and geopolitics, with today's selloff seemingly dictated by negotiations in the Middle East and an ongoing lack of retaliation by Iran,"

One Step Away From The Biggest Oil Shock In History -- The Strait of Hormuz is a narrow strip of water that links the Persian Gulf to the rest of the world. It’s the world’s single-most important energy corridor, and there’s no alternative route. Five of the world’s top 10 oil-producing countries—Saudi Arabia, Iran, Iraq, United Arab Emirates, and Kuwait—border the Persian Gulf, as does Qatar, the world’s largest liquefied natural gas (LNG) exporter. The Strait of Hormuz is their only sea route to the open ocean… and world markets. At its narrowest point, the space available for shipping lanes is just 3.2 kilometers wide. According to the US Energy Information Administration, more than 40% of global oil exports (around 21 million barrels) transit the Strait daily. That’s more than $1.5 billion worth of oil every day. And that’s not considering the immense amount of LNG— about 33% of the world’s daily LNG exports—and other goods transiting the Strait. It’s hard to overstate the importance of the Strait of Hormuz to the global economy. If someone were to disrupt the Strait, it would cause immediate global economic chaos as energy prices skyrocket. Thanks to its commanding geography and expertise in unconventional and asymmetric warfare, Iran can shut down the Strait, and there’s not much anyone can do about it. It’s Iran’s geopolitical trump card. Analysts believe it would take weeks for the US military to reopen it, but nobody really knows if it would ultimately be successful. The Millennium Challenge 2002 war game suggests it wouldn’t be. Military strategists have known about this situation for decades. But no one has found a realistic way to neutralize Iran’s power over the Strait. Iran has been crystal clear that it will close the Strait in the case Israel or the US attacks it. In other words, Iran holds a knife to the throat of the global economy. The US has sought to overthrow the Iranian government since the 1979 Revolution—for over 40 years. Iran’s control over the Strait of Hormuz has always served as a big deterrent to US regime change ambitions and invasion plans. Now, Iran and the US are headed toward a confrontation that will almost certainly disrupt the Strait. The potential outbreak of an enormous regional war in the Middle East could force the US to act against Iran this time. If war breaks out between the US and Iran—an increasingly likely outcome—I have no doubt that Iran will close the Strait of Hormuz. To call that a severe oil supply disruption would be a major understatement.

The Real Reason Iran Hasn’t Retaliated Against Israel -Iran has kept the world on edge since it promised to strike Israel more than two weeks ago -- a move experts say could plunge the region into an all-out war.The promised attack by Islamic republic is meant as retaliation for the July 31 killing in Tehran of Ismail Haniyeh, the political leader of the U.S.- and EU-designated Palestinian terrorist group Hamas.Supreme Leader Ayatollah Ali Khameneisaid after the assassination that Iran was "duty-bound" to avenge its "guest."An Iranian attack has been "imminent" for the past two weeks, and this anticipation has led to frequent bouts of hysteria on social media predicting an attack by Iran and its allies -- including Lebanese militant group Hizballah -- within hours. "I think they really enjoy that: watching Israel stuck in this waiting period, paying a heavy economic and psychological price," said Raz Zimmt, a senior researcher at the Institute for National Security Studies in Tel Aviv.But the fallout from the anticipation is a double-edged sword that also hurts Iran and its allies."The negative impact on Israel, be it the stress to the home front, the military mobilization, and even the economic consequences, will not be limited to Israel, but also affect Iran and Lebanon," warned Michael Horowitz, head of intelligence at the Bahrain-based Le Beck International consultancy. Analysts said the idea Iran is delaying its retaliation because it is relishing the psychological impact it is having is more of an excuse than a proper strategy. They agreed intense domestic debates, the complexity of coordinating with proxies, and assessing the risks associated with an attack have all contributed to Iran's hesitation. Zimmt said Iran is "facing a major dilemma" because while Khamenei and the powerful Islamic Revolutionary Guards Corps (IRGC) want to restore Iran's deterrence vis-a-vis Israel, there are elements in Iran that worry a large-scale attack could drag Iran into a war with Israel and maybe even the United States. Even if a decision on how to respond to Haniyeh's killing has been made, coordinating with Hizballah and other members of the so-called axis of resistance -- Tehran's loosely knit network of regional state and nonstate allies and proxies -- is a time-consuming process. Another factor likely affecting Iran's decision-making is the United States beefing up its military presence in the region more than it did in April ahead of Iran's unprecedented drone and missile attack against Israel. "We're seeing a bigger response [from the United States] than in April, which is probably meant to match the scope of the threat, as Iran may carry out a larger response than the one in April," Horowitz said. "The message [from the United States] in sending both defensive assets -- but also potentially offensive ones -- is one of deterrence and perhaps the only kind of message that does truly matter at this stage." Tehran has rebuffed calls by Western nations to show restraint, insisting it has a legitimate right to respond to Israel's killing of Haniyeh on Iranian territory. Still, the flurry of phone calls made to new President Masud Pezeshkian and acting Foreign Minister Ali Baqeri-Kani have raised speculation that attempts at diplomacy have helped delay an attack and could potentially stave it off."I am skeptical that diplomacy, on its own, is enough to truly change the Iranian calculus," Horowitz said. "Iran will do what it feels is in its best interest, regardless of the calls and statements urging restraint." But Iran has suggested a different kind of diplomacy could convince it to at least "delay" its promised attack: a permanent cease-fire in Gaza between Israel and Hamas. Farzan Sabet, senior research associate at the Geneva Graduate Institute, speculated Iran "may be looking for off-ramps" to justify a toned-down response, and some kind of Gaza cease-fire could be just the "diplomatic victory" it needs to do that. Zimmt said a Gaza cease-fire may not be important to Iran but it does provide Tehran with "an excuse or an explanation to legitimize this delay, both internally and mostly externally."He said a cease-fire could lead to Iran either reducing the scale of its attack or choosing a different method of retaliation altogether that does not involve a direct strike on Israel.It remains a mystery when and how Iran is going to respond, but as things stand Tehran does not seem to have any good options."Decision-makers in Tehran may have vacillated in finding a 'Goldilocks' option," Sabet said.That, he explained, is Iran's conundrum to deliver "a retaliatory strike that is not so weak as to have little symbolic or deterrent value, but not so strong as to cause an uncontrolled cycle of escalation that leads to a larger war."Tehran is effectively left with either a weak response or one that crosses the threshold of war.Both options "entail significant risks," Horowitz said, "either for Iran's regional projection power or the risks Iran could take if it crosses a line and is hit back in return."

Iraq Weekly Roundup: 33 Killed - At least 33 people were killed in recent violence:

• A Turkish soldier was killed in an incident involving Kurdistan Workers’ Party (P.K.K.) guerrillas in Duhok province.
• Turkish strikes in northern Iraq killed 17 guerrillas belonging to Kurdistan Workers’ Party (P.K.K.) forces.
• Four P.K.K. guerrillas were killed in earlier airstrikes.
• Turkish airstrikes also killed eight P.K.K. militants early last week.
• A militia member was killed during an ISIS attack in Tuz Khormato.
• ISIS gunmen killed two security members during a clash in a rural area ofQopi Qaradagh.

Israel Says Iran Poised For Major Retaliation; US Deploys Sub, Hurries Carrier Group -- In a significant shift in its recent assessment of Iran's intentions, Israeli intelligence reportedly now believes that Iran is preparing a major strike on Israel after all -- and that it will happen in the next few days. This comes after Israel had concluded that international pressure and US saber-rattling had persuaded Iran to leave it to Lebanese militant group Hezbollah to strike Israel for blowing up Hamas political leader Ismail Haniyeh in Tehran on July 31.Israeli Defense Minister Yoav Gallant shared his country's latest assessment with US Secretary of Defense Lloyd Austin in a Sunday conversation, Axios reported -- telling Austin that Iranian actions signify the country is readying a major strike. Also on Sunday, Gallant told an Israeli Defense Forces unit that Iran and Hezbollah "are threatening to harm us in a way they haven't done in the past."Israeli intelligence's see-sawing assessment reflects an ongoing debate inside the Iranian government, a source with access to the intelligence told Axios: The Iranian Revolutionary Guards Corps [IRGC] is pushing for a more severe and broader response than Iran's April 13 attack on Israel, but the new Iranian president and his advisers believe a regional escalation now wouldn't serve Iran's interests, the source said.A Pentagon spokesman said Austin assured Gallant that America is committed “to take every possible step to defend Israel and noted the strengthening of U.S. military force posture and capabilities throughout the Middle East in light of escalating regional tensions.”The strengthening of the US force posture included the deployment of the USS Georgia guided missile submarine to the Central Command theater. Armed with up to 154 Tomahawk land-attack cruise missiles, the Kings Bay, Georgia-based vessel recently completed joint training exercises in the Mediterranean with force recon Marines and special operations forces, including units from the UK, Norway and Italy. Austin also ordered the USS Abraham Lincoln carrier strike group, already steaming to the conflict zone laden with F-35C and F/A-18 fighters, to "accelerate its transit", the Pentagon said.

Massive Cyberattack Cripples Central Bank Of Iran: Report -- The opposition and Saudi-affiliated Iran International is reporting that the Central Bank of Iran has been hit with a large-scale cyber attack which is caused major disruption to the banking system across the Islamic Republic. The outlet says the impact of the attack if far-reaching, suggesting it could be one of the largest cyberattacks on Iran's state infrastructure to date, coming amid soaring regional tensions with Israel. Earlier Wednesday, Iran's Supreme leader, Ayatollah Ali Khamenei, warned the country about threats of irregular warfare, stating, "The exaggeration of our enemies' capabilities is intended to spread fear among our people by the US, Britain, and the Zionists. The enemies' hand is not as strong as it is publicized. We must rely on ourselves."He continued, "The enemy's goal is to spread psychological warfare to push us into political and economic retreat and achieve its objectives."Could this reported major cyber attack be the work of Israeli intelligence? Likely many in Iran believe so.Ironically it comes on the heels of claims by US officials and in Western media that Iranian state hackers are actively working toinfluence and interfere in the upcoming US elections.However, there has been no proof of these allegations, but only references to poorly made spoof websites which seek to influence either conservative or liberal voters.As for these Wednesday reports of a major cyber attack targeting Iranian banking, a story picked up in Israeli media as well, Iranian officials have not given official confirmation and state media sources remain silent thus far.

Airlines suspend flights as Middle East tensions rise (Reuters) - Concerns over a wider conflict in the Middle East have prompted international airlines to suspend flights to the region or to avoid affected air space.Below are some of the airlines that have adjusted services to and from the region:

Biden, European Leaders Tell Iran to 'Stand Down' Amid Frenzied Speculation --In a familiar refrain of the past several days, Israel Defense Forces (IDF) Spokesman Rear Adm. Daniel Hagari said Monday the military is on "peak alert" for an attack from Iran or Hezbollah. The White House too believes an attack is imminent or at least within "days" away. At the same time a senior Israeli official told Axios: "The Iranians openly signal (on the ground) their determination to carry out a significant attack in addition to their public statements that the attack will exceed the one they carried out in April."The official additionally observed that "Iranian public statements do not reflect any retreat." Warnings from the West urging Tehran to not retaliate have been on repeat for a week-and-a-half following the July 31st Israeli killing of Hamas leader Ismail Haniyeh in Tehran. The US has been joined by European countries in calling on Iran to "stand down" amid reports of significant Iranian and Hezbollah weapons movement and positioning.US President Joe Biden alongside the leaders of the UK, France, Germany, and Italy issued a fresh joint statement Monday: "We called on Iran to stand down its ongoing threats of a military attack against Israel and discussed the serious consequences for regional security should such an attack take place," a joint statement said after their presidents and prime ministers spoke by phone.As for the IDF, its latest statement also described that the Israeli Air Force has increased its patrols over Lebanon "to detect and intercept threats." "We view the statements of our enemies seriously, and are therefore prepared at the highest level of readiness for defense and attack," it continued.Even the Vatican has tried to intervene toward preventing a broader regional war:Following Haniyeh’s assassination, Iran’s Supreme Leader Ayatollah Ali Khamenei said Haniyeh’s death would “not pass in vain,” and its Islamic Revolutionary Guard Corps warned that “blood vengeance” for the killing is “certain.” Iranian President Masoud Pezeshkian furthered those threats on Monday, telling a Vatican official in a phone call that the assassination warrants Iran’s right to “self defense” and to “respond to an aggressor,” Iranian state news agency IRNA reported.Meanwhile amid fears of the wider Israeli confrontation with the 'Iran axis', the IDF has kept up its operations and strikes inside Gaza.

Alaskan F-22 Fighters Forward Deployed to Support Israel Against Iran: Qatari Airbase Plays Host The U.S. Air Force has forward deployed 12 F-22 Raptor fifth generation fighters to an unconfirmed location in the Middle East. The aircraft are permanently stationed at Joint Base Elmendorf-Richardson in Alaska, and transferred through Royal Air Force (RAF) Lakenheath in the United Kingdom before being forward deployed under the U.S. Central Command, which is responsible for the Middle Eastern theatre. The deployment comes as part of a broader surge in the American military presence in the region, which is intended to maximise Washington’s ability to respond to expected military retaliation by Iran against America’s close security partner Israel. Israel on July 31 launched an unprecedented attack on the Iranian capital Tehran. Among the casualties from the Israeli strike was Chairman of the Hamas Political Bureau Ismail Haniyeh. Iran previously responded to an Israeli attack on its territory in April, after an Israeli strike on an Iranian diplomatic building in Damascus killed two senior generals and 11 others, many of them diplomats. When Iran subsequently retaliated with drone and missile strikes on Israeli targets on April 13, an increased American military presence in the region was key to blunting the impact of the attacks. The expansion of the American military presence thus follows the pattern seen in early-mid April. The F-22 is one of two fifth generation fighter classes fielded by the United States and its allies, and was intended to serve as a heavier more capable counterpart to the cheaper F-35. Issues with the F-22 program, however, resulted in a 75 percent cut to planned production, with the aircraft’s avionics increasingly considered obsolete, particularly compared to new. F-35 variants and to the rival Chinese J-20 fifth generation fighter. The F-22 was initially intended to partly bridge the range gap between top American and Russian fighters favouring the latter, although the program failed to meet these requirements resulting in a fighter with the shortest ranged of any in the world of its size. This is a serious limiting factor in the Middle East in particular, where aircraft are required to cover vast distances for offensive operations, and would see their stealth capabilities compromised by carriage of external fuel tanks or by refuelling operations in the air. Although F-22s were previously stationed at Al Dhafra Airbase in Abu Dhabi, where they were employed for incursions into Syrian airspace to confront Russian and Syrian forces, as well as for strikes on targets in Afghanistan, there have been multiple indications that basing in the country is no longer favoured. The U.S. Air Force in May notably transferred multiple fighter units from bases in the United Arab Emirates to its facilities in Qatar, following a growing rift in relations between Washington and Abu Dhabi as the UAE government made clear it would not allow American air strikes on neighbouring countries from its soil unless it was informed beforehand. The UAE has resisted American pressure to ban the use of telecommunications equipment from the Chinese firm Huawei, and in 2021 also became the first Gulf state ever to place orders for Chinese fighter planes, while Western sources have also alleged that the country has begun to host Chinese military facilities on its soil. These among other factors have led Washington to seek to reduce reliance on military facilities in the country. Unlike Abu Dhabi, Doha has aligned itself very closely with Western Bloc interests, and is accordingly designated a Major Non-NATO Ally of the United States. Alongside F-22s, Al Udeid Airbase in Qatar is reported to have also begun hosting a squadron of U.S. Navy 5th Fleet F-18E/F Super Hornet fighters and an E-2 airborne early warning and control system on August 7. Al Udeid notably first hosted F-22s in June 2019.

White House Says US Is Prepared To Defend Israel From 'Significant' Attack - The White House said Monday that the US is prepared to defend Israel from a “significant” Iranian reprisal attack as the US continues to bolster its forces in the region.The US and Israel are expecting Iran to launch its response to the Israeli killing of Hamas’s political chief, Ismail Haniyeh, in Tehran, and think the attack could happen this week. Iran’s allies, including Hezbollah, the Houthis, and Iraqi Shia militias, may participate in the operation.“We share the same concerns and expectations that our Israeli counterparts have with respect to potential timing here. Could be this week,” White House National Security Council spokesman John Kirby told reporters. “We have to be prepared for what could be a significant set of attacks.”The US helped defend Israel when Iran launched its first-ever attack on Israeli territory in April, which was provoked by the bombing of the Iranian consulate in Damascus, Syria.“We obviously don’t want to see Israel have to defend itself against another onslaught, like they did in April. But, if that’s what comes at them, we will continue to help them defend themselves,” Kirby said.A day earlier, Secretary of Defense Lloyd Austin told his Israeli counterpart, Yoav Gallant, that he had ordered the deployment of the aircraft carrier USS Abraham Lincoln and its strike group to be “accelerated.” He also told Gallant that the US is sending the USS Georgia, a guided-missile submarine.“Secretary Austin reiterated the United States’ commitment to take every possible step to defend Israel and noted the strengthening of US military force posture and capabilities throughout the Middle East in light of escalating regional tensions,” the Pentagon said in a readout of the call.The new pledges from the US to defend Israel came after a poll conducted by the Chicago Council on Global Affairs found that the majority of Americans (56%) oppose the idea of using US troops to defend Israel from Iran.

Israeli strike on Gaza school threatens cease-fire, hostage release talks - An Israeli strike that hit a school in Gaza over the weekend, killing about 100 people, Palestinian officials say, has endangered upcoming cease-fire and hostage release talks between Israel and Hamas. Israel says it targeted the Al-Tabaeen School in Gaza City on Saturday because Hamas fighters were sheltering there, but the strike has fueled concern in Washington and is threatening to undo U.S. progress toward a negotiated deal. Talks were scheduled to continue Thursday after President Biden joined the leaders of Qatar and Egypt last week in urging Israel and Hamas to meet in Cairo or Doha and wrap up the final phases of the long-awaited deal. Hamas said in a statement on Telegram it agreed to an updated proposal on the deal July 2, but that new demands from Israel Prime Minister Benjamin Netanyahu indicates his country wants to keep fighting in Gaza rather than negotiate. The strike on the school is a “heinous crime,” Hamas added, calling on the U.S. and other mediators to compel Israel to agree to the July 2 proposal rather than “provide cover” for more attacks in Gaza. Osama Hamdan, a senior Hamas leader, told a Lebanon channel Monday that Israel “wants to escape the obligations of a cease-fire,” reiterating his support for the proposal already on the table instead of more talks.“There is a document that we have already agreed on,” he said. “We are waiting for the announcement of implementation mechanisms, including the cessation of aggression, withdrawal of Israeli occupation forces, aid delivery, and reconstruction in the Gaza Strip.”The Israeli military claimed Hamas was holding fighters at the school, a charge the Palestinian militant group has denied.“There have been a confirmed 31 terrorists eliminated in the strike on the Hamas stronghold in the Al-Taba’een school, where the terrorists planned to execute attacks against Israel,” the Israeli military said in a post on the social platform X.Military spokesperson Rear Adm. Daniel Hagari said in a video address that forces targeted one specific building in the compound with precise weapons where women and children were not present.Still, the Israeli strike on Al-Tabaeen has led to more international condemnation of Israel’s war in Gaza, where nearly 40,000 Palestinians have died in more than 10 months of war.

Documents Confirm Netanyahu Sabotaged Ceasefire Talks With New Demands - Documents obtained by The New York Times confirmed that Israel added new demands to the ceasefire proposal unveiled by President Biden back in May, an effort by Prime Minister Benjamin Netanyahu to sabotage the chances of a deal.The Times report said that Israeli negotiators believed Netanyahu’s added demands created more obstacles to a deal. This has also been acknowledgedby Mossad Director David Barnea, the Israeli official in charge of the peace talks.The new demands included a screening mechanism for the Israeli military to ensure displaced Palestinians returning to northern Gaza were not armed and indefinite Israeli control of the Gaza-Egypt border, which is not only opposed by Hamas but also by the Egyptian government.In response to the Times report, Netanyahu acknowledged the documents were authentic but claimed he didn’t add new demands. “The charge that Prime Minister Netanyahu added new conditions to the May 27 proposal is false. Prime Minister Netanyahu’s July 27 letter does not introduce extra conditions and certainly does not contradict or undermine the May 27 proposal,” his office said in a statement.Concerning the return of Palestinians to northern Gaza, Netanyahu’s office said the proposal made in May states only “unarmed civilians will be permitted” to cross into northern Gaza. The May proposal does say that displaced Palestinians returning to their homes should not be carrying arms, but it also says the entire population of Gaza will have “freedom of movement” inside the Strip.Netanyahu’s statement did not even address the condition for Israel to maintain control of the Gaza-Egypt border, known as the Philadelphi corridor, which is considered the most contentious demand. Axios reported in July that Netanyahu made the demand after there was a breakthrough in the negotiations concerning the issue of the Gaza-Egypt border. Israel was demanding weapons smuggling through the Philadelphi Corridor be prevented, and Egypt had agreed to build an “underground wall” on the border, which would be funded by the US. “We will not allow the smuggling of weapons to Hamas from Egypt, first and foremost through Israeli control of the Philadelphi Corridor and the Rafah Crossing,” Netanyahu said after those concessions were made.

Russian court orders $1.2 B of Linde UK assets be frozen --A Russian court has ordered that assets worth around $1.15 B of a British subsidiary of German industrial gases company Linde be frozen in a dispute over a gas processing plant, court filings showed on Wednesday. RusChemAlliance, which filed the lawsuit, is a joint venture 50% owned by Russia's Gazprom. RusChemAlliance has filed several other suits against European banks over the construction of a gas processing plant in Russia with Germany's Linde that was terminated due to Western sanctions. RusChemAlliance had asked the Court of Arbitration of St Petersburg and the Leningrad Region to impose interim measures by freezing assets belonging to the subsidiary, Linde Russia UK Limited, worth €746 MM ($820.7 MM) and 30.7 B roubles ($333.3 MM). The claimant argued that freezing assets was necessary as Western sanctions would make it impossible to enforce a future judgement in a jurisdiction that Russia considers “unfriendly,” and that Linde was trying to withdraw its assets from Russian territory, the filings show. RusChemAlliance also argued that Linde companies did not have sufficient assets inside Russia to enforce a judgement. In January 2023, the same court ordered nearly $500 MM of Linde's assets be frozen. The court accepted RusChemAlliance's claim, determining that the British subsidiary's claim rights over several gas plants on Russian territory be frozen, as well as funds in the company's bank accounts, securities and real estate. In 2021, Linde and Renaissance Heavy Industries signed an engineering, procurement and construction (EPC) contract with Gazprom and its partners for the Ust-Luga gas complex. Linde notified the customer in May and June 2022 that it had suspended work under the contract due to European Union sanctions imposed after Russia's invasion of Ukraine. RusChemAlliance has alleged that EU sanctions ban supplying equipment for the liquefied natural gas plant but do not cover equipment required for the other part of the Ust-Luga complex - a gas processing plant.