A Geopolitical Red Herring For Oil Markets

A Trump-Macron bromance briefly brought the oil price rally to a halt on Tuesday. The two leaders hugged and kissed quite a bit during the French President’s visit to Washington, and the oil market took notice when President Trump voiced some “flexibility” regarding a “new deal” with Iran, which took everyone by surprise. French President Emmanuel Macron is pulling out all the stops to convince Trump not to abandon the Iran nuclear deal, including veering from the official EU script by proposing some sort of “new…

Iran Claims Its Oil Exports To India Are Not Dropping

Iran says that its crude oil exports to India have hit 700,000 bpd this month, with sales volume “unprecedented”, Iranian media report, quoting a statement by the Iranian oil ministry. Last week, Reuters reported—citing shipping and industry sources data—that Indian crude oil imports from Iran dropped by 15.7 percent in the fiscal year 2017/18 ended March 31, compared to the previous fiscal year, after India’s state refiners cut supplies from Tehran over a disagreement between Iran and India about the awarding of the…

Are Investors Turning Away From Big Oil?

Earlier this year, when Big Oil reported its results for the final quarter of 2017, analysts projected that investors would be happy, making the industry an attractive investment opportunity once again. Indeed, investors in the most frugal of Big Oil companies were happy and the stock reflected this. However, other Big Oil stocks have suffered and are likely to continue to suffer as investors change their priorities. Bloomberg’s Kevin Crowley and Kelly Gilblom report in a recent story on the topic that Big Oil investors are demanding more…

Oil Majors Are Abandoning Venezuela

The crisis in Venezuela could enter a new phase, with the private companies operating in the country starting to panic. Chevron said on Wednesday that it evacuated executives from Venezuela following the imprisonment of two of its workers last week. The assets of Chevron are increasingly in peril, and the company is showing signs that it might pull the plug. In mid-April, Venezuelan authorities arrested two Chevron employees over refusing to sign contracts with PDVSA. The workers said that PDVSA was offering equipment at inflated prices, so they…

PDVSA Bond Holders Prepare For Interest Payment

A group of investors holding part of a secured US$2.5-billion bond issued by Venezuela’s PDVSA and maturing in 2020 are organizing ahead of an interest payment due to be made this Friday, according to sources who spoke to Bloomberg. The sources remained unnamed because of the private nature of the discussions. PDVSA is due to pay a total US$107 million to its bondholders this Friday. The group, which includes Ashmore Group as the largest bondholder of the 2020 notes, is preparing for a possible disappointment given Venezuela’s near-empty…

Will Higher Oil Prices Boost The Global Economy?

The recent oil price rally is sure to boost petrodollar inflows into the government coffers and sovereign wealth funds of oil producing nations. A part of those petrodollars could flow back into the global markets if oil producing countries boost investments in various asset classes, according to some large investment banks. These potential new petrodollar inflows could be a shot in the arm for global markets at a time when central banks around the world are starting to normalize their monetary policies. Yet, as oil producers struggle to patch…

Expect Much Tighter Oil Markets

As oil prices hover close to multi-year highs, Saudi’s Oil Minister has hit the wires saying that OPEC ‘shouldn’t be complacent and listen to some of the noise such as mission accomplished’ . Just as we learned earlier in this economic cycle via ‘don’t fight the Fed’, we too should take heed: ‘Don’t fight the Falih’. Year-to-date, U.S. crude inventories have risen by 3 million barrels, compared to 53 million barrels for the same period last year. Our seasonal Q1 build has been distinctly errant. While a number of factors can be assigned for such…

Can Japan Dodge Trump’s Trade War?

Japan is trying to avoid getting caught in the crosshairs of President Trump’s tariff maneuverings with countries that have large trade deficits with the U.S. Tokyo said that it wants to promote the export of U.S.-sourced liquefied natural gas (LNG) to Asian countries to help cut the trade deficit with Washington. Masaki Ishikawa, chief of the Trade and Economy Cooperation Bureau in the Ministry of Economy, Trade and Industry, said at a bilateral economic dialogue in Washington on Monday that he hoped it would “broaden the scope of…

UK Needs A Fracked Well A Day To Reduce Gas Imports

The UK will need to have one well per day fracked in the period between 2021 and 2035 if it wants to reduce its natural gas imports by 50 percent, a report from Cardiff Business School has estimated. The report was commissioned by Friends of the Earth. This rate of well fracking means a total of 6,100 wells will need to be drilled in the country over the 14-year period and will involve land takeover on a very large scale, the report’s authors concluded. Not everyone agrees with these findings, however. The Guardian quoted Ken Cronin, head…

World Bank: Oil Prices To Average $65 This Year

Oil prices are expected to average $65 a barrel this year, up from the $53 per barrel average of 2017, driven by strong consumer demand and OPEC’s continued cuts, the World Bank said in its April Commodity Markets Outlook. The World Bank now expects prices of energy commodities—crude oil, natural gas, and coal—to jump as much as 20 percent in 2018, which is a 16-percentage point upward revision from the bank’s previous commodity market outlook from October last year. “Accelerating global growth and rising demand are…

Asia’s Biggest Refiner To Continue Cutting Saudi Crude Oil Imports

Having slashed Saudi crude imports for May by 40 percent, China’s Sinopec—the largest oil refiner in Asia—will continue to cut imports of the flagship Saudi crude grade in June and July, as the prices for other Middle Eastern grades are more favorable, two executives at Sinopec’s trading arm Unipec told Reuters on Tuesday. Earlier this month, Unipec executives said that Sinopec had requested 40 percent lower Saudi oil import loadings for the month of May and that the request had been approved. Sinopec asked for lower Saudi…

Expect Electricity Prices To Rise Soon

Electricity prices in the U.S. (in real terms) have held steady for two decades. A remarkable record achieved because of: cost cutting during the initial days of industry deregulation, the abundance of natural gas that changed the fuel picture for electric generators and the declining cost of capital spurred in part by lower interest rates. In many industries, underperforming managements often look to fob off poor financial performance by claiming that their business has been uniquely victimized by a “perfect storm”. But at least for the U.S.’s…

Oil Prices Dip On Crude, Gasoline Build

After API surprised markets with a 1.1-million-barrel build in crude oil inventories yesterday, the EIA reinforced the mood by reporting a 2.2-million-barrel build for the week to April 20. Analysts had expected a modest build of 290,000 barrels in the period. The authority also said gasoline inventories had gone up by 800,000 barrels in the reporting period, compared with a 3-million-barrel decline a week earlier. Distillate inventories last week fell by 2.6 million barrels, from a drop of 3.1 million barrels reported for the prior week. Gasoline…

Government Pressure Could Cancel CEFC-Rosneft Deal

Beijing’s investigation into energy giant CEFC has significantly affected the acquisition deal for an almost 15-percent interest in Russia’s Rosneft, but the talks between the companies have not been cancelled, a company source told Bloomberg, adding that the investigation will lead to the layoffs of up to half of the company’s 30,000-strong staff. The private Chinese company last year agreed a deal to buy a 14.16-percent interest in Russia’s Rosneft for more than US$9 billion. At the time, the news raised quite a few eyebrows…

Permian On Track To Become Largest Oil Basin In The World

The Permian Basin has long been touted as the fastest growing shale play in the United States, but now its oil-producing prowess is being highlighted again as the Energy Information Administration forecasts the prolific basin’s May production to be 3.183 million bpd—an expected 73,000 bpd rise from April. The Permian play may very well, as Bloomberg Markets suggests, become the largest oil patch in the world over the next decade. If The Permian Was Part of OPEC The United States is quickly become a major contender for top oil producer…

Sudan Extends Invitation To Russian Oil Explorers

Sudan has invited Russian companies to take part in the development of its oil industry, Sputnik reports, quoting the adviser to Sudan’s energy minister. Abdel Zahir Mohammed said that the government had offered Russian energy companies several oil sites, including both producing and untapped ones, as well as fields that are currently being developed by other foreign companies, whom the Russian players would help to increase production. Sudan has been eager to build an oil industry after the split with South Sudan when it seceded in 2011.…

Iran Pushes Back Against The OPEC Deal

Extending the OPEC cuts beyond their current expiry date at the end of 2018 would seem unnecessary if oil prices keep rising, Iran’s Oil Minister Bijan Zangeneh told the Iranian oil ministry’s news service Shana on Monday. “High oil prices, even in the mid-term, would destabilize the prices and put pressure on them against OPEC’s interests,” the official outlet of the Iranian oil ministry quoted Zangeneh as saying. When asked about Iran’s position regarding an extension of the OPEC production cuts beyond 2018,…

Rystad Upbeat About Oilfield Service Providers

Rystad Energy expects a strong performance from the oilfield service sector based on the first-quarter reports of the top three players in this field, which featured an average increase in income from oilfield services sales of 21 percent. Schlumberger, Halliburton and GE Baker Hughes also reported combined revenue growth of 15 percent, in tune with Rystad’s expectations for the period. The consultancy expects the rest of the year to be strong as well, with improvement in oilfield equipment sales slower but present. “With the great…

Brent Breaches $75 As Iranian Sanctions Loom

Brent oil prices topped $75 in early trading on Tuesday as the market grows increasingly worried that the chance of renewed U.S. sanctions on Iran is growing and as Tehran rhetoric flared up. Prices then fell back, with WTI Crude was up 0.23 percent at $68.80 and Brent Crude was up 0.04 percent at $74.04. Today was the first time since November 2014 that Brent hit $75 and, according to analysts, the possibility of sanctions on Iran has been the most significant driver of the oil price rally in recent weeks—the other being the virtually eliminated…

Two Chevron Employees Could Face Treason Charges

Two Chevron Corp. workers arrested in Venezuela last week could face treason charges, according to sources quoted by Reuters on Monday. The draft charges that used the word treason, seen by Chevon’s own lawyers last week, may put Chevron squarely in the middle of the escalating feud between PDVSA and foreign oil companies at best, and between the Trump Administration and Maduro’s socialist regime at worst. The employees, who oversaw the Petropiar project co-owned by PDVSA and Chevron, were jailed when they allegedly refused to sign…

5 Companies To Watch As Commodities Soar

Now could be a good time to jump into commodity stocks. Geopolitical risk is back, which means commodity stocks like oil and gold could benefit from higher volatility—missile strikes in Syria sent the price of oil shooting up to its highest point in four years. With market volatility returning after the quiet of 2017, investors need to look long and hard at what opportunities are worth the risk—and which should be avoided. Luckily, there are plenty of potential winners out there—particularly companies invested in ‘under-the-radar’…

OPEC’s Biggest Problem

OPEC’s spare capacity is not what it once was, a development that opens up a larger upside risk to oil prices. A constant feature of the oil market is the prospect of unforeseen supply outages, whether from war, industrial accidents, sabotage, natural disasters or more mundane operational problems. These outages range from a mere nuisance to a major disruptive event, depending on size, scope and duration of the interruption. OPEC has often stepped in with extra supplies when these events occur, offsetting the lost barrels. IEA member countries…

CenterPoint Energy To Buy Indiana-Based Vectren For $6B

Houston-based CenterPoint Energy and Indiana-based Vectren said on Monday that they had agreed to merge in a US$6-billion transaction to become a leading U.S. energy delivery, infrastructure, and services company. Under the proposed deal, approved by the boards of directors of the two companies, Vectren shareholders will receive US$72.00 in cash for each share of Vectren common stock, and CenterPoint Energy will also assume all outstanding Vectren net debt. CenterPoint expects to fund the deal through a combination of equity and debt. The resulting…

What Is A ‘Fair’ Price For Oil?

Last week, oil prices hit their highest level since late 2014 on the back of continued global and U.S. stockpile drawdowns and expectations that oil demand growth will stay strong this year. Analysts and officials are once again trying to predict what a ‘fair’ price for oil is – a prediction that must take into account the summer driving season, the possibility of new sanctions on Iran, elections in Venezuela and Iraq, continuous OPEC chatter about “mission accomplished or not”, and reports of OPEC kingpin Saudi Arabia…

Russia Bets Big On Arctic Oil

Gazprom Neft, Russia’s fourth largest oil producer, has big plans for its Arctic oil operations, and it seems that neither sanctions nor production cuts can force it to quit its presence there. In fact, the oil division of Gazprom will try to turn itself into what its head of strategy and innovations called “a benchmark,” but not in terms of production. Gazprom Neft wants to become a benchmark in areas such as safety and efficiency, and most notably technology. Arctic drilling was one of the top targets of U.S. sanctions that…

U.S. Oil Looks To Conquer European Market

U.S. crude oil and condensate exports to Europe are expected to hit an all-time high of around 550,000 bpd in April, according to shipping programs, and traders expect the record pace to continue this year as U.S. oil is growing popular with European refiners, often at the expense of oil cargoes from OPEC nations and Russia. According to trade flows monitor in Thomson Reuters Eikon, between January and April this year, U.S. crude oil and condensate exports to Europe jumped fourfold compared to the same period of 2017, to 68 large Aframax tankers.…

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