• 4 hours British Utility Companies Brace For Major Reforms
  • 8 hours Montenegro A ‘Sweet Spot’ Of Untapped Oil, Gas In The Adriatic
  • 10 hours Rosneft CEO: Rising U.S. Shale A Downside Risk To Oil Prices
  • 11 hours Brazil Could Invite More Bids For Unsold Pre-Salt Oil Blocks
  • 12 hours OPEC/Non-OPEC Seek Consensus On Deal Before Nov Summit
  • 13 hours London Stock Exchange Boss Defends Push To Win Aramco IPO
  • 14 hours Rosneft Signs $400M Deal With Kurdistan
  • 17 hours Kinder Morgan Warns About Trans Mountain Delays
  • 23 hours India, China, U.S., Complain Of Venezuelan Crude Oil Quality Issues
  • 1 day Kurdish Kirkuk-Ceyhan Crude Oil Flows Plunge To 225,000 Bpd
  • 1 day Russia, Saudis Team Up To Boost Fracking Tech
  • 2 days Conflicting News Spurs Doubt On Aramco IPO
  • 2 days Exxon Starts Production At New Refinery In Texas
  • 2 days Iraq Asks BP To Redevelop Kirkuk Oil Fields
  • 2 days Oil Prices Rise After U.S. API Reports Strong Crude Inventory Draw
  • 2 days Oil Gains Spur Growth In Canada’s Oil Cities
  • 2 days China To Take 5% Of Rosneft’s Output In New Deal
  • 3 days UAE Oil Giant Seeks Partnership For Possible IPO
  • 3 days Planting Trees Could Cut Emissions As Much As Quitting Oil
  • 3 days VW Fails To Secure Critical Commodity For EVs
  • 3 days Enbridge Pipeline Expansion Finally Approved
  • 3 days Iraqi Forces Seize Control Of North Oil Co Fields In Kirkuk
  • 3 days OPEC Oil Deal Compliance Falls To 86%
  • 3 days U.S. Oil Production To Increase in November As Rig Count Falls
  • 3 days Gazprom Neft Unhappy With OPEC-Russia Production Cut Deal
  • 4 days Disputed Venezuelan Vote Could Lead To More Sanctions, Clashes
  • 4 days EU Urges U.S. Congress To Protect Iran Nuclear Deal
  • 4 days Oil Rig Explosion In Louisiana Leaves 7 Injured, 1 Still Missing
  • 4 days Aramco Says No Plans To Shelve IPO
  • 6 days Trump Passes Iran Nuclear Deal Back to Congress
  • 6 days Texas Shutters More Coal-Fired Plants
  • 7 days Oil Trading Firm Expects Unprecedented U.S. Crude Exports
  • 7 days UK’s FCA Met With Aramco Prior To Proposing Listing Rule Change
  • 7 days Chevron Quits Australian Deepwater Oil Exploration
  • 7 days Europe Braces For End Of Iran Nuclear Deal
  • 7 days Renewable Energy Startup Powering Native American Protest Camp
  • 7 days Husky Energy Set To Restart Pipeline
  • 7 days Russia, Morocco Sign String Of Energy And Military Deals
  • 7 days Norway Looks To Cut Some Of Its Generous Tax Breaks For EVs
  • 8 days China Set To Continue Crude Oil Buying Spree, IEA Says
Alt Text

The Next Big Digital Disruption In Energy

Blockchain technology is transforming the…

Alt Text

Iran Ready For OPEC Oil Deal Extension

Iran is ready to take…

Alt Text

3 Stocks To Play Today’s Hottest Market

Big automakers have jumped on…

$40 Is A Trampoline For Oil Prices Once More

Shale Rig

As crude hopscotches back above the $40 level, it is once again being used as a trampoline, propelling prices higher. Despite the Bank of Blighty (England) cutting interest rates for the first time in seven years, the crude complex is shrugging off dollar strength and rallying strongly for a second day. Hark, here are five things to consider in oil markets today.

1) Under the Petrocaribe energy pact, Venezuela is still selling cheap crude to countries in the Caribbean – all the while its own economy continues to crumble. Petrocaribe was established in 2005 by Hugo Chavez to share Venezuela’s wealth, but fast forward eleven years, and the relationship continues to eat away at Venezuela’s main source of foreign income.

By the end of last year Venezuela was owed ~$23 billion by Petrocaribe countries – with some countries paying their bills using goods instead such as coffee, pasta, black beans and even blue jeans. Cuba is the biggest debtor, owing $15 billion; it has previously paid for oil via an even more unorthodox method – sending doctors, teachers and military advisers the other way.

Even though Venezuela is exporting consistent volumes to the Caribbean, this is dwarfed by how much crude it sends to the United States. Our ClipperData show that Venezuelan exports to the U.S. have averaged 750,000 bpd so far this year, while Caribbean flows are averaging about a fifth of this:

(Click to enlarge)

2) Yesterday’s weekly EIA report showed US crude inputs at 16.85 million barrels per day last week, still tracking close to last year’s level (which in itself is was the five-year high for pretty much the entire of 2015). Runs remain elevated despite strong inventory levels for both crude and products.

That said, yesterday’s solid draw to gasoline stocks has helped the gasoline crack spread to hold above $15/bbl – still $10/bbl lower than this time last year (!) but significantly higher than the $12/bbl seen in mid-July. Last year saw refinery runs peaking at this time, holding above 17 million bpd for two weeks. Refinery runs are surprisingly close to last year’s levels, despite significantly weaker fundamentals this time around. Related: The World’s Biggest Oil Discovery Just Opened For Foreign Ownership

(Click to enlarge)

3) Last week we discussed how fracking an average well requires 3000 tons of sand (or 4,000 tons, according to this article), and how a widespread rally in the share prices of U.S. sand miners is pointing to optimism in drilling activity. Even though sand usage in the fracking industry is well down from its peak in 2014, the expectation is that given increasing use of sand per well, once rig counts start to climb, demand will surpass 2014’s record of 64 million tons.

Brown sand from sand mines in Texas and Arkansas has also recently risen in prominence versus white sand from Wisconsin and Minnesota; although white sand is stronger, brown sand is now seen as equally as capable as a proppant, and is 25 percent cheaper.

(Click to enlarge)

4) With the abundance of new LNG output in the world, the Middle East and North Africa (MENA) are expected to grow their import capacity significantly in the coming years to take advantage of low prices. Related: “Hot Lesbian” Ad Gets Canadian Oil Sands More Publicity Than It Deserves

Capacity at the beginning of this year was 39.1 Bcm (3.78 Bcf/d), but is expected to rise to 97.3 Bcm (9.4 Bcf/d) by 2021, led by Egypt, Kuwait and Morocco, as $10.3 billion is invested into LNG import facilities. MENA is expected to account for 6.5 percent of global LNG demand by the end of next year, up from ~1 percent in 2013.

(Click to enlarge)

5) Finally, Norway’s state-owned oil and gas fields contributed nearly 30 percent less revenue to the government’s coffers for the first half of the year compared to 2015. Revenues dropped to $4.58 billion (38.74 billion kroner), even though output rose by 4 percent.

Norway’s sovereign wealth fund is worth $876 billion; in 2008 (think: $100 oil) the government transferred $45 billion into the fund. In January of this year, it dipped into the fund for the first time ever to help cover a deficit in government spending.

By Matt Smith

More Top Reads From Oilprice.com:




Back to homepage


Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News