• 6 hours Oil Pares Gains After API Reports Surprise Crude Inventory Build
  • 7 hours Elon Musk Won’t Get Paid Unless Tesla Does “Extraordinarily Well”
  • 7 hours U.S. Regulators Keep Keystone Capacity Capped At 80 Percent
  • 8 hours Trump Signs Off On 30 Percent Tariff On Imported Solar Equipment
  • 10 hours Russian Funds May Invest In Aramco’s IPO To Boost Oil Ties
  • 11 hours IMF Raises Saudi Arabia Growth Outlook On Higher Oil Prices
  • 12 hours China Is World’s Number-2 In LNG Imports
  • 24 hours EIA Weekly Inventory Data Due Wednesday, Despite Govt. Shutdown
  • 1 day Oklahoma Rig Explodes, Leaving Five Missing
  • 1 day Lloyd’s Sees No Room For Coal In New Investment Strategy
  • 1 day Gunmen Kidnap Nigerian Oil Workers In Oil-Rich Delta Area
  • 1 day Libya’s NOC Restarts Oil Fields
  • 1 day US Orion To Develop Gas Field In Iraq
  • 4 days U.S. On Track To Unseat Saudi Arabia As No.2 Oil Producer In the World
  • 4 days Senior Interior Dept. Official Says Florida Still On Trump’s Draft Drilling Plan
  • 4 days Schlumberger Optimistic In 2018 For Oilfield Services Businesses
  • 4 days Only 1/3 Of Oil Patch Jobs To Return To Canada After Downturn Ends
  • 4 days Statoil, YPF Finalize Joint Vaca Muerta Development Deal
  • 4 days TransCanada Boasts Long-Term Commitments For Keystone XL
  • 4 days Nigeria Files Suit Against JP Morgan Over Oil Field Sale
  • 5 days Chinese Oil Ships Found Violating UN Sanctions On North Korea
  • 5 days Oil Slick From Iranian Tanker Explosion Is Now The Size Of Paris
  • 5 days Nigeria Approves Petroleum Industry Bill After 17 Long Years
  • 5 days Venezuelan Output Drops To 28-Year Low In 2017
  • 5 days OPEC Revises Up Non-OPEC Production Estimates For 2018
  • 5 days Iraq Ready To Sign Deal With BP For Kirkuk Fields
  • 5 days Kinder Morgan Delays Trans Mountain Launch Again
  • 6 days Shell Inks Another Solar Deal
  • 6 days API Reports Seventh Large Crude Draw In Seven Weeks
  • 6 days Maduro’s Advisors Recommend Selling Petro At Steep 60% Discount
  • 6 days EIA: Shale Oil Output To Rise By 1.8 Million Bpd Through Q1 2019
  • 6 days IEA: Don’t Expect Much Oil From Arctic National Wildlife Refuge Before 2030
  • 6 days Minister Says Norway Must Prepare For Arctic Oil Race With Russia
  • 6 days Eight Years Late—UK Hinkley Point C To Be In Service By 2025
  • 6 days Sunk Iranian Oil Tanker Leave Behind Two Slicks
  • 7 days Saudi Arabia Shuns UBS, BofA As Aramco IPO Coordinators
  • 7 days WCS-WTI Spread Narrows As Exports-By-Rail Pick Up
  • 7 days Norway Grants Record 75 New Offshore Exploration Leases
  • 7 days China’s Growing Appetite For Renewables
  • 7 days Chevron To Resume Drilling In Kurdistan
Alt Text

Is An Oil Price Spike Inevitable?

Oil prices have rallied recently…

Alt Text

Two Changing Trends In Oil Shipping

Both U.S. and Asian markets…

Oil Markets Start 2018 With A Bang

Cushing

Despite pipelines in the North Sea and Libya coming back online in 2018, oil has remained above $60 in the new year. These high prices have largely been driven by geopolitical fears across the globe.

(Click to enlarge)

(Click to enlarge)

(Click to enlarge)

(Click to enlarge)

- 2017 was a year of record-breaking U.S crude oil exports. In 2016, the U.S. averaged crude exports of 520,000 bpd, but that figured more than doubled to 1.1 million barrels per day (mb/d) by February 2017, only to hit higher levels as the year wore on.

- Canada remained the top buyer of U.S. crude, as proximity and pipeline interconnections made it an obvious destination.

- But other buyers of American crude emerged in 2017, including the Netherlands, Curacao and China.

Market Movers

BP (NYSE: BP) and Royal Dutch Shell (NYSE: RDS.A) have suggested that the U.S tax overhaul would be positive in the future, but would lead to one-time charges in the fourth quarter of 2017.

• The Forties pipeline is now fully operational. "All restrictions on the flow of oil and gas from platforms feeding into the pipeline system have been lifted and virtually all platforms are now on line," operator Ineos said in a statement on December 30.

• Rising oil prices would benefit shale companies that have relatively less hedging, exposing them to a more positive market. Cowen analysts singled out Anadarko Petroleum (NYSE:APC), EOG Resources (NYSE:EOG) and Continental Resources (NYSE:CLR) as potential winners.

Tuesday January 2, 2018

Oil prices started out the year with some bullish sentiment related to geopolitical flashpoints, while the market fundamentals looked less favorable with the restoration of some key pipelines.

Iran unrest pushes up oil prices. Oil prices remained at more than two-year highs as protests swept across multiple cities in Iran. Crowds of protestors, mainly young people, criticized the government for poor economic conditions. The demonstrations pushed crude prices up a bit, and both WTI and Brent opened above $60 per barrel for the first time in years. "Growing unrest in Iran set the table for a bullish start to 2018," the Schork Report said in a note to clients on Tuesday. Related: Russia’s Grip On European Gas Markets Is Tightening

Tension over North Korea. The saga over North Korea’s nuclear program continues to take new twists and turns. The latest disturbance comes after news that Russian oil tankers helped send oil to North Korea, which would be a violation of UN sanctions. The U.S. has also accused China of violating UN sanctions by shipping crude oil to the isolated North Korea regime.

Forties pipeline back online; Libya too. The return of the Forties pipeline to operation and the restoration of output from North Sea oilfields removed one of the recent bullish catalysts from the oil price equation. Libya’s pipeline outage also came to an end after the damaged pipeline was repaired. So far, the bearish news of resumed oil flows in the North Sea and Libya has been outweighed by the protests in Iran.

Venezuela to launch oil-backed cryptocurrency. The Venezuelan government has said that within days it will launch a new cryptocurrency backed by its 5.3 billion barrels of oil reserves. "Camp one of the Ayacucho block will form the initial backing of this cryptocurrency," Jorge Rodriguez, Venezuela’s communications minister told reporters, referring to a section of the country’s southern Orinoco Belt. "It contains 5.342 billion certified barrels of oil. We're talking about backing of $267 billion.” Few analysts think that Caracas can successfully stage a new cryptocurrency or that it would help the beleaguered government in any real way.

Midstream sector to invest billions in Permian pipelines. Surging oil and gas production from the Permian basin is leading to a flurry of investments in infrastructure able to move all of that product to market. Recently, Phillips 66 (NYSE: PSX) and Enbridge Inc. (NYSE: ENB) announced in a joint venture that they will build the Gray Oak Pipeline, which will have a capacity of 385,000 bpd. More projects are likely in the offing. “There will be billions spent, between natural gas, crude and natural gas liquids,” Aaron Blomquist, managing director, investment banking with Tudor, Pickering, Holt & Co., told the Midland Reporter-Telegram. “Each project will be about $1 billion, so it will be tens of billions. The Kinder Morgan natural gas pipeline (from West Texas to Corpus Christi) alone will cost $1.7 billion”

Drilling costs to rise in 2018. 90 percent of oil producers surveyed by Barclays say that they expect the cost of drilling and producing oil will rise this year. Nearly two-thirds expect the cost of oilfield services to rise by as much as 10 percent. And roughly half of the respondents expect cost inflation to eat away 75 percent of the efficiency gains that the industry has achieved in recent years. A growing number of companies also think that the efficiency gains are at least 25 to 50 percent structural, rather than cyclical. And finally, more than half of the respondents said that they expect to spend within their cash flow this year.

Saudi Arabia boosts gasoline prices. As part of the Kingdom’s wide-reaching economic reforms, the Saudi government has hiked gasoline prices at the start of the year, raising them from 0.75 riyals to 1.37 riyals per liter for Octane 91.

Bioplastics to take a bite out of oil demand. Bloomberg reports that the use of bioplastics derived from plant-based sources like sugar cane, corn and wood will rise by 50 percent over the next five years. The increase of plant-based plastics could dent the prospects of some heady projections for the growth of oil demand from the petrochemical sector. “Biochemicals and bioplastics could erode a portion of oil demand, much like recycling can erode overall virgin plastics demand,” said Pieterjan Van Uytvanck, a senior consultant at Wood Mackenzie. “It will become a larger portion of the supply.” Related: The Biggest Oil Story Of 2017

Russian gas production hits record high in 2017. Russian natural gas production rose by 7.9 percent last year to a record high, edging out the previous high set in 2011. Russia also has more projects in the works, which could allow it to continue to boost output and rival the U.S. for the top spot. New and planned LNG export terminals provide more outlets for Russian gas, while shipments via pipeline to Europe are also on the rise.

+$60 oil needed for new round of rig count additions. A survey from the Dallas Fed finds that oil executives believe that WTI will need to stay above $60 per barrel if the rig count is to continue to climb. The survey finds that the industry believes oil will need to trade between $61 and $65 per barrel if the rig additions are to rise significantly from current levels.

North Dakota oil production up, aided by pipeline. The WSJ notes that the beginning of operations at the Dakota Access pipeline has lowered the cost of shipping crude from the Bakken to the Gulf Coast, while also adding capacity. The early results are positive – North Dakota crude oil production hit a new peak in October at 1.185 mb/d, and output is up 135,000 bpd since the start of the pipeline.

By Tom Kool for Oilprice.com

More Top Reads From Oilprice.com:




Back to homepage


Leave a comment

Leave a comment




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