• 1 hour Dakota Watchdog Warns It Could Revoke Keystone XL Approval
  • 18 hours Oil Prices Rise After API Reports Major Crude Draw
  • 19 hours Citgo President And 5 VPs Arrested On Embezzlement Charges
  • 19 hours Gazprom Speaks Out Against OPEC Production Cut Extension
  • 20 hours Statoil Looks To Lighter Oil To Boost Profitability
  • 21 hours Oil Billionaire Becomes Wind Energy’s Top Influencer
  • 22 hours Transneft Warns Urals Oil Quality Reaching Critical Levels
  • 23 hours Whitefish Energy Suspends Work In Puerto Rico
  • 1 day U.S. Authorities Arrest Two On Major Energy Corruption Scheme
  • 2 days Thanksgiving Gas Prices At 3-Year High
  • 2 days Iraq’s Giant Majnoon Oilfield Attracts Attention Of Supermajors
  • 2 days South Iraq Oil Exports Close To Record High To Offset Kirkuk Drop
  • 2 days Iraqi Forces Find Mass Graves In Oil Wells Near Kirkuk
  • 2 days Chevron Joint Venture Signs $1.7B Oil, Gas Deal In Nigeria
  • 2 days Iraq Steps In To Offset Falling Venezuela Oil Production
  • 2 days ConocoPhillips Sets Price Ceiling For New Projects
  • 5 days Shell Oil Trading Head Steps Down After 29 Years
  • 5 days Higher Oil Prices Reduce North American Oil Bankruptcies
  • 5 days Statoil To Boost Exploration Drilling Offshore Norway In 2018
  • 5 days $1.6 Billion Canadian-US Hydropower Project Approved
  • 5 days Venezuela Officially In Default
  • 5 days Iran Prepares To Export LNG To Boost Trade Relations
  • 5 days Keystone Pipeline Leaks 5,000 Barrels Into Farmland
  • 5 days Saudi Oil Minister: Markets Will Not Rebalance By March
  • 6 days Obscure Dutch Firm Wins Venezuelan Oil Block As Debt Tensions Mount
  • 6 days Rosneft Announces Completion Of World’s Longest Well
  • 6 days Ecuador Won’t Ask Exemption From OPEC Oil Production Cuts
  • 6 days Norway’s $1 Trillion Wealth Fund Proposes To Ditch Oil Stocks
  • 6 days Ecuador Seeks To Clear Schlumberger Debt By End-November
  • 6 days Santos Admits It Rejected $7.2B Takeover Bid
  • 6 days U.S. Senate Panel Votes To Open Alaskan Refuge To Drilling
  • 7 days Africa’s Richest Woman Fired From Sonangol
  • 7 days Oil And Gas M&A Deal Appetite Highest Since 2013
  • 7 days Russian Hackers Target British Energy Industry
  • 7 days Venezuela Signs $3.15B Debt Restructuring Deal With Russia
  • 7 days DOJ: Protestors Interfering With Pipeline Construction Will Be Prosecuted
  • 7 days Lower Oil Prices Benefit European Refiners
  • 7 days World’s Biggest Private Equity Firm Raises $1 Billion To Invest In Oil
  • 8 days Oil Prices Tank After API Reports Strong Build In Crude Inventories
  • 8 days Iraq Oil Revenue Not Enough For Sustainable Development
Alt Text

Is OPEC Deal Compliance About To Crash?

OPEC’s victory lap to celebrate…

Alt Text

The IEA Is Grossly Overestimating Shale Growth

The IEA’s forecast that U.S.…

Alt Text

Oil Prices Nosedive On Bearish IEA Report

Oil prices are cratering after…

Matt Smith

Matt Smith

Taking a voyage across the world of energy with ClipperData’s Director of Commodity Research. Follow on Twitter @ClipperData, @mattvsmith01

More Info

Huge Crude Inventory Build Sparks Wave Of Panic Buying

oil storage

Today's price action has been a case of sell the rumor, buy the (bearish) fact, as the affirmation of a gargantuan crude build from today's weekly EIA report has stoked some buying interest. All we can suggest is that last night's API print took the sting out of today's number, while a surprise draw to gasoline seems to be pulling crude higher by its bootstraps. Hark, here are five things to consider in oil and energy today.

1) It has been announced today by Eni that production has started at the Cabaça South East field in Angola, as part of the East Hub Development project. The field is expected to boost production from the project to 150,000 barrels per day. It will also add to Eni's production volumes from the West Hub project, which is already producing and exporting crude via the N'Goma FPSO (Floating Production Storage and Offloading).

According to our ClipperData, the N'Goma FPSO loaded just over 70,000 bpd last year. Angola has 13 FPSO load points operating offshore Angola, in combination with two export terminals. in terms of exports, we have seen export loadings from the OPEC member pull back in January, down about 100,000 bpd from October's level; this is in line with its commitment to cut 78,000 bpd of production.

Asia accounted for the lion's share of Angolan exports last year, with half of total exports heading to China. North America and Europe are 2nd and 3rd in terms of destinations; combined with Asia, they account for 92 of all export volumes.

(Click to enlarge)

2) Acquisition activity continues apace in the Permian Basin. After two sizable acquisitions in January - Noble Energy's $2.7 billion purchase of Clayton Williams Energy and Exxon's $5.6 billion purchase via stock (plus another potential $1bln) of 275,000 acres from the Bass family - a $2.8 billion purchase of assets by Parsley Energy has just been announced.

It is Parsley's second deal in the Permian in less than a month, adding 71,000 net acres to its portfolio, bringing its total acreage up to 227,000 acres. There were $28 billion of acquisitions in the Permian Basin last year, triple the amount in the prior year. With just the three aforementioned deals, we are already up to $12 billion, and its only early February.

3) Today's weekly EIA report was fairly surreal, with a 13.8 million barrel build to U.S. oil inventories. The majority of this build, some 10.9mn bbls, was seen on the U.S. Gulf Coast, amid an increase in imports. This has propelled U.S. Gulf Coast crude inventories to a record high of 267.6mn bbls.

Despite high inventories across the board for both crude and products, refinery runs continue to outpace year-ago levels. Refinery runs only fell by 54,000 bpd last week, holding 383,000 bpd above year-ago levels.

(Click to enlarge)

4) Calculations from official Chinese data indicate Chinese oil demand in 2016 grew at its slowest pace in at least three years. Implied oil demand growth eased to 2.5 percent last year from 3.1 percent in the year prior. Gasoline consumption was 3.6 percent higher than in 2015. Diesel consumption dropped sharply. The silver lining? LPG consumption is projected to have grown by a whopping 24 percent.

5) Yesterday we discussed how renewables should account for 40 percent of the power generation mix in Europe by 2035. The chart below shows that Germany is already leading the charge on this front, through the ramp up in wind and solar power to offset its shift away from nuclear energy. During this transition period, however, coal has stepped up to fill any supply gaps, being the leading source for power generation last year. Related: Expensive Middle East Crude Could Lose Market Share To U.S. Shale

Germany is about to embark on a new round of wind power auctions, which are set to lower German power prices. Retail power prices have soared in recent years, as consumers have been footing the bill for subsidies via feed-in tariffs to boost the share of renewables in the generation mix.

The next phase is to put fixed annual volumes of wind and solar power up for auction, with 20-year supply contracts up for grabs at a guaranteed price. Allocating these contracts via an auction system means that by encouraging low bids, German consumers will finally see a price break in their utility bills. Six pilot auctions of utility-scale solar power in Germany have already helped to lower prices by more than a quarter since 2015.

(Click to enlarge)

By Matt Smith

More Top Reads From Oilprice.com:

Back to homepage

Leave a comment
  • Kr55 on February 08 2017 said:
    Any info on floating storage? That seems like a place the oil story today would be most interesting as the brent contango has flattened and inventive to store at sea is being taken away. Would expect some of the on land storage increases is floating storage being dumped onto shore.

Leave a comment

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