AuthorTopic: Oil Price Crash: Who Cooda Node?  (Read 140917 times)

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🤡 Trump’s Dangerous Oil Price Game
« Reply #825 on: May 07, 2019, 12:50:09 AM »
Now you know the reason the Kochs will put the Thumbscrews to Trumpovetsky.

RE

https://oilprice.com/Geopolitics/Middle-East/Trumps-Dangerous-Oil-Price-Game.html

Trump’s Dangerous Oil Price Game
By Nick Cunningham - May 06, 2019, 6:00 PM CDT


Trump’s trade war may have depressed oil prices at the start of the week, but the U.S.’ decision to send warships to the Middle East is an ominous sign of a potential escalation in conflict with Iran. The oil market seesawed on Monday as traders tried to balance these two sources of instability.

U.S. national security adviser John Bolton said that the U.S. was sending a carrier strike group and a bomber task force to the Middle East to send a message to Iran that any attack on U.S. interests would be met with “unrelenting force.” Bolton has always had a particularly hawkish stance on Iran, and reportedly rattled the national security establishment months ago when he requested that they draw up plans for a military strike.

The U.S. decision to send warships to the Middle East needs to be viewed in that context. Bolton, perhaps frustrated by his struggling regime change campaign in Venezuela, has turned his sights back to Iran, a perennial obsession of his.

The move comes only a week after the expiration of waivers on sanctions, and the U.S. is aiming to cut Iranian oil exports to zero. Trump is also looking at other non-oil sanctions as a way to squeeze Iran.

The surge in oil prices so far this year has been a supply-driven phenomenon, with OPEC+ taking 2.2 million barrels per day (mb/d) offline, a figure that includes the involuntary outages in Iran and Venezuela, according to Bank of America Merrill Lynch. “Iran's crude exports fell from a high of nearly 2.5mn b/d to a low of around 600k b/d in December before rebounding this year,” the investment bank wrote in a May 3 note. “As sanctions waivers expire in May, we anticipate further pressure on Iran's exports and anticipate volumes will fall below 500k b/d in 2H19 and could even reach zero depending on how wary buyers are of sanctions.”

Overall global supply outages are now at a multi-decade high of 4 mb/d, the bank said. Historically, every 1 mb/d swing in supply balances equates to a roughly $17-per-barrel move in oil prices, the investment bank said. 

However, while spot and short-term futures prices have climbed significantly this year, longer-dated futures have only moved up modestly. As Bank of America notes, spot prices are up $20 per barrel from December, but three-year futures prices are up only $6. That makes it harder for U.S. shale drillers to hedge future output, which makes it trickier to grow production. In other words, the shale response could be more modest than most people think, at least until the back end of the futures curve rises further.

It also means that OPEC+ has been dealt a “very good hand,” as Bank of America puts it. There is less of a fear that restraining output will stimulate a massive shale response, at least much larger from today’s already record high levels. Moreover, because Saudi Arabia needs higher oil prices to balance its books – Bank of America puts its fiscal breakeven price at about $93 per barrel this year – Riyadh will move slowly in bringing output back online. Bank of America puts the Brent floor price at about $70 per barrel.
Related: China Set To Defy U.S. Sanctions On Iran

The U.S. obsession with Iran puts further upward pressure on crude, and the moving of warships closer to Iran is worrying. The trick, from the Trump administration’s perspective, is how to escalate conflict with Iran (and Venezuela, for that matter) without sending oil prices soaring. High prices are a domestic political threat.

Judging by the reaction of the oil markets on Monday – slightly down during midday trading, but up later in the afternoon – Trump may have found the solution to this predicament. He ramped up the trade war with China at the same time that his administration escalated conflict with Iran. Normally, fears of conflict in the Middle East would drive up prices. But those concerns were clearly offset by the perceived pitfalls to the global economy from Trump’s trade war. So, it seems, Trump can have his Iran conflict and keep oil prices in check at the same time. It may only cost us global economic stability.

By Nick Cunningham of Oilprice.com
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🤡 Iranian Oil Pipeline Explodes
« Reply #826 on: May 08, 2019, 12:11:45 AM »
Sabotage, IMHO.  Should help prop up the prices.  They're taking a beating with Trumpovetsky's latest Trade War.

RE

https://oilprice.com/Latest-Energy-News/World-News/Iranian-Oil-Pipeline-Explodes.html

Iranian Oil Pipeline Explodes
By Irina Slav - May 07, 2019, 9:30 AM CDT


An oil pipeline in the Iranian province of Khuzestan, exploded yesterday, TankerTrackers.com reported citing Iran’s state news agency IRNA and disclosing satellite images of the blast. According to the governor of the province, there were no casualties, IRNA reported. Still, a nearby village has been evacuated.

Later reports from the Associated Press said the fire had also affected a gas pipeline, with five people injured.

The cause of the blast was accidental, according to media reports. The 42-inch pipeline was being repaired and what caused the fire was a bulldozer crashing into the pipeline and an oil spill that caught fire. The valves to linked oil and gas pipelines have been shut off to prevent the fire from spreading, but the oil in the Omidieh pipeline needs to burn in full before repairs can be restarted.

This is the second serious pipeline blast in Khuzestan, Iran’s main oil-producing province, in the last two months. In March, a gas pipeline there exploded, killing four and wounding at least five people. The blast was caused by a gas leakage, according to local government officials. However, a deeper cause of such accidents, some believe, is the combination of inadequate safety measures and aging pipeline infrastructure.

Related: Middle East Oil Giants Are About To Upend Oil Trading

While these factors cause accidental pipeline blasts, sabotage is not unheard of, either, in Khuzestan, which is home to most of Iran’s Arab minority. Separatism is a long-running theme in the area and protests are not infrequent either.

The most recent ones, however, had nothing to do with Arabs versus Persians. They were sparked by massive floods that devastated Khuzestan, with the locals blaming the government for its poor handling of the situation. Some even accused the government of deliberately diverting floodwater away from oil facilities instead of cities. Oil Minister Bijan Zanganeh denied the accusations.

The floods also caused Iran to reduce production at the fields in the affected parts of Khuzestan, although the reduction was not particularly significant, at 20,000 bpd. The floods killed more than 70 people and costs Iran US$2.5 billion in damaged infrastructure, homes, and farmland.

By Irina Slav for Oilprice.com
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🛢️ The Shale Boom Is About To Go Bust
« Reply #827 on: May 10, 2019, 02:33:02 AM »
https://oilprice.com/Energy/Crude-Oil/The-Shale-Boom-Is-About-To-Go-Bust.html

The Shale Boom Is About To Go Bust
By Nick Cunningham - May 09, 2019, 6:00 PM CDT


The shale industry faces an uncertain future as drillers try to outrun the treadmill of precipitous well declines.

For years, companies have deployed an array of drilling techniques to extract more oil and gas out of their wells, steadily intensifying each stage of the operation. Longer laterals, more water, more frac sand, closer spacing of wells – pushing each of these to their limits, for the most part, led to more production. Higher output allowed the industry to outpace the infamous decline rates from shale wells.

In fact, since 2012, average lateral lengths have increased 44 percent to over 7,000 feet and the volume of water used in drilling has surged more than 250 percent, according to a new report for the Post Carbon Institute. Taken together, longer laterals and more prodigious use of water and sand means that a well drilled in 2018 can reach 2.6 times as much reservoir rock as a well drilled in 2012, the report says.

That sounds impressive, but the industry may simply be frontloading production. The suite of drilling techniques “have lowered costs and allowed the resource to be extracted with fewer wells, but have not significantly increased the ultimate recoverable resource,” J. David Hughes, an earth scientist, and author of the Post Carbon report, warned. Technological improvements “don’t change the fundamental characteristics of shale production, they only speed up the boom-to-bust life cycle,” he said.

For a while, there was enough acreage to allow for a blistering growth rate, but the boom days eventually have to come to an end. There are already some signs of strain in the shale patch, where intensification of drilling techniques has begun to see diminishing returns. Putting wells too close together can lead to less reservoir pressure, reducing overall production. The industry is only now reckoning with this so-called “parent-child” well interference problem.

Also, more water and more sand and longer laterals all have their limits. Last year, major shale gas driller EQT drilled a lateral that exceeded 18,000 feet. The company boasted that it would continue to ratchet up the length to as long as 20,000 feet. But EQT quickly found out that it had problems when it exceeded 15,000 feet. “The decision to drill some of the longest horizontal wells ever in shale rocks turned into a costly misstep costing hundreds of millions of dollars,” the Wall Street Journal reported earlier this year.

Ultimately, precipitous decline rates mean that huge volumes of capital are needed just to keep output from declining. In 2018, the industry spent $70 billion on drilling 9,975 wells, according to Hughes, with $54 billion going specifically to oil. “Of the $54 billion spent on tight oil plays in 2018, 70% served to offset field declines and 30% to increase production,” Hughes wrote.

As the shale play matures, the field gets crowded, the sweet spots are all drilled, and some of these operational problems begin to mushroom. “Declining well productivity in some plays, despite application of better technology, are a prelude to what will eventually happen in all plays: production will fall as costs rise,” Hughes said. “Assuming shale production can grow forever based on ever-improving technology is a mistake—geology will ultimately dictate the costs and quantity of resources that can be recovered.”

There are already examples of this scenario unfolding. The Eagle Ford and Bakken, for instance, are both “mature plays,” Hughes argues, in which the best acreage has been picked over. Better technology and an intensification of drilling techniques have arrested decline, and even led to a renewed increase in production. But ultimate recovery won’t be any higher; drilling techniques merely allow “the play to be drained with fewer wells,” Hughes said. And in the case of the Eagle Ford, “there appears to be significant deterioration in longer-term well productivity through overcrowding of wells in sweet spots, resulting in well interference and/or drilling in more marginal areas that are outside of sweet-spots within counties.”

In other words, a more aggressive drilling approach just frontloads production, and leads to exhaustion sooner. “Technology improvements appear to have hit the law of diminishing returns in terms of increasing production—they cannot reverse the realities of over-crowded wells and geology,” Hughes said.

The story is not all that different in the Permian, save for the much higher levels of spending and drilling. Post Carbon estimates that it the Permian requires 2,121 new wells each year just to keep production flat, and in 2018 the industry drilled 4,133 wells, leading to a big jump in output. At such frenzied levels of drilling, the Permian could continue to see production growth in the years ahead, but the steady increase in water and frac sand “have reached their limits.” As a result, “declining well productivity as sweet-spots are exhausted will require higher drilling rates and expenditures in the future to maintain growth and offset field decline,” Hughes warned.

By Nick Cunningham of Oilprice.com
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🛢️ US oil drops 1% as US-China trade tensions increase
« Reply #828 on: May 14, 2019, 03:29:59 AM »
https://www.cnbc.com/2019/05/13/oil-market-us-china-trade-war-global-economy-in-focus.html

US oil drops 1% as US-China trade tensions increase
Published Mon, May 13 2019 5:50 AM EDTUpdated Mon, May 13 2019 2:35 PM EDT
Reuters
   

Oil pumpjacks in the Permian Basin oil field are getting to work as crude oil prices gain.
Spencer Platt | Getty Images

Oil futures fell on Monday with Wall Street, as worries about the Sino-U.S. trade talks spooked investors who had sent oil higher in early trade on concerns that tanker attacks in the Middle East could disrupt supplies.

Brent crude futures were down 42 cents at $70.20 a barrel. U.S. West Texas Intermediate (WTI) crude futures settled down 1%, or 62 cents, at $61.04.

Oil was pressured by a slump in stocks and other risk assets as investors moved into safe havens like Treasury bonds due to the intensifying U.S.-China trade war.

China defied a warning from U.S. President Donald Trump and said it would impose higher tariffs on a range of U.S. goods including frozen vegetables and liquefied natural gas. The move was widely expected after Washington last week raised tariffs on $200 billion in Chinese imports.

Investors fear the trade war between the world’s two largest economies could escalate further and derail the global economy.

Earlier, oil prices had risen more than $1 a barrel after Saudi Arabia said two Saudi oil tankers were among vessels attacked off the coast of the United Arab Emirates. It was unclear how the attacks occurred.

“This attack raises the stakes for oil and will add more volatility,” said Phil Flynn, an analyst at Price Futures Group in Chicago, in a note.

On Sunday, the UAE said four commercial vessels were attacked near Fujairah, one of the world’s largest bunkering hubs. The port lies near the Strait of Hormuz, a vital oil export waterway.

Iran’s foreign ministry described the incidents as “worrisome and dreadful” and called for an investigation.

Saudi Arabia is the largest producer in the Organization of the Petroleum Exporting Countries (OPEC) and the UAE is third.

The U.S. Maritime Administration said in an advisory on Sunday that the incidents off Fujairah, one of seven emirates in the UAE, had not been confirmed and urged caution.

Volumes were strong in early U.S. trading, with more than 710,000 U.S. crude futures contracts changing hands.

Oil prices have risen more than 30 percent this year, supported by supply concerns as the United States imposed sanctions on Iran and Venezuela.

Washington reimposed sanctions on Iran in November after pulling out of a 2015 nuclear accord between Tehran and world powers. Iran insists on exporting at least 1.5 million barrels per day (bpd) of oil, triple May’s expected levels under U.S. sanctions, as a condition for staying in an international nuclear deal, sources with knowledge of Iran-EU talks said.
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More graphs at the link.

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https://seekingalpha.com/article/4263164-natural-gas-lower-expected-inventory-build-poor-price-performance

Natural Gas: A Lower Than Expected Inventory Build And A Poor Price Performance
May 13, 2019 7:15 AM ET

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About: VelocityShares 3x Long Natural Gas ETN (UGAZ), Includes: BOIL, DGAZ, GAZB, KOLD, UNG, UNL
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Summary

Natural gas recovered.

A bullish inventory report on May 9.

Natural gas sits near the recent high, but it is not running anywhere on the upside.

A quiet time of the year.

Natural gas production and consumption grow - Trade the range.

Looking for more? I update all of my investing ideas and strategies to members of Hecht Commodity Report. Get started today »

The price of natural gas was sitting at just over the $2.60 per MMBtu level on Friday, May 9. Since November, the price of the volatile energy commodity has traded in a range from $2.4390 per MMBtu to a high at $4.929. The high came in mid-November, and the low was at the end of April. The price action in the natural gas futures market reflected seasonal factors over recent months. The price hit a high as the peak season of demand approached during the time of the year when stockpiles of the energy commodity decline. It hit a low as inventories began to climb during the start of the injection season.

The vast majority of the price movement in the natural gas futures market occurred from November through February, and since then the price range has declined. As we head into the late spring and summer months, inventories will build in preparation for the winter of 2019/2020. It is likely that we will not see any dramatic price action ion the natural gas futures market over the coming weeks, and maybe even months. Therefore, trading the range in the natural gas market using the Velocity Shares 3X Long Natural Gas ETN product (UGAZ) and its bearish counterpart (DGAZ) could be the optimal approach to the natural gas market as we move towards the summer season.
Natural gas recovered

After a technical breakdown which turned out to be nothing more than a head fake to stop out those holding long positions and to give shorts a brief moment of hope, the price of natural gas turned higher during the week of April 22.

Source: CQG

As the weekly chart shows, the price of nearby natural gas futures fell to its most recent low at $2.439 per MMBtu in late April. In 2018, the low for the year came in February at $2.53. In 2017, the bottom was at $2.522 in February, and in 2016 natural gas fell to a low at $1.611 in March. The price of the energy commodity had made a series of higher lows for three consecutive years before the price dipped below the $2.50 per MMBtu level during the week of April 15 which scared out longs and emboldened shorts. After the selling ran out of steam, the price began to drift higher. The weekly chart shows that price momentum and relative strength turned higher in oversold territory. Since the price moved back into its trading range, above the prior year’s lows, weekly historical volatility fell to under the 18% level at the end of last week. The total number of open long and short positions had turned slightly higher as the price was dropping but stabilized around the 1.277 million contract level as of the end of last week. Natural gas turned higher, and a bullish inventory report from the Energy Information Administration on Thursday, May 9 caused the price to put in a new high on Friday as it traded to $2.647 per MMBtu. While the price of the June futures traded to their highest level since April 15, it did not run away on the upside.
A bullish inventory report on May 9

I had expected inventories of natural gas to rise by 110 billion cubic feet for the week ending on May 3, but the EIA told us that the stockpile build was only 85 bcf.

Source: EIA

As the chart shows, stocks rose to a total of 1.547 trillion cubic feet as of May 3 which was 9% above last year’s level and 16.4% below the five-year average for this time of the year. The withdrawal season ended in late March and stocks fell to a low at 1.107 tcf, but they have climbed by 440,000 bcf over the past five weeks. Stocks will continue to grow until November, which is six months away, at the current rate we could go into the 2019/2020 season with around 3.7 trillion cubic feet of natural gas in storage. However, that will depend on the rate of production and the temperature over the coming summer months. A warmer than average summer season would increase demand for natural gas which is a primary input in the production of electricity in the United States. For the coming week, I expect that stockpiles will grow by more than on May 3 and the EIA will report a build of around 105 bcf into inventories.
Natural gas sits near the recent high, but it is not running anywhere on the upside

The initial reaction to the 85 bcf inventory build on May 9 was not too exciting. However, the price drifted higher on that day and closed the session near the highs of the day. On Friday, natural gas moved to the side and back above the $2.60 per MMBtu level on the June futures contract.

Source: CQG

As the daily chart illustrates, natural gas futures traded to the highest price since mid-April last Friday and closed the week above the $2.60 level for the third time in May and since April 16. Price momentum and relative strength are trending higher above neutral territory while open interest has been gently rising which is a sign that some longs are coming back to the futures market. I would be shocked to see the price take off on the upside from the current level. It is more likely that we will see natural gas trade in a narrow range between $2.50 and $2.90 over the coming weeks and perhaps through June so long as the weather remains around average temperatures. However, in 2017 the price range from May 1 through June 30 on the nearby futures contract was from $2.855 to $3.431, and in 2018 the price was between $2.695 and $3.053 per MMBtu. While a move towards the $3 level is not out of the question, the odds favor lots of selling above $2.85 per MMBtu in the current environment.
A quiet time of the year

Both the supply and the demand side of the fundamental equation for natural gas have expanded over the past years. Massive reserves sitting in the Marcellus and Utica shale regions of the United States continue to support rising output at the current price level. However, the growing demand for natural gas-powered electricity at the expense of coal in the US means that a hot summer could create more stress on the demand side of the fundamental equation. Meanwhile, the LNG business continues to grow, but the stall in trade negotiations between the US and China could cause demand for the natural gas in liquid form to drop from Asia over the coming weeks and months which would put pressure on the price of the energy commodity. The spring and summer months are typically quiet times in the natural gas futures market. No significant signs are telling us that 2019 will be much different from the past years.
Natural gas production and consumption grow- Trade the range

Perhaps the best illustration of the growth of the supply and demand side of the natural gas market in the US comes from looking at the trend in the open interest in the natural gas futures market.

Source: CQG

While the price of natural gas traded in a wide and wild range of $1.02 to $15.65 per MMBtu since 1990, the path of the total number of open long and short positions has steadily risen over the past three decades. The vast majority of risk positions in the futures market comes from hedging by producers and consumers. In the over-the-counter market, banks and financial institutions offer swaps and derivative instruments for hedgers to lock in price risk. The path of the open interest metric is a function of market growth.

If natural gas is going to trade in a narrow range over the coming weeks, buying dips when the price looks awful and taking profits during price recoveries will be the optimal approach to grinding out profits in the natural gas market. While the futures and futures options offered on the NYMEX division of the CME offer the most direct route to trading the energy commodity, the Velocity Shares 3X Long Natural Gas ETN product (UGAZ) and its bearish counterpart (DGAZ) provide an alternative for those who do not trade futures. The fund summary for UGAZ states:

“The investment seeks to replicate, net of expenses, three times the performance of the S&P GSCI Natural Gas Index ER. The index comprises futures contracts on a single commodity and is calculated according to the methodology of the S&P GSCI Index.”

Most recently, the price of June futures rose from $2.477 on April 25 to $2.647 on May 10, a rise of 6.86%.

Source: CQG

Over the same period, the price of UGAZ rose from $21.92 to $26.46 per share or 20.7% which is three times the rise in the price of the June futures on a percentage basis. The bearish DGAZ ETN product is the inverse of the UGAZ product. Both of these products are subject to time decay, which is the cost of the leverage, so they are only appropriate for short-term positions in the natural gas market.

The latest inventory report in the natural gas market was not bearish, but the price is not exploding to the upside as it did not implode to the downside after it broke through a technical resistance level in April. It looks like the energy commodity will trade in a range and buying on weakness and selling on strength will be the best way to enjoy the spring and early summer over the coming weeks.

The Hecht Commodity Report is one of the most comprehensive commodities reports available today from the #2 ranked author in both commodities and precious metals. My weekly report covers the market movements of 20 different commodities and provides bullish, bearish and neutral calls; directional trading recommendations, and actionable ideas for traders. I just reworked the report to make it very actionable!

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: The author always has positions in commodities markets in futures, options, ETF/ETN products, and commodity equities. These long and short positions tend to change on an intraday basis.

The author trades natural gas futures and derivative products from time to time
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🛢️ Natural Gas Prices In The Permian Flip Negative Again
« Reply #830 on: May 23, 2019, 01:06:34 AM »
https://oilprice.com/Energy/Energy-General/Natural-Gas-Prices-In-The-Permian-Flip-Negative-Again.html

Natural Gas Prices In The Permian Flip Negative Again
By Tsvetana Paraskova - May 22, 2019, 11:00 AM CDT


Natural gas prices at the Waha hub in West Texas are negative again this week, for the first time since plunging to an all-time low of minus $4.28 per million British thermal units (MMBtu) in early April, according to data compiled by Reuters.   

On Wednesday, next-day natural gas prices at the Waha hub in the Permian dipped to below zero—to minus $0.40 per MMBtu, for the first negative reading since early April.

According to Reuters estimates, Waha natural gas prices averaged just $0.92 per MMBtu so far in 2019, compared to $2.10 in 2018 and a five-year average of $2.80 between 2014 and 2018.

In early April, prices at the Waha hub plummeted to record low negative levels, as pipeline constraints and problems at compressor stations at one pipeline stranded gas produced in the Permian.

Gas production in the Permian has been rising in lockstep with crude oil production, and even though gas takeaway capacity has attracted less media attention, pipeline constraints for natural gas are similar to those of crude oil pipeline capacity.
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The natural gas takeaway capacity constraints have resulted in more gas flaring in the Permian on the one hand, and in a record-high spread between the Waha gas hub price and the U.S. benchmark Henry Hub in Louisiana, on the other hand.

The very low natural gas prices in the Permian are dragging down exploration and production (E&P) investment returns in the most prolific U.S. shale oil basin, Moody’s said in a report last month.   

The midstream constraints for oil and gas transportation in West Texas and New Mexico have been limiting exploration and production volumes and weakening the realized oil and natural gas prices for producers, Moody’s said in early April.

Case in point: Apache Corporation said in April that it had temporarily delayed natural gas production at its Alpine High play in the Permian in late March to mitigate the impact of the extremely low prices at the Waha hub.

By Tsvetana Paraskova for Oilprice.com
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🛢️Oil Rig Count Falls Amid Oil Price Correction
« Reply #831 on: May 25, 2019, 12:07:26 AM »
https://oilprice.com/Energy/Energy-General/Oil-Rig-Count-Continues-To-Plunge.html

Oil Rig Count Falls Amid Oil Price Correction
By Julianne Geiger - May 24, 2019, 12:20 PM CDT


The the number of active oil and gas rigs fell again in the United States this week according to Baker Hughes, after a string of losses in the weeks prior, keeping the overall rig count well below year-ago levels for a seventh week in a row.

The total number of active oil and gas drilling rigs in the United States fell by 4 according to the report, with the number of active oil rigs falling 5 to reach 797 and the number of gas rigs increasing by 1 to reach 186.   

The combined oil and gas rig count is 983, with oil seeing a 62-rig decrease year on year and gas rigs down 12 since this time last year. The combined oil and gas rig count is down 76 year on year.

Year-to-date, the oil rig count has fallen from 877 active rigs on January 4 to 797, while gas rigs have fallen from 198 to 186 during that same time. Oil rigs are now at their lowest since March 2018, according to Baker Hughes.

At 12:33pm EST, moments before data release, WTI was trading up slightly by $0.04 (+0.07%) at $57.95, after taking a beating the day before. WTI is trading down more than $4 per barrel week on week as the China-US trade war dampens the mood in the market on top of increasing crude oil inventories in the United States.
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The Brent benchmark was trading up as well, by $0.30 (+0.45%) at $66.80—also more than a $4 per barrel drop week on week. 

US oil production ticked up slightly for week ending May 17, coming in at 12.2 million bpd—just 100,000 bpd off the April 26 high of 12.3 million bpd.

Canada’s rig count increased by 15. Canada’s oil rigs are now up 3 year on year, with gas rigs down 6 year on year.

WTI was trading up 0.41% on the day at 1:09pm EST, with Brent up 0.66%.

By Julianne Geiger for Oilprice.com
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🛢️ Will The U.S. Slap Sanctions On Nord Stream 2?
« Reply #832 on: May 30, 2019, 04:38:59 AM »
Gotta sell that "Freedom Gas".  ::)

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https://oilprice.com/Energy/Crude-Oil/Will-The-US-Slap-Sanctions-On-Nord-Stream-2.html

Will The U.S. Slap Sanctions On Nord Stream 2?
By Nick Cunningham - May 23, 2019, 5:00 PM CDT


There is a growing push in the U.S. Congress to slap sanctions on the Nord Stream 2 pipeline.

The pipeline under construction would carry Russian natural gas to Germany, and has been a lightning rod of controversy both in Europe and across the Atlantic. Many governments and officials from Eastern Europe fear deeper dependence on Russia for gas supplies, a sentiment echoed by the U.S. government. Meanwhile, many in Western Europe are less concerned, viewing Russia as a rather reliable low-cost supplier of gas.

The U.S. has long tried to pry away Europe from Russia for geopolitical ends, and Nord Stream 2 is merely the latest chapter in this Cold War-era calculus. But, increasingly, the pipeline has commercial implications for the United States. The U.S. has become a major exporter of LNG, a position that will only grow over time with several gas export terminals along the Gulf Coast. The flood of shale gas is finding its way around the world.

At first, when U.S. LNG exports began in 2016, shipments were going to a smattering of countries in Latin America and the Caribbean. Soon, top importers included South Korea, Japan and China. Only a handful of countries in Europe have imported U.S. LNG in any significant way.

But that is starting to change with more U.S. shipments arriving in European ports. U.S. Secretary of Energy Rick Perry has likened U.S. gas to American soldiers liberating Europe from the Nazis. “The United States is again delivering a form of freedom to the European continent,” he told reporters in Brussels earlier this month. “And rather than in the form of young American soldiers, it’s in the form of liquefied natural gas.”
Related: Moscow May Use ‘Nuclear Option’ In European Gas Race

Over-the-top American bravado notwithstanding, U.S LNG shipments to Europe are on the rise. The wave of new LNG export terminals coming online this year – in the U.S., but also in Australia, among other places – has led to a glut for LNG. Spot prices in Asia have collapsed. Lower prices have made Europe a more attractive destination for gas, particularly as transit costs are lower than for shipments heading to Asia. The U.S.-China trade war has also boxed out American LNG from China, rerouting cargoes elsewhere. 
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As a result, more U.S. LNG has found its way to Europe (although in grand scheme of things, the U.S. is a marginal supplier of gas to Europe when compared to Russia, Norway or Algeria). However, gas prices in Europe, too, have collapsed, which pose a challenge to U.S. LNG exporters.

The U.S. government may offer a lifeline to gas exporters in Texas and Louisiana by targeting Nord Stream 2. Recently, Sec. Perry predicted that U.S. sanctions on Nord Stream 2 were coming in the “not too distant future.” Sanctions would hit companies working on the project. 

It may or may not be a coincidence that some of the biggest proponents of sanctioning Nord Stream 2 hail from Texas, home to a growing number of LNG export terminals. “We are looking at that issue,” Rep. Michael McCaul (R-TX), ranking member of the House Foreign Relations Committee, told Politico, referring to sanctions. “I think we're going to have legislation on it as well. The pipeline is going to empower Russia. I'm against it,” Rep. McCaul said. Senator Ted Cruz (R-TX) has spearheaded a sanctions bill in the Senate.
Related: The Fear Driven Oil Price Rally Won’t Last

But, to be clear, the fight to punish Russia has bipartisan support. Politico’s Morning Energy pointed out that the House Foreign Affairs Committee unanimously approved a bill sponsored by Rep. Denny Heck (D-WA), which calls on Congress to “continue to oppose construction of the Nord Stream 2 pipeline and other Russian Federation gas pipelines in northern Europe; and take affirmative diplomatic steps to halt the construction of such pipelines.” Meanwhile, the Chairman of the committee, Rep. Eliot Engel (D-NY) told Politico that he was open to sanctions on technologies used for the Nord Stream 2 pipeline.

The overarching motivation for American politicians in targeting Nord Stream 2 continues to be geopolitical – reducing European dependence on Russian gas. However, cutting down on Russia’s market share in Europe over the long run would also have major implications for the billions of dollars’ worth of investments along the U.S. Gulf Coast. And because there is almost no constituency in the Congress in favor of Nord Stream 2, Sec. Perry might be correct in saying that sanctions are on the way.

By Nick Cunningham of Oilprice.com     
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🛢️ Oil Prices Tank After Bearish U.S. Inventory Data
« Reply #833 on: May 30, 2019, 01:40:29 PM »
https://www.investing.com/news/commodities-news/oil-prices-tank-after-bearish-us-inventory-data-1883259

Oil Prices Tank After Bearish U.S. Inventory Data
Commodities4 hours ago (May 30, 2019 11:33AM ET)


Investing.com - U.S. crude oil inventories fell less than forecast last week, with an implied lack of refinery activity making some analysts question whether West Texas Intermediate oil will be able to hold above $55.

The Energy Information Administration said in its regular weekly report that crude oil inventories decreased by just 0.28 million barrels in the week to May 24.

That was compared to forecasts for a stockpile draw of 0.86 million barrels after a build of 4.74 million barrels in the previous week.

The EIA report also showed that gasoline inventories increased by 2.20 million barrels, compared to expectations for a drop of 0.53 million barrels, while, on the bullish side, distillate stockpiles fell by 1.62 million barrels, compared to forecasts for a build of 0.56 million.

The data was delayed by a day this week due to Monday’s Memorial Day holiday.

U.S. crude prices extended losses after the release, falling 1.8% at $57.73 a barrel by 11:31 AM ET (15:31 GMT), compared to $58.71 prior to the publication.

London-traded Brent crude futures lost 2.6% to $66.08 a barrel, compared to $67.27 ahead of the release.

Investing.com senior commodity analyst Barani Krishnan said the price move was unsurprising given the “extremely bearish data set” which raises the question of where the refiners are.

“While refinery runs did go up from the previous week to the season norm of above 90%, the smaller-than-expected draw is still indicative that refiners are hampered by the weak crack margins we have now for gas,” he said.

“If (refiners) don't ramp up their runs by next week, I think WTI will have serious problems holding above $55, whether OPEC continues cutting or not,” Krishnan concluded.

Oil has been under pressure this week as trade tensions between the U.S. and China escalate. The ongoing conflict between the world’s two largest economies runs the risk of derailing global growth, implying a negative impact on demand for crude.

Contrasting a slowdown in demand, supply is tightening thanks to the OPEC-led production cuts, U.S. sanctions on Iran and Venezuela and disruptions from Nigeria to Russia.

Ellen Wald, president of energy and geopolitics firm Transversal Consulting and an Investing.com contributor, noted that 2019 has been good to oil traders as prices have increased steadily since the beginning of the year.

“However, the pendulum of good news/bad news may finally be swinging more heavily to the negative side, as signs of global economic slowdown get stronger,” Wald warned.

But faced with tightening supply, Wald postulates that the “conflicting signals mean the surprises may very well continue”.
Oil Prices Tank After Bearish U.S. Inventory Data
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🛢️ Oil prices slide as trade wars roil financial markets
« Reply #834 on: June 03, 2019, 12:19:58 AM »
Lower & Lower we go...where it stops nobody knows...


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https://www.cnbc.com/2019/06/03/oil-market-us-china-trade-war-us-crude-stockpiles-in-focus.html

Oil prices slide as trade wars roil financial markets
Published 4 hours agoUpdated 2 hours ago

Key Points

    Front-month Brent crude futures were at $61.16 at 0109 GMT. That was 83 cents, or 1.3%, below Friday’s close.
    U.S. West Texas Intermediate (WTI) crude futures were at $52.88 per barrel, down 62 cents, or 1.2% from its last settlement.


Getty Images

Oil prices fell more than 1% on Monday, extending losses of over 3% from Friday, when crude markets racked up their biggest monthly losses in six months amid stalling demand and as trade wars fanned fears of a global economic slowdown.

Front-month Brent crude futures were at $61.16 at 0109 GMT. That was 83 cents, or 1.3%, below Friday’s close.

U.S. West Texas Intermediate (WTI) crude futures were at $52.88 per barrel, down 62 cents, or 1.2% from its last settlement.

The drops followed price slumps of more than 3% on Friday, which made May the worst-performing month for crude futures since last November.

“Oil prices slid on fresh trade worries after U.S. President Donald Trump stoked global trade tensions by threatening tariffs on Mexico, which is one of the largest U.S. trade partners and a major supplier of crude oil, ” said Mithun Fernando, investment analyst at Australia’s Rivkin Securities, in a note on Monday.

Edward Moya, senior market analyst at futures brokerage OANDA in New York, said last month’s crude oil price fall of more than 10% was “the worst May performance in seven years as the escalation of the global trade war saw the global growth outlook crumble.”

Moya warned “geopolitical risks remain in place” and added that “oil remains vulnerable” because of a weakening demand outlook for crude.

“The U.S.-China feud remains most critical to the global growth outlook, but the addition of trade tensions between the U.S. and Mexico raised the slower demand picture for the Americas, ” he said.

Barclays bank said in a note published last Friday that U.S. March oil consumption “declined significantly year-on-year for the first time since September 2017 ...(as) petroleum demand fell almost 370,000 barrels per day (bpd) year-on-year on weak consumption across the barrel.”
Rising US supply

U.S. bank Goldman Sachs said in a note published on Sunday that “escalating trade wars and weaker activity indicators have finally caught up with oil market sentiment”.

Brent crude oil prices have dropped almost 20% from their 2018-peak in late April.

“The magnitude and velocity of the move lower were further exacerbated by growing concerns over strong U.S. production growth and rising inventories,” Goldman said.

U.S. energy firms this week increased the number of oil rigs operating for the first time in four weeks, and weekly production last stood at a record 12.3 million barrels per day (bpd).

That’s pushed up commercial U.S. crude oil inventories, which have increased by 8.4% since the start of the year to 476.5 million barrels.

“With an increasingly uncertain macro outlook as well as rising U.S. production and large available core-OPEC spare capacity helping offset declining supply from Iran and Venezuela, we instead expect prices will likely remain around our 3Q forecasts and current levels, albeit with still high price volatility, ” Goldman said.

The bank’s Brent price forecast for the third quarter of this year was $65.50 per barrel.
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🛢️ Oil prices fall on rise in US inventories, supply worries
« Reply #835 on: June 05, 2019, 12:02:35 AM »
Pump prices here still in the $3.25 range.  I'm gonna wait until next month to fill up when it gets into the $2 neighborhood.  :icon_sunny:

RE

https://www.cnbc.com/2019/06/05/oil-markets-us-crude-inventories-rosneft-comments-in-focus.html

Oil prices fall on rise in US inventories, supply worries
Published 4 hours agoUpdated 2 hours ago
Reuters
   
Key Points

    Brent futures were down 27 cents, or 0.4%, at $61.70 a barrel by 0152 GMT. They rose 1.1% on Tuesday after a near 13 percent fall in the previous four sessions.
    U.S. West Texas Intermediate (WTI) crude was down by 32 cents, or 0.6%, at $53.16 a barrel. The U.S. benchmark closed 0.4% higher on Tuesday.


A Petrobras oil platform floats in the Atlantic Ocean near Guanabara Bay in Rio de Janeiro.
Getty Images

Oil prices resumed their slide on Wednesday, dragged down by a surprise gain in U.S. inventories and comments from the head of Russian state oil producer Rosneft questioning the point of a deal with OPEC to withhold supplies.

Brent futures were down 27 cents, or 0.4%, at $61.70 a barrel by 0152 GMT. They rose 1.1% on Tuesday after a near 13 percent fall in the previous four sessions.

U.S. West Texas Intermediate (WTI) crude was down by 32 cents, or 0.6%, at $53.16 a barrel. The U.S. benchmark closed 0.4% higher on Tuesday.

Oil prices have fallen sharply on fears about slowing global demand, but won a respite on Tuesday after a global stock market rally on hopes of a cut in U.S. interest rates.

U.S. crude stocks rose unexpectedly last week, while gasoline and distillate inventories built more than expected, industry group the American Petroleum Institute said on Tuesday.

Crude inventories rose by 3.5 million barrels in the week to May 31 to 478 million, compared with analysts’ expectations for a decrease of 849,000 barrels.

Official numbers from the U.S. Energy Information Administration (EIA) are due out later on Wednesday.

“It was a very bearish number and if confirmed by the EIA it will hammer prices,” said Stephen Innes, managing partner at SPI Asset Management in Bangkok.

The oil market has been weighed down by concerns about slowing global growth from the U.S.-Sino trade war and President Donald Trump’s threats last week to place tariffs on Mexican imports.

To prevent oversupply and prop up the market, the Organization of the Petroleum Exporting Countries (OPEC), together with allies including Russia, has been withholding production since the start of the year.

The group plans to decide later this month or in early July whether to continue the supply curbs.

But on Tuesday, the head of oil giant Rosneft, Igor Sechin, said Russia should pump at will and he would seek compensation from the government if cuts were extended.

Russia’s average daily oil output has nonetheless dropped to a three year-low after contaminated crude clogged its main export route.

Further pressuring oil prices and undermining OPEC’s efforts to tighten the market has been surging U.S. output to record highs, leading to more of its crude being exported.

“Does it make sense (for Russia) to reduce (oil output) if the U.S immediately takes (our) market share?” Sechin was quoted as saying by Interfax news agency.

“We have to defend our market share,” he said.
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🛢️ Explosions Rock Iran’s Largest Port As Oil Products Catch Fire
« Reply #836 on: June 06, 2019, 12:48:27 AM »
Any guesses who set those detonations?  ::)

Gotta prop up those oil prices!

RE

https://oilprice.com/Latest-Energy-News/World-News/Explosions-Rock-Irans-Largest-Port-As-Oil-Products-Catch-Fire.html

Explosions Rock Iran’s Largest Port As Oil Products Catch Fire
By Julianne Geiger - Jun 05, 2019, 10:00 PM CDT Hormuz


A fire broke out at Iran’s largest container shipping port, setting off explosions as oil products perpetuated the blaze, according to the Islamic Republic News Agency.

The fire broke out in the facility at the port used for storing oil products.

Iran’s Shahid Rajaee port on the Gulf Coast is North of the Strait of Hormuz—a critical chokepoint for oil tankers traveling to a variety of destinations.

INRA reported that the blaze was currently under control per local officials, but that due to the flammable nature of the oil products near the blaze, it is possible that fires will flare up again.

The port is critical for Iran, handling 39 percent of all cargo transit in Iran as of 2017, including oil product shipments.

Iran’s crude oil exports remain in the spotlight as the United States appears steadfast in its resolve to bring the sanction nation’s oil exports to zero. Oil exports from Iran have fallen to 400,000 barrels per day in May due to the sanctions, which is significantly down from April. In April 2018, Iran exported 2.5 million bpd of crude oil—a far cry from today’s 400,000 bpd.

Reports have surfaced, however, suggesting that this 400,000 bpd might be lower in reality, as Iran attempts to circumvent Washington’s sanctions by turning off transponders, making it impossible to track Iran’s shipments and calculate the total exported. Iran has long insisted that the United States will be unable to bring its exports to zero.

Today’s fire could provide some cover for Iran on that point, should oil flows drop further this month.

Signs are emerging that the Trump administration may be willing to sit down to the negotiating table with Iran over the nuclear deal with “no preconditions”, showing that the US may be willing to set aside its previous list of demands.

By Julianne Geiger for Oilprice.com
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🛢️ Oil Is On The Brink Of A Bear Market
« Reply #837 on: June 06, 2019, 01:31:40 AM »
Gettin' lower!


RE

https://oilprice.com/Energy/Energy-General/Oil-Is-On-The-Brink-Of-A-Bear-Market.html

Oil Is On The Brink Of A Bear Market
By Tom Kool - Jun 04, 2019, 2:00 PM CDT


Oil markets are heading into bear territory as fears of a global economic slowdown grow on the back of Washington's escalating trade wars with both China and Mexico.

Investor Alert: A new breakthrough – known by only a handful of scientists, researchers and insiders – is about to turn the energy world upside down. And one small company is at the center of it all. Get the full report here.

News

(Click to enlarge)

Rig

(Click to enlarge)

Rig Count

(Click to enlarge)

Saudi Arabia

(Click to enlarge)

- Saudi Arabia used 0.4 mb/d of oil for power generation in 2018, the lowest total since 2009, according to the EIA.

- The Kingdom has deployed more gas-fired generation, freeing up oil for export.

- It also has increased its refining capacity, making it a larger exporter of refined products and not simply crude oil.

Market Movers

- Four people were injured when an explosion hit an oil and chemical storage terminal owned by Kinder Morgan (NYSE: KMI) in Carson, CA.

- Apache (NYSE: APA) agreed to sell 140K MMBtu per day of natural gas to Cheniere Energy’s (NYSE: LNG) Corpus Christi liquefaction Stage 3 terminal. Meanwhile, Cheniere issued a final investment decision for Train 6 at its Sabine Pass facility.

- BP (NYSE: BP) agreed to sell its Gulf of Suez oil concessions to Dragon Oil. BP is focusing on its offshore Egypt assets.
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Researchers Turn Plastic Water Bottles Into Diesel and Jet Fuel
« Reply #838 on: June 06, 2019, 10:41:26 AM »


A research group led by Washington State University scientists has found a way to turn daily plastic waste products into jet fuel.

In a new paper published in the journal Applied Energy, WSU’s Hanwu Lei and colleagues melted plastic waste at high temperature with activated carbon, a processed carbon with increased surface area, to produce jet fuel.

“Waste plastic is a huge problem worldwide,” said Lei, an associate professor in WSU’s Department of Biological System Engineering. “This is a very good, and relatively simple, way to recycle these plastics.”

How it works

In the experiment, Lei and colleagues tested low-density polyethylene and mixed a variety of waste plastic products, like water bottles, milk bottles, and plastic bags, and ground them down to around three millimeters, or about the size of a grain of rice.

The plastic granules were then placed on top of activated carbon in a tube reactor at a high temperature, ranging from 430 degree Celsius to 571 degrees Celsius. That’s 806 to 1,060 Fahrenheit. The carbon is a catalyst, or a substance that speeds up a chemical reaction without being consumed by the reaction.

“Plastic is hard to break down,” Lei said. “You have to add a catalyst to help break the chemical bonds. There is a lot of hydrogen in plastics, which is a key component in fuel.”


https://www.naturalblaze.com/2019/06/researchers-turn-plastic-water-bottles-into-diesel-and-jet-fuel.html
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🛢️ Gas Flaring In The Permian Hits Record In Q1
« Reply #839 on: June 06, 2019, 01:13:41 PM »
https://oilprice.com/Latest-Energy-News/World-News/Gas-Flaring-In-The-Permian-Hits-Record-In-Q1.html

Gas Flaring In The Permian Hits Record In Q1
By Irina Slav - Jun 05, 2019, 12:00 PM CDT gas flaring


A pipeline capacity shortage caused natural gas flaring and venting to skyrocket to a record high in the first quarter of the year in the Permian, Rystad Energy said in a new report.

The average daily rate of flaring and venting reached 661 million cu ft with the research firm noting “This widespread waste of a valuable commodity is the result of persistent infrastructure challenges, a lack of sufficient takeaway capacity and an unexpected outage on a key pipeline in the area.”

The annualized rate of gas flaring in the Permian comes in at 6.8 billion cu m, which is theoretically enough to meet much of the gas demand of whole countries. Together with the Bakken, which is the other flaring hot spot in the United States, oil and gas producers waste so much of the commodity that it exceeds the annual gas demand of certain countries such as Israel, Hungary, and Romania.

The good news is that this degree of flaring should fall when the Gulf Coast Express pipeline comes on stream, Rystad’s head of shale research, Artem Abramov, said. Reuters notes that the Gulf Coast Express is scheduled to start operations in October this year and transport up to 2 billion cu ft of natural gas.

The bad news: it is the only new pipeline to come on stream this year. The next large pipeline project in the Permian won’t be operational until late 2020.

The pipeline problem of the Permian became obvious last year amid fast-rising production but most of the focus has been on its effect on oil prices. A year ago, total pipeline capacity stood at 3.1 million barrels daily but since then some new capacity has come online, which has mitigated the effect of rising production somewhat. This included an extension to the Sunrise pipeline and the repurposing of the Seminole-Red pipeline to carry crude rather than natural gas liquids. This has perhaps served to worsen the situation with natural gas takeaway capacity.

By Irina Slav for Oilprice.com
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