AuthorTopic: Oil Price Crash: Who Cooda Node?  (Read 147394 times)

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🛢️ Gas Flaring In The Permian Hits Record In Q1
« Reply #840 on: June 07, 2019, 12:00:02 AM »
https://oilprice.com/Energy/Oil-Prices/Oil-Just-Had-Its-Worst-Run-Since-2008.html

Oil Just Had Its Worst Run Since 2008
By Nick Cunningham - Jun 06, 2019, 6:00 PM CDT


Oil has entered a bear market as fears of an economic downturn mount. The fundamentals look much tighter than the swoon might suggest, but the supply and demand picture is also beginning to look more negative.

The EIA report was exceptionally weak, showing a strong build in crude oil (+6.8 million barrels), gasoline (+3.2 million barrels) and distillates (+4.6 million barrels). The combined builds across multiple products surprised the market. Sometimes, these figures sort of offset each other. For instance, if refiners are running really hard, they tend to build up gasoline stocks, but they use up crude oil in the process, so crude inventories dip even as gasoline stocks rise. This time around there was none of that. Increases across the board led to a plunge in oil prices.

“Oil has a Lehman Brothers moment,” is how Standard Chartered described it. The investment bank puts out its own “bull-bear index,” ranging from -100 to +100, measuring the direction the market seems to be heading in a given week.

“Our US oil data bull-bear index registers -96.7, only slightly better than the extreme -100 reading of two weeks ago,” the bank said. “The four-week average of the index is -79.4, taking it far below the five-year range.” There hasn’t been such a negative four-week run since 2008, the bank said. In other words, oil market fundamentals are heading in a really bearish direction, and the last time things looked this bad was during the financial crisis.
Related: This Giant Oil Field Just Hit An Impressive Production Record

The flip side is that the U.S. economy is not spiraling out of control in the way that it was after the collapse of Lehman Brothers. So, it’s possible that oil prices “have overshot to the downside,” Standard Chartered noted. “We think oil prices are now around USD 10 per barrel (bbl) too low on a fundamental basis, unless a specific data point is believed to be a leading indicator rather than a temporary blip,” Standard Chartered analysts said in a separate report on Tuesday.

Still, demand is starting to weaken. Standard Chartered notes that weakness is mostly confined to distillates (i.e., weaker activity in manufacturing and agriculture), with consumption in May dropping 9 percent, year-on-year. While gasoline demand has held up, it is still off 1.7 percent from a year ago.
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A Wall Street Journal survey of 10 investment banks finds an average Brent forecast of $70 per barrel for the year. Brent is now in the low-$60s, so major analysts are largely shrugging off the current tailspin and believe that crude will rebound. They are looking past the possibility of an economic downturn and instead are focusing on tightening supply conditions due to declines in Venezuela, Iran, potentially Libya and temporary outages from Russia. “I’m still happy with our forecasts,” Warren Patterson, senior commodities strategist at ING, told the WSJ. “The selloff we’ve seen has been purely driven by macroeconomic and trade concerns, and if we look at the fundamental picture, we see oil supply continuing to tighten.”

But it isn’t as if economic concerns have no effect on the fundamentals. Obviously, an economic downturn would undercut demand, leading to a supply/demand mismatch. The pending U.S. tariffs on Mexico, should they go forward, would almost certainly deepen the gloom. Bank of America Merrill Lynch admitted as much. “Fears of an escalating trade war, particularly following last Thursday evening news regarding new US tariffs on Mexico, have shattered confidence. Manufacturing PMIs could deteriorate further in the months ahead, derailing our $70/bbl average oil price projection for 2019,” the bank said.
Related: Battery Breakthrough Solves Major Electric Car Problem

The supply picture, while currently tight, could also flip from a bullish outlook to a bearish one. U.S. shale is expected to continue to grow, despite low oil prices and financial stress in the sector. “Well-publicized Wall Street demands that light tight oil producers rein in their spending have fueled expectations that supply growth would soon slow down,” data-tracking firm Kayrros said. Those concerns are “inflated,” and “budget discipline does not necessarily come at the cost of production growth,” Kayrros said. The firm noted that while the rig count is down, well completion data – which more reliably tracks production growth – “bounced back with a vengeance in Q1 2019” after a soft fourth quarter.

Rystad Energy also sees strong production growth ahead, despite poor financials. The Norwegian consultancy revised up its forecast for U.S. production to end the year at 13.4 million barrels per day. “Our US supply projections have been revised up yet again. US oil production is already higher than many in the market believe,” says Bjørnar Tonhaugen, Head of Oil Market Research at Rystad Energy.

If U.S. oil production continues to grow even as oil prices slide, that will make a rebound for Brent and WTI all the more difficult.

By Nick Cunningham of Oilprice.com
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🛢️ Bulls Beware: The 2020 Oil Market Is Quickly Turning Ugly
« Reply #841 on: June 09, 2019, 07:06:51 AM »
https://www.bloomberg.com/news/articles/2019-06-09/bulls-beware-the-2020-oil-market-is-quickly-turning-ugly

Bulls Beware: The 2020 Oil Market Is Quickly Turning Ugly
By Javier Blas
June 8, 2019, 11:21 PM AKDT

    IEA set to publish its first forecast for next year on Friday
    U.S. shale output and slower economy combine to weaken outlook


A deepwater oil platform in the Gulf of Mexico. Photographer: Luke Sharrett/Bloomberg

LISTEN TO ARTICLE
5:12


Oil bulls thought 2020 would be their year.

After half a decade of lower spending on new projects, oil production growth was supposed to slow to a trickle just as demand was supercharged by a once-in-a-generation shake up in the shipping fuel market. Many market commentators predicted that if $100 a barrel-oil was going to make a come back, it would happen in 2020.

Excitement is fading fast. The first official assessment of 2020 comes from the International Energy Agency on Friday, but a first look at forecasts from consultants and traders for supply and demand balances show persistent surpluses, not the deficit that was expected to underpin rising prices.

The culprits: rising shale production, a slowing global economy and the prospect of a deepening trade war.

"The balances for 2020 were already worrisome, and the downgrade in demand we are contemplating put them potentially in the ugly category," said Roger Diwan, an OPEC watcher at consultant IHS Markit Ltd.

Consultants and oil traders have already taken a first stab, and their supply and demand results show, at best, a balanced market. Many forecast supply will exceed consumption, perhaps by a large margin.
Brent crude has fallen nearly 20% since mid-May

The oil market, showing characteristics typical of an equity market, is already starting to reflect the potential for a surplus in 2020. Despite a tight physical market due to Russia’s pipeline contamination crisis and U.S. sanctions on Iran and Venezuela, oil prices briefly dipped below $60 last week, down more than 20 percent from a high above $75 in late April.

"The market is asking why it should bother going long for just three months when the future looks bleak," said Amrita Sen, chief oil analyst at Energy Aspects Ltd.

The bearish outlook for next year is a problem for the OPEC+ alliance led by Saudi Arabia and Russia. If the 2020 forecast proves correct, the group may be forced to keep in place its output cut far longer than originally anticipated to prevent a surge in global oil inventories.

The OPEC+ alliance is set to meet in the next few weeks in Vienna to discuss its production policy for the second half of 2019.

The bulls weren’t completely wrong in their analysis for next year: the shipping fuel changes, known as IMO 2020, are all but certain to boost demand for diesel, perhaps pushing that particular corner of the petroleum market into a deficit. However, supply growth, fueled by a resilient U.S. shale industry, continues to surprise to the upside.
Market Dynamic

"The dynamic of the market has changed because of shale," Ben van Beurden, the boss of Royal Dutch Shell Plc, said in a panel at the St. Petersburg International Economic Forum last week.

What neither bulls nor bears could anticipate is U.S. President Donald Trump and his erratic policies, throwing wrench after wrench into the gears of the global economy. Earlier this month, the International Monetary Fund cut its forecast for economic growth in China -- the engine of demand for commodities -- to 6% next year, the lowest since 1990 and less than half the peak of 14.2% in 2007.

"There is growing evidence of a sharper-than-expected slowdown in demand," said Martijn Rats, oil analyst at Morgan Stanley in London. Across the world’s top oil consumers, year-on-year consumption growth came to a halt in March. April demand figures, still preliminary, also show little increase.

The first tentative glances into 2020 by oil consultants are nearly unanimous about the prospect of oversupply -- a view shared in private by major commodity trading houses. The surpluses are all the more remarkable because none is predicting a recovery in Iranian and Venezuelan output. Over the last year, the combined output of the two troubled OPEC producers has dropped roughly 2.2 million barrels a day -- equal to what Germany consumes.
Iranian and Venezuelan combined oil production

S&P Global Platts, the owner of what was previously named PIRA Energy consultants, put the surplus next year at around 400,000 barrels a day in a report to clients in May. The Energy Information Administration, the statistical arm of the U.S. Department of Energy, sees a 100,000 barrel-a-day excess. And Energy Aspects, another influential consultant popular with hedge funds and big trading houses, sees a "large" stock-build of 500,000 barrels a day. IHS Markit expects a total surplus of 800,000 barrels a day next year.

The surpluses, however, mask notable differences within the petroleum market, with most consultants anticipating a larger overhang in refined products than in crude.

Although the Paris-based IEA hasn’t yet published its first detailed look into 2020, it offered some glimpses of its thinking earlier this year when it published a 5-year outlook from 2019 to 2024. In that report, it forecast oil demand next year at 102 million barrels a day, and production from non-OPEC countries plus condensates from OPEC at 71.9 million barrels. That, effectively, will leave a gap for OPEC crude to fill of just 30.1 million barrels, close to the cartel’s current production.

Since the publication of the report, the IEA has raised its non-OPEC supply view for 2019, and lowered its demand forecast, suggesting that if the cartel keeps pumping at current levels, production will exceed demand in 2020.
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🛢️ OPEC, the Future Is Probably Worse Than You Thought
« Reply #842 on: June 10, 2019, 12:01:07 AM »
https://www.bloomberg.com/opinion/articles/2019-06-09/opec-the-future-is-probably-worse-than-you-thought

OPEC, the Future Is Probably Worse Than You Thought

OPEC+ is really going to have to bear down on production cuts, and that’s before demand forecasts get slashed again.
By Julian Lee
June 8, 2019, 9:00 PM AKDT


Get ready. Photographer: AMER HILABI/AFP/Getty Images

Saudi Arabia and Russia are on a collision course.

On Friday the International Energy Agency will publish its first forecast of oil market balances in 2020. The headline figures will probably show stockpiles rising next year if the OPEC+ producer group doesn’t extend output cuts into a fourth year.

But their pain may not end there. Growing signs that demand growth is turning out to be much weaker than expected may require producers to make even deeper cuts. If so, that could spell the end of the partnership between Saudi Arabia and Russia on oil policy.

The production restraint agreed in November and December 2016 by OPEC and a group of supporting countries — Russia was the only one that offered a substantial voluntary reduction — was meant to drain excessive inventories and bring global supply and demand into balance during the first six months of 2017.

By mid-2019 that still hasn’t happened, despite a prolonged period of relatively robust demand growth that has seen the world’s oil consumption increase at an average rate of 1.4% per year over the period from 2017 through 2019, according to the most recent IEA figures. That’s equivalent to around 1.33 million barrels a day of additional demand each year.
Slowing Growth

The IEA has slashed its estimate of oil demand growth in 1Q19, downward revisions to 1Q and subsequent quarters may follow as more data come in

Source: Bloomberg, IEA

But the IEA has made a big cut to its assessment of oil demand in the first quarter. While the annual average figure hasn’t come down much, the move is worrying because it covers the only period for which we have any real data on consumption. The assessment may be cut further as more numbers come in and reductions to forecasts will almost certainly follow for subsequent periods.

Speaking at the St Petersburg International Economic Forum Friday, Russian oil minister Alexander Novak suggested that the trade wars could help push global demand growth this year below 1 million barrels a day. That would be the lowest level since 2011.
Cutting Down

Forecasts of 2019 oil demand growth may slip below 1 million barrels a day in the coming months

Source: Bloomberg, IEA

A Morgan Stanley report published last week argued that “there is growing evidence of a sharper-than-expected slowdown” in oil demand growth. Year-on-year increases are “grinding to a halt” across March and April for eight early-reporting countries, including China, India and the U.S. That is worrying because the IEA expects those three countries alone to account for 70% of the world's oil demand growth this year.

So where does that leave the producers? Whenever they next meet, it is almost certain they will decide to extend the current policy of restraint until the end of the year.

Sure, there may be some tweaks to the actual target levels for some countries — Kazakhstan wants to be able to produce more, as output rises from its giant Kashagan field. Russian oil companies also want restrictions eased, but any decision will ultimately rest with President Vladimir Putin, not the country’s energy industry.

But just extending the current deal may not be enough. The OPEC+ group has adopted stockpiles as its measure of success, with the focus shifting from the relatively opaque global figure to the highly visible U.S. inventory numbers, published each week.
An Exceptional Week

While U.S. oil stockpiles have always been volatile, the size of the change seen last week has only happened four times in nearly 30 years

Source: U.S. Energy Information Administration

The latest figures from the Department of Energy made grim reading for the producer group. Total inventories of crude and refined products soared by 22.44 million barrels in the last week of May — the biggest week-on-week increase in data going back almost 30 years.

And that wasn’t the only worrying number.
Demand Destroyed

U.S. oil demand has fallen year on year in three out of five months so far in 2019

Source: Bloomberg, EIA

Note: April and May are based on preliminary weekly data

Monthly data for the first quarter and initial weekly assessments for April and May show U.S. oil demand falling year on year in three out of five months so far in 2019.

The Organisation for Economic Cooperation and Development estimates that trade tensions have already cost the world close to 1 percentage point of growth. The OECD last month cut its global forecast for 2019 economic expansion to 3.2% from 3.9%. With demand growth tied closely to economic growth, these cuts bodes ill for oil consumption.

Although both the Saudi Arabian and Russian oil ministers talked up the benefits of the OPEC+ deal at the St Petersburg forum, Russia’s President Vladimir Putin had earlier asserted that the two countries “have certain differences in opinion regarding the fair price” for crude. The Russian leader says $60-65 a barrel — which is around the current level — “suits us just fine.”

While the OPEC+ ministers may be able to get away with extending their deal for another six months, a crunch is going to come when Russia decides it has had enough of restraint. For now, export restrictions resulting from the lingering contamination problems with its export pipeline to Europe are helping keep the nation’s output below its target, but once that is resolved, the industry will once again press to boost production.

Even Putin may balk at asking Russian oil companies to make deeper cuts to support prices. If he does, the OPEC+ cooperation will start to unravel.
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🛢️ Russian Energy Minister: Oil Could Still Drop To $30
« Reply #843 on: June 10, 2019, 02:07:51 PM »
The Ruskie Energy Minister must read the Diner.  :icon_sunny:

RE

https://oilprice.com/Energy/Oil-Prices/Russian-Energy-Minister-Oil-Could-Still-Drop-To-30.html

Russian Energy Minister: Oil Could Still Drop To $30
By Tsvetana Paraskova - Jun 10, 2019, 3:00 PM CDT


There is a risk that oil prices could drop to as low as $30 a barrel because OPEC and its Russia-led allies could produce more oil by the end of the year than market demand, Russia’s Energy Minister Alexander Novak said on Monday in comments suggesting that Russia could be on board with extending the cuts.

Earlier, Russian Finance Minister Anton Siluanov said that the price of oil could drop to $30 a barrel if OPEC and its partners fail to agree on extending the production cuts that currently expire at the end of June.

Asked to comment on Siluanov’s words, Novak told reporters in Russia today that such a scenario of a sharp drop in prices is not to be ruled out. Much will depend on the situation on the oil market in the second half of this year in the third quarter on trade wars, as well as on sanctions, Novak said.

“Indeed, there are big risks of over-production. But on the whole ... we need to analyze deeper and look at how the events will develop in June in order to take a balanced decision at the joint OPEC+ meeting in July,” Reuters quoted Novak as saying. Novak was speaking at a joint briefing with Saudi Energy Minister Khalid al-Falih, who was in Russia for meetings with Novak and Vladimir Putin, weeks before OPEC and its Russia-led partners are set to decide how to proceed with their oil market management policies in place since 2017.

OPEC is close to reaching an agreement to extend the production cut deal beyond June, al-Falih said on Friday from Russia, adding that the sticking point is now to calibrate the cuts with the non-OPEC group of producers led by Moscow.
Related: Russia Is Silently Preparing For An OPEC+ Deal Extension

Russia doesn’t need oil prices to be too high and sees the $60-65 a barrel price—the price at which Brent Crude currently trades—as “quite satisfactory,” Putin said last week.

But Saudi Arabia needs oil at $85 to balance its budget, so the leaders of the two OPEC+ groups are (again) at odds over what they see as a ‘fair price’ for oil.

Referring to the OPEC+ deal after the talks he held with Russia’s top officials, Saudi Arabia’s al-Falih told Russian news agency TASS in an interview published on Monday that “I am fairly confident that from the OPEC side almost everyone agrees that we need to extend the Declaration of Cooperation,” adding that “So, I think the remaining country to jump onboard now is Russia.” 

By Tsvetana Paraskova for Oilprice.com
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🛢️ OPEC’s Struggle To Avoid $40 Oil
« Reply #844 on: June 11, 2019, 12:08:18 AM »
Must remember to fill up this summer.

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https://oilprice.com/Energy/Oil-Prices/OPECs-Struggle-To-Avoid-40-Oil.html

OPEC’s Struggle To Avoid $40 Oil
By Nick Cunningham - Jun 10, 2019, 6:00 PM CDT


A few weeks ago, OPEC+ was mulling the possibility of exiting the production cut agreement because the oil market was at risk of over-tightening. Now Saudi Arabia is scrambling to extend the cuts and may even unilaterally lower its own production further in an effort to head off a price slide.

On Monday, officials from Saudi Arabia and Russia reportedly discussed a possible scenario in which oil prices crashed below $40 per barrel, a recognition that the market has rapidly deteriorated. They view that outcome as a possibility if they can’t agree on an extension. “Today there are big risks of oversupply,” Russian Energy Minister Alexander Novak said in Moscow after meeting with Saudi oil minister Khalid al-Falih. “We’ve agreed that we need to run a deeper analysis and to see how events unfold in June.”

Russian President Vladimir Putin seemed to fuel speculation of a rift in Vienna in comments to Interfax news last week. “Of course Saudi Arabia wants oil prices to remain higher,” the Interfax news agency quoted Mr. Putin as saying. “But we have no such need due to the more diversified nature of the Russian economy.”

The Saudis, of course, are desperate to prevent such a downward spiral. “Both at the bilateral and the OPEC+ level, we work in order to take preventive steps so as not to allow that scenario to happen,” al-Falih said in Moscow. He is undoubtedly trying to convince Novak of the wisdom of extending the production cuts. Perhaps to sweeten the pot, Saudi Arabia is considering investments in “multiple” projects in Russia, including the Arctic LNG 2 gas project, a stake in Russian petrochemical company Sibur Holding, along with other projects in partnership with Gazprom and Rosneft, Bloomberg reports.
Related: Platts: OPEC Oil Production Slumps With Saudis Cutting Deeper

The outlook for the oil market has darkened rather quickly. Less than a month ago, the IEA predicted a rather significant supply deficit in the second quarter even as it acknowledged some cracks in demand. But since then things have seemingly taken a turn for the worse, with oil posting its worst month since the financial crisis.

A growing number of analysts are drawing up downbeat assessments for the oil market next year. “The balances for 2020 were already worrisome, and the downgrade in demand we are contemplating put them potentially in the ugly category,” Roger Diwan of IHS Markit Ltd. told Bloomberg. Notably, top analysts see a supply surplus next year even if output from Iran and Venezuela fails to rebound. For instance, S&P Global Platts, as of now, estimates a surplus of 400,000 bpd in 2020, while the EIA puts the glut at a more modest 100,000 bpd. IHS Markit sees a whopping 800,000-bpd surplus.

The reason is that demand is cratering and U.S. shale is still expected to grow. “There is growing evidence of a sharper-than-expected slowdown in demand,” said Martijn Rats, oil analyst at Morgan Stanley, according to Bloomberg. The U.S.-China trade war has dramatically increased concerns about an economic slowdown.

The global economy is decelerating, with manufacturing activity around the world slowing down, a sure sign of an economy hitting some bumps. “You’ve suddenly got all sorts of countries around the world seeing their manufacturing indexes fall into contraction territory. That’s going to be bad for demand,” Bill O’Grady, chief market strategist at Confluence Investment Management, said in a Wall Street Journal interview.
Related: Russian Energy Minister: Oil Could Still Drop To $30

But assuming OPEC+ decides to extend the production cuts, the group will go a long way in guarding against a more dramatic selloff, even if it requires ongoing sacrifice on their part. “The weak economic data and widening trade conflict have made for a gloomier demand outlook. In response, we have revised our third-quarter forecast for Brent down to $66 (previously $73),” Commerzbank wrote in a note. “We are leaving our year’s end forecast of $70 unchanged…This is because we are convinced that OPEC and Russia will do everything in their power to prevent an oversupply and to ensure higher prices.”

The bank noted that while Putin is skeptical of letting prices rise too far, and is generally satisfied with prices in their current range, he has also indicated that Russia and OPEC would make a joint decision. “This suggests that Russia will take part in a production cut agreement beyond mid-year,” Commerzbank concluded.

Saudi Arabia may go further. After the U.S. announced no new waivers for countries buying Iranian oil, there was speculation that Riyadh would decide to boost output, perhaps by as much as 400,000 or 500,000 bpd. But with the recent weakening of the market, that’s now off the table. Instead, Saudi Arabia trimmed output by 120,000 bpd in May from a month earlier. The Saudis “could potentially even take production lower,” Helima Croft of RBC Capital Markets told the WSJ.

By Nick Cunningham of Oilprice.com
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🛢️ Oil Falls After API Reports Surprise Crude Build
« Reply #845 on: June 12, 2019, 01:23:16 AM »
https://oilprice.com/Latest-Energy-News/World-News/Oil-Falls-After-API-Reports-Surprise-Crude-Build.html

Oil Falls After API Reports Surprise Crude Build
By Julianne Geiger - Jun 11, 2019, 3:44 PM CDT


The American Petroleum Institute (API) reported another large, surprise build in crude oil inventories of 4.852 million barrels for the week ending June 6, coming in over analyst expectations of a 481,000-barrel drawdown in inventories. Cushing inventories also saw a sizable gain, and gasoline inventories grew as well.

Last week, the API reported a surprise build of 3.545 million barrels. A day later, the EIA estimated that US inventories had built by even more, by 6.8 million barrels.

The net build now a hefty 35.05 million barrels for the 24-week reporting period so far this year, using API data.


Oil prices rose slightly earlier on Tuesday as the oil market waits to see what the inventory situation in the United States looks like, and what the result will be of the upcoming OPEC.

At 4:22pm EST, WTI was trading up slightly by $0.12 (+0.23%) at $53.38—pennies over last week’s levels. Brent was trading up $0.06 (+0.10%) to $62.35—about $0.60 more than last week’s figures.

The API this week reported a build in gasoline inventories for week ending June 4 in the amount 829,000 barrels. Analysts estimated a build in gasoline inventories of 743,000 barrels for the week.

Distillate inventories fell by 3.461 million barrels for the week, while inventories at Cushing rose by 2.365 million barrels.

US crude oil production as estimated by the Energy Information Administration showed that production for the week ending May 31 rose to 12.4 million bpd, a brand new all-time high for the United States.

The U.S. Energy Information Administration report on crude oil inventories is due to be released on Wednesday at 10:30a.m. EST.

By 4:40pm EST, WTI was trading up at $53.39 and Brent was trading up at $62.38

By Julianne Geiger for Oilprice.com
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🛢️ Too Much Natural Gas Means There’s a ‘Looming Price Crash’
« Reply #846 on: June 12, 2019, 01:52:04 AM »
https://www.barrons.com/articles/small-stocks-are-getting-crushed-because-big-is-beautiful-51560278748

Too Much Natural Gas Means There’s a ‘Looming Price Crash’

By Avi Salzman
June 11, 2019 5:30 a.m. ET


Photograph by Alexander Nemenov/AFP/Getty Images

Natural gas prices have slumped 20% in the past year, and prices of liquefied natural gas, otherwise known as LNG, just hit a three-year low as supplies have risen faster than demand. Now one analyst sees a “looming global price crash” that will ripple through the energy sector.

As more countries, particularly in Asia, switch to natural gas from other fossil fuels, demand has been rising. But supply appears to be rising even faster. Citi analyst Anthony Yuen says that natural gas supplies have built up much faster than most analysts expected. Yuen expects “a 25% surge in global LNG supply from 2018 to 2020, with more than half from the U.S.” The U.S. Energy Information Administration predicted late last year that LNG export capacity from the U.S. would double by the end of 2019.

The supply glut has caused prices to fall around the world, with U.S. Henry Hub prices falling to the mid-$2 range per million BTUs from $4.80 in the fourth quarter of last year, and a natural gas futures contract in Asia dropping from $12 in the fourth quarter of 2018 to $4 per million BTUs today. Natural gas supplies are rising so quickly that European gas storage may be full two months earlier than expected, Yuen estimates.

He sees Henry Hub prices averaging $2.50 in 2019, down from his prior estimate of $2.80. And that decline could have a ripple effect across several industries.

“LNG tanker dayrates should surge as tankers should be increasingly used as floating storage of excess LNG,” Yuen wrote. “Global coal prices should fall, as coal-to-gas switching pressures coal prices lower. Power prices should also fall on lower prices of gas and coal as power generation fuels.”

Write to Avi Salzman at avi.salzman@barrons.com
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Gotta get those Oil Prices back up!

Looks like things are heating up.

RE

https://www.cnbc.com/2019/06/13/oil-jumps-more-than-3percent-on-reports-of-tanker-incident-in-the-gulf-of-oman.html

Oil jumps more than 3% on reports of tanker incident in the Gulf of Oman off Iran coast
Published 2 hours ago Updated Moments Ago
Natasha Turak
@NatashaTurak
   

Brent crude trading just before 9:00 a.m. London time on June 13, 2019.


DUBAI — Brent crude spiked as high as 4% on Thursday morning on reports of tanker explosions in the Gulf of Oman near the Iranian coastline, but later pared gains to trade 2.88% higher at $61.70 a barrel.

Tankers the Front Altair and the Kokuka Courageous have sustained significant fire damage and its crews have been evacuated, according to multiple shipping agents and chartering sources. The Kokuka Courageous, a chemical tanker that loaded in Saudi Arabia and was en route to Singapore, caught fire at the same time as the Front Altair just before 6:00 a.m. local time.

The cause of the fire remains unclear, but has sparked fears of attack and comes just weeks after alleged ship sabotage in the region.

A representative for BSM Ship Management, the Kokuka’s Singapore-based manager, said 21 crew had abandoned ship due to the “security incident”, which damaged the ship’s starboard hull. They were rapidly rescued from a lifeboat by a nearby vessel, according to the company’s spokesman.

“The Kokuka Courageous remains in the area and is not in any danger of sinking. The cargo of methanol is intact,” the spokesman said in a statement.

The ship is roughly 14 nautical miles off the coast of Iran and 70 nautical miles from the coast of the United Arab Emirates’ Fujairah, which was the site of alleged sabotage attacks on four tankers in mid-May that U.S. authorities have blamed on Iran. Iran denies any involvement. 

When four tankers sustained damage in the attacks of May 12 — two Saudi-owned, one from the UAE and one from Norway — crews did not have to abandon ship, indicating that today’s attack is much more serious.

Fujeirah Port operations are normal, according to a Platts Global Alert citing shipping sources.

The Front Altair was scheduled to carry a cargo of naptha, a petrochemical feedstock, from the Persian Gulf to Japan, Platts said. Its owner, Frontline, could not be immediately reached for comment.

Neither ship was under Saudi charter, and the Front Altair and Kokuka Courageous were bearing Marshall Islands and Panama flags, respectively.

United Kingdom Maritime Trade Operations, a division of the U.K. Royal Navy, said it is currently investigating the incident and has urged “extreme caution” amid mounting tensions between Iran and the U.S. 

Iranian state media has reported that two oil tankers were targeted in explosions, without providing evidence.

CNBC has reached out to maritime authorities for more details.

A spokesman for the US Navy’s Fifth Fleet in Bahrain told the Associated Press that his command was “aware” of the incident and was seeking further details. U.S. Naval ships are in the area and are “rendering assistance” after forces in the region received two separate distress calls, the Fifth Fleet said.

This is a breaking news story, please check back for more.
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🛢️ Goldman: No One Knows What’s Going On In Oil Markets
« Reply #848 on: June 13, 2019, 02:42:47 AM »
The "experts" can't figure this out?  ::)

RE

https://oilprice.com/Energy/Crude-Oil/Goldman-No-One-Knows-Whats-Going-On-In-Oil-Markets.html

Goldman: No One Knows What’s Going On In Oil Markets
By Irina Slav - Jun 12, 2019, 6:00 PM CDT


There has always been a lot of uncertainty around oil demand and supply, and in recent years this uncertainty has become excessive. Now, this level of excess uncertainty has got analysts struggling to make forecasts about demand and supply.

Bloomberg this week quoted Goldman Sachs’ commodities chief Jeffrey Currie as saying it has become “increasingly difficult to know what production levels will balance the market.” Currie was referring to the decision OPEC+ needs to make at the start of next month on whether to continue cutting production or start increasing it. The analyst attributed this higher difficulty to the lack of clarity around Iranian exports and steadily rising U.S. production.

The former factor has made Saudi Arabia reluctant to live up to its promise to fill any gap left by sanctioned Iranian oil: it does not know exactly how deep a gap there is, so it risks oversupply if its ramps up production in the blind. The latter factor has also contributed to expectations of a global oversupply, which has pushed prices down. Now add the U.S.-China trade war that consensus opinion says will affect global economic growth and a picture of uncertainty emerges that would probably make some analysts wish for a different career.

However, as usual, this sort of general picture tends to overlook the details. Some of these include the fact that any oversupply resulting from growing U.S. production will be oversupply of light crude while the market for heavy crude swings into a shortage on the back of Venezuela and Iran sanctions. All reports about the U.S. tipping the oil market into excess supply are based on data about production in the shale patch, and the shale patch produces light crude. There are heavier grades produced in the Gulf of Mexico but these tend to stay out of the oversupply stories.
Related: OPEC’s Struggle To Avoid $40 Oil

Then there is OPEC+, which grabs headlines ahead of every meeting. Also ahead of every meeting there is debate on whether the cartel and its partners will extend the cuts. Truth be told, in previous meetings the debate was rather pointless because it was all but clear that they would agree on cuts since they were relatively good for everyone. Now, analysts are less certain that the cut extension that’s been the talk of the industry will take place, and that’s because of another oversight: it’s never just about oil prices.

It’s no secret that ever since OPEC teamed up with Russia on production cuts it lost a lot of its influence: Russia is a bigger producer than Saudi Arabia and any whiff of it leaving the agreement pressures prices, which is something OPEC members do not like to see. Some go as far as to say that Russia is pulling the OPEC strings. And Russia is quite happy with lower priced oil, while its OPEC partners, especially Saudi Arabia, need higher barrel prices. So is it any wonder that media reports emerged about Aramco extending its offer for a stake in Novatek’s Arctic LNG 2 ahead of the OPEC+ meeting after earlier reports claimed the Saudi company had pulled out of the project?
Related: Can Trump Rely On The Saudis As Oil Prices Crash?

Of course, it could be a coincidence, but if there is one rule in international politics it is that nobody gets something for nothing. There is no reason why Russian-Saudi relations should be any different than, say, U.S.-German ones when it comes to energy in general and natural gas specifically. It is possible that Russia will back a cut extension if Saudi Arabia returns the favor appropriately. But it is also possible that something else takes priority, such as market share protection.

“It’s much easier to unify a position, when there is a supply disruption or a strong demand, then both Russia and Saudi Arabia want to grow production,” Currie told Bloomberg this week. Yet right now “it’s a very middling environment. This makes those tensions between Russia and Saudi Arabia more apparent.”

The silver lining is that we won’t have to wait long for some certainty. OPEC+ is meeting in the first week of July.

By Irina Slav for Oilprice.com
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RE

https://www.reuters.com/article/us-mideast-tanker-iran-zarif/irans-zarif-calls-oil-tanker-incidents-suspicious-wants-regional-talks-idUSKCN1TE1CG

June 13, 2019 / 2:19 AM / Updated 4 hours ago
Iran's Zarif calls oil tanker incidents "suspicious", wants regional talks


Iranian Foreign Minister Mohammad Javad Zarif shakes hands with Japan's Prime Minister Shinzo Abe, as Iranian President Hassan Rouhani looks on in Tehran, Iran, June 12, 2019. Official Iranian President website/Handout via REUTERS

LONDON (Reuters) - Iranian Foreign Minister Mohammad Javad Zarif said two oil tanker incidents in the Gulf of Oman on Thursday were “suspicious” and called for regional dialogue to avoid tensions.

Zarif tweeted that “reported attacks on Japan-related” oil tankers in the Gulf of Oman had taken place while Japanese Prime Minister Shinzo Abe was meeting Iran’s Supreme Leader Ayatollah Khamenei “for extensive and friendly talks”.

“Suspicious doesn’t begin to describe what likely transpired this morning,” he tweeted. “Iran’s proposed Regional Dialogue Forum is imperative.”

Reporting by Bozorgmehr Sharafedin; Editing by Kevin Liffey
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Re: 🛢️ Goldman: No One Knows What’s Going On In Oil Markets
« Reply #850 on: June 13, 2019, 09:54:51 AM »
The "experts" can't figure this out?  ::)

RE

https://oilprice.com/Energy/Crude-Oil/Goldman-No-One-Knows-Whats-Going-On-In-Oil-Markets.html

Goldman: No One Knows What’s Going On In Oil Markets
By Irina Slav - Jun 12, 2019, 6:00 PM CDT


There has always been a lot of uncertainty around oil demand and supply, and in recent years this uncertainty has become excessive. Now, this level of excess uncertainty has got analysts struggling to make forecasts about demand and supply.

Bloomberg this week quoted Goldman Sachs’ commodities chief Jeffrey Currie as saying it has become “increasingly difficult to know what production levels will balance the market.” Currie was referring to the decision OPEC+ needs to make at the start of next month on whether to continue cutting production or start increasing it. The analyst attributed this higher difficulty to the lack of clarity around Iranian exports and steadily rising U.S. production.

The former factor has made Saudi Arabia reluctant to live up to its promise to fill any gap left by sanctioned Iranian oil: it does not know exactly how deep a gap there is, so it risks oversupply if its ramps up production in the blind. The latter factor has also contributed to expectations of a global oversupply, which has pushed prices down. Now add the U.S.-China trade war that consensus opinion says will affect global economic growth and a picture of uncertainty emerges that would probably make some analysts wish for a different career.

However, as usual, this sort of general picture tends to overlook the details. Some of these include the fact that any oversupply resulting from growing U.S. production will be oversupply of light crude while the market for heavy crude swings into a shortage on the back of Venezuela and Iran sanctions. All reports about the U.S. tipping the oil market into excess supply are based on data about production in the shale patch, and the shale patch produces light crude. There are heavier grades produced in the Gulf of Mexico but these tend to stay out of the oversupply stories.
Related: OPEC’s Struggle To Avoid $40 Oil

Then there is OPEC+, which grabs headlines ahead of every meeting. Also ahead of every meeting there is debate on whether the cartel and its partners will extend the cuts. Truth be told, in previous meetings the debate was rather pointless because it was all but clear that they would agree on cuts since they were relatively good for everyone. Now, analysts are less certain that the cut extension that’s been the talk of the industry will take place, and that’s because of another oversight: it’s never just about oil prices.

It’s no secret that ever since OPEC teamed up with Russia on production cuts it lost a lot of its influence: Russia is a bigger producer than Saudi Arabia and any whiff of it leaving the agreement pressures prices, which is something OPEC members do not like to see. Some go as far as to say that Russia is pulling the OPEC strings. And Russia is quite happy with lower priced oil, while its OPEC partners, especially Saudi Arabia, need higher barrel prices. So is it any wonder that media reports emerged about Aramco extending its offer for a stake in Novatek’s Arctic LNG 2 ahead of the OPEC+ meeting after earlier reports claimed the Saudi company had pulled out of the project?
Related: Can Trump Rely On The Saudis As Oil Prices Crash?

Of course, it could be a coincidence, but if there is one rule in international politics it is that nobody gets something for nothing. There is no reason why Russian-Saudi relations should be any different than, say, U.S.-German ones when it comes to energy in general and natural gas specifically. It is possible that Russia will back a cut extension if Saudi Arabia returns the favor appropriately. But it is also possible that something else takes priority, such as market share protection.

“It’s much easier to unify a position, when there is a supply disruption or a strong demand, then both Russia and Saudi Arabia want to grow production,” Currie told Bloomberg this week. Yet right now “it’s a very middling environment. This makes those tensions between Russia and Saudi Arabia more apparent.”

The silver lining is that we won’t have to wait long for some certainty. OPEC+ is meeting in the first week of July.

By Irina Slav for Oilprice.com

Under ideal conditions of temperature and pressure the organism will grow without limit.

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Iran's Zarif calls oil tanker incidents "suspicious", wants regional talks


My money's on an entity identified in three letters.
"It is difficult to write a paradiso when all the superficial indications are that you ought to write an apocalypse." -Ezra Pound

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Who dunnit?  Any bets here?

RE

Iran's Zarif calls oil tanker incidents "suspicious", wants regional talks


My money's on an entity identified in three letters.

I'll second that bet!

RE
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Iran's Zarif calls oil tanker incidents "suspicious", wants regional talks


My money's on an entity identified in three letters.

Give me a C.
Under ideal conditions of temperature and pressure the organism will grow without limit.

Offline RE

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Who dunnit?  Any bets here?

RE

Iran's Zarif calls oil tanker incidents "suspicious", wants regional talks


My money's on an entity identified in three letters.

Give me a C.

As you might expect, in the MSM about the ONLY country not mentioned as possibly responsible is the FSoA.  ::)

They're ginning up for War, no doubt about it.  Now they say they have pics of Iranians removing mines from the ships.  Right.

Add an "I" after the "C".

RE
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