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Last Updated: March 22, 2018
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Market Watch

Headline crude prices for the week beginning 19 March 2018 – Brent: US$66/b; WTI: US$62/b

  • While swelling shale output continues to weigh on crude prices, geopolitical trends have taken over to add some volatility to the market.
  • With ex-ExxonMobil chief Rex Tillerson fired as the US Secretary of State and Venezuela’s alarming drop in crude oil, the market injected some risk premiums in crude prices over last week.
  • Tensions between Saudi Arabia and Iran has also heightened, with Saudi Arabia criticising the Iranian nuclear deal in 2015 as ‘flawed’ as President Donald Trump meets with the Saudi King.
  • Coupled with Trump’s pronouncements possibly leading to a trade war – especially with China and the EU – and Saudi Aramco’s planned IPO on shaky ground, macro elements have created a more unpredictable environment for oil to trade in.
  • While this has bounced prices up, continued gains in US crude have capped the rise. US crude production is now at 10.38 mmb/d, and could hit 11 mmb/d by 3Q18. Output from Canada and Brazil has also risen.
  • American oil and gas rigs gained 6 active sites last week, growing to 967. Oil rigs hit 800 again, with 4 additions, helping to contributing to the growth in American crude stock last week, according to the EIA.
  • Crude price outlook: With geopolitical tensions aflame and data pointing to a surprise drop in US crude stocks, the direction for prices this week should be upwards. Brent could end the week at US$69/b, with WTI trailing behind at US$65/b.

Headlines of the week

Upstream

  • Indonesia is reportedly expecting strong interest for its upcoming auction round – which includes blocks that failed to find a buyer over the last three years – as its new revenue split model, which switches from cost-recovery to gross-split, has heightened interest among companies.
  • Egypt’s upstream fortunes continue to grow, as SDX Energy announce a heavy oil discovery at the onshore Rabul 5 well in West Gharib.
  • Iraq is ramping up efforts to expand its crude output, with an ambitious US$4 billion plan to seawater into its fields to dislodge crude and a man-made island in the Persian Gulf to serve as an export facility hub.
  • Production has begun at the Ochigufu deepwater project in Block 15/06, Angola, with Eni and Sonangol expecting production to hit 25,000 b/d. Eni also has the UM8 reservoir, Mpungi field subsea system and the Vandumbu field in development for 2019, adding another 30,000 b/d.
  • PetroVietnam has sold a 5% working interest in the 15-1/05 PSC in the offshore Cuu Long basin to Murphy Oil, who will jointly develop the small field with PetroVietnam and South Korea’s SK Innovation.
  • Colombia will launch a new fiscal framework next month, designed to make its oil and gas contracts more attractive to investors.

Downstream

  • With a stated goal of reducing oil product imports by 25%, Iraq is mulling over several projects to boost domestic refining output, including an NGL-to-liquids plan, a new 70 kb/d refinery in Anbar and boosting crude volumes in stabilised Kirkuk to refineries in the centre and south.
  • Another competitor joins the downstream race in Mexico, as Spain’s Repsol announce it would be opening 200 fuel stations over 2018 with an eventual goal of reaching 10% market share by 2022.
  • Austria’s OMV will be spending €10 billion to focus on gas and refined products, as well as expand its business outside of Europe.

Natural Gas/LNG

  • All major construction milestones have been hit at Shell’s Prelude LNG project, and will join Ichthys as the final two of Australia’s current giant LNG projects when it begins producing gas in the ‘next couple of months.’
  • Golar LNG’s floating LNG production platform in Cameroon has started up, becoming the second in the world after Petronas last year, with Gazprom having purchased the entire 1.2 mtpa output for 8 years.
  • Bangladesh’s Summit Power International and Japan’s Mitsubishi Corp has agreed to develop a US$3 billion LNG-to-power project in Bangladesh.
  • Russia and Serbia has reportedly revived a gas pipeline plan that would allow Gazprom to bypass Ukraine to send piped gas to East Europe.
  • Algeria’s Sonatrach will be spending US$250 million to boost output at its Tinhert gas field, aiming to hit 20 mcm/d, from a current 5 mcm/d.
  • ExxonMobil will be leading a consortium to build Pakistan’s third LNG expect terminal, a US$150 million site in Port Qasim expected in 2019.

Corporate

  • Statoil is proposing to change its name to Equinor, to reflect a move away from hydrocarbons to a broader energy spectrum and low-carbon targets.
  • Saudi Aramco’s planned IPO is hitting more snags, as chatter suggests it could be delayed to 2019 and has received a tepid response in the USA.

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Crude Oil Prices: Changing Gear

In the last week, global crude oil price benchmarks have leapt up by some US$5/b. Brent is now in the US$66/b range, while WTI maintains its preferred US$10/b discount at US$56/b. On the surface, it would seem that the new OPEC+ supply deal – scheduled to last until April – is working. But the drivers pushing on the current rally are a bit more complicated.

Pledges by OPEC members are the main force behind the rise. After displaying some reticence over the timeline of cuts, Russia has now promised to ‘speed up cuts’ to its oil production in line with other key members of OPEC. Saudi Arabia, along with main allies the UAE and Kuwait, have been at the forefront of this – having made deeper-than-promised cuts in January with plans to go a bit further in February. After looking a bit shaky – a joint Saudi Arabia-Russia meeting was called off at the recent World Economic Forum in Davos in January – the bromance of world’s two oil superpowers looks to have resumed. And with it, confidence in the OPEC+ club’s abilities.

Russia and Saudi Arabia both making new pledges on supply cuts comes despite supply issues elsewhere in OPEC, which could have provided some cushion for smaller cuts. Iranian production remains constrained by new American sanctions; targeted waivers have provided some relief – and indeed Iranian crude exports have grown slightly over January and February – but the waivers expire in May and there is uncertainty over their extension. Meanwhile, the implosion in Venezuela continues, with the USA slapping new sanctions on the Venezuelan crude complex in hopes of spurring regime change. The situation in Libya – with the Sharara field swinging between closure and operation due to ongoing militant action – is dicey. And in Saudi Arabia, a damaged power repair cable has curbed output at the giant 1.2 mmb/d Safaniuyah field.

So the supply situation is supportive of a rally, from both planned and unplanned actions. But crude prices are also reacting to developments in the wider geopolitical world. The USA and China are still locked in an impasse over trade, with a March 1 deadline looming, after which doubled US tariffs on US$200 billion worth of Chinese imports would kick in. Continued escalation in the trade war could lead to a global recession, or at least a severe slowdown. But the market is taking relief that an agreement could be made. First, US President Donald Trump alluded to the possibility of pushing the deadline by 2 months to allow for more talks. And now, chatter suggests that despite reservations, American and Chinese negotiators are now ‘approaching a consensus’. The threat of the R-word – recession – could be avoided and this is pumping some confidence back in the market. But there are more risks on the horizon. The UK is set to exit the European Union at the end of March, and there is still no deal in sight. A measured Brexit would be messy, but a no-deal Brexit would be chaotic – and that chaos would have a knock-on effect on global economies and markets.

But for now, the market assumes that there must be progress in US-China trade talks and the UK must fall in line with an orderly Brexit. If that holds – and if OPEC’s supply commitments stand – the rally in crude prices will continue. And it must. Because the alternative is frightening for all.

Factors driving the current crude rally:

  • Renewed supply cut pledges from Russia and Saudi Arabia
  • Unplanned supply outages in Saudi Arabia
  • Supply issues in Venezuela, Iran and Libya
  • Optimism over a new US-China trade deal
February, 22 2019
“Lubricants Shelf” to Assess Engine Oil Market

Already, lubricant players have established their footholds here in Bangladesh, with international brands.

However, the situation is being tough as too many brands entered in this market. So, it is clear, the lubricants brands are struggling to sustain their market shares.

For this reason, we recommend an impression of “Lubricants shelf” to evaluate your brand visibility, which can a key indicator of the market shares of the existing brands. 

Every retailer shop has different display shelves and the sellers place different product cans for the end-users. By nature, the sellers have the sole control of those shelves for the preferred product cans.

The idea of “Lubricants shelf” may give the marketer an impression, how to penetrate in this competitive market. 

The well-known lubricants brands automatically seized the product shelves because of the user demand. But for the struggling brands, this idea can be a key identifier of the business strategy to take over other brands.

The key objective of this impression of “Lubricants shelf” is to create an overview of your brand positioning in this competitive market.

A discussion on Lubricants Shelves; from the evaluation perspective, a discussion ground has been created to solely represent this trade, as well as its other stakeholders.

Why “Lubricants shelf” is key to monitor engine oil market?

The lubricants shelves of the overall market have already placed more than 100 brands altogether and the number of brands is increasing day by day.

And the situation is being worsened while so many by name products are taking the different shelves of different clusters. This market has become more overstated in terms of brand names and local products.

You may argue with us; lubricants shelves have no more space to place your new brands. You might get surprised by hearing such a statement. For your information, it’s not a surprising one.

Regularly, lubricants retailers have to welcome the representatives of newly entered brands.

And, business Insiders has depicted this lubricants market as a silent trade with a lot of floating traders.

On an assumption, the annual domestic demand for lubricants oils is around 100 million litres, whereas base oil demand around 140 million litres.

However, the lack of market monitoring and the least reporting makes the lubricants trade unnoticeable to the public.

February, 20 2019
Your Weekly Update: 11 - 15 February 2019

Market Watch

Headline crude prices for the week beginning 11 February 2019 – Brent: US$61/b; WTI: US$52/b

  • Oil prices remains entrenched in their trading ranges, with OPEC’s attempt to control global crude supplies mitigated by increasing concerns over the health of the global economy
  • Warnings, including from The Bank of England, point to a global economic slowdown that could be ‘worse and longer-lasting than first thought’; one of the main variables in this forecast are the trade tensions between the US and China, which show no sign of being solved with President Trump saying he is open to delaying the current deadline of March 1 for trade talks
  • This poorer forecast for global oil demand has offset supply issues flaring up within OPEC, with Libya reporting ongoing fighting at the country’s largest oilfield while the current political crisis in Venezuela could see its crude output drop to 700,000 b/d by 2020
  • The looming new American sanctions on Venezuelan crude has already had concrete results, with US refiner Marathon Petroleum moving to replace Venezuelan crude with similar grades from the Middle East and Latin America
  • While Nicolas Maduro holds on to power, Venezuela’s opposition leader Juan Guaido has promised to scrap requirements that PDVSA keep a controlling stake in domestic oil joint ventures and boost oil production through an open economy when his government-in-power takes over
  • Despite OPEC’s attempts to stabilise crude prices, the US House has advanced the so-called NOPEC bill – which could subject the cartel to antitrust action – to a vote, with a similar bill currently being debated in the US Senate
  • The see-saw pattern in the US active rig count continues; after a net loss of 14 rigs last week, the Baker Hughes rig survey reported a gain of 7 new oil rigs and a loss of 3 gas rigs for a net gain of 4 rigs
  • While demand is a concern, global crude supply remains delicate enough to edge prices up, especially with Saudi Arabia going for deeper-than-expected cuts; this should push Brent up towards US$64/b and WTI towards US$55/b in trading this week


Headlines of the week

Upstream

  • Egypt is looking to introduce a new type of oil and gas contract to attract greater upstream investment into the country, aiming to be ‘less bureaucratic and more efficient’ with faster cost-recovery, ahead of a planned Red Sea bid round encompassing over a dozen concession sites
  • Lukoil has commenced on a new phase at the West Qurna-2 field in Iraq, with 57 production wells planned at the Mishrif and Yamama formation that could boost output by 80,000 boe/d to 480,000 boe/d in 2020
  • Aker BP has hit oil and natural gas flows at well 24/9-14 in the Froskelår Main prospect in the Alvheim area of the Norwergian Continental Shelf
  • Things continue to be rocky for crude producers in Canada’s Alberta province; production limits were increased last week after being previously slashed to curb a growing glut on news that crude storage levels dropped, but now face trouble being transported south as pipelines remain at capacity and crude-by-rail shipments face challenging economics

Midstream & Downstream

  • The Caribbean island of Curacao is now speaking with two new candidates to operate the 335 kb/d Isla refinery after its preferred bidder – said to be Saudi Aramco’s American arm Motiva Enterprises – withdrew from consideration to replace the current operatorship under PDVSA
  • America’s Delta Air Lines is now reportedly looking to sell its oil refinery in Pennsylvania outright, after attempts to sell a partial stake in the 185 kb/d plant failed to attract interest, largely due to its limited geographical position

Natural Gas/LNG

  • Total reports that it has made a new ‘significant’ gas condensate discovery offshore South Africa at the Brulpadda prospect in Block 11B/12B in the Outeniqua Basin, with the Brulpadda-deep well also reporting ‘successful’ flows of natural gas condensate
  • Italy’s Eni and Saudi Arabia’s SABIC have signed a new Joint Development Agreement to collaborate on developing technologies for gas-to-liquids and gas-to-chemicals applications
  • The Rovuma LNG project in Mozambique is charging ahead with development, with Eni looking to contract out subsea operations for the Mamba gas project by mid-March and ExxonMobil choosing its contractor for building the complex’s LNG trains by April
February, 15 2019