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Market Watch

Headline crude prices for the week beginning 26 March 2017 – Brent: US$70/b; WTI: US$65/b

  • A week-long rally last week has pushed oil prices up to opportunistic highs, with Brent ending the week above the US$70/b level.
  • Political tensions, particularly in the Middle East, have supported the prices. Over last weekend, Saudi Aramco announced that it has shot down ballistic missiles fired from Yemen over Riyadh. It is the latest in the proxy confrontation between Saudi Arabia and Iran, with the Saudi king attempting to get the USA on his side during Donald Trump’s visit.
  • Crude oil future contract trading has also begun in Shanghai, surpassing expectations in terms of volumes as individual investors have joined large commodity traders like Glencore and Trafigura.
  • Also supporting the rally was a surprise drop in US crude stockpiles last week, as imports dropped and refining rates rose, with strong demand drawing down gasoline and distillate inventories.
  • As a result, oil prices traded slightly weaker at the start of the week, as investors indulged in some profit-taking, but there seems to be enough strength in the market to keep prices on the higher end of the spectrum.
  • President Donald Trump’s introduction of new tariffs against China did spook the market with the threat of a trade war, that could potentially affect the US upstream industry infrastructure in the long term.
  • However, signs are that American crude storage surged this week, will add some gravity pull to prices this week, as the US rig count marched up, underscoring the continual concerns of American overproduction.
  • According to Baker Hughes, the American total rig count gained 5 sites last week – 4 oil and 1 gas – with the gains once again coming from the Permian Basin outweighing losses from Cana Woodford.
  • Crude price outlook: After highs last week and supply worries this week, crude prices this week should moderate slightly to US$68/b for Brent and US$64/b for WTI.


 

Headlines of the week

Upstream

  • Adnoc continues to sell stakes in its upstream concessions to attract strategic participation, with PetroChina being the latest with a 40-year, 10% stake in Umm Shaif, Nasr and Lower Zakum for US$1.175 billion.
  • Over 21,000 hectares of onshore oil and has blocks have been auctioned off in southeastern Utah, with the 43 parcels coming from lands that were scaled back from national park border by Presidential order last year.
  • Petro Matad will be drilling four wells in landlocked Mongolia this year, opening up one of the last onshore frontiers for oil exploration in a bid to reduce dependence on Russia refined product imports.
  • CNOOC’s Weizhou 6-13 oilfield in the South China Sea has started up ahead of schedule, with peak production of 9,400 b/d expected in 2019.
  • Vietnam has halted drilling in the offshore Red Emperor block due to pressure from China, potentially costing Spain’s Repsol US$200 million.
  • China’s first crude oil futures contract has launched in Shanghai, attracting huge attention with the first trade landed by Glencore.
  • Shell has sold its entire stake in the West Qurna 1 oilfield in Iraq to Itochu for US$406 million, continuing its exit from Iraq after the Majnoon field.
  • Mexico’s oil regulator has directed Pemex to float a minority stake of the company to raise funds to improve its hampered ability to develop assets.
  • Oil Search has announced that the Gobe condensate processing plant and oil export pipeline in Papua New Guinea will resume operations this week after the deadly earthquake. Operations at Kutubu will also resume ‘soon.’

Downstream

  • India and Myanmar are looking into building a pipeline from India’s east coast to Myanmar to ship refined products, which could connect to Bangladesh as well. Myanmar currently imports mostly from Singapore.

Natural Gas/LNG

  • As expected, Japan’s Inpex has officially delayed the startup of its troubled Ichthys LNG project in Australia to ‘April or May’, after a tropical cyclone caused minor damage at the site in the Northern Territory.
  • Greece’s Energean will be pumping in US$1.6 billion to develop the Karish and Tanin gas field offshore Israel, after a successful IPO in London.
  • Mubadala Petroleum and its partners Petronas and Shell are aiming to produce first gas from the Pegaga field in Malaysia by 3Q2021.
  • First gas has been achieved at the B15 field in Sarawak's SK310 PSC operated by Sapura E&P, and will connect to the Bintulu MLNG complex.
  • TransCanada is proposing to expand its Nova Gas Transmission Line that would expand transport of gas from Alberta and British Columbia to the rest of North America, now that British Columbia LNG plans are facing difficulties. Malaysia’s Petronas is reportedly interested in investing.
  • Despite some legal challenges, the EU Parliament is moving to draft new rules to regulate Russia’s planned Nord Stream 2 link to Germany.
  • Shell is reportedly considering signing a 15-year contract to purchase natural gas from Cyprus’s Aphrodite and Israel’s Leviathan to be processed into LNG at its Idku plant in Egypt.
  • Eni expects to sanction its Mamba LNG project in Mozambique by 2020, with a target for first gas in 2024.

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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