NrgEdge Editor

Sharing content and articles for users
Last Updated: August 10, 2018
7 views
Business Trends
image

Market Watch

Headline crude prices for the week beginning 6 August 2018 – Brent: US$73/b; WTI: US$69/b

  • Push and pull factors continue to keep crude prices in a steady range, with the market focusing on the success of OPEC’s new production deal, possible supply disruptions and global trade tensions.
  • OPEC sources reported that Saudi crude production in July had fallen by 200,000 b/d to 10.29 mmb/d – lower than expected and seemingly contradicted by Aramco’s own figures that showed a 230,000 b/d in July - but Saudi production is expected to ramp up soon.
  • Russian production is growing too, rolling back almost all previous cuts to pump some 11.215 mmb/d in July, up from 148,000 b/d and just below the post-Soviet Union record level.
  • This promised increased production, however, was offset by disruptions in the Red Sea, where the Yemeni Houthi group had halted shipments through the Bab al-Mandeb strait through militant action; the group is calling off attacks for two weeks for peace talks, but Saudi Arabian shipments are still suspended.
  • Additional tariffs came in on both the US and Chinese sides on US$16 billion worth of goods this week, US crude oil was removed at the last minute from the Chinese hitlist (but refined fuels remain), though the threat of a 25% tariff on US crude and LNG still remains.
  • The uncertainty over the trade situation has been enough to cause Sinopec to hold off on buying American crude, where it is anticipated that no new bookings for US crude will be made until October.
  • On the impending Iranian sanctions, while India seems to be slowly winding down purchases, China has directly defied American pressure to completed cut off Iranian imports, but did agree to ‘not ramp up purchases’.
  • A surprise drawdown at the Cushing storage hub supported American prices, but US drillers still shed two oil rigs and three gas rigs – the fourth weekly decline in the active rig count over the past five weeks.
  • Crude price outlook: Increase supply looks inevitable, which should keep some downward pressure on prices, although trade and geopolitical tensions could rear their ugly heads again. We expect Brent to trade at US$70-72/b and WTI at US$65-67/b.

 

Headlines of the week

Upstream

  • Eni has announced plans to invest some US$1.8 billion into three offshore Mexican fields through 2040, hoping to ramp up production at the Amoca and Mizton fields to 90,000 b/d by 2022 and start the Tecoalli field by 2024.
  • Tallgrass Energy is proposing to build the 700 mile/1126 km Seahorse pipeline to carry crude from Cushing, Oklahoma to the St James refining complex in Louisiana, to ease bottlenecks building up in Cushing.
  • Norway’s Aker BP has acquired Total’s interest in 11 licences on the Norwegian Continental Shelf for some US$205 million.
  • Petrobas is introducing its new Buzios crude, a medium-sweet grade from its pre-salt Santos field available from October that is targeted at China.
  • Oilfield services provider Petrofac is scaling back its foray into production, selling 49% of its oil and gas fields in Mexico to Perenco for US$200 million.
  • Total’s North Sea employees have gone on their third strike in two weeks on August 6, with another two walkouts planned for August 13 and 20.

Downstream

  • Indonesia will make its biodiesel mandate compulsory for all vehicles and heavy machinery from September 1, aiming to reduce its net imports of fuel.
  • In an attempt to get its refinery upgrade plans back on track, Indonesia’s Pertamina has approached Azerbaijan’s Socar and Japan’s JX Nippon Oil to partner on plan to upgrade its Balikpapan refinery by 100 kb/d.
  • Iraq has extended the deadline for foreign companies and investors to bid on the 70,000 b/d Diwaniya refinery near Baghdad, with bids closing October 30.
  • Jizzakh Petroleum is tapping Honeywell technologies in the new 115 kb/d refinery it is building in the eastern region of Uzbekistan.
  • Taiwan’s CPC is looking to invest US$6.6 billion in an Indian petrochemical project in Paradip, utilising feedstock from the nearby IOC refinery.

Natural Gas/LNG

  • As of July 27, 2018, the Ichythys LNG project in Australia is now operational after years of delays, which will be able to produce some 1.6 bcf/d of natural gas and 85,000 b/d of condensate at full capacity.
  • Shell is aiming to make its FID on the LNG Canada project by the end of 2018, as a flurry of activity revives hope for the dormant Kitimat project.
  • After work at the Mansuriyah gas fields in Iraq were halted in 2014 over IS militant activity by an international consortium led by Turkey’s TPAO, Iraq has decided to take over development itself using its state oil firms.
  • Egypt expects natural gas production from the West Nile Delta field 9B to begin in early October, with the Shell project aiming for output of 400 mcf/d.
  • PetroChina has announced  a ‘major shale gas discovery’ in the Huangguashan block in the Sichuan basin which boost CNPC’s production at the basin from 3 bcm in 2017 to 5.6 bcm this year.

Corporate

  • China’s Sinochem is filing for an IPO in Hong Kong that could raise some US$2 billion necessary to shift to higher-value areas of petrochemicals.

oil and gas oil and gas news news weekly update market watch market trends latest oil and gas trends
3
0 2

Something interesting to share?
Join NrgEdge and create your own NrgBuzz today

Latest NrgBuzz

“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
SHORT-TERM ENERGY OUTLOOK

Forecast Highlights

Global liquid fuels

  • Brent crude oil spot prices averaged $59 per barrel (b) in January, up $2/b from December 2018 but $10/b lower than the average in January of last year. EIA forecasts Brent spot prices will average $61/b in 2019 and $62/b in 2020, compared with an average of $71/b in 2018. EIA expects that West Texas Intermediate (WTI) crude oil prices will average $8/b lower than Brent prices in the first quarter of 2019 before the discount gradually falls to $4/b in the fourth quarter of 2019 and through 2020.
  • EIA estimates that U.S. crude oil production averaged 12.0 million barrels per day (b/d) in January, up 90,000 b/d from December. EIA forecasts U.S. crude oil production to average 12.4 million b/d in 2019 and 13.2 million b/d in 2020, with most of the growth coming from the Permian region of Texas and New Mexico.
  • Global liquid fuels inventories grew by an estimated 0.5 million b/d in 2018, and EIA expects they will grow by 0.4 million b/d in 2019 and by 0.6 million b/d in 2020.
  • U.S. crude oil and petroleum product net imports are estimated to have fallen from an average of 3.8 million b/d in 2017 to an average of 2.4 million b/d in 2018. EIA forecasts that net imports will continue to fall to an average of 0.9 million b/d in 2019 and to an average net export level of 0.3 million b/d in 2020. In the fourth quarter of 2020, EIA forecasts the United States will be a net exporter of crude oil and petroleum products by about 1.1 million b/d.

Natural gas

  • The Henry Hub natural gas spot price averaged $3.13/million British thermal units (MMBtu) in January, down 91 cents/MMBtu from December. Despite a cold snap in late January, average temperatures for the month were milder than normal in much of the country, which contributed to lower prices. EIA expects strong growth in U.S. natural gas production to put downward pressure on prices in 2019. EIA expects Henry Hub natural gas spot prices to average $2.83/MMBtu in 2019, down 32 cents/MMBtu from the 2018 average. NYMEX futures and options contract values for May 2019 delivery traded during the five-day period ending February 7, 2019, suggest a range of $2.15/MMBtu to $3.30/MMBtu encompasses the market expectation for May 2019 Henry Hub natural gas prices at the 95% confidence level.
  • EIA forecasts that dry natural gas production will average 90.2 billion cubic feet per day (Bcf/d) in 2019, up 6.9 Bcf/d from 2018. EIA expects natural gas production will continue to rise in 2020 to an average of 92.1 Bcf/d.

Electricity, coal, renewables, and emissions

  • EIA expects the share of U.S. total utility-scale electricity generation from natural gas-fired power plants to rise from 35% in 2018 to 36% in 2019 and to 37% in 2020. EIA forecasts that the electricity generation share from coal will average 26% in 2019 and 24% in 2020, down from 28% in 2018. The nuclear share of generation was 19% in 2018 and EIA forecasts that it will stay near that level in 2019 and in 2020. The generation share of hydropower is forecast to average slightly less than 7% of total generation in 2019 and 2020, similar to last year. Wind, solar, and other nonhydropower renewables together provided about 10% of electricity generation in 2018. EIA expects them to provide 11% in 2019 and 13% in 2020.
  • EIA expects average U.S. solar generation will rise from 265,000 megawatthours per day (MWh/d) in 2018 to 301,000 MWh/d in 2019 (an increase of 14%) and to 358,000 MWh/d in 2020 (an increase of 19%). These forecasts of solar generation include large-scale facilities as well as small-scale distributed solar generators, primarily on residential and commercial buildings.
  • In 2019, EIA expects wind’s annual share of generation will exceed hydropower’s share for the first time. EIA forecasts that wind generation will rise from 756 MWh/d in 2018 to 859 MWh/d in 2019 (a share of 8%). Wind generation is further projected to rise to 964 MWh/d (a share of 9%) by 2020.
  • EIA estimates that U.S. coal production declined by 21 million short tons (MMst) (3%) in 2018, totaling 754 MMst. EIA expects further declines in coal production of 4% in 2019 and 6% in 2020 because of falling power sector consumption and declines in coal exports. Coal consumed for electricity generation declined by an estimated 4% (27 MMst) in 2018. EIA expects that lower electricity demand, lower natural gas prices, and further retirements of coal-fired capacity will reduce coal consumed for electricity generation by 8% in 2019 and by a further 6% in 2020. Coal exports, which increased by 20% (19 MMst) in 2018, decline by 13% and 8% in 2019 and 2020, respectively, in the forecast.
  • After rising by 2.8% in 2018, EIA forecasts that U.S. energy-related carbon dioxide (CO2) emissions will decline by 1.3% in 2019 and by 0.5% in 2020. The 2018 increase largely reflects increased weather-related natural gas consumption because of additional heating needs during a colder winter and for additional electric generation to support more cooling during a warmer summer than in 2017. EIA expects emissions to decline in 2019 and 2020 because of forecasted temperatures that will return to near normal. Energy-related CO2 emissions are sensitive to changes in weather, economic growth, energy prices, and fuel mix.

U.S. residential electricity price

  • West Texas Intermediate (WTI) crude oil price
  • World liquid fuels production and consumption balance
  • U.S. natural gas prices
  • U.S. residential electricity price
  • West Texas Intermediate (WTI) crude oil price
February, 13 2019