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Last Updated: September 13, 2018
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Market Watch

Headline crude prices for the week beginning 10 September 2018 – Brent: US$78/b; WTI: US$67/b

  • International oil prices are holding steady on the high end of their range, as ongoing concern over the Iranian situation and escalating trade tensions continues.
  • The abating of Tropical Storm Gordon led the WTI discount to Brent to grow to US$11/b, the widest spread in over a month; however, with three new tropical storms developing, including Hurricane Florence due to hit the Carolinas, WTI prices could be in for a rocky road.
  • In the ongoing trade spat between the US and China, President Trump is now threatening to impose tariffs on an additional US$267 billion worth of Chinese imports; China’s room to retaliate with like-for-like tariffs is now constrained, and crude and LNG will now inevitably be dragged into the fracas.
  • The route in emerging currencies – particularly the Turkish lira, Indian rupee and Indonesia rupiah – has sapped some strength from the market over worries that these large oil buyers would have to curb demand.
  • On the impending Iranian sanctions, the US is returning to more of a hard-line stance, saying that it will consider waivers for dependent buyers like India only if imports are eventually eliminated completely.
  • Meanwhile, South Korea became the first of Iran’s major customers to cut its imports to zero, hoping to appease its ally during a delicate time in its relations with North Korea.
  • OPEC believes that world oil consumption will reach 100 mmb/d by the end of 2018, earlier than previously forecast and a sign of robust demand that validates the organisation’s decision to expand its oil supply.
  • Despite concerns over growing crude inventories in the US, investment into the Permian Basin continues unabated; some shale assets recently sold for US$95,001 per acre, more than double the previous record of US$40,001, as overall sales in a recent auction raised almost a billion dollars over two days.
  • While the future of the Permian remains bright, immediate action is cautious; US drillers cut active oil rigs for the second time in three weeks, shedding two sites, although two additional gas rigs left the net count unchanged.
  • Crude price outlook: Uncertainty will keep oil prices on an upward trend, with Brent likely to test to US$80/b level again, while WTI returns to the US$69-71/b level as the Atlantic hurricane season kicks into full gear.


Headlines of the week                                                                                    

Upstream

  • Hot on the heels of ExxonMobil’s stellar discoveries in Guyana, Tullow Oil will be drilling its first well in the Orinduik licence, which borders the recent Hammerhead-1 discovery by ExxonMobil and Hess.
  • Total has ruled out investing in the US shale oil industry, citing a lack of its own infrastructure in the region and increasing competition.
  • CNOOC has signed a new agreement with Uganda National Oil Company, paving the way for new exploration in the promising Albertine Graben.
  • Norway’s Equinor will begin drilling in Brazil’s North Carcara field by the end of 2018, aiming to increase output to 300-500,000 b/d before 2030.
  • Israel’s Ratio Oil Exploration was finally awarded its upstream rights in the Philippines, after winning the 416,000 hectare East Palawan block in 2015.
  • Despite national attempts to pull back away from energy, there is still great interest in Norwegian upstream, with 38 firms bidding in the latest APA auction.
  • Mexico’s incoming President Andres Manuel Lopez Obrador has allocated US$3.9 billion in the 2019 budget to resuscitate flagging national output.
  • Equatorial Guinea is threatening to exclude service firms like Technip, Subsea 7 and Schlumberger from operating for not complying with local content rules.
  • Gazprom, Mubadala Petroleum and Russia’s RDIF fund have established a joint venture to develop oil fields in Western Siberia’s Tomsk and Omsk regions.
  • Santos has sold a suite of its non-core Asian assets to Ophir Energy for US$221 million, including its interest in Indonesia’s Sampang and Madura Offshores PSCs and the Block 12W PSC in Vietnam.

Downstream

  • China’s Hengyi Industries International has delayed the startup of its 175 kb/d Pulau Muara Besar refinery in Brunei by several months, with construction now set to be complete by Q119, receiving first crude by end-March 2019.
  • ExxonMobil is looking at constructing a major petrochemicals complex in Guangdong, which would incorporate a 1.2 mtpa ethylene cracker, which could begin operations in 2023 if all milestones are hit.
  • Delta Air Lines is looking to sell off a stake in its Monroe Energy refining business, after its attempt to control jet fuel supply proved to be too risky alone.
  • Ahead of Saudi Aramco’s attempt to acquire part of SABIC, the Saudi petrochemicals giant has now purchased a 24.99% stake in specialty chemicals leader Clariant, beefing up its overall petchems capacity.

Natural Gas/LNG

  • Qatargas has signed a new 22-year agreement with PetroChina to supply up to 3.4 mtpa of LNG annually through to 2040.
  • Enterprise Product Partners has begun construction of a new 150 kb/d NGL fractionator in Mont Belvieu Texas – its tenth – aimed at boosting its total capacity to 1.4 mmb/d to service growing markets in Asia.
  • Anadarko’s Area 1 in Mozambique is now estimated to hold some 50-75 tcf of natural gas, enough to create some 50 mtpa of LNG.
  • Spain’s Repsol has agreed to purchase 1 mtpa of LNG from Venture Global’s Calcasieu Pass LNG plant in Louisiana over a period of 20 years.

Corporate

  • Transocean and Ocean Rig UDW has agreed to merge in a cash-and-stock transaction valued at some US$2.7 billion, consolidating the deepwater submersible industry even further.

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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