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Last Updated: September 27, 2018
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Market Watch

Headline crude prices for the week beginning 24 September 2018 – Brent: US$80/b; WTI: US$72/b

  • International crude oil prices are now at their highest levels in four years, as the market fret over tight supply following a declaration by OPEC that it was approaching the issue of raising output cautiously ahead of a meeting of OPEC oil ministers in Algeria this weekend
  • Despite President Trump’s demand that the group steps in to control oil prices, OPEC is taking a wait-and-see approach; Saudi Arabia signalled that it was comfortable with US$80/b oil and was in no rush to bring prices down from current levels
  • OPEC also is not guaranteeing that its members (and its NOPEC partners) will automatically replace lost Iranian barrels due to upcoming American sanctions; coupled with still-strong energy demand, this is leading traders to predict a very tight oil market over the next few months
  • Most financial institutions are maintaining that oil prices will stay at US$80/b, but some bullish traders, including Mercuria and Trafigura, are predicting a return to US$100/b oil by early 2019
  • Saudi Arabia’s new best (oil) friend Russia reported a surge in its crude production to a new post-Soviet record of 11.3 mmb/d, but the US has leapfrogged that to become the largest crude oil producer in the world
  • Caught in an American web of sanctions, Iran warned that it would veto any decision by OPEC that ‘harms the Islamic Republic’, setting the tone for a testy meeting in Algiers this Sunday and in Vienna this December
  • Iran also issued veiled threats about jeopardising international peace as the US and Iran butted heads at the annual International Atomic Energy Agency meeting in Vienna
  • As the noose closes on Iran, even neighbouring India is cutting down on purchases; Chennai Petroleum (partly owned by the National Iranian Oil Co’s trading arm) announced it would stop processing Iranian crude from October onwards to maintain its insurance coverage
  • Meanwhile, the imbroglio between China and the US has reached LNG, with China slapping a 10% tariff on US LNG imports in response to a new tranche of duties imposed on US$200 billion of Chinese imports by the US, threatening to upend the accelerating LNG terminal development in the US Gulf Coast
  • Despite prices tending upwards, the US active oil rig count fell by one last week as ongoing infrastructure bottlenecks in onshore shale basins, particularly the Permian, hamper the marketability of liquids
  • Crude price outlook: Prices sustaining at high levels seem inevitable for the moment, as sanctions against Iran kick in in six weeks and the full scale of its impact remains uncertain. With OPEC content to let prices rise, we see Brent trading towards US$82/b and WTI towards US$73/b this week.


Headlines of the week

Upstream

  • Shell is reportedly looking to sell its 22.5% stake in the Gulf of Mexico Caesar Tonga field to Focus Oil for some US$1.3 billion, as it continues an asset rationalisation process kickstarted by its purchase of the BG Group
  • Canada has decided to restart the approval process for the Trans Mountain oil pipeline, hoping to circumvent or rectify shortcomings that led to a court ruling quashing the project’s permits on insufficient environmental impact studies
  • North Africa-focused SDX Energy is reportedly in discussion with BP to purchase a ‘significant package of assets’, which would add to SDX’s current interests in the South Disouq, Meseda, NW Gemsa and South Ramadan areas
  • Mexico’s Pemex has signed a landmark pre-unitisation deal with the three-way Block 7 Consortium, which will focus on developing the JV’s Zama-1 ‘world class oil discovery’ containing 1.2-1.8 billion barrels of oil
  • CNOOC’s Penglai 19-3 oilfield project in the Bohai Sea has commenced production, with a peak of 58,700 b/d expected to be hit by 2020, which should soften the persistentn decline in Bohai Bay upstream production
  • First oil has been produced at the Tortue field, in the offshore Gabon Dussafu PSC, a major milestone for its operator Panoro Energy

Downstream

  • Eni and Pertamina have signed an MoU meant to deepen cooperation between the two firms, particularly in Indonesian downstream, leveraging Eni’s experience in developing bio-refineries
  • Uganda has delayed its planned 60 kb/d oil refinery startup to a still ambitious 2022 over delays in the design and engineering phase; the refinery is meant to take Ugandan crude from fields co-developed by Total, CNOOC and Tullow, with delays in the upstream output also contributing to the pushback
  • After years of delays, Vietnam’s Nghi Son refinery is finally entering full production mode, offering its first cargo of gasoline for export, although Nghi Son will eventually focus on supplying fuels to the domestic market
  • China is reportedly considering issuing a new tranche of fuel export permits of some 3-4 million tons to prevent state-owned refiners from having to cut runs
  • Russian petrochemical producer Sibur has been sending out feelers on a possible stock market flotation, having spoken to several banks about listing some 15% of its shares in Moscow or international bourses

Natural Gas/LNG

  • With Egypt’s giant Zohr gas field ramping out faster than expected, the country plans to revive its long-dormant Damietta LNG plant to resume LNG exports
  • Vitol has signed a long-term 15-year LNG agreement with Cheniere, with the trader taking in 700,000 tpa of LNG per year beginning end-2018
  • Trader Woodside has signed a mid-term deal with Germany’s Uniper to supply up to 600,000 tpa of LNG over a four-year period beginning 2019
  • Qatar Petroleum will be adding a fourth train to its North Field expansion project, which will expand its total capacity to 110 mtpa by 2024
  • French major Total has clarified that its LNG investment position will be to focus on what it calls the ‘Golden Triangle’ of the LNG market – cost-competitive projects in Qatar, Russia and the USA
  • Nigeria LNG expects to make a final investment decision on its planned US$7 billion, 8 million tpa Train 7 LNG expansion project by end-2018

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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