Oil market tightens in OPEC cuts


Oil prices rose on Tuesday afternoon when Saudi Arabia pledged further cuts in March, while its biggest partner in the deal, Russia has not committed to its share of the cuts agreed.

Graph of the week

(Click to enlarge)

– US ethane exports increased from almost nothing in 2013 to 260,000 bpd on average in the first 10 months of 2018, according to the EIA.
– Ethane is a critical raw material for the manufacture of petrochemical products, with plastics as the main end use.
– The increase in the production of petroleum liquids and natural gas has led to an increase in the supply of ethane. That has fueled a petrochemical boom along the US Gulf Coast. UU
– But it has also led to a rapid increase in ethane exports. I know. UU They overtook Norway in 2015 to become the world's leading exporter of ethane (Norway is the only other country to send ethane internationally).

Market movers

• TransCanada & # 39; s (NYSE: TRP) The Keystone pipeline remained partially closed until Monday after a leak was discovered near St. Louis, MO. TransCanada has not yet determined the cause and has not provided an estimated timeline for a restart.
• Rank Resources (NYSE: RRC) On Monday, the price of its shares rose more than 5.5 percent, after reporting an 18 percent increase in proved reserves at the end of 2018.
• BP (NYSE: BP) He said gas production started from its second phase of development of the West Nile Delta off the coast of Egypt. The maximum production of around 700 mcf / d is expected for April.

Tuesday, February 12, 2019

Oil prices rose during the first operations on Tuesday with the news that OPEC had cut production significantly in January.

OPEC production drops by almost 800,000 bpd in January. OPEC production decreased by 797,000 bpd in January from the previous month, with an average of only 30.81 mb / d. Saudi Arabia, the United Arab Emirates and Kuwait contributed to most of the reductions. However, Russia only reduced production by 90,000 bpd, well below the 230,000 bpd promised as part of the December agreement. Saudi Arabia said it would continue to reduce production, with plans to reduce output to a minimum of 9.8 mb / d in March, or about half a million barrels per day, less than it had promised. Oil prices jumped in the news.

India to stop sales of refined products to Venezuela. The two main refiners in India will continue to buy crude oil from Venezuela, but will stop selling refined products due to US sanctions. UU., According to Argus Media. It should be noted that PDVSA's boss, Manuel Quevedo, attended a conference in New Delhi. India could continue to be one of the few major oil buyers of the increasingly isolated regime of Nicolás Maduro. Quevedo said PDVSA planned to double exports to India to 300,000 bpd. John Bolton issued a veiled threat to India for not working with the Maduro regime, saying that twitter that "the nations and companies that support Maduro's theft of Venezuelan resources will not be forgotten."

Citgo in the eyes of creditors. The US government is trying to keep Citgo, PDVSA's subsidiary based in the United States, alive and intact so that it can be delivered to Juan Guaidó and a new Venezuelan government. However, creditors are invading the company to claim parts of the company while the Maduro regime collapses. "Citgo is the big prize," Francisco Monaldi, a member of the Energy Policy of Latin America at the Baker Institute for Public Policy at Rice University told the Houston Chronicle. "I said before that there would be a lot of payments for creditors, but now it seems that there is a more important actor that stops the sharks, which is the government of the United States." Related: The discovery of oil in South Africa could be a game changer

PDVSA pressures partners of joint ventures. PDVSA is pressing its joint venture partners to declare whether or not to continue operations in the country after US sanctions. UU Chevron (NYSE: CVX) has promised to remain in Venezuela. Chevron received an exemption from the US government. UU To continue working in the country until July 27. Chevron is trying to follow a fine line, promising to remain in Venezuela at the same time it covers its bets, implying that it must collaborate with the US government. UU Gobierno de venezuela "It's a fluid environment," said Chevron CEO Mike Wirth. "Our strong intention is to remain on the ground in Venezuela and be part of building a better future for the people of Venezuela," Wirth told Bloomberg. "We have a very close coordination in progress with several agencies within the government of the United States."

The world will be the "playground" of Saudi Aramco. Saudi Arabia Aramco will venture into international oil and gas exploration for the first time, according to Saudi Arabia's oil minister Khalid al-Falih. "We are not going to look inwards anymore and we will only focus on monetizing the resources of the kingdom," al-Falih told the FT. "Move forward, the world will be the Saudi Aramco playing field." The plans also run counter to Crown Prince Mohammed bin Salman's plans to diversify the Kingdom's economy.

Shale industry concerned about fracture blows. A recent shale conference in Texas was dominated by the discussion on how to minimize the damage to shale wells from "fracture blows", which occur when the location close to each other interferes with the production of each. This type of well interference can reduce productivity by 20 to 40 percent in the newer "children's wells," while inflicting even greater damage to the original "parent well." The industry is collecting data on how and when catastrophic losses can occur, but they are only in the early stages of dealing with the problem. The reason why this is important is because shale drilling will increasingly be dominated by children's wells.

Climate groups threaten to take legal action against Shell. A coalition of environmental groups is preparing legal action against Royal Dutch Shell (NYSE: RDS.A) in the Netherlands to force the company to make the oil transition. The groups say that Shell is "deliberately obstructing" the efforts in climate action.

Trump rates kill 8,000 solar jobs. The solar industry lost 8,000 jobs last year, a second consecutive year of declines. One of the main reasons for the loss of jobs and the lower growth was due to the Trump administration's 30 percent tariff on imported solar panels. However, there are about 242,000 people employed in the solar industry, more than the coal industry. Related: The renewable revolution has a lithium problem

Moscow demolishes OPEC + talk. The Kremlin rejected reports that Russia and OEPC were discussing a formal agreement. Russia's energy minister, Alexander Novak, said in December that a formal OPEC + architecture would carry risks. Recently there were reports that the two sides were about to reach an agreement, but the Russian government suppressed the speculation on Tuesday.

US exports of crude to Europe increase. The sanctions of EE. UU Iran has opened the door to more exports of US crude to Europe. In addition, sanctions against Venezuela could result in more shipments of crude from the United States abroad. Europe imported a record 630,000 bpd from the US UU In January.

Shell, Eni, Exxon win blocks in Egypt. Egypt held a tender for oil and gas exploration, and Royal Dutch Shell (NYSE: RDS.A) won the largest amount (three for oil and two for gas). ExxonMobil (NYSE: XOM) made its debut in Egypt. BP (NYSE: BP) and Eni (NYSE: E) also obtained some concessions. Egypt is becoming a key center of natural gas in the eastern Mediterranean.

We invite you to read some of the most recent articles that we have published that may be of interest to you:

By Tom Kool from Oilprice.com

More main readings by Oilprice.com:

Source link