Oil, Gas, And Fracking News Reads 23June 2018 – Part 2

Written by rjs, MarketWatch 666

Here are some more selected news articles about the oil and gas industry from the week ended 09 June 2018. Go here for Part 1.

This is a feature at Global Economic Intersectionevery Monday evening.

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Minnesota regulators near decision on disputed oil pipeline – Minnesota regulators will open two days of final arguments on whether they should approve Enbridge Energy’s proposal for replacing its deteriorating Line 3 crude oil pipeline from Canada across Minnesota.The proposal has aroused intense opposition from tribal and climate change activists. The Public Utilities Commission is scheduled to make its final decision late this month on whether the project is needed and, if so, what route it should take.Groups on both sides are urging supporters to pack the two-day hearing, which start Monday. Some opponents plan to canoe the Mississippi River to downtown St. Paul and then carry their boat to the proceedings. Calgary, Alberta-based Enbridge wants to replace Line 3, which it built in the 1960s. For safety reasons, Enbridge runs it at only about half its original capacity and only with light crude. The replacement would restore its original capacity of 760,000 barrels per day so that it can again deliver as much light or heavy crude as Midwest refineries want. All Enbridge still needs is Minnesota’s approval, through it has been a long, contentious process.The current Line 3 starts in Alberta and clips the northeastern corner of North Dakota before it traverses northern Minnesota on its way to Enbridge’s terminal in Superior, Wisconsin. Enbridge wants to lay a line that would run parallel to the existing one as far as Clearbrook, Minnesota, before taking a more southerly route to Superior.Enbridge says the old line is increasingly subject to corrosion and cracking, and that its maintenance needs are accelerating. It says that without a new Line 3, its customers would have to rely more heavily on rail and truck transport, which have higher costs and risks.

US Shale Oil Production to Rise 141000 Barrels a Day in July – Between July of 2017 and July of 2018, U.S. crude oil production from seven major shale regions is forecast to rise by 1.7 million barrels of oil per day to 7.34 million barrels a day. The month-over-month increase from June to July is expected to total 141,000 barrels a day. The forecast was published Monday by the U.S. Energy Information Administration (EIA) in its monthly Drilling Productivity Report. Total production in June is forecast to reach 7.2 million barrels a day, an increase of 164,000 barrels a day compared with previously estimated May production. In March the number of drilled but uncompleted (DUC) wells rose by 94 to a total of 7,622 including 122 new wells in the Permian basin. In April the number of DUC wells rose by 55 to a total of 7,677 including 111 new wells in the Permian basin. In May the number of DUC wells rose by 31 to a total of 7,772 including 100 new wells in the Permian basin. No overall oil production declines are forecast either for June or July, and production from new wells is expected to increase by 2 barrels per day per rig to 677 month over month in July. Natural gas production is expected to increase by 1.14 billion cubic feet per day. Production in the Permian Basin is expected to rise by 229 million cubic feet in July. Haynesville gas production is forecast to rise by 235 million cubic feet per day and Niobrara production is expected to be up by 52 million cubic feet per day. WTI crude oil for July delivery traded Monday at $65.90 a barrel, up about 1.3% from Friday’s closing price of $65.06. July crude opened at $64.46 Monday morning. Natural gas for July delivery traded Monday at $2.95 per million BTUs, down about 2.35% from Friday’s closing price of $3.02. July gas opened at around $3.05 Monday morning.

Total DUCs in US continue climbing in May: DPR – The number of DUCs, drilled, but uncompleted wells, in the Lower 48 U.S. states’ seven major plays rose less than 1% from April to May, the Energy Information Administration reported Monday in its monthly Drilling Productivity Report (DPR).A total of 31 DUCs were added to the total found in the Anadarko, Appalachia, Bakken, Eagle Ford, Haynesville, Niobrara and Permian plays. Total DUCs at May 31, was 7,772, up from 7,741 in April, Kallanish Energyreports.Just three of the seven plays saw a month-to-month increase in DUCs, led by the Permian Basin, which gained 100 drilled but uncompleted wells, to 3,203 from 3,103.The Eagle Ford (14) and the Bakken (1) were the other plays recording an April-to-May increase in DUCs, to 1,485 and 750, respectively. The remaining four plays each saw their DUCs total fall, led by a 48-DUCs drop in the Niobrara, falling to 491 from 539. Appalachia (the Marcellus and Utica Shale plays combined) saw its DUCs total drop by 27, to 744, from 771.

U.S. shale producers warn Chinese tariffs would hit energy exports (Reuters) – China’s proposed tariffs on U.S. petroleum imports, part of a mounting trade war between the two countries, would crimp sales to the shale industry’s largest customer, adding new pressure on U.S. crude prices, energy executives and analysts said in interviews this week. China has said it would slap a 25 percent tariff on imports of U.S. crude, natural gas and coal on July 6 if Washington went ahead, as planned, with its own tariffs on Chinese goods that day. Energy would be added for the first time to a burgeoning trade dispute that has hit imports of Chinese metals and solar panels, and exports of U.S. medical equipment and soybeans. Targeting petroleum puts the Trump administration’s “energy dominance” agenda in Beijing’s cross-hairs as U.S. shale has grabbed share from Middle East suppliers in Asia. China is the largest customer for U.S. crude, importing about 363,000 barrels a day in the six months ended in March. Thomson Reuters shipping data shows those exports have increased since, rising to an expected 450,000 bpd in July. “It is going to hurt everyone for the short term,” While U.S. crude will continue flowing to market even with tariffs, “it’ll force you to put your oil somewhere else, and it’ll cost you more” to line up other buyers. U.S. oil exports have steadily grown since the four-decade-old ban on crude exports was lifted at the end of 2015. China’s tariff threat caught U.S. producers off guard because it had been discussing buying more U.S. energy and agricultural products to reduce its $375 billion trade surplus with the United States. The levies could boost suppliers of West African crude at the expense of U.S. exports. The tariffs are “creating a whole new set of uncertainties on top of what’s already there,”

Cheniere pipeline to carry Oklahoma natgas output gets positive environmental review– Cheniere Energy’s Midcontinent Supply Header Interstate Pipeline, which would boost takeaway capacity from Oklahoma’s Anadarko Basin to support growing Gulf Coast demand for LNG exports, got a positive environmental review Thursday from the US Federal Energy Regulatory Commission. The project would result in some environmental impacts, but these would be reduced to less-than-significant levels with mitigation that is planned and being requested, the agency said in its final Environmental Impact Statement.Midship would augment Cheniere’s feedgas supplies at its LNG export terminals and provide another outlet for producers in the prolific SCOOP and STACK plays to reach downstream markets. The Houston-based company has been ramping up production at its Louisiana terminal, while continuing to build two liquefaction units with plans for a third at its Texas facility. “Due to the implementation of specialized construction techniques, the relatively short construction timeframe in any one location, and resource protection and mitigation plans designed to minimize and control environmental impacts for the Midship project, we conclude that minimal cumulative impacts would occur,” FERC said in its report.

Utah drillers import fracking sand from Wisconsin, but there may a cheaper place to buy it right inside the Beehive State — A trainload of sand, enough to fill 50 or more rail cars, can disappear down a single bore hole when drillers frack oil and gas wells in eastern Utah’s Uinta Basin. Utah energy developers must acquire their “frac sand” from Wisconsin quarries, which hold an abundance of clean silica grains of the right size, shape and hardness, a material known as “northern white.” But now alternative sources are under exploration in southern Utah’s Kane County, potentially opening the West’s first major quarries of sand needed for fracking operations. A 12,000-acre area in Kane County could yield enough to meet the needs for Utah energy developers for 40 to 50 years, according to energy industry representatives speaking last month at Gov. Gary Herbert’s Energy Summit in Salt Lake City. “We have some of the best frac sand in the country,” J.T. Martin, president of Salt Lake City-based Integrated Energy Cos., told conference attendees. “We are calling this ‘Utah pink Champagne.’ The Wisconsins have nothing on us.”

Zinke Caught in Conflict of Interest With Oil Giant Halliburton – Interior Secretary Ryan Zinke, who has spent his first 15 months opening public lands to oil and gas drilling, has been linked to a development project with Halliburton chairman David Lesar, POLITICO reported Tuesday.Lesar is backing a real estate development in Zinke’s hometown of Whitefish, Montana and receiving help from a foundation started by Zinke and currently run by his wife, Lola.Lola Zinke has agreed in writing to allow the Lesar-funded development, which would convert an industrial area into a hotel and shops, to build a parking lot on land donated to the Zinke’s foundation for a Veteran’s Peace Park, which has remained undeveloped for nearly 10 years. The Zinkes also own land across from the development that stands to increase in value, real estate agents told POLITICO.The development would also include a microbrewery, a project for which Zinke has spent five years lobbying town officials. Whitefish city planner David Taylor told POLITICO that the developers would allow the Zinkes to own and run the microbrewery, though the developers themselves said nothing had been decided.”The sad fact is that this is just the latest example of Zinke attempting to personally benefit from a resource that should benefit the public,” Whitefish conservation group the Western Values Project Executive Director Chris Saeger told The Associated Press. The Western Values Project has called for an investigation into Zinke’s offer of the land, donated for a park, to private interests and has asked Zinke to recuse himself from any future arrangements the Department of the Interior (DOI) makes with Halliburton. Halliburton is the largest oil services company in the U.S., and ethics experts told POLITICO any deal between the company and the Zinkes presents a conflict of interest, since Halliburton stands to benefit from DOI plans announced under Zinke to open public lands to fossil fuel interests, such as the decision to open U.S. coasts to offshore oil drilling. POLITICO highlighted the DOI’s move under Zinke to loosen Obama-era fracking restrictions on federal lands after lobbying by Halliburton, one of the world’s largest fracking companies. DOI is also responsible for drilling and pipeline safety standards. Marilyn Glynn, acting director of the Office of Government Ethics under President George W. Bush, also thought the development deal meant that Zinke should now remove himself from any decisions that could impact Halliburton. “In a previous administration, whether Bush or Obama, you’d never run across something like this,” she told POLITICO.

Why It Matters If Fracking Companies Are Overestimating Their ‘Proved’ Oil and Gas Reserves — Back in 2011, The New York Times first raised concerns about the reliability of America’s proved shale gas reserves. Proved reserves are the estimates of supplies of oil and gas that drillers tell investors they will be able to tap. The Times suggested that a recent Securities and Exchange Commission (SEC) rule change allowed drillers to potentially overbook their “proved” reserves of natural gas from shale formations, which horizontal drilling and hydraulic fracturing (“fracking”) were rapidly opening up. “Welcome back to Alice in Wonderland,” energy analyst John E. Olson told The Times, commenting on the reliability of these reserves after the rule change. Olson, a former Merril Lynch analyst, is best known for seeing the coming Enron scandal 10 years before the infamous energy company imploded in 2000.Today, those same rules have allowed shale drillers to boost their reserves of oil, as well as natural gas. As a result, these “proved” reserves, which investors and pipeline companies are banking on, could potentially be much less proven than they appear. And the unprecedented degree to which this is happening in the shale industry casts a shadow of doubt on the purportedly bright future of America’s booming oil and gas industry. Under the updated SEC rules, which went into effect in 2009, drillers can count oil and gas from wells that won’t be drilled or fracked for up to five years as part of their proved reserves. Those as-yet-untapped wells can be put on a company’s books as a subset of their “proved” reserves, listed under the label “proved undeveloped” reserves. And drillers can count all of the oil and gas they expect to pump out over the well’s entire lifetime – before they’ve found out how fast that well flows or seen a single drop of oil from it. Those “proved undeveloped reserves” now make up an average of just over half of the proved oil reserves at 40 drilling companies active in shale gas basins nationwide, according to SEC filings reviewed by DeSmog. For drilling companies that are less heavily involved in shale drilling, the average mix is roughly 30 percent – similar to the industry’s average before the SEC rule change.

Oil from Alaskan refuge not coming before 2030, Energy Department says – Oil from Alaska’s wilderness refuge won’t be added to U.S. production until well after 2030, and much of that oil could be headed to China, the Energy Department’s analysis arm says. The Energy Information Administration said this week that it looked at several ways opening the Alaska National Wildlife Refuge to drilling, called for in the Republicans’ tax law, would affect crude oil production in the U.S. “Much uncertainty surrounds any projection of production from ANWR,” the energy agency said in a Thursday report. That’s because the data it has on the area slated to be drilled in is more than 30 years old and confidential. “The only well drilled in the coastal plain was completed in 1986, and the results have remained confidential,” the report read. “Federal resource estimates are based largely on the oil productivity of geologic formations in neighboring state-owned lands in Alaska and two-dimensional seismic data that had been collected by a petroleum industry consortium in 1984 and 1985.” Three estimates done by EIA, including low, average, and high, all showed that production from the Arctic refuge would not start until 2031, because of the time needed to acquire leases, explore, and develop the required production infrastructure. The oil from the refuge also faces problems in getting to market if its intended for use in the lower 48 states. Most of the fuel likely will be bound for China, because of legal constraints and other factors, the agency said.

Former Bank Of Canada Head: ‘Pipeline Protesters May Be Killed…So Be It’ – As Canada’s controversial Trans Mountain pipeline expansion project faces ongoingopposition, the former governor of the Bank of Canada said that protesters may die but that the government should push the project through anyway. Speaking at an event Wednesday, David Dodge said, “We’re going to have some very unpleasant circumstances,” the Edmonton Journal reported. “There are some people that are going to die in protesting construction of this pipeline. We have to understand that.” “Nevertheless, we have to be willing to enforce the law once it’s there,” Dodge said. “It’s going to take some fortitude to stand up.” In an interview with the Journal, he elaborated by saying, “We have seen it other places, that equivalent of religious zeal leading to flouting of the law in a way that could lead to death.”Dodge’s comments prompted outrage from climate activists.Author and 350-org co-founder Bill McKibben warned, “North American governments have shown the ‘fortitude’ necessary to kill indigenous people often enough that this is no idle threat,” while Canandian author Naomi Klein called the threat a “disgrace.” She added, “If the worst happens, we now know they went into this with their eyes wide open.” Greenpeace climate and energy campaigner Mike Hudema, meanwhile, wondered if Canadian Prime Minister Justine Trudeau would weigh in on Dodge’s remarks. Trudeau was the target of sharp criticism from environmental advocacy groups after announcing last month that the government would purchase the pipeline and expansion system, which will roughly triple the system’s capacity. That $4.5 billion buyout, commentedthe B.C.-based Dogwood Initiative, makes every taxpayer “partial owner of a leaky 65-year-old pipeline – and the proponent of a still uncosted oil tanker expansion project.” Dodge, for his part, has been described as “not inclined to hold his tongue.”

Trans Mountain pipeline expansion still has hurdles to cross – The Canadian government’s deal to buy Kinder Morgan’s Trans Mountain crude pipeline is far from over, with industry executives anticipating a six-month delay in the planned startup, keeping Alberta heavy oil prices at steep discounts to global benchmarks. Canada said in late May it will buy the 300,000 b/d pipeline and 590,000 b/d expansion project for $3.5 billion. Alberta producers are keen on expanding the pipeline to access Asian customers via the Westridge export terminal in Burnaby, British Columbia. The expansion was originally scheduled to start up in December 2020, but that is looking unlikely unless construction resumes soon. “Pipeline construction is a seasonal activity during summer to the fall [June to August] in Western Canada and failure to start work on the main infrastructure works will also drive up expansion costs,” Chris Bloomer, president of the Canadian Energy Pipeline Association, said in an interview. “There are a few regulations that will be issued during the bird-nesting season [as ownership changes hands],” said Keith Chiasson, senior vice president for downstream with oil sands producer Cenovus Energy, noting a closer look will also be taken at the construction schedule. Kinder Morgan is now in talks with contractors on a new cost estimate and time schedule to restart work on the pipeline expansion that was stopped April 8. The expectation is the construction contracts will be revalidated, Bloomer said. Kinder could not be reached for comment on what their next steps would be in the transition process. The deal is expected to be ratified by its board by the fourth quarter. Kinder Morgan has estimated an expansion of the Trans Mountain pipeline will cost C$7.5 billion.

Leaked letter: Kinder Morgan broke rules for months during Trans Mountain Pipeline construction – Kinder Morgan put fish, porpoises, sea lions and other marine life in danger during recent construction work near an oil terminal in Vancouver, says a leaked federal letter that warns the company could face prosecution for its violations.The letter from the federal Fisheries and Oceans Department (DFO) notes that the company also went months without filing mandatory monitoring reports to the government and First Nations before federal officials noticed the Texas company was breaking the rules.The department sent the warning to an executive at the company’s Canadian unit, Trans Mountain, in a letter dated June 6, 2018, and obtained by National Observer. That was just days after the Trudeau government announced a deal to take over the Trans Mountain pipeline expansion project and buy many of Kinder Morgan’s Canadian assets for 4.5 billion Canadian dollars ($3.4 billion).It has prompted environmental lawyer Eugene Kung to raise this question: “Down the line, if the feds become the owner, what does it look like for them to prosecute themselves?” The letter contrasts with recent assurances by the federal government that its officials have kept a close eye on the company and taken adequate measures through a “world-leading” plan to ensure that the Trans Mountain west coast pipeline and tanker expansion project will proceed without damaging the environment or public safety. The warning letter identifies four different violations related to pile driving during expansion work on the Burrard Inlet in the metro Vancouver region near the Kinder Morgan terminal between January and May 2018. The company exceeded safe underwater noise limits for such marine species as the harbor porpoise and the Steller sea lion as it proceeded with the pile driving activity, according to a separate email sent by the federal department to members of an Indigenous Advisory and Monitoring Committee that was set up to keep tabs on the project.

Canadian oil pipeline could drive famous Puget Sound whales to extinction – Orcas are one of the Pacific Northwest’s most iconic creatures. But despite their beloved status, the local resident population known as the Southern Resident killer whales are critically endangered, with just 75 known animals left. Now, advocates worry the Trudeau government’s plan to purchase the Trans Mountain Expansion Project may push the whales to the edge of extinction. Southern Resident killer whales are acoustically, culturally, and genetically distinct from other orca populations. While they can be found from California to southern Alaska, they generally spend May through the fall in the inland waters of British Columbia and Washington state. Known as the Salish Sea, it’s one of the world’s busiest shipping routes, a reality that’s considered one of the biggest threats to the population, which has remained small and vulnerable for decades despite receiving federal protection in 2005. And the Salish Sea is about to get busier. The Trans Mountain expansion, which is the twinning of an existing oil pipeline that carries diluted bitumen from the Alberta tar sands to British Columbia’s shores, is expected to cause the number of oil tankers passing through these waters to jump from around the 60 that annually service the existing pipeline to over 400. “The ships go exactly where the whales go,” Misty MacDuffee, marine biologist and the Wild Salmon Program Director for B.C.’s Raincoast Conservation Foundation, told Earther.Earlier this spring, it looked like the whales might receive a reprieve from the increased noise, shipping traffic, and possible marine oil spills associated with the project. In April Kinder Morgan, the Texas-based company behind the expansion, made noises about shutting it down due to growing delays caused by court battles and indigenous-led resistanceagainst the project. But, after declaring the pipeline vital to national interests, in late May the Canadian government moved to purchase the expansion. Now, a project that Raincoast Conservation Foundation’s population viability analysis found “increases the risk to more than 50% probability that the population will decline below 30 animals,” is back on.

TransCanada Keystone XL May Be One Oil Pipeline Too Many – — TransCanada Corp.’s Keystone XL may be one pipeline too many for Canada, at least for now. Construction of the export line would supply Western Canada with more pipeline capacity than needed through 2030, assuming it were operating in the next decade along with the Trans Mountain pipeline expansion and Enbridge Inc.’s Line 3, according to research released by the Canadian Energy Research Institute on Tuesday. The three lines would raise the country’s crude export capacity to about 5.5 million barrels a day from just under 4 million barrels a day last year, according to CERI. Alberta’s growing crude oil production, mostly from the oil sands, won’t exceed the capacity of existing and three planned expanded oil pipelines for another twelve years. Canadian heavy crude prices have traded at an average discount to West Texas Intermediate future of almost $22 a barrel this year, about 70 percent bigger than the average discount last year, after existing pipelines filled to capacity amid a surge of new production from Suncor Energy Inc.’s Fort Hills oil sands mine. The discount widened 50 cents to $24 a barrel on Wednesday. The $8 billion Keystone XL, approved by U.S. President Donald Trump last year, would carry 830,000 barrels of crude from Alberta to Nebraska. While TransCanada hasn’t made a final investment decision on the pipeline, the company has said it has “approximately 500,000 barrels per day of firm, 20-year commitments.” A total of 12 percent of the pipeline would be reserved for uncommitted volumes, according to the National Energy Board. The company will begin clearing brush in Montana this fall, according to a U.S. State Department letter addressed to the Assiniboine and Sioux Tribes obtained by Bloomberg News. TransCanada didn’t respond to an email seeking comment. To be sure, all three pipelines will deliver crude to different markets, with Keystone XL boosting access to the U.S. Gulf Coast, where diminishing volumes of heavy crude from Latin America have increased demand for Canadian volumes, Dinara Millington, CERI’s vice president of research, said in a phone interview. Some oil sands volumes may migrate from Enbridge’s Mainline onto Keystone XL, she said. “You want that flexibility,” she said.

Province extends fracking ban ‘indefinitely’ after failing to meet its own conditions – Three and a half years into what was supposed to be a “temporary” moratorium on natural gas fracking in New Brunswick, the Gallant government has failed to execute key tasks it gave itself before the ban can be lifted and is citing that inaction as a reason to extend the moratorium further.”Our government has put a moratorium on hydraulic fracturing, which will continue indefinitely, as it is clear that our conditions (for ending it) cannot be satisfied in the foreseeable future,” read an update on the moratorium released by Premier Gallant last month.But critics complain the five conditions set by government in 2014 to end the moratorium are mostly assignments the Gallant government gave itself and did not complete, including failures to strengthen provincial fracking regulations or change natural gas royalty rates.”We are not aware of any work the government has done in order to satisfy its own conditions,” said Colleen Mitchell, president of the Atlantica Centre for Energy, an industry group that advocates for the moratorium to be lifted.The moratorium will continue even though locally produced natural gas supplies are rapidly running dry and New Brunswick is being forced to turn to jurisdictions that do allow fracking to solve its growing gas supply problems. “There’s an incredible amount of gas that’s coming up from the United States,” said Enbridge Gas New Brunswick general manager Gilles Volpe about how the sources of gas supplying the province have been shifting.

China’s threat to U.S. crude, coal exports is a tactical masterstroke: Russell (Reuters) – China’s threat to impose tariffs on U.S. crude oil, certain refined products and coal is possibly the only sign of clear thinking in the increasingly muddled escalating trade dispute with the administration of President Donald Trump. The tariffs on energy imports were mooted by the Chinese on June 15 as part of their response to the U.S. announcement of tariffs on $50 billion worth of imports. To be clear, the tariffs on crude oil and products and coal are still in the realm of the possible, and it will likely take a further deterioration in the relationship between the world’s two largest economies to turn them into a reality. It was also curious that the list of potential targets for customs included natural gas in its gaseous form, but not as liquefied natural gas (LNG). China imports zero gaseous natural gas from the United States, but is major buyer of its LNG. The Chinese threat to impose tariffs on energy imports makes sense from two perspectives. The first is that in economic terms it’s generally best to put tariffs on goods with high elasticity, in other words goods you can substitute relatively easily from other suppliers. The second is that if the aim of your tariffs is to inflict sufficient pain on the other country, it’s best to target them where they can do the most damage to the economy, or the politicians promoting the trade war. Looking at the first point, it’s clear that China would be able to source crude oil, refined products and coal from other countries, even if it had to pay slightly more. The Chinese have become a major buyer of U.S. crude, importing about 319,000 barrels per day (bpd) in the first five months of the year, according to vessel-tracking and port data compiled by Thomson Reuters Oil Research and Forecasts. This makes China the biggest net buyer of U.S. crude and therefore an important customer for the booming shale industry. With U.S. crude exports running at about 2 million bpd, China’s purchases represent about 16 percent of the total. However, U.S. crude supplies to China account for only about 3.5 percent of the country’s total daily imports. What this is likely to mean is that China will find it easier to replace U.S. crude imports than U.S. producers will to get new customers.

Continental Resources CEO Harold Hamm pulls out of OPEC meeting (Reuters) – Harold Hamm, founder and chief executive officer of Continental Resources Inc, has canceled a scheduled appearance at an OPEC event this week in Vienna, a company spokeswoman said. Hamm is the third of five U.S. shale executives to withdraw from a scheduled speaking slot at the OPEC meeting in Vienna. His withdrawal comes days after a trade skirmish between China and the United States intensified, with China imposing $50 billion in tariffs on U.S. crude oil and other goods, a retaliatory measure on Washington’s tariffs of Chinese products. Continental, the largest oil producer in North Dakota’s Bakken shale formation, has been a key supplier of crude oil to China, shipping more than 1 million barrels to the country since a U.S. crude export ban was lifted in 2015. It was unclear how China will replace that source of crude, but several OPEC countries produce crude grades similar to Continental’s Bakken wells. Continental spokeswoman Kristin Thomas confirmed Hamm’s withdrawal, saying the event did not fit with his schedule. The company did not immediately respond to requests for further comment on the China tariffs. Hamm, who was an informal campaign adviser to U.S. President Donald Trump in 2016 and was considered for a U.S. Cabinet post, had been listed since at least March on the OPEC International Seminar’s website as a speaker here. His attendance had been widely anticipated as he had derided OPEC as a “toothless tiger” in 2014. Trump also chided OPEC last week, blaming the group for rising oil prices and saying its 14 members were “at it again.” Yet, Hamm has appeared in recent months to be trying to reach a more conciliatory tone with OPEC producers. Last month he attended a board meeting of Saudi Aramco, the oil producer controlled by OPEC’s largest member, Saudi Arabia. He has also begun asking fellow shale producers to focus more on profitability and less on profligate production. Hamm’s withdrawal leaves only two U.S. shale executives confirmed to speak at the event, out of an original five. Centennial Resource Development Inc CEO Mark Papa and ConocoPhillips Ryan Lance also withdrew from the OPEC event.

Scottish Government Wins Fracking Case Against Ineos – (Reuters) – Scotland’s highest court ruled against petrochemicals company INEOS on Tuesday, after it challenged a devolved Scottish government moratorium against fracking for oil and gas. INEOS, headed by billionaire founder Jim Ratcliffe, argued the Scottish government had imposed an unlawful ban on fracking in October 2017 and had sought a judicial review to overturn it. The Court of Session said the government had not imposed a ban, despite several statements to that effect, and had instead an “emerging and unfinalized planning policy expressing no support on the part of the Scottish government” for fracking. The extraction of oil and gas from tight rocks by fracturing them using chemicals has become a contentious issue in Europe after it helped reverse a fall in U.S. oil output, transformed its gas sector and boosted the economy of several states. Despite that, fracking is also associated with environmental issues such as increased industrial activity, fears over water contamination and objections that it boosts fossil fuel production when more renewable energy should be encouraged. INEOS holds the rights, expiring on June 30, to explore for gas over a 400 km area between Glasgow and Falkirk. The devolved Scottish government announced last October it was against fracking, in line with public opinion. It ordered local authorities to reject planning applications from companies seeking to frack, a measure that energy minister Paul Wheelhouse told parliament was “sufficient to effectively ban the development of unconventional oil and gas extraction”. . Judge Lord Pentland said, despite such ministerial statements which he cited in the court opinion, “there is indeed no prohibition against fracking in force at the present time”. INEOS welcomed the court’s decision which it said clarified the “confusion arising out of government announcements”. “Today’s judgement makes it clear the SNP government will now have to make decisions based on facts and science rather than prejudice and political expediency,” it said. “With an environmental assessment and business and regulatory assessments still to be carried out, there may never be a fracking ban in Scotland.” Wheelhouse said, in reaction to the court ruling, that the government’s position against fracking remained unchanged.

Herald View: The ground is shaky under the SNP on fracking – FRACKING is obviously a dangerous concept – it can undermine a government’s policy foundations and cause severe structural damage to its credibility. Yesterday, the SNP administration was accused of extracting a liquid substance with its stance on fracking, which it told the world it had banned, only to change that to having a “preferred position” against the controversial practice. Accordingly, the Court of Session rejected a bid by would-be frackers Ineos to overturn the ban as there was no such ban, only an evolving planning policy. To that extent, yesterday’s ruling was a legal victory for the administration, but a political defeat as Ineos and the Tories cast aspersions on its competence and suggested it had performed a sleight of hand. On a day during which nothing was as it seemed, everyone was a winner, and everyone was a loser. In one sense, this was an exercise in semantics. The new party line is that there is at present a “moratorium” on fracking, and to all intents and purposes observers might conclude that there is therefore an “effective ban”. Seen thus, yesterday’s ruling is hardly as seismic as the frackers and their allies make out – particularly as they lost. But there is no doubt that it was embarrassing for the administration to learn that its previous talk of a ban was “mistaken” and that no such ban was legally in place. To make matters worse, it looked distinctly weaselly to change the words on its website from “The Scottish Government has put in place a ban on fracking in Scotland” (Tuesday’s position) to “No fracking can take place in Scotland and that remains the case” (Wednesday’s position).

‘Plenty’ of oil discoveries to be made in Northern Seas — A report due to be published by the Norwegian Petroleum Directorate (NPD) today will claim there are still “plenty” of oil and gas discoveries to be made in the North Sea, the Barents Sea and the Norwegian Sea. The report claims that mature and less explored regions still hold a “significant” amount of oil and gas and that exploration and discovery will hold the key to future high hydrocarbon yields. Torgeir Stordal, NPD exploration director, said: “This report includes an updated overview of undiscovered petroleum resources on the shelf. It shows that after more than 50 years of activity, about 55 percent of anticipated oil and gas resources have yet to be produced. Of these, just under half have not even been discovered.” About two-thirds of the undiscovered resources are said to be located in the Barents Sea with the rest is distributed between the North Sea and Norwegian Sea.

Exxonmobil plans LNG import terminal off east coast Australia by 2022 – Oil major ExxonMobil is planning an LNG import project off Australia’s east coast, in the state of Victoria, with a potential startup as early as 2022, a spokesman said Monday. ExxonMobil’s proposed project makes it the third LNG import terminal planned off Australia’s east coast, based on floating storage regasification units, as natural gas shortages in the region prompt energy companies and utilities to secure supply from global LNG markets. The project comes alongside similar plans by Australian utility AGL Energy and consortium Australian Industrial Energy, which is partly backed by Japanese energy traders Jera and Marubeni. It is still in very early stages of planning, but could begin importing gas from 2022 onwards, the spokesman said via email. Details on the size of the facility are not yet available and while a number of potential locations for it are being assessed, the state of Victoria has been flagged for its location, which would see it feed into the tight east coast gas network, he said. “ExxonMobil would be able to bring world-class project experience in all facets of LNG development, production and regasification,” he said. “Combined with the existing Gippsland resource and infrastructure, an LNG import facility could ensure ExxonMobil can continue to meet our customers’ needs,” the spokesman added. The Gippsland Basin Joint Venture oil and gas fields, located in the Bass Strait off Victoria’s Gippsland coast, are owned equally by Esso Australia, a subsidiary of ExxonMobil, and BHP Billiton Petroleum

U.S. LNG not included in China’s targeted tariff list — It’s not a surprise the proposed retaliatory Chinese tariffs on U.S. imports doesn’t include liquefied natural gas (LNG), Wood Mackenzie’s head of Asia-Pacific Gas and LNG, Nicholas Browne, said Monday.According to Browne, China’s announcement last Friday, that it would pursue duties against the U.S. if Washington made effective its tariffs plan on July 6, excludes LNG for two key reasons. “Firstly, LNG demand is growing rapidly in China. Secondly, the U.S. will be the key source of incremental supply growth in 2018 and 2019,” he said.The list from the Chinese government includes nearly all commodities, such as mineral fuels, mineral oils, bituminous substances and mineral waxes. Although LNG seems to be excluded from the list, natural gas in a gaseous state is included. That, however, would have no significance given China can’t import pipeline gas from the U.S., Browne noted.LNG has played a crucial role in limiting the extent of gas shortages during the last Chinese winter, with demand for the liquid fuel rising by a record 12 million tonnes (MMt) to reach 38 MMt in 2017. U.S. LNG met 1.6 MMt, or 4%, of that demand last year, Kallanish Energylearns. Tariffs on US LNG would increase costs and potentially limit availability of LNG, Browne said, adding CNPC recently signed two long-term deals with Cheniere Energy, one of which starts in 2018. “For flexible U.S. volumes, the introduction of tariffs would have posed a significant challenge for Chinese buyers as they seek to meet surging demand. It would also have created logistical headaches for suppliers to optimize their portfolios to ensure they could meet Chinese demand while redirecting U.S. LNG to other markets,” he explained. The U.S.-China trade war is at a “nascent stage” with an uncertain extent or duration. However, Browne believes LNG is clearly seen as an essential good by the Chinese government.

$1.6 Trillion Natural Gas Expansion Will Eliminate Any Chance Of Meeting Paris Carbon Goals — When the G20 countries meet in Argentina later this year, one of the topics on the agenda will be increasing investments in natural gas production by as much as $1.6 trillion by 2030. A new report by Oil Change International finds doing so will use up the entire remaining carbon budget limitations needed to meet the climate goals of the Paris climate accords. In other words, if the world’s major economies continue on their business as usual approach, all those promises made in Paris will likely be for naught. The slogan being used to justify continued use of natural gas resources is that it is a “bridge fuel to the future.” Indeed, in 2017, the governor of Rhode Island used it to advocate on behalf of a utility company that wants to build three 1,000 MW gas fired generating plants in the northwestern corner of the state and in nearby Massachusetts. One of the concerns with natural gas is leakage of methane, which is extraordinarily high from fracking operations. The Oil Change International study shows that even without such leakage, natural gas is not the bridge fuel its proponents claim it to be. “Setting methane leakage aside, we demonstrate that even in the hypothetical case of zero methane leakage, fossil gas cannot be a bridge fuel. This demonstrates that methane leakage is not the sole determinant of whether fossil gas causes net harm to the climate. To meet climate goals, fossil gas production and consumption must, as with other fossil fuels, be phased out, and reducing methane leakage does not alter that fact

Venezuela Forced To Shut Down Production As Operations Fall Apart – Every week the crisis in Venezuela takes a turn for the worse…There are now signs that its oil industry is entering a dangerous new phase. Argus Media reports that Venezuela has begun to “proactively shut in oil production to cope with nearly replete terminal storage, further accelerating an output decline and bringing the OPEC country closer to the psychological barrier of 1mn b/d.”Venezuela’s oil production fell to an average of 1.392 million barrels per day in May, down another 42,000 bpd from a month earlier, according to OPEC’s secondary sources. However, with the crisis in Venezuela spiraling out of control at a horrific pace, the numbers from May might as well be a year ago.The May numbers don’t reflect the full ramifications of having to deal with inadequate port capacity, after PDVSA diverted operations to Venezuela from its Caribbean island refineries and storage facilities following the attempt by ConocoPhillips to take control of them.The problem of export capacity has become so acute that PDVSA is demanding customers send ships that can handle ship-to-ship loadings, since there is a backlog of ships trying to load up at the country’s decrepit ports. PDVSA is even considering declaring force majeure on contracts that it will be unable to fulfill. The upshot is that PDVSA might have only 694,000 bpd available for export in June, which is less than half of the 1.495 mb/d that it is contractually obligated to deliver this month. As such, the 1.392 mb/d figure for May, bad as it is, is woefully out of date. Sources told Argus Media that production plunged to just 1.1-1.2 mb/d in early June, heading down towards 1 mb/d.

Factbox: Venezuela’s near collapse takes toll on oil industry – Venezuela’s near economic collapse has taken a toll on the country’s oil production, causing shifts in oil flows as buyers look to secure alternative supplies. As workers have fled the country, state-owned oil company PDVSA has had a difficult time maintaining crude output, let alone boosting production. PDVSA’s refining sector has also deteriorated on a lack of funds and manpower.PDVSA has had difficulty pulling crude from storage because its supplies are subject to seizure by creditors. Most notably, on April 26 the International Trade Court ordered PDVSA to pay $2.04 billion to ConocoPhillips for the 2007 expropriation of ConocoPhillips’ 50.1% interest in its Petrozuata joint venture in PDVSA, and its 40% stake in the Hamaca project, both of which were heavy oil installations in the Orinoco Belt of eastern Venezuela. And US has sanctioned individuals in Venezuela, including President Nicolas Maduro, prohibited the purchase and sale of any Venezuelan government debt, including any bonds issued by PDVSA, and banned the use of the Venezuela-issued digital currency known as the petro. Below are some key takeaways from the current situation.

* Venezuela crude production could be on the verge of sinking to 1 million b/d, and a drop in crude exports is causing a shift in trade flows.

* Venezuela’s crude output averaged 1.36 million b/d in May, down from 1.41 million b/d in April, and 1.9 million b/d in May 2017, according to S&P Global Platts. The International Energy Agency said it could fall to 800,000 b/d or even lower next year.

* S&P Global Platts Analytics sees Venezuelan production remaining above 1 million b/d during 2019. “They have a certain amount of production that they can keep going although the heavier grades would get impacted if they can no longer buy diluents,” said Chris Midgley, head of Platts Analytics.

* In early June, PDVSA notified 11 international customers that it would not be able to meet its crude supply commitments in full, a PDVSA official said. It is contractually obliged to supply 1.495 million b/d to these customers in June, but only has 694,000 b/d available. The customers either would not comment, or could not be reached for comment.

* Venezuela’s rig count has fallen to 28 in May from 36 in April, and 49 in January, according to Baker Hughes International Rig Counts.

* PDVSA has experienced similar drops in the past. In the 1980s, the number of rigs fell to less than 30, causing crude production to fall to 1.3 million b/d.

* Production has slowed largely because of a lack of maintenance and as skilled employees have fled the country. For instance, PDVSA Friday was operating its 202,000 b/d Petrocedeno extra heavy crude upgrader at just 39.6% of capacity, due to delayed maintenance, lack of spare parts, and electrical failures, according to an operator at the facility.

* PDVSA’s three other upgraders — the 120,000 b/d Petrosanfelix, 120,000 b/d Petromonagas and 190,000 b/d Petropiar upgraders — are expected to be operating below capacity in June.

Venezuela Rages: U.S. Sanctions Are “An Attack On The Oil Market” – The U.S. sanctions against Venezuela are affecting consumers worldwide and are an attack on the oil market, Venezuelan Oil Minister Manuel Quevedo said on Thursday. The minister, speaking at an OPEC International Seminar today – a day before OPEC ministers meet to discuss how much production to bring back to the market to ‘ease consumer and market anxiety’ – Venezuela’s Quevedo said, as carried by Platts:“These sanctions are very strong, the sanctions are practically immobilizing PDVSA.”“They are trying to asphyxiate PDVSA,” the minister added.“It affects not just the Venezuelan oil sector but the consumers worldwide,” Quevedo said, referring to the sanctions.“It’s an attack on the oil market. Oil is an instrument for development, not an instrument for a political attack.” The U.S. has been stepping up sanctions against Venezuela, after cutting off all access of PDVSA and its sovereign to U.S. banks, and cutting off all refinancing of new debt. Amid plummeting production, PDVSA fails to honor its supply obligations, and has started to refine imported crude oil.

Libya’s NOC confirms two crude storage tanks destroyed in Ras Lanuf attacks – The attacks last week on Libya’s eastern oil terminals destroyed two crude oil storage tanks at Ras Lanuf, cutting its storage capacity by 42% to 550,000 barrels, the National Oil Corp. said Monday, and warned of further tank losses. Storage tanks 2 and 12 at the Ras Lanuf oil terminal were destroyed by fires after armed militia assaults, the state oil company said in a statement. Ras Lanuf had five operational storage tanks, storing up to 950,000 barrels. The loss of the two tanks has reduced its total capacity by 400,000 barrels to just 550,000 barrels, NOC said. Tank 2 is in danger of leaking and spreading the blaze to tanks 1, 3 and 6, as firefighters have been unable to reach the tanks, which are still on fire, it added. NOC declared force majeure on crude oil loadings from the Es Sider and Ras Lanuf oil terminals Thursday. Libya’s oil production dropped 240,000 b/d, roughly 25%, as clashes between rival militia groups halted crude oil loadings from these two key eastern oil ports. The two Libyan terminals were set to load a total of around 420,000 b/d in June. Before the attacks, Libya produced an average of 950,000 b/d, a Platts survey of OPEC and oil industry officials and analysts showed earlier this month.

Egypt Raises Petrol Prices by up to 50 Percent – Egypt raised gasoline prices by up to 50 per cent, the oil ministry said on Saturday, under an IMF reform plan that calls for the slashing of state subsidies on some consumer products. Oil Minister Tarek El Molla said the price rises will help Egypt save up to 50 billion pounds ($2.8 billion) in allocations for state subsidies in the 2018-19 state budget.The price hike, the third since Egypt floated the pound currency in November 2016, is expected to add more pressure on Egyptian consumers struggling to make ends meet amid high unemployment and price volatility. The ministry said the price for 95 octane gasoline was increased to 7.75 Egyptian pounds a litre from 6.60 pounds; 92 octane was increased to 6.75 pounds a litre from 5 pounds and 80 octane was raised to 5.50 pounds a litre from 3.65 pounds. The ministry also raised the price for a canister of gas for Egyptian households to 50 pounds from 30, while a bottle of gas for commercial purposes was raised to 100 pounds from 60. Molla said the price rise will cut the funds allocated for fuel subsidies to 89 billion pounds from 139 billion pounds. “Moving fuel prices will help reduce petroleum products consumption by about 5 per cent,” Molla said.

China’s Oil Trade Retaliation Is Iran’s Gain – I’ve told you that once you start down the Trade War path forever it will dominate your destiny. Well here we are. Trump slaps big tariffs on aluminum and steel in a bid to leverage Gary Cohn’s ICE Wall plan to control the metals and oils futures markets. I’m not sure how much of this stuff I believe but it is clear that the futures price for most strategically important commodities are divorced from the real world.Alistair Crooke also noted the importance of Trump’s‘energy dominance’ policy recently, which I suggest strongly you read.But today’s edition of “As the Trade War Churns” is about China and their willingness to shift their energy purchases away from U.S. producers. Irina Slav at Oilprice.com has the good bits.The latest escalation in the tariff exchange, however, is a little bit different than all the others so far. It’s different because it came after Beijing said it intends to slap tariffs on U.S. oil, gas, and coal imports.China’s was a retaliatory move to impose tariffs on US$50 billion worth of U.S. goods, which followed Trump’s earlier announcement that another US$50 billion in goods would be subjected to a 25-percent tariff starting July 6.It’s unclear as to what form this will take but there’s also this report from the New York Times which talks about the China/U.S. energy trade.Things could get worse if the United States and China ratchet up their actions [counter-tariffs]. Mr. Trump has already promised more tariffs in response to China’s retaliation. China, in turn, is likely to back away from an agreement to buy $70 billion worth of American agricultural and energy products – a deal that was conditional on the United States lifting its threat of tariffs.“China’s proportionate and targeted tariffs on U.S. imports are meant to send a strong signal that it will not capitulate to U.S. demands,” said Eswar Prasad, a professor of international trade at Cornell University. “It will be challenging for both sides to find a way to de-escalate these tensions.” But as Ms. Slav points out, China has enjoyed taking advantage of the glut of U.S. oil as shale drillers flood the market with cheap oil. The West Texas Intermediate/Brent Spread has widened out to more than $10 at times. By slapping counter tariffs on U.S. oil, that would more than overcome the current WTI/Brent spread and send Chinese refiners looking for new markets. Hey, do you know whose oil is sold at a discount to Brent on a regular basis?Iran’s. That’s whose. And you know what else? Iran is selling tons, literally, of its oil via the new Shanghai petroyuan futures market.

Indian oil minister mum about adhering to US oil sanctions on Iran – India’s oil minister on Wednesday refused to commit his country to abandoning purchases of Iranian crude after the Islamic Republic was hit by US sanctions. International buyers of Iranian oil have until November 5 to wind down contracts before the US re-imposes sanctions on the oil, energy, shipping and insurance sectors, according to a US Department of the Treasury fact sheet.However, India’s top oil official, Dharmendra Pradhan, was tight-lipped Wednesday when asked about the sanctions on the sidelines of OPEC’s Vienna seminar. India is the second-largest buyer of Iranian crude, with imports averaging 600,000-700,000 b/d in the past 12 months.”Let’s wait and watch and see how things are unfolding,” he said in an interview with S&P Global Platts. “India was among the main importers of Iranian crude when there were sanctions a few years ago.” Earlier this year, India’s oil ministry said imports of Iranian crude in the 2018-19 fiscal year will rise by more than 30% year on year as Iran was providing Indian refiners with a “freight discount.”

Pakistan Among Top 5 Countries to Discover Oil and Gas in 2017 – Pakistan made two key oil and gas discoveries in the third quarter and another three discoveries in the fourth quarter of 2017. These discoveries may have prompted the US-based Exxon-Mobil to join off-shore drilling efforts in Pakistan. American energy giant’s entry in Pakistan brings advanced deep sea drilling technology, its long experience in offshore exploration and production and its deep pockets to the country. US Energy Information Administration (EIA) estimates that Pakistan has technically recoverable deposits of 105 trillion cubic feet (TCF) of gas and 9.1 billion barrels of oil. Exxon-Mobil is expected to accelerate exploration and lead to more discoveries and increased domestic oil and gas production.Russia led with 10 discoveries, followed by Australia with seven discoveries and Colombia with four discoveries. Pakistan and the UK each had three discoveries in the fourth quarter of 2017, according to Global Oil and Gas Discoveries Review.In fourth quarter of 2017, the Former Soviet Union leads with 12 discoveries, followed by Asia with eight discoveries, and Oceania with seven discoveries. Europe and South America had five discoveries each, followed by North America with two discoveries, while the Middle East and Africa had one discovery each in the quarter, according to Offshore Technology website.

How energy could play a role in North Korea denuclearization talks – The June 12 summit between President Trump and North Korean Leader Kim Jong-un offered little visibility on the path ahead for U.S. – North Korea relations. But behind the scenes, particularly in South Korea, there is great interest in using energy as a key incentive to nudge Pyongyang toward further concessions. The U.S. already has an active energy dialogue with South Korea, with imports of U.S. liquefied natural gas and crude growing dramatically. For North Korea, which has only minimal refining capacity and lacks domestic fossil fuel production, U.S. gasoline, diesel and propane would be an attractive asset. The U.S. has promised fuel exports to North Korea before, during the 1990s peace talks. But for North Korea, increased dependence on a U.S. energy supply chain could be viewed as a new source of insecurity: Like any import-dependent energy consumer, North Korea can enhance its security only through diversifying its imports across both geography and fuel source. North Korea will likely be open to U.S. energy support, but will try to hedge its bets elsewhere – particularly Seoul, which wants long-term energy infrastructure links to regional suppliers and greater access to renewable energy. The other options:

1. A Russian pipeline that would deliver natural gas or crude through the Korean Peninsula, serving markets on both sides of the demilitarized zone – though U.S. sanctions on the Russian energy sector would complicate such a project.
2. A “supergrid” transmission line linking the Koreas to hydroelectric and wind power resources in Western China, Mongolia and Russia. (Only 27% of North Koreans have regular electricity access.)

U.S. policymakers will likely offer bilateral incentives to North Korea in the form of petroleum products and grid-modernization investments rather than more complicated regional pipeline and transmission links. But ultimately, U.S. energy exports and investment may prove merely a bridge from the Korean Peninsula to the vast resources of neighboring Russia and China.

Russia’s Oil Export, Refinery Plans Point To Increase In Output -(Reuters) – Ahead of a meeting with Saudi Arabia and other producers, Russia already plans to increase oil exports, its July-September schedule shows, which coupled with increasing refinery runs suggests Moscow is gearing up to raise production. OPEC and non-OPEC producers are scheduled to meet on June 22-23 in Vienna to discuss a possible increase in output after more than a year and a half of coordinated cuts which have taken 1.8 million barrels per day (bpd) out of the market. Those cuts, led by Saudi Arabia and Russia, having helped slash global oversupply and raised prices by almost $20 a barrel, but there are now calls, from Russia’s energy minister Alexander Novak and others, that the deal be re-examined. Crude exports and transit from Russia is expected to rise to 63.34 million tonnes in the July-September quarter from 62.45 million planned for April-June, Russia’s export schedule shows. That works out to an increase of around 20,000 bpd – not significant in itself – but comes alongside plans by Russian refiners to raise third-quarter throughput by 2.2 million tonnes versus the second quarter, energy ministry forecasts show. Raising both would typically require a production increase. Under the deal among OPEC and non-OPEC producers, Russia agreed to cut production by 300,000 bpd compared to its output in October 2016. It has exceeded its production quota for the last three months, however, pumping an average 10.97 million bpd in May – or around 20,000 bpd more than agreed, ministry data showed. Russia could quickly add back at least 300,000 bpd of production, the ministry has said. Top producer Rosneft could increase output by 70,000 bpd in just two days, according to analysts who have recently visited the company.

OPEC grandee Attiyah says oil prices at $75/b are ‘reasonable’ — Oil prices trading between $70-75/b are “reasonable” for consumers and producers, said Qatar’s former energy minister Abdullah bin Hamad al-Attiyah in an interview with S&P Global Platts. Saudi Arabia and Russia are pushing for oil-producing group OPEC to scrap its current 1.8 million b/d production cut agreement in the wake of pressure from US President Donald Trump who has complained over high prices. “OPEC is under a lot of pressure from politics,” said Al-Attiyah, a former president of the 14-member producer group and an adviser to Qatar’s emir. He added that $70-75/b was “a reasonable price” for crude. Oil ministers are converging on Vienna for tense negotiations this week. Saudi and non-OPEC partner Russia are proposing the producer coalition increases output by 1.5 million b/d in the third quarter and consider further steps to manage the market, Russia’s energy minister Alexander Novak said over the weekend. However, he faces stiff opposition from Iran. The Islamic Republic has stressed its opposition to changing OPEC’s existing agreement without the full support of the group. “The issue of changing the agreement requires unanimity of all who have to be on board,” said Hossein Kazempour Ardebili, Iran’s OPEC governor, in an interview with S&P Global Platts June 14. He added that Iran, Iraq and Venezuela were aligned on the issue.

OPEC Confident Global Oil Demand Will Stay Strong – – An OPEC technical panel has found that global oil demand is on pace to stay strong in the second half of this year, suggesting that the oil market could comfortably absorb a production increase without sending oil prices plummeting, Reuters reported on Tuesday, citing three OPEC sources.A technical panel – a kind of economic body within OPEC – met on Monday to take stock of the oil market situation and to prepare a report for the ministers of the OPEC countries at their meeting later this week.“If OPEC and its allies continue to produce at May levels then the market could be in deficit for the next six months,” one of the sources told Reuters.“The market outlook in the second half is strong,” according to another source.OPEC is up for a tough meeting in Vienna this week after the leaders of the two groups of the OPEC/NOPEC production cuts – Saudi Arabia and Russia – have signaled that they are willing to boost production to offset what is sure to be further supply disruptions, mostly from Venezuela’s collapsing oil industry and from a potential decline in Iran’s oil exports in view of the returning U.S. sanctions.But it’s Iran and Venezuela – founding OPEC members and those most affected by U.S. sanctions and unable to boost production – that are most vehemently opposing an increase in the cartel’s production.According to one of Reuters’ sources, at the technical panel on Monday, Iran and Venezuela, as well as Algeria, continued to voice opposition to a production boost.This faction is reportedly also supported by Iraq. Iran said over the weekend that it would veto any proposal for a production increase with the support of Venezuela and Iraq.

Any OPEC outcome except free-for-all could help US shale producers – US shale oil producers will likely benefit from any decision OPEC makes this week in Vienna, with the exception of a complete breakdown in unity that created the current supply quotas.”The US is in a strong position either way here,” director of oil and products research at Morningstar Commodities and Energy Sandy Fielden said. “I think you’ll see a benefit even if OPEC increases production, provided that they don’t allow prices to fall below $40/b. And there’s absolutely no incentive for OPEC to allow that to happen.” Permian Basin drillers are making money despite steep Midland discounts caused by a lack of Texas pipeline capacity that is expected to continue until mid-2019. Oil prices would have to fall sharply to change that picture, analysts said.US shale was long seen as a rival to OPEC, but those tensions may be subsiding as a global supply shortage looms. Several CEOs of international oil companies, including US drillers Pioneer Natural Resources and Hess, will address the OPEC International Seminar on Wednesday in Vienna, at times sharing a stage with OPEC ministers. The production group will then meet Friday to discuss changes to its supply cut agreement that took effect in January 2017. Rapidan Energy Group President Bob McNally said chaos would be the only outcome to Friday’s meeting in Vienna that would be negative for US drillers.”If there was a disorderly breakdown of unity, and everyone went back to maximum production, if we go back to 2016 where everyone is going to the max, that could risk a price implosion,” he said. “If you’re a shale oil producer, you don’t want that.”That’s why McNally thinks US shale producers are praying this week for anything but a free-for-all.

Oil prices finish higher as traders assess trade tensions – Oil prices finished higher on Monday to recoup some of their recent losses, as traders assessed escalating trade tensions between the U.S. and China. July West Texas Intermediate crude rose 79 cents, or 1.2%, to settle at $65.85 a barrel on the New York Mercantile Exchange, after losing 2.7% on Friday and posting a loss of 1% last week. Global benchmark Brent crude for August delivery added $1.90, or 2.6%, to $75.34 a barrel on ICE Futures Europe, following a decline of 3.3% Friday and a roughly 4% loss last week.Investors were fixated on how trade-related disagreements between the U.S. and China are escalating. President Donald Trump on Friday announced tariffs on $50 billion worth of Chinese imports, and Beijing retaliated by targeting high-value American exports.The Chinese government announced plans to place tariffs on U.S. oil imports as well as other energy products, so trade war fears are “scaring oil traders into believing that we could see this trade spat lower economic growth and reduce oil demand,” said Phil Flynn, senior market analyst at Price Futures Group, in a daily email. Analysts at Commerzbank said in a note Monday that “the possible punitive tariff of 25% means that U.S. crude oil would no longer be a low-cost alternative despite the current price discount,” adding that they “therefore expect the high price gap between Brent and WTI to remain in place during the summer months.” Flynn, however, said “U.S. crude exports to China were roughly 380,000 barrels per day in March, a large amount but not enough to shatter the global oil supply and demand balance.” He believes the White House’s announcement of planned tariffs against Chinese goods and an equal retaliation by the Chinese “will not really slow the global economy by that much.” The trade tariffs also won’t start until early July, he said, so there’s “plenty of time to cut another deal.” On Friday, both WTI and Brent notched big drops for the session and the week, weighed by expectations that the Organization of the Petroleum Exporting Countries and its allies will agree to increase production at a meeting this Friday.

Oil hit by flaring tensions over U.S.-China trade (Reuters) – Oil fell on Tuesday as an escalating trade dispute between the United States and China unleashed sharp selloffs in many global markets. U.S. crude futures was down $1.08 to $64.77 a barrel. The crude price was also dented by expectations that producer group OPEC and partner Russia will gradually increase output in order to make up for falls in Venezuela and potential shortfalls from Iran, which is facing U.S. sanctions related to its nuclear activity. The United States and China are threatening punitive tariffs on each other’s exports, which could include oil supplies, which sent Chinese stocks to their lowest in almost a year and kept European indices and other industrial commodities such as copper and nickel under pressure. Brent crude futures fell 62 cents to $74.72 a barrel by 1120 GMT. Oil traders are closely watching a threat by China to react to U.S. tariffs by putting a 25 percent duty on U.S. crude oil imports, which have been surging since 2017 to a value of almost $1 billion per month. Global oil demand will be revised downwards and as such oil will not be immune from all of the potential negative impact of international trade wars. Energy consultancy Wood Mackenzie said the United States “would find it hard to find an alternative market that is as big as China”. It said China takes around 20 percent of all U.S. crude exports.

RBOB Slides After Surprise Build, WTI Flat On Crude Draw – With WTI unable to rally beyond $65 today due to trade war concerns (and with OPEC on its mind), investors’ expectations are for further inventory draws this week, which WTI did but an unexpected build in gasoline sent RBOB lower. “The market is in a holding pattern awaiting OPEC decisions and tethered very closely to the stock market, which is crumbling,” said Thomas Finlon, director of Energy Analytics Group LLC in Wellington, Florida. API”:

• Crude -3.016mm (-2.475mm exp)
• Cushing -1.594mm (-450k exp)
• Gasoline +2.113mm
• Distillates +750k

Another sizable draw for WTI but Gasoline surprised with a big build (as did Distillates)… WTI was unable to get back above $65 during the day session and the API print sparked a kneejerk lower in WTI/RBOB before WTI recovered…

WTI/RBOB Algos Confused As Production Stalls, Crude Draws, Product Builds — WTI bounced off $65 this morning but RBOB is lower after API’s unexpected build in gasoline as all eyes remain focused on Vienna and any OPEC headlines. However, DOE reported the biggest draw in crude since Jan (but another weekly build in Gasoline and Distillates).“The market is in a holding pattern awaiting OPEC decisions and tethered very closely to the stock market, which is crumbling,” said Thomas Finlon, director of Energy Analytics Group LLC in Wellington, Florida. DOE:

• Crude -5.914mm (-2.475mm exp) – biggest draw since Jan
• Cushing -1.296mm (-450k exp) – biggest draw since Feb
• Gasoline +3.277mm
• Distillates +2.715mm – biggest build since Feb

Following inventory draws across the board last week, very mixed bag this week with crude seeing the biggest draw since Jan (over double expectations) and products seeing big builds… Gasoline stocks are near 5Y highs for this time of year and bucking the seasonals… The WTI-Brent spread has pushed back down to $10…

WTI vs. WTI vs. WTI – The degree to which the perception of quality of West Texas Intermediate crude oil influences price was on display Wednesday in the form of the following crude value indication given to S&P Global Platts: WTI Midland at Cushing, Oklahoma, is worth 90 cents/b more than WTI at Cushing. If that sounds confusing, it is, and let me explain.West Texas Intermediate is the flagship US grade of oil produced in the Permian Basins of West Texas and transported by pipe, rail and truck to refiners near and far (like India far). The value of WTI at Cushing, Oklahoma, is the most commonly accepted benchmark for crude sales in the Americas for varying types of crude oil produced onshore and offshore in the US. It’s called “Cash WTI.”WTI at Cushing also forms the backbone of the de facto North American crude oil futures contract, CME Group’s NYMEX WTI Light Sweet Crude Oil, which for simplicity’s sake we’ll call NYMEX Crude from now on. Launched in March 1983, historically, it was often colloquially referred to in the market as “NYMEX WTI,” even though WTI was one of many grades that could be delivered at Cushing against the contract, which caused uncertainty.“Confusion over what is sold has led to problems, Merc officials say,” an Associated Press article from August 1990 reads. “Some buyers who thought they were getting WTI have discovered they were getting a different grade.” That led the NYMEX at the time to tell the market it should refer to the contract as light sweet crude instead of WTI, though the three-letter acronym persists to this day.CME says NYMEX Crude represents light sweet crude oil meeting a series of specifications including 37-42 API, less than 0.42% sulfur and other parameters, which includes WTI-type light sweet crude streams as well as other blends referred to as Domestic Sweet, or DSW, that meet those specs. To simplify: NYMEX Crude is WTI that meets NYMEX parameters, as well as other crudes, which may be blends, that meet NYMEX parameters. Blended crudes aren’t bad, but the possibility that a buyer may get one is an uncertainty, and uncertainty leads to lower bids for the unknown and higher bids for the known.

Crude Oil Prices Settle Lower as OPEC Decision Looms – – WTI crude oil prices settled lower Thursday as major oil producers neared a deal to hike oil production by about one million barrels per day to avert a possible supply shortage and stabilise prices. On the New York Mercantile Exchange crude futures for July delivery fell 0.26% to settle at $65.54 a barrel, while on London’s Intercontinental Exchange, Brent fell 2.22% to trade at $72.08 a barrel. Saudi Arabian Energy Minister Khalid al-Falih reportedly said OPEC and non-OPEC members were close to hashing out a deal to lift oil production, and suggested an output hike of about 1 million barrels was needed to stabilise prices. The production-cut accord – initially agreed in November 2016 – had achieved its goal of rebalancing the oil market, restoring global inventories to the five-year average, al-Falih said. The oil-cartel’s attempts to reach a consensus on an output hike has been plagued by other OPEC members, who have appeared unwilling to compromise. Iran had been one of the most vocal OPEC members against an uptick in production, insisting oil prices still needed to be supported, but has since warmed up to the idea of a modest boost in output. Non-OPEC Russia, meanwhile, has taken a more hawkish stance on output hikes, calling for a 1.5 million barrel a day increase in production amid fears the market could overheat as demand picks up. OPEC is expected to announce its decision on Friday. OPEC has also come under fire – for the sharp rise in oil prices – from U.S. President Donald Trump, claiming the oil-cartel was “artificially” keeping oil prices elevated. Some analysts have suggested OPEC would strive to reach a ‘goldilocks’ output hike, neither too high – which would irk Iran – nor too low, which would raise the risk of higher oil prices negatively impacting oil demand. “Saudi energy minister Khalid al-Falih hinted that looking at five-year average inventory levels is not a good measure of the health of global markets,” a team of analysts at Energy Aspect said in a research note. “If true, then a 1 million barrels a day increase between now and the end of the year is not warranted…half of that figure would be a good compromise.”

Oil price will be driven by consumers rather than OPEC: Kemp (Reuters) – Oil traders’ attention is focused this week on Vienna, where ministers from the Organization of the Petroleum Exporting Countries and its allies must decide whether to increase their output in the second half of 2018. But the direction of prices over the next year will be more influenced by less visible developments in the major oil-consuming countries, especially the United States, Europe, China and India. With available production capacity fairly fixed in the short-term, oil market rebalancing will depend on consumer reactions to higher prices (https://tmsnrt.rs/2M6MCGP ). Stocks of crude oil and refined products are now below their five-year averages and expected to continue falling in the second half of 2018 and through 2019. OPEC’s spare production capacity has shrunk to less than 2 million barrels per day (bpd) and is expected to fall to less than 1 million bpd by the end of 2019. OPEC and its allies are discussing an output increase of 1 million bpd or more to avert future shortages and stock declines. By adding barrels to the market now, OPEC can stabilise or even increase inventories and ease shortages later in 2018/19. But the cushion of spare capacity is already low and will shrink further as OPEC boosts its output, leaving the market without much capacity to absorb further disruptions. U.S. oil production is expected to rise by 1.4 million bpd in 2018 and another 1.1 million bpd in 2019 but may not be able to rise much faster because of pipeline bottlenecks. From the supply side, therefore, the oil market’s production capability now appears fairly fixed for the rest of 2018 and into 2019. Any further rebalancing will have to come from the demand side, where prices will have to rise high enough to moderate consumption growth.

OPEC Cartel On The Verge Of Collapse — The last time OPEC splintered, and the Saudi energy minister demonstrated that when it comes to the “cartel”, the only opinion that matters was that of, well, Saudi Arabia, was on November 27, 2014, when in the infamous “OPEC Thanksgiving Massacre”, OPEC effectively broke up after Saudi Arabia decided it could put shale out of business by sending the price of oil so lower, it would cause mass shale defaults and regain market share. The result was two-fold: oil prices crashed (both immediately as shown below) and over the longer-term, while the Saudi strategy proved to be an epic disaster as it woefully miscalculated that shale’s breakeven price was far lower than the Saudi advisors (Goldman and Citi, as well as a handful of hedge funds) had estimated. We bring this bit of not so ancient history because tomorrow OPEC may break apart again, for the simple reason that Iran, OPEC’s third largest producer, finds itself in a lose-lose situation, in which it either agrees with a production boost, thereby effectively greenlighting US sanctions against itself and allows Saudi Arabia to take over much of its market share, or defies Saudi Arabia, and along with Venezuela, causes OPEC to splinter again.Sure enough, with just hours to go until tomorrow’s meeting, Iran has continued to reject any increase in OPEC oil production, potentially dooming any effort by Saudi Arabia and Russia to get a consensus decision tomorrow.According to Bloomberg, during today’s Vienna talk, ministers from some of the world’s largest oil producers failed to secure the sought-after compromise that would allow the cartel to ease back on its production cuts. And here is where it gets interesting: while Iran alone can veto any change to the group’s output policy, there is historical precedent for the Saudis to act alone and increase supply when they see an urgent need. And even though Saudi Arabia also finds itself between a rock (the Aramco IPO which desperately needs even higher oil prices) and a hard case (President Trump who demands higher oil prices), Crown Prince MbS will have no choice but to yield to the latter, and overrule the Iran veto, concluding the process in which Trump effectively splinters OPEC. Sensing what is about to happen, Iran – which again has virtually no upside tomorrow no matter what the OPEC decision is – was not happy:

OPEC agrees modest hike in oil supply after Saudi and Iran compromise (Reuters) – OPEC agreed on Friday on a modest increase in oil production from next month after its leader Saudi Arabia persuaded arch-rival Iran to cooperate, following calls from major consumers to help reduce the price of crude and avoid a supply shortage. However, the decision confused some in the market as OPEC gave opaque targets for the increase, making it difficult to understand how much more it will pump. Oil prices rose as much as 3 percent. “Hope OPEC will increase output substantially. Need to keep prices down!” U.S. President Donald Trump wrote on Twitter less than an hour after OPEC announced its decision. The United States, China and India had urged Vienna-based OPEC to release more supply to prevent an oil deficit that would hurt the global economy. The Organization of the Petroleum Exporting Countries said in a statement that it would go back to 100 percent compliance with previously agreed output cuts but gave no concrete figures. Saudi Arabia said the move would translate into a nominal output rise of around 1 million barrels per day (bpd), or 1 percent of global supply. Iraq said the real increase would be around 770,000 bpd because several countries that had suffered production declines would struggle to reach full quotas. The deal gave a tacit green light to Saudi Arabia to produce more than currently allowed by OPEC as the 14-nation organization avoided setting individual country targets. Iran, OPEC’s third-largest producer, had demanded OPEC reject calls from Trump for an increase in oil supply, arguing that he had contributed to a recent rise in prices by imposing sanctions on Iran and fellow member Venezuela. Trump slapped fresh sanctions on Tehran in May and market watchers expect Iran’s output to drop by a third by the end of 2018. That means the country has little to gain from a deal to raise OPEC output, unlike top oil exporter Saudi Arabia. OPEC and its allies have since last year been participating in a pact to cut output by 1.8 million bpd. The measure had helped rebalance the market in the past 18 months and lifted oil LCOc1 to around $75 per barrel from as low as $27 in 2016. But unexpected outages in Venezuela, Libya and Angola have effectively brought supply cuts to around 2.8 million bpd in recent months. The output boost agreed on Friday had been largely priced into the market and was seen as modest.

Oil output to rise by 1m barrels a day as Opec reaches compromise – Major oil producers have agreed to pump more crude to help reduce prices and prevent a supply shortage, in a significant reversal of Opec’s strategy of curbing output over the past 18 months. After a fraught meeting in Vienna in which Iran was initially at odds with a Saudi-led drive to boost production, ministers settled on a target they said would increase output by around 1m barrels per day (bpd). Donald Trump, who has blamed the cartel for recent oil price highs, appeared to welcome the deal. “Hope Opec will increase output substantially. Need to keep prices down!” the US president tweeted after the agreement. However, analysts and ministers said the actual amount of extra oil is likely to be around a third lower than the headline 1m figure. Joe McMonigle, an energy analyst at HedgeEye, said: “I suspect we will eventually get some calculations from Opec but [the] lack of details is bullish not bearish for oil prices.” Brent crude, the international benchmark, was up nearly 2% to $74.47 (£56.12) a barrel, shortly after the agreement was announced. It hit $80 a barrel last month before falling back. The oil cartel also failed to spell out how the extra production would be allocated among members, a key question as several have no capacity to pump more crude.

Oil up over 2 percent as OPEC raises output modestly (Reuters) – Oil prices rose sharply on Friday as OPEC agreed a modest increase in output to compensate for losses in production at a time of rising global demand. Benchmark Brent crude LCOc1 jumped $2.29 a barrel, or 3.1 percent, to a high of $75.34 before slipping to around $74.60 by 1345 GMT. U.S. light crude CLc1 was $1.90 higher at $67.44. The Organization of the Petroleum Exporting Countries, meeting in Vienna, agreed on Friday to boost output from July after its de facto leader Saudi Arabia persuaded arch-rival Iran to cooperate in efforts to reduce the crude price and avoid a supply shortage. The group agreed OPEC and its allies led by Russia should increase production by about 1 million barrels per day (bpd), or 1 percent of global supply, OPEC sources said. The real increase will be smaller because several countries that recently underproduced oil will struggle to return to full quotas, while other producers may not be able to fill the gap. The deal looked to be broadly in line with expectations. Analysts had expected OPEC to announce a real increase in production of 500,000 to 600,000 barrels per day (bpd), which would help ease tightness in the oil market without creating a glut. “The effective increase in output can easily be absorbed by the market,” Harry Tchilinguirian, head of oil strategy at French bank BNP Paribas, told the Reuters Global Oil Forum.

OPEC ministers agree to raise oil production but don’t say by how much – OPEC ministers announced a deal on Friday that will increase oil supplies from the producer group, which has been capping output in order to balance the market and boost prices for the last 18 months.The agreement came after a week of tense negotiation at OPEC’s headquarters in Vienna, Austria. Top OPEC producer Saudi Arabia faced the challenge of convincing a handful of reluctant producers including Iran, Iraq and Venezuela to support an output hike.While OPEC avoided the disastrous outcome of ending the week without a deal, it left the oil market somewhat disappointed by declining to announce a hard figure.”With the looming threat of an Iran walkout, the best you could get was deliberate ambiguity,” said Helima Croft, global head of commodity strategy at RBC Capital Markets. On Friday, OPEC members agreed to start pumping more oil, though the agreement will not end the group’s 18-month-old deal to limit output. Instead the producers are seeking to cut no deeper than 1.2 million bpd, the target they set in November 2016. OPEC’s official statement said members agreed to return to 100 percent compliance with the 2016 deal beginning on July 1. The group said compliance reached 152 percent in May 2018, which means OPEC was cutting about 600,000 bpd more than it intended.Ahead of the official decision, sources said the group was aiming to restore about 1 million bpd to the market. However, industry sources familiar with the oil cartel’s deliberations said the actual increase is likely to total around two-thirds of Saudi Arabia’s target.That’s because some OPEC members would be unable to sufficiently ramp up crude production. Analysts say supply increases are more likely to fall in a range between 600,000 to 800,000 bpd.OPEC’s agreement with Russia and other producers to limit oil output has helped to clear a global supply overhang that weighed on prices for years. Oil prices shot up on Friday as details of the deal leaked ahead of the statement. John Kilduff, founding partner at energy hedge fund Again Capital, said the lack of clarity in the official statement around a production target was boosting crude futures.

Oil Prices Jump After OPEC Deal to Lift Output – WSJ — Oil prices rose by the biggest amount in nearly two years Friday after some of the world’s major oil producers agreed to boost crude output less than many investors had feared. Ministers from the Organization of the Petroleum Exporting Countries ended a contentious gathering with a loose promise to boost output by about 600,000 barrels a day. That was far less than the one million barrels many predicted.The result dashed the hopes of some big producing nations like Russia, which wanted to raise production further to sell more crude at these higher prices. The move was cheered by investors, who say they now feel more confident the global glut that dragged U.S. oil prices below $30 a barrel isn’t about to return. U.S. oil prices surged 4.6% to $68.58 a barrel; the price of Brent, the international benchmark, rose $2.50, or 3.4%, to $75.55. For U.S. prices, it marked the biggest one-day jump since November 2016 when OPEC agreed to cut oil output for the first time in eight years. Oil prices have risen briskly this year amid improving global economic growth and unexpected supply outages, drawing complaints from big consuming countries, like the U.S.OPEC said Friday its members had tentatively agreed with their non-OPEC partners to end their overcompliance with production curbs they set in 2016 to add barrels to the market.On paper, such a move would add about one million barrels a day to global markets, officials said. But the boost is to be shared among all members, some of whom can’t raise output at all right now. That translates into about 600,000 barrels of new oil a day, said people familiar with the deal’s technical aspects. The 2016 cuts had helped boost oil prices to a 3½-year high earlier this year, sending U.S. crude prices above $70 a barrel and boosting the earnings of big global producers like Exxon Mobil Corp. and Chevron Corp.

Trump Tweets Hope For “Substantial Increase” After OPEC Agrees To Hike Oil Production By 700kb/d – What was expected to be a drawn-out affair, with Iran potentially resisting and even leading to the collapse of the cartel, moments ago OPEC reached a deal in principle to raise oil production by 1 million b/d on paper, and in reality by 600 kb/d as many of the OPEC nations are already tapped out and unable to produce more.“Real” increase of 600,000 b/d: BBG – Vandana Hari (@VandanaHari_SG) June 22, 2018The deal is roughly what the committee had agreed to yesterday and is the plan pushed by Saudi Arabia all week.And while details haven’t yet been formally announced, the deal would mean a return to 100% compliance with output quotas.As Bloomberg notes, this is the deal traders have been waiting for:The fear was that, if the meeting broke up in disarray, Saudi Arabia would simply open the taps and other producers would follow suit, unleashing far more supply than the market needed. What this deal does is to bring some order to the process of easing supply restraint. Indeed, absent some last minute shock, Iran appears to have gone along with the majority and will comply with what is effectively A Saudi-Russian decision, prompted by Trump complaints for the cartel to produce more oil . Update: the deal is done and here are the headlines, which are as mostly reported previously – a 1 million “paper” production increase, which however will not be fully satisfied since many nations are already at their peak output, as OPEC nations comply with output quotas – with the exception of the “real” production increase, which according to the Nigeria energy minister will be 700kb/d while earlier reports had it at 600kb/d: Here is the final full #OPEC communique | #OOTTpic.twitter.com/f3I5yaKyiC

Congress Is Considering A Bill Enabling Anti-Trust Litigation Against OPEC – Trump’s open and repeated criticism of OPEC and its influence on oil prices provides credibility to the belief that he would sign into law the NOPEC legislation that is currently making its way through Congress. The bill would allow America to pursue litigation against OPEC on anti trust grounds.NOPEC isn’t a totally new concept, as it has been drafted and voted through Congress some 16 times over the past 18 years, but never made it past the President’s desk, whether it was Bush or Obama. But Trump could give NOPEC a different sort of ending, one which could see it taking up the status of US law. Anadolu agency reports: A legislation being debated in Congress could put pressure on OPEC if it is signed into law by President Donald Trump who has long been critical of the cartel’s practices. If the No Oil Producing and Exporting Cartels Act, or NOPEC, is signed into law, it would allow the U.S. to sue the cartel for manipulating crude prices and global oil market that caused enormous damage for the American economy and consumers.The NOPEC Act was first introduced in 2000 to allow the cartel to be sued by the U.S. in violation of anti-trust laws. It has been introduced around 16 times since then, but former presidents George W. Bush and Barack Obama were openly against it.“In the energy industry our players get hurt, because some actions by OPEC – flooding the market with oil at a time where normally they wouldn’t have in the past – ended up prices going too low during the production war, knocking out a lot of investment that we probably are going to need in future,” senior market analyst Phil Flynn from Chicago-based futures brokerage firm, Price Futures Group, told Anadolu Agency.“I would argue that OPEC conspired to knock a lot of energy producers out of business so that they could maintain the market share. And I think they succeeded in doing that in a large degree,” he said.

Rig count slides by 7 – Oil and gas companies pulled seven drilling rigs out of operation this week, the Houston energy services company Baker Hughes reported.The number of oil rigs operating in the United States fell by one while those seeking natural gas dropped by six, driving the overall rig count down to 1,052, compared to 941 a year ago.Texas lost one net rig over the week. In the booming Permian Basin, drillers pulled two rigs, bringing the rig count in the West Texas shale play to 474, compared to 369 a year ago. The Permian still accounts for more than half of the 862 oil rigs operating in the United States. The rig count was unchanged in the Eagle Ford shale, the second most active U.S. oil and gas field, with 82 operating rigs.

Rig Count Falls As US Oil Output Flatlines | OilPrice.com – Baker Hughes reported another dip in the number of active oil and gas rigs in the United States today. Oil and gas rigs decreased by 7 rigs, according to the report, with the number of oil rigs decreasing by 1, and the number of gas rigs decreasing by 6.The oil and gas rig count now stands at 1,052 – up 111 from this time last year.Canada, for its part, gained 21 oil rigs for the week – after last week’s gain of 27 oil and gas rigs. Despite weeks of significant gains, Canada’s oil and gas rig count is still down by 10 year over year. Oil benchmarks surged on Friday afternoon as the market processed OPEC’s agreement to stick more closely to the production cuts by holding the feet to the fire of those members who had underproduced its quota under the OPEC deal that went into effect in January 2017. The OPEC meeting on Friday resulted in OPEC agreeing to increase production to get back to agreed upon levels, which is about 1 million bpd more than the cartel produced in May, when compliance to the quota was about 150%. Missing from the events of the day was OPEC’s agreement to undo the production cut deal, or to gradually increase production beyond the contractual amount of 32.4 million bpd. The absence of any real change to the production quota proceeded a significant price spike of 4%, as relief set in that OPEC deal would either fall apart or come to an early end. At 11:44am EDT, the WTI benchmark was trading up 3.83% (+$2.51) to $68.05, with Brent up 2.31% (+$1.68) to $74.48. Both benchmarks are up week over week as well as on the day.US oil production continues putting downward pressure on oil prices, and for the second week in a row, US production reached 10.900 million bpd – close to the 11 million bpd production that many had forecast for the year. This week is the first week in over a quarter that wasn’t an increase. At 6 minutes after the hour, WTI was trading up 4.81% at $68.69, with Brent trading up 2.18% at $74.39.

OPEC/non-OPEC coalition to restore oil cut compliance to 100%: Falih – OPEC and its 10 non-OPEC partners have agreed to restore compliance with their production cuts to 100%, implying a nominal distribution of “just under 1 million b/d” between the 24 countries, Saudi energy minister Khalid al-Falih said Friday. How that output rise would be allocated among the members would be finalized tomorrow, Falih told reporters, emerging after nearly five hours of talks with his OPEC counterparts in Vienna. “We know that certain countries don’t have the spare capacity and others do so it will be disproportional in terms of which countries are actually able to pump the additional crude, but it will not be above the 1 million for sure collectively,” Falih said. Nigerian oil minister Emmanuel Kachikwu said the deal would result in the addition of 700,000 b/d in actual production among OPEC’s 14 members.

Saudi pledges ‘measurable’ oil supply boost as OPEC, Russia agree deal (Reuters) – OPEC agreed with Russia and other oil-producing allies on Saturday to raise output from July, with Saudi Arabia pledging a “measurable” supply boost but giving no specific numbers. The Organization of the Petroleum Exporting Countries had announced an OPEC-only production agreement on Friday, also without clear output targets. Benchmark Brent oil rose by $2.5 or 3.4 percent on the day to $75.55 a barrel. On Saturday, non-OPEC oil producers agreed to participate in the pact but a communique issued after their talks with the Vienna-based group provided no concrete numbers amid deep disagreements between OPEC arch-rivals Saudi Arabia and Iran. U.S. President Donald Trump was among those wondering how much more oil OPEC would deliver. “Hope OPEC will increase output substantially. Need to keep prices down!” Trump wrote on Twitter after OPEC announced its Friday decision. The United States, China and India had urged oil producers to release more supply to prevent an oil deficit that could undermine global economic growth. OPEC and non-OPEC said in their statement that they would raise supply by returning to 100 percent compliance with previously agreed output cuts, after months of underproduction. Saudi Energy Minister Khalid al-Falih said OPEC and non-OPEC combined would pump roughly an extra 1 million barrels per day (bpd) in coming months, equal to 1 percent of global supply. Top global exporter Saudi Arabia will increase output by hundreds of thousands of barrels, he said, with exact figures to be decided later. “We already mobilized the Aramco machinery, before coming to Vienna, pre-empting this meeting,” Falih said, referring to the Saudi state oil company. Russian Energy Minister Alexander Novak said his country would add 200,000 bpd in the second half of this year.