Oil, Gas, And Fracking News Reads 17February, 2019 – Part 2

Written by rjs, MarketWatch 666

Here are some more selected news articles about the oil and gas industry from the week ended 17 February 2019. Go here for Part 1.

This is a feature at Global Economic Intersection every Monday evening.

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Venezuela sanctions leave oil market short of heavy crude – (Reuters) – U.S. sanctions on Venezuela’s state-owned oil company are tightening the global oil market and sending refiners around the world scrambling to find replacements for the country’s diesel-rich heavy and extra heavy crudes. Venezuela’s heavy crudes, such as Merey, have few close substitutes, with the nearest being grades such as Brazil’s Marlim, Mexico’s Maya, Canada’s Bow River and Cold Lake, or Iraq’s Basra Heavy. Most of those crudes have an even higher sulphur content than Venezuela’s, which will require extra processing to make fuels of acceptable quality, and in any event the quantities are limited in the short term. Venezuela sanctions have arrived in a market that was already likely to be short of medium and heavy crudes because of U.S. sanctions on Iran and OPEC’s output cuts. The major oil exporters in the Middle East Gulf (Saudi Arabia, Iraq, United Arab Emirates, Kuwait and Iran) market mostly medium and heavy crudes. U.S. sanctions on Iran and Venezuela, together with OPEC’s output cuts, have therefore removed mostly medium and heavy oils from the market, leaving lighter grades relatively unaffected. The result is that prices of medium and heavy crudes have surged relative to their lighter counterparts since the middle of January. Mars, a medium crude grade from the U.S. Gulf, has moved to a rare premium over Louisiana Light Sweet. Oman, another medium crude, has moved to a premium over Brent, a light one. Venezuela has the world’s largest proven oil reserves, amounting to around 300 billion barrels, ahead of Saudi Arabia on 265 billion and Canada at 170 billion (“Statistical review of world energy“, BP, 2018). But the country’s oil industry has been in relative and absolute decline for the last 50 years as problems of producing and marketing its heavy crudes have been compounded by an unattractive investment regime and mismanagement.

Venezuela pressures foreign partners on oil venture commitments: sources (Reuters) – Foreign partners of Venezuela’s PDVSA are facing pressure from the state-run oil firm to publicly declare whether they will continue as minority stakeholders in Orinoco Belt projects following U.S. sanctions, three people familiar with the matter said. The sanctions on Petroleos de Venezuela (PDVSA), imposed last month in an attempt to dislodge Venezuelan President Nicolas Maduro, barred access to U.S. financial networks and oil supplies for the PDVSA joint ventures, pressuring Venezuela’s already falling crude output and exports. PDVSA’s Orinoco Belt joint venture partners, mostly U.S. or European companies, are facing difficulties getting cashflow out of the country as a result of the sanctions, straining their ability to continue production and exports. PDVSA has been in talks with the companies to persuade them to commit publicly to the joint ventures, the sources said in recent days. France’s Total SA, Norway’s Equinor ASA, Russia’s Rosneft and U.S.-based Chevron hold minority stakes in joint ventures with PDVSA that produce crude and operate oil upgraders capable of converting Venezuela’s extra-heavy oil into exportable grades. PDVSA did not reply to a request for comment. On Monday, Venezuelan Oil Minister and PDVSA head Manuel Quevedo said on a visit to India that relations with international oil companies including Chevron were continuing. A manager at Rosneft said last week that the company did not expect oil output to decline at its projects in Venezuela this year, adding that the company saw the current situation in Venezuela as temporary. Rosneft did not respond to a request for comment on Tuesday. The four crude upgraders are capable of converting up to 700,000 barrels per day. The oil is exported by the joint ventures and each partner receives its share of the exports. Total believes it can stay in Venezuela, its Chief Executive Patrick Pouyanne said on Monday, although last week the company said its bank accounts were blocked and it had evacuated its foreign employees. Rosneft has continued working normally at its Petromonagas joint venture with PDVSA, according to the sources. Equinor declined to comment on operational issues, referring questions to Petrocedeno, its joint venture with PDVSA. Chevron’s operations in Venezuela are continuing, a spokesman said on Monday, reiterating that the company was committed “to the country’s energy development in compliance with all applicable laws and regulations.”

U.S. Warns The World Against Buying Venezuelan Oil – In December, the Senate passed a parallel resolution 56-41, but a blocked vote by House Republicans prevented it from ever reaching the floor of the House. It was the first time the Senate had ever used congressional authority handed to them in the War Powers Act of 1973.U.S. National Security Advisor John Bolton has warned countries and companies against buying crude oil from Venezuela, after the Latin American country’s Oil Minister Manuel Quevedo said during a surprise visit to India that Venezuela wants to sell more oil to the fast-growing Indian market.In a tweet with a Bloomberg article on Venezuelan-Indian oil relations attached, Bolton wrote: “Nations and firms that support Maduro’s theft of Venezuelan resources will not be forgotten. The United States will continue to use all of its powers to preserve the Venezuelan people’s azsets and we encourage all nations to work together to do the same.”“We have a good relationship with India and we want to continue this relationship. The relationships with India will continue, the trade will continue and we will simply expand all the trade and relationship,” Indian outlet Business Today quoted the Venezuelan minister as saying on the sidelines of the Petrotech conference in India this week. At the start of the Venezuelan political crisis last month, Indian media reported that the Asian country continues to be one of the main buyers of Venezuelan crude oil. Indian refiners keep buying more than 400,000 bpd of oil from the troubled Latin American country, which is sitting on the world’s largest crude oil resources.In separate Venezuela-and-sanctions-related news, Bulgarian security officials said on Wednesday that they had blocked several bank accounts in a local bank that have received millions of euros from Venezuela’s state oil firm PDVSA, on which the U.S. slapped sweeping sanctions at the end of January. Bulgaria’s security services and prosecutor’s office were tipped off by the U.S. about those money transfers and have blocked transfers out of the bank accounts.

Exclusive: Venezuela shifts oil ventures’ accounts to Russian bank – document, sources (Reuters) – Venezuela’s state-run oil company PDVSA is telling customers of its joint ventures to deposit oil sales proceeds in an account recently opened at Russia’s Gazprombank AO, according to sources and an internal document seen by Reuters on Saturday. PDVSA’s move comes after the United States imposed tough, new financial sanctions on Jan. 28 aimed at blocking Venezuela’s President Nicolas Maduro’s access to the country’s oil revenue. Supporters of Venezuelan opposition leader and self-proclaimed interim president Juan Guaido said recently that a fund would be established to accept proceeds from sales of Venezuelan oil. The United States and dozens of other countries have recognized Guaido as the nation’s legitimate head of state. Maduro has denounced Guaido as a U.S. puppet seeking to foment a coup. PDVSA also has begun pressing its foreign partners holding stakes in joint ventures in its key Orinoco Belt producing area to formally decide whether they will continue with the projects, according to two sources with knowledge of the talks. The joint venture partners include Norway’s Equinor ASA, U.S.-based Chevron Corp and France’s Total SA. Even after a first round of financial sanctions in 2017, PDVSA’s joint ventures managed to maintain bank accounts in the United States and Europe to receive proceeds from oil sales. They also used correspondent banks in the United States and Europe to shift money to PDVSA’s accounts in China. State-run PDVSA several weeks ago informed customers of the new banking instructions and has begun moving the accounts of its joint ventures, which can export crude separately. The decision was made amid tension with some of its partners, which have withdrawn staff from Caracas since U.S. sanctions were imposed in January. The sanctions gave U.S. oil companies working in Venezuela, including Chevron and oil service firms Halliburton Co, General Electric Co’s Baker Hughes and Schlumberger NV, a deadline to halt all operations in the South American country.

Erdogan Says Venezuelan Gold Will Be Processed in Turkey – Turkey’s President Recep Tayyip ErdoÄŸan said on Tuesday that Venezuelan gold would be processed in the Central Anatolian province of Çorum. Speaking at a rally ahead of local elections on March 31, the president said Çorum would reach a new level in terms of gold trade amid reports that Venezuela sells most of its gold to Turkish refineries.On Monday Reuters reported that Venezuela uses some of the proceeds to buy consumer goods such as pasta and powdered milk, citing people with direct knowledge of the trade.Trade between the two nations grew eightfold last year.Venezuelan President Nicolas Maduro’s gold program has developed in tandem with his deepening relationship with Turkey’s ErdoÄŸan. Both leaders have been criticized internationally for cracking down on political dissent and undermining democratic norms to concentrate power. A Nov. 1 executive order signed by US President Donald Trump bars US persons and entities from buying gold from Venezuela. It does not apply to foreigners. Ankara has assured the US Treasury that all of Turkey’s trade with Venezuela is in accordance with international law.

Venezuela opposition takes steps to seize oil revenue as Maduro issues threat (Reuters) – Venezuela’s opposition-controlled congress named new temporary boards of directors to state-oil firm PDVSA on Wednesday, in an effort to wrest the OPEC nation’s oil revenue from increasingly isolated socialist President Nicolas Maduro. Maduro lashed out at the congress leader, Juan Guaido, saying in an interview that he would face the courts “sooner or later” for violating the constitution, after Guaido invoked constitutional provisions last month to assume an interim presidency. Although many Western countries have recognized Guaido as legitimate head of state, Maduro retains control of state institutions and Guaido needs funds if he is to assemble an interim government. Controlling PDVSA’s U.S. refiner Citgo Petroleum, Venezuela’s most valuable foreign asset, would go some way to helping in that, though seizing the reins of PDVSA itself seems improbable while Maduro remains in power. “We have taken a step forward with the reconstruction of PDVSA,” Guaido said on Twitter, just after congress named the directors. “With this decision, we are not only protecting our assets, we also avoid continued destruction.” PDVSA’s crude output has slumped to 70-year lows, due to crushing debts, widespread corruption, and little maintenance of its infrastructure. The administration of U.S. President Donald Trump, which backs Guaido, imposed sanctions on Venezuela’s oil sector on Jan. 28, aimed at curbing exports to the United States and upping the pressure on Maduro.

US shale oil growth could offset Venezuela shortfall: IEA – The continued strong growth of US shale oil will soften the blow from the recent US sanctions on Venezuela’s state-owned oil company PDVSA, the International Energy Agency said Wednesday, as it once again raised its estimates for non-OPEC supply on the back of robust US shale flows. The Paris-based market watchdog also trimmed its forecast for the demand for OPEC’s crude this year but kept its growth estimate for oil demand in 2019 unchanged at 1.4 million b/d. US liquids output, however, is forecast to rise by 1.52 million b/d in 2019, consolidating the US as the world’s biggest oil producer with average production hitting almost 17 million b/d this year, the IEA said in its latest monthly oil market report. The latest US forecast is around 200,000 b/d higher than previously estimated after stronger than expected US shale and NGL output in the fourth quarter of last year was carried through to 2019, an IEA official said. US liquids output jumped by a massive 2.2 million b/d last year as shale rebounded on firmer prices. Although US oil supply growth is set to slow this year following a near 40% fall in crude prices in Q4, the IEA noted that US crude production alone this year is still expected to grow by more than Venezuela’s current output of around 1.26 million b/d. “Sanctions are already making it difficult for PDVSA to export oil,” the IEA said “Even so, headline benchmark crude oil prices have hardly changed on news of the sanctions. This is because, in terms of crude oil quantity, markets may be able to adjust after initial logistical dislocations.” The IEA’s comments echo similar observations by the US Energy Information Administration, which on Tuesday predicted that US crude oil production growth will offset decreases in OPEC production and the impact of sweeping sanctions on Venezuelan crude flows through 2020. But the IEA also cautioned that crude quality, rather than quantity, will be an important issue moving forward, highlighting that the loss of Venezuela’s predominantly heavy, sour crudes will be felt most acutely by the market due to the US sanctions. While the supply of US oil output which is predominantly light and sweet continues to inch higher, the heavy sour barrels remains tightly supplied, the IEA said, squeezing US Gulf Coast refiners who are mostly geared towards processing heavier crudes.

Washington Eyes Crackdown On OPEC – Legislation targeting OPEC is suddenly gaining steam in the U.S. Congress, raising alarm bells for the cartel.On Thursday, the House Judiciary Committee passed a bill that would allow the U.S. Justice Department to sue members of OPEC for manipulating the oil market. The so-called “NOPEC” bill would remove sovereign immunity, exposing member countries to antitrust regulation.The bill has appeared in the past under prior administrations. But previous presidents from both political parties have opposed taking punitive action, fearing damage to the U.S.-Saudi relationship.Times have changed. President Trump has repeatedly posted angry tweets about OPEC, blaming it for high gasoline prices. That led to a revived push for the NOPEC legislation. The murder of Saudi journalist Jamal Khashoggi may have also been a turning point, erasing a lot of goodwill for Saudi Arabia in Washington.In theory, OPEC members could face confiscation of their assets in the United States. Saudi Aramco, for instance, controls Motiva Enterprises, which owns the largest oil refinery in the country in Port Arthur, Texas.According to the Financial Times, the prospect of the NOPEC bill becoming law has raised alarm bells not just for OPEC, but also for international oil companies who fear reprisals abroad. Companies like ExxonMobil and BP have major stakes in projects in places like Nigeria and Iraq. These OPEC-member countries could retaliate if they face punitive action from the U.S. government. The FT reports that the oil majors, along with the American Petroleum Institute and the U.S. Chamber of Commerce, are lobbying against the NOPEC legislation. Analysts speculate that Qatar exited OPEC in 2018 not just because of its rivalry with Saudi Arabia, but also because it has major interests in the U.S., and does not want to face antitrust action. Qatar Petroleum, along with ExxonMobil, just gave the final investment decision for the $10 billion Golden Pass LNG project in Texas.

BP CEO Bob Dudley warns oil market uncertainty could lead to a ‘real crunch’ –A flurry of intensifying risks could trigger an energy market “crunch” over the coming months, according to the chief executive of BP. His comments come at a time when energy market participants expect U.S. sanctions on crisis-stricken Venezuela, as well as OPEC-led production cuts, to offset a potential supply glut this year.When asked whether production cuts from the so-called OPEC+ coalition were likely to help stabilize oil prices, Dudley replied: “Well, there’s a lot of variables here and there’s a lot of things that could lead to a real crunch.”Speaking to CNBC’s Dan Murphy at an energy forum in Cairo, Egypt, Dudley cited “tragic circumstances” in Venezuela, uncertainty in Libya, rising production levels from the Permian Basin and the impact of U.S. sanctions on Iran.”So, the OPEC+ countries agreed to reduce production in the first quarter, we don’t even really have data from it. We will have to see what the data looks like but the markets feel tight to me.” “We plan BP on a sort of fairway, which I think is good for the world, between $50 a barrel and $65. That’s good for producers and consumers,” Dudley said. Brent crude, the international benchmark for oil prices, was trading at $61.90 a barrel Tuesday morning, up 0.6 percent, while West Texas Intermediate (WTI) stood at $52.68, 0.5 percent higher. OPEC and its allied producers, including Russia, agreed to impose output cuts from the beginning of January in order to prevent a global supply overhang. The Middle East-dominated group began capping supply in partnership with Russia and several other nations in January 2017 to end a punishing downturn in oil prices. The oil industry is generally optimistic that the measures imposed by OPEC and non-OPEC members could help balance the energy market over the coming months. But, some are concerned supply-side risks were not receiving enough attention. When asked whether he would like to see OPEC and non-OPEC producers taking further action to support the energy market at their next meeting in April, Dudley replied: “I think as an international oil company subject to the markets, I shouldn’t have a view about that actually.” “I think what is important is when prices are too high or too low, it leads to all kinds of unintended consequences,” he added.

South Africa Oil Discovery Could Be A Game-Changer One of the promising hotspots for oil and gas exploration drilling this year – South Africa’s offshore – has just yielded a massive natural gas and condensate find that could open a new exploration province for oil majors and change the energy fortunes of South Africa. France’s major Total said this week that it had made a significant discovery on the Brulpadda prospects off the southern coast of South Africa.“With this discovery, Total has opened a new world-class gas and oil play and is well positioned to test several follow-on prospects on the same block,” said Kevin McLachlan, Senior Vice President Exploration at Total. According to Total’s chief executive Patrick Pouyanne, the discovery could hold 1 billion barrels of oil equivalent of gas and condensate resources. The operator of the license, Total, and its partners Qatar Petroleum, CNR International, and South African consortium Main Street, now plan to acquire 3D seismic data this year, followed by up to four exploration wells on the license.“It is exciting for our country that this discovery has been made. It is potentially a major boost for the economy, and we welcome it as we continue to seek investment to grow our economy,” South Africa’s Mineral Resources Minister Gwede Mantashe said, commenting on the major gas discovery. The African Energy Chamber (AEC) also hailed the first major deepwater discovery off South Africa, saying, “This is a great first step for the country which still relies on imports of oil and gas despite the great reserves believed to be in its soil and waters.” According to AEC, the discovery could change the course of South Africa’s economy and help to reduce the country’s dependence on oil and natural gas imports. “The oil industry hopes this will be a catalyst and encouragement for all policy makers to work on an enabling business environment for exploration and drilling activities in South Africa,” NJ Ayuk, Executive Chairman at the Chamber, said. South Africa is currently working on new legislation that would separate the conditions for exploring and exploiting oil and gas resources from those for traditional minerals. Commenting on Total’s discovery, Andrew Latham, vice president, global exploration at natural resources consultancy Wood Mackenzie, said: “Even though the well isn’t an oil discovery, if Brulpadda proves to be anywhere near as big as the estimates of up to 1 billion barrels of oil equivalent resources, it will still be a game-changer for South Africa.”

BP has invested more money in Egypt than anywhere else in the last two years, CEO says – BP has invested more money in Egypt in the last two years than anywhere else, the oil giant’s Chief Executive Bob Dudley told CNBC. “Today (the scale of our operations) is very big,” Dudley told CNBC Monday. “We produce oil in the Gulf of Suez but really our focus in the last five years has been this big push for natural gas. All across from the Nile Delta, to the east, to the west of the Nile Delta, it’s helping power the country and other companies are here as well.” “In the last two years we’ve invested more money in Egypt, in both of those years, than in any other country in the world for BP, so it’s a really important place for us,” he told CNBC’s Dan Murphy. Egypt might lack the oil producing clout of its OPEC neighbors to the west (Libya and Algeria) and east (Saudi Arabia) but it’s pushing to become a Mediterranean energy hub, particularly in the natural gas sector. Cairo is expected to become a net gas exporter by the end of 2019 and the country has seen widespread interest in its natural gas potential – particularly after the success of Egypt’s Zohr gas field, an offshore natural gas field in the Mediterranean Sea operated by Italian energy firm Eni. Foreign direct investment (FDI) in Egypt’s oil and gas sector reached $10 billion in the full fiscal year of 2017/18, the country’s Petroleum Minister Tarek El-Molla told an Egyptian newspaper last August, and expects at least the same in 2018/2019. In December, El Molla said Egypt had signed over 12 exploration and production agreements with international oil companies (IOCs) during 2018. The petroleum minister told CNBC in January that Egypt’s gas reserves could even be a catalyst for peace in the region. The Egyptian economy has been on an upward turn since the political tumult brought on by civil unrest during the Arab Spring of 2011 and the overthrow of then-President Hosni Mubarak. In 2016, Egypt was forced to request a three-year, $12 billion loan from the international Monetary Fund (IMF). As ever, the IMF aid came with strings attached, requiring the government to embark on a reform program that included cutting fuel subsidies, introducing VAT and floating its currency, the Egyptian pound. Egypt has been praised by the IMF for adhering to the program and the Fund sees its budget deficit and unemployment rate declining further this year; the IMF predicts GDP growth of 5.5 percent in 2019.

Rosneft Boss Wants Russia Out Of OPEC Deal – Rosneft’s chief executive Igor Sechin wants Russia to quit its production control deal with OPEC, Reuters reported last week, citing sources that have seen a letter Sechin wrote to President Putin. According to the sources, Sechin sees the OPEC deal as a threat to Russia that benefits the United States, but the likelihood of his opinion leading to a pullout from the deal is limited. Sechin is one of the closest allies of Putin and one of the most powerful figures in Russian politics. As Forbes’ Kenneth Rapoza wrote last year, many politicians and big business executives seem willing to face Putin on a bad day. Less so are those willing to face Rosneft’s chief. What’s more, Sechin is not the only one unhappy with the OPEC deal. “The letter is a threat to the deal extension. But anyway, Putin is the ultimate decision maker,” one of the Reuters sources said. The perspectives of Russia’s President and the biggest players in its oil industry may differ here. For Putin, the OPEC deal is really a geopolitical tool rather than a tool for raising oil prices. Russia does not need prices higher. In fact, if they go too high, they will hurt the Russian economy. For the oil industry, however, it’s about the oil and the markets more than it is about geopolitics. Russia first joined forces with OPEC to exert more control over international oil prices in late 2016, when the first OPEC+ production cut agreement was sealed. It aimed to remove some 1.8 million bpd from the oversupplied global market that had pressured prices to below US$30 per barrel for Brent crude. The cuts worked so well that prices rebounded significantly, prompting last year a reversal, as large oil importers found it harder to keep buying at previous rates. Another rebound followed, reinforced by the reimposition of U.S. sanctions against Iran, which would substantially reduce the availability of Iranian crude on international markets. The effect of the sanctions, however, did not unfold quickly and the granting of sanction waivers to the largest Iranian oil importers led to another slump in oil prices. That’s when OPEC started talking about a new round of cuts. To be fair, Russia was reluctant about joining this round from the start. Moscow budgets lower than current prices, so higher prices were not a necessity for Russia. But the geopolitical agenda is still there, so it was hardly a surprise that despite the conspicuous reluctance, Russia eventually signed up for the new cuts, but at a lower rate than last time. Yet despite this, Russia has also made clear it would rather pass on the opportunity for a closer relationship with OPEC.

Russia’s Sechin raises pressure on Putin to end OPEC deal (Reuters) – Igor Sechin, head of Russian oil giant Rosneft and one of Vladimir Putin’s closest allies, has written to the Russian president saying Moscow’s deal with OPEC to cut oil output is a strategic threat and plays into the hands of the United States. The letter did not say whether the agreement in place since 2017 between the Organization of the Petroleum Exporting Countries (OPEC) and other large oil producers led by Russia to cut output should be extended or not. But according to two well-placed industry sources, the letter was a clear signal to other senior Russian officials involved in energy policy that Sechin wants the deal to come to an end. There is no guarantee Putin will back Sechin’s view because the president sees the pact with OPEC as part of a much bigger puzzle involving dialogue with OPEC’s leader Saudi Arabia over Syria and other geopolitical issues. “The letter is a threat to the deal extension. But anyway, Putin is the ultimate decision maker,” one of the sources said. Reuters has seen a copy of the letter with no date or header. A government source said it was sent at the end of December. The so-called OPEC+ deal has helped oil prices double to more than $60 per barrel. It has been extended several times and, under the latest deal, participants are cutting output by 1.2 million barrels per day (bpd) until the end of June. OPEC and its allies will meet on April 17-18 in Vienna to review the pact. Should Russia abandon the deal, it would result in a steep oil price crash or force Saudi Arabia to carry most of the burden of cutting output to continue propping up global crude prices. Riyadh has said it will not do this alone. A price crash would deal a severe blow to U.S. oil firms as they operate fields where it is more expensive to extract oil, but would benefit the broader U.S. economy. The United States, which overtook Russia and Saudi Arabia as the world’s biggest oil producer last year, is not participating in the output cuts.

$60 to $70 is a fair price for a barrel of oil, Egypt’s petroleum minister says – There is a fair price for a barrel of oil and OPEC and its non-OPEC partners are close to achieving it through their deal to cut production, according to Egypt’s Petroleum Minister Tarek El-Molla.”It is in the range between $60 and $70 a barrel … somewhere in this bracket of price,” El Molla told CNBC on Sunday when asked if oil prices were at an acceptable level to keep producers and consumers happy.”If prices of crude increase significantly we would start to see inflation and an exaggeration in the slowdown in consumption from the other side. If we see prices go down below a certain price then we will see a slowdown in investments,” he said.”So, actually, the fair equation is to have a balanced price between the producers and the consumers whereby each party is happy and to continue the growth of the global economy.” Egypt is a significant oil and natural gas producer in the Middle East although it’s not a member of OPEC and its output is dwarfed by members of the oil producing group and other non-OPEC producers like Russia. Egypt is aiming to boost production modestly in 2019, to 670,000 barrels a day, although its output still trails that of others in the region. The latest figures from OPEC’s monthly report in January showed that Egypt’s oil producing neighbors to the west, Libya and Algeria, produced 928,000 barrels a day and a million barrels a day respectively in December. OPEC lynchpin Saudi Arabia produced 10.5 million barrels a day. OPEC and non-OPEC producers including Russia (collectively known as ‘OPEC plus’) have last agreed in December to cut oil production by 1.2 million barrels a day in order to put a floor under prices, which have fallen due to rising oil supply and lackluster demand amid an uncertain global growth outlook.

Fund buying slows on crude but Venezuela supports diesel: Kemp (Reuters) – Hedge funds added more bullish positions in crude at the start of February but at a much slower pace than before, as optimism about OPEC output cuts was tempered by renewed anxiety about the U.S.-China trade talks. Hedge funds and other money managers increased their net long position in Brent crude futures and options for the eighth time in the last nine weeks but by just 1 million barrels. Fund managers added new short positions (+13 million barrels) for the week ended Feb. 5, almost as fast as new long positions (+15 million) suggesting much greater dispersion of views about where oil prices will go next. Funds added short positions at the fastest rate for nine weeks since the week ending Dec. 4 in a sign at least some managers think prices have peaked after the recent rally (https://tmsnrt.rs/2ULZTZE ). OPEC’s aggressive output reductions and U.S. sanctions on Venezuela have removed significant volumes of crude from the market since the start of the year, boosting prices. But doubts about progress in the U.S.-China trade talks and the outlook for the global economy have returned, with equity prices stalling and bond yields dropping, spilling across into concerns about oil consumption. In contrast, portfolio managers added another 8 million barrels of long positions in European gasoil futures and options, taking the overall net long position to 30 million barrels. Funds remain more cautious on gasoil (with long positions outnumbering short ones by just 2.6:1) than on Brent (where the ratio was 4.8:1), reflecting concerns about the economy, but also suggesting more upside potential. Perhaps more immediately and importantly, U.S. sanctions on Venezuela are hitting the availability of medium and heavy-density crudes, which are particularly suited for making gasoil. The same medium and heavy crude shortage that has pushed medium grades to a rare premium over their lighter counterparts may also be encouraging fund managers to turn a bit more bullish on diesel.

Oil prices fall as U.S. rig count rise, trade concerns — Oil prices fell on Monday as an uptick in U.S. drilling, a shutdown caused by a fire at a major U.S. refinery and concerns about U.S.-Chinese trade talks all overshadowed support from OPEC-led supply restraint. Benchmark Brent oil were down 59 cents, or 0.95 percent, to $61.51 a barrel. U.S. West Texas Intermediate(WTI) crude fell 89 cents or 1.78 percent to $51.78. “Oil prices are still trying to figure out what lead to follow. On the one hand, there is the OPEC+ cut story, now coupled with increasing issues around Venezuelan supply”, Vienna-based consultancy JBC Energy said. “At the same time, it has to be argued that a lot of the economic data that has been released over the last few days has really not been too encouraging, and U.S.-Chinese trade talks are also seemingly not progressing very fast.”Energy firms in the United States last week increased the number of oil rigs operating for the second time in three weeks, pointing to a further rise in U.S. crude production, a weekly report by Baker Hughes said on Friday.WTI prices were also weighed down by the closure of the second largest crude distillation unit (CDU) at Phillips 66’s Wood River, Illinois, refinery following a fire on Sunday. Trade talks between Washington and Beijing resume this week with a delegation of U.S. officials travelling to China for the next round of negotiations. The United States has threatened to increase tariffs already imposed on goods from China on March 1 if the trade talks do not produce an agreement, a move which could help slow growth in fuel demand.

Oil prices fall; slow progress in trade talks counters OPEC cuts (Reuters) – Oil prices fell about 1 percent on Monday as worries surrounding the resumption of U.S.-China trade talks overshadowed support from OPEC-led supply restraint. Brent crude futures lost 49 cents, or 0.8 percent to $61.61 a barrel by 12:53 p.m. EST (1753 GMT). U.S. West Texas Intermediate (WTI) crude fell 65 cents, or 1.2 percent, to $52.07 a barrel. Trade talks between the United States and China resumed with working level discussions before high-level discussions later in the week. While Beijing struck an upbeat note, it also expressed anger at a U.S. Navy mission through the disputed South China Sea. This cast a shadow as the two countries try to reach a deal before the March 1 deadline when U.S. tariffs on $200 billion worth of Chinese imports are scheduled to increase to 25 percent from 10 percent. On Thursday, U.S. President Donald Trump said he did not plan to meet with Chinese President Xi Jinping before the March 1 deadline, dampening hopes of a quick trade pact. Escalating U.S.-China trade tensions have cost both countries billions of dollars and disrupted global trade and business flows, roiling financial markets. “There’s a lot of uncertainty about what’s going on with this trade war, whether they’re going to get anything done,” said Phil Flynn, oil analyst at Price Futures Group in Chicago. “You’ve got concerns about slowing growth.” Still, oil prices have been buoyed this year by output curbs from the Organization of the Petroleum Exporting Countries and its allies, including Russia, a group known as OPEC+. The deal, effective from January, aims to cut 1.2 million barrels per day until the end of June to forestall a supply overhang. Suhail Al Mazrouei, the Energy Minister of the United Arab Emirates, said on Monday the oil market should achieve this balance in the first quarter of 2019. OPEC and its allies meet on April 17 and 18 in Vienna to review the agreement, but a draft cooperation charter seen by Reuters fell short of a new formal alliance among the producers. U.S. sanctions on Venezuela, along with older sanctions on fellow OPEC member Iran, have also prevented crude prices from falling further.

OPEC cut production by nearly 800,000 barrels a day in January, pumping just above its oil target – OPEC fell just short of its production goal in January, as a fresh round of output cuts from the 14-nation producer group got under way. The slight miss comes as the group once again cut its outlook for global oil demand in 2019. OPEC also slightly increased its forecast for supply from the United States and other non-OPEC nations. OPEC is partnering with 10 nonmember nations, including Russia, to keep 1.2 million bpd off the market. The so-called OPEC+ alliance aims to prevent another price-crushing oil glut like the one that gripped the market between 2014 and 2016. In January, OPEC managed to remove 797,000 barrels per day from the market by holding back supply. The group aimed to cut a combined 812,000 bpd in a bid to drain oversupply from the oil market. Total OPEC production stood at just over 30.8 million bpd in January, down from 31.6 million bpd in December, according to independent sources cited by the group in its monthly report. The biggest cuts by far came from top OPEC producer Saudi Arabia. The kingdom pumped about 10.2 million bpd in January, down 350,000 bpd from December and nearly 100,000 bpd below its official quota under the output cutting deal. The kingdom will continue to cut production, reducing output to about 9.8 million bpd in March, Saudi Energy Minister Khalid al-Falih told the Financial Times in an article published on Tuesday. The next biggest cuts came from the United Arab Emirates and Kuwait, though UAE pumped slightly above its quota last month. Altogether, most of the participating OPEC countries exceeded their quota during the first month of the deal, though some just barely pumped above target.

OPEC produced 30.81 mil b/d in Jan, 220,000 b/d above 2019 demand for its crude oil – OPEC has painted a bearish picture for 2019, with demand for its crude oil expected to fall due to weak demand growth and a sharp rise in output from producers outside the group. The group’s 14 members pumped 30.81 million b/d in January, down from 31.60 million b/d in December, according to its Monthly Oil Market Report Tuesday. Oil prices have recovered since December, when they fell to a 15-month low, with ICE Brent trading above $62/b this week. At the last OPEC meeting in Vienna, the group’s members agreed to slash output by 812,000 b/d, with Russia and nine other non-OPEC allies committing to a cut of 383,000 b/d for the first six months of 2019. OPEC’s research division estimates demand for its crude will average 30.62 million b/d in the first half of 2019, around 190,000 b/d lower than last month. Demand for OPEC crude in 2018 averaged 31.60 million b/d. Demand growth in 2019 was revised down to 1.24 million b/d due to “lower economic expectations from OECD Americas, Europe, as well as Latin America and the Middle East,” the report said. Global oil demand is estimated to average 100 million b/d this year, compared with 98.76 million b/d in 2018, OPEC said. The group pegged 2018 global oil demand growth at 1.47 million b/d. In another bearish sign, non-OPEC oil supply growth in 2019 was revised up to average 2.18 million b/d due to production increases expected in the US, Brazil, Russia, the UK, Australia, Kazakhstan and Ghana. The report however acknowledged that the growth in the US sector could be faced with further pipeline capacity constraints in North America, both in Texas and Alberta, as well as changes in the intensity of drilling and completion in the US shale industry. Saudi Arabia’s crude output fell 350,000 b/d in January to average 10.21 million b/d, according to an average of the six secondary sources that OPEC uses to gage production. The kingdom, however, self-reported production of 10.24 million b/d, its lowest since May 2018 and a fall of 401,000 b/d month on month.

Don’t expect US sanctions against Venezuela to fuel a rally in oil prices, IEA says –Energy market participants may be able to adjust to U.S. sanctions against Venezuela‘s crude industry, the IEA said in its closely-watched report on Tuesday. The report comes at a time when tensions in Venezuela are reaching boiling point, with the oil-rich, but cash-poor, country in the midst of the Western Hemisphere’s worst humanitarian crisis in recent memory.President Donald Trump‘s administration imposed targeted crude sanctions on Caracas late last month. The surprise move was designed to bar President Nicolas Maduro‘s access to oil revenue that has helped his embattled administration remain in power.”The imposition of sanctions by the United States against Venezuela’s state oil company Petroleos de Venezuela (PDVSA) is another reminder of the huge importance for oil of political events,” the Paris-based IEA said Tuesday. “Even so, headline benchmark crude oil prices have hardly changed on news of the sanctions. This is because, in terms of crude oil quantity, markets may be able to adjust after initial logistical dislocations,” the group added. International benchmark Brent crude traded at around $62.90 Tuesday morning, up 0.8 percent, while U.S.West Texas Intermediate (WTI) stood at $53.46, more than 0.6 percent higher. Supply issues in OPEC-member Venezuela and OPEC-led production cuts from the start of the year have bolstered crude futures in recent weeks. The IEA said oil prices had not increased “alarmingly” since U.S. sanctions were imposed on Venezuela because the market is still working off the surpluses built up in the second half of 2018 – when global supply was estimated to have exceeded demand by 1.3 million barrels per day (b/d).

Oil Market Tightens On OPEC Cuts – Oil prices jumped during early trading on Tuesday on news that OPEC had sharply cut output in January. . OPEC production declined by 797,000 bpd in January from a month earlier, averaging just 30.81 mb/d. Saudi Arabia, the UAE and Kuwait chipped in most of the reductions. Still, Russia only lowered output by 90,000 bpd, far short of the 230,000 bpd promised as part of the December deal. Saudi Arabia said it would continue to cut output, with plans to lower production to as low as 9.8 mb/d in March, or roughly half a million barrels per day lower than it had promised. Oil prices jumped on the news. India’s two leading refiners will continue to buy crude oil from Venezuela but will stop selling it refined products because of U.S. sanctions, according to Argus Media. Notably, PDVSA’s head Manuel Quevedo showed up at a conference in New Delhi. India could remain one of the few large buyers of oil from the increasingly isolated regime of Nicolas Maduro. Quevedo said PDVSA planned on doubling exports to India to 300,000 bpd. John Bolton issued a veiled threat to India to not work with Maduro’s regime, saying on twitter that “Nations and firms that support Maduro’s theft of Venezuelan resources will not be forgotten.” The U.S. government is trying to keep Citgo, the U.S.-based subsidiary of PDVSA, alive and intact so that it can be handed over to Juan Guaidó and a new Venezuelan government. However, creditors are swarming the company to lay claim to pieces of the company as the Maduro regime falls apart. “Citgo is the big prize,” Francisco Monaldi, a fellow in Latin American Energy Policy at Rice University’s Baker Institute for Public Policy, told the Houston Chronicle. “I previously said there’s going to be a sharkfest of payments to creditors, but now there seems to be a bigger actor stopping the sharks, which is the U.S. government.” PDVSA is pressing its joint venture partners to declare whether or not they will continue operations in the country following U.S. sanctions. Chevron pledged to remain in Venezuela. Chevron received a waiver from the U.S. government to continue working in the country until July 27. Chevron is trying to walk a fine line, pledging to remain in Venezuela while also hedging its bets, hinting about working with the U.S. government and a potential change in Venezuela’s government. “It’s a fluid environment,” Chevron’s CEO Mike Wirth said. “Our strong intent is to stay on the ground in Venezuela and be part of building a better future for the people of Venezuela,” Wirth told Bloomberg. “We’ve got a very close coordination under way with multiple agencies within the U.S. government.”

Oil up 1 pct on Saudi and OPEC cuts but outlook picture clouded (Reuters) – Oil prices gained about 1 percent on Tuesday, supported by OPEC-led production cuts and U.S. sanctions against Iran and Venezuela, though remain wary of surging U.S. output and the outcome of U.S.-China trade talks. Brent crude futures were up 61 cents at $62.12 a barrel and U.S. West Texas Intermediate (WTI) crude oil futures rose 54 cents to $52.95 a barrel by 0950 GMT. The continuing closure of parts of the Keystone pipeline that brings Canadian oil into the United States also helped to prop up WTI, traders said, after a partial shutdown at a Phillips 66 crude distillation unit led to initial sell-offs on Monday. Analysts said markets are tightening because of voluntary production cuts led by the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, as well as U.S. sanctions on OPEC members Venezuela and Iran. Saudi Arabia, the world’s top exporter and de facto leader of OPEC, said on Tuesday that it would reduce oil production to nearly 9.8 million barrels per day (bpd) in March, about half a million bpd more than it originally pledged. Also at the radar are hopes expressed by U.S. and Chinese officials that a new round of talks, which began in Beijing on Monday, would bring them closer to easing their months-long trade war. Beijing and Washington are trying to hammer out a deal before a March 1 deadline, without which U.S. tariffs on $200 billion worth of Chinese imports are scheduled to increase to 25 percent from 10 percent. However, climbing U.S. oil production, fighting near Libya’s main oilfield, sanctions on Venezuela and suspense over whether the U.S. will to grant more waivers to import Iranian oil leave markets unsure about the broader supply picture.

Oil up nearly 3 percent on Saudi and OPEC cuts – (Reuters) – Oil prices gained nearly 3percent on Tuesday, supported by OPEC-led production cuts, which Saudi Arabia said it would surpass by more than half a million barrels per day (bpd), and by U.S. sanctions against Iran and Venezuela. Brent crude futures LCOc1 were up $1.65, or 2.7 percent,at $63.16 a barrel by 1445 GMT. U.S. West Texas Intermediate(WTI) crude oil futures CLc1 also gained 2.7 percent, rising by $1.40 to $53.81. Markets are tightening because of voluntary production cuts from Jan. 1, led by the Organization of the Petroleum Exporting Countries and allies including Russia, aimed at forestalling a global overhang. Saudi Arabia, the world’s top oil exporter and de fact leader of OPEC, said it would reduce crude production to about9.8 million bpd in March, over half a million bpd more than it had originally pledged. Energy Minister Khalid al-Falih announced the move in an interview with the Financial Times published on Tuesday as the kingdom seeks to drive up oil prices to help to fund an economic transformation plan. However, rising U.S. oil production, fighting near Libya’s main oilfield, sanctions on Venezuela and suspense over whether Washington will grant more waivers to import Iranian oil haveleft markets unsure about broader supply. OPEC cut its forecast for 2019 world oil demand on Tuesday,citing slowing economies and expectations of faster supply growth from rivals, underlining the challenge it faces inpreventing a glut. Also on the radar are hopes expressed by U.S. and Chinese officials that a new round of talks, which began in Beijing onMonday, would bring them closer to easing their months-longtrade war.

WTI Extends Gains After Surprise Crude Inventory Draw – Oil prices rebounded from a two-week low Tuesday as Saudi Arabia pledged to deepen production cuts and U.S. President Donald Trump said he could extend a deadline for new tariffs on China. However, after tagging $54, WTI slid back lower to hover around $53 ahead of tonight’s API inventory data. An inventory build will lead market to believe “unwinding of inventories isn’t happening as quickly as they would like despite lower imports of Saudi crude into U.S. and recent sub-par growth of shale production,” said Bart Melek, head of global commodity strategy at TD Securities in Toronto. API:

• Crude -998k (+2.4mm exp)
• Cushing -502k (+1.4mm exp)
• Gasoline +746k (+1.2mm exp)
• Distillates -2.48mm (-1.7mm exp)

Expectations were for further inventory builds in crude and Cushing but both saw surprise draws (crude -998k vs +2.4mm exp) and distillates also saw a notably bigger than expected draw. WTI rebounded from its late-day drift lower… “OPEC’s overall production being down has refocused the market’s expectations around tightened supply,” said Gene McGillian, a senior analyst and broker at Tradition Energy in Stamford, Connecticut. “Whether or not we have enough strength to make a return to recent heights of $55 remains the question.” WTI drifted lower to $53 ahead of API then kneejerked higher on the surprise draw…

Oil price risks shift to upside: Kemp (Reuters) – Oil traders no longer expect the market to be over-supplied this year, amid optimism a full-blown U.S.-China trade war will be averted, and oil production growth will slow thanks to OPEC cuts and sanctions on Venezuela. Front-month Brent futures prices have jumped to almost $65 per barrel, up from just $50 in late December, and the highest for nearly three months (https://tmsnrt.rs/2V4bGD1 ). Brent’s six-month calendar spread has swung into a backwardation of almost 70 cents per barrel, from a contango of more than $1.50 late last year, the strongest for almost four months. Crude prices and spreads are being propelled higher by an almost perfect storm of increasing economic optimism (or at least reducing pessimism), OPEC cuts and unplanned supply disruptions. In recent days, senior policymakers from both the United States and China have signalled trade negotiations are making good progress, as fear of recession makes both sides more eager for a deal. More importantly, the U.S. president has indicated the deadline for the next round of tariff increases could be extended based on recent progress even if not all issues have been resolved by March 1. Oil consumption growth is likely to slow this year from the very rapid rates reported between 2014 and 2017 but if tariff increases can be avoided oil use should continue increasing at a moderate pace. Meanwhile, Saudi Arabia and its closest allies in OPEC have also acted early and aggressively to reduce production which should help eliminate the incipient surplus in the market. Saudi Arabia’s oil minister has said the kingdom’s production will fall to just 9.8 million barrels per day in March from 11.1 million in November (“Saudi Arabia goes on hunt for global oil and gas”, Financial Times, Feb. 12). Saudi Arabia’s willingness to act as swing producer has more than offset the limited cuts made by other members of the organisation and its allies led by Russia. The kingdom has demonstrated its commitment to eliminating the market surplus and pushing prices higher, even if it means tolerating poor compliance by other members of the OPEC+ group. At the same time, Iran’s exports remain crimped by U.S. sanctions imposed in November, with the expectation they will be lowered further from May, when sanctions waivers are likely to become less generous. And U.S. sanctions on Venezuela’s state-owned oil company PDVSA have reduced the country’s crude exports and tightened the global oil market even further.

Oil rises 1 percent on deepening OPEC supply cuts, sanctions on Venezuela – Oil prices rose on Wednesday, after top exporter Saudi Arabia said it would cut crude exports and deliver an even deeper cut to its production. Meanwhile U.S. futures gained on a reported decline in domestic oil inventories, though gains were capped by expectations that rising supply will swamp demand growth this year. Brent crude futures rose 84 cents, or 1.4 percent, to $63.26 a barrel around 9:20 a.m. ET (1420 GMT). U.S. crude oil futures gained 57 cents, or 1.1 percent, to trade at $53.67 a barrel. “It is a well-known fact that the world economy is losing momentum amid a plethora of downside risks including lingering US-China trade tensions and geopolitical uncertainty.” OPEC said on Tuesday that it had cut its output by almost 800,000 bpd in January to 30.81 million bpd. Most of that reduction has been thanks to Saudi Arabia. Energy minister Khalid al-Falih on Tuesday told the Financial Times production would fall below 10 million bpd in March, more than half a million bpd below the target it agreed to as part of a global deal to limit supply. U.S. restrictions on Venezuela’s energy sector have crippled exports and threaten to remove some 330,000 bpd in supply from the market this year, according to Goldman Sachs. The oil price has risen by 20 percent so far this year, yet most of that increase materialized in early January, before the imposition of U.S. sanctions on Venezuela’s energy sector. The global oil market remains well supplied and output would still likely outstrip demand this year, despite OPEC’s efforts and U.S. sanctions on Iran and Venezuela, the International Energy Agency said in its monthly market report on Wednesday. “Oil prices have not increased alarmingly because the market is still working off the surpluses built up in the second half of 2018,” the IEA said. “In quantity terms, in 2019, the U.S. alone will grow its crude oil production by more than Venezuela’s current output. In quality terms, it is more complicated. Quality matters.”

WTI Holds Gains Despite Bigger Than Expected Crude Build – WTI has extended gains, pushing back above $54, following last night’s surprise crude draw reported by API and Saudi Arabia pledged to deepen production cuts.The world’s biggest crude exporter will continue to curb output more than required by a December deal among top producers, Energy Minister Khalid Al-Falih told the Financial Times Wednesday. “Oil is rallying further as investors were given confirmation that the Saudis will curtail output, and they see a lower chance of the trade tensions escalating at the moment,” said Kim Kwangrae, a commodities analyst at Samsung Futures Inc. in Seoul.“Expectations of lower American crude stockpiles added to the optimism.” DOE:

• Crude +3.63mm (+2.4mm exp)
• Cushing -1.02mm (+1.4mm exp)
• Gasoline +408k (+1.2mm exp)
• Distillates +1.19mm (-1.7mm exp)

DOE data refuted API’s surprise crude draw with a bigger-than-expected build of 3.63mm barrels (2.4mm exp). Gasoline and Distillates also saw builds… The large Cushing draw may be attributable to the shutting of the Keystone pipeline after a likely oil spill near St. Louis. Production remains near record highs but the rollover in rig counts could signal a reduction in production looms…

WTI Oil Rises Despite Crude Inventories Surge – Crude oil prices gained on Wednesday, despite data showing that oil supplies in the U.S. registered a larger-than-expected inventory build. Crude oil for March delivery on the New York Mercantile Exchange rose 2.17% to trade at $54.27 a barrel by 10:32 AM ET (15:32 GMT), compared with $54.23 ahead of the report. The U.S. Energy Information Administration said in its weekly report that inventories rose by 3.633 million barrels in the week ended Feb. 8. Analysts had expected a crude-stock build of 2.668 million barrels, according to Investing.com, though the American Petroleum Institute late Tuesday reported a draw of 0.998 million. The data follows a prediction that the global oil market will be able absorb crude supply from suppliers outside of OPEC, according to the International Energy Agency. The Paris-based agency left its demand growth forecast for 2019 unchanged from its last report in January at 1.4 million barrels per day (bpd), while raising its estimate of growth in crude supply from outside OPEC to 1.8 million bpd in 2019, from 1.6 million bpd previously. OPEC has pledged to cut production by 800,000 bpd this year as part of an agreement with Russia and other non-OPEC producers. Supplies at Cushing, Okla., the key delivery point for Nymex crude, decreased by 1.02 million barrels last week, the EIA said. Total U.S. crude oil inventories stood at 450.8 million barrels as of last week, according to press release, which the EIA considered to be “about 6% above the five-year average for this time of year.” But the report also showed that gasoline inventories increased by 408,000 barrels, compared to expectations for a rise of 826,000 million barrels, while distillate stockpiles rose by 1.19 million barrels, compared to forecasts for a decline of 1.14 million.

Goldman sees oil rising toward $70, says demand forecasts are too gloomy – Oil prices have struggled to rally above $64 a barrel since last quarter’s sharp pullback, but Goldman Sachs believes crude futures could break out in the coming months. The investment bank forecasts international benchmark Brent crude will peak at $67.50 a barrel in the second quarter. Goldman’s outlook is based on its view that forecasts for demand growth have grown too gloomy and OPEC has adopted a “shock and awe” approach to pulling back supply. “Our constructive outlook for oil prices in 1H19 is predicated on both large supply cuts as well as resilient oil demand growth,” Goldman analysts said in a research note released on Tuesday evening. Goldman believes the world’s appetite for oil will grow by 1.4 million barrels per day in 2019. That’s in line with the International Energy Agency’s outlook, but above the consensus on Wall Street and OPEC’s view that demand will grow by just 1.24 million bpd. The bank thinks forecasters are underestimating oil demand from emerging markets in particular. Last year, developing countries drew down stockpiles of oil to weather a period when oil prices, the U.S. dollar and interest rates were rising – a triple threat that sent the cost of crude soaring in nations from Argentina to India. Goldman sees that trend of destocking reversing. The bank also thinks a recent, rapid decline in emerging market demand for power fuel will ease. However, Goldman notes that recent economic data have fallen short of its expectations, so it could be another few months before the bank can determine whether its demand outlook hits the mark. On the supply side, Goldman believes OPEC and its oil market allies have addressed flaws baked into their last deal to cut output, which ran between 2017 and mid-2018. In Goldman’s view, the new deal that kicked in last month delivers a big reduction at the outset – OPEC took nearly 800,000 bpd off the market in January – while making clear that the producers plan to ramp up output in the future, dissuading U.S. shale drillers from turning on the taps.

Oil Rises After Early Slide on Weak U.S. Data – – Oil bears may have to wait for more dire news on the U.S. economy or crude oversupply as a puzzling surge in market optimism is offsetting all the bad news. Futures of New York-traded West Texas Intermediate crude and London’s Brent oil rose more than 1% for a third day in a row after briefly falling Thursday on weak U.S. retail sales data. Saudi jawboning about production cuts and optimism over U.S.-China trade talks helped gains in the two prior sessions. WTI settled the latest session up 51 cents, or 1%, at $54.33 per barrel. Brent, the global oil benchmark, rose $1.03, or 1.6%, to $64.64 per barrel by 2:44 PM ET (19:44 GMT). It also edged toward a test of the key $65 resistance, hitting an intraday high of $64.81. Both WTI and Brent are up more than 19% year to date. The London benchmark is also trading at its highest premium to its U.S. rival since 2017, at a gap of more than $10. “Overall, it appears to me that the ‘lows have changed’ ” said Scott Shelton, energy futures broker at ICAP (LON:NXGN) in Durham, N.C., adding that while there was no real event driving the market “prices are just strong”. “Asian crude is driving this market,” said Shelton, who notes that backwardation in Brent — where front-month prices were positively higher to the second month — was steepening amid strengthening in global refining margins. “I would also think the downward momentum of prices ending is adding some additional support for (hedge fund) buying.” U.S. retail sales tumbled 1.2% in December, the first time in 10 months, the Commerce Department reported. Economists had forecast a gain of 0.1% for the period. Producer price inflation also came out weaker than expected, while initial jobless claims were also higher than expected last week. Shares on Wall Street tumbled, offsetting some of Thursday’s gains in oil, on anticipation that the slowdown could continue this year as American consumers worry over domestic tensions, the global economy and unresolved U.S.-China trade issues. Oil had rallied earlier on a Bloomberg report that President Donald Trump was considering a 60-day extension to the March 1 deadline requiring China to reach a trade deal with the U.S. or risk having tariffs on $200 billion worth of goods raised to 25% from 10%.

Oil prices rise on Beijing-Washington trade hopes, upbeat China data – Oil rose for a third day on Thursday, with Brent crude reaching its highest so far this year, as financial markets drew support from investor optimism that the United States and China could resolve their trade dispute. Crude futures briefly gave up their gains as the oil market followed U.S. stocks lower after data showed the biggest drop in retail sales in a decade. Brent crude futures were up 60 cents, or nearly 1 percent, at $64.21 a barrel around 11:25 a.m. ET (1625 GMT), down from a session high of $64.81, their highest intraday level in nearly three months. U.S. crude futures rose 12 cents to $54.02 a barrel, after earlier topping out at $54.68, about $1 shy of its 2019 high.The price of crude has risen 20 percent this year, driven primarily by the prospect of a decline in oil supply from OPEC and other top exporters such as Russia. “This rally that we’re seeing over the last two to three days is completely justified when you put the predicted OPEC production cuts into your global oil supply and demand equation,” Tamas Varga of PVM Oil Associates said. OPEC and allies such as Russia and Oman have agreed to cut crude output by a joint 1.2 million barrels per day, 800,000 bpd of which will come from OPEC. Thanks to healthy oil demand growth and lower OPEC+ production … we see the market tightening further over the coming months,” UBS analyst Giovanni Staunovo said. “As such, we continue to expect Brent oil prices will move up to $70-80 a barrel over three to six months.”

Oil prices hit 2019 highs amid OPEC-led supply cuts – Brent crude oil prices hit 2019 highs above $65 per barrel on Friday, spurred by U.S. sanctions against Venezuela and Iran as well as OPEC-led supply cuts. Brent rose as high as $65.10, pushing past the $65 mark for the first time this year, before edging back to $64.97 a barrel by 0450 GMT. That was still 0.6 percent above the last close. The international benchmark for oil prices is at a near 3-month high and set for a 4.6 percent gain for the week. U.S. West Texas Intermediate (WTI) crude futures were at $54.70 per barrel, up 29 cents, or 0.6 percent, from their last settlement. The Organization of the Petroleum Exporting Countries (OPEC) and some non-affiliated suppliers including Russia are withholding supply in order to tighten the market and prop up prices. The producer group known as OPEC+ has agreed to cut crude output by a joint 1.2 million barrels per day (bpd). Top exporter Saudi Arabia said it would cut even more in March than the deal called for. Russia has cut its oil production by 80,000-90,000 barrels per day from its level in October, Moscow’s reference level for its cuts, the country’s energy minister said. “Brent should average $70 per barrel in 2019, helped by voluntary (Saudi, Kuwait, UAE) and involuntary (Venezuela, Iran) declines in OPEC supply,” Bank of America Merrill Lynch said in a note. It also expects “a 2.5 million barrels per day drop in OPEC supply from 4Q18 into 4Q19.” Commodity investment firm Goehring & Rozencwajg (G&R) said that oil production from non-OPEC producers like Brazil, Mexico or the North Sea was also struggling, further tightening the market. “The North Sea, Mexico and Brazil all disappointed and we expect this to continue going forward,” G&R said in a note published on Thursday. Trade data in Refinitiv showed that combined crude oil shipments out of the North Sea, Mexico and Brazil were at 4.2 million bpd in January, down from 4.4 million bpd in December.Standing against these declines is soaring U.S. crude production, which rose by more than 2 million bpd last year, to 11.9 million bpd, making America the world’s biggest oil producer.

World’s Largest Offshore Oil Field Partially Shut Down – The Safaniyah oil field in Saudi Arabia – the world’s largest – is producing at a reduced capacity after a ship’s anchor cut a main power cable, Reuters reports citing a knowledgeable source. An earlier report from MarketWatch quoted information from Energy Intelligence suggesting production at the filed had completely stopped, sparking worry about global heavy oil supply.The worry was justified: with Venezuela sliding more deeply into chaos and with new U.S. sanctions reducing the flow of Venezuelan heavy crude to refineries, another heavy crude-producing field outage is exactly what the market does not need.Safaniyah has a production capacity of over 1 million barrels of heavy crude: reason enough for the market to get excited or worried, or both. However, now that there is more information about the possible cause of the outage and its extent, this excitement or worry might calm down. With or without a field outage, however, Saudi Arabia has once again played the star role in helping oil prices recoup some of the losses suffered late last year. The Kingdom has been reducing its production by more barrels than it was obliged to, leading an almost 800,000-bpd OPEC-wide production decline last month. Saudi Arabia plans to reduce its crude oil production further, to 9.8 million bpd in March, Energy Minister Khalid al-Falih said in an interview for the Financial Times. This compares with more than 11 million bpd produced in November. Exports, Al-Falih said, will also fall substantially over this month and next, to an average of 6.9 million bpd from 8.2 million bpd in November.

A Big Week For Oil Bulls – Oil posted sizable gains this week, with ongoing outages in Venezuela tightening the market. Also, one of the largest bearish factors for oil – the U.S.-China trade war – showed some signs of easing. OPEC cut production by 800,000 bpd in January, going a long way to erasing the supply surplus. However, the group also cut the demand estimate for its crude by 240,000 bpd from the last forecast due to a slowing economy. The group is still producing a bit more than what they think is needed. Saudi Arabia already indicated that it would shoulder an additional 0.5 mb/d reduction by March. The IEA said in its latest Oil Market Report that the dwindling supplies of medium and heavy barrels, at a time when light sweet oil is surging from U.S. shale, has disrupted both the crude and product markets. Medium and heavy losses from Iran, Venezuela, Mexico and limited midstream capacity restraining growth in Canada has all combined to put a premium on those barrels. As a result, refiners could face some challenges this year as they search for the right type of crude for their facilities. The EIA revised up its forecast for U.S. oil production in its latest Short Term Energy Outlook. The agency expects the U.S. to average 12.4 mb/d this year, a huge 300,000-bpd jump from last month’s estimate. Even better, the U.S. could average 13.2 mb/d in 2020, revised up from 12.9 mb/d from the previous report. Saudi Aramco partially shut its Safaniyah offshore oil field after a power cable was cut by a ship’s anchor, according to Reuters. The shutdown occurred about two weeks ago. The Safaniyah field is the largest offshore oil field in the world, with a capacity exceeding 1 mb/d. Energy Intelligence says about 300,000 bpd was impacted. A week of trade talks in Beijing between the U.S. and China ended with both sides indicating that significant progress was made. The talks will continue next week in Washington. It seems unlikely that a comprehensive agreement will be secured before the March 1 deadline, but the WSJ reports that they could agree to a memorandum of understanding outlining a framework trade deal, allowing talks to continue beyond the deadline. President Trump also indicated he would be willing to punt on tariffs if the two sides were making progress.

US crude rises 2.2% to 3-month high, settling at $55.59, boosted by OPEC output cuts – Brent crude oil climbed above $66 a barrel to its highest this year as OPEC-led supply cuts and this week’s announcement of a higher than expected cut by Saudi Arabia encouraged investors. The international oil benchmark ended Friday’s session $1.68 higher at $66.25 a barrel, up 2.6 percent on the day. Brent set a fresh three-month closing high going back to Nov. 19 on Friday and rose 6.7 percent on the week. U.S. West Texas Intermediate crude futures rose $1.18, or 2.2 percent, to $55.58 per barrel, also the best settlement since Nov. 19. WTI ended the week with a 5.4-percent gain. OPEC, along with allies led by Russia, made voluntary production cuts beginning last month aimed at tightening the market. Top exporter and de facto OPEC leader Saudi Arabia said on Tuesday it would cut over half a million barrels per day (bpd) more in March than the deal called for, sending prices surging. The cuts come alongside involuntary production curbs as a result of U.S. sanctions on Venezuelan and Iranian crude, along with curtailed Libyan output because of civil unrest. Prices were also buoyed by the partial closure of Saudi Arabia’s Safaniya, its largest offshore oilfield with a production capacity of more than 1 million bpd. The shutdown occurred about two weeks ago, a source said, and it was not immediately clear when the field would return to full capacity. “The market may be reconnecting with its fundamentals, specifically the several major supply chokeholds that have stacked up in recent months over and above the voluntary OPEC output restraints,” Bank of American Merrill Lynch said in a note that it expects a drop of 2.5 million bpd in OPEC supply in the fourth quarter of 2019 from a year earlier. However, the global supply picture remains uncertain.

IMF: Saudi Arabia Needs $80-85 Oil Price To Balance 2019 Budget — OPEC’s biggest producer Saudi Arabia would need oil prices at US$80-85 per barrel in order to balance its 2019 budget, Jihad Azour, Director of the Middle East and Central Asia Department at the International Monetary Fund (IMF), has told Reuters. Saudi Arabia’s officials, including Energy Minister Khalid al-Falih, don’t discuss publicly ‘targeted oil prices’ or a desired level of oil prices that would be comfortable to the Kingdom’s finances, but analysts and the IMF have estimates what oil price level would be enough to cover Saudi Arabia’s budget spending. For this year, “if you take the (2019) budget as presented with everything remaining equal, a breakeven point would be around $80-$85 dollars,” the IMF’s Azour told Reuters.The oil price slump in the fourth quarter of 2018 has certainly affected the public finances of the biggest oil exporting nations, including OPEC’s biggest, Saudi Arabia. Although Azour doesn’t see the price slump affecting the Kingdom’s ability to finance itself, he expects that those lower prices would weigh on the fiscal position of Saudi Arabia.For this year, the Kingdom announced its highest-ever budget, of around US$295 billion (1.1 trillion Saudi riyals). This breaks the previous record set in 2018, with budget spending at US$261 billion and it might spark concerns about the economy’s sustainability as the increase for 2019 includes a hefty bill for cost-of-living allowances introduced last year. Last month, the IMF slashed its forecast for Saudi Arabia’s economic growth this year to 1.8 percent, down by 0.6 percentage point from the previous economic outlook in October, due to lower oil prices and lower oil production growth.The IMF sees growth in Saudi Arabia for 2019 at 1.8 percent, compared to 2.4 percent expected last October, while it lifted its 2020 economic growth forecast by 0.2 percentage point from October to 2.1 percent.

Saudi Aramco will expand into international oil and gas exploration: FT –Saudi state energy giant Aramco aims to expand into international oil and gas exploration in the coming years, a move that will see the company compete more directly with the likes of Exxon Mobil and Royal Dutch Shell. Aramco has historically stuck to producing Saudi Arabia’s vast, low-cost oil reserves, the world’s second largest. But Saudi Energy Minister Khalid al-Falih now confirms in an interview with the Financial Times that the company will also look overseas for oil and natural gas prospects. “We are no longer going to be inward-looking and focused only on monetizing the kingdom’s resources,” Falih told the FT. “Going forward the world is going to be Saudi Aramco’s playground.” Aramco will prioritize building a global natural gas business as it pushes into overseas exploration and production, Falih said. Oil majors like Exxon and Shell are already shoring up their gas operations as the world’s appetite for the fossil fuel grows, particularly in Asia. The company has considered making investments in liquefied natural gas projects in the Russian Arctic and the U.S., according to recent news reports. Falih says Aramco is also considering opportunities in Australia, which recently topped Qatar as the world’s top exporter of LNG, a form of natural gas chilled to liquid form for transport by sea. Aramco has already invested in overseas refineries and petrochemicals plants. Its Motiva facility in Port Arthur, Texas, is the largest refinery in the United States. At home, Aramco is in the process of purchasing a 70 percent stake in Saudi petrochemicals company Sabic from the kingdom’s sovereign wealth fund. The deal, expected to raise $70 billion for the Public Investment Fund, will partially underwrite Crown Prince Mohammed bin Salman’s efforts to diversify the Saudi economy. Aramco also plans to list shares of the company on an international stock market in 2021 to shore up the fund, following a long delayed initial public offering.

The Saudis “Don’t Know” Where Jamal Khashoggi’s Body Is – Saudi authorities do not know where murdered journalist Jamal Khashoggi’s body is, despite having in custody the Saudi team that killed him, a high-ranking foreign affairs official in the kingdom said in an interview broadcast on Sunday. The dissident journalist was dismembered after his murder in the Saudi consulate in Istanbul, but his remains have yet to be found, AFP said.Saudi Minister of State for Foreign Affairs, Adel al-Jubeir said the murder was carried out by Saudi officials “acting outside their scope of authority” and that 11 people have been charged with the crime.Still, asked where Khashoggi’s body is, he told CBS’s “Face the Nation,” “We don’t know.”#Saudi minister Abdel al Jubeir says he can’t comment on reports by anonymous sources, repeats that #MBS didn’t order #Khoshoggi killing https://t.co/fGFh0PyNhd – Barbara Plett Usher (@BBCBarbaraPlett) February 8, 2019Jubeir said the public prosecutor responsible for the case had sought evidence from Turkey but had received no response. Questioned why those in custody couldn’t tell them where the body was, Jubeir responded: “We are still investigating.”

Google, Apple Condemned For Continuing To Carry Saudi Wife-Tracking App – Apple and Google – which have had zero compunction about removing “inappropriate content” that promotes “hate speech, graphic violence, bullying and harassment” have come under heavy criticism by human rights activists and lawmakers for carrying an app that allows Saudi men to track the whereabouts of their wives and daughters. Created by the National Information Center, the app – Absher, contains a database of women in Saudi Arabia and the means to prohibit them from travel – or catch them leaving without permission. Of note, more than 1,000 women flee Saudi Arabia each year according to Mansour al-Askar of the Imam Muhammad ibn Saud University in a May 2017 statement to The Economist . According to Human RIghts Watch, Saudi women require permission from a male guardian – usually their father or husband, to leave the country. “It’s really designed with the men in mind,” said senior Human Rights Watch researcher, Rothna Begum. “Of course, it’s incredibly demeaning, insulting and humiliating for the women and downright abusive in many cases, because you’re allowing men absolute control over women’s movements.” Begum told CNN that Google and Apple “should be considering the way that the app is being used and in practice,” and has suggested that the Silicon Valley companies ask the Saudi government to remove the guardianship functionality from the app. “Apple and Google could have more oversight over any government services apps anyway,” said Begum. “They should be looking to see whether or not these government apps are facilitating human rights abuses or encouraging discrimination in the country as well.”Amnesty International has also called on the Silicon Valley tech titans to “assess the risk of human rights abuses on women which is facilitated by the App and mitigate the harm that the App has on women.” “The use of the Absher app to curtail the movement of women once again highlights the disturbing system of discrimination against women under the guardianship system and the need for genuine human rights reforms in the country, rather than just social and economic reforms,” said Amnesty International in a statement emailed to CNN.

EU adds Saudi Arabia to ‘dirty money’ blacklist – The European Commission has added seven countries including Saudi Arabia, Panama, and Nigeria to a blacklist of nations that pose a threat because of lax controls on terror financing and money laundering. The new countries targeted by the commission on Wednesday join another 16 already on this register, bringing the total up to 23. The commission said it added jurisdictions with “strategic deficiencies in their anti-money laundering and counter-terrorist financing frameworks”. Will EU stop arms sales to Saudi in wake of Khashoggi killing?The move is part of a crackdown against money laundering after several scandals hit European Union banks in recent months. But it has triggered criticism from several EU states worried about their economic relations with the listed states, notably Saudi Arabia. “We have established the strongest anti-money laundering standards in the world, but we have to make sure that dirty money from other countries does not find its way to our financial system,” Vera Jourova, European Commissioner for Justice said in a statement. “Dirty money is the lifeblood of organised crime and terrorism,” she added, urging countries on the list to “swiftly remedy their deficiencies”. The 28 EU states now have one month, which can be extended to two, to endorse the list. They could reject it by qualified majority.

Iran is turning its ‘people into paupers’ instead of providing food, Saudi prince says — Iran is funding militias throughout the Middle East while turning its own people into paupers, Saudi Arabian Prince Turki Al-Faisal told CNBC Tuesday. “I’ve described Iran in the past, and I think the description still fits, the leadership in Iran has developed into a paper tiger with steel claws,” he told CNBC Tuesday. “The ‘steel claws’ are the militias that they have established throughout the Middle East, whether it’s Hezbollah (in Lebanon) or the Houthis (in Yemen) or the al-Abbas (a Shia militant group in Syria) or the various militias operating in Iraq and Syria whose main purpose is to further Iran’s influence and its domination of the areas in the Middle East,” he said, speaking to CNBC’s Hadley Gamble at the Milken Institute summit in Abu Dhabi. Iran and Saudi Arabia are rival religious and political powers in the Middle East. Relations between the Sunni-majority Saudi Arabia and Shia-dominated Iran have hit rock-bottom in recent years with civil wars in Yemen, Syria and Iraq seen as proxy battlegrounds between the two countries. Iranian support for the militant group Hezbollah in Lebanon and even, sporadically, to the Taliban in Afghanistan, in the form of weaponry and military training, has also made Iran a pariah on the global stage. A sluggish economy, made worse by re-imposed U.S. sanctions, and rising food prices have also fueled civil unrest and demonstrations against the government. Iranian President Hassan Rouhani said last month that Iran was facing its toughest economic situation “in 40 years.” The International Monetary Fund has predicted the country’s growth contracted by 1.5 percent in 2018 and will slump by 3.6 percent in 2019. Al-Faisal likened Iran to a “paper tiger” because he said poverty and protest were rising in the country with a “dysfunctional” government. He said he didn’t know whether there would be regime change in Iran but hoped U.S. sanctions would change the leadership’s conduct.

Iran to the Iraqis: do not attack US forces unless they refuse to withdraw following a parliamentary decision US president Donald Trump’s statement of his intention to remain in Iraq in order to “be looking a little bit at Iran because Iran is a real problem” has created a political storm in Mesopotamia among local politicians and groups now determined to put an end to the US presence in the country. Many are upset by Trump’s statement, saying that the “US forces are departing from their initial mission to fight terrorism, the reason for which they are allowed to stay in Iraq”. Iraqi President Barham Saleh commented that the US administration did not ask Iraq’s permission for US troops stationed in the country to “watch Iran”. US forces have been deployed in Iraq in large numbers since 2014 when ISIS occupied a third of the country. The US establishment under president Obama refrained from rushing to support the Iraqi government, leaving room for Iran to act rapidly and send weapons and military advisors to Baghdad and Erbil. The intentionally slow US reaction pushed the Grand Ayatollah Sayyed Ali Sistani to call for the mobilisation of the population, a call that led to the creation of the Popular Mobilisation Forces (PMF), called Hashd al-Shaabi, who managed to stop ISIS’s advance. Moreover, in response to Iraq’s request, a joint military operational room was formed in Baghdad’s “Green Zone” where Russian, Iranian, Iraqi and Syrian high-ranking officers are still present, coordinating military attacks and sharing electronic and other intelligence information about ISIS whereabouts and the movements of its militants, sleeping cells and leaders. The US also offered to conduct intelligence operations and air strikes against ISIS. Nevertheless, during the period that the ISIS threat diminished the number of the US forces has more than doubled, from 5,200to 11,000, according to sources within the Iraqi government; some Iraqi sources claim the real numbers are much larger, with as many as 34,000 US servicemen spread over 31 bases and locations, along with Iraqi forces. There are no military bases for US forces only.

Europe Is Determined to Save the Iran Deal – It has been more than 300 years since Iran and France launched official diplomatic ties. The initial contact between the two nations dates back to the late 16th and early 17th centuries, when the kingdom of Persia tried to secure support from European nations against a powerful neighbor: the Ottoman Empire. France was a popular destination for Iranian kings wishing to spend their time abroad, and Iran was a strategically important country at the crossroads of the Silk Road with unlimited access to the Persian Gulf. This made Iran-France relations particularly close. The two countries maintained cordial ties until the Islamic Revolution of 1979, which changed the political landscape of the Middle East and caused a shift in Iranian foreign policy. Iran-France relations suffered enormously as a result of the anti-Western tone of the revolution, and ties were cut for 11 months following the Gordji Affair. This refers to the case of Wahid Gordji, a translator at the Iranian Embassy in Paris, who was suspected by French intelligence of being behind the 1985-86 bomb attacks in the French capital. There were other reasons for the decline in Iran-France relations. The most controversial surrounded the Iranian nuclear program, which started in the early 2000s and lasted until the Joint Comprehensive Plan of Action (JCPOA) was agreed in 2015. The JCPOA, or the Iran nuclear deal, was signed by the Iranians and leading world powers, including the US, Britain, France, China, Russia, Germany and the European Union. During the talks, France was accused by the Iranian government of taking a hardline approach. In this edition of The Interview, Fair Observer talks to François Nicoullaud, the former French ambassador to Iran, about the ups and downs of Iran-France relations and the new US sanctions. The transcript has been edited for clarity.

IS resists ‘final push’ by US-backed force in eastern Syria – US-backed fighters in Syria say they are meeting fierce resistance in the last enclave held by Islamic State (IS) militants near the Iraqi border. A battle has been going on for hours, with US-led coalition air strikes and artillery fire pounding IS positions. Up to 600 jihadists are thought to be defending their last stronghold, a small pocket in Syria’s eastern province of Deir al-Zour. Two years ago IS controlled large areas of Syria and Iraq. On Saturday, after a pause of more than a week to allow some 20,000 civilians to leave the area, SDF spokesman Mustafa Bali said the group was launching the “final battle to crush IS”. Some civilians are believed to be still in the area. An SDF field commander told AFP news agency on Sunday morning: “There are heavy clashes at the moment. We have launched an assault and the fighters are advancing.” Monitors the Syrian Observatory for Human Rights said the SDF were advancing across farmland, and there were heavy clashes and landmines going off. Backed by air strikes, the SDF have driven out IS from towns and villages in north-eastern Syria in recent months.The battle for the tiny sliver of land still held by IS next to the Iraqi border has been raging for many hours. Air strikes and artillery fire have pummelled the IS position, which measures only about a mile across. The SDF believes it will shortly achieve a decisive victory. IS does still hold another scrap of territory in Syria – and it continues to carry out dozens of attacks – many targeting the SDF. Even as it seems likely to lose every last fragment of its once-vaunted and self-declared caliphate, IS can continue to operate and pose a potent threat in both Syria and Iraq from remote areas where its fighters find refuge, as well as through militants gone to ground in towns and cities.

Seven Children Among 16 Killed by US-Led Airstrikes in Syria – According to the Syrian Observatory for Human Rights, US airstrikes killed at least 16 civilians, including seven children, eight women, and an elderly man, in far eastern Syria. The civilians were fleeing an ISIS-held village that US-backed forces are attacking. This is the latest in a growing number of civilian deaths in US strikes, coming amid the latest in a series of ‘final offensives’ by the Kurdish forces against the “last” ISIS villages in Syria. These constant offensives have led to a stream of displaced civilians out of these areas. The civilians killed in these latest strikes were reportedly fleeing toward the Iraqi border. US officials did not address the report yet, and it is rare for civilian deaths to officially end up on the Pentagon’s tally. It is worth wondering, however, if the strike was deliberately intended to prevent civilians crossing into neighboring Iraq, or just attacking any groups of people scrambling out of the village.

US asks Europe, others, to repatriate ISIL fighters held in Syria – The United States has called on European nations and other countries to repatriate and prosecute their citizens who travelled to Syria to join the Islamic State of Iraq and the Levant (ISIL, also known as ISIS). The Kurdish-led Syrian Democratic Forces (SDF) say they have arrested more than 3,200 ISIL fighters in territory they control in northeastern Syria, with more than 900 believed to be foreign fighters. In addition to the hundreds of men, the SDF also says it is holding more than 4,000 family members, including elderly people and young children. “The United States calls upon other nations to repatriate and prosecute their citizens detained by the SDF and commends the continued efforts of the SDF to return these foreign terrorist fighters to their countries of origin,” State Department Spokesman Robert Palladino said in a statement on Monday. The announcement comes just two days before foreign ministers of US allies are set to meet in Washington for talks on the anti-ISIL coalition, with questions on how to move forward without the military backing of the US. The question of what to do with the foreign fighters in custody has grown increasingly thorny since US President Donald Trump’s surprise announcement in December that he intends to withdraw all American forces from Syria. Very few countries have expressed readiness to repatriate their citizens, posing a dilemma for the Kurdish-led forces, particularly lading up to the US withdrawal.

US Leaders Call on Allies to Send Troops to Syria as it Withdrawals – Senior United States lawmakers and military officials have urged the country’s allies to send hundreds of troops into Syria, as the US plans its withdrawal from the war-torn country, a top US official said.Speaking on a panel at the Munich Security Conference on Friday, US Senator Lindsey Graham said the US would consider keeping some troops in Syria if Washington’s allies agreed to deploy their own forces to help create a buffer zone near the Turkish border with Syria.Graham said he discussed the plan ahead of the conference with US General Joseph Votel and President Donald Trump, who announced in December that the US planned to pull about 2,000 American troops out of Syria.Votel, who is the top general leading US efforts to fight the Islamic State (IS) group, has been vocal in his opposition to the withdrawal of US forces.“The post-caliphate strategy should be different than the fight to destroy the caliphate,” said Graham, before calling on international officials in the room to send their own troops. “I’m hoping that President Trump will be coming to some of you and asking for your help and you will say yes. And in return, the capability that we have that is unique to the United States will still be in the fight in Syria,” he said.Graham also said the US would try to gain support for this plan at the conference. Acting US Defence Secretary Patrick Shanahan did not secure any solid pledges of support, however, as he met with 13 defence ministers from countries that make up the anti-IS coalition on the sidelines of the conference, AFP reported.

Russia, Turkey, Iran Hail US Pullout Of Syria At Sochi, But US War Drums Beat At Warsaw – President Vladimir Putin reasserted the Russian position that northern Syria must return to Damascus’ control during the opening day of the Sochi summit between the three leaders of Russia, Turkey and Iran. This just as the US-led Middle East summit is underway in Warsaw, Poland where the US and Israel have urged the world to “confront Iran” in places like Syria, Yemen, and Lebanon. The Sochi meeting is tackling the ramifications of US withdrawal, with tense relations between Russia and Turkey given Putin also urged steps to “completely destroy” jihadists in Idlib, and as the Russian Foreign Ministry ruled out any Turkish-led initiative without first getting a green light from the Assad government. But the Russia-Syria-Iran position is set to clash with Turkish President Erdogan’s vision. The February 14th meeting in Sochi between the three Presidents (Russia, Turkey and Iran) is not expected to find solutions agreeable to all parties about the two main problem areas left in Syria: northeast Syria (Manbij to Qamishli/al-Hasaka), currently occupied by US forces, and Idlib city and its rural areas occupied by jihadist groups friendly to Turkey. There are fundamentally different points of view. At the top of the agenda, the gathering is expected to have further discussions on a possible US withdrawal in the coming weeks – the month of April seems plausible – as announced by officials in Washington.All parties are agreed, however, that US withdrawal is a priority and will be a relief to the Levant. Therefore, any step that help to reach this objective smoothly should be taken. Nevertheless, the main differences are triggered by the Russian desire and intention to conclude a “temporary deal” with Turkey over North-east Syria’s status after the US withdrawal. These differences are related to the price Syria should pay to see US forces out of the country. Sources among decision makers in Damascus said “Russia is trying to find an excuse for Turkey to move into north-east Syria, within a ‘buffer zone’ of 12,000 sq km out of the 42,000 sq km that represent the zone east of the Euphrates under US occupation, reviving the 1998 Adana agreement between Ankara and Damascus”. A Syrian source reports, “The Russian President is trying to open the road for Turkey to regain a direct relationship with Syria on a higher level. Russia believes the temporary presence of Turkey is acceptable as long as the unity of Syria is non-negotiable. But we in Damascus believe that if Turkey moves in, it will be difficult to dislodge its forces ever again”.

BBC Producer’s Syria Bombshell- Douma Gas Attack Footage Was Staged – Now approaching nearly a year after the April 7, 2018 alleged chemical attack in Douma, Syria – which the White House used as a pretext to bomb Syrian government facilities and bases throughout Damascus – a BBC reporter who investigated the incident on the ground has issued public statements saying the “Assad sarin attack” on Douma was indeed “staged”. Riam Dalati is a well-known BBC Syria producer who has long reported from the region. He shocked his nearly 20,000 twitter followers on Wednesday, which includes other mainstream journalists from major outlets, by stating that after a “six month investigation” he has concluded, “I can prove without a doubt that the Douma Hospital scene was staged.” The “hospital scene” is a reference to part of the horrid footage played over and over again on international networks showing children in a Douma hospital being hosed off and treated by doctors and White Helmets personnel as victims of the alleged chemical attack. The BBC’s Dalati stated on Wednesday: “After almost 6 months of investigations, I can prove without a doubt that the Douma Hospital scene was staged. No fatalities occurred in the hospital.” He noted he had interviewed a number of White Helmets and opposition activists while reaching that conclusion. He continued in a follow-up tweet: Russia and at least one NATO country knew about what happened in the hospital. Documents were sent. However, no one knew what really happened at the flats apart from activists manipulating the scene there. This is why Russia focused solely on discrediting the hospital scene.

Netanyahu’s War Talk — While attending the Warsaw conference that is ostensibly committed to promoting “peace and stability” in the Middle East, Israeli Prime Minister Netanyahu let loose with this statement: “What is important about this meeting – and this meeting is not in secret, because there are many of those – is that this is an open meeting with representatives of leading Arab countries, that are sitting down together with Israel in order to advance the common interest of war with Iran.” Netanyahu said. The prime minister’s official Twitter account used the exact same wording:What is important about this meeting. and it is not in secret, because there are many of those – is that this is an open meeting with representatives of leading Arab countries, that are sitting down together with Israel in order to advance the common interest of war with Iran. – PM of Israel (@IsraeliPM) February 13, 2019 This isn’t a case of Netanyahu’s words being taken out of context or misinterpreted. The prime minister’s own official account used this wording because this is the message that Netanyahu wanted to convey. It should come as no surprise that someone who has railed against Iran throughout his career would use language like this. The prime minister has talked up the idea of bombing Iran for years, and his government has obviously been attacking Iranian targets inside Syria for quite a while. Netanyahu said this in the context of talking about attacking Iranian forces in Syria and forcing them out of the country:“What we are doing is pushing and driving Iran from Syria. We are committed to doing this,” he said. Netanyahu seems to be trying to create the illusion of broader regional support for possible escalation against Iran in Syria and Lebanon. He may be interested in war with Iran, but most Arab states don’t actually have any interest in war with Iran if they are the ones that have to fight it.

Israel fights boycott movement as pro-Palestinian campaign gains global support – Gil Sima doesn’t support Israel’s occupation of the West Bank. But that hasn’t stopped filmmakers from dropping out of his Tel Aviv International LGBT Film Festival to protest the country’s policies toward Palestinians. Like many other entertainment and cultural events here, the film festival has been targeted by the Boycott, Divestment, and Sanctions campaign. Founded in 2005, BDS calls for “recognizing the fundamental rights of the Arab-Palestinian citizens of Israel to full equality.” It also advocates for the return of millions of Palestinians to the homes their ancestors left or were forced from when Israel was established in 1948. Israeli officials allege the BDS movement is anti-Semitic and seeks to destroy the country. Prime Minister Benjamin Netanyahu’s government has spent at least $15 million on combating BDS since 2015. The campaign is reverberating in the United States, where the Senate passed a bill Tuesday that would allow states to punish businesses that take part in Israel boycotts. But despite vigorous efforts to quash BDS, the pressure from those who support it is mounting. Measures calling for boycotts of Israel, many of which are modeled on the anti-apartheid struggle in South Africa, including divesting from companies that sell to Israel’s army, are roiling college campuses. During the summer, more than a dozen performers backed out of Israel’s Meteor Festival after headliner Lana Del Rey canceled. Scientists, academics and even fruit fans have backed BDS: Grape exports to Europe from the Jordan Valley in the West Bank have fallen by 80 percent since 2007 because of boycotts, according to the head of the regional council there.

US Airstrikes Hit Decade High In Afghanistan – While Trump professes antipathy for US conflicts abroad, the US military in Afghanistan last year was busy dropping the most bombs in at least a decade, reported Military.com. American fighter jets, strategic and stealth bombers, attack aircraft and helicopters, and drones dropped an unprecedented 7,362 bombs in 2018, according to the latest US Air Force Central Command airpower statistics report published last week. For more clarity on just how many bombs were dropped in 2018, the second-highest year on record was 2011, when the US dropped 5,411 bombs during the height of the Operation Enduring Freedom – Afghanistan (2001 – 14), according to available government figures dating back to 2009.“Throughout the last year, the air component has supported multiple ongoing campaigns, deterred aggression, maintained security, and defended our networks,” said Lt. Gen. Joseph Guastella, Combined Forces Air Component Commander, in a news release.“We’ve orchestrated coalition airpower to destroy the [Islamic State] caliphate, support Iraq, and enabled significant progress in Afghanistan,” Guastella said. The “Combined Forces Air Component Command 2015-2018 Airpower Statistics” spreadsheet, found within the report, shows a tremendous increase in the “number of weapons released,” starting in the September 2018 through the end of the year. The unclassified data also shows aircraft operating under the Combined Forces Air Component Command flew 8,196 sorties in 2018, more than double the amount of amount of sorties in 2017. During the record year of Afghanistan bombardments, President Trump in December instructed the Pentagon to remove troops from Syria and dramatically reduce their numbers in Afghanistan. The increased bombing runs could be explained by the Trump administration trying to finish the job, which one of his campaign promises was to end the wars in the Middle East.

China’s treatment of Uighurs an ’embarrassment for humanity’: Turkey — Turkey on Saturday condemned China’s treatment of its Muslim ethnic Uighur people as “a great embarrassment for humanity,” adding to rights groups’ recent criticism over mass detentions of the Turkic-speaking minority. “The systematic assimilation policy of Chinese authorities towards Uighur Turks is a great embarrassment for humanity,” Turkish foreign ministry spokesman Hami Aksoy said in a statement. The northwest Xinjiang region of China, where most Uighurs live, has been under heavy police surveillance in recent years, after violent inter-ethnic tensions. Nearly one million Uighurs and other Turkic language-speaking minorities in China have reportedly been held in re-education camps, according to a UN panel of experts. Beijing says the “vocational education centres” help people steer clear of terrorism and allow them to be reintegrated into society. But critics say China is seeking to assimilate Xinjiang’s minority population and suppress religious and cultural practices that conflict with Communist ideology and the dominant Han culture. “It is no longer a secret that more than one million Uighur Turks, — who are exposed to arbitrary arrests — are subjected to torture and political brainwashing in concentration centres and prisons,” Aksoy said in the Turkish foreign ministry statement. “Uighurs who are not detained in the camps are also under great pressure,” he added. Turkey called on the international community and UN Secretary General Antonio Guterres “to take effective steps to end the human tragedy in Xinjiang region.”

Harsh Turkish Condemnation Of Xinjiang Cracks Muslim Wall Of Silence — In perhaps the most significant condemnation to date of China’s brutal crackdown on Turkic Muslims in its north-western province of Xinjiang, Turkey’s foreign ministry demanded this weekend that Chinese authorities respect human rights of the Uighurs and close what it termed “concentration camps” in which up to one million people are believed to be imprisoned. Calling the crackdown an “embarrassment to humanity,” Turkish Foreign Ministry spokesman Hami Aksoy said the death of detained Uighur poet and musician Abdurehim Heyit had prompted the ministry to issue its statement. Turkish media asserted that Mr. Heyit, who was serving an eight-year prison sentence, had been tortured to death. Mr. Aksoy said Turkey was calling on other countries and United Nations Secretary-General Antonio Guterres to take steps to end the “humanitarian tragedy” in Xinjiang.The Chinese embassy in Ankara rejected the statement as a “violation of the facts,” insisting that China was fighting seperatism, extremism and terrorism, not seeking to “eliminate” the Uighurs’ ethnic, religious or cultural identity.Mr. Aksoy’s statement contrastèd starkly with President Recep Tayyip Erdogan’s declaration six months earlier that China was Turkey’s economic partner of the future. At the time, Turkey had just secured a US$3.6 billion loan for its energy and telecommunications sector from the Industrial and Commercial Bank of China (ICBC).The Turkish statement constitutes the first major crack in the Muslim wall of silence that has enabled the Chinese crackdown, the most frontal assault on Islam in recent memory. The statement’s significance goes beyond developments in Xinjiang.

Is The Brother Of Trump’s Education Secretary Helping Build Concentration Camps For Chinese Muslims? – As China’s mass incarceration of members of its Uighur Muslim minority in its far-flung Xinjiang province has elicited condemnation from editorial boards of US newspapers to, more recently, the leader of one of the world’s largest Muslim nations, one of America’s most famous private security contractors – and, incidentally, brother to President Trump’s secretary of education, has found himself caught up in the burgeoning controversy.Five years after gaining the favor of the chairman of one of China’s largest conglomerates, Blackwater founder Erik Prince, who became chairman of Hong Kong-based Frontier Services Group (which, instead of offering private mercenary armies for hire, claims to provide training and support services) back in 2013, has been steadily stepping back from the firm he helped build as he cedes more and more control to forces in the mainland. And now, FSG has become caught up in a controversy surrounding China’s detention of more than one million Uighur’s in “re-education camps”, thanks to reports of a contract awarded to FSG to build a “training facility” in Xinjiang that critics feared would be used as a detention center.But according to a Bloomberg report published on Sunday, Prince denied the company’s involvement in the facility, and insisted that his decision to step down as chairman of FSG in December was a strategic move intended to help the company win contracts for mega-projects on the mainland. Now FSG has drawn international attention for a signing ceremony to build a training center in far western China, where the Chinese government has detained as many as a million Uighur Muslims in political camps. The statement, made in Chinese, was subsequently removed from the firm’s website. Prince distanced himself from the region in a statement to Bloomberg.“Erik Prince has no plans, desire nor interest to engage in any activity whatsoever either personally, through FSG or any other vehicle in Xinjiang Province now or at any time in the future,” an FSG spokesman added.Unlike Blackwater, which became infamous after killing 14 Iraqi civilians in a Baghdad square, FSG focuses on logistics and security, rather than paramilitary operations.Nonetheless, FSG’s controversial business with the Chinese government has thrust Prince back into the spotlight. Critics accuse FSG of potentially helping the Beijing government engage in mass repression of ethnic Uighurs and other Muslims in western Xinjiang and, in the process, advancing the geopolitical agenda of a strategic U.S. competitor.

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