Written by rjs, MarketWatch 666
Here are some more selected news articles about the oil and gas industry from the week ended 30 May 2020. Go here for Part 1.
This is a feature at Global Economic Intersection every Monday evening.
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New filing to defend Colorados oil & gas pollution rules – Environmental Defense Fund and Healthy Air & Water Colorado today came to the defense of rules adopted last year by the Air Quality Control Commission that strengthened regulations to reduce climate and air pollution from oil and gas industry operations across the state.Two separate lawsuits were filed in March (one by group of Western Slope counties and another by Weld County) seeking to roll back the new methane and ozone pollution regulations that were adopted unanimously by the AQCC in December of 2019. Thirty- five local government entities including counties, municipalities, and public health departments from across the state as well as thousands of ordinary Coloradans supported the rules. EDF and Healthy Air & Water Colorado filed motions (available here and here) to intervene in both cases in order to defend those rules.“This policy has been enormously successful and highly cost-effective, elevating Colorado to become a national leader in forward-thinking solutions. Rolling back clean air protections in the middle of the COVID crisis is a disservice to the state, and ultimately to the industry itself. It would compromise our public health at a time when we can least afford it, and amplify our climate problems.” “These commonsense clean air protections are entirely achievable and will make Colorado’s air healthier for everyone to breathe. Instead of attacking pollution safeguards during a public health crisis, we should seize every opportunity to clean our air and reduce emissions that can make Coloradans sicker. These rules will do just that – and benefit every single one of us”
Upcoming Rule Could Expand Oil, Gas Drilling in National Forests – Bloomberg Law -A proposed U.S. Forest Service rule stands to weaken a check on oil and gas development in national forests and possibly give the Interior Department more sway over land leasing decisions, legal analysts and conservationists say. The rulemaking, announced in 2018, aims to align the Forest Service’s leasing practices with those of the Bureau of Land Management to speed up fossil fuel development in national forests and grasslands nationwide, including oil and gas-rich forests in Ohio, Mississippi, and Colorado.The White House is reviewing a draft of the proposed rule, which will be published in June or July, Tracy Parker, Forest Service acting director of minerals and geology management, said in an interview.The BLM, part of the Interior Department, is in charge of oil and gas leasing on all federal lands, including those managed by the Forest Service – which is part of the Agriculture Department. Federal law prohibits BLM from leasing in national forests without Forest Service consent, Parker said. The Forest Service is remaking its oil and gas regulations at a time when it is weakening environmental checks and balances under the National Environmental Policy Act and joining with the BLM in prioritizing logging and fossil fuels development on federal public lands, said Hana Vizcarra, staff attorney at the Harvard Law School Environmental and Energy Law Program.The Forest Service, which last updated its oil and gas rules in 1990, wants to make quick oil and gas leasing decisions, “streamline” the approval process, and remove roadblocks to oil and gas development, according to the rulemaking announcement.The Forest Service and BLM have to deliver oil and gas to the public, and “there’s a need there that our regulations are consistent and are working well together,” Parker said.But any Trump administration push to expedite oil and gas development in national forests affects climate change and threatens drinking water in cities nationwide, said Randi Spivak, public lands director for the Center for Biological Diversity.Forest Service data shows drinking water for 180 million people in 68,000 communities nationwide originates in national forests, some of which are being drilled for oil and gas. “Fracking can pollute surface and groundwater,” Spivak said. “The Trump administration wants to put polluters over the interests of people, water, climate and wildlife.”
PUBLIC LANDS: Energy developers seek leases near iconic Utah park — Friday, May 22, 2020 —Oil and gas companies have proposed more than 150,000 acres of federal land for potential development in the canyons of eastern Utah, some as close as a mile and a half from the famous Arches National Park.
Trump administration slows on fracking plans after outcry for impacted Navajo Nation –The Trump administration has relented and will allow more time for opinions on plans to lease public land to oil and gas companies after outrage that the tribal communities who would be most affected were unable to join the scheduled “virtual” meetings and are being severely impacted by the coronavirus.Department of Interior (DOI) Secretary David Bernhardt agreed on Wednesday to extend the comment period on drilling plans for areas around Chaco Canyon Historical Park in New Mexico.Last week, the Bureau of Land Management (BLM), part of the DOI, held a series of Zoom meetings – despite the fact that many Native American communities in the area have limited access to internet. A Federal Communications Commission report found that less than half of households on tribal lands have access to fixed broadband service. The Navajo Nation, who are most impacted by the fracking plans, has now surpassed New York as the area with the highest number of coronavirus cases per capita in the US. Navajo Nation has a population of around 173,000 people across their lands in Arizona, Utah and New Mexico. The tribe has 4,153 confirmed cases and 144 deaths from Covid-19.The crisis prompted Doctors Without Borders – who typically work in war zones – to send a team to the Navajo Nation, the first time the organisation has done so in the US.The Chaco Canyon region is home to thousands of sacred, ancestral sites of indigenous peoples including the Hopi, Navajo and Zuni. It was named a UNESCO World Heritage site in 1987. In a statement to The Independent, Food & Water Action organizer Margaret Wadsworth said: “This extension is a victory for the communities fighting to protect Chaco and the people whose health and well-being are threatened by more fracking. The Bureau of Land Management should have made this decision in the first place. “The Navajo Nation has been devastated by the COVID-19 pandemic, and could not meaningfully participate in hearings where their voices would be essential. The real task for the BLM is to create a plan that puts the protection of our air, water, and health first, and not the interests of oil and gas corporations.”
Court rejects bid to revive cancelled US pipeline program (AP) – A federal appeals court on Thursday turned down the Trump administration’s request to revive a permit program for new oil and gas pipelines, an outcome that industry representatives said could delay more than 70 projects across the U.S. and cost companies up to $2 billion. The case originated with a challenge by environmentalists to the Keystone XL crude oil pipeline from the oil sands region of Canada to the U.S. It’s now affecting oil and gas pipeline proposals across the nation. The U.S. Army Corps of Engineers permitting program allows pipelines to be built across streams and wetlands with minimal review if they meet certain criteria. Environmental groups contend the program, known as Nationwide Permit 12, leaves companies unaccountable for damage done to water bodies during construction. “This is huge,” said Jared Margolis with the Center for Biological Diversity. “Hopefully this gives us a chance to put a pause on these major oil pipelines.” Army Corps spokesman Doug Garman said the agency was not commenting because the matter is still in litigation. Government attorneys, backed by 19 states and numerous industry groups, had argued the cancellation would delay construction of pipelines used to deliver fuel to power plants and other destinations. U.S. District Judge Brian Morris in Montana said in a pair of recent rulings in the Keystone case that Army Corps officials had failed to adequately consult with wildlife agencies before reauthorizing the permitting program in 2017. Its continued use could cause serious harm to protected species and critical wildlife habitat, he said. A two-judge panel of the 9th U.S. Circuit Court of Appeals denied an emergency request to block Morris’ ruling. They said in a one-page decision that the government, states and industry groups had not demonstrated sufficient harm to justify reviving the program while the case is still pending. The issue could take months to resolve barring further court intervention. In the absence of the nationwide permit, companies will have to apply for numerous individual construction permits on lines that sometimes cross hundreds of water bodies. That could cause delays of a year or more on more than 70 pending pipelines, increasing their combined costs by $2 billion, said Paul Afonso, chief legal officer for the American Petroleum Institute.
Trail of spills haunts Dakota Access developer -Federal pipeline inspectors didn’t like what they found when they looked at construction of the Permian Express pipeline. Unqualified welders were fusing the pipe together in central Texas, using unapproved methods. Regulators with the Pipeline and Hazardous Materials Safety Administration (PHMSA) were alarmed enough in May 2016 to seek a $1.3 million fine against the builder, a subsidiary of Energy Transfer Partners LP. Company attorneys, though, said the pipe was sound and the problems flagged by PHMSA were “insignificant deviations.” Four months later, the new pipeline leaked more than 33,000 gallons of oil through a hole next to a weld. It took crews 12 days to find the leak. It was one of 349 leaks, spills and other accidents since 2012 on pipelines operated by Energy Transfer and its subsidiaries. That record could signal trouble ahead for Energy Transfer’s most famous project, the Dakota Access pipeline. The company’s accident history has taken on renewed importance after U.S. District Judge James Boasberg in March ordered a broad review of the pipeline giant’s performance on safety and the environment. His order was part of long-running litigation with tribes who oppose Dakota Access. Boasberg might even shut down the line while the review is done. His decision on whether he’ll let it keep operating should come sometime after tomorrow, when briefs are due before the U.S. District Court for the District of Columbia (Energywire, March 26).Energy Transfer’s Sunoco subsidiary ranks eighth-worst for volume spilled per mile for the last three years on pipelines carrying hazardous liquids such as crude oil, according to PHMSA performance data. It’s had more accidents harming people or the environment than any other operator in the last five years – 38 – but it has one of the largest pipeline systems.” Water concerns are paramount for the Standing Rock Sioux Tribe, which has led opposition to Dakota Access. The tribe says a pipeline spill fouling its water supply would be an existential threat. The company says chances of a catastrophic spill are “infinitesimal.” Energy Transfer and its subsidiaries, though, have reported causing water contamination. Of 313 spills reported since 2012 on liquid lines, 35 caused water contamination and one was linked to tainted drinking water in a private well. On top of that, Dallas-based Energy Transfer and its subsidiaries are linked to 19 groundwater contamination sites in the most recent monitoring report from the Texas Groundwater Protection Committee. Thousands of demonstrators camped out to protest the pipeline as construction moved closer to Lake Oahe, a dammed section of the Missouri River in North Dakota a half-mile from the Standing Rock Indian Reservation that supplies water to the Standing Rock Sioux.In December 2016, with protests in the headlines, the Obama administration declined to grant a final permit for the pipeline to cross under the lake. President Trump, who has business and political ties to Warren, reversed course (Greenwire, Jan. 24, 2017). Four days after his inauguration, to which Warren had contributed $250,000, Trump issued an executive order accelerating Dakota Access (Energywire, Jan. 27, 2017).
Canadian gas exports to US likely to remain low well into June: Platts Analytics | S&P Global Platts – Below-normal exports of Canadian gas to the US Pacific Northwest and Midwest are likely to continue well into June as AECO basis continues to strengthen and incentivize storage injections in Alberta, according to S&P Global Platts Analytics. Exports to the US Pacific Northwest through Kingsgate have run under capacity this summer. While the market was previously expecting these flows to pick up by June, sentiments are now skewing toward this underutilization continuing throughout the month. Exports at Kingsgate have averaged 2.1 Bcf/d since May 5, according to Platts Analytics. Some of the weakness is due to maintenance. Kingsgate typically flows at capacity, which is closer to 2.3 Bcf/d or higher. The maintenance schedule for Gas Transmission Northwest, a subsidiary of TC Energy, reports there is 2.227 Bcf/d of capacity at Kingsgate. Elevated storage injections in Alberta are prompting Kingsgate to continue to move volumes well below capacity. High injection demand in Alberta has driven AECO basis to its highest value in years. AECO basis to Henry Hub has averaged minus 24 cents/MMBtu so far this summer after averaging 19 cents/MMBtu in May. This has collapsed the spread between AECO and the downstream PG&E Malin hub. AECO is trading at a 7 cent/MMBtu discount to Malin this summer compared to a $1.11/MMBtu discount last summer. June futures had AECO trailing Malin by about 20 cents/MMBtu or more up until the past week, but the June contract has moved to 11 cents/MMBtu behind Malin. This suggests weak exports to the Northwest could persist at least until late June, according to Platts Analytics.Exports from Western Canada into the US Midwest have averaged 3.1 Bcf/d summer to date, according to Platts Analytics. Exports to the Midwest were 3.9 Bcf/d since last summer until May 21. Earlier forecasts had exports averaging 3.4 Bcf/d this summer. The lower exports are also likely due to the injection strength so far on the NOVA Gas Transmission storage system this summer.
Alaska LNG Project receives federal regulatory approval (AP) – The Federal Energy Regulatory Commission issued a decision authorizing construction of the Alaska LNG Project, concluding an environmental impact statement process of more than three years. The commission announced Thursday it approved the state’s plans for the estimated $43 billion pipeline project that will move large volumes of North Slope liquefied natural gas, The Alaska Journal of Commerce reported. The Alaska Gasline Development Corporation submitted an application for the massive project in April 2017. “As anybody in the infrastructure development process knows, to go through the (National Environmental Policy Act) process in three years is an exceptionally fast time,” said Frank Richards, president of the state of Alaska public corporation. Oil producers Exxon Mobil Corp., ConocoPhillips Co. and BP PLC and the state spent more than $600 million on work to achieve the approval, with a state share of about $240 million. The project includes a gas treatment plant, an 807-mile (1,299-kilometer) buried pipeline from the North Slope to the Kenai Peninsula and a liquefaction plant at Nikiski capable of producing up to 20 million metric tons (22 million tons) of liquefied natural gas per year for export to Asian markets. The project could generate around 18,000 jobs during construction and about 1,000 new jobs during its 30-year operational life, according to estimates by the gasline development corporation and the Alaska Department of Labor and Workforce Development. The project would also provide natural gas to the Fairbanks area and other communities along the pipeline route that currently rely on fuel oil for heating and some power generation.
Iranian gasoline starts to arrive in fuel-starved Venezuela | S&P Global Platts – An Iranian tanker carrying gasoline has arrived over the weekend in Venezuelan territorial waters as the country deals with severe fuel shortages and US sanctions. The clean tanker Fortune — laden with 30,000 mt of gasoline — was north of the Venezuelan port of Puerto La Cruz as of Sunday morning, data from Platts trade flow tool cFlow showed. The Iranian Embassy said late Saturday in a tweet that one of its tankers arrived in Venezuelan waters escorted by the country’s navy. This was also confirmed in a tweet by Venezuela’s new oil minister Tareck El Aissami. The shipment comes amid rising political tensions between the US and the two OPEC members. US sanctions against both Iran and Venezuela have had a severe impact on their oil sectors. US officials have been watching reports of the Iranian gasoline shipments to Venezuela but have so far not taken any action to block them. Meanwhile, Iran has repeatedly warned of a “firm response” if the US takes action against its oil tankers. A senior US official said Sunday that Iran, Cuba, Russia and China were “engaged in malign activities and meddling around the world. The United States denounces their actions everywhere but especially in the Western Hemisphere, and we will not abide by their support of the illegitimate and tyrannical regime of Nicolas Maduro.” The US National Security Council called Venezuela’s imports of Iranian gasoline “an act of desperation.” “It will not stop Venezuela’s chronic fuel shortages or alleviate the suffering that Maduro has inflicted on the once prosperous people of his country,” the council said May 21 on Twitter.
Watch- Venezuela Sends Large Fighter Jet Escort For Tankers As Iran’s Flag Flies Over Caracas -To pretty much everyone’s surprise it appears the five Iranian gasoline tankers will be able to offload their fuel to Venezuela without incident, despite US threats to thwart what Washington sees as illicit sanctions-busting. It remains that the return trip could be a different story, however. Dramatic video emerged early this week showing the first couple of tankers’ arrivals within Venezuelan coastal waters, accompanied by what appeared a large Venezuelan military escort, as Maduro officials promised. First tanker to successfully arrive, the Fortune, docked by Monday, while all are now reported in Caribbean waters, with the second vessel soon to reportedly to dock as well, already safely within Venezuela’s Exclusive Economic Zone. Venezuelan military Sukhoi 30MK2 and F-16 aircrafts escort Iran’s second tanker on its journey to a Venezuelan port. pic.twitter.com/tfGFLNMzo9 – Camila (@camilateleSUR) May 26, 2020 According to multiple widely circulating videos, Maduro’s military deployed multiple warships to escort the tankers along with what appears at least a half-dozen Russian-produced fighter jets and F-16s. No doubt the Pentagon and Trump administration has monitored the images closely. There were growing fears of a ‘tanker war’ Caribbean-style given that last month Trump reportedly ordered a US naval build-up in the region against alleged Maduro government narcotrafficking. Though with plenty of oil, Venezuela has struggled to obtain gasoline for domestic consumption given its network of broken and derelict refineries, which its ally Iran has responded to by delivering 1.53 million barrels of gasoline and refining components. Venezuelan officials declared the fuel delivery as a “landmark in struggle for sovereignty” while unusually an Iranian flag appeared over downtown Caracas: Iranian flag flying in central Caracas today #Venezuela #Iran pic.twitter.com/4EwqfR90ql – CNW (@ConflictsW) May 25, 2020 Given that Maduro made good on his promise to send significant armed forces to provide security for the tankers, it’s likely the White House saw too many ‘unknowns’ if the US Navy were to attempt an intercept of the fuel.
Help us protect the headwaters of the Amazon from oil companies, elders say – (Reuters) – Indigenous leaders are calling for help to stop oil companies drilling in the headwaters of the Amazon river in the wake of the coronavirus pandemic, warning that encroaching on their homelands would destroy a bulwark against climate change. In video shared with Reuters on International Day for Biological Diversity on Friday, communities in Peru and Ecuador said pressure to exploit their territory would intensify as governments seek to reboot economies reeling from the virus. “We have taken care of the rainforest all our lives and now we invite everyone to share in our vision,” Domingo Peas, a leader from Ecuador’s Achuar nation, told Reuters Television. “We need to find a new route, post-oil, for economic development, for the well-being of all humanity, not just indigenous people.” The Achuar are among 20 indigenous nationalities representing almost 500,000 people living in a swathe of rainforest straddling the Peru-Ecuador border, often referred to as the Amazon Sacred Headwaters. Existing and proposed oil and gas blocks cover 280,000 square miles in the region, an area larger than Texas, according to a report published in December by international advocacy groups including Amazon Watch and Stand.earth. Oil is currently being extracted from 7% of these blocks. Ecuador and Peru have plans to exploit at least an additional 40%, including in forests teeming with wildlife, such as Ecuador’s Yasun’ National Park, the groups say.Home to jaguars, pink river dolphins, anacondas, howler monkeys and thousands of other species, the region, in many areas barely touched by the modern world, is seen as integral to the wider health of the Amazon, the world’s largest rainforest. Scientists fear that the ecosystem has now been cleared so extensively to grow soy and other export crops that it could flip from being a net absorber of carbon dioxide into a major emitter of the greenhouse gas. With massive fires last year underscoring rampant deforestation in Brazil, preserving pristine forest in remote parts of Peru and Ecuador offers a unique opportunity to nurture the resilience of the wider biome, indigenous leaders say. “Caring for the forests of the Amazon, is caring for your life and future generations,” said Rosa Cerda, vice president of the Confederation of Indigenous Nationalities of the Ecuadorian Amazon.Although communities in Ecuador and Peru have had some success in using lawsuits to block new exploration, past oil and mining projects suggest that carving new roads through trackless landscapes can trigger rapid deforestation. Leaks from pipelines pollute rivers used for drinking water, harming people and wildlife.
Trafigura takes a bet with North Sea oil on post-lockdown revival – (Reuters) – Commodities trader Trafigura has seized the moment and taken a rare dominant position in the North Sea crude market over the past two weeks as oil demand jumped, trading sources said. A combination of OPEC-led global production cuts, cheap freight rates and oil stuck in floating storage sent crude markets into overdrive starting at the end of April as fuel demand looked set to pick up with easing lockdowns. Differentials to benchmark dated Brent for grades around the world have shot up $6 a barrel in many cases, returning to trade at levels not seen since March before the peak lockdown period in April. In the last two weeks, Trafigura has snapped up 14 North Sea crude cargoes, including five Brent Blend and seven Forties and one each of Troll and Ekofisk. The cargoes are for delivery to Rotterdam or for loading between end-May and June 11. The volume of Forties, the largest crude underpinning the dated Brent benchmark, is equivalent to about half the June loading program. Trafigura declined to comment. Taking such large scale positions has not been seen for several years after they were made by other major traders like Glencore, Royal Dutch Shell and Vitol. The Geneva-based firm traded 6.1 million barrels per day of crude and refined products in 2019, making it the second biggest independent trader after Vitol. Unlike its rivals, Trafigura does not have a significant refining system. Its main interest is a stake in the 400,000 barrel-per-day Vadinar refinery in India. The record contango that arose due to the collapse in demand caused by the lockdowns had encouraged a vast build-up of oil in storage. Crude differentials have jumped so much that small quantities of floating storage have been released, though the market structure will have to flip into backwardation before the bulk is marketed.
Russian Gas Flow To Europe Drops As Poland Transit Deal Expires Authored by Tsvetana Paraskova via OilPrice.com, The flow of natural gas from Russia to Europe via the Yamal-Europe pipeline crossing Poland completely stopped on Tuesday after a two-and-a-half-decade-old transit deal between Russia and Poland expired and after the COVID-19 pandemic battered gas demand in Europe. The Russia-Poland transit deal for natural gas from the Yamal peninsula to Germany, via Belarus and Poland, expired on May 17. Poland has aligned its legislation with the energy regulations of the European Union (EU) and Polish operator Gaz-System began offering capacity bookings on the Polish section of the Yamal-Europe pipeline in accordance with EU regulations.Poland has been trying to wean itself off Russian energy supplies and has become one of the first eastern European countries to have booked U.S. liquefied natural gas (LNG) cargoes.With the end of the gas transit agreement with Russia, Poland is moving to a more liberalized natural gas market, but it expects that Russia will continue to send similar volumes of gas before the transit deal expired, a Polish official told Reuters last week.For July 1 through October 1, Poland’s Gaz-System has already sold 80 percent of the capacity on the pipeline made available as a result of termination of the transit contract, the company said on May 15. The remaining available capacity will be auctioned in June, July, and August at monthly auctions for monthly volumes.But the capacity bookings for the first days following the expiration of the gas transit showed little appetite for gas in Europe, according to analysts.Gaz-System told Reuters that the capacity booked for Sunday was much lower than for the previous days. So, “there is no need for the pumping stations to work for 24 hours a day at such low orders for the transit service,” the company said. Commenting on the drastic decline in gas flows from Russia via Poland, VTB Capital said in a note, as carried by Bloomberg: “Such a significant reduction in gas transit is primarily driven by weak demand in Europe amid warm winter, high levels of gas in underground storage and demand distortion due to Covid-19.”
India – Thick smoke from oil refinery triggers fresh panic – Triggering a fresh wave of panic among locals, dense plumes of smoke were seen coming from the Hindustan Petroleum Corporation Limited plant in Vishakhapatnam on Wednesday, May 21. According to reports, the smoke was diffused from the Crude Distillation Unit (CDU) at HPCL, which the company clarified was due to “technical snag” and “temperature issues”. The situation was swiftly brought under control by the people at the site, the operations were resumed as normal and no casualties have been reported. The recent incident at HPCL was viewed with heightened dread because of the recent styrene gas leak from an LG Polymers plant in the city that killed at least 12 people and had injured over 600. But, the HPCL PRO Kalidas told ANI that the situation is currently restrained. Kalidas said, “Due to a technical snag and temperature issues plant-3 restarted, thick smoke came out when the plant was started. Immediately a team of HPCL technical swung into action and took immediate measures to stop smoke, catalyst backup, situation under controlled and resumed operations.” While at HPCL plant the situation did not escalate into another disaster, in the latest development of the previous Vizag gas leak, the Supreme Court has denied interfering with the order issued by the National Green Tribunal (NGT) directing the LG Polymers to deposit Rs 50 crores for the damage caused by the harmful styrene gas. NGT had also set up a five-member committee under the leadership of former Andhra Pradesh High Court Judge B Seshasayana Reddy to visit the site of the accident and submit a report. Meanwhile, the work at the plant has been put on hold after the incident which killed at least a dozen of its workers.
Mobil Oil ask for five year extension on move to cleaner shipping fuel – An oil company is dragging its heels on a move to cleaner shipping fuels, as health officials call for “immediate” action. Mobil Oil New Zealand said it was not opposed to the move, in its submission to the Environment Select Committee in March, but holding off until late 2023 was”required”. In its submission, Mobil said the Government should consider waiting for “a minimum of five years” before signing Annex VI of Marpol, the international convention for the prevention of pollution from ships. The Ministry of Transport has said it plans to join Annex VI, which regulates air pollution from ships, by November 2021. New Zealand’s domestic fleet can use the cheaper, low-grade fuel until Annex VI regulations are enforced.But the Ministry of Health has called for immediate accession, saying the delay “to manage fuel price fluctuations” comes at the “expense of the health of New Zealanders”. More stringent Annex VI regulations took effect globally on January 1, when the sulphur limit of 3.5 per cent by mass for marine fuels dropped to 0.5 per cent. Mobil said New Zealand’s capability to accede would depend on the availability and cost of low sulphur fuel within the New Zealand market. This would require “significant changes” to both marine fuel supply infrastructure and the domestic marine vessel fleet, the submission said. “We expect that any reduction in marine fuel oil sulphur limits will result in significant costs both to our business and the business of our customers,” the submission said. New Zealand’s domestic fleet, including inter-island ferries, are not yet required to use the low sulphur fuel.Mobil said compliant fuels were likely to trade at a higher price than high-sulphur marine fuel oil, which would have cost repercussions for the domestic marine industry. “There may also be other, broader economic impacts for New Zealand.” Ministry of Transport environment, emissions and adaptation manager Glen-Marie Burns said before New Zealand could ratify the treaty, they must make changes to domestic legislation. “We estimated it would take approximately 18 months to align our domestic legislation …” They advised Cabinet that November 2021 was “the earliest timeframe” that they could accede. Annex VI obligations would come into effect three months later.
Global energy investment expected to tumble 20% in 2020 due to COVID crisis: IEA – (Reuters) – Global energy investment is expected to plunge by around 20% or $400 billion in 2020, its biggest fall on record, because of the new coronavirus outbreak, the International Energy Agency (IEA) said on Wednesday. The Paris-based IEA said this could have serious repercussions for energy security and the transition to clean energy as the global economy recovers from the pandemic. Governments are easing restrictions put in place to curb the spread of the virus after the confinement of around 3 billion people brought the global economy to a near standstill. At the start of the year, global energy investment was on track for a 2% increase in 2020, its biggest growth in six years, the IEA said. A total of $1.8 trillion was invested in the sector in 2019. “The historic plunge in global energy investment is deeply troubling for many reasons,” said Fatih Birol, the IEA’s Executive Director. “It means lost jobs and economic opportunities today, as well as lost energy supply that we might well need tomorrow once the economy recovers,” he said, adding that it could hurt the move towards cleaner energies. The IEA said revenues for governments and industry are set to plummet by over $1 trillion in 2020 due to the fall in energy demand and lower prices. Global energy companies have cut investments and shelved projects to shore up their finances due to the crisis. The IEA said higher debts after the crisis will pose lasting risks to investments. Investment in oil and gas is expected to fall by almost one-third. The IEA said if investment in oil stays at 2020 levels, it would reduce the level of global supply in 2025 by almost 9 million barrels a day, a clear risk of tighter markets if demand moves back to pre-crisis levels.
The stealth peak in world oil production – Monthly fluctuations will make it difficult to pinpoint a peak until long after it occurs. But, let’s note the difference between world output in November 2018 which was 84.5 million barrels per day (mbpd) versus December 2019 which was 83.2 mbpd when the world economy was supposedly still in high gear. (These numbers are for crude plus lease condensate which is the definition of oil on major oil exchanges.) Between these two dates monthly oil production was occasionally lower than December 2019, but never higher than November 2018. Does this mean oil production has reached an all-time peak? Recent developments tend to suggest an affirmative answer. With the dramatic drop in both oil consumption and oil prices since the onset of the pandemic, the oil industry is now flat on its back. Capital spending on new projects has been slashed drastically in the wake of these developments. Revenues are dropping as oil production is being shut in awaiting higher prices and as many firms file for bankruptcy. To believe that the world will soon return to and exceed its November 2018 oil consumption, one must believe in a quick resolution to the current downturn and the infections that led to it and also that confidence among consumers worldwide is still high. Germany re-opened many of its retail stores about a month ago, but the flood of consumers seeking to satisfy pent-up demand did not appear. It is important to note that this is happening in a country with a substantial social safety net in which the official unemployment rate is 5.8 percent as of April 30. In the United States, the world’s largest economy, the official unemployment rate stands at 14.7 percent. Is there any reason to believe that Americans will be more eager than Germans to flock to retail stores as lockdowns are lifted in the United States? Last week the Chinese government dropped the long-time practice of targeting economic growth saying it won’t announce a target for this year. Could it be that the Chinese economy won’t grow at all in 2020? Zero growth is not exactly an exhilarating target for the government to announce. If consumers worldwide are reluctant to spend, then the world economy will continue to slump. And, spending will likely not reach the pace it did in 2019 until there is solid job growth and a feeling of job security among many more people. Meanwhile, low oil prices will make it difficult for the world’s oil companies to justify spending on new supplies even as the natural production decline for existing wells takes its toll on production capacity.
Russia sees global oil market balancing in June-July – (Reuters) – Russia’s energy ministry sees global oil demand and supply balancing in the next two months, it said on its Twitter feed on Monday, citing the minister Alexander Novak. Leading oil producers are due to hold an online conference in around two weeks on how to further police joint efforts to steady a global oil market hammered by overproduction and a demand drop linked to the coronavirus pandemic. “For now, the surplus stands at around 7-12 million barrels per day. The energy ministry is counting on the market to balance out in June – July thanks to a consumption increase,” the ministry quoted Novak as saying at a state council meeting on energy. The minister also said supply has already dropped by 14 million to 15 million barrels per day thanks to the OPEC+ deal and output cuts in other countries. OPEC+ – a group made up of the Organization of the Petroleum Exporting Countries and other leading oil producers including Russia – agreed last month to cut their combined output by almost 10 million bpd, or roughly 10% of global production. They also expected other large oil producers, such as the United States, Canada and Norway, to make additional cuts. The RIA news agency, citing an unnamed source familiar with the minister’s speech at the state council meeting, reported that the energy ministry considers non-OPEC+ countries to have already cut output by 3.5 million to 4 million bpd. RIA also said Russian oil production volumes were near the country’s target of 8.5 million bpd for May and June. The energy ministry declined to comment on output volumes. Sources have told Reuters that OPEC and its allies want to maintain existing oil supply cuts beyond June, when the OPEC+ group is due to meet next.
Oil is on track for its best month ever after rebound, but traders say it’s ‘not out of the woods’ – In the last two months, oil has hit two very different first-of-its kind milestones. In April West Texas Intermediate, the U.S. oil benchmark, plunged below zero and into negative territory for the first time on record. Meanwhile May is shaping up to be WTI’s best month ever, going back to the contract’s inception in 1983 – an astonishing turnaround month-on-month. Improvements on both the demand and supply side of the equation have pushed prices higher. Data shows that people in the U.S. and China are starting to hit the road again, while producers around the globe have cut output at record rates in an effort to prop up prices. The contract has jumped more than 70% in May and posted four straight weeks of gains, but some traders warn that the near-term outlook for oil remains uncertain, and that prices could head back into the $20s after settling around $33 on Friday. Additionally, part of WTI’s blistering rally this month is due to the historic low from which it bounced. Prices are still about 50% below January’s high of $65.65, significantly cutting into profits for energy companies, which are often saddled with debt. A number of U.S. energy companies have already filed for bankruptcy protection, including Whiting Petroleum, which was once a large player in the Bakken region. If prices stay at depressed levels, there could be more casualties. Still, the market has shown signs of rebalancing itself, and analysts say that if demand continues to improve and producers keep wells shut-in, the worst could be over for oil. “The oil market rebalancing continues to gather speed, driven by both supply and demand improvements … These improvements are taking out the risk of a sharp pull-back in prices although we re-iterate our view that the rebalancing will take time,” Goldman Sachs said in a recent note to clients. “We believe that the next stage of the oil market rebalancing will be one of range-bound spot prices with the most notable shifts being a decline in implied volatility as well as a continued flattening of the forward curve without long-dated prices rising yet,” the firm added. While demand for petroleum products fell off a cliff in April, the outlook is improving as economies around the world begin to reopen. Raymond James, which has been tracking shelter-in-place orders, said that of the 3.9 billion people worldwide who have been under lockdown at some point since January, 3.7 billion, or 95%, have experienced some sort of reopening. Chinese demand for oil in April rebounded to 89% of what it was a year earlier, according to IHS Markit, and the firm expects May demand to be 92% of 2019′s level. During February’s low, demand in China, the world’s largest oil importer, fell to just 40% compared to a year earlier. In the U.S., all 50 states have begun the reopening process to varying degrees, which means people are once again driving. Data from the Energy Information Administration has shown an uptick in gasoline demand, although there’s still a way to go before the pre-coronavirus levels are reached.
Oil prices climb as faith in supply cuts grows – Oil prices rose on Tuesday, supported by growing confidence that producers are following through on commitments to cut supplies and as fuel demand picks up as coronavirus lockdowns ease. Brent crude futures were up 29 cents, or 0.8%, at $35.82 per barrel. West Texas Intermediate crude futures gained 2.3%, or 74 cents, to trade at $3402. There was no WTI settlement on Monday because of the U.S. Memorial Day holiday. “The current recovery in oil prices has primarily been driven by supply considerations. The world’s swing producers, the OPEC+ group, is more than living up to expectations to adhere to the 9.7 million barrels per day (bpd), or perhaps even bigger, self-imposed and co-ordinated output restraint,” said oil broker PVM’s Tamas Varga. “As lockdown restrictions are being eased, the demand side of the equation also provides support.” The market was buoyed by Russia saying that its oil output had dropped close to its target of 8.5 million bpd for May and June under the supply deal agreed by major producers (OPEC+). Russia’s energy ministry on Monday quoted minister Alexander Novak as saying that a rise in fuel demand should help to cut a global surplus of about 7 million to 12 million bpd by June or July. OPEC+ countries are due to meet again in early June to discuss maintaining their supply cuts to shore up prices, which are still down about 45% since the start of the year. The world’s major producers, including Saudi Arabia and Russia, agreed in April to cut their collective output by nearly 10 million bpd for May and June. Data from energy services business Baker Hughes, meanwhile, showed that the U.S. rig count hit a record low of 318 in the week to May 22, also indicating lower future output.
OPEC daily basket price increases to 29.75 USD per barrel (Xinhua) — The Organization of the Petroleum Exporting Countries (OPEC) daily basket price increased to 29.75 U.S. dollars a barrel on Tuesday, compared with 28.06 dollars last Friday, according to OPEC Secretariat calculations released on Wednesday. Also known as the OPEC reference basket of crude oil, the OPEC basket, a weighted average of oil prices from different OPEC members around the world, is used as an important benchmark for crude oil prices.
Russian minister, oil majors discuss output cut extension: sources – (Reuters) – Russian Energy Minister Alexander Novak met with domestic major oil companies on Tuesday to discuss the implementation of global oil production curbs and the possible extension of the current level of cuts beyond June, sources familiar with the plans told Reuters. The meeting is a further sign that Moscow is committed to supporting any future joint steps to stabilise oil markets for as long as may be required, after slashing its production to close to its quota under the global deal. A source, familiar with the meetings detail, said no decision was made. “Novak has just asked for opinions, whether to extend (the deal) or not. The opinions were divided almost equally,” the source said. He added that it was decided to analyse the market, wait for demand to improve when the planes, grounded due to the coronavirus-combat measures, start to fly again. Kommersant daily, citing three sources in oil industry, said Russia may keep the current level of cuts until September. The Kremlin said on Tuesday that the OPEC+ deal participants will look at how the situation on global oil markets develops before taking any policy decisions if additional efforts were needed to support the energy market and address overproduction. Kremlin spokesman Dmitry Peskov also said the deal on global oil production cuts agreed last month had definitely proved effective and helped ward off negative scenarios on oil markets.
Oil prices climb, bolstered by ongoing supply curbs – (Reuters) – Oil prices rose on Tuesday, supported by signs that producers are following through on commitments to cut supplies and as fuel demand picks up with coronavirus restrictions easing. Brent crude LCOc1 futures gained 64 cents, or 1.8%, to settle at $36.17 a barrel. U.S. West Texas Intermediate (WTI) crude futures rose $1.10, or 3.3%, to settle at $34.35 a barrel. The Organization of the Petroleum Exporting Countries and producers including Russia, a group known as OPEC+, agreed last month to cut their combined output by almost 10 million barrels per day in May-June to support prices at a time when coronavirus pandemic quarantines have slashed fuel demand. Russian Energy Minister Alexander Novak was due to meet oil producers on Tuesday to discuss the possible extension of current cuts beyond June, sources familiar with the plans told Reuters. Some other nations including major Gulf producers Saudi Arabia, United Arab Emirates and Kuwait have already pledged to go beyond their commitments. The RIA news agency said Russian oil production volumes were near the country’s target of 8.5 million bpd for May and June. “All the talk about balance in a couple of months seems to be supportive,” said Phil Flynn, senior analyst at Price Futures Group. On Monday, Russia’s energy ministry quoted Novak as saying that a rise in fuel demand should help cut a global surplus of about 7 million to 12 million bpd by June or July. “Global crude supply in June will likely be down 12 million bpd from March levels,” said Bjornar Tonhaugen, Rystad Energy’s head of oil markets. OPEC+ countries are due to meet again in early June to discuss maintaining their supply cuts to shore up prices, which are still down about 45% since the start of the year.
Oil drops more than 4% in second negative session in three on U.S.-China tensions Oil futures tumbled on Wednesday after U.S. President Donald Trump said he was working on a strong response to China’s proposed security law in Hong Kong and as some traders doubted Russia’s commitment to deep production cuts. Russian President Vladimir Putin and Saudi Crown Prince Mohammed bin Salman agreed during a telephone call on further “close coordination” on oil output restrictions, the Kremlin said. Still, many felt Russia was sending mixed signals ahead of the meeting in less than two weeks between the Organization of the Petroleum Exporting Countries and its allies. The group known as OPEC+ is cutting output by nearly 10 million barrels per day (bpd) in May and June. “It sounds great on paper, but the market is holding back excitement until we get a few more details about whether there will be cuts, how many barrels will be cut, and the length of the cuts,” said Phil Flynn, senior analyst at Price Futures Group. Brent crude fell $1.43, or 3.95%, to settle at $34.74 a barrel, while West Texas Intermediate crude settled $1.54, or 4.48%, lower at $32.81 per barrel. Meanwhile, tensions between the U.S. and China continued to rise after China announced plans to impose new national security legislation on Hong Kong, prompting protests in the street. U.S. Secretary of State Mike Pompeo said he had certified that Hong Kong no longer warrants special treatment under U.S. law as it did when it was under British rule, a blow to its status as a major financial hub. Gloomy forecasts over the economic impact of the pandemic also weighed on crude. Economists estimate another 2 million Americans filed initial applications for unemployment insurance last week. The U.S. Labor Department will report on Thursday. The euro zone economy will probably shrink between 8% and 12% this year, European Central Bank President Christine Lagarde said, warning a the outcome would be between medium and severe. In another sign of weak fuel demand, Japan’s refineries operated at only 56.1% of capacity last week, the lowest since at least 2005.
Oil prices take a 4% drop over tensions with China and worries about Russia – After climbing slowly for the past week, U.S. oil futures on Wednesday took a 4% drop and analysts blamed it on growing tensions between the U.S. and China. July West Texas Intermediate oil fell $1.54 or 4.5% and settled at $32.81 a barrel in trading on the New York Mercantile Exchange. Front-month July Brent crude lost $1.43 or about 4% at $34.74 a barrel on ICE Futures Europe. Some blamed the fall on reports that Russia favored easing up on supply cuts as planned in July. Market Watch reported that Moscow wants to start easing the cuts in keeping with the terms of the output curbs agreed to by the Organization of the Petroleum Exporting Countries and its allies earlier this year. “The July target is in line with the current OPEC+ deal, which has a record-breaking combined production cut of 9.7 [million barrels per day] among participants,” said Robbie Fraser, senior commodity analyst at Schneider Electric. “However, some in the group are likely to voice support for extending cuts beyond July – particularly if the market remains clearly oversupplied amid lackluster summer driving demand,” he said in a daily note. Traders also kept an eye on rising tensions in Hong Kong as China looks to impose new security laws that would end the country’s autonomy, and worsening relations between the U.S. and China. Secretary of State Mike Pompeo announced Wednesday in a tweet that he told Congress that Hong Kong is no longer autonomous from China. The announcement could pave the way for the Trump administration revoke its special treatment – it is exempt from tariffs levied on Chinese imports. “Traders are concerned that expected recovery in [energy] demand may be delayed if U.S. – China – Hong Kong political tension grows, and hence is weighing in on prices,” Manish Raj, chief financial officer at Velandera Energy, told MarketWatch. “This timing impact is seen in [the] futures curve, whereby near months have declined while outer month contracts are holding steady.”
Oil drops as surprise U.S. stock build douses demand recovery hopes – Oil prices slid for a second consecutive session on Thursday as U.S. industry data showed a steep and surprising build-up in crude stockpiles, dampening hopes of a smooth demand recovery as the world begins to ease its way out of coronavirus lockdowns. The decline extended losses from Wednesday on uncertainty about Russia’s commitment to deep oil production cuts in the lead-up to a June 9 meeting of the Organization of the Petroleum Exporting Countries and its allies, dubbed OPEC+. U.S. West Texas Intermediate (WTI) crude futures were down 4.4%, or $1.44 at $31.37 a barrel at 0402 GMT after slipping as much as 5% to a low of $31.14 earlier in the session. Brent crude futures dropped 3.2%, or $1.10 to $33.64 per barrel. “A surprise to consensus API (American Petroleum Institute)inventory build (data) and fear of Russia turning up production weighs on oil prices,” said Stephen Innes, chief global markets strategist at AxiCorp. “As is often the case during a run-up up to an OPEC+ meeting, the focus is squarely on Russia’s commitment and understandably so as historically they have been the laggard within the OPEC+.” Data from U.S. industry group API showed crude stocks rose by 8.7 million barrels in the week to May 22, compared with analysts’ expectations for a draw of 1.9 million barrels. Gasoline stocks rose by 1.1 million barrels, more than 10 times the build analysts had expected, and stocks of diesel and heating oil rose by 6.9 million barrels, nearly four times as much as anticipated. “It just indicates that demand recovery is progressing but it’s not strong enough yet to be really self-sustaining,” National Australia Bank’s head of commodity research, Lachlan Shaw said. The market will be looking to see if data from the U.S. Energy Information Administration later on Thursday matches API. With WTI holding above $30, OPEC+ will be closely watching to see whether U.S. oil shale oil producers, who have breakeven prices in the high $20 and low $30 dollar range, step up production.
WTI Slides After Official Data Confirms Big Crude Build – Oil prices rebounded (after a phone call between Saudi Arabia’s Crown Prince and Russia on Wednesday was described by The Kremline as positive) from their ugly reaction to a surprising (and large) crude inventory build reported by API but remained lower ahead of the DOE data on the heels of investor anxiety over Russia’s willingness to extend production cuts.“Crude oil looks like it has reached a consolidation stage,” said Ole Hansen, head of commodities strategy at Saxo Bank.“The global economic outlook and risk of new pockets of Covid-19 outbreaks will dictate the speed of demand recovery.”Things could escalate quickly if API’s surge in stocks is echoed by the EIA. Crude inventories have recently posted declines, something that was considered a sign of demand recovery in the oil market and extrapolated to match a rebound in the economy. Today’s EIA data is crucial in determining whether that rising crude demand continues or if it was just a fluke. DOE:
- Crude +7.928mm (-2.32mm exp)
- Cushing -3.395mm
- Gasoline -724k (-675k exp)
- Distillates +5.495mm (+2.55mm exp)
Official DOE data confirmed API’s surprise surge in crude stocks with a 7.93mm build (and distillates saw their 8th weekly build in a row)… As rig counts collapse near series lows, US crude production continues to plunge…
Oil rises as higher U.S. refinery rates offsets surprise crude build – (Reuters) – Oil futures rose about 2% on Thursday as a steady improvement in U.S. refining activity offset a surprise build in crude and diesel inventories and on worries that China’s new Hong Kong security law could result in trade sanctions. Brent for July rose 55 cents, or 1.6%, to settle at $35.29 a barrel on its second to last day as the front-month. U.S. West Texas Intermediate (WTI) crude rose 90 cents, or 2.7%, to settle at $33.71. That move in U.S. crude narrowed Brent’s premium over WTI to its lowest since mid-April. U.S. crude inventories rose 7.9 million barrels last week, exceeding expectations, due to a big increase in imports from Saudi Arabia, the Energy Information Administration (EIA) said. The EIA’s report, however, also showed refiners boosted output and gasoline stockpiles fell unexpectedly, while crude inventories at the U.S. Cushing storage hub in Oklahoma fell 3.4 million barrels. [EIA/S] The market initially fell due to the big increase in crude stocks, but switched into positive territory when it saw the drawdown at the Cushing delivery point for WTI, said Bob Yawger, director of energy futures at Mizuho in New York. Oil prices have rebounded in recent weeks on anticipation of improved demand after the coronavirus pandemic sapped worldwide consumption by roughly 30%. Overall investment is dropping and U.S. production cuts are balancing out the supply glut, but demand still has not bounced back entirely. Markets are also concerned Washington could slap trade sanctions on China due to Beijing’s move to impose a new security law on Hong Kong. Uncertainty about Russia’s commitment to continuing deep output cuts kept the rally in check. Saudi Arabia and other OPEC producers are considering an extension of record output cuts until the end of 2020 but have yet to win support from Russia, according to OPEC+ and Russian industry sources.
Oil prices fall as U.S. fuel demand remains weak — Oil prices edged lower on Friday after U.S. inventory data showed lackluster fuel demand in the world’s largest oil consumer while worsening U.S.-China tensions weighed on global financial markets. Brent crude slipped 25 cents, or 0.7%, to $35.04 a barrel by 0334 GMT and U.S. West Texas Intermediate crude was at $33.18 a barrel, down 53 cents, or 1.6%. Still, both contracts are set for a fifth weekly gain, helped by production cuts and optimism about demand recovery in other countries. “The rally needs a breather. It has been four weeks of gains and the market needs to buy time for downstream prices to catch up,” OCBC economist Howie Lee said. “Beyond the short term, the bullish momentum still looks rather intact.” Thursday’s data from the Energy Information Administration showed that U.S.crude oil and distillate inventories rose sharply last week. Fuel demand remained slack even as various states lifted travel restrictions they had imposed to curb the coronavirus pandemic, analysts said. “Memorial Day weekend did not bring U.S. motorists out in droves like many market bulls were hoping,” RBC Capital Markets analyst Christopher Louney said in a note. Looking ahead, traders will be focusing on the outcome of talks on output cuts between members of OPEC+, the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, in the second week of June. Saudi Arabia and some OPEC members are considering extending record production cuts of 9.7 million barrels per day beyond June, but have yet to win support from Russia.
U.S. oil futures up 88% in May, biggest monthly rise on record – U.S. oil futures reversed course to finish higher Friday, getting a boost as traders eyed developments in the U.S. relationship with China, and as another drop in U.S. oil rigs suggested further domestic production declines. Oil prices soared after a spokesman for President Donald Trump said that despite rising tensions, Trump was not pulling out of the U.S.-China phase one trade deal,” said Phil Flynn, senior market analyst at The Price Futures Group, telling MarketWatch that the news “caused oil traders to cover.” News on Trump’s press conference came out after oil futures settled. Trump said the U.S. would take steps to sanction Chinese officials over Beijing’s plans to impose new security laws that could undercut Hong Kong’s autonomy. He did not, however, discuss reneging on the U.S. trade deal with China. West Texas Intermediate crude for July delivery rose $1.78, or 5.3%, to settle at $35.49 a barrel on the New York Mercantile Exchange. Front-month U.S. benchmark WTI futures rose 88.4% for May, for its best month on record, based on data going back to 1983, according to Dow Jones Market Data Global benchmark Brent saw its July contract tacked on 4 cents, or 0.1%, to end at $35.33 a barrel on ICE Futures Europe Friday. It expired at the end of the session. Front-month prices rose 39.8% for the month, which was the strongest monthly rise since March 1999. The new front-month August contract settled at $37.84, up $1.81, or 5%, Friday. The move higher for U.S. prices started right after the Baker Hughes report on U.S. drilling rigs, and “prices began to gain momentum as futures hit new session highs, broke above Thursday’s highs, and ultimately traded to new highs for the week into the primary session close,” said Tyler Richey, co-editor at Sevens Report Research. Baker Hughes BKR, +0.73% on Friday reported that the number of active U.S. rigs drilling for oil declined by 15 to 222 this week. The total active U.S. rig count, meanwhile, also fell by 17 to 301, according to Baker Hughes.
Oil jumps nearly 90% in May to $35, registering best month on record – Oil jumped more than 5% on Friday, the last trading day of the month, capping off its best month in history as an uptick in demand as well as record supply cuts pushed prices higher. West Texas Intermediate, the U.S. oil benchmark, finished May with a gain of 88%. To put the number in context, WTI’s second best month on record was Sept. 1990, when it gained 44.6%. But experts are quick to note that the surge in prices follows the steepest downturn on record, and that oil still has a ways to go before it regains old highs. In April, with billions of people around the world under some sort of lockdown in an effort to slow the spread of Covid-19, demand for oil fell off a cliff, which sent prices plunging. WTI dropped below zero and into negative territory for the first time on record. Part of the move was due to the contract’s imminent expiration, but it also reflected the very real fact that no one wanted to take the physical delivery of crude while demand was expected to remain depressed. Since then, things have started to improve. Data released by the U.S. Energy Information Administration on Thursday showed that for the week ending May 22 gasoline demand rose to 7.3 million barrels per day from the prior week. This marked an improvement, although was still below 2019’s number ahead of Memorial Day weekend, which was 9.4 million bpd. Storage in Cushing, Oklahoma – the main delivery point for WTI – decreased by 3.4 million barrels, and refinery utilization also rose to 71% from 69%. Overall inventory rose by 7.928 million barrels, compared with the 1.3 million barrel draw analysts had been expecting, according to FactSet. On the other side of the equation, producers have scaled back output at a record pace as plunging prices made operation uneconomical. OPEC and its oil-producing allies agreed to the steepest production cut in history during an extraordinary, multi-day meeting in April. Then, earlier in May, Saudi Arabia said that, beginning June 1, it would voluntarily cut an additional 1 million bpd, on top of its portion of the cuts agreed to by OPEC+. Kuwait and UAE were among the other cartel members that followed suit and said they would also exercise additional cuts. In the U.S., production has dropped to 11.4 million bpd, 1.9 million bpd below March’s record high of 13.1 million bpd. Norway and Canada are among the other nations that have scaled back output. The OPEC+ production cuts as they stand now will begin to taper on July 1, and the group is expected to decide on whether or not to extend the deeper cuts at its June 9-10 meeting. On Friday the contract gained $1.78, or 5.28%, to settle at $35.49 per barrel. Earlier in the session it traded as low as $32.36 per barrel as geopolitical tensions weighed on sentiment. International benchmark Brent crude gained 4 cents, or 0.11%, to settle at $35.33 per barrel. For the month Brent gained 39.81%, for its best month since 1999. .
Imprisoned Saudi Princess Basmah hoped she would be granted mercy in Ramadan, but her cousin Mohammed bin Salman has turned a blind eye — Fourteen months after she was abducted, jailed, and accused of trying to flee Saudi Arabia, Princess Basmah bint Saud bin Abdulaziz al-Saud hoped she would be freed this Ramadan, but her pleas have fallen on deaf ears.Every year the king, Salman bin Abdulaziz Al Saud, issues pardons for hundreds of prisoners as a gesture of goodwill during the Islamic holy month, which this year ran from April 23 to May 23.On April 16, the princess broke her 13-month silence to reveal on Twitter that she was in jail, and begged her uncle King Salman and cousin Crown Prince Mohammed bin Salman for freedom. “I am beseeching my uncle … and my cousin … to review my case, and to release me as I have done no wrong. My current health status is VERY critical,” she said in a series of tweets.Those tweets were deleted shortly afterward, and all her communications from prison were cut. Her office reposted the tweets on April 27.Basmah and her 28-year-old daughter, Suhoud al-Sharif, wereabducted at their apartment building in Jeddah on March 1, 2019, and detained shortly after.They were later taken to the high-security al-Ha’ir prison, where they have remained since. Basmah was initially charged with using a fake passport and suspected of trying to flee the country. The charge was dropped in May 2019, but she remains in prison.
Gulf States force India and other South Asian states to repatriate impoverished migrant workers – Bowing to pressure from the sheikhs and oligarchs who rule the Arabian Peninsula’s Gulf States, India and other South Asian countries are being forced to repatriate millions of impoverished migrant workers whose labour is no longer needed. All six Gulf Cooperation Council (GCC) members – Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates (UAE) – have moved to dramatically slash expenditures and “overhead” after the COVID-19 pandemic triggered global economic distress, including a Saudi-initiated oil-price war. The consequent collapse in oil prices has left gaping holes in their state budgets, even as tourism and other sources of revenue dry up. The result has been the mass layoff of millions of migrant workers. Those fortunate enough not to have lost their jobs have often been forced to accept huge wage cuts. A migrant worker in Saudi Arabia working as a chef for one of the country’s many princes told the WSWS that his wage was cut in half after the COVID-19 crisis erupted. Prior to the outbreak of the pandemic there were 23 million or more migrant workers in the Gulf States, from South Asia, the Philippines, Egypt, Palestine, elsewhere in the Middle East, and East Africa. Constituting more than half of the Gulf States’ total workforce, the migrant workers have long filled construction and numerous other menial and low-paid jobs. Millions of women serve as domestics and health care workers. The migrant workers are ensnared in the kafala system, which ties a worker’s employment contract to their right to be in the country. This has created a super-exploited workforce comprised of people who lack any citizenship rights in countries ruled by absolute monarchs, and who are under constant threaten of being ordered to go home should they be fired or laid off or when their contract expires. However, the COVID-19 pandemic, the imposition of international travel bans and state-lockdowns, and the sudden loss of their employment mean that the newly jobless migrant workers facing expulsion have lacked the means or right to return home. As the Gulf States oligarchs have refused to provide the “disposable” migrant workers with financial support, they have become increasingly desperate. This has made the ruling elite, ever fearful of social opposition, all the more determined to expel them. Scapegoating the migrant workers also serves as a mean of deflecting mounting discontent among the officially-recognized “native” population of the Gulf States.
Historic Opportunity – Israel Reveals Date Of Planned West Bank Annexation –The head of the Governmental Coalition in Israel, Mickey Zohar, revealed that the measures to legislate the process of imposing Israeli sovereignty on all Jewish residential communities in the West Bank will begin in early July. The Likud MP said in a radio interview on Tuesday, that the government will approve the draft law on this, and then it will be submitted to the Knesset for approval, expecting that these measures will continue for only a few weeks. Representative Zohar announced that the concerned authorities are currently working on mapping in order to reach understandings with the American administration about the areas that Israel will impose their sovereignty over in the West Bank.In response to a question about whether the White House would insist on the establishment of a Palestinian state in exchange for the annexation, the head of the government coalition said: “He opposes this demand, expressing his conviction that Israel will not give up the annexation in any case.” He stressed that the government would also not agree to freezing construction work in isolated residential compounds in the occupied West Bank, but was ready to freeze construction in places not close to those that would be imposed on Israeli sovereignty.Netanyahu: “we don’t intend to change” July deadline for annexation of West Bank territory. ‘We have historic opportunity, which hasn’t existed since 1948, to apply sovereignty…in Judea & Samaria””It is a big opportunity & we will not let it pass by”https://t.co/RENO36aNer – Ben White (@benabyad) May 26, 2020Haaretz presents Monday remarks of PM Netanyahu as follows: Israel will not miss a “historic opportunity” to extend its sovereignty to parts of the West Bank, Prime Minister Benjamin Netanyahu said on Monday, calling the move one of his new government’s top tasks. Netanyahu has pledged to put Jewish settlements and the Jordan Valley in the West Bank under Israeli sovereignty. He has set July 1 as a starting date for cabinet discussions on the issue, which has also raised alarm within the European Union.
Netanyahu becomes the first Israeli prime minister to stand trial over corruption and fraud cases — The trial against Israeli Prime Minister Benjamin Netanyahu began in Jerusalem on Sunday, marking the first time in Israel’s history that a sitting prime minister has ever faced trial. The 70-year-old began his fifth term as prime minister this month as part of a power-sharing agreement with his rival Benny Gantz after a series of back-to-back elections failed to result in a coalition government over the past year. Netanyahu has refused to step down from power despite growing calls for his resignation and dwindling support from the Israeli public over his legal woes. Last year, Netanyahu was indicted on bribery, fraud, and breach of trust charges as part of three separate corruption cases:”Case 1,000″ refers to accusations that Netanyahu received expensive gifts from wealthy business magnates in exchange for favors. “Case 2,000” refers to allegations that Netanyahu promoted a particular newspaper in exchange for more positive coverage. And “Case 4,000” alleges that Netanyahu granted regulatory benefits to a major Israeli telecommunications company in exchange for favorable media coverage.The maximum sentence for bribery is 10 years in prison, according to Haaretz. Netanyahu is the first Israeli prime minister to be indicted while in office. Previous leaders who faced similar situations resigned before charges were even handed down.
Trump Slams Libya “Foreign Interference” & Urges “Rapid De-escalation” In Erdogan Call – After weeks of military gains by Libya’s Government of National Accord (GNA), President Trump has called for a deescalation during his phone call with Turkey’s President Erdogan. Turkey is the GNA’s only foreign ally.This is bound to once again raise questions about the US position. Nominally the US is backing the GNA, but at times Trump has expressed support for their enemy, the Libyan National Army (LNA). The deescalation would be seen as bailing out the LNA from recent losses. “President Trump reiterated concern over worsening foreign interference in Libya and the need for rapid de-escalation,” White House spokesman Judd Deere said in a statement.The LNA has a lot of foreign allies, from France and Russia to virtually the whole list of Gulf Arab states. LNA leader Khalifa Hafter, was a CIA asset in the past, and the US has criticized Russia for being too close with him, despite their own long history of backing him. Reuters reports:As the LNA has promised to respond with a massive air campaign, diplomats have warned of the risk of a new round of escalation with the warring sides’ external backers pouring in new weaponry.Turkey “will not bow to threats by Haftar or anyone else,” Turkey’s presidential spokesman Ibrahim Kalin said separately in an interview on NTV.LNA General Commander Field Marshal Khalifa Haftar: Every Turkish solider, mercenary sent by Erdogan to Libya and every traitor who has allowed the occupier to return is a target of our armed forces. Do not show them any mercy. #Libya #LibyaReview pic.twitter.com/ywJNeGfvkx – Libya Review (@LibyaReview) May 23, 2020It’s not clear where Turkey is going with this, as they mostly want maritime rights and a military base.Those are likely secured already, but the GNA probably feels very little need to step down in the face of recent gains.
Chinese provincial official urges shut down of CNPCs Dalian refinery (Reuters) – A vice governor in China’s northeastern Liaoning province appealed to the central government to shut down Dalian Petrochemical Corp, at the annual national parliament conference (NPC), according to an NPC report issued on Monday. A subsidiary of China National Petroleum Corp (CNPC), the 410,000 barrels-per-day (bpd) plant is CNPC’s biggest refinery and one of the oldest in the country. It is also China’s largest processor of Russia’s East Siberia Pacific Ocean blend crude transferred via pipeline. The refinery has had several severe accidents in the past decade, including an oil spill in 2010, an explosion in 2013 and a fire in 2017, stoking safety and pollution concerns as it is located less than 10 kilometres from the port city of Dalian. “I sincerely appealed (to) the industrial ministry and state-owned assets supervision and administration commission to coordinate with CNPC to shut down Dalian refinery as soon as possible,” said Chen Xiangqun, a vice governor at Liaoning, according to the NPC report. Beijing had vowed in 2017, soon after the fire at Dalian refinery, to relocate all small- and medium-sized chemical plants to planned chemical parks and out of urban areas by 2020, and move the larger plants by 2025. According to the petrochemical industry layout, CNPC’s Dalian refinery was due to move to Changxing island, where the 400,000 bpd Hengli Petrochemical is located. But there has been no update on its relocation since the layout was jointly issued by the state planner and industrial ministry in 2018.
China’s hermit investors fill doubled oil storage with crude bet – (Reuters) – Chinese financial investors betting on a rebound in oil prices are filling commercial storage tanks held by the Shanghai futures exchange just as fast as the exchange can find them. Despite a more than doubling of storage capacity over the past six weeks to 57 million barrels, with tanks sourced from state and private refiners, nearly all existing storage is set to be filled by end-June, two industry sources with knowledge of deliveries said. The flood of purchases has come from companies little-known to the oil industry which have been bidding up Shanghai futures, China’s only oil futures contract, since early April when global oil prices slumped as COVID-19 hammered demand. “We call them ‘hermit’ investors,” said a state oil official whose firm recently delivered cargoes into the contract. “They are hedge funds backed by rich individuals, trading affiliates of brokerages.” The buying pushed Shanghai crude futures prices above global benchmark Brent, encouraging state companies like Sinopec, PetroChina and Zhenhua Oil to deliver Middle East crude into the contract, the sources said. Between late April and the end of June, some 50 million barrels of oil valued at roughly $1.8 billion – equivalent to five days of China’s total purchases – are expected to be pumped into a dozen delivery points managed by International Energy Exchange (INE), the sources said. Most of the oil is Iraq’s Basra Light and Oman crude, they said. “With deliveries started in late April and based on our tracking, the 50 million barrels’ space will be more or less filled towards the end of June, taking in mostly April and May loading cargoes,” said the second state oil official. INE did not respond to a request for comment. The Shanghai Futures Exchange, which owns the INE, declined to comment on storage or buyers, saying: “This involves trade secrets of the participants, and is not public information.” Chinese oil stockpiling is normally driven by state giants which sweep up cargoes to fill the government’s strategic petroleum reserves or commercial reserves held by refiners. However, in the current downturn, stockpiling has been driven by financial investors who believe oil is set to bounce strongly off its lows, said the second official.
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