Written by rjs, MarketWatch 666
Here are some more selected news articles for the week ending 27 February 2021. Go here for Part 1.
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Looks Like We Made It – Propane and the 2021 Deep Freeze; Where Are We Now? –Here in Texas, the snow is melting, the power is back on, and some of us even have drinkable water. We’ll be dealing with the aftermath of the 2021 Deep Freeze for months, and talking about the insane natural gas and power prices for as long as gas and power markets exist. One thing you have not heard much about during these crazy few days is propane. And given what we’ve been through, no news is good news. Sure, it was impossible to exchange a tank at the local Quickie Mart, and there were sporadic reports of delayed propane deliveries and local shortfalls. But even up in the coldest Midwest states, there were no market meltdowns, no skyrocketing prices. Instead, propane has been the go-to fuel to keep folks warm, to get energy production moving again by defrosting wellheads and pipeline valves, and even to get restaurants back on their feet. It’s always dangerous to declare a winter victory with a few weeks left to go in the season, but today we’ll take that risk. We started laying the groundwork for our analysis of this season’s propane market late last year in Now You See It, where we warned of the possibility of a coming propane price squeeze. At that point, the big issue was exports, which were running at all-time highs and had the potential to deplete inventories at record rates. We worried that average days-supply, when calculated using both domestic demand and exports, had dropped to a five-year low, and that the market could get very tight. We kept the focus on propane supply and exports in Big Panama With A Purple Hat Band and It’s All Over Now, where we looked at how frigid weather in Asia had pulled even more U.S. propane into export markets. By early February the handwriting was on the wall, and we laid out the prospects for a looming deep freeze in Cold As Ice, suggesting that even with super-cold weather just ahead and low inventories in the Midwest (PADD 2), the propane market seemed to be reasonably well prepared for what was to come. So far, that’s how conditions in the propane market seem to be playing out. Prices did increase, but no huge spikes. As shown in the left graph in Figure 1, at the peak (nadir?) of the Deep Freeze on February 18, the Mont Belvieu spot propane price (blue line) was up only 17% over the January average, while the Conway price (green line) was up about 50%. Given that cold temperature records were being set across much of the country, those increases are relatively modest, especially when compared to the chaos in natural gas (right graph in Figure 1). Spot natural gas prices in the same general geographies were up as much as 150 times the average price in January. Most likely the average price for February will be 10 to 20 times the January average. Nothing like that has ever happened before (see Terminal Frost and Perfect Storm for our analysis of these market conditions).
OKLAHOMA: Injections wells closed or reduced after earthquake — Monday, February 22, 2021 — The injection of wastewater into underground wells by oil and natural gas producers has been stopped or reduced in the area where a magnitude 4.2 earthquake struck in northern Oklahoma.
COVID Obscures New Mexico Legislature – But Oil and Gas Still Get In – When state Sen. George Munoz, the new head of the New Mexico Senate Finance Committee, wants to hold a meeting, he gets to pick who’s invited. That’s how state senate meeting rules are structured. So if he chooses to invite oil and gas industry representatives to dominate a discussion of the financial ramifications of President Joe Biden’s moratorium on federal oil and gas leases, that’s Munoz’s prerogative. And that’s exactly what he did on Feb. 2. “We want information that’s good and we can rely on,” he said at the start of the virtual meeting. The unofficial keynoter was Ryan Flynn, president and CEO of the New Mexico Oil and Gas Association (NMOGA), the state’s best-known oil and gas industry advocacy group. Notably absent were any voices from outside government or industry: no one from Gov. Michelle Lujan Grisham’s green energy development task force; no one to comment on industry’s contribution to the climate crisis; and none of the many New Mexican economists who study the oil and gas industry and its fraught future. Consequently, Flynn – whose group’s stated goal is promoting oil and gas development in New Mexico – and a representative from a Texas trade group were given the chance to tell their story of impending economic catastrophe to a gallery of government representatives on a Zoom call. And while this might have looked like lobbying, don’t call Flynn a lobbyist because – to the surprise of many – he’s not. Not registered, anyway. He hasn’t been since 2019. Munoz began the session by introducing Flynn – with a slip of the tongue. “I keep wanting to say ‘Secretary Flynn,'” he chuckled, recalling Flynn’s previous position as New Mexico Environment Department (NMED) secretary under former Gov. Susana Martinez, whose administration vigorously promoted oil and gas development. “Ryan, you wanna go ahead and start out?” The verbal slip, easy familiarity and starring role illustrate how one of the state’s most powerful lobbies is treated within state government. And it’s an example of the soft power that the oil and gas industry holds in New Mexico and of a revolving door between industry and government.
Natural Gas Battles Local Climate Efforts – Facing the rising threat of wildfire and extreme drought, Flagstaff, Ariz., unveiled an ambitious effort two years ago to cut the heat-trapping emissions that drive climate change.A critical part of Flagstaff’s climate plan proposed that all new construction get to net-zero greenhouse gas emissions by 2040 and that the city promote “aggressive building electrification” to decrease reliance on fossil fuels. As in many places, buildings are a big source of Flagstaff’s greenhouse gases, mainly because many are heated by burning natural gas.But in February 2020, the Arizona Legislature blocked much of Flagstaff’s plan for its buildings. With the backing of the state’s main gas utility, the Legislature passed a bill that prevents municipalities and counties from banning new gas infrastructure and hookups.”It definitely put a huge hurdle in our plans for promoting electrification and fuel switching,” says Nicole Antonopoulos, Flagstaff’s sustainability director.The Arizona law was a test case for a strategy the natural gas sector is now deploying nationwide. Gas utilities, with help from industry trade groups, have successfully lobbied lawmakers over the past year to introduce similar “preemption” legislation in 12 mostly Republican-controlled state legislatures, according to the Natural Resources Defense Council (NRDC).The speed and scale of the strategy show just how high the stakes are for the gas industry. According to internal reports and hundreds of recent emails obtained through public records requests and shared with NPR, the gas industry sees an existential threat in the efforts of cities, states, businesses – and now the Biden administration – to sharply reduce fossil fuel use.”As you’re really looking at what’s going to come out of the Biden administration, they’re really talking about remaking the entire economy through a green lens, and that means eliminating natural gas,” Sue Forrester, vice president of advocacy and outreach at the American Gas Association (AGA), said during an industry conference last November. Gas utilities and their powerful lobby, the AGA, are racing on multiple fronts to convince lawmakers and the public that swapping out natural gas with electric would harm consumers and lead to higher bills. They argue that using natural gas is compatible with addressing climate change, despite scientific evidence to the contrary. Pro-gas groups have emerged around the country with names such as “The Empowerment Alliance” and “Partnership for Energy Progress” to sway local and state debates about electrification. The gas industry has launched ad campaigns on Facebook and Instagram touting gas as far better for cooking.
Fond du Lac Band tells outside protesters to respect its sovereignty after bomb scare – – The Fond du Lac Band of Lake Superior Chippewa is telling pipeline protesters who are not band members to respect its sovereignty after a “potential explosive device” prompted an evacuation near an Enbridge pipeline work site on the band’s reservation Friday. The band’s governing body said in a statement that it recognizes that some people oppose its decision to allow the project within its borders but asked protesters to honor its sovereign authority. A half-mile area around a rural stretch of Ditchbank Road near Cloquet was evacuated for several hours following reports of a package being thrown onto a work site as protesters were dispersing Friday afternoon, according to the Carlton County Sheriff’s Office. A bomb squad was called to the site, and state and federal authorities are investigating. “After careful examination, it was determined that the device was not an explosive agent,” the Sheriff’s Office said in a news release. “Investigators are following up on a number of leads.” Forty area residents were evacuated in addition to pipeline workers in an incident the Fond du Lac Band said “created widespread public safety concerns.” Emergency alerts were initially send to a large number of northeastern Minnesota residents before another alert clarified the evacuation order affected only residents in the area. Enbridge also briefly shut down its pipelines in the area. The company said two “nonexplosive items” were removed from inside an open pipe. “This incident disrupted not just a pipeline and the delivery of energy, but the lives of real people,” Enbridge said in a statement. “This is unacceptable and we will seek to prosecute those involved to the full extent of the law.”
PIPELINES: DOJ to court: Biden axing KXL permit rendered suit moot — Thursday, February 25, 2021 — A month after President Biden killed the border-crossing permit for the Keystone XL pipeline, his administration asked a federal appeals court yesterday to dismiss litigation over the approval.
Republicans criticizing Haaland’s nomination have ties to fossil fuels – Republicans appear eager to derail the cabinet nomination of Deb Haaland, a Native American congresswoman who wants to conserve federal lands and slow climate change as secretary of the interior to Joe Biden. In two days of confirmation hearings before the Senate energy and natural resources committee, Haaland faced hostile questions from a group of GOP senators who attempted to cast her as an extremist and a danger to American jobs. Haaland, a 35th-generation New Mexican who would be the first Native American cabinet secretary, supports the Green New Deal and opposes fracking on federal land. As secretary of the interior, she would implement Biden’s climate agenda, which, though relatively ambitious, may not go as far as she would prefer. Hostile questioning at her confirmation hearings was led by senators who have taken huge amounts of campaign cash from the oil and gas industry. Some are personally invested in fossil fuels. John Barrasso of Wyoming, the ranking Republican on the committee, said he was “troubled by many of Representative Haaland’s views”, which he characterized as “radical”. “We shouldn’t undermine our energy production and we shouldn’t hurt our own economy,” he said in an opening statement. “Representative Haaland’s positions are squarely at odds with the mission of the Department of [the] Interior.” Barrasso, who has questioned whether humans contribute to the climate crisis, also complained about a tweet in which Haaland said Republicans don’t believe in science. What he didn’t say was that the oil and gas industry has bankrolled his political career and he is personally invested in a company that transports a sizable portion of US natural gas. From 2015 to 2020, Barrasso’s campaign and leadership political action committee, or Pac, took in more than $480,000 from the pacs of oil and gas companies, more than from any other industry, according to data analyzed by OpenSecrets.org. In 2018, his most recent election year, his campaign got the maximum amount of $10,000 from the pacs of companies such as natural gas driller Chesapeake Energy, which extracts oil from wells in the Powder River Basin in Wyoming; oil giant Chevron, which owns oil and gas properties in Haaland’s state, New Mexico; and fossil fuel conglomerate Koch Industries. In his full federal career, Barrasso has received nearly $1.2m from oil and gas firms and their employees, making him one of the Senate’s top recipients of such money.
Who will clean up the ‘billion-dollar mess’ of abandoned US oilwells? – Jill Morrison has seen how the bust of oil and gas production can permanently scar a landscape. Near her land in north-east Wyoming’s Powder River Basin, where drilling started in 1889, more than 2,000 abandoned wells are seeping brine into the groundwater and leaking potent greenhouse gasses. The problem is getting worse. As the oil and gas industry contracts owing to the pandemic, low prices and the rise of renewables, more than 50 major companies have gone bankrupt in the last year. Joe Biden’s recent order to pause drilling on federal land could drive that number higher. Morrison, a rancher and the head of the Powder River Basin resource council, said the crash was exacerbating the abandonment issue. “They drill baby drilled themselves right out of business,” Morrison said. “We’re seeing something we’ve never seen before in the oil and gas industry, in terms of the downturn, and there’s going to be a billion-dollar mess to clean up.” Unplugged wells, either orphaned well, which have no liable party, usually due to bankruptcy, or idle, abandoned ones, where the company has walked away, but could still be liable, cause rampant methane emissions – up to 8% of US total according to a 2014 analysis. They also leak brine, oil and fracking fluid into the groundwater, and carcinogenic gases, like benzine, into the air, and as their numbers increase the impacts grow.”Methane is a strong greenhouse gas, it’s a precursor for ozone, and harmful for human health,” said Mary Kang, a McGill civil engineering professor who conducted the study. “Even just a few wells can be responsible for big emissions, and there are all the other associated risks, and impacts to wildlife and ecosystems.” The impacts aren’t just here in the rangy fields of Wyoming. There are unremediated wells in Los Angeles neighborhoods and Pennsylvania farms. There could be as many as 3.2m abandoned wells in the US, according to a 2018EPA report, but this is probably an undercount because both federal and state programs for regulating and monitoring non-producing wells are incomplete. There are an estimated 2,500 of them in the Powder River Basin alone. So many have been left uncapped because the regulations and bonding requirements, the money that companies pay ahead of time as insurance, for those wells are so minimal that it’s nearly impossible to hold drillers responsible or to pay for cleanup. Some companies simply walk away from wells, meaning they are still liable; when firms go out of business, they are not. The penalties for not cleaning up a well are minimal when there’s nothing but a small bond holding a company responsible. “How do you convince operators to comply when there’s no carrot and no stick?” That means the profits for drilling go to individual companies while the damages, both environmental and financial, are largely borne by the local community and by state and federal taxpayers. “Unplugged wells devalue property, they’re a mess to work around, it can lead to groundwater pollution, and no one is really tracking it,” Morrison said. … “The heart of the problem is that we have inadequate bonding requirements in places that allow oil and gas companies to walk away and leave taxpayers holding the bag.”
HazMat firefighters respond to 50-foot oil spill in Val Verde – A HazMat response was called Wednesday morning to a 50-foot oil spill following a leak in Val Verde. Los Angeles County Fire Department personnel responded to the scene near Del Valle Road and Hasley Canyon Road at around 9:56 a.m., according to Fire Department Public Information Officer Jonathan Matheny. A 50-foot circle of oil can be seen at the base of a leaking well on Del Valle Road near Hasley Canyon Road in Castaic on Wednesday, 021721. Dan Watson/The Signal “There’s an oil well there and there’s some oil leaking from the wellhead that is coming downhill,” he said. The spill was reportedly 50 feet in diameter on the ground “but the situation is static, meaning it’s not getting any bigger,” Matheny added. The response team, as well as the oil company, were en route as of 10:15 a.m. to investigate, according to Matheny. No injuries or additional incidents related to the spill were reported.
Gavin Newsom Sued for ‘Completely Unacceptable’ Approval of Oil and Gas Projects in California –Accusing California regulators of “reckless disregard” for public “health and safety,” the environmental advocacy group Center for Biological Diversity on Wednesday sued the administration of Gov. Gavin Newsom for approving thousands of oil and gas drilling and fracking projects without the required environmental review.The lawsuit claims that the California Geologic Energy Management Division (CalGEM) failed to adequately analyze environmental and health risks before issuing fossil fuel extraction permits, as required by law. According to the suit, California regulators approved nearly 2,000 new oil and gas permits without proper environmental review. “CalGEM routinely violates its duty to conduct an initial study and further environmental review for any new oil and gas well drilling, well stimulation, or injection permits and approvals,” the suit alleges. “Instead, CalGEM repeatedly and consistently issues permits and approvals for oil and gas drilling, well stimulation, and injection projects without properly disclosing, analyzing, or mitigating the significant environmental impacts of these projects.” The center noted that “despite Gov. Newsom’s progressive rhetoric on climate change, he has failed to curb California’s dirty and carbon-intensive oil and gas production.””His regulators continue to issue thousands of permits without review, and the governor has refused to act on his stated desire to ban fracking,” the group said in a statement. “Newsom’s regulators also failed to meet the governor’s deadline to publish a draft health-and-safety rule after vowing to do so before the end of 2020.” Hollin Kretzmann, an attorney at the Center for Biological Diversity’s Climate Law Institute, said Wednesday that “it is completely unacceptable for Gov. Newsom to continue to ignore our flagship environmental law that’s meant to protect people from oil industry pollution.””Newsom can’t protect our health and climate while giving thousands of illegal permits each year to this dirty and dangerous industry,” Kretzmann added. “We need the courts to step in and stop this.”
Arctic drilling plan in Alaska hits roadblock (Reuters) – Plans for seismic surveys to help find oil in the Arctic National Wildlife Refuge have fizzled due to a lack of protection for polar bears, according to a brief statement Saturday from the Department of the Interior. The Kaktovik Inupiat Corp (KIC), the Native-owned company that applied for permission to conduct the survey, failed to do the required work to identify polar bear dens in the region that would be surveyed, Interior spokeswoman Melissa Schwartz said in an emailed statement. The likely demise of the seismic plan is the latest in a series of setbacks that have deflated the decades-long ambition to convert the refuge into an oil-producing frontier. Alaska’s oil production has been waning since the late 1980s, when the state produced more than 2 million barrels of crude per day. Now its output is roughly 500,000 bpd. Ex-President Donald Trump passed tax legislation in 2017 that would have allowed for drilling in the ANWR, and the federal government held a lease sale in the last days of his presidency. Identification of den sites was needed for the U.S. Fish and Wildlife to grant KIC an incidental harassment authorization, a permit that would allow seismic operations near polar bears, Schwartz said. “The company was advised today that their request is no longer actionable,” she said in her statement. KIC had planned, through contractor SAExploration, to conduct seismic surveys on 352,416 acres within the refuge’s coastal plain. The company missed a Feb. 13 deadline to perform its aerial den-detection work, Schwartz said. The Jan. 6 ANWR lease sale drew qualifying bids for only 11 tracts, most from an Alaska state agency that was participating as a backstop in case oil companies did not submit bids. President Joseph Biden and Interior Secretary-designee Deb Haaland oppose oil development in the refuge.
Big Oil Posts Record Loss in 2020 —Rystad Energy has highlighted that the five integrated supermajors – ExxonMobil, BP, Shell, Chevron, and Total – posted a combined record loss of $76 billion in 2020. Rystad noted that the major chunk of this loss, $69 billion, can be attributed to asset impairments and write-offs as the supermajors re-evaluated their strategy to focus on the energy transition and become less dependent on petroleum. All five majors reported net losses last year, with ExxonMobil reporting the largest at $22.4 billion, followed by Shell and BP which also incurred losses of more than $20 billion, Rystad outlined. The company said Total and Chevron fared better than their peers, relatively speaking, reporting net losses of $5 billion to $6 billion. Rystad highlighted that all the majors had their gearing ratio raised in 2020, with BP and Shell both ending the year with a gearing above the 30 percent mark. ExxonMobil and Chevron raised a record amount of debt during the year, adding $19 billion and $18 billion respectively to their net debt, Rystad outlined, adding that both majors increased their gearing ratio by ten percent in 2020. The combined oil and gas output of the five majors dropped by nearly five percent, or 0.9 million barrels of oil equivalent per day, in 2020, compared from the year before, Rystad revealed. Lower emission targets and demand for cleaner energy have significantly impacted the long-term production outlook for the majors, according to Rystad, which forecasts that the majors’ net production will be around 17.5 million barrels of oil equivalent per day (boepd) in 2025 and peak at around 18 million boepd in 2028. The company’s internal forecast in February 2020 stood at 19 million boepd for 2025 and 20 million boepd in 2028. “Last year has certainly tested oil and gas majors like never before,” Rahul Choudhary, an upstream analyst at Rystad Energy, said in a company statement. “Some recovery can be expected in the near future as demand rebounds and oil prices cross the $60 mark. However, the key to success for the five majors over the next decade will be to strengthen their business in more resilient regions, restructure and resize to match the market needs, and pay back their high debt levels,” he added.
February’s Cold Blast Sets New Records for the Canadian Natural Gas Market | RBN Energy -The February 2021 polar vortex will be one for the natural gas record books in the U.S. and Canada – and the month isn’t even over yet! Though no stranger to frigid weather, Canada’s natural gas market has felt the impacts of this month’s extreme cold on both sides of the border. Its own prices, demand, and storage withdrawals have reached multi-year or all-time records as gas buyers have jockeyed for molecules from anywhere they can get them. Gas exports to the U.S. have reached highs not seen for more than a decade, adding emphasis to what has been an emerging turnaround story for Canadian gas into the U.S. market. To top things off, the latest gas market records might be a preview of what is to come in the next few years as Canada’s structural demand for natural gas continues to increase, regardless of how cold it is. Today, we describe all the latest Canadian gas market action and what might be in store for next winter. In the past week, we have been discussing the impacts that the extreme cold snap of February 2021 have had on energy markets. In our coverage last week, the impacts that the deep freeze has wrought on the U.S. natural gas and power markets have been plain to see, with skyrocketing gas prices (East Is East, West Is West) due to wellhead freeze offs (Terminal Frost), surging demand, and storage withdrawals that have struggled to balance both sides of the supply-demand equation (Perfect Storm). Cash prices at ONEOK Gas Transmission (OGT) hub in Oklahoma surged to an unheard of $1,250/MMBtu and some regions literally ran out of gas. However, the U.S. has not been alone in feeling the freakishly cold weather’s effects on demand, supplies, storage, and prices. Canadian natural gas markets have also experienced turmoil due to the February extremes. Prices have swelled, new demand records have been set, supplies have fallen, and storage withdrawals have cranked up to never-seen-before levels to keep supply and demand in balance. With gas needed everywhere all at once it seems, even long-suffering Canadian gas exports to the U.S. have recently surged to levels not seen for more than a decade. Like many a polar vortex, this one was initially felt in Western Canada and steadily expanded south and east from there. The impacts are typically seen first in the Alberta natural gas market, a province and market that is all too familiar with bone-chilling temperatures. Drawing on data from RBN’s Canadian NATGAS Billboard, the demand effects of the cold can be readily seen in the early days of this month (green oval in left graph in Figure 1). Though demand was already seasonally elevated, Alberta’s latest spike in gas demand began on February 5, reaching a new record peak of 7.7 Bcf just four days later on February 9 (green dot in middle graph). So intense was the cold in some parts of Alberta that a string of lofty demand highs were established, with six of the top 10 strongest demand days all occurring on either side of the February 9 record high. Pretty impressive for a gas market that, as we said, is used to extremely cold weather.
Crews respond to diesel spill in B.C. Central Coast – — Crews continue to try to minimize environmental damage caused by a Feb. 15 diesel fuel spill in the Wannock (Owikeno) River and the Rivers Inlet marine environment in B.C.’s Central Coast. According to the Ministry of Environment and Climate Change Strategy, a report was received that a tanker truck carrying between 7,000 to 8,000 litres of diesel was leaking fluid into the river, due to a crack in a line from one of the trailer units. The ministry says provincial and federal resources were deployed to the community and containment booms and sorbents were placed around the spill. Traditional knowledge at centre of efforts to protect land from shipwreck’s fuel Oil continues to spill from sunken freighter off Vancouver Island; wildlife affected New marine oil spill response base to begin construction on Vancouver Island The fuel is used for diesel power generators used by a nearby community and is situated where an old cannery is located, according to the ministry. A release issued by the Wuikinuxv Nation says their administration office was informed of a suspected leak and believes that more than 6,000 litres made it onto the ground and approximately 650 to 700 litres actually reached the inlet. “The spill is close to three culturally and ecologically rich wetland and estuary sites” the release indicates. “The Emergency Operations Centre, Operations and Maintenance and Stewardship Office are working with federal and provincial partners to assess, contain and clean up the spill.” A Transport Canada National Aerial Surveillance Program flight was conducted to map the spill and help identify priorities and sensitive areas around the spill site.
Natural Gas production falls below 3 bcf/d – Natural Gas production averaged less that three billion cubic feet per day (bcf/d) for the first time since the 1990s according to well placed sources at the Ministry of Finance. The Sunday Business Guardian has learnt that for January 2021 natural gas production averaged 2,990 million standard cubic feet per day (mmscf/d) or less than 3bcf/d. This is 1.2 bcf/d less than the installed capacity in T&T and is part of the reason the Minister of Finance Colm Imbert has raised alarm at the low natural gas production. On January 10, Imbert told a news conference that due to depressed oil and gas prices and lower than expected production, revenue from royalties on oil and gas was down by almost half – $806 million or 49.2 per cent. Meanwhile extra ordinary receipts from oil and gas companies also fell by 98.2 per cent or $100 million. The Central Bank in its Economic Bulletin for January reported that natural gas production declined by 23.6 per cent (year-on-year) over the second half of 2020. The bank said Atlantic LNG’s Train 3 was taken down for planned maintenance during the period, which coincided with similar activity at BPTT, the country’s largest natural gas producer. The fourth quarter of 2020 also saw a drop in LNG production at Train 1 amid discussions amongst its shareholders surrounding the future operation of the facility. Natural gas production dropped 29.8 per cent (year-on-year) during October to November 2020 alongside a 46.9 per cent fall in LNG production. The bank noted that the downstream industry also saw declines in output, with methanol production declining 29.4 per cent during the period, while production of ammonia was down by 1.1 per cent.
Israel’s beaches blackened by tar after offshore oil spill (Reuters) – Israel is trying to find the ship responsible for an oil spill that drenched much of its Mediterranean shoreline with tar, an environmental blow that will take months or years to clean up, officials said. Thousands of volunteers gathered on Sunday to remove the clumps of sticky black refuse from the pale beaches. Israel’s military said it was deploying thousands of soldiers to help with the effort. Authorities warned everyone else to keep their distance until further notice. Environmental groups called it an disaster. Attesting to the cost to wildlife, they posted pictures of tar-covered turtles. The event began last week during a winter storm, which made it harder to see the tar approaching and deal with it at sea, Israeli officials said. Together with European agencies, Israel was looking as a possible source at a Feb. 11 oil spill from a ship passing about 50 km (21 miles) from shore. Satellite images and modelling of wave movements were helping to narrow the search. Nine ships that were in the area at the time are being looked at, said Environmental Protection Minister Gila Gamliel. “There is a more than reasonable chance that we will be able to locate the specific ship,” she told Ynet TV. If found, Israel could take legal action. One course would be to sue insurance companies for compensation to help deal with the ecological fallout, she said, which could cost tens of millions of shekels. Late last week a 17-metre-long (55ft) fin whale was found washed up on a beach in southern Israel. The Nature and Parks Authority said on Sunday that an autopsy had found oil-based material in the whale’s body, with further tests pending.
Israeli Oil Spill Is a ‘Severe Ecological Disaster’ – A mysterious oil spill began to wash up on Israel’s coast last week, closing beaches and harming wildlife. The Israeli government urged people not to visit a wide stretch of beach on Sunday, Haaretz reported. Of Israel’s 119 miles of beach, 105 were impacted by the disaster, according to CNN. That’s 40 percent of Israel’s coastline, Haaretz noted. “The enormous amounts of tar emitted in recent days to the shores of Israel from south to north caused one of the most severe ecological disasters to hit Israel,” the country’s Nature and Parks Authority said Sunday, CNN reported.People first noticed the oil last Wednesday, according to Haaretz. It washed up as sticky, dark pieces of tar,NPR reported. As of Monday, it had spread to the beaches of southern Lebanon, Reuters reported. Animals have also been found covered in tar, including a few birds and nine sea turtles, Haaretz added. Sadly, four of the turtles died. The rest have been taken to the National Sea Turtle Rescue Center to recover. Additionally, a fin whale washed up dead on the Israeli coast on Thursday. Preliminary tests revealed that it did contain oil in its body, Reuters reported. Not least, ecologists are worried about Dendropoma petraeum, a reef-building snail whose population is already declining because of the climate crisis, NPR reported. Volunteers have rallied to help with cleanup efforts, with more than 4,000 people from the non-profit EcoOcean working to remove the tar. However, the Israel Nature and Parks Authority said it would take years to remove all of it, Haaretz reported. Most of the work will have to be done by hand. The government is currently investigating the cause of the spill with the help of European authorities, according to NPR. Israel thinks it likely spilled from a ship about a week ago during stormy weather in the Mediterranean. One candidate is a Feb. 11 oil spill from a ship passing about 21 miles from shore, Reuters reported.Environmental Protection Minister Gila Gamliel said the investigation had pinpointed nine ships as potential culprits.
Israel hit by worst environmental disaster in decades – Although the exact cause of the disaster is still under investigation, the head of the Israel Nature and Parks association said the incident is the country’s worst environmental disaster in decades. The cleanup of over 170 km (106 miles) of affected coastline will take a long time and consequences will be felt for years. Dozens of tons of fresh tar lumps began landing on Israeli beaches in Habonim, Maagan Michael, and Neve Yam on Wednesday, February 17, 2021. On Sunday, February 21, Israel’s Ministry of Environmental Protection (MoEP) warned people to refrain from going to beaches from Rosh Hanikra, in the north, down to Zikim Beach in the Hof Ashkelon Coastal Council, until further notice. “Do not go to Mediterranean Sea beaches for swimming, sports, or recreational activities until further notice,” the ministry said Sunday. “Exposure to tar can be harmful to public health! The Ministries are continuing to monitor the situation and will update the public regarding this matter.” It’s still unclear what the source of the tar is, landing on the beaches since Wednesday morning, authorities said. Tar is a product of the decomposition and crystallization of oils and oil products. This is usually the result of the illegal dumping of oil into the sea from a passing ship. “The source is not known, but it should be noted that if it’s from the dumping of oil from a ship, it may have traveled a great distance,” MoEP said. Because the tar that has been landing on the coasts is either semi-solid or completely solid, it must be removed manually, with the oily and sand debris being separated from regular debris as much as possible, the ministry said. “The disaster we are witnessing in recent days on the beaches of Israel is the most serious ecological disaster in recent years, and we’ll see its consequences in years ahead,” the country’s Nature and Parks association said.
Oil spill off Israels coast is its worst maritime pollution in decades –Tar that has washed up along Israel’s coast in recent days represents the country’s worse maritime pollution in decades, with officials blaming dozens of tons of oil spilled at an unknown location at sea. The accident has marred beaches over 170 kilometers (106 miles), 40 percent of Israel’s coast, affecting 16 communities. Air patrols dispatched on Saturday were able to pinpoint oil slicks between 200 to 500 meters from the coast, moving towards the mainland in the north of the country, around the port city of Haifa. Thousands of volunteers joined major cleaning efforts organized by NGOs and local authorities over the weekend. Officials say much work remains to remove all the tar, and most of it will have to be done by hand. The Israel Nature and Parks Authority believes the cleanup will take years. “This event will not end in the next few days, we are preparing for long, hard work,” said Environmental Protection Minister Gila Gamliel, as she announced that the government had allocated emergency funding to local authorities to deal with damage locally. The pollution was first noticed Wednesday; the Environmental Protection Ministry says the most likely scenario is an unreported spill from a tanker. On Saturday, Minister Gamliel said information received from the European Maritime Safety Agency points to an area about 50 kilometers off the Israeli coast as the source of the pollution, which occurred about a week ago. “We’ve identified 10 vessels that passed through that area, and one or more of them could be responsible for this severe incident,” she said. Identifiying the source might prove difficult, as officials say the tanker in question likely operated illegally and therefore not monitored. Using the European agency’s staellite tracking systems, the search for the source of the spill has been narrowed down. However, officials still await more specific information. Even then, it remains unclear what punitive measures could potentially be taken against the tanker’s operators. Wildlife in danger After two days of masses of tar washing up on the shores, particularly in the Haifa area at the Galim, Dor, Habonim and Gedur beaches, cleanup teams reported a decrease on Friday. Since Wednesday, animals have been found covered with tar, including a few birds and nine sea turtles. Four of the turtles died, while the others were taken to the National Sea Turtle Rescue Center at Mikhmoret between Tel Aviv and Haifa. There they were fed in an attempt to increase their metabolism and dilute the oil in their bodies.
Solomon Islands hit by another big oil spill – Two years since authorities were confronted with a major bunker spill, the government of the Solomon Islands is facing another big clean-up, accusing the crew of a 30-year-old bulk carrier of dumping around 1,000 tonnes of heavy fuel oil into local waters.The 1991-built, Panama-flagged Quebec stands accused of deliberately dumping fuel into the sea. The 28,451 dwt handysize ship, which European database Equasis says is managed by Singapore’s Feng Sea Shipping, was carrying out a logging shipment for a Chinese company when it dumped heavy fuel oil into Graciosa Bay in Temotu province in late January, the Solomons government claims.The director of the Solomon Island Maritime Authority, Thierry Nervale, told state media an initial assessment of the Quebec spill indicated about 1,000 tonnes of heavy fuel oil had been discharged, and that the government would pursue legal action against the vessel’s owners.”For us, it is clear that this is deliberate pollution of our seas. It’s not accidental,” Nervale said. The Hong Kong-flagged Solomon Trader ran aground on February 4 in 2019 in Kangava Bay off Rennell Island near the world’s largest raised coral atoll, a UNESCO world heritage site, becoming that year’s most high profile dry bulk casualty. It was loading bauxite in inclement conditions when the accident happened, which led to hundreds of tonnes of bunker fuel spilling and the ship being declared a total constructive loss.
Bolsonaro appoints Army reserve general to head Petrobras –Brazil’s far-right president, Jair Bolsonaro, appointed an Army reserve general to lead state-owned energy giant Petrobras, after criticising several successive increases in the price of fuel. “The government decided to appoint Joaquim Silva e Luna to fulfill a new mission, as… president of Petrobras, after closing the cycle, exceeding two years, of the current president Roberto Castello Branco,” said a brief note from the Ministry of Mines and Energy, published by the president on his Facebook account. Silva e Luna, formerly the defence minister under president Michel Temer, had been serving as general director of the Itaipu Binacional dam. His nomination will have to be confirmed by the Petrobras board of directors. Earlier Friday Bolsonaro had announced that there would be “changes” at Petrobras. “We will never interfere in this great company, nor in its pricing policy, but people cannot be surprised with certain increases,” Bolsonaro said during a morning event in the northeastern state of Pernambuco. He did not give further details. His statements were followed by a sharp drop in the oil company’s share prices. They closed down 7.92 percent Friday, with preferred shares down 6.63 percent.
Iraq decides to freeze oil prepayments deal on rising oil prices(Reuters) – Iraq has decided to freeze its first crude oil prepayment deal, which had aimed to boost its finances, because oil prices are rising, the country’s oil minister told BBC Arabic on Sunday. “We had concerns that oil prices would not rise above $40 when we announced this deal for the first time in the history of Iraq,” Iraq’s Oil Minister Ihsan Abdul Jabbar told the channel. Brent crude has been trading above $60 a barrel recently. Asked about the status of the prepayment crude oil deal, Abdul Jabbar said: “With the start of this year and the economic stability resulted from boosted oil prices, we decided to freeze this option.” Chinese state oil trader Zhenhua Oil Corp had emerged as the frontrunner in a tender to buy Iraqi crude for five years after it submitted the “most competitive bid” in the tender held by Iraq’s state oil marketer SOMO that attracted participation from international oil companies, trading houses and Chinese and Indian refiners. OPEC member Iraq was seeking a five-year prepayment starting January 2021 until December 2025 to be repaid with cargoes of its Basra crude, according to a letter sent by state oil marketer SOMO to its customers and seen by Reuters. Under the prepayment deal, the winner of the tender was to pay SOMO about $2.5 billion in return for 48 million barrels of crude between July 1, 2021 and June 30, 2022.
Oil prices rise with storm-hit U.S. output set for slow return – Oil prices rose on Monday as the slow return of U.S. crude output cut by frigid conditions served as a reminder of the tight supply situation, just as demand recovers from the depths of the COVID-19 pandemic. Brent crude was up $1.78, or 2.85%, at $64.70 per barrel. West Texas Intermediate gained $1.89, or 3.2%, to trade at $61.13 per barrel. Abnormally cold weather in Texas and the Plains states forced the shutdown of up to 4 million barrels per day (bpd) of crude production along with 21 billion cubic feet of natural gas output, analysts estimated. Shale oil producers in the region could take at least two weeks to restart the more than 2 million barrels per day (bpd) of crude output affected, sources said, as frozen pipes and power supply interruptions slow their recovery. “With three-quarters of fracking crews standing down, the likelihood of a fast resumption is low,” ANZ Research said in a note. For the first time since November, U.S. drilling companies cut the number of oil rigs operating due to the cold and snow enveloping Texas, New Mexico and other energy-producing centres. OPEC+ oil producers are set to meet on March 4, with sources saying the group is likely to ease curbs on supply after April given a recovery in prices, although any increase in output will likely be modest given lingering uncertainty over the pandemic. “Saudi Arabia is eager to pursue yet higher prices in order to cover its social break-even expenses at around $80 a barrel while Russia is strongly focused on unwinding current cuts and getting back to normal production,” said SEB chief commodity analyst Bjarne Schieldrop.
Oil jumps almost 4% as output slow to recover from Texas storms (Reuters) – Oil prices rose nearly 4% on Monday, boosted by the expected slow return of U.S. crude output after last week’s deep freeze in Texas shut in production. U.S. producers shut anywhere from 2 million to 4 million barrels per day of oil output due to cold weather in Texas and other oil producing states, and the unusually cold conditions may have damaged installations that could keep output offline longer than expected. Brent crude settled at $65.24 a barrel, rising $2.33, or 3.7%, while U.S. oil settled at $61.49 a barrel, jumping $2.25, or 3.8%. The U.S. benchmark crude contract for March delivery expires on Monday, and the more widely-traded April contract was up $2.44, or 4.1%, at 61.70 a barrel.Shale oil producers in the region could take at least two weeks to fully restart normal output, sources said, as damage assessments and power disruptions slow their recovery. “The significant loss of both crude and gasoline production suggests more upside and likelihood of new highs possibly within a one-week time frame,” But he cautioned that with limited refining capacity, price could under pressure if refiners take weeks to return to normal. “The market is behaving as if the refiners are going to come online quicker than the headlines would lead you to believe,” said Yawger. Gasoline crackspreads, an indicator of refiners’ margins have dropped by 5%.For the first time since November, U.S. drilling companies cut the number of oil rigs operating due to the cold and snow enveloping Texas, New Mexico and other energy-producing centres, signalling even tighter supplies ahead. [RIG/U] OPEC+ oil producers are set to meet on March 4, with sources saying the group is likely to ease curbs on supply after April given a recovery in prices, although any increase in output will likely be modest given lingering uncertainty over the pandemic.
Oil prices jump more than $1 on slow U.S. output restart — Oil prices jumped by more than $1 on Tuesday, as U.S. output was slow to return after a deep freeze in Texas shut in crude production last week. Shale oil producers in the southern United States could take at least two weeks to restart the more than 2 million barrels per day (bpd) of crude output that shut down because of cold weather, as frozen pipes and power supply interruptions slow their recovery, sources said. Brent crude was up $1.06, or 1.6%, at $65.30 a barrel by 0204 GMT, after earlier hitting a high of $66.38. U.S. crude rose 81 cents, or 1.4%, to $62.51 a barrel, after hitting a session high of $62.73. Both benchmarks have risen more than 1% after climbing nearly 4% in the previous session. “The positive momentum continues in the oil complex, with investors unabashedly predisposed to a bullish view,” said Stephen Innes, chief global markets strategist at Axi in a note. Goldman Sachs Commodities Research raised its Brent crude oil price forecasts by $10 for the second and third quarters of 2021, citing lower expected inventories, higher marginal costs to restart upstream activity and speculative inflows. The Wall Street bank expects Brent prices to reach $70 per barrel in the second quarter from the $60 it predicted previously and $75 in the third quarter from $65 earlier. Morgan Stanley expects Brent crude prices to climb to $70 per barrel in the third quarter on “signs of a much improved market” including prospects of a pick-up in demand. “It is hard not to be bullish with oil prices now that the deep freeze disruption practically guarantees the summer pickup in crude demand will erase whatever supply glut is left,” said Edward Moya, senior market analyst at OANDA in New York. “The global oil demand is looking a lot better now that the Pfizer vaccine shows positive results after one dose, the U.K. sees the end of the pandemic ‘in sight’, and as hospitalizations and deaths continue to decline after peaking in early January.” Stockpiles of U.S. crude oil and refined products likely declined last week, a preliminary Reuters poll showed on Monday, due to the disruption in Texas.
$100 Oil Bets Surge After Texas Turmoil – Amid all the issues ignited in the Texas turmoil, and as oil prices roar to post-COVID highs, analysts across the energy space appear to be outdoing each other with their bullish forecasts. Brent Crude prices could hit $70 a barrel in the second quarter of 2021, while they are set to average $60 this year, Bank of America said this week, raising its average price outlook by $10 a barrel from its previous projection. Echoing Bank of America, Morgan Stanley also sees Brent touching the $70 mark this year, but a bit later – in the third quarter, expecting “a much-improved market,” including on the demand side. On Sunday, Goldman Sachs started the investment banks’ upgrades of oil price forecasts, expecting Brent Crude prices to hit $75 a barrel in the third quarter this year, on the back of faster market rebalancing, lower expected inventories, and traders hedging against inflation. But those forecasts all pale in comparison to Azerbaijan’s Socar Trading SA predicts global benchmark Brent could hit triple digits in the next 18 to 24 months, and Bank of America sees potential spikes above $100 over the next few years on improving fundamentals and global stimulus. And, even with the WTI curve deep in backwardation…Bloomberg reports, speculators are also getting in on the action, increasing bets in the options market that oil will reach the vaunted level by December 2022. As the chart below shows, the open interest in these $100 strike Dec 2022 calls has exploded higher since the turmoil in the Texas energy markets.
WTI Tumbles After Surprise Crude, Gasoline Builds — Oil prices held on to gains today, amid equity market chaos, with WTI just losing $62 after hours.”After a $2 rally yesterday,” it was hard to sustain further gains, said Peter McNally, global head for industrials, materials and energy at Third Bridge.Still, “if the combination of seasonal demand, vaccine rollouts and ongoing supply constraints all conspire, it looks like inventories will continue to decline.”We suspect tonight’s data will be a mess given the impacts of the Texas storms on demand, refinery capacity, and production. API
- Crude +1.026mm (-5.372mm exp)
- Cushing +2.738mm (-3.034mm exp)
- Gasoline +66k (-3.472mm exp)
- Distillates -4.489mm (-3.905mm exp)
Analysts’ expectations were for a 5th weekly draw in a row (10th draw in last 11) but API reports a surprise crude build of just over 1mm barrels and a surprise build in gasoline stocks too…
WTI Surges Above $63 Despite Surprise Crude Build, Plunge In Gasoline Demand –Oil prices have rebounded higher overnight after dropping on a surprise crude build reported by API, as stockpiles at a key European storage hub are at their lowest level since September, according to Genscape. Additionally, the structure of the futures curve continues to indicate tighter supply.“Yesterday’s choppy performance in the oil and equity markets has fueled speculation over how much further the rally in risk assets has to go,” said Stephen Brennock, analyst at PVM Oil Associates.”Oil prices are treading water ahead of what is sure to be a weather-affected EIA update concerning U.S. oil stockpiles.”Pent up demand as the global economy recovers has even got some traders talking about the prospect of returning to $100 crude over the next year or two. DOE
- Crude +1.29mm (-5.372mm exp)
- Cushing +2.807mm (-3.034mm exp)
- Gasoline +12k (-3.472mm exp)
- Distillates -4.969mm (-3.905mm exp)
DOE confirmed API’s reports of a modest crude and gasoline build (and large distillates draw)… Overall crude stocks remain near 13 month lows…
Oil rises after data shows slump in U.S. output amid Texas freeze (Reuters) – Oil prices climbed on Wednesday to fresh 13-month highs after U.S. government data showed a drop in crude output after a deep freeze disrupted production last week. U.S. crude oil production dropped last week by more than 10%, or 1 million barrels per day, during the rare winter storm in Texas, equaling the largest weekly fall ever, the Energy Information Administration said. Refinery crude inputs dropped to the lowest since September 2008 as the freeze knocked out power to millions. [EIA/S] “If you’re getting that kind of drop in one week of EIA production, you’re likely to get more after that,” said Phil Flynn, senior analyst at Price Futures in Chicago. “There is some concern that this will be a long-term permanent production drop.” Traffic at the Houston ship channel was slowly coming back to normal but terminals were still facing several issues. After nearly a quarter of national refining capacity was idled by the freeze, refineries have also started to come back online this week. Brent crude futures rose $1.67, or 2.6%, to settle at $67.04 a barrel. The global benchmark hit a session high of $67.30 a barrel, its loftiest since Jan. 8, 2020. U.S. West Texas Intermediate (WTI) crude futures ended $1.55, or 2.5%, higher at $63.22 a barrel, after touching $63.37, also their highest since Jan. 8, 2020. The rally continued oil’s steady march to levels not seen since prior to the coronavirus pandemic as vaccine distribution increases and on forecasts for renewed demand. Oil prices have rallied about 30% since the start of the year, boosted as well by ongoing supply cuts by the Organization of the Petroleum Exporting Countries and its allies.
Oil mixed, U.S. crude hits highest since 2019 as refineries restart – (Reuters) – Oil prices were mixed on Thursday with U.S. crude edging up to its highest close since 2019 as Texas refineries restarted production after last week’s freeze, while Brent eased on worries that four months of gains will prompt producers to boost output. Earlier in the day, an assurance that U.S. interest rates will stay low and a sharp drop in U.S. crude output last week due to the winter storm in Texas, helped boost both U.S. crude and Brent to their highest intraday prices since January 2020. Brent futures for April delivery fell 16 cents, or 0.2%, to settle at $66.88 a barrel. The April Brent contract expires on Friday. U.S. West Texas Intermediate (WTI) crude, meanwhile, ended 31 cents, or 0.5%, higher at $63.53, its highest close since May 2019. Analysts said WTI increased late in the day as more Texas refineries started to return to service, including Valero Energy Corp’s Port Arthur plant and Citgo Petroleum Corp’s Corpus Christi plant. The freeze caused U.S. crude production to drop by more than 10%, or a record 1 million barrels per day (bpd) last week, while refining runs tumbled to levels not seen since 2008, the Energy Information Administration said. [EIA/S] “The more refineries return to service, the more crude oil they will burn through, and the less crude oil will go to storage,” said Bob Yawger, director of energy futures at Mizuho in New York. Overall, however, analysts noted price gains slowed on Thursday. “With momentum appearing to slow a week before the next OPEC+ meeting, crude may be positioning for a small correction,” said Craig Erlam, senior analyst at OANDA, noting “There’s still plenty of downside risks in the market and one of them is OPEC+ unity coming under strain in the coming months.” The Organization of the Petroleum Exporting Countries and its allies including Russia, a group known as OPEC+, are due to meet on March 4. Analysts noted recent higher oil prices – both Brent and WTI have gained more than 75% over the past four months – could encourage U.S. producers to return to the wellpad and OPEC+ to loosen its production reductions. The group will discuss a modest easing of oil supply curbs from April given a recovery in prices, OPEC+ sources said, although some suggest holding steady for now given the risk of new setbacks in the battle against the pandemic.
Oil prices hit 13-month highs on tighter supplies, Fed assurance on low rates — Oil prices remained close to 13-month highs on Thursday, with profit-taking limited by an assurance that U.S. interest rates will stay low and a sharp drop in U.S. crude output last week due to the storm in Texas. Brent crude for April slid 0.24% to settle at $66.88 per barrel. Earlier in the session the contract traded as high as $67.70, the highest level since Jan. 2020. U.S. West Texas Intermediate gained 0.49% to settle at $63.53 per barrel, after hitting a high of $63.81 per barrel earlier in the session, the highest level since Jan. 2020. Tamas Varga, analyst at PVM Oil Associates, said the dip was partly due to profit taking after a three-day rally. An assurance from the U.S. Federal Reserve that interest rates would stay low for a while weakened the U.S. dollar, while boosting investors’ risk appetite and global equity markets. The winter storm in Texas caused U.S. crude production to drop by more than 10% or 1 million barrels per day (bpd) last week, the Energy Information Administration said. Fuel supplies in the world’s largest oil consumer could also tightened as its refinery crude inputs had dropped to the lowest since September 2008, EIA’s data showed. ING analysts said U.S. crude stocks could rise in weeks ahead as production has recovered fairly quickly while refinery capacity is expected to take longer to return to normal. Barclays, which raised its oil price forecasts on Thursday, said it oil could rally again on the weaker-than-expected supply response by U.S. oil operators to higher prices. “However, we remain cautious over the near term on easing OPEC+ support, risks from more transmissible COVID-19 variants and elevated positioning,” Barclays said. The Organization of the Petroleum Exporting Countries and allies including Russia, a group known as OPEC+, are due to meet on March 4. The group will discuss a modest easing of oil supply curbs from April given a recovery in prices, OPEC+ sources said, although some suggest holding steady for now given the risk of new setbacks in the battle against the pandemic. Extra voluntary cuts by Saudi Arabia in February and March have tightened global supplies and supported prices.
Oil prices fall on rising U.S. dollar, expectations for supply gains Oil dips, but posts gains for the week and month – Oil prices fell on Friday as a collapse in bond prices led to gains in the U.S. dollar and expectations grew that with oil prices back above pre-pandemic levels, more supply is likely to come back to the market. U.S. West Texas Intermediate (WTI) crude futures dipped 3.2% to settle at $61.50 per barrel. For the week the contract gained 3.81%. For February WTI advanced 17.82%. Brent crude futures for April delivery slid 1.12% to $66.13 per barrel. “Bonds are selling off reasonably aggressively and the U.S. dollar has firmed this morning. That’s providing a bit of a headwind for crude oil this morning,” said Lachlan Shaw, National Australia Bank’s head of commodity research. A stronger greenback makes U.S.-dollar priced oil more expensive for those buying crude in other currencies. Despite the drop in prices on Friday, both Brent and WTI are on track for gains of about 20% this month, as markets have grappled with supply disruptions in the United States, while optimism has built for demand to improve with vaccine rollouts. Investors are betting that next week’s meeting of the Organization of the Petroleum Exporting Countries (OPEC) and allies, together called OPEC+, will result in more supply coming back to the market, given the recent jump in prices and expectations that demand will improve as pandemic lockdowns ease heading into the northern hemisphere summer. “The stakes at play this time around are particularly large (for OPEC+) insofar as oil prices have more than recovered to pre-pandemic levels, global inventories are continuing to trend down, and vaccine rollouts are accelerating,” Shaw said. “The market’s probably right to think at this price level and given what the fundamentals are doing, there’ll be more supply coming into the market over time.” U.S. crude prices also face headwinds from the loss of refinery demand after several Gulf Coast facilities were shuttered during the winter storm last week. There is about 4 million barrels per day of capacity still shut and it may take until March 5 for all of the shut capacity to resume though there is risk of delays, analysts at J.P. Morgan said in a note this week. “The greater concern to U.S. crude oil market participants should be the recovery of refinery demand,” the analysts said. “As refiners assessed the damage to their facilities, it became clear that the road to recovery would be weeks rather than days.”
Oil Futures Slide As Dollar Gets Stronger | Rigzone— Oil fell the most since November with a stronger dollar and concerns surrounding inflation weighing on crude’s best start to the year on record. Futures in New York declined 3.2% on Friday, with a rising dollar reducing the appeal of commodities priced in the currency. Yet, the U.S. crude benchmark still managed to post a nearly 18% gain this month as inventories worldwide tighten and pockets of demand return. Domestic crude production dropped in 2020 for the first time in four years, according to the U.S. government. “Prices have a little bit more risk to the downside from the recent run that we’ve seen,” said Tariq Zahir, managing member of the global macro program at Tyche Capital Advisors LLC. “To continue going higher from here, demand has to come back pretty substantially.” Crude prices have notched the largest year-to-date gain than in any year prior for the same time period, in part due to OPEC+ production curbs helping to deplete global stockpiles. Plus, the unprecedented cold blast that recently halted millions of barrels of U.S. output means oil markets are about 100,000 barrels a day tighter than previously thought, according to JPMorgan Chase & Co. Supply scarcity may worsen in the coming months as North Sea fields undergo major maintenance. The Organization of Petroleum Exporting Countries and its allies will meet next week to decide on output levels. While Russia has signaled it favors a further easing of production cuts, the country’s oil output dipped below its OPEC+ target this month, meaning it failed to take full advantage of the more generous quota it was afforded after January’s OPEC+ meeting. “We all know the OPEC return to production is looming over the market pretty strongly,” said Gary Cunningham, director at Stamford, Connecticut-based Tradition Energy. Continued declines in global supplies will “depend on how much production OPEC brings back and whether or not the sanctions on Iran are lifted.” West Texas Intermediate for April delivery fell $2.03 to settle at $61.50 a barrel. The U.S. crude benchmark rose 3.8% this week. Brent for April settlement, which expires on Friday, declined 75 cents to end the session at $66.13 a barrel. The contract gained 5.1% this week. The more actively traded May contract declined $1.69 to settle at $64.42 a barrel. Soaring bond yields on Thursday were the latest sign that accelerating inflation could trigger a pullback in monetary policy support that has helped fuel gains in risky assets during the pandemic. While global bonds have since stabilized, a less accommodative approach to monetary policy could have ripple effects across commodity markets.
Iran to launch direct shipping line to S. Africa, Latin America –Iran is going to launch a direct shipping line to South Africa and Latin American countries in near future, an official with the Iranian Chamber of Cooperatives (ICC) informed. According to Babak Afghahi, ICC’s head of the non-oil trade and export development committee, the mentioned shipping line will connect southern Iranian ports to the ports of South Africa and then to Latin American countries, specifically Brazil. The said shipping line is going to be launched with the support of the Islamic Republic of Iran Shipping Lines (IRISL) and is aimed to develop Iran’s non-oil trade with the countries in the mentioned regions. “With the support of the Islamic Republic of Iran Shipping Lines, considering the capacity of Iran’s cargo export to the mentioned destinations, the chambers of commerce across the country, the Trade Promotion Organization (TPO) of Iran and other export bodies have been informed about the new development,” Afghahi said. As reported by IRNA, the Islamic Republic’s trade with South Africa reached $43 million in the first six months of the previous Iranian calendar year (March 21-September 22, 2019), while the figure stood at $27 million in the same period of its preceding year. Following a new strategy for boosting non-oil trade and distancing the country’s economy from oil, Iran has been launching several direct shipping lines to its major trade destinations over the past few years Earlier this month, the Head of Iran-Syria Joint Chamber of Commerce Keyvan Kashefi announced the establishment of a direct shipping line between Iran’s southern port of Bandar Abbas and Syria’s Mediterranean port of Latakia. The country has also launched five direct shipping lines to Oman and is planning to establish direct routes to Qatar, India, Turkmenistan, and Russia as well.
Iran wants US to remove sanctions before nuclear talks to clear more crude – – A top Iranian foreign ministry official on Feb. 21 said the US needs to remove its sanctions before talks can begin to revive the nuclear deal with world powers at a time when the Islamic Republic is expected to bring as much as 1 million b/d of crude back to the market by the end of this year. “For us, the criteria is removing the sanctions,” Abbas Araghchi, Iran’s deputy foreign minister for political affairs, said in a television interview published Feb. 21 by state news agency IRNA. He noted Iran has set a self-imposed Feb. 23 deadline for sanctions to be removed or Tehran will quit additional commitments to the Joint Comprehensive Plan of Action. Araghchi also said Iran is studying a proposal by EU foreign policy chief Josep Borrell to hold an “informal meeting with the US as a guest.” China and Russia are aware, he added. “Principally, we think returning the US to the JCPOA doesn’t need negotiations. If they want to return to the JCPOA, it’s obvious that they should remove the sanctions,” he said. The Biden administration on Feb. 18 formally offered to restart negotiations with Tehran, inching the two sides closer to a deal that could see the restoration of Iran’s approximately 2.6 million b/d export capacity. President Joe Biden has said the US will rejoin the nuclear deal but only after Tehran resumes full compliance with its terms. In 2018, the US under former president Donald Trump dropped out of the JCPOA signed between Iran and global powers, and imposed tighter sanctions on the country. “I think there is going to be back and forth between the sides in coming weeks/months, but we still think 1 million b/d of additional Iranian oil by year end is more reasonable to assume,” Shin Kim, head of supply and production at S&P Global Platts Analytics, said Feb. 21 when asked about Iran’s response. Iranian crude production has climbed steadily since the US election in November. In January, Iran pumped 2.14 million b/d of crude, its highest since November 2019, according to the latest Platts survey of OPEC output. More is likely to come, sources have told Platts, particularly in the run-up to the Iranian new year Nowruz celebrations in late March. Platts Analytics said the US and Iran could reach a framework agreement to restore the JCPOA as early as in the next one to three months, with Iranian crude supply to grow by 1 million b/d between February and December. Full sanctions relief may not happen until the fourth quarter, however, assuming Iran would need four months to return its uranium enrichment levels to JCPOA compliance, Platts Analytics said. “Output then grows by 500,000 b/d by June 2022 and 150,000 b/d by end-2022,” it said in a recent note.
U.S. launches air strikes on facilities in Syria used by Iran-backed militia – The United States launched airstrikes in Syria on Thursday, targeting facilities near the Iraqi border used by Iranian-backed militia groups. The Pentagon said the strikes were retaliation for a rocket attack in Iraq earlier this month that killed one civilian contractor and wounded a U.S. service member and other coalition troops. The airstrike was the first military action undertaken by the Biden administration, which in its first weeks has emphasized its intent to put more focus on the challenges posed by China, even as Mideast threats persist. Biden’s decision to attack in Syria did not appear to signal an intention to widen U.S. military involvement in the region but rather to demonstrate a will to defend U.S. troops in Iraq. “I’m confident in the target that we went after, we know what we hit,” Defense Secretary Lloyd Austin told reporters flying with him from California to Washington. Speaking shortly after the airstrikes, he added, “We’re confident that that target was being used by the same Shia militants that conducted the strikes,” referring to a Feb. 15 rocket attack in northern Iraq that killed one civilian contractor and wounded a U.S. service member and other coalition personnel. Austin said he recommended the action to Biden. “We said a number of times that we will respond on our timeline,” Austin said. “We wanted to be sure of the connectivity and we wanted to be sure that we had the right targets.” Earlier, Pentagon spokesman John Kirby said the U.S. action was a “proportionate military response” taken together with diplomatic measures, including consultation with coalition partners.
Iran Says S.Korea To Release $1BN Of Its Frozen Funds After Tanker Seizure – Iran and South Korea have been engaged for the past two months in intense crisis meetings triggered by the Jan.4 Iranian seizure of the South Korean-flagged tanker MT Hankuk Chemi off the Islamic Republic’s southern waters. From the start of the IRGC’s capturing the vessel and detaining its crew, Tehran pointed to $7 billion to $10 billion in Iranian assets in Korean banks previously frozen by Seoul in compliance with US-led sanctions. The clear message has been that the tanker can be released when the funds are released, despite the official Iranian claim that the Hankuk Chemi violated ‘environmental protocols’. And now Iran’s Central Bank says Seoul has agreed to release some of these funds. It’s expected that $1 billion cash will be unfrozen in the first phase. “In the meeting with the South Korean envoy, we stressed how Iran could use its resources,” Governor of the Central Bank of Iran (CBI) Abdolnaser Hemmati told state media on Wednesday. “Great damage has been incurred on the Islamic Republic. It was Koreans themselves who asked and [came] to say that they are seeking to pay Iran’s assets and we showed them how to do so,” the Iranian bank official added. Ironically it had been Tehran officials that charged Seoul with “hostage taking” – in the form of badly needed funds at a moment the Iranian economy is being strangled by Washington sanctions. While the release of the 19-person crew was already accomplished in early February, it appears Iran is still holding the oil tanker itself. South Korea’s Ministry of Foreign Affairs had said of the crew’s release at the time: “The two sides… shared the view that the release of the sailors was an important first step to restore trust between the two countries and they will work to resolve the issue of frozen Iranian assets in South Korean banks,” according to The Hill.At this point there hasn’t been clear confirmation from the South Korean side that it’s unfreezing $1 billion as touted in Iranian sources. However, it’s clear that intensive talks have been ongoing, with South Korea previously scrambling to send diplomatic teams to Tehran over the tanker issue.
Explosion strikes Israeli-owned ship in Mideast amid tension – — An explosion struck an Israeli-owned cargo ship sailing out of the Middle East on Friday, an unexplained blast renewing concerns about ship security in the region amid escalating tensions between the U.S. and Iran. The crew and vessel were safe, according to the United Kingdom Maritime Trade Operations, which is run by the British navy. The explosion in the Gulf of Oman forced the vessel to head to the nearest port. The incident recalled the summer of 2019, when the same site saw a series of suspected attacks that the U.S. Navy blamed on Iran, which Tehran denied. Meanwhile, as President Joe Biden tries to revive nuclear negotiations with Iran, he ordered overnight airstrikes on facilities in Syria belonging to a powerful Iranian-backed Iraqi armed group. Dryad Global, a maritime intelligence firm, identified the stricken vessel as the MV Helios Ray, a Bahamian-flagged roll-on, roll-off vehicle cargo ship. Another private security official, who spoke to The Associated Press on condition of anonymity to discuss intelligence matters, similarly identified the ship as the Helios Ray. Satellite-tracking data from website MarineTraffic.com showed the Helios Ray had been nearly entering the Arabian Sea around 0600 GMT Friday before it suddenly turned around and began heading back toward the Strait of Hormuz. It was coming from Dammam, Saudi Arabia, and still listed Singapore as its destination on its tracker. Israel’s Channel 13, in an unsourced report, said the assessment in Israel is that Iran was behind the blast. Israeli officials did not immediately respond to requests for comment. The Iranian government did not comment on the blast Friday. The blast comes as Tehran increasingly breaches its 2015 nuclear accord with world powers to create leverage over Washington. Iran is seeking to pressure Biden to grant the sanctions relief it received under the deal that former President Donald Trump abandoned nearly three years ago. Iran also has blamed Israel for a recent series of attacks, including a mysterious explosion last summer that destroyed an advanced centrifuge assembly plant at its Natanz nuclear facility and the killing of Mohsen Fakhrizadeh, a top Iranian scientist who founded the Islamic Republic’s military nuclear program two decades ago.
Turkey’s Eternal Crusade On PKK Continues -Turkey is unrelenting in its crusade against the Kurdistan Worker’s Party and the People’s Protection Units, as two parts of a whole. Ankara’s forces carry out frequent operations within and without the country, targeting both the Kurdistan Worker’s Party’s (PKK) and the People’s Protection Units (YPG)’s interests and members. The Turkish government dubs both groups as terrorists, and does not shy away from invading the sovereign territory of other countries to pursue and “eliminate” their members and positions. As a result, Turkey frequently encroaches on Syrian and Iraqi territory, and even has observation posts set up to target its Kurdish enemy. It strongly opposes the Syrian Democratic Forces, a group whose core is comprised of the YPG, and receives heavy US support. Most recently, between February 10th and the 14th, Turkey began its most recent operation in northern Iraq. In particular, it took place on the Gara Mountain in the Duhok Governorate of the Kurdistan Region. The result was such that both the PKK and the Turkish Armed Forces claimed victory, following the operation. The accounts of what transpired vary. Turkey said it killed 53 PKK members, and captured 2. It admitted to losing 3 soldiers, while 4 of its troops were wounded in battle. According to the PKK, Turkey lost at least 30 soldiers, and dozens more were injured. A sort of collateral damage involved 13 Turkish hostages whose corpses were discovered in a cave network in the mountain area. Turkey and the US claimed that these were largely civilians, and some intelligence officers. The PKK claimed these were 13 Turkish military hostages. Turkey’s Defense Minister claimed many weapons and ammunition, as well as other equipment were seized. In the aftermath, Turkish president Recep Tayyip Erdogan vowed to expand military operations which showed progress to other regions where threats are still significant.
CNOOC Makes Large Oil and Gas Find –CNOOC Limited announced Monday that the company has made a “large sized” oil and gas discovery at the Bozhong 13-2 asset in Bohai Bay. Discovery well BZ13-2-2 was drilled and completed at a depth of 17,135 feet and encountered oil pay zones with a total thickness of approximately 1,135 feet, CNOOC noted. The well was tested to produce an average of approximately 1,980 barrels of crude oil and 5.25 million cubic feet of natural gas per day, the company highlighted. “The successful exploration of Bozhong 13-2 structure is another remarkable exploration achievement for the company to continuously enhancing [sic] its efforts in oil and gas exploration and production in offshore China,” Zhou Xinhuai, the general manager of CNOOC’s exploration department, said in a company statement. “After obtaining Bozhong 19-6 large sized condensate gas field, the company has made significant breakthrough in the exploration of another type of buried hill in Bohai, which not only has important promotion value, but also demonstrates promising exploration prospect in Bohai,” Xinhuai added. The Bozhong find is the first discovery CNOOC has announced in 2021. The company’s last discovery announcement came in March 2020, when it revealed that it had made a “large sized” find at Kenli 6-1 in Bohai Bay. Discovery well KL6-1-3 was drilled and completed at a depth of 5,236 feet and encountered oil pay zones with a total thickness of approximately 65 feet, CNOOC revealed in a company statement at the time, adding that the well was tested to produce around 1,178 barrels of oil per day. The CNOOC Group is the largest producer of offshore crude oil and natural gas in China and one of the largest independent oil and gas exploration and production companies in the world, according to its website.
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