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Here are some more selected news articles for the week ending 06 March 2021. Go here for Part 1.
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30 years later, echoes of largest inland oil spill remain in Line 3 fight | MPR News – Thirty years ago Wednesday, on March 3, 1991, the Line 3 oil pipeline ruptured in Grand Rapids, Minn., spilling 1.7 million gallons of crude oil onto the frozen Prairie River.It’s still the largest inland oil spill in U.S. history. Because the river was covered with ice, crews were able to keep the oil from reaching the Mississippi, 2 miles away.”There would be people on the ice, squeegeeing oil on top of the ice, which was weird, everything was weird, it was like some kind of gross landscape,” Scott Hall, a reporter for Grand Rapids public radio station KAXE, told MPR News in 2018 for an episode of its Rivers of Oil podcast, which dove deep into the impacts of the spill.”And so they had hoses going down, and just sucking as much oil as they could out into these tanker trucks.”About 50 people gathered at the Prairie River on the 30th anniversary of the largest inland oil spill in U.S. history. On March 3, 1991, a pipeline owned by the Lakehead Pipeline Co. ruptured, spilling about 1.7 million gallons of crude oil. The Lakehead Pipeline Co. owned Line 3, which was built in the 1960s to carry oil from Canada, at the time of the spill. And the company that succeeded Lakehead, Enbridge Energy, is now replacing that same Line 3 with a new pipeline along a different route across the state.Construction on the new line began in earnest in December. But Native American tribes and environmental groups continue to fight the $4 billion project, on the ground and in court. At least 50 people gathered at the Prairie River near the spill site in Grand Rapids Wednesday. Law enforcement issued citations to dozens of protesters after they blocked traffic on U.S. Highway 2. Protesters say the 1991 spill is an indicator of the risk that oil pipelines pose to Minnesota waters.
Enbridge’s Line 3 deal-making divides Ojibwe bands in Minn. – Last fall, Enbridge offered the Red Lake Band of Chippewa a lucrative deal if the tribe would drop legal efforts to quash the company’s new pipeline across northern Minnesota. Red Lake said no. In 2018, Enbridge made an attractive offer to the Fond du Lac Band of Lake Superior Chippewa to run part of the pipeline – a replacement for its current aging and corroding Line 3 – through its reservation. Faced with the alternative of having the new Line 3 next door with no control over it, the tribe took the deal. But it has caused lingering bad feelings with other Ojibwe. The two offers underscore Enbridge’s attempts to win over the Ojibwe bands in Minnesota – and the tensions those efforts have caused as construction of the controversial pipeline enters its fourth month. “There has been an attempt [by Enbridge] to divide us, and to an extent it has,” said Sam Strong, Red Lake’s tribal secretary. “It’s very negative, and it is their playbook.” Enbridge is spending more than $3 billion on the new Line 3, one of the largest construction projects for Minnesota in recent years. Line 3 is one of six Enbridge pipelines along a similar corridor, carrying thick crude from Alberta, Canada, to Superior, Wis. The corridor crosses the Leech Lake and Fond du Lac reservations. Enbridge platted the new Line 3 partly along a new route, largely to avoid crossing reservations, but still traversing a vast swath of land where the tribes have treaty rights to hunt, gather and fish. The Leech Lake Band of Ojibwe was not only against a new pipeline on its reservation, it wanted the old Line 3 gone. So when Enbridge agreed to remove the old pipe, Leech Lake didn’t oppose the new pipeline when it was approved by the Minnesota Public Utilities Commission (PUC). The other four tribes – Red Lake, Fond du Lac, the White Earth Band of Ojibwe and the Mille Lacs Band of Ojibwe – fought hard against the pipeline. They saw it as a desecrater of lakes, rivers and wild rice fields, a crop the Ojibwe hold sacred. “We really believe in the reciprocity of our people and the nature around us,” Strong said. “Financial compensation might benefit us, but if this pipeline burst and there is a catastrophic event, would we be complicit?” White Earth, the state’s largest Ojibwe band, and Red Lake continue battling Line 3 in both federal court and the Minnesota Court of Appeals. The Mille Lacs Band also is part of the state appeal, which aims to rescind the PUC’s approval of Line 3. Fond du Lac, after its deal with Enbridge, dropped out of the court fight and Leech Lake never joined it.In October, before Enbridge got its final environmental permits for the project, the company offered Red Lake a bundle of economic incentives, according to documents obtained by the Star Tribune. Red Lake rejected the offer, as it has a longstanding resolution opposing Line 3, Strong said. Still, he acknowledged that Enbridge’s offer caused some dissent within the tribe.
‘Pipe Dream’: Enbridge escalates local tensions – Indian Country Today – Berglund Park stood empty recently as families and community members huddled around warming fires in an open field nearby, listening to music and eating Indian tacos as they learned about the Enbridge Line 3 pipeline cutting through their community. A group of pipeline opponents known as water protectors from the nearby Honor the Earth camp organized the small winter carnival to provide information about the impact of dependence on fossil fuels and a future built on renewable energy. Their routine request to use the pavilion on Feb. 4, however, was rejected by public officials who said they had “concerns” – sparking a backlash that quickly turned the small-town festival into a public fight over freedom of speech and assembly. It is also emblematic of the powerful economic clout the Canadian company holds over the region and the divisions it creates in local communities, said Shanai Matteson, a non-Native woman raised in Palisade who has joined local Indigenous groups in opposing the pipeline.”It seems like there isn’t much common ground anymore,” she told Indian Country Today. “The pipeline is ripping through the community. A lot of people feel that Line 3 is inevitable and that we’re just causing problems by protesting.”Mara Verheyden-Hilliard, director of the Center for Protest Law and Litigation in Washington, D.C., sent a letter to city and county officials challenging the decision on behalf of water protectors, including Matteson and Winona LaDuke, White Earth Band of Ojibwe, a well-known environmental justice activist and executive director of Honor the Earth.”Your offices have attempted to deprive LaDuke, Matteson and others of their lawful rights to assemble on public land,” the letter said. “Basic First Amendment rights are being deprived at the whim and direction of entities and officials, armed with the power of the state, serving essentially as private security of a private corporation whose profit interests lie in suppressing and demonizing opposition to their activities – including suppressing educational events that can impact the public’s understanding of their dangerous pipeline.”Water protectors believe they were barred from Berglund Park because leaders wanted to curb criticism of Line 3 and Enbridge, a company that has brought jobs, donations and an economic boost to Aitkin County.The windfall has created sharp divisions in the community, splitting neighbors, families and friends. Matteson believes many people in the region, including some of her own family members, signed over their lands to Enbridge without fully understanding that they had a choice in the matter.”I think they figured that since their neighbors signed with Enbridge, they had little choice,” she said. “Refusing to sign would essentially be telling your neighbors that they’re wrong.”
Leaders of tribal nations in MN ask Walz to pause Line 3 work during legal appeal — The Minnesota Indian Affairs Council is asking Gov. Tim Walz to temporarily stop the ongoing construction of the Line 3 oil pipeline across northern Minnesota. In a letter dated Wednesday, the group, which serves as the official liaison between the state and the 11 Native nations within its borders, urged Walz to issue an executive order putting a stay on the pipeline replacement project construction while lawsuits challenging the project’s approval play out in court. “The pipeline project opens up a brand new pipeline corridor through a water-rich environment where wild rice and other plants and animals are plentiful,” the council wrote. The state’s seven Ojibwe bands, the letter continues, retain treaty-protected rights to hunt, fish and gather along the 330-mile stretch of land in the state where the pipeline is being constructed. “Clearly, the pipeline construction and operation will negatively impact the productivity of the resources throughout the pipeline corridor,” it continues. The letter from the council follows requests from the White Earth and Red Lake Nations to place a stay on the project until their appeals, along with challenges from environmental groups and the state Commerce Department, are heard in court. But those requests were denied by the Minnesota Public Utilities Commission and the Minnesota Court of Appeals. Enbridge Energy has quickly ramped up construction of Line 3 since it received final permits at the end of November. Work began in earnest on Dec. 1. More than 4,000 workers are currently building the pipeline, along five different sections spread out across the length of the pipeline corridor, which stretches from far northwestern Minnesota, south past the headwaters of the Mississippi River, and east to Enbridge’s pipeline hub in Superior, Wis. Tribes and groups fighting the project have argued their appeals will be moot without a stay, since it will likely take several months for the court process to play out. Enbridge anticipates completing the pipeline by the end of September. In the letter, tribal leaders also express worry that President Joe Biden’s recent decision to cancel the Keystone XL pipeline – which also would have carried Canadian oil into the U.S. – could embolden Enbridge to eventually build more pipelines in the new Line 3 corridor. “President Biden’s decision to stop the Keystone XL pipeline has essentially handed Enbridge a monopoly for exporting tar sands out of Canada,” the letter reads. “This does not bode well for us.”
Republicans used oil industry-backed study to criticize Deb Haaland – Republican senators cited a study commissioned by the biggest oil and gas trade association in the US in their criticisms of Deb Haaland, Joe Biden’s nominee to lead the Department of the Interior, during a confirmation hearing last week. Republicans on the Senate energy and natural resources committee referenced the study, which has been widely criticized by conservationists, as they grilled Haaland, a Democratic US representative from New Mexico, on her past statements about energy issues and the Biden administration’s climate plans. At issue in particular was the administration’s 60-day pause on new federal oil and gas leases, which several senators mischaracterized as a “ban”. All Republicans on the committee have received significant campaign contributions from oil and gas political action committees and employees, and some are personally invested in the industry, as the Guardian and the Center for Media and Democracy recently reported. Haaland, 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. As they criticized Haaland and Biden’s stance on federal leases, two of the senators cited projected job losses from a ban on federal oil and gas extraction that came from a study commissioned by the American Petroleum Institute(API). API is the country’s biggest oil and gas trade association and spent millions of dollars to help elect Republicans to Congress in the 2020 cycle.John Barrasso of Wyoming, the ranking member on the committee and a top Senate recipient of oil and gas contributions, cited the institute’s September 2020 study three times during the hearings, and Cindy Hyde-Smith of Mississippi referenced it once.On 23 February, Barrasso listed the study’s projected job losses for the states that committee members represent, leading with Haaland’s state of New Mexico (62,000 jobs) and his state of Wyoming (33,000). “My question is for you: why not just let these workers keep their jobs?” asked Barrasso. Conservationists have criticized the study. It considers a permanent ban on new and existing leases, not the current 60-day pause on only new leases, and predicts job losses over a two-year period. The energy news website DeSmog noted that for New Mexico, these predicted job losses far exceeded the total number of employees in the oil and gas extraction industry, and described the claim as “staggering”.
DAPL protester fighting grand jury jailed again; Martinez also now being fined — A Dakota Access Pipeline protester who is refusing to provide testimony to a federal grand jury is once again behind bars, his supporters say.Steve Martinez was held in contempt Wednesday for the second time in a month and jailed as a federal prisoner, according to supporters. He had been free for about a week, after being released Feb. 22 following 19 straight days of incarceration in the Burleigh Morton Detention Center. Grand jury proceedings are secret, and the government does not confirm them, much less talk publicly about them. Martinez’s supporters say the grand jury is investigating a violent clash between protesters and law officers more than four years ago that became the emblematic skirmish of the prolonged protest against the pipeline that’s now moving Bakken oil east. A New York City woman who suffered a serious arm injury is suing law officers and Morton County, seeking millions of dollars. Martinez is the one who drove Sophia Wilansky to get medical aid. He’s refusing to testify about it because he believes authorities are trying to suppress the anti-DAPL movement. Martinez, 46, is originally from Pueblo, Colorado, but he’s lived in Bismarck since November 2017. He received his first grand jury subpoena in December 2016, and about 40 of his supporters rallied outside the federal courthouse in Bismarck in January 2017. A federal judge refused to quash the subpoena, but prosecutors later withdrew it without giving a reason. They subpoenaed Martinez again last November, according to his attorneys. He was jailed Feb. 3 for not complying, released on a technicality about three weeks later, but immediately given another subpoena. He could be imprisoned for up to 1 1/2 years — the maximum length of the grand jury proceeding. He also is now being fined $50 per day but “continues to stand in solidarity with his Indigenous relatives,” according to his supporters.The pipeline has been operating since June 2017, though American Indian tribes are still fighting in court to try to get it shut down. Tribes and environmental advocates fear an oil leak would contaminate the Missouri River. The protest over six months in 2016-17 resulted in more than 750 arrests.
How Closing DAPL Would Impact Bakken Crude Oil Producers —When it finally came online in mid-2017, the Dakota Access Pipeline was a lifesaver for Bakken crude oil producers. For years, they had suffered from takeaway-capacity shortfalls that forced many shippers to rely on higher-cost crude-by-rail, sapping producer profits in the process. Then came DAPL, which provides straight-shot pipeline access to a key Midwest oil hub, and its sister pipe – the Energy Transfer Crude Oil Pipeline (ETCOP) – which takes crude from there to the Gulf Coast. Problem solved, right? Not exactly. Now, there’s at least an outside chance that a shutdown order is issued as soon as early April in connection with the ongoing federal district court process, with the timeline for a physical closure of the pipe still to be determined. A shutdown may last for only a few months but could potentially last much longer. Where does this uncertainty leave Bakken producers, many of whom have been hoping to benefit from the recent run-up in crude oil prices by ramping up their output this spring? Today, we discuss recent upstream and midstream developments in the U.S.’s second-largest shale/tight-oil play. While it was being developed, DAPL was among the most controversial pipeline projects in the U.S., second only perhaps to TC Energy’s Keystone XL, which remains in limbo (and only partially built) after President Biden canceled KXL’s Presidential Permit his first day in office. Opposition to DAPL didn’t stop when it began commercial operation 45 months ago today. On March 25, 2020, U.S. District Court Judge James Boasberg ruled in a lawsuit filed by the Standing Rock Sioux tribe that the U.S. Army Corps of Engineers violated the National Environmental Policy Act (NEPA) when, in February 2017, it issued DAPL’s developers an easement under Lake Oahe – a large reservoir near the tribe’s reservation in central South Dakota (see Figure 1) – without preparing an environmental impact statement (EIS). Three-plus months, later, on July 6, Boasberg ordered that the Corps’s easement be vacated and that DAPL be taken out of service until the Corps completed the EIS, a process expected to take a year or more. The U.S. Court of Appeals on August 5 stayed the District Court judge’s order that the pipeline be shut down during the preparation of the EIS, and the Corps announced on September 10 that it had formally started the process of preparing the environmental report. On January 27, 2021, the Court of Appeals affirmed the parts of Boasberg’s ruling vacating the Corps’s Lake Oahe easement and directing the Corps to finish the EIS but reversed the parts of Boasberg’s ruling requiring the pipeline to be shut down. Separately, Judge Boasberg is considering a second motion filed by the Standing Rock Tribe for an injunction to shut down DAPL. After the Court of Appeals’ late-January ruling, Boasberg scheduled a February 10 status conference to discuss the tribe’s injunction motion and how the Corps expects to proceed now that the appellate court has confirmed that its easement is vacated. A day before the planned meeting, the Corps asked that it be delayed to April 9, and Boasberg agreed. For its part, the Standing Rock Tribe has been arguing that, with the easement for DAPL’s crossing under Lake Oahe vacated, the pipeline should be shut down immediately and shouldn’t be allowed to be restarted unless and until an EIS has been approved. Energy Transfer, which owns the largest share of DAPL and operates the pipeline, said during its quarterly earnings call on February 17 that the pipeline has been operating safely for almost four years now and that it does not see a scenario under which the pipeline will be ordered offline.
California City Bans New Gas Stations, Says No More Pumps –The Petaluma, California, City Council unanimously moved to ban new gas stations, and existing stations will not be allowed to add any new gas pumps. Electrek discusses Petaluma’s Ban on New Gas Stations.Existing gas stations aren’t being shut down in Petaluma. It’s just that no new ones will be built, because there are enough – one within a five-minute drive of every residential area in the city, in fact, as the Santa Rosa Press Democrat writes. The plan is to accelerate the adoption of electric vehicles, and Petaluma’s City Council, with a population of around 60,000, feels its 16 existing gas stations is enough. Petaluma is the first seed planted, and many will follow and sprout, first in California, and then in other US states like Washington. For example, the Coalition Opposing New Gas Stations (CONGAS) is working to ban gas stations in Sonoma County, California, and its nine cities.Just as the world is moving away from coal and other fossil fuels and toward green energy, so too will towns and cities follow in Petaluma’s footsteps by deciding they have enough gas stations as EV numbers rise and ICE cars fall. The number of charging stations will multiply, and the number of gas stations will shrink.
Democrat Katie Porter says to target Big Oil in new role as natural resources chair (Reuters) – U.S. Representative Katie Porter, who has earned a reputation for grilling bank and drug company executives during Congressional hearings, told Reuters she will focus on a new target in her new role as chair of the House Natural Resources Oversight Committee: Big Oil. The position will make the California Democrat a key player in U.S. energy policy as President Joe Biden puts curbs on federal fossil fuel development at the center of a plan to fight climate change. Biden paused new federal oil and gas leases, source of about a quarter of U.S. petroleum production, shortly after taking office in a move widely seen as a first step toward delivering on his campaign promise of a permanent ban. Porter is one of several Democratic lawmakers that introduced a set of bills this week to reform federal oil and gas leasing regulations, including by raising royalty rates for the first time in a century – proposals that could impact existing leases even if new leases are eventually phased out. “How can things not have gone up as I see the cost of my everyday expenses — healthcare, childcare, college, housing — all go up?” Porter said. “This is not a coincidence. This takes intense lobbying work by the fossil fuel industry to prevent these changes.” Porter introduced a bill that would boost the amount oil companies must pay on their federal onshore production to 18.75% from 12%, a rate that has not changed since 1920, and also increase minimum bids in lease auctions to $5 per acre from $2. “I confess when I first heard the term ‘oil and gas royalty rates’ I didn’t immediately feel a deep emotional sort of reaction to fighting the issue. But as I began to understand what’s really at stake, which is oil and gas companies taking our public resources at pennies on the dollar, I began to feel outraged,” she said. A second-term Congresswoman from California, Porter has become a social media sensation after her rapid-fire grilling of powerful executives over issues like compensation and drugs pricing. She is perhaps best known for scrawling on what Twitter dubbed her “whiteboard of truth” during committee meetings -a prop she will use in her new oversight role. Porter said that as a professor who taught classes about bankruptcy, she enjoys teaching esoteric policy and making it real for people. “Our public lands are not a speculative investment,” she said. “They are a national treasure.”
Oil Sands Give OPEC a Boost — Major oil sands producers in Western Canada will idle almost half a million barrels a day of production next month, helping tighten global supplies as oil prices surge. Canadian Natural Resources Ltd.’s plans to conduct 30 days of maintenance at its Horizon oil sands upgrader in April will curtail roughly 250,000 barrels a day of light synthetic crude output, company President Tim McKay said in an interview Thursday. Work on the Horizon upgrader coincides with maintenance at other cites. Suncor Energy Inc. plans a major overhaul of its U2 crude upgrader, cutting output by 130,000 barrels a day over the entire second quarter. Syncrude Canada Ltd. will curb 70,000 barrels a day during the quarter because of maintenance in a unit. The supply cuts out of Northern Alberta, following a surprise OPEC+ decision to not increase output next month, could add more support to the recent rally in crude prices. OPEC+ had been debating whether to restore as much as 1.5 million barrels a day of output in April but decided to wait. The Saudi-led alliance closely monitors other major oil producers as it seeks to manage the entire global market, and surging production in North America was its biggest headache in recent years — especially from U.S. shale but also from Canada. “The U.S., Saudi Arabia, Russia, Canada, Brazil and other well endowed countries with hydrocarbon reserves — we need to work with each other, collaboratively,” Saudi Energy Minister Prince Abdulaziz bin Salman said after the group’s meeting on Thursday. Canada’s contribution to balancing the market with less production, much like slowing output in the U.S., is not a deliberate market-management strategy but significant nonetheless. Even though the output cuts are short-term, the battered oil-sands industry shouldn’t be a concern for the Saudis in the long run either, judging from McKay’s outlook for the industry. “I can’t see much growth in the oil sands happening because there is going to be less demand in the future,”
Keystone Pipeline Co. Taps Lobbyist Brother of Biden Adviser – A lobbying firm run by the brother of White House counselor Steve Ricchetti has signed the Canadian-based company behind the Keystone XL pipeline project, which President Joe Biden effectively halted upon taking office. Jeff Ricchetti, who runs Ricchetti Inc., will be lobbying on behalf of TC Energy Corp., regarding “legislative issues affecting energy infrastructure, the safe and efficient transportation of natural gas,” according to a disclosure form recently filed with the Senate. The presidential permitting for the pipeline to link oil sands in Canada to U.S. refiners was approved by the Trump administration after previously being rejected by President Barack Obama. On his first day in office, Biden issued an executive action revoking the Keystone XL pipeline’s cross-border presidential permit. The pipeline has drawn strong criticism from environmentalists but is backed by the energy and construction industries as well as the Canadian government.
USD Group nearing completion of Hardisty-to-Port Arthur, crude-by-rail network | S&P Global Platts – The US Development Group is nearing a mid-year completion of its rail terminal network from Alberta to the Texas Gulf Coast that would move more heavy Canadian crude specifically designed for long-haul rail transport, the company said March 4. The USD Group-Gibson Energy joint venture includes building a diluent recovery unit at its Hardisty terminal hub and a new Port Arthur terminal in Texas that would receive the oil sands crude by rail. The diluent recovery unit is designed to remove the diluent from the Canadian bitumen. The resulting crude is called DRUbit, a proprietary heavy Canadian crude oil specifically designed for safer rail transport. The remaining diluent, which is mostly condensate, then goes back to the mining and processing facilities to be blended with the heavy oil sands to prepare crude for pipeline transport. USD CEO Dan Borgen said March 4 that construction would be finished by the end of the second quarter, but that commissioning and startup could extend into early in the third quarter. “We are progressing on schedule and on budget,” Borgen said on the company’s earnings call. “We are pleased to see the industry begin to get behind the program.” The diluent recovery unit would start out by processing 50,000 b/d that is contracted with ConocoPhillips and eventually ramp up to at least 100,000 b/d, he said. The crude would move to the USGC along the Canadian Pacific and Kansas City Southern railway networks. Apart from the new Port Arthur terminal, crude volumes also can ship to USD’s existing Texas Deepwater hub in Houston. “The return to normal in Canada is actually happening at a faster rate than in the US,” Borgen said. “We are now moving into where crude-by-rail matters.” Indeed, Canadian oil production has recovered from its pre-pandemic volumes of about 5 million b/d of crude oil, condensate and diluent, while US production is still down by at least 2 million b/d from its pre-COVID-19 volumes. Imports of Canadian crude to the US Midwest and USGC combined are expected to recover to around 2.9 million b/d in March from less than 2.6 million b/d in May 2020, according to S&P Global Platts Analytics. However, crude-by-rail volumes are not yet recovered and may take quite some time. Canadian crude-by-rail exports plunged from an all-time high of 411,991 b/d in February 2020 to an eight-year low of 38,867 b/d in July as the pandemic took hold. Exports have since rebounded to 190,454 b/d in December, according to the Canada Energy Regulator.
Valero looks to reroute Mexico imports, double capacity as it finalizes storage network — Valero is looking to reroute its fuel imports to Mexico, while more than doubling its storage capacity, as the company finalizes the construction of a network of terminals in the country by 2022, ahead of an expected recovery in demand, the company’s Mexico head of operations said March 5. Valero will be in a position to import all the fuel it distributes in Mexico through two Gulf of Mexico import terminals in the ports of Altamira and Veracruz for which the company has long-term contracts. The terminals will feed a network of smaller inland terminals by rail, Valero’s Carlos Garcia told S&P Global Platts. “Our goal is to supply the Mexican market with fuels that have been produced at our refineries through a network that we control, so that we can ensure the quality of the product and reliability of the supply,” Garcia said. Valero began its Mexican operations in 2018 with terminals in the states of Chihuahua and Nuevo Leon that were supplied by rail from its refinery in McKee, Texas, Garcia said. When Valero’s network of terminals under development is completed, the company will have a total storage capacity of roughly 6 million barrels in key areas of the country, he said. This will allow Valero to stop bringing fuels to Mexico from Houston by rail. “We will only use rail to move the product inland, which is safer than trucks,” Garcia said. Valero is the world’s largest independent oil refiner, with an output of more than 3 million b/d of refined products from its refineries, mostly located in Texas. According to data from Mexico’s Energy Secretariat, private companies operating in the country imported 337,000 b/d of gasoline, diesel and jet fuel over 2020. Valero imported a little over 40,000 b/d into Mexico in 2020, Garcia said. The Veracruz terminal, the largest of the planned terminals in Mexico, with a total capacity of 2.1 million barrels, was recently completed by IEnova, the Mexico unit of California-based Sempra Energy. IEnova is also building two 640,000/b terminals in the Puebla and Mexico City region, also under long-term contracts with Valero. The three terminals will create a network that will allow Valero to better serve the center of the country, Garcia said.
Analysis: How Exxon Is Being Forced To Accept The Reality Of Bad Fossil Fuel Investments – Last August, ExxonMobil warned that it may need to remove 20 percent of its oil and gas proved reserves from its books. While that was a shocking number from the oil major, reality proved to be even more of a shock to the company. On February 24, Exxon reported that it would actuallyremove over 30 percent of its proved reserves from its books – essentially wiping out the value of its Canadian tar sands holdings from its books.According to the Securities and Exchange Commission (SEC), proved reservesare “the estimated quantities of crude oil, natural gas, and natural gas liquids which geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions.”Proved reserves are the concept on which the whole oil business is based. It is a main factor in how oil and gas companies are valued and in determining how much money banks will loan companies. Much of oil and gas lending is known as reserved-based lending.Exxon’s latest move is even more remarkable, however, because it has a reputation for being resistant to properly valuing reserves, often lagging behind the other oil major companies in making these downward adjustments.In this case, the market – and the SEC – forced Exxon’s hand on the matter. SEC rules require that oil and gas companies value reserves based on the average price of oil from the previous 12 months. In its latest SEC filing released this week, Exxon explains that this requirement essentially meant removing all of the value for its Canadian tar sands investments from its reserves.Along with wiping out the value of its tar sands holdings, Exxon also noted that it wrote off “approximately 1.5 billion oil-equivalent barrels, mainly related to unconventional drilling in the United States.” Unconventional drilling refers to the fracking business, which has been a financial disaster for many of those involved.
Israeli court slaps 7-day gag order on oil spill – A Haifa court slapped a seven-day gag order on the investigation into the source of a huge oil leak that has polluted Israel’s entire Mediterranean coast with tar. The ruling by the Haifa Magistrate’s Court came at the request of the Environmental Protection Ministry, which is probing the spill. The order prohibits publishing any details that may identify suspects, vessels, relevant ports, cargo and shipping lines, according to The Times of Israel. The Environmental Protection Ministry secured satellite images, dated February 11, of a suspicious black patch on the sea surface some 50 kilometers (31 miles) off the coast and footage showing 10 ships that were in the area around that time. Maya Jacobs, who heads the Zalul marine protection organization, reacted to the court order by saying, “When those active in the sea and creating the dangers of spills are wealthy oil and shipping companies with influence over regulators, Zalul demands a transparent investigation and the removal of the order.” Environmental Protection Minister Gila Gamliel pledged that authorities would use every means possible to locate whoever was responsible for the spill and prosecute. She announced that she had agreed with Prime Minister Benjamin Netanyahu on submitting a proposal for government approval on Monday for immediate funding for beach rehabilitation and advancement of legislation on preparedness for marine spills that should have been passed years ago. Meanwhile, nine local authorities belonging to the Sharon Carmel Towns Association stopped cleanup work at contaminated beaches under their jurisdiction Monday, after the Finance Ministry refused to approve a program and budget submitted by the Environmental Protection Ministry.
Israel clears Greek tanker over Mediterranean oil spill — Israeli authorities said Sunday they had cleared a Greek tanker of suspicion in relation to an oil spill that caused massive tar pollution on the Mediterranean coastline, devastating marine life. It is seen as Israel’s worst maritime pollution incident in decades. Powerful winds and unusually high waves pummelled Israel’s entire Mediterranean coastline on February 17, with tonnes of tar staining 160 kilometres (96 miles) of beach from its borders with the Gaza Strip to Lebanon. Volunteers have teamed up with authorities to clean the beaches, while officials from the environmental protection ministry launched an investigation into the source of the spill. After an Israeli media report had named the Greek oil tanker Minerva Helen as a possible culprit, the ship’s owner, Minerva Marine Inc., firmly denied any connection to the spill. On Sunday, the ministry said that “following an inspection conducted in Greece on the Minerva Helen tanker, it has been cleared of suspicion of involvement in the severe tar event on Israel’s beaches”. The ship’s owner said the Israeli media report was an “unfounded an inaccurate allegation”. It said the ship had been in the Mediterranean in the days before the storm, “without any cargo on board” and therefore could not be linked to a spill. The company also pledged to “cooperate with any relevant authority” interested in the Minerva Helen’s movements. On Saturday, in the Greek port city of Piraeus, Israeli inspectors conducted “an extensive examination” of the Minerva Helen that “positively ruled out the vessel as the source of the pollution”, the environmental protection ministry said in a statement. The investigation was conducted in coordination with Greek authorities, with assistance from the Hellenic Coast Guard, the ministry added.
Cyprus coast not affected by oil spill off Israel – The fisheries department said no signs of tar have been seen on the Cypriot coastline, as neighbouring Israel is dealing with what has been described as one of the worst ecological disasters in decades following a large oil spill from an unknown source. In a statement on Thursday, the department said it had been notified around a week ago by Israel’s ministry of environmental protection about the pollution in its sea and coast. Since then, it added, the department has been closely monitoring Cyprus’ maritime area through satellite images received from the European Maritime Safety Agency for images of possible oil spills. So far, there has been no depiction of a possible oil spill in Cyprus’ maritime area, it said. Moreover, the search and rescue coordination centre informed Israeli authorities that there had not been any marine incident or marine oil pollution up until February 17 in Cyprus’ area. Responding to a request by the Regional Marine Pollution Emergency Response Centre for the Mediterranean Sea (REMPEC), the Department of Fisheries and Marine Research sent satellite images taken on February 6 and 12, depicting possible oil spills, to be further assessed, it added. Israel has been tackling a large oil spill from an unknown source, which reportedly devastated sea life and dumped tonnes of tar across the coastline from Israel to southern Lebanon. The thick clumps of tar showed up on the neighbouring country’s beaches.
Mystery Israeli oil spill leads to multimillion dollar clean-up – A massive oil spill off the coast of Israel is being called the worst ecological disasters in the Mediterranean country’s history. The cause and full extent of the damage is still unknown, but Israeli authorities are investigating. Several tankers are under suspicion. The spill was discovered when patches of tar began washing up on more than 100 miles of Israel’s coastline this past week. According to the Times of Israel, some 70 tons of tar and contaminated material have been scraped off and collected along the country’s shores since cleanup efforts began. Beaches have been shut down, and the sale of fish and other seafood from the area is now prohibited. The Israeli government approved a $13.8 million response budget that will come from the state’s Fund for the Prevention of Marine Pollution, created some 40 years ago to pay for cleanups as well as equipment and training to respond to oil spills. There is still a fog of war with respect to what happened. Ten ships are under investigation including the Greek ship, called the Minerva Helen, which was an initial focus of authorities according to the Times of Israel. Minerva Marine, a longstanding player in the sector with a current fleet of dozens of tankers, said in a statement that the allegations were “unfounded and inaccurate” and claim to have evidence that the vessel was in no way involved. Whoever is found responsible, this disaster will raise questions about how the regulations and liability of oil spills and environmental pollution are handled. The Israeli Minister of Environmental Protection, Gila Gamliel, and Prime Minister Benjamin Netanyahu headed to the port town of Ashdod on Monday to assess the damage. The director of Israel’s Nature and Parks Authority, Shaul Goldstein, said that the spill will setback ecological renewal and protection efforts by decades. Curiously, a court in Haifa issued a gag order, prohibiting the publication of incident details. Officials says that the restrictions are in place to avoid undermining the investigation:
IMO regional pollution centre assists with oil spill incident in Israel – The IMO-administered Regional Marine Pollution Emergency Response Centre for the Mediterranean Sea (REMPEC) is assisting the competent authorities of Israel with technical expertise regarding the beaching of a large quantities of tar balls on the Israeli shoreline.The cause of the pollution is yet to be identified. As of 23 February 2021, 1,000m3 of tar balls have already been collected.REMPEC is supporting the identification of the source of the pollution by obtaining information from satellite images from Maritime Support Service (EMSA). So far, 10 vessels have been found to have been in the vicinity of the possible original position of the spill and the investigation continues.The Centre has also invited neighbouring countries to report any pollution in the last three weeks. No pollution has been reported by countries who responded.The REMPEC Mediterranean Assistance Unit (MAU) is working to assess the potential impact to neighbouring countries. This will be done using the results of forecasting model from the Mediterranean Operational Network for the Global Ocean Observing System (MONGOOS), a Member of the MAU. The Centre is also in contact with the Lebanese Competent Authorities, following reports of pollution of the Lebanese shoreline.
Volunteers struggle to clean oil spill as new stains keep arriving – Volunteers are struggling to clean the shores of Israel after a large-scale tar pollution which still has repercussions as new stains arrive to what were fairly cleaned beaches, the Environmental Protection Ministry said on Sunday. Pollution levels at Rosh HaNikra beach went up to moderate-heavy as new stains washed ashore. While many beaches are depicted as blue (very light) on the pollution ‘Stop-Light’ map created by the ministry, Dor Beach is orange (light to moderate) and a spot on Hof Hasharon park is red (moderate to heavy). Some tar was carried ashore to Tel Baruch beach in Tel Aviv, Bustan HaGalil shore, and Havat HaMaychalim beach in Haifa. The ministry explained that the rocks on these shores make cleaning operations hard and cautioned that further stains can hit the beaches in the future according to currents and sea-level changes. Some 70 tons of toxic tar had already been cleaned from Israel’s beaches last week, the Nature and Parks authority announced. However, the ministry believes that around 1.2 kilotons (1,200 tons) of tar has so far washed ashore since the spill. Volunteers and wildlife experts are hard at work to clean the shores and save the lives of seagulls and sea turtles injured by the tar. It is suspected that a young whale had died as a result of the pollution.
Israel eliminates 12 of 35 vessels suspected in oil spill –The oil spill that has caused the contamination of almost the entire stretch of Israel’s Mediterranean coast with tar is “without doubt a case of malice,” Environmental Protection Minister Gila Gamliel told a press briefing Monday. “Either the ship dumped oil into the sea on purpose, or the oil leaked out because of a fault,” she said. Either way, the ship’s owner “lacked compassion toward [marine] wildlife and nature and did not inform the authorities.” Tar contamination has affected 160 kilometers (100 miles) of the Mediterranean coastline’s 195 kilometers (121 miles), with tar still washing up on many beaches. It has also polluted beaches in Lebanon. The Environment Ministry believes that a spill identified 44 kilometers (27 miles) off shore on February 11 was responsible for the disaster. According to the Financial Times, 210 vessels passed within 50 kilometers of the shores of Israel and Lebanon between February 10 and 12. Gamliel said Monday that the ministry had investigated 35 vessels over recent days, eliminating 12 of them. Rani Amir, who directs the ministry’s National Unit for the Protection of the Marine Environment, pushed back against criticism of a lack of advance warning technology such as access to satellite images, saying that most of the contamination would have been inevitable anyway, especially as stormy weather would have prevented sending boats out to surround the slick and treat it at sea. He added that divers would not be sent to retrieve blocks of tar from the seabed until laboratory results determine exactly what the leaked substance is and whether the waters are safe. Gamliel also said that plans to increase the flow of oil through the southern port of Eilat looked like a “step in the wrong direction” and called for an urgent discussion by all relevant government bodies. In October, a memorandum of understanding was signed between the state-owned Europe-Asia Pipeline Co. (EAPC), formerly the Eilat-Ashkelon Pipeline Co., and MED-RED Land Bridge, a joint Israeli-UAE venture, to use Israel as a land bridge between the Red Sea and the Mediterranean for the transport of Gulf oil to markets in Europe.
Lebanon seeks U.N. help over Mediterranean oil spill pollution – Lebanon’s Foreign Ministry on Tuesday moved to file a report with the U.N. in which it asked for technical assistance in the face of a Mediterranean oil spill that has contaminated at least half of coastline. The report, prepared by the National Council for Scientific Research at the request of caretaker PM Hassan Diab, highlights the magnitude of the damage, describes it as an environmental disaster and warns that the recovery could take several years, the National News Agency said. The report also calls on the U.N. to “determine the reasons behind this spill and identify the culprit so that Lebanon can demand compensations for the severe environmental damage it has incurred.” “This is considered an environmental disaster and (Lebanon) has no ability to address it and contain its protracted damage” on its own, the report says. MP Enaya Ezzeddine of the Development and Liberation bloc has said that the amount of tar that has polluted the sand beaches of south Lebanon in recent days has been estimated to be at around two tons. “The cleaning process will be arduous and painstaking and it requires followup and cooperation between municipalities, scout associations and local, national and international NGOs and environmental groups,” Ezzeddine added. Lebanese on Saturday raked balls of tar away from a turtle beach in the South after a massive slick washed ashore after hitting neighboring Israel. A storm more than a week ago threw tons of the sticky, black substance onto the beaches of Israel, apparently after leaking from a ship. Within days the spill had spread to south Lebanon, where clumps of tar contaminated beaches stretching from the border town of Naqoura to the southern city of Tyre, all the way to the capital Beirut. The swathe of coastline, which includes some of the country’s best preserved beaches, is a nesting site for turtles which usually appear later in the year. On Saturday morning, mask-clad volunteers and members of the civil defense sifted blobs of tar out of sand on the beach of the Tyre Coast Nature Reserve, an AFP journalist said. The protected zone covers 3.8 square kilometers of beach as well as adjacent sea waters. As well as endangered loggerhead and green sea turtles, the beach provides shelter for the Arabian spiny mouse.
Israel finds ship behind oil spill off its coast, ministry says — Israel has located the ship responsible for an oil spill that blackened its beaches with tar last month, the environment ministry said on Wednesday, without giving details. The country’s investigation has focused on an unidentified ship that passed about 50 km (30 miles) off the coast on Feb. 11 as the likely source of what environmentalist groups are calling an ecological disaster that could take years to clean up. Environmental Protection Minister Gila Gamliel will give more details about the ship later on Wednesday, her ministry said. Clumps of sticky black tar from the spill have also washed up on the coasts of south Lebanon and the Gaza Strip. The ministry, which has been working with European agencies, had conducted a broad search that it said included dozens of vessels.
Chevron Pacific Indonesia says Dumai oil spill is not toxic waste PT Chevron Pacific Indonesia or CPI on late Sunday evening acknowledged that there had been a pipe leakage from one of its pipes located at the Port Of Chevron Pacific Indonesia-Dumai in the Riau Province. This incident occurred at 14:50 Western Indonesia Time (WIB) on Saturday, February 27, according to the oil firm’s corporate communications manager Sonitha Poernomo in a statement on the following day of February 28. The spokesperson was unable to explain the detailed amount of crude oil that spilled to the area’s waters as it is currently being calculated by the firm’s mitigation team. However, the firm’s early estimates conclude that it does not reach thousands of barrels. “At the time the pipes in the port were not in use and field officials immediately cleaned the area and fixed the leaking pipe,” said Sonitha Poernomo. She assured that the crude oil spill is not hazardous and toxic waste (B3 waste) as it was confirmed that it came from the company’s port pipeline. Upon mitigating further loss, Chevron Pacific Indonesia installed oil booms to prevent a broader spread of oil and constantly cleaned the oils that managed to escape the pipes. The company has also worked together with the Dumai City administration to further protect local residents and the environment. Dumai chief of environmental pollution control, Afdal Syamsir, said local officials have mobilized mitigation teams to the site of the oil spill and prevented further losses to the environment.
Iran launches vessel to deal with oil spill in Gulf (Xinhua) — Iran’s Ports and Maritime Organization (PMO) has launched a home-made oil spill response vessel (OSRV) to boost environment protection efforts in the Gulf, the Press TV reported Thursday. The ship is 55.5 meters long, 13 meters wide and six meters in height. It has a draft of four meters and a storage capacity of 550 cubic meters for recovered oil, according to the report. The OSRV is also equipped with a 350-meter drum oil skimmer, a dispersant system, a powerful pump and an electronically controlled diesel engine that allows it to sail with a speed of 16 knots, it said. The PMO has spent 25.27 million U.S. dollars on building the vessel, which is fully designed by Iranian shipbuilders, it added.
Offshore Project Commitments Set for Record Boost – According to a new Rystad Energy report, offshore project commitments are expected to not only recover going forward but their number is also set to reach a new record in the five-year period towards 2025.The report showed that the commitment count is forecasted to hit 592 projects from the beginning of 2021 up until the end of 2025, with growth expected across shallow water (0-410 feet), deepwater (410-4,921 feet) and ultra-deepwater (beyond 4,921 feet) depth levels. Total offshore project commitments declined during 2016-2020 to 355 projects, from 478 during 2011-2015, Rystad highlighted.Shallow water commitments are expected to take the largest share of the total offshore project pie, rising to 356 from 206 in the last five years, and 323 projects during 2011-2015. The number of deepwater projects is forecasted to rise to 181, from 106 in 2016-2020 and 115 in the five years before that. Rystad noted that it was expecting about 55 ultra-deepwater projects from this year until 2025, which it outlined was up from 43 in the previous five years.Ultra-deepwater activity is projected to be primarily concentrated in South America, with over 50 percent of the total committed value, while the Middle East is likely to lead shelf developments with 40 percent of the total value, Rystad highlighted. Deepwater investments are forecasted to be less dependent on any particular region, with a quarter of greenfield expenditure expected in Europe.”The growth in commitments will stimulate rising demand for floating production, storage and offloading vessels as well as subsea tiebacks,” Rajiv Chandrasekhar, an energy service analyst at Rystad, said in a company statement.”The search for large new fields in deep and remote waters became much more economically viable after dayrates for drilling rigs and offshore supply vessels fell in the wake of the oil price crash in 2014 and 2015. This offers significant support for companies interested in deepwater,” he added.For the purpose of its analysis, Rystad defined that a project is committed when more than 25 percent of its overall greenfield capital expenditure is awarded through contracts.
Murban futures aim to consolidate UAE position as global oil power, but uptake may take time – Abu Dhabi’s move to launch its Murban oil futures contract this month will strengthen its position as a global oil power, but challenges over adoption remain, according to leading experts and analysts. The Abu Dhabi National Oil Company has confirmed that trading of the contract will begin on March 29, marking a major change in how the oil rich emirate prices its crude exports. Murban is Abu Dhabi’s flagship crude grade and makes up more than half of the UAE’s total output. “What it does show is that Abu Dhabi and the UAE is continuing to consolidate its role as a major producer in the future,” Dan Yergin, vice chairman of IHS-Markit, told CNBC on Thursday. “It continues to add capacity and sees itself as a global economic hub, and it wants that reflected in the crude stream,” Yergin told CNBC’s “Capital Connection.” Wider impact After its launch was delayed by nearly a year due to regulatory hurdles, the futures contract for Murban, trading on the new ICE Futures Abu Dhabi Exchange, will let the market determine the price of Abu Dhabi’s oil and replace the less transparent retroactive pricing methods that have been used in years past. “The announcement further cements ADNOC’s shift toward benchmarking Murban as a price setter for the Middle East crude market, particularly for light sour barrels, a plan that has been in motion for several years,” Amrita Sen, chief oil analyst at Energy Aspects said. It may take time for Murban to gain a foothold in the pricing of Mideast Gulf crude exports, with many companies likely to take a wait-and see stance. Azlin Ahmad CRUDE OIL EDITOR, ARGUS MEDIA However, experts are divided over whether the contract will dramatically elevate the status of the grade among its rivals or expand its share in the increasingly competitive Asian markets, where 90% of Murban is sold. Abu Dhabi also thinks the futures contract can be used as a regional benchmark to price other crudes from the Gulf, but concerns around adoption remain. “Murban has the potential to be a significant development in the evolution of crude trading in the Middle East, but we’ll have to see how readily the market adopts the contract,” Herman Wang, managing editor of OPEC and Middle East news at S&P Global Platts, told CNBC. ‘It may take time’ Saudi Arabia, the largest producer in the Gulf, currently uses a method linked to Omani crude futures traded on the Dubai Mercantile Exchange. Most other producers base their monthly crude price on the Dubai and Oman crude price assessments operated by S&P Global Platts. “In a market that tends to hold on to familiar benchmarks, even if flawed, for a long time, it is difficult to see who, beyond ADNOC, might be the first to explore this new pricing option,” Azlin Ahmad, crude oil editor at Argus Media, said in a recent research note. “All this suggests that it may take time for Murban to gain a foothold in the pricing of Mideast Gulf crude exports, with many companies likely to take a wait-and see stance.”
Saudi and Russia are at loggerheads again, but OPEC meeting ‘unlikely to ruin the oil party’ – – A group of some of the world’s most powerful oil producers will hold a crucial meeting on Thursday to discuss reversing some of the output cuts it made last year. OPEC and its non-OPEC partners, an energy alliance sometimes referred to as OPEC+, will convene via videoconference in a bid to reach consensus over how to manage supply to the market. The group last year agreed to restrict the amount of oil it produces in an effort to prop up oil prices as strict public health measures coincided with an unprecedented fuel demand shock. This week’s supply decision comes at a time when oil prices have rebounded to pre-virus levels, production in the U.S. has taken a hit from freezing storms and the coronavirus pandemic continues to cloud the outlook. OPEC’s de facto leader Saudi Arabia has publicly encouraged allied partners to remain “extremely cautious” on production policy, warning the group against complacency as it seeks to navigate the ongoing Covid-19 crisis. Non-OPEC leader Russia, meanwhile, has indicated it wants to push ahead with a supply increase. Analysts broadly expect OPEC+ to hike output from current levels, but questions remain over how much exactly and which countries will be affected. At an industry event last month, Saudi Arabia’s Energy Minister Prince Abdulaziz bin Salman reportedly said to those trying to foresee the energy alliance’s next move: “Don’t try to predict the unpredictable.” Both Saudi and Russia ‘will get what they want’ Tamas Varga, analyst at PVM Oil Associates, told CNBC via telephone that he believed OPEC and non-OPEC partners had done an “amazing job” in rebalancing the market. However, while the global oil demand is recovering, he warned that the recovery is still “very, very fragile.” “What really matters here is Russia and Saudi Arabia. The breakeven price for Russia’s budget is much lower than that of Saudi Arabia, so you will see a kind of gap in the views between these two countries,” Varga said. OPEC+ initially agreed to cut oil production by a record of 9.7 million barrels per day last year, before easing cuts to 7.7 million and eventually 7.2 million from January. OPEC kingpin Saudi Arabia has since taken on voluntary cuts of 1 million from the beginning of February through March.Alexander Novak, Russia’s deputy prime minister, appeared to signal Moscow’s intent for a supply increase last month, claiming the market has already balanced. “Russia wants to move back towards normal production as quickly as possible while Saudi Arabia wants to enjoy high prices a little while longer and rather keep the market on the tight side than the loose side. We think both will get what they want,” Bjarne Schieldrop, chief commodity analyst at SEB, said in a research note. Russia will likely be allowed to increase output further, he added, while Saudi Arabia will return “some or potentially all” of its 1 million barrels per day unilateral cut. Analysts expect OPEC+ to discuss allowing as much as 1.3 million barrels per day back into the market on Thursday.
Oil dips as Chinese fuel demand doubts outweigh vaccines, U.S. stimulus hopes – Oil prices were up on Monday as fears that Chinese oil crude consumption is slowing overshadowed rising optimism about COVID-19 vaccinations and a U.S. economic stimulus package increasing fuel demand. Brent crude fell 81 cents, or 1.3%, to trade at $63.61 per barrel, and U.S. West Texas Intermediate (WTI) fell 97 cents, or 1.58%, to trade at $60.53 per barrel. Both contracts finished February 18% higher. China’s factory activity growth slipped to a nine-month low in February, sounding alarms over Chinese crude buying and pressuring oil prices. “One negative is more and more talk about Chinese oil demand maybe faltering, that they bought all the oil that they’re going to need for a while,” . “There’s some talk that their strategic reserves are filled up, and so some people are betting against the Chinese continuing to drive oil prices.” Support for the market came from rising COVID-19 vaccinations stirring up economic activity along with a $1.9 trillion coronavirus-related relief package passed by the U.S. House of Representatives on Saturday. If approved by the Senate, the stimulus package would pay for vaccines and medical supplies, and send a new round of emergency financial aid to households and small businesses, which will have a direct impact on energy demand. The approval of Johnson & Johnson’s COVID-19 shot also buoyed the economic outlook. Outside of China, some manufacturing data was positive, helping to keep prices from moving lower. German activity hit its highest level in more than three years and Euro zone factory activity raced along, driven by rising demand. OPEC oil output fell in February as a voluntary cut by Saudi Arabia added to agreed reductions under a pact with allies, a Reuters survey found, ending a run of seven consecutive monthly increases. The Organization of the Petroleum Exporting Countries and its allies, a group known as OPEC+, meet on Thursday and could discuss allowing as much as 1.5 million barrels per day of crude back into the market. ING analysts said OPEC+ needs to avoid surprising traders by releasing too much supply. “There is a large amount of speculative money in oil at the moment, so they will want to avoid any action that will see (those investors) running for the exit,” the analysts said.
Oil slips more than 1% ahead of key meeting between OPEC and allies Oil prices slid on Tuesday before this week’s OPEC+ meeting where producers are expected to ease supply curbs as economies start to slowly recover from the coronavirus crisis. OPEC Secretary General Mohammad Barkindo said the outlook for oil demand was looking more positive, particularly in Asia, and headwinds from last year continued to abate. Brent crude dipped 99 cents, or 1.55%, to $62.70 per barrel, after easing back from last week’s more than one-year peak above $67. U.S. West Texas Intermediate (WTI) was 28 cents higher at $60.92 per barrel, also down from last week’s high. Prices slipped after a recent rally on expectations that the Organization of the Petroleum Exporting Countries and its allies, a group known as OPEC+, would add more oil to the market from April as they ease back on last year’s deep supply cuts. “With the speculative market heavily long, the past three sessions’ falls look corrective ahead of Thursday’s meeting,” said Jeffrey Halley, market analyst at OANDA. OPEC+, which meets on Thursday, could discuss allowing as much as 1.5 million barrels per day (bpd) back into the market. OPEC oil output fell in February as a voluntary cut by Saudi Arabia added to reductions agreed to in a previous OPEC+ pact, a Reuters survey found, ending a run of seven consecutive monthly increases. In Asia, China’s factory activity growth slipped to a nine-month low in February, which could curtail Chinese crude demand. Oil buying by the world’s top importer has recently eased. “There are signs that the physical market is not as tight as futures markets suggest,” ING Economics said in a note.
U.S. oil futures settle below $60 for first time in more than a week — Oil futures fell on Tuesday (link), with U.S. prices settling below the $60 mark for the first time since Feb. 19. Traders weighed prospects for crude production, with the Organization of the Petroleum Exporting Countries and its allies expected to make a decision on output levels by Thursday. At an OPEC+ technical meeting held Tuesday, S&P Global Platts reported (link) that OPEC Secretary General Mohammad Barkindo said producers must emphasize “cautious optimism.” The pandemic still poses downside risks to the economy, but “encouraging global economic developments and resilient demand in Asia are upside factors,” Barkindo said. April West Texas Intermediate crude fell 89 cents, or 1.5%, to settle at $59.75 a barrel. That was the lowest front-month contract finish since Feb. 19, FactSet data show.
WTI Extends Losses After Surprise Crude Build – m Oil prices tumbled today, leaving WTI back below $60 after OPEC+ headlines suggested “the market could handle more barrels” and a broad equity market sell-off didn’t help.“We have come a long way from a year ago,” OPEC chief Mohammad Barkindo said.“The days of GDP and oil demand figures being in the red because of the pandemic-induced shock appear to be behind us.” Sounds a little optimistic. This week’s inventory data will likely be extremely noisy, dominated by the turmoil in Texas.API
- Crude +735k (-1.805mm exp)
- Cushing +732k
- Gasoline -9.993mm (-2.125mm exp) – biggest draw ever
- Distillates -9.053mm (-2.90mm exp) – biggest draw since Jan 2003
Huge product draws suggest demand but with refineries largely shut-in due to Texas, inventories were crushed to meet what demand there was elsewhere. Crude stocks surprisingly rose (again no demand from refiners) WTI extended its losses after the surprise crude build…
Oil slips on concerns that OPEC+ may be set to pump up supply – Oil prices were down in early trade on Wednesday, extending several days of losses, amid uncertainty over how much supply producing countries will push to restore to the market at a meeting this week while the coronavirus pandemic persists. U.S. West Texas Intermediate (WTI) crude futures fell 18 cents, or 0.3%, to $59.57 a barrel by 0122 GMT, down 6% since Feb. 25, when they hit their highest close since May 2019. Brent crude futures dipped 7 cents, or 0.1%, to $62.63 a barrel, down 7% from a 13-month high hit last week. The Organization of the Petroleum Exporting Countries (OPEC) and allies, together called OPEC+, are set to meet on Thursday, at a time when they are generally positive on the oil market outlook compared with a year ago when they slashed supply to boost prices. OPEC+ sources last week said an output increase of 500,000 barrels per day (bpd) looked possible without building inventories. Saudi Arabia’s voluntary cut of 1 million bpd is due to end in April, but it is unclear whether it will restore all of that supply right away. “The days of GDP and oil demand figures being in the red because of the pandemic-induced shock appear to be behind us,” OPEC Secretary General Mohammad Barkindo said on Tuesday, speaking ahead of a meeting of OPEC+’s Joint Technical Committee (JTC). However, a JTC document seen by Reuters cited continued uncertainties in physical markets and risks of the coronavirus pandemic persisting with COVID-19 mutations. “The question the group must answer this week is whether the rebound in demand is strong enough to sustain an increase in output,” ANZ analysts said in a note. Reinforcing concerns of potential oversupply, the American Petroleum Institute industry group reported U.S. crude stocks rose by 7.4 million barrels in the week to Feb. 26, in stark contrast to analysts’ estimates for a draw of 928,000 barrels. “The unexpectedly large crude inventories build hit at a worrying time for oil bulls,” said Stephen Innes, global market strategist at Axi.-
Oil Inventories Soar Most Ever; Gasoline Stocks Drained Most Since 1990 — Oil prices surged back higher overnight after a brief dip on the API-reported surprise crude build (and massive product draws), as hopes that OPEC+ won’t hike output too much prevail. The widespread view among the Organization of Petroleum Exporting Countries and its allies is that the oil market can absorb extra barrels, according to people familiar with the matter.“The question is not ‘if’ but rather ‘by how much’ the petro-nations will ease supply curbs,” said Norbert Ruecker, an analyst at Julius Baer Group Ltd.“The economic recovery and the likely leisure and travel activity bounce will fuel oil demand and extra supplies will be needed to avoid an over-tightening.”As we saw with API data, the Texas turmoil will make this inventory/production/demand data very noisy. DOE:
- Crude +21.563mm (-1.805mm exp) – biggest build ever
- Cushing +485k
- Gasoline -13.624mm (-2.125mm exp) – biggest draw ever
- Distillates -9.719mm (-2.90mm exp) – biggest draw since Jan 2003
After API’s data (massive build in crude, massive draws in products), DOE’s official data was stunning to behold with a record build in crude and record draw in gasoline stocks… Graphics Source: Bloomberg After tumbling in the prior week, Gasoline demand rebounded last week, but remains well below pre-COVID levels… After plunging the prior week due to the storm in Texas (tied with the record drop in August during the hurricane season), US crude production returned very modestly last week… At least 15 refineries, accounting for a combined 4.2 million barrels per day of capacity, were still experiencing ongoing outages last week. Front-month WTI futures were trading around $61 ahead of the official data and slipped lower on the crazy data… But the algos were quick to return and push it higher.
Oil Prices Get Boost from Fuel Inventory Data — Oil jumped the most in more than a week after a U.S. government report showed a record drop in domestic fuel inventories from the aftermath of a deep freeze that shuttered refineries in several states. Crude futures in New York climbed 2.6% on Wednesday, snapping a three-day streak of losses. U.S. gasoline inventories tumbled last week by the most since 1990 after a polar blast wiped out more than 5 million barrels a day of refining capacity in late February along the U.S. Gulf Coast, according to Energy Information Administration data. Crude stockpiles swelled with refineries still shut. “Absent the magnitude of the changes, things came in pretty much as expected with the enormous product draw more than offsetting the record crude build.” The U.S. data also showed gasoline supplied, a gauge for demand, surged the most since May, supporting those who say the oil market needs more barrels from producers as OPEC+ heads into a meeting on Thursday. The group is poised to agree on a coordinated production hike to cool the rapid surge in crude prices. Oil has rallied more than 25% so far this year, shepherded by the OPEC+ alliance’s continued production curbs and expectations for demand to meaningfully rebound as Covid-19 vaccines are rolled out worldwide. That strength though has paved the way for the alliance to unleash more barrels, with OPEC Secretary-General Mohammad Barkindo saying Tuesday that both the wider economic outlook and oil-market fundamentals continue to improve. The group could return the bulk of the 1.5 million-barrel-a-day hike that’s up for debate. There are two parts to the potential production ramp-up that OPEC+ will discuss. The first is whether the cartel will proceed with a 500,000-barrel-a-day collective increase in April. The second is the question of how Saudi Arabia could phase out its extra reduction of 1 million barrels a day. “Elevated price levels will incentivize the cartel to taper their output cuts, but given the uncertainty, the market is likely to be on edge heading into tomorrow’s meeting,” TD Securities commodity strategists including Bart Melek said in a note. West Texas Intermediate for April delivery rose $1.53 to settle at $61.28 a barrel. Brent for May settlement climbed $1.37 to end the session at $64.07 a barrel. In the U.S., the decline in both gasoline and distillate inventories coincides with a spate of refinery outages left in the wake of the cold snap: Plants processed crude at the lowest level on record last week. While some refineries, like Motiva Enterprises LLC’s Texas site, have been able to restart key processing units, many that shut due to the freeze are still in the process of making repairs or restarting operations. Meanwhile, much of the crude production hit by the cold temperatures has been restored. Crude supplies grew by a record 21.56 million barrels, signaling weak demand from refiners at the time.
Oil strengthens on prospect of OPEC+ maintaining supply cuts, drop in U.S. inventories -Oil prices rose more than $1 per barrel on Thursday after Saudi Energy Minister Prince Abdulaziz bin Salman urged caution and vigilance at the beginning of a meeting of OPEC ministers and their allies about the future of supply cuts. Brent crude futures were up $1.11, or 1.7%, at $65.18 a barrel while U.S. West Texas Intermediate (WTI) crude rose $1.07, or 1.8% to $62.35. Ministers from OPEC members and their allies started a meeting to discuss the future of an oil output cut at 1300 GMT. Analysts and traders say a four-month price rally from below $40 a barrel is now out of step with demand and that physical sales are not expected to match supply until later in 2021. But with prices above $60, some analysts have predicted OPEC+ producers will increase output by about 500,000 barrels per day (bpd) and expect Saudi Arabia to at least partially end its voluntary reduction of 1 million bpd. Three OPEC+ sources on Wednesday said some members believe that output should remain unchanged and that it was not immediately clear whether Saudi Arabia would end its voluntary cuts or extend them. “The market … can take back at least 500,000 bpd (excluding Saudi’s extra cuts) from April and even more in following months, in line with the recovery we expect in oil demand,” said Rystad’s head of oil markets, Bjornar Tonhaugen. “Some mild negative price reaction will take place, though, if the decision is to increase output. Such a development would prevent some steep stock draws that had been priced in for a while for coming months.” In the United States, despite a record surge of more than 21 million barrels in crude oil stockpiles last week, gasoline stocks fell by the most in 30 years as refining plunged to a record low because of the Texas freeze. Giving a floor to prices, Yemen’s Houthi forces said on Thursday that they had fired a missile at a Saudi Aramco facility in Saudi Arabia’s Red Sea city of Jeddah. There was no immediate confirmation from Saudi authorities.
OPEC+ extends most oil output cuts into April, Saudi keeps voluntary curb (Reuters) – OPEC and its allies agreed to extend most oil output cuts into April, offering small exemptions to Russia and Kazakhstan, after deciding that the demand recovery from the coronavirus pandemic was still fragile despite a recent oil price rally. OPEC’s leader Saudi Arabia said it would extend its voluntary oil output cut of 1 million barrels per day (bpd), and would decide in coming months when to gradually phase it out. The news pushed oil prices back towards their highest levels in more than a year with Brent trading up 5% above $67 a barrel as the market had expected OPEC+ to release more barrels. [O/R] OPEC+ had cut output by a record 9.7 million bpd last year as demand collapsed due to the pandemic. As of March, it is still withholding about 7 million bpd, or 7% of world demand. The voluntary Saudi cut brings the total to about 8 million bpd. Under Thursday’s deal, Russia was allowed to raise output by 130,000 bpd in April and Kazakhstan by another 20,000 bpd to meet domestic needs. “Everybody (else) is going to maintain the freeze,” Saudi Energy Minister Prince Abdulaziz bin Salman told a news conference to outline the deal. He said Saudi Arabia would decide in the next few months when to gradually phase out its 1 million bpd voluntary cut “at our time, at our convenience”. “We are not in a hurry to bring it forward,” he said. The Saudi minister and Russian Deputy Prime Minister Alexander Novak, lynchpins in the OPEC+ group, had earlier told OPEC+ ministers the recovery in demand was fragile. Novak said after the meeting that OPEC+ had to tread cautiously to avoid overheating the market.Russia has been insisting on raising output to avoid prices spiking any further and lending support to shale oil output from the United States, which is not part of OPEC+. But in February Moscow failed to raise output, despite being allowed to do so by OPEC+, because harsh winter weather hit its production at mature fields. Novak said Moscow needed extra barrels to meet recovering demand at home.
OPEC : 14th OPEC and non-OPEC Ministerial Meeting – opec.org – The 14th Meeting of OPEC and non-OPEC Ministers took place via video conference on Thursday March 4, 2021, under the Chairmanship of HRH Prince Abdul Aziz bin Salman, Saudi Arabia’s Minister of Energy, and Co-Chair HE Alexander Novak, Deputy Prime Minister of the Russian Federation. The Meeting emphasized the ongoing positive contributions of the Declaration of Cooperation (DoC) in supporting a rebalancing of the global oil market in line with the historic decisions taken at the 10th (Extraordinary) OPEC and non-OPEC Ministerial Meeting on 12 April 2020 to adjust downwards overall crude oil production and subsequent decisions. The Ministers noted, with gratitude, the significant voluntary extra supply reduction made by Saudi Arabia, which took effect on 1 February for two months, which supported the stability of the market. The Ministers also commended Saudi Arabia for the extension of the additional voluntary adjustments of 1 mb/d for the month of April 2021, exemplifying its leadership, and demonstrating its flexible and pre-emptive approach. The Ministers approved a continuation of the production levels of March for the month of April, with the exception of Russia and Kazakhstan, which will be allowed to increase production by 130 and 20 thousand barrels per day respectively, due to continued seasonal consumption patterns. The Meeting reviewed the monthly report prepared by the Joint Technical Committee (JTC), including the crude oil production data for the month of February. It welcomed the positive performance of participating countries. Overall conformity with the original decision was 103 per cent, reinforcing the trend of aggregate high conformity by participating countries. The Meeting noted that since the April 2020 meeting, OPEC and non-OPEC countries had withheld 2.3bn barrels of oil by end of January 2021, accelerating the oil market rebalancing. The Meeting extended special thanks to Nigeria for achieving full conformity in January 2021, and compensating its entire overproduced volumes. The ministers thanked HE Timipre Sylva, Minister of State for Petroleum Resources of Nigeria, for his shuttle diplomacy as Special Envoy of the JMMC to Congo, Equatorial Guinea, Gabon and South Sudan to discuss matters pertaining to conformity levels with the voluntary production adjustments and compensation of over-produced volumes. In this regards the Ministers agreed to the request by several countries, which have not yet completed their compensation, for an extension of the compensation period until end of July 2021. It urged all participants to achieve full conformity and make up for previous compensation shortfalls, to reach the objective of market rebalancing and avoid undue delay in the process
Oil Surges As OPEC+ Agrees To Keep Output Unchanged In April – Crude gains accelerated two hours after the start of today’s meeting following headlines that OPEC+ has agreed to keep output unchanged in April, with a delegate adding that OPEC+ decided not to hike output by 500kb/d in April.Energy Intel’s Amena Bakr adds that Saudi Arabia may voluntarily extend its cut to April, however on condition that “compensation” volumes must be committed. Additionally, Bakr notes that the Saudis were the ones who proposed a rollover of existing production quotes for April and May.As B loomberg summarizes… “there we have it. The group has agreed to roll over production for a month at current levels, including the voluntary Saudi cut. That’s a very bullish outcome. Prices up almost $3 a barrel.”Of course, nothing is decided until the meeting concludes, but it appears that OPEC+ is willing to sacrifice production if it means much higher oil price for the next 1-2 months.The messages are mixed however:
- Saudi Arabia is mulling extending its 1 million b/d voluntary cut for a third month into April
- So far, most OPEC+ nations appear to back a roll-over of their production cuts into next month
- But Russia is resisting, insisting that Moscow should be allowed to increase its oil production.
Crude prices surge as OPEC+ extends most oil output cuts into April, Saudi keeps voluntary curb – Crude prices surged Thursday after OPEC and its allies agreed to extend most oil output cuts into April, offering small exemptions to Russia and Kazakhstan, after deciding that the demand recovery from the coronavirus pandemic was still fragile despite a recent oil price rally. OPEC’s leader Saudi Arabia said it would extend its voluntary oil output cut of 1 million barrels per day (bpd), and would decide in coming months when to gradually phase it out. The news pushed oil prices back toward their highest levels in more than a year with Brent, the global benchmark, trading up five per cent above $67 US a barrel as the market had expected OPEC+ to release more barrels. The price of West Texas Intermediate, the North American benchmark, also rose, closing at $63.83 US a barrel on Thursday, up $2.55. The price of Western Canada Select climbed to $52.65 US a barrel, up $2.84. “For Canada, absolutely a net positive event,” “All of this just trickles straight through to further cash flows for Canadian oil producers, most of whom are sitting near or at their highest production levels.” Canadian oil producers got a lift with shares of MEG Energy Corp. surging nearly 10 per cent while Vermilion Energy Inc. rose 5.6 per cent and Cenovus Energy Inc. gained 4.9 per cent. OPEC+ had cut output by a record 9.7 million bpd last year as demand collapsed due to the pandemic. As of March, it is still withholding about 7 million bpd, or seven per cent of world demand. The voluntary Saudi cut brings the total to about 8 million bpd. Under Thursday’s deal, Russia was allowed to raise output by 130,000 bpd in April and Kazakhstan by another 20,000 bpd to meet domestic needs.
Oil prices surge past recent highs on OPEC’s crude production decision -Oil surged to the highest in nearly two years after the OPEC+ alliance surprised traders with its decision to keep output unchanged, signaling a tighter crude market in the months ahead. Futures in New York climbed 4.2%, rising the most since Saudi Arabia last shocked markets with its January pledge to unilaterally cut output. Global benchmark Brent also jumped on Thursday. The OPEC+ producer alliance agreed during a virtual gathering to hold output steady in April. Saudi Arabia said it is in no hurry to bring back supply and will maintain its 1 million barrel-a-day voluntary production cut. “The decision to maintain the current OPEC+ supply cuts for the month of April has given the oil bulls exactly what they needed as far as the tight-supply narrative goes,” OPEC+ has helped drain a global glut that accumulated during the pandemic through its supply management, pushing crude futures up more than 30% so far this year. The strength is evident across many corners of the oil market, with key timespreads widening further in a bullish backwardation structure — an indication of tightening supplies — and data from brokers showing rallies in key swap markets in the North Sea. Meanwhile, Brent options volume rose to the highest since March 2020, according to preliminary trade data compiled by Bloomberg. The OPEC+ decision represents a victory for Saudi Arabia, which has advocated for production restraints to keep crude prices supported. However, higher prices could spur additional drilling activity by U.S. shale explorers, with domestic oil rigs already at the highest since May 2020. Saudi Arabia appeared unfazed by that risk: Saudi Energy Minister Prince Abdulaziz bin Salman told reporters after the meeting that the U.S. mantra of “drill, baby, drill is gone forever.” “The longer prices stay up, the greater the likelihood we will eventually see a supply response from the U.S. But, it’s not going to be as immediate as it would have been in the past.” OPEC+ had been debating whether to restore as much as 1.5 million barrels a day of output. As part of the agreement, Russia and Kazakhstan were granted exemptions. The group’s next meeting is scheduled for April 1 to discuss production levels for May. West Texas Intermediate for April delivery rose $2.55 to settle at $63.83 a barrel, the highest since April 2019. Brent for May settlement climbed $2.67 to end the session at $66.74 a barrel, the highest since late February. The ramifications of a swiftly tightening oil market may also impact prices at the pump, with U.S. retail gasoline prices approaching $3 per gallon for the first time in six years.
Oil surges after OPEC+ hold cuts, strong U.S. jobs growth – Oil prices jumped about 3% on Friday, hitting their highest levels in more than a year, following a stronger-than-expected U.S. jobs report and a decision by OPEC and its allies not to increase supply in April. Brent futures rose $2.62, or 3.9%, to settle at $69.36 a barrel. The session high for the global benchmark was its highest since January 2020. West Texas Intermediate (WTI) crude rose $2.26, or 3.5% to settle at $66.09 a barrel. For the week, Brent was up 5.2%, rising for a seventh week in a row for the first time since December, while WTI was up about 7.4% after gaining almost 4% last week. Both contracts surged more than 4% on Thursday after the Organization of the Petroleum Exporting Countries and allies, together known as OPEC+, extended oil output curbs into April, granting small exemptions to Russia and Kazakhstan. “OPEC+ settled for a cautious approach … opting to increase production by just 150,000 barrels per day (bpd) in April while market participants looked for an increase of 1.5 million bpd,” said UBS oil analyst Giovanni Staunovo. Investors were surprised that Saudi Arabia had decided to maintain its voluntary cut of 1 million bpd through April even after the oil price rally of the past two months on the back of COVID-19 vaccination programs around the globe. Some forecasters revised their price expectations upward following the OPEC+ decision. Goldman Sachs raised its Brent crude price forecast by $5 to $75 a barrel in the second quarter and $80 a barrel in the third quarter of this year. UBS raised its Brent forecast to $75 a barrel and WTI to $72 in the second half of 2021. In addition, the market got a boost after a report showed the U.S. economy created more jobs than expected in February. The nonfarm payroll report “shows that Americans are closer to pre-pandemic behavior that will drive strong demand for crude,” said Edward Moya, senior market analyst at OANDA in New York. Traders also noted the rising dollar, which hit its highest since November, was limiting the gain in crude prices. A stronger dollar makes oil more expensive for holders of other currencies. However, analysts and traders have said that slow physical crude sales and recovery for demand not predicted until around the third quarter suggest that the price rally is unwarranted.
Oil Soars Above $66 With Saudi Supply Gamble Buoying Crude Bulls – Oil rallied to the highest in nearly two years in New York after OPEC+ shocked markets with a decision to keep supply limited as the global economy starts to recover from a pandemic-driven slump. U.S. benchmark crude futures topped $66 a barrel on Friday, while its global counterpart Brent neared the key $70 level. The producer alliance’s supply curbs and the rollout of Covid-19 vaccines have aided a stellar rebound for crude from the depths of the coronavirus-related fallout. OPEC+’s surprise decision on Thursday to keep output steady in April boosted prices further and led to strength in the market’s structure. Major banks upgraded price forecasts, with some calls for oil reaching north of $100 next year. “In some ways, even more important than the lack of oil was the message that came with it: They’re not really worried about price, not worried about tightening,” Crude has soared more than 30% so far this year with OPEC+’s output restraint holding the market over until a full-fledged comeback in consumption. The group’s latest decision represents a victory for Riyadh, which has advocated for tight curbs to keep prices supported. “Overall, this was the most bullish outcome we could have expected,” JPMorgan Chase & Co. analysts wrote in a note to clients. Saudi Arabia’s bold and unexpected gamble to restrain production is founded upon its view that this time around higher prices will not lead to a big increase in output by American shale drillers. Saudi Energy Minister Prince Abdulaziz bin Salman said in an interview after the meeting that shale companies were now more focused on dividends. West Texas Intermediate for April delivery advanced $2.26 to settle at $66.09 a barrel, the highest level since April 2019. Futures surged 7.5% this week, the largest weekly gain in a month. Brent for May settlement climbed $2.62 to end the session at $69.36 a barrel. Oil’s rebound this year stands to intensify the debate about a potential resurgence in inflation, and complicate the task facing the Federal Reserve as it supports the U.S. recovery. The Treasury market is already looking for signs of faster price gains, with yields rising rapidly. Meanwhile, U.S. employers added more jobs than forecast in February.
Saudis Bet Against Return of USA Shale Glory Days – — Saudi Arabia just made a high-stakes wager that the glory days of U.S. shale, which transformed the global energy map in the last decade, are never coming back. By keeping a tight grip on supply at Thursday’s meeting of the OPEC+ alliance of oil producers, Saudi Energy Minister Prince Abdulaziz bin Salman showed he’s focused on boosting prices — and confident that this time around it won’t encourage American producers to surge back and steal market share. “‘Drill, baby, drill’ is gone for ever,” said Prince Abdulaziz, who’s orchestrated the revival of the oil market after last year’s catastrophic collapse. His swagger comes mixed with a good dose of diplomatic tension: Russia, Saudi Arabia’s most important OPEC+ partner, has tried to convince Riyadh for several months to increase output, fearing that rising oil prices would ultimately awaken rival shale producers. The Saudis are certain the American industry has reformed itself. If the prince is right, OPEC+ will be able to both push prices higher now and recover market share later without worrying that rivals in Texas, Oklahoma and North Dakota will flood the market. But if Riyadh has miscalculated — and it’s got shale wrong before — the danger will be lower prices and production down the line. The Saudis have so far convinced their allies the strategy will work. After a quick virtual meeting on Thursday, OPEC+ agreed to prolong its production cuts, defying expectations of an output hike. Russia, however, secured an exemption for itself and Kazakhstan, and will increase output marginally in April. Brent crude jumped 5% to a one-year high of almost $68 a barrel after the decision. Front-month futures extended gains on Friday and a raft of banks updated their price forecasts, including Goldman Sachs Group Inc., which increased its estimates by $5 — to $75 next quarter and $80 in the following three months. “This is an incredibly bold move on the part of OPEC+ to extend the oil price rally,” said KPMG Global Energy Sector Leader Regina Mayor. If history is a guide, however, trouble may be brewing. The OPEC+ coalition, which groups Saudi Arabia, Russia and almost two dozen other oil producers, has in the past underestimated its American rivals, who year after year produced more than most expected. From a low point of less than 7 million barrels a day in 2007, the U.S.’s total petroleum output more than doubled to hit an all-time high of almost 18 million barrels a day by early 2020, forcing the cartel to cede market share. “This is a risky take,” Amrita Sen, chief oil analyst at consultant Energy Aspects Ltd., said Friday in a Bloomberg Television interview. While U.S. oil companies probably won’t raise output this year, in 2022 “there’s nothing really stopping them, especially the small and mid-cap producers.” Sen sees prices hitting $70 a barrel as soon as next week, $80 by the end of the year and a possible climb to $100 in 2022. For now, U.S. total oil output remains constrained, hovering at 16 million barrels due to the impact of last year’s slump, which briefly saw benchmark prices trade below zero. Under pressure from shareholders, shale producers have promised restraint, putting profits before the growth they relentlessly pursued during the boom years. Although drilling has risen from the lows of 2020, it’s well below previous levels. In addition, President Joe Biden is trying to temper the worst excesses of the industry, including the indiscriminate natural gas flaring that’s a byproduct of shale’s success. Under a different oil minister, Saudi Arabia attacked shale producers in 2014 and 2015, flooding the market and forcing prices lower — a strategy that ultimately failed. Prince Abdulaziz is doing the opposite, because oil higher prices will eventually benefit shale producers. Yet, he’s convinced the industry won’t repeat its past excesses.
Goldman hikes Brent forecast, says ‘shale discipline’ behind OPEC strategy (Reuters) – Goldman Sachs Commodities Research raised its Brent forecast for second and third quarter by $5 a barrel after OPEC and its allies kept the deal unchanged, and said ‘discipline of shale producers’ is likely behind the group’s slower output increase. The Wall Street bank now sees Brent prices at $75 a barrel in second quarter and at $80 a barrel in third quarter of 2021, it said in a note dated Thursday. U.S. shale producers have quickly responded to oil price gains in recent years, winning market share as Saudi Arabia and other major producers have cut output, although they held back on boosting production since pandemic-led demand destruction last year. The Organization of the Petroleum Exporting Countries and its allies (OPEC+) on Thursday agreed to extend most oil production cuts until April, after deciding that the demand recovery from the coronavirus pandemic was still fragile. “OPEC’s supply strategy is working because of its unexpectedness and suddenness,” Goldman said. “We believe it is now clear that OPEC+ is in fact pursuing a tight oil market strategy, with our updated supply-demand balance pointing to OECD (inventories) falling to their lowest level since 2014 by the end of this year.” The bank lowered its OPEC+ production forecast by 0.9 million (bpd) over the next six months, and said shale, Iran and non-OPEC supplies are likely to remain highly inelastic to prices until the second half of 2021, allowing OPEC+ to quickly rebalance the oil market. “Key will be the potential shale supply response, although the latest earnings season suggests investors are still a long way away from rewarding growth,” the bank said, and raised its 2022 U.S. shale production forecast by 0.3 million bpd. Brent crude futures rose 1.2% to $67.57 a barrel by 0609 GMT on Friday and U.S. West Texas Intermediate (WTI) crude futures advanced 1.2% to $64.60 per barrel.
Column: OPEC+ keeping output cuts won’t surprise the physical crude market (Reuters) – The decision by OPEC and its allies to extend crude oil output cuts into April came as something of a surprise to a market expecting some level of increase, but it shouldn’t have. The problem for the prevailing narrative is that it’s focused on what is happening in the paper crude market, the widely followed and traded Brent and West Texas Intermediate futures. They have been signalling increasing tightness in the global oil market as the world starts to recover from the economic impact of the coronavirus pandemic, coupled with the ongoing supply restrictions imposed by the producer group, referred to as OPEC+. The paper market has a point: oil demand does look like it will be heading higher, but the problem is a matter of timing. The market is priced for a sharp increase in demand right now, and in the next few months. But the physical crude market is telling another story, with traders there saying there are plenty of cargoes available, especially for delivery to the top-importing region of Asia. The physical market has largely already sorted out what they are buying for April, and they are now looking more at loading programmes for May and June. It’s quite likely that the OPEC+ group looked at what refiners were wanting in April and concluded that there was not yet enough demand to warrant pumping more crude in that month. If the paper market then takes OPEC+’s decision to keep its output down by about 7 million barrels per day (bpd) and bid up prices, then that’s just a serendipitous bonus for the producers. The Brent market duly did what was expected, with the front-month contract rising as much as 5.7% to a one-year high of $67.75 a barrel, before retreating slightly to end Thursday’s trade at $67.17. But the front-month contract expires on March 31, making it largely irrelevant to the physical market. The bullishness seen in paper crude contrasts with reports from physical traders, where in recent days there have been reports of several West African cargoes being offered for re-sale, and refiners in China, the world’s biggest crude importer, cutting back on purchases. There were some interesting comments from Prince Abdulaziz bin Salman, the energy minister of top exporter Saudi Arabia, after Thursday’s meeting of OPEC+. He says the kingdom is not in any hurry to end its voluntary, additional 1 million bpd of output cuts.If the Saudis genuinely believed the market was tight, adding those barrels back would be the first step and would reduce the risk of prices rising too rapidly, choking demand and the nascent global recovery. Another point the Saudi minister made was that countries complaining of high prices should use up inventories of cheap crude bought during the price collapse last year, a sign that OPEC+ doesn’t yet believe inventory levels have dropped to what could be considered more normal levels. But perhaps Salman’s bravest comment was an apparent suggestion that U.S. shale oil isn’t the force in the market it used to be. “Drill, baby, drill is gone forever,” he said, referencing the U.S. Republican Party’s political slogan to promote the expansion of onshore production.
Biden Bombs Syria and Claims Self Defense – by Caitlin Johnstone – On orders of President Biden, the United States has launched an airstrike on a facility in Syria. As of this writing the exact number of killed and injured is unknown, with early reports claiming “a handful” of people were killed. Rather than doing anything remotely resembling journalism, the western mass media have opted instead to uncritically repeat what they’ve been told about the airstrike by US officials, which is the same as just publishing Pentagon press releases. Here’s this from The Washington Post:The Biden administration conducted an airstrike against alleged Iranian-linked fighters in Syria on Thursday, signaling its intent to push back against violence believed to be sponsored by Tehran.Pentagon spokesman John Kirby said the attack, the first action ordered by the Biden administration to push back against alleged Iranian-linked violence in Iraq and Syria, on a border control point in eastern Syria was “authorized in response to recent attacks against American and coalition personnel in Iraq, and to ongoing threats.”He said the facilities were used by Iranian-linked militias including Kaitib Hezbollah and Kaitib Sayyid al-Shuhada.The operation follows the latest serious attack on U.S. locations in Iraq that American officials have attributed to Iranian-linked groups operating in Iraq and Syria. Earlier this month, a rocket attack in northern Iraq killed a contractor working with the U.S. military and injured a U.S. service member there. So we are being told that the United States launched an airstrike on Syria, a nation it invaded and is illegally occupying, because of attacks on “US locations” in Iraq, another nation the US invaded and is illegally occupying. This attack is justified on the basis that the Iraqi fighters were “Iranian-linked”, a claim that is both entirely without evidence and irrelevant to the justification of deadly military force. And this is somehow being framed in mainstream news publications as a defensive operation.This is Defense Department stenography. The US military is an invading force in both Syria and Iraq; it is impossible for its actions in either of those countries to be defensive. It is always necessarily the aggressor. It’s the people trying to eject them who are acting defensively. The deaths of US troops and contractors in those countries can only be blamed on the powerful people who sent them there.The US is just taking it as a given that it has de facto jurisdiction over the nations of Syria, Iraq, and Iran, and that any attempt to interfere in its authority in the region is an unprovoked attack which must be defended against. This is completely backwards and illegitimate. Only through the most perversely warped American supremacist reality tunnels can it look valid to dictate the affairs of sovereign nations on the other side of the planet and respond with violence if anyone in those nations tries to eject them.
“Biden is Not Obama”: Israel Very Pleased With Biden’s Decision to Bomb Syria – Israeli officials told Walla News on Friday that Israel is highly pleased with President Biden’s decision to bomb Shia militia targets in eastern Syria. Although the airstrikes hit an Iraqi militia, the attack is being framed as a move against Iran, and the officials compared Biden to President Obama, who they view as soft on Iran due to the 2015 nuclear deal. “The Iranians didn’t realize that Biden is not Obama, and that if they will continue down this road of miscalculation they will eventually get hit,” one Israeli official told Walla. According to a report from Axios, Israel was given advanced notice of the Syria airstrikes on Thursday morning. The notification took place during talks of the so-call “working group,” a forum the US and Israel are using to discuss Iran issues that is headed by each countries’ national security advisors. Israel has been bombing Syria for years and frequently targets Shia militias that they always claim are linked to Iran. Last week, Israel bombed Damascus, Syria, killing nine people who were described as pro-government militia fighters.
Rockets fired at Iraqi airbase hosting U.S.-led coalition troops – Ten rockets were fired at an Iraqi military base hosting U.S.-led coalition troops Wednesday, the latest in a series of rocket attacks in Iraq, with this one just days before the pope is due to visit the country.The rockets targeted the Ain al-Asad air base, northwest of Baghdad, at 7:20 a.m. local time Wednesday (11:20 p.m. ET Tuesday). The attack was confirmed in a tweet from Col. Wayne Marotto, the military spokesman for Operation Inherent Resolve, the 83-member coalition to defeat the Islamic State militant group. There are approximately 1,400 coalition troops at the sprawling base.Iraqi security forces are leading the response and investigation, he added.”A U.S. civilian contractor suffered a cardiac episode while sheltering and sadly passed away shortly after,” Pentagon press secretary John Kirby said in a statement. He later said it remained unclear if the rocket attack had caused the cardiac arrest. Major Gen. Tahseen al-Khafaji of the Iraqi security forces told NBC News that there was no damage reported at the base. Security forces were investigating who was behind the attack, he added.
Rocket attack on base in Iraq raises threat of US escalation – A rocket attack on the sprawling Ain al-Asad air base in Iraq’s western province of Anbar early Wednesday has heightened the threat of a further escalation of US military aggression in the country and the wider region. The 10 rockets that fell on the base, which houses US and other NATO troops, claimed no casualties, but one US civilian contractor died of a heart attack while sheltering during the assault. Iraqi security officials said little damage was inflicted on the base, while witnesses told local media they had seen flames and a long plume of black smoke. Raising the prospect of another round of US military action, President Joe Biden told reporters, “We are following that through right now… we’re identifying who’s responsible and we’ll make judgments.” The rocket attack follows last week’s US air strikes against facilities near the Iraqi border used by Iranian-backed Iraqi Shia militias in Syria. Those strikes, the first military action ordered by the new Democratic president, were initially reported to have killed 17 people, while later reports said that just one person died. While there was widespread speculation that the rockets fired on Ain al-Asad were in retaliation for the US strike in Syria, as of Wednesday evening no group had claimed responsibility. The area surrounding the base is overwhelmingly Sunni and not under the control of the predominantly Shia Hashed al-Shaabi, or Popular Mobilization Forces (PMF), an official arm of Iraq’s military, which the US military attacked last week in Syria.
Houthi Rebels Claim Missile Attack On Saudi Aramco Facility – The Houthi rebels in Yemen claimed they have struck an Aramco facility in Jeddah in a missile attack, Russia’s Sputnik reports, citing a statement by the rebel group. The Associated Press later also reported the attack.”The missile forces managed today to strike [a facility] of the Saudi Aramco company in Jeddah with a Quds 2 cruise missile. The strike was precise,” a spokesman said.The news comes just days after Saudi Arabia said it had intercepted a Houthi ballistic missile over the capital, Riyadh. The Saudi side has yet to confirm or deny the attack.The Houthis last targeted Saudi oil facilities last November. The group – which the outgoing U.S. administration in January designated as a terrorist group – said they had hit a distribution center property of Saudi Arabia’s state oil company. The group also warned that “operations will continue,” advising foreign companies and residents of Saudi Arabia to be cautious.The report came in late November, a week after Saudi Arabia said it had thwarted a Houthi attack on an oil products terminal near the border between the Kingdom and Yemen. The Saudi side confirmed the hit.Since 2015, Saudi Arabia and Iran have been essentially fighting a proxy war in Yemen, where the Saudis lead a military Arab coalition to “restore legitimacy” in the country, while the Houthi movement, which holds the capital Sanaa, is backed by Iran.The Houthi rebels have often claimed they have hit oil infrastructure assets in Saudi Arabia and have taken responsibility for several high-profile attacks in the region.The most notable attack that the Yemeni rebel group claimed responsibility for was the September 2019 attacks on Saudi Aramco’s oil facilities that cut off 5 percent of daily global supply for weeks, sending oil prices soaring. But Saudi Arabia and the United States have said that it was Iran – and not the Houthis – who was responsible for the attack.
At least 20 killed by suicide car bomb near restaurant in Somalia capital (Reuters) – At least 20 people were killed and 30 wounded by a suicide car bomb just outside a restaurant near the port in Somalia’s capital Mogadishu late on Friday, an emergency services official said. The blast sent plumes of smoke into the sky and triggered gunfire, witnesses and state-owned media reported. “So far we have carried 20 dead people and 30 injured from the blast scene,” Dr. Abdulkadir Aden, founder of AAMIN Ambulance services told Reuters. The blast occurred at the Luul Yemeni restaurant near the port, witnesses said. “A speeding car exploded at Luul Yemeni restaurant. I was going to the restaurant but ran back when the blast shook and covered the area with smoke,” resident Ahmed Abdullahi, who lives near the site, told Reuters. Somalia’s state-controlled Radio Mogadishu reported there was also destruction of property and that police had cordoned off the area.
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