Tag Archives: Oil

Oil steady as U.S. inventory drop contends with demand woes

By Laila Kearney

NEW YORK (Reuters) – Oil prices were little changed on Wednesday, supported by a bigger-than-expected drop in U.S. crude inventories but under pressure as rising global COVID-19 cases threatened global fuel demand.

Brent crude prices were down 7 cents at $56.51 a barrel by 10:55 a.m. EST (1555 GMT). An earlier rise took prices as high as $57.42 a barrel, the strongest since Feb. 24.

U.S. West Texas Intermediate (WTI) was down 11 cents, or 0.3%, at $53.32. The session high of $53.93 was its highest since Feb. 20.

U.S. crude inventories fell by 3.2 million barrels in the week to Jan. 8 to 482.2 million barrels, exceeding analysts’ expectations in a Reuters poll for a 2.3 million-barrel drop, as refiners increased crude runs, the Energy Information Administration said.

“The strong tick higher in refining activity has resulted in the fifth consecutive draw to oil inventories, pushing them to their lowest since last March,” said Matt Smith, director of commodity research at ClipperData.

Refinery crude oil runs were up by 274,000 barrels per day in the last week, EIA said.

Adding to optimism over a tightening market, Saudi Arabia cut supplies of crude for February loading for at least three Asian buyers while meeting requirements of at least four others, several refinery and trade sources told Reuters.

But rising COVID-19 cases that continue to spur restrictions on travel and other activities by governments across the world limited oil prices and the pandemic is expected to cast a shadow on the market for months to come, analysts said.

“While I see crude prices trading higher over the coming months, investors need to be mindful that the road to higher oil demand and prices will remain bumpy,” UBS oil analyst Giovanni Staunovo said.

Governments across Europe announced tighter and longer coronavirus lockdowns on Wednesday over fears about a fast-spreading variant first detected in Britain, with vaccinations not expected to help much for another two to three months.

China recorded the biggest daily jump in COVID cases in more than five months, despite four cities in lockdown, increased testing and other measures aimed at preventing another wave of infections in the world’s second biggest economy.

(Additional reporting by Ahmad Ghaddar in London and Aaron Sheldrick in TOKYO; Editing by Kirsten Donovan, Philippa Fletcher and David Gregorio)

Oil hits 11-month high near $57 on tight supply expectations

By Laura Sanicola

NEW YORK (Reuters) – Oil hit an 11-month high just below $57 a barrel on Tuesday, bolstered by Saudi Arabia’s plans to limit supply, offsetting worries that rising coronavirus cases globally would curtail fuel demand.

Brent crude was up 90 cents, or 1.6%, at $56.56 a barrel by 1118 EST (1618 GMT) after touching its highest since last February at $56.75. U.S. West Texas Intermediate (WTI) gained 82 cents, or 1.6%, to $53.07.

Saudi Arabia plans to cut output by an extra 1 million barrels per day (bpd) in February and March to keep inventories in check.

The Saudi cut is part of an OPEC-led deal in which most producers will hold output steady in February. Last year’s record cuts from OPEC and its allies helped oil recover from historic lows reached in April. Some analysts believe the oil complex is underestimating supply levels.

“Storage at Cushing is only 10.2 million barrels below the all-time record high, so there is no problem with supply here in the U.S., but the complex is responding positively to this chatter about undersupply,” said Bob Yawger, director of energy futures at Mizuho.

Oil also gained on expectations for a drop in U.S. crude stockpiles. Analysts expect crude inventories to fall by 2.7 million barrels for a fifth straight week of declines.

The first of this week’s two supply reports, from the American Petroleum Institute, is due at 4:30 p.m. EST (2130 GMT).

The market is also being supported by the prospect of increased economic stimulus in the United States. President-elect Joe Biden, who takes office on Jan. 20, has promised “trillions” in extra pandemic-relief spending.

However, oil price gains were capped by demand concerns as coronavirus cases rise around the world.

Chinese authorities introduced new curbs in areas surrounding Beijing on Tuesday and Japan is to widen a state of emergency beyond Tokyo.

(Additional reporting by Alex Lawler and Jessica Jaganathan; Editing by Kirsten Donovan, David Goodman and David Gregorio)

Trump replaces Republican head of energy regulatory panel who supports carbon markets

WASHINGTON (Reuters) – President Donald Trump demoted Neil Chatterjee, the Republican head of an energy regulation panel, after he promoted the use of carbon markets by U.S. states to curb climate change.

Trump replaced Chatterjee, who had been chairman of the Federal Energy Regulatory Commission, or FERC, with fellow Republican James Danly, who had been a commissioner, Chatterjee said on Twitter late Thursday.

If Joe Biden becomes president it is likely he would quickly name a Democratic FERC chair.

Last month Chatterjee had promoted putting a price on carbon emissions, an idea backed by many former Republican politicians and leading companies as a way to lower emissions of pollutants scientists say are warming the planet.

The White House did not immediately respond to a request for comment.

Carbon pricing has struggled to gain support in the U.S. Congress and in the administration of Trump, who doubts climate science and wants to cut costs on coal, oil and natural gas.

In a proposed policy statement on Oct. 15 Chatterjee said that carbon pricing by U.S. states is an “important market-based tool that has wide support from across sectors.” He also held a conference exploring how a carbon tax would world in power markets.

Josh Price, an analyst at Height Capital Markets, said in a note to clients that the proposed blessing for state-led carbon pricing schemes was a “direct threat to coal.”

Chatterjee’s term was due to end on June 30, and he said he would serve out the rest of that as a commissioner. He once worked on pro-fossil-fuel policies as an aide to Senate Majority Leader Mitch McConnell of coal-producing Kentucky.

FERC, an independent panel of the Energy Department, regulates the transmission of electricity and natural gas across states and reviews large energy projects.

Chatterjee told the Washington Examiner that his demotion was “perhaps” because he has supported carbon markets and that if the demotion was retribution, he was proud of his independence.

Danly said in a statement that Chatterjee had left his mark on FERC by brokering an agreement on terminals for natural gas exports and taking other actions to help “secure our American energy independence.”

(Reporting by Timothy Gardner in Washington; Editing by Matthew Lewis and Cynthia Osterman)

IEA says oil demand recovery set to slow for rest of 2020

By Noah Browning

LONDON (Reuters) – The International Energy Agency (IEA) trimmed its 2020 oil demand forecast on Tuesday, citing caution about the pace of economic recovery from the pandemic.

The Paris-based IEA cut its 2020 outlook by 200,000 barrels per day (bpd) to 91.7 million bpd in its second downgrade in as many months.

“We expect the recovery in oil demand to decelerate markedly in the second half of 2020, with most of the easy gains already achieved,” the IEA said in its monthly report.

“The economic slowdown will take months to reverse completely … in addition, there is the potential that a second wave of the virus (already visible in Europe) could cut mobility once again.”

Renewed rises in COVID-19 cases in many countries and related lockdown measures, continued remote working and a still weak aviation sector are all hurting demand, the IEA said.

China – which emerged from lockdown sooner than other major economies and provided a strong prop to global demand – continues a strong recovery, while a virus upsurge in India contributed to the biggest demand drop since April, the IEA said.

Increasing global oil output and the downgraded demand outlook also mean a slower draw on crude oil stocks which piled up at the height of lockdown measures, it added.

The agency now predicts implied stock draws in the second half of the year of about 3.4 million barrels per day, nearly one million bpd less than it predicted last month, with July storage levels in developed countries again reaching record highs.

However, preliminary data for August showed industry crude oil stocks fell in the United States, Europe and Japan.

As output cuts eased among producers from the Organization of the Petroleum Exporting Countries (OPEC) and allies such as Russia, global oil supply rose by 1.1. million bpd in August.

After two months of increases, recovery among countries outside the OPEC+ pact stalled, with production in the United States falling 400,000 bpd as Hurricane Laura forced shut-ins.

(Reporting by Noah Browning; editing by Jason Neely)

Oil markets flat as restarts begin at storm-hit energy operations

By Erwin Seba

HOUSTON (Reuters) – Energy companies on Friday continued efforts to restore operations at U.S. Gulf Coast offshore platforms and refineries shut by Hurricane Laura as oil markets largely shrugged off the storm’s impact.

Some 300 offshore production facilities and half-dozen refineries halted ahead of a Category 4 storm that hit the coast of Louisiana early Thursday with winds of 150 mile per hour (240 kph). The destructive winds cut a narrow path through the area, sparing facilities not directly in its path.

However, Citgo Petroleum’s 418,000-barrel per day Lake Charles, Louisiana, plant was on the storm’s path, and repairs could take four to six weeks, according to Mizuho Securities. The company did not reply to requests for comment.

Motiva Enterprises, operator of the largest U.S. refinery, and Valero Energy Corp on Friday began restarting their Port Arthur, Texas, refineries.

U.S. crude futures traded at $43.08 per barrel at midday, up four cents, up slightly from $42.34 a week ago. U.S. gasoline futures were up 2 cents, less than 2% higher than they were a week ago.

About 84%, or 1.56 million barrels per day, of U.S. Gulf of Mexico crude output and 60% of natural gas offshore production were shut on Thursday, the U.S. Department of Interior reported.

Exxon Mobil Corp said its 369,024 bpd Beaumont, Texas, refinery, about 50 miles (80 km) west of the storm’s landfall, required “minor repairs,” a spokesman said. The company was taking steps to restart once power and port operations were restored.

Cheniere Energy Inc’s and Cameron LNG’s Cameron liquefied natural gas plants in Louisiana took almost no pipeline gas early on Friday, according to preliminary data from Refinitiv.

“Refiners may be reluctant to quickly return to production when the product they make is a money losing proposition,” Robert Yawger, director of energy futures at Mizuho Securities, wrote on Friday.

The ports of Beaumont, Orange and Sabine, Texas, and Cameron and Lake Charles, Louisiana, remained closed on Friday, according to the U.S. Coast Guard.

Houston, the United States’ largest energy export port, restarted operations on Thursday and had nearly halved the list of 53 vessels waiting on Thursday to reenter the port.

One-way movement and other restrictions were in place on Friday at points along the Houston Ship Channel, according to the U.S. Coast Guard.

(Reporting by Erwin Seba; writing by Gary McWilliams; Editing by Marguerita Choy and David Gregorio)

Iraq is open for U.S. business, prime minister says; Trump eyes oil prospects

WASHINGTON (Reuters) – President Donald Trump on Thursday said U.S. companies were involved in many prospects in Iraq’s oil business, as Iraqi Prime Minister Mustafa al-Kadhimi declared his country open for American business and investment.

Trump told reporters before a meeting with the Iraqi leader that the U.S. military had very few troops in Iraq and looked forward to the day when it did not have to be there, but would help the country if neighboring Iran should do anything.

Al-Kadhimi took office in April, becoming the third Iraq head of state in a chaotic 10-week period that followed months of deadly protests in the country, which has been exhausted by decades of sanctions, war, corruption and economic challenges.

The meeting comes amid a new spike in tensions between the United States and Iran after Washington said it would move to reinstate all U.S. sanctions on Iran at the United Nations.

Washington is pushing to extend a U.N.-imposed arms embargo against Iran that is due to expire in October under Tehran’s 2015 nuclear deal with world powers. Trump withdrew the United States from the deal in 2018 and reimposed crippling sanctions on Iran.

Five U.S. firms, including Chevron Corp, signed agreements on Wednesday with the Iraqi government aimed at boosting Iraq’s energy independence from Iran.

The U.S. Department of Energy said in a statement that Honeywell International Inc, Baker Hughes Co, General Electric Co, Stellar Energy and Chevron signed commercial agreements worth as much as $8 billion with the Iraqi ministers of oil and electricity.

The agreements were signed following a meeting of the Iraqi ministers with U.S. Energy Secretary Dan Brouillette, as well as a roundtable in Washington on Wednesday with the Iraqi prime minister and the U.S. energy industry.

(Reporting by Jeff Mason; writing by Andrea Shalal; editing by Diane Craft and Dan Grebler)

Dakota Access oil pipeline users downplay need for line to investors

By Laila Kearney and Devika Krishna Kumar

NEW YORK (Reuters) – The largest oil pipeline out of the Bakken shale formation in North Dakota could be forced to shut this week, and the companies that use it are telling investors they can survive without it. But in legal filings, they have made its closure seem dire.

The 570,000 barrel-per-day (bpd) Dakota Access Pipeline (DAPL) is facing a federal court order to be closed and drained pending a new environmental assessment. A decision on whether it can remain running while a legal battle continues is expected any day. The pipeline is critical for moving oil out of North Dakota, the second-largest crude-producing state, trailing only Texas.

Numerous industry groups and states issued legal statements in support of DAPL both prior to and after a judge last month ordered the line, operated by Energy Transfer LP, closed by early August.

Before opening in 2017, producers and refiners relied on a patchwork of pipelines and rail to get oil out of the region.

But on recent earnings calls and fillings, companies including Marathon Petroleum Corp and Continental Resources Inc, the largest Bakken producer, said they have plenty of alternatives should the line be shut.

“It would not have a major impact on moving all of our production if DAPL were shut in, and the cost to us would be a few dollars per barrel,” said John Hess, chief executive officer of Hess Corp, which transports about 55,000 bpd of oil on DAPL, on an earnings call last week.

However, in an April court filing, the company said it “does not have other practical options to transport the crude oil that is currently being shipped on DAPL.”

A source familiar with the company’s thinking said Hess has since found alternatives for shipping its oil.

The differing statements come down to the need to reassure investors, experts said.

“They really shouldn’t do that,” said Ted Borrego, who has practiced oil and gas law for over 45 years and teaches at the University of Houston Law Center. “But a big chunk of what you need to be able to drill wells is money, and if you’ve got investors that are nervous, they tend to sit on their wallets.”

Last month, a U.S. district court judge found fault with one of the pipeline’s permits and ordered DAPL shut and drained by Aug. 5. That order was delayed by an appeals court, which is still deciding whether DAPL can remain in use during the appeals process.

Energy Transfer did not immediately respond to a request for comment.

Producers and refiners that use Bakken oil relied for years on rail transit due to the lack of pipelines. North Dakota output peaked at 1.5 million bpd in late 2019 and is at about 1 million bpd as of August, according to the state’s Department of Mineral Resources.

“The loss of the pipeline has less of an impact if production is reduced,” said Sandy Fielden, analyst at financial services firm Morningstar.

Privately, shippers and executives say ramping up rail shipments takes time and rail cannot handle the same volume as pipelines. One unit train can carry between 50,000 and 90,000 barrels of oil, far less than DAPL’s daily capacity.

“No producer wants DAPL to close,” said one shipper on the line, who spoke on the condition of anonymity.

In May, 52 million barrels of crude was transported from the PADD 2 region that includes North Dakota to the U.S. Gulf Coast, compared with just 351,000 barrels shipped via rail, according to U.S. Energy Information Administration data.

Continental Resources said in a legal filing in June that shutting the line could cost between $4 and $7 a barrel extra, boosting costs for all producers and shippers by $832 million to $1.5 billion annually. Bakken oil currently costs about 20 cents less than U.S. benchmark crude.

Executives on the company’s earnings call on Tuesday said they were confident that the line would remain open.

(Additional reporting by Arathy S Nair; Editing by Marguerita Choy)

Oil prices gain on sharp U.S. crude inventory drop

By Laila Kearney

NEW YORK (Reuters) – Oil prices edged up on Wednesday after a steep drop in U.S. crude inventories, but another record day for COVID-19 cases worldwide kept gains in check.

Brent crude futures <LCOc1> gained 35 cents to $43.57 a barrel by 10:57 a.m. EDT (1457 GMT). U.S. West Texas Intermediate crude futures <CLc1> were up 18 cents to $41.22.

U.S. crude oil inventories fell by 10.6 million barrels last week to 526 million barrels, the Energy Information Administration said, in their largest drawdown since December. [EIA/S]

Net U.S. crude imports fell 1 million barrels per day to 1.9 million bpd, the EIA said.

The drawdown was likely a result of supply cuts by the Organization of the Petroleum Exporting Countries and its allies, which were agreed-upon in April, finally being realized in fewer shipments.

“There’s an assumption those tankers pretty much let go of all their oil and so the expectation is that the OPEC cuts are going to lead to bigger draws in the United States,” said Phil Flynn, senior analyst at Price Futures Group in Chicago.

A record number of new coronavirus infections were reported globally, while in the United States, deaths from the novel coronavirus were approaching 150,000, the highest level in the world and rising by 10,000 in 11 days, according to a Reuters tally.

“The virus is spreading like wildfire across the Americas while Europe and Asia are displaying worrying signs of a second surge in cases,” said Stephen Brennock of oil brokerage PVM.

Six U.S. states reported one-day records for coronavirus deaths on Tuesday and cases in Texas passed the 400,000 mark.

Attempts to provide relief amid the outbreak were in disarray after Republicans in the United States on Tuesday disagreed over their own plan for providing $1 trillion in new coronavirus aid.

Indian refiners are cutting crude processing and shutting units for maintenance as fuel demand falters, officials at the companies said.

(Additional reporting by Ahmad Ghaddar in London and Aaron Sheldrick in Tokyo; Editing by Marguerita Choy)

Exclusive: More than 40 countries accuse North Korea of breaching U.N. sanctions

By Michelle Nichols

NEW YORK (Reuters) – More than 40 countries accused North Korea on Friday of illicitly breaching a United Nations cap on refined petroleum imports and called for an immediate halt to deliveries until the end of the year, according to a complaint seen by Reuters.

The 15-member U.N. Security Council imposed an annual cap of 500,000 barrels in December 2017 in a bid to cut off fuel for North Korea’s nuclear weapons and ballistic missile programs.

But in a complaint to the U.N. Security Council North Korea sanctions committee, 43 countries – including the United States, Britain and France – said they estimated that in the first five months of this year Pyongyang had imported more than 1.6 million barrels of refined petroleum via 56 illicit tanker deliveries.

The complaint said North Korean vessels continue to conduct ship-to-ship transfers at sea “on a regular basis as the DPRK’s primary means of importing refined petroleum.” North Korea’s formal name is the Democratic People’s Republic of Korea (DPRK).

The countries asked the Security Council sanctions committee to make an official determination that North Korea had exceeded the cap and “inform member states that they must immediately cease selling, supplying, or transferring refined petroleum products to the DPRK for the remainder of the year.”

Similar requests to the committee in 2018 and 2019 were blocked by North Korean allies Russia and China. They are also the only two countries to have formally reported deliveries of refined petroleum to the Security Council sanctions committee.

“China and Russia collectively have reported 106,094.17 barrels of refined petroleum product transfers … January through May,” the complaint said. “The official accounting of the DPRK’s imports vastly under represents the volume of refined petroleum products that actually enter the DPRK.”

The 43 countries also urged the committee to call on states to “immediately exercise enhanced vigilance regarding the DPRK attempting to procure additional refined petroleum products and to prevent illicit ship-to-ship transfers of refined petroleum products to vessels owned, controlled, or acting on behalf of or working in cooperation with the DPRK.”

North Korea has been subjected to U.N. sanctions since 2006 over its nuclear and ballistic missile programs. While the Security Council has steadily strengthened sanctions, U.N. monitors reported this year that North Korea continued to enhance its programs last year.

North Korean leader Kim Jong Un and U.S. President Donald Trump have met three times since 2018, but failed to make progress on U.S. calls for Pyongyang to give up its nuclear weapons and North Korea’s demands for an end to sanctions.

The complaint to the Security Council committee said: “If the DPRK is able to flagrantly evade international sanctions, it will have little incentive to engage in serious negotiations.”

The North Korean mission to the United Nations in New York did not immediately respond to a request for comment.

(Reporting by Michelle Nichols; Editing by David Gregorio)

Living near gas flaring sites may increase risk of preterm birth, study shows

By Valerie Volcovici

WASHINGTON (Reuters) – Women living near oil and gas production sites where natural gas is flared may be at a higher risk of giving birth preterm, a team of California researchers reported on Wednesday.

Analysis of more than 23,000 birth records from 2012 through 2015 reveals a 50% higher chance of preterm birth for women living within three miles (5 km) of Texas’ Eagle Ford shale basin than for women who lived farther away, according to the study.

“Our study finds that living near flaring is harmful to pregnant women and babies,” said co-author Jill Johnston, an environmental health scientist at the University of Southern California.

The research, published in the journal Environmental Health Perspectives, adds to evidence linking pollution with poorer pregnancy outcomes. Another study in June found a correlation between air pollution or higher outdoor temperatures and increased chances of having a preterm or stillborn baby.

Those findings, in the Journal of the American Medical Association, resulted from analyzing 70 studies covering 32 million births. It also found that black women were disproportionately at risk.

In the new study, by scientists at USC and UCLA, the association between preterm births and flaring proximity was seen only among Hispanic and Latina women, who made up 55% of the study population. No effect was seen among non-Hispanic White women, who comprised 37% of the total. Preterm babies are at higher risk of respiratory and cardiovascular illness, as well as developmental delays.

The team said it was the first to look at birth outcomes in relation to oil and flaring, which has seen a sharp increase in southern Texas’ Eagle Ford and other U.S. shale hubs.

Flares can release chemicals such as benzene, carbon monoxide and nitrogen oxides, along with fine particulate matter, heavy metals and black carbon.

The U.S. drilling industry flared or vented more natural gas in 2019 for the third year in a row, amid soaring production and a lack of regulatory efforts to curb the practice, according to state data and independent research estimates.

When oil prices are low, or when oil fields lack pipeline access, drillers tend to vent or flare gas, which can burn for weeks at a time.

(Reporting by Valerie Volcovici; Editing by Katy Daigle and Marguerita Choy)