Your Weekly Update: 29 Jan — 2 Feb

Market Watch

Headline crude prices for the week beginning 29 January 2017 — Brent: US$69/b; WTI: US$65/b

• Oil remains near its recent highs, correcting slightly at the start of this week with a rebound in the dollar and positive US crude output data.
• The US dollar has been sliding since December, boosting prices — since crude oil is priced in US$. With the US seemingly signalling that a weak dollar might be beneficial, this could further fuel the crude rally.
• Solidarity within OPEC and its NOPEC allies, led by Russia, is reassuring markets that the group will act beyond 2018 if necessary.
• A tenth consecutive fall in weekly US crude inventories boosted prices last week, but consensus within the industry is that stockpiles will gain this week, while American output is expected to hit 10 mmb/d ‘soon.’
• However, US Energy Secretary Rick Perry stood with energy ministers from Russia and Saudi Arabia at Davos last week, stating that he believes the US will not become a ‘spoiler’ for oil markets as new production gets absorbed by global demand, which has returned to healthy growth.
• Hedge funds have also reportedly bet big on Brent and WTI continuing to rise, as the price future curve is moving in backwardisation all the way through 2022, indicating either rising demand, tightening supply, or both.
• Confidence has returned, as a poll by DNV GL shows that 63% of 813 industry executives were positive for 2018, with Europe showing the largest improvement (25% to 64%) and Asia at 57% (up from 30%).
• The active US oil and gas rig count jumped by 11 last week, as the addition of 12 new oil rigs — particularly in the Permian, where the number grew by 18 — offset the loss of a single gas rig.
• Crude price outlook: The week started with a small correction, but there is enough confidence to keep oil prices at recent levels. US data may temper rises, but Brent should remain within range of US$70/b and WTI at US$66/b.

Headlines of the week

Upstream

• BP has announced two more new major finds in the UK North Sea; the Capercaillie and Achmelvich discoveries join 18 expected new North Sea startups this year, while boosting BP’s output to 200,000 barrels by 2020.
• The first export cargo of 500,000 barrels out of the North Sea Catcher Area are been sold a premium to Brent, surprising analysts.
• China’s CNOOC and Norway’s Petoro has relinquished their interest in the last remaining exploration licence in Iceland; with only a minor junior partner left, this is likely to end of Iceland’s dream of finding oil.
• Eni has begun exploratory drilling in the Black Sea with Rosneft, but keeping an eye out that it does not circumvent US sanctions on Russia.
• Russia has remained China’s top crude oil supplier for a 10th month in December 2017, capping off its second year ahead of Saudi Arabia. Russian exports to China hit 1.194 mmb/d over 2017.

Downstream

• Gunvor has received provisional approval from The Netherlands to add a fuel upgrading unit at its 88 kb/d Rotterdam refinery to meet strict new emission standards for shipping fuels.
• Russia’s Tatneft has started up a naphtha hydrotreater and isomerisation unit at its TANEKO refinery to improve gasoline quality and gasoil yield.
• The UAE’s Mubadala Petroleum has announced plans to double the capacity of the Pak Arab refinery in Karachi, Pakistan to 200 kb/d.

Natural Gas/LNG

• The first Russian LNG cargo has landed in the USA, with the Gaselys tanker dropping off Siberia-sourced LNG in Boston. A second shipment, also by France’s Engie, may be on its way, heading to Massachusetts.
• Nigeria is seeking to amend its law on gas-flaring penalty, moving it from a charge to a fine, as the former enjoys a tax relief which potentially cost the government billions in gas flaring penalty revenue.
• Hess Midstream Partners and Targa Resources have formed a joint venture to build a 300 mscf/d dry gas processing plant in Little Missouri, North Dakota to capture gas that is currently being flared in the Bakken.
• Bangladesh and Indonesia have signed an agreement on LNG imports, as the South Asian country seeks to plug its domestic shortage of natural gas. Bangladesh has several FSRU projects in the pipeline, signing its first ever LNG import deal with Qatar last September.
• Mubadala Petroleum is aiming to finalise the FID on the Pegaga offshore gas condensate project in Malaysia within this quarter.
• The government of Sarawak has acquired a 10% stake in the Bintulu LNG complex’s new Train 9, with Petronas acquiescing to the state’s demands.

Corporate

• Preparing for the future, BP has invested US$5 million in US electric vehicle charging firm FreeWire and is also reportedly considering a US$1.8 billion bid for Italian solar firm Rete Rinnovabile.
• Malaysia’s Sapura Energy — its largest oil and gas services company — is evaluating a potential public listing of its E&P business on the KLSE.

Thailand’s PTTEP reported a 60% jump in full year 2017 net profits, up to US$594 million from US$ US$372 million, while keeping an eye out to acquire oil and gas assets in Southeast Asia and the Middle East.

Source: https://www.nrgedge.net/article/1517380714-your-weekly-update-29-jan-2-feb