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[waldron] 22/7/2018 09:30

Saudi Arabia struggling to sell oil after raising output to please Trump, say financial experts

The US president asked the kingdom to boost production over Twitter, following disruptions in Venezuela and Libya

Grant Smith and Javier Blas

The Independent Online


Saudi Arabia has rushed to boost oil production under pressure from US President Donald Trump – only to discover that global markets might not need it yet, according to some financial experts.

The kingdom’s crude oil output surged the most in three years last month, as the US president demanded his ally’s help in cooling petrol prices and filling in the supply gap that will be created by his sanctions on Iran.

However, the Saudis are struggling to sell as much extra oil as they’d hoped and are privately fretting that they may have opened the taps too quickly, according to people briefed by Riyadh in the last few days.



Martijn Rats, global oil strategist at Morgan Stanley, said: “Saudi Arabia and several other members of the Organisation of Petroleum Exporting Countries (Opec) have increased exports sharply ahead of sanctions on Iran, and the timing mismatch between these effects is pressuring oil prices.”

A rare public statement from the Saudi Energy Ministry earlier this week could be taken as an illustration of their unease.

It rejected as “without basis” any concerns that the kingdom was moving to oversupply world markets. Exports would be stable this month and fall in August, it said.

At the last Opec meeting in late June, the Saudis and their allies – which include several neighbours from the Gulf Cooperation Council and also non-Opec producer Russia – promised to boost output by about one million barrels a day to offset disruptions in Venezuela and Libya, plus the looming losses in Iran.

They were reacting to pressure from President Trump, who was bashing the cartel on Twitter after the London crude oil price hit a three-year high of more than $80 (£61) a barrel in May.

Prices have since retreated to about $73 as Libya restored some halted output and the escalating US-China trade war stoked fears about the strength of demand.


Mike Wittner, head of oil market research at Societe Generale SA in New York, said: “They’re pushing out a heck of a lot of crude right now, and they’re worried about the downward pressure on prices. The Saudis are trying to thread a needle right now, and the width of that needle is $70 to $80.”

Oil prices rose in response to the ministry’s statement and Brent crude, the international benchmark, was 0.5 per cent higher at $72.92 a barrel in London as of 8.13am on Friday.

Saudi Arabia initially planned to reach record output of 10.8 million barrels a day this month, people briefed on production policy said late last month.

That level was always dependent on the strength of domestic and international demand, so could end up ranging from 10.6 million to 11 million, they said.

The kingdom told fellow producers that output in July will be in line with June’s level of just below 10.5 million barrels a day, people familiar with the matter said.

The impact of US sanctions on Iran’s oil shipments, which remains highly uncertain, will play a big part in determining the final outcome.



Since quitting the international nuclear agreement with Iran, the Trump administration has sent conflicting signals, indicating last month that it intended to choke off Iranian crude exports entirely.

More recently, however, officials such as Secretary of State Mike Pompeo and Treasury Secretary Steve Mnuchin have suggested a more flexible approach could be taken.

Iranian exports are already starting to fall, with shipments to Europe slumping by about 50 per cent in June, according to estimates from the International Energy Agency.

A more significant supply gap won’t emerge until sanctions enter full force in November, according to the people who spoke with the Saudis, who asked not to be identified as the talks were private.

As a result, the kingdom seems to be having difficulty right now placing all the barrels it wanted to.

The problem is being compounded by weak appetite for crude in Asia, where concerns are building about the strength of demand, consultant Energy Aspects Ltd said.

Amrita Sen, Energy Aspects’ chief oil analyst said: “This is a market where the increase in GCC and Russian supplies has come at a time when the refinery bid is lacking.”


Saudi crude exports fell by about 500,000 barrels a day to 6.7 million in the first half of July compared with the same period in June, tanker tracking by Bloomberg shows.

According to the statement on Thursday from the Energy Ministry, which cited Saudi Arabia’s liaison to Opec Adeeb Al-Aama, exports for this month as a whole will be in line with June’s levels, and will decline by 100,000 barrels a day in August.

With so many factors shifting the balance between global supply and demand, the appetite for additional Saudi crude may change, especially as the extent of Iran’s losses becomes clearer.

Market sentiment could flip again to focus on worries over whether the kingdom has enough idle production capacity to prevent a shortage emerging on the global market.

Societe Generale’s Mr Wittner, said: “We have hardly started to see a reduction in flows from Iran. Though there’s a lot of crude coming out from Saudi Arabia now, spare capacity is really going to be the big issue going forward. And spare capacity is getting very tight very quickly.”

The Washington Post with contributions from Bloomberg’s Julian Lee and Wael Mahdi

[basem1] 21/7/2018 09:06

Surprised TXP aren't on his list. Cheaper than a lot of the rubbish that is on his list. Genl also a major buy at these levels, throwing off cash galore at present.

[bountyhunter] 20/7/2018 14:31

header rolled as August Nymex contract expiry is today

[adrian j boris] 20/7/2018 13:40

Eni, Shell trial to resume

LAGOS, July 20, 2018 – An Italian court is set to resume the trial on alleged corruption by Shell and Eni on Friday.

The judge is expected to decide whether the Nigerian government will be included as a party that suffered damages, daily Business Day reported.

In addition to the two companies, 13 defendants were sent to trial by an Italian judge in December 2017. Among the defendants are Eni CEO Claudio Descalzi and former chief Paolo Scaroni.

Malcolm Brinded, former executive director for upstream international; Peter Robinson, former vice-president for Shell’s sub-Saharan Africa operations; Guy Colegate, a business adviser; and John Copleston, a strategic investment adviser, were all charged with bribery in October in relation to the 2011 sale of the OPL 245 block offshore Nigeria to Shell and Eni.

The trial was originally scheduled for March but was postponed to May. After a procedural hearing, the court readjourned until June. At that hearing the next date was set for July.

[sarkasm] 18/7/2018 12:57

Gas flaring at oil production sites declines in 2017, says World Bank
By Kondapuram Sampangi Archana Rani
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Gas flaring from oil production sites across the world had witnessed a decline in 2017 despite a 0.5% increase in production, according to the World Bank’s new satellite data.
Image: An offshore oil and gas drilling platform. Photo: courtesy of QR9iudjz0/Freeimages.com.

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The bank said that the 5% decline in gas flaring, which is a source of greenhouse gas emissions, is the start of reversing years of increases in gas flaring that started in 2010.

According to the data released by the Global Gas Flaring Reduction Partnership (GGFR), about 141 billion cubic meters (bcm) of natural gas was flared last year which is a decrease compared to nearly 148 bcm in 2016.

GGFR is a World Bank-managed organization comprised of governments, oil companies, and international institutions. It aims to reduce global gas flaring.

Although Russia remains the largest gas flaring country, it has reported a largest decline in gas flaring in 2017 compared to that in 2016.

World Bank senior director Riccardo Puliti said: “The latest global gas flaring data is encouraging, but we will have to wait a few more years to know whether it represents a much-needed turning point.

“Ending routine gas flaring is a key component of our climate change mitigation agenda, and the global flaring reduction Initiative we launched just three years ago now has 77 endorsers, covering about 60 percent of the total gas flared around the world.”

In 2015, the United Nations (UN) and World Bank launched the “Zero Routine Flaring by 2030” Initiative which aims to find ways to end routine flaring at existing oil production sites no later than 2030.
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The initiative is supported by 27 governments and more, 35 oil companies, and 15 development institutions.

GGFR Program Manager Bjorn Hamso said: “The Initiative is an essential tool for ending routine flaring.

“Going forward, it is paramount that oil field operators continue to address ongoing “legacy” flaring, and that new business models are developed that will enable more investors to participate in flaring reduction projects.”

According to World Bank, gas flaring takes place due to technical, regulatory and economic constraints, and is causing more than 350 million tons of CO2 emissions annually.

[cpap man] 18/7/2018 10:15

UOG



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