Oil futures settled lower Monday, weighed down by increased exports from Iraq and Libya and mixed global economic data. NYMEX July crude settled down 24 cents to $102.47/barrel and ICE July Brent settled 58 cents lower to $108.83/b.
In products, NYMEX July ULSD settled 1.09 cents lower at $2.8773/gal and July RBOB was down 2.2 cents at $2.9499/gal. The front-month Brent-WTI spread settled at $6.36/b, down from $6.70/b Friday. The spread has been mostly confined to a $6-$7/b range for the past two weeks.
Global petroleum markets ended moderately lower in the wake of mixed global manufacturing data after an uptick in China was followed by weaker than expected readings in both Europe and the US, said Tim Evans, commodity analyst at Citi Futures Perspective, in a note. With the notable exception of France at 49.6, the numbers were above 50, the number that divides expansion from contraction, but with no particular sign of broader economic acceleration that would signal stronger-than-expected petroleum demand.
Brian Swan, commodity analyst at Schneider Electric, said despite China’s Purchasing Managers Index climbing to 50.8 in May, expectations of increased export supply from both Iraq and Libya served to push futures prices lower. Iraq’s crude exports last month averaged 2.582 million b/d, the country’s oil ministry said Sunday, with all the supplies sent from Iraq’s southern terminals.
The May figure was 73,000 b/d higher than the April total of 2.509 million b/d. Futures were also weighed down by reports that Libyan production was at 156,000 b/d Monday, up from 155,00 b/d a day earlier and that the Hariga oil export terminal could reopen within two days, Evans said.
ICE front-month Brent fell to a three-week low of $108.62/b after disappointing eurozone data that put manufacturing activity in the region at a six-month low, though still expanding. “This, though, will only increase the odds for Quantitative Easing European style [when the ECB holds its monthly policy meeting on Thursday],” said Price Futures Group senior market analyst Phil Flynn.“This may support Brent crude [going forward] despite promises by Libya that their oil fields would be back up and running.”
United Leadership, which is carrying the first cargo of Kurdish crude loaded out of the Turkish port of Ceyhan, was outside of the Moroccan port of Mohammedia on Monday, according to Platts cFlow vessel tracking software.
The vessel, which is carrying more than 1 million barrels of crude, is currently stationary outside of the port, which is the delivery point for the 200,000 b/d Mohammedia refinery, owned by Samir. A representative for Samir could not be immediately reached for comment.
“The United Leadership arrived in Mohammedia today at 11:00 am [1000 GMT] and is to be received by Moroccan refiner Samir,” a port agent said.
As of last week, the cargo appeared to be headed towards the US Gulf Coast, but it turned sharply southeast over the weekend towards Morocco. United Leadership was loaded at Ceyhan a week and a half ago with stored Kurdish barrels at the Botas terminal.
The Kurdish Regional Government has been sending between 100,000 and 120,000 b/d of oil — reportedly a mix of the Taq Taq and Tawke fields — through the smaller of the two parallel lines that make up the Kirkuk-Ceyhan export pipeline.
A dispute between Baghdad and Erbil over independent Kurdish oil exports has snowballed as a result of the successful export out of Ceyhan, though smaller parcels of 40,000 mt each have been flowing out of the smaller Turkish ports of Dortyol and Mersin since December last year.
Baghdad has repeatedly threatened to take legal action against any entity that buys Kurdish volumes not sold through Iraq’s official market agency SOMO. Iraq filed a request for arbitration with the International Chamber of Commerce against Turkey over the exports shortly after United Leadership left Ceyhan.
The Obama administration’s latest proposal to reduce carbon dioxide emissions is largely aimed at the more than 600 US coal-fired power plants. But oil refiners should expect higher electricity costs the rule could bring, sources said Monday.
The Environmental Protection Agency says the proposal, released Monday morning, would reduce emissions 30% from 2005 levels by 2030 (See story, 1421 GMT). Diana Cronan, a spokeswoman for the American Fuel & Petrochemical Manufacturers, said the proposal is expected to have an indirect effect on refiners, since the new regulations on power plants could increase electricity prices.
After crude oil, electricity is the second highest cost refiners face, she said. “When electric costs go up, due to the proposed [regulations], all goods, materials and services will also go up,” Cronan said.
An oil industry lobbyist, who declined to comment on the record since he was still reviewing the EPA proposal, said the proposed regulations, could negatively impact the petroleum coke market if the rule spurs additional switching to natural gas.
In addition, the lobbyist said, combined heat and power units at refineries, which produce steam internally and sell electricity to the grid, may be subject to the looming emissions reductions. “Some of those units, depending on size and how much electricity they sell to the grid, are defined as electric generating units and potentially subject to this rule,” the lobbyist said. “Whether they’ll be required to reduce emissions as part of this or something else is what we’ll be investigating.”
Several oil industry sources said they were still reviewing the EPA proposal. The rule is subject to a four-month public comment period, but is already expected to be subject to several court challenges and will not be in place for years.
The proposal grants states options to arrive at the emissions reductions, including installing new renewable generation or launching cap and trade programs. A court settlement with states and environmental groups required greenhouse gas regulations for oil refineries to be finalized in 2012, but those rules have been delayed indefinitely.
Canadian midstream company Gibson Energy is considering building a diluent recovery unit at one of its Canadian storage sites to extract the blending component from heavy crude oil and mix it with bitumen, a company executive said Monday.
Speaking to the RBC Capital Markets Conference in New York, CEO Stewart Hanlon said the company was considering building the unit, which makes the diluent necessary for blending with heavy bitumen extracted from Western Canada’s heavy oil sands production.
“Diluted bitumen is less valuable than neat bitumen,” he said, adding that Gibson’s Edmonton facility has connections to major oil-producing pipelines, including crude traveling on several Enbridge lines. Shipping in the diluent necessary for blending into the heavy, viscous crude to move it through pipelines cuts into producer profit margins.
Hanlon said that diluent is now railed in to its Edmonton facility, where there are 500 barrels of storage and 300 barrels under construction. There is a 22-car loading facility and connections to both Canadian Pacific and Canadian National railways, which can carry the heavy crude down to the Gulf Coast refiners, its main market.
Alaska North Slope crude oil and liquids production averaged 541,001 b/d in May, up 6,260 b/d from 534,741 b/d in May 2013, the Tax Division of the state’s Department of Revenue said Monday.
May ANS output decreased 14,968 b/d from the 555,987 b/d produced in April. Prudhoe Bay, the largest ANS field, averaged 300,003 b/d in May, down from 303,646 b/d a year ago and down from 316,002 b/d in April.
Daily stocks at the Valdez terminal averaged 2.01 million barrels last month, down from 5.02 million barrels in May 2013 and down from 2.22 million barrels in April.
By Mading Ngor Jun 2, 2014 4:59 PM GMT+0700
South Sudan said it earned $1.9 billion from oil sales in the 12 months through May as the country seeks to restore output lost in nearly six months of conflict.
The sale of 35.3 million barrels of crude brought total revenue of $3.5 billion, the Petroleum Ministry said in an e-mailed statement late yesterday. Of that figure, $857 million was allocated to neighboring Sudan, which exports the oil via pipelines across its territory to a port on the Red Sea, and $788 million went to loan settlements, it said. The ministry didn’t provide figures for the previous 12-month period when oil output was shut down due to a dispute over transit fees.
Petroleum Minister Stephen Dhieu Dau expressed “optimism” that “current operational challenges” to oil production will be resolved and output restored to its level in 2011, when the country declared independence from Sudan, according to the statement.
South Sudanese oil production has fallen by at least a third to about 160,000 barrels per day since fighting erupted in mid-December between factions loyal to President Salva Kiir and his former deputy, Riek Machar.
Oil facilities have been a key target for rebel forces, with Upper Nile the only state still pumping crude. Last week, Finance Minister Aggrey Tisa Sabuni said the government has borrowed $200 million from oil companies operating in the country to make up for a fall in revenue.
Fighting in the world’s newest nation has left thousands of people dead and forced more than 1.3 million to flee their homes, according to the United Nations. Clashes have continued in oil-rich Upper Nile and Unity states, even after Kiir and Machar signed a May 9 accord seeking to end the violence.
To contact the reporter on this story: Mading Ngor in Juba at mngor@bloomberg.net
To contact the editors responsible for this story: Paul Richardson at pmrichardson@bloomberg.net Michael Gunn, Emily Bowers
By Reed Landberg Jun 3, 2014 1:24 AM GMT+0700
The European Union said the U.S. must do more to reduce greenhouse gas emissions than the proposal President Barack Obama’s government released today if it’s to keep talks on limiting global warming on track.
The decision announced by the Environmental Protection Agency in Washington calls on existing power plants to reduce fossil fuel pollution by 30 percent from 2005 levels by 2030. It’s the most comprehensive climate-protection plan yet from Obama’s administration.
“All countries including the United States must do even more than what this reduction trajectory indicates,” EU Climate Commissioner Connie Hedegaard said in a statement from her office in Brussels today.
The program starts to set in place policies the U.S. will bring to discussions this year of 190 nations on how to limit pollution after 2020. While it gives Obama ammunition to show that other nations also need to act, the limits set out by the EPA cover only about a third of emissions by 2030.
Envoys to those talks organized by the United Nations intend to make an agreement next year that would apply to all nations instead of just the rich industrial ones.
Obama failed to win support in Congress in his first term for a bill that would have capped carbon dioxide output from industry and allow polluters to trade emissions permits. He’s using his executive authority under the Clean Air Act to enact the restrictions outlined by the EPA.
Changing Climate
Without action, scientists say the planet will warm more than 2 degrees Celsius (3.6 degrees Fahrenheit) since the industrial revolution, the steepest rise since the last ice age ended more than 10,000 years ago. Environmental groups agreed with the EU that the U.S. and other nations must do more to combat the risk to the climate.
“While a step forward, this rule simply doesn’t go far enough to put us on the right path,” Erich Pica, president of Friends of the Earth, said in a statement. “The science on climate change has become clearer and more dire, requiring more aggressive action from the president.”
The European Commission, the EU’s regulatory arm, has proposed the 28-nation bloc cut greenhouse gases 40 percent by 2030, doubling the scale of the reduction it’s making by 2020.
U.S. Goals
The U.S. is on track to meet its commitment to pare 17 percent of emissions from 2005 levels and hasn’t yet discussed a 2030 target. The rules proposed by Obama today apply to U.S. power plants, which produce about two-thirds of the country’s greenhouse gases.
Even if Obama’s policy is implemented, the U.S. will burn far too much coal to curb global warming, according to forecasts by the International Energy Organization.
The EPA envisions coal producing about 30 percent of U.S. power in 2030, down from about 42 percent this year. The Paris-based IEA estimates that figure must fall to 14 percent over the same period if the world is to meet its global warming targets.
“This proposed rule is the strongest action ever taken by the U.S. government to fight climate change, which is good news and also shows that the United States is taking climate change seriously,” Hedegaard said. “This is an important step for an administration and a President really investing politically in fighting climate change.”
Global Negotiation
Action by the U.S. is necessary to bring countries including China and India with the quickest-growing pollution levels into a global agreement.
Those nations were classed as developing nations and exempt from making binding commitments in 1997 when the Kyoto Protocol was adopted, rolling out an international system of pollution limits in industrial nations for the first time.
“I fully expect action by the United States to spur others in taking concrete action,” Christiana Figueres, executive secretary of the United Nations Framework Convention on Climate Change, said in a statement.
Envoys to the UN talks meet in Bonn this week to set out language for the deal that they intend to adopt next year, and is expected to take effect in 2020.
Different Paths
Australia, while welcoming Obama’s program, said countries will follow their own paths. The Liberal-National government in Australia, which has the largest per-capita fossil-fuel emissions among rich nations, aims to kill off the world’s highest emission tariffs brought in by the prior Labor administration.
“We welcome constructive action to cut emissions,” the office of Environment Minister Greg Hunt said in an e-mailed statement. “Each country can play its role but no single model will suit every country. The U.S. is taking its own approach and we respect that.”
The U.S. achieved carbon cuts by boosting energy generated from natural gas, his office said. Australia has pledged to cut emissions from its economy 5 percent below 2000 levels by 2020. That would mean a 12 percent reduction from a 2005 baseline.
UN Secretary General Ban Ki-moon will convene a summit in New York in September, when he expects nations to pledge action to cut pollutants causing global warming. Through a spokesman in New York, Ban welcomed Obama’s “important initiative” as a “significant step toward reducing global greenhouse gas emissions.”
Environment and energy ministers will meet in Peru in December for more discussions and then in Paris in December 2015.
“This announcement will put other global leaders on notice that the U.S. will do everything necessary to get a global climate agreement in Paris,” said Nick Mabey, chief executive officer of E3G, a British non-profit group advocating sustainable development. “ Obama cannot deliver limits on coal power at home unless he can show China is committed to reducing emissions as well.”
To contact the reporter on this story: Reed Landberg in London at landberg@bloomberg.net
To contact the editors responsible for this story: Reed Landberg at landberg@bloomberg.net Will Wade, Stephen Cunningham
By Mark Chediak and Jim Polson Jun 3, 2014 6:00 AM GMT+0700
Coal-dependent power companies from American Electric Power Co. (AEP) to Duke Energy Corp. (DUK) face billions of dollars in added costs from the Obama administration’s proposed climate rules. Renewable-energy backers and nuclear generators like Exelon Corp. (EXC) stand to gain from the effort to shift the foundations of the U.S. energy industry.
The regulations will be felt from the coal mines of West Virginia to natural gas wells in the Marcellus Shale as the U.S. moves toward cleaner fuel sources. A clampdown on emissions from coal-fired plants, the largest source of electricity, will force state regulators to determine whether consumers will foot the bill for reducing gases that contribute to climate change.
The redrawing of the U.S. energy map stems from the Environmental Protection Agency’s proposal yesterday to cut power-plant emissions -- the nation’s single largest source of carbon dioxide -- by 30 percent from 2005 levels. The reductions give the Obama administration ammunition as it seeks to convince developing nations from India to China to join a global agreement needed to avert dangerous climate change that’s affecting cities worldwide.
“The rule is going to speed the transition away from coal into natural gas and renewables and potentially increase the role nuclear electricity plays in the U.S.,” said Christopher Knittel, director of the Center for Energy & Environmental Policy Research at the Massachusetts Institute of Technology. “Twenty or thirty years from now, we should expect coal to play a more modest role.”
State Regulators
Supporters of the regulations say they will help public health and cut power bills an average of $103 per household annually in 2020 because of more energy efficiency. Opponents say the measures will threaten reliable grid operations by forcing the shutdown of additional coal-fired power plants, which have historically been among the cheapest sources of U.S. electricity.
The proposed regulation will permit states to achieve reductions in climate-warming pollutants by promoting renewable energy, encouraging greater use of natural gas, embracing energy efficiency technologies or joining carbon trading markets. The regulations will apply to existing power producers. Separate regulations governing new plants have already been proposed.
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American Electric, Duke and Southern Co., which have each struggled with new technologies to burn coal with fewer emissions, may be forced to seek an additional $1 billion from customers if they’re required to pay for carbon permits, according to one estimate.
“It’s a critical issue for us not to strand all that investment that we made and secondly to make sure the grid can operate in a reliable fashion through this transition,” American Electric Chairman and Chief Executive Officer Nick Akins said in a May 28 interview.
Carbon Price
American Electric is the biggest carbon emitter among U.S. power producers, followed by Duke and Southern, according to a report last month by M.J. Bradley & Associates LLC, a Concord, Massachusetts-based environmental consulting group.
“While we expect investor owned utilities, public power, and cooperative utilities to recover these higher costs from end users, the financial strain could result in weaker financial metrics and flexibility and downward rating pressure,” Fitch Ratings said in a statement yesterday.
Power sellers like Dynegy Inc., which don’t have the ability to pass costs on through regulated customer rates, will also suffer under the rules, said Julien Dumoulin-Smith, an analyst for UBS AG.
Cost Overruns
Southern and Duke have faced cost overruns and delays at plants designed to burn coal with fewer emissions. American Electric in 2011 ended a pilot project to capture carbon dioxide from a plant in West Virginia, saying the technology didn’t make economic sense without federal carbon regulations.
Assuming a $10 per-metric-ton price for emitting the gas, the companies would each face at least $1 billion in added costs, translating to 7 percent to 12 percent increases on customer bills, according to an April 16 research note written by a group of Sanford C. Bernstein & Co. analysts led by Hugh Wynne.
“Our evaluation of the proposed rule will include a thorough examination of potential compliance costs our customers will ultimately bear,” said Chad Eaton, a spokesman for Charlotte, North Carolina-based Duke. Southern and American Electric are also studying the proposal.
Using Gas
Change has already been under way in the utility industry. About 60 gigawatts of coal plants, or 6 percent of the nation’s total capacity, is expected to be forced out of business by the end of the decade to meet mercury emission standards and other existing rules, according to the Energy Information Administration.
Gas prices that fell to a 10-year low in 2012 because of added U.S. output have spurred the largest coal-consuming utilities to use more of the fuel, which produces about half the CO2.
The Obama proposal is less aggressive than expected and the government is giving individual states “considerable flexibility” in how to meet the requirements, Kit Konolige, a New York-based analyst with BGC Partners LLC, said in an e-mailed note.
‘Eminently Doable’
The EPA’s target is “eminently doable by 2030,” Wynne said in an interview yesterday. CO2 emissions, down 15 percent from 2005 levels in 2012, will decline another 5 percent by 2018 based on already planned coal plant retirements. The remaining drop could be achieved by running existing gas plants more frequently, reducing the need for coal, he said.
“You’re eventually going to have to order some gas turbines to replace the coal-fired plants,” said Nicholas Heymann, a New York-based analyst at William Blair & Co. That could prove a boon to turbine makers like General Electric Co., Siemens AG and Alstom SA. “We think those orders are going to start to shape up sometime late this year and early next year.”
In places where wind power is competitive, opportunities exist for some of the capacity lost from coal shutdowns to be replaced with renewables, Bloomberg New Energy Finance wrote in a May 23 report.
Nuclear plants, which emit no CO2 to generate power, may see a boost from the regulations. Exelon and Entergy Corp., the two largest nuclear plant owners, could enjoy “material earning gains,” as the price of power rises on competitors’ needs to purchase emissions permits, the Bernstein analysts wrote.
Margin Gain
Exelon, based in Chicago, has long supported federal rules to limit carbon emissions, at one point leaving the U.S. Chamber of Commerce, the largest business lobbying group, because of a disagreement over global warming policies. The company said it was pleased the draft rule recognizes the importance of nuclear power.
With 23 nuclear reactors and 44 wind-power projects, it has much to gain from carbon regulations. Exelon may see a $1.3 billion gain in its generation gross margin, adding about 97 cents of earnings per share, according to Bernstein.
The company has suffered in recent years, announcing its first dividend cut in February 2013 after lower gas costs caused power prices to drop. Its shares have rebounded this year, gaining 33 percent.
“Exelon is clearly the biggest beneficiary here,” said Dumoulin-Smith, who rates the company a hold and doesn’t own the shares. “This is all about keeping the nukes around.”
To contact the reporters on this story: Mark Chediak in San Francisco at mchediak@bloomberg.net; Jim Polson in New York at jpolson@bloomberg.net
To contact the editors responsible for this story: Susan Warren at susanwarren@bloomberg.net Tina Davis, Robin Saponar
By Nayla Razzouk and Khalid Al-Ansary Jun 3, 2014 3:00 AM GMT+0700
An oil tanker shipping crude from Iraq’s semi-autonomous Kurdish region turned back after getting almost 200 miles across the Atlantic Ocean, amid a challenge over the shipment’s legality.
The United Leadership, able to haul 1 million barrels, signaled that it was about 5 miles off Mohammedia in Morocco at about 6 p.m. local time yesterday, according to information entered by the ship’s crew and captured by Coulsdon, England-based IHS Maritime. It turned back on May 30 after getting about 190 miles west of Gibraltar, at which point it was sailing to the U.S. Gulf. The shipment is illegal, SOMO, Iraq’s oil marketing company, said yesterday.
“There will be a lot of attention focused on where that tanker heads because it is potentially a milestone, the first cargo,” Richard Mallinson, an analyst at Energy Aspects Ltd. in London, said by phone. “That would discourage any potential buyers. It may also limit the Kurds’ options, it may force them to accept discounts on the price that they can sell for.”
Three calls to the Kurdish Regional Government’s natural resources ministry weren’t answered and an e-mail wasn’t returned. United Leadership is owned by Marine Management Services MC, according to a database IHS maintains for the United Nations’s shipping agency. Four calls to the company’s offices in Piraeus, Greece yesterday weren’t returned and the line went dead when Bloomberg News asked for an e-mail address for Marine Management’s directors. An e-mail to the company’s generic e-mail address wasn’t immediately returned.
Escalating Dispute
The KRG estimates its region has about 45 billion barrels of crude reserves. Iraq itself has about 150 billion barrels. A dispute between the two sides escalated last month when the Kurds began pumping oil through their own pipeline to Ceyhan, the Turkish port in the Mediterranean sea from where ship tracking data show United Leadership loaded its cargo.
Iraq said May 23 it sought arbitration over Kurdish oil sales at the International Chamber of Commerce. SOMO said June 1 that buyers should not purchase the cargo. The KRG says it’s abiding by the Iraqi constitution, according to its website. Shipping signals can be wrong because much of the information is entered manually and because not all data are captured.
“Nowadays, due to technology, it has become easy to track any shipped oil and anyone who will deal with this oil may face problems,” Asim Jihad, a spokesman for Iraq’s oil ministry, said by phone yesterday.
Disputes about cargoes sometimes delay merchant ships. A tanker called the ETC Isis spent months marooned off Singapore in 2012 as part of a dispute between northern and southern Sudan. Earlier this year, U.S. special forces boarded a tanker shipping crude from eastern Libya that the nation’s government said was illegally shipped.
To contact the reporters on this story: Nayla Razzouk in Dubai at nrazzouk2@bloomberg.net; Khalid Al-Ansary in Baghdad at kalansary@bloomberg.net
To contact the editors responsible for this story: Alaric Nightingale at anightingal1@bloomberg.net Rachel Graham
By Christine Buurma Jun 3, 2014 2:01 AM GMT+0700
Natural-gas stockpiles are recovering faster than estimated from a winter battering in the U.S., with prices now 30 percent below a peak in February.
Hedge funds reduced their bets on a rally for a fifth week and to the lowest level since December, U.S. Commodity Futures Trading Commission data show.
Prices dropped 5.7 percent in May as inventory gains surpassed analysts’ estimates for four consecutive weeks. Stockpiles are now 40 percent below the five-year average level, compared with 50 percent in April.
“We’ve had a pretty mild May and that’s raised hopes that these big storage injections will continue all summer,” Phil Flynn, a senior market analyst at Price Futures Group in Chicago, said by phone May 30. “There’s growing optimism about the supply picture.”
Natural gas fell 4.7 cents, or 1 percent, to $4.505 per million British thermal units on the New York Mercantile Exchange in the week ended May 27, the period covered by the CFTC report. Prices rose 7 cents, or 1.5 percent, to settle today at $4.612.
Supply Gain
An Energy Information Administration report on May 29 showed inventories rose 114 billion cubic feet to 1.38 trillion in the week ended May 23, topping the median increase of 110 billion in analyst estimates compiled by Bloomberg. The gain was greater than the five-year average for a sixth week.
“The pace of restocking picked up and traders began to have heightened expectations about the size of weekly supply increases,” Teri Viswanath, the director of commodities strategy at BNP Paribas SA in New York, said in a phone interview May 30.
Gas demand fell on average by 5.7 billion cubic feet a day, or 8.8 percent, in May to 56.7 billion from almost 65 billion in April, according to data from LCI Energy Insight, an analysis and consulting firm in El Paso, Texas.
The EIA, the Energy Department’s statistical arm, estimates that record production will boost stockpiles to 3.405 trillion cubic feet by the end of October, which would be the lowest level for the time of year since 2008.
Record Production
Marketed gas output in 2014 will climb for a ninth straight year, reaching an all-time high of 72.26 billion cubic feet a day, as new wells come online at shale deposits such as the Marcellus in the Northeast, EIA forecasts show.
In other markets, speculators raised bets on crude to a record as supplies at Cushing, Oklahoma, decreased to a five-year low and gasoline demand expanded.
Money managers boosted net-long positions in benchmark West Texas Intermediate futures by 7.4 percent to 348,069, the highest in data going back to 2006, in the week ended May 27, the data show, pushing prices to a one-month high and helping WTI cap the first monthly gain since February.
Stockpiles at Cushing, the delivery point for WTI, fell for the 16th time in 17 weeks in the week ended May 23, the EIA said. Supplies have dropped as the southern leg of the Keystone XL pipeline began moving oil to Gulf Coast refineries from Cushing.
WTI futures gained $1.67 to $104.11 a barrel on the New York Mercantile Exchange in the period covered by the CFTC report. The contract fell 87 cents to $102.71 on May 30, ending the month up 3 percent.
Gasoline Bets
Net-long positions in gasoline rose by 1,311 futures and options combined, or 2.2 percent, to 60,130, the CFTC report showed. Futures advanced 1.1 percent to $2.9952 a gallon on the Nymex in the week covered by the report and settled at $2.9965 on May 30. The fuel fell 0.4 percent for the month.
Gasoline at U.S. pumps, averaged nationwide, rose 0.1 cent to $3.669 a gallon on May 31, according to data from Heathrow, Florida-based AAA, the nation’s largest motoring group. Retail prices are down 1.8 cents for the month.
Money managers’ bets on ultra-low sulfur diesel slid by 753, or 2.7 percent, to 27,657 futures and options combined, the CFTC report show. Futures dropped 0.3 percent to $2.9399 a gallon in the week covered by the report and were down 1.7 percent for May.
Net-long positions on four U.S. natural gas contracts held by money managers slid by 13,300 futures equivalents to 326,711 in the week ended May 27, according to the CFTC. Long positions decreased by 1.6 percent, falling for a fifth week, while bearish bets gained 4,059 to 229,460.
The measure includes an index of four contracts adjusted to futures equivalents: Nymex natural gas futures, Nymex Henry Hub Swap Futures, Nymex ClearPort Henry Hub Penultimate Swaps and the ICE Futures U.S. Henry Hub contract. Henry Hub, in Erath, Louisiana, is the delivery point for Nymex futures, a benchmark price for the fuel.
“We would need a very cool summer to push gas prices much lower,” Price Futures Group’s Flynn said. “Inventories are still at an 11-year seasonal low, so we still have a long way to go to get back to normal levels.”
To contact the reporter on this story: Christine Buurma in New York at cbuurma1@bloomberg.net
To contact the editors responsible for this story: David Marino at dmarino4@bloomberg.net Charlotte Porter
Prepared by Prepared by Alison Ciaccio, Platts Markets Editor
New York - June 2, 2014
Platts Survey of Analysts
Crude oil stocks down 2 million barrels
Gasoline stocks up 2 million barrels
Distillates stocks down 1 million barrels
Refinery utilization, or run rate, or run rate, up 0.5 percentage point to 90.4% (EIA)
U.S. commercial crude oil stocks are expected to have fallen 2 million barrels during the week ended May 30 with a pullback in imports offsetting an idle crude oil unit at Marathon Petroleum's Garyville, Louisiana, refinery, a Platts poll of analysts showed Monday.
The American Petroleum Institute (API) will release its weekly report at 4:30 p.m. EDT (2130 GMT) Tuesday, while the U.S. Energy Information Administration (EIA) is scheduled to release its weekly data at 10:30 a.m. EDT (1530 GMT) Wednesday.
The No. 1 crude oil unit at Marathon's Garyville refinery was shut, along with other undisclosed units, after a May 28 tornado damaged a cooling water system that serves part of the refinery. The company said Friday that it expects the unit to be back online by mid-June.
Carl Larry, president of Oil Outlooks, who estimated a 2 million-barrel drop in crude oil stocks the week ended May 30, said crude oil imports could drop back below the 7 million barrels per day (b/d) mark, offsetting the idled crude oil unit at Garyville.
U.S. crude oil imports were at 7.8 million b/d for the May 23 reporting week, according to EIA data.
Tim Evans, commodity analyst at Citi Futures Perspective, expects crude oil imports to have fallen by 600,000 b/d to 7.2 million b/d the week ended May 30.
At the New York Mercantile Exchange (NYMEX) hub at Cushing, Oklahoma, crude oil stocks are expected to have fallen by 1 million barrels, some analysts noted.
For the May 23 reporting week, Cushing crude oil stocks fell 1.5 million barrels, putting stocks at a 47% deficit to the EIA five-year average.
Evans said there has been some talk in the market that Cushing inventories might recover during the second half of the year, "a plausible development that would remove one of the market's critical fundamental supports of the past four months," he said.
U.S. REFINERY RUNS UP, REFINED STOCKS MIXED
U.S. refiners are expected to have increased run rates by 0.5 percentage point to 90.4% of capacity, based on EIA data.
However, Larry estimated a 1 percentage-point drop in run rates as storms crossed over the U.S. South during the week ended May 30.
U.S. gasoline stocks are estimated to have risen 2 million barrels the week ended May 30, while distillate stocks are expected have to fallen by 1 million barrels.
Still, gasoline fuel demand remains a wild card, said Larry.
"If we get another week of demand over 9 million b/d combined with the loss of Garyville and some slowdowns because of weather," gasoline stocks could draw, Larry said.
For distillates, Larry said, it's a matter of production.
"We think that refinery production eases off just a little here as more refineries are trying to increase that gasoline yield," Larry said. "This number could see a bigger draw if exports are going to continue to bounce back for two weeks in a row."
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Gulf state’s oil minister accompanying Emir on Tehran visitThe SPQ1 gas platform is seen on the southern edge of Iran's South Pars gas field in the Gulf, off Assalouyeh, 621 miles (1,000 kilometers) south of Tehran, on January 26, 2011. (Reuters/Caren Firouz)
The SPQ1 gas platform is seen on the southern edge of Iran’s South Pars gas field in the Gulf, off Assalouyeh, 621 miles (1,000 kilometers) south of Tehran, on January 26, 2011. (Reuters/Caren Firouz)
Kuwait, Reuters—Kuwait’s oil minister said his country was looking to sign an agreement with Iran to secure much-needed natural gas supplies.
The minister’s comments to the state news agency KUNA late on Sunday came on the sidelines of a visit by Kuwait’s Emir, Sheikh Sabah Al-Ahmed Al Sabah, to Iran, the first by a ruler of the US-allied Gulf Arab state since the 1979 Islamic Revolution.
“Iran has large quantities of gas and Kuwait is in need of Iranian gas through cooperation between the two countries,” KUNA quoted Ali Saleh Al-Omair as saying while in Tehran.
The oil-rich OPEC producer lined up 15 billion US dollars’ worth of gas supply from BP and Royal Dutch Shell last month to help meet soaring demand.
Kuwait also signed a contract to import liquefied natural gas (LNG) from fellow Gulf state Qatar to help meet its energy needs to the end of 2014 in April.
Iran sealed a preliminary agreement to export gas to the Gulf state of Oman in March, after an agreement dating back to 2005 was revived during a visit of Iranian President Hassan Rouhani to the capital Muscat.
Demand for gas in the Gulf Cooperation Council (GCC) states is rising on the back of growing populations and an industrial boom.
Still, some analysts have said that Iran, which holds the world’s largest gas reserves, is unlikely to provide a quick supply fix for gas-hungry Gulf states, even if it reaches a deal with world powers over its nuclear program and sanctions are lifted.
Iran has been prevented from exporting much of its natural gas because of Western sanctions over its contested nuclear program.
Kuwait, home to a sizeable Shi’a Muslim minority, is seen by some as a potential bridge between Iran and the Gulf Arab states, including the main power Saudi Arabia, with which relations remain strained, not least because of opposing stances over the Syria conflict.
Mon Jun 2, 2014 7:04am GMT
* Russian oil output down to 10.53 mln bpd in May
* Production declining at mature W.Siberian oil fields
* Government trying to tweak taxation system
* Russian daily natural gas production down to 1.71 bcm
By Vladimir Soldatkin
MOSCOW, June 2 (Reuters) - Russian oil and gas condensate output edged down 0.1 percent in May from April, declining for the fifth month in a row in terms of daily production, Energy Ministry data showed on Monday, on the back of the depletion of fields in West Siberia.
Oil and gas condensate production declined to 10.53 million barrels per day (bpd) last month from 10.54 million bpd the month before. Output has been falling from the start of the year after touching a post-Soviet high of 10.63 million bpd in December.
In terms of tonnes, output reached 44.535 million last month versus 43.119 million in April.
The latest figures show the longest streak of declining monthly output for years, giving a warning signal for the government which generates half of its revenue from the sale of these commodities.
Authorities have been trying to prop up falling production by designing a new taxation system involving a reduction in exports duties and increased mineral extraction taxes. The proposals are due to be discussed later this week.
The production decline is in contrast to an increase by members of the Organization of the Petroleum Exporting Countries, where production rose to a three-month high in May. Top exporter Saudi Arabia boosted supply slightly because of a higher need for crude in domestic power plants, industry sources said.
Russian crude exports via the Transneft pipeline monopoly fell to 17.465 million tonnes in May from 17.578 million in April.
Lower oil production was registered at Russia's two top oil producers, Rosneft and Lukoil, who have been unable to arrest the negative trend at old West Siberian oil fields where Russia produces some 80 percent of its oil.
According to the data, Rosneft's output nudged down 0.4 percent, while production at Lukoil fell 1.2 percent on a daily basis. Lukoil has said its first-quarter production declined 2.8 percent in West Siberia.
Russia's natural gas production in May stood at 52.95 billion cubic metres (bcm), or 1.71 bcm per day, down from 1.73 bcm per day in April.
Daily gas output at Gazprom, the world's top natural gas producer, edged down to 1.15 bcm in May from 1.16 bcm per day in April. (Reporting by Vladimir Soldatkin; Writing by Lidia Kelly; Editing by Muralikumar Anantharaman and David Holmes)
02/06/2014 | 10:14 AM | Kuwait News
تصغير الخطتكبير الخط
TOKYO, June 2 (KUNA) -- Kuwait's crude oil exports to Japan fell 35.0 percent in April from a year earlier to 5.30 million barrels, or 177,000 barrels per day (bpd), for the first decline in two months, government data showed.
As Japan's fifth-biggest oil provider, Kuwait supplied 5.0 percent of the Asian nation's total crude imports, the Japanese Natural Resources and Energy Agency said in a preliminary report.
Japan's overall imports of crude oil slid 4.3 percent year-on-year to 3.53 million bpd for the second consecutive monthly decline. Shipments from the Middle East accounted for 79.9 percent of the total, down 1.5 percentage points from a year before.
Saudi Arabia remained Japan's No.1 oil supplier, although imports from the kingdom shrank 4.5 percent from a year earlier to 1.15 million bpd, followed by the United Arab Emirates with 869,000 bpd, up 17.4 percent. Qatar ranked third with 426,000 bpd and Russia fourth with 322,000 bpd, respectively.
Japan is the world's-third biggest oil consumer after the US and China. But in its annual Energy Outlook released last month, the US Energy Information Administration predicted India will take over Japan by 2025.(end) mk.ws
Mon Jun 2, 2014 9:11pm GMT
* Total of $40 trillion needs to be invested in energy supply by 2035
* Investment more than double in 2013 compared to 2000
* Upstream spending dominated by LNG
By Simon Falush and Nina Chestney
LONDON, June 3 (Reuters) - A potential shortfall in investment in production in the Middle East could create a $15 spike in the oil price by 2035, the energy arm of the Organisation for Economic Co-operation and Development (OECD) said.
The world will need to be a total of $40 trillion invested in energy supply and $8 trillion on energy efficiency by 2035 to meet growing demand and falling output from mature sources of energy, the International Energy Agency (IEA) said in a report.
A large proportion of this will need to come from the Middle East, as a rise in non-OPEC production such as U.S. shale oil starts to lose steam in the mid 2020s.
But the IEA was wary on prospects for a large enough increase in investment from the region.
"The prospects for a timely increase in oil investment in the Middle East are uncertain: there are competing government priorities for spending, as well as political, security and logistical hurdles that could constrain production," the report said.
If production does not increase as needed, it will raise oil prices, the report said.
"If investment fails to pick up in time, the resulting shortfall in supply would create tighter and more volatile oil markets, with prices that are $15 per barrel higher on average in 2025."
Brent crude oil is currently trading at around $109 per barrel, and has been in a relatively tight range since November. It reached as high as $117 per barrel in 2013 and $128 per barrel in 2012.
The IEA said that investment in energy production was over $1.6 trillion in 2013, more than double in real terms than 2000, and that $130 billion was spent to improve energy efficiency.
Investment in renewable sources of energy rose to a peak of $300 billion in 2011 from $60 billion in 2000, but has since fallen to $250 billion for 2013.
More than four times this, $1.1 trillion per year was spent on the extraction and transport of fossil fuels, oil refining and the construction of fossil fuel-fired power stations, the report said.
Of the $40 trillion that will need to be spent by 2035, less than half will be spent on meeting growth in demand.
"The larger share is required to offset declining production from existing oil and gas fields and to replace power plants and other assets that reach the end of their productive life," the report said.
GAS SURGES, POWER STRUGGLES
Of the total investment in upstream oil and gas spending of more than $850 billion per year by 2035, gas will account for most of the increase. Over $700 billion is expected to be invested in the liquefied natural gas (LNG) sector alone during this period.
The IEA warned that more gas might not lead to much lower prices.
"The expectation that a surge in new LNG supplies will totally transform gas markets needs to be tempered by recognition of the high capital cost of LNG infrastructure, with transportation typically accounting for at least half of the cost of gas delivered over long distances," the report said.
For Europe's power markets, the IEA warned that a shortfall of investment could threaten reliability of electricity supplies.
"The investment required to maintain the reliability of Europe's electricity system is unlikely to materialise with the current design of power markets," the report said, adding that wholesale prices were around 20 percent too low to make investment attractive.
"Europe requires more than $2 trillion in power sector investment to 2035... If this situation persists, the reliability of European electricity supply will be put at risk," the IEA said.
Spending on renewable sources of energy and energy efficiency will not be enough to meet targets on climate change stabilisation goals, the report said.
"Today's policies and market signals are not strong enough to switch investment to low-carbon sources and energy efficiency at the necessary scale and speed," the report said. (Editing by William Hardy)
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