shale oil

U.S. oil output from seven major shale formations is expected to rise by about 38,000 barrels per day (bpd) in July to about 7.8 million bpd, the highest since November, the U.S. Energy Information Administration said in a monthly forecast on Monday.

The biggest increase is set to come from the Permian, the top-producing basin in the country, where output is expected to rise by 56,000 bpd to about 4.66 million bpd, the highest since March 2020.

The forecast increase in total output was attributable to the Permian and Appalachia basins, with the other five basins expected to decline, or remain flat, the data showed.

The Eagle Ford basin in South Texas and the Bakken basin in North Dakota and Montana are each expected to register declines of 4,000 bpd.

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Source: Reuters

oil-price-demand

Although oil may not be headed to a new supercycle, prices still have room to rise from current levels because of a strong demand rebound and expected tightness in supply, some of the world’s largest commodity trading groups say.

There is a chance for $100 oil, Jeremy Weir, chief executive officer at commodity trader Trafigura, told the FT Commodities Global Summit on Tuesday.

“You need higher prices to incentivize… and also maybe to build on the cost of carbon in the future as well. You also need to attract capital in the business,” Weir told the online debate.

The largest commodity traders are bullish on oil in the near term, too.

Brent Crude traded at over $73.50 a barrel early on Tuesday, but the top executives of the trading houses see further upsides.

“Higher from here” for the next six months, Glencore’s Head of Oil Marketing, Alex Sanna, told the same event today. According to Sanna, better news about vaccination programs, inflation bringing in investor cash, and the demand recovery will all contribute to rising oil prices.

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Source: Oil Price

oil-rig

Growing demand in Asia means that the age of oil isn’t over yet, although consumption in developed western economies has trended lower over the past decade, according to Karin Kneissl, a newly appointed director on the board of Russia’s oil giant Rosneft.

“I’ve always underlined that it’s the East that plays the decisive role, not the West. And the energy market is more dynamically developing in the East. And you shouldn’t also discount the African continent,” said Kneissl, who was Austria’s foreign minister between 2017 and 2019.

Continued growth in oil demand in Asia, due to increased economic prosperity and rising population, will shape the global trend in oil demand, Kneissl said at the St. Petersburg International Economic Forum, as quoted by Sputnik.

According to the new independent board member of Russia’s largest oil company, the current global push toward green energy and the stigmatization of fossil fuels and fossil fuel funding could result in a new supercycle for oil.

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Source: Oil Price

oil

Global oil demand is set to rebound and remain robust for some time, BP’s chief executive Bernard Looney told Bloomberg News on the sidelines of an economic forum in Russia, reiterating views expressed by most forecasters and analysts.

“There is a lot of evidence that suggests that demand will be strong, and the shale seems to be remaining disciplined,” Looney told Bloomberg News at the St. Petersburg International Economic Forum. “I think that the situation we’re in at the moment could last like this for a while,” the top executive of one of the world’s largest oil companies said.

Looney’s assessment of the oil market is similar to the views recently expressed by investment banks such as Goldman Sachs and Barclays, as well as OPEC and the International Energy Agency (IEA).

Goldman Sachs continues to see oil hitting $80 this year, despite the possible return of Iranian oil to the market.

Barclays, for its part, said two weeks ago that global oil demand was recovering with major economies reopening amid a cautious supply approach from OPEC+ and restraint in U.S. shale.

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Source: Oil Price

Image Credit: Public domain/Flickr

oil-demand

Oil demand is recovering faster than previously expected, and unless OPEC+ puts additional barrels on the market on top of the plans to restore 2 million barrels per day (bpd) by July, oil prices will be heading higher as the gap will widen, the Executive Director of the International Energy Agency, Fatih Birol, told Bloomberg Television in an interview on Tuesday.

According to Birol, global oil demand could return to the pre-crisis levels of 2019 as soon as in a year’s time.

“Demand in one year or so may well come back to the levels of before the crisis,” Birol told Bloomberg, noting the strong demand in the United States, Europe, and China.

This most recent proclamation regarding oil demand is in stark contrast to its forecast three months ago, when the IEA said in its annual Oil 2021 report with projections through 2026 that global oil demand would take until 2023 to return to the pre-pandemic levels of 100 million bpd. Back then, the Paris-based agency warned that COVID-19 would change parts of consumer behavior forever, with global gasoline demand likely past its peak already.

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Source: Oil Price

oil-gas-news

Do we still need to explore for oil and gas? One conclusion in our Horizons scenario analysis is that if the world gets onto a 2 °C pathway, there’s enough oil in existing discoveries to meet future oil demand. It’s a view the IEA NZE concurs with.

Dr Andrew Latham, Huang Tra Ho and Julie Wilson have just published their analysis of the Majors’ exploration performance for 2011-2020. In that tumultuous decade, exploration lost its way economically, before a pivot to value that got returns back to respectable levels – even at US$50/bbl. I asked them where exploration goes from here.

Is exploration still relevant?

It will still play a role in upstream. Even if we do get onto a 2 °C pathway, exploration can deliver new resource into the supply stack that’s lower cost and less carbon-intensive than existing resources. We also think the focus of exploration will progressively shift towards gas, for which demand will be more resilient through the transition.

There is still a likelihood that oil and gas demand holds up for some years. In that case, we’ll want exploration to find new resource to offset the natural decline in production from existing fields.

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Source: Hellenic Shipping News Worldwide

oil-well

A number of peculiar things have happened in the Middle East in the past few weeks involving the U.S., Saudi Arabia, and the UAE, all with some sort of focus on Iran. To begin with, at the end of April, the U.S’s designated main man in Saudi Arabia – Crown Prince Mohammed bin Salman – stated very publically that he seeks “a good and special relationship with Iran…We do not want Iran’s situation to be difficult, on the contrary, we want Iran to grow… and to push the region and the world towards prosperity.”

Such sentiments are in direct contrast to what might be expected from the effective ruler of Saudi Arabia, the historical archenemy of which is Iran. Bin Salman has previously launched numerous tirades against Iran accusing it of being the prime mover of instability and terrorism across the region. Stranger still, though, is the fact that these comments followed a secret meeting in Baghdad between senior figures from the Saudi and Iranian regimes, brokered by Iraq Prime Minister, Mustafa al-Kadhimi. These talks were subsequently confirmed by an Iraqi government official through various news services, although neither Riyadh nor Tehran formally acknowledged them.

The positive comments towards Iran from bin Salman came at around the same time as Saudi Arabia’s flagship oil and gas company, Aramco, let it be known that it is in the process of broadening and deepening its relationship with China, which is not only Iran’s chief sponsor via the 25-year deal signed back in 2019 but also the country most intent on replacing the U.S. as the key superpower in the Middle East.

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Source: Oil Price

oil-gas

As the U.S. oil and gas industry slowly appears to be getting back on track, ramping up production in line with demand, the effects of the Texas storm earlier this year appear to have hit production levels harder than originally thought according to new figures.

Aging infrastructure is the reason for President Biden’s new national infrastructure plan. However, this comes after years of neglect which has cost the oil and gas sector billions of dollars, as well as wreaking havoc on both the environment and communities relying on vital energy supplies.

Every year, extreme weather hinders energy distribution across the U.S. During California’s hot summers we see wildfires halting energy production from the state’s aging electrical infrastructure. This is largely because it is common practice to wait until a component fails within the system for it to be replaced, rather than preemptively investing in better structures.

This February, the electrical grid shut down and refineries halted production as Texas was hit hard by a winter storm which saw freezing pipes and no energy supply for heat and water to many houses across the state. Many were left to rely on generators to heat their houses to escape freezing temperatures for up to a week.

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Source: Oil Price

oil-gas-stocks

For years, searching for potentially rewarding oil and gas stocks during the ongoing energy crisis has pretty much felt like dumpster diving. The energy sector has been deeply out of favor over the past few years, with the Covid-19 pandemic only serving to make an already bad situation much worse.

But the worst appears to be in the rearview mirror as the energy sector continues to stage an impressive rebound as the global economy recovers from the ravages of the pandemic.

The energy sector is just coming off a bumper earnings season whereby it posted the biggest earnings beat of all 11 sectors of the U.S. economy.

With impressive bottom-line growth, many top energy names are returning more capital to shareholders in the form of share buybacks and dividends. Companies usually repurchase shares when they believe they are undervalued, a big positive for oil and gas bulls.

Meanwhile, Crude oil futures have rallied to their highest finish in months, with WTI price climbing above $65 for the first time in two months after OPEC+ stuck with plans to gradually ease production curbs, signaling confidence in the demand outlook.

With summertime fast approaching, here are 3 energy picks, with two being natural gas/LNG stocks bearing in mind that natural gas demand in the United States peaks in the wintertime, with a lesser peak during the summer.

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Source: Oil Price

Caribbean

BHP has commenced oil production in Trinidad and Tobago in the next big energy development in the Caribbean. After recent successes in Guyana and Suriname’s energy sectors, Australian firm BHP has begun production on its $500m Ruby Project, located in shallow water in Block 3(a) within the Greater Angostura Field.

The project will see gas and oil being produced from the Ruby and Delaware reservoirs via five production wells offshore Trinidad and Tobago. Several more wells are expected to be drilled in the area by the end of the year.

Peak production levels are expected to be around 16,000 bpd of oil and 2.26mn m³/d of gas, upon completion of the development.

Geraldine Slattery, President of BHP, stated “The start-up of Ruby represents the continued development of BHP’s oil and gas production facilities in Trinidad and Tobago, re-enforces the quality of the resource and its investment competitiveness.”

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Source: Oil Price