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Against Expectations, Oil and gas Remain Cheap

In the months after Russia’s invasion of Ukraine any hint of bad news sent energy prices into the stratosphere. When a fire forced an American gas plant to close, strikes clogged French oil terminals, Russia demanded Europe pay for fuel in roubles or the weather looked grimmer than usual, markets went wild. Since January, however, things have been different. Will oil and gas remain cheap?

Brent crude, the global oil benchmark, has hovered around $75 a barrel, compared with $120 a year ago; in Europe, gas prices, at €35 ($38) per megawatt-hour (mwh), are 88% below their peak in August.

It is not that the news has suddenly become more amenable. Oil and gas remain cheap despite the trends. The Organisation of the Petroleum Exporting Countries (opec) and its allies have announced swingeing cuts to output. In America, the number of oil and gas rigs has fallen for seven weeks in a row, as producers respond to the meager rewards on offer. Several of Norway’s gas facilities—now vital to Europe—are in prolonged maintenance. The Netherlands is closing the largest gas field in Europe. Yet any uptick in price quickly fades away. What is keeping things steady?

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Source: Economist

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Oil and Gas Fabrication Market Size to Hit USD 6.93 Billion, Globally, by 2029 at a CAGR of 4.7%

The global oil & gas fabrication market size was worth USD 4.86 billion in 2021. The market value is slated to rise from USD 5.03 billion in 2022 to USD 6.93 billion by 2029 at 4.7% CAGR during the forecast period. The infrastructure of the oil & gas industry is complex. An oil rig or platform is a large structure with facilities for drilling wells and extracting and processing oil and natural gas. Some of these oil platforms even have facilities to house workers. There are different oil platforms such as fixed platforms, semi-submersible platforms, compliant towers, and others. All of these structures are built on steel legs. Fortune Business Insights presents this information in their report titled “Oil & Gas Fabrication Market, 2022-2029.”

Growing Demand and Consumption of Oil & Gas to Foster Market Growth

The rising oil & gas production & exploration activities, along with increasing investments in the services market, surges the demand for oil & gas fabrication. The necessity to enhance the efficiency of established and fresh reserves is increasing. Rising investments in ultra-deepwater and deepwater projects and growing emphasis on emerging unconventional hydrocarbons propel the global oil & gas fabrication market growth during the forecast period.

However, the oil & gas industry production results in rising pollution levels and increasing global warming threats. Governments have imposed regulations on oil & gas companies.

Global Market Experienced a Downward Trend Due to Decreased Oil & Gas Demand

In March 2020, oil prices plunged due to geopolitical events along with the global impact of the COVID-19 pandemic. As a result, in 2020, the average number of the U.S. rigs fell 52% from 2019. The U.S. rig count hit a low of 244 in mid-August since then it has risen to 397 as of February 19, 2021. In 2020, industrial participants’ business was impacted by the COVID-19 pandemic as customers delayed purchases and planned projects, citing COVID-19-related market uncertainties, permitting delays and logistical constraints.

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Source: GlobeNewswire

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eia

EIA Sees Record U.S. Shale Output Despite Slow Growth

The biggest U.S. shale regions are expected to produce a record-high level of crude oil in July. Growth is sputtering and set to be the slowest since December 2022. With that, data from the Energy Information Administration (EIA) showed on Monday.

The seven main shale-producing regions in the United States are expected to pump 9.375 million barrels per day (bpd) of crude oil next month. It is a record high, according to estimates in the EIA’s Drilling Productivity Report.

While output could reach an all-time high, it would be only 8,000 BPD higher than the estimated June crude oil production of 9.367 million bpd.

TOP Producing Region by EIA

The Permian, the top-producing region, is set to see only a 1,000-bpd increase in output. This is even July production is expected at a record 5.763 million bpd. The rise in output would be the smallest in the Permian since February 2023.

The Bakken region will lead the gains with crude oil production set to rise by 7,000 bpd. This is from June to 1.214 million bpd in July. According to EIA’s forecasts, the estimated production from the shale basin in North Dakota and Montana would be the highest since November 2020.

While small gains are expected in the other regions, Eagle Ford is expected to see its crude oil production drop by 5,000 bpd to 1.117 million bpd. This would be the lowest output level since April 2023.

In natural gas output, the Permian will lead gains in July. This will be followed by Bakken and Appalachia. The output in the Anadarko and Eagle Ford basins is set to decline next month compared to June, according to the EIA estimates.

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Source: Oil & Gas 360

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Oil Prices Rise

Oil Prices Rise As China’s Crude Imports Jump

Oil prices rise early on Wednesday as Chinese data showed crude imports. It is the world’s top oil importer jumped in May, recovering from a weak April.

As of 8:13 a.m. EDT on Wednesday, ahead of the EIA weekly inventory report, WTI Crude prices were up by 0.99% at $72.45. The international benchmark, Brent Crude, traded at $76.98, up by 0.94% on the day.

Following a slump on Tuesday, oil prices recovered some of the losses early on Wednesday. This is as China’s data showed crude oil imports jumped in May by 12.2% year-on-year. Then by 17.4% compared to April. China imported a total of 12.11 million barrels per day (BOP) of crude in May. This is the data from the General Administration of Customs showed. This is as refiners returned from maintenance and moved to stockpile crude.

The building of crude inventories has supported crude oil imports and demand despite the mixed macroeconomic data coming out of China in recent weeks.

“Demand slowdown from China has been a major concern for the crude oil market recently, and a recovery in oil imports is likely to provide some comfort to the oil market,” ING strategists Warren Patterson and Ewa Manthey said on Wednesday.

“Higher refinery utilization has also increased refined product supplies in the Chinese market, with China reverting to being a net exporter of refined products last month.”

Oil prices recovered early on Wednesday, helped by the higher Chinese crude imports and the market shifting focus from macroeconomic concerns to a looming supply deficit in the second half of the year.

On Tuesday, concerns about the economy erased all the Saudi cut-induced gains from Monday. The 1 million bpd Saudi cut has failed to move oil prices in any meaningful way so far. In addition, a bearish industry report on inventories from the American Petroleum Institute (API) also weighed on prices on Tuesday. Although the API reported a crude inventory draw, it also found that gasoline and distillate inventories increased.

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Source: Oil Price

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Column: US Oil and Gas Output Still Rising in Response to High Prices Last Year

US oil and gas output continued to rise strongly in March – the delayed impact of very high prices that prevailed until the third quarter of 2022.

Oil output increased by 171,000 barrels per day (b/d) in March compared with February, according to the U.S. Energy Information Administration (“Petroleum supply monthly”, EIA, May 31).

The gains were led by the Lower 48 states (+137,000 b/d) and Gulf of Mexico (+45,000 b/d), which more than offset lower production from Alaska (-11,000 b/d).

Output rose by almost 10% in the first three months of 2023, compared with the same period a year earlier, and was the second-highest for the time of year after 2020.

On the gas side, dry production hit record 3,171 billion cubic feet in March and was more than 7% higher than in the same month a year earlier (“Natural gas monthly”, EIA, May 31).

Gas output climbed to a record 9,180 billion cubic feet in the first quarter and was also 7% higher than a year before.

Shale production is often characterised as “short cycle” because wells have a relatively rapid decline rate and new ones must be drilled constantly to replace the dwindling output from older ones.

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Source: Reuters

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federal regulations code

Texas Republicans want to shield oil and gas from federal climate regulations. Their bill would have little impact, experts say.

Texas could soon have a new law based on the federal regulations code on climate. It aims to make the state a sort of safe haven for the oil and gas industry. It is by shielding it from federal climate and environmental regulation. But experts say the measure would do little to change environmental enforcement in Texas. It would be more symbolic than anything.

Texas Republicans in both chambers have supported House Bill 33. It was authored by state Rep. Brooks Landgraf, R-Odessa. Moreover, it is as a way to ward off federal climate rules under President Joe Biden. They pledged that the U.S. would cut its greenhouse gas emissions in half by 2030. This is just among other goals to slow climate change. The president’s climate agenda has been viewed by many Texas Republicans as disastrous. Mainly for the nation’s biggest oil and gas state.

HB 33

HB 33, which was approved by the House before being altered by a Senate committee. It seeks to shelter the industry from what Republicans have called “federal overreach”. This will be done by barring state agencies from enforcing federal regulations on oil and gas operations. This is if those regulations do not exist under Texas law. Texas lawmakers used a similar approach in 2021. It is when they passed a law to make Texas a “Second Amendment sanctuary state.”

The language is similar to a bill proposed in Louisiana two years ago that would have made it a “fossil fuel sanctuary state.”

When the Environmental Protection Agency creates a new rule, states can decide whether they’ll enforce it or leave that to the EPA. Typically, Texas agencies have opted to enforce federal rules themselves — for example, the EPA delegates its authority to enforce many rules under the Clean Air Act to Texas. The State Railroad Commission, which regulates the oil industry in Texas, is currently seeking authority from the EPA to regulate carbon dioxide wells for geological storage, known as carbon sequestration.

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Source: The Texas Tribune

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US Oil and Gas Auction Yields Nearly $80 Million for Federal Coffers

The U.S. on Thursday held its first sale of oil and gas drilling rights on federal lands. This was since the passage of President Joe Biden’s landmark climate change law. It is attracting more than $78 million in high bids for leases in New Mexico and Kansas. Let’s talk more about this US Oil and Gas Auction.

The federal auction was just the second to be held in New Mexico. It is the nation’s second-largest oil-producing state since Biden became president in 2021.

Promontory Exploration LP of Midland, Texas, and Devon Energy Corp (DVN.N) of Oklahoma City were the auction’s top spenders, each picking up leases in New Mexico.

Biden’s Interior Department had attempted to suspend federal oil and gas leasing to study its environmental and climate impacts, but the Inflation Reduction Act that passed last year requires some oil and gas auctions if federal rights of way are offered for renewable energy projects.

The 19 offered parcels on 3,300 acres (1,335.5 hectares) in New Mexico garnered 99.9% of the high bid total of $78.81 million, according to sale information published by the U.S. Bureau of Land Management.

The highest price paid for a parcel was $16.2 million by Devon for 280 acres in the state’s Eddy County. It was also the auction’s highest price paid per acre at $57,901. It was Devon’s only parcel purchased in the sale.

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Source: Reuters

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Oil and Gas Employment in Texas Rose in April

The Texas Independent Producers and Royalty Owners Association said the state saw a gain in upstream oil and gas employment. This was in April and that more jobs were available with Houston offering the most opportunities. Let’s talk more about this.

The association’s analysis of data from the U.S. Bureau of Labor Statistics showed that direct Texas upstream employment last month totaled 199,400. It was an increase of 700 jobs from March and 17,600 more than a year earlier. The 12-month period ended in April saw an increase of 1,700 jobs in oil and natural gas extraction and 15,900 jobs in the services sector.

The employment data showed that there were more jobs available in the sector, the association said in a statement. There were 15,127 active job postings for the Texas oil and natural gas industry in April. The leading three cities by total unique oil and natural gas job postings were Houston (5,228), Midland (1,391), and Odessa (686).

World Fuel Services and producer Neste signed an agreement for sustainable aviation fuel, extending an existing relationship, the companies said in a statement. Neste’s U.S. operations are headquartered in Houston.

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Source: Houston Chronicle

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Crude Oil Prices Likely to Remain Elevated. Here’s Why

Crude oil prices have been fluctuating within a band. This was since the last couple of months driven by a bunch of positive and negative factors coming into play. But, investors may brace for further volatility in global oil prices due to various factors that are impacting the market.

Analysts believe that crude oil prices are likely to stay elevated in the short term amid supply concerns. It is due to a steep fall in US inventories and as production cuts by the OPEC countries begin to be felt.

US crude oil inventories shrank at their fastest pace in nearly six months over the past week. The data is from the American Petroleum Institute (API) pointed out.

The North American oil supply has already been squeezed by Canadian wildfire. Now, there are expectations of a surge in road trips in the US beginning with next Monday’s Memorial Day holiday. Both the contracts of crude oil have been rising in the run-up to the peak summer demand for travel.

“The sharp fall in US crude oil inventories, OPEC production cuts, increasing fuel consumption in the US, and Saudi Arabian energy minister’s warning against shorting oil, are all factors that are supporting the crude oil prices,” said Ajay Kedia, Director, Kedia Advisory.

The Organization of Petroleum Exporting Countries (OPEC) and its allies including Russia are expected to consider further output cuts at a meeting on June 4.

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Source: mint

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Bank Of America Sees Oil Prices Heading Toward $90 This Year

Oil prices will return to above $80 per barrel in the second half of this year. This could continue rising toward $90 due to a deepening supply deficit at Francisco Blanch. This is what the head of commodities research at Bank of America has been telling Bloomberg Television on Friday.

This quarter will be a little weaker, with oil prices averaging in the mid-$70s, Blanch said.

“We’ll get back up over $80 in the second half of the year toward $90. The deficit is going to get deeper over the course of the next six to nine months”. This is what the BofA’s head of commodities research was mentioning.

The supply deficit becomes wide due to the OPEC+ cuts and the lack of response from U.S. shale. This is as seen in previous cycles as Blanch was noting.

“Demand will eventually turn around and get a little better in the developed markets. So those three things start to push inventories lower again into the year-end and into 2024, and that’s what gets you higher in terms of prices,” he added.

Analysts in the latest monthly Reuters survey also see prices rising toward $90 per barrel by the end of this year, driven by Chinese demand and a tightening market following OPEC+’s latest production cuts.

So far this year, Brent prices have averaged around $82 per barrel.

Earlier this week, the International Energy Agency (IEA) said that the decline in oil prices over the past few weeks contrasts with an expected tightening of the market later this year when demand is set to exceed supply by nearly 2 million barrels per day (bpd).

Since the middle of April, oil prices have lost all the gains from OPEC+’s latest announcement of new production cuts.

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Source: Oil Price

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