Friday

March 3, 2017

  March 3, 2017

 

Leaner, Fitter, Faster: Shale 2.0 Challenges OPEC AgainBy Javier Blas    When the who’s who of the oil industry met a year ago in Houston, Saudi Arabia’s energy minister had harsh words for U.S. shale drillers struggling with the worst price crash in a generation.

"Lower costs, borrow cash or liquidate," said , who managed the world’s Ali Al-Naimilargest oil-exporting business for more than two decades.

In the year since, the drillers have largely taken Al-Naimi’s advice. While more than 100 have gone bankrupt since the start of 2015, the companies that survived have reshaped themselves into fitter, leaner and faster versions.

Add to the mix the election of President Donald Trump, carrying the promise of fewer regulations, added pipelines and energy independence, and you see why the mood at CERAWeek, the conference that every year gathers oil executives, bankers and investors in Houston, will be far brighter next week than in 2016.

"North American oil companies are going to increase their spending by 25 percent in 2017 compared to last year," said , the oil historian-cum-consultant who Daniel Yerginhosts the CERAWeek. "The increase reflects the magnetism of U.S. shale."

So far this year, U.S. energy companies have raised $10.5 billion in fresh equity, with shale and oil service groups drawing the most investment, the best start of the year since at least 1999 and equal to a third of what the sector raised in the whole of 2015.

In Midland, the Texas city at the center of the Permian basin, the activity rush is palpable, as is the threat of higher costs for shale companies. The county’s active-rig total ranks second in the U.S., behind only Reeves County further to the west.

For a U.S. industry that once seemed ever-dependent on $100 oil, the return to profit with lower prices was a big surprise. And producers returned to profit using the very playbook offered by one-time market rival Naimi, who was replaced as Saudi Arabia’s energy minister in May.

"Today, almost every single shale basin is economic in the $35-$50 a barrel price range," said head of energy at in Houston.Regina Mayor, KPMG

Company Watch

1:00 p.m.: Baker Hughes U.S. rig count  3:30 p.m.: CFTC Commitment of Traders report

All times eastern

Events

"Markets are spooked by swelling inventories. Several weeks of an increasing number of active drilling rigs have spurred expectations of increasing U.S. shale production."– Michael Poulsen, an analyst at Global Risk

Management (Terminal link)

Quote of the Day

4 million — Number of barrels Vitol is said to be offering from its storage terminal in South Africa, as the glut ebbs. (Terminal link)

Number of the Day

Today's Oil News

Saudi Arabia Keeps on Cutting

Note: Libya, Nigeria and Iran are exempt from cutsSaudi Arabia continued to lead the OPEC cuts in February. Output from Saudi fell by 90,000 barrels a day last month to keep production below its pledged level of 10.058 million barrels a day for a second month, according to Bloomberg data released March 2. Iraq continues to pump above its pledged level, as does the U.A.E.

— Christopher Sell

Note: Oil and gas integrateds producing more than 1 million barrels a day of crude, according to Bloomberg Intelligence. Company data as of 9:30 am London time. U.S. company data as of previous day's close.     

  Oil Buyer's Guide 2  March 3, 2017

 

Today's Oil News

SupplyOil headed for its biggest weekly

decline in two months as the comeback in U.S. supplies continued to stymie OPEC’s bid to eliminate a global surplus. Futures in New York traded near a three-week low today, only a few days after they were at a seven-week high. It’s been the story all year, with prices oscillating between $50 and $55 a barrel as evidence of output curbs by some producers is tempered by surging U.S. supply. Just this week, data showed American stockpiles expanded further to a record high, while Saudi Arabia led OPEC’s efforts to cut production for a second month. Full on Terminal.story

Vitol is offering to sell Nigerian crude oil from a storage terminal in

, five traders familiar with South Africathe matter said, in what may be a signal that the global supply glut is beginning to ease. The world’s biggest oil merchant has been offering 4 million barrels of Nigeria’s Qua Iboe for delivery to Europe that it’s been keeping at storage facilities in Saldanha Bay on South Africa’s west coast, according to the people. Normal trades are about 1 or 2 million barrels each. Full on Terminal.story

Brazil's pre-salt output totalled about 1.59 million barrels of oil equivalent a day in January, compared with 1.57 million in December, oil regulator ANP

said in a statement. Full on story Terminal.

Nigeria’s anti-graft agency filed new charges against Royal Dutch Shell and Eni, alleging the companies “corruptly” paid $801 million in 2011 when acquiring an offshore oil field. The European oil majors gave that sum to former Nigerian oil minister Dan Etete, his Malabu Oil & Gas and others in relation to the purchase of Oil Prospecting License 245 and “thereby committed an offence,” according to documents from the Federal High Court in Abuja. “Eni reaffirms the correctness of its conduct within the acquisition of the license,” the Italian oil producer said in an emailed statement today. The company said it hasn’t been notified of any charges relating to the deal. Full storyon Terminal.

China’s energy companies may be in the hunt for assets again as oil prices stabilize and the country’s reliance on overseas supplies rises. Producers including CNPC were reported to be involved in deals from the Middle East to South Asia worth at least $5.7 billion over the past week. That may signal a renewed hunger for acquisitions after spending slumped from more than $27 billion in 2012 to as little as about $3 billion two years later. Full on story Terminal.

CGG said it’s in talks with creditors to switch $1.88 billion of high-yield and convertible bonds into its own shares as the slump in crude exploration prevents the French oil-services company from repaying debt. The company posted a net loss of $577 million last year after a loss of $1.45 billion in 2015. This year’s operating results will be in line with that of last year as the market won’t improve, while cash generation will probably be lower because of a less favorable working capital requirement, CGG said. The company has cut its workforce by almost half over the past three years as sales collapsed. Full on Terminal.story

Companies

The move by Saudi Aramco to cut the OSP for Arab Light crude to Asia "is a clear signal that the Kingdom currently deems regional fundamentals as relatively loose," RBC Capital Markets said in a March 2 note. “Asia’s voracious thirst for crude is instrumental in helping to clean up the plethora of light, sweets in the Atlantic Basin. This means head-on competition with key Middle Eastern crudes,” it said. Full story on Terminal.

The fuel oil market is to tighten as Saudi demand rises, according to Energy Aspects. The "stars are aligning for another period of exceptional strength in fuel oil," due to demand from Saudi Arabia and declining output in the Middle East, Energy Aspects said in a research note. Full on Terminal.story

Brent may trade towards $60 a barrel in the short term, but U.S. output and OPEC compliance slippage will cap prices and the 2017 forecast remains at $57 a barrel average, BMI Research said in a report dated March 2. Full on story Terminal.

Weak U.S. gasoline demand could prompt a switch to gasoil, said JBC Energy. U.S. gasoline inventories have barely fallen this year in spite of reduced yields for the motor fuel and hefty exports, signalling "substantial easing" in demand growth or even large declines since the New Year, JBC said in a note. Full on Terminal.story

OPEC shipments will increase to 23.97 million barrels a day in the four weeks to March 18, compared with the period to Feb. 18, tanker tracker Oil Movements said in a report. The figure excludes Ecuador, Angola and Gabon. Full on story Terminal.

The slump in the U.S. gasoline crack is in danger of weighing on both crude prices and timespreads, Petromatrix analyst Olivier Jakob wrote in an emailed report. Full storyon Terminal.

Market Calls

OPEC Watch

  Oil Buyer's Guide 3  March 3, 2017

OPEC Output Totaled 32.2 Million Barrels a Day in February

PRODUCER TICKER CURRENT MONTH ('000 B/D) LAST MONTH ('000 B/D) CHANGE ('000 B/D) % CHANGE CAPACITY ('000 B/D)

Total OPEC-13 OPCRTOTL Index 32,165 32,230 -65 -0.20 36,405

Saudi Arabia OPCRSAUD Index 9,780 9,870 -90 -0.91 11,500

Iraq OPCRIRAQ Index 4,440 4,490 -50 -1.11 4,700

U.A.E. OPCRUAE Index 2,950 2,950 0 0.00 4,700

Iran OPCRIRAN Index 3,830 3,800 30 0.79 3,150

Kuwait OPCRKUWA Index 2,710 2,710 0 0.00 2,200

Venezuela OPCRVENZ Index 2,010 2,030 -20 -0.99 2,500

Nigeria OPCRNIGE Index 1,680 1,640 40 2.44 2,200

Angola OPCRANGO Index 1,690 1,670 20 1.20 1,870

Algeria OPCRALGE Index 1,040 1,040 0 0.00 1,150

Qatar OPCRQATR Index 620 615 5 0.81 780

Ecuador OPCRECDR Index 535 530 5 0.94 555

Libya OPCRLIBY Index 700 690 10 1.45 780

Gabon OPCRGABO Index 180 0 0 0.00 220Source: Bloomberg

OPEC Watch

Saudi Arabia Still Bears Brunt of Oil Cuts as OPEC Output DropsBy Angelina Rascouet and Julian LeeSaudi Arabia continued to lead OPEC’s efforts to cut production, helping the organization get closer to a goal set out in a historic accord last year.

Riyadh lowered oil supply by 90,000 barrels to 9.78 million barrels a day in February from a month earlier, according to a Bloomberg News survey of analysts, oil companies and ship-tracking data. It was the second month in a row that the world’s biggest crude exporter pumped below its own target of 10.06 million barrels a day.

Overall, OPEC’s production fell to 32.17 million barrels a day in February, a 65,000 barrel-a-day drop from January, the first month of the accord. Accounting for the members who raised

output and the suspension of Indonesia, total output remains 415,000 barrels a day above the target set out in the Nov. 30 deal. That means the group as a whole is only about 70 percent of the way toward the production level it deemed necessary to eliminate a global oversupply and boost prices.

Iraq’s production dropped by 50,000 barrels to 4.44 million barrels a day, the survey showed. A strike by oil workers in Gabon — the tiniest member — contributed to a decline of 15,000 barrels a day. Angola, among the most compliant members in January, failed to meet its target in February after the start-up of two oil projects. Output there ramped up 20,000 barrels to 1.69 million barrels a day.

Supply

Iran, Nigeria, Libya Up

Iran’s output increased to 3.83 million barrels a day in February, slightly above its goal of 3.797 million barrels a day, according to the survey. Libya and Nigeria — both exempt from the accord — saw a combined 50,000 barrel-a-day growth.

Saudi Output Down

Saudi Arabia's production totaled 9.78 million barrels a day in February, according to the survey, bringing its proportion of OPEC output down to 31.4 percent, from 32.1 percent in January.

  Oil Buyer's Guide 4  March 3, 2017

 

 

Supply

U.S. Crude Imports in January, February Highest Since 2014By Bert Gilbert, Application Specialist

 

 

U.S. imports of waterborne crude reached 4.81 million barrels a day in the first two months of this year, a level not seen since 2014, when imports reached 4.89 million barrels a day over the same period.

These high import levels have contributed to the inventory builds so far this year.

As the chart demonstrates, this increase in imports has largely been driven by imports from OPEC members. That's slightly counter-intuitive, given that on Nov. 30 OPEC agreed to cut production by 1.2 million barrels a day, beginning in January.

 

Bill of lading data available on Bloomberg's show that AHOY <GO> much of the increased imports in January and February are coming from Iraq and Saudi Arabia, offsetting declines from Angola and Venezuela.

Many of these barrels were probably loaded for export in the run-up to the OPEC meeting, when producers increased output to give themselves leeway.

With a roughly 45-day transit time from the Middle East to the U.S., that production surge bolstered imports in January and February.

This article was written by a Bloomberg LP employee involved with sales-support and was edited by the News department. To suggest ideas or provide feedback, contact the editor for this story: Christopher Sell at csell1@bloomberg.net   

Refinery Outages

Imports From OPEC Reached 3.3 Million Barrels/Day

Iraq and Saudi Arabia Drive Increase in Imports

  Oil Buyer's Guide 5  March 3, 2017

 

 

Refinery Outages

Operating rates at independent refineries in eastern Shandong province rose to 58.8 percent of capacity in the week ending March 2, according to industry website . That's the Oilchem.nethighest level since the week ended Dec. 29, when the rate was 59.1 percent.

— Alfred Chang

Phillips 66's Wood River, Illinois, refinery reported a process unit upset on March 2, according to a state filing. The refinery can process 336,000 barrels a day, according to data compiled by Bloomberg.

— Bill Lehane

Refining NZ's Marsden Point in New Zealand is to shut a crude distillation unit and associated hydrotreater, and a hydrodesulfurization and benzene removal units, from this weekend, the Northern Advocate newspaper reported, citing refinery manager Peter Gubb.

— Sheela Tobben

is to shut three Marathon Petroleumunits at its Catlettsburg, Kentucky, refinery

 

today for planned work, the company said in a filing with the state regulator.

— Sheela Tobben

BP's Cherry Point refinery in Ferndale, Washington, is conducting maintenance on a unit that treats gasoline before

blending, a person familiar with operations said. The unit is a chemical treater that is part of the process to remove contaminants from hydrocarbon streams. The work may last several weeks.

— Barbara Powell

WTI Survey

Analysts Neutral on WTI Crude Outlook in Weekly Survey    By Mark ShenkAnalysts and traders are undecided on WTI crude futures, a weekly Bloomberg survey showed.

Of those surveyed, 16 of 39, or 41 percent, were neutral, and 14, or 36 percent, were bearish. The remaining nine were bullish.

Front-month WTI fell $1 this week to $52.99 a barrel on March 2.

 

Benchmarks

Current and Planned Refinery Outages

  Oil Buyer's Guide 6  March 3, 2017

 

Benchmarks

For live spot prices, click or run on Bloomberg. For crack here BOIL<GO>

spreads, click or run here CRKS<GO>

Futures Based Swaps

PERIOD WTI BRNT WTI/BRNT NYULSD NYULSD/WTI

Bal Mo 52.92 55.27 -2.36 157.85 13.38

APR 17 53.32 55.57 -2.25 159.03 13.48

MAY 17 53.62 55.76 -2.13 160.16 13.65

JUN 17 53.89 55.9 -2.01 161.34 13.87

Bal Qt 52.92 55.27 -2.36 157.85 13.38

Q2 17 53.61 55.74 -2.13 160.18 13.66

Q3 17 54.14 55.98 -1.83 163.79 14.65

Q4 17 54.28 55.95 -1.66 166.94 15.83

Bal Yr 53.9 55.83 -1.92 163.06 14.58

Cal 18 54.14 55.57 -1.43 166.79 15.91

Cal 19 53.79 55.09 -1.3 168.63 17.04

PERIOD NYULSD/BR NYRB NYRB/WTI NYRBBR RBHO

Bal Mo 11.02 165.58 16.62 14.27 7.73

APR 17 11.22 168.43 17.42 15.17 9.4

MAY 17 11.51 169.62 17.62 15.48 9.46

JUN 17 11.86 169.55 17.32 15.31 8.22

Bal Qt 11.02 165.58 16.62 14.27 7.73

Q2 17 11.53 169.2 17.45 15.32 9.02

Q3 17 12.82 163.1 14.36 12.53 -0.69

Q4 17 14.17 149.46 8.49 6.83 -17.47

Bal Yr 12.66 161.09 13.75 11.83 -1.97

Cal 18 14.48 157.44 11.98 10.56 -9.34

Cal 19 15.73 155.53 11.54 10.23 -13.1Source: Bloomberg

For live swap prices, click or run on Bloomberghere CFVL<GO>

Spot prices as of end of previous day. Futures as of 7:30 a.m.  

Bloomberg Briefs: Oil Buyer's Guide

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  Oil Buyer's Guide 7  March 3, 2017

 

 

Here's an overview of useful functions for oil traders, analysts and researchers. Each function is linked to the terminal. If you have any feedback about this page or the content of the Briefs, please contact Paul Smith, brief editor, at .psmith152@bloomberg.net

CFVL <GO> Commodity Fair Values.Proprietary algorithms developed by Bloomberg to calculate fair value prices.

Contract Table Menu.CTM <GO> Search for the futures contracts you want to see by keyword or category.

BTM <GO> for Block Trade Monitor swaps to futures and options. See activity that has the potential to move the market.

BOIL <GO> Bloomberg Spot Oil. Wholesale crude prices, OSPs, product prices and swap benchmarks.

CPLY <GO> Commodity Playbook. Key information on standard commodity plays, which helps you identify trading strategies and spot anomalies.

REFO <GO> Global RefineryAssists you with forecasting Outages.

refinery outages and alerts you when an unplanned outage occurs or when a planned outage is scheduled.

Global Refinery NTBK <GO>for different crudes and Netbacks

locations. Chart historical refinery margins and find details on yield vectors and other inputs.

CMSP MARGIN <GO> Brent RefineryCreate your own Margin Calculator.

custom refinery margin to track historically.

NRGZ <GO> Energy Industry Reportsfrom DOE, BP, IEA forecasts and Eurostat data.

OPEC <GO> OPEC Oil Production.

PRICE DISCOVERY

TRADE IDEAS

FUNDAMENTAL ANALYSIS

Monthly estimates on production and spare capacity, compiled by Bloomberg.

Weekly ECO 10 <GO> DOEannouncements.

for Commodity Studies COSY <GO>oil and products, natural gas, and other commodities.

data. Some GENS <GO> Genscapefree-for-all, some subscription based. Includes Cushing and Bakken net flows, and ARA crude storage.

Showing OTEN <GO> Oil Tenders.issuer, product, awardee, price, and load and delivery dates.

AHOY <GO> U.S. Oil Trade Flows.Filter U.S. customs bills of lading data for shipping vessels entering the country with cargo.

Oil Flow XLTP XOILF <GO>Analytics. Excel template showing Bloomberg indexes that track crude and oil product tankers by deadweight tonnage.

BMAP NEW <GO> Commodity Maps.Specify custom search areas to track vessels and find ports, pipelines, refineries, LNG terminals, and other oil-related energy assets.

Commitments of Traders COT <GO>Comprising data from CFTC, Reports.

ICE and NYSE Liffe.

Bloomberg Default DRSK <GO>Analyzes the credit health of a Risk.

company by estimating its default probability over the next year.

CPFC <GO> Commodity Price

PHYSICAL

FINANCIAL

Forecasts. Analyst forecasts for energy including Nymex WTI, ICE Brent and ICE gasoil. Includes contributor names, and quarterly and annual forecasts.

Find short, timely analysis as well as industry specific data sets. Covering key indicators and critical themes.

BI OILS <GO> Crude Oil Production

BI DRIL <GO> Drilling & Drilling Support

BI INTO <GO> Integrated Oils

BI SERV <GO> Oil & Gas Services & Equipment

BI EXPR <GO> Crude Oil & Natural Gas E&P

BI RNMK <GO> Refining & Marketing Dashboard

FIRST OIL <GO> Speedy, bullet-point news.

Top News: Oil. OTOP <GO> Real-time curated oil news.

NI OILMARKET <GO> Market-moving oil stories.

NI OILKEY <GO> Market-moving oil stories and global macro stories.

NI REFOUT <GO> Refinery outages stories.

NI ANANRG <GO> News about analysts' energy research.

NI OIL FFM <GO> How to use terminal functions relevant to the oil market.

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