tuesday march 21, - bloomberg.com · tuesday march 21, 2017 march 21, 2017 ... "although the...
TRANSCRIPT
Tuesday
March 21, 2017
March 21, 2017
Big Oil Upending Shale Turf Where Wildcatters RuledBy Javier Blas Big Oil is muscling in on shale country.
Exxon Mobil, and are jumping into American shale with Royal Dutch Shell Chevrongusto, planning to spend a combined $10 billion this year, up from next to nothing only a few years ago.
The giants are gaining a foothold in West Texas with such projects as Bongo 76-43, a well which is being drilled 10,000 feet beneath the sprawling Permian Basin.
If the big boys are successful, they’ll scramble the U.S. energy business, boost American oil production, keep prices low, and steal influence from big producers, such as Saudi Arabia. And even with their enviable balance sheets, the majors have been as relentless in transforming shale drilling into a more economical operation as the pioneering wildcatters before them.
“We’ve turned shale drilling from art into science,” , Shell’s vice president of Cindy Taffunconventional wells, said on a recent visit to Bongo 76-43, about 100 miles (160 kilometers) west of Midland, Texas, capital of the Permian.
Traditionally, oil companies drilled one well per pad—the flat area they clear to put in the rig. At Bongo 76-43, Shell is drilling five wells in a single pad for the first time, each about 20 feet apart. That saves money otherwise spent moving rigs from site to site. Shell said it’s now able to drill 16 wells with a single rig every year, up from six in 2013.
Chevron said it estimates its shale output will increase as much as 30 percent per year for the next decade, with production expanding to 500,000 barrels a day by 2020, from about 100,000 now. “We can see production above 700,000 barrels a day within a decade,” Chevron CEO told investors this month.John Watson
Exxon said it plans to spend one-third of its drilling budget this year on shale, with a goal to lift output to nearly 800,000 barrels a day by 2025, up from less than 200,000 barrels now. The company doubled its Permian footprint with a $6.6 billion acquisition of properties from the billionaire Bass family. , Exxon’s new CEO, said Darren Woodsshale isn’t “on a discovery mode, it’s in an extraction mode.” Full on Terminal. story
Spread Watch
4:30 p.m.: API U.S. oil inventoriesToday: Energy Transition Dialogue conference, Berlin. Final day
All times eastern
Events
"Although the talk is creating some positive headlines, I see limited upside from a deal extension. The market will eventually focus on U.S. production and inventories ahead of Wednesday’s inventory report."
– Ole Sloth Hansen, head of commodity
strategy at Saxo Bank ( )Terminal link
Quote of the Day
Oil Traders Take Note: Two Key Technical Levels to Watch (Terminal link)
What to Read
Today's Oil News
Oil Stocks to Be Drawn by 600,000 B/D in 2017, Says SG
Global crude inventories are forecast to be drawn down by 600,000 barrels a day in 2017, compared with a build of 400,000 barrels a day in 2016, according to a Societe Generalereport, published March 20 In terms of OECD days forward cover, inventories are forecast to .draw steadily through 2017, the report said, approaching the five-year average in the second-half of the year. “When days forward cover returns to the five-year average, we would say that the inventory overhang is gone and that the market rebalancing is complete,” the report said.
— Christopher Sell
U.S. crude traded at the biggest discount versus Brent since Jan. 31 as American oil drillers have been adding the most rigs since 2012, stockpiles hit a record this month and the nation’s production has risen to the highest in more than a year. WTI for May delivery was $2.72 a barrel cheaper than Brent on March 20.
— Mark Shenk
Oil Buyer's Guide 2 March 21, 2017
Today's Oil News
SupplyOil rebounded as investors weighed
a possible extension of OPEC-led production cuts against a forecast increase in U.S. crude stockpiles. Futures rose as much as 1.1 percent in New York, paring March 20’s 1.2 percent decline. OPEC will likely extend the six-month deal past June until global inventories fall to five-year average levels, according to Nomura Holdings. U.S. stockpiles probably increased by 3 million barrels last week, according to a Bloomberg survey before a government report on March 22. Full on storyTerminal.
PetroChina has chartered the Suezmax Delta Commander to load 130,000 metric tonnes of crude around April 1-3 from Whiffen Head, Canada, for shipment to Asia, according to shipping fixtures compiled by Bloomberg. The vessel is booked at about $3 million to $3.5 million, with options to bring oil to Singapore or other destinations in the Far East region. Full on Terminal.story
Marathon Oil agreed to buy about 21,000 net acres in the Permian’s Northern Delaware basin of New Mexico for $700 million in cash, adding to holdings in the area it entered earlier this month. The Houston-based explorer and producer will now hold about 91,000 acres in the Permian basin, acquired after it sold oil-sands assets in Alberta for $2.5 billion. Full on Terminal.story
Libya’s major oil ports of Es Sider and are resuming operations and Ras Lanuf
preparing to export crude after a two-week halt in shipments due to military clashes. Full on Terminal.story
Shell's Martinez refinery in Californiaof Rubiales oil took 337,700 barrels
from Colombia. That's the first time the grade has reached the region since October 2013, according to U.S. Customs data compiled by Bloomberg. Full on Terminal. story
Chevron’s sale of its stakes in Chinese offshore oil fields operated by state-owned CNOOC has stalled, people with knowledge of the matter said. Bids that Chevron received for its interests in three fields in China’s Bohai Bay didn’t meet its expectations, according to the people. Chevron had aimed to sell the assets for as much as $1 billion, the people said. Full on Terminal.story
EnQuest signaled it’s still open to selling a stake in its North Sea Kraken project, set to start pumping oil next quarter. — The explorer and producer which derives more than three-quarters
— of its output from the U.K. North Sea held talks to divest a 20 percent stake in Kraken last year with Israel’s Delek Group, but negotiations collapsed. Full on Terminal.story
Algeria appointed a new CEO at state-owned energy company Sonatrach Group, dismissing the incumbent after less than two years and bringing in the oil and gas producer’s sixth leader since 2010. Energy Minister Noureddine Boutarfa gathered the board of Sonatrach on March 20 and named Abdelmoumen Ould Kaddour as CEO, replacing Amine Mazouzi, the ministry said on its Facebook page. Mazouzi became CEO of Sonatrach in May 2015. Full on Terminal.story
Companies
People
Global oil demand growth is to rise by 1.4 million barrels a day this year, following robust expansion of 1.6 million barrels a day in 2016, Societe Generale analyst Michael Wittner said in an emailed note on March 20. Full on Terminal.story
Nomura sees OPEC extending production cuts in the second half of 2017. It also reiterated its Brent forecast of $60 a barrel for 2017 and $70 a barrel for 2018, analysts including Gordon Kwan said in a March 21 report. Full on story Terminal.
U.S. inventories are to trend lower in the next month, pushing prices back to the trading range before moving higher next quarter, Standard Chartered Bank analysts including Paul Horsnell, head of commodities research, said in a note. Full on Terminal.story
Downstream divestments from oil majors will continue to provide opportunities for trading houses to grow their fuel distribution businesses, BMI Research said in a March 20 note. Latin America and Africa are to remain a "core focus" for investments given the consumption growth potential and a lack of distribution infrastructure. Full storyon Terminal.
JX Energy has shut the 95,200 barrel-a-day no.2 crude distillation unit at the Mizushima B refinery on March 20 for regular maintenance, a company official said. The company plans to restart the CDU on May 7. Full on Terminal. story
Total's Port Arthur, Texas, refinery is operating its fluid catalytic cracker at normal rates for the first time since a Feb. 7 fire damaged a pump on the unit, a person familiar with operations said. Full on Terminal. story
Market Calls
Refinery Outages
Early Insight
Oil Buyer's Guide 3 March 21, 2017
Waterborne U.S. Imports in the Week Ended March 16, AHOY<GO>
kb/dCrude
OilFinished Motor
GasolineMogas Blending
Comp.Total Motor
GasolineEthanol
Jet Fuel
Distillate Fuel Oil
Residual Fuel Oil
Unfinished Oils
Total Crude and Products*
PADD I 359.9 0.0 235.8 235.8 0.0 84.3 23.9 185.9 19.6 909.3
PADD III
2581.9 0.0 5.0 5.0 13.4 0.0 0.0 356.5 244.6 3188.1
PADD V 609.8 12.4 6.4 18.8 0.0 121.2 0.0 28.8 15.8 794.3
Sum 3551.6 12.4 247.2 259.5 13.4 205.5 23.9 571.2 280.0 4891.7Source: Bloomberg LP
Change from Prior Week AHOY<GO>
kb/dCrude
OilFinished Motor
GasolineMogas Blending
Comp.Total Motor
GasolineEthanol
Jet Fuel
Distillate Fuel Oil
Residual Fuel Oil
Unfinished Oils
Total Crude and Products*
PADD I -442.2 -41.1 -119.0 -160.1 -1.3 46.5 -44.0 59.8 -49.4 -589.4
PADD III 639.4 0.0 -26.9 -26.9 13.4 0.0 -31.2 213.1 108.7 903.2
PADD V -192.3 0.2 -19.2 -19.0 0.0 19.8 -29.2 -86.0 -24.2 -331.0
Sum 4.9 -40.9 -165.2 -206.1 12.2 66.2 -104.4 187.0 35.1 -17.2Source: Bloomberg LP *Total does not include ethanol. Tables compiled by Michael Carone, Bloomberg LP
Early Insight
U.S. Waterborne Crude Imports Rose by 4,900 Barrels a DayBy Christopher SellPreliminary U.S. waterborne crude imports rose by 4,900 barrels a day to 3.6 million barrels a day in the week ended March 16, according to customs data compiled by Bloomberg. The Gulf Coast saw the sole increase of 639,400 barrels a day to 2.6 million barrels a day. The East and West Coast saw declining imports of 442,200 barrels a day and 192,300 barrels a day, respectively. Total crude and product imports fell by 17,200 barrels a day to 4.9 million barrels a day.
Cushing Stockpiles Increased by 1.9 Million Barrels Last Week: Bloomberg EstimateBy Christopher SellCrude stockpiles at the Cushing, Oklahoma, storage hub are projected to have increased by 1.9 million barrels in the week ended March 17, according to a Bloomberg estimate.
This would bring crude stocks at the hub to 68.4 million barrels. Currently, stockpiles are at 66.5 million barrels, according to EIA data.
Click here to learn more on the methodology.
Tanker Tracker
Net Flows Monitored by Genscape
Oil Buyer's Guide 4 March 21, 2017
Tanker Tracker
U.S. Crude and Product Shipments Decline for First Time in Three WeeksBy Christopher Sell, Bloomberg Briefs Editor Crude and refined product shipments from the U.S. Gulf fell to 3.91 million metric tonnes on 100 ships in the week ended March 16. That's the first decline in three weeks, and down 5 percent from the previous week's 4.13 million metric tonnes on 100 ships, according to data compiled by Bloomberg. Shipments to Mexico fell slightly to 559,324 metric tonnes from 639,300 metric tonnes the IHS previous week. This was offset by a slight increase in shipments to the U.S. and Canada to 1.14 million metric tonnes, from 1.03 million metric tonnes the previous week.
Supply
Fuel Exports From U.S. Gulf Total 3.91 Million Metric Tonnes
Oil Buyer's Guide 5 March 21, 2017
Supply
U.S. East Coast Gasoline Demand Spikes on Storm StellaBy Christopher SellWinter Storm Stella slashed gasoline demand on the U.S. East Coast on March 14, as drivers stayed off the road, according to a report byGenscape.
This was preceded by a spike in demand on March 12 and 13, as drivers filled up tankers ahead of the storm, the report said.
Total PADD 1A (New England) gasoline rack activity fell 69 percent on March 14 from the previous day amid the winter storm, and PADD 1B (mid-Atlantic) rack demand dropped 65 percent on March 14 compared to the previous day, said , Suzanne Danforthdownstream product development director at Genscape in the report.
When looking at individual states, Connecticut saw the largest jump in rack activity on March 13, up 46 percent from the previous week to six million gallons.
During the storm on March 14, Connecticut gasoline rack activity fell to just 820,000 gallons, nearly 81 percent below the previous week.
In New Jersey, on March 13 gasoline
rack demand jumped 30 percent week-on-week to 14 million gallons, and fell almost 73 percent to 2.8 million gallons on March 14, the report said.
Benchmarks
Demand Peaked then Fell on Storm
Oil Buyer's Guide 6 March 21, 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 49.24 52.07 -2.83 153.18 15.1
APR 17 49.49 52.22 -2.73 153.84 15.12
MAY 17 49.96 52.43 -2.46 154.53 14.94
JUN 17 50.33 52.59 -2.25 155.4 14.94
Bal Qt 49.24 52.07 -2.83 153.18 15.1
Q2 17 49.93 52.41 -2.48 154.59 15
Q3 17 50.66 52.74 -2.09 157.73 15.59
Q4 17 50.83 52.82 -1.99 160.78 16.7
Bal Yr 50.35 52.6 -2.25 157.25 15.7
Cal 18 50.62 52.54 -1.92 161.16 17.07
Cal 19 50.31 52.3 -1.99 163.61 18.41
PERIOD NYULSD/BR NYRB NYRB/WTI NYRBBR RBHO
Bal Mo 12.27 162.92 19.19 16.36 9.74
APR 17 12.39 164.29 19.51 16.78 10.45
MAY 17 12.48 164.7 19.21 16.75 10.17
JUN 17 12.68 164.07 18.58 16.32 8.67
Bal Qt 12.27 162.92 19.19 16.36 9.74
Q2 17 12.52 164.35 19.1 16.62 9.76
Q3 17 13.5 156.73 15.17 13.08 -1
Q4 17 14.71 142.95 9.21 7.22 -17.83
Bal Yr 13.45 155.5 14.96 12.71 -1.75
Cal 18 15.15 151.62 13.06 11.14 -9.54
Cal 19 16.42 148.89 12.22 10.24 -14.72Source: 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
Bloomberg Brief Managing Editor
Paul Smith
Executive Editor,
Energy and Commodities
Stuart Wallace
Oil Buyer’s Guide Editor
Christopher Sell
Data Editor: U.S. Crude Oil
Joseph Aboussleman
Data Editor: Canadian Crude
Megan R. Kirshner
Data Editor: Natural Gas
Andrew Stewart
Marketing & Partnership Director
Courtney Martens
+1-212-617-2447
Advertising
Lucy Rosen
+1-212-617-6759
Reprints & Permissions
Lori Husted
+1-717-505-9701 x2204
Interested in learning more about
the Bloomberg terminal? Request a
free demo .here
© 2017 Bloomberg LP.
All rights reserved. This newsletter
and its contents may not be
forwarded or redistributed without
the prior consent of Bloomberg.
Please contact our reprints group
listed left for more information.
Spots
Source: Bloomberg