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Oil Prices Climb On A Bounty Of Bullish Catalysts – OilPrice.com

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Oil Prices Climb On A Bounty Of Bullish Catalysts | OilPrice.com


Michael Kern

Michael Kern

Michael Kern is a newswriter and editor at Safehaven.com and Oilprice.com, 

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Oil prices appear to be on an unstoppable march toward $100, with Ukraine sending troops into Ukraine, OPEC failing to hit its production targets, and industry CEOs predicting still higher prices.

Oil prices

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– Oil prices rose to their highest level since 2014 after Moscow recognized the independence of the breakaway regions of Donetsk and Luhansk and moved its troops into eastern Ukraine, aggravating European supply concerns. 

– Spot Brent prices have been trading above the $100 per barrel since last week, now even ICE Brent futures seem to be climbing increasingly closer to that threshold. 

– Backwardation in ICE Brent prices is at the highest in more than a decade, with the 1-month spread between the April and May contracts rising to $2.40 per barrel.

– The backwardation does not only impact oil markets, gasoil futures are just as tight amid globally low inventories. 

Market Movers

– US oil major ExxonMobil (NYSE:XOM) signed a deal with the Papua New Guinea government on the development of the long-stalled P’nyang gas field, agreeing on a 63% government take. 

– As elevated crude prices have provided Saudi Aramco (TADAWUL:2222) with windfall profits, the Saudi national oil company is in talks with Chinese companies to further invest in its downstream sector. 

– US oil major Chevron (NYSE:CVX) is reportedly looking to sell its assets in Equatorial Guinea, acquired as part of its $13 billion takeover of Noble Energy in 2020, seeking to garner $1 billion from the sale. 

Tuesday, February 22, 2022

Just as oil industry CEOs have gathered in London for the International Petroleum Week, reiterating their bullish vision for oil prices, Russia’s foreign policy took center stage and added another layer of upside risks by moving its army into eastern Ukraine. Gas prices shot up in Europe and oil prices followed, driven by concerns that supply disruptions from Russia or potential sanctions packages could make oil markets even tighter than they are today. Brent crude hit $99 early on Friday morning before falling back.

Germany Halts Nord Stream 2. The German government halted the certification process of Nord Stream 2 on the back of Russia’s incursion into Ukraine, sending TTF spot prices up by 10% on the day, to €80 per MWh ($29 per mmBtu).

OPEC+ Compliance Continues To Be A Problem. According to media reports, OPEC+ compliance with its oil production targets rose to 129% in January, up 7 percentage points from December 2021, with underperformance being even more prevalent for the OPEC-10, standing at 133% last month. Related: OPEC Is Ready To Embrace $100 Oil

US LNG Feedgas Flows Hit Record Highs. Just as Venture Global’s Calcasieu Pass is set to start commercial production, though only 4 out of 18 liquefaction trains are operational, US LNG feed gas flows have been trending at record levels of 13 bcf per day.

EU Mulls Compulsory Gas Storage Fill. The European Union is considering whether to mandate member states to fill their natural gas storage capacities as Brussels wants to establish minimum gas storage requirements to avoid this year’s inventory tightness amid low Russian gas supplies. 

TotalEnergies Marks Another Major Suriname Discovery. French major TotalEnergies (NYSE:TTE) and its partner APA Corporation (NASDAQ:APA) have made a significant oil discovery in Block 58, offshore Suriname, with its Krabdagu-1 well encountering a net pay of 90 meters, the fifth major find in the South American country.

Qatar Confirms Little Maneuvering Capacity. According to the Qatari energy minister Saad al-Kaabi, Qatar can divert only 10-15% of its exports to customers without contracts, saying that it is ‘almost impossible’ to supplant Russian gas supplies into Europe. 

Beaumont Refinery Lockout Finally Ends. Union workers locked out of their jobs for 10 months voted to accept an updated contract offer from ExxonMobil (NYSE:XOM), allowing the 370,000 b/d Beaumont, TX refinery to avoid a wildcat strike and return to normal operations. 

Canada Stops Funding Trans Mountain Amid Ballooning Costs. Canada’s government announced that it would stop further public funding for the prospective 890,000 b/d Trans Mountain oil pipeline after its costs had surged 70% to $17 billion and its completion date shifted nine months to Q3 2023. 

Somalia is Not Yet Ready for Exploration. Somalia’s Prime minister clashed with his own Energy Ministry and disavowed an oil exploration deal signed with US-based upstream firm Coastline Exploration, arguing that no deals can be signed in the pre-election period. 

Kuwait Launches LNG Terminal. Kuwait has finally started full operations at its 22 million tons per year Al-Zour LNG import facility, eight months after it received its first cargo there, helping the country cope with increasing electricity demand. 

Pentagon to Build Up Lithium and Rare Earths Stockpiles. The US Department of Defense is reportedly planning to boost its strategic stockpiles of rare earth minerals, lithium, and cobalt to reduce its dependence on China, with domestic production remaining rudimental. 

Sri Lanka Runs Out of Fuel. Attesting to the ongoing travails of emerging economies with little foreign exchange reserves, Sri Lanka has launched an emergency diesel tender as the country is left with only three days worth of gasoil consumption. 

Nickel and Aluminium Feel the Russian Heat. Prices of nickel and aluminum soared to multi-year highs on concerns over supply disruption from Russia, with the latter reaching a ten-year high, trading at $24,500 per metric tonne on Tuesday.

By Michael Kern for Oilprice.com

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Telus prioritizing ‘most important customers,’ avoiding ‘unprofitable’ offers: CFO

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Telus Corp. says it is avoiding offering “unprofitable” discounts as fierce competition in the Canadian telecommunications sector shows no sign of slowing down.

The company said Friday it had fewer net new customers during its third quarter compared with the same time last year, as it copes with increasingly “aggressive marketing and promotional pricing” that is prompting more customers to switch providers.

Telus said it added 347,000 net new customers, down around 14.5 per cent compared with last year. The figure includes 130,000 mobile phone subscribers and 34,000 internet customers, down 30,000 and 3,000, respectively, year-over-year.

The company reported its mobile phone churn rate — a metric measuring subscribers who cancelled their services — was 1.09 per cent in the third quarter, up from 1.03 per cent in the third quarter of 2023. That included a postpaid mobile phone churn rate of 0.90 per cent in its latest quarter.

Telus said its focus is on customer retention through its “industry-leading service and network quality, along with successful promotions and bundled offerings.”

“The customers we have are the most important customers we can get,” said chief financial officer Doug French in an interview.

“We’ve, again, just continued to focus on what matters most to our customers, from a product and customer service perspective, while not loading unprofitable customers.”

Meanwhile, Telus reported its net income attributable to common shares more than doubled during its third quarter.

The telecommunications company said it earned $280 million, up 105.9 per cent from the same three-month period in 2023. Earnings per diluted share for the quarter ended Sept. 30 was 19 cents compared with nine cents a year earlier.

It reported adjusted net income was $413 million, up 10.7 per cent year-over-year from $373 million in the same quarter last year. Operating revenue and other income for the quarter was $5.1 billion, up 1.8 per cent from the previous year.

Mobile phone average revenue per user was $58.85 in the third quarter, a decrease of $2.09 or 3.4 per cent from a year ago. Telus said the drop was attributable to customers signing up for base rate plans with lower prices, along with a decline in overage and roaming revenues.

It said customers are increasingly adopting unlimited data and Canada-U.S. plans which provide higher and more stable ARPU on a monthly basis.

“In a tough operating environment and relative to peers, we view Q3 results that were in line to slightly better than forecast as the best of the bunch,” said RBC analyst Drew McReynolds in a note.

Scotiabank analyst Maher Yaghi added that “the telecom industry in Canada remains very challenging for all players, however, Telus has been able to face these pressures” and still deliver growth.

The Big 3 telecom providers — which also include Rogers Communications Inc. and BCE Inc. — have frequently stressed that the market has grown more competitive in recent years, especially after the closing of Quebecor Inc.’s purchase of Freedom Mobile in April 2023.

Hailed as a fourth national carrier, Quebecor has invested in enhancements to Freedom’s network while offering more affordable plans as part of a set of commitments it was mandated by Ottawa to agree to.

The cost of telephone services in September was down eight per cent compared with a year earlier, according to Statistics Canada’s most recent inflation report last month.

“I think competition has been and continues to be, I’d say, quite intense in Canada, and we’ve obviously had to just manage our business the way we see fit,” said French.

Asked how long that environment could last, he said that’s out of Telus’ hands.

“What I can control, though, is how we go to market and how we lead with our products,” he said.

“I think the conditions within the market will have to adjust accordingly over time. We’ve continued to focus on digitization, continued to bring our cost structure down to compete, irrespective of the price and the current market conditions.”

Still, Canada’s telecom regulator continues to warn providers about customers facing more charges on their cellphone and internet bills.

On Tuesday, CRTC vice-president of consumer, analytics and strategy Scott Hutton called on providers to ensure they clearly inform their customers of charges such as early cancellation fees.

That followed statements from the regulator in recent weeks cautioning against rising international roaming fees and “surprise” price increases being found on their bills.

Hutton said the CRTC plans to launch public consultations in the coming weeks that will focus “on ensuring that information is clear and consistent, making it easier to compare offers and switch services or providers.”

“The CRTC is concerned with recent trends, which suggest that Canadians may not be benefiting from the full protections of our codes,” he said.

“We will continue to monitor developments and will take further action if our codes are not being followed.”

French said any initiative to boost transparency is a step in the right direction.

“I can’t say we are perfect across the board, but what I can say is we are absolutely taking it under consideration and trying to be the best at communicating with our customers,” he said.

“I think everyone looking in the mirror would say there’s room for improvement.”

This report by The Canadian Press was first published Nov. 8, 2024.

Companies in this story: (TSX:T)

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TC Energy cuts cost estimate for Southeast Gateway pipeline project in Mexico

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CALGARY – TC Energy Corp. has lowered the estimated cost of its Southeast Gateway pipeline project in Mexico.

It says it now expects the project to cost between US$3.9 billion and US$4.1 billion compared with its original estimate of US$4.5 billion.

The change came as the company reported a third-quarter profit attributable to common shareholders of C$1.46 billion or $1.40 per share compared with a loss of C$197 million or 19 cents per share in the same quarter last year.

Revenue for the quarter ended Sept. 30 totalled C$4.08 billion, up from C$3.94 billion in the third quarter of 2023.

TC Energy says its comparable earnings for its latest quarter amounted to C$1.03 per share compared with C$1.00 per share a year earlier.

The average analyst estimate had been for a profit of 95 cents per share, according to LSEG Data & Analytics.

This report by The Canadian Press was first published Nov. 7, 2024.

Companies in this story: (TSX:TRP)

The Canadian Press. All rights reserved.

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BCE reports Q3 loss on asset impairment charge, cuts revenue guidance

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BCE Inc. reported a loss in its latest quarter as it recorded $2.11 billion in asset impairment charges, mainly related to Bell Media’s TV and radio properties.

The company says its net loss attributable to common shareholders amounted to $1.24 billion or $1.36 per share for the quarter ended Sept. 30 compared with a profit of $640 million or 70 cents per share a year earlier.

On an adjusted basis, BCE says it earned 75 cents per share in its latest quarter compared with an adjusted profit of 81 cents per share in the same quarter last year.

“Bell’s results for the third quarter demonstrate that we are disciplined in our pursuit of profitable growth in an intensely competitive environment,” BCE chief executive Mirko Bibic said in a statement.

“Our focus this quarter, and throughout 2024, has been to attract higher-margin subscribers and reduce costs to help offset short-term revenue impacts from sustained competitive pricing pressures, slow economic growth and a media advertising market that is in transition.”

Operating revenue for the quarter totalled $5.97 billion, down from $6.08 billion in its third quarter of 2023.

BCE also said it now expects its revenue for 2024 to fall about 1.5 per cent compared with earlier guidance for an increase of zero to four per cent.

The company says the change comes as it faces lower-than-anticipated wireless product revenue and sustained pressure on wireless prices.

BCE added 33,111 net postpaid mobile phone subscribers, down 76.8 per cent from the same period last year, which was the company’s second-best performance on the metric since 2010.

It says the drop was driven by higher customer churn — a measure of subscribers who cancelled their service — amid greater competitive activity and promotional offer intensity. BCE’s monthly churn rate for the category was 1.28 per cent, up from 1.1 per cent during its previous third quarter.

The company also saw 11.6 per cent fewer gross subscriber activations “due to more targeted promotional offers and mobile device discounting compared to last year.”

Bell’s wireless mobile phone average revenue per user was $58.26, down 3.4 per cent from $60.28 in the third quarter of the prior year.

This report by The Canadian Press was first published Nov. 7, 2024.

Companies in this story: (TSX:BCE)

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