The Oil Price Collapse Continues After Brief Respite

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The Oil Price Collapse Continues After Brief Respite

Published

1 year ago

March 17, 2023

Harry Miller

The oil price crash appeared to have been halted on Thursday after the Swiss central bank stepped in to save Credit Suisse and the energy ministers of Russia and Saudi Arabia met to signal a willingness to intervene if the collapse continued. On Friday morning, however, prices headed lower once again.

In one of the most tumultuous weeks in recent years for oil markets, oil prices are on course to post a more than 10% loss. The oil price collapse took a breather on Thursday as the Swiss national bank stepped in to save Credit Suisse while Saudi Arabia and Russia signaled a willingness to intervene. Bearish sentiment is difficult to shake off, however, and prices continued lower on Friday morning.

Australia Eyes LNG Diversion as Winter Looms. Australian authorities might compel LNG exporters along the country’s east coast to divert excess gas supply towards domestic consumers amidst decreasing natural gas production which has raised the risk of gas shortfalls between 2023 and 2026.

Last US Refining Addition to Start Soon. The last large-scale refining project to be commissioned in the US, the 250,000 b/d capacity Blade project at ExxonMobil’s (NYSE:XOM) refinery in Beaumont, TX, is set to start up in the upcoming weeks, running on Permian crude and increasing naphtha and gasoline supply in the US Gulf Coast.

Canada Calls for National Tailing Remediation Plan. The federal government of Canada and Albertan authorities will establish a working group that would seek to expedite the remediation of oil sands tail ponds after a 10-month-long leak at Imperial Oil’s (TSX:IMO) Kearl project was not properly reported.

White House Delays SPR Return Dates. The Biden administration has revised two exchange contracts it signed with Shell (LON:SHEL) covering 3.6 million barrels of US SPR crude, delaying their return until 2025, despite assurances from the US Department of Energy that it would expedite the repurchases.

IAEA Says Tons of Uranium Missing in Libya. Inspectors of the UN’s nuclear agency discovered that some 2.5 tonnes of uranium have gone missing from a Libyan site controlled by the rival Benghazi government, though the Eastern Libyan forces allegedly found the missing uranium the next day.

Iraq and Kurdistan Edge Closer to a Deal. Potentially leading to a resolution of a long-standing legal battle, the Iraqi federal government and regional Kurdish authorities have agreed that oil revenues from Kurdistan will be transferred to a bank account under federal government supervision.

Exxon Dissatisfied with Prospects of Italian LNG. US oil major ExxonMobil (NYSE:XOM) has reportedly been considering selling its majority stake in the 9 bcm per year capacity Rovigo LNG terminal as part of a larger divestment drive to sell non-core assets.

Canada’s East Coast Terminal Not Happening. Spanish oil firm Repsol (BME:REP) has scrapped its plans to build an LNG terminal on Canada’s east coast citing excessive transportation costs to deliver gas to Saint John, NB, and a lack of buyers who would commit to 15- to 20-year offtake agreements for the gas.

Credit Suisse Woes Distress Greek Shippers. Battered by financial losses and corruption scandals, the massive slump of Swiss bank Credit Suisse (SWX:CSGN) is also bad news for Greek shipping companies as CS was the largest lender to Greek shipping with an active portfolio of at least $5.2 billion.

Declining LNG Prices Prompt Chinese Buying. As spot prices of LNG continue their decline for the fourth straight month and currently trend around $13 per mmBtu, China is stepping up its purchases, with Kpler data showing an increase in March arrivals to 5.4 million tons, a 9% increase month-on-month.

Guinea Iron Prospects Buoyed by Breakthrough. One of the world’s largest iron ore deposits, the Simandou mine in Guinea, will soon restart production after operator Rio Tinto (NYSE:RIO) agreed on new terms for the JV operating the project, guaranteeing the government a 15% take.

Kuwait Wants to Do Trading, Too. The Kuwaiti national oil company KPC is considering setting up an oil trading arm, reportedly even as soon as the end of 2023, seeking to replicate the success of Saudi Aramco which already has trading offices in Dhahran, Fujairah, Singapore, Houston, and London.

Venezuela Tests Waters on Colombia Gas Exports. With Colombia’s left-wing president Gustavo Petro increasing cooperation with Venezuela, the two countries are seeking to reactivate the 224-km Antonio Ricaurte gas pipeline and export some 25 MMCf/day of Venezuelan gas to its western neighbor.

Shell Divests Non-Operated Stakes in Malaysia. UK-based energy major Shell (LON:SHEL) sold its non-operated stakes in two offshore fields in Malaysia to local firm Petroleum Sarawak, leaving it with 19 production-sharing agreements including the most recently launched Rosmari-Majoram project.

By Michael Kern for Oilprice.com

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Michael Kern

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

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Why the Bank of Canada decided to hold interest rates in April – Financial Post

Published

1 hour ago

April 24, 2024

Harry Miller

Divisions within the Bank of Canada over the timing of a much-anticipated cut to its key overnight interest rate stem from concerns of some members of the central bank’s governing council that progress on taming inflation could stall in the face of stronger domestic demand — or even pick up again in the event of “new surprises.”

“Some members emphasized that, with the economy performing well, the risk had diminished that restrictive monetary policy would slow the economy more than necessary to return inflation to target,” according to a summary of deliberations for the April 10 rate decision that were published Wednesday. “They felt more reassurance was needed to reduce the risk that the downward progress on core inflation would stall, and to avoid jeopardizing the progress made thus far.”

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Others argued that there were additional risks from keeping monetary policy too tight in light of progress already made to tame inflation, which had come down “significantly” across most goods and services.

Some pointed out that the distribution of inflation rates across components of the consumer price index had approached normal, despite outsized price increases and decreases in certain components.

“Coupled with indicators that the economy was in excess supply and with a base case projection showing the output gap starting to close only next year, they felt there was a risk of keeping monetary policy more restrictive than needed.”

In the end, though, the central bankers agreed to hold the rate at five per cent because inflation remained too high and there were still upside risks to the outlook, albeit “less acute” than in the past couple of years.

Despite the “diversity of views” about when conditions will warrant cutting the interest rate, central bank officials agreed that monetary policy easing would probably be gradual, given risks to the outlook and the slow path for returning inflation to target, according to the summary of deliberations.

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They considered a number of potential risks to the outlook for economic growth and inflation, including housing and immigration, according to summary of deliberations.

The central bankers discussed the risk that housing market activity could accelerate and further boost shelter prices and acknowledged that easing monetary policy could increase the likelihood of this risk materializing. They concluded that their focus on measures such as CPI-trim, which strips out extreme movements in price changes, allowed them to effectively look through mortgage interest costs while capturing other shelter prices such as rent that are more reflective of supply and demand in housing.

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They also agreed to keep a close eye on immigration in the coming quarters due to uncertainty around recent announcements by the federal government.

“The projection incorporated continued strong population growth in the first half of 2024 followed by much softer growth, in line with the federal government’s target for reducing the share of non-permanent residents,” the summary said. “But details of how these plans will be implemented had not been announced. Governing council recognized that there was some uncertainty about future population growth and agreed it would be important to update the population forecast each quarter.”

• Email: bshecter@nationalpost.com

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Meta shares sink after it reveals spending plans – BBC.com

Published

4 hours ago

April 24, 2024

Harry Miller

Woman looks at phone in front of Facebook image - stock shot.

Shares in US tech giant Meta have sunk in US after-hours trading despite better-than-expected earnings.

The Facebook and Instagram owner said expenses would be higher this year as it spends heavily on artificial intelligence (AI).

Its shares fell more than 15% after it said it expected to spend billions of dollars more than it had previously predicted in 2024.

Meta has been updating its ad-buying products with AI tools to boost earnings growth.

It has also been introducing more AI features on its social media platforms such as chat assistants.

The firm said it now expected to spend between $35bn and $40bn, (£28bn-32bn) in 2024, up from an earlier prediction of $30-$37bn.

Its shares fell despite it beating expectations on its earnings.

First quarter revenue rose 27% to $36.46bn, while analysts had expected earnings of $36.16bn.

Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown, said its spending plans were “aggressive”.

She said Meta’s “substantial investment” in AI has helped it get people to spend time on its platforms, so advertisers are willing to spend more money “in a time when digital advertising uncertainty remains rife”.

More than 50 countries are due to have elections this year, she said, “which hugely increases uncertainty” and can spook advertisers.

She added that Meta’s “fortunes are probably also being bolstered by TikTok’s uncertain future in the US”.

Meta’s rival has said it will fight an “unconstitutional” law that could result in TikTok being sold or banned in the US.

President Biden has signed into law a bill which gives the social media platform’s Chinese owner, ByteDance, nine months to sell off the app or it will be blocked in the US.

Ms Lund-Yates said that “looking further ahead, the biggest risk [for Meta] remains regulatory”.

Last year, Meta was fined €1.2bn (£1bn) by Ireland’s data authorities for mishandling people’s data when transferring it between Europe and the US.

And in February of this year, Meta chief executive Mark Zuckerberg faced blistering criticism from US lawmakers and was pushed to apologise to families of victims of child sexual exploitation.

Ms Lund-Yates added that the firm has “more than enough resources to throw at legal challenges, but that doesn’t rule out the risks of ups and downs in market sentiment”.

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Oil Firms Doubtful Trans Mountain Pipeline Will Start Full Service by May 1st

Published

14 hours ago

April 24, 2024

Harry Miller

Oil companies planning to ship crude on the expanded Trans Mountain pipeline in Canada are concerned that the project may not begin full service on May 1 but they would be nevertheless obligated to pay tolls from that date.

In a letter to the Canada Energy Regulator (CER), Suncor Energy and other shippers including BP and Marathon Petroleum have expressed doubts that Trans Mountain will start full service on May 1, as previously communicated, Reuters reports.

Trans Mountain Corporation, the government-owned entity that completed the pipeline construction, told Reuters in an email that line fill on the expanded pipeline would be completed in early May.

After a series of delays, cost overruns, and legal challenges, the expanded Trans Mountain oil pipeline will open for business on May 1, the company said early this month.

“The Commencement Date for commercial operation of the expanded system will be May 1, 2024. Trans Mountain anticipates providing service for all contracted volumes in the month of May,” Trans Mountain Corporation said in early April.

The expanded pipeline will triple the capacity of the original pipeline to 890,000 barrels per day (bpd) from 300,000 bpd to carry crude from Alberta’s oil sands to British Columbia on the Pacific Coast.

The Federal Government of Canada bought the Trans Mountain Pipeline Expansion (TMX) from Kinder Morgan back in 2018, together with related pipeline and terminal assets. That cost the federal government $3.3 billion (C$4.5 billion) at the time. Since then, the costs for the expansion of the pipeline have quadrupled to nearly $23 billion (C$30.9 billion).

The expansion project has faced continuous delays over the years. In one of the latest roadblocks in December, the Canadian regulator denied a variance request from the project developer to move a small section of the pipeline due to challenging drilling conditions.

The company asked the regulator to reconsider its decision, and received on January 12 a conditional approval, avoiding what could have been another two-year delay to start-up.