Subscribe to our free daily newsletters
  Oil and Gas News from OilGasDaily.Com  

Subscribe to our free daily newsletters

Oil benchmarks pulled in two different directions by hurricanes
by Daniel J. Graeber
Washington (UPI) Sep 11, 2017

Forecast for major oil benchmarks lowered
Washington (UPI) Sep 11, 2017 - Because of the conflicting forces at play for crude oil prices, the trend is sluggish and the forecast for major benchmarks is lower, RBC Capital Markets said.

The price for Brent crude oil is, at about $53.50 per barrel early Monday, about $6 per barrel higher than this time last year, but still about $40 less than it was three years ago. A plan implemented by the Organization of Petroleum Exporting Countries in January to erase the surplus on the five-year average for global crude oil inventories through managed production declines helped put a floor under crude oil prices, but it's a shaky one.

"Signs of improving market fundamentals have become increasingly apparent, but sentiment remains polarized," a research note emailed from RBC Capital Markets read.

OPEC members Libya and Nigeria are exempt from the agreement so they can steer oil revenue toward national security efforts. According to the latest estimate from commodity pricing group S&P Global Platts, production in August from both countries combined was about a half million barrels per day above the level from October, the month used by OPEC as a peg to gauge cuts and quotas.

Meanwhile, U.S. oil production from shale basins has become more efficient and therefore more resilient to a weaker market than expected. Last week, Bill Barrett Corp., which has a strong focus in Colorado shale, said it expected to produce between 6.4 million and 6.6 million barrels of oil equivalent this year, a 4 percent increase from its previous estimate and 12 percent higher than last year.

The U.S. Energy Information Administration said the four week average for total crude oil production of 9.3 million barrels per day as of Sept. 1 was 9.5 percent higher than last year. Total crude oil inventories in the United States, however, have moved steadily lower and helped drain the surplus on the five-year average.

"Investors impatiently wait for global inventories to return to the seasonal balance, but the market has seemingly found a provisional state of symmetry," RBC's report read. "A cautious price path forward is paramount in the elusive pursuit of equilibrium."

RBC said it expected the price for West Texas Intermediate, the U.S. benchmark for the price of crude oil, would be around $49.30 per barrel for the year, about $1.50 higher than the level early Monday. Brent is expected to average $52.50 per barrel for the year. The RBC estimate for both bencharmks is a downward revision of $3.50 per barrel.

In its forecast from Aug. 8, the U.S. EIA said it expected Brent to hold a $2 premium over WTI for the year at $51 per barrel. The EIA's next short-term market report is due out Tuesday.

The mixed impact from hurricanes in the United States left the U.S. and global benchmarks for crude oil moving in opposite directions early Monday.

Irma was downgraded to a tropical storm early Monday by the U.S. National Hurricane Center. Making landfall as a hurricane, it left millions of Florida residents without power and many of the regional airports were closed Monday because of heavy flooding. Though weakening as it makes its way northwest, the NHC forecast said Irma has a "very large wind field," with hurricane-force winds extending outward as far as 60 miles.

Southern Gulf Coast states, meanwhile, continue to pick up the pieces from Harvey, which struck a central part of the U.S. energy sector in late August. As of Sunday afternoon, there were still five refineries shut down, representing about 5.8 percent of the total U.S. refining capacity.

Florida has no refineries of its own and many ports are still closed because of the storm, causing huge demand strains in the region.

A report emailed from London oil broker PVM said the impact from both hurricanes extends beyond U.S. borders.

"The temporary product shortage that has been created in the Gulf of Mexico area was felt across Latin America in countries that are traditional U.S. product importers," the report read. "Additionally, the product shortage on the other side of the Atlantic served as a motivation for European refineries to ramp up production."

That helps explain the variance in major oil price indices early Monday. The price for West Texas Intermediate, the U.S. benchmark for the price of oil, was up 0.55 percent at 9:10 a.m. EDT to $47.74 per barrel. The price for Brent crude oil, the global benchmark, was down 0.67 percent to $53.42 per barrel.

Meanwhile, a separate report from RBC Capital Markets said a resilient U.S. shale oil sector and robust production from Libya and Nigeria, two members of the Organization of Petroleum Exporting Countries exempt from a multilateral production cut deal, means oil prices may stay lower for even longer than expected. That comes as traders are looking for signs of a return to balance for the five-year average for global crude oil inventories, which is still in a surplus.

RBC said it expected the price for WTI would be around $49.30 per barrel and Brent is expected to average $52.50 per barrel for the year. The RBC estimate for both bencharmks is a downward revision of $3.50 per barrel.

Oil demand pressures mount after U.S. hurricanes
Washington (UPI) Sep 11, 2017 - Post-hurricane recovery in the southern United States will be a positive factor for crude oil demand, offsetting short-term declines, Goldman Sachs said.

Irma was downgraded to a tropical storm as it worked its way up the western coast of Florida early Monday. In an incident update from Sunday afternoon, when Irma was still a hurricane, the U.S. Energy Department said at least 10 ports that would receive oil shipments were closed because of the storm. Florida has no refinery capacity of its own and several areas were without gasoline, though the Energy Department said regional inventories are above the five-year average.

As of 2 p.m. EDT, Sunday, five refineries in the Gulf Coast region were still closed because of Harvey, which made landfall in Texas in late August. That represents a loss of about 5.8 percent of the total U.S. refining capacity.

Both storms wreaked havoc on the U.S. energy sector and overall markets, prompting wide swings in supply and demand. In an emailed research note, Goldman Sachs said Irma would result in lower demand, but not lower production. Harvey's impact on demand, meanwhile, would be considerably longer because of the concentration of production and refinery centers in the southern Gulf Coast region.

Based on historic models, Goldman said it expected demand to rise when weighed against a season with no hurricane activity.

"Over the next several months, we believe that the post-storm recovery will likely bring oil demand to a higher level, helping to gradually offset this negative initial impact," the note read. "The lack of an outlet for U.S. crude production should post-Harvey refinery outages remain elevated could in addition over time create risk of onshore production disruptions."

The risk of higher demand and lower production would in part counter normal seasonal trends. Consumer demand tends to drop off after the longer Labor Day holiday in early September in the United States. Oil prices as a result usually decline in the waning months of the year.

Oil prices were moving in mixed territory early Monday, with Brent crude oil trading at a $5.80 premium over West Texas Intermediate, the U.S. benchmark for the price of oil. The divergence would be explained by demand strains in the United States.

Cuban oil drilling program low on funds
Washington (UPI) Sep 11, 2017
An effort to raise up to $4.8 million to help fund drilling operations at a reservoir in Cuba fell well short of its goal, Melbana Energy Ltd. said. Melbana is one of the few Western companies, and the only one listed on Australia's stock exchange, with an established footprint in Cuba. It initiated a push last month to raise capital for its preliminary efforts and said that through the ... read more

Related Links
All About Oil and Gas News at

Thanks for being here;
We need your help. The SpaceDaily news network continues to grow but revenues have never been harder to maintain.

With the rise of Ad Blockers, and Facebook - our traditional revenue sources via quality network advertising continues to decline. And unlike so many other news sites, we don't have a paywall - with those annoying usernames and passwords.

Our news coverage takes time and effort to publish 365 days a year.

If you find our news sites informative and useful then please consider becoming a regular supporter or for now make a one off contribution.

SpaceDaily Contributor
$5 Billed Once

credit card or paypal
SpaceDaily Monthly Supporter
$5 Billed Monthly

paypal only

Comment using your Disqus, Facebook, Google or Twitter login.

Share this article via these popular social media networks DiggDigg RedditReddit GoogleGoogle

Could switchgrass help China's air quality?

Reusable ruthenium-based catalyst could be a game-changer for the biomass industry

Center for Biorenewable Chemicals introduces idea for new molecules,

Technique could aid mass production of biodegradable plastic

Defects in next-generation solar cells can be healed with light

Engineers develop tools to share power from renewable energy sources during outages

New records for the solar cell of tomorrow

NREL, Swiss scientists power past solar efficiency records

Light-Based Method Improves Practicality and Quality of Remote Wind Measurements

Texas makes wind energy strides

UK wind electricity cheaper than nuclear: data

Saudi Arabia shortlists 25 bidders for major wind plant

Jacobs JV wins support contract for nuclear research center

PM opens country's fifth nuclear power plant

China and Brazil sign agreements on nuclear power

Kazakhstan inaugurates IAEA-backed nuclear fuel bank

Periodic table of ecological niches could aid in predicting effects of climate change

Australia has hottest winter on record

Researchers tackle methane emissions with gas-guzzling bacteria

Methane from tundra, ocean floor didn't spike during previous natural warming period

US House passes bill to clear path for self-driving cars

Post-Harvey Houston faces a car crunch

China mulls petrol car ban, boosting electric vehicles

Fuel economy standards cheaper, more beneficial than previously believed

Slow recovery for Iraq's Mosul after IS ouster

Iraq faces vast challenges despite victories over IS: experts

Iraq strikes major victory over Jihadists; As IS slides from defeat to defeat

Jordan, Iraq reopen only border crossing; Iraqi forces close in on last jihadist ISIS stronghold

Trump keeps Iran deal, but threatens more sanctions

S. Korea seeks rare talks with North to ease military tensions

US sending mixed messages on Iran nuclear deal: Zarif

US-China citizen gets 10 years for spying in Iran; 2 Iranians charged in US over hacking

Memory Foam Mattress Review
Newsletters :: SpaceDaily :: SpaceWar :: TerraDaily :: Energy Daily
XML Feeds :: Space News :: Earth News :: War News :: Solar Energy News

The content herein, unless otherwise known to be public domain, are Copyright 1995-2017 - Space Media Network. All websites are published in Australia and are solely subject to Australian law and governed by Fair Use principals for news reporting and research purposes. AFP, UPI and IANS news wire stories are copyright Agence France-Presse, United Press International and Indo-Asia News Service. ESA news reports are copyright European Space Agency. All NASA sourced material is public domain. Additional copyrights may apply in whole or part to other bona fide parties. All articles labeled "by Staff Writers" include reports supplied to Space Media Network by industry news wires, PR agencies, corporate press officers and the like. Such articles are individually curated and edited by Space Media Network staff on the basis of the report's information value to our industry and professional readership. Advertising does not imply endorsement, agreement or approval of any opinions, statements or information provided by Space Media Network on any Web page published or hosted by Space Media Network. Privacy Statement