The Week Ahead for Crude Oil, Gas and NGLs Markets 1/15/2018

CRUDE OIL

  • US crude oil inventories decreased by 4.9 MMBbl, according to the weekly Energy Information Administration report. Gasoline and distillate inventories increased 4.1 and 4.3 MMBbl respectively. Total petroleum inventories posted a decrease of 5.5 MMBbl, with a significant amount of the decline generated by the draw in propane inventories due to cold weather. US production was also affected by the cold weather, with the report estimating declines to be 293 MMBbl/d. Imports decreased 308 MMBbl/d from the week prior to an average of 7.7 MMBbl/d.
  • Prices established a new high at levels not seen since the price collapse in winter 2014. Much of the price strength can be associated with the OPEC-led production cut extension, the geopolitical unrest in the Middle East, anti-government protests in Iran, and Venezuelan production declines. In additional bullish news, the EIA raised its global demand growth estimate for 2018 by 100 MMBbl/d. However, in the same report, the EIA stated that US production could average 10.3 MMBbl/d in 2018, which would be the highest annual average production in US history. The current price run will support additional production and may facilitate faster growth than currently expected.
  • Another element of the price run that has carried prices for the past two months has come from the speculative trade. The speculative trade continued last week, as the latest CFTC report showed the managed money long positions increased by 36,580 contracts and now represent 18.2% of total open interest. This type of behavior leaves the market extending into an over-bought situation. One of the analytical tools the market uses to help define this status is the Bollinger Study, as shown below. This chart measures continuous price action in WTI, and depicts two standard deviation bands (upper and lower in green) around the 20-week moving average. Since April 2015, there have been five periods when price runs have extended to the upper band (extreme). When prices get to this level of extension, one of two events will eventually occur: 1) price action consolidates, defining a new range with brief extensions lower testing new support (Periods 1, 2, 4, and 5) or 2) prices correct downward quickly (Period 3). While the market never knows how long the positive extended price action will last, a consistent theme among all the periods is that a significant correction to the run occurs eventually. The market has been trading closely around the upper second standard deviation level since September 2017, and is likely nearing a breaking point.

  • Another analytic tool that the market follows is the weekly price action, with a momentum indicator called the Relative Strength Index (RSI). The chart below is the Weekly Continuation WTI with the RSI. Notice the peaks of the RSI at similar times to the periods discussed previously. None of the previous four periods had the elevated RSI level that occurred at the close of last week. It is also important to realize that prices do not stay elevated for very long when the momentum indicator is this overbought.

  • Last week’s price gains were achieved with gains in volume and open interest, which is supportive of more gains as trade opens this week. Eventually, this run will succumb to selling pressure, but it may be headed to a blow-off topping process. Short of that event, expect a more consolidative trading pattern with a slightly negative bias in the coming weeks, as speculative traders start to re-evaluate the fundamental supply-and-demand balance. Drillinginfo continues to expect the trade to eventually return to the established mid-$50/Bbl level in the near term.
NATURAL GAS
  • Natural gas dry production regained most of the losses from the previous week’s freeze-offs, increasing 2.1 Bcf/d week-on-week. Dry production is not quite back to the record highs established in late December, but is regaining from the storm-induced losses. Canadian imports declined 1.8 Bcf/d as temperatures moderated last week, and Canadian supplies continue to be the swing source of US supply.
  • On the demand side, temperatures moderated significantly last week, and demand reflected such with Res/Com demand down 22.26 Bcf/d (offsetting a portion of the previous two weeks’ gains, which totaled 31 Bcf/d). Industrial demand decreased 2.6 Bcf/d, and Power demand also decreased 5.74 Bcf/d on average for the week. LNG exports decreased 890 MMcf/d, while Mexico exports were up 210 MMcf/d, leaving total demand down 33.94 Bcf/d and total supply down 170 Bcf/d.
  • The storage report last week came in well above expectations, with a record withdrawal of 359 Bcf. This record release provided the additional momentum for prices to rally as the week closed. into the close for the week. This week’s release should follow more seasonal averages, being close to the 5-year average but below the withdrawals of 2017 for the same week.
  • Price action last week rebounded from the previous week’s weak close and gained every day during the week, with higher highs each day. Some of the strength was from some short covering by the speculative sector, as the latest CFTC release (dated Tuesday, Jan 9) showed a decline of 28,683 contracts. Additional buying came from the Managed Money long (speculative length) sector, which added 11,186 contracts. Interpreting the price action on Wednesday through Friday (especially after the storage release), it should be expected that additional short covering led to the gains at the end of the week.
  • Prices are now challenging the highs from November when the market was looking into the beginning of the current winter. Now traders are looking at the remaining winter months with only a portion of the winter (2 months) remaining to cause hesitation. It is that apprehension (the longer-term effects of the weather remaining and the short covering) that forced the large run in prompt gas but a more muted run in the summer contracts (the February contract rallied from the weekly low of $2.784 to the high of $3.224, while the April contract rallied from only $2.624 to the high $2.802). As long as the production growth maintains the focus of the market, prices are likely headed down over the coming months.
NGLs
Prices
  • Ethane prices hit a 5-month high on Friday, at $0.28/gallon, increasing 15% week-over-week. The high prices are attributed to higher gas prices along the anticipation of new ethane demand from crackers expected to come online in the coming months. Chevron Phillips and Indorama both expect to bring crackers online before the middle of the year, bringing on about 120 Mb/d of ethane demand.

Propane

  • Inventories decreased 6.3 MMBbl in last week’s EIA report. Propane stocks now sit at 61.7 MMBbl, roughly 18.0 MMBbl lower than this time last year. However, propane stocks are still above the five-year average of 57.7 MMBbl for this time of year prior to 2015 (before the crude price crash).

                                                                                                                                                Source: EIA

The post The Week Ahead for Crude Oil, Gas and NGLs Markets 1/15/2018 appeared first on Drillinginfo.

Source: Drilling Info

 

Tamarack Valley Energy Announces $195 Million – $205 Million 2018 CapEx

Tamarack Valley Energy Announces $195 Million – $205 Million 2018 CapEx

Tamarack Valley Energy Ltd. (ticker: TVE) has announced its 2018 capital budget and full year guidance, along with an operational update, including record Q4 production volumes.

TVE Core Areas
2018 CapEx
Tamarack’s $195 million – $205 million capital budget for 2018 reflects the company’s asset base, its higher oil and liquids weighting in 2018 relative to 2017, and a continued focus on efficiencies and cost control. Tamarack expects its increased oil and liquids weighting is expected to improve netbacks and provide support for cash flows …

Continue reading Tamarack Valley Energy Announces $195 Million – $205 Million 2018 CapEx at Oil & Gas 360.

Source: Oil & Gas 360

 

Total confirmed as new operator of deepwater presalt Lapa field

Petrobras and Total have finalized key steps in their strategic alliance.


Source: Offshore

 

Shell to redevelop North Sea Penguins with a floater

Shell will commission a newbuild Sevan 400 FPSO for its re-development of the Penguins oil and gas field in the UK northern North Sea.


Source: Offshore

 

Worries About US Shale Output As Oil Hits Three-Year High

Brent crude rose to a three-year high of $70 a barrel last week, but there are questions about the rally’s resilience as higher oil prices threaten to unleash a new wave of U.S. shale output.

“The higher the prices go, the harder shale producers pump,” Tamas Varga at London-based broker PVM, said. He added, an “overdue correction could be under way.”

Oil prices have been rising since late June, supported by supply cuts led by OPEC producers and allies outside of the cartel such as Russia, which helped to curb excess stockpiles.

Brent, the international oil benchmark, on Jan.11 hit the highest level since December 2014, spurring concern that higher prices will attract increased US shale production, undermining efforts by global producers to cut supplies and triggering renewed pressure on prices.
Source: Oil & Gas Investor

 

Carl Icahn’s Letter to the Board of SandRidge Energy: Moving Beyond the Bonanza Debacle

Carl C. Icahn’s Open Letter to the Board of Directors of SandRidge Energy: Moving Beyond the Bonanza Debacle, January 9, 2018 Obviously pleased that you made the wise choice to terminate the Bonanza merger agreement but still have concerns about many of the things this board has permitted to happen at SandRidge Current directors were remiss in attempting to ram through a dilutive, overpriced and value-destroying acquisition without at the very least reaching out and discussing this with company’s shareholders This was especially insulting considering management’s post-bankruptcy promises to protect the balance sheet, reduce operating costs, generate FCF and develop significant remaining inventory in the Northwest Stack and North Park Basin in a disciplined manner We believe the primary effect of the deal would have been to entrench yourselves at the expense of shareholders We question why you refuse to hold James Bennett accountable for his history with SandRidge during a period of massive value destruction, including an ill-advised acquisition binge, a bankruptcy filing, Bennett presiding over a $90 million payout to the former CEO, and taking over $50 million in compensation for himself, all while the shareholders suffered Your attempt to entrench yourselves by adopting an unorthodox poison pill […]

The post Carl Icahn’s Letter to the Board of SandRidge Energy: Moving Beyond the Bonanza Debacle appeared first on InvestorAlmanac.

Source: Investor Almanac

 

Liberty Oilfield Services Goes Public with a Bang: Up 28% First Day on NYSE

Liberty Oilfield Services Goes Public with a Bang: Up 28% First Day on NYSE

Liberty Oilfield Services Inc. (ticker: LBRT) announced the pricing of an upsized initial public offering of 12,731,092 shares of its Class A common stock at $17.00 per share early on Jan. 12. The shares opened trading on the NYSE today at $21.20.  By midday shares of Liberty were trading at almost a 28% premium.

LBRT IPO Source: Google

In addition, Liberty and the selling shareholder granted the underwriters a 30-day option to purchase up to an additional 1,909,663 shares of Liberty’s Class A common stock at the IPO price, less underwrit…

Continue reading Liberty Oilfield Services Goes Public with a Bang: Up 28% First Day on NYSE at Oil & Gas 360.

Source: Oil & Gas 360

 

Liberty Oilfield’s IPO Sets Optimistic Tone For 2018

If Liberty Oilfield Services Inc.’s (NYSE: LBRT) upsized IPO is any indication, predictions of 2018 being the “year of the service sector” just might have some legs. The industry’s first IPO of the year soared nearly 28% from its $17 opening on the New York Stock Exchange Jan.12, hovering around $21.80 in mid-afternoon trading.

All told, the Denver-based company raked in roughly $216 million. It was a good showing for an IPO that almost made its debut last spring. Liberty was one of five oilfield services providers that filed IPOs in the first five months of 2017 but pulled back because of low oil prices at the time.

“The market wasn’t good and we didn’t need to do it,” Chris Wright, Liberty Oilfield’s chairman and CEO, told Hart Energy. “We just figured we’d wait until the market was more reasonable, and the market is.”
Source: Oil & Gas Investor

 

At 939 U.S. Rig Count Highest in 4 Months; Canada Adds 102

At 939 U.S. Rig Count Highest in 4 Months; Canada Adds 102

Permian operators activate 3 more rigs
Drilling activity increased in the U.S. this week, more than reversing the decline seen over the past two weeks according to Baker Hughes’ Rig Count.

A total of fifteen rigs came online this week, the largest single-week increase since last May. Thirteen of these rigs are land-based, while two are offshore. There are now 919 land, one inland waters and 19 offshore rigs drilling in the U.S., for a total of 939.

Continue reading At 939 U.S. Rig Count Highest in 4 Months; Canada Adds 102 at Oil & Gas 360.

Source: Oil & Gas 360

 

US Supreme Court To Hear Schlumberger Fight Over Patent Damages

The U.S. Supreme Court on Jan. 12 agreed to review a bid by Schlumberger Ltd. (NYSE: SLB), the world’s largest oilfield services provider, to allow companies to recoup profits lost due to patent infringement when patented technology is used overseas.

The case involves a fight over how much rival ION Geophysical Corp. (NYSE: IO) must pay for infringing Schlumberger technology that helps search for oil and gas beneath the ocean floor.

The justices will hear Schlumberger’s appeal of a lower court ruling that barred it from recovering more than $93 million stemming from foreign contracts the Houston-based company said it lost as a result of the infringement.
Source: Oil & Gas Investor

 

New York City Plans to Sell $5 Billion of Fossil Fuel Pension Holdings, Sues Oil Majors

New York City Plans to Sell $5 Billion of Fossil Fuel Pension Holdings, Sues Oil Majors

Mayor Bill de Blasio, Comptroller Scott M. Stringer and other trustees of the city’s $189 billion pension funds announced today a plan to divest city funds from fossil fuel reserve owners within five years, which would make New York City the first major U.S. pension plan to do so.

In total, the city’s five pension funds hold roughly $5 billion in the securities of over 190 fossil fuel companies. The city’s move is among the most significant divestment efforts in the world to date.

Continue reading New York City Plans to Sell $5 Billion of Fossil Fuel Pension Holdings, Sues Oil Majors at Oil & Gas 360.

Source: Oil & Gas 360

 

Shell's Gaza Gas Field Sale Hits Problems

It may prove to be Royal Dutch Shell Plc’s (NYSE: RDS.A) hardest sell. The Anglo-Dutch group is struggling to find a buyer for its gas field off the Gaza Strip, even among energy companies long used to dealing with projects fraught with political and security risks.

At least one European company has shown interest in the undeveloped Gaza Marine Field following a reconciliation deal in October between the two rival Palestinian factions, a source involved in the talks said.

But the firm’s discussions over the field, located about 30 km (20 miles) off the Gaza coast, have ground to a halt since tensions in the wider region have taken a fresh turn for the worse, the source told Reuters.
Source: Oil & Gas Investor

 

The State of American Energy: Pretty Darn Good – and Getting Better!

The American Petroleum Institute (API) hosted its annual State of American Energy event Tuesday at the Ronald Reagan Building in Washington, DC, featuring the release of API’s 2018 State of Energy report and a keynote address from API President Jack Gerard. Gerard’s remarks – and the API report – painted a bright future for the oil and gas industry, which is “Powering Past Impossible” on all fronts, from regulatory reforms to technological advances.

Overall, the energy industry hasn’t had it better in years. Now, API is focused on devising a strategy for ensuring continued success on a variety of fronts. In the United States, oil and gas production is up and continues rising, oil prices have recovered, greenhouse gas emissions are down and decreasing, regulatory roadblocks are finally being cleared away, and the industry is directly supporting over 10 million jobs (and counting).

Gerard spoke highly of the industry’s greenhouse gas reductions in particular:

 “Today we are increasing energy development as we’re contributing to lower greenhouse gas emissions, a reality many believed was implausible, if not impossible.”

Even with these resounding successes, there’s more work to be done. As the Houston Chronicle recently reported, Gerard has publicly pushed the Trump administration to make good on its promises for supporting infrastructure development in 2018. According to the article, Gerard’s remarks were clearly representative of the will of the industry:

“Energy lobbyists are eager to see Congress take steps to speed up oil and gas pipeline permitting while modernizing the nation’s power grid.”

Gerard also made some international headlines by calling for the U.S. government to continue its participation in the North American Free Trade Agreement (NAFTA) with Mexico and Canada. While the current U.S. administration is considering withdrawing from NAFTA over trade disagreements, Gerard made the case for continuing NAFTA as a job-supporting, economy-boosting pact:

“From our vantage point, the energy part of NAFTA is not broken,” he told reporters after the event, according to the AFP. “We believe they should stay with the existing NAFTA construct as it relates to energy, as opposed to pulling out of NAFTA.”

He argued that it was more important than ever to stay in the agreement as the U.S. industry will depend on it to facilitate increasing exports of oil, gas and petroleum products in the coming years.

Even with these concerns in mind, the industry is faring well. In large part, the petroleum industry sector’s success can be traced back to hydraulic fracturing, which has unlocked an abundance of energy even cheaper than coal has been in recent years. The shale revolution is driving down power costs across much of the country, as new pipeline networks make natural gas the energy source of choice for more utilities. It’s a trend that many, including API, expect will continue.

Source: Energy In Depth

 

Norwegian offshore oil and gas production rising as project backlog falls

Norwegian offshore fields delivered record volumes of gas last year, according to a review by the Norwegian Petroleum Directorate.


Source: Offshore

 

FERC Upholds New York's Denial Of Constitution Natural Gas Pipeline

U.S. energy regulators rejected Williams Cos. Inc.’s (NYSE: WMB) request to overturn New York’s denial of a water permit for the company’s proposed Constitution natural gas pipeline from Pennsylvania to New York, according to a filing on Jan. 11.

Williams said in a statement it was disappointed with the U.S. Federal Energy Regulatory Commission’s (FERC) decision and said it would seek a rehearing and, if necessary, appeal of this decision.

“Constitution remains committed to constructing and placing into operation this critical piece of energy infrastructure,” Williams said.
Source: Oil & Gas Investor

 

SUV-Riding New York Mayor Sues Energy Companies for Causing Global Warming

Earlier this week New York City mayor Bill de Blasio stood side-by-side with several leading anti-fossil fuel activists, whom he called “my brother and sister activists,” and announced he would sue five oil and gas companies for causing Hurricane Sandy.

No, this is not The Onion – but it’s close.

Continue reading on EID Climate.

Source: Energy In Depth

 

EV Energy Transfers Listing To NASDAQ Capital Market

EV Energy Partners LP (NASDAQ: EVEP) said on Jan. 11 it received a determination from the NASDAQ Stock Market granting approval of EVEP’s request to transfer its listing to the NASDAQ Capital Market from the NASDAQ Global Market.

As a result of the transfer to the NASDAQ Capital Market, EVEP expects to be granted an additional 180-day grace period to regain compliance with NASDAQ’s minimum bid price requirement.
Source: Oil & Gas Investor

 

As Oil Hits $70, Warning Lights Flash Up In Asia

Oil prices have risen above $70 per barrel (bbl) for the first time since 2014 as investors bet supply cuts led by OPEC will dominate the market this year.

But some traders are sounding a warning—the world’s biggest crude-consuming region, Asia, is showing signs of an impending downward correction.

Prices for Brent crude oil futures, the international benchmark for oil prices, have risen by more than 50% since mid-2017 and hit $70/bbl this week for the first since December 2014. Average Asian physical crude oil prices also moved over $70/bbl in January.
Source: Oil & Gas Investor

 

Splish Splash – Streamlining Permian Water Delivery and Produced Water Takeaway, Part 2

A number of Permian producers and their contractors are working to rein in well-completion and operating costs by developing extensive pipeline networks to efficiently deliver fresh, brackish or treated water to new wells for use in hydraulic fracturing — and deliver produced water from producing wells to treatment and disposals sites. This water-related infrastructure build-out is driven by a combination of necessity and economy, and is made possible in part by the trend among producers to assemble very large, contiguous leaseholds so they can drill longer horizontal wells. Today, we continue our series on water-related pipeline, storage and treatment infrastructure.

Source: RBN Energy

 

Record NatGas Consumption Drives Largest U.S. Gas Storage Draw on Record

Record NatGas Consumption Drives Largest U.S. Gas Storage Draw on Record

359 Bcf draw breaks previous record of 288 Bcf
The frigid temperatures seen over the past week have made their presence felt in natural gas markets, as the EIA reported the largest gas draw ever this week.

U.S. inventories declined by 359 Bcf from December 29 to January 5, even higher than the analyst estimate of 330 Bcf. Stocks declined throughout the country, but especially in the South Central region, where there was a draw of 153 Bcf.

Continue reading Record NatGas Consumption Drives Largest U.S. Gas Storage Draw on Record at Oil & Gas 360.

Source: Oil & Gas 360