Connect with us

Markets

Shell Commences Trans-Forcados Pipeline Testing

Published

on

Pipeline Vandalism
  • Shell Commences Trans-Forcados Pipeline Testing

After months of repairs, Shell Petroleum Development Company (SPDC) has started testing the Trans-Forcados crude export pipeline for a potential restart, with the Astro Perseus crude tanker expected to load the first cargo by the weekend.

The pipeline has been largely shut since it was bombed by the Niger Delta Avengers (NDA) in February 2016.

The pipeline resumed exports in October 2016 after it was repaired but was shut down in November after the militants bombed the subsea facility for the second time.

Before the militant attacks, the Forcados stream accounted for between 200,000 and 240,000 barrels per day.

But following the repeated attacks on the Forcados pipeline, companies that fed crude into the Forcados stream have been working around the long-term pipeline outage, exporting oil via barges at the Warri refinery, but this has been limited to roughly 20,000 bpd.

One of the companies, Seplat Petroleum Development Company Plc, said it planned to bypass the Trans-Forcados pipeline with the Amukpe-Escravos pipeline, which is scheduled for completion this year.

In the oil markets, the price of crude rose to $50 a barrel on Wednesday, following the biggest one-week drop in United States inventories so far this year, and after Iraq and Algeria joined Saudi Arabia in supporting an extension of supply cuts by the Organisation of Petroleum Exporting Countries (OPEC).

Reuters reported that concerns about rising output from the U.S., Libya and Nigeria continue to weigh on crude oil markets, even though analysts have questioned the sharp rebound, following the release of U.S. government figures.

The U.S. Energy Information Administration said U.S. crude inventories fell by 5.2 million barrels last week, more than the 1.8 million-barrel slide that was predicted.

With the drop in U.S. inventories, global benchmark Brent crude was up $1.34 at $50.07 per barrel, while US light crude oil was $1.43 higher at $47.30 a barrel.

Also supporting prices were comments from Algeria’s energy minister on Wednesday that Algeria and Iraq will favour extending global supply cuts when OPEC meets later this month.

On Monday, Saudi Arabia’s oil minister, Khalid al-Falih said he expected the output deal to be extended to the end of the year or possibly longer.

State-owned Saudi Aramco will also reduce oil supplies to Asian customers by about 7 million barrels in June, a source told Reuters, as part of the OPEC’s deal to reduce production.

Aramco had previously maintained supplies to important Asian customers.

But questions remain about the effectiveness of OPEC-led cuts, with OPEC member Libya saying production now exceeded 800,000 barrels per day for the first time since 2014 and could rise to 1.2 million bpd later this year.

Nigeria, which along with Libya is exempt from OPEC cuts, is also expected to see a jump in output soon as Shell reopens the Trans-Forcados oil export pipeline after tests.

However, the Minister of State for Petroleum, Dr. Ibe Kachikwu, said recently that Nigeria would voluntarily join the cuts if its production reached 1.8 million bpd.

Crude oil prices surged after the OPEC deal, but have come under pressure in recent weeks as U.S. production surged, undermining OPEC-led efforts to balance supply with demand.

Brent and U.S. light crude closed at their second lowest levels since November 29, 2016 the day before OPEC announced it would cut output in the first half of 2017.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Crude Oil

Oil Dips Below $62 in New York Though Banks Say Rally Can Extend

Published

on

Oil

Oil Dips Below $62 in New York Though Banks Say Rally Can Extend

Oil retreated from an earlier rally with investment banks and traders predicting the market can go significantly higher in the months to come.

Futures in New York pared much of an earlier increase to $63 a barrel as the dollar climbed and equities slipped. Bank of America said prices could reach $70 at some point this year, while Socar Trading SA sees global benchmark Brent hitting $80 a barrel before the end of the year as the glut of inventories built up during the Covid-19 pandemic is drained by the summer.

The loss of oil output after the big freeze in the U.S. should help the market firm as much of the world emerges from lockdowns, according to Trafigura Group. Inventory data due later Tuesday from the American Petroleum Institute and more from the Energy Department on Wednesday will shed more light on how the Texas freeze disrupted U.S. oil supply last week.

Oil has surged this year after Saudi Arabia pledged to unilaterally cut 1 million barrels a day in February and March, with Goldman Sachs Group Inc. predicting the rally will accelerate as demand outpaces global supply. Russia and Riyadh, however, will next week once again head into an OPEC+ meeting with differing opinions about adding more crude to the market.

“The freeze in the U.S. has proved supportive as production was cut,” said Hans van Cleef, senior energy economist at ABN Amro. “We still expect that Russia will push for a significant rise in production,” which could soon weigh on prices, he said.

PRICES

  • West Texas Intermediate for April fell 27 cents to $61.43 a barrel at 9:20 a.m. New York time
  • Brent for April settlement fell 8 cents to $65.16

Brent’s prompt timespread firmed in a bullish backwardation structure to the widest in more than a year. The gap rose above $1 a barrel on Tuesday before easing to 87 cents. That compares with 25 cents at the start of the month.

JPMorgan Chase & Co. and oil trader Vitol Group shot down talk of a new oil supercycle, though they said a lack of supply response will keep prices for crude prices firm in the short term.

Continue Reading

Crude Oil

Oil Prices Rise With Storm-hit U.S. Output Set for Slow Return

Published

on

Crude oil

Oil Prices Rise With Storm-hit U.S. Output Set for Slow Return

Oil prices rose on Monday as the slow return of U.S. crude output cut by frigid conditions served as a reminder of the tight supply situation, just as demand recovers from the depths of the COVID-19 pandemic.

Brent crude was up $1.38, or 2.2%, at $64.29 per barrel. West Texas Intermediate gained $1.38, or 2.33%, to trade at $60.62 per barrel.

Abnormally cold weather in Texas and the Plains states forced the shutdown of up to 4 million barrels per day (bpd) of crude production along with 21 billion cubic feet of natural gas output, analysts estimated.

Shale oil producers in the region could take at least two weeks to restart the more than 2 million barrels per day (bpd) of crude output affected, sources said, as frozen pipes and power supply interruptions slow their recovery.

“With three-quarters of fracking crews standing down, the likelihood of a fast resumption is low,” ANZ Research said in a note.

For the first time since November, U.S. drilling companies cut the number of oil rigs operating due to the cold and snow enveloping Texas, New Mexico and other energy-producing centres.

OPEC+ oil producers are set to meet on March 4, with sources saying the group is likely to ease curbs on supply after April given a recovery in prices, although any increase in output will likely be modest given lingering uncertainty over the pandemic.

“Saudi Arabia is eager to pursue yet higher prices in order to cover its social break-even expenses at around $80 a barrel while Russia is strongly focused on unwinding current cuts and getting back to normal production,” said SEB chief commodity analyst Bjarne Schieldrop.

Continue Reading

Crude Oil

Crude Oil Rose Above $65 Per Barrel as US Production Drop Due to Texas Weather

Published

on

oil

Crude Oil Rose Above $65 Per Barrel as US Production Drop Due to Texas Weather

Oil prices rose to $65.47 per barrel on Thursday as crude oil production dropped in the US due to frigid Texas weather.

The unusual weather has left millions in the dark and forced oil producers to shut down production. According to reports, at least the winter blast has claimed 24 lives.

Brent crude oil gained $2 to $65.47 on Thursday morning before pulling back to $64.62 per barrel around 11:00 am Nigerian time.

U.S. West Texas Intermediate (WTI) crude rose 2.3 percent to settle at $61.74 per barrel.

“This has just sent us to the next level,” said Bob Yawger, director of energy futures at Mizuho in New York. “Crude oil WTI will probably max out somewhere pretty close to $65.65, refinery utilization rate will probably slide to somewhere around 76%,” Yawger said.

However, the report that Saudi Arabia plans to increase production in the coming months weighed on crude oil as it can be seen in the chart below.

Prince Abdulaziz bin Salman, Saudi Arabian Energy Minister, warned that it was too early to declare victory against the COVID-19 virus and that oil producers must remain “extremely cautious”.

“We are in a much better place than we were a year ago, but I must warn, once again, against complacency. The uncertainty is very high, and we have to be extremely cautious,” he told an energy industry event.

Continue Reading

Trending