Headline crude prices for the week beginning 26 February 2017 – Brent: US$67/b; WTI: US$64/b
- Crude prices chalked up a week of gains last week, gaining on positive signs in US demand and continued statements of support from OPEC to ‘manage global crude oil supply.'
- Last week, US data showed a surprise drawdown of 1.6 million barrels in US crude inventories, with net imports dropping to a record low and exports surging. Stocks at the important Cushing, OK hub declined even further, defying market predictions that oil inventories were set to rise.
- With US crude exports hitting 2 mmb/d, American net crude imports fell below 5 mmb/d, the lowest level since the EIA began recording data in 2001. Strong demand from US refineries supported the drawdown.
- Various OPEC ministers voiced positive statements on the effectiveness of the supply freeze. Saudi Energy Minister Khalid al-Falih said the ‘market is rebalancing' and ‘inventories should continue to decline' over the year.
- Al-Falih said Saudi Arabia's exports have been averaging less than 7 mmb/d over January-March, with output well below its production cap. He also said OPEC and its allies were hoping to create a permanent framework to stabilise oil markets after the current agreement ends.
- Algerian Energy Minister Mustapha Guitouni stated OPEC was looking to preserve ‘market stability' to balance producers and consumers, suggesting that it could intervene again if prices fall dramatically.
- American crude inventories are expected to reverse last week's surprise decline, with data pointing to a million barrel gain, that capped gains in crude prices earlier this week.
- The US active oil and gas rig count gained 3 sites last week. It was a fifth consecutive week of gains for oil rigs, inching up by 1 to 790, just shy of the 800 mark.
- Crude price outlook: Lingering concerns over the swell of US crude output should trim crude prices back to US$65-66/b range for Brent and US$62-63/b for WTI.
Headlines of the week
- BHP Billiton and ExxonMobil, 50:50 partners in the Gippsland Basin Joint Venture, have dropped plans to sell their 13 fields, licences and associated infrastructure in some of Australia's largest and oldest onshore oilfields.
- Abu Dhabi has chosen Spain's Cepsa to develop its offshore oil shores in a push to diversify partnerships; the Madrid-based player will take a 20% stake in the Umm Lulu and Sateh Al Razboot Persian Gulf fields.
- India also gained a foothold in Abu Dhabi, with an ONGC-led consortium securing a 10% stake in the Lower Zakum concession for US$600 million.
- Aker BP announced a moderate discovery in the North Sea's Alvheim, with the Frosk well yielding ‘encouraging' flows of 30-60 mmboe.
- With turmoil in Iraq's Kurdistan region dying down, Chevron has resumed drilling operations in the area, starting the Sarta 3 field.
- South Korea's SK Innovation has made an oil discovery in the PRMB 17/03 Block in China's section of the South China Sea; SK Innovation has an 80% stake in the block, with CNOOC holding the remainder.
- India's ONGC has turn to international service firms for the first time, shortlisting Halliburton, Schlumberger and Baker Highs to assist in boosting production at its onshore Gujarat and Assam oil fields.
- As Egypt prepares to offer ten new onshore blocks for exploration, Kuwait Energy announced it had struck oil in the South Kheir-1X well, with small flows of some 2,000 b/d of crude oil.
- Turkey's first new oil refinery in 30 years, SOCAR's US$6 billion 300 kb/d Star refinery, is scheduled to start up in the third quarter of 2018.
- Amid US sanctions and Venezuela's financial woes, PDVSA's American arm Citgo Petroleum has slowed plans to upgrade its 235 kb/d refinery in Aruba. The Dutch territory has raised the issue with the US government.
- Total, Borealis and NOVA Chemicals have formed a US Gulf Coast 50:50 petrochemicals joint venture, integrating the Bayport and Port Arthur facilities of Total and Novealis (a Borealis-NOVA joint venture).
- ExxonMobil has acquired a 2.5% stake in the crucial Baku-Tblisi–Ceyhan (BTC) pipeline in Azerbaijan from Itochu's subsidiary CIECO.
- ExxonMobil has halted operations at PNG LNG as a 7.5 magnitude earthquake struck the highlands Papua New Guinea; Oil Search also halted its drilling activities in the wake of the quake.
- Petronas has inked its first LNG contract with India, agreeing to supply an undisclosed amount of LNG to Dubai-based H-Energy Mideast DMCC.
- Spain's Repsol will be selling its ‘non-strategic' 20% stake in Gas Natural to CVC Capital Partners for €3.82 billion euros.
- Thailand has pushed the new auctions for the Erawan and Bongkot gas fields back by a month to April, with a decision expected by end-2018.
- Extending a partnership that began with the Subsea Integration Alliance in 2015, Schlumberger and Subsea 7 have announced plans to form a 50:50 joint venture, which would boost their FEED capabilities.
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