Oil stable on threats of rebel attacks in Nigeria, tighter US crude inventories

Traders say oil prices are unlikely to fall far due to risks to supply disruptions. (Reuters)
Updated 18 January 2018
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Oil stable on threats of rebel attacks in Nigeria, tighter US crude inventories

SINGAPORE: Oil prices were stable on Thursday, supported by tighter inventories of crude as well as rebel threats of an attack on Nigeria’s petroleum industry, but the market was weighed down by a reported rise in US fuel stocks.
Brent crude futures were at $69.34 at 0753 GMT, down 4 cents from their last close. On Monday, they hit their highest since December 2014 at $70.37 a barrel.
US West Texas Intermediate (WTI) crude futures were at $64.03 a barrel, up 6 cents from their last settlement. WTI marked it highest since December 2014 at $64.89 on Tuesday.
Traders said that oil markets were generally well supported by supply cuts led by the Organization of the Petroleum Exporting Countries (OPEC) and Russia, who started to withhold production in January last year and are expected to continue their restraint through 2018.
Despite this, analysts said the recent oil price rally, which has lifted crude by around 14 percent since early December, may be about to run out of steam.
Data from the American Petroleum Institute (API) on Wednesday showed a well-supplied fuel product market, which could mean lower crude demand going forward.
US refinery crude runs fell by 420,000 barrels per day (bpd) and refined product stocks rose, implying a well-supplied market.
Gasoline stocks rose by 1.8 million barrels while distillate fuels stockpiles, which include diesel and heating oil, climbed by 609,000 barrels, the API data showed.
Refined product supplies in Asia are also healthy, largely thanks to a sharp rise in exports from China.
“The upside is now limited for oil prices ... US oil producers will ramp up production in the coming months ... US shale oil output will increase by a good 111,000 barrels per day (bpd) next month to 10 million bpd, and ... will rise to about 11 million bpd by the end of next year. This would put the US on par with Saudi Arabia and Russia’s output,” said Fawad Razaqzada, market analyst at futures brokerage Forex.com.
Coface, a French trade credit insurance company, said it “forecasts oil prices will consolidate some gains to average $65 (per barrel) in 2018.”
The firm said the reasons for this expected slowdown were an expected rise in US oil output as well as a slowdown in demand growth.
Despite this, traders said prices were unlikely to fall far due to risks to supply disruptions.
In Nigeria, the militant group Niger Delta Avengers threatened to launch attacks on the country’s oil sector in the next few days.
Markets were also supported by a drop in available crude inventories.
US crude inventories fell by 5.1 million barrels in the week ended Jan. 12 to 411.5 million, according to the API.
Official US oil inventory and production data is due on Thursday from the Energy Information Administration.


US says conserving oil is no longer an economic imperative

Updated 19 August 2018
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US says conserving oil is no longer an economic imperative

  • Fears of oil scarcity no longer driver of US energy policy
  • Surging shale production brings energy abundance

WASHINGTON: Conserving oil is no longer an economic imperative for the US, the Trump administration declares in a major new policy statement that threatens to undermine decades of government campaigns for gas-thrifty cars and other conservation programs.
The position was outlined in a memo released last month in support of the administration’s proposal to relax fuel mileage standards. The government released the memo online this month without fanfare.
Growth of natural gas and other alternatives to petroleum has reduced the need for imported oil, which “in turn affects the need of the nation to conserve energy,” the Energy Department said. It also cites the now decade-old fracking revolution that has unlocked US shale oil reserves, giving “the United States more flexibility than in the past to use our oil resources with less concern.”
With the memo, the administration is formally challenging old justifications for conservation — even congressionally prescribed ones, as with the mileage standards. The memo made no mention of climate change. Transportation is the single largest source of climate-changing emissions.
President Donald Trump has questioned the existence of climate change, embraced the notion of “energy dominance” as a national goal, and called for easing what he calls burdensome regulation of oil, gas and coal, including repealing the Obama Clean Power Plan.
Despite the increased oil supplies, the administration continues to believe in the need to “use energy wisely,” the Energy Department said, without elaboration. Department spokesmen did not respond Friday to questions about that statement.
Reaction was quick.
“It’s like saying, ‘I’m a big old fat guy, and food prices have dropped — it’s time to start eating again,’” said Tom Kloza, longtime oil analyst with the Maryland-based Oil Price Information Service.
“If you look at it from the other end, if you do believe that fossil fuels do some sort of damage to the atmosphere ... you come up with a different viewpoint,” Kloza said. “There’s a downside to living large.”
Climate change is a “clear and present and increasing danger,” said Sean Donahue, a lawyer for the Environmental Defense Fund.
In a big way, the Energy Department statement just acknowledges the world’s vastly changed reality when it comes to oil.
Just 10 years ago, in summer 2008, oil prices were peaking at $147 a barrel and pummeling the global economy. OPEC was enjoying a massive transfer of wealth, from countries dependent on imported oil. Prices now are about $65.
Today, the US is vying with Russia for the title of top world oil producer. US oil production hit an all-time high this summer, aided by the technological leaps of horizontal drilling and hydraulic fracturing.
How much the US economy is hooked up to the gas pump, and vice versa, plays into any number of policy considerations, not just economic or environmental ones, but military and geopolitical ones, said John Graham, a former official in the George W. Bush administration, now dean of the School of Public and Environmental Affairs at Indiana University.
“Our ability to play that role as a leader in the world is stronger when we are the strongest producer of oil and gas,” Graham said. “But there are still reasons to want to reduce the amount we consume.”
Current administration proposals include one that would freeze mileage standards for cars and light trucks after 2020, instead of continuing to make them tougher.
The proposal eventually would increase US oil consumption by 500,000 barrels a day, the administration says. While Trump officials say the freeze would improve highway safety, documents released this month showed senior Environmental Protection Agency staffers calculate the administration’s move would actually increase highway deaths.
“American businesses, consumers and our environment are all the losers under his plan,” said Sen. Tom Carper, a Delaware Democrat. “The only clear winner is the oil industry. It’s not hard to see whose side President Trump is on.”
Administration support has been tepid to null on some other long-running government programs for alternatives to gas-powered cars.
Bill Wehrum, assistant administration of the EPA’s Office of Air and Radiation, spoke dismissively of electric cars — a young industry supported financially by the federal government and many states — this month in a call with reporters announcing the mileage freeze proposal.
“People just don’t want to buy them,” the EPA official said.
Oil and gas interests are campaigning for changes in government conservation efforts on mileage standards, biofuels and electric cars.
In June, for instance, the American Petroleum Institute and other industries wrote eight governors, promoting the dominance of the internal-combustion engine and questioning their states’ incentives to consumers for electric cars.
Surging US and gas production has brought on “energy security and abundance,” Frank Macchiarola, a group director of the American Petroleum Institute trade association, told reporters this week, in a telephone call dedicated to urging scrapping or overhauling of one US program for biofuels.
Fears of oil scarcity used to be a driver of US energy policy, Macchiarola said.
Thanks partly to increased production, “that pillar has really been rendered essentially moot,” he said.