Oil steady on lower Iran exports, rising US supply

A pump jack operates in the Permian Basin oil production area near Wink, Texas U.S. August 22, 2018. (Reuters)
Updated 29 August 2018

Oil steady on lower Iran exports, rising US supply

  • Iran’s crude oil and condensate exports in August are set to drop below 70 million barrels for the first time since April 2017
  • Bowing to pressure from Washington, many crude buyers have already reduced orders from Iran

LONDON: Oil prices steadied on Wednesday, supported by news of a fall in Iranian crude supplies as US sanctions deter buyers, but held back by evidence of a rise in US inventories.
Benchmark Brent crude oil was unchanged at $75.95 a barrel by 0905 GMT. US light crude was 5 cents higher at $68.58 a barrel.
Iran’s crude oil and condensate exports in August are set to drop below 70 million barrels for the first time since April 2017, well ahead of the Nov. 4 start date for a second round of US economic sanctions, preliminary trade flows data on Thomson Reuters Eikon show.
Bowing to pressure from Washington, many crude buyers have already reduced orders from Iran, OPEC’s third-biggest producer.
Although Tehran is offering steep discounts, Iran’s August crude oil and condensate loadings are estimated at 2.06 million bpd, versus a peak of 3.09 million bpd in April.
“US sanctions toward Iran are now increasingly kicking in which will help to dry up the physical crude oil market,” said SEB Markets commodities analyst Bjarne Schieldrop.
US crude inventories rose by 38,000 barrels to 405.7 million barrels in the week to Aug. 24, the American Petroleum Institute said on Tuesday.
Official US fuel inventory and crude production data will be published later on Wednesday by the Energy Information Administration (EIA).
Traders said reports of potential investment in Venezuela’s struggling oil production also affected markets. Venezuelan crude exports have halved since 2016 to below 1 million barrels per day (bpd).
To stem tumbling output, Venezuelan state-run oil firm PDVSA said on Tuesday it had signed a $430 million investment agreement to increase production by 640,000 bpd at 14 oilfields, although some analysts doubted whether this investment would go through given the instability in the country.
Despite the risk of disruption, especially from OPEC-countries like Venezuela, Iran, Libya and Nigeria, Bank of America Merrill Lynch said global supply could climb toward the end of the year.
“Heading into 4Q18, we expect rising non-OPEC oil production as supply outages abate and greenfield projects ramp up,” the US bank said. “Non-OPEC supply outages are at a 15-month high of 730,000 bpd. However, nearly half of these volumes are in the process of being restored.”
Adding to that will be new production in Canada, Brazil and the United States, which the bank said “should provide a substantial boost to non-OPEC supplies” during the second half of the year “taming upside pressures on Brent crude oil prices.”


China's aviation regulator raised concerns with Boeing on 737 MAX design changes

Updated 12 December 2019

China's aviation regulator raised concerns with Boeing on 737 MAX design changes

  • China is reviewing the airworthiness of the plane
  • China was first country to ground plane in March

BEIJING: China’s aviation regulator raised “important concerns” with Boeing Co. on the reliability and security of design changes to the grounded 737 MAX, it said on Thursday, but declined to comment on when the plane might fly again in China.
China is reviewing the airworthiness of the plane based on proposed changes to software and flight control systems according to a bilateral agreement with the United States, Civil Aviation Administration of China (CAAC) spokesman Liu Luxu told reporters at a monthly briefing.
He reiterated that for the plane to resume flights in China, it needed to be re-certified, pilots needed comprehensive and effective training to restore confidence in the model and the causes of two crashes that killed 346 people needed to be investigated with effective measures put in place to prevent another one.
China was the first country to ground the 737 MAX after the second crash in Ethiopia in March and had set up a task force to review design changes to the aircraft that Boeing had submitted.
The US Federal Aviation Administration (FAA) will not allow the 737 MAX to resume flying before the end of 2019, its chief, Steve Dickson, said on Wednesday.
Once the FAA approves the reintroduction into service, the 737 MAX can operate in the United States, but individual regulators could keep the planes grounded in other countries until they complete their own reviews.
“Due to the trade war, the jury is still out on when China would reintroduce the aircraft,” said Rob Morris, Global Head of Consultancy at Ascend by Cirium.
Chinese airlines had 97 737 MAX jets in operation before the global grounding, the most of any country, according to Cirium Fleets Analyzer.