The United States has joined the United Nations and Libyan government’s investigation into the potential brokering of an unlawful sale of Libyan oil by General Khalifa Haftar. The rebel general reportedly traveled to Venezuela to discuss oil contracts to raise money for his Libyan National Army (LNA) through the sale of crude oil. Libya’s National Oil Corporation (NOC) is the only legal entity allowed to market Libyan crude as a result of sanctions given by the United Nations during the country’s civil war.
The U.S. Gulf Coast was hit by Tropical Storm Cristobal yesterday, causing offshore oil production to shut down by almost 24%, equating to more than 430,000 barrels per day. According to the U.S. Bureau of Safety and Environmental Enforcement (BSEE), this was a 140,000 barrel per day improvement compared to June 9th. Occidental Petroleum, BP, and Shell were some of the companies who evacuated employees ahead of the storm. There were a total of 188 platforms and rigs evacuated by those operators. Since the last update, 61 of the 643 platforms had still been evacuated in the Gulf of Mexico. Cristobal battered southern Mexico and shut down ports over the past week, before moving through the Gulf of Mexico and depositing heavy rainfall from Louisiana to Florida.
As some countries begin measures to reopen and try to get back to somewhat of a normal routine again, Brazil is still fighting the spread of COVID-19. At least five oil producers have registered coronavirus cases among their employees and contractors at facilities located off the coast of Brazil.
The OPEC meeting that concluded today in Vienna ended with ministers approving productions cuts for the first quarter of 2020. The cuts for OPEC+ will be increased from 1.2 million bpd to 1.7 million bpd. A 500,000 bpd cut should be painless for the organization as they are currently at over-compliance with the cuts as a group. Saudi Arabia has been carrying a large portion of the cuts to compensate for the group’s non-compliant members including Iraq, Russia and Nigeria. The group is now tasked with divvying up the cuts and enforcing the members compliance with the cuts.
Ecuador’s government was forced out of the capital, Quito, by violent protests earlier this week. The country is already in an uneasy state with the vulnerable economy that has been battered by lack of public transportation and blocked roads. These violent protests stem from President Moreno’s decision to cut subsidies which led to an extremely sharp increase in gas prices. Gas prices in Ecuador have increased up to 120%. Due to these protests, the state-owned energy company Petroamazonas was forced to stop production after the fields were taken over by people not affiliated with the organization. The government has also deployed the army to key locations to safeguard the nation’s resources.
In 2018, the United States petroleum production increased 16% while simultaneously increasing natural gas production by 12%. According to the Energy Information Administration (EIA), “these totals combined established a new production record.” The United States has been the largest producer of natural gas since it passed Russia in 2011, and last year the U.S. surpassed Saudi Arabia to become the largest producer of petroleum. All signs indicate that the U.S. will continue to expand their production prominence, and over the next decade, the U.S. is set to account for 61% of all new global oil and gas production, nearly nine times the amount of Canada who projects to be second on the production increase list.
Tensions in the Middle East rose again over the weekend after reports indicated that four oil vessels were “attacked” or “sabotaged” at the mouth of the Persian Gulf near Fujairah Emirate, just outside of the Strait of Hormuz. The United Arab Amirates (UAE) stated that the damaged ships were two crude oil tankers owned by Saudi Arabian shipping firm Bahri, one fuel bunker barge flying a UAE flag and Norwegian oil products tanker owned by Thome Ship management. These reports are still largely unconfirmed, but come as no surprise given the recent rhetoric and geopolitical tensions facing the region.
It has been a wild Monday for traders after President Trump tweeted yesterday that the United States will increase tariffs on $200 billion of Chinese imports, which, is casting doubt on the likelihood of a successful U.S. and Chinese trade deal.
Oil prices are taking a breather today after Wednesday’s strong rally due in large part to the gasoline inventory draw and low production levels in Venezuela.
WTI failed to settle above $60/barrel yesterday and President Trump’s tweet warning OPEC on high oil prices may be taking the wind out of the bull’s sails.