Tag Archive for: crude

Mexico Spent About $1.26 billion on 2018 Oil Hedges

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From Oil&Gas People / 1 de Diciembre de 2017

 

Mexico spent some 24.1 billion pesos ($1.26 billion) on contracts to hedge its 2018 oil exports, Finance Ministry Chief Economist Luis Madrazo said on Tuesday, part of government’s efforts to stabilize its budget.

Madrazo did not specify the number of barrels of export production that Mexico had hedged with derivatives contracts nor did he detail the average price per barrel of put options that the government has purchased.

In September, the Finance Ministry proposed a 2018 budget that based expected oil export revenue on an estimate of $46 per barrel. Members of Congress increased that estimate to $48.5 per barrel earlier this month as global oil prices rose.

For more than a decade, Mexico’s government has paid for a hedge every year in a bid to guarantee its revenues from oil exports by state company Pemex. The program is seen as the world’s top sovereign derivatives trade.

Last year, the government bought put options at an average price of $38 per barrel to cover 250 million barrels of crude at a cost of $1.03 billion and underpin the 2017 budget, which was based on an average price of $42 per barrel.

The government set aside $4 a barrel from a special fund to make up the difference between its put options and the budgeted price.

This year, Mexico is on track to not see any income from its oil hedge as prices for Mexican crude are currently near $54 per barrel, well above the put options. In 2016, Mexico saw a $2.65 billion payout from its oil hedge.

Mexico hedges its crude every year and deals are closely watched by the market since the trades are big enough to affect prices. The program is a longstanding part of the country’s strategy for safeguarding oil revenues from market volatility.

Mexico used to receive about one-third of federal revenues from oil sales, but it now funds less than one-fifth of the budget with oil sales after the collapse crude prices in late 2014 and a decline in production.

 

oilhedge

 

From Oil&Gas People / 1 de Diciembre de 2017

 

Mexico’s Pemex says March crude oil exports hit record low

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Reporting by David Alire Garcia; Editing by Andrew Hay

“May 5 Mexican national oil company Pemex said on Friday that March crude exports fell to a record low of just above 1 million barrels per day (bpd), while oil output for the month also dipped.

Pemex’s March crude shipments averaged 1.001 million bpd, the lowest level of monthly exports going back to at least 1990 when records began. March exports were down nearly 6 percent compared with the same month last year.

Meanwhile, crude production during the month fell 9 percent to average 2.018 million bpd.

Pemex’s oil output hit a peak of 3.38 million bpd in 2004, but since then has steadily declined.

A four-year-old energy overhaul that ended Pemex’s decades-long monopoly on production led to the first-ever competitive oil auctions and joint venture partnerships, but fresh output streams from new entrants in the market are not expected for several years.

On Wednesday, despite lower oil production, Pemex reported its first quarterly profit in five years on higher sales and rising prices, gaining some $4.7 billion during the January-March period.”

Fri May 5, 2017 | 1:33pm EDT

REUTERS

Oil Rises From One-Month Low Before U.S. Crude Inventory Data

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by Grant Smith

“Oil rose from its lowest close in a month amid estimates that U.S. crude inventories continue to shrink, although refined products are growing more plentiful.

Futures gained as much as 0.9 percent in New York after dropping 1 percent Monday. U.S. crude stockpiles are forecast to have decreased for a fourth week from a record last month, according to a Bloomberg survey before a report from the Energy Information Administration on Wednesday. Meanwhile, U.S. gasoline and distillate inventories probably climbed last week. The industry-funded American Petroleum Institute will release its supply data on Tuesday.

Oil has fallen the past two weeks on concerns increasing U.S. crude production will offset efforts by the Organization of Petroleum Exporting Countries and its allies to eliminate a global supply glut. While Fereidun Fesharaki, the head of industry consultant FGE, says OPEC is certain to extend output cuts when its ministers meet later in May, industry data showed American rigs targeting crude climbed to the highest level in two years.

“Everyone is waiting for the oil-inventory drawdowns materializing as a result of the OPEC and non-OPEC cuts,” said Giovanni Staunovo, an analyst at UBS Group AG in Zurich.

West Texas Intermediate for June delivery increased 38 cents to $49.22 a barrel on the New York Mercantile Exchange at 12:15 p.m. London time. Futures fell 49 cents to $48.84 on Monday, the lowest settlement since March 28. Total volume traded was about 16 percent above the 100-day average.

U.S. Fuels

Brent for July settlement rose 54 cents to $52.06 a barrel on the London-based ICE Futures Europe exchange. The contract dropped 53 cents to settle at $51.52 a barrel on Monday. The global benchmark crude traded at a $2.52 premium to July WTI.

Supplies of gasoline probably rose 1 million barrels to 242 million and inventories of distillate fuel, a category that includes diesel and heating oil, surged 1.5 million barrels to 152.4 million last week, according to a Bloomberg survey of eight analysts. Nationwide crude stockpiles are forecast to have dropped by 3.25 million to 525.5 million barrels in the week ended April 28.”

1 de mayo de 2017 19:15 GMT-5

Bloomberg

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Dakota Access Oil Pipeline in New Setback as Permit Denied

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The U.S. Army Corps of Engineers denied Energy Transfer Partners LP a permit to build a section of the $3.8 billion Dakota Access Pipeline in North Dakota after weeks of opposition from Native Americans, environmentalists and other groups.

“There’s more work to do” in exploring alternative routes, Jo-Ellen Darcy, the corps’ assistant secretary for civil works, said in a statement Sunday, rejecting the company’s request for a permit to route the line under Lake Oahe. The move punts a decision to the administration of President-elect Donald Trump. He expressed support for Dakota Access as recently as Dec. 1.

Protests against the crude-oil pipeline have resulted in hundreds of arrests and drawn support from celebrities. The standoff is emblematic of a broader effort by environmentalists to stall oil and gas pipelines, which they say aren’t needed and hurt the nation’s progress in reducing its reliance on fossil fuels. Protesters who have camped for months in North Dakota had been told the area would be closed on Monday and they would have to move to designated protest zones.

Energy Transfer Partners and Sunoco Logistics Partners LP called the move “a purely political action” in a statement Sunday, adding that they are fully committed to bringing the project to completion.

“This is nothing new from this administration, since over the last four months, the administration has demonstrated by its action and inaction that it intended to delay a decision in this matter until President Obama is out of office,” the companies said in the statement.

Energy Transfer Partners slid as much as 3.7 percent to $33.12 in New York on Monday. The stock was down 3.6 percent to $33.16 at 9:35 a.m. local time. Parent company Energy Transfer Equity LP fell as much as 1.8 percent to $16.18 while Sunoco Logistics declined as much as 3.4 percent to $22.40.

The setback may be temporary. While the decision by President Barack Obama’s administration prevents the pipeline’s completion for now, analysts and Republican leaders have said Energy Transfer will probably receive the approval it seeks after Trump takes office in January.

Trump Administration

“The Obama administration’s refusal to issue an easement for the Dakota Access Pipeline violates the rule of law and fails to resolve the issue,” North Dakota Senator John Hoeven, a Republican, said in an e-mail. “Instead, it passes the decision off to the next administration, which has already indicated it will approve the easement, and in the meantime perpetuates a difficult situation for North Dakotans.”

Hoeven called for the protesters to immediately vacate the site.

The Trump administration can probably overturn the Corps’ decision and issue the required easement soon after taking power, Elvira Scotto, an analyst at RBC Capital Markets, said in a note Sunday night.

Dakota Access has been central to the intensifying debate over the need for new pipelines in the U.S. It has become a rallying point for the anti-fossil fuel movement and has drawn intense opposition from Native Americans who say it’ll damage culturally significant sites.

“We wholeheartedly support the decision of the administration,” Dave Archambault II, tribal chairman of the Standing Rock Sioux Tribe, said in a statement on Sunday. “In a system that has continuously been stacked against us from every angle, it took tremendous courage.”

The pipeline could help cut costs for drillers in North Dakota’s Bakken shale region that have turned to more costly rail shipments when existing pipes filled up. Dakota Access, with a capacity of about 470,000 barrels a day, would ship about half of the current Bakken crude production and enable producers to access Midwest and Gulf Coast markets.

The permit would be for the final section of the pipeline, which spans four states. The project was originally slated to be operational at the end of this year.

“The thoughtful approach established by the Army today ensures that there will be an in-depth evaluation of alternative routes for the pipeline and a closer look at potential impacts,” Interior Secretary Sally Jewell said in an e-mail.

Energy Transfer owns the project with Phillips 66 and Sunoco Logistics. Marathon Petroleum Corp. and Enbridge Energy Partners LP announced a venture in August that would also take a minority stake in the pipeline.

Copyright: Bloomberg

Oil stays low ahead of Opec meet

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Oil fell to its lowest in three months on Monday, as the prospect of another year of oversupply and weak prices overshadowed chances that Opec will reach a deal to cut output.

Donald Trump’s surprise win in last week’s US presidential election boosted the dollar and stocks but undermined oil. Crude has also fallen because of waning expectations that the world’s largest exporters will agree to reduce production this month.

Brent crude futures fell 50 cents on the day to $44.25 a barrel by 2:50pm GMT, while NYMEX crude futures dropped by 57 cents to $42.84 a barrel.

“In the same way that a strong Opec agreement was needed to continue the rally above $55, a lack of agreement will be needed to break below $40 and right now, we’re at $45,” Petromatrix strategist Olivier Jakob said.

Opec plans to cut or freeze output, but analysts doubt the group’s ability to reach an agreement at its meeting on 30 November.

Opec said on Friday its output hit a record 33.64 million barrels per day in October, and forecast an even larger global surplus in 2017 than the International Energy Agency (IEA) on Thursday.

Yet, Saudi Energy Minister Khalid al-Falih has said it was imperative for Opec to reach a consensus on activating a deal made in September in Algiers to cut production.

“Opec know what needs to be done but too few members will agree to take the production pain for the price gain, knowing also that the price gain incentivises non-Opec to produce more, lengthening the rebalancing process,” PVM Oil Associates analyst David Hufton said.

The dollar index hit an 11-month peak on Monday, driven by an aggressive sell-off in bonds that has pushed Treasury yields to their highest since January.

Ordinarily, a strong dollar would push oil lower, but the correlation between the two is at its most positive in two months, suggesting they are more likely to move in lockstep with one another than in opposite directions.

Data from the InterContinental Exchange on Monday showed investors delivered the largest weekly cut on record to their bets on a sustained rise in the price of oil.

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Copyright: Up Stream

Pemex lays out the map for the road ahead

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Mexico’s state oil company Pemex has laid out the broad strokes of a new strategy that could dramatically expand its use of partnerships in the Mexican exploration and production sector over the next five years.

The plans open up the possibility of more than 160 new opportunities for private companies over the next two years.

Pemex has already announced plans for the farm-down this year of an interest in the deep-water Trion discovery, and said 2017 would also bring other farm-outs in the shallow-water area of Ayin-Batsil and the onshore areas of Ogarrio and Cardenas-Mora. The company’s latest 2016-2021 business plan also labels 2017 as its target date for partnerships in the extra-heavy oil field of Ayatsil-Tekel-Utsil and the tricky but promising region of Chicontepec, as well as seven more unspecified onshore areas in the northern and southern parts of the country.

The strategy also sets out ambitious plans for 2018, with six deals proposed for shallow waters in the northern part of the country, 64 onshore agreements in the north and south and 86 natural gas contracts in the Burgos and Veracruz areas.

“Pemex’s business plan is a good roadmap, but short and medium-term challenges remain,” political risk consultancy Eurasia Group wrote in a note. “Operational challenges will remain substantial and many of the projects are likely to face delays.”

Pemex only recently gained the ability to take on operating partners in its projects as part of reforms passed in 2014 to end its nearly 80-year monopoly.

The state-led company has touted its new ability as being crucial to helping make up for its declining production curve and bringing in new technology and best practices.

A small number of farm-outs were announced with the passage of implementing legislation in 2014, but details since then have been scant other than Trion. Industry executives have called for more opportunities.

When it comes to exploration rights, by law Pemex must sign contracts for stakes in its projects via an open public bid round run by Mexican oil regulators, not just by direct negotiations.

Pemex did not provide many details on the projects mentioned, merely offering a list of “business opportunities” as part of its roadmap forward.

The strategy was unveiled as Pemex comes under pressure to show progress and activity on areas assigned in the process known as Round Zero.

That process divvied up what fields the Mexican player could retain following reforms but, without activity, acreage reverts back to regulators.

“The plan is very ambitious but I think it’s rightly so,” said Francisco Monaldi, adjunct professor of political economy of oil at Rice University in Houston, suggesting executives aim to position Pemex to take full advantage of the abilities offered by the energy reform.

Chiefly, Pemex will need to find a “winning formula” that can incentivise new operators to come in, and the process for the deep-water Trion block may end up being a model for that going forward, according to Luis Miguel Labardini, partner at Marcos y Asociados in Mexico City.

Ongoing discussions surrounding that joint operating agreement, with lots of feedback from international oil companies, led to the jettisoning of provisions that could have limited the autonomy of new partners, such as the ability of Pemex to unilaterally remove the new operator despite holding a minority stake in the project.

Some of the areas mentioned, notably the Ayatsil-Tekel-Utsil extra-heavy oil field and the Chicontepec region, also have higher production costs that could make economics difficult if lower oil prices persist.

Experts also acknowledged future political risk. The term of energy reform proponent President Enrique Pena Nieto is up in 2018, and the administration at present stands in a weak position due to multiple corruption scandals and its inability to stem violence from drug cartels.

15 Noviembre_shutterstock_391549441

Copyright: Up Stream

Oil Trades Near $44 as U.S. Election Sends Stocks, Dollar Higher

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Oil traded near $44 a barrel in New York amid a broader market rally driven by speculation Hillary Clinton’s chances of winning the U.S. election increased after the FBI said her handling of her e-mails wasn’t a crime.

Futures rose as much as 2.1 percent in New York following the Federal Bureau of Investigation’s report. The S&P 500 Index was set for its biggest gains since June and the dollar rose against its peers for the first time in seven sessions. Russia, the world’s biggest energy producer, is “on board” with an OPEC agreement to limit crude oil production to help re-balance the market, according to OPEC Secretary General Mohammed Barkindo.

“The U.S. election is front and center in all the markets,” said Chris Kettenmann, chief energy strategist at Macro Risk Advisors LLC in New York. “There was talk over the weekend of Russia agreeing to limit production in cooperation with OPEC, but we need to see a resolution from the Nov. 8 vote before the focus shifts to Nov. 30.”

Oil retreated below $45 a barrel following the failure of the Organization of Petroleum Exporting Countries to agree on output quotas for member countries on Oct. 28, which must happen before a deal can be finalized. OPEC pumped at a record rate in October, according to data compiled by Bloomberg.

West Texas Intermediate for December delivery rose 32 cents, or 0.7 percent, to $44.39 a barrel at 11:26 a.m. on the New York Mercantile Exchange. The contract slid 59 cents to $44.07 on Friday, the lowest close since Sept. 20. Prices fell 9.5 percent last week, the most in almost 10 months.

Election Focus

Brent for January settlement rose 4 cents to $45.62 a barrel on the London-based ICE Futures Europe exchange. Prices declined 8.3 percent last week, the most since January. The global benchmark traded at an 68-cent premium to January WTI.

“The stock market is up on the increasing likelihood of a Hillary Clinton victory,” said Thomas Finlon, director of Energy Analytics Group LLC in Wellington, Florida. “This is also strengthening the dollar, which is weighing on commodities.”

The Bloomberg Dollar Spot Index, a gauge of the greenback against 10 major peers, rose as much as 0.5 percent. A stronger U.S. currency reduces the appeal of dollar-denominated raw materials as an investment.

A magnitude 5 earthquake struck near Cushing, Oklahoma, the nation’s largest crude-storage hub, prompting some pipeline operators to shut operations at the site as a precaution. Oklahoma’s oil and gas regulator reported that all pipelines under its jurisdiction were operating again after shutting down as a precaution because of the temblor, centered less than 2 miles west of Cushing.

Gasoline dropped to the lowest level in seven weeks after Colonial Pipeline Co. restarted the largest U.S. line for the fuel Sunday, six days after an explosion and fire in Alabama during planned work.

December gasoline futures fell 1.5 percent to $1.3579 a gallon after touching $1.3561, the lowest since Sept. 20. 

Copyright: Bloomberg

Big Oil Pledges $1B For Gas Technologies To Fight Climate Change

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Some of the world’s biggest oil companies, including Saudi Aramco and Royal Dutch Shell, pledged on Friday to invest $1 billion to develop climate-friendly technologies as a global deal to wean the world off oil came into force.

The Oil and Gas Climate Initiative (OGCI), which also includes Total, BP, Eni, Repsol , Statoil, CNPC, Pemex and Reliance Industries, launched the Climate Investments fund which will invest in technologies to reduce carbon emissions but which will also help an increase gas use.

The companies pledged to use a large share of the $1 billion for speeding up carbon capture, use and storage (CCUS) in gas-fired power plants and towards reducing leakages of methane, one of the most polluting greenhouse gases.

“If we can reduce and build the technologies to monitor and reduce fugitive methane emissions that’s like an essential licence for us to be able to advocate natural gas,” BP Chief Executive Bob Dudley told journalists.

The investment is nevertheless dwarfed by the joint annual spending of the member companies, even as they battle one of the longest downturns in the sector’s history. Shell, Total, BP, Statoil, Repsol and Eni are expected to spend nearly $100 billion in 2016.

The 10 firms, which jointly produce around 20 percent of the world’s oil and gas, have already screened a list of 200 CCUS-related technologies and are now assessing which one or ones to develop to commercial scale.

The group will also invest in improving efficiency in transport and energy-intensive industries.

The announcement coincides with the official coming into force of the 2015 Paris Agreement, intended to wean the world economy off coal, oil and gas in the second half of this century in order to slash carbon emissions.

The oil and gas sector, which is directly responsible for 5 percent of manmade greenhouse emissions and the use of its products for another 32 percent, is under growing pressure from investors and the general public to help fight climate change.

“If the CEOs of the 10 largest corporations meet six times during the year it’s not for philanthropy, it’s real business,” said Patrick Pouyanne, chief executive of Total.

Critics have said oil companies need to do more to reduce emissions and to shield themselves from climate change risks.

“Companies could be worth considerably more, not less, if they aligned their portfolios with 2 C by exercising capital discipline and opting for lower-cost upstream projects that make both financial and climate sense,” said Anthony Hobley, chief executive of think tank Carbon Tracker Initiative.

Copyright: Rig Zone

Oil Extends Decline as OPEC Splits Prevent Deal to Curb Supply

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Oil declined for a second day as OPEC’s internal disagreements undermined efforts among major suppliers to reach an agreement in Vienna on trimming output to support prices.

Futures fell as much as 1.1 percent in New York after sliding 2.1 percent at the end of last week. The Organization of Petroleum Exporting Countries ended a meeting on Friday without reaching a deal on country quotas, according to delegates who took part in the discussions. Non-OPEC nations finished talks with the group on Saturday without any supply commitments, Brazil’s Oil and Gas Secretary Marcio Felix said. Brazil attended as an observer.

Oil has fluctuated near $50 a barrel amid uncertainty over whether OPEC can implement the first supply cuts in eight years at its official November meeting. As the gathering opened in Vienna last week, OPEC Secretary-General Mohammed Barkindo warned of the consequences if producers don’t follow through on an agreement to reduce output. The price recovery has already taken far too long and suppliers can’t risk delaying it further, he said.

“Talks over the weekend make it seem less likely there will be an agreement on production cuts,” said Ric Spooner, a chief market analyst at CMC Markets in Sydney. “The market has probably made a fair bit of the adjustment, but I wouldn’t be surprised to see oil fall further into the $47 range.”

West Texas Intermediate for December delivery dropped as much as 53 cents to $48.17 a barrel on the New York Mercantile Exchange, and was at $48.44 at 2:48 p.m. in Singapore. The contract fell $1.02 to $48.70 on Friday. Total volume traded was about 4 percent above the 100-day average. Prices are set for a third monthly gain, up 0.4 percent in October.

OPEC Meeting

Brent for December settlement, which expires Monday, lost as much as 42 cents, or 0.8 percent, to $49.29 a barrel on the London-based ICE Futures Europe exchange after falling 1.5 percent Friday. Front-month prices are up 0.7 percent this month. The global benchmark traded at a premium of $1 to WTI. The more-active January contract slid 27 cents to $50.41 a barrel.

OPEC agreed in Algiers last month to trim output to a range of 32.5 million to 33 million barrels a day and is due to finalize the deal at its Nov. 30 summit in Vienna. The accord helped push prices to a 15-month high above $50 a barrel earlier this month, although they have subsequently fallen amid doubts the group will follow through on the pledge. More than 18 hours of talks over two days in the Austrian capital this weekend yielded little more than a promise that the world’s largest producers would keep on talking.

Some progress was made at the Friday meeting on the methodology to be used for allocating output quotas to OPEC members, said one delegate, who asked not to be identified because the talks were private. Russia reiterated that it’s willing to freeze production, rather than cut, but only if there is an OPEC agreement first, according to participants in Saturday’s meeting.

Oil-market news:

  • Iraq published data showing a rare level of detail for its oil production and exports as it seeks to be excluded from OPEC’s planned output cuts because of its war with Islamic militants.

  • Libyan crude production increased to 640,000 barrels a day, according to a National Oil Corp. official.

  • China’s oil output slump shows no signs of abating as the country’s state-run energy giants hold back spending amid the crash in prices.

  • Rigs targeting crude in the U.S. fell by 2 to 441 last week, according to data from Baker Hughes Inc. Friday.

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Copyright: Bloomberg

Oil Investors Ease Back as Market Steadies Before OPEC Talks

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Oil investors are playing it safe as OPEC hammers out the details of a deal to trim output.

Money managers reduced bets on falling prices to the lowest since May as oil held above $50 a barrel, prolonging a rally that began when the Organization for Petroleum Exporting Countries announced a deal to cut production to between 32.5 million and 33 million barrels a day. The group plans to finalize the agreement at a meeting in Vienna on Nov. 30.

“The shorts are not laughing off this OPEC deal anymore,” Phil Flynn, a market analyst at Price Futures Group in Chicago, said in a phone interview. “There’s a growing realization that there’s going to be a deal to lock in production. Things will be relatively calm until we get the agreements.”

Saudi Arabia’s Energy Minister Khalid Al-Falih said Oct. 19 that many nations are willing to join OPEC in cutting production. So far, Russia has said it’s considering taking steps to stabilize the market. Alexander Novak, the country’s energy minister, said Sunday that “many scenarios” are being discussed. Venezuelan President Nicolas Maduro, on a tour of oil-producing countries to boost support for the deal, said Oct. 21 he’s in favor of inviting the U.S. to the next OPEC meeting and creating an “alliance” of OPEC and non-OPEC nations.

“This week the market is in a pause after the run-up to $50,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. “There’s still a lot of question about what OPEC is actually going to do next month. Absent that, people are waiting for some more direction than we have now.”

In addition to slashing short bets in West Texas Intermediate crude by 21 percent during the week ended Oct. 18, hedge funds also reduced their long positions by 3.2 percent from a two-year high, according to the Commodity Futures Trading Commission. Net longs increased to the highest in two years.

Oil Inventories

WTI slipped 1 percent during the report week to $50.29 a barrel. The U.S. benchmark rose 0.1 percent on Monday to $50.91 as of 9:41 a.m. London time. Prices reached a 15-month high on Oct. 19 after government data showed U.S. crude stockpiles fell to the lowest level since January.

U.S. stockpiles dropped 5.25 million barrels to 468.7 million in the week ended Oct. 14, according to the Energy Information Administration, after reaching 512.1 million in late April.

“$50 will be the floor through the OPEC meeting, barring some spike in the dollar,” Price Futures Group’s Flynn said. “With U.S. inventories falling at a rapid pace, the prospect of a cut or freeze has real consequences.”

In other markets, net-bullish bets on gasoline rose 9.4 percent to 40,085 contracts, the highest since March 2015, as futures climbed 1.5 percent in the report week. Ultra low sulfur diesel net-longs fell 7 percent to 8,439. Futures slipped 1.2 percent.

WTI held above $50 a barrel even as Russia’s energy minister said the country may produce a new oil-output record next year. As OPEC members head into technical meetings Oct. 28-29, investors will be watching for details on country allocations. Iraq should be exempted from cutting production, Oil Minister Jabbar Al-Luaibi said Sunday.

“The market just wants to see the proof in the pudding,” said Carl Larry, director of oil and gas at consultant Frost & Sullivan in Houston. “We got to $50. That’s as good as it’s getting, going into the November election and the actual OPEC meeting.”

 

 

Copyright: Bloomberg.