Libya oil pipeline maintenance completed

Spanish Market: Crude oil
06/01/22

Libya's state-owned oil firm NOC expects the country's crude production to partially recover in the coming days following the early completion of pipeline maintenance in the east of the country, but output remains severely constrained by field blockades in the west.

NOC's latest output guidance is around 730,000 b/d, down from 780,000 b/d earlier this week and over a third lower than Argus' estimate of Libya's average production in November.

Output dropped sharply around two weeks ago when branches of the Petroleum Facilities Guard (PFG) shut down supply from the El Sharara, El Feel, Hamada and Wafa fields in western Libya, prompting NOC to declare force majeure on crude exports from the Zawia and Mellitah terminals. Production was cut further in recent days by maintenance work on a pipeline linking the Samah and Dahra fields to the Es Sider terminal in the east of the country. That work had been expected to last one week but has been completed earlier than scheduled.

By James Keates

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04/11/24

Mexico GDP outlook dims in October survey

Mexico City, 4 November (Argus) — Private-sector analysts have again lowered their projections for Mexico's gross domestic product (GDP) growth this year, with minimal changes in inflation expectations, the central bank said. For a seventh consecutive month, median GDP growth forecasts for 2024 have dropped in the central bank's monthly survey of private sector analysts. In the latest survey conducted in late October, analysts revised the full-year 2024 growth estimate to 1.4pc, down from 1.46pc the previous month. The 2025 forecast also dipped slightly, to 1.17pc from 1.2pc. The latest revisions are relatively minor compared to the slides recorded in preceding surveys, suggesting negativity in the outlook for Mexico's economy may be moderating. This aligns with the national statistics agency Inegi's preliminary report of 1.5pc annualized GDP growth in the third quarter, surpassing the 1.3pc consensus forecast by Mexican bank Banorte. Inflation projections for the end of 2024 inched down to an annualized 4.44pc from 4.45pc, while 2025 estimate held unchanged at 3.8pc. September saw a second consecutive month of declining inflation, with the CPI falling to 4.58pc in September from 4.99pc in August. The survey maintained the year-end forecast for the central bank's target interest rate at 10pc, down from the current 10.5pc. This implies analysts expect two 25-basis-point cuts to the target rate, most likely at the next meetings on 14 November and 19 December. The 2025 target rate forecast held steady at 8pc, with analysts anticipating continued rate reductions into next year. The outlook for the peso remains subdued, following political shifts in June's elections that reduced opposition to the ruling Morena party. The median year-end exchange rate forecast weakened to Ps19.8 to the US dollar from Ps19.66/$1 in the previous survey. The peso was trading weaker at Ps20.4/$1 on Monday, reflecting temporary uncertainty tied to the US election. Analysts remain wary of Mexico's political environment, especially after Morena and its allies pushed through controversial constitutional reforms in recent months. In the survey, 55pc of analysts cited governance issues as the primary obstacle to growth, with 19pc pointing to political uncertainty, 16pc to security concerns and 13pc to deficiencies in the rule of law. By James Young Mexican central bank monthly survey Column header left October September Headline inflation (%) 2024 4.45 4.44 2025 3.80 3.80 GDP growth (%) 2024 1.40 1.46 2025 1.17 1.20 MXN/USD exchange rate* 2024 19.80 19.66 2025 20.00 19.81 Banxico reference rate (%) 2024 10.00 10.00 2025 8.00 8.00 Survey results are median estimates of private sector analysts surveyed by Banco de Mexico from 17-30 October. *Exchange rates are forecast for the end of respective year. Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Oil services upturn takes a pause for breath

04/11/24

Oil services upturn takes a pause for breath

New York, 4 November (Argus) — The boom in demand for oil field services is showing signs of wavering in the short term as international customers signal greater caution around spending and the outlook for US shale remains challenged. Upstream spending growth in the North American onshore market is expected to be flat in 2025, with low natural gas prices, drilling efficiencies and further consolidation among producers in the shale patch all exerting downward pressure. Given a mixed international outlook, one bright spot will be offshore markets, and deepwater in particular, according to investment management firm Evercore ISI. "The solid growth years of 2023 and 2024 are over as the cycle resets," senior managing director James West says. "We view 2025 as an aberration in a long-term, albeit slower, growth cycle." In the near term, the sector's attention will be focused on spending plans by top producers including state-run Saudi Aramco and Brazil's Petrobras, as well as any signs of a potential recovery in Chinese oil demand given the government's latest stimulus efforts to kick-start growth. The sector has had to contend with more than $200bn of shale mergers and acquisitions over the past year, which has shrunk the pool of available customers, and led to oil field services providers beginning their own round of consolidation. Moreover, with capital discipline remaining the rallying cry, significant productivity gains have enabled producers to do more with less. Its immediate challenges were put into stark contrast this week by oil's renewed plunge, this time on the back of Israel's decision to spare Iran's energy infrastructure from retaliatory strikes. SLB, the biggest oil field services contractor, has attributed recent price volatility to concerns over an oversupplied market owing to higher output from non-Opec producers, as well as questions over when the cartel will return barrels to the market and weak economic growth. That spurred some customers to adopt a "cautionary approach" when it came to activity and spending in the third quarter. Gas to the rescue But SLB remains upbeat over the long-term outlook, given the current emphasis on energy security, a key role for natural gas in the energy transition, and expectations that oil will remain a "large part" of the energy mix for decades to come. Gas investment remains robust in international markets, particularly in Asia, the Middle East and the North Sea. "While short-cycle oil investments have been more challenged, long-cycle deepwater projects globally and most capacity expansion projects in the Middle East remain economically and strategically favourable," SLB chief executive Olivier Le Peuch says. Exploration successes in frontier regions from Namibia to Suriname are also unlocking vast reserves that only serve to bolster confidence in the offshore market. Global offshore investment decisions will approach $100bn this year and in the next 2-3 years, adding up to more than $500bn for 2023-26, according to Le Peuch, representing a "growth engine for the industry going forward". Meanwhile, Baker Hughes expects to capitalise on a growing market for gas infrastructure equipment. The company forecasts natural gas demand will grow by almost 20pc by 2040, with global LNG demand increasing at a faster rate of 75pc. "This is the age of gas," chief executive Lorenzo Simonelli says. The top services firms see limited short-term growth prospects for North America, with the exception of the Gulf of Mexico. Hydraulic fracturing services provider Liberty Energy plans a temporary reduction in its fleet in response to slower customer activity and market pressures. And SLB says any potential pick-up in gas rigs could be offset by a further decline in oil rigs owing to efficiencies. By Stephen Cunningham Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Asian demand might cap WTI availability for Europe

04/11/24

Asian demand might cap WTI availability for Europe

London, 4 November (Argus) — Asia-Pacific refiners have increased their intake of US light sweet WTI crude for November loading and could remain keen buyers in December, potentially limiting supply for Europe. Asian refiners have bought around 1.3mn b/d of WTI loading in November, traders say, up from roughly 800,000 b/d loading in October, and surpassing average flows of 1.15mn b/d to the region this year. Arbitrage economics from the US to Asia are better than those to Europe at present, traders say. And firmer refining margins for naphtha-rich crudes in Asia-Pacific could prompt refiners to maintain high purchases of WTI in December. Asian buyers tend to seek WTI around two weeks before European refiners owing to the longer shipping times, affecting availability of the grade in Europe. European interest in November-loading WTI has been limited by refinery maintenance, exacerbated by an abundance of cheap light sweet crude in the region following the sudden restart of Libyan crude exports in October. The rebound in Libyan supply after a period of disruption pressured differentials for competing light sweet grades from the North Sea and Mediterranean regions. North Sea Forties and Ekofisk and Algerian Saharan Blend fell to their lowest in at least two months against North Sea Dated in mid-October. At the same time, delivered WTI has been supported by high freight rates. Shipping costs to take an Aframax from the US Gulf coast to Europe were 62pc higher on average in October than in September, narrowing WTI's discount to North Sea light sweet crudes. Abundant and affordable WTI has tended to act as a cap on light sweet crude prices in the region. But the higher freight costs have meant that WTI has been one of the more expensive crudes in the North Sea Dated basket. WTI was at parity to light sweet Oseberg in early October, up from a discount of around $1/bl a month earlier. WTI has set the benchmark as the lowest-priced crude only six times in the past two months, compared with 26 occasions over the same period last year. But European demand for crude is expected to rebound in December, as regional refineries ramp up following autumn maintenance. Ekofisk has already added around 60¢/bl relative to WTI since mid-October, briefly moving from a discount to a premium to the US grade over 25-29 October. Any WTI supply tightness in the final weeks of the year, and continued firm demand in Asia, could limit WTI flows to Europe and support light sweet crude prices. Arbitrage effects For some Asia-Pacific refiners, a workable WTI arbitrage has helped pressure the price of alternative supplies. Indian refiner IOC opted to buy two cargoes of WTI in a tender which closed on 17 October instead of the west African crude it typically favours. The refiner bought a cargo of WTI each from US-based Occidental Petroleum and Japanese trading company Mitsui for delivery in December and January to the western port of Vadinar and eastern port of Paradip, market participants say. Lacklustre interest from Indian and European buyers, and plentiful light sweet crude supply, have since combined to pressure some Nigerian crude differentials, pushing them down by 20¢-$1.15/bl against North Sea Dated in October. This has helped reinvigorate demand and clear more November shipments on the eve of the December-loading cycle. IOC subsequently bought a shipment each of Nigerian Agbami from Chevron and Angolan Nemba from an undisclosed seller in a tender which closed on 24 October. But up to a dozen November-loading Nigerian cargoes remained unsold as of 29 October, according to traders. By Lina Bulyk Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Opec+ delays supply return for one month

03/11/24

Opec+ delays supply return for one month

London, 3 November (Argus) — Eight Opec+ members that were due to begin raising crude output from December have opted to delay the restart by one month, the Opec secretariat said today, 3 November. The eight ꟷ Saudi Arabia, Russia, Iraq, the UAE, Kuwait, Kazakhstan, Algeria and Oman ꟷ had already postponed, by two months, a plan to start returning supply, over concerns about worsening economic indicators, and in turn, weakening oil prices. With these concerns still very much live, the group has decided again to delay the start of a move that would have added 180,000 b/d to global supply in December. The eight "have agreed to extend the November 2023 voluntary production adjustments of 2.2mn b/d for one month until the end of December 2024," the Opec secretariat said. As was the case with the postponement in September, the secretariat did not give any explicit rationale for the move. This one month deferral means a decision about whether to start returning supply in January, or to delay again, will coincide with Opec and Opec+ group meetings that are scheduled to take place in early December. Delegate sources told Argus after the first postponement that its decision was also to allow some of the group's serial overproducers, namely Iraq, Russia and Kazakhstan, time to improve compliance with their pledged output targets. The secretariat today again made a point of underlining the wider group's "collective commitment to achieve full conformity," with a focus on those three countries. Benchmark North Sea Dated crude was assessed by Argus at $73.48/bl on Friday, 1 November, around $20/bl below where it was before Opec+ announced its initial output cut in October 2022. The alliance has reduced output by 4mn b/d since then, Argus estimates. Much of the oil price weakness is down to an increasingly gloomy demand outlook, primarily driven by worse-than-expected consumption growth in China. Global oil supply is also higher than Opec+ would prefer — including from its own overproducers — and is due to rise further, with the US, Guyana and Canada driving gains. The IEA forecasts a supply surplus of more than 1mn b/d in 2025, even in the absence of any increase from Opec+. By Nader Itayim and Bachar Halabi Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

TMX exports reach new record in October

01/11/24

TMX exports reach new record in October

Houston, 1 November (Argus) — Crude exported via the 590,000 b/d Trans Mountain Expansion (TMX) pipeline reached a new high in October at 413,000 b/d. TMX loadings out of Vancouver were up by 103,100 b/d from September and surpassed the previous record of 368,800 b/d in August by 12pc, according to data by analytics firm Vortexa. The exports loaded onto 24 Aframax tankers, up from an average 20 per month, according to Teekay Tankers in an earnings call. Of those 24 Aframaxes, nine went directly to Asia-Pacific ports while at least four went to the Pacific Area Lightering zone (PAL), where the vessels discharged onto very large crude carriers (VLCCs) for Asia-Pacific. The rest traveled to ports along the US west coast. China overtook the US west coast as the largest importer of TMX crude in October, increasing its loadings from 139,900 b/d in September to 208,300 b/d, or over 50pc of the total volume. A record amount of TMX crude still departed for the US west coast in October at 204,700 b/d, up 20pc from the prior month. Future imports into the region might be stifled in the short-term, with US independent refiner PBF planning to run less TMX crude during the fourth quarter amid higher prices and ongoing maintenance on equipment used to remove impurities from heavy sour crude, like the grades exported from TMX. Long-term, TMX transportation rates could become more economical for California refineries, PBF said in its third quarter earnings call. Canadian high-TAN crude fob Vancouver averaged a roughly $11.35/bl discount to December Ice Brent in August, when October cargoes were trading, while heavy sour Cold Lake averaged a roughly $10.60/bl discount. By Rachel McGuire Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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