Dakota Pipeline definitely starts working May the 14th

The decision is made

Firstly, there is an interesting notice, that access pipeline in Dakota is about to start servicing the country. It will happen on interstate level by May the 14th. “It will begin interstate crude oil delivery. In a deal made with the U.S. Federal Energy Regulatory Commission.”

Yesterday, Thursday the 13th of april, energy transfer partners LP filled a tariff. In mentioned tariff it is clearly seen what the story is about. The Pipeline and the oil are going to be delivered, and prices are going with the current conditions.

https://www.enbridge.com/Projects-and-Infrastructure/For-Shippers/Tariffs/North-Dakota-Pipeline-Company-Tariffs.aspx

 

 

Location

The 1,172-mile (1,885-km) Dakota Access line runs from western North Dakota to Patoka, Illinois.

Following, this project is worth 3.8 billion dollars, and it gained world’s attention. Yet, it happened because the Native American tribes consider this oil will damage their soil. So they sued to block completion of the final link for the pipeline through a remote part of Norh Dakota.

While The Rock Sioux tribe is claming the pipeline would desecrate a sacred burial ground, it is also stating any oil leak would poison the tribe’s water supply.

Following, thousands of protestors were demonstrating on the streets of North Dakota and Washington D.C. Many of them were stating the support for the tribe considering it is very important. Considering this soil pollution is a real problem for Native’s everyday life & also questioning this projects + and – parts. For example many opponents were saying assertiveness on the pipeline, and the petroleum it was intended to carry would lead to a serious climate change.

Obama/Trump Solutions

The administration of Democratic President Barack Obama said in 2016: ” We would reconsider the permits issued for the pipeline’s route near tribal lands”, delaying the project by several months. The question is, what is beeing achieved whit the delayed project? We have the awareness that every big investment contains god and bad sides. It will make money, but it will also soil the ground. True story, it just needs to be counted: Which of these is worth more?

But Obama’s move was quickly beeing reversed after the inauguration of Republican President Donald Trump in January.

Among Trump’s first acts in office was to sign an executive order that reversed a decision by the Obama administration to delay approval of the pipeline.

 

 

 

The tribe also lost several lawsuits aimed at stopping the pipeline.

Specifications about North Dakota Pipeline

It begins in the Bakken oil fields in Northwest North Dakota. It is set to travel in a more or less straight line southeast. Through South Dakota and Iowa. And end at the oil tank farm near Patoka, Illinois. Routing the pipeline across the Missouri River near Bismarck was rejected. It happened because of the route’s proximity to municipal water sources. Residential areas; and road, wetland, and waterway crossings. The Bismarck route would also have been 11 miles longer.

MAY the 14th, 2017 is the date when Pipeline will definitely start its interstate delivery. As mentioned earlier it will prove itself as a profit gaining investment.

 

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Global OIL market nears balance even as stocks go up

 

 

Global OIL Demand

In the beginning, after nearly three years of surplus production, global demand for oil is finaly close to run out. Non counting the growth in the overhang of unused crude oil.

International Energy Agency said that in March, oil stocks in OPEC fell by 17.2 million barrels per day. “Over the first three months of the year, stocks were up by 38.5 million barrels, or 425,000 barrels per day (bpd), after a large increase in January.”

Yet, OECD stocks fell by 8.1 million barrels in February. To 3.055 billion barrels as demand outpaced supply to the tune of around 200,000 bpd between January and March.

Stocks are still 330 million barrels above the five-year average.

Inconsistency Reasons

 

There are several possible explantions for the inconsistency. For example, demand is overstated or the supply is understated in the estimates. On the other hand, explanation lies with “less visible” stocks, inclouding stocks held at sea. That stocks held at the sea can be either in transit or for speculative reasons. And they can also be on land, but outside the OPEC countries.

“Indeed, a look at data from various sources shows stocks drawing in some non-OECD countries over (the first quarter of 2017). Non-OECD stocks are thought to be roughly equal in size to OECD volumes, but there is far less data available about them.” As the IEA info shows.

“The net result is that global stocks might have marginally increased in the first quarter, versus an implied draw of about 0.2 million barrels per day”

We have an interesting second half to come…

 

Global Level

 

Looking at the global level, oil held offshore fell to 58.4 million barrels in March. It started from 82.6 million barrels at the end of 2016. Iranian offshore stocks also fell to 4 million barrels in March. It has started from 28 million barrels when sanctions were lifted in early 2016.

“In other words, the full extent of the production cuts has not hit yet,” Bernstein said.

The price of oil LCOc1 has increased to around $56 a barrel. It went from a 13-year low of $27 hit in January last year, which has encouraged a raft of new supply.

For the second half of 2017, the IEA expects non-OPEC supply to rise by 485,000 bpd, above its previous estimate of 400,000 bpd. The one of main reasons would be led by increases in U.S. production growth.

Indeed, although the oil market will likely tighten throughout the year, overall non-OPEC production, not just in the U.S., will soon be on the rise again.

Oil market is a volatile, very interesting market to work on. Especially when it comes to predicting possible trends based on the geopolitical activities around the world.

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RUSSIA BETS ON INTENSIFYING GOLD OUTPUT IN 2018 (Oymyakon)

 

The coldest place in Russia

In one of the coldest spots on earth, Oymyakon district of the Republic of Sakha in Russia, it is believed that gold outputs will very soon rise.

Yakutia (Oymyakon) in winter gets so cold that metal actually snaps. In the beginning, it gives an opportunity to examine the field and extract as much as gold as possible. When the weather is warmer people make a living by dredging the soil. Where they are finding slight amounts of gold.

Yakutia region is unusually rich with gold , but the surface is alluvial. That makes the process of digging gold really expensive. The extraction is done by alluvial mining. The process with digging mines which extract the gold ore from the surface will be the primar way to extract gold in 2018.This process is called HardRock mining.

First Two Ore Mining Capacities

 

Production at the first two mines is to be opened in a few months. That would be the first production there since the fall of the Soviet Union. One is being launched by GV Gold. With U.S. fund BlackRock and the European Bank for R& D among its shareholders, and another by the locally-owned Yantar group.

These non-native producers are opening mines in Yakutia, to help Russia keep its place. Russia is the worlds 3rd biggest gold producer. After China and Australia, and ahed of the U.S, who are in 4th place.

“It is always hard to move away from old traditions but all regions nearby… have already gone through it,” said Elena Andreyeva, who is a chief ore mining geologist at Yantar.

Market global gold prices are now $1,285 per ounce in London, down by around a third from their peak in 2011.

As Russian currency has also fallen, it makes the foreign investments way more attractive . Especially in the area dependent on gold. Also for the bulk of local revenues and the fact that it will be a challenging place to work.

Direct flights from Moscow to the main village of Oymyakon district do not exist. Yet it is possible that will soon change. Oymyakon is located 9300km east of Moscow. Temperatures there often fall below 50 Celsius.

The area Is so cold, that some locals have heated garages in order to keep their vehicles alive. If they go out in winter, they keep their engines running at all times so they don’t seize up.

Locals call it “the Pole of Cold.” The district claims the title of the coldest continually-inhabited settlement in the northern hemisphere.

The area was home to Soviet Union prisoners. They were made to pan the gold from local rivers with bare hands.

 

RETURNS

As a proportion of national gold production, alluvial gold has fallen to around 30 percent from 83 percent twenty years ago, according to the Russian Gold Industrialists’ Union.

In Oymyakon it is also declining. Still it accounts for the bulk of 9 tonnes of gold the district produced in 2016 when Russia produced a total 297 tonnes.

GV Gold’s new plant will start production in May. It is expected to produce up to 3 tonnes of gold a year. Including gold-bearing concentrate. GV Gold has put in $113 million for the first stage of investment in the mine, which will become the third of its type in the area.

 

“This would be the biggest gold mining and processing plant in the Oymyakon district,” said Alexander Tuluptsov, chief executive of the Tarynsky plant, told Reuters.

He expects GV Gold to see a return on its investment within five to six years.

Yantar’s Khangalas plant, located few kilometers away from the area of Oymyakon, will start operating in 2018. It should produce up to 1 ton of gold a year, including concentrate.

Nowadays, Yantar’s other alluvial gold production Producers first offer the gold to the Russian central bank and some of the surplus is exported. Russia exported around 30 t of gold last year, mainly to Europe, China and India, according to Russia’s Gold Industrialists’ Union. Which was 2.3 t in 2016, and this year it plans to produce around 1.8 t.

 

BLOOMING OUTPUT

 

“Hardrock mining is more stable and profitable and less dependent on weather and logistic issues than alluvial mining,” said Mikhail Leskov, director for mining practice at American Appraisal Russia.

Some other gold-ore mining projects will come on tap soon. Amongst them, Polyus, Russia’s largest gold producer has inspiring plans. It will commission its largest eastern Natalka gold deposit by the end of 2017. Ore mining has advantages over the seasonal alluvial mining. It is less related to weather, climate changes, and all the factors of nature.

Despite still beeing some way behind China’s 453.9 and Australia’s 298 tonnes of gold production last year, the new mines should help Russia meet forecasts by the Gold Industrialists’ Union for an increase in output by 8 tonnes this year.

That will lead Russia to way better position in 2017, and surely prepare it for 2018. The year when the capacities of Oymyakon will rise world’s Gold supply, coming straight from successful Russian projects.

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Asia’s fuel demand stubmbles, after years of soaring growth

ASIA

 

The explosive growth of fuel consumption in Asia, is taking a downwards trend. Fuel consumption in Asia’s biggest economies is plummeting under the OPEC’s decision to end a global supply glut and lift prices.

 

First of all, Asia takes third place over the global supplies. Asia Is the worlds fastest growing region in oil consumption. Surely the insatiable fuel thirst has long been a core support for prices.

Yet some resources say that picture of buoyant growth in demand is crumbling.

“The signs of growing demand aren’t quite what they seem. Chinese fuel growth is at a three year low, Japanese fuel demand is down,” said Matt Stanley, a fuel broker at Freight Investor Services (FIS) in Dubai. “Considering the sheer volume of product available… sooner or later I think we could see some distressed sellers.”

http://www.nasdaq.com/markets/crude-oil-brent.aspx

Speaking about Brent Crude Oil, futures have risen by 5.5% this month to 55.75$ per barrel. As traders bet on a broader commodity market , risk is present. And there are also Middle East risk premium after the U.S. missile attack on Syria last week.

Top exporter Saudi Arabia this month lowered the price for its May. Crude for Asian customers by 30 cents versus Apri. And to a discount of 45 cents compared with the benchmark Oman/Dubai average. There remains an abundance of oil available to buyers. In conclusion, that abundance is more opaque& physical oil market is not as convinced by the rally in financial markets.

 

CHINA AND INDIA GASOLINE EXPORTS

 

China’s gasoline exports in February climbed to their second-highest monthly level on record. As refiners increasingly turned to exports to Asian markets to drain a domestic supply glut. A glut that almost wiped out imports altogether.

In India also, which is not rarely considered as the next driver of global demand growth, fuel consumption fell 0.6%. In comparison with March from a year earlier.

“The stutter in Indian demand may have been caused due to the effects of demonetization,” said Sukrit Vijayakar, director of energy consultancy Trifecta.

 

Especially relevant, India abolished existing 500 and 1000 rupee notes last year, which made up the mush of the country’s cash in circulation.

India’s annual fuel demand is still expected to grow this year. But it is unlikely to recover enough to fully offset the demonetization impact.

K.Surana, chairman of Hindustan Petroleum Corp, said: “I expect India’s fuel demand to rise by 5.5 to 6 percent this year.” Though that is still a high growth rate by global standards, it is a far cry from 2016’s refined product demand growth of more than 10.9 percent.

 

POPULATION FALLING

Analysing the other major Asian oil buyers, their terminal also declines. For example South Korea and Japan face major demographic problems. Low birth rates, and an aging population. A Japaneese government agency predicted that before 2065 population will fall by nearly a third.

Improving fuel efficiency and the long-term picture for oil producers trying to sell to Japan, appears to be bleak.

“Because of structural factors such as the improvement of vehicle fuel economy, domestic demand has been weakening… and that is continuing.”

Japan’s oil demand is expected to fall by more than 1.5 percent per year on average over the next five years, forecasts by the government’s energy committee show.

In South Korea, oil products demand fell by 0.4 percent in January-February from a year earlier, according to data from Korea National Oil Corp.

“This year’s overall domestic oil products demand growth is expected to slow,” said Lee Seung-moon, a research fellow at the state-run Korea Energy Economic Institute.

The longer-term trend in South Korea is similar to that in Japan. Aging population, rising efficiency, and alternative fuels are making a fuel market fuss.

 

IS THERE AN END TO GLUT?

In the beginning, Goldman Sachs wrote in a note to clients on Wednesday that its long-term forecast for benchmark U.S. crude is $50 per barrel versus the current price of $53.08 per barrel.

Other data shows that global oil supplies on average exceeded demand by 680,000 bpd in 2016. And that 2017 will still see oversupply, albeit of less than 100,000 bpd, excluding stored oil.

Lots of fuel remains stored on tankers. Which are in Asia’s oil trading hub around Singapore. Eikon data shows that around 20 supertankers are currently sitting offshore Singapore and southern Malaysia, filled with oil.

While this is slightly lower than a month ago, it is a sign of continuing oversupply.

Keeping oil on tankers is only profitable if fuel prices for future delivery are significantly higher than those for imminent discharge.

Yet the forward price curve for Brent crude futures, shows only a slight increase of 90 cents in prices between now and a peak in November, at $57.20 per barrel.

“That’s not enough to make it profitable to store oil on tankers..” said an anonymous ship broker.

What’s worse, Brent prices start falling from November onward, back toward $56 a barrel for delivery toward the end of 2018 and into 2019.

Such a price curve, “makes it commercial suicide to store oil on tankers, so the only reason to do that is if you have nowhere else to put it,” the broker added.

 

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