Posts

Oil Production; Summary of Main Oil News this week

, ,

Russian energy ministry and output cut talks

The main official of Rosneft, Igor Sechin, said on Saturday that the Russian energy ministry had his backup in discussions over oil production cuts.

“The most important thing is to have a mechanism to defend our interests.”

In previous months, Sechin has expressed some suspicions about the ability of the OPEC. And its power to influence oil markets amid a shale oil production boom in the United States.

The countries: Oil producers, including OPEC and non-OPEC; agreed to cut output for 1.8 a day. This decision dates from last year, and will be active till June the 30th. It aims to reduce global oil inventories.

The Oil producing countries will meet later this month in Vienna, to discuss a possible extension of the deal.

 

Georgia nuclear plant construction (Southern Co)

Georgia Power and Westinghouse decided to transfer the Project management of Georgia nuclear power plant expansion, to Southern Co.

 

The temporary agreement until June 3 will allow construction of the plant expansion to continue.

Westinghouse Electric Co filed for bankruptcy in March, was hit by billions of dollars of cost overruns. At four nuclear reactors under construction, including at the Georgia project and another in South Carolina.

The Georgia project is owned by a group of utilities led by Southern Co.

Gasoline in India

Firstly, the gasoline consumption growth has been slowing since the middle of 2016, after rising for the previous two years.

Secondly, observing the last 9 months we see that consumption growth for most other fuels used for cooking and transportation is also slowing down.

 

Based on the current data, demand for liquefied petroleum gas and kerosene used for cooking, heating and lighting as well as diesel used for transport; all show signs of leveling off or falling in the first four months of 2017.

These trends maybe come from the demonetisation of large-denomination bank notes in India. They were announced at the start of November as part of the government’s anti-corruption campaign.

 

Crude Oil prices Impact:

 

Rising crude oil and refined fuel prices over the last year are also likely to have constrained the growth in consumption and other fuels.

Observing the retail gasoline prices, we note that they rose by around 10 percent between January 2016 and January 2017. While diesel prices climbed by almost 8 percent. (Ministry of Petroleum and Natural Gas)india

India’s middle class is pretty sensitive to increases in prices & costs, so they are curbing a demand for Oil. Their middle class, urban as well as rural, is emerging very fast.

Nevertheless the recent slowdown in consumption growth for gasoline and other fuels, it is too early to determine if the deceleration is temporary linked to demonetization and price rises or something more lasting.

India as a source of oil demand:

Noteworthy, India has been one of the most important sources of oil demand growth during the cuts. So any extended slowdown in consumption growth, would make the mission of global market harder. The rebalancing will be way more complicated.

 

/0 Comments/by

Base metal prices keeping a downward trend (info & data)

,

Important to know of Today’s market:

  • European CB President Mario Draghi Speaks
  • Bank of Canada Governor Poloz Speaks
  • UK Services Purchasing Managers Index rose to actual 55.0 (forecast was 53.3)

For more info: https://www.investing.com/

 

LME Today:

All base metal prices on the London Metal Exchange humbled today in morning trade, May 4. After a significant sell-off on Wednesday that saw copper prices down 3.7% and nickel falling 3.3%.

Three-month copper price fell further this morning as it began trading below $5,600 per tonne. Nickel price fell additionaly $150 per tonne. All other base metals saw a slight decline.

Metal Bulletin senior analyst, William Adams, said:

“The battering the base metals suffered on Wednesday has poured cold water on last week’s attempted rebounds and has opened the way for more price weakness, especially in the case of nickel where prices have dropped to levels not seen since June last year.”  (Metal Bulletin)

Copper inventories on the LME have risen by over 60,000 tonnes over the last two days.

 

Copper below $5,600/t

On Wednesday, the LME copper price plummeted by over $200 per tonne at the close of trading. Three-month copper price is down $39.50 to $5,560.50 per tonne.
Copper inventories up 32,925 tonnes to 317,850 tonnes, with 29,275 of this in Busan. It follows a rise of 31,250 tonnes yesterday.

  • Reuters wrote that German copper products group Wieland will be acquiring the copper and steel tube business Wolverine Tube as part of its plans to expand internationally.

Workers at PT Freeport Indonesia still continuing with the one-month announced strike. They are persistent & not giving up their ideas. This is reducing the copper outputs. And will surely lead to lower supplies.
 

Other base metals fall

Three-month aluminium price fell $12.50 to $1,911 per tonne.  Stocks declined 1,175 tonnes to 1,609,925 tonnes. 

“Held well against yesterday’s sell off, trading in a $19 range (vs copper that spanned $196) with evidence of consumer buying via the spreads market. Light turnover in comparison to the copper and nickel.” (F.M.)
Nickel plunged another $150 to $9,080 per tonne. Yesterday nickel prices declined $285.  Inventories were up 30 tonnes to 380,502 tonnes.
The 3month zinc price fell $26.50 to $2,548.50 per tonne. Inventories for zinc fell 2,250 tonnes to 342,475 tonnes. Glencore’s zinc production rose 9% y-o-y, with the company adding that it currently has no plans to restart idled capacity in Australia and Peru.
Lead started trading today at $2,167.60 per tonne – a decline of $34.50 on yesterday’s close. Stocks were up 5,550 tonnes to 174,250 tonnes.
The three-month tin price decreased just $60 to $19,830 per tonne as it consolidates around the $19,800-19,900 mark.
Tin stocks on the LME fell to the lowest recorded since 1980 yesterday. Stocks declined a further 35 tonnes today and currently stand at 2,630 tonnes. (Numbers from Fast Markets)

Finishing

Metal Bulletin wrote an article on data about: Spanish unemployment, services PMI across Europe, data on UK lending, EU retail sales and a host of US data including: Challenger job cuts, initial jobless claims. Also non-farm productivity, labour costs, the trade balance. Paying attention to factory orders and natural gas storage. There’s many going on today, it will also be a challenging trade for next few days.

/0 Comments/by

SHFE morning report; weaker U.S. and Chinese data

Important Facts about Today’s Market:

 

  • New Zealand Employment Change QoQ rose to actual 1.2% (forecast 0.8%)
  • Germany Unemployment Change – 30K actual (forecast -10K)
  • UK Construction Purchasing Managers Index (PMI) fell to actual 52.2(forecast 52.4)
  • The US ADP Nonfarm Employment Change to actual 263K (forecast 187K)
  • Also US ISM Non-Manufacturing PMI fell to 55.2 (forecast 57.0)
  • US Crude Oil inventories to -3.641M while exp. was -1.661M
  • FED Statement & FED Interest Rate Decision

 

SHFE

 

Base metals today on the Shanghai Futures Exchange were broadly lower during Asian morning trade, as desolate economic data from China and the USA weighed on market sentiment.

US Car sales

Firstly, under-performance in US car sales during April combined with China’s weaker PMI data has left market participants concerned over weaker economic growth in these two countries, according to a Shenzhen-based senior analyst. 

Secondly,the perceived weakness has dampened market sentiment and sent the base metals prices into retreat this morning.

“Prices drifted lower as investors fretted about weaker than expected manufacturing activity in China. Metals also fell as US carmakers reported steeper-than-expected US sales declines, suggesting demand will be weaker in that region.”

Thirdly, sales at all six of the biggest automakers in the USA fell again in April, with each company’s figures coming in below analysts’ estimates resulting in the fourth consecutive month of falling sales in aggregate, according to National Australia Bank (NAB). (Metal Bulletin)

“On Monday, March US personal spending figures disappointed (0.0% compared with 0.2% expected) and now the new drop in car sales confirms the view that not all is well with the US consumer. The recent soft US data releases are challenging the view that a rebound in activity should be expected in [the second quarter].”

 

China

Meanwhile, China has also had its fair share of disappointing data this week.

Following, China’s official NBS manufacturing PMI fell to 51.2 in April from 51.8 in March and below market expectations of 51.6, while the country’s non-manufacturing PMI also dropped to 54.0 in April from 55.1 in the previous month. Additionally, China’s Caixin manufacturing PMI fell to 50.3 last month from 51.2 in March.

“These three numbers taken together point to the same issues, that there is a slowdown in new domestic orders, export orders are falling, there is rising unemployment and a fundamental weakening in business confidence. Also, looking at the extreme, we may have to face the fact that the Chinese economy may be starting to embrace a downtrend,” Bands Financial Ltd said on Tuesday.

 

Copper price dips

SHFE June copper contract stood at 46,610 yuan per tonne as of 03:48 London time. Down 180 yuan compared with the previous session’s close.

“Tightened credit in China during April will continue to put pressure on copper prices,” China’s Galaxy Futures said on Wednesday.
After suffering a mild downturn in April, copper is facing more headwinds going into May, according to INTL FCStone Inc analyst Edward Meir.
“The market finds itself in somewhat of a soft spot going into [the second quarter] given that the big events driving values higher last quarter, namely the Escondida and Grasberg outages, are now behind us and the next wave of labour negotiations will not take place until later this year,” Meir said. (M.B.)

In conclusion, workers at PT Freeport Indonesia have continiued a month-long strike. At the world’s second-largest copper mine Grasberg. The strike is expected to hinder expansion plans at the mine.Strikers are persistent, it is the 3rd day of protests.

 

 

 

/0 Comments/by

Small price increases for LME base metals; only zinc declines (27.04.)

,

Another morning of wispy price increases today, on the London Metal Exchange. Following average gains of 0.8% on Wednesday.

Zinc was the only base metal to see a decline this morning, falling just $2 per ton. All other metals recorded small increases.

Copper prices were followed by the news that major copper producers BHP Billiton, Freeport-McMoRan and Antofagasta had lowered their production forecasts for 2017 due to operation disruptions. The three-month copper price continued to rise, currently trading at $5,719.50 per ton.

Nickel hit its lowest since June 2016 at the kerb of trading yesterday, but rose $40 per ton during premarket trading this morning.

“On balance, we remain mildly bullish for the base metals’ fundamentals but volume on the LME remains low, so it may take a pick-up in volume before prices become more directional again.” (Metal Bulletin senior analyst William Adams.)

Copper price rallies

 

  • The three-month copper price rose by $4.50 to $5,719.50 per ton – this is the fourth day in a row the copper price has increased.
  • Inventories fell 900 tons to 260,575 tons, a fifth consecutive day of decline. 
  • Sucden Financial noted in its Q2 metals forecast: “Supply disruptions [for copper] and labor disputes will have the potential to squeeze prices higher still and, with macro tailwinds suggesting robust demand growth, we expect prices to trade on the floor at around $5,550 per ton.”
  • BHP Billiton has cut its copper production guidance for the 2017 financial year again due to the 44-day long strike at its Escondida mine during the quarter ending March 31, following a 2% reduction on its guidance in the fourth quarter last year.
  • Rio Tinto has also revised its 2017 copper production guidance downward after reporting a 37% decline in first quarter copper output due to the significant impact of the strike at Escondida and the production curtailment at Freeport’s Grasberg.

All other base metals rise; Zinc decline

The three-month aluminium price continued its premarket trend of the week with a small increase. It rose $5.50 to $1,969.50 per ton.

Aluminium stocks fell again, but by the smaller margin that we have recently been seeing; they dropped just 3,925 tons to 1,652,200 tons.

Nickel rose $40 to $9,265 per tons, as it tries to recover from freefalling prices over the last few days. Nickel stocks were down 336 tons to 379,002 tons.

Zinc was the only metal to see a price decline. The three-month zinc price fell $2 per ton to start trading at $2,624 per ton.

The three-month lead price saw an increase of $6 to $2,191 per ton and Inventories fell 350 tons to 165,400 tons.

Tin rose $10 to $19,910 per ton, and it looks to bounce back above the $20,000 per ton mark. Stocks for tin fell 10 tons to 3,020 tons.

Currency moves and data releases

  • The dollar index was up 0.01 to 98.96.
  • In other commodities, the Brent crude oil spot price was down 0.62% to $51.13 per barrel.
  • The UK FSTE 100 was down 38.22 (0.52%) to 7,250.50.
  • In data, US crude oil inventories saw a decline of 3.6 million. The stronger-than-expected decline is crude oil inventories is boosting oil prices, which in turn exerts upward pressure across the metals complex.
  • The Gfk German consumer climate for April was 10.2, up on the previous rating of 9.8. The Spanish unemployment rate for Q2 of 2016 was 18.8% – higher than the forecasted 18.6%.
  • The economic agenda is busy today with a host of US data out, including on core durable goods orders, unemployment claims, goods trade balance and pending home sales.

 

/0 Comments/by

North Korean missile test failed. Oil falls after

14 Apr 2017 LME/COMEX/NYMEX Closed for Good Friday LME/COMEX/NYMEX
17 Apr 2017 LME Closed for Easter Monday LME

 

Friday, as well as Monday are holidays for LME. Friday was holiday for all the stock exchanges, while LME is not open yet. Tomorrow is the first Post-holiday working day.

Post Easter Holiday News

 

Monday. After the three-day Easter break, crude oil felt in trading. The United States is continuing to add output. As well as that, they are undermining OPEC effort to support prices. Also, as the market digested North Korea’s failed missile launch on Sunday.

In the beginning, benchmark “Brent crude futures were down 49 cents at $55.40 at 0310 GMT. On Thursday, before the break closed most major markets, they settled up 3 cents at $55.89 a barrel.”

Reuters: “West Texas Intermediate crude futures were also down 47 cents at $52.71 a barrel. They rose 7 cents to $53.18 on Thursday. Both benchmarks last week rose for a third consecutive week. With Brent adding 1.2 percent over the four days before the Good Friday holiday and WTI up 1.8 percent.”

 

Markets

 

Markets were subdued to start this trading week. The major trading center in London is closed for holiday even on Monday (today). Following, markets feel pressure and more geopolitical tensions over North Korea. Sunday they launched a ballistic missile, which has failed because it blew up immediately.

“The United States is working with allies and China on responses to the failed test! ” (D.T.’s security adviser said on Sunday.)

As a sign that output gains, crammers in the U.S. added rigs last week for a 13th consecutive week.

 

“They added 11 oil rigs in the week to April 13, bringing the total count up to 683.” (Baker Hughes, Energy services firm said.) That is the highest in about two years. <RIG/U>

 

US act

 

United States is constantly irritating OPEC with its increasing outputs. In the meantime, they are also irritating other major oil producers who made a deal to cut outputs. Curbing output sustains a rally in prices in a market that has been oversupplied since 2014.

“U.S. crude oil production has climbed to 9.24 million barrels per day. (EIA data). That makes the U.S. the world’s third-largest producer after Russia and Saudi Arabia.”

“Non-OPEC compliance will improve over the next two months with Russia driving the largest reductions in volume terms.”( BMI info)

“Kazakhstan is likely to continue to exceed its quota given strong output from the Kashagan field.”

 

 

/0 Comments/by