Oil Market - Macro View March 6

[dan_s]

https://www.investing.com/analysis/the- ... -200177921

From John White at Roth Capital 3/6/2017:

On Friday, 3/3/2017, Reuters reported an armed faction had entered two major Libyan oil ports, pushing back forces that captured and reopened the terminals in September, officials and residents said. The move risks increasing the fighting around the ports and casts new doubt over Libya's attempt to revive its oil production. The terminals at Es Sider and Ras Lanuf are two of Libya's largest, with potential combined production capacity of about 600,000 b/d. It was unclear late on Friday to what extent the faction that attacked, the Benghazi Defense Brigades (BDB), had gained control over the area. There was no statement from the Libyan National Oil Corporation (NOC) in Tripoli, which restarted operations at the ports after the eastern-based Libyan National Army (LNA) took them over seven months ago. < My Take: Libya is a mess and it will remain that way for a long time.

On Tuesday, 2/28/2017, Saudi Arabia said it wants crude oil prices to rise to around $60 a barrel this year, sources from OPEC countries said, as Reuters reported. This is the level the OPEC heavyweight and its Gulf allies - the United Arab Emirates, Kuwait and Qatar - believe would encourage investment in new fields but not lead to a jump in U.S. shale output, the sources said. OPEC officials have repeatedly said the group does not target a specific oil price and their focus is on drawing global oil inventories and helping the market to re-balance. But behind closed doors, Riyadh and its Gulf OPEC allies hope to see a higher level because the low price has pressured their finances and stoked fears of a future supply shortage. < My Take: It is ALWAYS about the money, even when they say it isn't.

Also on Tuesday, 2/28/2017, Reuters advised that Kurdistan has agreed to new deals to borrow $3 billion from trading houses and Russian state oil firm Rosneft (ROSN-NC) that will be guaranteed by future oil sales to strengthen its fiscal position as the semi-autonomous region fights the Islamic State. Kurdistan's natural sources minister Ashti Hawrami told Reuters the new deals had been concluded in recent weeks. Trading houses have been pre-financing Kurdish oil exports for the past two years after the government in Erbil decided to start independent oil exports via Turkey's Mediterranean terminals. Rosneft said last week it would join them. Kurdistan says it needs to export oil independently as Baghdad has not paid Erbil its budget share just as the region needs money to fight Islamic State and host Syrian refugees.

On Friday, 3/3/2017 the Pawnee Nation filed a lawsuit in tribal court in Oklahoma against 27 oil and gas producers, seeking damages for an earthquake they said was caused from man-made activity related to hydraulic fracturing. The Native American group claimed that wastewater injected into disposal wells helped trigger a 5.8 magnitude earthquake in September, the strongest on record in the state, that damaged several Pawnee Nation buildings, including several that are more than 100 years old. < My Take: Oklahoma needs the money and will NEVER to anything to shut down the oil & gas business in that state. How do you prove what caused an earthquake?

[dan_s]

"Natural gas is getting a boost from some return of winter weather and a drop in U.S. rigs drilling for gas last week. Natural gas rigs fell five to 146 in the past week raising concerns that the low price of gas will lower output. That comes as demand for natural gas is rising. You might not know it because the warm winter has masked the growing structural shortage in this market. Natural gas is still a bullish accident waiting to happen." - Phil Flynn 3/6/2017

As I have been trying to tell EPG members for months in my weekly podcasts - winter weather related demand for natural gas is just one of the parts of demand. Industrial demand, exports and demand for power generation are all increasing. The U.S. natural gas market is going to be much tighter this summer than it was a year ago.