Oil prices look set to see their largest weekly decrease since July
Indian Observer Post
London, September 8th, 2018: The Oil prices are set for their largest weekly loss since July, due to fears of emerging market contagion and some bearish data from the EIA, reports oilprice.com in its weekly report published on Friday.
According to https://bit.ly/2MbiREq, the Crude oil prices fell sharply this week after the EIA revealed a surprising build in gasoline inventories, suggesting that peak summer driving season has come to a close and could usher in a softer period of demand. The news overshadowed a strong decline in crude oil inventories.
According to a report by Tom Kool, Saudi oil exports to the U.S. jumped above 1 million barrels per day last week (four-week average) for the first time since 2017, according to EIA data. Shipments are also up 250,000 bpd compared to May, perhaps an indication that Saudi Arabia is responding to political pressure from the American lawmakers.
Transocean (NYSE: RIG) announced a move to take over Ocean Rig (NASDAQ:ORIG), a rival offshore drilling contractor, for $2.7 billion. The deal will give Transocean twice as many deepwater rigs and drillships as its nearest competitor, according to the Houston Chronicle. The acquisition is also a sign of the faith that Transocean has in the growth of the offshore drilling sector (more below), which has lagged onshore shale, for instance. "Adding Ocean Rig's premium assets to our industry-leading fleet ... better positions us to capitalize on what, we believe, is an imminent recovery in the ultra-deepwater market," Transocean President and Chief Executive Jeremy Thigpen said.
As the oil industry steps up offshore exploration, a recent report from the IHS Markit projects that global demand for mobile offshore drilling rigs will increase by 13 percent through 2020. IHS says there will be demand for an average of 521 rigs in 2020 up from 453 this year.
Saudi Aramco awarded Baker Hughes a major services contract to help boost production at the Marjan oil field. Saudi Arabia is aiming to boost production capacity by 1 million barrels per day by 2023 at a handful of offshore fields in order to offset declines from mature fields.
Energy Transfer Partners (NYSE: ETP), Magellan Midstream Partners (NYSE: MMP), Delek Group, (TLV: DLEKG) and MPLX (NYSE: MPLX) have decided to jointly fund the “Permian Gulf Coast Pipeline,” another major conduit that will connect the Permian to the Gulf Coast. The target in-service date is mid-2020. The announcement adds yet another pipeline to the mix – there are already several projects in the works to expand midstream capacity from West Texas.
The CEOs of Schlumberger (NYSE: SLB) and Halliburton (NYSE: HAL) admitted this week at an industry conference that they are seeing activity in the Permian slowdown. Pipeline constraints have not yet curtailed production growth, but the oilfield service companies, who are on the frontlines and have a good vantage point on drilling activity, have already felt the impact. “These challenges will likely have a dampening effect on production growth, wellhead prices and investment levels in the coming year,” Schlumberger’s CEO Paal Kibsgaard said at the Barclays conference in New York. Also, Kibsgaard said that the assumption that Permian production will grow at a 1.5-mb/d annual rate is “starting to be called into question.”
Tags:
Oil prices; Unexpected build in gasoline; Schlumberger’s CEO Paal Kibsgaard; Barclays conference in New York; Kibsgaard; Energy Transfer Partners (NYSE: ETP); Magellan Midstream Partners (NYSE: MMP); Delek Group; Permian Gulf Coast Pipeline; Gulf Coast; West Texas;
Representational Photo of Oil Rig Exploration: Courtesy Offshore Magazine