Monday, March 2, 2015

Brent down 4 percent on Iran, Libya; U.S. crude up on spread play

(Reuters) - Brent crude tumbled nearly 4 percent on Monday on speculation of a nuclear deal that could boost Iran's oil exports, and U.S. crude rose by almost 2 percent as traders bet the gap between the two would narrow.
Iranian Foreign Minister Mohammad Javad Zarif said a deal on Iran's nuclear programmer's could be concluded this week if the United States and other Western countries had sufficient political will and agreed to remove sanctions on Tehran.
Iranian oil exports have been restricted by sanctions for several years as the United States and Europe responded to Tehran's nuclear programmer's, although Iran says its nuclear plans are peaceful.
Analysts say Iran could increase its oil sales fairly quickly if sanctions were lifted and may eventually be able to raise exports by up to 1 million barrels per day (bpd). A Reuters survey last week showed Iran pumped around 2.8 million bpd in February.
Brent was also pressured initially by rising Libyan output and a firmer dollar that weighed on greenback-denominated commodities. [USD/]
In the case of U.S. crude, its advance versus Brent came after a smaller-than-expected build in the Cushing, Oklahoma delivery point, reported by oil services firm Genscape.
"The Genscape expectations for a slower rise in crude at Cushing and returning production in Libya reverses the dynamic in play last week when Brent was rallying on sensitivity to supply disruptions and big gains in Cushing inventories were weighing on U.S. crude," said Phil Flynn, analyst at Price Futures Group in Chicago.
Brent was down $2.32, or 3.7 percent, at $60.26 a barrel by 11:46 a.m. EST (1646 GMT).
U.S. crude rose 75 cents, or 1.5 percent, to $50.51.
Brent's premium to U.S. crude was at below $10 a barrel, after reaching above $13 earlier on Monday.

Oil falls more than 1 percent on dollar, supply concerns

(Reuters) - Oil dropped more than 1 percent on Monday, with Brent slipping to around $62 a barrel, depressed by a stronger dollar and a rise in Libyan crude output.
The U.S. dollar hit an 11-year high against a basket of currencies after a rate cut in Chinadented the Chinese yuan and also hit emerging Asian currencies. [FRX/]
Brent crude hit a low of $61.78 a barrel and was at $62.08 by 0910 GMT (4.10 a.m. EST), down 50 cents.
Front-month Brent jumped 18 percent in February, the largest monthly rise since May 2009. U.S. crude was down 55 cents to $49.21 a barrel.
Disruption to oil supplies from members of the Organization of the Petroleum Exporting Countries (OPEC) has helped support crude with lower output from Libya and Iraq in the first couple of months of this year.
But output from several OPEC countries may be recovering.
Libya's oil production has now recovered to more than 400,000 barrels per day (bpd), officials said.
"Libyan production is up and Iraqi exports are on the rise," said Tamas Varga, oil analyst at London brokerage PVM Oil Associates, saying crude markets were likely to fall further.
U.S. oil markets are particularly weak with a U.S. refinery strike denting demand for crude and domestic production still increasing, despite reports that the number of exploration rigs operating in North America is falling due to lower oil prices.
The number of oil rigs fell by 33 last week to 986, the smallest drop this year, a survey showed.
These diverging trends helped stretch the premium for Brent over U.S. crude to its widest since January 2014 on Friday at $13 a barrel.
Technical charts point to a further widening of the spread to $16.98 in the next three months, Reuters market analyst Wang Tao said.
"While we expect Brent prices to recover eventually, with our 2016 forecast at $60/bbl, we do not expect a V-shaped recovery from here," Barclays analysts said in a note.
"Prices will have to move lower first, to create a meaningful impact on supply reductions, before the market balances in the first half of the year."
A Reuters poll suggests oil prices have probably touched a floor and should recover in the second half of 2015 as the collapse in the market over the last year begins to curb production.

Sunday, March 1, 2015

Oil up sharply, posts first monthly gain since June

(Reuters) - Crude oil rose sharply on Friday as Brent and U.S. futures posted their first monthly gains since June, supported by an improving demand outlook and supply outages.
On its way to contract expiration, March New York ultra-low sulfur diesel (ULSD) gained more than 7 percent in volatile trading, and the 36 percent February increase was the biggest percentage monthly rise in 15 years.
Brent crude LCOc1 rose $2.53 to $62.58 a barrel. February's 18 percent gain was the biggest monthly percentage rise since May 2009.
U.S. crude CLc1 rose $1.59 to settle at $49.76, managing a 3.1 percent February gain.
Both Brent and U.S. futures briefly pared gains after Baker Hughes Inc (BHI.N) data showed its U.S. oil drilling rig count fell only 33 to 986 this week.
U.S. crude gains have been curbed by rising crude oil inventories in the United States, up 8.4 million barrels last week, according to government data. [EIA/S]
Money managers cut their net long U.S. crude futures and options positions in the week to Feb. 24, the U.S. Commodity Futures Trading Commission (CFTC) said Friday.
Both contracts have been supported by signs that lower prices are starting to reduce investment in non-OPEC production, even as the U.S. rig count slide slows.
Brent's more pronounced February gains have been fueled by disruptions to production and exports from Libya and Iraq.
"The main event this week has been the widening of the spread between Brent and WTI (U.S. crude)," said Ole Hansen, senior commodity strategist at Saxo Bank.
The spread between Brent and U.S. crude CL-LCO1=R was as wide as $13 a barrel on Friday, the highest Brent premium since January 2014.
Brent has also received support from strong U.S. refined products futures.
"Cold weather and refinery problems and tight supplies on the East Coast have helped make the ULSD contract the most sensitive part of the oil sector," said Robert Yawger, director for energy futures at Mizuho Securities USA in New York.
March ULSD HOH5 rose 16.31 cents to settle at $2.2989 a gallon, after reaching $2.3325, a 2015 peak and the highest since November.
March's premium HOc1-HOc2 to April HOJ5 ULSD swung from 22.35 cents a gallon to 37.69 cents on Friday.
March RBOB gasoline RBc1 rose 6 cents to settle at $1.7676 a gallon, going off the board above RBOB's 100-day moving average of $1.7658.Both products posted the first monthly gains since June.

Saturday, February 28, 2015

Compound from Chinese medicinal herb shows promise for Ebola

(Bloomberg) -- The tide may be turning in the retreat of the U.S. oil explorers.Rigs targeting oil fell by 33 to 986, the smallest decline since Jan. 2, Baker Hughes Inc. said on its website Friday. Energy rigs in the Permian Basin shale region dropped by seven to 355 after dropping by as much as 49 earlier in the month. The Eagle Ford in Texas lost three rigs.
The slowing decline in rig numbers comes as oil posted its first monthly increase since June after falling 50 percent in a year. The U.S. has lost more than a third of its oil rigs over four months in a retrenchment that threatens to bring the nation’s shale boom to a halt. Saudi Arabia has sought to allow prices to fall to curb U.S. and other non-OPEC output.
Three or four weeks ago, the rig count “was falling like Newton’s apple and now it’s just rolling down the hill,” James Williams, president of WTRG Economics, said in a phone interview Friday. “What it means is that the Saudi policy is working.”
The drop in oil prices has already wiped out thousands of U.S. jobs and dried up more than $86 billion in capital spending as domestic producers face stiff competition from suppliers abroad.
Saudi Arabia, the most powerful member of the Organization of Petroleum Exporting Countries, led the group’s November decision to maintain production levels as prices plunged. The world’s biggest crude exporter will maintain that tack when the group next meets in June, according to some of the world’s biggest banks.

Record Production

OPEC production climbed 163,000 barrels a day to 30.568 million in February, led by gains in Saudi Arabia, according to a Bloomberg survey of oil companies, producers and analysts.
Analysts watch the rig count to help forecast U.S. production. The idling of 589 rigs in 12 weeks hasn’t yet led to a reduction in output, which is forecast by the Energy Information Administration to climb to 9.3 million barrels a day this year, the highest since 1972. Output rose 5,000 barrels a day in the week ended Feb. 20 to reach 9.29 million, the highest rate in weekly EIA data going back to 1983.
Crude stockpiles swelled 8.43 million barrels to a record 434.1 million over the same period.
“You can’t really look at rig counts and make an assessment of what this will do with production,” Stephen Schork, president of Schork Group Inc., a consulting group in Villanova, Pennsylvania, said by phone Friday. “We are seeing record production week in and week out regardless.”

Rebalancing Market

The U.S. benchmark West Texas Intermediate oil for April delivery rose $1.59 to $49.76 a barrel Friday on the New York Mercantile Exchange. Prices tumbled 49 percent in the last half of 2014. WTI’s discount to Brent crude widened to $12.82 this month from $4.75 thanks to the ample supplies and production combined with U.S. laws against most crude exports.
U.S. oil drillers Chesapeake Energy Corp. and Continental Resources Inc. joined the ranks of companies this week presenting analysts with spending cuts. The “sharp drop in expenditures” will slow oil production growth in North America this year, with fourth-quarter output potentially flat compared with the year earlier, Evercore ISI said in its Feb. 22 report.
“I want to compliment our industry for their prompt response to today’s low oil price environment,” Continental Resources Chief Executive Officer Harold Hamm said in a call with analysts Feb. 25. “These actions will accelerate the rebalancing of supply and demand and facilitate the recovery of more rational prices.”
Analysts at Wood Mackenzie Ltd. and Genscape Inc. have forecast that the number of rigs actively drilling in the U.S. will continue to slide into the second quarter before bottoming.
“The current rig count is pointing to U.S. production growth decelerating close to the level required in our view to balance the oil market,” Goldman Sachs Group Inc. said in a research note Feb. 20. “We continue to expect that lower prices will be required in order for the capex and rig cuts to materialize into sufficiently lower production growth.”

Compound from Chinese medicinal herb shows promise for Ebola

(Reuters) - A drug derived from a Chinese medicinal herb is showing promise for combating Ebola infection, effectively imprisoning the virus inside cells so it cannot do its usual damage, scientists said on Thursday.
The researchers said the compound, called tetrandrine, blocked infection of human white blood cells in lab dishes and prevented Ebola virus disease in lab mice. More research is needed, including monkey studies, before it can be tested in people, they added.
"The work has revealed a new chink in the armor of Ebola virus," said virologist Robert Davey of the Texas Biomedical Research Institute in San Antonio, who estimated this approach potentially could be used to treat people in two to five years.
"I am hopeful that the dose needed to control disease will be safe but we just have to do the work and find out," Davey added.
There is no approved drug treatment or vaccine for the Ebola virus, which causes hemorrhagic fever and spreads person to person through contact with body fluids.
"In my opinion, tetrandrine is now one of the most promising candidates that could be used to inhibit Ebola virus infection," said Norbert Klugbauer, a pharmacologist and microbiologist at Germany's University of Freiburg who also worked on the study published in the journal Science.
To successfully infect a cell, the virus needs to be transported deep within it in order to break out of bubble-like intracellular transport structures called endosomes that carry the virus within the cell.
The researchers identified channels that are important in controlling the movement of the "bubbles" within cells. These are known as "two-pore channels." The study showed that tetrandrine blocked these channels, effectively imprisoning the virus inside the "bubbles" so it could not actually infect the cell.
"The virus is then trapped in the bubble and cannot escape. It is then detoured to be destroyed. This stops infection," Davey said.
In human cells in lab dishes, the researchers found tetrandrine inhibited infection by the virus of white blood cells called macrophages. These cells are important players in the immune system's ability to ward off foreign invaders like viruses and bacteria, basically swallowing them up.
Tetrandrine is derived from the root of a medicinal herb, Stephania tetrandra. It also lowers blood pressure.
More than 9,500 deaths have been reported in three West African countries since the world's worst Ebola outbreak began in December 2013.

Friday, February 27, 2015

Oil May Fall Again Says Analyst Who Predicted ’09 Rebound

(Bloomberg) -- Oil prices could drop again later this year as a supply glut persists, according to Jason Kenney, a Banco Santander SA analyst who accurately predicted a rebound in prices after the 2008 slump.
The current oil shock caused by the boom in U.S. shale production is reminiscent of the mid-1980s, when development of fields in the North Sea and the Gulf of Mexico caused a supply glut, Kenney, the head of European oil and gas equity research at the Spanish bank, said by phone from Edinburgh Thursday. It differs from the 2008 collapse, which was caused by slumping demand in a recession, Kenney said.
“My gut feel is that the oil price could see a double bottom,” Kenney said. “We’ve got too much inventory” and the recent price rebound may not have taken fully into consideration the supply glut, he said.
The price of oil collapsed about 60 percent from June to January as the Organization of Petroleum Exporting Countries maintained production and the U.S. pumped at the fastest pace in three decades. A plunge on a similar scale happened almost 30 years ago, when crude dropped from about $30 a barrel in November 1985 to less than $10 four months later. A two-month rebound to $17 was followed by second dip to near $10.
West Texas Intermediate, the U.S. benchmark, has recovered about 12 percent from its Jan. 29 low as oil companies have idled a record number of drilling rigs and cut spending. U.S. output continues to rise and the nation’s stockpiles of crude increased to 434.1 million barrels last week, the most in weekly data starting in 1982, according to the Energy Information Administration.

Rig Count

“I’m not really bothered by the rig count,” Kenney said. “I’m not sure production is falling quickly enough.” The longer the oil price remains above a level that allows shale oil to keep pumping, “there’ll be technology gains and efficiency improvements so that North American shale can be developed more effectively at lower prices still,” he said.
There is also potential for Iranian crude to come back to the market and for Libyan oil disruptions to dissipate, which could put more downward pressure to prices later this year, he said.
Kenny predicted at the end of 2008, following a 75 percent price slump amid a global financial crisis, that Brent crude would recover by about 60 percent to average $60 a barrel in the following year. The international benchmark averaged $62.67 in 2009, according to ICE Futures Europe data. In nine analyst forecasts compiled by Bloomberg News at the time, the median difference to the actual 2009 Brent price was more than $10.
Brent will average $52.50 a barrel this year, Kenney estimates. This assumption is based on the average of $50 a barrel that international oil companies he covers are using to establish their budgets for the next three years, he said. The median Brent forecast of 46 analyst estimates compiled by Bloomberg is $61.69 a barrel for 2015.Brent for April settlement gained $1.21, or 2 percent, to $61.26 at 9:56 a.m. New York time on the London-based ICE exchange. (Bloomberg)

Pelindo II Needs Rp 14t to Build 5 Ports by 2019

Jakarta. Indonesia Port Corporation II, a state-owned port operator, says it needs Rp 14 trillion ($1.6 billion) to build and develop five ports across Indonesia by 2019.

The operator known as Pelindo II is planning to build three ports this year, namely in Sorong, Kijing and Tanjung Carat. Meanwhile, development of two other ports, in Bojonegara and Cirebon, is scheduled to start in 2016.
Pelindo II would raise funding from internal cash, bank loans, bonds and investors — barring any capital government injection.

“We cannot provide details [of the funding source] now, but we are not relying on any government assistance,” said R. J. Lino, president director of Pelindo II, on Monday.

Investor Daily, Jakarta Globe