Oil heads for weekly gain as trade war headlines whipsaw market

Category : News

By Sharon Cho and Grant Smith on 8/16/2019

SINGAPORE (Bloomberg) – Oil headed for a weekly increase as hopes that the U.S. and China could resume negotiations to resolve their trade dispute capped a week of volatile trading.

Futures added as much as 1.7% on Friday in New York, bringing their gain for the week to 1.4%. President Donald Trump said he had a call coming soon with his Chinese counterpart Xi Jinping after a pledge from Beijing to retaliate against planned U.S. tariffs. Earlier in the week, oil surged the most in more than a month after the Trump administration said it would delay levies on some products.

Oil volatility has gained more than 9% this week through Thursday

Oil has swung between gains and losses this month as concerns about the impact of the U.S.-China trade war compete with a pledge from Saudi Arabia to keep markets balanced by limiting production. A second weekly surprise increase in American crude inventories compounded demand fears after weak economic data from Germany and China stoked negative sentiment.

“The yo-yoing on the oil market continues and the oil price remains highly prone to fluctuations,” said Eugen Weinberg, head of commodities research at Commerzbank AG in Frankfurt. “The oil price currently remains at the mercy of expectations for the global economy, and is thus caught between economic concerns and hopes that the trade dispute might end soon.”

West Texas Intermediate crude for September delivery rose $0.80, or 1.5%, to $55.27/bbl on the New York Mercantile Exchange as of 9:58 a.m. in London.

Brent for October settlement added $0.88, or 1.5%, to $59.11/bbl on the ICE Futures Europe Exchange, taking its weekly advance to 1%. The global benchmark traded at a $3.88 premium to WTI for the same month.

Plans by the U.S. for 10% tariffs on an additional $300 billion in Chinese imports have taken the two nations off the track of resolving their dispute through negotiation, China’s State Council Tariff Committee said in a statement on Thursday. Trump told reporters in Morristown, New Jersey, that he has a call scheduled “very soon” with Xi on trade.

“Investors are still hopeful about the possibility of further trade talks and Trump is likely pressured by the tumultuous sessions seen on Wall Street,” said Kim Kwangrae, a commodities analyst at Samsung Futures Inc. There’s upside for oil due to potentially easing trade conflicts and geopolitical risks, he said.

OPEC sees ‘somewhat bearish’ oil outlook even as market tightens

Category : News

By Grant Smith on 8/16/2019

LONDON (Bloomberg) – Global oil markets face a “somewhat bearish” outlook for the rest of the year amid slowing economic growth and the long-running trade war, even though supplies will be tighter than previously thought, OPEC said.

The Organization of Petroleum Exporting Countries, which pumps about a third of the world’s oil, increased estimates for world demand this year and next, and lowered forecasts for production from its rivals. Nonetheless, its monthly report — which doesn’t typically give a view on prices — warned that the market may weaken.

That increases pressure on Saudi Arabia, the cartel’s de facto leader, which has shouldered most of the burden in production cuts aimed at bolstering oil prices amid faltering demand and a relentless flood of new shale supplies from the U.S.

Crude prices have fluctuated this week, following twists and turns in the clash between Washington and Beijing as President Donald Trump imposed steeper tariffs on Chinese goods and then touted further negotiations to resolve the impasse. At just under $60/bbl in London, crude is below the levels most OPEC nations need to cover government spending.

A coalition of oil producers composed of OPEC members and allies such as Russia has curtailed supply this year to try and keep global markets in balance. Riyadh has reduced output by far more than it initially promised, reporting to the OPEC secretariat that it cut production again in July to 9.58 MMbpd.

The report released by OPEC’s Vienna-based research department on Friday indicated that — in theory — the cartel’s efforts should be sufficient to prevent any surplus this year.

The global balance of supply and demand is tighter than it appeared a month ago. OPEC raised its assessment of consumption for this year and next by 50,000 bpd, and trimmed projections for non-OPEC supplies by 40,000 bpd for 2019 and by 90,000 bpd for 2020.

As a result, even though oil inventories in developed nations have risen above average levels, global stockpiles should decline this quarter by an average of 2.1 MMbpd. OPEC is pumping about 29.6 million a day, compared with a daily requirement of 30.28 MMbpd.

Nevertheless, the focus in crude futures markets remains squarely on the outlook for demand, which is being soured by the growing risk of recession and the protracted dispute between the U.S. and China.

A Saudi official speaking anonymously said last week that the kingdom had sounded out its partners on potentially stepping up their efforts and is open to all options. The Saudis, Russia and other key members of the coalition will meet to review their strategy in Abu Dhabi on Sept. 12.

“The outlook for market fundamentals seems somewhat bearish for the rest of the year, given softening economic growth, ongoing global trade issues and slowing oil-demand growth,” OPEC said in the report. “It remains critical to closely monitor the supply-demand balance and assist market stability in the months ahead.”

Weatherford automated connection integrity system reaches deployment milestone

Category : News


BAAR, SWITZERLAND – Weatherford’s Vero automated connection integrity system, which applies artificial intelligence to validate well integrity and minimize safety risks, has completed 15,000 tubular connections in 50 operations worldwide since its market debut.

Deployment results include:

  • Kazakhstan: Running multiple jobs per month for an operator with zero Nonproductive Time while consistently improving efficiency and removing personnel from the rig floor.
  • United Arab Emirates: Offshore operation achieved a 30 percent increase in running speeds and zero rejected joints on multiple jobs.
  • Norway: Improved previous mechanized operational performance by 15 percent, resulting in the fastest liner-running operation on that rig in four years.
  • Qatar: The operator asked for the system by name when it needed to pull and re-run a completion. Weatherford is currently running a third commercial operation for the operator.

By applying artificial intelligence at every stage from pipe manufacturing to well installation, Vero improves connection make-up efficiency and eliminates errors associated with human judgement during the connection process. In doing so, the solution can minimize the chance of well failures associated with poorly made-up connections, reduce the total cost of well ownership, minimize personnel safety risks, and protect corporate reputation.

“The future for Vero is very bright,” said Dean Bell, president of well construction for Weatherford. “There is no debate. Vero is the most disruptive technology ever introduced in the tubular running space and operators are taking notice. Vero is now being engaged in most major offshore and onshore markets around the world, with its first-ever U.S. operation scheduled to begin this fall in the Gulf of Mexico. Vero goes beyond tubular running to help our customers build wells that last a lifetime.”