US Atlantic Coast refiners face new threat in Buckeye proposal to reverse pipeline: Fuel for Thought

Storm clouds are gathering once again over US Atlantic Coast refineries, but unlike a few years ago when it was high oil prices causing a problem, this time the threat is coming from the Midwest.

Hemmed in by geography, Midwestern refiners are looking east as a logical place to sell their gasoline and diesel.

The proposed partial reversal of Buckeye’s Laurel Pipeline, a 350-mile line now carrying gasoline and diesel from Philadelphia-area refineries west to Pittsburgh, would offer Midwest refiners easier access to the East Coast market…

 

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How The US Sets Global Oil And Gas Prices

The US is increasingly influential in price formation for crude and global gas markets. But tight oil and shale gas, through LNG exports to Europe, are likely to be cap and collar in their respective markets for the next few years – tight oil setting the ceiling price, US gas the floor.

The big three – Saudi Arabia, Russia and the USA – have jostled for position as the world’s leading oil producer since the start of the new millennium. The astonishing growth path of tight oil propelled the USA to top dog 2015, ousting by a small margin Saudi Arabia, No.1 since the early 1990s. In the background, Russia, like the USA, built production up. Last year, all three produced 12 million b/d (including NGLs), give or take, and each is currently producing at or close to all-time-record levels.

The competitive sparring of the last few years is about to end, and in this fight there will be only one winner. Our latest Macro Oils Long Term Outlook shows the extent to which the USA outpaces the rest in the near future. We forecast that by 2025, US liquids volumes will increase by over 50% to 19 million b/d; Saudi Arabia will be broadly flat, whereas Russia faces gentle decline…

 

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Oil Heads for Longest Gain in a Month as U.S. Supply Seen Lower

Oil advanced for a fourth day in New York, its longest run of gains in a month, on estimates that U.S. crude inventories continued their decline from record levels seen earlier this year.

Futures added as much as 1.5 percent after rising 2 percent in the previous three sessions. Inventories probably dropped by 2.25 million barrels last week, a Bloomberg survey showed before an Energy Information Administration report Wednesday. Prices also climbed as the dollar weakened against the euro following a positive outlook from European Central Bank President Mario Draghi, making dollar-priced commodities like crude more attractive…

 

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China, India Increased Coal Production While Shaming Trump For His Paris Decision

China and India were critical of President Donald Trump’s decision to withdraw from the Paris climate accord, but it turns out both countries boosted coal production about 4 percent during the first five months of this year.

The Associated Press ran the numbers, and figured out China and India boosted coal production in the first half of 2017 after cutting production the year before. China cut production 8 percent last year to boost coal prices and get rid of excess capacity as their economy faltered.

BP recently reported coal production saw its biggest drop on record in 2016, as more countries switched to using natural gas…

 

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US Crude Oil Rig Count: Turning Point for the Bear Market?

According to Baker Hughes (BHI), the US crude oil rig count rose by 11 to 758 on June 16–23, 2017. Rigs rose 1.5% week-over-week and 129.8% year-over-year.

US crude oil rigs have risen for 23 straight weeks. The rise in crude oil rigs could lead to a rise in production. High production would pressure oil prices. Lower crude oil prices have a negative impact on oil drillers like Baker Hughes (BHI), Atwood Oceanics (ATW), Transocean (RIG), and Halliburton (HAL).

The US crude oil rig count peaked at 1,609 in October 2014. Its low was 316 in the week ending May 27, 2016—the lowest level since the 1940s. Since then, the US crude oil rig count has risen 138%…

 

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Japan regulator to brief on probe into LNG trading

Japan’s Fair Trade Commission (JFTC) said it will brief on its probe into liquefied natural gas (LNG) trading practices at 3 p.m. (0600 GMT) on Wednesday.

The commission late last year ordered the country’s LNG buyers to provide details on contract requirements that prevent them from reselling the fuel to third parties.

Markets have been waiting to hear from the powerful anti-monopoly regulator on an investigation into whether so-called destination clauses limit competition, which could lead to billions of dollars of LNG contracts being renegotiated…

 

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Cheniere launches $500 million LNG contract with Korea

Korea Gas Corp. signed a 20-year supply agreement in January 2012 to buy liquefied natural gas from Cheniere Energy Inc.’s Sabine Pass export facility in Cameron Parish. On Sunday, the companies held a ceremony to mark the start of the deal at Sabine Pass.

Under the contract, Korea Gas, known as KOGAS, can buy 3.8 million tons of LNG each year — more than 10 percent of South Korea’s total demand — from Cheniere.

Cheniere is the United States’ only LNG exporter, so far, although a number of other facilities are in the works. The company has said it expects to load close to 200 LNG vessels with shipments this year, and its LNG has been delivered to 20 countries worldwide. The Korea Gas contract generate more than $500 million in revenue per year…

 

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WSJ: US Fracking Revolution Revives American Plastics Industry

The fracking revolution that has resurrected energy drilling in the U.S. is having broader effects on reviving American industry, according to The Wall Street Journal.

“That boom in drilling has expanded the output of oil and gas in the U.S. more than 57 percent in the past decade,” the newspaper reported. The re-birth of U.S. drilling is driving down the cost of raw materials for plastics companies like Dow Chemical, which is putting $8 billion into petrochemical facilities along the Gulf of Mexico.

“The scale of the sector’s investment is staggering: $185 billion in new U.S. petrochemical projects are in construction or planning, according to the American Chemistry Council,” the WSJ reported. “Last year, expenditures on chemical plants alone accounted for half of all capital investment in U.S. manufacturing, up from less than 20% in 2009, according to the Census Bureau”…

 

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Is There Still Hope For Higher Oil Prices?

Oil prices have cratered in recent weeks, dipping to their lowest levels in more than seven months and any sense of optimism has almost entirely disappeared. All signs point to a period of “lower for longer” for oil prices, a refrain that is all too familiar to those in the industry.

WTI dipped below $44 per barrel on Tuesday, and the bearish indicators are starting to pile up.

Libya’s production just topped 900,000 bpd, a new multi-year high that is up sharply even from just a few weeks ago. Libyan officials are hoping that they will hit many more milestones in the coming months. Next stop is 1 million barrels per day (mb/d), which Libya hopes to breach by the end of July…

 

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Wall St set to open higher as oil prices recover

U.S. stocks were set to open higher on Monday as oil prices climbed from last week’s seven-month lows.

Oil edged up for the third straight session but gains were capped by the relentless rise in U.S. supply and bloated global inventories.

The recent drop in oil prices has spurred concerns about low inflation, which stubbornly remains below the Federal Reserve’s 2 percent target rate…

 

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