CL=F - Crude Oil Aug 19
| Pre. Settlement | N/A |
| Settlement date | 2019-07-22 |
| Open | 55.72 |
| Bid | 56.14 |
| Last price | 55.30 |
| Day's range | 55.62 - 56.36 |
| Volume | 10,241 |
| Ask | 56.15 |
- Simply Wall St.•4 hours ago
Is Chu Kong Petroleum and Natural Gas Steel Pipe Holdings Limited's (HKG:1938) CEO Paid At A Competitive Rate?
David Chen is the CEO of Chu Kong Petroleum and Natural Gas Steel Pipe Holdings Limited (HKG:1938). This analysis aims...
- Bloomberg•8 hours ago
Oil Prices Continue Lower Despite U.S. Downing of Iranian Drone
(Bloomberg) -- The downing of an Iranian drone in the Strait of Hormuz wasn’t enough to lift oil prices, which slid to the lowest in almost a month amid pessimism about the global economy.Futures tumbled 2.6% on Thursday in New York, the fourth consecutive daily loss. Prices managed to climb about 60 cents after President Donald Trump said the U.S. had downed an Iranian drone in the Persian Gulf, but even that wasn’t enough to push the market up. Instead, crude joined a decline for tech and consumer stocks amid a spate of disappointing corporate earnings, alongside signs that Beijing and Washington are making little progress on a trade deal.Russian pipeline operator Transneft PJSC, meanwhile, said it resumed full flows from the country’s largest crude producer, Rosneft PJSC, after imposing restrictions due to contamination concerns.“The market is waking up to the fact that global oil demand is wilting and the possible prompt that could improve the situation is still remote,” said Judith Dwarkin, chief economist at Calgary-based consultant RS Energy. “There’s been no improvement in the U.S.-China trade dispute even though they say they are coming back to the table.”Oil has fallen about 8% since Monday, on track for its worst weekly performance since late May. The specter of a renewed U.S.-China conflict dented the demand outlook, while American fuel stockpiles jumped. That’s overshadowed worries that Iran may shut down the Strait of Hormuz, a key chokepoint for much of the world’s oil shipments.West Texas Intermediate for August delivery closed down $1.48 to $55.30 on the New York Mercantile Exchange, falling to the lowest since June 19. It was at $55.63 at 4:05 p.m., after Trump announced the drone incident.September Brent lost $1.73 to close at $61.93 a barrel on the ICE Futures Europe Exchange, before rebounding to $62.44.In an interview with Bloomberg Wednesday, Iran’s Foreign Minister Javad Zarif said the U.S. “shot itself in the foot” by pulling out of its nuclear accord with his nation. Crude briefly rallied on Thursday after Iran confirmed the seizure of an oil tanker in the Persian Gulf this week.Iran’s state-run Press TV news channel later aired footage of a tanker that disappeared from global satellite tracking systems four days ago. The ship was smuggling fuel out of the country, the Iranian Revolutionary Guard Corps said.(An earlier version of this story misspelled the name of RS Energy’s chief economist.)\--With assistance from Sharon Cho and James Thornhill.To contact the reporters on this story: Alex Nussbaum in New York at anussbaum1@bloomberg.net;Alex Longley in London at alongley@bloomberg.netTo contact the editors responsible for this story: Simon Casey at scasey4@bloomberg.net, Carlos Caminada, Christine BuurmaFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
- Simply Wall St.•13 hours ago
Investors Who Bought BNK Petroleum (TSE:BKX) Shares Five Years Ago Are Now Down 84%
Some stocks are best avoided. It hits us in the gut when we see fellow investors suffer a loss. Spare a thought for...
- Simply Wall St.•14 hours ago
What Can We Make Of Seplat Petroleum Development Company Plc’s (LON:SEPL) High Return On Capital?
Today we are going to look at Seplat Petroleum Development Company Plc (LON:SEPL) to see whether it might be an...
- Zacks•16 hours ago
North Dakota Oil Production Holds Stable Near Record Mark
The newest numbers showed that daily crude output remained above one million barrels for the 28th month, further confirming North Dakota as one of the hottest shale plays in the United States.
- FX Empire•16 hours ago
Earnings and Trade Concerns Pull Equities From Record Highs
Investors have sold equities across the globe and headed back towards the safety of government bonds and Gold. After spending several weeks pricing in the impact of expected monetary easing by major central banks, bullish investors took a pause as fundamentals began to show signs of cracks.
- Bloomberg•22 hours ago
China's Top Coal Group Says Regulator to Slash Imports
(Bloomberg) -- China will tighten its grip on coal imports in the second half and keep full-year shipments at similar levels as 2018, according to an executive from the national industry group.The latest customs clearance halt at some mainland ports is because imports have exceeded quotas in the first six months, said Su Chuanrong, executive director-general of China National Coal Association. Overseas purchases are also set to weaken because domestic demand has faltered, Su said Thursday.The association’s outlook chimes with a chorus of predictions including from trading house Noble Resources International Pte that China’s coal imports are bound to slump in the second half. Inbound cargoes have gained 6% on-year in the first six months despite curbs in place. In the latest sign of a clampdown, the port of Caofeidian has decided to suspend clearance of coal for traders as regulators seek to cap annual imports. “Demand isn’t booming as it’s supposed to,” Su said in an interview. The current period tends to be a key consumption season as households and businesses crank up air conditioning use, but cooler temperatures have cut demand for cooling, she added.Thermal coal futures on the mainland have slipped 4% this month. Daiwa Capital Markets said earlier this week that recent heavy rainfalls in southern China could lead to higher hydropower output, which squeezes coal-fired generation, while lower temperatures may hurt power consumption as well.To contact Bloomberg News staff for this story: Feifei Shen in Beijing at fshen11@bloomberg.netTo contact the editors responsible for this story: Ramsey Al-Rikabi at ralrikabi@bloomberg.net, Jasmine Ng, Aaron ClarkFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
- Zacks•2 days ago
The Zacks Analyst Blog Highlights: Callon Petroleum, Carrizo Oil & Gas, McDermott International and Occidental Petroleum
The Zacks Analyst Blog Highlights: Callon Petroleum, Carrizo Oil & Gas, McDermott International and Occidental Petroleum
- Bloomberg•2 days ago
India Considers Breaking Up World's Top Coal Miner
(Bloomberg) -- India may spin off units of Coal India Ltd., the world’s largest coal miner, into separate listed companies to boost competition and raise government funds, according to people with knowledge of the matter.The state-run company and the coal ministry are studying a proposal by the finance ministry’s Department of Investment & Public Asset Management to list four of Coal India’s biggest production units, as well as its exploration arm, said the people, who asked not to be named as the plan isn’t public. The development is in an early stage and it was unclear how long it may take, the people added.Prime Minister Narendra Modi’s government has sought to sell some state assets to raise funds, and these divestments will continue to remain a priority, Finance Minister Nirmala Sitharaman said July 5, setting a record target of raising 1.05 trillion rupees ($15 billion) in the current fiscal year. Spinning off Coal India subsidiaries would also lead to greater competition in the domestic coal market and improve corporate governance, the people said.A spokesman at Coal India didn’t respond to requests seeking comment, while press officials at the coal and finance ministries declined to comment.The four units -- Mahanadi Coalfields, South Eastern Coalfields, Northern Coalfields and Central Coalfields -- account for more than three-fourths of the company’s output, while constituting less than half of its workforce. The fifth unit would be Central Mine Planning & Design Institute.India’s state run coal giant has been unable to meet growing demand despite abundant resources. Coal India produced a record 607 million metric tons in the last fiscal year to March, falling short by 22% of a target proposed in 2017. The goal has been revised a few times since then, but output was still just below a revised target. Meanwhile, imports of the fuel surged to a record over the same period.Shares in the miner declined 1.2% to 230.00 rupees in Mumbai. Kolkata-based Coal India has a market cap of about $20.6 billion, with the government holding almost 71% of the company.India, the world’s second-largest coal consumer after China, depends on Coal India for about 83% of the domestic production. The miner has consistently fallen short of production targets, while an overworked railway network has hampered transport of the fuel.The government’s top planning body, NITI Aayog, proposed in 2017 that Coal India be broken up so its units can compete against each other. It was dismissed at the time by Coal Minister Piyush Goyal, who said the plan doesn’t reflect government policy.(Updates shares in seventh paragraph and adds chart.)To contact the reporters on this story: Debjit Chakraborty in New Delhi at dchakrabor10@bloomberg.net;Rajesh Kumar Singh in New Delhi at rsingh133@bloomberg.net;Siddhartha Singh in New Delhi at ssingh283@bloomberg.netTo contact the editors responsible for this story: Ramsey Al-Rikabi at ralrikabi@bloomberg.net, Unni Krishnan, Alpana SarmaFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
- Zacks•3 days ago
Oil & Gas Stock Roundup: Callon Petroleum's Acquisition, McDermott's Contract Wins & More
Shale producer Callon Petroleum (CPE) agreed to buy smaller E&P player Carrizo Oil & Gas (CRZO) for $3.2 billion, while McDermott International (MDR) clinched twin contracts from Saudi Aramco.
- Simply Wall St.•3 days ago
The RAK Petroleum (OB:RAKP) Share Price Is Up 40% And Shareholders Are Holding On
It hasn't been the best quarter for RAK Petroleum plc (OB:RAKP) shareholders, since the share price has fallen 20% in...
- FX Empire•4 days ago
NEM’s XEM Technical Analysis – Support Levels in Play – 05/07/19
NEM’s XEM takes a hit early on but could find support from the broader market. A move through to $0.065 levels will be key.
- Bloomberg•4 days ago
China Sets Commodities Records in Good Sign for Growth
(Bloomberg) -- If you’re looking for signs of China’s slowdown, you won’t find much in the data for output of the commodities needed to power and build the world’s second-biggest economy.Production of a swathe of materials -- from crude steel to coal and aluminum -- reached record levels in June, contributing to stronger-than-expected industrial output even as the wider economy expanded at its slowest pace since the early 1990’s. While each market has its own dynamics, the burst of heavy-industry activity supports the idea that policy action is stabilizing growth and boosting expectations for the second half of the year.“It reflects confidence from the commodity producers,” Helen Lau, analyst at Argonaut Securities Asia Ltd., said by phone from Hong Kong. “Even though June is the start of a weak season, cyclically speaking, they still want to produce because they basically expect that going forward, things will be back on track.”The strong output data slots into signs of tentative stabilization in Monday’s economic figures, with infrastructure spending and manufacturing investment both also picking up. Better-than-expected retail sales may point to an improvement in the property and auto sectors -- both a vital source of commodities demand.Highlights from NBS output data:Crude steel production rose 10% from a year earlier and average daily production reached a record. Run-rates were equivalent to more than a billion tons a year. Coal output rose 10% from a year earlier.The country’s oil refineries and aluminum smelters were running at record rates, measured by average daily output.Production of crude oil was at its highest in two years.To contact Bloomberg News staff for this story: Martin Ritchie in Shanghai at mritchie14@bloomberg.netTo contact the editors responsible for this story: Phoebe Sedgman at psedgman2@bloomberg.net, Keith GosmanFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
- Zacks•7 days ago
Oil Price Spurts as Tensions Intensify in the Strait of Hormuz
The Strait of Hormuz, where the BP-operated oil tanker was "harassed," is touted as the most important global passageway for transporting crude.
- Bloomberg•7 days ago
Oil Caps Weekly Gain as Strengthening Storm Buoys Fragile Market
(Bloomberg) -- Oil capped its best week since mid-June as Tropical Storm Barry gained strength, approaching refineries in Louisiana and leaving deserted offshore platforms on its path.Futures in New York gained 4.7% for the week after prices held above $60 a barrel for a third day on Friday. Forecast to make landfall as a hurricane early Saturday, Barry has already curbed about half of U.S. Gulf of Mexico production.Coupled with rising tensions between the U.K. and Iran, as well as a steep drop in American crude stockpiles, the storm helped offset concerns over weakening demand.“After quite a few weeks of very bearish petroleum numbers the last two weeks have actually been supportive,” said Kyle Cooper, a consultant at Ion Energy Group in Houston. “It’s a bullish backdrop. I don’t think we’re going to run away here, but the mid-$50s to low $60s seems like a reasonable level.”Still, the longer-term outlook looks less promising. The Organization of Petroleum Exporting Countries warned Thursday of a glut in 2020 as U.S. shale production surges. The International Energy Agency said Friday there had been a surprise pile-up of inventories in the first half of this year, and that OPEC may need to cut output to the lowest in 17 years to prevent another overhang.The uncertainties have slowed the market’s momentum in recent days. While oil has traded higher in six of the last seven sessions, it’s also been stuck within a $1 range the past two days, the first time trading has been that narrow since April. An index of price volatility was at its lowest since May 22.West Texas Intermediate crude for August delivery closed Friday 1 cent higher at $60.21 a barrel on the New York Mercantile Exchange. Brent for September settlement rose 20 cents, or 0.3%, to $66.72 a barrel on the ICE Futures Europe Exchange.Barry may drop as much as 25 inches (64 centimeters) of rain in some places, according to an advisory from the U.S. National Hurricane Center. Gulf of Mexico operators have shut-in about 1 million barrels a day of oil production because of the storm, the Bureau of Safety and Environmental Enforcement said in a notice.Meanwhile, Britain raised the threat level to the highest possible for ships operating in the Persian Gulf as tensions escalate in a region accounting for a third of seaborne petroleum trade. The U.K. government designated the region a level-3 risk on Tuesday, a day before British warship HMS Montrose had to stop Iranian vessels from impeding a BP Plc oil tanker as it exited the region, according to a person with knowledge of the matter.\--With assistance from James Thornhill and Tsuyoshi Inajima.To contact the reporters on this story: Alex Nussbaum in New York at anussbaum1@bloomberg.net;Grant Smith in London at gsmith52@bloomberg.netTo contact the editors responsible for this story: David Marino at dmarino4@bloomberg.net, Carlos Caminada, Joe CarrollFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
- Oilprice.com•7 days ago
Is A Crude Glut Looming?
Slowing global economic growth is beginning to weigh on oil markets, with the IEA warning that crude supply has exceeded demand in the first half of the year
- Bloomberg•7 days ago
Russia Has Your Back, OPEC. What Could Go Wrong?
(Bloomberg Opinion) -- The only country that could really make OPEC+ work is the U.S. That’s not an option, so it’s stuck with Russia. OPEC’s own forecasts show just how much sway Moscow has over the group.Next year looks ugly for oil producers. OPEC expects demand to grow by 1.14 million barrels a day, flat with expectations for this year (which have been coming down). But it also expects supply from non-OPEC countries to surge by 2.4 million barrels a day. Hence, the world will need fewer OPEC barrels: 1.34 million a day, equivalent to almost the entire production of Angola.And OPEC’s market share has been dropping already. The International Energy Agency piled on Friday morning with its own monthly report, surmising implied demand for crude oil from OPEC could drop to 28 million barrels a day in early 2020, an amount the group last produced in summer 2003.The bugbear, as ever, is U.S. shale production. America accounts for 71% of that extra non-OPEC supply forecast for 2020. Brazil and Norway are also big contributors, albeit way behind. The 10 partner countries that form the “plus” bit of OPEC+, meanwhile, account for 5%.That small increase for the “plus-ones,” so to speak, is interesting. Virtually all of it stems from an expected uptick in Russian production penciled in beyond the first quarter of 2020. That is when the current phase of the OPEC+ supply cuts are scheduled to end, so OPEC’s forecasters are assuming Russian output, along with some other countries’, ticks up again.It’s a revealing assumption because it also rests on the assumption that Russia’s compliance with cuts – a relatively recent phenomenon – will actually intensify this year to levels never achieved before.The IEA’s own projections display a similar faith in Russian restraint, implying compliance of almost 240%. The lingering effects of this year’s problems with contaminated oil have served to bolster Russian compliance, mathematically at least. And President Vladimir Putin made a big show of cutting (and announcing) his deal with Saudi Arabia to keep supplies curbed.Yet it must be unnerving for Saudi Arabia to depend this much on the discipline of a major rival oil producer not exactly known for such discipline. Indeed, the whole premise of the “plus-ones” is somewhat Potemkinesque when you take a closer look. Six of the 10 countries barely count at all, each tasked with reducing supply by 20,000 barrels a day or less – drops in a vast, oily ocean. Even then, they aren’t expected to collectively meet their obligations anyway. Oman contributes a little more, but the positive aspects of the plus-ones for OPEC really boil down to just three countries. Kazakhstan’s enormous contribution, particularly in 2019, is a function of maintenance being performed on two giant oil fields rather than a strong sense of commitment (judging by its track record over the past two years, anyway). Similarly, Mexico’s projected compliance of almost 400% across the period is mere impotence dressed up as abstinence. Involuntary or not, one less barrel is one less barrel. Still, depending on others’ misfortunes is a defining, and telling, characteristic of OPEC+. At a more extreme level, Venezuela fulfilled a similar function in the first phase of the cuts, and it remains reliably unreliable.Russian discipline is, therefore, crucial to maintaining the illusion of control. Say, instead, the country adhered to its average compliance level since January 2017 of 57%. Relative to OPEC's current projections, this would add back roughly 100 million barrels to the market through the end of 2020. That is a huge amount when you consider Khalid Al-Falih, Saudi Arabia’s energy minister, recently floated the idea of trying to slash global oil inventories by more than 200 million barrels.Above all, these cuts, both real and conjectured, are happening in the context of weakening demand prospects. Growth in oil consumption in the first quarter slumped to its lowest level since 2011, according to the IEA’s latest report. The agency still forecasts a rebound in the second half of 2019, which looks ever more curious in the face of weakening expectations from the likes of OPEC and a steady drip of bad economic data, the latest coming from Singapore and China, the heartland of oil-demand growth. Consider this: Tropical Storm Barry has forced a million barrels a day of supply offline in the Gulf of Mexico; and, yes, oil prices have rallied a bit but remain below where they were just two months ago.Cutting oil supply to support prices in a fundamentally weak market is a Sisyphean task, which is why the OPEC+ agreement, originally penciled in for six months, is racing toward its third birthday. Signs of strain are building in the U.S. shale business model, but OPEC has been waiting in vain for a Texan collapse for years (plus, its own actions provide breathing space for even the most overextended wildcatter). In the meantime, it relies on actual Saudi discipline, a motley crew of walking wounded, and – crucially – faith in Moscow’s fidelity. What could possibly go wrong?To contact the author of this story: Liam Denning at ldenning1@bloomberg.netTo contact the editor responsible for this story: Mark Gongloff at mgongloff1@bloomberg.netThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Liam Denning is a Bloomberg Opinion columnist covering energy, mining and commodities. He previously was editor of the Wall Street Journal's Heard on the Street column and wrote for the Financial Times' Lex column. He was also an investment banker.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
- Bloomberg•7 days ago
Oil Surplus Makes Surprise Return Despite OPEC Cuts, IEA Says
(Bloomberg) -- Global oil stockpiles swelled surprisingly in the first half of this year as production cuts by OPEC and its partners failed to prevent the return of a surplus, the International Energy Agency said.World supply exceeded demand at a rate of 900,000 barrels a day during the first six months of 2019 as consumption proved far weaker than expected amid a faltering economy, the IEA said. With the outlook for 2020 also deteriorating, the Organization of Petroleum Exporting Countries may need to reduce output to the lowest in 17 years to keep markets in balance, the agency predicted.“This surplus adds to the huge stock-builds seen in the second half of 2018,” the Paris-based IEA said in its monthly report. “Clearly, market tightness is not an issue for the time being and any rebalancing seems to have moved further into the future.”Global oil demand grew at the weakest pace since 2011 in the first quarter, and by a third less than anticipated in the second, amid the first contraction in manufacturing activity in seven years, according to the agency. That thwarted efforts by OPEC and its partners to keep markets in equilibrium by cutting production.Although crude prices have recovered by about 25% in London this year, at about $67 a barrel they remain considerably below last year’s peak. That’s a problem for Saudi Arabia and others in the OPEC cartel, who need higher price levels to cover government spending.Last week the organization and its partners -- a 24-nation coalition known as OPEC+ that includes Russia -- agreed to keep output restrained until early 2020 to check the formation of a new glut. But the report on Friday from the IEA, which advises most of the world’s major economies, is another sign that OPEC’s challenge is getting harder.As recently as last month, the IEA thought that world oil stockpiles grew only slightly in the first half of this year as a surge in the first quarter was tempered by a pullback in the second.But in its latest report, the agency slashed estimates for global demand growth during the second quarter by 450,000 barrels a day to 800,000 a day, while also raising its assessment for new supplies outside OPEC. Non-OPEC supply continues to expand, driven by the boom in U.S. shale oil. As a result, oil inventories accumulated substantially during the first half.While the agency’s forecast for demand growth in 2019 as a whole remained steady, at about 1.2 million barrels a day, it hinges on an assumption that economic recovery will spur a massive rebound in the second half, with consumption expanding roughly three times as much as in the first.Call on OPECThe task faced by OPEC next year is also growing tougher, as the IEA lowered its forecast for demand in 2020 and boosted projections for non-OPEC supply.In consequence, the amount of crude needed from the organization -- which pumps more than a third of the world’s oil -- will slump again next year, to considerably below its current rate of production.The IEA forecasts that an average of 29.1 million barrels a day will be required from the group, whose 14 members pumped 29.9 million a day last month, when their output was already reduced by voluntary cutbacks as well as political crises in Iran and Venezuela.To prevent another surplus in 2020, OPEC would need to cut output on average by a further 800,000 barrels a day, and throttle back in the first quarter to a rate of just 28 million a day, a level it hasn’t produced since 2003. If the group doesn’t take this action, stockpiles may balloon in early 2020 by 136 million barrels, the agency predicted.“Clearly, this presents a major challenge to those who have taken on the task of market management,” the IEA said.OPEC itself acknowledged the predicament on Thursday, when its own first detailed assessment of 2020 fundamentals indicated that oil supplies may pile up next year unless the organization makes deeper cuts. However, Saudi Energy Minister Khalid Al-Falih signaled last week that the kingdom -- which has already slashed production by far more than initially planned -- is reluctant to shrink supplies further.To contact the reporter on this story: Grant Smith in London at gsmith52@bloomberg.netTo contact the editors responsible for this story: James Herron at jherron9@bloomberg.net, Amanda JordanFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
- Bloomberg•7 days ago
Australian Thermal Coal Leaves Investors Cold
(Bloomberg Opinion) -- When you’re in the business of buying and selling, timing is everything.That’s the costly lesson facing BHP Group, which is looking at options to divest its thermal coal assets according to a report Thursday by Thomas Biesheuvel of Bloomberg News that cited people familiar with the matter.Arch-rival Rio Tinto Group raised $2.7 billion selling mines in the Hunter Valley north of Sydney to Yancoal Australia Ltd., in a process that started in 2016. BHP could get far less: Macquarie Group Ltd. estimates $1.6 billion. That’s despite the fact that BHP’s Mount Arthur and Cerrejon mines, in the Hunter Valley and Colombia, post roughly the same Ebitda as as the ones Rio Tinto sold. BHP has had good reasons to keep operating these mines. They’ve produced several years of good earnings, for one. Mount Arthur has probably been even more profitable than it looks on paper, thanks to its ability to utilize tax losses that will now be running low.Still, it will be galling to sell at a discount when the long-term price for the high-energy coal mined in the Hunter Valley is now about a third higher than the $63 a metric ton level at the time Rio Tinto’s deal was announced.What’s changed? More or less everything.Back in 2016, coal was still the lowest-cost way of delivering new generation in most major markets. The slumping price of wind and solar generation since then has changed the game. Thermal coal will fall to 11% of U.S. generation by 2030 from the mid-20s at present, S&P Global Ratings wrote in a report Wednesday; outside of Spain and Germany, most European coal-fired plants will be retired by 2025.North Asian markets supplied by Mount Arthur look like an exception, with Japan, South Korea and China making up about 80% of Australia’s thermal coal exports. The first two countries are rare cases where falling renewables costs have failed to undercut the black stuff.Even there, though, the picture is dimming: Japan’s coal-fired capacity will go into to decline starting 2023, and actual demand should fall faster since its most recent plants use fuel more efficiently, according to a report this week by the Institute for Energy Economics and Financial Analysis, a research group opposed to fossil fuels. South Korea now has taxes on coal amounting to $60 a ton and imports will fall by half by 2040, according to the International Energy Agency.The group of potential buyers looks thin, too. Anglo American Plc, which has a one-third stake in Cerrejon alongside BHP and Glencore Plc, doesn’t seem in the mood for bulking up. The Japanese trading houses that have historically been major investors in Australia’s mining industry, meanwhile, have been quietly divesting strategic coal stakes for several years. What does that leave? Glencore, despite a promise in February to cap coal output, shouldn't be ignored. In that announcement, the commodities trader noted it may still buy out some minority stakes, which seems to anticipate a deal on Cerrejon. Glencore could also, in theory, get rid of its South African operations and replace them with Mount Arthur, keeping total output within limits and swapping in a more profitable mine. That would depend on finding a buyer for those South African mines, though, and there’s enough turmoil in that country’s coal and energy sector as it is.China is another possible buyer for Mount Arthur. The pit is adjacent to Yancoal’s existing operations, suggesting possible synergies. Still, 2019 isn’t the best year to be doing this. Since February, the country has been holding up shipments of Australian coal for ill-defined reasons that have a whiff of geopolitics about them. Any Chinese business looking for government approval to buy an Australian coal mine will have to reckon with that.Beyond that, there’s even the possibility that smaller local miners will have a go. In the old days, the idea that a relative minnow like Whitehaven Coal Ltd. could absorb a pit the size of Mount Arthur would have seemed absurd, but at Macquarie’s estimate of a $600 million price tag it’s not impossible. Based on BHP’s latest results, a buyer could pay off that sum in 18 months or so and run the mine for cash, assuming rehabilitation costs weren’t too high. Still, how times have changed. Back when Rio Tinto was hawking its coal assets, the company could plausibly argue that it still saw a bright future for the stuff. Nowadays, BHP is warning that it could be “phased out, potentially sooner than expected,” even as it’s trying to tempt buyers. Those M&A bankers are going to have their work cut out to get a good price.To contact the author of this story: David Fickling at dfickling@bloomberg.netTo contact the editor responsible for this story: Matthew Brooker at mbrooker1@bloomberg.netThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.David Fickling is a Bloomberg Opinion columnist covering commodities, as well as industrial and consumer companies. He has been a reporter for Bloomberg News, Dow Jones, the Wall Street Journal, the Financial Times and the Guardian.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
- Bloomberg•8 days ago
Saudis Pledge to Keep Doing OPEC's Heavy Lifting as Shale Surges
(Bloomberg) -- Saudi Arabia is fulfilling its pledge to make deeper cuts in oil output than the OPEC+ agreement on output requires, according to the first indication of the kingdom’s production since the supplier group extended curbs earlier this month.The de facto leader of the Organization of Petroleum Exporting Countries will pump less than 10 million barrels a day of crude in both July and August, according to a person familiar with Saudi energy policy. Saudi Arabia will limit exports to fewer than 7 million barrels a day, said the person, who asked not to be identified because the information isn’t public.OPEC and partners including Russia agreed to keep cutting production through the end of March. The alliance is seeking to mop up excess crude in the market and buoy prices. Brent crude has gained about 1% this month to near $67 a barrel, helped by the extended cuts, geopolitical tensions and sanctions that crimped sales from Iran and Venezuela.Even as Saudi Energy Minister Khalid Al-Falih pledged that his country would continue doing more than its share to pare global supply, Middle Eastern oil producers are keeping Asia, their biggest regional market, well supplied. Consumption in Asia is picking up and will help boost demand in the second half, said the person.State oil company Saudi Aramco will supply full contractual amounts of crude to at least six buyers in Asia for August, in line with sales to that region in June and July. Persian Gulf producers are maintaining shipments to buyers that may be lacking crude from Iran, said Edward Bell, director of commodity research at Dubai-based bank Emirates NBD PJSC.The Saudis “need to make sure Asia stays well supplied, while taking away crude from regions that don’t need it as much,” Bell said. “Expect to see Saudi supplies to the U.S. constrained for the rest of the year.”OPEC, which pumps 40% of the world’s oil, said Thursday that it’s producing about 560,000 barrels a day more than will be needed next year as the ongoing surge in U.S. shale threatens to deliver another surplus. Global oil consumption will continue to grow in 2020 at the same pace as this year, OPEC said in its monthly report, with the expansion driven by emerging economies like India and China.Saudi Arabia’s crude exports to the U.S. hovered around 500,000 barrels a day in May and June and at about the same level so far in July, compared with just over a million barrels daily in August of last year, according to data from the U.S. Energy Information Administration.Planned Saudi production for July and August would be little changed from previous months, with June output at 9.73 million barrels a day, according to data compiled by Bloomberg.To contact the reporter on this story: Anthony DiPaola in Dubai at adipaola@bloomberg.netTo contact the editors responsible for this story: Nayla Razzouk at nrazzouk2@bloomberg.net, Bruce Stanley, Mohammed Aly SergieFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
- Bloomberg•8 days ago
OPEC Sees New Oil Surplus in 2020 as U.S. Shale Surges Again
(Bloomberg) -- A week after OPEC agreed to keep oil production restrained until early next year, the group’s first forecasts for 2020 showed it faces an even longer and tougher challenge.The Organization of Petroleum Exporting Countries, which pumps 40% of the world’s oil, estimated that it’s producing about 560,000 barrels a day more than will be needed next year as the ongoing surge in U.S. shale threatens to deliver another surplus. Supplies from producers outside the cartel will grow by more than twice as much as global oil demand, it forecast.OPEC and its partners agreed in Vienna last week to continue their output curbs into the first quarter of 2020, to balance markets against a faltering global economy and record American output. The latest outlook will present the coalition with a dilemma later this year: should they continue, and even double-down on the strategy throughout 2020, or abandon the cuts and risk a price slump.Crude prices, trading near $67 a barrel in London, remain below the levels most OPEC nations need to cover government spending.Global oil consumption will continue to grow in 2020 at the same pace as this year, at about 1.1 million barrels a day, or 1.1%, according to the report from OPEC’s Vienna-based research department. The expansion will be powered by emerging economies like India and China, but tempered by stagnant consumption in developed nations.Supplies from outside OPEC, however, will soar by 2.4 million barrels a day, as new pipelines in the U.S. enable the country’s shale-oil explorers to press on with more drilling. The fresh tide of American oil will be supplemented by other countries such as Brazil and Norway.As new non-OPEC supplies swamp the growth in demand, the amount of crude required from the cartel will slump sharply for a third consecutive year.An average of 29.27 million barrels will be needed from OPEC in 2020, according to the report. That’s significantly below the 29.83 million a day its 14 members produced last month, when their output fell again as the voluntary cutbacks were compounded by crises in Iran and Venezuela.That the organization’s production has fallen far more than intended this year, and may still prove to be too high, only illustrates the scale of its challenge. As of May, OPEC and its partners said they were cutting supply by about 700,000 barrels a day more than the 1.2 million a day pledged at the start of the year as Saudi Arabia reduced supplies more than it pledged.With OPEC pumping in excess of levels needed next year, the organization and its partners would have to trim output further to keep markets in equilibrium. However, Saudi Arabian Energy Minister Khalid Al-Falih signaled last week in Vienna he’s reluctant to go down this path, saying that the kingdom has already cut “deep enough.”Indeed, Thursday’s report may vindicate warnings from Al-Falih’s predecessor, Ali Al-Naimi, that production cuts by OPEC would only back-fire by giving prices enough support to encourage greater investment in U.S. shale.For now, there’s no sign the kingdom intends to reverse its current policy.Saudi output will remain under 10 million barrels a day in August, well below the limit agreed with OPEC, according to a person familiar with Riyadh’s energy policy. At last week’s meeting, OPEC and its partners signed a charter symbolizing their willingness to manage supplies over the long term, and Al-Falih said that intervention will be necessary until American shale output goes into decline.The organization’s latest outlook suggests he will be tested on that commitment.(Updates with over-compliance in the ninth paragraph.)To contact the reporter on this story: Grant Smith in London at gsmith52@bloomberg.netTo contact the editors responsible for this story: James Herron at jherron9@bloomberg.net, Rakteem Katakey, John DeaneFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
- Coindesk•8 days ago
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- Simply Wall St.•9 days ago
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- Financial Times•9 days ago
Oil rises on US inventory drawdown and geopolitical tensions
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