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Oil prices jump more than 4% in the wake of Hamas attack on Israel

Oil prices jump with more than 4% on Monday as the Israel-Hamas conflict extended into its third day following a surprise attack on Israel by Palestinian militants Hamas.

Global benchmark Brent settled 4.2% higher at $88.15 a barrel, while the U.S. West Texas Intermediate gained 4.3% to $86.38 per barrel.

At dawn on Saturday during a major Jewish holiday, Palestinian militant group Hamas launched a multi-pronged infiltration into Israel — by land, sea and air using paragliders. The attack came hours after thousands of rockets were sent from Gaza into Israel.

At the time of publication, at least 700 Israelis have reportedly been killed, according to NBC News. The Palestinian Health Ministry, meanwhile, has recorded 313 deaths so far.

While there is a surge in crude prices, analysts believe it will be a knee-jerk reaction, and likely temporary.

“For this conflict to have a lasting and meaningful impact on oil markets, there must be a sustained reduction in oil supply or transport,” said Vivek Dhar, Commonwealth Bank’s director of mining and energy commodities research.

“Otherwise, and as history has shown, the positive oil price reaction tends to be temporary and easily trumped by other market forces,” he wrote in a daily note. The conflict does not directly put any major source of oil supplies in danger, he added.

Neither side is a major oil player. Israel boasts two oil refineries with a combined capacity of almost 300,000 barrels per day. According to the U.S. Energy Information Administration, the country boasts “virtually no crude oil and condensate production.” By a similar strand, the Palestinian territories produce no oil, data from EIA shows.

However, the conflict sits at the doorstep of a key oil producing and export region for global consumers.

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Source: CNBC

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Middle East Gas Giants Look To Capitalize On Booming Demand

Global gas, specifically the Middle East gast giants, demand is projected to rise in the next decade. This is influencing a 12.5% surge in production between 2023 and 2030.

However, Rystad Energy forecasts that even in scenarios of 1.9 and 2.5 degrees Celsius warming. This is with the rapid growth in renewable energy sources. The current set of existing gas fields will not meet global demand, requiring rapid growth in unconventional gas supply. Gas-rich geographies such as the Middle East, with basins such as Rub al Khali, will play an essential role in bridging that gap, providing an estimated 20 million tons per annum (tpa) of LNG by 2040.

The production of unconventional gas, such as shale, has experienced rapid growth in recent years due to technological advancements and reduced lead times. This rapid growth has driven the global share of unconventional gas supply in global gas production at a pace that has previously required significantly more time to achieve, escalating from 4% in 2000 to 12% in 2022 and 35% in 2023.

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Source: Oil Price

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OPEC Optimistic on Demand, Calls for More Oil and Gas Investment

OPEC is optimistic on demand and sees under-investment as a risk to energy security. This is what Secretary-General Haitham Al-Ghais said on Monday at an energy industry event in Abu Dhabi.

He stressed the importance of continued investment in the oil and gas industry. He said he sees a call to stop investing in oil as counterproductive.

“We still see oil demand as quite resilient this year, as it was last year,” Al-Ghais said.

It is worth noting the group’s forecast was for year-on-year demand growth. IT is more than 2.3 million barrels per day (bpd).

He added that investment in the oil and gas sector was important for energy security.

“We are…running quite low on spare capacity; we have said this repeatedly and this requires a concerted effort by all of the stakeholders to see the importance of investing in this industry,” he said.

The UAE’s Energy Minister Suhail Al-Mazrouei echoed the call and said investment by both international and national oil companies was needed.

“And these investments need the financial world to be willing to finance oil and gas,” Al-Mazrouei said.

He later told reporters that his country is on track to expand its oil production capacity to 5 million bpd by 2027 from 4.2 million bpd currently.

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Source: ARAB NEWS

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US Oil And Gas Production Growth Accelerates Despite Higher Costs

US Oil And Gas Production expanded at a faster pace during the third quarter of the year despite still rising costs, the latest Dallas Fed Energy Survey has shown.

Costs have now been on the rise for 11 quarters in a row, the Dallas Fed said, with the situation particularly difficult for oilfield service providers.

Even with rising costs, optimism in the industry increased over the third quarter, likely thanks to rising oil prices, which also probably motivated the increase in production. The optimism was evident in respondents’ input despite expectations of still higher costs next year.

Speaking of prices, the respondents in the Dallas Fed survey forecast a WTI price of $87.91 per barrel on average for the final quarter of the year. This compares with an average price forecast of $77.48 in the previous quarter’s survey edition.

The Energy Transition Affecting US Oil and Gas Production

Asked about what the effects of the energy transition would be on the industry, about a third of respondents said they expected the transition to push the price of oil higher. Another third predicted the transition will push the price of oil significantly higher. Just 9% expect the transition to make oil cheaper.

These expectations suggest highly resilient oil demand in the face of EVs and other electrification efforts that are part of the transition push.

Another interesting take from the survey concerned oil consumption now and in 2050. Some 28% of respondents saw oil consumption in 2050 slightly higher than current levels while 25% saw it as substantially higher. Another 25% saw 2050 oil consumption as slightly lower than current levels and only 8% expected it to be significantly lower than current levels.

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Source: Oil Price

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Oil Moves Higher On EIA Inventory Draw

Crude oil prices moves higher today after the Energy Information Administration reported a crude oil inventory draw of 2.2 million barrels for the week to September 22.

This compared with an inventory draw of 2.1 million barrels for the previous week, which in turn followed a build of around 4 million barrels for the week before that.

In fuels, the EIA reported inventory builds.

Gasoline stocks added 1 million barrels in the week to September 22, which compared with a decline of 800,000 barrels for the previous week.

Gasoline production averaged 9.1 million barrels daily last week, which compared with 9.7 million barrels daily a week earlier.

In middle distillates, the EIA reported a modest inventory build of 400,000 barrels for the week to September 22, with production averaging 4.9 million barrels daily.

This compared with an inventory draw of 2.9 million barrels for the previous week when production of middle distillates averaged 4.8 million barrels daily.

The EIA report followed the American Petroleum Institute’s estimate, which showed a crude oil inventory draw of some 1.6 million barrels. More importantly, however, the API also estimated that stocks at Cushing, Oklahoma, had slipped to below 22 million barrels, which is on the brink of the minimum operating level for the hub.

Meanwhile, earlier today, oil prices inched up on continued concern about supply, despite the API’s estimate of an inventory build rather than the expected draw.

The news about Cushing also had a bullish effect on prices because if draws continue, it would reach a point, from which it would be useless to pump out crude due to compromised quality.

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Source: Oil Price

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12,100 New Jobs in Texas Oil and Gas This Year So Far

The Texas upstream oil and natural gas industry has added 12,100 jobs in 2023, Texas Oil and Gas Association (TXOGA) noted in a media release, citing newly-released data from the Texas Workforce Commission (TWC). In August alone, employment in the sector rose by 1,200 jobs, TXOGA highlighted.

“The oil and natural gas industry serves as a major driver of the Lone Star State’s robust economy,” said Todd Staples, president of TXOGA.

“The 1,200 jobs reported in August add to already strong job growth numbers for this year, continued evidence of the strong demand for these irreplaceable resources both at home and abroad,” he added.

In its review of the August Current Employment Statistics (CES) report from the U.S. Bureau of Labor Statistics (BLS), the Texas Independent Producers and Royalty Owners Association (TIPRO) said that Texas upstream employment for August 2023 totaled 208,500 jobs.

Texas Oil and Gas: The Industry has Added 51,500 Texas Upstream Jobs

Since the COVID-low point of September of 2020, the industry has added 51,500 Texas upstream jobs, averaging growth of 1,479 jobs a month, TXOGA pointed out. At 208,500 upstream jobs, compared to the same month in the prior year, August 2023 jobs were up by 18,200, or 9.6 percent, over August of 2022, TXOGA said.

Months with an increase in upstream oil and natural gas employment have outnumbered months with a decrease by 30 to five, according to TXOGA. Oil and natural gas jobs pay among the highest wages in Texas with employers paying an average salary of approximately $115,000 in 2022, the association said.

The upstream sector involves oil and natural gas extraction and excludes other industry sectors such as refining, petrochemicals, fuels wholesaling, oilfield equipment manufacturing, pipelines, and gas utilities, which support hundreds of thousands of additional jobs in Texas, TXOGA outlined.

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Source: Rig Zone

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Oil and Gas lease sale

First Oil and Gas lease sale of 2023 nets estimated $14.7 million in Wyoming

The Bureau of Land Management’s first oil and gas lease sale in over a year netted roughly $14.7 million in Wyoming — about $1.8 million more than last year’s sale.

Wyoming will receive 48% — roughly $7 million — of that revenue.

While Gov. Mark Gordon applauded the lease sale in a Monday statement, he noted that it represents “not even a quarter of a loaf.”

“The fact that our producers participated to the degree they did is a credit to the Wyoming oil and gas industry,” Gordon said. “Their efforts mean Wyoming will continue to provide energy for the Nation, even though they do so with increasing pressure from Washington, DC, to give up.”

Federal law requires the Bureau of Land Management to hold lease sales each year on a quarterly basis. But in 2021, President Joe Biden signed an executive order to pause these sales as part of his plan to address climate change by making the environmental review process for sales more stringent.

The higher mandatory fees required by the Inflation Reduction Act mean higher fuel prices at the pump. Since Wyoming receives 48 percent of royalty rates, bonus bids and rental payments, the State will receive more revenue due to the increased federal fees, which comes at a cost to consumers and the oil and gas economy.

The Wyoming oil and gas industry has yet to regain the number of drilling rigs or employees it had in 2019. The number of drilling rigs for 2023 has hovered around 20, slightly more than half of the number in 2019.

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Source: Casper Star-Tribune

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Tighter Oil Market Supports Prices

Despite lingering concerns about China’s economy, global oil demand hit a record high in June. It could be on track for another form of tighter oil market move in August. This is what the International Energy Agency (IEA) said in its latest monthly report.

The cuts from OPEC+ and Saudi Arabia are coupled with expected continued strength in demand. They are set to result in inventory draws for the rest of the year, supporting oil prices, analysts and forecasting agencies say.

China, of course, will be the key driver of price moves either up or down, depending on how its economy fares and how much stimulus authorities are ready to unroll to help a much-awaited rebound after the reopening early this year.

So far into 2023, weaker-than-expected Chinese economic data have stopped price rallies in their tracks. U.S. economic prospects have turned somewhat brighter, with the Fed and investment banks no longer expecting a recession.

But persistent worries about China are holding oil prices back.

Just this week, following seven consecutive weeks of gains, oil prices dipped on three consecutive days after China reported another set of weak economic data. Concerns about the property and credit markets in the world’s second-largest economy also weighed on market sentiment.

The Central Bank of China pledged on Thursday to keep its policy “precise and forceful”. This is to help the economy struggling to lift off.

The bank vowed to “better leverage the dual functions of aggregate and structural monetary policy tools and firmly support the recovery and development of the real economy.”

The oil market continues to be cautious about China’s economy. This is until market participants see additional measures to prop up the economy in the world’s top crude oil importer. Moreove the results of these measures are the concerns about China will not abate.

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Source: Oil Price

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US Gas Prices Climb to Highest Level in Nearly 10 Months

US Pump gas prices are creeping toward $4 a gallon nationally.

According to AAA, the national average for regular gasoline hit $3.85 a gallon on Monday. That’s the highest level since October 19 and comes just weeks ahead of Labor Day weekend when millions of Americans will hit the roads.

The summer spike in gas prices has eased, with the cost to drivers moving just gradually higher more recently. The national average is up by two cents over the past week.

Still, gas prices have climbed by 28 cents over the past month and 32 cents since the Fourth of July as a result of higher oil prices caused by Russia and Saudi Arabia cutting supply and extreme heat sidelining some US refineries.

When the summer unofficially started Memorial Day weekend, drivers were enjoying big savings on gas from the year before. Those year-over-year savings have nearly vanished, with the national average down just 11 cents from this point last summer.

According to AAA, there are now 11 states averaging $4 or higher, including Arizona, Illinois and Utah. Colorado and Michigan aren’t far away.

OPEC leader Saudi Arabia earlier this month extended its oil production cut at least until September. An official source from the Saudi Ministry of Energy told state-run news agency SPA On August 3 that the kingdom will extend this voluntary cut of one million barrels per day. The source told state media the cut could be extended further and the move is aimed at supporting the stability and balance of oil markets.

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Source: CNN

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Oil and Gas lease sale

Chevron Acquires PDC Energy, Creating the Largest Oil & Gas Business in Colorado

Denver-based PDC Energy in acquisition by Chevron Corporation, creating Colorado’s largest oil and gas company. The deal comes three years after Chevron acquired Noble Energy.

The new company will now hold 600,000 acres statewide. It is about half of that in the Denver-Julseburg Basin adjacent to Chevron’s existing operations. This will produce 400,000 barrels of oil per day on average. It will be one of Chevron’s top five production units in the world.

“We have an inventory that has permission and we see possibilities here,” Chevron’s Regional Vice President, Kim McHugh told CBS News Colorado.

“Both companies have the commitment to lowering their carbon footprint.”

McHugh also said, “These two companies have similar cultures both safe and reliable benefitting the communities where they operate.”

Chevron is based in California. it is also looking to expand its renewable fuel business in Colorado to include hydrogen, geothermal and carbon sequestration.

McHugh says the company has not made decisions yet regarding possible layoffs at PDC Energy.

No decision on possible layoffs after Denver-based PDC Energy was acquired by Chevron

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Source: CBS News

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