Dec 5, 2018

Dec. 5, 2018 – Daily Energy Update

By Sarfaraz A. Khan

WTI crude oil: $52.38 a barrel
Brent crude: $60.98 a barrel
Natural gas: $4.53 per MMBtu

Oil prices have received support from the Saudi-Russian pact and the Sino-US trade war truce, though gains were partly offset by swelling US supply and a plunge in global stock markets amid concerns over an economic slowdown.

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Two major crude oil pipelines bringing Canadian oil into the US were hit by disruptions. TransCanada Corp's Keystone line, with a capacity of 590,000 bpd, was shut due to a third party issue. Enbridge Inc's Mainline pipeline was hit with outages and reduced flow rates. (Source)

The American Petroleum Institute (API) reported a crude oil inventory build of 5.36 million barrels for the week ending November 30. Analysts, on the other hand, were expecting a fall of 2.39 million barrels, as per S&P Global Platts. This could mark 11th consecutive weekly growth. Inventories at Cushing, Oklahoma increased by 1.44 million barrels. The U.S. Energy Information Administration will release its definitive crude oil numbers on Thursday at 11:00 a.m. EST. (Source)

Schlumberger (SLB) has warned that it has seen “significantly larger” drop in fracking activity which could fuel 15% drop in North America revenues for Q4-2018 on a sequential basis. Patrick Schorn, the company’s executive further said that its clients will take "a more conservative" approach in early 2019 due to the weakness in oil prices. Any international ramp-up could also slow down. (Source)

Shale oil driller Devon Energy (DVN) expects to spend $2.4 billion to $2.7 billion as capital expenditure in 2019. That’s below Bloomberg consensus of $2.76 billion. (Source)

Royal Dutch Shell (RDS.A, RDS.B) has confirmed that its Prelude floating liquefied natural gas unit will come online by the end of 2018. Prelude, which taps into taps into northern Australia’s natural gas reserves for export markets, can produce 3.6 million tons of LNG, 1.3 million metric tons of condensate, and 400,000 metric tons of liquefied petroleum gas in a year. (Source)

Exxon Mobil (XOM) and Chevron (CVX) are interested in selling their stakes in Azerbaijan’s largest oilfield – the Azeri-Chirag-Gunashli field in in the Caspian Sea – ending their 25 year old relationship. The ACG produced 600,000 barrels of oil per day in H1-2018, which equivalent to roughly three-quarters of Azerbaijan’s total oil production. Exxon Mobil holds 6.8% slice in ACG which the company believes can fetch up to $2 billion. Chevron holds 9.57% stake in ACG and 8.9% interest in the Baku-Tbilisi-Ceyhan pipeline. (Source I, Source II)