OIL PRICE INTELLIGENCE REPORT
In today’s newsletter, we will take a quick look at some of the critical figures and data in the energy markets this week.
We will then look at some of the key market movers early this week before providing you with the latest analysis of the top news events taking place in the global energy complex over the past few days. We hope you enjoy.
But before we get onto the data please do take a moment to look at ourpremium service. If you find the weekly free letters of value then you will get huge benefit from a premium membership. There is no risk to you as the first 30 days are without charge so you can see if the service is right for you at our expense. To find out more please click here.
Chart of the Week
• Natural gas has eaten away at coal’s market share in the electric power sector. But falling natural gas production and slightly higher hub prices could lead, at least in the short-term, to a stabilizing of coal’s position.
• The EIA projects natural gas-fired generation to cost more than coal generation in 2016 and 2017. Coal-fired power plants, as a result, could be called on more in the years ahead.
• But the decline of coal is explained by a lot more than just variable costs of generation. The age of a plant; maintenance and major infrastructure upgrades to old plants; lawsuits; regulations; and public relations all factor into the accelerated rate of coal plant closures in recent years.
• Still, coal will at least get a temporary market respite from higher natural gas prices.
Market Movers
• Sunoco Logistics (NYSE: SXL) announced a $20 billion merger with Energy Transfer Partners (NYSE: ETP) on Monday. Both stocks fell by about 7 percent on Monday on the news.
• Noble Energy (NYSE: NBL) and Delek Drilling (OTCPK: DGRLY) areclosing in on the $4 billion in financing they need to drill the massive Leviathan gas field off the coast of Israel.
• Concho Resources (NYSE: CXO) agreed to purchase over 16,000 acres in the Delaware Basin in New Mexico for $430 million in cash and stock. Concho also said that its production could rise by 20 percent year-on-year.
Tuesday November 22, 2016
Oil prices soared on Monday following news that OPEC is making progress on a deal to cut production. The potential breakthrough is coming from Iraq, which is widely seen as the most obstinate of all OPEC members (along with Iran), arguing that it needs higher production to pay for its war against the Islamic State. Iraqi officials said they will offer three new proposals at the technical meeting taking place this week in Vienna. The WSJ reports that the proposals “will be consistent with OPEC policy and are designed to bolster the unity of the group,” although few specifics were available. “All of the options will be logical and in line with OPEC policy,” Iraqi oil minister said. WTI spiked by nearly 4 percent and Brent was up 4.6 percent on Monday before falling back a bit on Tuesday afternoon.
Optimism on OPEC deal. On top of the new openness from Iraq, commentsfrom other prominent OPEC and non-OPEC officials buoyed the markets further. Iran’s oil minister said that it’s “highly probable” that OPEC reaches a deal. Russian President Vladimir Putin said he sees no obstacles to a deal. “It is likely everybody will be on board by the end of the day,” said Ibrahim Waya, a Nigerian official. One last thing that could boost the chances of a deal: the latest proposal being discussed in Vienna is a deal that could last for just six months rather than a year, making it easier to stomach for some of the holdouts.
PDVSA misses $404 million bond payment. Venezuelan state-owned oil company PDVSA missed coupon payments on three bonds, a worrying sign for a company (and country) dangerously close to insolvency. That counts as a technical default, although the company will have a 30-day grace period. “We still believe PdVSA will make these payments,” the J.P. Morgan analysts said, according to the Wall Street Journal.
We will then look at some of the key market movers early this week before providing you with the latest analysis of the top news events taking place in the global energy complex over the past few days. We hope you enjoy.
But before we get onto the data please do take a moment to look at ourpremium service. If you find the weekly free letters of value then you will get huge benefit from a premium membership. There is no risk to you as the first 30 days are without charge so you can see if the service is right for you at our expense. To find out more please click here.
Chart of the Week
• Natural gas has eaten away at coal’s market share in the electric power sector. But falling natural gas production and slightly higher hub prices could lead, at least in the short-term, to a stabilizing of coal’s position.
• The EIA projects natural gas-fired generation to cost more than coal generation in 2016 and 2017. Coal-fired power plants, as a result, could be called on more in the years ahead.
• But the decline of coal is explained by a lot more than just variable costs of generation. The age of a plant; maintenance and major infrastructure upgrades to old plants; lawsuits; regulations; and public relations all factor into the accelerated rate of coal plant closures in recent years.
• Still, coal will at least get a temporary market respite from higher natural gas prices.
Market Movers
• Sunoco Logistics (NYSE: SXL) announced a $20 billion merger with Energy Transfer Partners (NYSE: ETP) on Monday. Both stocks fell by about 7 percent on Monday on the news.
• Noble Energy (NYSE: NBL) and Delek Drilling (OTCPK: DGRLY) areclosing in on the $4 billion in financing they need to drill the massive Leviathan gas field off the coast of Israel.
• Concho Resources (NYSE: CXO) agreed to purchase over 16,000 acres in the Delaware Basin in New Mexico for $430 million in cash and stock. Concho also said that its production could rise by 20 percent year-on-year.
Tuesday November 22, 2016
Oil prices soared on Monday following news that OPEC is making progress on a deal to cut production. The potential breakthrough is coming from Iraq, which is widely seen as the most obstinate of all OPEC members (along with Iran), arguing that it needs higher production to pay for its war against the Islamic State. Iraqi officials said they will offer three new proposals at the technical meeting taking place this week in Vienna. The WSJ reports that the proposals “will be consistent with OPEC policy and are designed to bolster the unity of the group,” although few specifics were available. “All of the options will be logical and in line with OPEC policy,” Iraqi oil minister said. WTI spiked by nearly 4 percent and Brent was up 4.6 percent on Monday before falling back a bit on Tuesday afternoon.
Optimism on OPEC deal. On top of the new openness from Iraq, commentsfrom other prominent OPEC and non-OPEC officials buoyed the markets further. Iran’s oil minister said that it’s “highly probable” that OPEC reaches a deal. Russian President Vladimir Putin said he sees no obstacles to a deal. “It is likely everybody will be on board by the end of the day,” said Ibrahim Waya, a Nigerian official. One last thing that could boost the chances of a deal: the latest proposal being discussed in Vienna is a deal that could last for just six months rather than a year, making it easier to stomach for some of the holdouts.
PDVSA misses $404 million bond payment. Venezuelan state-owned oil company PDVSA missed coupon payments on three bonds, a worrying sign for a company (and country) dangerously close to insolvency. That counts as a technical default, although the company will have a 30-day grace period. “We still believe PdVSA will make these payments,” the J.P. Morgan analysts said, according to the Wall Street Journal.
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