Mark Latham Commodity Equity Intelligence Service

Friday 24th June 2016
Background Stories on www.commodityintelligence.com

News and Views:

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    Macro

    UK votes to leave - Germany: 'No special treatment for Britain'


    Manfred Weber, a senior German conservative MEP and a close ally of Angela Merkel, has warned Britain will receive "no special treatment" and must leave the EU within two years.

    He writes in four tweets: "We respect and regret the decision of the British voters. It causes major damage to both sides.

    Manfred Weber, a senior German conservative MEP and a close ally of Angela Merkel CREDIT: EPA

    "This was a British vote, not a European vote. Co-operation within Europe is a question of self-assertion of the continent.

    "We want a better and smarter Europe. We have to convince the people and bring Europe back to them.

    "Exit negotiations should be concluded within two years at max. There cannot be any special treatment. Leave means leave."

    http://www.telegraph.co.uk/news/2016/06/24/eu-referendum-results-live-brexit-wins-as-britain-votes-to-leave/
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    Commodities Reel in World Market Tumult as U.K. Votes for Brexit


    Commodities were swept up in global market turmoil as investors sold off growth-related assets including oil and copper and sought haven in precious metals as U.K. voters opted to leave the European Union after more than four decades.

    The Bloomberg Commodities Index fell as much as 2 percent, the most in more than a month, as Brent crude futures slumped 6.6 percent and copper in London tumbled 4 percent. Gold rose the most in almost 8 years and silver rallied in its biggest intraday gain in 18 months. BBC projections showed voters backing “Leave” by 52 percent to 48 percent as of 5:11 a.m. London time, in a surprising rejection of Europe’s postwar political and economic order.

    As results rolled in to show voters in the world’s fifth-largest economy opted to leave the EU, markets across the globe plunged into turmoil. The British pound slid to the lowest since 1985 and Asian stocks tumbled while safe-haven assets including U.S. Treasuries rose. Energy and raw material companies led losses in equities across Asia.

    “It’s a big shock, the fear is spreading,” Kang Yoo Jin, a Seoul-based commodities analyst at NH Investment & Securities Co., said by phone. “Everything else in commodities except precious metals is getting slammed right now as the general expectation throughout this week was that Brexit won’t happen. Once markets open in the U.S., it could be a ‘Black Friday’ as there is a chance that prices will be hit harder.”

    Volatile Markets

    Energy and industrial metals, where demand is tied to expectations for global economic growth, were hardest hit. Brent crude traded 5.9 percent lower at $47.90 a barrel, after tumbling the most since April 18. Copper slid the most since Jan. 7 to $4,588 a metric ton and nickel fell as much as 4.7 percent. Agricultural commodities had smaller losses, with wheat down as much as 2.4 percent in Chicago and corn losing as much as 2.6 percent.

    Precious metals were the lone bright spot, as investors expect them to hold their value in times of economic turmoil. Gold rose as much as 8.1 percent, the most since Sept. 17, 2008, days after Lehman Brothers filed for bankruptcy at the height of the global financial crisis. Silver gained as much as 6 percent, the most since Dec. 1, 2014. In a sign of risk aversion, yields on U.S. 10-year Treasury notes slid.

    “I have never seen volatility like this in my whole life,” Bob Takai, Tokyo-based president of Sumitomo Corp. Global Research Co., said by phone. “It’s definitely a flight to quality assets. In these kinds of circumstances, gold, and also silver a little bit, are the typical places to hide investors’ money.”

    http://www.bloomberg.com/news/articles/2016-06-24/commodities-reel-in-world-market-tumult-as-u-k-votes-for-brexit

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    Five questions for Britain and Europe after Brexit vote


    Britons voted in a referendum on Thursday to leave the European Union. Following are answers to key questions on what will happen next in Britain’s relations with the bloc:

    1. WHAT DOES IT ALL MEAN?

    The EU is in shock and entering uncharted territory. No member state has ever left and Article 50 of the EU treaty, which sets out how a state can exit the bloc, offers little detail. Although it provides a sketchy legal framework for a two-year period of withdrawal (see below), many fear the process can quickly become acrimonious, disrupting the economy and European affairs across the board.

    Cameron has said he will notify the Union “immediately” that Britain is leaving by invoking Article 50. But it is not clear how quickly Britain will set that two-year clock ticking and the EU itself cannot, officials believe, trigger the process itself.

    Having lost, Cameron faces huge pressure from his divided Conservative party to resign, although he should remain premier until the party elects a successor. Pro-Brexit potential successors may try to prevent him launching the departure process right away. EU leaders have hoped Cameron might deliver formal notice when they meet him at a summit on Tuesday but many seem willing to give Britain several weeks to get organised.

    Some Brexit campaigners have suggested Britain should wait before triggering Article 50 to give more time for negotiation, possibly even to win better EU membership terms or to secure a deal to retain British access to EU markets once it has left.

    EU leaders have ruled out further talks on membership — “Leave means leave,” they say — and many want a quick, two-year divorce while negotiating terms for a future, arms-length relationship may take much longer. However, major EU powers appear keen to see as orderly a transition as possible to a new relationship. That could involve Article 50 negotiations being extended beyond two years to allow time for a broader deal. But such an extension requires the consent of all 28 member states, and reaching that unanimity could be problematic.

    A deal Cameron struck with EU leaders in February to curb immigration, protect London finance interests from the euro zone and opt out of “ever closer union” is killed by the referendum.

    If no treaty is agreed, EU law simply ceases to apply to Britain two years after it gives formal notice it is leaving.

    Until a departure treaty is signed — which requires assent from Britain and a majority of the remaining 27 states weighted by population — Britain remains, in principle, a full member of the EU but will be excluded from discussions affecting its exit terms. In practice, many expect British ministers and lawmakers to be rapidly frozen out of much of the Union’s affairs.

    Some Brexit campaigners have also said Britain should act more quickly, for example to stop funding the EU budget or curb immigration from EU states. That could provoke EU reprisals.

    “The Article 50 process is a divorce: who gets the house, who gets the kids, who gets the bank accounts,” a senior EU official said, referring to priorities such as settling the EU budget and the status of Britons living in other EU states and of EU citizens in Britain — several million people in total.

    Failing to stick to Article 50 would be “messy divorce territory”, the official told Reuters: “It is spouses, instead of working through lawyers, throwing dishes at each other.”

    An array of laws and EU entitlements will cease to apply to British business and citizens, creating what Brexit campaigners say will be opportunities for more growth and more selective immigration but which Cameron has said will do long-term damage to the economy and Britain’s global influence.

    New trade barriers would hurt both sides’ economies. But the EU fears a political “domino effect” would cost more long-term.

    2. WHAT’S HAPPENING RIGHT NOW?

    European Parliament leaders meet at 8 a.m. (0600 GMT).

    European Council President Donald Tusk, who will chair the summit next week and has spoken to all the leaders in the days before the vote, will deliver a statement in the name of the Council, the EU’s governing body, once the result is official.

    European Commission President Jean-Claude Juncker, the EU chief executive, hosts Tusk and European Parliament President Martin Schulz at his Berlaymont headquarters in Brussels at 10:30 a.m. (0830 GMT). Also present will be Dutch Prime Minister Mark Rutte, whose government holds the rotating EU presidency.

    Look for a mantra of Three Rs: Regret – at losing nearly a fifth of the EU economy and more of its military and global clout; Respect – for the will of the British people; and Resolve – to keep the rest of the Union together. Leaders will also remind Britain that it remains a full member for the time being.

    Foreign ministers are gathering for a regular meeting in Luxembourg. The German and French foreign ministers will meet counterparts from the other four EU founders — Italy, the Netherlands, Belgium and Luxembourg. All the bloc’s ministers will discuss the vote over lunch from 1 p.m.

    Tusk has plans, as yet unconfirmed, to fly to key capitals, Rome, Berlin and Paris over the weekend to discuss the next steps. Foreign ministers of the founding six may meet in Berlin on Saturday. EU envoys meet in Brussels on Sunday and Juncker may bring forward to Sunday from Monday a meeting of the 28 members of the Commission. French President Francois Hollande and German Chancellor Angela Merkel meet in Berlin on Monday.

    Britain’s commissioner, close Cameron ally Jonathan Hill, faces being stripped of his sensitive portfolio overseeing banks and financial services. He may choose to resign. That would allow a new British premier to appoint someone else to the Commission, albeit for a limited period until Britain leaves.

    Some euro zone finance ministers have said they may meet at the weekend, though Eurogroup officials say there are no plans.

    EU leaders meet in Brussels for a 24-hour summit starting at 5 p.m. on Tuesday. EU officials expect Cameron to report on the vote and what Britain will do next, then go home that evening.

    Leaders may agree to meet again in July.

    3. WHAT IS ARTICLE 50?

    This 261-word section of the Lisbon Treaty has the following key phrases:

    – A Member State which decides to withdraw shall notify the European Council of its intention … The Union shall negotiate and conclude an agreement with that State, setting out the arrangements for its withdrawal, taking account of the framework for its future relationship with the Union.

    – It shall be concluded … by the Council, acting by a qualified majority.

    – The Treaties shall cease to apply to the State in question from the date of entry into force of the withdrawal agreement or, failing that, two years after the notification … unless the European Council, in agreement with the Member State concerned, unanimously decides to extend this period.

    – The member of the European Council or of the Council representing the withdrawing Member State shall not participate in the discussions … or in decisions concerning it.

    4. WHERE DOES THE EU GO FROM HERE?

    The Union needs quickly to fill a 7-billion-euro hole in its 145-billion-euro annual budget, which is currently fixed out to 2020, as it loses Britain’s contributions while saving on what Britons receive from EU accounts.

    The EU will also want to clarify as quickly as possible the status of firms and individuals currently using their EU rights to trade, work and live on either side of a new UK-EU frontier.

    Britain is likely give up its six-month presidency of EU ministerial councils, due to start in July next year. Its place may be filled by Estonia or, possibly Malta or Croatia.

    EU leaders may push for a quick show of unity on holding the bloc together in the face of eurosceptics inspired by the result in Britain — including National Front leader Marine Le Pen, who leads polls for next April’s French presidential election.

    Divisions between Berlin and Paris on managing the euro zone probably rule out a big move on that front before both hold elections in 2017. Closer EU defence cooperation, without sceptical Britain, may be revived. A major EU security policy review is already on the summit agenda as is a new push to tighten control on irregular immigration from Africa.

    Many leaders caution against alienating voters by moving too fast on integration, which they say has alienated voters. Summit chair Tusk wants to launch a formal process of reflection on where the Union has failed to connect with people.

    5. SO WHAT CHANGES?

    In principle, nothing changes immediately. Britons remain EU citizens and business continues as before. In practice, many believe trade, investment and political decisions will quickly anticipate British departure from the bloc. The EU could also face a Britain breaking apart if europhile Scots make another push for independence and seek to join the EU on their own.

    There is a “Brussels consensus” that Britain must be made an example of for leaving and will face a chilly future, cast out to perhaps talk its way back later into some kind of trade access in return for concessions such as free migration from inside the bloc and contributions to the EU budget – things which Brexit voters want to end but which the likes of Norway and Switzerland have accepted in varying forms.

    However, cautious diplomats do not rule out surprise turns.

    http://www.mineweb.com/news-fast-news/five-questions-britain-europe-brexit-vote/

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    Brazil police arrest former minister Paulo Bernardo: media


    Brazil police arrested former minister Paulo Bernardo and raided Workers Party headquarters in Sao Paulo on Thursday in the latest stage of its massive probe into corruption at state-run companies, Globo TV and O Estado de S.Paulo newspaper said.

    Bernardo was planning minister and communications minister during Workers Party administrations for about 10 years. Police also carried out searches at the house of his wife, Senator Gleisi Hoffmann, Globo TV said.

    Bernardo and Hoffmann were indicted in March on charges of corruption for their suspected involvement in an illegal campaign finance scheme uncovered in 2014. They have denied any wrongdoing.

    Brazilian police were not immediately available to comment on the reports.

    Some of Brazil's most powerful executives and politicians face charges or are in jail for taking kickbacks in public works and funneling part of the money to fund political campaigns.

    http://www.reuters.com/article/us-brazil-politics-idUSKCN0Z913Q
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    Chilean politician put under house arrest in wide corruption scandal


    A Chilean court ordered that a prominent former senator be placed under nighttime house arrest, while authorities investigate him for possible tax fraud and bribery.

    Pablo Longueira, who was a presidential candidate in Chile's 2013 election, is accused by prosecutors of receiving close to $1 million from specialty mining company SQM from 2009 to 2013, then hiding the donations through falsified receipts in contravention of Chilean law. He also is accused of accepting bribes while working on a 2010 law that regulates mining concessions.

    The order for Longueira's arrest came late on Wednesday night, six days after a court jailed conservative senator Jaime Orpis after he was convicted of falsifying donation receipts.

    It also comes the day after Chile's public prosecutor said it was investigating a former high-level cabinet official in leftist President Michelle Bachelet's government for bribery and tax offenses.

    Longueira has maintained his innocence.

    "I understand the charges and I don't agree with them," he said during a brief appearance before a judge.

    The current scandal caused Longueira to resign in March from the UDI party, which was founded by right-wing allies of former dictator Augusto Pinochet.

    The UDI, like several other major political parties in Chile, has been wracked by a series of money-in-politics scandals in the past year and a half. That in turn has tarnished Chile's reputation for transparency and left Chileans disenchanted with politicians across the spectrum.

    http://www.reuters.com/article/us-chile-crime-idUSKCN0Z91LO

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    Oil and Gas

    Iran floating oil storage

    Iran floating oil storage

    Floating Storage Update


    The amount of Iranian oil on floating storage has decreased by

    1.9 M Barrels 

    As the Dan leaves the fleet

    The Current Amount Of Oil Stored


    46.7 M Barrels 

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    Cheap LNG May Lure 50 More Nations to Gas From Oil, WoodMac Says


    The number of liquefied natural gas importers may more than double as a glut damps prices and encourages nations to ditch crude, according to Wood Mackenzie Ltd.

    More than 50 countries may switch to LNG, with demand from new importers accounting for about 150 million metric tons per year (7.2 trillion cubic feet of gas) by 2025, amid an oversupply of the fuel and tankers to carry it, according to Noel Tomnay, vice president research global gas and LNG at the consultant. That’s about 61 percent of the current global market.

    “You’ve got easy access to shipping and you’ve got easy access to supply, and you’re going to get, we believe, further rises in the oil price whereas LNG prices, at spot level, are probably going to be quite flat,” Tomnay said in an interview in London. “The opportunity is going to become increasingly compelling for markets to switch in to gas.”

    Egypt, Jordan and Pakistan increased the number of LNG importers to 34 last year, helping offset the first decline in Asian purchases since 2009, according to the International Group of LNG Importers. Markets are forming as countries consider switching to gas from crude after prices for the fuels diverged, with spot LNG in Japan sliding 45 percent this year as Brent oil gained 35 percent.

    Demand and supply on the LNG market won’t align until 2021, according to the International Energy Agency, which estimates that the crude market will balance next year.

    Infrastructure Investment

    This year, WoodMac expects five new importers of the gas chilled to minus 162 degrees Celsius (minus 260 Fahrenheit) to turn it into a liquid for transport by ship. They are Colombia, Jamaica, Malta, the Philippines and Abu Dhabi.

    While markets such as Bangladesh can easily turn to LNG, most the new entrants, including El Salvador, Ghana and Kenya, would be switching from naphtha, diesel and fuel oil and require investment in infrastructure such as new pipelines and power plants, Tomnay said.

    That would be a boon for suppliers and companies that provide floating storage and regasification units, which are a quicker and cheaper way to receive the fuel and pump it into local networks than traditional land-based terminals. Hoegh LNG Holdings Ltd. will provide an FSRU to Colombia, while Excelerate Energy will supply a floating terminal to Abu Dhabi.

    Emerging Markets

    LNG suppliers from French energy company Total SA to trading house Noble Group Ltd. have said they are looking at emerging markets for future demand growth. While it will be harder for trading companies to enter new markets due to financing constraints, they may benefit from relationships formed supplying oil to those markets, Tomnay said.

    To help the countries start imports, some suppliers may offer one-stop solutions and develop partnerships for building infrastructure, Tomnay said. Floating power plants may be used to allow a regas facility to operate alongside generators, he said.

    Long-term contracts will be needed to support the construction of infrastructure, and governments in most of these markets would prefer a link to oil as a “default position,” to avoid risks associated with other indexes, he said.

    “If you can do a pricing deal linked to oil but discounted to oil, it’s going
    to be attractive,” Tomnay said.

    http://www.bloomberg.com/news/articles/2016-06-23/cheap-lng-may-lure-50-more-nations-to-gas-from-oil-woodmac-says

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    Oil Cargoes Lack Buyers in Europe as Refinery Demand Falters


    Cargoes of crude oil are struggling to find buyers in Europe as demand from refineries falters due to unplanned halts.

    Recent strikes at French refineries and the continued abundance of inventories mean demand for cargoes of newly pumped crude is weakening, according to DNB Markets and JBC Energy GmbH. That’s apparent in the price structure of derivatives linked to North Sea oil, where contracts for immediate delivery have been getting cheaper relative to later cargoes, broker data compiled by Bloomberg show.

    “From a physical perspective, the market is very bearish,” Eugene Lindell, an analyst at Vienna-based consultant JBC said by phone. “From a seasonal perspective, you’d have peak European crude intake in July and August” and refiners should be preparing for that, but “that’s not what we’re seeing.”

    Oil futures in New York have advanced about 90 percent from a 12-year low in February as disruptions from Nigeria to Canada and falling output in the U.S. ease a global surplus. While the biggest names in global oil markets, from Saudi Arabia’s Energy Minister to the International Energy Agency, share the view the global oil supply is now back in balance with demand, some data on physical oil flows point to a continued oversupply.

    In the North Sea, the price structure of derivatives called contracts for difference -- used in the North Sea for speculation or hedging -- has inverted. On June 1, they were in backwardation, an indication of strong market where cargoes for the earliest weeks fetch higher prices. Now they are in contango, a sign of a weak market where earlier cargoes are cheapest.

    The CFD for one week ahead traded at a discount of $2.10 a barrel Wednesday, according to data from PVM Oil Associates Ltd. compiled by Bloomberg. That compares to a gap of $1.23 on June 1 and is close to the widest discount since November, the data show. The discount narrowed to $1.96 Thursday.

    A handful of cargoes have taken longer than normal to sell in the North Sea. Total SA, one of the companies affected by the French industrial action, took delivery of a cargo of Forties crude onto a supertanker called Maran Thetis in April and was still trying to sell it earlier this week, according to traders and brokers monitoring price reporting agency Platts’s trading window. Samail, a tanker capable of shipping 2 million barrels of crude, discharged in Rotterdam on Thursday, three months after loading at Scotland’s Hound Point terminal.

    Negative Skew

    Options markets are also showing indications of weak demand for crude, Harry Tchilinguirian, head of commodities strategy at BNP Paribas SA, said by phone.

    Prices for the contracts are trading in a pattern that indicates traders are hedging more against declines than increases. That bearish bias, or skew, is the widest it’s been in at least four and a half years, according to exchange data compiled by Bloomberg.

    This reinforces “what we’re observing in the physical market,” Tchilinguirian said. “Despite outages of production in Nigeria, we’re not seeing in the curve structure on the physical side any indication of supply shortages, rather to the contrary.”

    http://www.bloomberg.com/news/articles/2016-06-23/oil-cargoes-lack-buyers-in-europe-as-refinery-demand-falters

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    Weir sells renewables units as it battles oil price slump


    Weir has sold two businesses as the industrial pump-maker feels the effects of the oil price crash - with no improvement in sight.

    Demand for the company’s products has slumped as the price of crude oil has collapsed, resulting in Weir being demoted from the FTSE 100 last year.

    In an attempt to deal with the impact of energy businesses slashing spending, the Glasgow-based firm launched a £100m disposal plan.

    This strategy has resulted in the sale of two businesses based around renewable energy: American Hydro Corporation, which supplies the hydroelectric and water distribution industries; and Spain’s Ynfiniti Engineering Services, which maintains wind turbines.

    Ynfiniti maintains wind turbines CREDIT: BLOOMBERG

    The combined value of the disposals is £34.4m, but could rise to £36.7m if certain conditions are satisfied, though Weir said it would take a loss of £5m on the deal. Together the two divisions had revenues of £38m last year, and made £1.4m operating profit.

    Finnish engineering group Wartsila is buying American Hydro. The buyer of Ynfiniti - which Weir bought into in 2010 - was not revealed.

    Proceeds from the sales will be used to reduce Weir’s debt and to pay its scrip dividend.

    Weir’s share price has collapsed since the oil price crash hit in late 2014, falling as low as 764p from pre-slump levels of £27.00.

    Posting annual results in February, chief executive Keith Cochrane described “unprecedented challenges” as full-year revenues fell by more than fifth to £1.9bn and pre-tax profits almost halved to £220m, forcing him to freeze the dividend, ending decades of steady rises.

    Weir chief executive Keith Cochrane

    Mr Cochrane also said he was seeking a further £40m of savings, on top the £110m made already.

    Revealing the sale, Weir also updated on market conditions. “Trading in April and May was consistent with the trends seen in the first quarter and in line with expectations,” the company said.

    "Orders for the five months to the end of May were 15pc below the prior year period, though this was better than the 21pc decline recorded in the first quarter.”

    http://www.telegraph.co.uk/business/2016/06/23/weir-sells-renewables-units-as-it-battles-oil-price-slump/

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    Origin Energy to Frack Amungee NW-1H in Australia's Beetaloo Shale Basin


    Falcon Oil & Gas on Wednesday said operations to re-enter the Amungee NW-1H well has begun.

    The company’s operating partner, Origin Energy, expects the running of production casing and cementing on this well to be completed by the end of June. A multi-stage fracture stimulation programme to test the Middle Velkerri “B” shale reservoir will be performed on Amungee NW-1H by the end of July, followed by a 90 day production testing program.

    Amungee NW-1H in Australia’s Beetaloo shale basin was drilled last year.

    Also, Falcon said civil works at the Beetaloo W-1 vertical well commenced mid-May 2016. Spudding of this well will take place in July after the rig is released from the Amungee NW-1H well.

    http://www.naturalgasasia.com/origin-energy-to-frack-amungee-nw-1h-in-australias-beetaloo-shale-basin-18856?utm_content=buffer86d9c&utm_medium=social&utm_source=twitter.com&utm_campaign=buffer
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    Colombia's Ecopetrol offers 20 blocks in auction launch


    Colombia's state oil company Ecopetrol offered 20 oil and gas blocks for auction on Thursday, part of a company plan to cut back amid low global crude prices.

    One-hundred and thirty-eight companies from 21 countries, some of which already operate in the Andean country, attended the auction launch, Ecopetrol said in a statement.

    "The fields are close to logistical facilities, which adds extra attraction for small and medium sized gas and oil companies," the company said.

    The blocks will be sold in an electronic auction on Sept. 30.

    Ecopetrol has been selling assets in a bid to fund its investment plan, which is down by $1.8 billion this year.

    http://www.reuters.com/article/ecopetrol-colombia-idUSL1N19F250

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    US Shale Oil: Frack count grows, production levelling out


    Rystad Energy expects horizontal oil completion activity in the US Shale to outpace drilling operations by 30% in 2H16, resulting in the contraction of DUC inventory by 800 wells. These additional completions will support total US oil output by providing an additional 300-350 kbbl/d to the exit-2016 rate. The additional output will be more than sufficient to balance the base production decline. The inventory of 4,000 drilled but uncompleted oil wells (DUCs) is estimated to hold close to 2 billion barrels of oil reserves.

    'Research shows that operators are now starting to complete wells that have previously been put on hold deliberately. This comes as more than 90% of the accumulated oil DUC inventory can be commercially completed at a WTI of 50 USD/bbl,' says Artem Abramov, Senior Analyst and product manager at Rystad Energy.

    The recent extreme production decline - among the key crude producing states, North Dakota suffered from an all-time high historical decline rate of 70 kbbl/d in April 2016 - fell far outside a natural 10-20 kbbl/d range, which one would expect as a result of current completion activity and mature base production. The significant decline acceleration appears to have come from older 'low decline' wells brought on-line before 2016.

    'It is not the first time such temporary shifts in base decline are observed, and they were caused by road restrictions imposed by the state over the month. This trend is unlikely to persist and should not be extrapolated to the US Shale industry in general,' says Abramov.

    The number of wells in Bakken is not sufficient to keep production flat and this trend is even more apparent in 2Q than in 1Q.

    http://www.oilvoice.com/n/US-Shale-Oil-Frack-count-grows-production-levelling-out/97dfb4bebe20.aspx?utm_source=twitterfeed&utm_medium=twitter&utm_campaign=Feed%3A+OilvoiceHeadlines+%28OilVoice+Headlines%29

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    Canada's oil output to grow 28 pct to 4.9 mln bpd by 2030 - report


    Canadian oil production will grow by 28 percent to hit 4.9 million barrels per day (bpd) by 2030, the Canadian Association of Petroleum Producers said in its annual report.

    The estimate is lower than CAPP's previous forecast of 5.3 million bpd by 2030, and comes amid a two-year rout in global oil prices that continue to hammer Canadian oil companies, which have slashed billions in capital expenditures.

    Production from Alberta's oil sands, the world's third-largest crude reserves and No. 1 source of U.S. oil imports, will hit 3.7 million bpd by 2030, the industry group said on Thursday.

    CAPP expects conventional oil production in Western Canada, including condensates, to fall to 1.1 million bpd by 2018 from 1.3 million bpd in 2015 and is expected to remain relatively stable to 2030.

    http://www.reuters.com/article/canada-energy-forecast-idUSL4N19F3FL

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    QEP Resources to pay $600 million for Permian shale acreage


    U.S. oil producer QEP Resources Inc said on Tuesday it would spend $600 million to buy acreage in the Permian Basin of Texas, the latest in a recent string of sector acquisitions as crude prices stabilize near $50 per barrel.

    The deal comes a day after Marathon Oil Corp said it would pay $888 million for Oklahoma acreage. Devon Energy Corp, Pioneer Natural Resources Co and others have announced similar deals so far this month, eager to ink agreements as oil prices rise from lows plumbed in 2015.

    QEP plans to buy 9,400 acres in Texas from unnamed sellers, funding the deal by offering 20 million shares of its stock.

    The offering was not immediately popular on Wall Street, and shares of QEP fell 3.2 percent to $18.70 in post-market trading after the deal's announcement.

    The deal is worth about $64,000 an acre, which is high compared with recent shale acreages in the United States, in part because of the Permian's famously thick oil-bearing rock formations.

    On a pure price per acre basis, acreage transactions inked since May have ranged between $11,190 an acre for Newfield Exploration Co's purchase of assets from Chesapeake Energy Corp in Oklahoma, to around $14,557 in Marathon Oil Corp's acquisition of PayRock Energy Holdings LLC.

    Denver-based QEP said the new land offers 430 potential drilling locations, a 50 percent boost to the company's possible drill sites in the Permian. The new land - in Martin County - is roughly 10 miles away from QEP's existing acreage in the Permian.

    The acreage currently produces 1,400 barrels of oil equivalent per day (boe/d) from vertical wells.

    "We believe this acquisition, combined with our existing crude oil assets, will enhance our crude oil production growth and improve our operating efficiency," Chuck Stanley, QEP's chief executive, said in a statement.

    The deal is expected to close by September.

    http://uk.reuters.com/article/us-qep-resources-shale-idUKKCN0Z72ZK
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    Agriculture

    Belarus may revive potash cooperation with Uralkali


    Belarus is considering cooperating with Russian potash producer Uralkali, it said on Thursday, the first sign the two sides might work together again since Uralkali broke off a potash alliance in 2013, triggering a fall in global prices.

    Uralkali is the world's biggest producer of potash, a widely used nutrient for crops, while state-controlled Belaruskali is the second largest.

    "New Uralkali shareholders are coming to me every month saying: 'accept us'. We are not against it - let's unite, on our conditions," Belarus President Alexander Lukashenko said at an event in Minsk.

    "Let's resume work and agree how much we will produce."

    Lukashenko did not disclose his conditions. The previous joint venture was based in Minsk, that time a crucial condition for Belarus and the main concern for Uralkali.

    Uralkali declined to comment. Its major shareholder, Uralchem, was not available for comment.

    The collapse of Uralkali's joint venture with Belaruskali triggered a fall in global prices as competition between producers intensified. Prices have not yet fully recovered.

    Lukashenko also said Minsk signed a new potash supply contract with India on Wednesday, although Belarussian Potash Company (BPC), a trading arm of Belaruskali, later said it was still finalising the deal.

    "I think it's a wonderful contract, taking into account the current prices," Lukashenko said, without disclosing the price or volume to be supplied.

    BPC said in its statement it expected to sign the contract in June.

    A major Indian customer, who asked not to be named, told Reuters both sides were close to signing the deal.

    In 2015, Uralkali was the first major producer to sign a one-year contract with India to supply 800,000 tonnes of potash at $332 per tonne.

    Apart from Belaruskali and Uralkali, Canada's Potash Corp of Saskatchewan and Agrium Inc, U.S.-based Mosaic Co and Germany's K+S AG supply the crop nutrient to India.

    India and China, the world's biggest fertiliser consumers, usually sign contracts for potash earlier in the year. This year, deals were delayed by high stocks built up by farmers.

    India's deal, if signed, will be a rare instance of that country signing a potash supply contract with a major producer before China. Contracts with China usually set a price floor and benchmark for other markets.

    http://www.reuters.com/article/belarus-potash-idUSL8N19F1A2
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    Base Metals

    Zambia expects copper output to double next year


    Zambia's copper output will rise by 5.5% to 750 000 t this year and output is expected to double to 1.5-million tonnes in 2017, Mines Minister Christopher Yaluma said on Thursday. Copper production in Africa's second-biggest producer of the metal was at 711 515 t in 2015.

    "It has to do with mining companies trying to optimise their production. We will also maintain consistent mining policies," Yaluma told journalists on the sidelines of a mining conference.

     Zambia's frenzied royalty tax changes last year caused concern in the mining sector and prompted firms to suspended major capital investment. The cabinet in February approved a new royalty system that varies depending on the copper price as the country seeks to keep struggling mines open and limit job losses. 

    Mining companies operating in Zambia including Vedanta Resources and Glencore cut thousands of jobs and closed copper shafts as prices fell after slower growth by top consumer China.

    http://www.miningweekly.com/article/zambia-expects-copper-output-to-double-next-year-2016-06-23
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    Steel, Iron Ore and Coal

    Lenders turn away BHP port debt plan, wary of coal


    Australian mining giant BHP Billiton pulled a $500-million debt refinancing plan at one of Australia's biggest coal export terminals after banks were reluctant to lend to the sector, said three sources with knowledge of the process. 

    The decision earlier this month sets back efforts to simplify complex debt arrangements at the Newcastle Coal Infrastructure Group (NCIG) project and stalls BHP's plan to release cash tied up in the terminal as it looks to strengthen its balance sheet amid a global commodities slump. 

    It also underscores the plight of the industry in trying to attract financing from lenders wary of coal's commercial outlook and contribution to climate change. 

    BHP had approached existing and new financiers for around $500-million of new debt to replace $685 million taken out in 2007. Under the now-defunct plan, BHP was to supply $185-million of the debt and would get the rest from lenders at generous terms, according to the three sources who spoke on the condition of anonymity because of the sensitivity of the subject. 

    "It wasn't a problem with BHP, it was more a coal market-specific problem," said Alen Golubovic, director of infrastructure and fixed income research for FIIG Securities, adding that banks were more open to rolling over existing debt than taking on new commitments. 

    http://www.miningweekly.com/article/lenders-turn-away-bhp-port-debt-plan-wary-of-coal-2016-06-23
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    Russia may increase production and export of coal in 2016 by 10 mln T


    Russia plans to increase coal production in 2016 by 10 million tonnes, while the increase of coal exports will also be around 10 million tonnes, Deputy Energy Minister Anatoly Yanovsky told the international conference "Prospects of energy cooperation between Russia - EU. Gas Aspect", sponsored by the Russian gas society.

    "We now have an increase in comparison with last year - more than 5.5 million tonnes of production and a similar increase in exports, including exports to the Asia-Pacific region. Relying on this data, than before the end of the year we will have plus 10 million tonnes in production and a 10 million tonnes increase in export," he said.

    Yanovsky added that the ministry expects coal exports to China to increase as well.

    Earlier, the deputy minister said that coal production in Russia in 2016 is planned at the level of 2015.

    In 2015, coal production in Russia reached 373 million tonnes against 358.2 million tonnes a year earlier.

    http://en.sxcoal.com/0/148337/DataShow.html
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    China May steel sector PMI further slides to 50.9


    The Purchasing Managers Index (PMI) for China’s steel industry fell to 50.9 in May from 57.3 in April, the first drop after climbing for five consecutive months, showed data from the China Federation of Logistics and Purchasing (CFLP),

    http://en.sxcoal.com/0/148327/DataShow.html
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    China’s major steel makers cut July prices


    China’s major steelmakers adjusted down prices for their main steel products for July delivery as a correction to their relatively high prices in response to weakening demand from end users.

    http://en.sxcoal.com/0/148328/DataShow.html
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    Molybdenum price is on tear

    Molybdenum price is on tear

    While base metals have enjoyed a good 2016 so far with only lead (-5%) in negative territory for the year and the likes of zinc (+27%) and tin (+18%) entering bull markets, molybdenum is making a star turn.

    A metric tonne of molybdenum on the London Metal Exchange fetched $16,500 on Thursday after customs data from China showed imports of concentrate and oxides surged 131% in May. Over the first five months of the year, China imported 8,851 tonnes of molybdenum concentrates and oxide, up 89% year on year.

    The price of molybdenum has shot up 43.5% year to date as it recovers from a record low of $10,200 hit in October last year.

    Thinly traded and primarily produced as byproduct of copper mining with annual supply of less than 270,000 tonnes a year, the molybdenum price is bound to be volatile, but the last year has been particularly topsy-turvey – the metal is still only worth half of what in July 2015.

    The difficult environment has led several molybdenum mine closures in north America which together with China supply more than two-thirds of the world's molybdenum used primarily in steel alloys.

    http://www.mining.com/molybdenum-price-is-on-tear/
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