Mark Latham Commodity Equity Intelligence Service

Thursday 24th March 2016
Background Stories on www.commodityintelligence.com

News and Views:

Attached Files





    Macro

    Russia says Turkey suppresses Kurds under pretext of fighting terrorism


    Anakara is hindering Kurdish forces in their fight against Islamic State and using the slogan of a "war against terrorism" to suppress Kurdish organizations in Syria and Turkey, Russian Foreign Minister Sergei Lavrov said on Wednesday.

    Illegal traffic across the Turkish-Syrian border has decreased dramatically since the start of Russia's military operation in Syria, Lavrov told a news briefing.

    Referring to the Turkish border, he stressed a need to fully implement U.N. Security Council resolutions demanding a halt of trade in artifacts and oil with Islamic State and to stop "terrorists" from crossing into Syria, including from Turkey.

    http://www.reuters.com/article/mideast-crisis-russia-syria-turkey-idUSR4N16P01K
    Back to Top

    Negative Yields Seep Into Shell, Sanofi Debt as ECB Skews Market


    Sanofi and Royal Dutch Shell Plc bond yields have dropped below zero, highlighting how European Central Bank stimulus is distorting the region’s credit markets.

    Traders are quoting yields of minus 0.016 percent on the French pharmaceutical company’s 1.5 billion euros ($1.7 billion) of bonds maturing in May, according to data compiled by Bloomberg. That’s the first time the yield has dropped below zero. The same happened for Shell’s May 2018 bonds earlier this week.

    About 16 billion euros of highly rated corporate bonds are trading with yields below zero as negative deposit rates spur money managers to look for alternative safe places to park cash. Bond prices have also been bolstered by the ECB’s plan to start buying non-bank corporate notes, as policy makers seek to drive investors into riskier or longer-dated debt.

    Shell’s 2.5 billion euros of notes yield minus 0.021 percent, Bloomberg data show. The The Hague, Netherlands-based oil company declined to comment on the yields. Sanofi’s press-relations office in Paris didn’t answer a call and e-mail.

    http://www.bloomberg.com/news/articles/2016-03-23/negative-yields-seep-into-shell-sanofi-debt-as-ecb-skews-market
    Back to Top

    Canada: stimulus

     A stimulus budget from Canada's
    new Liberal government, combined with a modest recovery in oil
    and non-commodity exports, makes it likely the Bank of Canada's
    next move will be an interest rate rise rather than a cut.
    Back to Top

    Plat/Gold is not confirming rally.

    Image title
    Back to Top

    Optomec 3D Printing Systems Used in Mass Production of Consumer Electronics


    Optomec, a leading global supplier of production-grade additive manufacturing systems for 3D printed metals and 3D printed electronics, today announced its Aerosol Jet® technology is being used by LITE-ON Mobile Mechanical SBG (LITE-ON) for high-volume production of electronic devices. LITE-ON, a global contract manufacturer, has pioneered a 3D Direct Printing (3DP) solution that enables 3D antenna patterns and other functional electronics to be integrated into virtually any mechanical structure or cover - maximizing design flexibility, ensuring optimal placement and performance, and allowing slimmer product designs.

    “We see Aerosol Jet as a strategic component of our 3DP solution, which has enabled us to expand into new markets.”

    “With the flexibility provided by Aerosol Jet technology, our 3DP systems can print sensors, antennas, and other functional electronics onto plastic components and covers, as well as metal die-cast insert-molded polymer frames, and even onto glass panels and ceramic materials,” said Henrik Johansson, Senior Manager, Technology Development Antennas, at LITE-ON. “We see Aerosol Jet as a strategic component of our 3DP solution, which has enabled us to expand into new markets.”

    LITE-ON first purchased Aerosol Jet technology to develop prototypes for its OEM customers, which include world leading communication device, personal care and automotive brands. The digitally driven Aerosol Jet-based 3DP process provides full design flexibility, with quick iteration and minimum lead-time for last-minute changes. After successfully implementing Aerosol Jet in prototype environments, LITE-ON expanded its usage and has now deployed multiple production machines in Guangzhou, China, operating 24x7 printing conformal electronics onto millions of consumer devices. Since the 3DP process requires no plating or special resins, logistics are simplified and production costs are lowered.

    The open architecture of the Aerosol Jet hardware allows configurations to be optimized for specific production needs. The implementation at LITE-ON leverages a series of Aerosol Jet print modules spread across multiple 5-axis motion platforms, configured to handle common smartphone and tablet form factors. Each machine is able to print a wide range of common electronics materials, at a rate of millions of units per year, enabling next-generation applications in consumer electronics, automotive, aerospace and smart IoT devices. Click here for video.

    “LITE-ON has been an incredible strategic customer for Optomec. Their dedication and commitment was critical to proving the viability of Aerosol Jet technology in a real world 24/7 production setting,” said Dave Ramahi, Optomec President and CEO. “With its unique and in-depth process knowledge in Aerosol Jet printing, Optomec is pleased to recognize LITE-ON as a 'Center of Excellence' for High Volume Production of 3D Printed Electronics.”

    http://www.businesswire.com/news/home/20160323005181/en/Optomec-3D-Printing-Systems-Mass-Production-Consumer

    Attached Files
    Back to Top

    Oil and Gas

    Scramble for oil storage extends, suggesting excess has room to run


    Trading houses are betting on oil markets remaining oversupplied for at least two more years even as crude prices stage a recovery driven by early signs of falling production.

    Traders such as Vitol, Gunvor and Glencore are looking to extend or lock in new leases onstorage tanks for crude oil and refined products in key hubs as far out as the end of 2018, sources at storage firms and trading houses say.

    Storing oil in a heavily oversupplied market has been a cash cow for traders and oil companies in recent years as markets bet that future oil prices will be significantly higher than current ones, in what is known as contango.

    Ian Taylor, chief executive of top oil trader Vitol, said on Tuesday that "stocks of crude and products continue to build and these will weigh upon the market".

    Like other traders, Vitol has invested in recent years in storage, and last August acquired the other half of its VTTI storage subsidiary for $830 million.

    Oil prices have risen 30 percent since mid-February to around $40 per barrel, as global production shows signs of slowing, which has led to a significant narrowing of the crude contango despite a stock overhang of 300 million barrels.

    Crude oil has found more of a balance in recent weeks through supply disruptions in Iraq, Libya and Nigeria.

    But refined oil products have not followed suit. Gasoline and blending components have been quietly building, squeezing the amount of storage left in Europe. U.S. gasoline stocks, when adjusted for current consumption, are just at the top of their 10-year range.

    Krien van Beek, head of sales at RVB Tank Storage Solutions, a tank storage broker in the Netherlands, said traders are seeking storage on 12-month leases for products such as gasoline and naphtha outside key hubs in northern Europe, Singapore and the United States.

    "They are prepared to look at storage for the longer term because of the contango in the market but everyone is cautious about costs because we are at the top of the storage market," van Beek said.

    "Since the standard storage options are taken, traders are considering less conventional and less attractive locations."

    According to RVB, global commercial tank capacity is around 900 million cubic metres across 4,400 facilities - not including "captive tanks" in refineries that are not open to commercial buyers.

    HINGE POINT

    This chimes with the International Energy Agency's view that a "hinge point" in the market, when demand surpasses available supply, will not begin to draw down stocks in earnest until 2018.

    "We still see an oversupplied market, just not so much as it was before," said Andrew Wilson, the IEA's oil market analyst in charge of stocks and prices.

    A key choke point, however, is forming in middle distillates - the diesel used to power trucks and generators, and the heating oil that warms homes around the world in winter.

    Typically, these stocks fall over the winter. But warm weather this year kept this from happening - all while refineries worldwide ran full steam to feed seemingly insatiable demand for gasoline in the United States, China and India.

    Global distillate stocks in the developed world are close to a record high, in the thick of refinery maintenance season, and in the run-up to the time when gasoline use hits its summer high point, but interest in diesel typically fades.

    "Absent run cuts, the market faces another round of rapid stockbuilds once refineries return from maintenance," Robert Campbell of Energy Aspects said in a note.

    http://www.reuters.com/article/oil-storage-idUSL5N16V239
    Back to Top

    Kurds pumping oil again?


    IRAQ-KURD PIPELINE RESUMES PUMPING AFTER SUSPENSON: PORT AGENT. More supply

    @zerohedge  

    No detail just headline
    Back to Top

    Algeria's Sonatrach to sell oil and gas sites


    After a deep slide in oil prices, Algeria’s Sonatrach is shifting strategy to offer foreign firms direct negotiations to buy stakes in 20 oil and gas fields in a bid to attract investors and increase output, a source at the state energy company said.

    The campaign to bring in energy investment comes at a crucial time for the north African Opec producer as it tackles lower revenues and stagnating production.

    Algeria, a key gas supplier to Europe, is also in talks with EU officials on holding a summit in Algiers in May that will discuss energy investment opportunities in Algeria as EU leaders look to diversify from Russian gas.

    The switch to bilateral deals follows two energy bidding tenders that failed to attract much interest. A bid scheduled for last year was cancelled because of low crude prices.

    “Direct negotiations are a more efficient, less expensive, a faster, and a less bureaucratic approach,” the Sonatrach source said of the talks.

    The source did not give details of the other firms and ENI declined to comment.

    The stakes being sold are expected to leave Sonatrach the majority holder as Algerian law dictates.

    The 20 fields, which the source said Sonatrach took over from state hydrocarbons agency Alnaft in September as part of the streamlining process, include oil and gas fields across the centre and south of the country in places such as Ouargla and Adrar provinces, and Illizi near the Libyan border.

    As part of the campaign, Sonatrach chief Amine Mazouzi will travel to China at the end of the month for meetings with Chinese oil companies Sinopec and CNPC, which are already operating in Algeria.

    Algeria’s energy potential is not in doubt, but oil executives say tough terms on production-sharing contracts, bureaucracy and other problems make the country less attractive.

    Reforms to open up the and gas sector to foreign investment in 2005 were reversed a year later, adding a windfall tax and more Sonatrach control, when oil prices were high and Algeria’s reserves were in good shape.

    Security is also a factor after the 2013 attack on the In Amenas plant run by BP and Statoil with Sonatrach in which 40 oil workers died.

    BP and Statoil on Monday said they were reducing staff in Algeria after rockets hit another gas plant last week.

    http://www.irishexaminer.com/business/algerias-sonatrach-to-sell-oil-and-gas-sites-388964.html

    Attached Files
    Back to Top

    Global LNG Growth Peaks in 2016 With Australia Projects: Chart

    Image title


    Australia is leading a wave of new liquefied natural gas projects that will increase global capacity by a record this year. That’s coinciding with a slump in prices to the lowest since 2009 that’s straining the cash flow of some of the most expensive energy projects ever. LNG growth is set to slow after this year, with fewer new developments on the horizon. Woodside Petroleum Ltd. on Wednesday scrapped plans to develop the $40 billion Browse development, citing the “extremely challenging” market.

    http://www.bloomberg.com/news/articles/2016-03-23/global-lng-growth-peaks-in-2016-with-australia-projects-chart

    Attached Files
    Back to Top

    CNOOC announces weak 2015 annual results


    In 2015, the Company maintained an intensive exploration program and made significant achievements in oil and gas exploration while lowering exploration capital expenditures. During the year, the Company made 16 new discoveries and successfully appraised 23 oil and gas structures. In offshore China, the Company made independent new discoveries including mid-to-large sized structure Liuhua 20-2, and successfully appraised a number of mid-to-large sized oil and gas structures such as Caofeidian 6-4. Overseas, we obtained new discoveries in Algeria and Nigeria, and successfully appraised three oil and gas structures including Libra in Brazil. Due to the low oil price, the Company's reserve replacement ratio was 67% for the year. As at the end of 2015, the Company's net proved reserves were approximately 4.32 billion barrels of oil equivalent (BOE).

    The Company successfully met its annual oil and gas production target, with net oil and gas production reaching 495.7 million BOE, an increase of 14.6% year-over-year (yoy). The seven projects planned for 2015 have commenced production smoothly with many of them coming on stream ahead of schedule, demonstrating once again the Company's outstanding competence in project management.

    During the year, the Company continued to proactively promote the 'Year of Quality and Efficiency' program. The Company stimulated its operational vitality through management innovations and effectively lowered operating costs by utilizing market mechanisms. The Company has embarked on the path for future growth through innovation in technology. We established a long-term mechanism to optimize our cost structure, thereby laying a solid foundation to offset the challenges posed by low oil price.

    In 2015, the Company's average realized oil price was US$51.27 per barrel, a decrease of 46.6% yoy, while the average realized natural gas price was US$6.39 per thousand cubic feet, a decline of 0.8% yoy. In addition, the Company's oil and gas sales revenue was RMB146.6 billion, representing a decline of 32.8% yoy. Due to the efforts of the lowering costs and enhancing efficiency program, the Company's all-in cost decreased by 5.9% yoy to US$39.82 per BOE, representing a cost decline for the second consecutive year. The net profit declined by 66.4% yoy to RMB20.25 billion.

    In 2015, the Company's capital expenditures were RMB66.5 billion, representing a decrease of 37.9% yoy.

    In 2015, the Company's basic earnings per share was RMB0.45. The Board of Directors have proposed a year-end dividend of HK$0.25 per share (tax inclusive).

    http://www.oilvoice.com/n/CNOOC-announces-2015-annual-results/129b09cfb9d2.aspx?utm_source=twitterfeed&utm_medium=twitter&utm_campaign=Feed%3A+OilvoiceHeadlines+%28OilVoice+Headlines%29

    Attached Files
    Back to Top

    Oil Trader Trafigura Wins Better Rates on $5.5 Billion Financing


    Trafigura Group Pte. lowered its borrowing rate as the commodity trader raised $5.5 billion in bank financing amid record industry profits from oil trading.

    A European revolving credit facility totaled $5.1 billion, including a one-year tranche for $1.91 billion and a three-year for $3.19 billion, the Singapore-based company said Thursday in a statement. Trafigura, which has major trading operations in Geneva, also closed a three-year 46 billion-yen ($413 million) loan, almost double the size of its previous Samurai credit in 2014.

    “We’ve met our target of raising collectively over $5.5 billion at a tighter price, a more than adequate sum to finance company operations in current market conditions,” Chief Financial Officer Christophe Salmon said in the statement.

    Trade finance is the lifeblood of the commodity-trading sector which needs short-term capital from banks to fund the business of moving physical stocks of oil, metals and other raw materials around the world. Against a backdrop of record profits from oil trading and reduced financing needs due to lower commodity prices, traders including Trafigura and Vitol Group are winning improved lending terms.

    Rosneft Volumes

    Lifting increased volumes from Russia’s Rosneft OAO has propelled Trafigura to become the world’s second-largest independent oil trader, handling close to 4 million barrels a day. That trails Vitol which handles more than 6 million barrels a day.

    Trafigura said in December that gross profit for its oil trading division soared 50 percent to a record $1.7 billion in the 12 months through September. Vitol posted net income in the first nine months of 2015 of $1.25 billion, up 59 percent from the same period in 2014, according to a person familiar with the company’s accounts.

    Oil traders are filling storage tanks and profiting from a market structure called contango that allows them to store oil to sell later at higher prices. They are also benefiting from price volatility and arbitrage opportunities between geographical markets.

    Gunvor Group, another top independent oil trader, announced record profit of $1.25 billion this week, due to Russian asset sales and strong results from its oil-trading unit.

    Trafigura will use the credit facility to refinance the $5.3 billion it raised last year and for general corporate purposes, the company said. Lead arrangers and bookrunners included Lloyds Bank Plc, Societe Generale SA, UniCredit SpA, ING Bank NV, Royal Bank of Scotland Plc and Rabobank, with 45 banks participating.

    Bank of Tokyo-Mitsubishi UFJ and Mizuho Bank were lead arrangers for the Samurai loan, which was supported by 12 Japanese financial institutions.

    http://www.bloomberg.com/news/articles/2016-03-24/oil-trader-trafigura-wins-better-rates-on-5-5-billion-financing

    Attached Files
    Back to Top

    Ineos lands Marcellus shale gas in Norway


    Europe has taken its first shipment of US shale gas with the arrival of an Ineos carrier at the Swiss operator’s petrochemicals plant in Norway.

    The JS Ineos Intrepid made it to the facility at Rafnes on Wednesday laden with 27,500 cubic metres of gas form the Marcellus shale play in western Pennsylvania.

    The vessel, one of a planned fleet of eight so-called Dragon-class units Ineos will use to transport US shale gas to Europe, left the Marcus Hook terminal near Philadelphiaearlier this month.

    Ineos chairman Jim Ratcliffe said on the carrier’s arrival in Norway: “Shale gas economics has revitalised US manufacturing, it has the potential to do the same for European manufacturing.”

    He added: “We are nearing the end of a hugely ambitious project that has taken us five years and cost $2 billion, as we begin supply of ethane from shale to our sites in Europe.”

    The deep-water Marcus Hook terminal is connected via the 480-kilometre Mariner East pipeline to the Marcellus shale.

    To receive the US gas, Ineos has built two large ethane gas storage tanks at Rafnes and another of its terminals, Grangemouth, in Scotland, where it will use the ethane in gas crackers as fuel and feedstock. It is expected that shipments to Grangemouth will start later this year.

    On Tuesday, a Scottish politician said Scotland “would be foolish” if it missed out on the opportunity to develop its own indigenous shale gas resources.

    MSP Murdo Fraser, also convener of the Scottish Parliament’s Economy, Energy and Tourism Committee, said: “There is a lively debate in Scotland today and across the UK about fracking.

    “Our committee has not considered this issue directly, but my personal view is that we would be foolish to miss this opportunity.”

    Fraser told the Upstream Efficiency Forum conference in Aberdeen that many people now losing their jobs in the offshore industry had exactly the right skills to develop unconventional onshore gas.

    He added: “The Ineos petrochemical plant at Grangemouth relies on shale gas from the US being shipped across the Atlantic in a fleet of Chinese-built supertankers - and yet, Grangemouth is sitting close to substantial gas reserves right here in Scotland.

    “On no level does this make sense, not least the environmental cost of shipping shale gas from Pennsylvania to Scotland.”

    Fraser added: “My hope is that, once the elections are out of the way, the Scottish Government will start listening to their own scientists and lift their moratorium on fracking , with the proper controls and regulation in place.”

    http://www.upstreamonline.com/live/1427645/ineos-lands-marcellus-shale-gas-in-norway?utm_source=twitterfeed&utm_medium=twitter

    Attached Files
    Back to Top

    Exxon Mobil must allow climate change vote: SEC


    The U.S. Securities and Exchange Commission has ruled Exxon Mobil Corp  must include a climate change resolution on its annual shareholder proxy, a defeat for the world's largest publicly traded oil producer, which had argued it already provides adequate carbon disclosures.

    In a Tuesday letter to Exxon seen by Reuters, the SEC said the oil producer cannot keep a proposal spearheaded by New York state's comptroller from a full shareholder vote at thecompany's annual meeting in May.

    If approved, the proposal would force Exxon to outline specific risks that climate change or legislation designed to curb it could pose to its ability to operate profitably.

    Exxon had argued that the proposal was vague and that it already publishes carbon-related information for shareholders, including a 2014 report on its website entitled, "Energy and Carbon – Managing the Risks."

    The SEC found those reports do not go far enough.

    "It does not appear that Exxon Mobil's public disclosures compare favorably with the guidelines of the proposal," Justin Kisner, an attorney-adviser with the SEC, wrote to the oil producer.

    Exxon Mobil declined to comment on the SEC's ruling.

    "We'll be communicating the board's recommendations on shareholder resolutions through the proxy document next month," Exxon spokesman Alan Jeffers said.

    It is not uncommon for companies to give shareholders their opinion on proxy votes. It is unclear whether the proposal, though, has much chance of success. Exxon shareholders have never approved a climate change-related proposal, and last year they rejected by 79 percent a request that a climate expert be appointed to the company's board.

    Nevertheless, New York state Comptroller Thomas DiNapoli, who oversees the state's $178.3 billion pension fund, called the SEC's decision a "major victory" for shareholders.

    "Investors need to know if Exxon Mobil is taking necessary steps to prepare for a lower carbon future, particularly now in the wake of the Paris agreement," DiNapoli said in a statement, referring to an agreement last fall by 195 countries to rein in rising emissions that have been blamed for global warming.

    "The SEC has rejected Exxon's attempt to silence investors' concerns about the very real financial risks associated with climate change," said Shanna Cleveland of Ceres, a nonprofit group that tracks environmental records of public companies.

    DiNapoli was joined in the SEC filing by the Church of England, the Vermont State Employees' Retirement System, the University of California Retirement Plan and the Brainerd Foundation.

    The ruling from the SEC comes as Exxon fights other carbon-related battles, including an inquiry by New York Attorney General Eric Schneiderman into whether the company misled the public and shareholders about the risks of climate change.

    http://www.reuters.com/article/us-exxon-mobil-shareholders-exclusive-idUSKCN0WP2TG
    Back to Top

    China's ENN buys $750 mln stake in Australia's Santos


    Chinese gas distributor ENN is set to become the top shareholder in Australian gas producer Santos after agreeing to buy a $750 million stake from Hony Capital in a push to ease its dependence on China's state-owned giants for supply.

    As part of the deal, Hony, one of China's most successful private equity funds, will buy a stake in a unit of ENN Group, looking to help drive ENN's expansion offshore.

    "We are gaining a strategic investor and partner in Hony Capital whose deep China experience and global outlook can help us accelerate future growth overseas," ENN Group chairman Wang Yusuo said in a statement.

    Santos said on Friday it had approved the transfer of Hony's 11.7 percent stake to ENN Group's ENN Ecological Holdings Co . Hony acquired most of its interest last November when Santos sold A$3 billion in new shares to help it slash debt.

    ENN is effectively paying A$4.84 a share, based on Thursday's exchange rate, a 23 percent premium to Santos' last close.

    Private Chinese gas distributors like ENN are looking to acquire interests in gas producers to lock in supplies of liquefied natural gas (LNG) and ease their dependence on state-owned giants CNOOC Ltd, PetroChina and Sinopec, bankers have said.

    "Once the proposed transaction completes, we will be keen to meet with ENN and discuss whether there are opportunities to supply gas through ENN into the growing Chinese gas market," Santos said in an email to Reuters.

    ENN is building China's first private LNG receiving terminal in Zhoushan, set to handle 3 million tonnes a year, starting in 2018.

    "Bringing in ENN as a strategic investor will help Santos connect to that opportunity in China, and at the same time we are helping a Chinese company expand internationally," Hony Capital Chairman John Zhao said in a statement.

    The jewel in Santos' crown is a 13.5 percent stake in the Papua New Guinea LNG (PNG LNG) project, while its biggest LNG asset is the newly opened $18.5 billion Gladstone LNG project in Australia.

    "Santos investors will wait to see what ENN's intentions are towards Santos, but at the very least this should provide some comfort that there are other buyers out there willing to pay a premium for Santos stock," UBS analysts said in a note.

    Hony, whose backers include state-sponsored Legend Holdings , Singapore's Temasek and Abu Dhabi Investment Authority, will invest $380 million for a stake in ENN, subject to approval by ENN-EC's shareholders.

    Santos shares rose 3 percent on Thursday to value the group at A$7.1 billion, in line with the value of a takeover proposal it rejected last year from a fund backed by the ruling families of Brunei and the United Arab Emirates.

    http://www.reuters.com/article/santos-ltd-enn-ec-idUSL3N16V5A5

    Attached Files
    Back to Top

    Summary of Weekly Petroleum Data for the Week Ending March 18, 2016


    U.S. crude oil refinery inputs averaged over 15.8 million barrels per day during the week ending March 18, 2016, 176,000 barrels per day less than the previous week’s average. Refineries operated at 88.4% of their operable capacity last week. Gasoline production decreased last week, averaging 9.7 million barrels per day. Distillate fuel production decreased last week, averaging over 4.7 million barrels per day.

    U.S. crude oil imports averaged 8.4 million barrels per day last week, up by 691,000 barrels per day from the previous week. Over the last four weeks, crude oil imports averaged 8.1 million barrels per day, 11.6% above the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 415,000 barrels per day. Distillate fuel imports averaged 93,000 barrels per day last week.

    U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 9.4 million barrels from the previous week. At 532.5 million barrels, U.S. crude oil inventories are at historically high levels for this time of year. Total motor gasoline inventories decreased by 4.6 million barrels last week, but are well above the upper limit of the average range. Both finished gasoline inventories and blending components inventories decreased last week. Distillate fuel inventories increased by 0.9 million barrels last week and are above the upper limit of the average range for this time of year. Propane/propylene inventories fell 0.3 million barrels last week but are well above the upper limit of the average range. Total commercial petroleum inventories increased by 6.9 million barrels last week.

    Total products supplied over the last four-week period averaged over 19.4 million barrels per day, up by 1.6% from the same period last year. Over the last four weeks, motor gasoline product supplied averaged about 9.4 million barrels per day, up by 7.0% from the same period last year. Distillate fuel product supplied averaged about 3.6 million barrels per day over the last four weeks, down by 8.0% from the same period last year. Jet fuel product supplied is up 1.5% compared to the same four-week period last year.

    CUSHING CRUDE OIL INVENTORIES FELL 1.26 MLN BBL, EIA SAYS. and shipped promptly to ARA

    http://ir.eia.gov/wpsr/wpsrsummary.pdf
    Back to Top

    US oil production falls again


                                                 Last Week     Week Before   Last Year

    Domestic Production '000....... 9,038              9,068            9,422

    http://ir.eia.gov/wpsr/overview.pdf
    Back to Top

    AREX: the Wolfcamp

    Image title
    Back to Top

    New Marcellus/Utica Driller Quietly Launches w/$800M Investment


    Details are just now coming to light of a new E&P (exploration and production, or drilling) company head quartered in Pittsburgh and focused totally on the Marcellus and Utica region.

    Until now the company has flown under our radar. The company is American Petroleum Partners (APP)–not to be confused with Aubrey McClendon’s American Energy Partners (AEP)–and is headed by Rice Energy alumnus Varun Mishra, who is the founder and CEO.

    The big news is that last September Mishra’s new company, founded in 2014, received a major injection of investment capital. Apollo Global Management invested $411 million in APP with the option to double it up to $800 million.

    MDN has it on very good authority that although APP quietly issued a press release about this last September, the company has intentionally kept the news quiet. Not any more! Big mouth MDN is blabbing it to the world.

    http://marcellusdrilling.com/2016/03/new-marcellusutica-driller-quietly-launches-w800m-investment/?utm_source=dlvr.it&utm_medium=twitter
    Back to Top

    Emerald Oil becomes latest U.S. driller to file for bankruptcy protection


    Emerald Oil this week joined dozens of U.S. oil producers in seeking Chapter 11 bankruptcy protection amid a punishing oil downturn and said Wednesday it intends to sell its business in an auction.

    In court papers, Emerald Oil Chief Financial Officer Ryan Smith said the Denver-based company since last year has stopped most of its drilling, cut 40 percent of its workers and tried to refinance its debt but wasn’t able to consummate at least four attempted deals.

    “The debtors have fallen victim to the same macroeconomic forces afflicting the rest of the oil and gas industry,” Smith said in court papers. He said the company considered several financial options but its access to capital markets was “significantly impaired” and the value of its proved developed reserves dropped dramatically.

    Emerald Oil pumps most of its crude from North Dakota’s Williston Basin, where drilling activity has been reduced to a fraction of what it once was before the sharp drop in oil prices, which began in late 2014. The company said it has $405 million in total assets and $361 million in total debt.

    Emerald Oil said it is planning to sell itself at an auction, though the private company Latium Group has already made an offer for Emerald and will be the leading bidder in the auction. Emerald Oil said it obtained a $20 million loan, subject to court approval, to keep running its operations through bankruptcy.

    “Emerald’s plan and the Latium transaction would allow the business to continue to operate and would provide a sound path for potential recovery for company stakeholders,” Emerald CEO McAndrew Rudisill said in a written statement.

    JPMorgan Chase & Co. recently estimated 48 domestic oil companies have filed for bankruptcy protection.

    http://fuelfix.com/blog/2016/03/23/emerald-oil-becomes-latest-u-s-driller-to-file-for-bankruptcy-protection/?utm_source=twitterfeed&utm_medium=twitter
    Back to Top

    MHR Wiggles Out of One Midstream Contract, Sues to End Another


    Two weeks ago Magnum Hunter Resources (MHR), a driller focused almost exclusively on the Marcellus/Utica and going through bankruptcy protection proceedings, struck a deal with pipeline company Texas Gas Transmission Inc. to terminate four existing contracts with company to use its pipelines.

    MHR was pressuring Texas Gas to cancel the contracts it has with MHR subsidiary Triad Hunter, but Texas Gas was resisting. In the end Texas Gas agreed to cancel the contracts provided they get a $15 million “unsecured claim” which grants Texas Gas the right to be near the front of the line to get paid $15M when MHR is either sold or emerges from bankruptcy proceedings.

    MHR isn’t, however, having as much success with cancelling signed contracts for another of its subsidiaries in the Bakken Shale region. Bakken Hunter has an existing, signed contract with Oklahoma midstream company Oneok.

    Citing the recent Sabine Oil & Gas ruling in which that company was allowed to cancel midstream contracts during bankruptcy, MHR is asking a Delaware bankruptcy court to allow them to wiggle out of the Oneok deal.

    In addition to updates on these two situations, we also have news that the Securities and Exchange Commission is at least partially blaming two former Magnum Hunter employees–a chief financial officer and chief account officer–for the company’s financial predicament…

    http://marcellusdrilling.com/2016/03/mhr-wiggles-out-of-one-midstream-contract-sues-to-end-another/?utm_source=dlvr.it&utm_medium=twitter

    Attached Files
    Back to Top

    Energy Transfer slashes synergy expectations from Williams deal


    Energy Transfer Equity on Wednesday cut its expectations for commercial synergies from its takeover of rival pipeline company Williams Cos Inc, due in part to lower oil prices and the increased cost of capital.

    Energy Transfer now expects that the base case for earnings before interest, taxes, depreciation and amortization from commercial synergies from the deal is about $170 million a year by 2020, it said in a filing with the Securities and Exchange Commission. It had previously expected more than $2 billion of annual EBITDA by 2020 from the synergies.

    http://www.reuters.com/article/williams-de-ma-energy-us-idUSL2N16V1UB

    Attached Files
    Back to Top

    Precious Metals

    Barrick Gold to face US group lawsuit over LatAm mine


    A federal judge on Wednesday granted class certification for a U.S. class-action lawsuit filed against Barrick Gold Corp claiming Barrick misstated facts of its now halted Pascua-Lama gold-mine project on the border of Argentina and Chile.

    The class certification means the world's largest gold producer will have to face the U.S. lawsuit.

    U.S. District Judge Shira Scheindlin in Manhattan said that shareholders who purchased Barrick shares from May 7, 2009 through Nov. 1, 2013 are a part of the class-action lawsuit.

    Investors who bought Barrick's common stock during this period have said Barrick touted Pascua-Lama as a world-class project even as it became clear that the project would fall short of expectations.

    Barrick bought the untapped Pascua-Lama mine in 1994, and had been counting on it to generate a large percentage of its overall gold production.

    But cost overruns, environmental issues and falling bullion prices, among other issues contributed to the company's decision on Oct. 31, 2013 to indefinitely halt the project.

    Class action lawsuits can lead to larger damages or broader remedies than individual lawsuits that can be costly to pursue.

    The case is in re: Barrick Gold Securities Litigation, U.S. District Court, Southern District of New York, No. 13-03851.

    http://www.reuters.com/article/barrick-gold-lawsuit-idUSL2N16W029
    Back to Top

    Base Metals

    Copper usage in decline


    Judging by the pipes and plumbing fixtures inside the E.W. Berger & Bros. warehouse in New Jersey, the
    slumping global copper market has more to worry about than just weakening demand from China.

    E. W. Berger has cut monthly purchases of copper products to 5,000 pounds (2.3 metric tons) from 20,000 pounds a decade
    ago. While the cost of the metal has dropped, more clients prefer plastic, which is even cheaper, said owner Jay Richman.
    Demand for copper in the U.S., the second-largest user, has plunged by more than a quarter in the 10 years through 2014,
    including a 55 percent plunge in tubes and pipes, the Copper Development Association estimates.

    From plumbing to communications to electronics, traditional copper uses are losing out to lower-cost or better-performing
    substitutes. That’s muddying the demand outlook as economic growth slows in China, which accounts for 45 percent of demand
    and helped send prices to a record in 2011. Now, the metal has dropped in value for three straight years and in January slid to
    the lowest since 2009, as mine owners failed to cut output enough to avoid a surplus.

    “It’s a dramatic shift,” said E.W. Berger’s Richman, 65, who has been selling plumbing supplies in Weehawken for four
    decades at the business founded by his father. “People are continuously changing and trying to find the best way and
    cheapest way to do it.”

    Attached Files
    Back to Top

    Steel, Iron Ore and Coal

    China Coal Energy Company sees huge loss in 2015


    China Coal Energy Co. posted a huge loss and shrinking revenue in 2015 as the saturated coal industry has begun to bite into corporate profitability.

    The Shanghai-listed mining company posted losses of 2.52 billion yuan (around 390 million U.S. dollars) last year, a sharp contrast with profits of 767 million in 2014, according to its latest financial report on Wednesday.

    Its total revenue dropped 16.1 percent year on year to 59.27 billion yuan for the whole year.

    The state-owned coal producer suffered as domestic coal prices continued to drop last year, according to the company's board chairman Li Yanjiang, who attributed the lackluster performance to an over-supplied market.

    The Bohai-Rim Steam-Coal Price Index, a benchmark index, stood at 370 yuan per tonne by the end of 2015, markedly down from 525 yuan per tonne at the beginning of the last year.

    Responding to the situation, the company cut production at less-competitive coal mines and transferred business to the more profitable coal processing sector, the report said. Its new coal chemical plants raked in 1.5 billion yuan in profit last year, which offset the loss from leaden coal mining.

    Coal mining is one of several heavy industries struggling with serious overcapacity amid the economic slowdown, which has made many coal mines redundant, with less than 80 percent of the capacity actually under operation.

    The problem has become a priority, and the government has promised to slash 500 million tonnes of coal capacity in the next three to five years.

    By the end of 2015, the country had a total coal production capacity of 5.7 billion tonnes.

    http://en.chinamining.com.cn/Companies/2016-03-24/1458786476d75790.html
    Back to Top

    China Feb coking coal imports down 24.9pct on year


    China’s coking coal imports in February fell 24.9% on year and down 11.87% on month to 2.97 million tonnes, showed the latest data from the General Administration of Customs (GAC).

    http://en.sxcoal.com/0/143180/DataShow.html
    Back to Top

    Jiangsu to cut nearly half coal capacity in 3-5 yrs


    Eastern China’s Jiangsu province targeted to shut 47.7% of its coal capacity in 3-5 years in response to the national call of overcapacity elimination, according to a statement released by the provincial Development and Reform Commission.

    According to the country’s elimination standards, the province could keep all its mines. But given the low production capacity, long-term losses and poor safety conditions in some mines, the provincial government decided to guide the orderly exit of 14 coal mines from five enterprises by offering policy support.

    Of this, eight mines under three local enterprises – owned by the prefecture and lower-level governments – account for 8.36 Mtpa of the total shut capacity; and that of the six mines under the rest two state-run enterprises was at 3.46 Mtpa.

    Jiangsu will close 11 coal mines with combined capacity of 10.16 Mtpa in 2016, two mines with 0.46 Mtpa capacity in 2018, and one mine with 1.2 Mtpa capacity in 2020.

    By end-2015, total coal production capacity of the province’s 20 mines in six coal enterprises was 24.77 Mtpa, including 18 mines that in normal operation with capacity at 21.82 Mtpa, and the rest two halted mines taking 2.95 Mtpa capacity.

    http://en.sxcoal.com/0/143205/DataShow.html
    Back to Top

    Iron ore sinks to test $50 level amid China concern


    Iron ore futures in Singapore dipped back below $50 a metric ton amid a resurgent dollar and indications China’s economy has yet to rebound, offering early vindication to forecasters including Goldman Sachs Group who’d argued that recent gains were unlikely to persist. Miners’ shares fell.

    The SGX AsiaClear contract for May settlement sank as much as 5.8% to $49.90 a ton in Singapore and was at $51.41 at 2:07pm local time, while on China’s Dalian Commodity Exchange futures fell as much as 5.1%. Losses in the contracts in Asia typically presage a drop in the Metal Bulletin price for 62% content spot ore in Qingdao, which is updated daily.

    Iron ore has been on a wild ride in March as investors sought to gauge conflicting economic signals from China against still-elevated port stockpiles and shifts in the US currency. Prices posted the biggest ever one-day gain on March 7 in a rally to the highest since June, prompting banks including Goldman to say the gains would be temporary. Miner BHP Billiton said after the spike that it was probably more bearish about iron ore than the price of any other commodity in its portfolio.

    “There hasn’t been much improvement in China’s economy and steel mills aren’t keen to purchase iron ore, especially after the price surge,” said Zhao Chaoyue, an analyst at China Merchants Futures Co in Shenzhen. “The dollar also surged overnight, spurring a sell-off in commodities.”

    http://www.bloomberg.com/news/articles/2016-03-24/iron-ore-under-the-cosh-as-50-level-tested-amid-china-concern
    Back to Top

    The “massive” rally that means China will curb steel exports


    The record flood of steel exports from China will probably abate after prices surged in the largest producer, boosting the attractiveness for mills of local sales against shipments overseas, according to commodity trader Noble Group Ltd.

    “The main reason why we’re going to see lower Chinese steel exports, at least for the next few months, is that the Chinese steel prices have way outperformed steel prices in other regions since December,” Gueorgui Pirinski, a carbon-steel materials analyst at Noble Group, said at a conference in Singapore on Wednesday. “We’ve had a massive 30, 40 percent rally.”

    Exports from China, which accounts for about half of global output, surged to an all-time high last year as producers contended with sinking local prices and a glut of material. The flood boosted competition in Asia, Europe and the U.S., hammering profits at mills worldwide and spurring an increase in trade tensions amid claims the rising volumes from China were being sold too cheaply. This year, steel prices in China have rebounded in a shift that Pirinski said was driven by lower output.

    “The major driver of this reversal in trend has been the very aggressive curtailment in domestic steel production in China,” said Pirinski, who raised the possibility that output may now pick up, endangering the recovery in steel prices. “We will see a material pickup in domestic production of steel in China — that will then put into question the sustainability of the steel price.”

    Steel reinforcement bar in China, a benchmark product used in construction, has jumped 25 percent in 2016 after five years of losses. The contract price on the Shanghai Futures Exchange rallied to 2,240 yuan ($345) a metric ton on Wednesday, the highest since June. It bottomed in December at 1,618 yuan.

    China’s steel exports expanded almost 20 percent to a record 112.4 million tons in 2015, according to customs data released in January. In February, sales of steel products dropped 17 percent to 8.11 million tons, the lowest since March last year, government data show.

    The unprecedented tide of cheap shipments from China prompted a backlash from Europe, India and the U.S., which have moved to raise tariffs as local mills complained. Still, the spread of protective trade rules wasn’t a cause for slowing shipments, according to Pirinski. The reason “China steel exports are falling is not anti-dumping duties, it’s not all the posturing,” he said.

    https://www.ajot.com/news/the-massive-rally-that-means-china-to-curb-steel-exports-1
    Back to Top

    China key steel mills daily output down 0.28pct in early-March


    The daily output of China’s key steel mills edged down 0.28% from ten days ago to 1.59 million tonnes in early-March, according to the latest data released by the China Iron and Steel Association (CISA).

    China’s daily crude steel output in early-March was estimated at 2.08 million tonnes, dropping 1.8% from late-February.

    By March 10, stocks in key steel mills posted a second straight ten-day fall of 0.64% or 88,600 tonnes to 13.71 million tonnes.

    Domestic prices of the six major steel products all increased in early-March, with rebar price averaging 2146.9 yuan/t, up 8.2% from late-February, showed data from the National Bureau of Statistics (NBS).

    Over January-February, China produced 121.07 million tonnes of crude steel, dropping 5.7% from the previous year; China’s daily crude steel output also fell 7.27% on year to 2.02 million tonnes in the same period, according to the NBS data.

    In spite of the drop in output, profits in steel mills witnessed an increase as steel and iron ore prices gained more strength in February; in March, demand from industrial activities showed uptick due to better performance of the housing sector.

    Thus, crude steel output may see a slight increase in later period, thanks to the rising demand from end-users combined with higher operating rates and profits in steel mills.

    By March 21, China’s social stock of steel products stood at 11.82 million tonnes, falling 398,500 tonnes on week, among which rebar stocks contributed 250,000 tonnes, indicating a better demand from downstream sectors.

    The lower-than-expected stock level will provide a stronger support for steel prices.

    http://en.sxcoal.com/0/143177/DataShow.html

    Attached Files
    Back to Top

    Russia's NLMK earnings drop 37 pct in fourth quarter


    Russia's biggest steelmaker NLMK said on Thursday its core earnings fell 37 percent in the last three months of 2015 from the previous quarter due to lower prices for its products and a decline in sales.

    Earnings before interest, taxation, depreciation and amortisation (EBITDA) totalled $321 million, down from $508 million in the third quarter, the company said.

    NLMK and other Russian steelmakers struggled to maintain profit levels in 2015 as a surge in cheap exports from China undermined prices for their products.

    "Key factors behind the slump in steel product prices included an unprecedented spike in steel exports from China on the back of the continuing fall in demand and the dip in raw material prices," Chief Financial Officer Grigory Fedorishin said.

    Fedorishin said NLMK was also hit by lower demand at home, which fell 9 percent in 2015 with Russia's flagging economy in recession for a second year in a row.

    Analysts polled by Reuters had expected fourth-quarter EBITDA of $343 million, down 32 percent from the previous quarter and a decline of 50 percent from $638 million in the fourth quarter of 2014.

    Net profit for the last quarter of 2015 was $76 million, down 81 percent quarter-on-quarter due to foreign exchange losses, while revenue slipped 19 percent from the third quarter to $1.6 billion due to both lower sales prices and volumes.

    http://www.reuters.com/article/nlmk-results-idUSL5N16W192

    Attached Files
    Back to Top
    Commodity Intelligence LLP is Authorised and Regulated by the Financial Conduct Authority

    The material is based on information that we consider reliable, but we do not represent that it is accurate or complete, and it should not be relied on as such. Opinions expressed are our current opinions as of the date appearing on this material only.

    Officers and employees, including persons involved in the preparation or issuance of this material may from time to time have "long" or "short" positions in the securities of companies mentioned herein. No part of this material may be redistributed without the prior written consent of Commodity Intelligence LLP.

    Company Incorporated in England and Wales, Partnership number OC334951 Registered address: Highfield, Ockham Lane, Cobham KT11 1LW.

    Commodity Intelligence LLP is Authorised and Regulated by the Financial Conduct Authority.

    The material is based on information that we consider reliable, but we do not guarantee that it is accurate or complete, and it should not be relied on as such. Opinions expressed are our current opinions as of the date appearing on this material only.

    Officers and employees, including persons involved in the preparation or issuance of this material may from time to time have 'long' or 'short' positions in the securities of companies mentioned herein. No part of this material may be redistributed without the prior written consent of Commodity Intelligence LLP.

    © 2017 - Commodity Intelligence LLP