A global oil glut is building as OPEC kingpin Saudi Arabia pumps near record highs in an attempt to win a market-share battle against stubbornly resistant U.S. shale production, the International Energy Agency (IEA) said on Wednesday.

The West's energy watchdog said in a monthly report that although higher-than-expected oil demand was helping to ease the glut, growth in global oil consumption was far from spectacular.

As a result, signs are emerging that the crude oil glut is shifting into refined products markets, which could make a recent rally in oil prices unsustainable.

"Despite tentatively bullish signals in the United States, and barring any unforeseen disruption elsewhere, the market's short-term fundamentals still look relatively loose," said the IEA, which coordinates energy policies of industrial nations.

Global oil production exceeds demand by around 2 million barrels per day, or over 2 percent, following spectacular growth in U.S. shale production and OPEC's decision last year not to curtail output in a bid to force higher-cost U.S. producers to cut theirs.

As a result, benchmark Brent oil prices more than halved from June 2014 to $46 per barrel in January. They have since rebounded to around $65, however, on fears of a steep slowdown in U.S. production growth.

"In the supposed standoff between OPEC and U.S. light tight oil (LTO), LTO appears to have blinked. Following months of cost cutting and a 60 percent plunge in the U.S. rig count, the relentless rise in U.S. supply seems to be finally abating," the IEA said.

But it added that the recent oil price rebound was giving U.S. producers a new lease on life.

"Several large LTO producers have been boasting of achieving large reductions in production costs in recent weeks. At the same time, producer hedging has reportedly gone steeply up, as companies took advantage of the rally to lock in profits," the IEA said.

"It would thus be premature to suggest that OPEC has won the battle for market share. The battle, rather, has just started."

http://www.reuters.com/article/2015/05/13/iea-oil-idUSL5N0Y429N20150513

China, the world's second largest oil consumer after the U.S., imported 80.34 million tons of crude oil in the first quarter of this year, 7.50% more than in the same period of last year, according to the latest figures from China's General Administration of Customs.

The import value of crude oil for the three-month period declined 42.80% from a year earlier to RMB 206.09 billion.

From Jan to Mar, the country saw its imports of refined oil reach 7.9 million tons, reflecting a decrease of 7.50% year on year. The import value of refined oil went down 43.30% from a year earlier to RMB 23.78 billion in the three-month period.

In the month of Mar, the country imported a total of 26.81 million tons of crude oil and the import value for the month reached RMB 66.66 billion.

Meanwhile, China imported 2.87 million tons of refined oil last month with import value of RMB 8.96 billion.

http://en.chinamining.com.cn/News/2015-05-14/1431574329d72203.html

China is set to step up diesel exports this month, with shipments climbing to near record highs of more than 650,000 tonnes, as domestic demand remains tepid and inventory builds, industry sources said.

The increased exports come as regional demand for diesel is picking up in Asia, they said, and would likely keep refiner margins in check rather than putting them under pressure.

Diesel, used to run trucks and tractors and generate power at construction and mining sites, is a bellwether of industrial activity. An increase in exports by the world's No. 2 oil consumer suggests that its economy is still weak, traders said.

Diesel demand in China has been largely flat this year, also held down by efforts to shift to a more consumption-based economy, away from industrial and infrastructure development, they added.

China's top refiners, including Sinopec Corp and PetroChina, are expected to export about 650,000 tonnes of diesel in May, more than double the nearly 300,000 tonnes in April, two sources familiar with the matter said.

"Domestic demand for gasoil is weak and inventory high, so could be why there are more (gasoil) exports in May," a third source based in Beijing said.

The export volumes are only estimates and actual shipments could change depending on refinery output for the month, the sources said.

The expected volume is well above the 476,406 tonnes of diesel that China exported last June, which was the highest in 2014, according to customs data.

This year, the country exported between 65,000 and 300,000 tonnes of diesel a month in the first quarter of 2015, down from last year's monthly average as domestic prices rose above international prices, one source added.

The higher exports in May could also reflect increased activity from China National Offshore Oil Corp, the parent of China's top offshore oil producer CNOOC Ltd, which exported diesel for the first time in April, a Singapore-based trader said.

http://www.reuters.com/article/2015/05/13/china-diesel-exports-idUSL3N0Y42I620150513

Average liquefied natural gas (LNG) spot prices for buyers in Japan fell to a two-month low in April, trade ministry data showed on Thursday, in another sign of slack global demand.

Spot LNG contracted in April for delivery to Japan averaged $7.60 per million British thermal units (mmBtu), down from $8  month earlier, less than half the level a year ago, the Ministry of Economy, Trade and Industry (METI) said.

Spot cargoes booked earlier and arriving in April averaged $7.90 per mmBtu, up from $7.60 in March. Asian benchmark spot LNG LNG-AS stood at $7.40 per mmBtu last week,  little changed from a month ago, as demand from end users remained subdued.

Tokyo started surveying spot LNG prices in March 2014 to add transparency to the market amid concerns about rising fuel costs
in the wake of the shutdown of nuclear plants after the Fukushima crisis. The average spot price is based on around 10 percent of the nation's purchases of the super-chilled fuel.

 The trade ministry survey looks at samples of fixed prices for LNG sold to power companies and utilities among others, and excludes spot deals linked to benchmark prices such as the U.S. natural gas Henry Hub index.

http://www.reuters.com/article/2015/05/14/lng-japan-spot-idUSL3N0Y52EG20150514

ConocoPhillips liked what it saw with a test well drilled in partnership with Shell targeting Colombia's La Luna shale, its chief executive said.

http://www.upstreamonline.com/live/1399824/conocophillips-encouraged-by-colombia-test?utm_source=twitterfeed&utm_medium=twitter

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U.S. crude oil refinery inputs averaged 16.0 million barrels per day during the week ending May 8, 2015, 379,000 barrels per day less than the previous week’s average. Refineries operated at 91.2% of their operable capacity last week. Gasoline production increased last week, averaging 9.7 million barrels per day. Distillate fuel production decreased last week, averaging 4.9 million barrels per day.

U.S. crude oil imports averaged 6.9 million barrels per day last week, up by 340,000 barrels per day from the previous week. Over the last four weeks, crude oil imports averaged about 7.2 million barrels per day, 2.2% below the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 776,000 barrels per day. Distillate fuel imports averaged 294,000 barrels per day last week.

U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 2.2 million barrels from the previous week. At 484.8 million barrels, U.S. crude oil inventories are at the highest level for this time of year in at least the last 80 years. Total motor gasoline inventories decreased by 1.1 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 decreased by 2.5 million barrels last week and are in the lower half of the average range for this time of year. Propane/propylene inventories rose 1.9 million barrels last week and are well above the upper limit of the average range. Total commercial petroleum inventories decreased by 5.5 million barrels last week.

Total products supplied over the last four-week period averaged 19.4 million barrels per day, up by 3.6% from the same period last year. Over the last four weeks, motor gasoline product supplied averaged over 9.0 million barrels per day, up by 3.0% from the same period last year. Distillate fuel product supplied averaged about 4.1 million barrels per day over the last four weeks, down by 0.5% from the same period last year. Jet fuel product supplied is up 9.0% compared to the same four-week period last year.

http://ir.eia.gov/wpsr/wpsrsummary.pdf

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North Dakota posted a surprising jump in oil and natural gas output in March, as producers leaned on newer technologies and processes to offset a slump in commodity prices.

Many industry observers had expected output to fall for the third consecutive month in the wake of a more than 50 percent drop in oil prices since last summer.

"We scratched our heads in the month of March" as to why production increased, Lynn Helms, director of the state's Department of Mineral Resources, said during a conference call with reporters.

Yet the increase shows producers' willingness to wring efficiencies out of existing operations, as well as their attempt to maintain production, even at depressed prices, to safeguard relationships with service providers ahead of any future spike in crude oil prices.

About 189 North Dakota wells were completed in March at locations owned by Exxon Mobil Corp, Hess Corp, Continental Resources Inc and ConocoPhillips, reversing a trend in which most producers delayed completions.

"These four appear to be more in tune with having normal cash flow, and continue to complete their wells in a more aggressive manner," Helms said.

But in a sign of divergent strategies in the No. 2 U.S. oil producing state, EOG Resources Inc and Marathon Oil Corp continue to delay fracking.

"These two are going to hold onto completions as long as they legally can," Helms said. North Dakota producers have one year once drilling has finished to bring a well into production or face placing the well on an abandoned status.

The state's oil producers pumped nearly 1.2 million barrels per day (bpd) in March, up about 1 percent, or some 15,000 bpd, from February, according to the Department of Mineral Resources.

The number of wells that had been drilled but not fracked, a metric commonly known as "ducks," fell by 20 during March to 880, reversing a months-long trend that had concerned some in the industry.

http://www.reuters.com/article/2015/05/13/north-dakota-oil-production-idUSL1N0Y41IU20150513

LLOG Exploration, a privately-held oil and gas company focused on deepwater in the Gulf of Mexico, plans to drill a well into the block near where BP Plc's Macondo well ruptured in 2010, causing the worst offshore oil spill in U.S. history.

LLOG Exploration, which has backers including Blackstone Energy Partners, received approval to drill a well in Blocks 252 and 253 in the Mississippi Canyon area of the Gulf from regulators on April 13, according to records filed with the U.S. Bureau of Safety and Environmental Enforcement.

LLOG's plans to develop the block that sits due east of the plugged Macondo well were first reported by Subsea Engineering News in October.

A representative for LLOG did not immediately respond to a request for comment.

Macondo's blow-out caused the Deepwater Horizon oil rig to explode on April 20, 2010. The disaster left 11 workers dead and huge stretches of the Gulf of Mexico fouled with petroleum that gushed from the site for 87 days.

BP sold its interest in six exploration blocks located in the deepwater Gulf of Mexico, including portions of Mississippi Canyon Block 252 in early 2014, it said.

"Out of respect for the victims of the Deepwater Horizon accident and to allow BP to perform any response activities related to the accident, there is an exclusion zone covering the original Macondo well, the two relief wells and nearby debris, in which there will be no oil and gas operations," a BP spokesman said in a statement.

http://www.reuters.com/article/2015/05/13/gulfmexico-macondo-idUSL1N0Y42IF20150513

Parsley Energy, Inc. today announced financial and operating results for the quarter ended March 31, 2015. The Company has posted to its website a presentation that supplements the information in this release.

First Quarter 2015 Highlights

Parsley delivered record quarterly net production of 18.9 MBoe/d, an increase of 4% over Q4 2014 and up 106% year-over-year.
Parsley is raising full-year 2015 production guidance from 18-19 MBoe/d to 20-21.5 MBoe/d.
Wolfcamp B well productivity—already among the best in the Midland Basin—improved for the fourth consecutive quarter.

The three Wolfcamp B wells Parsley completed in its Core area in Q1 2015 with 30 days of production had peak 30-day initial production (IP) rates per 1,000-foot lateral of 231 Boe/d on average, up 30% versus average peak 30-day IP rates for Wolfcamp B wells completed in its Core area in Q1 2014.

Parsley drilled its most productive Wolfcamp A well to date, registering a peak 30-day IP rate per 1,000-foot lateral of 188 Boe/d on the Mary 18A-18-2H.
Parsley is introducing a new Wolfcamp A/B type curve with an estimated ultimate recovery (EUR) of 1 million Boe, based on more than 30 Wolfcamp A and B wells the Company has put on production.
The Company continues to weight activity toward the second half of 2015 but now plans to add three horizontal rigs on June 1st, one month earlier than anticipated, running four rigs from that time through the end of the year.
Parsley now intends to complete 35-40 gross horizontal wells in 2015, up from the prior guidance range of 30-35 gross horizontal wells, and has revised its drilling schedule such that the average stimulated lateral length of wells completed this year is expected to be approximately 6,500 feet, up from the previous estimate of approximately 5,400 feet. To accommodate these changes, the Company is raising its capital budget from the previously announced $225-$250 million to $250-$300 million.
Parsley acquired 3,562 net acres in its Core area in northwest Reagan and north Midland Counties for approximately $7 million in cash and an estimated $10 million in drilling carries. The Company has identified 114 net horizontal drilling locations associated with this acreage, with an estimated average stimulated lateral of approximately 5,800 feet.
The Company increased its inventory of net horizontal drilling locations by more than 20% through acquisitions and revised spacing assumptions.

“Our first quarter operating results continue to validate the tremendous potential of our resource base,” said Bryan Sheffield, Parsley Energy’s Chief Executive Officer. “We are pleased to have delivered production growth in Q1 despite weather related downtime that cost us an average of approximately 1,500 Boe of production per day. Having drilled more than 30 horizontal Wolfcamp wells, our confidence in the repeatability of our basin-leading well results prompted us to increase production guidance for the year and introduce a 1 million Boe type curve for our Wolfcamp A and B wells. We now expect to generate close to 50% year-over-year production growth on a capital budget that is significantly lower than 2014 spending.”

http://finance.yahoo.com/news/parsley-energy-announces-first-quarter-203000370.html

Williams Cos said on Wednesday it would buy affiliate Williams Partners LP for about $13.8 billion, the latest in a series of deals in the oil and gas pipeline industry as operators look to simplify their corporate structure.

Master Limited Partnerships (MLPs) are also being bought out to eliminate incentivized distribution rights that can divert a large chunk of cash returns to general partners.

Distribution payouts are becoming a burden for energy companies at a time when they are struggling to cope with a steep fall in global crude prices.

Crestwood Equity Partners said last week it would buy Crestwood Midstream Partners to cut out incentive distribution rights.

Williams Cos is offering 1.115 of its own shares for each Williams Partners' share. The offer works out to $55.86 per share, an 18 percent premium to Williams Partners' Tuesday close.

William Cos' shares were up 8 percent, while William Partners rose 27 percent to trade at $60.

The combined company said it expects third-quarter dividend of 64 cents per share. Williams previously expected to pay dividend of 60 cents per share, while Williams Partners was expecting to pay out 85 cents.

The companies said the deal would reduce cost of capital, freeing up funds for acquisitions. Lower capital cost would also drive a 10-15 percent dividend growth rate through 2020.

http://www.reuters.com/article/2015/05/13/williams-lp-ma-williams-idUSL3N0Y45SQ20150513

Woodside of Australia said that the conditions precedent to the LNG deal it has signed last year with Cheniere’s unit Corpus Christi Liquefaction have been satisfied.

Cheniere has just made a final investment decision on the construction of Trains 1 and 2 of the Corpus Christi liquefaction project.

Under the deal, Woodside will buy about 0.85 million tonnes of LNG per annum from the Corpus Christi project on start-up of the second train at the export facility being developed near Corpus Christi, Texas.

LNG will be purchased on a free on board basis. The price payable by Woodside will be 115% of the monthly Henry Hub price plus US$3.50 per million British thermal unit (MMBtu), in line with contracts signed with the other buyers from the Corpus Christi LNG project, Woodside said in a statement on Thursday.

The twenty-year agreement includes an extension option of up to an additional ten years and a mechanism that gives Woodside the option to forgo deliveries with sufficient notice through the payment of US$3.50/MMBtu for cancelled quantities.

Cargoes to Woodside from Train 2 are expected to start in 2019.

http://www.lngworldnews.com/woodside-cheniere-close-corpus-christi-lng-deal/

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