Energy Journal: OPEC’s Oil Production Crept Up Last Month

What to Watch

OPEC Output Rises on Higher Crude Production in Saudi Arabia

OPEC’s output inched up last month, reports The Wall Street Journal’s Christopher Alessi.

In its closely watched monthly oil market report, the Organization of the Petroleum Exporting Countries said the group’s total crude  output rose by 12,000 barrels a day in April, month-on-month, to average 31.9 million barrels a day. The increase was mainly the result of higher crude production in Saudi Arabia—the world’s largest crude exporter and the de-facto head of OPEC—and Algeria.

Meanwhile, oil prices edged lower Monday morning, slightly eroding the sharp gains of the past week as investors reacted to a robust U.S. rig count.

Brent crude oil, the global benchmark was down 0.1% at $77.03 a barrel in midmorning trading. On the New York Mercantile Exchange, West Texas Intermediate futures were trading down 0.1% at $70.60 a barrel.

Energy News

The Next Battlefield in Washington’s Fight to Contain China? It May Be Portugal

China Three Gorges Corp. plans to launch a $10.8 billion offer to buy the almost 77% it doesn’t already own of Portugal’s main energy utility. The move is likely to draw attention  from European officials and U.S. authorities, as Western governments have grown more cautious of approving acquisitions by foreigners of assets in strategic sectors such as energy infrastructure, defense, technology and telecommunications. Shares at Portuguese utility EDP were up 10% on Monday morning.

 

Trump’s California Comments Fuel Optimism Among Auto Executives

Auto makers still hope they can lobby the Trump administration to take a softer tone on the  rollback of emissions standards so the national rules do not conflict with those of states such as California, that have mandated tough emissions standards.

“Three dollars [for driving fuel] is like a small fence. You can get through it, you can get over it. But $4 is like the electric fence in Jurassic Park. There’s no getting over that.”

–  Patrick DeHaan, petroleum analyst at GasBuddy, a fuel-tracking app.

Saudi Aramco Subsidiary Is Supplying U.S Oil to the United Arab Emirates

Saudi Aramco’s trading division, the Aramco Trading Companyhas been selling U.S. condensate, an ultra-light crude oil, to the United Arab Emirates, Reuters reports.

 

WSJ Energy In-Depth

Gas Is Headed for $3. What That Means for the U.S. Economy

Drivers are feeling the pinch as average U.S. retail gasoline prices have  reached their highest levels in more than three years, write Stephanie Yang and Alison Sider.

Economic growth has boosted demand for oil. If that growth continues, most consumers should be able to afford to pay more to fill up their tanks.

But conflicts in oil-producing regions could mean even higher gas prices, posing a threat to U.S. growth as the cost of fuel and gasoline weighs on drivers, airlines, delivery companies and other big consumers.

Average U.S. retail gasoline prices are already climbing toward $3 a gallon, the most expensive in more than three years. In states such as California and Washington, prices have already breached the $3 level after rising 24% and 17%, respectively, from a year ago.

“Prices at the pump are quite high especially as we enter the driving season,” said Gregory Daco, chief U.S. economist at Oxford Economics. “That’s going to be one of the channels where you see a hit to people’s disposable income and spending.”

Big Number

500,000

Venezuela’s oil production is set to suffer yet another decline, writes Spencer Jakab for Heard on the Street.

ConocoPhillips has moved to take control of PdVSA facilities in the Caribbean after winning a $2 billion legal judgment tied to Venezuela’s seizure of its assets in 2007.

The move is likely to hurt Venezuela because that storage and refining infrastructure is needed to blend the country’s heavy crude with lighter varieties and make it suitable for sale abroad. Energy economist Philip Verleger estimates the issue could cut off exports of as much as 500,000 barrels a day out of the 1.4 million Venezuela produces.

FutureCurve

Wednesday: The International Energy Agency releases its monthly oil market report.

June 5-6th: The London Crude Oil Summit. The speakers include Franco Magnani, CEO of Eni Trading and Shipping.

Reporter’s Notebook

The WSJ’s Neanda Salvaterra on Ghana’s ambitions for its oil industry. Ghanaian President Nana Akufo-Addo wants to add value to his country’s recent oil wealth. “My government will use oil to create assets,” said Mr. Addo on Saturday in front of an audience at the London Business School’s Africa Business Summit. Ghana’s oil industry got a boost in 2007 from the discovery of the offshore Jubilee oil field, but Mr. Addo aims to do more than just to borrow against his nations crude deposits. This “provides us with a perfect opportunity to set up a petrochemical industry.”

WSJ reporter Manju Dalal on Chinese energy firms seeking to dabble in dollar bonds. Forty Chinese companies are seeking permission to sell dollar bonds, according to the National Development and Reform Commission’s website, adding to a similar number of issuers last month looking to do the same. The newbies include the likes of Chinese oil-and-gas driller CNOOC, Three Gorges, Sunac and China Vanke. Mainland firms are seeking to sell dollar bonds at a time the weighted average annual lending rate is rising. It rose a quarter-point during first quarter to 5.96%, according to the PBoC.