Oil prices plunge after report of quick Saudi production return after attacks
Ben Geman, Axios, September 17, 2019
Crude oil prices fell sharply Tuesday, reversing some of their major increases over recent days, after Reuters reported that Saudi Arabia will quickly restore output lost during attacks on its facilities over the weekend. Why it matters: The report, if borne out, will ease fears of a prolonged outage from the strikes against a massive processing facility and oil field in OPEC’s largest producer and the world’s largest crude oil exporter. Where it stands: Reuters says that the kingdom is “close to restoring 70% of the 5.7 million barrels per day (bpd) production lost following the attacks,” citing a “top Saudi source.” The same source expects full restoration in 2-3 weeks. By the numbers: The global benchmark Brent crude quickly fell after the report and is now down $4 to $63.65 per barrel, a 6% slide, via OilPrice.com. West Texas Intermediate, the key U.S. contract, similarly slid by several dollars and is back under $60 per barrel. What’s next: Saudi Energy Minister Prince Abdulaziz bin Salman is scheduled to give a press conference around 1:15 pm ET.
Our Take: “These attacks are a reminder that there is no substitute for American energy production, which has grown into a stabilizing force for world markets.” Senator Lisa Murkowski
From the Washington Examiner, Daily on Energy:
DEMOCRATS AND REPUBLICANS LOOK FOR ADVANTAGE IN FOSSIL FUEL FIGHT IN AFTERMATH OF SAUDI OIL ATTACKS: Democrats and Republicans are looking to use the Saudi oil strike to make their case for the future of fossil fuels in America.
Senator Ed Markey, a Massachusetts Democrat, said Monday he plans to reintroduce legislation reinstating the four-decade crude oil export ban lifted under by Congress under the Obama administration.
“Efforts to upend oil markets in the Middle East underscore the need to end our reliance on oil,” Markey said. “Energy independence won’t be found in a Saudi oil field, but in an American solar farm,” he added, plugging his Green New Deal resolution that would transition the U.S. to 100% clean, renewable, and zero-emitting energy.
Yes, but it could have been worse, Republican say: Republicans and industry allies say the shale boom has protected the U.S. from big energy price spikes, with the U.S. becoming the world’s largest oil and gas producer.
“For anyone wondering why so many of us believe that American supply matters, now you know,” said Energy and Natural Resources Committee chairwoman Lisa Murkowski, speaking at a hearing Tuesday morning.
The American Petroleum Institute promoted an op-ed by its chief economist Dean Foreman on Monday touting the trade group’s monthly oil market report to be introduced this week that will show U.S. oil production set new records at 12.3 million barrels per day.
“For a second year in a row, the U.S. has supplied virtually all global growth in oil demand — and now can backstop global oil markets during a potential crisis,” Foreman writes.
China Faces Broad Economic Slump as It Seeks Trade Fix With U.S.
Liyan Qi, Grace Zhu, Lin Zhu, The Wall Street Journal, September 17, 2019
Economic activity in China cooled further in August, testing Beijing’s tolerance for slower growth as it seeks to ease trade tensions with the U.S. Softness was visible last month in nearly every aspect of the Chinese economy, with industrial output and retail sales data pointing to sluggish demand and low confidence among businesses and consumers. Economists had been expecting economic activity to have recovered a little from July, when it fell to its lowest level in more than a decade. Value-added industrial output in China rose 4.4% in August from a year earlier, far below economists’ expectations of 5.2% growth and slower than the 4.8% increase in July, the National Bureau of Statistics said Monday.
USGS Updates Gas Hydrate Assessment for North Slope
Alaska Business, September 11, 2019
The Alaska North Slope contains an estimated 53.8 trillion cubic feet of natural gas hydrate resources, according to a new assessment by the US Geological Survey. This estimate is for the undiscovered, technically recoverable natural gas resources stored within gas hydrate formations. “The USGS is committed to providing the most up-to-date, publicly available, peer-reviewed estimates of the nation’s energy resources,” said Walter Guidroz, program coordinator for the USGS Energy Resources Program. “As more information becomes available, we sometimes need to revise our assessments to ensure they reflect the best available science.” This assessment updates a 2008 USGS assessment that estimated about 85 trillion cubic feet of undiscovered, technically recoverable gas resources within gas hydrates of the Alaska North Slope. That assessment was the first-ever estimate of technically recoverable gas resources within gas hydrate.
Our Take: Smaller volumes than predicted in 2008, existing technology can produce the resource. Read the full assessment here.