US Fed holds rate, signals possible September cut

Spanish Market: Metals, Natural gas, Oil products
31/07/24

The US Federal Reserve kept its target interest rate unchanged at a 23-year high today while signaling a September rate cut "could be on the table" if inflation continues on its easing trajectory.

The Fed's Federal Open Market Committee (FOMC) held the federal funds target rate unchanged at 5.25-5.5pc. The Fed has held rates unchanged since July 2023 after hiking them by 5.25 percentage points from March 2022 in the steepest course of hikes in four decades.

"We're getting closer to the point at which it will be appropriate to begin to dial back restriction," Fed chairman Jerome Powell said after the meeting. "If we get the data that we hope we get, a reduction in the policy rate could be on the table at the September meeting."

The decision to keep rates steady was widely expected.

Following today's meeting, the FedWatch tool, which tracks fed funds futures trading, projected an 81.6pc probability of a quarter point cut at the September FOMC meeting and an 18.2pc chance of a half point cut, compared with 86.3pc chance of a quarter point cut and a 13.2pc probability of a half point cut a day earlier.

The Fed has been battling to rein in inflation, which saw the consumer price index surge to a four-decade high of 9.1pc in June 2022 because of supply chain disruptions caused by the global economic reopening following the Covid-19 pandemic.The Fed's favorite inflation gauge, the Personal Consumption Expenditures (PCE) price index, fell to an annual 2.5pc in June, close to the Fed's long range target of 2pc. The unemployment rate has risen to 4.1pc in June from 3.5pc in July last year.

By Bob Willis

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07/10/24

Kinder Morgan to shut Tampa terminals Tuesday

Houston, 7 October (Argus) — Kinder Morgan is planning to shut its terminals and fuel racks in Tampa, Florida, on Tuesday as the region prepares for Hurricane Milton to make landfall Wednesday evening . "We will continue to monitor the storm's path and make any adjustments as needed," Kinder Morgan said in a statement on Monday. Kinder operates the Port Sutton, Tampa Bay Stevedores and Tampaplex terminals in Tampa's Hillsborough Bay and the Port Manatee terminal further south in the Tampa Bay. The terminals handle a wide range of bulk products including fertilizers, scrap metal, petroleum coke and coal according to Kinder Morgan's website. Kinder's Tampa refined products terminal has 1.8mn bls of storage and is connected to the Central Florida Pipeline (CFPL) which transports gasoline, diesel, ethanol and jet fuel to Orlando, including to Orlando International Airport. The airport said today that it will cease operations the morning of 9 October in advance of the hurricane. By Nathan Risser Hurricane Milton projected path Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

CNRL to buy Chevron's Canadian oil sands, shale: Update

07/10/24

CNRL to buy Chevron's Canadian oil sands, shale: Update

New York, 7 October (Argus) — Canadian Natural Resources (CNRL) agreed to buy a 20pc stake in the Athabasca Oil Sands Project (AOSP) and 70pc interest in the Duvernay shale from Chevron for $6.5bn, extending its lead as Canada's top producer. The all-cash transaction has an effective date retroactive to 1 September, the companies said Monday. Closing is expected during the fourth quarter. The assets being sold accounted for about 84,000 b/d of oil equivalent (boe/d) of production, net of royalties, to Chevron last year. Chevron last October announced plans to acquire US independent Hess for $53bn, pledging to sell $10bn-$15bn of assets by 2028. While the Hess deal has been delayed by a mid-2025 arbitration hearing, Chevron, the second-largest US oil producer, has increasingly focused its attention on the Permian shale basin of west Texas and southeastern New Mexico, as well as an expansion project in Kazakhstan. CNRL's acquisition bolsters its position as Canada's largest petroleum producer after pumping out 1.29mn boe/d of oil and gas in the second quarter this year. About 72pc came from oil and natural gas liquids (NGLs), with the balance from natural gas. CNRL anticipates the oil sands and Duvernay assets will lift the company's production profile by about 122,500 boe/d in 2025. About half, or 62,500 b/d, will come in the form of synthetic crude oil produced from AOSP's 320,000 b/d Scotford upgrader near Edmonton, Alberta. The upgrader is fed diluted bitumen piped from the Muskeg River and Jackpine mines in the oil sands region. The deal would increase CNRL's stake in AOSP to 90pc. Calgary-based CNRL first made its foray into AOSP in 2017 when it bought a 70pc stake from Shell and Marathon Oil Canada for $9.75bn ($C$12.74bn). Muskeg River and Jackpine are adjacent to the company's fully owned Horizon mine and upgrader, and the increase in ownership may allow for increased synergies between the two assets, according to executives. "It allows for a little bit more ease in terms of governance on the asset," CNRL president Scott Stauth said Monday on an investor call. "I can see us utilizing the equipment more effectively between the two sites." Undeveloped oil sands projects Also included in Monday's deal are additional stakes in undeveloped oil sands leases that CNRL could tap as it works through its reserves. This includes a 20pc increase the Pierre River project that would provide CNRL with 90pc ownership; a 60pc increase in the Ells River project that would lift the company's stake to 90pc; a 33pc increase in the Saleski project, for 83pc; and a 6pc working interest in Namur that would reach 65pc. Reserves from Pierre River could be used to extend the life of the Horizon project as the North Mine depletes. A standalone facility there is also possible, but would require a significant capital outlay, CNRL executives said. CNRL in May said it was considering a massive 195,000 b/d increase to its Horizon production using two new technologies. CNRL said production from the light oil and liquids rich assets in the Duvernay is expected to average 60,000 boe/d in 2025, half of which would be natural gas. CNRL anticipates pushing production to 70,000 boe/d by 2027 with more than 340 locations already identified as candidates for drilling. With WTI above $70/bl, "this is a very attractive acquisition for us," CNRL chief financial officer Mark Stainthorpe said. CNRL has been actively acquiring assets in recent years. The company purchased Canadian assets belonging to Painted Pony in 2020, Devon Energy in 2019, TotalEnergies in 2018 and Cenovus Energy in 2017, among other deals. By Stephen Cunningham and Brett Holmes Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Chevron shuts Gulf platform ahead of Hurricane Milton

07/10/24

Chevron shuts Gulf platform ahead of Hurricane Milton

New York, 7 October (Argus) — Chevron evacuated and shut in its Blind Faith oil and gas production platform in the Gulf of Mexico in advance of Hurricane Milton, which has strengthened into a category 5 storm as it barrels toward Florida's west coast. Output from Chevron's other operated facilities in the region remains at normal levels, the company said today. The 65,000 b/d Blind Faith platform is located around 160 miles southeast of New Orleans. Milton, with maximum sustained winds of 160 mph, was about out 130 miles west of Progreso, Mexico, according to an 11am ET National Hurricane Center advisory. The storm will move through the Campeche Bank offshore region north of Mexico's Yucatan peninsula — where state-owned Pemex's largest oil and natural gas production operations are located — today and Tuesday, then cross the eastern Gulf of Mexico and approach the west coast of the Florida Peninsula by Wednesday. On its current track, the hurricane is expected to skirt to the south of the majority of US offshore oil and natural gas platforms in the Gulf of Mexico. The region accounts for around 15pc of total US crude output and 5pc of US natural gas production. Hurricane Helene temporarily shut in up to 29pc of oil production and 20pc of gas output in the Gulf of Mexico late last month. By Stephen Cunningham Hurricane Milton projected path Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Concerns remain over plans of firm tapped to run Citgo

07/10/24

Concerns remain over plans of firm tapped to run Citgo

London, 7 October (Argus) — The top bidder in the auction for Venezuelan state-run PdV's US refining subsidiary, Citgo, says it plans to reinvest in its 804,000 b/d of refining capacity, but concerns remain over the private equity-backed buyer's intentions. Amber Energy was selected on 27 September as the top bidder in an auction for the seventh-largest US refiner, with a bid of $7.3bn. The company, backed by investors including Elliott Investment Management, says it would focus on "enhancing the value of its [Citgo's] core assets" by prioritising "operational excellence", reinvesting in the business and pursuing "strategic investments". Amber is led by industry veterans Gregory Goff and Jeff Stevens. The latter was chief executive of Western Refining from 2010-17, while Goff ran refiner Andeavor from 2010-18, during which time it changed its name from Tesoro, bought Stevens' Western Refining and was then bought by Marathon Petroleum. Goff and Stevens' refining pedigree has not allayed concerns in the market that one of their investors, Elliott, and other undisclosed backers, want to split up the assets and sell them for a combined price higher than the investment group's $7.3bn bid. Elliott's track record of activist investing in North American refiners shows a clear preference for improving the core business of processing crude into fuels, with little interest in what the investment firm views as non-core assets. Elliott pushed Canadian integrated energy company Suncor in 2022 for board changes and divestment of its 1,500 retail stores, which it ultimately did not sell. The firm had more luck with Marathon, which agreed to sell its 3,900-store Speedway network in 2019, the year after it bought Andeavor. Last year, Elliott purchased a $1bn stake in Phillips 66 and called for the company to refocus on its refining business and reduce operating costs. Phillips 66 divested some of its retail network and pipelines this year. The investment group, which started out trading in the 1970s but has since expanded into a multi-strategy hedge fund and private equity firm, has shown a clear preference for merchant refiners within its activist investments, and criticised the strategy of integrated refining companies. It is not clear whether that preference carries through to its private-markets investment in Amber, which could also be eyeing an initial public offering for the assets down the line. Elliott did not respond to requests for comment on its strategy. A spokesperson for Amber declined to discuss details of the company's strategy on the record. Seeking closure Amber said it expects the sale to close in mid-2025, pending regulatory approval and a final recommendation by the US Court for the District of Delaware. But investors involved in the auction process and other downstream operators told Argus that higher bids from other refiners or groups are likely, as Amber's bid is considered relatively low for what are widely viewed as attractive refining assets. The auction comes at a time of flatlining domestic demand for road fuels such as gasoline, and ongoing worries about the future of the US refining industry, where smaller and less profitable plants are the most likely to shutter operations. But Citgo's two Gulf coast assets — a 455,000 b/d refinery in Louisiana and a 165,000 b/d plant in Texas — are large, complex refineries that could benefit from access to export markets as domestic demand wanes and the Gulf coast readies for the 2025 closure of LyondellBasell's 264,000 b/d Houston plant. Citgo's 184,000 b/d Lemont refinery in Illinois could gain access to cheap Canadian heavy crude and sell products to the US market when major plants such as ExxonMobil's 252,000 b/d Joliet refinery in Illinois and BP's 435,000 b/d Whiting facility in Indiana are off line owing to outages or maintenance. By Nathan Risser Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Nigeria starts local currency crude sales to Dangote

07/10/24

Nigeria starts local currency crude sales to Dangote

Lagos, 7 October (Argus) — Nigeria's state-owned oil firm NNPC began selling crude to the country's 650,000 b/d Dangote refinery in the local currency on 1 October, as planned, the Nigerian government said. Co-ordinating minister of the economy Wale Edun said he has conducted "a post-commencement review" of the programme, where downstream regulator NMDPRA, NNPC and Dangote officials confirmed the start of sales in naira. "From 1 October, NNPC will commence the supply of approximately 385,000 b/d of crude oil to the Dangote refinery, which will be paid for in naira," Edun had said previously. The programme will also involve Dangote supplying gasoline and diesel of "equivalent value to the domestic market to be paid for in naira". The crude and product sales will be valued in dollars at prevailing international market prices, but financial settlements will be completed in naira at a fixed exchange rate that has so far not been disclosed. Maritime and port regulatory costs for coastal deliveries of crude and products under the programme, which are normally collected in dollars, "will also be paid for in naira", Edun said. The Nigerian Ports Authority's managing director, Abubakar Dantsoho, previously confirmed the set-up of a "one-stop shop that will co-ordinate service provision from all regulatory and security agencies", listing Nigerian ports, maritime, customs and tax authorities and the navy as participants. Dangote will sell diesel volumes under the programme "to any interested offtaker", the government said, but gasoline will only be sold to NNPC. "NNPC will then sell to various marketers for now," according to the government. "Since gasoline is still subsidised by the government, using discounted foreign exchange [available] only to NNPC, prices at wholesale and retail are still considerably below the market. That is why only NNPC can buy Dangote's gasoline today," said Bob Dickerman, the chief executive of local oil trader Pinnacle. Nigeria's diesel market has been deregulated since 2003 but efforts to remove the country's longstanding gasoline subsidy have stalled. Dangote started sales of gasoline to NNPC on 15 September under an older contract in which the national oil company pays the refiner in dollars. Argus tracking shows Dangote's crude receipts rose by 5pc on the month to 195,000 b/d in September. Dangote said it is aiming for a run rate of 350,000 b/d in its first phase of operations but has fallen short of that level in every month this year except for June. By Adebiyi Olusolape Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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