Oil prices are rising as China wants to end the trade war

Oil prices were relatively quiet this week, bouncing around, but ended the week positively.

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Friday, January 18, 2019

IEA: The compensation oil market will be a "marathon". The IEA said in its recent oil market report that "the road to a balanced market takes time and is more of a marathon than a sprint." The agency noted that Saudi Arabia is determined to achieve it, but less clarity "to Russia , The Agency has left its forecast for demand growth unchanged, arguing that while the world economy is showing some worrying signs, lower oil prices will also help to keep demand higher.

OPEC production declined by 751,000 bpd in December, OPEC released its monthly oil market report on Thursday, which saw a drop of around 751,000 bpd from secondary sources. Saudi Arabia cut production by 468,000 bpd, Iran lost 159,000 bpd and Libya lost 172,000 bpd. Minor cuts came from the United Arab Emirates (-65,000 bpd) and involuntary losses from Venezuela (-33,000 bpd). The biggest gain comes from Iraq, which added 88,000 bpd. The monthly totals were reached prior to the implementation of the OPEC + agreement, which foresees a reduction of 1.2 mb / d in October.

RRP: Brent averages $ 61, The EIA forecasts a price of $ 61 per barrel for Brent for 2019, with the WTI averaging $ 8 below Brent in the first quarter. This discount will decrease to a lower $ 4 per barrel in the fourth quarter. The agency maintained a 12.1 mb / d forecast for oil production in the US this year, even though the price forecast had fallen.

No progress in trade talks between the US and China, US Trade Representative Robert Lighthizer has seen no progress in negotiating structural trade issues earlier this month. The two sides will resume negotiations at the end of January. Related topics: Low oil prices are not the only problem for Permian

OPEC is considering influence campaign in the US According to the Wall Street Journal, OPEC is considering a PR campaign in the US to avert punitive measures in Congress. The Influence Campaign would be the first in the cartel, and it would be to channel the money through "industry organizations, think tanks, academics, and other opinion makers," according to the WSJ. Above all, OPEC is concerned about the anti-trust regulation that has found support in Congress.

Gasoline glut in Asia. Global refineries are producing ever-increasing volumes of gasoline while refineries are pursuing higher margins for diesel. In the meantime, the launch of new refineries in Asia, with a focus on producing naptha for petrochemicals, could further compound gasoline flooding.

Natural gas supply and groundbreaking records in the US, According to the EIA, US natural gas supply is expected to rise to an all-time high of 90 billion cubic feet per day in 2019. This is a significant increase from a record high of 2018 with 83.31 v. Per day The demand will be 82,65 v. Chr. / Day also reach a record high.

Offshore spending is expected to grow on land in 2019, Offshore spending this year will exceed onshore shale spending. This will benefit oil field service companies exposed to "the offshore underwater market and the maintenance, modification and operations (MMO) sector," said Rystad Energy. "Many would expect offshore spending to be cut just as drastically as slate, but after four years of intense cost orientation, offshore budgets were at a 10-year low last year, and at that level you do not need much additional activity or inflation are driving the market forward, "said Runfad Energy, Research Researcher at Oilfield Services.

Libyan National Army launches attack on the field of Sharara, The Libyan National Army (LNA), led by General Khalifa Haftar, launched an attack on January 15 to secure the El Sharara oil field, the largest in the country, with a capacity of 300,000 bpd. The field is offline since December. "Should the LNA manage to take over the El Sharara facilities, Haftar's control of Libya's strategic oil and gas resources would be greatly enhanced," Verisk Maplecroft wrote in a statement. "This in turn would support Haftar's bargaining position in ongoing negotiations with the Government of the National Agreement." If the LNA succeeds, it also increases the likelihood of a repeat of the dispute with the internationally recognized government in Tripoli, as it did last year. In 2018, a significant portion of Libyan oil went out of business as both sides took control of the nations' oil export terminals. Related topics: Oil can never return to the three digits

Hedge funds closed after book losses on trading in oil and gas, Almost 100 energy-focused hedge funds were closed between 2016 and September 2018. The total fell to 738, according to Reuters and Eurekahedge. This is the lowest number of active hedge funds focused on energy since 2010. "The number of funds has dropped dramatically and no new funds have been used," said David Mooney, founder of Casement Capital, Reuters. "Raw material hedge funds have nearly died out."

Tesla dismisses 7 percent of the workforce, Tesla (NASDAQ: TSLA) She said she would lay off 7 percent of her workforce to cut costs. This would allow the company to sell its Model 3 at a lower price as the subsidies expire.

China wants to expand oil dealings in Iran, Despite the looming sanctions on Iran in the coming months, China hopes to expand its operations in Iran, according to the Wall Street Journal. Sinopec has reportedly made strong demands on Iran, knowing that the country has few other options. Sinopec expects its operations to be part of an existing contract that would allow it to go ahead even if US sanctions expire.

By Tom Kool for Oilprice.com

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