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Oil prices close sharply down

Oil prices are set to close out the week down sharply, lower than where they were before the Soleimani killing. WTI is currently at a one-month low. With de-escalation in the air, the geopolitical risk premium has disappeared for the time being.

Product stocks soar. Crude stocks rose slightly in the past week, but gasoline stocks shot up sharply. In the past two weeks, gasoline stocks have increased by more than 22 million barrels. The EIA data was released shortly after President Trump spoke about Iran, a move the market interpreted as a de-escalation. The EIA data combined with the Iran news sent oil prices tumbling.

Iran wants U.S. out of the Middle East. “It is in their interest that they pack and leave voluntarily, not only Iraq but Afghanistan and the Arabic countries,” Brig. Gen. Amir Ali Hajizadeh said on Thursday. The U.S. faces uncertainty in Iraq as the Iraqi parliament and Prime Minister have voiced support for expelling American forces from the country.

EPA tightens pollution on trucks. The U.S. EPA initiated a process to limit emissions of nitrogen dioxide from heavy trucks. The industry supports it, as analysts say the move could head off stricter state-level standards in California.

U.S. GHG emissions fall 2 percent. U.S. greenhouse gas emissions declined by 2.1 percent last year, due to an 18 percent decline in coal generation. Without policy changes, analysts say emissions declines will not accelerate.

Apache Corp. skyrockets 27 percent on Suriname find. Apache Corp. (NYSE: APA) saw its share price shoot up 27 percent this week after it announced a prolific discovery in offshore Suriname. Apache is partnering with Total SA (NYSE: TOT) on the project. “It’s binary. Yesterday, Suriname was worth nothing and now: we don’t know what it’s going to be worth,” BofA Global Research energy analyst Doug Leggate told Reuters. One brokerage called the discovery “among the most anticipated in the world.” The discovery comes at a critical time as Apache’s Permian assets are struggling. Meanwhile, Apache also announced that it would eliminate nearly 500 jobs in order to cut costs.

Talos says Mexico discovery holds 670 million barrels. Talos Energy (NYSE: TALO) said that its Zama field, one of the largest discoveries in Mexico in two decades, may hold roughly 670 million barrels of recoverable oil.

BlackRock joins climate investor group. BlackRock, the world’s largest asset manager, said that it would join Climate Action 100+, a collection of 370 institutional investors managing $41 trillion in assets. The group pressures companies to cut carbon pollution.

Trump to water down NEPA. The Trump administration wants to weaken the National Environmental Policy Act (NEPA), one of the bedrock environmental laws that requires environmental assessments before major infrastructure or energy projects move forward. The plan to defang NEPA is intended to accelerate permitting for big projects, but it will likely face legal challenges once it is finalized later this year.

Russia opens TurkStream. Russia inaugurated the TurkStream pipeline this week, a pipeline that runs from Russia to western edge of Turkey via the Black Sea. The pipeline will then carry gas to Western Europe. Just a few weeks ago, Russia started up the Power of Siberia pipeline, a long-distance conduit that runs to China. Meanwhile, the Nord Stream 2 pipeline has stalled at the eleventh hour due to U.S. sanctions, but is likely to be completed later this year.

Atlantic Coast Pipeline loses permit. A federal court unanimously tossed out a federal permit for a compressor station servicing the Atlantic Coast Pipeline because of the deleterious health effects it would have on an African-American community, which constitutes “unequal treatment,” the court said. The pipeline aims to carry Marcellus shale gas to the U.S. Southeast, but will have to cross sensitive forests and the Appalachian Trail, and as the court decision indicates, would have negative impacts on certain areas.

Emissions on U.S. Gulf Coast to soar. The shale boom, and the coming wave of petrochemical plants, LNG export terminals and other infrastructure – mostly in Texas and Louisiana – will cause a spike in greenhouse gas emissions over the next five years. A new report said 157 planned facilities to be built by 2025 will result in the emissions equivalent of 50 coal-fired power plants.

World Bank: Global GDP growth a tepid 2.5 percent. The World Bank said that global GDP will expand by just 2.5 percent this year, “if everything goes just right.” Behind the lethargy is an “unprecedented runup in debt worldwide, and the prolonged deceleration of productivity growth.” Last year, GDP grew by 2.4 percent. Emerging market debt ballooned to 170 percent of GDP in 2018, up from 115 percent in 2010.

China opens oil and gas exploration. For the first time, China will allow foreign companies to explore for oil and gas in the country. “China is accelerating the sector reform due to growing energy security concerns,” Zhu Kunfeng, the Beijing-based associate director of upstream research at IHS Markit, told Reuters.

Occidental to slash jobs. Occidental Petroleum (NYSE: OXY) said it would “significantly” cut jobs as it tries to cut costs after the $38 billion takeover of Anadarko Petroleum. The acquisition quadrupled the company’s debt to $40 billion.

Canadian oil prices fall again. Alberta may have loosened the mandatory production cuts too far as WCS prices have recently fallen sharply relative to WTI. The differential is at risk of a “blowout,” according to Credit Suisse. If the discount reaches $25 per barrel, the Alberta government “might be forced to step back in” and issue cuts again, Manav Gupta of Credit Suisse said. WCS recently fell to a $22-per-barrel discount.

Global oil and gas discoveries hit 4-year high. The world’s oil and gas companies discovered 12.2 billion barrels of oil equivalent last year, the largest total since 2015. There were 26 discoveries of at least 100 million barrels in 2019.

Wave of refineries up for sale. Royal Dutch Shell (NYSE: RDS.A) said that it is looking to sell its refinery in Anacortes, Washington, and there are now seven major refineries in the U.S. that are up for sale, accounting for 5 percent of the country’s processing capacity. Companies are having trouble finding bidders because of unfavorable locales, worries about falling margins, and the coming restart of nearby facilities in the Caribbean that will add to competition,” Reuters said.

Dele Fashomi
Dele Fashomi, seasoned journalist and communication teacher, is a holder of Master of Arts degree in Communication and Language Arts from the University of Ibadan in 1992/93. Earlier, he had bagged a Bachelor degree from the same university in 1984, after which he proceeded to the Nigerian Institute of Journalism, Lagos, in 1990, for a postgraduate diploma in Journalism. He had done many courses in communication, including the EU-BBC Editing Course in 2002. Mr. Fashomi combines effectively the practice, research and teaching of communication. And to date, he has published two academic works in communication: Issues in Communication Technology and Policy (2010) and Economic and Social Issues in Advertising and PR (2013). He had his first break in the Nigerian media in Concord Newspapers in 1990 and today, he has over two and half decades experience earned in several newspapers. He has been part of many start-ups, such as The Republic (1987), The Comet (1999), The Anchor 2001 - 2002; Sun Newspapers (2003); Westerner newsmagazine (2005 - 2010) as Editor; National Life (2011) as Sunday Editor, and Newswatch Newspapers (2012- 2016) as Daily Editor. Dele Fashomi is now the Publisher/Editor-in-Chief of newspaper online, which he started in July 2015. He is also into biography writing, with many books in his trail, some of which he wrote alone and one he co- authored with his mentor, Mr Dare Babarinsa, entitled:  Olabiyi Durojaiye - DARE TO BE DiFFERENT. He also guided and collaborated with Pa Olatunji Odusanya in writing his autobiography - AGAINST ALL ODDS. There are many other books in the works under his pen.