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Oil prices unchanged by Trump-Kim historic summit

The markets shrugged at the historic meeting between President Trump and North Korean dictator Kim Jong Un. Both sides hailed the summit as a breakthrough, with a pledge towards denuclearization, but as expected, there was a lack of even the most basic details on how they might get there. Oil was flat at the start of Tuesday.

Opposition to an increase in the OPEC/non-OPEC production limits continues to grow, with Iraq coming out against such a move. OPEC’s second largest producer said that the production cuts have not yet achieved the intended objective of balancing the oil market. “Producers from within and outside OPEC have not yet reached the goals set,” Iraq’s oil minister Jabbar al-Luaibi said in a statement. Iraq “rejects unilateral decisions made by some producers which do not consult with the rest.” He went on to add: “We shouldn’t exaggerate the need of the oil market for more oil at the present time, and which could cause great damage to global markets.” The statement of opposition comes after Iran and Venezuela also called upon the group to keep the limits in place. The open resistance from a growing number of OPEC members to what seems to be a likely outcome (a softening of the production curbs) is setting the stage for a contentious meeting.

Despite opposition from some OPEC members, the two most important producers, Saudi Arabia and Russia, are already signaling their intent to raise output. Saudi Arabia also added production last month, which, marking a significant change in strategy. OPEC’s secondary sources said Saudi Arabia increased production by 85,000 bpd in May while the Saudis themselves said production rose by 161,000 bpd. Russia also increased output at the beginning of June from 10.95 million barrels per day to 11.09 mb/d. The data suggests the two producers are laying the groundwork for higher output.

Venezuela told OPEC that it increased production in May by 28,000 bpd, but those communications tend to lack credibility. OPEC’s secondary sources say that Venezuelan output actually fell by 42,000 bpd, putting overall output at a new low of 1.392 mb/d, or roughly 750,000 bpd below 2016 levels.

In its latest monthly Oil Market Report, OPEC said that there is a “wide forecast range” for the second half of the year, with demand for the group’s oil running at 1.7 mb/d between the upper and lower bounds of the forecast. In other words, the group says demand growth is highly uncertain, which provides little insight into what the cartel might do in Vienna in less than two weeks. “Looking at various sources, considerable uncertainty as to world oil demand and non-OPEC supply prevails,” OPEC said. “This outlook for the second half of 2018 warrants close monitoring.”

The Netherlands said the Groningen gas field will produce less than 12 billion cubic meters per year by the end of 2020, and the government is planning on ceasing production altogether by 2030. The field, one of Europe’s largest, has been blamed for a rise in earthquakes.

Global spending on renewable energy for electricity generation is exceeding that of all fossil fuels and nuclear power combined. According to the IEA, the world spent $297 billion on renewable energy in 2016 (the latest year for which complete data is available), which was more than twice the $143 billion spent on new nuclear, coal, gas and fuel oil power combined. Renewables will account for 56 percent of all new electricity capacity installed between now and 2025. Costs have declined so much that renewables are the cheapest option in many places. As of last year, about 12.1 percent of global electricity generation came from non-hydro renewables, double the share from a decade earlier.

An analysis of 10 years’ worth of earnings calls by S&P Global Ratings found that “climate” and “weather” were frequently discussed, while words like “oil,” “Trump,” “the dollar” and “recession” received less attention. “The effect of climate risk and severe weather events on corporate earnings is meaningful,” S&P said in the joint report with Hamilton, Bermuda-based Resilience Economics Ltd.

Mizuho analyst Paul Sankey gave Buy ratings to Chevron (NYSE: CVX) and Occidental (NYSE: OXY), and said Chevron was in a “multi-year sweet spot” with lower capex and 6 percent annual production growth. ExxonMobil (NYSE: XOM) is in the opposite position, with production flat and the company entering a period in which it plans years of higher spending levels.

The Nembe Creek Trunk Line, which carries Bonny Light crude in Nigeria, shut down last week for repairs. Bonny Light has been under force majeure for a month, and the outages could curtail Nigeria’s oil exports. According to Reuters, exports could fall from 1.79 mb/d in June to just 1.43 mb/d in July.

Norwegian oil company Equinor (NYSE: EQNR), formerly Statoil, said that oil demand could peak around 2030 at about 111 mb/d. EVs and efficiency will offset rising demand in petrochemicals and aviation.

Sunday Olatunji
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.