Oil rises more than 2% on firm yuan, expectations of more OPEC cuts

MOSCOW (MRC) -- Oil jumped more than 2% on Thursday on expectations that falling prices could lead to production cuts, coupled with a steadying of the yuan currency after a week of turmoil spurred by an escalation in U.S.-China trade tensions, said Hydrocarbonprocessing.

Brent crude ended the session up USD1.15, or 2.1%, at USD57.38 a barrel, after hitting a session high of USD58.01. U.S. West Texas Intermediate (WTI) crude futures rose USD1.45, or 2.8%, to settle at USD52.54 a barrel after hitting a peak of USD52.98.

Prices rebounded after tumbling nearly 5% to their lowest since January on Wednesday after data showed an unexpected build in U.S. crude stockpiles after nearly two months of decline. Lending some support to prices on Thursday, inventories at Cushing, Oklahoma, the delivery point for WTI, fell about 2.9 million barrels in the week to Aug. 6, said traders, citing data from market intelligence firm Genscape.

China’s yuan strengthened against the dollar and its exports unexpectedly returned to growth in July on improved global demand despite U.S. trade pressure. The dollar fell 0.2% against the offshore yuan. “Today’s price rebound across the energy spectrum looks like a normal correction from a short-term oversold technical condition,” Jim Ritterbusch of Ritterbusch and Associates said in a note.

“While some Saudi overtures of additional output restraint, a softening U.S. dollar and lift in global risk appetite are facilitating today’s rally, we are not viewing this as the beginning of a sustainable advance by any measure." Reports that Saudi Arabia, the world’s biggest oil exporter, had called other producers to discuss the slide in crude prices have helped supported the market, traders and analysts said.

“Saudis are scrambling to send a signal that will stabilize oil markets ... With energy prices heading for the worst weekly close since December, we should not be surprised to hear more rumors that OPEC may be considering increased production cut efforts ahead of a key summit that is tentatively planned for the second week in Abu Dhabi,” said Edward Moya, senior market analyst at OANDA in New York.

Persistent worries about demand growth have weighed on global oil markets, particularly as the world’s two biggest economies are locked in a trade row. Crude oil shipments into China, the world’s largest importer, in July rose 14% from a year earlier as new refineries ramped up purchases. Fuel exports continued to climb as supply outstripped demand in the world’s second-largest oil consumer.

Saudi Arabia plans to keep its crude oil exports below 7 million barrels per day in August and September despite strong demand from customers, to help drain global oil inventories and bring the market back to balance, a Saudi oil official said.

Geopolitical tensions over the safety of oil tankers passing through the Persian Gulf remained unresolved as Iran refused to release a British-flagged tanker it seized last month.

The U.S. Maritime Administration said U.S.-flagged commercial vessels should send their transit plans for the Strait of Hormuz and Gulf waters to U.S. and British naval authorities, and that crews should not forcibly resist any Iranian boarding party.
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MOSCOW (MRC) -- A Venezuelan oil joint venture with a state-owned Chinese company has started an expansion project to boost output to 165,000 barrels per day (bpd), President Nicolas Maduro said, from a current capacity of 110,000 bpd, said Reuters.

Sinovensa, owned by PDVSA subsidiary Venezuelan Petroleum Corp (CVP) and China National Petroleum Corp (CNPC), produces extra-heavy Orinoco crude and blends it with lighter oil to produce medium-grade Merey.

"Thanks always to China, for all of this effort and all of this cooperation," Maduro said in a televised broadcast that included a delegation of Chinese officials.

PDVSA said in a statement that a second phase of the project would take capacity to 230,000 bpd.

Blended crude grades are widely sought in Asian markets, where PDVSA is increasingly sending its crude production in the wake of Trump administration sanctions that have effectively halted sales of Venezuela oil to the U.S. market.

Venezuela last year sold CNPC an additional 9.9 percent stake in Sinovensa, leaving it with 49 percent ownership. PDVSA owns the rest.
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MOSCOW (MRC) -- Shareholders of Anadarko Petroleum Corp voted overwhelmingly to sell the company for USD38 billion to rival Occidental Petroleum Corp , ending a short-lived contest that pitted two of the most storied names in the oil industry against one another, said Hydrocarbonprocessing.

Occidental in May beat out Chevron Corp to grab a major oil industry prize: Anadarko’s nearly quarter million acres in the Permian Basin, the top U.S. shale field, where low-cost output has helped turn the United States into the world’s top oil producer at more than 12 million barrels per day.

Anadarko’s shareholders voted 99% in favor of the deal that gives them USD72.34 per share based on Wednesday’s closing price for Occidental. Investors also voted in a non=binding measure 71% against executive payouts tied to the deal. Anadarko’s top six executives are to receive USD300 million in payouts.

Occidental said immediately after the vote it had closed the transaction, and had named new executives to run Western Midstream Partners LP, Anadarko’s natural gas pipeline business. Its shares rose 2.5% to close at USD47.13.

“We begin our work to integrate our two companies and unlock the significant value of this combination for shareholders,” Occidental Chief Executive Vicki Hollub said in a statement. Anadarko shares are up 56% from the day before it disclosed merger talks, while Occidental shares are down 30% since its discussions were revealed.

The market’s sour response has dampened enthusiasm for deals. Even with stocks of many shale firms trading at multi-year lows, it may not be enough to spur a buyout spree by the world’s largest oil and gas firms, said Artem Abramov, analyst with Rystad Energy.

“Some super-majors might be waiting for even lower pricing,” Abramov said. Hollub has been lining up financing and organizing asset sales to fund the deal while battling activist investor Carl Icahn, who wants to replace four Occidental directors and influence the pace of the company’s asset sales.

Hollub avoided her own shareholder vote on the deal by securing a controversial and pricey USD10 billion financing agreement with Warren Buffett’s Berkshire Hathaway. Icahn likened the deal to “taking candy from a baby” on Buffett’s part.

Occidental this week sold USD13 billion in bonds to help fund the Anadarko purchase and has proposed selling Anadarko’s Africa assets to Total SA. It also formed a drilling partnership with Colombia’s state-run oil company Ecopetrol SA to develop part of its Permian shale field for up to USD1.5 billion.

Occidental last week reported a 14% drop in second quarter profit, as costs related to the deal and weaker chemical earnings hit its bottom line.
MRC

MOSCOW (MRC) -- European downstream firm Varo Energy said it had agreed to increase its stake in a major refining complex in Germany to up to 55% by buying shares from oil major BP, as per Hydrocarbonprocessing.

Swiss-based Varo currently holds 45 percent of the Bayernoil complex while BP holds 10%. Bayernoil consists of two plants - Vohburg and Neustadt - with a combined capacity of 220,000 barrels per day. Italy’s Eni and Russia’s Rosneft hold the remaining interests.

As part the agreement with BP, Varo will also acquire the major’s polymer modified bitumen plant at Vohburg and a 9% stake in the major crude oil pipeline TAL that brings oil from the Italian port of Trieste to central Europe.

Varo partially restarted the Vohburg plant in June after a devastating fire at the gasoline-making unit last year. “The Bayernoil refinery is a key strategic asset for VARO’s operations in Germany and beyond. Investing in additional shares will offer greater flexibility and help us further optimize our logistics to continue to best serve our customers,” Varo CEO Roger Brown said in a company statement.

The transaction is expected to close in the coming months. The company also operates Switzerland’s only refinery at Cressier and has storage and retail assets in Western Europe. It is owned by oil trading giant Vitol, U.S. private equity firm Carlyle Group and Dutch firm Reggeborgh Invest.

Varo’s shareholders cancelled a floatation on the Amsterdam stock exchange in 2018 and held talks earlier this year on selling part of the firm with an outside investor including Hong Kong tycoon Henry Cheng.
MRC

MOSCOW (MRC) -- Gazprom neftekhim Salavat, one of Russia's largest production complexes for oil refining and petrochemicals, has resumed its high density polyethylene (HDPE) production after scheduled turnaround, according to ICIS-MRC Price Report.

The customers of the enterprise said the production of HDPE at the plant was fully resumed by 8 August after the scheduled maintenance works, and the shipment of commercial products will begin in the coming days. The turnaround at PE production started in early July. The annual production capacity of HDPE at Gazprom Neftekhim Salavat is 120,000 tonnes/year.

It is also worth noting that the next series of scheduled shutdowns for scheduled works of Russian polyethylene producers will begin in September. Two producers will simultaneously shut down their production capacities for maintenance works: Stavrolen (from 1 September for 45 days) and Kazanorgsintez (a sequential shutdown of capacities is planned from 14 September to 21 October).

OAO "Gazprom neftekhim Salavat" (formerly OAO "Salavatnefteorgsintez") is one of the leading petrochemical companies in Russia, carrying out a full cycle of processing hydrocarbon material. The list of products manufactured by the plant includes more than 140 items, including 76 grades of the main products: gasoline, diesel fuel, kerosene, fuel oil, toluene, solvent, liquefied gases, benzene, styrene, ethylbenzene, butyl alcohols, phthalic anhydride and plasticizers, polyethylene, polystyrenes, silica gels and zeolite catalysts, corrosion inhibitors, elemental sulfur, ammonia and urea, glycols and amines, a wide range of household products made of plastics, surfactants and much more.
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