ExxonMobil Earns $3.1 Billion in Q2 2019

Exxon Mobil Corporation has estimated second quarter 2019 earnings of $3.1 billion, compared with $4 billion a year earlier.

Earnings included a favourable identified item of about $500 million, reflecting the impact of a tax rate change in Alberta, Canada. Capital and exploration expenditures were $8.1 billion, up 22 percent from the prior year, reflecting key investments in the Permian Basin.

 
“We continue to make significant progress toward delivering our long-term growth plans,” said Darren W. Woods, ExxonMobil chairman and chief executive officer. “Our new U.S. Gulf Coast steam cracker is exceeding design capacity by 10 percent, less than a year after startup. Our upstream liquids production increased by 8 percent from last year, driven by growth in the Permian Basin, and we are preparing to startup the Liza Phase 1 development in Guyana, where the estimated recoverable resource increased to more than 6 billion oil-equivalent barrels.”
 

Downstream

Industry fuels margins, while remaining under pressure during the second quarter, improved from very low levels in the first quarter on stronger gasoline margins, mainly in the U.S.

Planned maintenance activity remained at a high level during the quarter, as the company successfully completed a significant turnaround at its Joliet, Illinois, refinery in the U.S. mid-continent region. Results were also impacted by unscheduled downtime at refineries in Baytown, Texas; Sarnia (Canada); and Yanbu (Saudi Arabia).

Strengthening the Portfolio

Mozambique Rovuma Venture S.p.A., an incorporated joint venture owned by ExxonMobil, Eni S.p.A. and China National Petroleum Corporation, announced that the government of Mozambique approved its development plan for the Rovuma LNG project. The project includes two liquefied natural gas trains with a combined annual capacity of more than 15 million metric tonnes. A final investment decision is expected later in 2019.

Investing for Growth

ExxonMobil and SABIC announced the decision to proceed with the Gulf Coast Growth Ventures project to construct a new chemical facility in San Patricio County, Texas. The new facility will include an ethane steam cracker with a capacity of 1.8 million metric tonnes per year, two polyethylene units and a monoethylene glycol unit.

The company also made a final investment decision on a multi-billion dollar expansion of its integrated manufacturing complex in Singapore to convert fuel oil and other bottom-of-the-barrel crude products into higher-value lube basestocks and distillates. The expansion will add 20,000 barrels per day of ExxonMobil Group II basestocks capacity and increase production of lower-sulphur fuels by 48,000 barrels per day.

ExxonMobil announced that it will proceed with a $2 billion expansion project at its Baytown, Texas, chemical plant. The expansion will add annual production of about 400,000 metric tonnes of Vistamaxx performance polymers, and about 350,000 metric tonnes of linear alpha olefins.

The company reached a final investment decision to upgrade its Fawley refinery in the United Kingdom to increase production of ultra-low sulphur diesel by almost 45 percent, or 38,000 barrels per day, along with logistics improvements. The more than $1 billion investment includes a hydrotreater unit to remove sulphur from fuel, supported by a hydrogen plant which will improve the refinery’s overall energy efficiency.

https://tankterminals.com/news/exxonmobil-earns-3-1-billion-in-q2-2019/?utm_medium=email&utm_campaign=Subscribers%20-%20Week%2032&utm_content=Subscribers%20-%20Week%2032+CID_d7aea314e905c4e42897ab82b52bc5e3&utm_source=weekly&utm_term=ExxonMobil%20Earns%2031%20Billion%20in%20Q2%202019 

OPEC Oil Production Drops To Eight-Year Low

https://oilprice.com/Energy/Crude-Oil/OPEC-Oil-Production-Drops-To-Eight-Year-Low.html

Deeper production cuts at leading producer Saudi Arabia, lower output at sanctions-hit Iran, and outages in Libya and Venezuela sent OPEC’s crude oil production in July falling to its lowest level since 2011, the monthly Reuters survey found.   

In July, OPEC’s fourteen members pumped a combined 29.42 million bpd, a decline of 280,000 bpd compared to June, according to the Reuters survey that tracks supply to the market from shipping data and sources at OPEC, oil companies, and consulting firms.

While Saudi Arabia continued to cut even deeper than it had done earlier this year in its efforts to ‘do whatever it takes’ to reduce oversupply and bolster oil prices, the three OPEC members exempt from the OPEC+ pact—Iran, Venezuela, and Libya—all saw lower production in July compared to June, the Reuters survey found.

The Saudis pumped 9.65 million bpd in July, after OPEC and its allies extended the production cuts into 2020 at the beginning of the month.

That’s a deeper cut compared to the 9.813 million bpd Saudi production in June that OPEC reported in its official figures. In June, the Saudis had lifted production from May by 126,000 bpd, but they were still producing less than their 10.311-million-bpd quota under the pact.

The Reuters survey for July suggests that the Saudis are trying hard to tighten the market by deepening the cuts.

Elsewhere in the group, the three members exempted from the pact—Iran, Venezuela, and Libya—involuntarily reduced their respective production in July. Iran’s output further dropped due to the U.S. sanctions, Libya briefly shut down its largest oil field Sharara, while another blackout in Venezuela impacted oil production which has been steadily declining amid the economic and political crisis.

OPEC will release its official crude oil production data for July in the Monthly Oil Market Report (MOMR) on Tuesday, August 13.  

By Tsvetana Paraskova for Oilprice.com

INSIDE EMPTY VENEZUELAN SUPERMARKET (Depressing)

Oil prices could crash by $30 if China buys Iranian crude: BofA

Tugboats dock the oil tanker “Daniel” carrying crude oil imported from Iran at the Port of Zhoushan in Zhoushan city, east China’s Zhejiang province, 8 March 2018. 

Imaginechina | AP Images

https://www.cnbc.com/2019/08/05/brent-and-wti-price-could-crash-if-china-buys-iranian-oil.html

• Bank of America Merrill Lynch warns the oil price could slip sharply if China buys Iranian oil.
• Beijing could undermine Washington’s foreign policy stance by ignoring U.S. sanctions placed on Iran.
• BofA is keeping its $60 per barrel price estimate in place for 2020.

Crude oil prices could sink by as much as $30 a barrel if China decides to buy Iranian crude oil in retaliation to the latest U.S. tariff measures, according to Bank of America Merrill Lynch.

“While we retain our $60 a barrel Brent forecast for next year, we admit that a Chinese decision to reinitiate Iran crude purchases could send oil prices into a tailspin,” a BofA Merrill Lynch Global Research report said Friday, warning that prices could sink by as much as $20-30 a barrel in that scenario.

The Chinese Ministry of Commerce has threatened countermeasures after President Donald Trump threatened to slap a 10% tariff on $300 billion dollars of Chinese goods. The decision Thursday floored oil markets and sent crude plunging 8% — the most in four years.

Analysts warn that “oil volatility is set to rise again” as markets wait for a Chinese response to the latest US tariff threat, which could include purchasing Iranian oil.

“This decision would both undermine US foreign policy and cushion the negative terms-of-trade effects on the Chinese economy of rising US tariffs,” the report added.

Iranian oil exports slide

Shipments of Iranian oil fell below 550,000 b/d (barrels per day) in June from about 875,000 b/d in May and about 2.5 million b/d in June 2018, according to data from S&P Global Platts. Roughly half of Iran’s exports were shipped to China in June and July, according to the firm.

But a Chinese decision to purchase Iranian oil in a further defiance of U.S. sanctions could act as a double edged sword, according to other analysts.

“Iran would welcome any opportunity to increase its production whether or not it breaches the terms of the U.S. sanctions, but the strategy there would introduce China to a partner over which it doesn’t have an enormous amount of control,” Edward Bell, Director of Commodities Research at Emirates NBD told CNBC’s “Capital Connection.”

“Don’t forget there are other producers that would also be targeting that trade with China, so for instance you could see Iraq or Saudi Arabia step in and try and discount the volumes that they would be exporting to China as a way to circumvent Iran getting that extra market share,” he added.

Traders fret on crude demand

Crude oil prices slumped further on Monday, as traders focused on a deteriorating demand outlook.

Analysts at BofA Merrill Lynch said the latest round of US tariffs could reduce global oil demand by 250,000-500,000 barrels per day, adding to worries about a demand slowdown that is challenging the fundamentals for crude.

“The kind of deterioration in global trade volumes that we’ve seen this year does mathematically lead into lower demand for crude oil,” Bell added.

“If that carries on through the end of 2019 or perhaps even 2020 as we enter the firm end of the US election cycle when Trump is likely to want to maintain that hard stance on China, then it could be a very difficult barrier for crude to try and break through some of those demand concerns.”

Brent crude was trading at $60.94 early Monday, down around 1.5%, while WTI traded at $54.81, again slipping around 1.5% for the session.

MEG tensions - muted affect on tanker markets

http://www.tankeroperator.com/ViewNews.aspx?NewsID=11016

The current state of affairs between the UK and Iran has sparked tales of the Suez Crisis and the Gulf War, so why has there been minimal impact on freight rates and crude prices?

 

First, there hasn’t been any major disruption to flows through the Middle East Gulf, thus far, Gibson Shipbrokers said in an analysis of the situation.

The reported inspection of the 2,000 dwt tanker ‘Riah’ would barely have been newsworthy had it not been for the current media hysteria, but the recent seizure of the ‘Stena Impero’ has made owners nervous.

Furthermore, those looking to operate in the region that are not British linked may feel the current tit for tat measures between Iran and the UK, pose a lower risk. If removing all British flagged product and crude carriers out of the total trading tanker pool, this represents a drop of only 2% in the global fleet.

However, the British-managed VLCC ‘Mesdar’ did spook the markets when it seemed to change course abruptly to Iran before heading back into the Gulf. Although there were attacks on five non-British operated vessels around the Gulf, Iran has denied any involvement.

Second, global demand growth has slowed. The IEA reported that 1Q19 global oil demand growth had slumped to 310,000 barrels per day, the lowest figure recorded since the end of 2011.

Although factors, such as limited output from Iran and Venezuela and OPEC+ led production cuts should suggest a bullish tone, slower global economic growth and trade wars between major economies present a downside demand risk.

However, the IEA has estimated a stronger second half of this year, due to economic activity output improving and new plants ramp up, which could support prices later in the year.

Finally, the world remains oversupplied, hence the recently agreed extended cut in OPEC+ production.

In June, world oil supply topped the 100 mill barrels per day mark for the first time since January, according to the IEA. There have been calls for OPEC+ to cut crude production to 28 mill barrels per day - the lowest since 2003 - down from current levels of around 30 mill in an attempt to rebalance the markets.

Global inventories and stocks are still deemed too high. The benchmark Brent crude price briefly reached a yearly peak of $74 per barrel in April, but recent events in the MEG have affected crude price volatility by only 4%, with prices barely moving from the mid-$60 per barrel levels throughout.

In comparison, when OPEC announced its first round of production cuts back in December, Brent moved 8% overnight.

Production cuts have also had a knock on effect for tanker rates. For example, the benchmark VLCC rate -TD3 - has fallen WS6 points to WS42 ($1.21per tonne) since the start of July, despite MEG tensions.

At the moment, owners have adopted a ‘sit and wait’ policy whilst acting with caution throughout the region. The global knock on effect for the tanker market at the moment seems to be fairly muted and its business as usual, Gibson said.

37 people injured in Texas ExxonMobil fire

https://www.upi.com/Top_News/US/2019/08/01/37-people-injured-in-Texas-ExxonMobil-fire/8231564649823/

Emergency workers have contained a fire that erupted earlier in the day with an explosion at a Texas ExxonMobil plant, authorities said.

The Harris Country Office of Homeland Security and Emergency Management said the fire had been contained and until it's extinguished, the air quality in the area would continue to be monitored for contamination.

Plant manager Jason Duncan said 37 people were treated for non-life threatening injuries, including first degree burns. Meanwhile, 66 people were examined at an occupational health clinic with some receiving first aid before being released, Harris Country OHSEM said.

"Our first priority is people in the community and in our facilities," ExxonMobil Baytown Area said in a statement.

The fire began with an explosion at around 11 a.m. Wednesday at the unit of the Baytown plant that contains light hydrocarbons including propane and propylene, officials said.

As smoke plumed from the plant some 26 miles from Houston, the City of Baytown issued an emergency alert to residents informing them that a precautionary shelter had been established for residents west of the plant.

The Texas Commission on Environmental Quality dispatched emergency staff to the site within minutes to perform handheld air monitoring along with ExxonMobil, it said.

"Harris County wishes all people affected a quick recovery and thanks to all first responders involved," the county said.

The cause of the explosion and subsequent fire was being investigated by the Harris County Fire Marshal's Office.

ExxonMobil said it was cooperating with all government agencies in the investigation.

"We deeply regret any disruption or inconvenience that this incident may have caused the community," ExxonMobil said.

However, ExxonMobil in Bayton has a history of safety and environmental violations, according to OSHA records, KHOU 11 reported.

In the past decade, ExxonMobil in Baytown has been fined $40,000 for eight safety violations. In the past three years, five workers were injured, including one person who lost a finger.

In 2010, it was ordered to pay almost $20 million in fines for Clean Air Act violations

Gold is set to surge no matter what the Fed does, traders say

https://www.cnbc.com/2019/07/30/gold-is-set-to-surge-no-matter-what-the-fed-does-traders-say.html

Gold is holding strong.

The yellow metal is on pace for its third month of gains and sitting at six-year highs as investors hold their breath ahead of the Federal Reserve’s pivotal meeting on Wednesday, in which the central bank’s leaders will decide whether to cut longer-term interest rates.

Regardless of the Fed’s decision, gold is set to surge either way, according to two longtime traders.

Whether the Fed succumbs to market expectations and cuts, or stays put and maintains its pledge of patience, “I look at gold as higher in both scenarios,” Anthony Grisanti, founder and president of GRZ Energy, said Tuesday on CNBC’s “Futures Now.”

If it cuts, Grisanti expects gold — which was trading around the $1,430 level on Tuesday — to slide to its 21-day moving average at $1,414.70.

“But if the Fed does nothing, you could get a surprise if the equities markets sell off and the buyers come into gold for protection,” the veteran futures trader said.

In some parts of the market, that process is already underway. Referencing recent Commitments of Traders reports from the Commodity Futures Trading Commission, Grisanti said some hedge funds have been making major moves into the precious metal.

“Hedge funds have added about 60,000 contracts over the last five weeks in gold, so they’re getting long at a terrific pace right now in gold,” he said. “Say the Fed doesn’t do anything tomorrow, as I expect, and you have a big sell-off in equities, which I expect — then I think people ... are going to look at gold and say, ‘Hey, maybe we need to own this for protection.’”

With things shaping up nicely for gold, Scott Nations, a historic gold bear and the president and chief investment officer of NationsShares, finally ceded to the bulls.

“People who have been watching the show for a long time are not going to believe their ears, but I want to buy the December contract at [$]1,440. My target to the upside’s going to be [$]1,475 ... with a stop that’s going to be [$]1,420,” Nations said in the same “Futures Now” segment.

Nations’ reasoning? “I think the Fed is going to cut. But, also, ... more importantly, interest rates in Europe are incredibly low, and we’re now [at] the point in Europe where there are corporate [bond]s that have negative yields,” he said.

“What does that do? It means that the opportunity cost from owning gold, or the penalty for storing and insuring it, disappears,” he said. “And I think as long as European rates go lower — and they’re already really low, but as long as they go lower — then gold can overcome the strength of the dollar. ”

Gold prices were nearly 1% higher