Oil price bounces back after Saudi reassurance

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Energy

Wednesday, May 1,2019

Oil prices have rebounded on Tuesday after two days of declines, pushed higher by turmoil in Venezuela and the insistence by Saudi officials that the OPEC production cuts would be extended in the second half of 2019. Saudi oil minister Khalid al-Falih told the Russian press that OPEC+ should maintain production cuts in some form through the end of the year. Oil prices bounced on the news. As of Tuesday morning, of opposition leader, Juan Guaidó had reportedly launched an attempted military coup. “The definitive end of the usurpation started today,” said Guaidó. “The National Armed Forces, today, brave soldiers, patriots loyal to the constitution, have heeded our call.” The reports suggest that some generals in the armed forces have ordered their troops to back the coup. At the time of this writing, it was unclear how successful the campaign would be. The U.S Fish and Wildlife Service said that the Trump administration’s plan to open up the Alaska National Wildlife Refuge (ANWR) for drilling did not adequately consider the impacts of oil spills, climate change and the welfare of polar bears. The Interior Department is hoping to hold a lease sale later this year in ANWR, but Fish & Wildlife (which is housed within Interior) said the environmental assessment and permitting process was flawed. That could open up the lease plan to litigation. ExxonMobil interested in making more acquisitions in the Permian, according to the FT. A senior VP at Exxon told analysts on an earnings call last week that he “would be surprised if over time we did not pick up more Permian acreage.” The comments come in light of the battle between Chevron (NYSE: CVX) and Occidental Petroleum (NYSE: OXY) for Anadarko Petroleum (NYSE: APC). Whoever wins that bidding war will substantially increase their presence in the Permian. Warren Buffet’s Berkshire Hathaway said it would invest $10 billion into Occidental Petroleum (NYSE: OXY), although contingent on the company winning the bidding war for Anadarko Petroleum. Occidental’s bid for Anadarko is viewed as more generous than that of Chevron (NYSE: CVX), at least at the moment, but to date, Anadarko has seemed to prefer Chevron. That could change with the backing of Buffet. Similarly, regulations on seismic activity and the influx of cheap LNG has all but killed any hopes of getting fracking off the ground in the UK. A UK government liaison between industry and local communities just resigned her post, blaming post, environmentalists from stifling development. Meanwhile, Iraq is set to be the world’s fourth-largest oil producer by 2030, adding more than 1 mb/d over the next decade to top 6 mb/d, according to a recent IEA report. If it succeeds, Iraq would only trail the U.S., Saudi Arabia and Russia. However, Iraq will need large volumes of water for oil field injections to realize these goals. “Without it, production rates could struggle to climb much beyond their current levels,” the IEA said in its report. Published in Business

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