Crude-Oil Futures Rise to Four-Month High

U.S. crude-oil futures rose to the highest settlement in four months Tuesday as a push in stock markets to multiyear highs raises hopes about broader economic growth.

Light, sweet crude oil for February delivery settled 68 cents, or 0.7%, higher at $96.24 a barrel on the New York Mercantile Exchange. The February contract expired at settlement Tuesday, and the more heavily traded March contract settled 64 cents higher at $96.68 a barrel.

Brent crude oil on the ICE futures exchange for March delivery traded 68 cents higher at $112.39 a barrel.

Energy and commodities markets often use equities as a proxy for investor expectations about the future of the economy, and with it, demand for raw materials. On Tuesday, oil markets cheered a turnaround in stocks after declines early in the session.

The Dow Jones Industrial Average was recently 0.3% higher at 13693, on pace to finish at the highest level since 2007.

"The bottom line is the equities are starting to find some life here in the afternoon," said Bob Yawger, director of energy futures at Mizuho in New York. "Crude is trading against its highs, and equities are trading against their highs."

Oil prices have rallied by roughly 8% since the beginning of December on an improving outlook for global oil demand and concerns that the hostage crisis in Algeria could mark a new period of violence in the oil-rich region.

On Friday, the International Energy Agency raised its global oil-demand forecast for 2013 by 900,000 barrels a day, due to stronger demand from China.

Still, analysts and traders are increasingly wary that the rally could quickly lose steam.

"It looks like we're getting close to a peak on oil," said Phil Flynn, an analyst at Price Futures Group in Chicago. "We're probably ready for a pullback."

The Bank of Japan said Tuesday it agreed on an "open-ended" plan to fight deflation, adopting an inflation target of 2% and disclosing open-ended asset purchases. Investor response was mixed, however, as the program won't come into effect until 2014.

Without further support from stock markets and a weaker U.S. dollar, the oil market is unlikely to push higher if demand holds at current levels, some analysts said.

"The uptrend across the energy complex that has been developing for some six weeks has largely run its course," said Jim Ritterbusch, head of trading adviser Ritterbusch & Associates, in a research report.

Front-month February reformulated gasoline blendstock, or RBOB, settled 3.31 cents, or 1.2%, higher at $2.8299 a gallon. February heating oil settled 0.5% higher at $3.0682 a gallon.

Copyright (c) 2012 Dow Jones & Company, Inc.

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Oil Futures Rise as Economic Outlook Improves

NEW YORK--Improving economic data from the world's two largest oil consumers and a drop in oil supplies at a key storage hub sent U.S. crude-oil futures higher Thursday.

Traders rallied behind oil after a drop in U.S. jobless claims, coupled with improving Chinese manufacturing activity, suggested that demand for oil and fuel products could be headed higher. New applications for unemployment benefits in the U.S. fell to 330,000 last week, the lowest since January 2008.

"The unemployment claims number really helped," said Peter Donovan, a broker at Vantage Trading in New York. And after a sharp price decline Wednesday, he said, "we were probably due for a little bit of a bounce back."

Light, sweet crude for March delivery settled 72 cents, or 0.8%, higher at $95.95 a barrel on the New York Mercantile Exchange.

The gains helped reverse a $1.01 drop Wednesday due to a cut in the capacity of the Seaway pipeline, which runs to Houston from a supply hub in Oklahoma. The reduced capacity raised concerns that oil supplies will build up in the middle of the U.S., far from refineries along the Gulf Coast. On Thursday, pipeline operators said the capacity cut was due to a major refinery that lowered demand due to maintenance and wasn't the result of problems with the pipeline.

"The market reaction was that the Seaway problem is going to be short lived," said Andy Lipow, president of Lipow Oil Associates.

Brent crude on the ICE futures exchange rose 48 cents to $113.28 a barrel.

The gains Thursday kept oil futures above $95 a barrel for the fifth-straight session. U.S. oil prices have gained 12% since mid-December on an improving economic outlook as well as hopes that expanded pipelines will relieve the U.S. supply bottleneck.

Oil futures were also boosted Thursday by a report from the U.S. Energy Information Administration that showed crude stockpiles at the Cushing, Okla., pipeline hub fell by 500,000 barrels last week after seven-straight weeks of gains.

Total stockpiles at the supply depot rose above 50 million barrels for the first time ever earlier this year.

Surging production from new shale-oil fields in North Dakota, Texas and other states has overwhelmed existing transportation infrastructure, keeping U.S. oil prices depressed compared to prices overseas as pipeline operators try to link up supplies with refineries along the coasts. Storage declines in Cushing, if they continue, would signal that the glut is easing.

Front-month February reformulated gasoline blendstock, or RBOB, settled 2.91 cents higher at $2.8629 a gallon. February heating oil settled 0.83 cent higher at $3.0864 a gallon.

Copyright (c) 2012 Dow Jones & Company, Inc.

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UK Energy Secretary Expects 28 New Fields on UKCS in 2013

The UK Secretary of State for Energy and Climate Change Ed Davey confirmed at a meeting in Parliament Wednesday night that the government expects around 28 new oil and gas fields on the UK Continental Shelf to get approval this year, following the approval of 29 projects in 2012.

Speaking at the British Oil & Gas Industry All Party Parliamentary Group at its annual reception at Westminster Palace, which was attended by Rigzone, Mr Davey reiterated the UK government’s support for the UK oil & gas industry.

"Oil and gas will form an integral part of the UK energy mix for decades to come. Over 70 percent of the UK's primary energy demand may still be filled by oil and gas into the 2040s. With 20 billion barrels or more still to be drawn from the UK’s North Sea fields, having an indigenous source helps prevent overreliance on imports from more volatile parts of the world," Mr Davey said.

"So the UK oil and gas industry is a vitally important strategic resource now and over the next half century, to help fulfill our energy needs and as a contribution to the UK’s energy security."

Davey illustrated how the UK government has been acting to encourage investment and innovation in the oil and gas sector.

"Introducing, for instance, new field allowances West of Shetland; extending the small fields allowance; and putting in place new allowances for shallow-water gas fields."

The result of this has seen the level of investment in new oil and gas fields increase significantly in recent years, the Energy Secretary pointed out.

"The level of investment in new oil and gas projects sanctioned in 2011 was over 10 times the amount of 2009. 18 projects with a total value of $20.5 billion (GBP 13 billion) were approved. In 2012, 29 projects [were] approved with capital expenditure of over $17.3 billion (GBP 11 billion). In 2013, we are already expecting around 28 new fields to get approval."

Also at the meeting was Oil & Gas UK Chief Executive Malcolm Webb, who commented in his own speech: "We welcome the Coalition government’s new long-term approach to the UK oil and gas industry which is already reaping rewards for the British economy... With improvements to the tax regime as a result of better engagement with the Treasury, no less than 30 new offshore oil and gas developments were approved in the last twelve months.

"Furthermore, 167 new licences to explore for petroleum in UK offshore waters were awarded in the latest licensing round. This upturn is set to continue and presents excellent business opportunities right across our world-class supply chain to the benefit of the UK’s energy security, balance of trade and tax revenues. Most importantly at this time however, it has, as predicted, resulted in thousands of new and well paid jobs."

Statoil said in December that its recent decision to go ahead with its $7 billion-plus Mariner heavy oil field in the UK North Sea was positively affected by the expansion of the UK's Ring Fence Expenditure Supplement – a measure taken by the UK government to support investment in marginal fields.

A former engineer, Jon is an award-winning editor who has covered the technology, engineering and energy sectors since the mid-1990s. Email Jon at jmainwaring@rigzone.com.

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WHL Energy Appoints Ex-Exoma Founding MD as Company Secretary

Australian-listed WHL Energy said Wednesday that it has appointed David Rowbottam as Company Secretary. Rowbottam's appointment will be effective Jan. 31.

Rowbottam will add the duties of Company Secretary to his current role as WHL Energy's Finance Director. He brings to the expanded role recent experience as a General Manager, Chief Financial Officer, Financial Controller and Company Secretary. He has also held senior management positions with a number of companies including Antares Energy, Alinta Group and the BHP Group.

Rowbottam was the founding Managing Director of ASX-listed oil and gas exploration company Exoma Energy until March 2010, and he remains a Director of several unlisted companies.

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Rockhopper's Exploration Director Retires

Falkland Islands explorer Rockhopper Exploration announced Wednesday that Dave Bodecott, the firm's exploration director, will retire from the company on Jan.31.

Rockhopper added that subsurfasce work on the firm's existing acreage, and in relation to new ventures, will now be managed by Fiona MacAulay, Rockhopper's geology and geophysics manager.

Rockhopper Chairman Pierre Jungels commented in a statement:

"Dave has made a huge contribution as a member of the management team since the company's inception, firstly as a consultant and, since January 2007, as a highly valued board director. We would like to extend our thanks to him for his hard work culminating in the discovery of Sea Lion and the successful exploration and appraisal programme which followed that. All of us at Rockhopper wish him well for the future."

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Specialist Energy Group Boosts Order Intake

Pump supplier Specialist Energy Group reported Wednesday that it ended last year with an order intake of $54.5 million (GBP 34.5 million) – an almost 10-percent increase over the end of 2011.

The UK-based firm, whose wholly-owned subsidiary Hayward Tyler supplies specialist pumps and motors to the oil and gas industry as well as the power generation sector, also reported a strong second-half performance thanks (in part) to steps taken during 2012 to improve operational efficiencies and expand its market penetration, it said.

Specialist Energy said that it had seen notable growth in international oil and gas markets during 2012, where it has seen orders valued at nearly $11 million (GBP 7 million) for its range of seawater life and firewater pumps.

Specialist Energy CEO Ewan Lloyd-Baker commented in a statement:

"Significant steps have been taken over the last twelve months to improve the operational efficiencies within our core manufacturing activity so that we can better leverage Hayward Tyler's growing international order book. As a consequence, we are now seeing a genuine momentum within Hayward Tyler which the board believes will be healthily reflected in our full year results."

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Yokogawa Wins ICSS Contract for Cygnus Project

GDF Suez announced Thursday that it has awarded Yokogawa Europe Solutions a contract to supply integrated control and safety systems (ICSS) for the Cygnus offshore development project in the UK North Sea.

The Cygnus gas discovery, located in the North Sea’s Southern Gas Basin, is estimated to hold approximately 635 billion cubic feet of gas.

Under the contract, Yokogawa will supply the complete ICSS comprising of the following systems: process control, process shutdown, emergency shutdown, fire & gas detection (complete with associated field devices), process data historian, and field device asset management.

Yokogawa will also be supplying an operator training system (OTS).

The ICSS will be distributed across the Cygnus complex, which currently consists of a total of four greenfield offshore platforms. Three platforms are bridge linked (Alpha WHP, PU, and UQ) and a second remote drilling centre is located on the fourth platform (Bravo WHP). The planned export route is through the ETS pipeline system to the Perenco Bacton Gas Terminal in North Norfolk.

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The Philippines Challenges China's Maritime Claims at UN Tribunal

The Philippines will challenge China's claim to most of the South China Sea/West Philippine Sea at a United Nations tribunal, its Department of Foreign Affairs (DFA) disclosed in a statement Tuesday.

The row between Manila and Beijing escalated in April last year, when government vessels from both sides faced off for several weeks at the Scarborough Shoal. The area around the Scarborough Shoal is widely believed to contain massive gas reserves, and has consequently drawn strong interest from both the Philippines and China.

"This afternoon, the Philippines has taken the step of bringing China before an arbitral tribunal under the 1982 United Nations Convention on the Law of the Sea (UNCLOS) in order to achieve a peaceful and durable solution over the West Philippine Sea," the DFA said.

"The Philippines has exhausted almost all political and diplomatic avenues for a peaceful negotiated settlement of its maritime dispute with China. We hope that the arbitral proceedings [will] bring this dispute to a durable solution," the DFA added.

Manila told Beijing's ambassador Tuesday about its decision to take China to arbitration under UNCLOS.

It is however clear that China is unwilling to participate in the process. The country, through the state-controlled Xinhuanet, emphasized that it wants to continue on bilateral negotiations.

"China has stressed bilateral talks with the Philippines to settle the island dispute. The Chinese Government has always stood for a negotiated settlement of international disputes through peaceful means. In this spirit, China has solved territorial disputes and demarcated borders with some neighboring countries through consultations and negotiations in an equitable, reasonable and amicable manner," Xinhuanet reported Wednesday.

UN leader Ban Ki-moon told reporters Wednesday that the two countries should seek to resolve their issues through dialogue in a peaceful and amicable way.

"The UN is ready to provide technical and professional assistance, but primarily all these issues should be resolved by the parties concerned," Ban said, careful to avoid backing any country involved. 

Quintella has reported on the upstream and downstream oil and petrochemicals markets from 2004. Email Quintella at quintella.koh@rigzone.com.

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Bechtel Bags FEED Contract for Mozambique Proj.

Bechtel has been selected by Anadarko Mocambique Area 1, Limitada to perform a front end engineering and design (FEED) for a new liquefied natural gas (LNG) facility in the Republic of Mozambique. This is the first LNG project in the country.

"The Mozambique LNG FEED award builds on Bechtel's extensive experience in LNG and in Africa, where we have worked for more than 50 years," said Jack Futcher, president of Bechtel's Oil, Gas and Chemicals business unit. "We are excited by the prospect of working with Anadarko and its partners to develop a world-class facility that will bring jobs and economic development to Mozambique."

The FEED is for the initial phase of the onshore LNG facility that will be built in the Cabo Delgado province in the northeast of the country. Bechtel will develop a design for a multi-train liquefaction plant with a nominal train capacity of five million metric tonnes per annum (MMTPA) of LNG, and an overall LNG park plan that will allow for future expansion of the facility to approximately 50 MMTPA. First commercial LNG sales from the facility are planned for 2018.

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