US Crude Futures Rise Versus Oil Traded Overseas

U.S. crude-oil futures prices rose Monday as investors continued to wager domestic oil prices will increase compared to oil traded overseas.

The discount for U.S.-traded West Texas Intermediate crude-oil versus Europe's Brent crude futures shrunk to $13.36 a barrel, the narrowest price spread since July, as U.S. futures settled at a one-month high.

Analysts and traders said the agreement reached early Monday between Cyprus and its international lenders removed a hurdle standing in the path of both oil markets. But throughout Monday's session, traders extended a recent rally in U.S. crude on hopes that a decline in oil stockpiles in the middle of the U.S. will continue.

"Growing capacity of both rail and pipelines is starting to drain Cushing," said Andy Lebow, a broker at Jefferies Bache in New York, referring to Cushing, Okla., a key oil-transit hub. The latest gain in WTI, he said, "is a Cushing trade."

Light, sweet crude for May delivery settled $1.10, or 1.2%, higher at $94.81 a barrel on the New York Mercantile Exchange, the highest settlement since Feb. 19.

Brent crude on the ICE futures exchange traded 51 cents higher at $108.17 a barrel.

Last week, the U.S. Energy Information Administration said stockpiles in Cushing fell by 300,000 barrels to 49 million barrels in the week ended March 15, the lowest level since Dec. 14.

Cushing is the delivery point for Nymex crude-oil futures, so any changes in oil inventories there can have an outsized influence on futures prices.

In January, stockpiles in Cushing rose to a record 51.9 million barrels after the Seaway Pipeline from Cushing to the Gulf Coast was forced to reduce capacity. The Brent-WTI price spread widened to more than $23 in response.

Analysts at JBC Energy said Monday it's possible the discount could shrink to nearly $11 as more investors pile into the wager. But it's unlikely to hold at that level because U.S. oil shipments by rail become unprofitable when the discount hits $15, JBC said.

Meanwhile, after U.S. prices held relatively flat over the past two weeks amid concerns about Europe's debt crisis, oil traders are now focusing on improving economic data and signs of rising oil demand that they say could help boost prices.

"The bailout has created some positive sentiment in the market," said Gene McGillian, a broker at Tradition Energy, referring to the agreement forged early Monday between Cyrpus and its creditors. He said an improving economic outlook suggest prices could see further gains.

"The factors that drove us to $98 are emerging again," he said.

Front-month April reformulated gasoline blendstock, or RBOB, settled 0.01 cent higher at $3.0626 a gallon. April heating oil settled 0.71 cent lower at $2.8772 a gallon.

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

Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.

View the original article here

US Crude Futures Rise Versus Oil Traded Overseas

U.S. crude-oil futures prices rose Monday as investors continued to wager domestic oil prices will increase compared to oil traded overseas.

The discount for U.S.-traded West Texas Intermediate crude-oil versus Europe's Brent crude futures shrunk to $13.36 a barrel, the narrowest price spread since July, as U.S. futures settled at a one-month high.

Analysts and traders said the agreement reached early Monday between Cyprus and its international lenders removed a hurdle standing in the path of both oil markets. But throughout Monday's session, traders extended a recent rally in U.S. crude on hopes that a decline in oil stockpiles in the middle of the U.S. will continue.

"Growing capacity of both rail and pipelines is starting to drain Cushing," said Andy Lebow, a broker at Jefferies Bache in New York, referring to Cushing, Okla., a key oil-transit hub. The latest gain in WTI, he said, "is a Cushing trade."

Light, sweet crude for May delivery settled $1.10, or 1.2%, higher at $94.81 a barrel on the New York Mercantile Exchange, the highest settlement since Feb. 19.

Brent crude on the ICE futures exchange traded 51 cents higher at $108.17 a barrel.

Last week, the U.S. Energy Information Administration said stockpiles in Cushing fell by 300,000 barrels to 49 million barrels in the week ended March 15, the lowest level since Dec. 14.

Cushing is the delivery point for Nymex crude-oil futures, so any changes in oil inventories there can have an outsized influence on futures prices.

In January, stockpiles in Cushing rose to a record 51.9 million barrels after the Seaway Pipeline from Cushing to the Gulf Coast was forced to reduce capacity. The Brent-WTI price spread widened to more than $23 in response.

Analysts at JBC Energy said Monday it's possible the discount could shrink to nearly $11 as more investors pile into the wager. But it's unlikely to hold at that level because U.S. oil shipments by rail become unprofitable when the discount hits $15, JBC said.

Meanwhile, after U.S. prices held relatively flat over the past two weeks amid concerns about Europe's debt crisis, oil traders are now focusing on improving economic data and signs of rising oil demand that they say could help boost prices.

"The bailout has created some positive sentiment in the market," said Gene McGillian, a broker at Tradition Energy, referring to the agreement forged early Monday between Cyrpus and its creditors. He said an improving economic outlook suggest prices could see further gains.

"The factors that drove us to $98 are emerging again," he said.

Front-month April reformulated gasoline blendstock, or RBOB, settled 0.01 cent higher at $3.0626 a gallon. April heating oil settled 0.71 cent lower at $2.8772 a gallon.

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

Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.

View the original article here

PetroChina 2012 Net Below Forecast; To Speed Up Overseas Expansion

HONG KONG - PetroChina Co. aims to speed up overseas acquisitions, exploration and production even after its net profit lagged behind analysts' expectations, as China's largest listed oil company by output hopes to secure more resources to feed growing domestic demand.

Beijing-based PetroChina aims to produce 200 million metric tons of oil and gas a year by the end of 2015, 10% more than the record 181.8 million tons produced last year, Vice President Sun Longde told reporters in Hong Kong Thursday.

The company is seeking acquisition targets in Central Asia, Middle East, North America, Africa and Asia, Mr. Sun said, but didn't name any targets.

"Over the next three years, we will continue to increase our international presence. Overseas production will account for 50% of the company's total oil and gas production by 2015 [versus 10% last year]," Mr. Sun said.

The ambitious plan is an extension of ex-chairman Jiang Jiemin's push to expand beyond China's shores. Mr. Jiang resigned as chairman of PetroChina and China National Petroleum Corp. Monday to head China's State-owned Assets Supervision and Administration Commission. The change is effectively a promotion for Mr. Jiang, as he will now oversee all of China's non-financial state-owned assets, including PetroChina and its parent, CNPC.

Since 2007, CNPC has invested $12 billion in oil and gas projects in Canada, Australia, the U.S. and France, according to data provider Dealogic.

PetroChina is speeding up exploration and production of natural gas, in response to a sharp rise in domestic natural gas consumption because of the government's push to encourage the use of cleaner fuels.

However, its natural gas business has been incurring losses since last year, because it needs to procure expensive natural gas imports to meet rising demand, but has to sell at government-set prices that are lower than import costs.

Its natural gas and pipeline business swung to an operating loss of 2.11 billion yuan (US $339.5 million) in 2012, from an operating profit of 15.5 billion yuan.

Mr. Sun said he is positive about China's natural gas market this year, as the Chinese government could roll out a new pricing mechanism and increase domestic gas prices.

"We suffered a total of 41.9 billion yuan in losses from importing piped natural gas from Central Asia last year. As gas imports have dented our profitability, we expect the government to accelerate natural gas pricing reforms," he said.

PetroChina's revenue rose 9.6% to 2.2 trillion yuan in 2012 due to increases in oil and gas output. However, its net profit fell 13% to 115.33 billion yuan from 132.96 billion yuan in 2011, because of losses from its natural gas and refining businesses. It was below the average 125.1 billion yuan forecast of 29 analysts polled earlier by Thomson Reuters.

High crude costs squeezed its downstream refining and chemical operations last year as China's fuel-pricing system prevents refiners from passing on higher costs to consumers.

To contain inflation, the government often forces the two largest refiners--PetroChina and China Petroleum & Chemical Corp., or Sinopec--to maintain prices for refined products even when crude oil prices surge in the global market.

Analysts expect domestic refining margins to improve in the first quarter after the government raised domestic gasoline and diesel prices by 3.5%-3.8% in late February. The government will likely implement a new fuel policy in the near term, they said.

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

Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.

View the original article here

PetroChina 2012 Net Below Forecast; To Speed Up Overseas Expansion

HONG KONG - PetroChina Co. aims to speed up overseas acquisitions, exploration and production even after its net profit lagged behind analysts' expectations, as China's largest listed oil company by output hopes to secure more resources to feed growing domestic demand.

Beijing-based PetroChina aims to produce 200 million metric tons of oil and gas a year by the end of 2015, 10% more than the record 181.8 million tons produced last year, Vice President Sun Longde told reporters in Hong Kong Thursday.

The company is seeking acquisition targets in Central Asia, Middle East, North America, Africa and Asia, Mr. Sun said, but didn't name any targets.

"Over the next three years, we will continue to increase our international presence. Overseas production will account for 50% of the company's total oil and gas production by 2015 [versus 10% last year]," Mr. Sun said.

The ambitious plan is an extension of ex-chairman Jiang Jiemin's push to expand beyond China's shores. Mr. Jiang resigned as chairman of PetroChina and China National Petroleum Corp. Monday to head China's State-owned Assets Supervision and Administration Commission. The change is effectively a promotion for Mr. Jiang, as he will now oversee all of China's non-financial state-owned assets, including PetroChina and its parent, CNPC.

Since 2007, CNPC has invested $12 billion in oil and gas projects in Canada, Australia, the U.S. and France, according to data provider Dealogic.

PetroChina is speeding up exploration and production of natural gas, in response to a sharp rise in domestic natural gas consumption because of the government's push to encourage the use of cleaner fuels.

However, its natural gas business has been incurring losses since last year, because it needs to procure expensive natural gas imports to meet rising demand, but has to sell at government-set prices that are lower than import costs.

Its natural gas and pipeline business swung to an operating loss of 2.11 billion yuan (US $339.5 million) in 2012, from an operating profit of 15.5 billion yuan.

Mr. Sun said he is positive about China's natural gas market this year, as the Chinese government could roll out a new pricing mechanism and increase domestic gas prices.

"We suffered a total of 41.9 billion yuan in losses from importing piped natural gas from Central Asia last year. As gas imports have dented our profitability, we expect the government to accelerate natural gas pricing reforms," he said.

PetroChina's revenue rose 9.6% to 2.2 trillion yuan in 2012 due to increases in oil and gas output. However, its net profit fell 13% to 115.33 billion yuan from 132.96 billion yuan in 2011, because of losses from its natural gas and refining businesses. It was below the average 125.1 billion yuan forecast of 29 analysts polled earlier by Thomson Reuters.

High crude costs squeezed its downstream refining and chemical operations last year as China's fuel-pricing system prevents refiners from passing on higher costs to consumers.

To contain inflation, the government often forces the two largest refiners--PetroChina and China Petroleum & Chemical Corp., or Sinopec--to maintain prices for refined products even when crude oil prices surge in the global market.

Analysts expect domestic refining margins to improve in the first quarter after the government raised domestic gasoline and diesel prices by 3.5%-3.8% in late February. The government will likely implement a new fuel policy in the near term, they said.

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

Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.

View the original article here

Canadian Overseas Inks Amended Liberian PSC

Canadian Overseas Petroleum and its wholly owned subsidiary, Canadian Overseas Petroleum Bermuda Limited (COPL), announced Friday that a restated and amended production sharing contract (PSC) for Block LB-13 offshore Liberia has been agreed with ExxonMobil Exploration and Production Liberia Limited and the National Oil Company of Liberia (NOCAL).

Liberian President Ellen Johnson Sirleaf, has approved and signed the appropriate paperwork related to the PSC so that it can be sent to the Liberian Legislature for a ratification vote. The terms of the PSC will take effect once ratification has occurred and the PSC is enacted into law. Completion of the transactions contemplated is expected to occur shortly after ratification and remain subject to a number of conditions.

In addition, certain terms of the previously announced purchase agreements between COPL, COPL Bermuda , and Peppercoast Petroleum plc, and between COPL Bermuda and ExxonMobil have been amended. COPL Bermuda and ExxonMobil have amended the Asset Purchase Agreement announced Nov. 16, 2011 such that COPL Bermuda will now have a 20 percent working interest in Block LB-13 and ExxonMobil as operator will have an 80 percent working interest. ExxonMobil will continue to pay COPL Bermuda's working interest portion of drilling expenses for the first $120 million of gross drilling costs committed under the PSC, and COPL Bermuda's share of joint venture costs up to the completion of those operations. As part of the new arrangements, the payment terms as between COPL Bermuda and Peppercoast have also changed from the agreement announced in May 2011.

The new arrangements call for the completion of the acquisition of the original Production Sharing Contract by COPL Bermuda to be funded by NOCAL such that NOCAL shall pay the obligations of COPL Bermuda to Peppercoast. Following that transfer, the ExxonMobil affiliate will pay to NOCAL (1) all funds previously owed to COPL Bermuda under the Asset Purchase Agreement, and (2) on behalf of COPL Bermuda and the ExxonMobil affiliate, all amounts owed by COPL Bermuda and the ExxonMobil affiliate to the Government of Liberia on account of the issuance of the PSC. Upon that payment, the PSC shall be owned 20 percent by COPL Bermuda and 80 percent by the ExxonMobil affiliate. All payments will follow the approval by the Legislature of the Republic of Liberia of these arrangements to assure transparency and compliance with law.

As a result of these changes, COPL will no longer issue any shares to Peppercoast to complete the transaction. Further, other than legal costs, usual closing costs and on-going fees under the PSC, COPL and COPL Bermuda will have no net cash outlay or cost in connection with the closings other than forgiveness of accounts receivable related to the $15 million 3D seismic license fee owing by Peppercoast to COPL and other inter-company amounts and $7 million of fees payable to the Government of Liberia.

Arthur Millholland, president and CEO of COPL, commented, "We are very pleased to have been able to reach agreement with representatives from the Government of Liberia, NOCAL and ExxonMobil for an amended PSC for Block LB-13, and believe that this represents a great opportunity for our shareholders and the citizens of Liberia. The revised Sale and Purchase Agreement with Peppercoast and the revised Asset Purchase Agreement with ExxonMobil provide a low risk method for our involvement in Block LB-13. We look forward to working with ExxonMobil to begin planning exploration activities offshore Liberia."

Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.

View the original article here