Tag: Brent Crude

U.S. crude oil storage demand has surged in recent weeks to levels similar to the COVID-19 pandemic, according to data from storage broker The Tank Tiger, as traders brace for a flood of increased supply in coming months from the Organization of the Petroleum Exporting Countries and its allies.

This month, OPEC+ agreed to accelerate oil output hikes for a second consecutive month in June as the group looks to punish over-producing members. OPEC leaders are also contemplating a similar increase in July, and could bring back as much as 2.2 million barrels-per-day (bpd) of supply to the market by November, Reuters reported earlier.
 
A secondary objective of the OPEC+ supply hikes is to win back market share from U.S. producers, who ramped up output to record levels in recent years while the OPEC+ was making deep supply cuts.
 
Brent crude futures slumped last month to a four-year low of $58.40 a barrel on fears the coming surge in OPEC+ supply could coincide with a global economic slowdown stemming from U.S. President Donald Trump’s trade war.
 
Sliding prices sent a signal to traders to store oil until prices recover, especially as the market structure shows a glut of supply forming next year, said Steven Barsamian, chief operating officer at The Tank Tiger.

By: Reuters  / May 22, 2025.

 A U.S. House committee released a budget proposal that includes more than $1.5 billion to replenish and maintain the Strategic Petroleum Reserve, and cancels a congressionally mandated sale, following huge sales from the facility in 2022.

The proposal from the House Energy and Commerce Committee released late on Sunday contains $1.32 billion to purchase oil to help replenish the SPR, the world’s largest emergency stockpile of crude, and $218 million for maintenance of the facility.

U.S. Energy Secretary Chris Wright had estimated in March that it would take $20 billion and years to accomplish U.S. President Donald Trump’s goal of filling the SPR, a move that would help domestic energy producers amid relatively low oil prices. The facility has the capacity to store about 727 million barrels and currently holds about 399 million barrels.

The House committee is controlled by Trump’s fellow Republicans and this move is part of a wider proposal to cut grants and loan financing in former President Joe Biden’s landmark climate law, the Inflation Reduction Act.

Biden, a Democrat, sold a record 180 million barrels from the SPR in 2022 after Russia, a leading oil producer, invaded Ukraine, bringing the reserve down to its lowest level in 40 years.

The House measure, which faces a committee vote on Tuesday, also repeals a congressionally mandated sale of 7 million barrels from the SPR through fiscal year 2027. The Biden administration had worked with Congress to cancel congressionally mandated sales to help keep levels in the SPR from falling.

The Department of Energy also issued a proposal in the Federal Register on Monday that would allow the government to buy oil for the SPR at an indexed price, instead of a fixed price – meaning the actual price of the oil could move higher or lower with the market.

The Biden administration had adopted a fixed-price rule, arguing that it helped in arranging quick purchases for the reserve.

The DOE said in the new proposed rule that fixed-price contracts have “only served to unnecessarily create confusion in the industry.”

By: Reuters / May 12, 2025

California could lose up to 17pc of its refining capacity within a year, triggering major concerns about its tightly supplied and frequently volatile products market.

US independent Valero announced on 16 April that it will shut or repurpose its 145,000 b/d Benicia refinery near San Francisco by April 2026. The firm is also evaluating strategic alternatives for its 85,000 b/d Wilmington refinery in Los Angeles. And independent Phillips 66 said in October that it would shut its 139,000 b/d Los Angeles refinery in the fourth quarter of this year.

Valero’s Benicia announcement brought a quick reaction from state officials. Governor Gavin Newsom on 21 April urged regulators at the California Energy Commission (CEC) to work closely with refiners through “high-level, immediate engagement” to make sure Californians have access to transport fuels. He has ordered them to recommend by 1 July any changes to California’s approach that are needed to ensure adequate fuel supply during its energy transition.

The message appears to have hit home. The CEC delayed a vote on new refinery resupply rules to provide time for additional feedback and consultation with stakeholders after the Valero announcement. The CEC also plans to introduce a rule this year for minimum inventory requirements at refineries in the state as well as possible rules on setting a refiner margin cap.

The new rules are part of an effort by Newsom to mitigate fuel price volatility in California, including the signing of two pieces of legislation known as AB X2-1 and SB X1-2. Refiners have been unhappy with the state’s regulatory and enforcement environment for some time. It is “the most stringent and difficult” in North America owing to 20 years of policies pursuing a move away from fossil fuels, Valero chief executive Lane Riggs says.

The long and short of it

Refinery closures are fuelling long and short-term supply concerns in California. The most immediate is an anticipated supply crunch at the end of this summer. Phillips 66’s plan to shut the Los Angeles refinery by October will deal a significant blow to the state’s refining capacity and is likely to occur at a time when Californian gasoline prices are most prone to volatility.

The US west coast is an isolated market, many weeks sailing time from alternative supply sources in east Asia or the US Gulf coast. California’s strict product specifications further limit who can step in when refinery output falls. The state sometimes sees price spikes in late summer and early autumn because the switch from summer gasoline blends leaves local inventories low while in-state refineries adjust to producing winter grades.

California gasoline prices spiked in September 2022 when stocks fell to a nine-year low on the west coast. Spot deliveries hit a record $2.45/USG premium to Nymex Rbob futures in the Los Angeles market at the time (see graph). Production problems at several refineries in southern California led to another spot price surge in September 2023. The California Air Resources Board (Carb) permitted an earlier switch to cheaper winter gasoline production in response to both events.

Refinery closures will force California to rely on imports in the longer term, leaving the state exposed to stretched supply lines. State regulators’ proposed solutions have raised eyebrows. The CEC’s Transportation Fuels Assessment report in August last year included a policy option in which California would buy and own refineries, which the state is not pursuing. Another option involves state-owned products reserves to allow rapid deployment of fuel when needed. The CEC and Carb regulators will also release a draft transportation fuels transition plan later this year.

By Eunice Bridges and Jasmine Davis , Argusmedia, 05 May 20205.

An accord was reached to establish two oil refineries in India through a joint venture between the countries, India’s Ambassador to Saudi Arabia Suhel Ajaz Khan said in a briefing

Saudi Arabia and India agreed to deepen energy ties and pursue closer cooperation in areas like tourism and technology as the countries seek to strengthen relations at a time of turbulence for the global economy. 

An accord was reached to establish two oil refineries in India through a joint venture between the countries, India’s Ambassador to Saudi Arabia Suhel Ajaz Khan said in a briefing, without giving more details.  

The developments come after Saudi Crown Prince Mohammed bin Salman and Indian Prime Minister Narendra Modi met in Jeddah on Tuesday night. India’s leader departed shortly after, rather than staying in the kingdom until Wednesday, following one of the worst attacks on civilians in India’s northern Jammu and Kashmir region in years.

India and Saudi Arabia’s leaders met as both countries look to support their economies in the face of wide-ranging US tariff policies that threaten to stunt growth. India is already facing its slowest economic expansion in four years and Saudi Arabia is forecast to come under renewed pressure from subdued oil prices.

Deeper ties would stand to bolster stability and energy security for both and follow on years of flirtation between the G-20 nations on partnerships for everything from oil to agriculture and technology. 

Saudi Crown Prince MBS had in 2019 pledged $100 billion of investments in India, but only about $10 billion of that has materialised. State-owned oil behemoth Saudi Aramco has also long sought entry into India’s refining sector with little success.

A plan to jointly build a mega complex in western India, for example, hasn’t come to fruition due to challenges over land and a proposal for a stake in Reliance Industries Ltd.’s mega refinery in Gujarat failed to fructify on valuation issues.  

It’s unclear if Aramco will be involved in the refineries mentioned by India’s envoy to Saudi Arabia on Tuesday. 

Saudi Arabia, the de-facto leader of the OPEC+ producer group, was once India’s largest oil supplier but has seen its share of the market decline as imports from Russia and Iraq increase. 

Ahead of his visit, Modi had said the two sides are exploring joint projects in refineries and petrochemicals, according to comments he made to Arab News.

By Sudhi Ranjan Sen and Sherif Tarek, Business Standard / Apr 23 2025.

Companies can use AI to summarize lengthy regulations, such as TSCA, but need to continually verify data accuracy, panelists said at last week’s GlobalChem conference.

Chemical manufacturers are increasingly turning to artificial intelligence to enhance operations.  

AI usage in the chemical industry has particularly increased over the last five years, Seneca Fitch, director of the health sciences practice at scientific consulting firm ToxStrategies, said at a GlobalChem conference panel in Washington, D.C. last week.

Fitch was joined by Rebecca Morones, a senior product steward at BASF, and Sean Watford, an environmental systems and information scientist at the U.S. Environmental Protection Agency, to discuss how they use AI and how to train the technology to give the answers needed.

AI can be used to perform risk assessments, as well as simplify and summarize laws with hundreds of pages, such as the Toxic Substances Control Act, to help companies stay compliant.

Data management, Fitch added, is an important use of the technology, but only if manufacturers start with quality data. 

“Garbage in equals garbage out. We’ve heard that saying a lot, and so it’s very important that we are using optimal data when we are training models, so that we are making sure to get the most valid and reliable results,” Fitch said.

AI hallucinations can skew results

Morones said she uses Microsoft Copilot to summarize information, such as EPA risk evaluations. She noted, however, that while the platform provides highlighted outlined points, it does not perform an in-depth analysis of information, Morones said.

“You still have to read the documents,” Morones said. “But I feel like there’s also 200 pages it’s sifting through, which does at least help get you to kind of where you’re looking for and give you a great oversight.”

However, AI can pull incorrect data, also known as hallucinations, Morones added. Her colleagues have asked AI for the density of a safety data sheet or what a TSCA fee is, and the platform found an incorrect answer.

“So if your businesses are using this, and I do caution that, just make sure that they are aware of these hallucinations,” Morones said. “And anytime it comes to regulatory aspects, you should probably have them come to the regulatory experts. Don’t rely on what they’re seeing or what they’re doing.”

At other times, the technology may pull up references that appear legitimate but actually do not exist, Fitch said, adding that any information generated by an AI model should be independently verified by staff to ensure its validity. 

“With that lesson, it’s really important that not only are we reviewing the things that are coming out of any AI model, but also that we’re verifying them,” Fitch said. “Because something could certainly sound logical, it could certainly look real, and yet it’s not. It’s false information and that hallucination, that’s not rare.”

Leveraging prompt engineering

To obtain the necessary answers to queries, manufacturers will need to use prompt engineering to train the technology.

“I think that the most practical advice is that it is a computer and it uses logic,” Fitch said.

Morones described prompt engineering as instructing a computer to perform a simple task, such as how to make a peanut butter and jelly sandwich. “It’s not going to understand, ‘Grab two slices of bread,’” Morones said. “You have to be very specific for what you’re doing.” 

One strategy the EPA uses to reduce hallucinations through prompt engineering is to ask the model the same question multiple times, to ensure consistency in answers, Watson said. “If the question or the task might be repeated over and over again, you want to ensure that you’re getting similar performance for each iteration of the task,” Watson said. 

If companies are interested in exploring AI for regulatory purposes or efficiency, Morones said qualified employees should be involved in its development.

“You’re the one that understands better than AI is going to understand,” Morones said. “You know what you’re looking at, what you need to find.”

 By: Sara Samora, Manufacturingdive / April 21, 2025.

The sub-optimal capacity utilisation of oil refineries has started affecting the supply of critical petroleum products, including jet fuel, at important installations.

Sources at the Oil and Gas Regulatory Authority (Ogra) told Dawn that an important defence organisation had asked the regulator to ensure that its regulated entities, particularly local refineries, honour their commitments to supply JP-8 fuel.

The sources said that none of the six oil refineries had provided their committed quantities to defence organisations in the first nine months (July-March) of the current fiscal year.

Based on the complaint, the government and Ogra have now pushed all refineries to ensure their committed supplies.

However, the refineries have responded that Ogra’s lenient view towards importing finished petroleum products like petrol and diesel by a couple of selected oil marketing companies was taking a toll on their capacity utilisation, and they were pushed to close their refining units.

Data showed that Rawalpindi-based Attock Refinery Limited (ARL) had supplied about 85pc of its committed quantities of JP-8 to defence organisations in the nine months under review. This was followed by 70pc of committed quantities by Parco and 52pc by Pakistan Refinery Limited.

The remaining three refineries — National Refinery, Byco and Enar — have supplied 25.5pc, 25pc and 44pc of their contracted supplies, respectively. All put together, the combined supplies by six refineries reached just 58pc against their contracted quantities for July-March.

Sources said the ARL had reported that it was the only refinery that supplied about 85pc of its contracted volumes during the current financial year and had promised to do more on a “best-effort basis”, given technical reasons.

The refinery, which relies entirely on indigenous crude, highlighted that depletion of reserves in northern oilfields had hampered output. It has requested the government to reallocate 5,000 barrels per day of crude oil from southern oilfields, which are currently being exported — a request ARL says it has pursued since 2022 but in vain.

Moreover, the refinery was also facing serious challenges in abrupt and frequent curtailment in local crude production due to forced gas curtailment by the SNGPL to accommodate imported LNG. Furthermore, condensate supplies from certain Khyber Pakhtunkhwa fields were often disrupted due to frequent strikes and the law and order situation.

As if that was not enough, the free influx of smuggled petroleum products in the country also posed a serious existential threat to the oil refining industry. “The local refineries, including the ARL, have been constantly complaining about falling capacity utilisation and sales, due to the unabated influx of smuggled petroleum products in the country,” it said.

The sources said that Parco had also complained to the government that its diesel stocks were touching historic levels and its storage facilities were full due to lower purchases by oil marketing companies, which had been freely allowed by the regulator to import refined products. As a result, the production of jet fuels was adversely affected.

By: Khaleeq Kiani , Dawn / April 18th, 2025

For years, BP has been tipped as a potential target of the next mega-merger deal in the oil industry.

Speculation about a blockbuster acquisition involving BP resurfaced again this year after activist hedge fund Elliott bought nearly 5% in the UK-based supermajor and demanded changes, big and fast.

BP’s shares have underperformed the stocks of the other four of the Big Oil group – Shell, TotalEnergies, ExxonMobil, and Chevron – ever since 2020.

Neither former BP CEO Bernard Looney, with the push toward renewables, nor his successor Murray Auchincloss, with the strategy reset to return on the path of oil and gas, have managed to erase the company’s underperformance in the past five years.

Speculation about another oil giant taking over BP is not new—such rumors have been swirling for over a decade, particularly ones suggesting that Shell could be the bidder for a merger with BP.

But this year, Elliott’s aggressive approach to the companies in which it buys significant stakes has rekindled speculation about BP becoming a target of the next mega-merger deal in the global oil industry.

Analysts aren’t ruling out anything, not even one of the U.S. supermajors – Exxon or Chevron – approaching BP for a potential deal.

At the start of this year, 6 out of 50 M&A experts surveyed by Bloomberg mentioned BP as one of Europe’s top mergers and acquisitions targets for 2025. BP collected the fourth-highest number of votes from these experts, after mining giant Anglo American, French video-game company Ubisoft Entertainment, and UK broadcaster ITV.

Elliott’s demands for changes in strategy, board reshuffles, and a swift turnaround of the stock performance have prompted analysts this year to speculate about which potential suitor could be best positioned to take over BP.

A year ago, reports emerged that Abu Dhabi National Oil Company (ADNOC) had weighed buying BP, but talks didn’t go far, and ultimately, the state firm of the United Arab Emirates decided not to pursue a takeover of the UK supermajor.

A national oil company in the Middle East could be one possible BP suitor, considering BP’s presence in the region, especially in Iraq, where BP has just been given the go-ahead to a $25-billion contract to develop Kirkuk oil fields.

Yet, analysts tend to speculate more about a Shell-BP merger of equals or a potential Chevron approach for BP if the U.S. supermajor fails to complete the deal to buy U.S. Hess Corp.

BP also has a huge presence in the U.S. oil industry.

In the U.S. Gulf of Mexico, BP looks to boost its production capacity to more than 400,000 barrels of oil equivalent per day by the end of the decade, the company said this week as it announced an oil discovery in the deepwater U.S. Gulf of Mexico 120 miles off the coast of Louisiana.

The discovery at the Far South prospect comes as BP announced a few weeks back a strategy reset to shift focus back to growing oil and gas production and investments after a few years of trying to be an integrated energy company with a major presence in renewables.

In a very unfortunate development for BP, any positive share performance from the strategy reset was obliterated within a month by the tariff and trade wars, which crashed the price of Brent Crude oil to the low $60s per barrel.

Lower oil prices could test BP’s ability to sustain its returns to shareholders, including dividends, especially as the supermajor flagged an increase in its net debt in the first quarter of 2025.

The pressure from Elliott on BP to boost returns and stock performance is likely to continue, as well as speculation over whether or not a split or acquisition of BP would give investors more bang for their buck.

As for who the potential buyer could be, Allen Good, director of equity research at Morningstar, told CNBC, “I wouldn’t take anything off on the table.”

By Tsvetana Paraskova,  Oilprice.com / Apr 17, 2025