OIL PRICES STEP BACK DESPITE RISING DEMAND

El Taladro Azul  Published  originally in Spanish in  LA GRAN ALDEA

M. Juan Szabo^[1] y Luis A. Pacheco^[2]    

 

The combination of continued high interest rates, a further rise in US crude oil inventories, and a confusing economic and geopolitical environment continued to weigh on oil prices this week, taking them to their lowest since February.

Indeed, oil prices fell for four consecutive days, pushed by the reluctance of the Federal Reserve (US Central Bank) to commit to interest rate cuts this year, as well as another atypical increase of 1.8 MMBBLS in US commercial crude oil inventories. On the last day of the week (May 24), the downward trend was reversed, but not enough to avoid a week of lower prices.

FUNDAMENTALS.

Comments from Federal Reserve officials earlier in the week, along with the content of the minutes of the most recent meeting of the Federal Open Market Committee (FOMC), raised doubts about the plans to reduce interest. The minutes note that the Federal Reserve (FED) continued to expect inflation to return to 2% in the medium term, but that reducing inflation would take longer than previously thought. An interest rate cut looks increasingly unlikely until September, and hopes of multiple interest rate cuts this year have evaporated. The Personal Consumption Expenditures (PCE) Price Index will be released on May 31, and will likely confirm the validity of the FED's interpretation of the documents.

The European Central Bank has all but promised to cut its deposit rate from an all-time high of 4%. But they keep markets guessing to what level, and how quickly, it will reduce borrowing costs after that. Economists at Société Générale predict that the ECB will cut rates in June and September, but then pause to wait for the Federal Reserve to implement its first rate cut.

Attention was also refocused on the early June meeting of OPEC+, where member countries will discuss whether to extend their 2.2 MMbpd production cut. The decision to hold the meeting virtually indicates that the group would maintain the current production policy; The decline in prices during May practically eliminated the probability that member countries would begin to undo the cuts. The only flash point within the group is the disagreement with Iraq and Russia for their failure to comply with their commitments.

In particular, the export figures published by Russia are unreliable, as is the case of Venezuela and Nigeria, due to the multiplicity of export terminals used and the use of its “ghost fleet”, which sometimes acts as floating inventory for months. By correlating the different sources, including reports of tanker movements, we conclude that part of the Russian export ended up in Cuba: Russian shipments have been replacing Venezuelan shipments to the island. It is estimated that, from March until now, some 70 Mbpd of Russian crude oil and products were unloaded in Cuba. Until now, OPEC has tended to turn a blind eye to Russia's lack of compliance.

Regarding the US, the Energy Information Administration Agency (EIA) reported an increase for the week of 1.8 MMbbls in its inventory of commercial crude oil, excluding the Strategic Reserve (SPR), an indicator highly valued by the oil market. The market's overreaction to this relatively smaller increase is due to the contrast with analysts' estimates of a reduction of 2.5 MMbpd.

On the other hand, EIA figures showed a reduction in gasoline inventory of almost 1.0 MMbbls, despite increased refining runs. This material increase in gasoline demand is due to the beginning of the high consumption season with the arrival of “Memorial Day.” In addition, demand for aviation fuel is showing marked growth, with passenger numbers exceeding 2019 (pre-pandemic) records by more than 10%, according to the Air Transportation Administration (TSA).

Crude oil production in the US continues at the same levels, around 13 MMbpd. However, the natural decline, which is not being offset by replacement activities through well repair and drilling, has resulted in reduced production somewhat. Evidence of this slow deterioration is the continued reduction of active rigs in the US territory; this week, according to Baker Hughes, another 4 rigs were withdrawn from activity.

One piece of news that cannot be ignored, due to its potential impact on oil facilities in the Gulf of Mexico, is the weather forecasts. It is predicted that up to seven major hurricanes could form in the Atlantic in an “extraordinary” 2024 season, beginning June 1. It is a forecast that exceeds the previous worst years, such as 2005 that generated hurricanes Katrina and Rita.

As for China, the government's policies to resolve the housing market crisis have not yet borne fruit. What is undeniable is that China's growth has been disappointing this year. There is not much evidence that there are substantial opportunities in the economy that strong stimulus can successfully address. On the contrary, it appears that China's sustainable growth rate has slowed.

On the supply side, in operations in Guyana, the Liza Destiny oil production vessel produces approximately 160,000 barrels per day. ExxonMobil Guyana recently revealed that peak production at the Liza Unity FPSO was 252,000 barrels per day, as a result of optimizations introduced by the company. The other side of the coin is that there is concern in Guyana whether ExxonMobil is carrying out this process safely. Meanwhile, growth forecasts in Canada and Brazil have been undermined by weather conditions and delays in project execution.

GEOPOLITICS

The week that has just ended has been very eventful from a geopolitical perspective. While war confrontations continued their destructive dynamics, the international scene was dominated by events far from the battlefields.

First, the President of Iran, Ebrahim Raisi, died on Sunday in a plane crash. Foreign Minister Hossein Amir-Abdollahian and 7 companions also died in the accident, in the middle of dense fog in a rugged area near the border with Azerbaijan. Raisi was the potential replacement for Iran's aging supreme leader, Ayatollah Ali Khamenei, making the power struggle sour. Presidential elections have been called for July 28 – they coincide with the Venezuelan elections and may dilute global attention on the Latin American country.

A possible side effect of the upheaval in Iran and the complexity of the Middle East is a rearrangement of the relationship with the groups that carry out violence on behalf of Iran: Hamas, Houthis, Hezbollah, and countries like Lebanon and Syria; Syria has shown a willingness to reach out to countries outside the Iranian sphere.

In the context of the case that South Africa brought to the International Court of Justice (ICJ), accusing Israel of genocide, the judges ordered Israel to immediately stop its military attack on the city of Rafah, in Gaza. While the International Court of Justice has no means to enforce its orders, the decision is a further sign of Israel's global isolation over its military campaign in Gaza, particularly since it began its offensive against Rafah this month.

The Israeli government responded with indignation. Finance Minister Bezalel Smotrich said that those demanding Israel stop the war were also demanding that it cease to exist, something Israel would not accept. The leader of the Israeli opposition, Yair Lapid, described the order as “a collapse and a moral disaster,” for not linking the demand to stop the fighting with the demand that Hamas release the Israeli hostages.

On the other hand, Spain, Norway, and Ireland announced that they would recognize a Palestinian state on May 28 and urged other European states to follow their example. The three countries said they hoped their decision would accelerate efforts to secure a ceasefire in Israel's war against Hamas in Gaza, which is now in its eighth month.

News has also been recorded on the Ukrainian front. Vladimir Putin is reportedly willing to stop the war in Ukraine with a negotiated ceasefire that recognizes the borders drawn on the battlefield, Russian sources told Reuters. Putin is reportedly prepared to continue fighting if Kyiv and the West do not respond. Putin's offer seems like an elegant way of declaring that the invasion objectives cannot be achieved, since the proposed borders incorporate recently conquered lands.

For its part, Ukraine, with the use of the recently received military equipment, reports that it has successfully repelled the Russian push, and has even gained some ground compared to the time when Putin generated the offer. On Saturday afternoon, Russia bombed a shopping center in the city of Kharkiv, with 200 people inside, precisely in the region where the Ukrainian army was pushing back the Russians. The truth is that Russia has not been able to stop Ukrainian attacks on its energy infrastructure, neither on its territory nor on the Crimean Peninsula, controlled by the Russians since 2014.

These two conflicts have placed a kind of double moral standard on multinational organizations: Could it be that the thousands of Ukrainian civilians who have died due to the unjustified Russian bombing are not a matter of concern to South Africa or the International Court of Justice?

At the G7 meeting in Italy, which began on Friday the 24th, the issue of the reconstruction of post-war Ukraine will be discussed. G7 finance chiefs are not expected to agree on the details of a loan for Ukraine, leaving much work in the coming weeks or months to secure more financing for the war-torn country. The U.S. has been pressuring its allies to agree to issue a loan backed by future receipts from about $300 billion of Russian assets frozen shortly after Moscow invaded Ukraine in February 2022. A European official said that the statement at the end of the meeting would probably include an agreement in principle on a loan, but he did not provide details. A reconstruction of the proposed magnitude would have a positive impact on energy demand, at least in the medium term.

All these variables, interacting with the perception of the oil market actors, generate a somewhat unstable balance, which tilts prices to one side or the other, in response to news that seems minor. Thus, the market adopted a somewhat somber stance, which at the close of the markets on May 24, in preparation for a long weekend, showed the price of Brent and WTI crude markers at $82.12/bbl and $77.72 /bbl respectively. A drop compared to the previous week of around 2.5%.

 

VENEZUELA

Political/Economic Aspects

Naturally, on the eve of the July 28 elections, politics is taking over the national dynamic. All speech and actions are done to try to convince the population to support one or the other of the sides of the current polarization. Incidentally, the regime makes enormous efforts to hinder, discredit, and demotivate the surprising cohesion of the opposition and its decision to make elections its main strategy.

The duo Edmundo González Urrutia (EGU) and María Corina Machado (MCM) have been successful in maintaining hope among citizens for political change. On the one hand, MCM has continued with the campaign of encouraging people even in the most remote parts of the country, to talk about the unstoppable change. He has managed to appear in all regions even though the regime does not allow her to travel by plane and her road trips are hindered by road and bridge closures. These obstacles have only underlined the epic nature of his ability to draw massive crowds, wherever she goes. On the other hand, EGU has maintained a simple speech, calling for a great national reconciliation, which has also resonated. After all, almost every family in the country has been affected, divided, and separated by ideological polarization, persecution, and violence.

Some analysts cast doubt on whether the success of citizen rallies will be reflected in the organization necessary to mobilize the vote and safeguard it. Another thing that must be analyzed carefully is the apparent lack of programmatic content on both sides of the dispute; Beyond general wishes, the campaign has focused on emotions.

The regime is at a crossroads, which is why it continues to have contacts with representatives of the Biden administration, mainly related to the granting of licenses by OFAC. More importantly for the regime’s officials, personal sanctions and sanctions are on the table, as well as post-electoral guarantees.

Citizens' preferences seem clear, but how they materialize on voting day remains to be seen. The regime has a series of cards to play, some obvious and others that we may not even imagine, that could force a result that is not in line with the current trend. Things are not going well for the regime, which makes them capable of anything to retain power.

The uncertainty caused by the replacement of OFAC licenses, LG 44 with LG 44-A, has limited oil revenues, at least while the sanctions' outlook becomes clearer or prices recover. India's purchases of Venezuelan crude oil were suspended, although they apparently resumed recently, probably authorized by OFAC. The reduction in income kept public spending down, including fewer CLAP boxes to distribute. The injection of foreign currency into the exchange market was insufficient to keep the Bs./$ exchange rate constant, which slid just over 2%. Power outages have continued, and gasoline shortages once again generated long lines in the interior of the country.

BP, the British oil company, announced the suspension of negotiations for the joint development of the Cocuina natural gas field until express authorization is received from OFAC. On the positive side, Repsol, the Spanish oil company, received the special license that it was waiting to begin the development of the fields included in the area extension of PetroQuiriquire.

We cannot fail to mention the visit and tour of the president of PDVSA and Minister of Petroleum, Colonel Pedro Tellechea, through the Expo Fedeindustria 2024. The minister offered a press conference and made a presentation of the country's oil plans. Tellechea emphasized that the supply of fuel to the domestic market was assured by the new fleet of tanker trucks and service stations that were in “optimal conditions”, capable of supplying 102 MBPD of gasoline. However, he did not mention where was PDVSA to obtain such volumes.

The most striking thing about the presentation is that it detailed that in a year and a half of activity, they had managed to increase Venezuelan production by 60 Mbpd. He added that from May to December the production would reach 1.23 Mbpd, that is, almost 300 Mbpd more. These projections are more the result of voluntarism than of technical analysis, but as they say, the paper holds up to anything. When establishing credibility, it must be emphasized that the production figures until April presented by Tellechea do not coincide with the production volumes sent directly to OPEC by his ministry.

 

Hydrocarbons Sector

Crude oil production maintained its level from the previous week, averaging 784 Mbpd, distributed geographically as detailed below:

•          West                163 (Chevron 65)

•          East                 144

•          Orinoco Belt    477 (Chevron 93)

•          TOTAL             784 (Chevron 158)

Chevron continues with its drilling program in the PetroIndependencia joint venture; They hope to reach 160 MBPD by June.

Meanwhile, Maurel & Prom (the French oil company) and Repsol will begin their efforts to begin development activities in their respective fields.

Repsol will surely look for synergies between the infrastructure it is receiving under the extension of the PetroQuiriquire block, with those already operated by the mixed company. The sum of the resulting productions could reach around 25 MBPD, a volume that Repsol will handle and export in the form of heavy and medium crude oil if it keeps the old and new fields segregated. Under this scheme, similar to that of Chevron, you will be able to begin repaying the outstanding debt with PDVSA. We do not rule out that Repsol is analyzing the feasibility of exporting its production through the Salina terminal, on the eastern coast of Lake Maracaibo, for the export of its crude oil. Maybe also the production managed by Maurel & Prom.

Meanwhile, Maurel & Prom remains limited to doing minor jobs that do not require drilling rigs. Their team faces the challenge of getting one or more rigs that can drill and make major repairs in the flat waters on the western side of Lake Maracaibo. It is estimated that it will take at least 6 months to condition one of the rigs that remain in the lake. An additional complexity is that the remaining potential in the Cretaceous reservoirs, in terms of light crude oil and gas, has a high content of hydrogen sulfide (H 2 S). Therefore, this potential can only be reactivated by putting into operation the desulfurization plant built by Shell in the early 2000s – more investment and time.

Refining operations reached 210 Mbpd, with a gasoline production yield of 64 Mbpd, and around 68 Mbpd of diesel, hence the need to resort to gasoline rationing in the domestic market, a marked contrast with the announcements made by the minister Tellechea.

Exports continued at the same pace as in previous weeks, with the difference that India is about to receive a shipment of crude oil. There remains a high probability of diluent shortages due to delays or decisions by OFAC to issue licenses. The talks with Iran, to supply again condensed, seem to be affected by the uncertainty generated by the death of President Raisi, and the appointment of a new president.

PRECIOS PETROLEROS UN PASO ATRÁS A PESAR DE UNA DEMANDA EN ASCENSO

El Taladro Azul  Published Publicado en  LA GRAN ALDEA

M. Juan Szabo^[1] y Luis A. Pacheco^[2]    

La combinación de la continuación de las altas tasas de interés, un nuevo aumento en los inventarios de crudo en EE. UU., y un confuso ambiente económico y geopolítico, continuó pesando sobre los precios del petróleo esta semana, llevándolos a sus mínimos desde febrero. 

En efecto, los precios del petróleo cayeron durante cuatro días consecutivos, empujados ​​por la renuencia de la Reserva Federal (Banco Central de EE. UU.) a comprometerse con recortes de tasas de interés este año, así como también por otro aumento atípico de 1,8 MMBBLS en los inventarios de crudo comercial en EE. UU. El último día de la semana (24 de mayo), la tendencia a la baja se revirtió, pero no lo suficiente como para evitar una semana de reducción de los precios. 

FUNDAMENTOS.

Los comentarios de funcionarios de la Reserva Federal a principios de semana, junto al contenido de las minutas de la más reciente reunión del Federal Open Market Committee (FOMC), sembraron dudas sobre los planes de reducción de las tasas de interés y su potencial efecto en la demanda petrolera; las minutas señalan que la Reserva Federal (FED) seguía esperando que la inflación regrese al 2 % a mediano plazo, pero que el proceso de reducción de la inflación tardaría más de lo que se pensaba anteriormente. Un recorte en tasas de interés parece cada vez más improbable, al menos hasta septiembre, y las esperanzas de múltiples recortes en las tasas de intereses en el año se han evaporado. El índice de precios de gastos de consumo personal (PCE) se publicará el 31 de mayo, y probablemente confirmará la validez de la interpretación de los documentos de la FED.

El Banco Central Europeo prácticamente ha prometido recortar su tasa de depósito desde un máximo histórico del 4 %. Pero mantienen a los mercados adivinando hasta qué nivel, y con qué rapidez, reducirá los costos de endeudamiento después de eso. Los economistas de Société Générale predicen que el BCE recortará las tasas en junio y septiembre, pero luego hará una pausa para esperar a que la Reserva Federal implemente su primer recorte de tasas.

La atención también se reenfocó hacia la reunión de principios de junio de la OPEP+, donde los países miembros discutirán si extender o no su recorte de producción de 2,2 MMbpd. La decisión de celebrar la reunión en forma virtual es vista como una indicación de que el grupo mantendría la actual política de producción; la baja en los precios, durante mayo, prácticamente acabaron con la probabilidad de que los países miembros comenzaran a deshacer los recortes. El único punto álgido dentro del grupo es la desavenencia con Irak y Rusia por sus incumplimientos con respecto a sus compromisos contraídos.

En particular, las cifras de exportación publicadas por Rusia son poco confiables, como también es el caso de Venezuela y Nigeria, por la multiplicidad de terminales de exportación utilizados y la utilización de su “flota fantasma”, que a veces funge de inventario flotante por meses. Al correlacionar las diferentes fuentes, incluyendo reportes de movimiento de tanqueros, concluimos que parte de la exportación rusa terminó en Cuba: los cargamentos rusos han estado reemplazando los envíos venezolanos hacia la isla. Se estima que, desde marzo hasta ahora, unos 70 Mbpd de crudo y productos rusos fueron descargados en Cuba. Hasta ahora, la OPEP ha tendido a hacerse la vista gorda con los incumplimientos de Rusia

En lo que respecta a EE. UU., el mayor productor de petróleo del mundo, la Agencia de La Administración de Información de Energía (EIA: por sus siglas en inglés) mostró un incremento para la semana de 1,8 MMbbls en su inventario de crudo comercial, excluyendo la Reserva Estratégica (SPR: por sus siglas en inglés), un indicador muy valorado por el mercado petrolero.  La sobrerreacción del mercado a este relativo menor aumento se debe al contraste con los estimados de los analistas de una reducción de 2,5 MMbpd.  

Por otro lado, las cifras de la EIA mostraron una reducción en el inventario de gasolina de casi 1,0 MMbbls, a pesar de mayores corridas de refinación. Este aumento material en la demanda de gasolina obedece al inicio de la temporada de alto consumo con la llegada de “Memorial Day”. Además, la demanda de combustible de aviación muestra un marcado crecimiento, ya que según la Administración de Transporte Aéreo (TSA: por sus siglas en inglés) el número de pasajeros excede los récords de 2019 (prepandemia) en más de un 10 %.

La producción de crudo en EE. UU. continua en los mismos niveles, alrededor de 13 MMbpd, aunque la declinación natural que no está siendo compensada por actividades de reposición mediante reparación y perforación de pozos, ha reducido en algo la producción, por debajo del piso reportado por los informes de la EIA.  Evidencia de este lento deterioro lo constituye la continua reducción de taladros activos en el territorio de EE. UU., esta semana otros 4 taladros fueron retirados de la actividad, según Baker Hughes.

Una noticia que no puede ser ignorada, por su potencial impacto en las instalaciones petroleras en el golfo de México, son los pronósticos meteorológicos del gobierno de EE. UU. Se prevé que se podrían formar hasta siete huracanes importantes en una “extraordinaria” temporada en el Atlántico de 2024, que comenzará el 1 de junio. Es un pronóstico que excede a los previos peores años, como el 2005 que generó los huracanes Katrina y Rita. 

En cuanto a China, las políticas del gobierno para resolver la crisis del mercado inmobiliario no han dado sus frutos todavía. Lo que sí es innegable es que el crecimiento de China ha sido decepcionante este año; no hay mucha evidencia de que haya brechas de oportunidades sustanciales en la economía, que con estímulos contundentes se puedan abordar con éxito. Por el contrario, parece que la tasa de crecimiento sostenible de China se ha reducido.

En el lado del suministro, en las operaciones en Guyana, el buque de producción de petróleo Liza Destiny produce aproximadamente 160.000 barriles diarios, mientras que ExxonMobil Guyana reveló recientemente que la producción máxima en la FPSO Liza Unity fue de 252.000 barriles por día, producto de optimizaciones introducidas por ExxonMobil. La otra cara de la moneda es que en Guyana hay preocupación de si ExxonMobil está llevando a cabo este proceso de manera segura. Mientras, los pronósticos de crecimiento en Canadá y Brasil se han visto mermados por condiciones meteorológicas y retrasos en la ejecución de proyectos.

GEOPOLÍTICA

La semana que recién culmina, ha estado muy movida desde el punto de vista geopolítico. Mientras que las confrontaciones bélicas continuaron su destructiva dinámica, el escenario internacional fue dominado por eventos alejados de los campos de batalla. 

En primer lugar, presidente de Irán, Ebrahim Raisi, murió el domingo en un accidente aéreo. El ministro de Asuntos Exteriores, Hossein Amir-Abdollahian y 7 acompañantes, también fallecieron en el accidente, en medio de una densa niebla en un área escarpada cerca de la frontera con Azerbaiyán. Raisi era el potencial reemplazo del envejecido líder supremo de Irán, el ayatolá Alí Jamenei, lo que enrarece la lucha por el poder. Por los momentos, se han convocado elecciones presidenciales para el 28 de julio – coinciden con las elecciones venezolanas, y puede diluir la atención global sobre el país latinoamericano.

Un posible efecto colateral del sacudón en Irán y de las complejidades del Medio Oriente, es un rearreglo de la relación con los grupos que ejercen violencia en representación de Irán: Hamás, Hutíes, Hezbollah y países como Líbano y Siria; Siria ha mostrado voluntad para acercarse a países fuera de la esfera iraní.

En el contexto del caso que Sudáfrica llevó a la Corte Internacional de Justicia (CIJ), acusando a Israel de genocidio, los jueces ordenaron a Israel que detuviera inmediatamente su ataque militar contra la ciudad de Rafah, en Gaza. Si bien la Corte Internacional de Justicia no tiene medios para hacer cumplir sus órdenes, la decisión es una señal más del aislamiento global de Israel por su campaña militar en Gaza, particularmente desde que comenzó su ofensiva contra Rafah este mes. 

El gobierno israelí respondió con indignación. El ministro de Finanzas, Bezalel Smotrich, dijo que quienes exigían a Israel que detuviera la guerra también exigían que dejara de existir, algo que Israel no aceptaría. El líder de la oposición israelí, Yair Lapid, calificó la orden como “un colapso y un desastre moral”, al no vincular la exigencia de detener los combates, con la exigencia a Hamás de liberar a los rehenes israelitas. 

Por otro lado, España, Noruega e Irlanda anunciaron que reconocerán un Estado palestino el 28 de mayo e instaron a otros Estados europeos a seguir su ejemplo. Los tres países dijeron que esperaban que su decisión acelerara los esfuerzos para asegurar un alto el fuego en la guerra de Israel contra Hamás en Gaza, que ahora se encuentra en su octavo mes.

En el frente ucraniano también se han registrado noticias. Se reporta que Vladímir Putin está dispuesto a detener la guerra en Ucrania con un alto al fuego negociado que reconozca las fronteras delineadas en el campo de batalla, dijeron a Reuters fuentes rusas. Se reporta que Putin está preparado para seguir luchando si Kiev y el Occidente no responden. La oferta de Putin pareciese una forma elegante de declarar que los objetivos de invasión no podrán ser alcanzados, ya que las fronteras propuestas incorporan los terrenos recientemente conquistados.

Por su parte, Ucrania, con la utilización de los equipos militares recién recibidos, reporta que ha repelido exitosamente el empuje ruso, inclusive ha ganado algo de terreno con respecto al momento de que Putin generara la oferta. El sábado en la tarde, Rusia bombardeó un centro comercial en la ciudad de Kharkiv, con 200 personas en el interior, precisamente en la región donde el ejército ucraniano está haciendo retroceder a los rusos. Lo cierto es que, Rusia no ha podido detener los ataques ucranianos a su infraestructura energética, ni en su territorio, ni en la península de Crimea, controlada por los rusos desde 2014.

Estos dos conflictos han puesto una suerte de doble rasero moral en las organizaciones multinacionales: ¿Será que los miles de civiles ucranianos que han muerto a causa del bombardeo injustificado ruso no es materia que concierne a Sur África ni a la Corte Internacional de Justicia?  

En la reunión del G7 en Italia, que comenzó el viernes 24, se debatirá el tema de la reconstrucción de la Ucrania postguerra. No se espera que los jefes de finanzas del G7 lleguen a un acuerdo sobre los detalles de un préstamo para Ucrania, dejando mucho trabajo en las próximas semanas o meses para asegurar más financiación para el país devastado por la guerra. EE. UU. ha estado presionando a sus aliados para que acepten emitir un préstamo respaldado por los ingresos futuros de unos 300.000 millones de dólares de activos rusos congelados poco después de que Moscú invadiera Ucrania en febrero de 2022. Un funcionario europeo dijo que el comunicado al final de la reunión probablemente incluiría en principio un acuerdo sobre un préstamo, pero no dio detalles.  Una reconstrucción de la magnitud propuesta tendría un impacto positivo en la demanda por energía, al menos en el mediano plazo.

Todas estas variables, interactuando sobre la percepción de los actores del mercado petrolero, generan un equilibrio algo inestable, que inclina los precios, hacia un lado u otro, en respuesta a noticias que parecieran de poca monta.  Así, el mercado adoptó una postura algo sombría, que al cierre de los mercados el 24 de mayo, en preparación a un fin de semana largo, mostraba la cotización de los crudos marcadores Brent y WTI a $82,12/bbl y $77,72/bbl respectivamente. Una caída con respecto a la semana previa de alrededor de un 2,5 %.

 

VENEZUELA                                                                                   

Aspectos Político/Económico

Como es natural, en vísperas de las elecciones del 28 de julio, lo político se está apoderando de la dinámica nacional. Todo el discurso y las acciones se hacen en función de tratar de convencer a la población que apoye uno u otro de los lados de la actual polarización. Dicho sea de paso, el régimen hace enormes esfuerzos para entorpecer, desacreditar y desmotivar a la sorprendente cohesión de la oposición y su decisión de hacer de las elecciones su principal estrategia.

La dupla Edmundo González Urrutia (EGU) y María Corina Machado (MCM) ha sido exitosa en mantener en la ciudadanía la esperanza de un cambio político. Por un lado, MCM ha seguido con la campaña de animar a la gente hasta en los sitios más remotos del país, hablando del indetenible cambio. Ha logrado aparecer en todas las regiones a pesar de que el régimen no le permite desplazarse en avión y le entorpecen el camino con cierres de carreteras y puentes. Esos obstáculos no han hecho más que subrayar lo épico de su capacidad de convocar enormes concentraciones, a dondequiera que va. Por el otro lado, EGU ha mantenido un discurso sencillo, convocando a una gran reconciliación nacional, lo cual también ha calado. Después de todo, casi todas las familias del país han sido afectadas, divididas y separadas por la polarización ideológica, la persecución y la violencia.

Algunos analistas arrojan dudas sobre si el éxito de las concentraciones de ciudadanos se verá reflejado en la organización necesaria para movilizar el voto y la salvaguarda del mismo. Otra cosa que debe analizarse con cuidado, es la aparente falta de contenido programático en ambos lados de la contienda; más allá de deseos generales, la campaña se ha concentrado en las emociones.  

El régimen se encuentra en una encrucijada, por eso continúa teniendo contactos con los representantes de la administración Biden, principalmente relacionados con la concesión de licencias por parte de la OFAC, pero, más importante para los oficialistas, está sobre la mesa las sanciones personales y las garantías postelectorales.

Las preferencias de la ciudadanía parecen estar muy claras, pero como se materializan el día de la votación está por verse. El régimen tiene una serie de cartas por jugar, unas obvias y otras que quizás ni las imaginamos, que podrían forzar un resultado no acorde a la tendencia actual. Las cosas no le están saliendo bien al régimen, lo cual los hace capaces de cualquier cosa para retener el poder.

La incertidumbre que sembró el reemplazo de las licencias de la OFAC, LG 44 por la LG 44-A, ha limitado los ingresos petroleros, al menos mientras se aclara el panorama sancionatorio o los precios se recuperan. Las compras de crudo venezolano por parte de India fueron temporalmente suspendidas, aunque aparentemente se reanudaron en los últimos días, probablemente autorizado por la OFAC. La reducción de ingresos mantuvo a la baja el gasto público, incluyendo menos cajas CLAP para distribuir. La inyección de divisas al mercado cambiario fue insuficiente para mantener constante la tasa de cambio Bs./$, la cual se deslizó poco más de un 2 %. Los cortes eléctricos han continuado y la escasez de gasolina volvió a generar largas colas en el interior del país.

BP, la petrolera británica, anunció la suspensión de las negociaciones de desarrollo conjunto del campo de gas natural Cocuina, mientras no se reciba autorización expresa de la OFAC. En el lado positivo, Repsol, la petrolera española, recibió una licencia especial que estaba esperando para iniciar el desarrollo de los campos incluidos en la extensión del área de PetroQuiriquire, su empresa mixta.

No podemos dejar de mencionar la visita y recorrido del presidente de PDVSA y ministro de Petróleo, coronel Pedro Tellechea, por la Expo Fedeindustria 2024. El ministro ofreció una rueda de prensa e hizo una presentación sobre los planes petroleros del país. Tellechea enfatizó que el suministro de combustible al mercado local estaba asegurado en virtud de los nuevos camiones cisterna y estaciones de servicio que estaban en “óptimas condiciones”, capaces de suministrar 102 MBPD de gasolina, sin embargo, no menciono el origen de ese volumen.

Lo más llamativo de la presentación es que detalló que en año y medio de actividad habían logrado incrementar la producción venezolana en 60 Mbpd, pero que de mayo a diciembre se alcanzaría la producción de 1,23 MMbpd, o sea casi 300 MBPD más; unas proyecciones más voluntaristas que viables, pero como dicen, el papel aguanta todo. A la hora de establecer credibilidad, hay que subrayar que las cifras de producción hasta abril que presentó Tellechea, no coinciden con los volúmenes de producción enviados directamente a la OPEP por su ministerio.

 

Sector de los Hidrocarburos

La producción de crudo mantuvo su nivel de la semana anterior, promediando 784 Mbpd, distribuidos geográficamente como se detalla a continuación:

•          Occidente                    163(Chevron 65)

•          Oriente                        144

•          Faja                             477 (Chevron 93)

•          TOTAL                         784 (Chevron 158)

Chevron continua con su programa de perforación en la empresa mixta PetroIndependencia; esperan alcanzar los 160 MBPD durante para junio. 

Mientras tanto, Maurel & Prom (la petrolera francesa) y Repsol empezarán sus gestiones para comenzar las actividades de desarrollo en sus respectivos campos.

Repsol seguramente buscará sinergias entre las infraestructuras que está recibiendo en virtud de la extensión del bloque de PetroQuiriquire, con las ya operadas por la empresa mixta. La suma de las producciones resultantes pudiera alcanzar unos 25 MBPD, volumen que Repsol manejará y exportará en forma de crudo pesado y mediano, si mantiene segregado los campos viejos y nuevos. Bajo este esquema, similar al de Chevron, podrá empezar a amortizar la acreencia pendiente con PDVSA. No descartamos que Repsol esté analizando la factibilidad de reactivar la exportación a través del terminal de la Salina, en la costa oriental del lago de Maracaibo, para la exportación de su crudo y quizás también la producción manejada por Maurel & Prom.

Mientras, Maurel & Prom sigue limitada a hacer trabajos menores que no requieran taladros y se enfrenta al reto de conseguir uno o más taladros que pueda perforar y hacer reparaciones mayores en las aguas llanas en la costa occidental del lago de Maracaibo. Se estima que tomarán al menos 6 meses para acondicionar un taladro de los que todavía quedan en el lago. Una complejidad adicional es que potencial remanente en los yacimientos del cretáceo, en términos de crudo liviano y gas tiene un contenido elevado de ácido sulfhídrico (H₂S) y, por lo tanto, solo podría ser reactivado poniendo en funcionamiento la planta de desulfuración construida por Shell a principios de los años 2000 – más inversiones y tiempo.

La refinación alcanzó 210 Mbpd, con un rendimiento de producción de gasolina de 64 Mbpd, y alrededor de 68 Mbpd de diésel, de ahí la necesidad de recurrir a racionamiento de gasolina en el mercado interno, un marcado contraste con los anuncios hechos por el ministro Tellechea. 

Las exportaciones continuaron al mismo ritmo de las semanas anteriores, con la diferencia de que India está por recibir un cargamento de crudo. Sigue habiendo una alta probabilidad de que escaseé diluente, debido a los retrasos o decisiones de la OFAC para emitir licencias. Las conversaciones con Irán, para suplir nuevamente condensado, están a la espera de que se regularice la situación de incertidumbre tras la muerte del presidente Raisi ,y nombramiento de un nuevo presidente.

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[1] Analista Internacional de Energía

[2] Académico no-residente del Baker Institute

PRICES MOVE TIMIDLY UPWARDS IN AN ENVIRONMENT OF BULLISH SIGNALS

El Taladro Azul  Published  originally in Spanish in  LA GRAN ALDEA

M. Juan Szabo^[1] y Luis A. Pacheco^[2]    

In a week in which economic signals were more positive than expected, and given the signs of continued increase in demand, oil prices sustained a moderate rise. Some of the macroeconomic outlook showed an improving trend, such as a slowdown in inflation in the US, to a monthly rate of 0.3%, while US crude oil inventories decreased, albeit marginally. This was offset by a relative “calm” in the geopolitical scenario, and the publication of the new report from the International Energy Agency (IEA) showing reductions in crude oil demand projections and increases in supplies.

FUNDAMENTALS

The Energy Information Administration (EIA) report, published on Wednesday the 15^th, revealed that commercial crude oil inventories in the US fell by 2.5 MMbbls, and that gasoline inventories also dropped, for the first time in three weeks; stronger domestic demand and a rebound in exports outpaced higher refinery output, which hit the highest rates since the start of the year. All of this push up oil prices.

Prices also reacted slightly to the publication of the April CPI figures, which revealed a 0.3% increase, slightly less than expected; raising prospects for an interest rate cut in the third quarter, although it will take more than a strong CPI report to induce the first cut, as inflation remains stubbornly above the Fed's 2% target Federal.

Markets ignored the IEA downward revision of its 2024 oil demand growth forecast. The IEA lowered its 2024 crude oil demand outlook by 140,000 bpd to 1.06 MMbpd, citing poor industrial activity and a lower diesel consumption. Notably, the IEA’s estimate is almost half of the growth forecast by OPEC, each faithful to its strategy of positioning, on the one hand, renewables, and on the other, oil.

At the long-awaited OPEC+ ministerial meeting on June 1, they will have to deal with the internal tensions that have appeared in the group. This is due, mainly, to the lack of definition surrounding the compensation plans to be applied to Iraq and Kazakhstan, two countries that have exceeded the agreed objectives. However, the group's production has remained around 41 MMbpd with a slight downward trend. The meeting will be held virtually, which signals a potential continuation of the cuts.

Xi Jinping's government announced its most forceful attempt yet to rescue China's beleaguered housing market, relaxing mortgage rules and urging local governments to buy unsold homes as central authorities grow increasingly concerned about the sector's drag to the general economy. The support package also includes lower down payment requirements for home buyers, and 300 billion yuan ($42 billion) of central bank funds to help government-backed companies buy excess housing inventory.

On the supply side, the results of the US oil activity indicate production remaining around 13 MMbpd, and with total drilling activity with little change, but with a marginal reduction in the most attractive Shale Oil basins. South Texas was subjected to hurricane force winds and heavy rains that generated power outages and affected local refineries, as well as oil production in the area, which is yet to be reported.

GEOPOLITICS

The war movements on both fronts, Ukraine/Russia and Hamas/Israel, continued active, but as an extrapolation of the events of previous weeks. Consequently, the perception of geopolitical risk has slowed down and did not move perceptibly the needle in the oil market.

In Ukraine, Russian troops are managing to advance in the northeast of the country, around Kharkiv. However, NATO maintains that Russia does not have enough forces on the ground to make a significant breakthrough.

The Ukrainian strategy continues focused on weakening the supply lines of the Russian forces. Drone attacks have caused a fire at the 240 Mbpd Tuapsé refinery and damage to oil infrastructure in the port of Novorossiysk , in the Krasnodar Krai region on Russia's Black Sea coast. This refinery and terminal constitute the most important outlet for Russian crude oil and products in the Black Sea and could therefore affect Russian exports.

As far as the Middle East is concerned, Israeli forces have continued to bomb Jabaliya in northern Gaza. Hamas said Friday that its fighters were fighting invading Israeli troops in the narrow alleys of Jabaliya. Israel confirmed the clashes and indicated that numerous Hamas terrorists had been captured or eliminated. In parallel, the much-criticized massive attack, announced by Israel to take Rafah at the southern end of the strip, seems to have been transmuted, for now, into a more surgical operation while the civilian population is managed to evacuate; more than 600,000 Palestinians have already left the area.

Activities have also increased in northern Israel, where Hezbollah terrorists have attacked Israeli military targets. The fierce fighting has caused a high number of casualties and damage to the infrastructure of the Gaza Strip, but has not affected the distribution of oil and its products;. Markets are alert to events that could raise their assessment of the resulting geopolitical risk.

On the other hand, the Houthi rebels announced that they had attacked a US warship and a cargo ship, but US sources reported that the ships had not been hit by enemy fire. However, on Saturday, the Greek-flagged tanker M/T Wind, transporting Russian crude oil to China, was hit by a Houthi missile in the Red Sea.

This situation of quasi geopolitical stability and the tight fundamentals of supply and demand have led to a discrete increase in prices, with a weekly gain of around 2% compared to the previous week.

At market close on Friday, May 17, Brent and WTI crude oil were trading at $84/bbl and $80/bbl respectively.

IN OTHER NEWS

·      Mergers and Purchases (M&A) transactions continue in the Shale Oil basins. This time it is Crescent Energy (NYSE: CRGY) that will buy SilverBow Resources (NYSE: SBOW), an operator in the Eagle Ford basin. A transaction valued at $2.1 billion that will create the second-largest E&P company in Eagle Ford, with a production of around 250 Mboepd (thousands of barrels of oil equivalent per day).

·      Colombia's Trans-Andean pipeline is expected to remain out of service until December, the chief executive of Colombia's state-owned Ecopetrol said. Earlier this month, reporting its first-quarter financial results, Ecopetrol said it had been transporting crude oil through Ecuador since November 2023 to combat oil theft. In Colombia, it is common for large volumes of oil to be stolen and used in clandestine refineries to produce a fuel, known as “pategrillo”, which is used in the production of cocaine or in illegal mining.

·      Brazilian President Lula da Silva will replace Petrobras CEO Jean Paul Prates with Magda Chambriard, former head of Brazil's oil and gas regulator, ANP, according to information from the Ministry of Mines and Energy. Petrobras shares, listed in New York, fell more than 6% when the news of Prates' departure and also that of the state company's CFO became known. Chambriard's appointment is a sign that the government is seeking better alignment between Petrobras and its political objectives. However, to the investment community, it is a deterioration in the governance of the state-owned company, which will imply a potential change in the stated investment plan and greater interference and political control of the company. This type of occurrence once again brings to the fore the issue of whether private participation in state oil companies is sufficient to guarantee less discretionary management and their viability over time. The examples of PDVSA, YPF, Ecopetrol and Pemex do not give rise to much optimism, although the size and technical complexity of Petrobras' operations makes it a somewhat different case.

·      Chevron announced it will exit its UK offshore business in the North Sea, beginning the process of selling its remaining assets in the area. The planned divestiture, confirmed to Reuters on Thursday, comes as Chevron prepares for its $53 billion acquisition of rival Hess, which it previously said will include $10 billion to $15 billion in asset sales worldwide.

·      For the first time in its 128-year history, the “Blue Chips” Dow Jones Industrial Average closed above the 40,000 mark. Stocks posted their longest weekly winning streak since February, after inflation reports revived hopes of early interest rate cuts.

·      Russian Deputy Prime Minister Alexander Novak reported that Russia and China will soon sign a contract that will allow the completion of the “Power of Siberia-2” gas pipeline, which will transport Russian natural gas to China. The agreement is the product of years of negotiations, but the cancellation of gas supplies to Europe raised Russian interest. The gas pipeline will transport well over fifty billion cubic meters of natural gas per year, from the Yamal region in northern Russia, precisely where it was supplied to Europe, to China through Mongolia.

·      At the time of going to press, it was learned that the Iranian president's helicopter crashed to the ground near Varzaqan, northern Iran, amid adverse weather conditions. President Ebrahim Raisi, his chancellor, and other officials were returning from an inauguration ceremony for a dam near the border with Azerbaijan. In the early hours of Monday, after 15 hours of searching, Iranian rescue teams located the remains of the helicopter: “There were no signs that its crew members were alive”, said the head of the Red Crescent. Next, state television and the official IRNA agency announced: “The President of Iran, Ebrahim Raisi, and the Iranian Foreign Minister, Hosein Amir Abdolahian, have died in a helicopter crash in a mountainous and difficult-to-access area in the northwest of the country”. This event will have important repercussions on the future of Iran and its international relations, given the controversial personality of the deceased president and the strong internal dissidence in the regime.

 

VENEZUELA

Political /Economic Aspects

In a sort of cat and mouse game, the regime intensifies its measures of harassment and repression of the opposition, as the support for Edmundo Gonzales Urrutia and Maria Corina Machado surges. The latest actions in this regard have been the closure of hotels where the opposition candidate, Edmundo González, or María Corina Machado have stayed, as well as the suspension of radio stations that have interviewed the opposition candidate. The Argentine Foreign Ministry reported that the safe conduct requests for political asylum seekers at its embassy in Caracas were denied by the regime. Let us remember that all asylum seekers are part of the MCM political team.

Also, Jorge Rodríguez, in his well-known habit of violating the independence of public powers, urged the CNE to withdraw the invitation to the European Union to exercise the function of verification and observation of the electoral process. Such presence would obviously be uncomfortable if the regime were to manipulate the election results.

Satellite photographs, shown in a CSIS report, show the mobilization of military personnel and equipment to the border with Guyana. This was possibly done to keep the controversy hot and to be able to take advantage of it if the electoral conditions warrant it.

As a result of some buyers refraining from buying Venezuelan oil, upon learning of the replacement of OFAC License 44 with 44 A, the government's oil revenues have decreased. This period of uncertainty could be prolonged, given that, according to reports, the US would prioritize the issuance of licenses to companies with existing oil production and assets in the country; not to those that would seek to enter Venezuela for the first time. The measure seems designed to respond to the needs of companies that have projects waiting to be restarted to recover outstanding debt and add oil to global markets, such as the Italian ENI and the Spanish Repsol, 

The regime use of oil revenues has to be a precarious balance between financing public spending (electoral) and trying to keep the Bs./$ exchange rate under control as an inflation control mechanism. Public spending has shown a contractionary trend. The exchange rate, although slowly, has already exceeded 40 Bs/$ in the parallel market. Another parameter with electoral repercussions, that the regime has handled with great caution, is the supply of fuel to the domestic market. The exchanges of crude oil for gasoline and diesel have been reduced; long lines are already observed at service stations, and some are closed due to lack of fuel. The shortage is being carefully managed to avoid affecting centers with large populations, such as Caracas.

In the most recent chapter of the auction of PDV Holding shares in CITGO (the proceeds will go to pay part of the debts created by the administrations of Hugo Chávez and Nicolás Maduro), the judge in the case, Leonard Stark, decided to continue with the process. Stark dismissed the latest objections from the lawyers representing the Venezuelan state company. The trustee in charge of the auction, Robert Pincus, had established that holders of the PDVSA 2020 bonds, whose claim is still being disputed in the New York courts, could benefit from the auction. PDVSA's lawyers argued that this intention would not only complicate the auction unnecessarily, introducing debts that have yet to be defined in the courts, but would also reduce the funds resulting from the auction for other creditors. In any case, this latest decision by Judge Stark paves the way and the second round of offers for PDV Holding shares is still scheduled for June 11.

Hydrocarbons Sector

Oil activities were carried out without major problems, except for some blackouts in different parts of the country, with very limited effects on oil results.

Crude oil production fell slightly compared to the previous week. The average for the week was 782 Mbpd, distributed geographically as detailed below:

•          West                163 (Chevron 65)

•          East                 144

•          Orinoco Belt    475 (Chevron 93)

•          TOTAL             782 (Chevron 158)

Chevron continues its drilling program at PetroIndependencia, which has brought its production to 158 Mbpd. Meanwhile, Repsol continues negotiating contracts with PDVSA and waiting to receive a private License from OFAC; Maurel & Prom, already in possession of a private license with a duration of 2 years, is trying to extend its duration and in parallel is focused on the search for a drill usable in the flat waters of Lake Maracaibo.

On the natural gas front, Trinidad and Tobago and Shell also received a license from OFAC last year to develop a gas field with Venezuela. However, Shell requested an individual license that would also authorize developments on the Deltana Platform southeast of Trinidad.

Refining remained at 200 Mbpd, with a gasoline production yield of 60 Mbpd, and around 67 Mbpd of diesel, hence the need to resort to gasoline rationing in the domestic market, since the volumes of products imported by barter have also been reduced.

Exports continued at the same pace as previous weeks, with no crude oil sent to India or Cuba. However, PDVSA assumes that India will receive authorization to restore purchases of Venezuelan crude oil. A diluent shortage could also develop, due to OFAC delays in issuing licenses. It is not ruled out to turn to Iran again for the supply of condensate.

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[1] International Energy Analyst

[2] Nonresident Fellow, Baker Institute