David Feldman

Three Things to Know in Energy – 2/20/2017

Blog Post created by David Feldman Champion on Feb 19, 2017

1. China claims stake in Abu Dhabi oil venture.


CNPC (China National Petroleum Corp.) purchased its claim in Abu Dhabi’s largest oil concession.  CNPC acquired an 8% stake in the venture joining two other Chinese companies, a Japanese company, a South Korean company, Total SA, and BP Plc as investors. 


The UAE is increasingly looking to form relationships in Asia, seeing that future demand is likely to originate from Asian growth over the next two decades.   Asia is primed for the fastest growth in energy demand according to the International Energy Agency.  With this in mind the UAE is eagerly forming new relationships to supplement the US and European demand that has historically been their major consumers.


2. Trump Approves XL oil pipeline.


New President Donald Trump has given the green light for another pipeline to resume construction.  This time it’s the XL oil pipeline, set to carry oil from western Canada to the southern U.S.  Previously stalled the Obama administration, Trump as authorized the development as long as it’s built with US steel.  The idea is that the pipe will provide a significantly more affordable option to transport the oil compared to the current barge and railway alternatives.  Additionally, this project will help to create US employment opportunities. 


3. Oil prices stay flat.


Oil futures are standing steady as tugs from either side seem to be offsetting each other.  US crude stocks have shown larger-than-expected growth over the last couple weeks which would tend to bring the price down, but this has been offset by OPEC members stating they may exercise an option to extend supply cuts for an additional six months.


We continue to sit around the $53 mark, and it has been a fairly tight trading range all year.  However, with US inventory reaching record levels last week (259M barrels), OPEC seems to have the ball in their court as to what they will do in response if this trend continues.