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ANS rises into $80s
Surprise US inventory build steals momentum from geopolitical rally
Steve Sutherlin Petroleum News
Despite sliding Aug. 14 along with other crude benchmarks, Alaska North Slope crude remained above the $80 mark, falling $1.11 to close at $81.43 per barrel. West Texas Intermediate fell $1.37 on the day to close at $76.98 and Brent inched below $80 -- off 93 cents to close at $79.76.
Prices slid as U.S. crude reserves increased for the first time in seven weeks, while fears of escalating conflict in the Middle East diminished slightly on U.S. diplomatic efforts combined with strategic deterrence.
U.S. commercial crude oil inventories for the week ending Aug. 9 -- excluding Strategic Petroleum Reserve stocks -- lofted by 1.4 million barrels from the previous week to 430.7 million barrels, 5% below the five-year average for the time of year, according to data released Aug. 14 by the U.S. Energy Information Administration.
The gain was a surprise on several levels.
Analysts polled by The Wall Street Journal had predicted U.S. crude stockpiles would fall by 1.2 million barrels, and a Reuters poll called for a dip of 2.2 million barrels.
American Petroleum Institute estimates reported Aug. 13 ahead of EIA data said commercial crude stocks fell by 5.2 million barrels.
The slide in crude prices was cushioned as Libya's Waha oil company production dropped by 115,000 barrels per day due to maintenance on the pipeline from the Waha field to Es Sider port, a company source told Reuters Aug. 15.
Finished petroleum product consumption in the United States hinted that demand was healthy.
Total U.S. motor gasoline inventories fell 2.9 million barrels over the week ended Aug. 9 to 225.1 million barrels ---- 3% below the five-year average for the time of year, the EIA said. Distillate fuel inventories trimmed 1.7 million barrels for the week to 126.1 million barrels -- 7% below the five-year average for the time of year.
The Strategic Petroleum Reserve inched up by 700,000 barrels to 376.5 million barrels.
ANS dropped $1.16 August 13 to close at $82.54, while WTI tumbled $1.71 to close at $78.35 and Brent tumbled $1.61 to close at $80.69.
Middle East tensions drive crude higher Crude capped a robust climb on fears of rising Middle East hostilities Aug. 12, as ANS soared $2.52 to close at $83.69, WTI skyrocketed $3.22 to close at $80.06 and Brent soared $2.64 to close at $82.30.
"Geopolitical tensions have risen following Iran's vow to retaliate against Israel for the assassination of a Hamas leader in Tehran late last month," Rystad Energy said in a client note, Quantum Commodity Intelligence reported Aug. 14.
"The situation remains tense and highly uncertain," Rystad said. "This week and next will be crucial in determining whether further escalation can be avoided and whether the geopolitical risk premium will significantly affect oil prices."
ANS rose 70 cents Aug. 9 to close at $81.17, as WTI rose 65 cents to close at $76.84 and Brent rose 50 cents to close at $79.66.
On Aug 8, ANS added 67 cents to close at $80.47, WTI added 96 cents to close at $76.19 and Brent added 96 cents to close at $79.16.
From Wednesday to Wednesday, ANS rose $1.63 from its close of $79.80 Aug. 7 to $81.43 on Aug. 14. The peak of the week for ANS was $83.69 Aug. 12.
On Aug. 14 ANS traded at a $1.67 premium over Brent, and at a $4.45 premium over WTI.
2 billion BOE unlocked in GOM Chevron has mastered ultra-high-pressure technology with the potential to produce more than 2 billion barrels of oil equivalent in the Gulf of Mexico, according to Wood Mackenzie estimates.
Chevron announced first oil at the Anchor field in the U.S. Gulf of Mexico deepwater, Wood Mackenzie said in a note.
"First oil from Anchor is a major technological milestone in the U.S. Gulf of Mexico, culminating from a decade-long effort from operators, service companies and regulators," said Mfon Usoro, Wood Mackenzie principal analyst. "The US GoM has repeatedly proven itself as a hub for technological innovation and the deployment of the ultra-high-pressure technology puts the region once again at the forefront of a technology breakthrough."
"Chevron is leading the way to unlock ultra-high-pressure reservoirs in the Inboard Paleogene, which have never been produced," Usoro said. "The Inboard Paleogene will herald a new chapter in the US Gulf of Mexico."
Usoro said production from the Inboard Paleogene could permanently change the landscape in the U.S. GoM, adding that operators expect individual wells to recover at least 30 million barrels of oil equivalent.
"Success in the play could extend the life of the basin," she said. "However, if results fall short, it could mark the beginning of production decline in the basin and a blow to a resurgence in exploration for additional barrels in the play."
Anchor, 140 miles off the Louisiana coast, was launched in December 2019 and consists of a system of subsea wells connected to a semi-submersible floating production unit with a production capacity of 75,000 barrels per day of oil and 28 million cubic feet per day of gas, Oil&Gas Journal reported Aug. 12.
In water depths of 5,000 feet, Anchor uses subsea high-pressure technology rated to 20,000 psi, with reservoir depths reaching 34,000 feet from the water surface, the Journal reported. Total potentially recoverable resources are estimated at some 440 MMboe.
Chevron operates Anchor with 62.86% interest. TotalEnergies holds the remaining 37.14%.
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