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ARAMCO IPO IS BEHIND SAUDI ARABIA’S PUSH FOR OPEC CUTS
Saudi Arabia’s efforts to have the OPEC oil cartel extend its production cuts into 2018 are being driven by the planned IPO of the state-owned Saudi Arabian Oil Co., or Aramco, report Summer Said, Benoit Faucon and Sarah McFarlane, citing people familiar with the matter.
The 13 members of the Organization of Petroleum Exporting Countries are scheduled to meet in Vienna Thursday to decide on extending a deal agreed last year with 11 other oil producing nations to cut crude oil outputs. The Saudi plan for a nine-month extension of the agreement is meant to continue to alleviate a global supply glut and boost prices.
The Saudis would like prices to continue to rise well into 2018 in order to drive up the value of the initial public offering of Aramco, which is planned for some time next year, according to people familiar with the matter. The initial offering of 5% of the company could be valued at more than $2 trillion.
“But the IPO’s value will in large part be determined by the price of oil, which has yet to recover fully from the 2014 price crash,” the reporters note.
OIL SLEUTHS ON THE RISE
Fluctuations in the price of oil over the past three years have driven investors to seek out new and more detailed sources of data on crude, creating an opening for both amateur and professional oil sleuths, reports Georgi Kantchev.
“Dramatic gyrations in the price of oil in the past three years have boosted demand for such services, intensifying competition in a market that for years had been dominated by governments, oil companies and a handful of big data providers,” Mr. Kantchev writes.
Oil data gatherers employ a range of technologies to compile statistics and intelligence on topics like Middle Eastern exports or U.S. drilling. These include satellites to monitor oil tankers at sea, infrared cameras to measure the level of stored oil and computer algorithms to analyze data and develop forecasts.
“So much of oil data is hidden and we’re trying to make it accessible,” one amateur oil sleuth told Mr. Kantchev.
ODEBRECHT’S ENERGY ARM RENOGIATES $5 BILLION IN DEBT
The oil and gas division of Brazilian engineering group Odebrecht SA reached an agreement with a group of creditors to restructure $5 billion in financial debt, Luciana Magalhaes reports.
The conglomerate has come under financial pressure since pleading guilty to violating foreign bribery laws and signing a multibillion-dollar anticorruption settlement with Brazilian, U.S. and Swiss prosecutors last year.
The company said that creditors representing more than 60% of the claims accepted the restructuring plan.
MARKETS
Oil prices were little changed Wednesday, after five straight days of gains on the back of expectations that OPEC will announce output cuts on Thursday.
Brent crude, the global benchmark, gained 0.2% to $54.26 a barrel. West Texas Intermediate for June delivery, meanwhile, traded flat at $51.47 a barrel on the New York Mercantile Exchange. If it closes at these levels, it would put an end to five straight days of gains, the longest winning streak since early April.
According to Stephen Brennock, analyst at London-based brokerage PVM, the world’s major oil producers “are almost guaranteed to extend production curbs” at Thursday’s OPEC meeting in Vienna, after oil ministers from Saudi Arabia and Algeria expressed confidence that a deal would be struck.
Read our latest market report here.
May 24, 2017 at 05:19PM
from Christopher Alessi
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