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(Bloomberg) — Brent crude headed for its biggest weekly gain since December 2016 as Saudi Arabia’s production cuts outweighed concerns over the health of the global economy.Â
The global benchmark is on track for an 9.4% advance this week, ending three consecutive weeks of losses. Prices rallied as Saudi Arabia reduced output even before OPEC’s cuts deal went into effect this month. Yet fears over global oil demand persisted ahead of further trade negotiations between the U.S. and China, where the central bank lowered reserve requirements for lenders on Friday to support growth.
“Underpinning this wave of buying is mounting evidence that Saudi Arabia has taken an axe to its oil production,†said Stephen Brennock, an analyst at PVM Oil Associates.Â
Oil’s positive start to 2019 follows its worst quarter in four years and a 20% annual loss driven by panic over a growing glut of crude. While OPEC’s output plunged by the most in almost two years last month and producers have pledged to curb supplies through the first half of 2019, concerns about oversupply prevail as stockpiles at America’s main storage hub show signs of swelling.
Brent for March settlement rose as much as $1.33, or 2.4%, to $57.28/bbl on the ICE Futures Europe exchange, after earlier falling as much as 1.1%. The benchmark crude was at $57.14/bbl in London.
West Texas Intermediate for February delivery rose $0.95, or 2%, to $48.04/bbl on the New York Mercantile Exchange. Prices are up 5.9% this week, the most since June. The March contract traded at a discount of $8.77 to Brent.
Saudi Arabia, the world’s biggest crude exporter, trimmed production last month, bringing overall output in OPEC down 530,000 bpd to 32.6 MMbpd, according to a Bloomberg survey of officials, analysts and ship-tracking data. That’s the sharpest pullback since January 2017 when OPEC started on its strategy to clear a glut created by surging supplies from shale producers.
Oil has risen for five days, shaking off concern over global growth that’s hammered stock markets this week. Optimism that the U.S. and China are working toward a thaw in trade tensions has helped bolster prices.
China said a U.S. delegation will visit next week for trade talks, confirming the two sides will have their first face-to-face negotiation since President Donald Trump and his counterpart Xi Jinping agreed to a 90-day truce in their trade war last month.
In the U.S., the American Petroleum Institute was said to report oil inventories at the storage hub in Cushing, Oklahoma, have risen by 483,000 bbl last week. While gasoline stockpiles jumped 8 MMbbl, the nationwide crude hoard fell 4.46 MMbbl, according to the API.
Weekly U.S. government data on oil inventories will be released on Friday, two days later than normal because of the New Year holiday. It would be a sixth consecutive weekly increase at Cushing, if confirmed by government data on Friday.
By HEESU LEE AND GRANT SMITH
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Valaris Limited announced new contracts awarded subsequent to issuing the Company’s most recent fleet status report on February 21, 2023. Three-year contract with Petrobras for drillship VALARIS DS-8. The rig will be reactivated for this contract. The total contract value is approximately $500 million, including a $30 million mobilization fee. 100-day contract with a TotalEnergies affiliate for drillship VALARIS DS-12. The contract is expected to commence in second quarter 2023. 70-day contract with Beach Energy offshore New Zealand for heavy duty modern jackup VALARIS 107. The contract is expected to commence in third quarter 2023. The total contract value is approximately $26 million. President and Chief Executive Officer Anton Dibowitz said, “We are particularly pleased to have secured the award for preservation stacked drillship VALARIS DS-8, for a contract that is expected to generate a meaningful return over the firm contract term, and we remain focused on exercising our operational leverage in a disciplined manner. This most recent award represents the sixth contract awarded to one of our high-quality stacked floaters since mid-2021, and speaks volumes about our demonstrated track record of project execution when reactivating rigs.” Dibowitz added, “Following the reactivation of VALARIS DS-17 and DS-8, we will have ten floaters working across the golden triangle, including four drillships in Brazil, a market where we expect to see continued growth over the next several years.” Updated Guidance As a result of the contract awarded to VALARIS DS-8, which will require the rig to be reactivated from preservation stack, we are updating our first quarter 2023 and full-year 2023 guidance provided on our fourth quarter 2022 conference call on February 21, 2023. First Quarter 2023 Contract drilling expense is expected to increase by approximately $5 million to $385 million to $395 million. Adjusted EBITDA is expected to decrease by approximately $5 million to negative $5 million to breakeven. Adjusted EBITDAR, which adds back one-time reactivation expense, is expected to be $25 million to $30 million, unchanged from the guidance provided on our fourth quarter 2022 conference call. Full-Year 2023 Revenues are anticipated to be $1.8 billion to $1.9 billion, unchanged from the guidance provided on our fourth quarter 2022 conference call. Contract drilling expense is expected to increase by approximately $60 million to $1.49 billion to $1.59 billion. Adjusted EBITDA is expected to decrease by approximately $60 million to $180 million to $220 million. Adjusted EBITDAR, which adds back one-time reactivation expense, is expected to be $280 million to $320 million, unchanged from the guidance provided on our fourth quarter 2022 conference call. Capital expenditures are expected to increase by $60 million to $320 million to $360 million. Source: Valaris Join our mailing list here We are #1 on Google and Bing for the "Largest Mobile Energy Network" Come join our community! Download the Rig Lynx app here
Seadrill Limited announced that the West Neptune has executed approximately six months of term extensions with LLOG Exploration Offshore, L.L.C in the US Gulf of Mexico. The extensions will commence in direct continuation of the existing term, and will keep the rig busy until Q3 2024, furthering Seadrill and LLOG’s long-term association. Total contract value for the extension is approximately $79 million. Source: Seadrill Join our mailing list here We are #1 on Google and Bing for the "Largest Mobile Energy Network" Come join our community! Download the Rig Lynx app here
Semisub rig owner Dolphin Drilling has inked a new contract with Peak Petroleum in Nigeria for its 1974-built Blackford Dolphin. The firm contract, which follows the letter of award in January, gives the Euronext Growth-listed owner of three rigs the potential to extend the unit’s backlog by a minimum of 120 days and up to 485 days. The deal adds to and will be a direct continuation of the previously announced 12-month contract with General Hydrocarbon Limited (GHL). Øystein Stray Spetalen-backed company said the effective dayrate associated with the minimum firm period of the contract is $325,000, including the mobilisation fee. “The final award of the contract for Blackford Dolphin shows the opportunities in Nigeria at a strong dayrate, in addition to building on the backlog for the rig. It also underlines the attractiveness of our assets, and we look forward to returning to revenue-generating operations in 2023,” noted Bjørnar Iversen, CEO of Dolphin Drilling. Source: Dolphin Join our mailing list here We are #1 on Google and Bing for the "Largest Mobile Energy Network" Come join our community! Download the Rig Lynx app here
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