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(Reuters) Oil prices jumped more than 4 percent on Wednesday as the extension of U.S.-China talks raised hopes of easing trade tensions between the two superpowers, while OPEC-led crude output cuts also provided support.
U.S. West Texas Intermediate (WTI) crude CLc1 futures rose $2.38 to $52.16 a barrel, a 4.8 percent gain, by 1:15 p.m. EST (1815 GMT), the first time this year that WTI has topped $50.
Brent crude LCOc1 futures gained $2.48, or 4.2 percent, to $61.20 a barrel.
West Texas Intermediate (WTI) crude CLc1 futures for February delivery rose $2.38 to $52.16 a barrel, a 4.8 percent gain.
The day’s sharp gains extended a rally that has pushed prices up more than 13 percent in 2019.
“After a dreadful December for risk markets, crude oil continues to catch a positive vibe,†said Stephen Innes at futures brokerage Oanda in Singapore, noting that investors were growing less fearful that U.S.-China trade tensions would slow global economic growth and dampen demand for crude.
The trade talks in Beijing were carried over into an unscheduled third day, amid signs of progress on issues including Chinese purchases of U.S. farm and energy commodities.
State newspaper China Daily said Beijing was keen to end the trade dispute, but that any agreement must involve compromise.
Oil prices also have received support from supply cuts by the Organization of the Petroleum Exporting Countries and allies including Russia.
The OPEC-led cuts, which officially began in January, are aimed at reining in an emerging glut as U.S. crude output C-OUT-T-EIA has surged to a record 11.7 million bpd.
Saudi Arabia’s energy minister said he was confident that action to rein in output would bring the oil market into balance. Khalid al-Falih also said he would not rule out calling for further action.
Data from the U.S. Energy Information Administration (EIA) showed domestic crude stockpiles fell less than expected last week. Gasoline and distillate inventories rose more than anticipated.
Crude inventories USOILC=ECI fell by 1.7 million barrels, smaller than the 2.8 million-barrel draw analysts had expected.
Gasoline inventories USOILG=ECI rose by 8.1 million barrels, far exceeding analysts’ expectations in a Reuters poll for a 3.4 million-barrel gain. Distillate stockpiles USOILD=ECI rose by 10.6 million barrels, more than five times the expected 1.9 million-barrel increase, the EIA data showed.
“The report is bearish given the smaller-than-expected decline in crude oil inventories and the very large increase in refined product inventories,†John Kilduff, a partner at Again Capital Management in New York.
Morgan Stanley cut its 2019 oil price forecasts by more than 10 percent. The bank said in a note it now expected Brent to average $61 a barrel this year, and WTI to average around $54 per barrel.
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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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