Mid-Week Review

Oil mostly lower as demand concerns pressure price, but Iranian tensions limit loss

Oil futures moved mostly lower Tuesday, with U.S. prices pulling back from their best level in nearly three weeks, as the continuing U.S.-China trade dispute weighed on prospects for energy demand, but tensions in the Middle East provided some support.  News that the Organization of the Petroleum Exporting Countries and its allies are likely to extend their production-cut deal into the second half of the year, “paired with elevated tensions with Iran are both offering some price support,” Tyler Richey, co-editor at Sevens Report Research, told MarketWatch. “However, the most recent escalation in the trade war is acting as a headwind.”  Click here to read more from MarketWatch.

Russian pipeline restart hit by dirty oil evacuation problems

Hopes for a speedy resumption of oil exports from Russia to Poland and Germany along the Druzhba pipeline route are fading after plans to remove dirty oil from the pipeline had a major setback last week, three trading sources said.  Russia halted oil flows along the pipeline to Eastern Europe and Germany in April because of contaminated crude, leaving refiners in Europe scrambling to find supplies.  Under the restart plan, Total was due to take the lion’s share of the dirty oil into its Leuna refinery in Germany to dilute and process it there, sources said.  The plan, not previously reported, would allow the pipeline to restart clean oil shipments after its biggest ever outage, now in its fourth week.  Click here to read more from Reuters.

Shale gains bring U.S. oil breakeven price down to $50 a barrel

The cost of profitably drilling a shale oil well in the U.S. has fallen to a modern low of $50 per barrel, likely ensuring the growth of the onshore shale industry for years to come, according to the latest survey by the Federal Reserve Bank of Dallas.  Led by surging production and efficiency gains in West Texas’ booming Permian Basin, the average breakeven price of oil has fallen 4 percent – or $2 per barrel – during the past year down to the $50 threshold, the Dallas Fed said.  Click here to read more from Chron.

Faltering North Sea Oil Production Set To Tighten Global Markets

Crude and lease condensate production in the North Sea is set for lower levels in the summer months, further tightening the global oil market which is already grappling with production declines in Iran and Venezuela, OPEC’s cuts, and a contamination issue that shut some Russian pipeline supplies to Europe, according to Rystad Energy.  Current unplanned outages at Oseberg and Flotta in the North Sea restrict a total of 160,000 bpd of North Sea production, the energy research firm said on Friday.  Rystad has estimated that outages in the North Sea in May will be 185,000 bpd. Yet, the biggest disruption is expected next month, when North Sea oil production is seen down to its lowest level since August 2014 because of scheduled maintenance at Ekofisk.  Click here to read more from OilPrice.com.