(Bloomberg) -- Oil pared losses and headed for a weekly gain as surprisingly strong American jobs data countered concern over growing trade tension between the U.S. and China.Labor Department data showed a jump of 1.76 million in payrolls last month, more than had been anticipated. Prices had faltered earlier after President Donald Trump signed executive orders prohibiting U.S. residents from doing business with WeChat, TikTok or the apps’ Chinese owners.Crude rallied to a five-month high earlier this week, buoyed by a weaker dollar and the biggest back-to-back weekly decline in U.S. crude stockpiles in a year. But a sustained recovery in oil consumption is looking shaky, with crude imports into China shrinking in July, and Saudi Arabia this week cutting prices to Asia less-than-expected.OPEC+ is returning some supply to the market this month as it tapers its record output curbs, but habitual quota cheat Iraq has promised to make deeper cuts following a call with Saudi Arabia on Thursday.Oil Minister Ihsan Abdul Jabbar pledged that Iraq will cut output by an extra 400,000 barrels a day in August and September, on top of a previous commitment to slash 850,000 barrels a day in each month.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Iraq made its strongest commitment yet to implement deep cuts in crude production after the country’s oil minister and his Saudi counterpart held a phone call Thursday.OPEC’s second-biggest producer -- and a long-time laggard in meeting oil-output quotas -- has faced mounting pressure to boost its compliance as the group’s patience wears thin. The country failed to meet its production-cut target in May and June, and removed just 11,000 barrels a day last month, according to tanker-tracking data compiled by Bloomberg.The two countries issued a joint statement -- a rare move until recently -- in which Oil Minister Ihsan Abdul Jabbar pledged that Iraq will cut output by an extra 400,000 barrels a day in August and September. That’s on top of a previous commitment to slash 850,000 barrels a day in each month. He spoke to Saudi Energy Minister Prince Abdulaziz bin Salman late on Thursday.Delivering these “compensation cuts” would assign Baghdad a target of 3.4 million barrels a day for this month and next, well below the 3.79 million that a Bloomberg survey estimates it pumped in July.“The two ministers stressed that efforts by OPEC+ countries towards meeting production cuts and the extra cuts under the compensation regime will enhance oil market stability, help accelerate the rebalancing of global oil markets and send a constructive signal to the market,” the joint statement read.The Organization of Petroleum Exporting Countries and its allies have been making record production cutbacks to offset the loss in demand caused by the coronavirus crisis. The strategy has paid off, tripling crude prices from the two-decade low struck in late April to about $45 a barrel.However, compliance with pledged cuts has been mixed among the coalition’s 23 members, with countries like Saudi Arabia making extra curbs and others such as Iraq and Nigeria trailing in their commitments.Iraq has chafed against the quotas set by OPEC+ over the past few years, contending that it should have remained exempt while rebuilding its economy and oil industry following decades of conflict and sanctions.The financial strains it faces at home have been underscored again this summer, as the government’s failure to provide adequate electricity supply while temperatures hit searing records drives street protests in Baghdad.Key OPEC+ ministers will hold an online meeting to review their strategy on Aug. 18. The issue of poor compliance has dominated recent gatherings, and even prompted sharp rebukes from the Saudis, according to delegates.(Updates with forthcoming JMMC meeting in final paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Stena Bulk AB, one of the world’s biggest tanker lines, plans to run some of its ships on used cooking oil to offer customers a way to offset their pollution. The major problem might be getting enough of it.Stena Immortal, a medium-range tanker that can transport around 40,000 tons of fuel, made a 10-day voyage from Rotterdam to the U.S. earlier this year. It used a marine biofuel produced by Dutch company GoodFuels.The fuel costs around $100 a ton more than the blend of marine gasoil and low-sulfur fuel oil that the Stena Immortal usually runs on, and it used 22 tons a day, according to Stena Bulk Chief Executive Officer Erik Hanell. That translates to a 30% higher fuel bill, according to Bloomberg calculations based on marine gasoil prices in Rotterdam.Given those numbers, the used cooking oil won’t be economic on its own. Rather, the Swedish shipper plans to offer it as part of a carbon-credit scheme. The fuel may not necessarily be used on the vessel carrying the client’s cargo, but on any Stena Bulk ship to reduce the amount of carbon-emitting petroleum used on the customer’s voyage, Hanell said. No contracts have been signed yet, he said.“We want to be ahead of the curve for shipping,” Hanell said in an interview. The fuel is currently only available at Rotterdam, but Stena is looking for sources of biofuels near other major ports, he said.Stena Bulk’s efforts are part of a broader shipping industry push to de-carbonize after the International Maritime Organisation pledged to halve greenhouse gas emissions from 2008 levels by 2050. Shipping accounts for around 2.2% of these emissions, the IMO said.There’s an increasing interest in biodiesels produced from cooking oil and blended with very low-sulfur fuel oil across the shipping industry, said Douglas Raitt, a regional advisory services manager at Lloyd’s Register Singapore Pte. However, high prices, scalability and understanding the true sustainability of these fuels may be hurdles to their uptake, he said.“Without more specific legislation, the drive to use these ‘low carbon drop-in-now’ fuels may not really take a hold in the market unless the consumer demands it,” Raitt said.The limited volumes of waste biomass for shipping means that these new technologies will need to be further developed and tested to produce enough biofuel to cover increased demand, said Peter Sand, chief shipping analyst at industry group BIMCO. It will take some time before massive ocean-going cargo carriers can switch from fossil fuels, he said.GoodFuels, majority-owned by Finco Fuel Holding BV, also supplies the fuel to several other shippers including Denmark’s Norden A/S, which trialled it on its merchant vessels in 2018. It’s sourced from restaurants and also residual oil from the production of cosmetics or other biofuels across Europe and Asia, said Chief Technology Officer Bart Hellings. Getting enough of the feedstock is the main challenge, he said.The company is aiming to produce 30,000 to 50,000 tons of the fuel this year, Hellings said. That compares with a total marine fuel market of around 400 million tons a year, according to IHS Markit.“Looking at the demand side, I can say that we are basically permanently sold out,” Hellings said. To increase production, GoodFuels is looking to build a first-of-its-kind facility that could make shipping fuel from sawdust, he said.(Updates with analyst comment in 9th paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.