Oil Market Update (April 3, 2013)

- April 3rd, 2013

A brief overview of oil price developments, supply and demand and significant market movers.

West Texas Intermediate crude slid for a second day amid speculation that US inventories could climb to the highest level in more than 22 years. Prices also fell after data showed US manufacturing grew less than forecast in March

WTI for May delivery declined as much as 60 cents to $96.54 a barrel in electronic trading on the New York Mercantile Exchange on Monday.

Organization of the Petroleum Exporting Countries (OPEC) crude oil output is on track to reach its lowest level since October 2011 as unrest in Libya, pipeline leaks in Nigeria and Iraqi export disruptions weigh on supplies, a Reuters survey has found.

Supply from the OPEC is set to average 30.18 million barrels per day (bpd), down from 30.42 million bpd in February, the survey of shipping data and sources at oil firms, OPEC and consultants found. OPEC’s March output will be the lowest since October 2011 when the group produced 29.81 million bpd.

Russia’s second-largest oil major, Lukoil (MCX:LKOH,LSE:LKOH), purchased 100 percent of fellow oil company Samara-Nafta. Samara-Nafta operates in Ulyanovsk and Samara regions. The company currently extracts around 2.5 million tonnes of oil a year and its reserves are estimated at 85 million tonnes. It also owns rights to conduct exploration and develop more than 60 oil fields in 23 various areas.

Samara-Nafta’s owner, American corporation Hess (NYSE:HES), put the company up for sale in November last year and submission of applications for the offering was closed in mid-March. At least 30 companies entered a bid including Rosneft, Gazprom Neft, Bashneft and Surgutneftegaz. The deal is currently awaiting approval from the Russian Antimonopoly Committee.

TransCanada (TSX:TRP,NYSE:TRP) announced it is looking for companies interested in shipping oil across the country, as it presses ahead with a plan to establish a pipeline from Western Canada to Saint John, New Brunswick.

The company confirmed that a binding “open season” will run from April 15 to June 17. During that time, it is looking for “firm commitments” from companies interested in delivering oil to Montreal, Quebec City and Saint John, New Brunswick.

TransCanada says, if established, the Energy East Pipeline could have the capacity to transport 850,000 barrels of crude oil from Alberta’s oil sands to refineries in the east. The company said the pipeline could eliminate the need to import crude oil to supply the refineries. Pending approval, TransCanada forecast a late-2017 in-service date.

Athabasca Oil (TSX:ATH) announced a significant increase in bitumen contingent resources and light oil reserves at its Hangingstone project.

Tecent company highlights include the reclassification of 51 million barrels of Hangingstone’s probable bitumen reserves to the proved reserve category with contingent bitumen resources also having increased to 10.6 billion barrels, according to a press release. Proved plus probable bitumen reserves increased to an estimated 342 million barrels; and light oil reserves increased to 22 million barrels of oil equivalent (boe) proved of plus probable reserves.

The Hangingstone project area is comprised of 136,000 acres of oil sands leases which, based upon an independent engineering estimate contain 51 million barrels of proved reserves, 66 million barrels of probable reserves and 900 million barrels of contingent resources (best estimate).

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