Energy and Natural Resources Market Radar (June 9, 2014)

June 9, 2014

3 minute read

The end of Mexico’s 75-year state energy monopoly is creating opportunities for investors. Alfa SAB, a conglomerate with a stake in U.S. shale, increased its stake in Pacific Rubiales Corp, the Bogota-based company, to 12.3 percent from a previously disclosed 10 percent. That makes it the second-largest shareholder in Latin America’s biggest non-state-owned oil company.
Goodrich Petroleum successfully completed the highly anticipated C.H. Lewis well in Amite County, Mississippi, and achieved a peak 24-hour average production rate of 1,450 barrels of oil equivalent per day. The company is expected to report results at the Nunnery well in the same county this month.

In U.S. natural gas, the prompt contract rose by about 16 cents or 3.5 percent from the prior week, as the near-term weather forecast turned warmer than normal. Conversely, the weekly storage numbers continue to imply a narrowing deficit compared with last year.

Governor Francisco Perez, of Argentina’s Mendoza Province, seized half of YPF S.A.’s Chachahuen exploration field, Clarin newspaper reports, citing Mendoza daily Los Andes. YPF shared the field with Vila Manzano group. Mendoza may offer the area to another company in auction.
U.S. hot rolled coil (HRC) steel prices fall for a third straight week. The CRU Weekly Price assessment shows US HRC at $677 per short ton, down $6 per ton from last week, on a rise in supply from increased production and imports. This follows a fall of $2 per ton last week.
Copper fell 2.4 percent this week as China began an investigation into the use of copper collateral for multiple loans, prompting fears of inventory release into the market.

Meeting the world’s energy supply needs by 2035 will require $40 trillion of investment, as demand grows and production and processing facilities have to be replaced, the International Energy Agency said. More than half of that amount will be needed to compensate for declining output at mature oil and gas fields, and the remainder for finding new supplies to meet rising demand, the Paris-based agency said in a report this week.
BHP Billiton Ltd., the world’s largest mining company, flagged more investment in energy and fertilizer, while scaling down spending on steelmaking raw materials as China’s economy switches gears toward consumption rather than fixed asset investment.
China is working on how to cap its greenhouse gas emissions for the first time, an effort that would spur a worldwide effort to hold back climate change. The world’s biggest producer of fossil fuel emissions has been studying for more than a year how and when it might be able to make its pollution levels peak and hopes to act as soon as possible, said Xie Zhenhua, China’s lead envoy to the United Nations global warming talks. “China will behave in a very responsible way for Chinese people and the world and we will try our utmost to peak as early as possible,” Xie said yesterday in an interview at the talks in Bonn with Bloomberg and other news organizations. “We are working very hard and trying to find a balanced equilibrium between environmental protection and economic development.”

China's Qingdao port halted shipments of aluminum and copper due to an investigation by authorities, causing concern among bankers and trade houses financing the metals, with approximately 80,000 tons of aluminum ($150 million current market value) and 20,000 tons of copper (about $140 million) claimed to be missing from warehouses. The port of Qingdao is China's third-largest foreign trade port and the world's seventh-largest port.