Trump targets NGLs

By Liz Hampton, U.S. Energy Editor 

Hello Power Up readers! Oil prices are up more than 5% to kick off the week after OPEC+ agreed to keep its output increases for July at the same level as the previous two months. Both contracts had fallen by over 1% last week. Global Brent futures were trading at $65.62 a barrel, up $2.83, while U.S. West Texas Intermediate (WTI) futures were at $63.7 a barrel, up $2.89. U.S. Henry Hub natural gas futures were trading at $2.0885 per million British thermal units, up 3.59%. 

Natural Gas Liquids (NGL) facility is seen at Saudi Aramco's Shaybah oilfield, Saudi Arabia. REUTERS/Ahmed Jadallah

U.S. LPG exports were thrown a curve ball last week when Washington ordered a broad swath of companies to stop shipping goods to China without a license and revoked licenses already granted to some exporters. Butane and ethane, both natural gas liquids used heavily to make petrochemicals, were lumped into this group. 

China imported 230,000 barrels per day of ethane from the U.S. last year, according to the U.S. Energy Information Administration.

Meanwhile, U.S. natural gas liquids exports hit a record high in April, with the U.S. exporting about 2.9 million barrels per day (bpd). Exports to China fell 35% to 619,000 bpd during the month, according to ship tracking firm Kpler, the lowest since November 2023. 

Enterprise Products Partners last week warned that its ethane and butane exports could be hurt by the new requirement that it apply for a license. The company's marine export terminal in Houston loaded 213,000 bpd of ethane in 2024, of which 40% went to China. 

In other news, eight OPEC+ members met online over the weekend, and stuck to its plan of a large 411,000 barrels per day increase for July. The group had already announced plans for the larger increase as a way to punish overproducers. 

Goldman Sachs over the weekend said it expects the group will implement a final 0.41 million barrels per day increase in August. The bank kept its cautious oil price forecast, projecting Brent to average $60 a barrel and WTI to average $56 a barrel through 2025. 

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U.S. shale producer EOG Resources on Friday said it would buy rival Encino Acquisition Partners for $5.6 billion, a move that will bolster its position in the Utica shale region. Encino is majority owned by the Canada Pension Plan Investment Board. The deal will give EOG some 1 billion barrels of undeveloped net resource. 

The U.S. will axe 24 clean energy projects that were issued under the Biden administration that totaled more $3.7 billion, including one at Exxon's refinery in Baytown, Texas. That project was meant to cut carbon emissions by allowing the use of hydrogen instead of natural gas to produce ethylene. 

U.S. crude oil production hit a record high in March, but demand fell, the U.S. Energy Information Administration said on Friday in a monthly report. Crude output totaled 13.488 million barrels per day, but product supplied for oil and petroleum products fell to a 12-month low of 19.950 million bpd. 

The White House is considering a plan to clear the backlog of requests from small refineries for exemptions from biofuel laws, Jarrett Renshaw and Stephanie Kelly reported last week. Under the U.S. Renewable Fuel Standard, refiners are required to blend biofuels, such as ethanol, into their fuel supply or buy credits known as RINs. 

U.S. oil drillers cut the number of rigs operating last week for a fifth week in a row, bringing the total rig count to the lowest since November 2021, energy services firm Baker Hughes said on Friday. The total rig count fell by three to 563. 

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