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Oil Hits Seven-week High on Demand Hopes, War Jitters

A pumpjack brings oil to the surface in the Monterey Shale, California, US April 29, 2013. REUTERS/Lucy Nicholson/File Photo
A pumpjack brings oil to the surface in the Monterey Shale, California, US April 29, 2013. REUTERS/Lucy Nicholson/File Photo
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Oil Hits Seven-week High on Demand Hopes, War Jitters

A pumpjack brings oil to the surface in the Monterey Shale, California, US April 29, 2013. REUTERS/Lucy Nicholson/File Photo
A pumpjack brings oil to the surface in the Monterey Shale, California, US April 29, 2013. REUTERS/Lucy Nicholson/File Photo

Oil prices hit seven-week highs on Wednesday as summer demand optimism and concerns over escalating conflicts offset an industry report that said US crude inventories unexpectedly rose.

Brent crude futures for August, due to expire on Thursday, were up 20 cents to $85.53 a barrel by 1235 GMT, while the more active September contract gained 21 cents to $84.74.

US West Texas Intermediate crude was up 3 cents to $81.60 per barrel.

"The current snapshot presents an underwhelming picture but there are green shoots that indicate a more optimistic outlook," said Tamas Varga of oil broker PVM, Reuters reported.

The Brent price being $8 over the lows hit in early June "shows genuine optimism that the global oil balance will eventually tighten," Varga added.

Both benchmarks, having recovered strongly in the last two weeks, gained more than $1 in the previous session to seven-week peaks after a Ukrainian drone strike led to an oil terminal fire at a major Russian port.

In the Middle East, Israeli Foreign Minister Israel Katz warned of a possible "all out war" with Lebanon's Hezbollah, even as the US attempted to avoid a broader conflict between Israel and the Iran-backed group.

An escalating war risks supply disruption in the key oil-producing region.

"Any cooling off between both parties seems difficult in the near term, which may keep oil prices well-supported as market participants shrug off pockets of weakness on the economic front, from weaker-than-expected US retail sales to mixed sets of data out of China this week," said Yeap Jun Rong, a market strategist at IG in Singapore.

China data this week showed May industrial output lagged expectations, but retail sales, a gauge of consumption, marked the quickest growth since February.

Meanwhile, US crude stocks rose by 2.264 million barrels in the week ended June 14, market sources said on Tuesday, citing American Petroleum Institute figures. Analysts polled by Reuters had expected a 2.2 million barrel draw in crude stocks.

However, gasoline inventories fell by 1.077 million barrels, while distillates rose by 538,000 barrels, the sources said, speaking on condition of anonymity.

Official stocks data from the US Energy Information Administration is due at 1500 GMT.

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Aramco, Sempra Announce Deal for Royalties of Equity and Purchase of LNG from Port Arthur

Saudi Aramco and Sempra announced that their respective subsidiaries have executed a non-binding heads of agreement (HoA) for a 20-year sale and purchase agreement (SPA) for liquefied natural gas (LNG) offtake of 5.0 million tons per annum (Mtpa) from the Port Arthur LNG Phase 2 expansion project. (SPA)
Saudi Aramco and Sempra announced that their respective subsidiaries have executed a non-binding heads of agreement (HoA) for a 20-year sale and purchase agreement (SPA) for liquefied natural gas (LNG) offtake of 5.0 million tons per annum (Mtpa) from the Port Arthur LNG Phase 2 expansion project. (SPA)
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Aramco, Sempra Announce Deal for Royalties of Equity and Purchase of LNG from Port Arthur

Saudi Aramco and Sempra announced that their respective subsidiaries have executed a non-binding heads of agreement (HoA) for a 20-year sale and purchase agreement (SPA) for liquefied natural gas (LNG) offtake of 5.0 million tons per annum (Mtpa) from the Port Arthur LNG Phase 2 expansion project. (SPA)
Saudi Aramco and Sempra announced that their respective subsidiaries have executed a non-binding heads of agreement (HoA) for a 20-year sale and purchase agreement (SPA) for liquefied natural gas (LNG) offtake of 5.0 million tons per annum (Mtpa) from the Port Arthur LNG Phase 2 expansion project. (SPA)

Saudi Aramco, one of the world's leading integrated energy and chemicals companies, and Sempra, one of North America's leading energy infrastructure companies, announced on Wednesday that their respective subsidiaries have executed a non-binding heads of agreement (HoA) for a 20-year sale and purchase agreement (SPA) for liquefied natural gas (LNG) offtake of 5.0 million tons per annum (Mtpa) from the Port Arthur LNG Phase 2 expansion project.

The HoA further contemplates Aramco's 25% participation in the project-level equity of Phase 2.

The parties expect to execute a binding LNG SPA and definitive equity agreements with terms substantially equivalent to those in the HoA, with the SPA and equity agreements subject to several conditions.

“We are excited to take this next step into the LNG sector,” said Aramco upstream president Nasir Al-Naimi. “As a potential strategic partner in the Port Arthur LNG Phase 2 project, Aramco is well-placed to grow its gas portfolio with the aim of meeting the world's growing need for lower-carbon sources of energy. This agreement is a major step in Aramco's strategy to become a leading global LNG player.”

Sempra chairman and chief executive Jeffrey Martin said: "The planned expansion of Port Arthur LNG would help facilitate the broad distribution of US natural gas across global energy markets. By expanding the Port Arthur LNG facility's global reach, we can improve energy security while providing a lower-carbon alternative to coal for electricity production."

Port Arthur LNG is a natural gas liquefaction and export terminal in southeast Texas with direct access to the Gulf of Mexico. The Port Arthur LNG Phase 1 project is currently under construction and consists of trains 1 and 2, as well as two LNG storage tanks and associated facilities.

The Port Arthur LNG Phase 2 project is a competitively positioned expansion of the site to include the addition of up to two trains capable of producing up to 13 million tons yearly.

At the heart of Sempra Infrastructure's flagship Port Arthur Energy Hub, Port Arthur LNG has the potential to expand to a total of eight trains, which would position it as one of the world's most significant LNG export facilities. The facility is expected to play an important role in enhancing global energy security and resilience.

Moreover, Sempra Infrastructure is actively advancing infrastructure projects within the Port Arthur Energy Hub, addressing the rising demand for lower-carbon fuels and reducing carbon intensity. This includes the proposed Titan Carbon Sequestration project.