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Oil Stabilizes As OPEC Ponders Deeper Cuts

13 May 2017   Prices

Oil prices appear to have recovered from last week’s flash crash following a significant draw in U.S. inventories and bullish rumors surrounding the OPEC deal. (Click to enlarge) (Click to enlarge) (Click to enlarge) (Click to enlarge) (Click to enlarge) (Click to enlarge) Friday, May 12, 2017 Oil prices showed some life this week after an encouraging drawdown in inventories in the U.S., sparking large gains on Wednesday. Crude stocks dropped by a sizable 5.3 million barrels last week, and importantly, there was not a corresponding uptick in gasoline inventories, confirming a significant reduction in storage. WTI and Brent jumped up from their six-month lows. OPEC ponders deeper cuts. We are roughly two weeks away from OPEC’s official meeting in Vienna, which is expected to result in a six-month extension of the production cuts. But now top OPEC officials are wondering if it will be enough. OPEC’s monthly report […]

Oil Prices Slip As The U.S. Rig Count Continues To Climb

13 May 2017   Prices

The number of active oil and gas rigs in the United States rose by 8 on Friday, according to oilfield services provider Baker Hughes . The total oil and gas rig count in the U.S. now stands at 885 rigs, or 479 above the count a year ago. Oil rigs increased by 9, while gas rigs fell by 1. At 12:16pm EST, WTI was trading down 0.23 percent for the day at $47.72, while Brent Crude traded down just 0.04 percent at $50.75—picking up about a $1.50 per barrel from last Friday after the Energy Information Administration (EIA) reported earlier in the week a decrease in both crude oil and gasoline inventories, and after reports that OPEC had reached a consensus on a possible extension of its production cut deal, which may be extended into 2018 . This optimism was offset to some degree by reports that Libya—which is […]

Does This Oil Price Rally Have Legs?

13 May 2017   Prices

With oil prices spiking nearly 10 percent from last Friday’s sudden, capitulation “flash crash” which was perhaps driven by Pierre Andurand liquidating his entire long book, there has been a scramble by analysts to “fit” the narrative to the price action and the sudden change in momentum, most notably by Goldman, which continues to pump one after another bullish crude note, we suppose because Goldman’s prop trading desk still has some oil left to sell to clients. However, is the recent bounce an indication of a sustainable direction shift, facilitated by another even more acute round of OPEC jawboning even as shale production continues to grow, or just a dead cat bounce? According to Bloomberg FX commentator Mark Cudmore, the answer is the latter as he explains in his latest overnight “macro view” note. Traders’ New Love for Oil Isn’t Basis for Marriage: Macro View What a difference a […]

In Fight Against U.S. Shale Oil, OPEC Risks Lower for Longer

13 May 2017   OPEC

Saudi Arabia signals curbs will be rolled into next year Oil market attention shifts to potential oversupply in 2018 When Khalid Al-Falih arrived at Davos in late January, the Saudi oil minister was exultant. The output cuts he’d painstakingly arranged with fellow OPEC states and Russia were working so well, he said, they could probably be phased out by June. Almost five months later, U.S. production is rising faster than anyone predicted and his plan has been shredded. In a series of phone calls and WhatsApp messages late last week, Al-Falih told his fellow ministers more was needed, according to people briefed on the talks, asking not to be named because the conversations are private. In their battle to revive the global oil market, OPEC and its allies are digging in for a long war of attrition against shale. “OPEC is now recognizing they need longer — and potentially […]

OPEC Should Give Up on Production Cuts

13 May 2017   OPEC

The Organization of the Petroleum Exporting Countries deserves a pretty good grade, arguably a B-plus, for its effort to prop up the world oil market. That may not be reflected in prices, which are barely 4% higher than last September, just before the coalition laid the groundwork for its deal to reduce production. Instead, they get points for denting the inventory glut weighing on the market and for keeping cheating to a…

Some OPEC Members Seek to Broaden Effort to Cut Oil Output

13 May 2017   OPEC

Six months after restricting their oil output in an effort to raise global crude prices, some members of OPEC are pushing for a broader effort to reduce petroleum production, say people familiar with the matter. Cartel members in recent weeks have suggested either making deeper production cuts or bringing new participants into the effort to cut oil exports, these people said. Members of the Organization of the Petroleum…

More oil expected from Kazakhstan

13 May 2017   Kazakhstan

Kazakhstan could add at least another quarter million barrels of oil per day to the market through new field development, a country assessment found. The U.S. Energy Information Administration updated its country profile for Kazakhstan, noting the landlocked Central Asian country last year reached major milestones with oilfield developments. In October, the giant Kashagan field resumed production following several years of delays. At its peak, Kashagan should produce at least 370,000 barrels per day. In July, a consortium managing the Tengiz reservoir “decided to proceed with expansion plans that should increase liquids production at the Tengiz project by about 260,000 bpd beginning in 2022,” the EIA’s assessment read. Kazakhstan is one of the 12 producers outside of the Organization of Petroleum Exporting Countries that agreed […]

Funding for giant Israeli gas field to be tapped

13 May 2017   Israel

Parties to the development of the Leviathan natural gas field off the coast of Israel said they’re ready to tap into a loan to facilitate momentum. Delek Group, alongside its partners at Avner Oil Exploration Ltd., sanctioned the giant Leviathan gas field in February and secured a loan agreement with dozens of banks, led by J.P. Morgan and HSBC, for about $1.75 billion to finance the project. In a statement Friday, Delek said the partnership aims to make its first withdrawal from the account in the coming days. “The first withdrawal funds shall be used, inter alia, for payment of the payment demands issued by the operator to the partners in the Leviathan project, as well as for the […]

Oman Cut to Junk by S&P as Crude Oil Decline Imperils Finances

13 May 2017   Oman

Credit rating lowered to one notch below investment grade S&P says Oman can’t mitigate risk of volatile export revenue Oman was cut to junk by S&P Global Ratings, which said a drop in crude could hamper exports from the largest Arab oil producer outside OPEC and jeopardize its finances. S&P lowered the Gulf state’s sovereign debt long-term rating to BB+, one level below investment grade, from BBB- and changed the outlook to negative, the New York-based firm said in a statement Friday. “The negative outlook reflects the potential for Oman’s income level to weaken and for its fiscal and external positions to deteriorate,” S&P said in a statement . The slump in oil prices since 2014 has put pressure on the finances of the sultanate, forcing it to join other Gulf countries in tapping international debt markets to plug budget shortfalls. Oman, which has the third-lowest investment grade rating […]

U.S. drillers add oil rigs for 17th week in a row: Baker Hughes

13 May 2017   Shale Oil, USA

U.S. energy firms added oil rigs for a 17th week in a row, extending a 12-month drilling recovery that is expected to help boost crude production in the United States to a record high next year. Drillers added nine oil rigs in the week to May 12, bringing the total count up to 712, the most April 2015, energy services firm Baker Hughes Inc said on Friday. While that is more than double the same week a year ago when there were only 318 active oil rigs, the pace of those additions has declined with the total over the past four weeks falling to the lowest since March. U.S. crude output was expected to rise to an average of 9.3 million barrels per day (bpd) in 2017 […]

US oil rig count up 9 to 712 in week ended Friday: Baker Hughes

13 May 2017   Shale Oil, USA

The US oil rig count rose by 9 to 712 in the week ending Friday, up from 318 a year ago, Baker Hughes said in its weekly report.
The US natural gas rig count fell by one to 172, up from 87 rigs a year ago.  The total US oil and gas rig count was 885 for the week, eight higher than a week ago, and 479 rigs higher than a year ago.  There was one miscellaneous rig working this week, flat from last week and flat from a year ago.  Horizontal rigs operating in the US rose by eight week on week to 742, and was up from 315 a year ago. The vertical rig count rose by one on the week to 77, but was 24 higher than a year ago. Directional rigs totaled 66, down one from a week ago and 28 higher than a year ago.  There were 21 US offshore rigs operational this week, up two from last week and down one from a year ago.  Canada’s rig count fell by two to end the week at 80, but was up from 43 rigs operating the same week a year ago. Canada’s oil rig count rose by two on the week to 29, while the gas rig total fell by four to 51.

US coal train loadings continue to drop, reach 2017 low volumes: railroads

13 May 2017   Coal, USA

Sustained declines in coal train loadings from the Powder River Basin have pushed down total US volumes to a 2017-low weekly total, Surface Transportation Board filings showed. Data filed by the four major US railroads — BSNF, CSX, Norfolk Southern and Union Pacific — for the week ending May 5 showed nationwide coal loadings averaged 82.4 trains/d, down from 89.2 trains/d the previous week. US loadings were last lower the final week of 2016 at 81.1 trains/d. PRB coal loadings averaged 44.5 trains/d, down from 46.7 trains/d the previous week. PRB counts have slipped for three straight weeks and were last lower 49 weeks ago on May 27 last year at 41.4 trains/d. Central Appalachia loadings fell for the first time in five weeks as volumes dipped to 15.2 trains/d from a year-high 17.4 trains/d the prior week. Northern Appalachia coal loadings slipped to 9.5 trains/d from 9.7 trains/d, […]

Who Will Lead The Transportation Transformation?

13 May 2017   Electric Cars

A moment of truth is at hand, not just for Tesla, not just for electric vehicles, but for transport generally. It is by no means clear that Tesla will ever earn any money, real money, the kind of money that makes your market cap worthy of industry leadership. Earnings matter and the time has come for Tesla to produce the goods , not just the Model 3. (Click to enlarge) The good news is that even if Tesla were to go out of business (which is neither a prophecy nor a preference) EVs are going to replace internal combustion engine autos; the only question is when? I like to think it will happen by 2030, hence: 0 to 60 in 15 Years (where 60 is percent-market-share). This claim is not as ridiculous as it sounded a year or so ago. Indeed, Bloomberg New Energy Finance just published the illuminating […]

Oil Rallies Higher, Undeterred By ‘Surprise Surge’ In U.S. Production

12 May 2017   Prices

Oil is rallying for a second consecutive day, with continued positive momentum from yesterday’s weekly inventory report, in combination with rising hopes of deeper and/or longer production cut commitments by OPEC. (OPEC cuts are starting to feel like QE at the turn of the decade: omnipresent). Hark, here are five things to consider in oil markets today. 1) Yesterday we discussed the impending restart to export flows of Nigeria’s Forcados crude, as an export pipeline gets back up and running after militant attacks last year. Nigeria has suffered outages to a number of key grades such as Qua Iboe, Brass River and Bonny Light in the last year or so, but as our ClipperData illustrate below, we are seeing flows of most of these grades getting back up to speed. The loss of the Forcados crude stream – which averaged ~200,000 bpd of exports in 2015, dropping to ~50,000 […]

Oil prices edge up in anticipation of extended crude output cut

12 May 2017   Prices

A pump jack operates at a well site leased by Devon Energy Production Company near Guthrie, Oklahoma September 15, 2015. Oil prices edged up on Tuesday, driven by anticipation that an OPEC-led pledge to cut production would be extended beyond the first half of the year and into 2018, although overall high supply still weighed on markets. Brent crude futures, the international benchmark for oil prices, were at $49.60 per barrel at 0045 GMT on Tuesday, up 26 cents, or 0.5 percent, from their last close. U.S. West Texas Intermediate (WTI) crude oil futures were trading at $46.66 per barrel, up 23 cents, or 0.5 percent from the day before. The higher prices were a result of top exporter and de facto OPEC leader Saudi Arabia saying on Monday it would “do whatever it takes” to rebalance a market that has been dogged by oversupply for over two years, […]

3 Reasons Natural Gas Is Heading A Lot Higher

12 May 2017   Prices

Commodity pricing is a complex thing, with a whole host of things affecting the price at which buyers and sellers transact, but almost all of those things fall into one of three categories; the fundamental, the political and the technical. These three things are often in conflict, but when they all point to the same thing a major, sustained move is coming. That is the case right now with U.S. natural gas and the resulting move could easily push prices to levels not seen for years. Supply & Demand Fundamentals Commodity specific fundamental factors such as supply and demand are the most influential thing on price. The basic economic theory of pricing tells us that, but it also suggests that the market will automatically adjust to changing conditions. When demand outstrips supply, for example, prices rise which slows demand and the higher price makes additional marginal production profitable, increasing […]

Natural Gas Settles Higher on Stockpile Data

12 May 2017   Prices

Natural gas prices jumped to a three-month high, breaking from a recent pattern of tight trading after government data showed a smaller-than-expected storage addition for last week. The U.S. Energy Information Administration said natural-gas stockpiles grew by 45 billion cubic feet in the week ended Friday, compared with the 54 bcf expected by forecasters surveyed by The Wall Street Journal. The report is a widely watched measure of…

Oil Price Volatility Spikes Amid OPEC’s Charm Offensive

12 May 2017   OPEC

“Well he would say that, wouldn’t he.” Mandy Rice Davies at the time of the Profumo scandal, 1963. OPEC has mounted yet another charm offensive as a result of last week’s roughly 5% crash in the global price of crude. As was widely reported by the wire services, the headline from Saudi Oil Minister Khalid al-Falih to the effect that the Saudis would do whatever it takes to end the global supply glut of crude hit the world press on 8 May and gave markets a short-term boost. Al-Falih was quoted as saying that global oil markets had improved from 2016 lows when crude prices fell below the $30 per barrel level for a reason. “I believe the worst is now behind us with multiple leading indicators showing that supply-demand balances are in deficit and the market is moving towards rebalancing. We should expect healthier markets going forward.” He […]

In Fight Against U.S. Shale Oil, OPEC Risks Lower for Longer

12 May 2017   OPEC, Shale Oil

Saudi Arabia signals curbs will be rolled into next year Oil market attention shifts to potential oversupply in 2018 When Khalid Al-Falih arrived at Davos in late January, the Saudi oil minister was exultant. The output cuts he’d painstakingly arranged with fellow OPEC states and Russia were working so well, he said, they could probably be phased out by June. Almost five months later, U.S. production is rising faster than anyone predicted and his plan has been shredded. In a series of phone calls and WhatsApp messages late last week, Al-Falih told his fellow ministers more was needed, according to people briefed on the talks, asking not to be named because the conversations are private. In their battle to revive the global oil market, OPEC and its allies are digging in for a long war of attrition against shale. “OPEC is now recognizing they need longer — and potentially […]

Oil Edges Higher As OPEC Reaches Consensus On Cut Extension

12 May 2017   OPEC, Prices

OPEC members and their partners in the oil production cut agreements from last November and December have reached a consensus to extend the deal until the end of 2017, the oil ministers of Iraq and Algeria said at a joint news conference. Jabber al-Luaibi and Noureddine Boutarfa said the official announcement of the extension will take place at OPEC’s May 25 meeting at its headquarters in Vienna, with the Algerian minister adding that “Algeria and Iraq maintain a united stand for the next cuts.” No mention was made about deepening the cut, as some analysts have suggested might be necessary. The initial agreement envisaged OPEC taking off 1.2 million bpd from global supply with Russia and 10 other non-members cutting another 600,000 bpd. Two OPEC members are exempt from the cut—Nigeria and Libya— and a third member, Iran, was allowed to boost output to a specified level. Earlier this […]

Should OPEC Abandon Its Current Oil Price Strategy?

12 May 2017   OPEC, Prices

If OPEC was a person, you’d recommend either therapy or that it cut its losses and start licking its wounds. As Bill Baruch, chief market strategist at iiTRADER told marketwatch.com , “OPEC threw the kitchen sink at the market, trying different statements that ranged from extending cuts past the end of 2017 and deepening cuts – nothing worked.” Prices have continued to slide, dropping to the lowest yet in 2017. Brent crude dropped beneath $50 pb during the week, to $48.79. WTI sank further, to $45.90. It’s largely due to the increase of over 10 percent in U.S. output since 2016Q3; stocks are at 527.8m barrels which is at the higher end of expectations for this time of year. However, shale isn’t the sole source of pain – Libya has also achieved its highest level of production since 2014 at almost 800,000 pbd, thanks to two fields – the […]

OPEC Raises Forecast for Rival Oil Output

12 May 2017   Oil Supply, OPEC

OPEC on Thursday boosted its forecast for 2017 oil-production growth from countries outside the cartel by more than 60%. It is the latest evidence that surging U.S. production is dragging down efforts by the Organization of the Petroleum Exporting Countries to raise oil prices by limiting output. In its monthly report, OPEC raised its estimate of 2017 production growth from non-OPEC producers to 950,000 barrels a day over last year’s…

Oil Producers in Consensus to Extend Cuts, OPEC Members Say

12 May 2017   OPEC

Oil cuts to be extended by six months: Iraq, Algeria ministers OPEC to make formal decision at May 25 meeting in Vienna OPEC and other oil producers taking part in output cuts have reached a consensus to extend the limits until the end of the year, oil ministers for two of the group’s members said. All members of the Organization of Petroleum Exporting Countries support an extension of the cuts for a second six-month period, as do non-member nations that joined last year’s accord to curtail a global oversupply of crude, Iraq’s Jabbar Al-Luaibi and Algeria’s Noureddine Boutarfa said Thursday in a joint news conference in Baghdad. “The decision to decrease output will be for six months, and Algeria and Iraq maintain a united stand for the next cuts,” said Boutarfa, who hosted the OPEC meeting in September 2016 where the cuts were first agreed in principle. Iraq is […]

OPEC Raises 2017 Estimate for Supply Growth From Rivals by 64%

12 May 2017   Oil Supply, OPEC

Non-OPEC to grow 950,000 barrels a day in 2017, led by U.S. Outlook for non-OPEC now 4 times higher than at outset of cuts OPEC boosted estimates for growth in rival supplies by 64 percent as the U.S. oil industry’s recovery accelerates, threatening the group’s attempts to clear a surplus. Production from outside the Organization of Petroleum Exporting Countries will increase by 950,000 barrels a day this year, OPEC said in a report, revising its forecast up by about 370,000. The projection is four times higher than in November, when the group announced a production cut to try and re-balance oversupplied world markets. Non-OPEC nations pump about 60 percent of the world’s oil. Oil prices sank to a five-month low below $44 a barrel in New York last week on concern that the cuts by OPEC and 11 partners, including Russia, aren’t clearing the glut and that more supply […]

OPEC sees much higher oil supply from rivals in 2017

12 May 2017   OPEC

OPEC on Thursday sharply raised its forecast for oil supply from non-member countries in 2017 as higher prices encourage U.S. shale drillers to pump more, hampering OPEC efforts to clear a glut and support prices by cutting its output. In a monthly report, the Organization of the Petroleum Exporting Countries revised up its estimate of oil supply growth from producers outside the group this year to 950,000 barrels per day (bpd), up from a previous forecast of 580,000 bpd. OPEC is curbing its output by about 1.2 million barrels per day (bpd) from Jan. 1 for six months, the first reduction in eight years, to clear excess supply. Russia and 10 other non-OPEC producers agreed to cut half as much. The report will add to a debate about the effectiveness of the […]

Exclusive: IEA to review oil demand outlook after China, India signal auto policy shifts

The International Energy Agency will review its electric vehicle (EV) use and oil demand forecasts after India and China recently signaled new policies in favor of electric cars and vehicles using other alternatives to gasoline. In its current policies scenario, last updated in November 2016, the IEA expects vehicle demand for oil to rise until 2040. But after the world’s two fastest growing oil markets, China and India, indicated they are likely to take radical turns away from gasoline, the IEA says it will need to review its forecasts. “We will therefore revisit our analysis of future EV market penetration on the basis of these new announcements for the next World Energy Outlook 2017, to be released on 14 November,” an IEA spokesman told Reuters. In […]

Saudi Reports Quarterly Budget Deficit of 26.2 Billion Riyals

12 May 2017   Saudi Arabia

First quarter revenue rises 72% to 144 billion riyals Revenue from oil more than doubles, non-oil revenue up 1.3% Saudi Arabia reported a first quarter budget deficit of 26.2 billion riyals ($7 billion) as oil revenue surged, the Ministry of Finance said. Revenue for the three months to March rose 72 percent from a year earlier to 144.1 billion riyals, while expenses fell 2.7 percent to 170 billion riyals, the ministry said in a report on Thursday. Oil revenue more than doubled to 112 billion riyals from 52 billion riyals, while non-oil revenue was 1.3 percent higher at 32.1 billion riyals. The Saudi government is shifting to quarterly statements on the economy — having typically reported only annually — to boost transparency as it implements its long-term blueprint for life after oil. Repairing public finances after the drop in crude prices since 2014 is crucial to the plan, which […]

U.S. Shale Spending Dwarfs Competition: Grows 10 Times Faster

12 May 2017   Shale Oil

While OPEC has just two weeks left until the May 25th meeting to decide on an extension of its production cuts, U.S. shale is back to drilling and planning capital spending increases this year at a pace that is ten times faster than the rise in international oil companies’ budgets. Emerging from the oil price rout with leaner operations and a meaner cost attitude, U.S. shale has started taking advantage of the increase in oil prices following the production cut deal that OPEC and 11 non-OPEC nations led by Russia struck at end-November. U.S. production started growing from the recent lows, and drillers have become more confident in their plans, with WTI prices hovering around US$50 for most of the first quarter this year. Drillers in North America plan a combined capital expenditure of US$84 billion this year, an increase of 32 percent compared to last year, according to […]

Oil bulls draw hope from fall in U.S. crude stocks:

12 May 2017   Oil Supply, Prices

U.S. crude stocks have shown a sustained decline over the last five weeks, giving oil bulls new inspiration that the market is rebalancing. Commercial crude inventories have fallen by 13 million barrels since the end of March, according to data from the U.S. Energy Information Administration ( tmsnrt.rs/2r39psy ). Crude stocks generally follow an annual cycle driven by seasonal variations in fuel consumption and the maintenance schedule for U.S. refineries. Stocks typically rise during the first four months of the year, reaching an annual peak in early May, before falling steadily through the middle of September. During the decade between 2007 and 2016, crude stocks increased by an average of 45 million barrels between the start of the year and the annual peak on […]

Former OPEC Member’s Byzantine Rules Shooing Away Explorers

12 May 2017   Indonesia

Only 20% onshore rigs in Indonesia operating vs 60% in 2012 Nation may not see major oil, gas investment: Drilling group Red tape, rising costs and declining crude prices are throttling exploration in Indonesia, the former OPEC member that now produces less oil than it uses. Only 20 percent of the 287 onshore rigs operated by contractors for local and foreign explorers are at work, compared with 60 percent in 2012, according to Wargono Soenarko, chairman of the Indonesian Oil, Gas and Geothermal Drilling Contractors. Four out of six offshore rigs are operational, he said in an interview. The decline in drilling reflects uncertainty over regulation, a complicated permits system as well as high production costs that have deterred investments for new exploration, Soenarko said. It’s a challenge the government needs to tackle for success in its plan to overhaul the nation’s energy policy and lure as much as […]

Trump’s climate stance looms over Arctic meeting

12 May 2017   Arctic, Climate

U.S. Secretary of State Rex Tillerson will host foreign ministers from Arctic nations at a summit in Alaska on Thursday, where President Donald Trump’s reluctance to fight climate change will likely cast a shadow over talks. The Arctic Council, which includes the United States, Russia, Canada and five other countries, meets every two years to tackle problems in the region, which is warming at a faster pace than any other part of the world. Unlike former President Barack Obama, Trump has expressed doubts about whether human activity has a significant role in climate change, and is mulling whether to pull the United States out of a global pact to fight it. He is expected to decide whether Washington will leave the 2015 Paris […]

Natural gas has displaced coal in the Northeast’s generation mix over the past 10 years

12 May 2017   Climate, Coal, Shale Gas

Source: U.S. Energy Information Administration, Power Plant Operations Report The generation fuel mix of electricity in the Northeast Census division of the United States has shifted dramatically over the past 10 years. In the nine Northeast states, natural gas nearly doubled its share of the region’s total generation to 41% in 2016, up from 23% in 2006. Coal-fired generation fell from 31% to 11% of generation over the same period. Nuclear-powered generation as a share of total generation remained relatively constant near 34%. Despite more than doubling over the same period, the share of nonhydro renewables remains relatively small. Overall, total generation in the region declined by 3% between 2006 and 2016. Increased access to low-cost natural gas from the Marcellus Shale and other regional shale plays has driven the switch away from coal in the Northeast United States. Environmental policies at the federal and regional level, such as […]

Democratic senators snubbed with Atlantic energy move

12 May 2017   Offshore

A move to open up parts of the Atlantic to oil and gas activity by the Trump administration went against regional interests, a letter shows. The U.S. Interior Department said it would reassess permits denied to six companies looking to conduct seismic surveys in the Atlantic Ocean. Usually seen as a precursor to oil and gas drilling, Interior Secretary Ryan Zinke said it could advance other technologies as well. “Seismic surveying helps a variety of federal and state partners better understand our nation’s offshore areas, including locating offshore hazards, siting of wind turbines, as well as offshore energy development,” he said in a statement . The Interior Department said seismic data for parts of the Atlantic […]

Oil prices edge up in anticipation of extended crude output cut

11 May 2017   Prices

A pump jack operates at a well site leased by Devon Energy Production Company near Guthrie, Oklahoma September 15, 2015. Oil prices edged up on Tuesday, driven by anticipation that an OPEC-led pledge to cut production would be extended beyond the first half of the year and into 2018, although overall high supply still weighed on markets. Brent crude futures, the international benchmark for oil prices, were at $49.60 per barrel at 0045 GMT on Tuesday, up 26 cents, or 0.5 percent, from their last close. U.S. West Texas Intermediate (WTI) crude oil futures were trading at $46.66 per barrel, up 23 cents, or 0.5 percent from the day before. The higher prices were a result of top exporter and de facto OPEC leader Saudi Arabia saying on Monday it would “do whatever it takes” to rebalance a market that has been dogged by oversupply for over two years, […]

Oil Prices Jump On Bullish Inventory Data, Saudi Export Cuts

11 May 2017   Prices

After yesterday’s monthly EIA report, and tomorrow’s monthly OPEC report, the weekly EIA inventory report acts as the filling in this energy data sandwich. While have to wait until next Tuesday (16th) to get the IEA’s monthly offering, hark, here are five things to consider in oil markets today: 1) Saudi Arabia’s oil minister, Khalid Al-Falih is having his Mario Draghi moment, committing to do ‘whatever it takes’ to rebalance the crude market, and this effort is being reflected through in Saudi’s exports for April, which have dropped considerably versus March. But as one producer cuts exports, another is boosting them, such is the undulating nature of the global oil market – and of OPEC itself. Hence, Nigeria is preparing to restart the Trans Forcados export pipeline, after it being out of commission for much of the last year. The pipeline was initially attacked by militants last February, and […]

IEA Sees Oil Market Supply Deficit Deepen Significantly This Year

11 May 2017   Prices

Global oil demand will exceed supply in the second quarter, and even more so until the end of the year, if OPEC extends the production cuts, according to Neil Atkinson, head of oil analysis at the International Energy Agency (IEA). “It is starting to become clear that if the objective of the OPEC cuts was to flip the market from surplus into deficit that is now slowly beginning to happen,” Atkinson said at the Platts Crude Oil Summit in London on Wednesday, as quoted by MarketWatch . The market is largely expecting OPEC to extend its production cuts until the end of this year, and Saudi Oil Minister Khalid al-Falih has even hinted at extending the deal into early 2018, citing producers’ resolve to do ‘whatever it takes’ to rebalance the market. The IEA has been optimistic that the balance will be achieved. As early as its March Oil […]

Why Goldman Thinks You Should Go Long On Oil

11 May 2017   Prices

As pessimism sweeps over the oil market, a few prominent voices are unbowed, arguing that the market is well on its way towards balance. Goldman Sachs’ head of commodities Jeff Currie said at an S&P Global Platts Conference in London this week that investors should probably be going long on crude oil because the market is already in a supply deficit. He pointed to the futures market, where the curve could be headed into backwardation – a situation in which near-term oil futures trade at a premium to contracts further out. That structure points to concerns about a deficit in the short run, which is why front month contracts would trade at a higher price than deliveries six or twelve months away. But the backwardation is also a symptom of fears over long-term oil prices. Goldman Sachs has consistently argued that crude prices could remain relatively low for years […]

For Some, There’s Never Been a Better Time to Buy Oil

11 May 2017   Prices

Decline in fuel inventories is accelerating, says Jeff Currie Supply deficit to expand even more if OPEC extends cuts: IEA Oil is trading near $50 again, OPEC seems to be losing its ability to influence prices and a wave of new supply is hitting the market from Texas to Libya . For some, there’s never been a better time to buy. Despite last week’s selloff, the global oil market is rebalancing rapidly, said Jeffrey Currie, head of commodities research at Goldman Sachs Group Inc. If the Organization of Petroleum Exporting Countries extends its cuts into the second half — as the group has signaled — demand will significantly exceed production, according to the IEA’s Head of Oil Industry and Markets Neil Atkinson. “Do I want to be long oil? The answer is absolutely yes because we are going into a deficit market,” Currie said at the S&P Global Platts […]

Libya, Nigeria, And Iraq – A Triple Threat To The OPEC Deal

11 May 2017   OPEC

Saudi Arabia’s energy minister Khalid al-Falih tried to put the markets at ease by all but confirming that OPEC would extend its production cuts through the end of the year. He tried to talk up oil prices even further by hinting that the group might even agree to a 9-month extension . With the OPEC cuts seemingly assured for little while longer, surely the global surplus is poised to shrink in the relatively near future, pushing up prices? Perhaps. But higher production from within OPEC could once again lead to disappointment. Libya’s National Oil Corporation just announced that it ramped up production to a two-year high of 796,000 barrels per day (bpd). That should definitely be a cause for concern for the oil bulls out there. For much of the first quarter fighting in Libya knocked production offline, briefly taking output below 500,000 bpd. The outages were one of […]

World’s Largest Oil Trader Warns OPEC: Beware For Weak Demand

11 May 2017   OPEC

When it comes to the oil market, the narrative over the past year, ever since OPEC’s first aborted its meeting last April, has been just one: limit crude supply in hopes of rebalancing the oil market, reducing excess inventories, in the process sending the price of oil higher. However, echoing what we have warned for many months, overnight the world’s biggest independent oil trader said OPEC’s efforts could be in vain because the oil producing cartel is seeking to control the wrong thing: it’s not a matter of supply, but global demand which is simply not there. (Click to enlarge) According to Vitol Group, the world’s biggest independent oil trader, demand isn’t expanding as much as expected, and U.S. shale output is growing faster than forecast, Bloomberg reports. As a logical outcome, that’s increasing the burden on the world’s biggest producers, who need to stick to their pledges to […]

Libyan oil production has potential to cross 1 million barrels per day

11 May 2017   Libya

Libya has the technical potential to produce as much as 1.2 million barrels of oil per day, though commercial and security issues interfere, an oil leader said. Mustafa Sanalla, the chairman of the Libyan National Oil Corp. said the current crude oil production rate of 800,000 barrels per day is the best output since 2014. Libya is exempt from an agreement coordinated by the Organization of Petroleum Exporting Countries to balance the market through managed production declines and the chairman said national security issues and contractual disputes with European partners were impeding further growth. “There are no technical reasons for the loss of production,” he said in a statement . “We are able produce an average of 1.1 million […]

Libya’s Oil Output Tops 800,000 Bpd For The First Time Since 2014

11 May 2017   Libya

Libya’s crude oil production has exceeded 800,000 bpd for the first time since 2014, and could average up to 1.2 million bpd for the rest of this year if oil flows freely, National Oil Corporation (NOC) chairman Mustafa Sanalla said on Wednesday in a statement that could fuel more fears of rising global supply. Just yesterday, reports suggested that Libya’s output had reached 780,000 bpd . Furthermore, a commercial dispute between Libya and Germany’s Wintershall had shut in more than 160,000 bpd of output, costing the country nearly US$250 million monthly, Sanalla said. “ We would be producing almost 1 million bpd if it were not for Wintershall’s refusal to implement terms it agreed to in 2010, ” NOC’s chairman noted. According to a Sanalla statement sent to The Wall Street Journal, the dispute between Wintershall and NOC is over liabilities that Wintershall owes to Libya dating back to […]

NYSE executives to woo Aramco IPO in upcoming Saudi visit

11 May 2017   Saudi Arabia

A New York Stock Exchange (NYSE) delegation will visit Saudi Arabia in late May to try to lure a listing by state oil giant Saudi Aramco, industry sources familiar with the matter said. The visit will follow a similar trip to Riyadh last month by London Stock Exchange (LSE) CEO Xavier Rolet, as top exchanges around the world vie to win slices of Aramco’s initial public offering, expected to be the largest in history. Aramco plans to list about 5 percent of its shares, mostly on the Saudi stock market, the Tadawul, and the rest likely on one, two or even three international exchanges, industry sources have previously said. Saudi officials have said the IPO, planned […]

Saudi Reports Quarterly Budget Deficit of 26.2 Billion Riyals

11 May 2017   Saudi Arabia

First quarter revenue rises 72% to 144 billion riyals Revenue from oil more than doubles, non-oil revenue up 1.3% Saudi Arabia reported a first quarter budget deficit of 26.2 billion riyals ($7 billion) as oil revenue surged, the Ministry of Finance said. Revenue for the three months to March rose 72 percent from a year earlier to 144.1 billion riyals, while expenses fell 2.7 percent to 170 billion riyals, the ministry said in a report on Thursday. Oil revenue more than doubled to 112 billion riyals from 52 billion riyals, while non-oil revenue was 1.3 percent higher at 32.1 billion riyals. The Saudi government is shifting to quarterly statements on the economy — having typically reported only annually — to boost transparency as it implements its long-term blueprint for life after oil. Repairing public finances after the drop in crude prices since 2014 is crucial to the plan, which […]

Gas Looting In Mexico Turns Deadly

11 May 2017   Mexico

On May 3, a government investigation into illegal pipeline taps in the central state of Puebla turned violent. Gunmen using local civilians as human shields opened fire on army officials, leaving 10 dead . This Sunday, less than two weeks after the tragic event, a tapped pipeline in the nearby town of Nenetzintla erupted in flames. Image source: Univision noticias Don’t Buy Gold. Buy This Instead… This small company could be one of the biggest winners of the coming gold boom. Backed by a billionaire resource investor and management dream team they could be the next big thing in the space. Click here to find out more (Click to enlarge) Mexico loses an estimated 20,000 barrels of gasoline daily to theft — about three times the daily gas consumption of Washington, DC, according to Public Radio International. That’s a loss of as much as $4 million daily, ranking the […]

Venezuelan crude sales to the U.S. bounced in April

11 May 2017   Venezuela

Venezuelan crude sales to the United States recovered in April compared to previous months to reach 741,000 barrels per day (bpd), its highest level since November, due to a larger supply of diluted and upgraded oil, according to Thomson Reuters trade flows data. Oil upgraders capable of converting Orinoco Belt’s extra heavy crude into exportable grades have increased processing in recent weeks after working partially earlier this year, allowing more exports, sources close to the projects said. Sales of Zuata 30, Venezuela’s lightest upgraded crude, to the United States almost doubled to 178,000 bpd in April compared with the previous month, according to the data. Exports of diluted crude […]

China to toughen efforts in cutting excess capacity

11 May 2017   China

China will carry on phasing out sub-standard production capacity, especially in fields of steel and iron, coal-mining and coal-fired power plants, to keep up with targets set for the year. The decision was made at a State Council executive meeting, which was presided over by Premier Li Keqiang on Wednesday. Li listened to reports on the latest progress of this year’s campaign to cut excess capacities of steel, iron, coal-mining and coal-fueled power generation, as well as the findings of inspections over the drive in concrete and glass sectors. Li said reforms offer the way forward in cutting overcapacity, which is a vital part of the supply-side structural reform. “China takes the initiative to reduce production capacity based on its own national conditions. The efforts are to make the growth model and economic structure shift to new economic drivers,” he added. The government work […]

Trump Administration Revives Nevada Plan as Nuclear Waste Piles Up

11 May 2017   Nuclear, USA

Communities across the country are rallying behind the Trump administration’s push for a nuclear repository in Nevada, hoping their decades-old wait to ship radioactive material could be coming to an end. Yucca Mountain was designated 30 years ago as a final resting place for used fuel and other nuclear waste. Progress has stalled since then amid opposition by Nevada politicians who remain concerned about such a facility’s…

Bid to revoke Obama-era methane rules fails in U.S. Senate

11 May 2017   Climate, USA

In a blow to administration efforts to free the oil and gas industry from Obama-era environmental rules, a Senate resolution to revoke a rule to limit leaks and flaring of methane from oil and gas production on federal lands fell short of votes 49-51 on Wednesday. The surprise vote outcome came after Republican leaders scrambled for weeks to secure the 51 votes necessary to pass the Congressional Review Act resolution, which would revoke the rule and prevent any similar regulations from being introduced. Getting the Trump administration to repeal the Interior Department’s Bureau of Land Management methane rule had been a top priority of the oil and gas industry, but not all Republicans supported the measure because it would make it difficult to regulate methane waste in the future. Republican Senator John McCain […]

U.S. crude oil inventories drop sharply as imports decline: EIA

11 May 2017   Oil Supply

U.S. crude stockpiles posted their biggest one-week drawdown since December last week as imports dropped sharply, while inventories of refined products also fell, helping boost oil prices that have been weighed down by concerns about oversupply. Crude inventories USOILC=ECI fell 5.2 million barrels in the week to May 5, the U.S. Energy Information Administration said, compared with expectations for a decrease of 1.8 million barrels. At 522.5 million barrels, crude stocks were the lowest since February. U.S. crude imports USOICI=ECI fell last week by 799,000 barrels per day, the biggest weekly drop since mid February, to just 6.9 million bpd, the first time they have been below 7 million bpd since early March. Stocks at the Cushing, Oklahoma, delivery hub for U.S. crude futures USOICC=ECI fell 438,000 barrels, […]