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…

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 , “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 […]

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 […]

An Extension Is Not Enough – Why OPEC Needs To Cut More

10 May 2017   OPEC

Crude oil prices are slumping, and everyone is clamoring to know: how far can oil fall? Is this a buying opportunity, or is the selloff likely to worsen? Bloomberg recently reported a large options trade worth about $7 million. Around 14000 August $39 puts were traded, which was more than 20 times the existing Open Interest at that level. (Click to enlarge) The buyers of the put will only start to breakeven and earn a profit if crude oil prices fall below $39 per barrel within the expiry date of the options, which would require a further fall of 15 percent. But is this likely? Can crude oil fall that much? For four months, crude oil traders waited patiently to see the results of the OPEC production cuts. The compliance from OPEC and its allies has been much better than market expectations. However, the U.S. shale oil producers had […]

Production Cuts vs Innovation – Why OPEC Has Lost The Oil Price War

10 May 2017   OPEC

OPEC and its cartel of friends must be sweating condensates in advance of their May 25th meeting. The oil price war, triggered almost three years ago, is far from over. Calling a truce with production cuts has been an ineffective strategy. In fact, it’s been a feeble strategy and nobody in the business should rely on its extension to be effective. Price wars are often triggered by the arrival of a new entrant into an entrenched market clique. American light tight oil began flowing into petroleum supply chains in 2010. By 2014, output from plays like the Bakken, Eagle Ford and Permian had penetrated 4 percent of the world’s oil market, antagonizing starched interests in the industry. There is a standard script for price wars that is played out in many businesses, not just oil. Airlines, pizza parlours and makers of high-tech equipment know the story line well. Act […]

Saudi energy minister says oil output cuts likely to be extended

9 May 2017   OPEC

Saudi Arabia’s energy minister Khalid Al-Falih said on Monday that oil markets were rebalancing after years of oversupply, but that he still expected an OPEC-led deal to cut output during the first half of the year to be extended to all of 2017. The Organization of the Petroleum Exporting Countries (OPEC), of which Saudi Arabia is the de-facto leader, as well as other producers including Russia, pledged to cut output by almost 1.8 million barrels per day (bpd) during the first half of the year to prop up the market. But ongoing high supplies have resulted in crude oil prices falling back below $50 per barrel. This has put pressure on OPEC to extend the cut to cover all of 2017. “Based on consultations that I’ve had with […]

Opec and Russia poised to roll over oil output cuts

9 May 2017   OPEC, Russia

Opec and Russia are on course to extend their oil output cuts in an attempt to draw down supplies and bolster the price, with Saudi Arabia saying the cartel is prepared to do “whatever it takes” to end the supply glut. Khalid al-Falih, Saudi Arabia’s energy minister, said on Monday he expected the Opec-led production deal to be rolled over until at least the end of this year. His comments follow a bruising sell-off last week that led to prices falling to their lowest levels in six months. “Based on consultations that I’ve had with participating members, I am confident the agreement will be extended into the second half of the year and possibly beyond,” said Mr Falih during an industry event in Kuala Lumpur. “The producer coalition is determined to do whatever it takes to achieve our target of bringing stock levels back to the five-year average.” Russia, which has led a group of non-Opec member producers in assisting with the cuts, also appears to be backing an extension, which is expected to be agreed at the next Opec ministerial meeting on May 25.

Saudi Arabia and Russia Signal Oil-Cuts Extension Into 2018

8 May 2017   OPEC

Prolonging cuts will speed up rebalancing of market: Novak Saudi Minister Al-Falih confident of agreement to extend Saudi Arabia and Russia signaled they could extend production cuts into 2018, doubling down on an effort to eliminate a supply surplus just as its impact on prices wanes. In separate statements just hours apart on Monday, the world’s largest crude producers said publicly for the first time they would consider prolonging their output reductions for longer than the six-month extension widely expected to be agreed at the OPEC meeting on May 25. “We are discussing a number of scenarios and believe extension for a longer period will help speed up market rebalancing” the Russian Energy Minister Alexander Novak said in a statement. Speaking in Kuala Lumpur earlier Monday, his Saudi counterpart Khalid Al-Falih said he was “rather confident the agreement will be extended into the second half of the year and […]

Saudi Arabia Says Oil Curbs Could Extend Beyond End of 2017

8 May 2017   OPEC, Saudi Arabia

Producer group determined to reach goal of reducing stockpiles U.S. shale output has slowed impact of OPEC’s production curbs Saudi Arabia’s oil minister said he’s confident that an agreement by producers to curb crude output and shrink a market glut will be extended into the second half of the year and possibly beyond. While U.S. shale output growth and the shutdown of refineries for maintenance have slowed the impact of cuts by OPEC and its partners, producers are determined to reach their goal of reducing bloated stockpiles, Khalid Al-Falih said at the Asia Oil and Gas Conference in Kuala Lumpur on Monday. He said he’s confident the global oil market will soon rebalance and return to a “healthy state.” Surging U.S. production has raised concern the Organization of Petroleum Exporting Countries and partners are failing to reduce an oversupply and prop up prices. Oil has surrendered all its gains […]

Saudi oil minister Falih confident output cut deal will be extended by 6 months

8 May 2017   OPEC, Saudi Arabia

Saudi energy minister Khalid al-Falih said Monday at an industry conference in Kuala Lumpur that he was confident that the crude oil output cut deal will be extended by six months or more as the market was moving towards rebalancing. “Based on the consultation I have had with participating members, I am rather confident that the agreement will be extended into the second half of the year and possibly beyond and that includes consultations I have had this morning with the Malaysian prime minister,” Falih said during the opening address at the 19th ASIA Oil and Gas Conference in Kuala Lumpur. The producer coalition is determined to do “whatever it takes to achieve our targets and bringing stock levels back to the five-year average.” Falih said he was pleased that OPEC and non-OPEC partners that agreed to the supply cuts are so far exhibiting discipline and adherence to the […]

Analysis: As prices fall, OPEC looks to Q3 for optimism

6 May 2017   OPEC, Prices

OPEC officials maintain market is rebalancing Cut extension details still in flux Market has priced in extension, say analysts The price swoon of the last few weeks has no doubt disappointed — if not frustrated — OPEC’s 13 members, who have seen their efforts to cut production to support prices seemingly thwarted by stubbornly high inventories. But all along, OPEC officials have maintained that their goal with the production cut deal can not and should not be measured by how the market reacts day to day, or even week to week. Their eyes are focused on the third quarter, when OPEC’s own analysis, as laid out in its most recent monthly oil market report, estimates global demand for OPEC crude will rise to 33.13 million b/d, some 1.3 million b/d above current levels. OPEC will issue its newest monthly oil market report next Thursday. Article continues below… Oilgram News […]

OPEC heads for rollover, bigger oil cut unlikely: delegates

5 May 2017   OPEC

OPEC and non-OPEC oil producers look likely to extend their agreement to limit supplies beyond its June expiry to help clear a glut, three OPEC delegates said on Thursday, downplaying the chance of additional steps such as a bigger cut. The Organization of the Petroleum Exporting Countries, Russia and other producers originally agreed to curb production by 1.8 million barrels per day (bpd) for six months from Jan. 1 to support the market. Oil prices LCOc1 have gained support but stockpiles are still high and production from non-participating countries such as the United States has been rising, keeping crude below the $60 level that OPEC kingpin Saudi Arabia would like to see. However, OPEC officials generally believe the agreement is helping to bring the market closer to balance between supply […]

Oil’s OPEC-Driven Gain Wiped Out as Shale Boom Offsets Cuts

5 May 2017   OPEC, Prices

American output has longest run of gains in more than 4 years Commodities tumble amid concern Chinese consumption to weaken The oil rally following OPEC’s deal has disappeared. Futures on both sides of the Atlantic dropped to their lowest since late November on growing signs that the group’s production cuts are failing to clear a surplus of crude. Oil stocks felt the pinch, with the S&P Oil & Gas Exploration and Production Index slumping as much as 4.9 percent Thursday to the lowest since August. “Evidence is mounting that the OPEC agreement, and the market’s reaction, were much ado about nothing,” John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy, said by telephone. U.S. crude output has risen to the highest since August 2015 as shale drillers add rigs every week. In response, the Organization of Petroleum Exporting Countries is likely […]

OPEC oil output falls in April but compliance weakens: Reuters survey

3 May 2017   OPEC

Pipelines are seen at the industrial zone at the oil port of Brega, Libya, January 12, 2017. OPEC oil output fell for a fourth straight month in April, a Reuters survey found on Tuesday, as top exporter Saudi Arabia kept production below its target while maintenance and unrest cut production in exempt nations Nigeria and Libya. But more oil from Angola and higher UAE output than originally thought helped OPEC compliance with its production-cutting deal slip to 90 percent from a revised 92 percent in March, according to Reuters surveys. The Organization of the Petroleum Exporting Countries pledged to reduce output by about 1.2 million barrels per day (bpd) for six months from Jan. 1 – the first supply cut deal since 2008. Non-OPEC producers are cutting about half as much. OPEC wants to get rid of excess supply that is keeping oil below $52 a barrel, half the […]

Rising U.S. oil production knocks OPEC off course: Kemp

3 May 2017   OPEC

An oil derrick and wind turbines stand above the plains north of Amarillo, Texas, U.S., March 14, 2017. U.S. crude production is surging, complicating OPEC’s efforts to rebalance the oil market. U.S. production rose by more than 450,000 barrels per day (bpd) in the five months ending in February, according to the U.S. Energy Information Administration (EIA) ( ). Total U.S. crude production has increased from a recent low of 8.567 million bpd in September to 9.031 million bpd in February (“Petroleum Supply Monthly”, EIA, April 28). Production continued rising in March and April, and now stands at over 9.2 million bpd, according to weekly estimates published by the agency (“Weekly Petroleum Status Report”, EIA, April 26). Weekly estimates are considered less reliable than the monthly numbers, but the two series have tended to follow one another closely, so there is no reason to doubt the continued growth […]

U.A.E. Minister Sees ‘Logic’ in Oil-Cuts Extension Beyond June

3 May 2017   OPEC

Output limits are helping re-balance crude market: Al Mazrouei Extension in cuts must be consensus decision, minister says OPEC and allied oil producers should extend their collective production cuts into the second half of the year when an expected upturn in demand will help to re-balance the crude market, United Arab Emirates Energy Minister Suhail Al Mazrouei said. All countries participating in the cuts must agree to any extension, he said Tuesday in the U.A.E. capital Abu Dhabi. The Organization of Petroleum Exporting Countries and other major suppliers including Russia agreed to pump less oil during the first six months of the year to try to counter a global oversupply weighing on prices. Suhail Al Mazrouei Photographer: Akos Stiller/Bloomberg “There is a major logic in continuing the cut, but it’s a consensus decision and not an individual one,” Al Mazrouei said. The production decrease is working, and the market […]

All Eyes On Saudi Arabia As OPEC Begins To Unravel

3 May 2017   OPEC, Saudi Arabia

Has OPEC failed? That’s the question analysts have begun to ask , approaching the group’s next meeting later this month. When the members gather at their headquarters in Vienna, it will likely be to agree on an extension of production cuts in place since January. Those cuts, originally intended to re-balance markets and boost prices, had an initial positive effect but their ultimate impact has been difficult to measure, as inventories have declined only gradually while global oil shipments have increased. New production from outside of OPEC, particularly in the United States, has kept global inventories high. It’s generally believed that OPEC members will recognize the need to extend cuts, with one observer calling it a “ 100 percent ” probability. There is some speculation that Russia, a non-OPEC state whose cooperation is crucial to the overall success of OPEC’s strategy, may prove intransigent when it comes to cutting […]

Extension of OPEC/non-OPEC crude oil production cut deal near certain: analysts

3 May 2017   OPEC

The likelihood of OPEC and major non-OPEC producers agreeing to extend their ongoing crude oil output cut is near certain, two prominent analysts said Monday. Related article: OPEC faces challenging path to H2 oil output cuts if deal is extended OPEC producers are “100% certain” to extend their end of the output cut deal at a May 25 OPEC ministerial meeting in Vienna, Fereidun Fesharaki, chairman of consultants FGE, told the Middle East Petroleum and Gas Conference in Dubai. In December, OPEC teamed up with major producers such as Russia to cut production by nearly 1.8 million b/d compared with October 2016 levels starting January 1. Article continues below… Oilgram News brings you fast-breaking global petroleum and gas news on and including: Industry players, upstream and downstream markets, refineries, midstream transportation and financial reports Supply and demand trends, government actions, exploration and technology Daily futures summary Weekly API statistics, […]

Oil production cuts: Fool me once…no, make that any number of times

2 May 2017   OPEC

The jawboning of oil prices by the Saudi Arabian/Russian tag team should be wearing off after more than a year of actions that don’t measure up to the words. Oil prices slumped recently, dropping from around $54 per barrel to just below $50 as of Friday’s close. As if on cue, the Russian energy minister announced Friday that Russia has now met its target of reducing oil production by 300,000 barrels per day . It only took four months to do something that should have taken just weeks. (The agreement came into force on January 1.) And, of course, we’ll have to see if the Russians have actually done what they say they’ve done. Only a week earlier, the Saudi energy minister indicated that there is momentum growing in OPEC for extending production cuts beyond June for another six months. This announcement comes only six weeks after the same […]

OPEC Deal Extension Could Be Shorter Than 6 Months

2 May 2017   OPEC

OPEC could extend its crude oil production cut agreement by less than six months – the period that is widely assumed to be the logical continuation of the initial deal, which will be in force until June 30. According to Sam Barden, director of commodity trader and advisor SBI Markets, as quoted by Trend, there is “no chance” of a six-month extension – OPEC producers need their oil production and their market share, which has suffered as a result of the initial agreement that, together with 11 non-OPEC producers, aimed to shave off 1.8 million barrels from global daily supplies. Barden went on to suggest that Iran and Iraq will not partake in an extension, despite declarations from both countries’ oil ministers that they support the deal. Just this Saturday, Iran’s Oil Minister Bijan Zanganeh told media once again that Tehran will “support” the extension, but mentioned nothing of […]

BLOG: Dream On, OPEC – The US Will Never Act Like A Cartel

2 May 2017   OPEC

OPEC Sec Gen says US is outside the global trend of cutting crude production for the sake of market stability, but in reality, tight oil companies made market-driven cuts before OPEC could make a deal. Apparently, the United States is out of sync with the rest of the world – which some might argue is good – because tight oil producers didn’t cut back when OPEC finally managed to address market volatility. OPEC Secretary General Mohammed Barkindo called out the United States as outside the “global trend of de-stocking” its production, during his April 27 remarks in Paris to the 18th International Oil Summit. Since its agreement in late November, a step that occurred after a number of fits and starts, OPEC agreed to cut its production by 1.2 million barrels per day (MMbpd) . That was in response to dismally low oil prices that had spiraled downward for […]

OPEC Deal Backfires: Saudis Lose Market Share To Iran, Iraq

2 May 2017   OPEC

Since the start of OPEC’s production cuts, oil market analysts and experts have been focusing on how U.S. shale would respond to the relatively higher and stable oil prices, possibly eating up some of the cartel’s global market share while the cuts last. The market share war is also going on a micro level within OPEC itself – a diverse group of producers, with each pushing and pursuing their own agenda in every meeting and collective decision. This time around it is no different. Saudi Arabia, OPEC’s biggest producer and de facto leader, is losing market share, while Iran and Iraq have so far emerged as winners of the cuts with in the cartel in a battle for market share, according to Christof Ruehl, former chief economist at BP who is currently Global Head of Research at the Abu Dhabi Investment Authority (ADIA). “If you’re talking about winners, you […]

Extension of OPEC-led cuts could end oil glut by end-2017: Poll

29 Apr 2017   OPEC

Supply and demand in the oil market could fall into balance by the end of this year if OPEC and its partners extend their deal to reduce crude output, a Reuters survey forecast on Friday. However, the prospect of rising output from outside OPEC, led by U.S. shale oil producers, could continue to hamper the rebalancing process, analysts said. The Reuters survey of 35 economists and analysts forecast that Brent crude would average $57.04 a barrel in 2017, compared with last month’s forecast of $57.25 and an average so far this year of about $55. “Growing oil production in the U.S. will remain a deterrent to further extensions to the output cap by OPEC and non-OPEC countries … (and) once again reinvigorate debate on defending market share […]

Is The Market Running Out Of Patience With OPEC?

28 Apr 2017   OPEC

Just as we warned yesterday following the EIA inventory and production data release, the exuberance over the crude draw was misplaced (due to the surge in product builds and almost unprecedented refining activity along with continued resurgent oil production). Saudi imports continue to show no sign of the OPEC cuts and as one analyst noted, “the market looks like it wants to turn lower, maybe it has run out patience waiting for OPEC” As a reminder, U.S. crude inventories declined 3.6m bbl Wednesday, but gasoline, distillate stockpiles grew by a combined 6m bbl, and U.S. production also grew for the 10th week. As Bloomberg reports, WTI, Brent deepen declines and erase Wednesday’s post-EIA rally as market’s focus switches to big builds in gasoline and distillate inventories, rather than the crude draw. “ The gasoline numbers took the edge off the headline ,” in EIA data Wednesday, says Jasper Lawler, […]

OPEC wants further drop in oil stocks, is working for consensus

28 Apr 2017   OPEC

OPEC wants oil inventories to decline further and is working to ensure a policy-setting meeting in May reaches consensus, the group’s secretary-general said on Thursday in comments pointing to an extension of a global supply cut. The Organization of the Petroleum Exporting Countries, Russia and other producers originally agreed to curb production by 1.8 million barrels per day (bpd) for six months from Jan. 1 to support the market. Oil prices have gained support from the pact but a supply glut has been slow to shift, limiting their increase. As a result, OPEC members including top exporter Saudi Arabia have signaled support for extending the deal at a May 25 meeting. OPEC Secretary-General Mohammad Barkindo, speaking […]

OPEC Ministers to Meet Russia Amid Push to Extend Cuts

27 Apr 2017   OPEC, Russia

Consensus is moving in direction of prolonging deal: Al-Falih Saudi minister will speak to Russian counterpart this week The energy ministers of OPEC members Saudi Arabia and Venezuela plan to meet their Russian counterpart to discuss extending oil-output cuts amid a developing consensus that they should prolong their joint effort to curb supply. Saudi Minister of Energy and Industry Khalid Al-Falih said that he will talk with Russia’s Alexander Novak by phone this week and meet him within the next two weeks. Venezuela’s Oil Minister Nelson Martinez was also planning to visit Moscow after talks in Algeria on Wednesday, said a person familiar with the matter. Play VideoPlayMuteCurrent Time 0:00/Duration Time 0:00Loaded: 0%Progress: 0%Stream TypeLIVERemaining Time -0:00Playback Rate1 Chapters Chapters captions settings, opens captions settings dialog captions off, selected CaptionsFullscreen This is a modal window. No compatible source was found for this media. Captions Settings Dialog Beginning of dialog […]

Can An OPEC Extension Push Oil To $60?

26 Apr 2017   OPEC

It now seems quite likely that OPEC will agree to an extension of November’s production cut agreement at their May meeting. The question facing analysts and market watchers is how much a cut extension will impact the market going forward, and whether it will deliver the boost in prices that OPEC is hoping for. In November, the agreement was a boon to the price, sending WTI north of $50, only for prices to fall a few months later. The impact of the deal, which was publicized for months beforehand and enjoyed blanket coverage from all major market media outlets, was significant but temporary. Inventory reports in February caused the price to crash back down, and apart from a brief swing upwards after U.S. missile strikes in Syria, an event which had analysts crowing over the return of the risk premium, prices have slumbered near $50, far below where OPEC […]

Op-Ed: Will OPEC Production Cuts Fail?

25 Apr 2017   OPEC

OPEC complies with its production cut deal, but one month before the cartel returns to Vienna to consider an extension, crude oil’s march toward market stability and a $65 per barrel price point is slow. A barrel of oil lingers priced in the low $50s and the global supply and demand ratio remains out of whack. Does that mean failure for OPEC’s six-month experiment to stabilize global markets and increase the price of oil ? Not according to the experts. When markets closed April 21, the price of WTI had dropped below $50 to $49.62 per barrel , underscoring investor weariness. That falls short of the $65 target – in fact, it’s far closer to prices in November before the historic decision by OPEC and non-OPEC member nations agreed to limit their production. WTI closed at $45.23 per barrel Nov. 29. After the agreement was announced Nov. 30, the […]

Oil Veteran Says OPEC Needs Year to Pull Off Elusive Mission

25 Apr 2017   OPEC

Production cuts need to be extended through 1H 2018: Fesharaki Onshore oil inventories are still rising, FGE founder says OPEC needs a year more to accomplish what’s at the moment proving to be mission impossible, according to a veteran oil analyst. Saudi Arabian oil minister Khalid Al-Falih acknowledged last week that the group and its allies, after three months of limiting output, have failed to hit their target of eroding oil inventories below the five-year historical average. The reductions need to be prolonged to not only until the end of 2017, but also extended through the first half of next year for the goal to be met, said Fereidun Fesharaki, the head of industry consultant FGE. While the Organization of Petroleum Exporting Countries and its partners began cutting output in January as part of a six-month deal, International Energy Agency data show inventories rose during the first quarter in […]

OPEC panel recommends six-month extension of oil output cuts: source

22 Apr 2017   OPEC

An OPEC and non-OPEC technical committee recommended that producers extend a global deal to cut oil supplies for another six months from June, a source familiar with the matter said, in an effort to clear a glut of crude that has weighed on prices. The Organization of the Petroleum Exporting Countries (OPEC), Russia and other producers originally agreed to cut production by 1.8 million barrels per day (bpd) for six months from Jan. 1 to support the market. Compliance numbers were also reviewed at the meeting in Vienna on Friday that comprised of officials from countries monitoring adherence to agreed output levels, namely OPEC members Kuwait, Venezuela, Algeria and non-OPEC Russia and Oman. Overall compliance with pledged cutbacks stood at 98 percent in March, a source said. Two sources said the rate in March represented an increase from February’s level. Oil prices still declined on Friday, with Brent crude […]

Russia Hits 250,000 Bpd Oil Production Cut Milestone

22 Apr 2017   OPEC, Russia

Russia has cut 250,000 bpd of its crude oil output, with another 50,000 bpd to go as per its agreement with OPEC, Energy Minister Alexander Novak told media today, adding that the other 50,000 bpd will be cut by the end of the month. The undertaking took as basis the country’s record-high October output, which exceeded 11 million bpd. Earlier this month, Novak said that the ministry will start discussing Russia’s possible participation in the production cut extension that is currently being negotiated by OPEC members in order to increase prices further, having failed to push them up to $60 a barrel since the start of the year. Novak said last week that “It still remains unclear whether the agreement should be extended. We’ll have consultations with our companies and other countries in the nearest future, and we have to see how he situation unfolds in April and consider […]

Major Oil Producers Reach Initial Deal to Extend Output Cuts

21 Apr 2017   OPEC

Saudi minister says producers haven’t met goal for inventories Gulf Arabs agreed; Iran, Venezuela show support: Oman minister A number of major crude-producing countries reached an initial agreement to extend output cuts, Saudi Arabia’s oil minister said Thursday, as persistently high stockpiles weigh on prices. OPEC and other major suppliers have failed, after three months of limiting production, to achieve their target of reducing oil inventories below the five-year historical average, Saudi Arabia’s Khalid Al-Falih said at a conference in Abu Dhabi. The producers pledged to reduce output for six months starting in January. Al-Falih didn’t identify or specify the number of countries in the initial deal for an extension. Khalid Al-Falih, Saudi Arabia’s energy and industry minister. “Although there is a high level of commitment, we haven’t reached our goal, which is to reach the five-year average,” Al-Falih said. “There is an initial agreement that we might be […]

Does The Biggest Winner Of The OPEC Deal Support An Extension?

21 Apr 2017   OPEC

OPEC continues to make progress on cooperation as they close in on an agreement to extend their production cuts for another six months. On April 20, several top OPEC officials voiced their most definitive statements yet on the extension, even as they caution that more work needs to be done. “There is consensus building but it’s not done yet, ” Saudi energy minister Khalid al-Falih told reporters on the sidelines of a conference in the United Arab Emirates. “ We are talking to all countries,” al-Falih added, referring to the key role that Russia will play in whether or not an extension can be sealed. “ We have not reached an agreement for sure, but the consensus is building.” On top of that, OPEC’s Secretary-General Mohammed Barkindo said the deal is working – it just needs more time. “ We are optimistic the policy measures have already placed us […]

OPEC Likely to Extend Production Cut Deal, Says Saudi Energy Minister

20 Apr 2017   OPEC

OPEC is likely to reach an agreement to extend the group’s production cuts into the second half of 2017, Saudi Arabia’s energy minister said Thursday. Saudi support is essential for the 13-member Organization of the Petroleum Exporting Countries to renew its agreement at its next meeting, in Vienna on May 25. The group committed last year to cut about 1.2 million barrels of oil a day in a bid to bring a vast global…

OPEC And NOPEC To Meet At Vienna Summit To Discuss Cut Extensions

20 Apr 2017   OPEC

The members and non-members of OPEC that participated in the global agreement to reduce oil production in November will be meeting on May 25th – the day of the bloc’s planned summit in Vienna, sources in-the-know told Reuters . All but two members of OPEC – Nigeria and Libya – participated in the output reduction, with Saudi Arabia taking the largest hit to its production. Eleven NOPEC nations, including Russia, agreed to cut 600,000 additional barrels daily, which hoped to take out of production a total of 1.8 million barrels per day for the first six months of 2017. Now, the same countries are determining whether they should extend the provisions in the second half of 2017, but the fact that both OPEC and NOPEC are meeting on the same day suggests things may more quickly this time around. “It all depends on Russia’s position,” an OPEC delegate told […]

Saudi Minister Wants OPEC Oil-Production Deal Extended, Perhaps for Less Than 6 Months

20 Apr 2017   OPEC, Saudi Arabia

An extension to an agreement by members of the Organization of the Petroleum Exporting Countries and producers outside the group to cut crude-oil production is most likely needed, but perhaps not for as long as another six months, Saudi Arabia’s energy minister Khalid al-Falih said Thursday. A preliminary agreement has been reached, though not all OPEC ministers have signed on, Mr. Falih said at an energy-sector event. …

Barkindo says OPEC, non-OPEC committed to restore market stability

19 Apr 2017   OPEC

OPEC Secretary General Mohammad Barkindo listens during a news conference after a meeting of the Organization of the Petroleum Exporting Countries (OPEC) in Vienna, Austria, November 30, 2016. OPEC Secretary-General Mohammad Barkindo said on Wednesday that all oil producers taking part in a supply-cut pact are committed to bringing global inventories down to the industry’s five year average and restoring stability to the market. Barkindo, speaking in the United Arab Emirates, said compliance data in March is showing better conformity by the oil producers with the agreement than in February. OPEC and non-OPEC producers agreed in December to cut supplies for six months, helping lift oil prices to about $55 a barrel after a two-year slump. OPEC will review policy for the second half of this year at a May 25 meeting. Barkindo would not say whether the agreement will be extended for another six months, but that any […]

Citi Sees Oil Surging $10 as OPEC Combats Roaring U.S. Shale

18 Apr 2017   OPEC, Prices, Shale Oil

Mid-$60 oil seen by end-2017 as effects of OPEC cuts increase Bank sees commodity investment flows rising in second quarter Citigroup Inc. joined Goldman Sachs Group Inc. in backing commodities, saying it’s the season to have faith in raw materials and oil will probably rally to the mid-$60s by the end of the year. While U.S. shale output may come “roaring back” amid higher crude prices, production curbs by OPEC and its allies should help offset that increase over the next six to nine months, Citi analysts including Ed Morse and Seth Kleinman wrote in an April 17 report. The producers need to extend their deal to cut supplies through the end of the year amid concerns that Russia is lagging behind on its pledged reductions, the bank said. While the historic agreement between producers that went into effect Jan. 1 “induced a euphoric and unsustainable surge” in bullish […]

Most oil producers want extension of output cuts: Iran minister

17 Apr 2017   OPEC

Most oil producers support an extension of output cuts by OPEC and non-OPEC countries, and Iran would also back such a move, Iranian Oil Minister Bijan Zanganeh was quoted as saying. “(Zanganeh) stressed that most countries want OPEC’s decision to be extended,” the Iranian Students’ News Agency (ISNA) reported. “Iran also supports such a decision and if others comply, so would Iran,” Zanganeh told reporters late on Saturday, according to ISNA. The market has been oversupplied since mid-2014, prompting members of the Organization of the Petroleum Exporting Countries and some non-OPEC producers to agree to cut output in the first six months of 2017. OPEC meets on May 25 to consider extending the cuts beyond June. Saudi Arabia, Kuwait and most […]

OPEC March Crude Oil Data » Peak Oil Barrel

15 Apr 2017   Oil Supply, OPEC
OPEC March Crude Oil Data » Peak Oil Barrel

The OPEC Monthly Oil Market Report is out with OPEC’s crude oil production numbers for March 2017. All data is through March 2017 and is in thousand barrels per day.

Looking at the above chart it seems obvious what most OPEC nations were doing. They announced in the summer of 2016 that there would likely be quota cuts beginning in 2017. And those cuts would be a percentage of their current production. So everyone began making heroic attempts to increase production by the end of 2016. So now, after everyone who felt that they should cut, has cut, they are right back to the level that they were at before the cuts were proposed.