Next OPEC+ ministerial meeting planned for April: RIA

22 Jan 2018   OPEC

The next Joint OPEC-Non-OPEC Ministerial Monitoring Committee (JMMC) will be held in April in Saudi Arabia, Russian RIA news agency reported on Sunday, citing an OPEC statement. It also said that compliance with the global oil production cut deal by OPEC and non-OPEC nations was at 129 percent in December and averaged 107 percent over the whole of last year. Saudi Arabia’s energy minister urged global oil producing nations on Sunday to extend their cooperation beyond 2018, but said this might mean a new form of deal rather than continuing the same supply cuts that have boosted prices in recent months.

OPEC, Russia Signal Global Oil Alliance May Endure Past 2018

22 Jan 2018   OPEC, Russia

Oil market still isn’t fully re-balanced, Russia’s Novak says It’s unclear whether inventories will drop at same pace: Falih OPEC and Russia reaffirmed that they’ll persevere with oil-production cuts until the end of the year to clear a global glut and signaled their readiness to cooperate beyond that. Russia is prepared to continue cooperating with OPEC and its de-facto leader Saudi Arabia even after the cuts expire, Energy Minister Alexander Novak said in a Bloomberg television interview held jointly with his Saudi counterpart. Producers should keep limits on output through 2018 as the market may re-balance at the end of the year or in 2019, Saudi Energy Minister Khalid Al-Falih said. Neither minister said whether the cuts would continue in 2019. 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 […]

Don’t worry about oil price movement yet, Russia says

20 Jan 2018   OPEC, Prices, Russia

It’s too early in 2018 to discuss stabilization for oil prices, which are down 2 percent from their peak, but up 3.5 percent so far, a Russian official said. Crude oil prices started the year on a historic rally, moving from $66.65 per barrel for Brent, the global benchmark, to its highest close in four years, just above $70 per barrel, in a span of about a week and a half. As of early Friday, Brent was trading closer to $69 per barrel. Brent futures ended 2017 up almost 22 percent. Arkady Dvorkovich, Russia’s deputy prime minister, said it was too early in the year to […]

OPEC Revises Up Non-OPEC Production Estimates For 2018

19 Jan 2018   OPEC

U.S. shale suppliers are forcing OPEC to revise upward its estimates for supplies originating outside the bloc’s member nations, according to the latest data released by the bloc. Non-OPEC production will increase by 1.15 million barrels per day in 2018, up from a previous estimate of a 990,000-bpd jump for the year in last month’s report. American oil exports, which gained market share over the course of 2016 and 2017, have been offsetting cuts made by OPEC and its band of allies over the past year. “Higher oil prices are bringing more supply to the market, particularly in North America and specifically tight oil, including unconventional NGLs,” OPEC said in its monthly report. “Shale producers in the US have managed to lower their breakeven costs by 30-50 per cent in 2015-17, by improving technology and efficiency and as oil field service providers offered deep discounts on rigs and crews […]

OPEC Oil Production Falls In December

19 Jan 2018   OPEC

The latest OPEC Monthly Oil Market Report is out with production numbers for December 2017. All data is in thousand barrels per day. (Click to enlarge) Total OPEC crude only production was up by 42,400 barrels per day in December. However, that was after November production was revised downward by 75,000 bpd. So, OPEC production was actually down 33,000 bpd from what was reported last month.  I have posted OPEC production according to “secondary sources” as well as OPEC production based on “direct communication” in order to show what Venezuela said they were producing when called by the editors of the MOMR. More about that below Venezuela’s production chart. (Click to enlarge) Algeria was up 30,000 bpd in December, but the downward trend continues. (Click to enlarge) Angola’s crude oil production is holding steady. (Click to enlarge) Ecuador’s latest peak was in 2015 […]

OPEC sees more oil supply from rivals, countering its cuts and Venezuelan woes

19 Jan 2018   OPEC

OPEC raised its forecast for oil supply from non-member countries in 2018 as higher prices encourage U.S. shale drillers to pump more, offsetting an OPEC-led deal to clear a supply glut and a deepening collapse in Venezuelan production. In a monthly report on Thursday, the Organization of the Petroleum Exporting Countries said outside producers would boost supply by 1.15 million barrels per day (bpd) this year, up from 990,000 bpd expected previously. “Higher oil prices are bringing more supply to the market, particularly in North America and specifically tight oil,” OPEC said in the report, using another term for shale. OPEC, Russia and several other non-OPEC producers began to cut supply a year ago to get rid of a global glut of crude that had built up since 2014. They have extended the pact until the end of 2018. The OPEC forecast of higher rival supply […]

‘Returning to heady days’: IEA raises US oil growth forecasts

19 Jan 2018   IEA

The International Energy Agency revised higher its US oil production growth forecasts for 2018, stressing that rapidly expanding shale output is a major factor offsetting Opec-led supply cuts. The latest body to raise estimates, following the US energy department’s statistics arm and Opec’s own research unit, the IEA said: “this year promises to be a record-setting one for the US.” Production growth, the IEA said in its monthly market report, was returning “to the heady days of 2013-2015” with US total output on course to overtake Saudi Arabia and rivaling Russia.

Still, the oil market will be broadly in balance this year. Big producer nations have feared a price rebound in recent weeks — to a 2014 high of around $70 a barrel — could spur a flood of new shale oil supply, undermining efforts by global producers to curb output. Opec countries and allies outside of the cartel such as Russia agreed late last year to extend a supply cut deal for the whole of 2018 as they seek to further reduce excess stockpiles and bolster prices. “The historically high-performance rate for the producer pact, however, was met with an equally remarkable increase in US production, which offset roughly 60 percent of the realized cuts,” the IEA said.

The IEA said the impact of the reduction was “further blunted” by a rebound in output from Libya and Nigeria, which have been excluded from the cuts deal because of conflict in both countries. Even so, the IEA said should Opec and Russia maintain their compliance then “the market is likely to balance for the year as a whole with the first half in a modest surplus and the second half in a modest deficit.”

OPEC Under Pressure As Oil Rally Continues

17 Jan 2018   OPEC

Top OPEC officials surely did not expect such a dramatic run up in prices, at least not this early in the year. Both OPEC and the IEA have forecasted a rebound in crude storage levels in the first half of this year, a trend that was thought to keep a lid on any price rally. The working assumption was that oil prices wouldn’t dramatically improve until mid-2018. Against that backdrop, OPEC officials didn’t think they would have to answer too many questions about the group’s plan until its June meeting. But with Brent at $70, the market is watching for clues about OPEC’s resolve — and some tiny cracks appear to be forming. Russia’s energy minister said last week that OPEC and the non-OPEC coalition would begin discussing the possibility of a “smooth exit” from the production cuts, according to Reuters . Russian energy minister Alexander Novak also tried […]

Russian effort to comply with OPEC balancing effort based on market, not price

17 Jan 2018   OPEC, Russia

The situation on the market, not the price of oil, determines Russia’s appetite for complying with the OPEC balancing act, the country’s energy minister said. Russia is among the handful of producers party to the Organization of Petroleum Exporting Countries playing a role in the multilateral effort to balance an oversupplied market for crude oil with coordinated cuts in output. Russia is also the largest non-OPEC contributor and a member of a joint committee monitoring compliance. Geopolitical risk, global energy demand forecasts and the late 2017 decision by OPEC to extend the deal for another year helped push crude oil prices to four-year highs. That’s led to some concern that parties […]

Russia To Discuss Possible Exit From OPEC Deal

13 Jan 2018   OPEC, Russia

Alexander Novak . Reuters reports that Novak might discuss the country’s potential exit from the pact in Oman next week. Russia had vowed to cut output by 300,000 barrels per day under the agreement as part of a group of non-OPEC producers who elected to coordinate the bloc’s market stabilization initiative. “We see that the market is becoming balanced. We see that the market surplus is decreasing, but the market is not completely balanced yet and, of course, we need to continue monitoring the situation,” Novak said. Russian oil majors have been complaining about the deal and how it is creating stumbling blocks on the road towards the industry’s expansion plans. Brent barrel prices are currently approaching $70 a barrel, suggesting crude markets are rebalancing as we approach June, when the deal is set for “review” – a process with little description in the full text of the OPEC […]

Analysis: OPEC’s Venezuela, Africa woes could give other members room to boost oil output

12 Jan 2018   OPEC

If any OPEC members have been tempted to cheat on their quotas with oil prices hovering around three-year highs, they have yet to act on it. Higher prices may embolden countries that can to cheat on quotas Saudi discipline, downside risks in unstable nations could cap any gains Vast majority of OPEC spare capacity in Saudi Arabia and Gulf allies And despite pervasive speculation that prolonged elevated prices could encourage members to play loose with their production cut agreement, starting a slippery slope to a bruising marketshare battle with US shale producers, OPEC officials have maintained that such fears are overblown. A closer examination of the organization’s spare production capacity — and where the downside supply risks lie — may lend some backing to their bravado. The US Energy Information Administration, in its Short-Term Energy Outlook released Tuesday, estimated that OPEC’s “surplus crude oil production capacity” – barrels that […]

UAE Oil Minister: OPEC Deal Could Extend Beyond 2018

12 Jan 2018   OPEC

The OPEC/Russia deal for crude oil production cuts could extend beyond 2018, the United Arab Emirates’ energy minister, Suhail al-Mazrouei has suggested. Speaking to CNBC , Al-Mazrouei said “I am expecting that this group of countries that stood and have become responsible for helping the market to correct, (that) there is a very good chance that they could stick together and put a shape around that alliance.” His statement comes amid a variety of scenarios on how the deal might come to an end, featuring civil unrest in Venezuela and Iran that may lead to supply disruptions; Russia pulling out of the pact in June; OPEC members and other parties to the deal starting—or continuing—to cheat; and oil prices rising too high. For now, it looks like the last scenario is most likely: there is already talk that OPEC would act if Brent tops US$70 a barrel, as this […]

The Biggest Loser Of The OPEC Deal

11 Jan 2018   OPEC

OPEC’s oil production and supply cuts—now in their second year—have claimed a victim. It’s an industry that’s vital for the crude oil exports of oil-producing countries: supertanker shipping. The supertankers, or very large crude carriers (VLCCs), are vessels capable of carrying around two million barrels of oil. As OPEC and its non-OPEC allies work to remove a combined 1.8 million bpd off the market to draw down the global glut, the number of supertankers voyaging from the Middle East to Asia, for example, has dropped. This decreased demand coincides with a period of new-build vessels being delivered and adding to the global supertanker fleet, thus creating an excess supply of supertankers at a time when crude oil trade out of the Middle East is down. Moreover, the oil futures market is currently in backwardation (the situation in which front-month prices are higher than those for months further in the […]

Goldman: OPEC Will Talk Oil Prices Down If Brent Tops $70

11 Jan 2018   OPEC, Prices

OPEC doesn’t want central banks around the world the start responding to inflationary pressure from oil prices above $70 a barrel, nor do they want U.S. shale investments to rise, so the cartel will try to talk oil prices down if Brent exceeds $70 per barrel in the coming days, according to Goldman Sachs. At 09:32 a.m. on Wednesday, Brent Crude was up 0.41 percent at $69.10, just shy of the $70-a-barrel mark, after the American Petroleum Institute (API) reported a staggeringly large draw of 11.19 million barrels of United States crude oil inventories for the week ending January 5, marking six large draws in as many weeks. Robust global oil demand growth is also supporting oil prices, as well as geopolitical concerns out of the Middle East, most notably Iran. OPEC would otherwise enjoy $70 oil, but central banks could intervene to temper inflation from the higher oil […]

Soaring Indian Oil Demand Grabs OPEC’s Attention

10 Jan 2018   India, OPEC

Last week, we discussed changing trends in Iraqi crude flows into Asia . Total deliveries of OPEC crude to China rose last year by 300,000 bpd, as cartel members looked to keep one of its key growth markets well supplied. Even though Iraqi deliveries into China reached the highest on our records in November at a million barrels per day, arrivals in 2017 were actually down versus the prior year, as Iraq shifted its focus towards India and the U.S. instead . While Iraqi deliveries to China edged lower versus 2016 volumes, other cartel members such as Angola, Venezuela, Kuwait and Libya all saw flows increase. Angola and Venezuela led the charge in terms of higher deliveries, as both nations continue to service their debts with China (via oil, as opposed to cash). A rebound in Libyan production meant more found its way to Chinese shores, while Saudi Arabia […]

OPEC won’t react to small, short-lived oil supply disruptions

9 Jan 2018   OPEC

OPEC is monitoring unrest in Iran as well as Venezuela’s economic crisis, but the group will only boost output if there are significant and sustained production disruptions from those countries, a senior OPEC source from a major Middle Eastern oil producer said. Venezuela’s economic troubles have hit the country’s oil output, which is at near 30-year lows, but Iran’s output has not been affected by a wave of anti-government protests. Traders said political tensions in Iran, the third-largest producer in the Organization of the Petroleum Exporting Countries (OPEC), had pushed prices higher. Brent crude LCOc1, the international benchmark, was trading at around $67.52 a barrel, on Monday. Brent hit $68.27 high last week, the highest since May 2015, on Iran tensions. Saudi Arabia, OPEC’s de-facto leader, wants to see oil prices above $60 a barrel, to boost the valuation of its national oil company Aramco ahead […]

Total OPEC production up slightly in December

9 Jan 2018   OPEC

Though Venezuelan oil production is lower than it’s been in more than a decade, its fellow OPEC members picked up the slack, a market survey found. A survey of production from the 14 members of the Organization of Petroleum Exporting Countries from commodity pricing group S&P Global Platts found total output in December at 32.4 million barrels per day, up 50,000 barrels per day from November. OPEC members are now in their second year of a coordinated effort to balance an oversupplied market with production cuts. De facto OPEC leader Saudi Arabia, its largest producer, is leading by example, Platts reported, with production of around 9.9 million barrels per day last month, below its official quota by […]

Bioplastics Threaten Big Oil

8 Jan 2018   IEA

What sector will account for the largest source of oil demand growth over the next two decades? Most people might assume transportation, with hundreds of millions of people in the developing world acquiring cars for the first time. However, according to the International Energy Agency (IEA), the petrochemical industry will represent the largest source of additional oil consumption through 2040. By 2040, the IEA actually sees oil demand from passenger vehicles declining, while road freight accounts for a growth of 4 million barrels per day (mb/d). Aviation adds 3 mb/d and maritime shipping adds another 1.4 mb/d. On the other hand, the manufacturing of petrochemicals such as plastics will add 6.2 mb/d to global oil demand by 2040, according to the IEA’s New Policies Scenario , which incorporates the effects of policies from governments that have already been announced. The debate over ‘peak oil demand’ typically comes down to […]

OPEC oil cut adherence rises in Dec as Venezuela output slides: survey

6 Jan 2018   OPEC

OPEC deepened compliance with an oil supply-cutting deal in December due to a further decline in Venezuelan output and extra cuts by Gulf exporters, a Reuters survey found, showing strong commitment to the deal despite higher prices. Adherence to the curbs rose to 128 percent from 125 percent in November, the survey found. The United Arab Emirates for the first time since the deal took effect in January 2017 pumped below its OPEC target, joining Saudi Arabia and Kuwait. The Organization of the Petroleum Exporting Countries is reducing output by about 1.2 million barrels per day (bpd) as part of a deal with Russia and other non-OPEC producers. The pact will run until the end of 2018. Oil hit its highest since May 2015 this week, supported by falling inventories, strong demand and high OPEC compliance. Many producers, still suffering from a 2014 price collapse, are […]

OPEC vs Shale: The Oil Saga Continues

5 Jan 2018   OPEC

The continuous rise in U.S. shale production last year offset part of the OPEC–Russia production cuts and capped oil price gains. Supported by the global inventory drawdown and geopolitical woes, however, oil prices rose steadily in the fourth quarter of 2017 to end the year at above $60 per barrel WTI and $66 per barrel Brent. As we roll into 2018, the higher oil prices continue to drive increased U.S. shale production, and set the stage for yet another year of the OPEC-shale tug-of-war that will influence the price of oil. According to analysts, the $60-plus WTI price isn’t sustainable in the near term, barring geopolitical risks that could push prices up. The U.S. Energy Information Administration (EIA) expects U.S. crude oil production to have averaged 9.2 million bpd for all of last year. It expects U.S. crude oil production to average an all-time high of 10.0 million bpd […]

OPEC Should Thank Venezuela For Falling Production

5 Jan 2018   OPEC, Venezuela

OPEC’s crude oil production remained largely unchanged from November in December, but that was mostly thanks to a 50,000-bpd decline in Venezuela’s production, as well as further cuts in Saudi Arabia, a Bloomberg survey of ship-tracking data, analyst opinions, and company information has suggested. At 32.47 million barrels daily, OPEC’s production is a hair below the 32.5-million-bpd ceiling it imposed on its members with the production cut agreement. But OPEC should hold off on patting itself on the back. While Saudi Arabia and Iran cut their production in December by 20,000 bpd each, Libya’s fell for reasons outside the control of the National Oil Corporation: a pipeline blast temporarily took off between 70,000 and 100,000 bpd off daily production. According to the survey data, Libya’s average daily production decline for the whole month was 30,000 bpd. Meanwhile, Nigeria raised its oil production by the same amount, effectively offsetting the […]

Oil Resurrection Sets Stage for Another OPEC-Shale Clash in 2018

29 Dec 2017   OPEC, Shale Oil

OPEC cuts drive price gain as threat of U.S. output persists WTI, Brent up more than 11% this year; set for 2nd annual gain Oil’s revival from the biggest crash in a generation persisted, with prices set for a second annual gain after a year marked by hurricanes, Middle East conflict and the tussle between OPEC and U.S. shale. Futures are up more than 11 percent in 2017, having entered a bull market in September. The year’s gains were driven by output cuts by the Organization of Petroleum Exporting Countries and Russia, along with geopolitical tensions in the Middle East and pipeline disruptions from the North Sea to Canada and Libya . In 2018, investors will watch whether the price recovery triggers a new flood of U.S. output. “The current highs are unsustainable in the short-to-medium term, with prices likely to head back below $60 once we get past […]

Oil Market Will Rebalance By March: Iraqi Minister

27 Dec 2017   Iraq, OPEC

With what has now become habitual optimism, the Iraqi oil minister, Jabar al Luaibi, said he expected the global oil market to rebalance by the end of the first quarter of 2018. That’s despite Iraq’s own inability to reach the production quota assigned it by the cartel last year. “I am optimistic, and during the first quarter of next year there will be more balance between supply and demand, which will reflect positively on improving global oil prices,” Al Luaibi told media, noting that global crude oil inventories had already been reduced to more palpable levels from a massive overhang in 2014. The minister, however, acknowledged that a further rise in U.S. oil production this month “might” have an effect on prices. That statement comes after earlier this month Al Luaibi said he expected Iraq’s oil production to hit 5 million bpd in the first quarter of 2018: around […]

2018 Could See The OPEC Deal Collapse

26 Dec 2017   OPEC

The OPEC extension keeps the oil market on track to balancing at some point next year, but if the group overshoots on tightening, OPEC members could begin cheating, potentially leading to an unraveling of the deal. To be sure, there is a great deal of uncertainty over the pace of inventory drawdowns. The IEA predicts a return to rising inventories in the first half of 2018 , a prospect that threatens another downturn in prices. In this scenario, OPEC will struggle to balance the market, and may be forced into yet another extension. Indeed, there are some analysts who see the downside risk as a much greater threat than the upside, and that the oil market should brace for lower prices. But let’s look at the bullish case for a moment. The inventory surplus has dramatically narrowed this year, falling to just a little more than 100 million barrels […]

Oil producers to discuss exit plans from cuts once market near balance: Russia

23 Dec 2017   OPEC

Oil producers will discuss an exit strategy for their deal on cutting output once the market moves closer towards being balanced, Russian Energy Minister Alexander Novak said in remarks published on Saturday. “We will talk about it as we get closer to the market rebalancing,” Novak was quoted as saying by Russia’s Interfax news agency. RIA news agency carried similar comments. Novak had said in an interview with Reuters this week that detailed talks on an exit strategy would only start when the markets approached balance.

Russia backs gradual, managed exit from oil cuts with OPEC

23 Dec 2017   OPEC, Russia

OPEC and Russia will exit from oil production cuts very smoothly, possibly extending the curbs in some form so as not to create any new surplus in the market, the Russian energy minister told Reuters. Alexander Novak also said in comments cleared for publication on Friday that he saw no direct connection between the oil cuts and Saudi Arabia’s plan to list Aramco, the world’s top oil producer. “Everyone in the market is interested in achieving balance,” Novak said in response to a question on whether Saudi Arabia could abruptly exit the cuts as soon as it lists Aramco sometime in 2018. The share sale promises to be the world’s biggest. The Organization of the Petroleum Exporting Countries and other large oil producers led by Russia agreed last month to extend until the end of next year their deal to cut a combined 1.8 million barrels per […]

OPEC starts working on oil supply cut exit strategy: sources

22 Dec 2017   OPEC

OPEC has started working on plans for an exit strategy from its deal to cut supplies with non-member producers, two OPEC sources said, a sign that an eventual winding down of the deal is coming onto producers’ radar, at least in theory. The Organization of the Petroleum Exporting Countries, Russia and other non-OPEC producers on Nov. 30 extended an oil output-cutting deal until the end of 2018 to finish clearing a glut. But the market is increasingly interested in how producers will exit the deal once the excess is cleared. Two OPEC sources said the group’s secretariat in Vienna has been tasked to work on a plan with different options and it was too early now to say what the plan would look like. “It’s a continuity strategy, rather than exit,” one of the OPEC sources said. Oil prices have rallied this year and are trading […]

Goldman Says ‘Stellar’ Demand May Fast-Forward OPEC’s Exit

20 Dec 2017   OPEC, Prices

Global oil inventories will have re-balanced by mid-2018 Backwardation forecast to strengthen further in second quarter OPEC’s desire to clear the global oil inventory overhang may come sooner than expected, enabling the group to exit from its production cuts early, according to Goldman Sachs Group Inc. Global stockpiles will remain below seasonal levels and continue to shrink through the second quarter of next year, said the bank. The market will have re-balanced by mid-2018, fast-forwarding OPEC’s exit from production cuts to the second half of the year, according to Goldman. It kept its forecast for Brent crude at $62 a barrel. Goldman is one of the most bullish banks for oil next year and this month boosted its price forecast for Brent, the benchmark for more than half the world’s oil, on the producers’ strong commitment to the cuts. Prices are on course for a second yearly gain after […]

Fracking Puts Pressure on OPEC’s Bottom Tier

20 Dec 2017   OPEC, Shale Oil

Regarding Walter Russell Mead’s “ Fracking Our Way to Mideast Peace ” (op-ed, Dec. 12): While the general sentiment is correct that American energy independence frees American foreign policy, it does not address the repercussions. Consider the economic impact in the lower economic status countries in OPEC (Venezuela, Libya, Angola, Algeria, Ecuador, Kuwait and Nigeria—almost all of the cartel except Saudi Arabia, Qatar, Iran and the UAE). These repercussions have ranged from slight economic decline to complete economic collapse (see Venezuela). This is by no means a fault of American foreign policy. On the contrary, OPEC has made decisions in recent years that have not had the best interest of its entire member body at heart. Mr. Mead does little to describe the industry downturn in the U.S., which at one point lost over 250,000 jobs among operators, service companies and other third-party providers. As for how this lands […]

Coal demand falling, IEA says

19 Dec 2017   Coal, IEA

Global coal demand is on a clear decline and its share in the power mix is on pace to fall to the lowest level since record-keeping began, the IEA said Monday. The Paris-based International Energy Agency said global coal consumption declined 1.9 percent last year, the second year in a row for a decline. Demand, meanwhile, is down 4.1 percent over the last two years. In their annual report on coal, the IEA said global demand will be more or less even for the next five years, though sectors like natural gas and renewables are picking up. “The energy system is evolving at a rapid pace all around us, with a more diversifying fuel mix, and the cost of […]

Key Pipeline Closure Amplifies OPEC’s Efforts

15 Dec 2017   OPEC, Prices

But this time, it’s not the usual suspects of Libya, Nigeria, or Iraq. It’s a shutdown of a major oil pipeline in the North Sea, which is expected to last for weeks. The Forties Pipeline System—responsible for carrying 40 percent of the UK’s North Sea crude oil production—was shut down earlier this week after a small hairline crack at Red Moss near Netherley, south of Aberdeen, was discovered. At the time of writing, the latest media update from Forties operator Ineos early Thursday stated that “At this stage it is still too early to say how long the repair will take to complete, but it is expected to be a matter of weeks rather than days. We can confirm that formal Force Majeure has been declared on relevant contracts.” Not only is the Forties pipeline a key transit route for North Sea oil, the Forties crude blend is the […]

The Most Important Part Of The OPEC Deal

15 Dec 2017   OPEC

The OPEC meeting in Vienna last month was, despite all the hype, always going to be a dull affair. The extension of the oil supply cuts had been all but decided before the members met, and only the length of the extension was subject to speculation. But in six months’ time, these members will meet again, and this time around there will undoubtedly be drama. Saudi Arabia’s Energy Minister Khalid al-Falih said in Vienna that discussing an exit strategy from the cut agreement was premature, adding that the exit would be gradual. Now, it’s beginning to look like his remark may have been a bit premature: other OPEC officials are already talking about it. In recent days, two OPEC oil ministers —UAE’s Suhail al Mazrouei and Kuwait’s Issam al-Marzouq—have commented on an exit strategy. Both have been guarded in their remarks, with Al Mazrouei saying simply that it was […]

OPEC Wakes Up to the Threat of U.S. Shale 2.0

14 Dec 2017   OPEC, Shale Oil

Stronger U.S. output is blunting OPEC’s effort to clear glut Once expected in third quarter ’18, rebalancing now seen later OPEC predicted that global oil markets won’t rebalance until late next year after boosting forecasts for supplies from the U.S. and other rivals. The Organization of Petroleum Exporting Countries’ monthly report raised its outlook for non-OPEC supply in 2018 by 300,000 barrels a day, as its projections for American output caught up with those of the U.S. government. As a result, an initiative by OPEC and Russia to clear a global oil glut by cutting production — previously seen succeeding in the third quarter of 2018 — will take effect more slowly. Oil prices climbed to a two-year high above $65 a barrel in London this week, supported by a temporary pipeline halt in the U.K. and the Nov. 30 decision by OPEC and Russia to press on with […]

OPEC Oil Output Falls to Six-Month Low but U.S. Fills Gap

14 Dec 2017   OPEC

A worker makes adjustments in the Bashneft PAO oilfield in Russia. OPEC production fell to its lowest in six months but rival U.S. production was surging faster than expected, meaning oil markets may not rebalance before the end of 2018, the oil cartel said Wednesday in its closely watched monthly oil report. The Organization of the Petroleum Exporting Countries said its crude production fell by about 133,500 barrels a day in November to 32.45 million barrels a day. The group and its Russia-led allies agreed last month to extend the combined production cuts of 1.8 million barrels a day until the end of 2018. However, the output decrease last month was tied to other factors with domestic demand for Saudi oil declining in the winter and Angola and Venezuela facing production issues. However, OPEC said other producers were fast filling the gap, notably U.S. shale-oil companies that have been […]

U.S. Shale Sends OPEC Deal Back To Square One

14 Dec 2017   OPEC, Shale Oil

True to its perpetually optimistic form, OPEC, which last month for the first time conceded to the threat posed by rising U.S. shale production…  sharply raised its demand forecast for cartel oil in 2018, ahead of the OPEC meeting at the end of November. And, according to OPEC’s latest market report for the month of December, demand is set to continue rising, with global oil demand projected to grow at around 1.53 mb/d in 2017, in line with last month’s forecast. China is projected to lead oil demand growth in the non-OECD, followed by Other Asia – which includes India – and OECD Americas. Which means that an unexpected Chinese landing, whether hard or soft, will have an adverse impact on oil in addition to all other commodities. (Click to enlarge) Separately, in 2018, world oil demand is expected to grow by 1.51 mb/d according […]

U.S. Shale Output Rises As OPEC Production Falls To 6-Month Low

14 Dec 2017   OPEC, Shale Oil

OPEC’s crude oil production dropped to a six-month low in November, while U.S. and other non-OPEC supply has grown stronger than initially expected this year, which prompted the cartel to revise up on Wednesday its estimates for non-OPEC supply growth in 2018. OPEC’s crude oil production fell by 133,500 bpd from October to stand at 32.448 million bpd in November, OPEC’s Monthly Oil Market Report showed on Wednesday. This was the lowest production the cartel has reported in six months . The largest increase among the members came from Nigeria, whose production in November jumped by 95,800 bpd from October to 1.790 million bpd, according to OPEC’s secondary sources. Angola, Saudi Arabia, Venezuela, and the UAE saw the largest declines in production. The final OPEC monthly report for this year focused on the 2017 highlights and expectations for 2018. In both overviews, the predominant theme was the U.S. shale […]

OPEC November Oil Production

14 Dec 2017   OPEC

The OPEC data below was taken from the December OPEC Monthly Oil Maret Report . All data is through November 2017 unless otherwise noted. OPEC crude oil production declined by 133,500 barrels per day in November. Algeria was up slightly in November after that huge decline in October. Angola was the biggest loser in November, down 108,700 barrels per day. Ecuador, though holding its own for the last year, appears to be in slow decline. I have managed to cobble together an estimate of Equatorial Guinea’s historical C+C production. I had the EIA’s production numbers through June 2013. I subtracted 10% for “other liquids”, then merged that with the OPEC MOMR data that started in 2016. However, Equatorial Guinea’s production is not enough to make much difference. Gabon is also in slow decline. And their production is not enough to make much difference in total OPEC production. Iran ignores […]

OPEC sees balanced oil market by late 2018 as cuts erode glut

14 Dec 2017   OPEC

OPEC expects the world oil market to be balanced by late 2018 as its deal with other producers to cut output reduces excess oil in storage, even as the U.S. and other producers outside the group pump more crude. The Organization of the Petroleum Exporting Countries, in a monthly report, cut its estimate of global demand for its crude in 2018 by 270,000 barrels per day (bpd) to 33.15 million bpd, in part because of higher U.S. supply. But the 14-country producer group said its oil output in November, as assessed by secondary sources, was below the 2018 demand forecast at 32.45 million bpd, a drop of about 133,000 bpd from October. The report follows the Nov. 30 decision by OPEC, […]

Kuwait’s oil minister says premature to talk about exit strategy from supply cuts

14 Dec 2017   Kuwait, OPEC

Kuwait’s oil minister said on Thursday it was too early to talk about a strategy to exit the current OPEC and non-OPEC supply cutting pact. “It’s premature to talk about exit strategy. Any exit strategy in the future will surely be implemented in a smooth manner that will not disrupt the stability of the market and it will be on a gradual basis,” Bakheet al-Rashidi, Kuwait’s newly appointed oil minister, said in a statement. “The developments of market fundamentals will continue to be closely monitored by the Joint Ministerial Monitoring Committee (JMMC), in which the State of Kuwait is a leading member, to ensure that the target of re-balancing the market and restoring its stability is achieved,” he added. The Organization of the Petroleum Exporting Countries and non-OPEC producers led by Russia agreed last month to extend oil output cuts until the end of 2018 to […]

Summary of Weekly Petroleum Data for the Week Ending December 8, 2017

14 Dec 2017   OPEC

U.S. crude oil refinery inputs averaged about 17.0 million barrels per day during the week ending December 8, 2017, 243,000 barrels per day less than the previous week’s average. Refineries operated at 93.4% of their operable capacity last week. Gasoline production increased last week, averaging over 10.1 million barrels per day. Distillate fuel production decreased last week, averaging over 5.2 million barrels per day. U.S. crude oil imports averaged about 7.4 million barrels per day last week, up by 161,000 barrels per day from the previous week. Over the last four weeks, crude oil imports averaged over 7.4 million barrels per day, 3.3% less than the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 483,000 barrels per day. Distillate fuel imports averaged 149,000 barrels per day last week. U.S. commercial crude oil inventories (excluding those in the […]

Cyberattacks: The Biggest Threat To OPEC

13 Dec 2017   OPEC

Oil and cybersecurity in one sentence certainly makes for a thrilling read, and there will be an increasing amount of information on the topic as the Internet of Things expands and the global oil industry adopts automation and digital technology. OPEC is no exception in this digitalization drive, but unlike its non-OPEC counterparts, the cartel has emerged as much more vulnerable to cybersecurity threats. An analysis of data collected from 134 countries by the International Telecommunication Union has revealed that some of the world’s biggest oil producers, including Iraq, Saudi Arabia, Venezuela, Iran, and the UAE, are lacking in the cybersecurity department. This means that, compared to European producers and the United States, OPEC members are pretty much unprepared for a major cyberthreat. What is the likelihood of such a threat actually materializing? Well, the general opinion in cybersecurity circles is that everything that can be hacked will be […]

UAE says OPEC, allies to announce exit strategy from oil cuts in June

United Arab Emirates Energy Minister Suhail bin Mohammed al-Mazroui said on Monday that OPEC and non-OPEC oil producers plan to announce in June an exit strategy from global supply cuts, but that does not mean the pact will end by then. Mazroui said it was premature to talk about the form or shape of such an exit strategy before June, when OPEC, Russia and other producers participating in the supply-reduction agreement – aimed at boosting oil prices – are due to meet next. “We will announce … a strategy in the June meeting. That does not mean we will exit in June. That means we will come up with a strategy,” he told reporters […]

Kuwaiti Oil Minister: OPEC Cuts May End Earlier Than Planned

12 Dec 2017   Kuwait, OPEC

To keep the air of mystery, or whatever remains of it after the November 30 Vienna Club meeting, Kuwait’s Oil Minister Issam al Marzouq yesterday said the cuts may end before the end of 2018. “We still have a full year left in the agreement, but there is a possibility that we exit the cuts agreement before 2019 if the market is re-balanced by June,” Al Marzouq said , adding that Russia was pressuring its partners in the agreement to end it as soon as it is possible. The minister was speaking to Bloomberg on the sidelines of an event of the Organization of Arab Petroleum Exporting Countries. Separately, at the same event, Al Marzouq said he expected the market to rebalance no sooner than the last quarter of 2018, in keeping with the extension that OPEC and its partners agreed to in Vienna last month. He added that […]

Withdrawal From OPEC Deal Could Take 6 Months To Negotiate

8 Dec 2017   OPEC

Withdrawing from the OPEC-NOPEC agreement to cut 1.8 million barrels per day of output could take up to six months to fully negotiate, according to top Russian energy official Alexander Novak. “This is a process to be discussed. It can take three months or half-year. A specific moment of time to be considered, depending on the future demand,” the minister said. Novak said discussing a premature withdrawal did not reflect any desire within the Russian leadership to abandon the deal, which, over its lifetime in 2017, has allowed the Brent barrel price to recover to $60+. Last week, OPEC and its non-OPEC partners agreed to extend the deal through the end of 2018, but the team included a review clause that would take place in June. It is unclear whether countries will have the ability to leave the pact at that point. Libya and Nigeria will face a combined […]

The Drastic Drop Off In U.S. Oil Imports

7 Dec 2017   Oil Supply, OPEC, USA

While the dust may now have settled on last week’s OPEC meeting, the cartel’s impact on U.S. oil inventories is set to linger on. Stocks are at their lowest level since January 2016, and are down over 80 million barrels from their peak in March – in spite of a 30 million barrel injection from the SPR. As we head into the holiday season, the U.S. should expect little in the way of holiday cheer from OPEC flows. U.S. imports of OPEC crude have averaged 3.26 million barrels per day through the first eleven months of this year, a smidge higher than last year’s average. Although imports started out the year at 3.7mn bpd in January, the highest monthly level since 2013, we have seen them dropping below the 3mn bpd mark in recent months – led by a significant drop in deliveries from Saudi Arabia. (Click to enlarge) […]

OPEC’s Latest Agreement May Not Stabilize Oil Prices

6 Dec 2017   OPEC, Prices

The 14-strong Organisation of Petroleum Exporting Countries (OPEC), along with 10 oil states outside of the cartel, has reached an agreement to limit oil output until the end of 2018. This decision comes after what has already been more than a year of production cuts, the Telegraph reports . This new deal, wider and more inclusive than the one running since the beginning of this year, will also extend to Nigeria and Libya. Previously, these two countries were exempt from the production quotas, despite being OPEC members, because of their struggles with internal political unrest. OPEC crucially reached an agreement despite the last-minute posturing from Russian oil minister Alexander Novak, who warned that oil prices above $60 a barrel could reignite a production boom in the U.S. shale industry. The agreement reached by the OPEC and non-OPEC members faces several serious challenges in achieving its objective of stabilising oil […]

Oil Markets Calm After OPEC Storm

6 Dec 2017   OPEC, Prices

Natural gas production in the Appalachia region (which includes the Marcellus and Utica shales) has increased by more than 14 billion cubic feet per day (Bcf/d) since 2012. That growth has been the main driver behind the growth in total U.S. gas output. – From January through October 2017, total natural gas output from the Appalachia region averaged 23.8 Bcf/d. – Gas output per rig from new wells also shot up in the region over the past few years. Since 2012, average monthly output per rig for new wells increased by 10.8 Mcf/d since 2012, much higher than any other region in the country. Market Movers • ExxonMobil (NYSE: XOM) is considering investments in offshore oil and gas in Egypt, according to Reuters. • CNPC said it discovered a new oil field in the Juggar Basin […]

Oil Climbs as OPEC Tightening Dovetails With U.S. Supply Drop

6 Dec 2017   OPEC, Prices

Bank of America Merrill Lynch sees Brent at $70 next year U.S. crude stocks probably fell 2.5 million barrels last week Crude rose as lower OPEC production and signs of shrinking U.S. oil inventories bolstered expectations for an end to the global surplus. Futures gained 0.3 percent Tuesday in New York. Output by the Organization of Petroleum Exporting Countries last month slid to the lowest in half a year, evidence the cartel is succeeding in reducing a glut. Oil stockpiles in the U.S. probably declined for a third week, according to a survey of analysts before the release of government data on Wednesday. OPEC members “continue to abide by their cuts,” Gene McGillian, a market research manager at Tradition Energy in Stamford, Connecticut, said by telephone. “Signs that U.S. inventory levels continue to come down and demand stays strong will probably get the market to restart its rally.” Oil […]

OPEC oil output falls in November to lowest since May

5 Dec 2017   OPEC

 OPEC oil output fell in November by 300,000 barrels per day (bpd) to its lowest since May, a Reuters survey found, pressured by a drop in Angolan and Iraqi exports, strong compliance with a supply cut deal and involuntary declines.  OPEC’s adherence to pledged supply curbs rose to 112 percent from October’s 92 percent, the survey found. Top exporter Saudi Arabia pumped below its OPEC target, as did all other members except Ecuador, Gabon and the United Arab Emirates. The Organization of the Petroleum Exporting Countries is reducing output by about 1.2 million bpd as part of a deal with Russia and other non-member producers, which have also committed to production cuts. Oil LCOc1 is trading near a two-year high supported by falling inventories, strong demand and high compliance […]

The One Indicator OPEC Must Watch

5 Dec 2017   OPEC

“We will not let go of our current approach until we reach a balanced market,” Saudi oil minister Khalid al-Falih said Monday at a news conference in Riyadh. OPEC ended months of speculation last week when it decided to extend its production cuts through the end of 2018, easing concerns that the limits would be lifted before the oil market was ready. But while it put some uncertainty to rest, the next question is what OPEC does when the oil market becomes “balanced”? What is the exit strategy ? There isn’t one at the moment, and we can assume OPEC doesn’t know what comes next. But we do know that the group has one key metric in mind: inventories. The target is to bring global oil inventories back down to the five-year average. Oil inventories exploded between 2014 and 2017, hitting record levels that left the world awash in […]