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OPEC Looks To Permanently Expand The Cartel

20 Oct 2017   OPEC

At its November 30 meeting, OPEC will seek to discuss making its current partnership with non-OPEC producers permanent, OPEC’s Secretary General Mohammad Barkindo told reporters at the Oil & Money conference in London on Thursday. “This platform of 24 countries, now hopefully growing, should be institutionalized,” Barkindo said, as quoted by Platts. “We should have a permanent framework to sustain this platform,” OPEC’s secretary general added. “We are working with the Russian and Saudis on how we can structure this platform to sustain it.” In his speech at the conference, OPEC’s chief said that “at OPEC we recognize the importance of institutionalizing a framework that builds on this unparalleled global platform of stability. This would go beyond the short-term and look at some of the broader challenges, as well as opportunities, the oil industry is expected to face in the years and decades ahead.” Referring to the U.S. shale […]

OPEC leans toward nine-month extension of oil supply cut: sources

19 Oct 2017   OPEC

 OPEC is leaning toward extending a deal with Russia and other non-members to cut oil supply for a further nine months, four OPEC sources said, although stronger-than-expected demand growth may allow the group to delay a decision until early next year. A flag with the Organization of the Petroleum Exporting Countries (OPEC) logo is seen during a meeting of OPEC and non-OPEC producing countries in Vienna, Austria September 22, 2017. REUTERS/Leonhard Foeger The Organization of the Petroleum Exporting Countries, plus Russia and nine other producers are cutting oil output by about 1.8 million barrels per day until March 2018, in an attempt to eradicate a supply glut that has weighed on prices. After slow initial progress, OPEC is more confident the cut is working. Oil prices are near a two-year high, supported by falling stocks, strong global demand, a slowdown in U.S. shale output and high […]

OPEC’s Barkindo says balanced oil market is in sight

19 Oct 2017   OPEC

There is no doubt that in the wake of efforts by global oil producers to curb production that the crude market is rebalancing, and doing so at an accelerating pace, OPEC’s secretary-general said on Thursday. A balanced oil market is in sight, Mohammad Barkindo said in a speech at the Oil & Money conference in London.

OPEC compliance with oil output cut deal at 86 percent: IEA head

17 Oct 2017   OPEC

The Organization of Petroleum Exporting Countries (OPEC) has a compliance rate with their output cut pledges of about 86 percent, Fatih Birol, the executive director of the International Energy Agency (IEA), said on Tuesday. Ruben Sprich “Their compliance is about 86 percent, higher than in the past… whether or not they will continue with this plan in November it’s up to them,” Birol told Reuters on the sidelines of the World Knowledge Forum in Seoul. “If they do so, we may see, sometime next year, a rebalancing of the markets, as we still see a significant amount of stock in the markets which is higher than historical averages.” OPEC and other producers including Russia agreed to cut their production by around […]

Kuwaiti Minister: OPEC Deal Extension May Be Unnecessary

17 Oct 2017   OPEC

OPEC and its partners may not need to extend the November 2016 crude oil production cut agreement beyond its March 2018 deadline if everyone fully complies with their quotas, Kuwait’s Oil Minister Essam al-Marzouk told media yesterday. Al-Marzouk noted that OPEC’s compliance rate had hit 116 percent, without adding, however, that this figure referred to August production specifically, while the September data from OPEC’s secondary sources revealed that compliance had fallen, with seven OPEC members pumping more in September than they did in August and three—Iraq, Iran and Gabon—producing above their quotas . The Kuwaiti minister, who leads the ministerial committee that monitors compliance with the deal, went on to add that the top priority for the cartel right now was to make all members stick to their quotas in order to render redundant another extension of the deal. He said OPEC will decide on whether to extend or […]

Gazprom Neft Unhappy With OPEC-Russia Production Cut Deal

17 Oct 2017   OPEC, Russia

Russia’s oil producer Gazprom Neft is ‘holding its nose’ to the OPEC/non-OPEC production cut deal because it has made the company cut its production growth targets, Gazprom Neft’s first deputy CEO Vadim Yakovlev told Reuters in an interview published on Monday. “The companies involved in this deal are paying a different price. The effect is equal for everyone, but the contribution of the companies to the deal is different,” Yakovlev said. “This is related to the market players’ ability to increase their output – we have such a possibility and have to ‘hold our noses’. Gazprom Neft makes a big contribution to the deal. For us, this is a very sensitive issue as it is holding up the development of our fields,” said the manager who noted that the company sees the deal as a short-term one. In June this year, Gazprom Neft CEO Alexander Dyukov said in an […]

Is OPEC Considering Deeper Output Cuts?

16 Oct 2017   OPEC

The oil price, as measured by the most traded Brent Crude number, has been relatively stable since the agreement to limit output was implemented last year and excess inventory has been falling, aided by continued robust demand. Bloomberg reports the comments of OPEC Secretary General Mohammad Barkindo: “There is a growing consensus that … a rebalancing process is under way. We are gradually but steadily achieving our common and noble objectives.” We would take issue with the claim the objectives are noble. Stitching up the market to support higher prices is hardly a noble endeavor, exploiting as it does the leverage of the few (producers) over the many (consumers). But evidence suggests he is right in that the market is more balanced now than a year ago. The question is: where is it going from March of next year, when the current agreement to restrict output expires? “To sustain […]

OPEC again raises demand forecast for its oil, points to 2018 deficit

12 Oct 2017   OPEC

OPEC forecast higher demand for its oil in 2018 on Wednesday and said its production-cutting deal with rival producers was getting rid of a glut, pointing to a tighter market that could move into a deficit next year. Brazil’s state-run oil company Petrobras LPG fuelling stations are seen in the Guanabara bay in Rio de Janeiro, Brazil October 7, 2017. REUTERS/Pilar Olivares In a monthly report, the Organization of the Petroleum Exporting Countries said the market could find support in winter from low distillate fuel stocks and forecasts of colder weather, which would boost distillates demand for heating. OPEC said the world would need 33.06 million barrels per day (bpd) of its crude next year, up 230,000 bpd from its previous forecast. That is its third consecutive monthly increase in the projection from its first estimate made in July. The report illustrates growing confidence among OPEC […]

OPEC’s oil price forecast near a make-or-break point for U.S. shale

12 Oct 2017   OPEC

The price for crude oil next year should be around the so-called Goldilocks number for shale oil drillers in the United States, OPEC economists said. The Goldilocks scenario refers to a price point that’s not so high that it encourages a strong drive in crude oil exploration and production, but not low enough to curtail capital spending and operations. Economists with the Organization of Petroleum Exporting Countries said in their monthly market report for October that the price for West Texas Intermediate, the U.S. benchmark for the price of oil, could be in a range between $50 per barrel and $55 per barrel for 2018. “A rise above that level would encourage U.S. oil producers to expand their drilling activities, otherwise […]

How OPEC Continues To Cheat On Its Own Deal

12 Oct 2017   OPEC

OPEC Monthly Oil Market Report. All data is through September 2017 and is in thousand barrels per day. (Click to enlarge) The above chart does not include the 14th member of OPEC that was recently added, Equatorial Guinea. I do not have historical data for Equatorial Guinea so I may not add them at all. OPEC production has held steady for the past four months. Equatorial Guinea production is tiny, 141,000 bpd so their monthly change in production can be ignored without much effect. OPEC 14 production was up 88,000 barrels per day in September. But that was after their August production had been revised downward by 82,000 bpd. The OPEC 13, (not including Equatorial Guinea), peaked in 2016 at 32,385 kbpd and are down 150 kbpd for the first 9 months of 2017. Please note that when I say “peaked” I mean “peaked so far“. I am well […]

OPEC September Oil Production

12 Oct 2017   OPEC

All data below is based on the latest OPEC Monthly Oil Market Report . All data is through September 2017 and is in thousand barrels per day. The above chart does not include the 14th member of OPEC that was recently added, Equatorial Guinea. I do not have historical data for Equatorial Guinea so I may not add them at all. OPEC production has held steady for the past four months. Equatorial Guinea production is tiny, 141,000 bpd so their monthly change in production can be ignored without much effect. OPEC 14 production was up 88,000 barrels per day in September. But that was after their August production had been revised downward by 82,000 bpd. The OPEC 13, (not including Equatorial Guinea), peaked in 2016 at 32,385 kbpd and are down 150 kbpd for the first 9 months of 2017. Please note that when I say “ peaked ” […]

OPEC To Take Drastic Action Despite Shale Slowdown

11 Oct 2017   OPEC

WTI recently dipped below $50 per barrel for the first time in a month, erasing the strong September rally. It’s no coincidence that after two weeks of price declines, OPEC has tried to talk up the oil market again, hinting that more drastic action could be forthcoming. Echoing the world’s top central bankers, OPEC’s Secretary General said that the oil cartel might need to take “extraordinary” measures to balance the oil market next year. “There is a growing consensus that, number one, the re-balancing process is underway,” OPEC’s Mohammad Barkindo told reporters on Sunday in New Delhi. “Number two, to sustain this into next year, some extraordinary measures may have to be taken in order to restore this stability on a sustainable basis going forward.” As always, OPEC is vague on the specifics, but the working assumption is that the group will agree to an extension of the cuts […]

U.S. shale producers called to OPEC balancing effort

11 Oct 2017   OPEC, Shale Oil

OPEC Secretary General Mohammad Sanusi Barkindo calls North American shale producers to do their part in the effort to balance an oversupplied market for crude oil. Photo courtesy of the Organization of Petroleum Exporting Countries Oct. 10 (UPI) — Operators working in shale basins in the United States are called on to do their part to bring the oil market back to balance, OPEC’s secretary general said. Members of the Organization of Petroleum Exporting Countries and a handful of non-member states started an effort to drain the surplus on the five-year average in global crude oil inventories through managed production declines in January. The agreement stands until March. Speaking at an energy conference in New Delhi, OPEC Secretary General Mohammad Sanusi Barkindo said oil demand growth in 2018 should be “quite robust,” while commercial oil stocks in the world’s advanced economies continues to fall. Barkindo said the effort in […]

OPEC Secretary General urges U.S. shale oil producers to help cap global supply

10 Oct 2017   OPEC

OPEC’s Secretary General Mohammed Barkindo on Tuesday called on U.S. shale oil producers to help curtail global oil supply, warning extraordinary measures might be needed next year to sustain the rebalanced market in the medium to long term. “We urge our friends, in the shale basins of North America to take this shared responsibility with all seriousness it deserves, as one of the key lessons learnt from the current unique supply-driven cycle,” said Barkindo. The Organization of the Petroleum Exporting Countries official’s comments came during a speech delivered at a conference.

OPEC can’t “afford to letup” as 2018 supplies rise: Gunvor CEO

10 Oct 2017   OPEC

The oil market is rebalancing but OPEC cannot “afford to letup” on its production cuts in the face of rising non-OPEC supplies next year, trading house Gunvor’s CEO Torbjorn Tornqvist told Reuters. “OPEC in our view cannot afford to let up, because more oil is coming and the question is, ‘is the demand increase big enough to absorb that?’” Tornqvist told the Reuters Global Commodities Summit taking place this week. He said that 2017 is different compared to 2016 in terms of market rebalancing with oil product stocks falling and crude in floating storage clearing up with the current market structure. “We don’t see this market being out of balance one way or another,” he said. But he said that overall crude oil stocks […]

OPEC Says ‘Extraordinary’ Steps Needed for Stable Market in 2018

9 Oct 2017   Oil Supply, OPEC

Re-balancing of oil market is underway: OPEC Secretary-General More measures may be needed to sustain recovery into next year Oil producers are succeeding in re-balancing an oversupplied market, though they may need to take further steps to sustain the recovery into 2018, OPEC Secretary-General Mohammad Barkindo said. Saudi Arabia and Russia are currently leading consultations between the Organization of Petroleum Exporting Countries and other major suppliers about the future of their agreement to cut oil output, Barkindo said Sunday in New Delhi. The pact expires in March, and oil producers are debating whether to extend it later into the year. “There is a growing consensus that, number one, the re-balancing process is underway,” he said after meeting with Indian Oil Minister Dharmendra Pradhan. “Number two, to sustain this into next year, some extraordinary measures may have to be taken in order to restore this stability on a sustainable basis […]

OPEC SEP CRUDE OIL OUTPUT UP SLIGHTLY FROM AUG ON MORE FROM LIBYA, IRAQ: PLATTS SURVEY

7 Oct 2017   OPEC

OPEC Sep crude oil output up slightly from Aug on more from Libya, Iraq: Platts survey Venezuelan output slumps to 1.86 mil b/d Libyan output recovery still volatile, production up 80,000 b/d Saudi output 10 mil b/d; Iraq 4.50 mil b/d; Iran 3.83 mil b/d OPEC oil output in September rose marginally by 10,000 b/d, as production increases in Libya and Iraq were largely offset by declines in Venezuela and Angola, an S&P Global Platts survey of OPEC and oil industry officials and analysts showed October 6. OPEC’s 14 members saw their collective September output rise to 32.66 million b/d from 32.65 million b/d in August. That is some 740,000 b/d above its declared ceiling of about 31.92 million b/d, when Equatorial Guinea, which joined in May, is added in and Indonesia, which suspended its membership in December, is subtracted. OPEC announced the ceiling as part of a production […]

Saudi hopes for consensus on future of global oil deal before November OPEC meet

7 Oct 2017   OPEC, Saudi Arabia

Saudi Arabia hopes to reach a consensus with Russia and other major oil producers on the future of a global deal to cut oil output before an OPEC meeting in November, Energy Minister Khalid al-Falih said on Friday. Falih was speaking in Moscow two days after Russian President Vladimir Putin said it was possible that the supply reduction deal, which is due to expire in March, could run to the end of next year, although Russia has not made any commitment. Saudi Arabia has made no firm pledge to extend the deal, but Falih said on Thursday his country was “flexible” regarding Moscow’s suggestion. “I am looking forward to reaching a consensus, working with you in the next few weeks before […]

Exports could add a layer to OPEC, non-OPEC accountability, tracker says

5 Oct 2017   OPEC

Monitoring oil exports may add another layer of support to the OPEC-led effort to balance an oversupplied market, a director at a vessel tracking firm said. Russian Energy Minister Alexander Novak kicked off a five-day energy conference in Moscow and St. Petersburg this week with suggestions that oil exports from members of the Organization of Petroleum Exporting Countries and non-member states may be monitored. “This is a new instrument, which has not been clearly formed yet,” he was quoted by Russian news agency Tass as saying. Russia is party to a committee monitoring overall compliance to an agreement enacted in January that was designed to drain the five-year surplus in global crude oil inventories with […]

Putin Says Oil Pact With OPEC May Be Extended to End of 2018

5 Oct 2017   OPEC, Russia

President Vladimir Putin said Russia is open to extending a deal with OPEC to curb oil supplies to the end of 2018, though he’ll wait to make a decision until nearer the expiry of the existing pact in March. The comments are the strongest signal yet that the Kremlin is willing to redouble efforts to lift global energy prices, coming as Putin prepares to welcome King Salman Bin Abdulaziz of Saudi Arabia to Russia for the first time this week. OPEC Secretary-General Mohammad Barkindo called them a “very strong endorsement” of the deal. “Based on the realities in March 2018, we will make our decision, but I do not rule out that we may extend” the agreement, Putin said at the Russian Energy Week conference […]

Iran sees no objection within OPEC to deepening or extending oil cut

5 Oct 2017   OPEC

Iran’s oil minister said on Wednesday he saw no objection within OPEC to extending or even deepening an OPEC-led deal to cut oil output get rid of a supply glut. The deal by the Organization of the Petroleum Exporting Countries and non-OPEC producers including Russia to cut supply by about 1.8 million barrels per day runs until March 2018. “It depends on collective decision and consensus within OPEC, but I think there is no objection against this proposal,” Iran’s Bijan Zanganeh told Reuters, asked whether there were talks to deepen the cut or extend it. Asked to specify if he meant no objection to deeper cuts, he replied: “Yes. I‘m discussing.”

Iran says OPEC met oil output cut pledges by just over 100 percent in September: RIA

5 Oct 2017   Iran, OPEC

Iranian Oil Minister Bijan Zanganeh said on Wednesday that OPEC members had fulfilled their obligations under a global oil output cut deal by slightly over 100 percent in September, the RIA news agency quoted him as saying. He was also cited as saying that non-OPEC producers had met their own output cut obligations by nearly 100 percent.

Venezuela To Invite More Countries To Join Output Cuts

5 Oct 2017   OPEC, Venezuela

Up to 12 oil producing countries from South America and Africa have been invited to join the OPEC/non-OPEC production cut deal, Venezuela’s Oil Minister Eulogio del Pino said on the sidelines of an energy forum in Russia on Wednesday. At the event, Del Pino stressed on the importance that more countries join the output cut pact, Venezuela’s oil ministry said in a statement today. Currently, there are 24 countries in the deal, representing around 50 percent of the market; it would be a very positive message if we could include 12 more countries in the agreement, Del Pino said. OPEC ministers and ministers from other oil producing nations will discuss this week the progress of the production cut deal and a mechanism to monitor crude oil exports, on the sidelines of the Russian Energy Week between October 3 and 7, Russian Energy Minister Alexander Novak said on Tuesday. More […]

Russia’s Novak: no need now to talk about additional oil output cuts – magazine

4 Oct 2017   OPEC, Russia

There is no immediate need to talk about additional oil output cuts as part of a global deal between OPEC and non-OPEC nations, Russian Energy Minister Alexander Novak said in an interview with the Oil and Gas Vertical magazine published on Tuesday. Sponsored

Russia proposes a mechanism to monitor crude oil exports

4 Oct 2017   OPEC, Russia

Ministers from the Organization of Petroleum Exporting Countries attending a conference in Moscow may take up export monitoring, Russia’s energy minister said. Russian Energy Minister Alexander Novak said he expected around 30 ministers from OPEC and non-OPEC producers to show up for a five-day conference in Moscow, which began Tuesday. Before they arrived, he said a mechanism to monitor oil exports could be added to agenda. “At the latest meeting we agreed to monitor oil exports,” he was quoted by Russian news agency Tass as saying. “This is a new instrument, which has not been clearly formed yet, which is why I think it will be one of the main issues on the discussion agenda from the viewpoint of export […]

Oil Markets Fear An OPEC Compliance Collapse

4 Oct 2017   OPEC

Natural gas inventories are down significantly compared to 2016 levels, which helps explain the prices around $3/MMBtu compared to prices much lower than that last year. – Inventories are still a bit above the five-year average, but the surplus has narrowed substantially. Soon storage levels could dip below that average level. – The EIA forecasts inventories “in the Lower 48 states to reach 3,755 Bcf by the end of October 2017, about 48 Bcf lower than the previous five-year average and 222 Bcf lower than at the end of October 2016.” Market Movers – Dominion Energy (NYSE: D) is considering a major expansion of its Atlantic Coast natural gas pipeline, according to the AP, which could extend the project into South Carolina, connecting more Marcellus Shale gas to the U.S. Southeast. – Hess (NYSE: HES) says […]

Next Week Could Be A Turning Point For The OPEC Output Deal

4 Oct 2017   OPEC

OPEC ministers and ministers from other oil producing nations will discuss this week the progress of the production cut deal and a mechanism to monitor crude oil exports, on the sidelines of an energy forum in St. Petersburg, Russian Energy Minister Alexander Novak said on Tuesday. “We will discuss the state of the market and the current situation regarding monitoring and execution of the crude production deal with our colleagues at the Russian Energy Week,” Russia’s TASS news agency quoted Novak as saying. “At the latest meeting we agreed to monitor oil exports. This is a new instrument, which has not been clearly formed yet, which is why I think it will be one of the main issues on the discussion agenda from the viewpoint of export control mechanism,” Novak noted. Before the latest meeting on September 22, reports emerged that the OPEC/non-OPEC joint panel tasked with monitoring the […]

OPEC Producers Unmoved By U.S. Shale Threat In Asia

4 Oct 2017   Asia, OPEC, USA

Middle Eastern oil producers are confident that strong demand for their product from Asia will keep their coffers full even as U.S. shale boomers venture into the biggest regional oil market, S&P Platts reports , citing comments from the APPEC conference that took place last week in Singapore. OPEC’s Secretary General, Mohammed Barkindo, said at the conference that the Asia-Pacific region continues to be a key market for the cartel—and not just key, but the “primary outlet for OPEC and Middle Eastern export barrels.” He added that by 2040, oil exports from the Middle East to Asia will rise to 22 million bpd from 14.5 million bpd last year. OPEC’s number-two, Iraq, already has concrete plans to increase the portion of its oil that it sends to Asia from the current 50 percent to as much as 80 percent, according to Dheyaa Jafar Hajam al-Musawi, councilor for energy affairs […]

Iran says OPEC ready to do everything needed for market stability

4 Oct 2017   Iran, OPEC

Iran’s Oil Minister Bijan Zanganeh talks to journalists during a meeting of the Organization of the Petroleum Exporting Countries (OPEC) in Vienna, Austria, November 30, 2016. REUTERS/Heinz-Peter Bader MOSCOW (Reuters) – Iranian Oil Minister Bijan Zanganeh said on Wednesday it is his understanding that all OPEC members want to do everything necessary to stabilize oil markets. Asked by reporters in Moscow whether an oil production-cutting deal should be extended beyond March, he said: “We have not discussed with each other in this regard. But it seems that all the OPEC members believe that to make stability on the market … it’s my sense that all are ready to do everything needed for this situation.” Reporting by Katya Golubkova, Vladimir Soldatkin, Olesya Astakhova, Darya Korsunskaya and Jack Stubbs; Editing by Dale Hudson

Saudi Compliance To OPEC Deal Comes At A Price

4 Oct 2017   OPEC, Saudi Arabia

Saudi Arabia is following through with its pledge to stick to the output cuts in the OPEC/non-OPEC deal. The Kingdom is also reducing exports to some buyers, even to its most prized market—Asia. But this compliance comes at a price—Saudi Arabia has lost market share in Asia, with Russia, Angola and Iraq being the main beneficiaries. At first glance, it may seem odd that Saudi Arabia is giving up some share of its beloved Asian market. But the Kingdom has two very sound reasons to stick to cuts, and to ‘motivate’ other members to do the same. Those two reasons are (a.) reducing the budget deficit and (b.) getting the highest valuation possible for Saudi Aramco before the IPO takes place in 2018. Saudi Arabia’s two main drivers actually come down to just one goal: achieve higher oil prices . However, the Saudis face another dilemma—the higher the price […]

Survey Shows Spike In OPEC’s September Oil Production

3 Oct 2017   OPEC

Bloomberg survey . Total production from the cartel reached 32.83 million barrels per day, which marks a 120,000 bpd increase from August, the Bloomberg survey found. Libya and Nigeria are both exempt from output cuts agreed on by OPEC last November. Though Nigeria has agreed to limit production to 1.8 million bpd earlier this year, Libya has made no such pact. Nigeria’s production reached 1.77 million bpd in September, the report said. Saudi Arabia, the de facto leader of OPEC, also saw a production jump. The No. 1 cartel producer saw its production increase by 60,000 bpd month-over-month, while ally Kuwait saw a similar jump of 50,000 bpd. Total compliance within the block dropped to 82 percent in September, compared to 88 percent in August, the survey said. The Sharara field, the largest in the North African country, reached 230,000 bpd last week , according to an anonymous source, […]

OPEC oil output edges higher in September as Iraq, Libya pump more

30 Sep 2017   OPEC

OPEC oil output has risen this month by 50,000 barrels per day (bpd), a Reuters survey found, as Iraqi exports increased and production edged higher in Libya, one of the producers exempt from a supply-cutting deal. OPEC’s adherence to its pledged supply curbs slipped to 86 percent from August’s 89 percent, the survey found. Top exporter Saudi Arabia continued to shoulder a larger portion of OPEC’s total cut by pumping below its target. The gain in Iraqi supplies shows that political tension over the Kurdish region’s independence referendum has not affected its exports. Concern that these could be at risk has helped support oil, which this week reached almost $60 a barrel, the highest in more than two years. “No rapid solution to the crisis can be expected, which should continue to lend support to the oil price,” said Carsten Fritsch, an analyst at Commerzbank in […]

Summer best time to back out of OPEC deal, Russia says

30 Sep 2017   OPEC, Russia

It’s best to draw out of the OPEC-led effort to balance the market with production cuts during the summer when demand is high, Russia’s energy minister said. Russia is a member of a committee monitoring the effort to drain the surplus on the five-year average of global crude oil inventories and the largest contributor among parties that aren’t a member of the Organization of Petroleum Exporting Countries. Russian news agency Tass reported Monday it was told by “a high-ranking source” within OPEC the consensus so far was mixed on extending the arrangement by possibly another six months, which make be the expiration date into September 2018. Russian Energy Minister Alexander Novak told Austria’s Die Presse newspaper it would […]

Mideast OPEC producers fret oil price rally may burn out

29 Sep 2017   OPEC

Middle East OPEC producers are concerned weak demand and excess supply in the first quarter of 2018 may undermine an oil price rally that has pushed Brent crude about 30 percent higher since June, OPEC and industry sources said. Supply cuts since Jan. 1 by the Organization of the Petroleum Exporting Countries, Russia and other producers helped lift prices, while Hurricane Harvey added to gains when it knocked out nearly a quarter of U.S. refining capacity. Benchmark Brent rose above $59 a barrel this week, its highest level in more than two years and nearing the $60 mark. Gulf oil sources have said OPEC’s largest producer Saudi Arabia would like to achieve that level this year. Brent is now trading around $58. “I don’t think it is sustainable,” said […]

As OPEC Compliance Peaks, Can The Drawdowns Continue?

26 Sep 2017   OPEC

Since it agreed to production cuts, OPEC stated that its mission is to see the oil futures curve flip from contango to backwardation as part of its work to erase the global oil glut. Since summer began, the contango is disappearing, and now Brent and Oman futures are in a state of backwardation for the rest of 2017 and for 2018, but OPEC’s work is far from over. Contango, a market situation in which the spot prices are lower than future prices, encourages traders to store crude oil and profit from selling it at prices higher than the spot market. Crude oil stores are precisely what OPEC is trying to do away with. Backwardation, contango’s opposite, was one of OPEC’s key goals with the output cuts—discouraging the storage of crude oil and driving oversupply down. It looks like OPEC has accomplished one of its goals: flipping from contango to […]

Tass: OPEC might extend production cut deal again

26 Sep 2017   OPEC

A source close to negotiations over an OPEC-led effort to balance the market with production cuts told Russian media Monday an extension was under review. The Organization of Petroleum Exporting Countries and a handful of non-member state producers like Russia started implementing an agreement in January to bring the five-year average for global oil stockpiles closer to even with managed production cuts. The agreement was supposed to last 12 months, but was extended to March earlier this year. Russian news agency Tass reported Monday it was told by “a high-ranking source” within OPEC the consensus so far was mixed on extending the arrangement again. “Currently, extension is under discussion for a period of 3-6 months,” the source was quoted as saying . Members of […]

Opec has lost its crown as world’s top oil player

26 Sep 2017   OPEC

It’s happy days for Opec, but once the whoops die down, the group should take a long hard look at itself. Because it has lost its crown as the world’s top oil player. Shale billionaire Harold Hamm told Bloomberg TV on Friday that forecasts of US oil production growth are way too optimistic and are distorting global crude prices. That news was greeted with big smiles – if not wild cheering – by oil ministers meeting in Vienna to discuss the effectiveness of their output deal. But it’s too early for them to start celebrating just yet. That wasn’t the only boost the ministers got ahead of their latest gathering. Analysts at Goldman Sachs said in a Sept 21 note that the level of Brent backwardation – the premium for crude for delivery next month over that for delivery a year in the future – “is consistent with OECD […]

OPEC’s pact compliance ‘acceptable’, some changes needed: Iran minister

25 Sep 2017   OPEC

OPEC’s compliance with an agreement among oil producers to reduce output has been acceptable, Iran’s oil minister said on Monday, adding that some changes were needed if participants seek to balance the market. The Organization of the Petroleum Exporting Countries, Russia and several other producers have cut production by about 1.8 million barrels per day (bpd) since the start of 2017. Oil prices have risen by 15 percent in the past three months. Participants have been considering extending the deal beyond the end of March 2018 when it is due to expire. “OPEC’s compliance has been acceptable overall. However, some changes are needed,” Iran’s oil minister Bijan Zanganeh was quoted as saying by SHANA, the oil ministry’s news agency. “Firstly, all members […]

OPEC’s Premature Victory Lap

25 Sep 2017   OPEC

OPEC met on Friday to review the progress of their work over the past 9 months, assessing whether or not they should extend their current production cuts beyond the March 2018 expiration date. OPEC gathered in Vienna at a time when the oil market arguably looks tighter than it has in a very long time. Demand is growing at a rapid clip – increasing at a 1.6 million-barrel-per-day rate this year – global supply fell in August, and inventories have drained at a much swifter pace in recent months. Kuwait’s oil minister Issam Almarzooq said that global crude and refined product stockpiles have “massively drained.” “We are on the right track and there is now more light at the end of the tunnel,” Almarzooq said at the start of the meeting on Friday. “This is not the time to take our foot off the accelerator.” Part of the reason […]

Iran Says OPEC Must Address Rising Libya, Nigeria Oil Output

25 Sep 2017   OPEC

OPEC backs any action to help stabilize oil market: Zanganeh Iraq to boost output capacity while committing to OPEC Cuts OPEC’s commitment to cutting production to clear a global glut is working, but the group needs to address rising output from Libya and Nigeria, Iran’s Oil Minister Bijan Namdar Zanganeh said. Compliance with the output cuts is “acceptable,” Zanganeh told reporters Sunday in Tehran. The Organization of Petroleum Exporting Countries should focus on “the situation with Libya and Nigeria,” he said, referring to the two countries exempted from capping production due to their internal strife. Nigeria will be able to participate in cuts when its output stabilizes at 1.8 million barrels a day, Oil Minister Emmanuel Kachikwu said Friday. “OPEC’s actions are working and compliance is acceptable overall, although there needs to be some change,” Zanganeh said, referring to OPEC members’ compliance with their pledges to pump less. “Changes […]

OPEC Seeks to Contain Its ‘Problem Children’

23 Sep 2017   OPEC

The oil refinery in Warri, Nigeria, pictured in August 2015, has roared back to life after years of neglect. Nigeria and Libya have added 550,000 barrels a day of crude-oil production since October, wiping out almost half of the cuts achieve by other members of OPEC. The Organization of the Petroleum Exporting Countries is scrambling to contain output from its strife-torn members Libya and Nigeria, where surging production could threaten to derail the oil cartel’s efforts to withhold crude supply and raise its price. Libya and Nigeria were exempt from OPEC’s agreement last year to join with Russia and other producers to cut about 2% of the world’s oil production . The countries’ oil industries at the time were crippled by civil unrest and weren’t expected to recover any time soon. Both have since struck deals with militants that turned on the spigots again. Libya and Nigeria have added […]

OPEC says winning battle to end oil glut

23 Sep 2017   OPEC

OPEC and other oil producers are clearing a glut that has weighed on crude prices for three years and may wait until January before deciding whether to extend their output curbs beyond the first quarter of 2018, ministers said on Friday. The Organization of the Petroleum Exporting Countries, Russia and several other producers have cut production by about 1.8 million barrels per day (bpd) since the start of 2017, helping lift oil prices by 15 percent in the past three months. OPEC and its allies have been considering extending the deal beyond the end of March when it is due to expire. Russia’s energy minister said no decision was expected before January, although other ministers suggested such a decision could be taken before the end […]

IEA: Subdued demand means relatively oversupplied oil market

22 Sep 2017   IEA, Oil Supply

Despite multilateral efforts to balance the oil market with managed production cuts, the situation in general still favors the supply side, the IEA said. The Organization of Petroleum Exporting Countries in January started implementing an arrangement to sideline the equivalent of about 2 percent of the world’s demand for oil in an effort to draw on the five-year level of crude oil held in global stockpiles. Parties to a committee monitoring the impacts of the agreement meet later this month, after already extending the original terms by another three months earlier this year. Commentary from the International Energy Agency, published late Wednesday , said long-term trends matter when looking for signs of balance. […]

OPEC Seeks to Contain Its ‘Problem Children’

22 Sep 2017   OPEC

The oil refinery in Warri, Nigeria, pictured in August 2015, has roared back to life after years of neglect. Nigeria and Libya have added 550,000 barrels a day of crude-oil production since October, wiping out almost half of the cuts achieve by other members of OPEC. The Organization of the Petroleum Exporting Countries is scrambling to contain output from its strife-torn members Libya and Nigeria, where surging production could threaten to derail the oil cartel’s efforts to withhold crude supply and raise its price. Libya and Nigeria were exempt from OPEC’s agreement last year to join with Russia and other producers to cut about 2% of the world’s oil production . The countries’ oil industries at the time were crippled by civil unrest and weren’t expected to recover any time soon. Both have since struck deals with militants that turned on the spigots again. Libya and Nigeria have added […]

Kemp: Mission Accomplished? OPEC Banishes Contango

22 Sep 2017   OPEC

“There is no doubt that the oil market is moving in the right direction,” the Organization of the Petroleum Exporting Countries noted with satisfaction in its most recent bulletin published on Wednesday. “The rebalancing process was never going to happen overnight; it was never going to happen in a linear fashion; and it was always going to require a concerted effort,” OPEC observed. “Patience and perseverance are still required”, the bulletin warned, but the organisation is well on the way to achieving the objectives it set when announcing output cuts in November 2016. Reported oil inventories in the advanced economies have begun to decline towards their five-year average while oil stored at sea and in remote locations has also […]

OPEC’s Strategy To Clamp Down On Cheating

22 Sep 2017   OPEC

The latest chapter of the “what will OPEC do next” saga unfolded on Thursday as reports emerged that the cartel and the non-OPEC producers led by Russia may discuss a proposal to consider informal monitoring of crude oil exports, in addition to supervising compliance to production cuts. The OPEC/non-OPEC joint panel on monitoring the cuts, which consists of OPEC’s Kuwait, Venezuela, and Algeria, as well as non-OPEC Russia and Oman, is expected to discuss on Friday in Vienna a recommendation for monitoring exports, Bloomberg reports, citing two delegates who spoke on the condition of anonymity. Even if the producers agree to monitoring exports, results would be discussed internally, and OPEC’s secondary sources will remain the only official measuring stick for compliance, the delegates told Bloomberg. According to Russian media, Russia’s Energy Minister Alexander Novak has said that the panel would discuss a monitoring procedure for oil exports at the […]

OPEC panel to discuss extending oil cut deal, tracking exports

22 Sep 2017   OPEC

OPEC and non-OPEC nations meeting on Friday will discuss a possible extension of an oil supply cut deal to support prices and will consider monitoring exports to assess compliance. The Organization of the Petroleum Exporting Countries aims to clear a global oil supply glut by curbing output by about 1.2 million barrels per day (bpd). Russia and other non-OPEC producers agreed to cut half as much. The pact runs to the end of March. Ministers on a panel monitoring the deal, which comprises Kuwait, Venezuela and Algeria, plus non-OPEC producers Russia and Oman, are scheduled to meet at 0800 GMT on Friday in Vienna. Oil prices have gained more than 15 percent in the past three months to trade above $56 a […]

OPEC Has Success at Last, But Oil Revival May Be Short-Lived

21 Sep 2017   OPEC, Prices

When OPEC and its allies gather this week, they’ll have the best evidence yet that their efforts to clear a global oil glut are succeeding. It may prove short-lived. Crude prices have rebounded to a three-month high and the world’s bloated fuel inventories are shrinking, signaling that nine months of production cuts by the alliance of the Organization of Petroleum Exporting Countries and nations including Russia are at last paying off. Yet as U.S. shale oil continues to thrive and seasonal demand wanes, the surplus that has weighed on markets for three years looks set to come back. “The strategy finally has a window of opportunity in which it can work,” said Ed Morse, head of commodities research […]

IEA Sees Risk of Volatile Oil Prices on Weak Upstream Investment

19 Sep 2017   IEA

Lag in investment raises risk of tightened market: Atkinson IEA failed to foresee ‘technical ingenuity’ of U.S. shale A dearth of new investment in oil production is stoking a risk of tighter crude supply and unstable prices, even as demand growth is expected to slow over the next five years, according to a senior International Energy Agency official. The worldwide cushion of spare production capacity will shrink without further investment in exploration and output, Neil Atkinson, the head of the IEA’s oil markets and industry division, said at a conference in Manama, Bahrain. “There are still not enough signs of investment beginning to return, and that raises the risk of tightening of the market in the next five years and a risk to the stability of oil prices,” he said Sunday. “There is at least a possibility of going back to the situation we had 10 years ago where […]

IEA: Price Spike Coming In 2020

19 Sep 2017   IEA

The oil market has been awash in crude for more than three years, and OPEC has struggled to accelerate the rebalancing effort, but the world could be heading for a supply crunch in a few years due to the sharp fall in industry spending. The halving of oil prices from $100 per barrel before 2014 down to just $50 today has led to a corresponding plunge in upstream investment. But even as benchmark prices seem to have stabilized over the past year, with most analysts predicting gradual and modest gains in the year ahead (depending on OPEC’s actions), there’s still no sign of a serious rebound in spending levels. The problem of a shortage of supply seems very far off today, given the swift turnaround in U.S. shale and persistently high levels of crude storage. But demand continues to rise—the IEA just upgraded its demand growth estimate for 2017 […]