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Analysis: OPEC caught in limbo as options to change status quo limited

18 Aug 2017   OPEC

As OPEC and non-OPEC nations meet for another joint technical committee meeting on August 21, the oil producer group’s options seem limited, leading to a preoccupation with ensuring compliance with output cuts and hoping that the strength of the oil markets lasts longer.  This upcoming meeting in Vienna, following on from a similar meet-up in Abu Dhabi earlier this month in which Iraq, Kazakhstan, Malaysia and UAE were scrutinized, highlights OPEC’s commitment to the pact but also the fact that its hands are somewhat tied.  Analysts have said that this need for patience is a “fact of life” that the group and even the oil market will have to live with.  OPEC production starts to climbThere also seems to be a consensus that if deeper cuts aren’t invoked then the rebalancing could drag on much longer, placing even greater pressure to maintain conformity. But deeper cuts could compound the problem.  “The conundrum OPEC and Russia face is as follows: more aggressive supply cuts may raise the oil price but will only invite more US shale production. Abandoning supply cuts will no doubt lead to a price correction into the $40/b [territory] and maybe lower,” according to Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas.  “This catch-22 situation may leave no other option than continue current supply policy and see where oil inventories end up by March 2018,” he said.

Analysts See OPEC Compliance Erode In H2 2017

17 Aug 2017   OPEC

OPEC’s compliance with the output cuts will continue to slip in the second half this year, despite recent rhetoric reiterating the cartel members’ commitment to stick to the production quotas, according to JP Morgan. “More positive overtures from the Saudi Arabian and Iraqi Energy Ministers on their respective commitments to the agreed cuts helped bolster market sentiment on the outlook for prices,” JP Morgan said in a note, as quoted by the Trend news agency. At the beginning of last week, OPEC held a meeting with some of the producers and cited its members Iraq and the UAE, as well as non-OPEC signatories to the deal Kazakhstan and Malaysia, as laggards in compliance. OPEC however added that they “all expressed their full support for the existing monitoring mechanism and their willingness to fully cooperate.” The jawboning continued when Iraqi oil minister Jabar al-Luaibi visited Saudi Arabia last week to […]

IEA: OPEC Must Extend Cuts To Balance Oil Markets

16 Aug 2017   OPEC

It has long been the suspicion of many oil market analysts that the U.S. shale industry was likely too nimble for OPEC to really hammer it into oblivion. That proved to be the case after two years of low prices – shale production came off from peak levels, but held up through 2016. That was long enough to force OPEC’s hand. The deal that OPEC put in place late last year, taking a combined 1.8 million barrels per day (mb/d) off the market, really took the pressure off of shale producers. OPEC decided that it would sacrifice some production in order to boost revenues through higher prices. That threw a lifeline to shale producers, and shale output has made a swift comeback since last year. Now, there is a growing expectation that OPEC can’t keep its cuts going. The OPEC/non-OPEC coalition had hoped that the market would have balanced […]

Oil prices edge lower on OPEC output

15 Aug 2017   OPEC, Prices

Crude oil prices edged lower early Monday on signals of declining volatility and reports of a stronger position from OPEC-member Libya. Sandy Fielden, the director of research, commodities and energy at Morningstar, said in a report that crude oil prices were settling into a relatively narrow range, which would indicate the volatility that followed a decline in crude oil prices that started in the second half of 2014 is finally starting to ease. “Although outside factors such as geopolitical instability — think Venezuela or North Korea — can always throw a curveball, the indications are that today’s relative stability is here to stay until the next system shock,” his report read. Crude […]

Is OPEC Counting Too Much On Venezuela Sanctions?

14 Aug 2017   OPEC, Venezuela

The Organization of Petroleum Exporting Countries (OPEC) released its monthly oil market report on Thursday, and the news was enough to send WTI below $50 after a brief week-long rally. The report indicated OPEC’s production reached a new height in July, as members pumped above and beyond the production cuts agreed to last November and extended this May. Within the group, however, there’s lots of potential for disruption, which could send prices up or down depending on circumstances. Total OPEC production reached its highest level all year, topping out at 32.9 million bpd in July, up 172,600 bpd from June. Saudi Arabia, the largest producer and de facto leader of OPEC, reported monthly production averaging 10.06 million bpd. The country exceeded its production quota largely due to higher seasonal demand, and will likely lower it again at the end of the summer. The oil producer has stated it intends […]

Exposing The OPEC Deal Saboteurs

12 Aug 2017   OPEC

And some surprising numbers this week show that slide is likely to continue. With the world’s largest oil-producing nations pumping out more crude than many energy observers are expecting. That’s OPEC. A group oil investors have been looking to as a saviour — expecting that production cuts from key nations like Saudi Arabia will help support global oil prices. But a survey released this week by Platts shows that OPEC output is far from declining. In fact, OPEC production in July hit its highest level for 2017 — coming in at 32.82 million barrels per day, up 330,000 b/d from June. There’s one big reason for OPEC’s surging production: Libya. A nation that saw its July production rise 180,000 barrel per day — as key oil fields across the country restart under ceasefire deals between the central government and local rebel factions. All told, Libya’s July production rose to […]

OPEC/Non-OPEC Overproduce 470,000 Bpd Above Commitment

12 Aug 2017   OPEC

Stronger-than-expected oil demand growth may be tilting the market to rebalancing, but confidence in any sustained rebalancing is suppressed on the back of OPEC and non-OPEC producers’ signals of weakening resolve, the International Energy Agency (IEA) said in its August report on Friday. Together, the 22 signatories to the oil output cut deal are producing about 470,000 bpd above the combined level they have committed to keep, according to the IEA, so promises of increased demand and reaffirmations of signatories to the production cuts are falling on mostly deaf ears. “There would be more confidence that re-balancing is here to stay if some producers party to the output agreements were not, just as they are gaining the upper hand, showing signs of weakening their resolve,” the international agency noted. At the beginning of this week, OPEC held a meeting with some of the producers and cited its members Iraq […]

Saudi Arabia: Deeper Cuts Are Still On The Table

12 Aug 2017   OPEC, Saudi Arabia

OPEC and its non-OPEC partners have not closed the door to the possibility of extending the production cut agreement or even lowering production levels, Saudi Oil Minister Khalid al-Falih told Saudi-owned newspaper Asharq Al-Awsat in remarks published on Friday. Al-Falih’s comments were aired just a day after OPEC confirmed reports that its crude oil production increase last month, reporting a daily rate of 32.869 million barrels , up by 172,600 bpd. Libya, Nigeria, and Saudi Arabia were the main drivers behind the OPEC production increase, with Libya raising its output by 154,300 bpd—by far the biggest increase among the cartel’s members. Nigerian oil production rose by 34,300 bpd to 1.748 million bpd, while Saudi Arabia’s went up by 31,800 bpd to 10.067 million bpd. “The possibility of continued production cuts is on the table, and the door to extension of reduction has not been closed. If further actions are […]

IEA says strong oil demand growth helps market’s rebalancing

11 Aug 2017   IEA, Prices

Global oil demand will grow more quickly than expected this year, helping to ease a glut despite rising crude production from North America and weak OPEC compliance with output cuts, the International Energy Agency said on Friday. The agency revised its 2017 demand growth forecast to 1.5 million barrels per day (bpd) versus 1.4 million bpd in its previous monthly report and said it expected demand to expand by a further 1.4 million bpd next year. “Producers should find encouragement from demand, which is growing year-on-year more strongly than first thought,” the Paris-based IEA said. “There would be more confidence that rebalancing is here to stay if some producers party to the output agreements were not, just as they are gaining the upper hand, showing signs of weakening their resolve,” the IEA added. The Organization of the Petroleum Exporting Countries is curbing output by about 1.2 […]

OPEC output climbed 173,000 b/d in July

11 Aug 2017   OPEC
OPEC output climbed 173,000 b/d in July

Total crude oil production from the Organization of Petroleum Exporting Countries increased 173,000 b/d month-over-month in July to average 32.87 million b/d, according to five secondary sources used in the cartel’s August Monthly Oil Market Report.  Preliminary data indicate that global oil supply increased 170,000 b/d month-over-month in July to average 97.3 million b/d.  Libya output gained 154,000 b/d from June to just more than 1 million b/d. Nigeria rose 34,300 b/d to 1.75 million b/d. Both countries were exempted from the deal by OPEC and certain non-OPEC members to collectively curb output, but Nigeria recently agreed to cap its output at 1.8 million b/d.

Saudi Arabia, the leader of the output curtailment deal, lifted its output by 31,800 b/d from June to 10.07 million b/d. Smaller increases were also seen from Iran, Equatorial Guinea, Ecuador, Gabon, and Qatar.  Production from Iraq fell 33,100 b/d from June to 4.47 million b/d. Angola dropped 19,300 b/d to 1.65 million b/d. Venezuela declined 15,800 b/d to 1.93 million b/d. Smaller decreases were seen from Kuwait, UAE, and Algeria.

OPEC said non-OPEC supply rose 520,000 b/d in July to average 64.49 million b/d, mainly driven by Canada, Norway, the US, OPEC NGLs, Ghana, Colombia, Brunei, and Congo, which partially offset declines in the UK, China, Mexico, and Azerbaijan.  OPEC revised down forecast non-OPEC oil supply growth for 2017 by 28,000 b/d to 780,000 b/d, representing total non-OPEC supply of 57.77 million b/d.  Global oil demand is projected to average 96.49 million b/d in 2017, with demand growth expected at 1.37 million b/d following an upward revision of 100,000 b/d mainly reflecting better-than-expected second-quarter data from regions in the Organization for Economic Cooperation and Development, OPEC says.

OPEC sees higher 2018 oil demand, points to easing glut

11 Aug 2017   OPEC

OPEC forecast higher demand for its crude in 2018 on Thursday due to rising global consumption, and pointed to signs of a stronger oil market that suggest an OPEC-led production cut is getting rid of price-sapping excess supply. In a monthly report, the Organization of the Petroleum Exporting Countries said the world would need 32.42 million barrels per day (bpd) of its oil next year, up 220,000 bpd from the previous forecast. OPEC also said physical oil markets in Europe and West Africa had firmed and that an increase in the price of Brent crude oil for immediate delivery compared to later supplies indicated the glut was easing. “The entire forward curve has flattened for Brent amid some bullish indicators in the physical market,” OPEC said. “Crude differentials strengthened […]

Iraq, Saudi Arabia express full commitment to OPEC balancing act

11 Aug 2017   OPEC

Oil production from Iraq and Saudi Arabia will remain subdued until the markets reach a target level that indicates a balanced market, leaders said. Saudi Prince Mohammed bin Salman bin Abdulaziz al-Saud hosted Iraqi Oil Minister Jabbar al-Luabi to discuss recent trades in shared oil policy. Saudi Arabia is the largest oil producer in the Organization of Petroleum Exporting Countries and Iraq is second. In terms of contribution to the OPEC-led effort to balance a market that’s oversupplied by historic standards, Saudi is said to be cutting the most, while Iraq has been considered among the least compliant. According to the official Saudi Press Agency, both sides touched on coordination with the multilateral agreement “and the confirmation of the two countries full commitment […]

OPEC Says Crude Output Rose in July

11 Aug 2017   OPEC

OPEC crude oil production rose further in July, in the latest sign the cartel’s efforts to reduce output and drain a global supply glut are falling short. The Organization of the Petroleum Exporting Countries’ output rose by roughly 0.5%, to 32.87 million barrels a day last month, up by 172,600 barrels from June. The uptick, which was smaller than the prior month’s increase, was driven by higher production in Libya, Nigeria…

OPEC Deal In Jeopardy As Exempted Nations Boost Output

11 Aug 2017   OPEC

All data is through July 2017 and is in thousand barrels per day. (Click to enlarge) The above chart does not include the 14th member of OPEC that was just added, Equatorial Guinea. I do not have historical data for Equatorial Guinea so I may not add them at all. It doesn’t really matter since they are only a very minor producer. Also, they are in steep decline, dropping at about 10 percent per year. The huge June OPEC production increased was due to a revision, explained below. (Click to enlarge) May OPEC production was revised upward by 18,000 bpd and June OPEC production was revised upward by 109,000 bpd. Counting the June revision July production was up about 280,000 barrels per day over what was reported last month. (Click to enlarge) Not much is happening in Algeria. They peaked almost 10 years ago and have been in slow […]

Oil Glut Endures As OPEC Confirms Higher Output

11 Aug 2017   OPEC

OPEC confirmed reports that its crude oil production increase last month, reporting a daily rate of 32.869 million barrels, up by 172,600 bpd. Global commercial oil stocks in the OECD block stood at 3.033 million barrels, still above the five-year average by 252,000 barrels. Libya, Nigeria, and Saudi Arabia were the main drivers behind the OPEC production increase, with Libya raising its output by 154,300 bpd – by far the biggest increase among the cartel’s members. Nigerian oil production rose by 34,300 bpd to 1.748 million bpd, while Saudi Arabia’s went up by 31,800 bpd to 10.067 million bpd. On the other hand, OPEC reported, based on secondary sources, Iraqi oil output fell by 33,100 bpd ion July, the biggest decline among OPEC members. The second-largest decline came from Angola, whose production fell by 19,300 bpd, and Venezuela’s output dropped by 15,800 bpd. As for non-OPEC supply, the cartel […]

OPEC’s uphill effort leaves oil prices in negative territory

9 Aug 2017   OPEC, Prices

Crude oil prices move into negative territory early Monday as some market analysts say they’re seeing a ceiling start to emerge over the recent rally. File photo by Monika Graff/UPI Aug. 7 (UPI) — With demand pressures from seasonal factors starting to fade, crude oil prices lost ground early Monday as questions about balance start to resurface. Crude oil prices broke out of the mid-$40 range in mid June as demand factors started to show up as declining oil and gasoline inventories. Brent, the global benchmark for the price of oil, and West Texas Intermediate, the U.S. benchmark, both broke through the $50 mark late in the second quarter, but WTI lost grip on the psychological threshold in recent sessions. Efforts by the Organization of Petroleum Exporting Countries to balance the market through coordinated production declines have been offset at times by a U.S. shale oil sector that’s more […]

OPEC holds second day of compliance talks, to issue statement: sources

9 Aug 2017   OPEC

OPEC and non-OPEC officials were holding a second day of meetings in Abu Dhabi to discuss ways to boost compliance with their oil output-cutting pact, sources familiar with the talks said. The Organization of the Petroleum Exporting Countries, Russia and other producers are cutting production by about 1.8 million barrels per day (bpd) until March 2018 to get rid of a glut and support prices. In Abu Dhabi, a panel comprising Russia, Kuwait and Saudi Arabia, plus officials from OPEC’s Vienna headquarters, has met individually with officials from Iraq, the United Arab Emirates, Kazakhstan and Malaysia, one of the sources said. A statement on the compliance-boosting effort is being drafted and will probably be issued after the meeting concludes on Tuesday, two sources said. Major OPEC producers Iraq and the UAE have shown relatively low compliance with the deal based on figures OPEC uses to monitor […]

OPEC holds second day of compliance talks, to issue statement: sources

9 Aug 2017   OPEC

OPEC and non-OPEC officials were holding a second day of meetings in Abu Dhabi to discuss ways to boost compliance with their oil output-cutting pact, sources familiar with the talks said. The Organization of the Petroleum Exporting Countries, Russia and other producers are cutting production by about 1.8 million barrels per day (bpd) until March 2018 to get rid of a glut and support prices. In Abu Dhabi, a panel comprising Russia, Kuwait and Saudi Arabia, plus officials from OPEC’s Vienna headquarters, has met individually with officials from Iraq, the United Arab Emirates, Kazakhstan and Malaysia, one of the sources said. A statement on the compliance-boosting effort is being drafted and will probably be issued after the meeting concludes on Tuesday, two sources said. Major OPEC producers Iraq and the UAE have shown relatively low compliance with the deal based on figures OPEC uses to monitor […]

Iraqi oil minister visits Saudi Arabia to talk OPEC, joint cooperation

9 Aug 2017   OPEC

Iraqi oil minister Jabar al-Luaibi departed for Saudi Arabia on Tuesday where he will meet his counterpart Khalid al-Falih to discuss oil market developments and OPEC’s efforts to stabilize the market. The visit follows an invitation from Saudi Energy Minister Falih and Luaibi will be accompanied by a delegation of Iraqi energy officials, the Iraqi oil ministry said in a statement. Luaibi will discuss “ways to strengthen and develop bilateral relations between the two brotherly countries, especially in the field of oil and gas, in a way that serves their common interests,” the ministry said. Luaibi said in the statement that the two sides will discuss “oil market developments, coordination and the joint efforts to achieve the goals agreed upon at the OPEC meetings to try and stabilize the global oil market and support oil prices.” They will also discuss joint cooperation in the oil and […]

OPEC Cuts: A Curse For U.S. Refiners, A Blessing For Canadian Oil Sands

3 Aug 2017   Canada, OPEC, USA

The lowered exports of OPEC heavy crude grades to North America are tightening the price spread between WTI and Western Canadian Select (WCS), cutting into the refining margins of U.S. refiners and at the same time helping Canadian oil sands producers sell their heavy oil at a higher price, Fitch Ratings said in a release this week. OPEC has been mostly cutting heavy grades since the start of the production curbs. After the cartel extended the cuts into March next year and after it saw that oil prices continue to be depressed due to the persisting glut, OPEC is now deliberately targeting lower supplies to the U.S. to draw down the stockpiles, which the industry and market monitor most closely for signs of where the global demand/supply is going. OPEC’s biggest exporter and de facto leader, Saudi Arabia, has pledged to cut its total August exports to 6.6 million […]

OPEC’s ‘Catch-22’: How to Unwind Its Deal to Cut Oil Output

2 Aug 2017   OPEC

OPEC and other big oil producers are facing a new high-wire act: how to keep the oil market calm if they decide to lift their output curbs and ramp production back up.  Saudi Arabian Energy Minister Khalid al-Falih said last week the Organization of the Petroleum Exporting Countries doesn’t want to “shock the markets” when it unwinds a November agreement to withhold almost 2% of global oil supply. The deal is set to expire in March 2018.  “We will work on a smooth exit from the agreement. We will make sure it’s not abrupt,” Mr. Falih told reporters in St. Petersburg after meeting with other oil ministers.  Since the deal, analysts and investors have raised questions about how the group will extricate itself from the arrangement. Investors worry the coalition of OPEC and other big producers like Russia—an alliance that accounts for 55% of world-wide oil output—could simply return to pumping full tilt when the deal expires, potentially sinking prices.  “The producers have created a Catch-22 situation,” said Harry Tchilinguirian, head of commodity strategy at BNP Paribas. ”There has been no guidance about a formal mechanism for exiting the agreement and that’s unnerving the market.”

Can OPEC Boost Compliance Back To 100%?

1 Aug 2017   OPEC

A joint OPEC/non-OPEC technical committee will be meeting in Abu Dhabi on next week to discuss ways to improve compliance by members that have not been sticking 100 percent to their output quotas so far. The calling of the meeting, to be held on August 7 and 8, follows the Joint OPEC-Non-OPEC Ministerial Monitoring Committee (JMMC) session in Russia on July 24, which “ noted that despite the high level of conformity at the aggregate level, there is still room for improvement by some participating producing countries, and demanded that all participating producing countries must promptly reach full conformity.” The monitoring committee has estimated total OPEC/non-OPEC compliance was 98 percent in June, but OPEC-only compliance, according to the IEA, plunged to 78 percent last month from 95 percent in May. Non-OPEC compliance in June was 82 percent, according to the IEA. The new meeting comes as Saudi Arabia scolded […]

Waning OPEC Compliance Threatens Oil Price Rally

1 Aug 2017   OPEC

Analysts cut yet again—for a sixth consecutive month—their oil price forecasts for 2017 and 2018, as the slower-than-expected rate of oil market rebalancing puts an increasing amount of pressure on OPEC’s resolve to stick with the cuts, according to 33 economists and analysts surveyed in the July Reuters poll . According to the survey, Brent crude prices are seen averaging US$52.45 per barrel this year, lower than the US$53.96 forecast in the June poll . For WTI, the experts now expect the price to average US$50.08 in 2017, compared to US$51.92 in the June poll. Analysts and economists also cut their 2018 price projections, with Brent seen averaging US$54.51 next year, down from US$57.37 in the previous poll. WTI price is expected to average US$51.88 next year, a significant downward revision from the US$55.20 predicted in June. Earlier this month, the International Energy Agency (IEA) said that the rebalancing […]

OPEC’s Existential Sucker Punch

1 Aug 2017   OPEC

You wait decades for an existential crisis, then two come along at once. At least that’s how it must feel for OPEC’s beleaguered ministers. In the short term the market for their oil is being eroded by rising production outside their control. Looking further ahead, oil demand itself is under threat from the electrification of road transport. OPEC may not yet be dead, but its days are surely numbered. The most obvious short-term threat to the group comes from the rapid rise in U.S. shale oil, but the risks have expanded to include other areas like Brazil’s prolific sub-salt discoveries and more recent finds further north along the east coast of South America. An increasing volume of U.S. crude is finding its way to markets in Asia that used to be the preserve of the group’s Middle Eastern powerhouses. China was the biggest foreign buyer of U.S. crude in […]

OPEC Oil Output Jumps To 2017 High On Further Libya Recovery

1 Aug 2017   Oil Supply, OPEC

OPEC oil output has risen this month by 90,000 barrels per day to a 2017 high, a Reuters survey finds. LONDON, July 31 (Reuters) – OPEC oil output has risen this month by 90,000 barrels per day (bpd) to a 2017 high, a Reuters survey found, led by a further recovery in supply from Libya, one of the countries exempt from a production-cutting deal. A dip in supply from Saudi Arabia and lower Angolan exports helped to boost OPEC’s adherence to its supply curbs to 84 percent. While this is up from a revised 77 percent in June, compliance in both months has fallen from levels above 90 percent earlier in the year. The extra oil from Libya means supply by the 13 OPEC members originally part of the deal has risen far above their implied production target. Libya and Nigeria were exempt from the cuts because conflict had […]

OPEC’s Existential Sucker Punch

31 Jul 2017   OPEC

You wait decades for an existential crisis, then two come along at once. At least that’s how it must feel for OPEC’s beleaguered ministers. In the short term the market for their oil is being eroded by rising production outside their control. Looking further ahead, oil demand itself is under threat from the electrification of road transport. OPEC may not yet be dead, but its days are surely numbered. The most obvious short-term threat to the group comes from the rapid rise in U.S. shale oil, but the risks have expanded to include other areas like Brazil’s prolific sub-salt discoveries and more recent finds further north along the east coast of South America. An increasing volume of U.S. crude is finding its way to markets in Asia that used to be the preserve of the group’s Middle Eastern powerhouses. China was the biggest foreign buyer of U.S. crude in […]

OPEC, Non-OPEC Nations to Meet on Compliance With Oil Targets

31 Jul 2017   OPEC

Representatives of some OPEC and non-OPEC nations will meet in Abu Dhabi on Aug. 7-8 to discuss why some of them are falling behind in their pledges to cut production, according to an OPEC statement.  The meeting, co-chaired by Kuwait and Russia, will examine reasons why some countries aren’t fully implementing their cuts, it said. Some nations will argue that the independent sources used by OPEC to assess compliance overestimate their production, according to two people familiar with the matter, who asked not to be identified because the discussions aren’t public.  Targets for output reduction are based on production estimates from six independent parties, known as “secondary sources.” Last year, as the deal was being negotiated, Iraq complained about these estimates, claiming they aren’t accurate. Other members of the Organization of Petroleum Exporting Countries are also putting the blame on secondary sources for their poor performance, said two people.

OPEC Has a Crippling Problem: Its Members Can’t Stop Pumping

31 Jul 2017   OPEC

OPEC, the once powerful oil cartel, is struggling to hold the line in a make-or-break fight to limit oil production, prop up crippling low prices and prove its relevance. Why? Its members are addicted to oil. Eight months after the Organization of the Petroleum Exporting Countries announced a plan for its 14 members and 10 allied…

Could Brazil Derail The OPEC Deal?

28 Jul 2017   Brazil, OPEC

Brazil is a major oil producing country, but in 2016 was still a net importer, though imports dropped significantly and they have been a slight exporter overall so far this year. It is one of the few countries that have consistently grown production over recent years, and possibly the only non-OPEC country that will show overall growth of conventional crude in the ten years to (say) 2022. Production Brazil ANP or anp (Agência Nacional do Petróleo, Gás Natural e Biocombustíveis) publishes Excel files for monthly production on all wells. In theory it should be easy to extract field data from these, in practice not so much. The files are downloaded from a database but not always consistently, sometimes in field units sometimes SI, sometimes one month per file sometimes more, around 2010 onshore and offshore was split but naming conventions weren’t always followed, handling of wildcat wells seems a […]

Saudi Arabia Growing Nervous Over OPEC Compliance

27 Jul 2017   OPEC, Saudi Arabia

OPEC officials are hoping to limit the production of both Libya and Nigeria, as fears grow that the two exempted members are undermining cuts from the rest of the cartel. Saudi Arabia is also promising to lower its oil exports in order to take more supply off of the market. Saudi Arabia’s energy minister Khalid al-Falih reportedly cut short his vacation in order to attend the OPEC monitoring meeting in St. Petersburg on Monday, an unexpected move that put more weight on the details of the gathering. His attendance suggests OPEC is worried about the pace of rebalancing in the oil market, and also raises speculation about what OPEC might do next. OPEC’s Secretary-General Mohammad Barkindo said al-Falih decided to attend because of the meeting’s “strategic importance” and because of “the high expectations of the times,” the Wall Street Journal reported. The WSJ also said that al-Falih was “very […]

Former Russian Energy Minister: OPEC Deal Working Exactly As Planned

27 Jul 2017   OPEC

OPEC held a technical meeting in St. Petersburg on July 24 to monitor compliance with the group’s cuts and assess the progress of the rebalancing of the oil market. Unlike their official meetings, these meetings are not typically headline-making events, but with the rebalancing taking much longer than expected, OPEC is eager to speed things up. Oilprice.com spoke with Igor Yusufov, a former Russian energy minister and founder of a $3 billion energy investment fund called Corporation Energy, to get the latest view from Russia. Oilprice.com: The OPEC meeting in St. Petersburg was intended to just be a gathering to monitor the progress of the OPEC/non-OPEC cuts, but it took on greater importance because of the recent downturn in prices. From Russia’s perspective, is more aggressive action needed to accelerate the rebalancing in the oil market? Is Russia open to cutting its production deeper, or is that off of […]

China, India oil imports show Saudi Arabia is already carrying the burden of cuts:

26 Jul 2017   OPEC, Saudi Arabia

Saudi Arabia wants to do more to boost crude oil prices by taking a razor to its exports, but the kingdom is already doing much of the heavy lifting in Asia, where it is surrendering market share in the world’s top importing region. Saudi Energy Minister Khalid al-Falih said after a meeting of the Organization of the Petroleum Exporting Countries (OPEC) and its allies on Monday that his country would limit crude oil exports to 6.6 million barrels per day (bpd) in August, almost 1 million bpd below levels a year ago. This commitment is belated recognition that OPEC and its non-OPEC allies, including Russia, have to do more than just comply with their November agreement to cut output by a combined 1.8 million bpd. For the output restrictions to work by draining global oil inventories, the producers will also have to curb exports. Vessel-tracking […]

Russia sees oil supplies dwindling from global market

26 Jul 2017   OPEC

Hundreds of millions of barrels of crude oil are lacking from the global energy market because of joint efforts with OPEC, Russia’s oil minister said Monday. Members of a committee monitoring a deal coordinated by the Organization of Petroleum Exporting Countries are meeting in St. Petersburg to consider the effectiveness of managed declines that began in January. The agreement includes major non-OPEC oil producers like Russia and Kazakhstan. For the first time in three years, Russian Energy Minister Alexander Novak said global oil and petroleum product volumes have declined. “More than 350 million barrels of oil supply have been removed by the joint effort,” he was quoted by Russian news agency Tass as saying. […]

OPEC, non-OPEC debate how to cap rising Libyan, Nigerian oil output

24 Jul 2017   OPEC

Russia called on OPEC to limit oil output rises from its members Libya and Nigeria in the near future, as it hosted a meeting of key OPEC states on Monday to discuss ways to prop up oil prices. OPEC has agreed with several non-OPEC producers led by Russia to cut oil output by a combined 1.8 million bpd from January 2017 until the end of March. But OPEC states Libya and Nigeria are exempt and their production has been rising. The deal to curb output propelled crude prices above $58 a barrel in January but they have since slipped back to the $45 to $50 range as the effort to drain global inventories has taken longer than expected. Rising output from U.S. shale producers has offset the impact of the output curbs, as has climbing production from Libya and Nigeria, which were granted an […]

Falih: no discussion of deeper oil output cuts at OPEC/non-OPEC meeting

24 Jul 2017   OPEC

Saudi Energy Minister Khalid al-Falih said there would be no discussion of deeper oil output cuts at a meeting of ministers from OPEC and non-OPEC nations on Monday. Ministers from countries including Kuwait, Venezuela, Algeria, Saudi Arabia, Russia and Oman will discuss production caps on Nigeria and Libya, Falih told reporters.

OPEC Huddles With Oil Allies in Fight Against Glut

24 Jul 2017   OPEC

ST. PETERSBURG—The Organization of the Petroleum Exporting Countries met Monday with big oil-producing allies such as Russia, wrestling with a difficult fact: They are pumping too much crude. OPEC, the 14-nation cartel, and 10 big non-OPEC producers agreed last year to reduce their petroleum output by almost 1.8 million barrels a day—nearly 2% of global oil supply—to draw down a global glut that keeps prices low. But prices have…

OPEC Grapples With Growing Threats to Oil Deal

24 Jul 2017   OPEC

OPEC is worried that its plan to drain a global oil glut—and thereby raise crude prices—isn’t working. A long-planned meeting in St. Petersburg, Russia, on Monday to discuss the oil market with big producers outside the cartel has turned into a critical gathering. Over the weekend, the Organization of the Petroleum Exporting Countries said, its ministers have held a series of “intensive consultations” about the challenges for an…

Oil Producers Don’t Have a Plan to End the Glut

22 Jul 2017   OPEC

Producers meet in St. Petersburg with prices still depressed They’ll likely persevere as alternatives are worse: SocGen OPEC and Russia’s plan to clear the global oil glut hasn’t worked as they hoped, but there’s little expectation the world’s largest producers will act more aggressively when they meet this weekend. Oil has slumped into a bear market and inventories remain stubbornly high despite a deal between OPEC and 10 countries outside the group to cut output. The implementation of supply curbs is faltering as Libya and Nigeria restore lost production. The trouble for ministers meeting in St. Petersburg to review the progress of the deal is the alternatives look little better than the status quo. If the Organization of Petroleum Exporting Countries abandons the deal and increases oil output, a further plunge in prices would inflict more pain on their economies. And while deepening the production cuts would spark a […]

OPEC Deal At Breaking Point As Compliance Falls

22 Jul 2017   OPEC

WTI has traded in a $3.90 range so far in July ($43.65 / $47.55) and the sideways price action has lead to waning market enthusiasm for bulls, bears and option traders who are betting aggressively on a quiet market. Over the last two weeks fund gross long positions in NYMEX WTI haven’t budged while gross short positions have been cut by 28%. In ICE BRENT speculators have also been inactive on the long side while cutting gross shorts by 13%. In options markets WTI U17 at the money implied volatility has dropped to a multi-week low at 28% on a lack of large directional bets which have been justified by a 2-month low in realized volatility (20-day) to 26%. Lastly, even retail is getting less excited about crude having withdrawn $450m from the USO in the last two weeks. – So where will we find excitement? Next week’s calendar […]

Daily OPEC Oil Prices Now Public For The First Time Ever

22 Jul 2017   OPEC, Prices

Despite the oil industry being arguably the most vital and influential sector in the world, the average member of the public knows relatively little about its inner workings. Oil prices are possibly the most obvious example of this, with constant discussions over whether they will drop below $40 or if they are set to rise. What many investors are unaware of, however, is that there are over a thousand types of crude oil. This means that Western Canadian Select, currently trading at 37.27, is already below that much-hyped $40 mark, and while Brent oil prices fell nearly 50 cents on Thursday, Qatar’s Marine blend was up by a dollar. From the giant Daqing oil field in China, to the offshore Girassol oil field in Angola, oil is produced around the world at differing levels of quality and with varying costs. A barrel of Alaskan North Slope will cost you […]

OPEC, Russia to Stand Pat on Oil Deal Even as Glut Persists

22 Jul 2017   OPEC

OPEC and Russia’s plan to clear the global oil glut hasn’t worked as they hoped, but there’s little expectation the world’s largest producers will act more aggressively when they meet this weekend. (Bloomberg) — OPEC and Russia’s plan to clear the global oil glut hasn’t worked as they hoped, but there’s little expectation the world’s largest producers will act more aggressively when they meet this weekend. Oil has slumped into a bear market and inventories remain stubbornly high despite a deal between OPEC and 10 countries outside the group to cut output. The implementation of supply curbs is faltering as Libya and Nigeria restore lost production. The trouble for ministers meeting in St. Petersburg to review the progress of the deal is the alternatives look little better than the status quo. If the Organization of Petroleum Exporting Countries abandons the deal and increases oil output, a further plunge in […]

Oil cuts working, market in balance by end-March: Kuwait minister

19 Jul 2017   OPEC

The world oil market is taking longer than expected to rebalance but the glut should go by the end of March and OPEC need not take further action to curb supplies for now, Kuwait’s oil minister said. Essam al-Marzouq also told Reuters there was no need for the Organization of the Petroleum Exporting Countries to hold an extraordinary meeting before its scheduled gathering in November because OPEC-led supply cuts were “working well”. OPEC and 11 non-OPEC states have cut output by 1.8 million barrels per day (bpd) since January. The curbs, which were initially due to run for the first half of 2017, were extended to March 2018 in a bid to cut oversupply and lift prices. “We are in the first two weeks of the extension period. It is too early to say now what I will do in November,” Marzouq said in an interview […]

Ecuador Abandons The OPEC Deal: Who’s Next?

19 Jul 2017   Ecuador, OPEC

Ecuador announced its withdrawal from the OPEC agreement this week, a move that could shake the foundation of a deal that was already starting to show some cracks. “We need funds for the fiscal treasury and for that reason we’ve taken the decision to gradually increase production,” Ecuadorian oil minister Carlos Perez said , according to Reuters. Ecuador is running a fiscal deficit equivalent to 7.5 percent of GDP. Low oil prices are really hurting government finances, and production restrictions only add to the pain. With oil prices having posted few gains from the deal since it was implemented at the start of the year, Ecuador decided enough was enough. It needs to produce as much as possible. Ecuador, by any measure, is not a massive oil producer. The Andean nation produced just 527,000 bpd in June, making it the third smallest OPEC producer after Equatorial Guinea and Gabon. […]

Libya’s NOC chief to attend OPEC, non-OPEC meeting: statement

18 Jul 2017   Libya, OPEC

The head of Libya’s National Oil Corporation (NOC) said on Tuesday he would lead a Libyan delegation to a meeting of OPEC and non-OPEC oil producers in St Petersburg, Russia on July 22 to share his country’s production plans. NOC Chairman Mustafa Sanalla will share with a technical committee “the factors enabling and constraining Libya’s production recovery”, he said in a statement. “I will consult with significant Libyan decision-makers before I leave and hope to present a unified Libyan position in St Petersburg that will show we can act together in the national interest,” Sanalla said. The technical committee involving six OPEC and non-OPEC members is due to convene before ministers from the countries hold talks in the Russian city on July 24. OPEC members Libya and Nigeria have boosted production since they were exempted from an OPEC-led deal to cut output, weighing on global prices. […]

OPEC June Production Data

17 Jul 2017   OPEC

The above chart does not include the 14th member of OPEC that was just added, Equatorial Guinea. I do not have historical data for Equatorial Guinea so I may not add them at all. It doesn’t really matter since they are only a very minor producer. Also, they are in steep decline, dropping at about 10% per year. March OPEC production was revised upward by 23,000 bpd while April production was revised upward by 72,000 bpd. Not much is happening in Algeria. They peaked almost 10 years ago and have been in slow decline ever since. Angola peaked in 2010 but have been holding pretty steady since. Ecuador peaked in 2015. They will be in a slow decline from now on. Any […]

Commodity Weekly: Heightened Intra-OPEC Competition on Horizon

15 Jul 2017   OPEC

With the efficacy of OPEC-led cuts clearly in doubt, it would behoove cartel members to prioritize individual self-interest. This opinion piece presents the opinions of the author. It does not necessarily reflect the views of Rigzone. In the absence of any supply shock, oil markets will continue to be gripped by bearish sentiment for the foreseeable future. Many believe that the 1.8 million barrel per day production cuts led by the Organization of the Petroleum Exporting Countries (OPEC) have not measured up in terms of speed or substance to bring global supplies back into balance by sometime in 2018. At the same time, the specter of unabated U.S. crude production growth in 2017 and 2018 has led many market observers to drastically reduce oil price forecasts – with some arguing that we are headed toward sub-$40 oil. Backing up these assertions is the fact that the U.S. rig count […]

Big Oil Just Woke Up to Threat of Rising Electric Car Demand

15 Jul 2017   Electric Cars, OPEC
Big Oil Just Woke Up to Threat of Rising Electric Car Demand

The world’s biggest oil producers are starting to take electric vehicles seriously as a long-term threat.  OPEC quintupled its forecast for sales of plug-in EVs, and oil producers from Exxon Mobil Corp. to BP Plc also revised up their outlooks in the past year, according to a study by Bloomberg New Energy Finance released on Friday. The London-based researcher expects those cars to reduce oil demand 8 million barrels by 2040, more than the current combined production of Iran and Iraq.  Growing popularity of EVs increases the risk that oil demand will stagnate in the decades ahead, raising questions about the more than $700 billion a year that’s flowing into fossil-fuel industries. While the oil producers’ outlook isn’t nearly as aggressive as BNEF’s, the numbers indicate an acceleration in the number of EVs likely to be in the global fleet.

To see BNEF’s report comparing long-term EV adoption forecasts, click here.

“The number of EVs on the road will have major implications for automakers, oil companies, electric utilities and others,” Colin McKerracher, head of advanced-transport analysis at BNEF in London, wrote in a note to clients. “There is significant disagreement on how fast adoption will be, and views are changing quickly.”

 

Kuwait says premature for OPEC to cap Libya, Nigeria oil output

15 Jul 2017   OPEC

OPEC member Kuwait said on Friday it would be premature to cap Nigerian and Libyan oil production as the two African countries’ output needed to stabilize further. The market is on a recovery track due to rising global demand, Kuwait’s OPEC governor Haitham Al-Ghais told Reuters. In an effort to eradicate a supply glut, the Organization of the Petroleum Exporting Countries is curbing output by 1.2 million barrels per day (bpd) until March 2018, while Russia and other non-OPEC producers are cutting half as much. But oil prices have fallen more than 15 percent this year due to still-booming supplies and stubbornly high global stocks, which remain way above OPEC targets despite the cut agreement. A ministerial committee from OPEC and non-OPEC countries, which is headed by Gulf OPEC member Kuwait, meets in Russia on July 24 to discuss compliance with the cuts, from which Nigeria […]

Libya gains balance Nigerian oil loss

15 Jul 2017   Libya, Nigeria, OPEC

Officials from a state oil company in Libya brief representatives from Norwegian energy company Statoil about the potential to bring production back to normal levels. Photo courtesy of the Libyan National Oil Corp. July 14 (UPI) — Disruption to Nigerian oil exports is offset by production gains from Libya, which is on pace to add another 100,000 barrels per day to the market, a market report found. Nigeria and Libya are two members of the Organization of Petroleum Exporting Countries exempt from a multilateral effort to balance the market with production declines so they can steer oil revenue to national security efforts. Since the deal was implemented in January, both countries have stabilized somewhat and in part undermined the broader OPEC-led effort. OPEC economists in their monthly market report for July said that, combined, Nigeria and Libya were adding about a quarter million barrels of oil per day to […]

IEA Less Confident on Oil Rebalancing as OPEC Supply Rises

14 Jul 2017   IEA, Oil Supply

The rebalancing of global oil markets has become less certain, with OPEC production rising and little evidence that bloated stockpiles are shrinking as expected, the IEA says. (Bloomberg) — The rebalancing of global oil markets has become less certain, with OPEC production rising and little evidence that bloated stockpiles are shrinking as expected, the International Energy Agency said. While world demand is climbing faster than initially estimated, OPEC’s implementation of the supply cutbacks needed to clear the inventory surplus has faltered to its lowest level since the group began in January, the Paris-based agency said. That’s a change from two months ago when the IEA said the “ rebalancing is here” and was accelerating in the short term. “We need to wait a little longer to confirm if the process of rebalancing has actually started in the second quarter,” said the IEA, which advises most of the world’s major […]