OPEC

OPEC Ministers to Meet Russia Amid Push to Extend Cuts

27 Apr 2017   OPEC, Russia

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

Can An OPEC Extension Push Oil To $60?

26 Apr 2017   OPEC

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

Op-Ed: Will OPEC Production Cuts Fail?

25 Apr 2017   OPEC

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

Oil Veteran Says OPEC Needs Year to Pull Off Elusive Mission

25 Apr 2017   OPEC

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

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

22 Apr 2017   OPEC

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

Russia Hits 250,000 Bpd Oil Production Cut Milestone

22 Apr 2017   OPEC, Russia

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

Major Oil Producers Reach Initial Deal to Extend Output Cuts

21 Apr 2017   OPEC

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

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

21 Apr 2017   OPEC

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

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

20 Apr 2017   OPEC

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

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

20 Apr 2017   OPEC

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

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

20 Apr 2017   OPEC, Saudi Arabia

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

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

19 Apr 2017   OPEC

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

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

18 Apr 2017   OPEC, Prices, Shale Oil

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

Most oil producers want extension of output cuts: Iran minister

17 Apr 2017   OPEC

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

OPEC March Crude Oil Data » Peak Oil Barrel

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

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

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

Oil market rebalancing, demand expected to rise: Aramco CEO

The oil market is rebalancing in the short term, and demand will continue to grow in the long term, Saudi Aramco Chief Executive Amin Nasser said at the Columbia University Energy Summit on Friday. In the short term, the oil market has a surplus, but Nasser said that supplies are falling behind what will be required in coming years. “The future market situation will be increasingly on firmer grounds, though volatility could continue until the rebalancing takes firmer hold and inventory withdrawals assume a more consistent trend,” he said. In both 2018 and 2019, Aramco expects demand to continue to grow, and Nasser said he expects the growth will continue into the years ahead. “I believe that peak demand is […]

Aramco CEO Sees Oil Market Closer to Balance Despite U.S. Boom

15 Apr 2017   OPEC, Prices

Rise in U.S. output leading to short-term price drop: Nasser Aramco IPO is “on track” and “everything is going well” The global oil market is moving closer to balance even as increases in U.S. oil production push prices down in the short-term, Saudi Arabian Oil Co. Chief Executive Officer Amin Nasser said. “This is not a good indication of where the market is likely to be headed going forward, as the large new production capacity and investment we will need in the future are lagging,” Nasser said during an event at Columbia University in New York Friday. “While the short-term market is pointing to a surplus of oil, the supply required in the coming years is falling behind.” Many indicators are pointing to a more balanced market, Nasser said. The combined inventories of countries in the Organization for Economic Cooperation and Development are flattening and poised to drop, among […]

OPEC sees rivals’ oil output rising as it over-delivers on cuts

13 Apr 2017   OPEC

 OPEC cut oil output in March by more than pledged under a supply reduction deal and said oil inventories had fallen in February, suggesting that its effort to clear a supply glut that has weighed on world oil prices is succeeding. But the Organization of the Petroleum Exporting Countries also raised its forecast for supplies from non-member countries in 2017 as higher oil prices encourage U.S. shale drillers to pump more, reducing demand for OPEC’s oil this year. OPEC is curbing its output by about 1.2 million barrels per day (bpd) from Jan. 1 for six months, the first reduction in eight years, to get rid of a supply glut. Russia and 10 other non-OPEC producers agreed to cut half […]

Exclusive: OPEC figures show oil output cuts exceed pledge in March – sources

12 Apr 2017   OPEC

OPEC states cut oil output in March by more than they pledged under supply curbs, according to figures the exporter group uses to monitor its supply, extending a record of higher-than-expected adherence to its first production cut in eight years. The Organization of the Petroleum Exporting Countries agreed to cut output by about 1.2 million barrels per day (bpd) for six months from Jan. 1 to prop up prices and reduce a glut. Russia and 10 other non-OPEC states agreed to cut half as much. Production from the 11 OPEC members with output targets under the deal has averaged 29.757 million bpd, according to average assessments of secondary sources OPEC uses to monitor its output. The […]

OPEC’s war on oil overhang starts to bear fruit

12 Apr 2017   OPEC

OPEC appears to be slowly winning the battle against a global overhang of crude and oil products as inventories in onshore and floating storage decline. The price of oil may not reflect this just yet, as Brent crude futures are struggling to recover its losses for the year to date and break above $55 a barrel. But there is no doubt that stocks are falling around the world, from Saldanha Bay in South Africa, to the Caribbean. A persistent glut of Nigerian oil is easing and even Iran has liquidated the amount of crude held in floating storage. The Organization of the Petroleum Exporting Countries explicitly said a joint deal with non-OPEC producers to cut some […]

Saudi Arabia Said Likely to Support OPEC Extending Output Cuts

12 Apr 2017   OPEC, Saudi Arabia

Riyadh hasn’t taken a final decision on the production curbs OPEC will meet in Vienna late next month to discuss its policy Saudi Arabia is likely to support extending OPEC output cuts into the second half of 2017 in an effort to boost oil prices, according to a person familiar with the kingdom’s internal discussions. The Organization of Petroleum Exporting Countries is scheduled to gather in Vienna on May 25 to discuss whether to roll over for another six months the 1.2 million barrels a day in production cuts it implemented in January. Several OPEC countries, including Kuwait, have expressed public support for an extension. While Riyadh is likely to support extending the curbs to end a three-year oil glut, the kingdom hasn’t taken a final decision yet, the person said, asking not to be identified because the conversations aren’t public. Saudi Arabia, the world’s largest oil exporter, will […]

Former Russian Energy Minister: U.S. Should Join OPEC Output Cuts

12 Apr 2017   OPEC, USA

U.S.-Russian relations took a turn for the worse over the past week after American airstrikes in Syria. U.S. Secretary of State Rex Tillerson is in Moscow this week for discussions. Meanwhile, oil analysts are trying to figure out if the OPEC deal, which hinges on Russian participation, will be extended for another six months. Oilprice.com spoke with Igor Yusufov , a former Russian energy minister and founder of a $3 billion energy investment fund called Fund Energy, to get the latest view from Moscow. Oilprice.com: Only a few months ago, the U.S. and Russia appeared to be on their way to improved relations. But the U.S. airstrikes in Syria looks to have dashed those hopes. What happens next with U.S.-Russian relations? Some political commentators in the U.S. are wondering whether the sudden confrontational approach from the U.S. government towards Russia is an effort to undercut criticisms of alleged ties […]

U.S. Threatens OPEC As Oil Exports Hit Record High

7 Apr 2017   OPEC

U.S. oil exports jumped to a record high in February, rising by a whopping 35 percent from a month earlier. At over 1 million barrels per day (mb/d), the U.S. became a larger exporter than a handful of OPEC members, including Ecuador, Gabon, Libya and Qatar. The U.S. used to prohibit the export of crude oil, a prohibition that was removed at the end of 2015. Since then, exports have inched up bit by bit. But in the fourth quarter of 2016, exports began to surge, a rapid rise that has extended into this year. In February, the latest month for which data is available, U.S. exports climbed to a record high 31.2 million barrels. (Click to enlarge) There are multiple reasons for the sudden uptick in exports. First, of course, is the OPEC production cuts. The reduction of Middle Eastern crude has made U.S. oil more competitive in […]

This Non-OPEC Member Just Called For An Extension Of The OPEC Deal

4 Apr 2017   Oman, OPEC

Non-OPEC Oman will continue to cap its crude oil output at 970,000 bpd this year if OPEC and non-OPEC countries were to extend the production cuts through the end of 2017, according to a senior Omani government official. “We support any initiative that will lift oil prices. If that means extending the current agreement beyond the first six months, we will not block it,” Salim bin Nasser Al Aufi, undersecretary at the Ministry of Oil and Gas, said at a media briefing on Monday, as quoted by Times of Oman. Still, the official was quick to add: “However, we need to know the details – how long it is going to continue.” Oman is part of the group of 11 non-OPEC producers—including Russia—that had agreed to act jointly with the cartel to cut oil supply, and that pledged a total production cut of 558,000 bpd. In January, Oman said […]

OPEC’s Barkindo says ‘encouraged’ by Iraq’s progress towards cut compliance

4 Apr 2017   Iraq, OPEC

OPEC Secretary General Mohammed Barkindo said he has emerged “encouraged” from a meeting over the weekend with Iraqi officials about the country’s compliance levels with the OPEC/non-OPEC production cuts agreed late last year. “We cannot seek anything less” than 100% compliance, Barkindo said Sunday at the Iraq Energy Forum in Baghdad. “Full implementation of the OPEC agreement is crucial.” Iraq has faced criticism for not fully complying with its required cut, but officials with the Iraqi oil ministry have pointed to the country’s sharp fall in exports as evidence it is complying. Iraq’s declared exports are 276,000 b/d lower than they were in December, the last month before the agreement went into force. The agreement, however, covers production not exports, and Iraq’s declared output of 4.464 million b/d for March remains 113,000 b/d above its quota of 4.351 million b/d under the deal. Falah Alamri, Iraq’s OPEC governor and […]

OPEC’s Barkindo Sees Progress in Oil Cuts as Stockpiles Drop

3 Apr 2017   OPEC

Crude stockpiles are starting to decline in a sign that the production cuts implemented this year are bringing the market to balance, according to OPEC’s Secretary-General Mohammad Barkindo. “I remain cautiously optimistic that the market is already rebalancing,” Barkindo told reporters Sunday in Baghdad. “We have started seeing stock levels coming down.” Record inventories accumulated since 2014 have been a drag on crude prices even as OPEC and some non-member producers curbed output. Slow progress in bringing down those stockpiles is one reason six members of the Organization of Petroleum Exporting Countries and Oman back extending production cuts beyond June, with Saudi Arabia and Kuwait saying oil stockpiles need to fall to the five-year average. Still, there are signs OPEC’s policy is starting to have an impact. Oil had its biggest weekly increase this year last week amid speculation OPEC will extend its deal to curb output, and after […]

March exports dip as OPEC cuts continue

31 Mar 2017   OPEC

Top Oil Ministry officials say Iraq is fully complying with an agreement to cut production. A worker checks the valve gears of pipes linked to oil tanks at Turkey’s Mediterranean port of Ceyhan, which is run by state-owned pipeline company Botas. (UMIT BEKTAS/Reuters) Iraq is on track to reduce its oil exports for the third straight month in 2017 – a sign of the government’s ongoing efforts to cut output in line with an OPEC agreement aimed at boosting the price of oil.As of March 30, Iraq’s State Oil Marketing Organization (SOMO) has sold an average of 3.241 million barrels per day (bpd) for the month, according to SOMO Director General Falah Alamri – a 1 percent decrease from February’s export levels, of 3.271 million bpd.”We have more than 100 pe… This content is for registered users. Please login to continue. If you are not a registered user, you […]

Russia Reaches 2/3 Of Oil Output Cut Target

31 Mar 2017   OPEC, Russia

Russia has cut crude oil production by 200,000 barrels daily , Energy Minister Alexander Novak said. That’s two-thirds of the amount it agreed to cut under the OPEC-non-OPEC agreement closed at the end of last year. The 300,000-bpd reduction that Russia agreed to represents 2.7 percent of its October output, which exceeded 11 million bpd . This went up to 11.23 million bpd in November – the month that was taken as the basis, from which individual cut quotas were assigned. The country, which was the largest non-OPEC producer that signed up for the cut agreement, said it would reduce production gradually, raising suspicions about whether it will try to find a way around it. Still, the amount is small compared to its total daily output, and the cut will be helped by the start of maintenance season. Together, OPEC and the 11 non-OPEC producers that signed up for […]

OPEC compliance with oil curbs rises in March as UAE joins cut: survey

OPEC oil output is likely to fall for a third straight month in March, a Reuters survey found on Wednesday, as the United Arab Emirates made progress in trimming supplies while maintenance and unrest cut production in exempt nations Nigeria and Libya. The reduction by the UAE has helped boost OPEC compliance this month with its production-cutting deal to 95 percent, up from an initial February estimate of 94 percent and a record high, according to Reuters surveys. The Organization of the Petroleum Exporting Countries pledged to reduce output by about 1.2 million barrels per day (bpd) from Jan. 1 – the first accord on supply curbs since 2008. Non-OPEC countries pledged to cut about half as much. OPEC wants to end a glut that is keeping oil LCOc1 below $52 a barrel, half the […]

Major oil traders see high likelihood of output cuts being extended

29 Mar 2017   OPEC

Major oil traders gathered in Switzerland this week said they expected OPEC and non-OPEC producers to extend their pact to curb output in the second half of this year, providing Russia complies.  “I think the surprise so far this year is how quickly shale came back on a relatively modest price rebound,” Gunvor CEO Torbjorn Tornqvist told a panel at the FT Commodities Global Summit in Lausanne.  An unexpectedly quick return of U.S. shale production since OPEC and non-OPEC producers agreed in December to limit oil production has put the brakes on a rebounding oil price. After rallying to above $55 a barrel after the December agreement, crude is now trading at around $51 a barrel.  “Will the agreement hold? By and large, yes. I think the rewards have been there, they (the cuts) put a floor to the market,” said Tornqvist.  A committee of ministers from OPEC and non-OPEC members said on Sunday that it had agreed to review whether the global pact to limit supplies should be extended by six months.  The upturn in shale output has also prompted OPEC to engage U.S. producers in talks about how best to tame the global oil glut, although Tornqvist said he did not expect the pace of recovery in shale production to be sustained.

Saudi Arabia Will Not Break The OPEC Deal

29 Mar 2017   OPEC, Saudi Arabia

The OPEC deal is turning out to be a failure, but has it led the Saudi’s to abandon the deal? Have they cheated on their numbers? These were the questions that arose on March 14, when reports came in that Saudi Arabia had increased production by 263,000 barrels per day in February over January. The OPEC “Monthly Oil Market Report” publishes two separate figures. One, the production data directly provided by the member nations. Second, the data collated from six independent secondary sources, mainly consisting of statistical agencies and specialist oil industry publishers. Both figures have been fairly consistent in the case of Saudi Arabia, with an average gap of 72,000 barrels a day in 2016, with the maximum gap being 102,000 barrels a day. However, in January of this year, there was a gap of 117,000 barrels a day, when the secondary sources data exceeded the government figures […]

Oil loses out after weekend meeting of OPEC

28 Mar 2017   OPEC

Crude oil prices lost traction early Monday after parties to an OPEC-led production deal delayed action on a possible extension until next month.  Crude oil prices got support Friday as expectations built that a monitoring committee would agree to extend the terms of a six-month deal to curb production. A joint ministerial committee led by members of the Organization of Petroleum Exporting Countries and participating non-member states said progress was moving toward full conformity.  As of February, parties to the deal were six percentage points short of full compliance. Officials meeting in Kuwait during the weekend said that, despite rising production from countries like the United States, declines in offshore storage and other factors would have a stabilizing impact on the market.

Fruitless OPEC Meeting Sees Oil Prices Edge Lower

28 Mar 2017   OPEC

Oil prices are subdued to start the week, as the weekend’s compliance meeting has done little to allay oversupply fears. As WTI continues to trek on in forty-dollardom, hark, here are five things to consider in oil markets today: 1) OPEC members appear to have pulled a u-turn in relation to discussing production cuts via exports. When the production deal was initially announced, it was suggested that exports would not fully reflect production cut implementation. We have now had some back-pedaling from key members in recent days: Iraqi oil minister, Jabbar al-Luaibi, said that the OPEC deal is based on exports and not output . Meanwhile, Saudi Arabia is insisting that it is exports, not production, that is key to the market rebalancing . The chart below of total Iraqi crude export loadings (both northern and southern exports) serves to illustrate how much Iraq is currently complying with the […]

Pro-Extension Voices In OPEC Become Louder

28 Mar 2017   OPEC

In a statement , the joint committee of seven oil ministers from the parties to the cut said that the deal could be extended for another six months, depending on how oil’s fundamentals look in June. An earlier version of the statement, however, had the committee recommending the extension, according to Reuters. The committee, which was set up to monitor the progress of the cuts and compliance rates, met in Kuwait over the weekend to review the situation. Its members commended the participants for their high rate of compliance – 94 percent as of February – and urged them to strive for 100 percent. It seems that even a maximum compliance rate won’t change prices much, as U.S. inventory builds and rising production from the shale patch continue to offset the cuts already made by OPEC and its partners. Moreover, not everyone is on board with the extension idea. […]

OPEC Weighs Extension As Oil Markets Start To Lose Their Nerve

28 Mar 2017   OPEC

To extend or not extend? Officials from OPEC and a select few non-OPEC countries met over the weekend to review the state of the oil market, monitor their progress and discuss what to do next regarding their collective production cut deal. The group offered a glimmer of hope for an extension of the cuts, with several countries stating their support for such a move. However, there was no formal position from the members. Instead they said that they will consider an extension when they meet in April and issue a recommendation ahead of the official ministerial summit on May 25. The monitoring meeting this past weekend comes amid “increasing skepticism” in the oil market regarding the odds of a six-month extension, JBC Energy said in a recent report. U.S. oil production is rebounding strongly, with output back up to 9.1 million barrels per day, roughly 600,000 bpd higher than […]

Iranian oil minister says global oil cuts deal likely to be extended

28 Mar 2017   Iran, OPEC

Iranian Oil Minister Bijan Zanganeh told reporters on Tuesday that a global oil cuts deal is likely to be extended, but that time is needed to discuss the subject thoroughly first. “It seems that most of the OPEC and non-OPEC (countries) are going to extend the agreement, but time is needed to evaluate the situation and to have face-to-face meetings and discussions with others,” Zanganeh, who was visiting Moscow, said. Asked whether Iran would be ready to cut its own output under the possible extension, Zanganeh said: “I think it is necessary that all members comply with their commitments.” Iran’s current oil production stands close to 3.8 million barrels per day, he said. Zanganeh is part of a delegation led by Iranian President Hassan Rouhani which is […]

Oil Exporters Nearly Back to Square One on Deal

27 Mar 2017   OPEC

You don’t need a fancy degree in petroleum engineering to figure out what has been weighing on oil prices—grade school math will do the trick. U.S. benchmark prices rallied from around $47 a barrel before the late November meeting of oil exporters to more than $54 a month ago on two perceived successes: First, Saudi Arabia and Iran, rivals in the Organization of the Petroleum Exporting Countries, managed to make a compromise while…

Oil Producers Consider Output Cut Extension as Support Grows

27 Mar 2017   OPEC

Oil producers pledged to consider extending their pact limiting supply, as half a dozen nations said more time was needed to drain swollen stockpiles. Five OPEC members and Oman backed an extension, with Kuwait saying it should be for six months. The ministers met this weekend in Kuwait City and asked the Organization of Petroleum Exporting Countries to make a recommendation in a month on the possibility of prolonging the supply curbs. “We are ready to support” extending the deal, which took effect in January, Venezuela’s Oil Minister Nelson Martinez said on Sunday. Fellow OPEC producers Iraq, Algeria and Angola have also backed an extension. “It does make sense to extend the agreement for another six months,” said Mohammed Al Rumhy, energy minister for non-OPEC producer Oman. Brent crude, the global benchmark, was trading down 4 cents at $50.76 a barrel as of 9:23 a.m. in Singapore on Monday. […]

Oil nations look at extending supply cut

27 Mar 2017   OPEC

Major oil producers are considering extending their recent cuts to output in a fresh bid to boost prices. Countries in the oil cartel Opec and several other oil nations started to reduce production at the start of 2017. The move initially pushed up the oil price, but it has dropped in the last few weeks on fears the limits would not be enough to deal with an oil glut. A group of ministers agreed on Sunday to review extending the cuts by six months, taking them to the end of 2017. At a meeting in Kuwait, they requested that officials report next month “regarding the extension of the voluntary production adjustments”. Opec countries and 11 other oil-producing nations, including Russia, agreed in December 2016 to slash production, the first time in 15 years that a global pact had been struck. ‘Jittery’ The price of Brent crude peaked at over […]

OPEC, non-OPEC oil producers meet in Kuwait over output-cut compliance

27 Mar 2017   OPEC

A worker checks the valves at Al-Sheiba oil refinery in Basra, Iraq, January 26, 2016. OPEC and rival oil producers are meeting in Kuwait on Sunday to review their progress with a global pact to cut supplies and may discuss whether the agreement should be extended beyond June to help stabilize the market. The Organization of the Petroleum Exporting Countries and 11 other leading oil producers including Russia agreed in December to cut their combined output by almost 1.8 million barrels per day (bpd) in the first half of the year. The accord, aimed at supporting the oil market, has lifted crude to more than $50 a barrel. But the price gain has encouraged U.S. shale oil producers, which are not part of the pact, to boost output. OPEC Secretary-General Mohammed Barkindo is investigating whether the deal needs to be extended, Iraqi Oil Minister Jabar Ali al-Luaibi […]

OPEC and Allies Gather as Oil Market Warns Them: Job’s Not Done

25 Mar 2017   OPEC

OPEC and allies reviewing the impact of their oil cuts this weekend face a market with an unambiguous message: their work is far from done. As producers meet in Kuwait to gauge how well they’ve implemented output cuts agreed on last year, talks will be overshadowed by the question of whether the persisting glut requires the curbs to be extended beyond the summer. With U.S. crude stockpiles swelling to new records and prices sinking below $50 a barrel, OPEC and its partners have little choice but to keep going, according to all 13 analysts surveyed by Bloomberg. “The cost of a change of course for producers is simply too high,” said Bill Farren-Price, chief executive officer of consultants Petroleum Policy Intelligence. “They are committed to this course for now, and they will look for stocks to draw in the second half.” Oil jumped 20 percent in the weeks following […]

OPEC Out Of Moves As Goldman Sachs Expects Another Oil Glut In 2018

24 Mar 2017   Oil Supply, OPEC, Prices

Oil prices are heading down again on swelling U.S. crude oil inventories, with Brent dropping below $50 per barrel for the first time this year. The OPEC deal that has taken more than 1 million barrels per day of oil off the market has not succeeded in reversing this bearish trend for inventories. And with the deal at its midway point, focus is shifting towards an extension of the cuts through the end of the year. But OPEC’s usual strategy of jawboning the market back up ahead of these negotiations seems to be wearing thin amid record high crude oil inventories. “OPEC has used up most of its arsenal of verbal weapons to support the market. One hundred percent compliance by all is the only tool they have left and on that account they are struggling, ” said Ole Hansen, head of commodity strategy at Saxo Bank. “OPEC’s market […]

OPEC and Allies Gather as Oil Market Warns Them: Job’s Not Done

24 Mar 2017   OPEC

OPEC and allies reviewing the impact of their oil cuts this weekend face a market with an unambiguous message: their work is far from done. As producers meet in Kuwait to gauge how well they’ve implemented output cuts agreed on last year, talks will be overshadowed by the question of whether the persisting glut requires the curbs to be extended beyond the summer. With U.S. crude stockpiles swelling to new records and prices sinking below $50 a barrel, OPEC and its partners have little choice but to keep going, according to all 13 analysts surveyed by Bloomberg. “The cost of a change of course for producers is simply too high,” said Bill Farren-Price, chief executive officer of consultants Petroleum Policy Intelligence. “They are committed to this course for now, and they will look for stocks to draw in the second half.” Oil jumped 20 percent in the weeks following […]

OPEC In Trouble As Saudis Becoming Weary Of “Free Riders”

24 Mar 2017   OPEC

From casual observation, one might be forgiven for referring to the OPEC production cut in place since November 2016 as the “Saudi production cut.” That’s because Saudi Arabia, OPEC’s leading producer and de facto leader, has reduced its crude production by the biggest margin, shouldering the bulk of the burden for the rest of OPEC and striving the hardest to bring prices back up. But how long will Riyadh choose to maintain this strategy? Saudi energy minister Khalid al-Falih said definitively that his country will abide no “ free riders ” hoping to take advantage of Saudi cuts to ramp up their own production, as OPEC and non-OPEC producers did in the 1980s. It now seems possible that OPEC may agree on an extension of the production cuts past June 2017, but with its own agenda and an eye towards an “ oil-less ” future, Saudi Arabia may choose […]

Russia, Saudis Move at a Different Pace as Oil Cuts Scrutinized

24 Mar 2017   OPEC, Russia, Saudi Arabia

Russia and Saudi Arabia head to this weekend’s OPEC committee meeting as the tortoise and hare of a global deal to cut oil supply, with Moscow sticking to a slow and steady pace despite Riyadh’s cajoling. OPEC’s de-facto leader Saudi Arabia publicly prodded the Kremlin to speed up and implement its full 300,000 barrel-a-day production cut by the end of this month, but Energy Minister Alexander Novak reiterated it won’t reach the target before April — four months into the agreement. While this pace has offset the impact of deeper-than-expected cuts by other OPEC members, the need to show unity means Russia is unlikely to get called out for its inertia, said Daniela Corsini, a Milan-based analyst at Intesa Sanpaolo SpA. “Confidence in the OPEC/non-OPEC deal is the most important tool to protect crude prices,” Corsini said by email. “Saudi Arabia will not openly criticize poor Russian compliance as […]

Russia will play OPEC ball, report finds

23 Mar 2017   OPEC, Russia

Russia is likely to play along with what’s expected to be another six months of OPEC production cuts despite lackluster compliance, a new report finds. Members of the five-member committee monitoring a managed production decline agreement from the Organization of Petroleum Exporting Countries meet during the weekend in Kuwait to consider the durability of the deal. The monitoring team counts Russia as a member. Russia is among the parties contributing to the agreement and is expected to contribute most to production declines from producers outside OPEC. Russia’s contribution is vital to the arrangement, though the Kremlin offered mixed support for the agreement last year after publicly stating in […]

Goldman Sachs: OPEC’s Influence On Oil Prices Is Dwindling | OilPrice.com

23 Mar 2017   OPEC

In a research note, Goldman Sachs has effectively demoted OPEC from a price setter to a mere inventory manager, with the cartel’s long-term control over international oil prices diminishing thanks to shale, which sports much faster returns: 6-9 months from final investment decision to peak production versus several years for conventional oil. The lengthy process of conventional oil is precisely what gave OPEC the ability to pull the strings of international prices.  Goldman commended OPEC on its decision to cut production, adding, however, that it had an opposite to the desired effect by “underwriting” shale oil production, and spurring the growth in it that we are now witnessing.  The investment bank also has some bad news for the oil industry, noting that the period between this year and 2019 will see a hefty increase in global oil production thanks to large-scale investments made in 2011-2013. In fact, Goldman expects the possible addition of 1 million barrels of crude to global daily output in the period.  There is some uncertainty as to whether all these mega projects will deliver in line with expectations, given the oil industry’s history of failing to do this, but delivery has improved in the last three years, so the 1 million barrels are a real possibility.

View full article at oilprice.com

How OPEC Shot Itself In The Foot

23 Mar 2017   OPEC

At the start of March, we showed a fascinating chart from Rystad Energy, demonstrating how dramatic the impact of technological efficiency on collapsing U.S. shale production costs has been: in just the past 3 years, the wellhead breakeven price for key shale plays has collapsed from an average of $80 to the mid-$30s… (Click to enlarge) … resulting in drastically lower all-in breakevens for most U.S. shale regions. (Click to enlarge) Today, in a note released by Goldman titled “OPEC: To cut or not to cut, that is the question”, the firm presents a chart which shows exactly how OPEC lost the war against U.S. shale. The cost curve has massively flattened and extended as a result of “shale productivity,” driving oil breakeven in the U.S. from $80 to $50-$55, in the process sweeping Saudi Arabia away from the post of global oil price setter to a mere inventory […]

OPEC Out Of Moves As Goldman Sachs Expects Another Oil Glut In 2018

23 Mar 2017   OPEC

Oil prices are heading down again on swelling U.S. crude oil inventories, with Brent dropping below $50 per barrel for the first time this year. The OPEC deal that has taken more than 1 million barrels per day of oil off the market has not succeeded in reversing this bearish trend for inventories. And with the deal at its midway point, focus is shifting towards an extension of the cuts through the end of the year. But OPEC’s usual strategy of jawboning the market back up ahead of these negotiations seems to be wearing thin amid record high crude oil inventories. “OPEC has used up most of its arsenal of verbal weapons to support the market. One hundred percent compliance by all is the only tool they have left and on that account they are struggling, ” said Ole Hansen, head of commodity strategy at Saxo Bank. “OPEC’s market […]

Saudi Arabia may insist on Iran oil output cuts to continue OPEC deal: sources

23 Mar 2017   Iran, OPEC, Saudi Arabia

Geopolitical rivals Saudi Arabia and Iran may be headed for another OPEC showdown, as the producer group enters negotiations over extending oil production cuts in force since January.  Saudi Arabia may demand that Iran, which is allowed a slight rise in output under the deal, commit to an output reduction as a condition of continuing the cuts, people familiar with the kingdom’s thinking told S&P Global Platts.  The provision is among several that Saudi Arabia, tired of seeing its market share eroded as it bears most of the burden of OPEC’s agreed cuts, is likely to come to the table with, sources say. These include stipulations on members who have exceeded their quotas and exempt members nearing full production capacity, notably Nigeria.