Oil Supply

Oil Shortage Feared by 2020 as Discoveries Fall to Record Low

27 Apr 2017   Oil Supply

Global oil discoveries fell to a record low in 2016, the International Energy Agency says, raising fresh concerns about the potential for a petroleum-supply shortage as soon as 2020. The IEA—a Paris group that monitors energy trends for oil-dependent places like the U.S. and Europe—is stepping up its warnings about historically low oil-industry investment during the latest price downturn. Oil companies and producing nations curtailed spending by hundreds of billions of dollars during the price rout, resulting in…

Summary of Weekly Petroleum Data for the Week Ending April 21, 2017

27 Apr 2017   Oil Supply, USA

U.S. crude oil refinery inputs averaged 17.3 million barrels per day during the week ending April 21, 2017, 347,000 barrels per day more than the previous week’s average. Refineries operated at 94.1% of their operable capacity last week. Gasoline production decreased last week, averaging over 9.7 million barrels per day. Distillate fuel production decreased last week, averaging about 5.1 million barrels per day. U.S. crude oil imports averaged over 8.9 million barrels per day last week, up by 1.1 million barrels per day from the previous week. Over the last four weeks, crude oil imports averaged over 8.1 million barrels per day, 4.9% above the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 916,000 barrels per day. Distillate fuel imports averaged 54,000 barrels per day last week. U.S. commercial crude oil inventories (excluding those in the Strategic […]

Oil Prices Pull Higher As Refiners Soak Up Soaring Crude Imports

27 Apr 2017   Oil Supply, USA

In today’s game of rock-paper-scissors from the weekly EIA inventory report, crude inputs were propelled higher (like a rock), blunting the impact of super-strong imports (the scissors). On paper, the crude draw is bullish, but a modest rally is being kept in check somewhat by solid builds to the products. Hark, here are five things to consider in oil markets today: 1) Even though crude imports jumped higher by over 1.1 million barrels per day last week, a climb into unchartered territory by refinery runs meant that crude inventories were drawn down by 3.6 million bbls. Refinery runs jumped to 17.3 million bpd, the highest level on record, as cheap and available crude – as opposed to strong demand – is driving on refining activity. Refinery runs are now a surreal 1.44 million bpd – or 9 percent – higher than year-ago levels: (Click to enlarge) 2) Crude imports […]

EIA Takes Markets By Surprise, Reports Major Crude Oil Inventory Draw

27 Apr 2017   Oil Supply, USA

Amid growing pessimism regarding an extension of OPEC’s oil production deal, and a day after the American Petroleum Institute reported an estimated increase of 897,000 barrels in U.S. commercial inventories, the EIA reversed the mood with a draw of 3.6 million barrels for the week to April 21. Analysts had expected a respite for oil prices with a decline in inventories of 1.6 million barrels and though they were out of luck with API, EIA exceeded the expectations. The EIA reported that crude inventories stood at 528.7 million barrels at the end of last week, still near the upper seasonal limit despite refineries increasing their runs after the end of maintenance season, which some analysts argued was the reason for the hefty weekly inventory increases that we saw over the last couple of months. They may well have been right, as refinery runs averaged 17.3 million barrels in the […]

Trump Order Aims To Allow Drilling At National Monuments

27 Apr 2017   Oil Supply, USA

U.S. President Donald Trump signed an executive order on Wednesday to identify national monuments that can be rescinded or resized – part of a broader push to open up more federal lands to drilling, mining and other development. The move comes as part of Trump’s effort to reverse a slew of environmental protections ushered in by former President Barack Obama that he said were hobbling economic growth – an agenda that is cheering industry but enraging conservationists. Trump signed the order at the Interior Department in Washington, saying that his predecessors’ use of the 1906 Antiquities Act to create monuments marked an “egregious abuse of federal power.” He said the order […]

US E&Ps Can Turn A Profit On $50 to $60 Oil, Barclays Finds

27 Apr 2017   Shale Oil

Declining development costs and capital efficiency improvements position US E&P companies to earn solid returns at $50 to $60 per barrel oil prices, says Barclays’ report. Sharp declines in development costs and advancements in capital efficiency means exploration and production companies (E&Ps) can turn a solid profit even if oil remains in the $50 to $60 per barrel range, according to Barclays’ analysis of year-end 2016 annual reports. In fact, Barclays is projecting that within that range, the industry can deliver average recycle ratios (per-barrel profit divided by the cost of discovering and extracting the product) close to 145 percent, grow reserves and production at a consistent 7 percent rate and keep balance sheets in shape. Last year, drill-bit finding and development costs dropped 30 percent from 2015 and 50 percent from 2015, Barclays said in an April 26 equity research report. Permian and Appalachian players have typically been […]

Fast-rising U.S. shale oil output puts OPEC cut at risk: Rystad

27 Apr 2017   Shale Oil, USA

Shale oil output in the United States is rising much faster than expected and gaining market share globally, increasing the risk of a “volume war” with OPEC and weaker oil prices, the founder of oil and gas consultancy Rystad Energy said. Rystad Energy expects U.S. shale oil output to grow by 100,000 barrels per day (bpd) each month for the rest of this year and into 2018 if oil prices hold around $50-$55 a barrel, well above estimates by the U.S. Energy Information Administration for monthly gains of about 29,000 bpd in 2017 and 57,000 bpd in 2018. “We see a risk for a weaker oil price towards the end of the year … because shale is delivering so much oil and OPEC might fight back,” Jarand […]

Crude stocks decline, product inventories rise sharply: EIA

27 Apr 2017   Oil Supply, USA

U.S. crude stocks fell last week as refineries hiked output, while gasoline stocks increased and distillate inventories rose, the Energy Information Administration said on Wednesday. Crude inventories USOILC=ECI fell by 3.6 million barrels in the week to April 21, compared with analysts’ expectations for an decrease of 1.7 million barrels. Crude stocks at the Cushing, Oklahoma, delivery hub USOICC=ECI fell by 1.2 million barrels, EIA said. Refinery crude runs USOICR=ECI rose by 347,000 barrels per day, EIA data showed. Refinery utilization rates USOIRU=ECI rose by 1.2 percentage points. Gasoline stocks USOILG=ECI rose by 3.4 million barrels, compared with analysts’ expectations in a Reuters poll for a 1 million-barrel drop. […]

Will Trump Spark An Offshore Drilling Boom?

27 Apr 2017   Offshore, USA

In a bid to fend off criticism over a dearth of achievements in his first 100 days in office, President Trump plans to sign a flurry of executive orders this week. Among them is an executive order intended to open up new areas of offshore oil and gas drilling. “This builds on previous executive actions that have cleared the way for job-creating pipelines, innovations in energy production, and reduced unnecessary burden on energy producers,” a White House official told the Reuters earlier this week. The order calls for a “review of the locations available for offshore oil and gas exploration and of certain regulations governing offshore oil and gas exploration.” Specifically, the Trump administration is hoping to open up new areas to drill in the Gulf of Mexico, plus areas in the Atlantic and Arctic Oceans. The Obama administration had previously designated the Atlantic and the Arctic off limits […]

First US Bakken crude set to arrive in Asia mid-May:

27 Apr 2017   Shale Oil, USA

The first cargo of US Bakken crude is heading to Asia, adding to the widening list of western crude moving eastward amid the narrowing spread between low sulfur crude in the West against high sulfur crude in the East. Western trading firm Mercuria Energy has chartered a vessel to move a cargo of the crude, which has a gravity of 43 API, into Asia for the first time ever, according to a source close to the matter. The crude has been co-loaded with US Mars crude on the VLCC Maran Canopus, traders said. The VLCC left the US Gulf Coast on March 20 and is due to arrive in Singapore on May 13, according to cFlow , S&P Global Platts trade flow software. The vessel is currently located off the coast of South Africa. It is unclear however, if the cargo has a final outlet. Article continues below… Oilgram […]

Baker Hughes sees chance of mid-2017 rebound

26 Apr 2017   Oil Supply, USA

Industry headwinds remain in some business segments because the global oil and gas sector hasn’t fully recovered from 2016, Baker Hughes reported. The company has reported steady gains in North American exploration and production figures, released as weekly rig counts. Spending on exploration and production plummeted last year after crude oil prices collapsed to below $30 per barrel, but the appetite for 2017 has improved since members of the Organization of Petroleum Exporting Countries agreed to cap production to offset supply-side strains. The company reported a 15.3 percent decline in quarterly revenue to $2.26 billion as North American activity was not enough to compensate for lags elsewhere. “While the onshore rig count increase in North America has been more robust than […]

Unsung Gulf of Mexico Tracks New Crude Oil Production Record

26 Apr 2017   Offshore, USA

Permian Basin hoards the spotlight, but meanwhile, offshore producers are a fraction of a percentage point away from hitting another all-time high during the first half of the year, according to RBN Energy. Far from the $40,000 per acre land rush for shale in the Permian Basin, operators in the Gulf of Mexico are toiling offshore to outpace their own production records. In January, Gulf of Mexico (GOM) production totaled 1.75 million barrels per day, less than a percentage point away from the previous record set in 2009, according to Housley Carr, an analyst at RBN Energy LLC. Within the next month or so, the 2009 record is expected to fall. By 2018, the U.S. Energy Information Administration (EIA) expects a total of 1.9 million barrels per day in 2018, Carr noted in an April 24 report. “Admittedly, that’s an increase of only [300,000 barrels per day] from 2016, […]

Halliburton Helped by Drilling Boost in U.S.

25 Apr 2017   Shale Oil

Stepped-up drilling for oil in the U.S. may have global producers on edge about oversupply, but the increased activity in the domestic energy sector is a boon for oil-field services firm Halliburton Co. The Houston company reported its first quarterly increase in revenue since the fourth quarter of 2014, when oil prices fell off and started to pressure production. The company said its results in the first three months of 2017…

US onshore rig day rates jump as glut fades

25 Apr 2017   Shale Oil

Perhaps the most surprising sign of a recovery in the US onshore drilling industry has been the abrupt about-face for day rates, an analysis by RigData, a unit of S&P Global Platts, showed Friday. The first quarter has seen a 3.5% spike in the average day rate to $14,600, according to RigData. While that is still down from a record $19,015 in Q4 2014, it is the biggest quarter-to-quarter jump since the previous post-bust recovery in 2010. A major contributing factor to the day rate recovery has been the erosion of the rig glut, which can be monitored by tracking the available rig ratio. The ratio is calculated by dividing the number of available rigs by the number of marketed rigs. Once this ratio has sustained above a certain threshold, then day rates soften; when it trends below that threshold, day rates begin to rise. On a nationwide basis, […]

East Coast refiners eye Texas oil as North Dakota alternative

25 Apr 2017   Shale Oil, USA

U.S. East Coast refiners are looking to buy increasing volumes of domestic crude oil from the Gulf Coast, two sources said, the latest twist in a trade flow upheaval in the wake of the opening of the Dakota Access pipeline. Major U.S. East Coast refiners profited from railing hundreds of thousands of barrels of discounted Bakken crude to their plants daily from 2013 until 2015. But as more and more pipelines were built in North Dakota, the discount began to disappear, and so did the rail cars. Now, at least two East Coast refiners, Phillips 66 ( PSX.N ) and Delta Air Lines Inc’s ( DAL.N ) subsidiary Monroe Energy, are looking to move more crude […]

Trump to sign offshore orders as 100th day in office, shutdown near

25 Apr 2017   Offshore, USA

Ahead of his 100th day in the White House on Saturday, President Trump is expected this week to unveil details of major policy initiatives, including executive orders aimed at expanding oil and natural gas drilling in federal waters and an outline of his tax reform goals. The week will also be complicated by ongoing negotiations with Congress to keep the federal government from shutting down on Friday, as occurred in 2013. These negotiations appear to be centered on funding for Trump’s border wall. While the border wall is a thorny issue for many Republicans and a nonstarter for Democrats, White House Chief of Staff Reince Priebus said the administration expects Trump’s “priorities” to be included in the spending bill Congress needs to pass by midnight Friday to avoid shutdown. “So we expect a massive increase in military spending,” Priebus said Sunday on NBC’s “Meet the Press.” “We expect money […]

U.S. drillers add oil rigs for 14th week in a row -Baker Hughes

22 Apr 2017   Shale Oil

U.S. drillers added oil rigs for a 14th week in a row, extending an 11-month recovery that is expected to boost U.S. shale production in May in the biggest monthly increase in more than two years. Drillers added five oil rigs in the week to April 21, bringing the total count up to 688, the most since April 2015, energy services firm Baker Hughes Inc said on Friday. That is more than double the same week a year ago when there were only 343 active oil rigs. U.S. crude futures dropped below $50 a barrel on Friday, for the first time in two weeks and putting it on track for its biggest weekly loss in six weeks, due to doubts the OPEC-led production cut will restore balance to an oversupplied market, especially as U.S. drillers keep producing more oil. [O/R] U.S. shale production in May was set for its […]

U.S. Oil Drilling Growth Shows First Signs of Cooling Off

22 Apr 2017   Shale Oil, USA

U.S. oil drillers slowed the pace of a months-long expansion as investors worry that growing shale production will ruin OPEC’s efforts to prop up prices. Drillers added 5 rigs targeting crude this week, bringing the total to 688, according to Baker Hughes Inc. data reported Friday. While all four of the biggest oil basins boosted activity this week, the handful of rigs added is the smallest amount of growth in nearly two months. The number of working rigs has more than doubled from a 2016 low of 316 in May, often expanding weekly by double digits, with as many as 29 rigs added during one week in January. Crude dropped below $50 Friday on concerns that surging U.S. production could undermine OPEC’s efforts to reduce global supplies. “It’s not surprising to see the rig count continue to build from the carryover from recently higher commodity prices,” Luke Lemoine, an […]

More oil production possible from Texas shale

22 Apr 2017   Shale Oil

Exploration and production activity in the Permian basin shows the area could respond with major output once conditions improve, the Dallas Fed said. The Federal Reserve Bank of Dallas in a report on regional energy indicators said gains in crude oil prices since the Organization of Petroleum Exporting Countries in January placed a ceiling on production has improved market conditions in Texas. “The firming of crude oil prices since the OPEC agreement has likely boosted confidence in the sector, which is reflected in the continuous increase in drilled wells in the Permian since the beginning of this year,” Dallas Fed senior research analyst Kunal Patel said in a statement . The overall picture for the United States has improved steadily since January, with total domestic […]

Exxon Is Going Primetime With The World’s Next Shale Hotspot

22 Apr 2017   Argentina, Shale Oil

The U.S. shale sector continues to be the hottest spot in natural resources investment. But news this week suggests America’s oil and gas industry may have a new rival — as shale in a completely different part of the world gets ready to go commercial. In Argentina. The governor of Argentina’s Neuquen province Omar Gutierrez said in a statement Monday that shale production is about to begin in earnest in his territory. With ExxonMobil reportedly about to push the button on a major project in the Vaca Muerta shale here over the coming weeks. Governor Gutierrez noted that he was in Houston last week meeting with Exxon management. Who reportedly told him the company will enter the “production phase” on the company’s Vaca Muerta projects this May. Gutierrez didn’t give additional detail on the specific projects that will be put into full-scale production. And Exxon itself hasn’t made any […]

US E&P Budgets Rebound, Grow For First Time Since 2014 Downturn

22 Apr 2017   Oil Supply, USA

Exploration and production (E&P) spending in the United States will increase this year for the first time since the 2014 downturn, which roiled the industry for two years rife with lay-offs and bankruptcy filings.  Increasing capital expenditures (CAPEX) is expected to drive production up this year by 5 percent, according to Fitch Ratings’ measurement across 40 U.S. E&Ps. Total drilling and completion spending is on the rise, too, increasing by roughly 58 percent.  Most of the CAPEX is dedicated toward highest-return shale plays, especially the Permian Basin, Eagle Ford, STACK, Haynesville and Marcellus basins, the ratings group said in a statement April 21.

What’s more, the Fitch sample forecasts that land rig counts in the lower 48 will increase up to 65 percent, year-over-year. The pace is likely to slow during the second half of 2017, but still culminate in up to 875 land rigs by year-end.  The disparity between CAPEX and production growth for the year indicates growth will continue next year. Spending more money on the production side – rather than testing and delineation – as well as efficient gains, will further boost 2018 growth, Fitch said.  In August 2016, analysts at RBN Energy, LLC, said E&P CAPEX had likely hit bottom when 46 U.S. E&Ps revealed spending that year at $41 billion – down 51 percent and 70 percent from investment made in 2015 and 2014, respectively.

View full article at www.rigzone.com

Offshore Crude Backlog Haunts Oil Price Recovery

21 Apr 2017   Oil Supply, Prices

Oil is trying to recover after yesterday’s shellacking, but oversupply fears still remain. As rumors and murmurs circulate about an extension to the OPEC production cut, hark, here are five things to consider in oil markets today: 1) Yesterday we mentioned how we’re seeing a strong influx of arrivals into the U.S. Gulf Coast from the Middle East this week (something we originally alluded to last month ). This is in response to an increase in March loadings heading to the U.S., after Middle East producers favored sending crude to Asia in January and February. That said, while we are seeing increasing arrivals into the U.S. Gulf, it may not necessarily translate to higher imports this week. After reaching its lowest point since last September early last week, crude waiting offshore in the U.S. Gulf has been rising, up over 9 million barrels in the last ten days: (Click […]

Oil Majors See Huge Opportunity In Eastern Mediterranean

21 Apr 2017   Cyprus, Israel, Oil Supply

Quite suddenly, there is remarkable oil industry news to come out of the East Mediterranean region. If the plan is executed, in the space of seven years the balance of energy security in Western Europe will be radically changed. In geopolitical terms, this will be immense; when the planned Israel-Cyprus-Greece-Italy gas pipeline is built, European countries will be able to cut their ever-increasing dependence on Russian gas supplies. The story of major gas discoveries in the East Mediterranean started in the shallow-water offshore Egypt, with Miocene Nile Delta discoveries progressively stepping out into deeper and deeper water. The first discovery was made by Phillips Petroleum in 1969, when it drilled the play-opening Abu Qir 1 NFW. It discovered gas in the Messinian Abu Madi sandstones. Subsequent exploration was led by the likes of AMOCO, BG, BP, Eni and Shell. There are now over 100 mainly gas and wet gas […]

BP Gulf Oil Spill Damage Valued at $17.2 Billion in New Study

21 Apr 2017   Offshore

BP Plc’s 2010 Gulf of Mexico oil spill caused damage to beaches, animals, fish, and coral that the public values at $17.2 billion, according to a financial accounting released on the seventh anniversary of the disaster. The tally, published Thursday in the journal Science, is based on a survey of thousands of Americans that asked what they’d be willing to pay to prevent the kind of impacts unleashed by the spill, which began with an explosion on the Deepwater Horizon drilling rig on April 20, 2010. The worst oil spill in U.S. history killed 11 rig workers, spewed 134 million gallons of crude, soiling birds and marine life across the Gulf. BP, which contracted the rig, was forced to sell off billions of dollars in assets to pay for damages. The latest study, ordered by the U.S. government, is the most comprehensive attempt yet to put on value on […]

Why Exxon Is Giving Its Shale Unit a Long Leash

21 Apr 2017   Shale Oil

In a matter of weeks, crews working for Exxon’s XTO Energy Inc. unit will begin erecting drilling rigs across a patch of southeast New Mexico to exploit the region’s mile-thick strata of oil-soaked rock. ExxonMobil Corp. paid almost $6 billion for the drilling rights in late February—its biggest acquisition in more than six years—but that’s where the parent company’s involvement ends: Decisions on when and how to harvest the crude fall solely on the shale experts at XTO. Exxon Chief Executive Officer Darren Woods and his top lieutenants at corporate headquarters in suburban Dallas are intentionally staying out of the way of the tightly knit phalanx of XTO engineers, physicists, and geologists leading the oil major’s advance into shale. Based largely in the Texas cities of Fort Worth and Midland, XTO’s 5,000-person staff has been exempt from many of the centralized bureaucratic and planning structures of their overlords since […]

Oil-Sands Operators Bet on Local Advantage as U.S. Partners Flee

21 Apr 2017   Canada, Tar Sands

Now that multinational energy producers have sold their stakes in Canada’s oil sands, local companies are hatching plans to make some real changes.  Cenovus Energy Inc. and Canadian Natural Resources Ltd. are betting they can exploit new technologies and their deeper understanding of Canadian-specific issues, such as environmental rules and relations with native communities, to profit from one of the world’s biggest hydrocarbon reserves without their former partners.  “The oil sands require a focus on environmental issues like carbon pricing, indigenous issues, things like that, that are very specific kinds of skills that companies need to have for Alberta, for Canada,” said Harrie Vredenburg, a professor at the University of Calgary’s Haskayne School of Business. “Some of the multinationals are not necessarily particularly suited to that. In all those things, it does favor the Canadian firms.”

Will Banks Allow Another Slew Of Oil Bankruptcies?

21 Apr 2017   Shale Oil

Last week, U.S. banks boosted the borrowing bases for several independent energy companies, lifting spirits in the industry. The move was taken as a sign that lenders are beginning to share in the optimism that oil and gas producers have been enjoying since the beginning of the year, with prices staying above $50. While some banks seem to be sharing some of the optimism, others are more cautious. A recent analysis from Bloomberg Gadfly’s Lisa Abramowicz reveals that a lot of energy companies with revolving credit lines are tapping deep into these resources. Abramowicz cites data from Bloomberg Intelligence that shows at least 11 companies have used up more than two-thirds of their credit lines. Banks, Abramowicz says, do not like this, so they may well decide to cut the credit lines of companies they consider risky. They can afford to—exposure to the oil and gas industry is more […]

Don’t Believe The Hype: Oil Markets Far From Recovery

20 Apr 2017   Oil Supply, Prices

Global oil inventories are falling because of OPEC and non-OPEC production cuts, but the road to market balance will be long. Production cuts have removed approximately 1.8 million barrels per day (mmb/d) of liquids from the world market since November 2016 (Figure 1). (Click to enlarge) Figure 1. OPEC-NOPEC Have Cut 1.8 mmb/d Liquids Since November 2016. Source: EIA April 2017 STEO, EIA International Data and Labyrinth Consulting Services, Inc. Saudi Arabia has cut 619 kb/d (35 percent of total) and the Gulf States Cooperation Council—including Saudi Arabia—has cut 1,159 kb/d (65 percent of the total). Other significant contributors outside the GCC include Iraq (12 percent), Russia (12 percent) and Mexico (9 percent) (Table 1). Nigeria’s cuts are probably involuntary since it was exempted from the OPEC agreement. Iran and Libya–also exempted–and both increased production. Table 1. Summary table of OPEC-Non OPEC production cuts, November 2016 through March 2017. […]

Fracking Bolsters the American Economy

20 Apr 2017   Shale Oil

Our friends at Institute for Energy Research shared this guest post with us, which was written by their founder and CEO, Robert Bradley, Jr. and recently published in Forbes . Warning: low-cost, clean energy may be hazardous to your health . Or so say environmental activists who will trot out any line of attack in their crusade against fossil fuels. For years, the green movement has spread falsehoods about hydraulic fracturing — or fracking — the practice of unlocking hydrocarbons by injecting high-pressure liquid deep into the earth. Lately, the leave-it-in-the-ground lobby has doubled down on its mission to thwart the latest oil and gas extraction techniques. But research consistently shows that fracking is a secure — and economically savvy — form of energy production. Banning it, as New York State and Maryland have done, hurts economies — and the environment. False Issues Critics have recently blamed fracking for […]

What Does The Future Hold For Canada’s Oil Sands?

20 Apr 2017   Canada, Tar Sands

Phases in Canada’s Oil Sands We have entered a unique phase in major oil sands acquisitions in Alberta. Canadian companies are using their operational expertise, large market values, and stable balance sheets to build up larger positions in Canada’s oil sands. Over the last decade, oil production from Canada’s oil sands has increased 100 percent and an increasing number of players are participating in that growth. In 2006 there were 6 companies, not including the Syncrude Canada consortium, that controlled all oil sands production in Alberta. Now, there are around 20 oil sands producers. (Click to enlarge) Over the years, key acquisitions took place in Canada’s oil sands that helped grow the resource to what it is now: 1. The first phase was from 2006 to 2010 when oil companies were acquiring undeveloped assets to secure a position in developing Canada’s oil sands. Examples include Statoil’s $2.2 billion acquisition […]

Oil prices fall on expected surge in U.S. shale output

19 Apr 2017   Prices, Shale Oil

Oil prices fell on Tuesday on news that U.S. shale oil output was expected to post the biggest monthly rise in more than two years, fuelling concerns that U.S. production growth is undermining OPEC-led efforts to rein in oversupply. The latest U.S. government drilling data showed shale production in May was set to rise to 5.19 million barrels per day (bpd), with output from the Permian play, the largest U.S. shale region, expected to reach a record 2.36 million bpd. Global benchmark Brent crude futures were down 26 cents at $55.10 a barrel at 0803 GMT. They touched an intraday low of $54.98, the weakest level in 11 days. U.S. West Texas Intermediate (WTI) crude futures traded down 21 cents at $52.44 a barrel, the lowest since April […]

Bankruptcy leads to closure of platform offshore California

19 Apr 2017   Offshore, USA

The pending closure of an oil installation offshore California because of a corporate bankruptcy marks a shift in state trajectory, environmentalists said. Venoco, which has its headquarters in Colorado, said it filed for Chapter 11 bankruptcy and would dispose of its assets as a result. The company will quit-claim its lease for the offshore South Ellwood field back to the state and now starts the decommissioning of its offshore Holly platform and associated infrastructure onshore. Venoco Chief Operating Officer Mike Wracher said there was a steady string of circumstances that led to the financial constraints that necessitated bankruptcy, including the ongoing closure of Line 901 in California. “We have pursued a number of market-based and regulatory solutions to address these challenges during the last […]

Why The Permian Doesn’t Keep OPEC Awake At Night

19 Apr 2017   Shale Oil, USA

The old saying goes, “Everything’s bigger in Texas”. The latest subject of this axiom is the legendary Permian Basin. The recent headlines have been eye-popping. “The Permian Basin Keeps On Giving”. “A $900 Billion Oil Treasure Lies Beneath West Texas Desert”. “Shell’s New Permian Play Profitable at $20 A Barrel”. “The World’s Hottest Oil Play”. “Permian Basin Prevails”. “The Permian Basin: An existential Threat To Canadian Oil As The War On Cost Heats Up”. “This Texas Oilfield Is Messing With OPEC”. The articles contain analysis and commentary concluding that no matter what happens in the rest of the world, the future of oil prices will be heavily influenced by U.S. light tight oil (LTO) producers and more specifically, the Permian. This is more of the popular thesis OPEC is dying or dead and the United States has replaced Saudi Arabia as the world’s swing producer. Except it is not […]

May U.S. shale oil output seen rising most in over two years

18 Apr 2017   Shale Oil

U.S. shale production in May was set for its biggest monthly increase in more than two years, government data showed on Monday, as producers stepped up their drilling activity with oil prices hovering at over $50 a barrel. May output is set to rise by 123,000 barrels per day to 5.19 million bpd, according to the U.S. Energy Information Administration’s drilling productivity report. That would be the biggest monthly increase since February 2015 and the highest monthly production level since November 2015. In the prolific Permian play located in West Texas and New Mexico, oil production is forecast to rise by nearly 76,000 bpd to 2.36 million bpd, data showed, a new record for the largest U.S. shale play. In the Eagle Ford region, output is set to rise by 39,000 bpd to […]

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 […]

Undaunted by oil bust, financiers pour billions into U.S. shale

18 Apr 2017   Shale Oil

Investors who took a hit last year when dozens of U.S. shale producers filed for bankruptcy are already making big new bets on the industry’s resurgence. In the first quarter, private equity funds raised $19.8 billion for energy ventures – nearly three times the total in the same period last year, according to financial data provider Preqin. The quickening pace of investments from private equity, along with hedge funds and investment banks, comes even as the recovery in oil prices CLc1 from an 8-year low has stalled at just over $50 per barrel amid a stubborn global supply glut. The shale sector has become increasingly attractive to investors not because of rising oil prices, but rather because producers have achieved startling cost reductions – slashing up to half the cost of pumping a […]

Undaunted by oil bust, financiers pour billions into U.S. shale

17 Apr 2017   Shale Oil

Investors who took a hit last year when dozens of U.S. shale producers filed for bankruptcy are already making big new bets on the industry’s resurgence. In the first quarter, private equity funds raised $19.8 billion for energy ventures – nearly three times the total in the same period last year, according to financial data provider Preqin. The quickening pace of investments from private equity, along with hedge funds and investment banks, comes even as the recovery in oil prices CLc1 from an 8-year low has stalled at just over $50 per barrel amid a stubborn global supply glut. The shale sector has become increasingly attractive to investors not because of rising oil prices, but rather because producers have achieved startling cost reductions – slashing up to half the cost of pumping a […]

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 […]

Saudi Aramco chief warns of looming oil shortage

The head of Saudi Arabia’s state energy giant has warned of a looming oil shortage as a $1tn drop in investments into future production takes effect.  Amin Nasser, chief executive of Saudi Aramco, the world’s largest oil producing company, said on Friday that 20m barrels a day in future production capacity was required to meet demand growth and offset natural field declines in the coming years. “That is a lot of production capacity, and the investments we now see coming back — which are mostly smaller and shorter term — are not going to be enough to get us there,” he said at the Columbia University Energy Summit in New York.  Mr Nasser said that the oil market was getting closer to rebalancing supply and demand, but the short-term market still points to a surplus as US drilling rig levels rise and growth in shale output returns.  Even so, he said it was not enough to meet supplies required in the coming years, which were “falling behind substantially”. About $1tn in oil and gas investments had been deferred and cancelled since the oil downturn began in 2014.

Oil Thesis For 2017 – International Production

15 Apr 2017   Peak Oil

Summary Recent data on international rig counts continue to show little increase into 2017. We anticipate oil production from non-OPEC, non-US production sources to decline in 2017 as depletion and decline rates take their toll; We differ from IEA’s interpretation of the trend line for non-OPEC, non-US production in H2 2017. This is our third and final article updating our oil thesis for 2017. Our prior articles addressed sentiment and fundamentals , and here, we’ll discuss international rig counts and what the low number of rigs portend for oil production. As always, we like to use our kids’ affinity for desserts to explain an oil concept, and kids are a bit of an expert when it comes to understanding decline and depletion rates. So, let’s use my daughter for instance. Like any oil producer with a new oil field, whenever my daughter gets a big bowl of ice cream, […]

IEA says global oil market now close to balance

14 Apr 2017   IEA, Oil Supply

The global oil market is close to balance, after nearly three years of excess supply, as production cuts by top exporters offset a longer-term decline in demand in the richest nations, the International Energy Agency said on Thursday. The agency said oil stocks across the Organisation for Economic Cooperation and Development (OECD) fell by 17.2 million barrels in March, resulting in an increase of 38.5 million barrels, or 425,000 barrels per day (bpd), in the first three months of the year. “The net result is that global stocks might have marginally increased in the first quarter, versus an implied draw of about 0.2 million barrels per day,” the Paris-based IEA said. “It can be argued confidently that the market is already very close to balance, and as more data becomes […]

Can We Expect A Big Draw In Crude Inventories Anytime Soon?

14 Apr 2017   Oil Supply, Shale Oil

With shale producers adding rigs every week, output is rising and so are stockpiles which weighs on prices and curbs their upward potential, ruining OPEC’s efforts to rebalance the market.  That’s good news for bears and bad news for bulls, but according to RBC commodity analysts, it is not so much the growing production which is hurting the price rise. It is refinery runs, which have been lower over the first quarter of the year because of maintenance season.  In fact, the RBC analysts have estimated that lower refinery runs – below 90 percent of capacity – in the first quarter have accounted for the bulk of the inventory increase, a hefty 64.2 percent of it, while rising production only accounted for 11.5 percent. Where did the rest of the stockpiles increase come from? Imports accounted for 20.8 percent of it, and the strategic petroleum reserve accounted for the remaining 3.5 percent. When they wrote their estimates, the analysts were confident that, as maintenance season ends, inventories will begin to fall. However, this is not yet happening, despite the Energy Information Administration reporting refinery runs of over 90 percent for the last two weeks.

More oil on the market than last year, a report finds

14 Apr 2017   Oil Supply

Higher oil prices mean more production from the United States, leaving the global market with more oil than last year, the International Energy Agency said. “Even after taking into account production cut pledges from the eleven non-OPEC countries, unplanned outages in Canada as well as in the North Sea, we expect production will grow again on a year-on-year basis by May,” the IEA noted in a report issued Thursday. Members of the Organization of Petroleum Exporting Countries agreed to cut about 1.2 million barrels of oil per day through a deal that went into force in January. The latest monthly market report from OPEC economists said contributing members are cutting more […]

ConocoPhillips Sells San Juan Basin Assets For $3B

14 Apr 2017   Shale Oil

ConocoPhillips, the largest U.S. independent oil producer, said on Thursday it would sell natural gas-heavy assets in San Juan basin to privately held Hilcorp Energy Co for about $3 billion. ConocoPhillips has been selling assets to reduce its exposure to profit-sapping natural gas assets and shore up its balance sheet. The assets, which span New Mexico and Southwestern Colorado, produced 124,000 barrels of oil equivalent per day, about 80 percent of which was natural gas, ConocoPhillips said. Conoco said last month it would sell oil sands and western Canadian natural gas assets to Cenovus Energy Inc for $13.3 billion. Conoco will receive $2.7 billion in cash from the San Juan basin asset sale, which is expected to close in the third quarter. The deal […]

Bankers’ Fading Fear of Oil Lending Is Latest Boon for Shale

14 Apr 2017   Shale Oil

JPMorgan, Wells Fargo, Citigroup cut reserves amid oil rise Banks release $370 million loan provisions in first quarter Wall Street banks’ growing optimism about the energy industry is the latest boost for U.S. oil and natural gas producers already enjoying higher prices. JPMorgan Chase & Co., Wells Fargo & Co. and Citigroup Inc. said on Thursday in their first-quarter earnings results that rising oil prices have helped them free a combined $370 million they previously set aside to cover bad loans. If the optimism turns into an increase in lending, it would be a boon to shale firms from Texas to North Dakota that rely on borrowed money to finance their drilling and fracking. That could further accelerate U.S. oil production, which is already expected to rise above 10 million barrels a day for the first time in late 2018, and put more pressure on OPEC’s efforts to restrain […]

North Dakota oil output rises back above 1 mil b/d in Feb

14 Apr 2017   Shale Oil

Up 5% from Jan; first month above 1 mil b/d since Nov Spring thaw will slash output, but rebound expected by May Bakken spot prices rise while breakeven prices fall North Dakota crude oil production rose back above the 1 million b/d threshold in February for the first time since November, but output could drop as low as 950,000 b/d in March or April as frozen roads thaw and force the state to impose weight restrictions on service trucks, the state’s top oil and gas regulator said Thursday. February’s preliminary output of 1.03 million b/d was 5% higher than January’s adjusted figure of 981,380 b/d, but it’s still well below the state’s all-time high of 1.23 million b/d in December 2014. Lynn Helms, director of the state Department of Mineral Resources, said during a press conference that he did not expect production to hit 1 million b/d until much […]

U.S. Oil-Rig Count Climbs by 11

14 Apr 2017   Shale Oil, USA

The number of rigs drilling for oil in the U.S. rose by 11 in the past week to 683, according to oil-field services company Baker Hughes Inc. The Baker Hughes report was delivered a day early because U.S. financial markets will be closed in observance of Good Friday. The U.S. oil-rig count is typically viewed as a proxy for activity in…

U.S. offshore oil production on the rise

14 Apr 2017   Offshore, USA

With two oil fields in the Gulf of Mexico starting production this year, and five on tap for 2018, offshore production is set to increase, a U.S. report found. Eight new fields in the U.S. waters of the Gulf of Mexico started producing oil last year, leading to a high-water mark of 1.6 million barrels per day, beating the previous record set in 2009 by 44,000 bpd. By January, regional offshore production was up another half million barrels on a daily basis. A March report from analytical group Wood Mackenzie found the cost to break even on oil and gas projects in deep waters, the U.S. Gulf of Mexico in particular, has dropped from around $70 […]

U.S. Oil Rig Count Climbs to Highest in Almost Two Years

14 Apr 2017   Shale Oil

U.S. crude production will likely rise in the months ahead as explorers added rigs for a 13th week, capping the longest stretch of gains since 2011. Rigs targeting crude rose by 11 to 683 this week, the highest level since April 2015, according to Baker Hughes Inc. data released Thursday. The number of wells drilled has more than doubled since tumbling to 316 in May.