Oil prices rise on North Sea pipeline outage, but growing US output looms

15 Dec 2017   Prices

Oil prices moved up on Friday, lifted by the Forties pipeline outage in the North Sea and ongoing OPEC-led production cuts, although rising output from the United States kept a lid on markets. U.S. West Texas Intermediate (WTI) crude futures were at $57.28 a barrel at 0757 GMT, up 26 cents, or 0.5 percent, from their last settlement. Brent crude futures, the international benchmark for oil prices, were at $63.47 a barrel, up 16 cents, or 0.25 percent, from their previous close. The ongoing outage of the Forties pipeline, which carries North Sea oil to Britain, was the main price driver, traders said. “Forties pipeline operator Ineos declared force majeure on crude deliveries following Tuesday’s discovery of leaks in the pipeline, indicating that repairs could take several weeks,” U.S. investment bank Jefferies said. While the pipeline outage physically mostly affects the North Sea region, it is […]

Oil prices up slightly on pipeline outage support

15 Dec 2017   Prices

Oil prices rose almost 1 percent on Thursday after a pipeline outage in Britain continued to support prices despite data expecting a global crude surplus in the beginning of next year. FU.S. West Texas Intermediate futures settled up 44 cents, or 0.8 percent, to $57.04 a barrel. Brent crude futures settled at $62.44 a barrel, the same settlement as Wednesday. Prices have been supported by an outage on the Forties crude pipeline that was expected to last several weeks. Operator Ineos declared force majeure on crude oil, gas and condensate deliveries from the pipeline, a source familiar with the matter told Reuters on Wednesday. “At present you can’t ignore the impact of the Forties pipeline outage,” said John Kilduff, partner at Again Capital Llc in New York, […]

Key Pipeline Closure Amplifies OPEC’s Efforts

15 Dec 2017   OPEC, Prices

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

Oil prices up on lower U.S. crude stocks, but growing output caps gains

14 Dec 2017   Prices

Oil markets rose on Thursday, lifted by a fourth straight weekly fall in U.S. crude inventories, though climbing output capped prices well below the 2015 highs reached earlier this week. FILE PHOTO – A pump jack is seen at sunrise near Bakersfield, California October 14, 2014. REUTERS/Lucy Nicholson U.S. West Texas Intermediate (WTI) crude futures were at $56.69 a barrel at 0545 GMT, up 9 cents, or 0.2 percent, from their last settlement. Brent crude futures, the international benchmark for oil prices, were at $62.79 a barrel, up 35 cents, or 0.6 percent from their last close. U.S. crude oil stockpiles fell by 5.1 million barrels in the week to Dec. 8, the fourth consecutive week of decline, to 442.99 million barrels, lowest since October 2015. [EIA/S] Despite the price gain, Brent was well below $65.83 a barrel, the June 2015 high touched earlier this week. […]

Oil prices hold steady on competitive data, North Sea outage

14 Dec 2017   Prices

Oil prices waded into positive territory early Wednesday on word that OPEC was producing less and a key North Sea pipeline network was staying closed for now. Ineos, which operates the Forties pipeline system in the North Sea, said Wednesday it was reviewing a range of options to repair cracks in a system that carries about 40 percent of total regional production, or about 450,000 barrels per day. A hairline crack discovered last week has spread and it could be a matter of weeks before the system returns to normal. With several fields in the North Sea closed down in response, Phil Flynn , a senior market analyst for the PRICE Futures […]

Oil slips as U.S. gasoline stock build overshadows crude draw

14 Dec 2017   Oil Supply, Prices

Oil prices slipped for a second straight day on Wednesday, as a slump in U.S. crude stockpiles was offset by a larger-than-forecast rise in gasoline inventories and as U.S. crude output continued to grow to record highs. A driver looks at the price as he fills the tank of his car at a gas station in Shanghai, China November 17, 2017. REUTERS/Aly Song U.S. crude inventories last week dropped 5.1 million barrels, more than anticipated, and production hit another record high at 9.78 million barrels per day (bpd), government data showed. The U.S. peak, when records were only kept on a monthly basis, is 10.04 million bpd, set in November 1970. Gasoline stocks jumped 5.7 million barrels, more than double analysts’ expectations for a 2.5 million-barrel gain. “It’s kind of a mixed bag across the board – a little bigger than expected draw on crude […]

UK natural gas price hovers near 4-year peak

UK natural gas prices stayed near their highest level in four years on Wednesday, reflecting supply disruptions in the North Sea, but the reopening of a key European hub for Russian imports helped ease concerns over shortages. The cost of gas for the UK’s energy needs eased 5 pence to 68p a therm, though it remains up 17 per cent since the beginning of the month. The price for delivery in January dipped nearly 5p to 60.85p. Fears of a supply crunch have risen during the cold snap gripping the country, sparked by the shutdown of a key North Sea oil and gas pipeline that is expected to cut as much as 40 per cent of daily supply into the new year.

A surge in gas prices on Tuesday also reflected an explosion at the Baumgarten gas import hub in Austria, the main conduit for Russian supplies into Europe. The operator Gas Connect Austria said on Wednesday that the main arteries supplying neighbouring countries had come back online late on Tuesday. Same-day UK gas prices rose almost 50 per cent to a high of 99p a therm on Tuesday, the highest level since 2013. The shutdown of the Forties Pipeline System caused the closure of the British North Sea Elgin-Franklin and Britannia gasfields.

On Wednesday, the UK’s gas system was undersupplied by 27.8m cubic metres as demand fell short of flows, National Grid data showed, but the UK government stressed that the country had adequate import capacity. The pipeline outage has also reduced supplies of North Sea crude oil by 450,000 b/d, boosting oil prices to the highest in more than two years. Brent crude, the international oil benchmark underpinned by supplies from the North Sea, jumped to almost $66 a barrel on Tuesday. Prices have since eased to $63.76 a barrel.

Oil prices recover on big U.S. crude stock drawdown, pipeline shutdown supports

13 Dec 2017   Prices

 Oil prices rose on Wednesday as industry data showed a larger-than-expected drawdown in U.S. crude stockpiles, while expectations for an extended shutdown of a major North Sea crude pipeline also continued to bolster markets.  Brent crude was up 69 cents, or 1.1 percent, at $64.03 a barrel by 0743 GMT. It had settled down $1.35, or 2.1 percent, on Tuesday on a wave of profit-taking after news of a key North Sea pipeline shutdown helped send the global benchmark above $65 for the first time since mid-2015. U.S. West Texas Intermediate crude was up 45 cents, or 0.8 percent, at $57.59 a barrel. Britain’s biggest pipeline from its North Sea oil and gas fields is likely to be shut for […]

Oil prices settle down, but still higher on North Sea outage

13 Dec 2017   Prices

The perfect storm of a healthy appetite from China, a decline in global inventories and a major North Sea pipeline outage sent oil prices higher on Tuesday. After a relatively quiet start to the day, Brent crude oil prices shot up 2 percent during Monday’s session after pipeline operator Ineos shut down the Forties crude network in the North Sea after discovering a “hairline crack” on a pipe near Aberdeen, Scotland, last week. The system carries about 40 percent of the oil produced in the British waters of the North Sea, or about 450,000 barrels of oil per day. London oil broker PVM said the outage, which Ineos said could take weeks to resolve, “is one of the most significant unplanned crude oil […]

Oil Prices Hit High, Before Sliding, Amid Disrupted Supply

13 Dec 2017   Prices

The beleaguered global oil industry is seeing the beginning of the end of the crude glut. A wave of oil-supply disruptions, rising demand and OPEC’s production cuts has raised hopes among investors and producers that global oil supplies are finally falling back in line with demand, after years of being out of whack. Oil inventories in the industrialized world—a proxy for the glut—have fallen to their lowest levels in two years. Brent crude, the international benchmark, rose past $65 a barrel in volatile trading Tuesday for the first time since June 2015 before falling to $63.46 a barrel on Tuesday evening in London. Oil-industry players are now preparing for a more stable price around $60 a barrel or higher, after a […]

Five main drivers of oil prices in the coming year Opec and Russia’s production deal matters as Brent hits $65 on pipeline closure

13 Dec 2017   Prices

The oil market has climbed above $65 a barrel for the first time since 2015, boosted by the closure of the UK’s biggest oil pipeline that has cut North Sea supplies at a time when Opec’s output cuts with Russia have already spurred a robust rally in crude prices this year. Now, as the industry approaches 2018, the outlook remains clouded in uncertainty as supplies, led by a resurgent US shale industry, are forecast to climb sharply while Opec’s alliance with Russia may come under strain as the world’s biggest producers look to eventually bring production back online. As the oil market awaits 2018, here are the five factors to watch:

1. Forties pipeline system As the conduit for 40 percent of oil and gas supplies from the UK North Sea, the shutdown of the 400,000 barrel a day line has forced operators at up to 85 fields to curtail production. While the UK is a relatively small oil producer at the global level, a 400,000 b/d drop in supplies is almost equivalent to how much oil Saudi Arabia, the world’s largest exporter, has been assigned to cut as the de facto leader of Opec. Share this graphic As North Sea Brent, the international benchmark, is underpinned by supplies from fields affected by the outage, the market has been quick to react. Olivier Jakob at Petromatrix says it was a “serious supply disruption” likely to upend global flows. “The disruption to Forties is not just about missing barrels, it is also about the losing a key component

Gas prices even for now, but British pipeline problem could change that

13 Dec 2017   Prices

Retail U.S. gasoline prices are holding steady, but it remains to be seen how much of a spike to expect from a British pipeline outage, an analyst said. Motor club AAA reports a national average retail price for regular unleaded Tuesday at $2.46 per gallon, a slight decline from Monday, but more or less stable from last week. Until Monday, markets had given up some of the gains from November after the Organization of Petroleum Exporting Countries agreed to hold their production positions static through the end of next year. That decision moderated the price of oil, until Monday when pipeline operator Ineos said it closed a pipeline system […]

UK Gas Prices Rise Most In 8 Years On Explosion, Outages

It has been a tough week already for those that heat their homes in Britain (and those that trade Natural Gas). Following extreme weather warnings and the forties pipeline crack shutdown , an explosion at one of the Europe’s biggest gas hubs further tightened supplies sending gas futures prices up by the most in 8 years. As Bloomberg reports , gas futures rose the most in more than eight years in Britain, which already is struggling to absorb the impact of a crack that shut down a North Sea pipeline network. After snow fell for two days in London, cooler-than-normal temperatures spread from the Alps to Scandinavia, raising demand for heating fuels. (Click to enlarge) An explosion at around 9am at Austria’s main gas pipeline hub, left one person dead and 18 injured, according to police. The facility about 50 kilometers (31 miles) northeast of Vienna transports the equivalent […]

Oil Prices Climb as Key Pipeline Shuts Down for Repair

12 Dec 2017   Prices

Global oil prices jumped to their highest level since 2015 as the shutdown of a key European pipeline sapped more crude from a market where supply has already tightened due to production cuts. Brent crude, the global benchmark, was up 1%, at $65.33 a barrel on London’s Intercontinental Exchange. On the New York Mercantile Exchange, West Texas Intermediate futures were trading up 0.7%, at $58.38 a barrel. Late Monday, British refining and chemicals company Ineos said it would shut down the Forties Pipeline System for several weeks after discovering a widening crack. The pipeline system delivers around 40% of U.K.’s North Sea oil and gas production, carrying about 445,000 barrels of crude a day. “The pipeline outage is the big driver right now,” said Tom Pugh, a commodities economist at Capital Economics. “When you take out so much oil out of the market, that inevitably adds to the tightness.” […]

Brent crude oil jumps to mid-2015 high after North Sea pipeline outage

12 Dec 2017   Prices

Brent oil prices jumped by 1 percent on Tuesday to their highest since mid-2015, after the shutdown of the Forties North Sea pipeline knocked out significant supply from a market already tightening due to OPEC-led production cuts.  Brent crude futures LCOc1, the international benchmark for oil prices, were at $65.32 a barrel at 0748 GMT, up 63 cents, or 1 percent, from their last close. The contract hit a high of $65.70 a barrel earlier in the day. That marks the first time Brent has risen above $65 since June, 2015. U.S. West Texas Intermediate (WTI) crude futures CLc1 were at $58.38 a barrel, up 39 cents, or 0.7 percent, from their last settlement. “Brent crude raced higher … as news broke that the […]

Oil prices jump on pipeline outage, stocks take breather

12 Dec 2017   Prices

Oil prices jumped on Tuesday after the shutdown of a North Sea pipeline knocked out significant supply from an already tightening market, while world stocks took a break from a three-day rally. Brent crude futures, the international benchmark for oil prices, rose above $65 a barrel – their highest since mid-2015 – after Britain’s Forties pipeline was shut due to cracks as a cold snap sweeps the country. [O/R] “The market reaction shows that in a tight market, any supply issue will quickly be reflected in higher prices,” said ANZ bank. Analysts also said the pipeline is a significant component underpinning the Brent benchmark. U.S. crude oil futures CLc1 rose nearly 1 percent to $58.51 a barrel. The […]

Oil Prices Rise on Pipeline Shutdown Announcement

12 Dec 2017   Prices

Oil prices rose and the global benchmark hit its highest level since 2015 Monday after the owner of a major European pipeline said it is shutting the system down for a period of weeks. Ineos, the British refining and chemicals company, said it would shut down the Forties Pipeline System for a “matter of weeks” after a hairline fracture discovered last week grew. The outage raised the prospect of a supply shortfall and comes as the global oil market has already become tighter following nearly a year of production cuts by the Organization of the Petroleum Exporting Countries and other major producers. Brent crude rose $1.29, or 2.03%, to $64.69 a barrel on ICE Futures Europe—its highest level since June 2015. U.S. crude futures rose 63 cents, or 1.1%, to $57.99 a barrel on the New York Mercantile Exchange. The pipeline system carries about 445,000 barrels of crude a […]

Saudis To Slash Oil Exports To Asia By 100,000 Bpd

12 Dec 2017   Prices, Saudi Arabia

Saudi Arabia will cut its crude oil exports to Asia by more than 100,000 bpd in January compared to December, while keeping its shipments to Europe and the U.S. at the December levels, the Saudi Energy Ministry said on Monday. “Aramco will maintain its overall supply levels next month at their recent low levels,” the ministry said in a statement, as carried by Reuters. “We hope that by leading by example, our partners from OPEC and non-OPEC will do the same in order to keep conformity levels above 100 percent and accelerate the rebalancing of the market,” an energy ministry spokesman said in the statement. Saudi Arabia’s overall global crude oil shipments will be kept at 6.9 million bpd in January, an industry source familiar with the Saudi plans told Reuters on Monday. For December, the Saudis had cut total crude oil exports by 120,000 bpd from just above […]

Are NatGas Prices About To Explode?

As I write this, Henry Hub (the primary confluence of pipelines in northern Louisiana at which the NYSE daily futures contract price is pegged) is off 11 cents to $2.79 per thousand cubic feet (or million BTUs), having lost 8.8 percent in value for the week and 12 percent for the month. The reason is simple: overall demand is coming in lower than this time last year. But that’s not going to last for much longer. You see, there is a major catalyst in the natural gas market that could soon send prices through the roof in 2018. Here’s how… Natural Gas Price Squeeze The reason why American natural gas prices have plummeted boils down to two things: • An excess of supply; • And unusually warm weather. Most of the retreat is tied to the supply side. Expectations by year-end indicate that natural gas demand will be down […]

Oil prices slip under shadow of U.S. drilling

11 Dec 2017   Prices

Oil markets edged lower on Monday as ongoing output cuts led by OPEC were countered by rising U.S. drilling activity that points to a further increase in American production.  Brent crude futures LCOc1, the international benchmark for oil prices, were 15 cents lower at $63.25 a barrel at 0950 GMT. U.S. West Texas Intermediate (WTI) crude futures CLc1 were at $57.03 a barrel, down 33 cents from their last settlement. Both Brent and WTI crude oil settled more than 1 percent higher on Friday, and oil prices have gained well over a third in value from their 2017 lows. “It’s time for a breather,” said Warren Patterson, commodities strategist with ING. The gains are largely due to production cuts by the Organization of […]

Is This The Top Of The Oil Market?

11 Dec 2017   Prices

The surge in gasoline stocks offset the positive news of a crude inventory drawdown this week, deflating sentiment surrounding crude oil prices. Gasoline stocks jumped by a stunning 6.8 million barrels for the week ending on December 1, the second consecutive week of strong builds. In fact, it’s the largest two-week increase in inventories since the beginning of this year. That bearish data was compounded by the fact that U.S. oil production data showed a jump to 9.707 million barrels per day, an all-time record high. The fact that the U.S. is now producing more oil than ever before would be big news, but everyone kind of expected this to happen at some point in 2017, with more gains in the offing for 2018. (Click to enlarge) It wasn’t all bad news for oil bulls—the EIA did report a drawdown of crude stocks by 5.6 million barrels, another strong […]

Is Oil About To Collapse?

11 Dec 2017   Prices

When writing about markets, here and elsewhere, I usually try to avoid the temptation to write sensational things. Words like “collapse” and “crash”, or “surge” and “explode” attract clicks, which in turn often translates to cash for a writer, but major events like that are rare. That is all fine and logical, but…WTI really does look like it is about to collapse. Let’s be clear, I am not necessarily talking about a return to the sub-$30 of the beginning of 2016 here, but a return to the more recent lows around $42 before too long is distinctly possible, and if that happens, who knows where we go from there? There are, as I have noted in the past, reasons to believe that the long-term path of oil is still upward, but more immediately there is one dominant factor that keeps adding downward pressure, large and still growing supply from […]

Oil Jumps as Resurgent Chinese Demand Brightens Global Outlook

9 Dec 2017   China, Prices

Shipments averaged 9.05 million barrels a day in November Oil rig count in the U.S. at highest level since September Crude edged higher as near-record Chinese orders for foreign crude signaled stronger demand in the world’s second-largest economy. Futures climbed 1.2 percent in New York. A rebound in China’s crude imports last month from a one-year low defused some of the pessimism among investors fanned by a U.S. government report earlier this week showing bearish increases in fuel inventories and domestic oil production. “Everyone is talking about that big jump in imports of crude into China last month,” according to John Kilduff, a partner at Again Capital LLC , a New York-based hedge fund. “It’s definitely a strong source of demand.” This year’s watershed moment for global oil markets was last month’s agreement by the Organization of Petroleum Exporting Countries, Russia and allied producers to extend production curbs through […]

Oil rises 1 percent on China demand, but weekly losses loom

9 Dec 2017   Prices

Oil prices rose more than 1 percent on Friday, helped by rising Chinese crude demand and threats of a strike in Africa’s largest oil exporter.  But prices were still on track for weekly losses of up to 1.9 percent amid concerns that rising U.S. production could undermine OPEC-led supply cuts. By 1:32 p.m (1832 GMT), Brent crude was up 99 cents or 1.6 percent at $63.25 a barrel, but heading for a weekly slide of 0.9 percent. U.S. West Texas Intermediate (WTI) crude was at $57.25 a barrel, up 56 cents or 1 percent on the day and on track for a 1.9 percent loss on the week. China’s crude oil imports rose to 9.01 million barrels per day (bpd), the second highest on record, data from […]

Why Oil Prices Bounced Back

9 Dec 2017   Prices

On the tail end of a rather dull week in oil markets, crude prices recovered on Thursday and Friday following the Trump administration’s announcement that the U.S. will move its embassy in Israel to Jerusalen.  After sinking for much of the week, oil prices recovered slightly on Thursday and Friday. Analysts attributed the rise to tensions in the Middle East after the Trump administration announced the U.S. would move its embassy in Israel to Jerusalem, a move that was met with widespread protest in the region. Meanwhile, data from China showed strong crude import data for November – imports jumped above 9 million barrels per day, up from 7.3 mb/d a month earlier. Inclusion of Libya in OPEC deal insignificant . Saudi oil minister Khalid al-Falih seemed […]

Oil stable as strong Chinese demand counters rising dollar

8 Dec 2017   Prices

Oil prices were stable on Friday as the weight of a strengthening U.S. dollar was countered by China’s relentless thirst for crude and the OPEC-led supply cuts that have gradually tightened the market this year.  U.S. West Texas Intermediate (WTI) crude futures were at $56.70 a barrel at 0714 GMT, virtually unchanged from their last settlement. Brent crude futures, the international benchmark for oil prices, were up 7 cents, or 0.1 percent, at $62.27 a barrel. Sponsored Traders said a stronger dollar, which has gained over 0.9 percent this month against a basket of other leading currencies, was weighing on prices. A rising greenback attracts financial traders who switch investments between commodity futures and foreign exchange. “A strong U.S. dollar could act as a headwind to commodities,” Bank […]

Oil prices recover on GDP gains in Europe, U.S. labor

8 Dec 2017   Prices

Oil prices moved back into black territory after signs of modest growth in the European economy and fewer U.S. jobless claims. File photo by John Angelillo/UPI Dec. 7 (UPI) — A rebound in GDP in the European Union and a possible cash-squeeze for U.S. shale operators pushed oil prices into positive territory Thursday. Last week, the Organization of Economic Cooperation and Development reported growth in the world’s industrialized economies was apparent, but also lopsided. Nevertheless, the economies in Europe continued to show slow, but steady, momentum for the year. The European Commission’s record-keeping office reported gross domestic production for the third quarter was up 0.6 percent for the 28 member states and those countries using the euro currency to 2.6 percent. Last week, the U.S. Commerce Department reported GDP increased at an annual rate of 3.3 percent during the third quarter, an improvement over second quarter growth of 3.1 […]

Oil rises over 1 percent on threatened Nigeria strike, short covering

8 Dec 2017   Prices

Oil prices climbed more than 1 percent on Thursday due to a threatened strike in Nigeria and as traders cover shorts after sharp losses the previous day brought on by an unexpectedly large rise in U.S. stocks of refined fuels. “Short covering in the market, together with the threat of a strike by Nigeria’s key oil union, has provided some support to oil prices in today’s session,” said Abhishek Kumar, senior energy analyst at Interfax Energy’s Global Gas Analytics in London. Sponsored One of Nigeria’s two main oil unions threatened to launch a nationwide strike from Dec. 18 over what it said was a “mass sacking of workers that joined the union.” The country is Africa’s top oil exporter. Brent futures […]

Hedge Funds Killed The OPEC Rally

8 Dec 2017   Prices

Oil investors were confident ahead of the OPEC meeting last week, holding onto their bullish bets, but now there seems to be a bit of an OPEC hangover after weeks of hype. Heading into the meeting, hedge funds and other money managers increased their bullish bets on crude futures, despite already collectively holding a disproportionately bullish set of positions. The week before the meeting, bets on WTI jumped to their most bullish since February, according to Bloomberg . The shift occurred largely because short bets were liquidated, a sign that investors had fled the scene when they realized that OPEC wasn’t bluffing. “There was definitely a consensus that we were going to see a six- to nine-month extension, so to be short in front of that obviously would not be a good positioning for hedge funds,” Nick Holmes, an analyst at Tortoise Capital Advisors LLC, told Bloomberg. “There was […]

Oil settles at two-week low on surprise U.S. fuel stock rise

7 Dec 2017   Prices

U.S. crude on Wednesday slid nearly 3 percent on Wednesday, its biggest daily decline in more than two months, after a sharp rise in U.S. inventories of refined fuel suggested demand may be flagging, while U.S. crude production hit another weekly record. U.S. gasoline stocks rose by 6.8 million barrels and distillate inventories were up 1.7 million barrels, government data showed, both exceeding expectations in a Reuters poll. The surprise data hit prices of both crude and products in a market that was tilted bullish and vulnerable to a selloff, analysts said. Sponsored The Energy Information Administration data also showed U.S. crude […]

Oil dips on rising U.S. fuel stocks, but OPEC’s supply cuts support market

6 Dec 2017   Prices

Oil prices dipped on Wednesday, as refined product inventories in the United States rose in what the market interpreted as a sign of lacklustre demand.  Brent crude futures LCOc1, the international benchmark for oil prices, were down 6 cents at $62.80 a barrel as of 0751 GMT. U.S. West Texas Intermediate (WTI) crude futures were at $57.50 a barrel, down 22 cents. Sponsored Traders said prices fell after an American Petroleum Institute (API) report late on Tuesday that showed a 9.2 million barrel rise in gasoline stocks in the week ended Dec. 1, and an increase of 4.3 million barrels in distillate inventories, […]

Oil Prices Fall After API Reports Huge Build In Gasoline Inventories

6 Dec 2017   Oil Supply, Prices

The American Petroleum Institute (API) reported a large draw of 5.481 million barrels of United States crude oil inventories for the week ending December 1, while analysts had expected a drawdown of 3.507 million barrels . The draw may embolden oil bulls who were left wanting after the OPEC meeting failed to lift prices as many had hoped. Last week, the American Petroleum Institute (API) reported a surprise build of 1.821 million barrels of crude oil when analysts had expected a drawdown of 3.15 million barrels . A day later, however, the EIA reported a 3.4-million-barrel draw , more in line with analyst expectations. Gasoline inventories, on the other hand, saw a massive build this week of 9.196 million barrels for the week ending December 1, compared to forecasts of a much smaller 1.145-million-barrel build . This week’s unexpectedly large build in gasoline inventories is likely to put downward […]

OPEC’s Latest Agreement May Not Stabilize Oil Prices

6 Dec 2017   OPEC, Prices

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

Fear Will Drive Oil Prices Higher In 2018

6 Dec 2017   Prices

The price of oil has always been driven by cycles of fear and complacency. During the cycle of fear, geopolitical events can send the price of oil soaring. During the cycle of complacency, oil prices will fall on bad news (e.g., the appearance of too much supply or weakening demand), but often seem immune to bullish news. Over the past decade, the world has experienced both cycles. The Cycle of Fear A decade ago “peak oil” was helping drive the fear cycle, as many credible voices asserted that a terminal decline in oil production was imminent. For a while, it looked like they might be right. Production in Saudi Arabia remained flat even as global demand continued to grow, and oil prices skyrocketed above $100 a barrel (bbl). These were just the types of consequences predicted by those who predicted an imminent terminal decline. But the reality was that […]

Oil Markets Calm After OPEC Storm

6 Dec 2017   OPEC, Prices

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

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

6 Dec 2017   OPEC, Prices

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

Report: LNG Project Sanction Uptick in 2018

6 Dec 2017   LNG, Prices

There will be an uptick in the number and capacity of LNG projects sanctioned in 2018, according to a new report. There will be an uptick in the number and capacity of LNG projects sanctioned in 2018, as improving market conditions, tighter fiscal management and the need to invest to meet long term demand support final investment decisions. That is the view of BMI research, which made the statement in a new LNG project outlook report sent to Rigzone. “Given the delay to a number of projects over the last two years, there is now a backlog of developments that are close to FID [final investment decision] and are awaiting better energy market conditions to move ahead,” the report states. “Despite a weak outlook for LNG prices in 2018 and 2019…both strengthening oil prices and better fiscal management by companies will support capital allocation to enable final investment decisions…to […]

Higher Oil Prices Widen U.S. Trade Deficit

6 Dec 2017   Prices

The U.S. trade deficit increased to $48.7 billion in October from $44.9 billion in September amid rising imports and higher crude oil prices, increasing the value of U.S. oil imports, government data showed on Tuesday. Total U.S. exports were $195.9 billion in October, down by less than $0.1 billion from September. Imports, on the other hand, increased to $244.6 billion in October, up from $240.8 billion in September. The trade deficit increased to the highest since January and was above expectations of a Reuters poll of economists who had predicted the October deficit would stand at $47.5 billion. Imports of industrial supplies and materials increased $1.8 billion, reflecting a $1.5 billion increase in crude oil imports. The U.S. crude oil imports rose to $10.664 billion in October from $9.131 billion in September. The average import price of crude oil stood at $47.26 per barrel in October, the highest level […]

Oil Slips as OPEC Deal Seen Leading to Potential Shale Surge

5 Dec 2017   Prices

U.S. rig count at highest since September, output at record Shale drillers will boost spending 20% in 2018: Evercore Oil retreated amid worries that OPEC’s deal to extend production cutbacks may take U.S. shale activity to a whole new level. Futures tumbled as much as 1.6 percent in New York. OPEC and partners including Russia last week agreed to keep cutting output through the end of next year. At the same time, North American explorers probably will boost spending by 20 percent in 2018, according to an Evercore ISI survey of industry budget trends. “It’s been a steady climb on the production side here in the U.S., which continues to eat away at OPEC’s hopes for balancing this market,” John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund, said by telephone. “They are sowing the seeds for the deal unraveling just because the way it’s […]

Oil Prices Wane After Output Cap Extension

5 Dec 2017   Prices

Oil prices fell Monday, as the market appeared to look past OPEC’s agreement late last week to extend its crude production cuts through the end of 2018 . U.S. crude futures recently trade down 75 cents, or 1.29%, to $57.61 a barrel on the New York Mercantile Exchange. Brent crude , the global benchmark, fell 92 cents, or 1.44%, to $62.81 a barrel on ICE Futures Europe. “A lack of any significant bullishness in the weekend let the bears regain control they were looking for,” said Donald Morton, senior vice president at Herbert J. Sims & Co., who oversees an energy trading desk. Mr. Morton said traders are expecting government data this week to show increases in fuel inventories. And traders who rely on algorithms to put on short-term trades have been liquidating bullish positions, accelerating the selloff, he said. The Organization of the Petroleum Exporting Countries and a […]

Gasoline Prices Begin To Fall As Demand Tapers Off

5 Dec 2017   Prices

Gasoline prices in the United States are slowly falling after a Thanksgiving high, according to emerging data on the fuel’s price points. But drivers should enjoy the current falling prices—because they won’t be here for long. On Monday, the national gallon of gasoline averaged $2.465, down 3.5 cents from the previous Monday. Demand for gasoline dropped after Thanksgiving as families returned to their homes, ending a yearly road-trip season—kicking off the season of lowered demand for the fuel. Still, GasBuddy’s pre-Thanksgiving report pegs gas prices at their highest average since 2014, the year oil prices crashed from their highs of over $100 per barrel—so the fall in prices won’t be as much as many are accustomed to. “With OPEC deciding last week to extend last year’s agreement on oil production cuts, the future for gasoline prices isn’t as rosy,” said Patrick DeHaan from “While the short term may […]

U.S. energy sector gains drag on oil prices

5 Dec 2017   Prices

Steady improvements in the North American energy sector and a forecast about a geopolitical risk premium sent crude oil prices lower early Monday. Members of the Organization of Petroleum Exporting Countries and non-member states like Russia agreed last week to extend a production cut agreement credited with supporting crude oil prices to the end of 2018. The measure is aimed at draining the surplus from the five-year average in global crude oil inventories, and Saudi Arabia’s energy minister said the work is only halfway done. High U.S. oil production and a previous OPEC policy of defending a market position with robust output sent oil prices plummeting below $30 per barrel last […]

Oil Falls Below $58 as Rig Count Counters OPEC Curbs Extension

4 Dec 2017   Prices
Oil Falls Below $58 as Rig Count Counters OPEC Curbs Extension

Oil dropped below $58 a barrel as investors weighed an increase in U.S. drilling rigs against OPEC’s promise to extend output cuts through the end of next year.  Futures fell as much as 1.2 percent in New York after adding 1.7 percent Friday. OPEC and its allies including Russia last week agreed to keep supply cuts in place and beefed up the extension with the inclusion of Nigeria and Libya. Executives from three of the biggest independent U.S. drillers said that while they won’t increase activity just because prices rise, they’ll still grow.

Oil has advanced for the past three months amid optimism that output cuts by Organization of Petroleum Exporting Countries and its partners are helping to balance the market. Yet U.S. rivals have been expanding their operations, with drillers adding two oil rigs to reach 749 last week, the highest level since late September, according to Baker Hughes.  “The OPEC deal will mostly work for non-OPEC,” said Eugen Weinberg, head of commodities research at Commerzbank AG in Frankfurt. “Even if OPEC delivers the cuts promised, and prices stay high long enough, the main result will be that U.S. shale adds on close to 1 million barrels a day of additional production.”

West Texas Intermediate for January delivery dropped 57 cents to $57.79 a barrel on the New York Mercantile Exchange at 10:35 a.m. London time, after gaining 96 cents on Friday. Total volume traded was about 21 percent below the 100-day average. Brent for February settlement dropped 51 cents to $63.22 a barrel on the London-based ICE Futures Europe exchange. Prices added $1.10, or 1.8 percent, to close at $63.73 on Friday. The global benchmark crude was at a premium of $5.43 to February WTI.

Oil settles up but off highs as Flynn news spooks Wall Street

2 Dec 2017   Prices

Oil prices settled up slightly on Friday, but came off session highs as financial markets reeled from an ABC News report that added to concerns about President Donald Trump’s exposure to a probe into Russian meddling in last year’s campaign. Brent crude rose as high as $64.32 a barrel, the day after OPEC and other crude producers agreed to extend output cuts until the end of 2018 to tighten global supplies and support prices. But oil pared gains as Wall Street stocks slid following an ABC report that former national security adviser Michael Flynn was prepared to tell investigators that prior to taking office, Trump directed him to make contact with Russians. [.N] Sponsored Reuters has not verified the ABC News report, which cited a Flynn confidant. Flynn also pleaded guilty on Friday to lying to the FBI. “Oil prices have pared earlier gains in […]

OPEC Extension Sends Oil Prices Soaring

2 Dec 2017   Prices

OPEC followed through on its promise, extending the production cuts through the end of 2018, bringing relief to an oil market that had grown jittery in recent days. Oil prices traded in a relatively narrow range after the meeting and appeared muted. But once concerns over a selloff calmed, oil prices rallied once again on Friday morning. OPEC deal extended through 2018. The deal will run from January through to December, and the exact volumes of the production cuts will be the same as this year. The OPEC/non-OPEC coalition said that they would monitor market conditions and would remain “agile,” ready to respond if the fundamentals deviate significantly from expectations. They will revisit the agreement at the next official meeting in June 2018, but they assume the cuts will last […]

Oil Price to Rise in 2H18 with OPEC, NOPEC Cut Extension

2 Dec 2017   Prices

Supply-demand balance expected to tighten in second half of 2018. The OPEC and NOPEC agreement to keep current production restraints in place through 2018 will contribute to an oil price increase in the second half of next year, according to Wood Mackenzie. “The stakes were high for OPEC,” Ann-Louise Hittle, Wood Mackenzie vice president of oils research, said in a statement sent to Rigzone. “Despite the success in cutting output and follow-on price recovery, if the agreement had ended in March 2018, our forecast shows there would have been a very large 2.4 million barrels per day year-on-year increase in total world oil supply for 2018,” she added. “That would have led to a persistent oversupply for every quarter of 2018,” Hittle continued. With the extension in place, Wood Mackenzie expects the supply and demand balance to tighten in the second half of next year, which will help lift […]

Oil in mid-$60 per barrel range fair, Russian company says

2 Dec 2017   Prices, Russia

A price range for crude oil of between $60 and $65 per barrel is a good point on which to base a budget, the head of Russian oil company Lukoil said Friday. CEO Vagit Alekperov said Friday that, for ministers from the Organization of Petroleum Exporting Countries and non-members, the mid-$60 range was preferable for now. “The budget for 2018 is based on $60 dollars [per barrel],” he was quoted by Russian news agency Tass as saying. Russia is party to an effort led by OPEC to balance an oversupplied market with coordinated declines in production. Russia is the largest contributor to the agreement outside of OPEC and helped steer negotiations this week that led to a nine-month extension to a deal set to expire in March. From […]

Russia Ups Oil Price Forecast For 2018

2 Dec 2017   Prices, Russia

Russia’s Economy Ministry will increase its forecast for the price of the country’s Urals oil blend for 2018, following the extension of the OPEC/non-OPEC production cut agreement extension, announced yesterday in Vienna. Economy Minister Maxim Oreshkin said the new price level the ministry will work with will be above US$50. Previously, it was US$43.80 a barrel. Oreshkin recently warned the production cut agreement was harmful for the Russian economy as it discouraged oil companies from making new investments. Yesterday, OPEC and its partners from the Vienna Club, which last year agreed to reduce crude oil production by a combined 1.8 million bpd to relieve the global supply glut and improve prices, extended the cuts until the end of next year, with a review of the latest deal planned for June 2018. The decision was expected, despite some last-minute worry that Russia might be reluctant to sign up for a […]

Lukoil CEO says oil markets won’t overheat

2 Dec 2017   Prices, Russia

Oil markets will not overheat as they did during a price spike in the last decade as global demand is rising fast and the alliance of OPEC and non-OPEC countries is working well, the head of Russia’s top private producer Lukoil said. Vagit Alekperov, the long-serving chief executive and top shareholder of Lukoil, told Reuters he expected global oil demand to rise by 1.8 million barrels per day next year. Sponsored In addition to that, the supply of crude from producers who are not participating in production cuts is estimated to rise by 0.8 million bpd next year, he said. “We still have plenty of excessive stocks globally […]

Oil Prices Rise After OPEC Announces Deal

1 Dec 2017   Prices

Oil prices closed higher lower on Thursday after a group of major oil producers agreed to extend supply cuts through the end of next year. Light, sweet crude for January delivery inched up 10 cents, or 0.2%, to $57.40 a barrel on the New York Mercantile Exchange, after three straight days of losses. Brent, the global benchmark, advanced 46 cents, or 0.7%, to $63.57 a barrel. The Organization of the Petroleum Exporting Countries, along with a host of outside producers including Russia, agreed to continue to curb output for an additional nine months on Thursday, extending a deal that was set to expire in March 2018. “This is well within expectations,” said Ric Navy, senior vice president for energy futures at RJ O’Brien & Associates LLC. “The surprise would have been if they did anything different than that.” Prices swung between losses and gains throughout the day as traders […]