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There Are 300,000 Iraqi Barrels Signaling Oil Glut Will Deepen – Bloomberg
There Are 300,000 Iraqi Barrels Signaling Oil Glut Will Deepen – Bloomberg.
Not only is OPEC refraining from cutting oil output to stem the five-month plunge in prices, it’s adding to the supply glut.
Just five days after the Organization of Petroleum Exporting Countries decided to maintain production levels, Iraq, the group’s second-biggest member, inked an export deal with the Kurds that may add about 300,000 barrels a day to world supplies.
In a global market that neighboring Kuwait estimates is facing a daily oversupply of 1.8 million barrels, the accord stands to deepen crude’s 38 percent plunge since late June. Or as Carsten Fritsch, a Frankfurt-based analyst at Commerzbank AG, put it: there’ll be “even more oil flooding the market that nobody needs.”
Benchmark Brent crude slumped immediately after the deal was signed yesterday inBaghdad, dropping 2.8 percent to $70.54 a barrel. The price, which slipped another 0.2 percent today, is down 9 percent since OPEC’s Nov. 27 decision and 17 percent over the past 30 days.
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Brent Rebounds From $70 as Oil Rout Stutters After OPEC Inaction – Bloomberg
Brent Rebounds From $70 as Oil Rout Stutters After OPEC Inaction – Bloomberg.
Brent crude rebounded from near $70 a barrel as the market rout prompted by OPEC’s failure to curb production falters. West Texas Intermediate rose for the second day in three.
Futures advanced as much as 1.3 percent in London and 1.6 percent in New York. The global benchmarks fell 18 percent last month after the Organization of Petroleum Exporting Countries maintained its output target at 30 million barrels a day, opting to let low oil prices force U.S. shale producers to cut supply. Saudi Arabia won’t give up market share “at this time for anybody,” said Prince Turki Al-Faisal, the kingdom’s former intelligence chief.
Crude is in a bear market as the U.S. pumps the most oil in more than three decades while global demand slows. OPEC, responsible for about 40 percent of the world’s supply, resisted calls from members including Venezuela to reduce its quota at the Nov. 27 meeting in Vienna.
“The market is still trying to find its feet following the OPEC meeting last week,” Jens Naervig Pedersen, a commodities analyst at Danske Bank A/S, said by e-mail from Copenhagen today. “There seems to be some short-term support around the $70 to $72-a-barrel mark for Brent. But overall the market is still plagued by uncertainty.”
Brent for January settlement gained as much as 92 cents to $71.46 a barrel on the London-based ICE Futures Europe exchange and was at $70.81 at 10:41 a.m. London time. It dropped $2 yesterday to $70.54. The European benchmark crude traded at a premium of $3.46 to WTI. Prices are down 36 percent this year.
Challenging (Crude) Convention | Daniel Davis
Challenging (Crude) Convention | Daniel Davis.
Media reports regarding the American crude oil industry have been uniformly positive in the past few months. Oil prices have dropped to their lowest level since 2010 and along with it prices at the pump. According to some reports, the US now produces as much or more oil than either Saudi Arabia or Russia. As the US closes in on energy independence, our reliance on foreign suppliers dwindles. Some suggest we are nearing a time of oil and economic security not seen in decades. If only that were true.
The above rendering of events is taken, almost without examination, as gospel truth in the United States. The only subject of debate seems to be ascertaining whetherhydraulic fracturing (“fracking”) is safe for the environment of if burning the additional hydrocarbons is adding to risks of climate change. We find this near-religious belief in looming US oil “independence” to be troubling, as a considerable body of publicly available information leads to a very different conclusion.
Instead of being on the dawn of a new age of plenty, a careful analysis of all available data indicates the probability of near to mid-term trouble even maintaining current levels of production, let alone eliminating the chasm between US production and consumption.
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Brent Plunge To $60 If OPEC Fails To Cut, Junk Bond Rout, Default Cycle, “Profit Recession” To Follow | Zero Hedge
While OPEC has been mostly irrelevant in the past 5 years as a result of Saudi Arabia’s recurring cartel-busting moves, which have seen the oil exporter frequently align with the US instead of with its OPEC “peers”, and thanks to central banks flooding the market with liquidity helping crude prices remain high regardless of where actual global spot or future demand was, this Thanksgiving traders will be periodically resurfacing from a Tryptophan coma and refreshing their favorite headline news service for updates from Vienna, where a failure by OPEC to implement a significant output cut could send oil prices could plunging to $60 a barrel according to Reuters citing “market players” say.
By way of background, the key reason OPEC is struggling to remain relevant is because, as the FT reported over the weekend, “US imports of crude oil from Opec nations are at their lowest level in almost 30 years, underlining the impact of the shale revolution on global trade flows. The lower dependence on imports from the cartel, which pumps a third of the world’s crude, comes amid advances in hydraulic fracturing that has propelled domestic US production to about 9m barrels a day – the highest level since the mid-1980s.”
The US “shale miracle” is best seen on the following chart showing the total output of the US compared to perennial crude powerhouse, Saudi Arabia:
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Gulf of Mexico Crude Oil and Gas Production – Peak Oil BarrelPeak Oil Barrel
Gulf of Mexico Crude Oil and Gas Production – Peak Oil BarrelPeak Oil Barrel.
BOEM and BSEE have published in 2014 the GOM oil & gas reserves at end 2010 few months ago and at end 2011 lately.
The big change is that they now report proved and probable reserves = 2P (in contrary to SEC rules for operators reporting at the US Stock Exchange, forbidding to report probable reserves), when before they reported only proved reserves = 1P
They argue:
In order to more closely align BOEM GOM reserves definitions with the Petroleum Resources Management System definitions (SPE/AAPG/WPC/SPEE 2007), this report clarifies that Proved Reserves in this and previous reports are Proved plus Probable (2P) estimates.
The difference between original reserves estimates from previous year found little difference for discoveries before 1995
The difference between 2P 2011 and 2P 2010 is a very large decrease for Thunder Horse (-488 Mb or 573 Mboe) and the largest increase is Great White +73 Mb
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US oil dependency on Middle East has hardly changed since 2007
US oil dependency on Middle East has hardly changed since 2007.
This is part 2 of a series of articles on how US tight oil has impacted on oil markets
The following graph shows US petroleum imports from OPEC countries starting in 1960. This includes both crude oil and petroleum products.
Fig 1: US crude oil and product imports from OPEC
Note: Indonesia left OPEC in 2008 but it is included here because most of US imports happened before that year. Indonesia’s oil available for export peaked in 1977, US oil imports from Indonesia peaked one year later in 1978 and Indonesian oil consumption exceeded production since 2004.
Data are from the EIA’s Energy Review page (petroleum section):http://www.eia.gov/totalenergy/data/monthly/#petroleum
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Japan Expands, Extends Oil Storage Lease Contract With Abu Dhabi – Bloomberg
Japan Expands, Extends Oil Storage Lease Contract With Abu Dhabi – Bloomberg.
Japan expanded and extended for three years a lease that allows Abu Dhabi to store crude oil in the Asian country.
Abu Dhabi’s leased capacity at the Kiire terminal in Kagoshima prefecture, in southwestern Japan, will rise to 1 million kiloliters (6.3 million barrels), Atsushi Taketani, director of the Japanese trade ministry’s petroleum refining and reserve division, said in an interview. The storage project was started at about 600,000 kiloliters in 2009, according to the ministry.
Japan last year agreed to extend a similar contract with Saudi Arabia that lets the kingdom store crude in tanks in Okinawa. In exchange for providing capacity to two of its biggest oil suppliers, Japan has priority for buying the stored crude in the event of an emergency, according to the ministry.
Vice Minister of Economy, Trade and Industry Yosuke Takagi and Hamad Al Hurr Al Suwaidi, a member of the Supreme Petroleum Council, signed a memorandum of understanding to extend the lease on Nov. 9 in Abu Dhabi, capital of the United Arab Emirates, Taketani said.
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Plunging oil prices a game-changer for major pipeline projects | Jeff Rubin
Plunging oil prices a game-changer for major pipeline projects | Jeff Rubin.
A sharp correction in oil prices is putting the debate around major pipeline projects, such as Keystone XL, into a more nuanced light.
Part of the impetus behind constructing new pipelines to carry bitumen from northern Alberta to the U.S. Gulf Coast, Kitimat on the Pacific, or even all the way across the country to Saint John, New Brunswick was to help close the substantial discount between Canadian oil and world prices. Well, crude’s recent drop into the $85-a-barrel range has basically collapsed the once wide-open spread that had existed between West Texas Intermediate and Brent crude with hardly any new lengths of pipe being laid into the ground at all.
It’s quite a turnaround considering that not that long ago WTI had traded as much as $40 a barrel lower than Brent. The difference between Brent and a barrel of Western Canadian Select, the benchmark price for oil sands product, was even more significant, a fact that had caused considerable hand wringing in downtown Calgary as well as on Parliament Hill.
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Peak Oil Notes – Oct 23
New York oil futures traded around $82 a barrel this week until Wednesday’s stocks report showed an unexpected 7 million barrel jump in US crude stocks. The jump resulted in a nearly $2 decline in the futures market to a close of $80.52 a barrel, the lowest settlement since June of 2012. London’s crude, which had been trading around $86 slid $1.51 on Wednesday to a close of $84.71. Refinery maintenance is in full swing with utilization down to 86.7 percent, the lowest since March, as changeover to winter blends continues. Refinery maintenance, the primary cause of the crude inventory build, is now at its peak, but should be over in a few weeks. Gasoline inventories fell last week due to less production, but distillates increased as demand for heating oil and diesel is currently weak.
US natural gas futures fell to a new 11-month low on Wednesday as traders are expecting that Thursday’s report will show that a larger than normal amount of gas was injected into storage last week. Mild weather, with minimal demand for heating gas, is expected to continue across the US for the next couple of weeks and long-range forecasts are predicting that really cold weather will not settle in across the US until January.
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WTI Gains for Third Day as Iran Seeks Halt to Price Drop – Bloomberg
WTI Gains for Third Day as Iran Seeks Halt to Price Drop – Bloomberg.
Brent crude traded for a fifth day close to a level that’s prompting speculation that OPEC will respond by cutting supply. West Texas Intermediate, which fell into a bear market this month, extended a rally.
Brent, the global benchmark, rose or fell through its closing level at least 12 times and was at $85.83 a barrel as of 11:13 a.m. WTI futures climbed as much as 0.9 percent to $83.48 a barrel in New York, having fallen as low as $79.78 on Oct. 16.
Banks including BNP Paribas SA and Bank of America Corp. predict prices are near a floor, in part counting on the Organization of Petroleum Exporting Countries to reduce output. Goldman Sachs Group Inc. said Oct. 17 that a rout in oil had gone too far. Iran’s President Hassan Rouhani instructed the oil ministry to use diplomacy to halt the slide, state-run Mehr news agency reported yesterday. Saudi Arabia and Kuwait started cutting output from a joint oil field on Oct. 16.
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Peak Oil Notes – Oct 16
The price plunge which began in mid-June when New York oil futures trading around $105 a barrel continued this week with oil touching $80 on Wednesday before recovering to close at $81.78. London’s Brent crude underwent a similar collapse to close yesterday at $83.46. Weak demand: increasing US shale oil production: a stronger dollar; and the refusal of the Saudis and its Gulf Arab allies to cut production combined to trigger the decline. US retail gasoline fell to an average of $3.17 a gallon, the lowest since February 2011. The weekly stocks report will be delayed until Thursday, but analysts are expecting a 2 million barrel increase in US crude inventories.
The IEA confirmed the weakness in the world oil markets this week by cutting their forecast for the increase in global oil demand by this year by 250,000 b/d from last month’s estimate. The Agency now believes that growth in consumption this year will be only 700,000 b/d, but will increase to 1.1 million b/d in 2015 as the global economy improves.
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Energy round-up: sinking oil | New Economics Foundation
Energy round-up: sinking oil | New Economics Foundation.
Photo credit: 
Kim Strømstad
OCTOBER 17, 2014 // BY: STEPHEN DEVLIN
Three things you shouldn’t miss this week
- Chart: Price chart for crude oil brent
Source: Nasdaq
- Article: Price fall hastens decline of ‘big oil’ as Western majors retreat – This year’s fall in energy prices is hastening the decline of big oil, as the seven Western majors sell-off assets, cut investment, return money to shareholders and shrink in size.
- Article: First new British nuclear plant in decades wins EU funding fight – A British plan to guarantee the price of power from its first new nuclear project in decades won European Union backing in a landmark ruling on Wednesday that now faces legal challenges.
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