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China and India—two of the world’s largest oil importers and the biggest demand growth centers globally—are close to setting up an oil buyers’ club to have a say in the pricing and sourcing of crude oil amid OPEC’s cuts and U.S. sanctions on Iran and Venezuela, Indian outlet livemint reports, citing three officials with knowledge of the talks.

This is not the first time that the two major oil importers are working to create such an oil club.

India and China have discussed creating an ‘oil buyers’ club’ to be able to negotiate better prices with oil exporting countries and will be looking to import more U.S. crude oil in order to reduce OPEC’s sway, both over the global oil market and over prices, India’s Petroleum Ministry said in June 2018.

“With oil producers’ cartel OPEC playing havoc with prices, India discussed with China the possibility of forming an ‘oil buyers club’ that can negotiate better terms with sellers as well as getting more US crude oil to cut dominance of the oil block,” a tweet from the Petroleum Ministry’s Twitter account said in the middle of last year, when oil prices were rising ahead of the return of the U.S. sanctions on Iran’s oil industry.

According to the officials cited by livemint, China and India have exchanged senior-level visits several times since then and have made progress on “joint sourcing of crude oil.” Related: Massive Drop In U.S. Oil Rig Count Fails To Arrest Price Slide

Reports of the strengthened Chinese-Indian cooperation in potentially forming an oil buyers’ club come just as the U.S. sanction waivers for all Iranian oil customers expire this week.

…click on the above link to read the rest of the article…

Saudi Oil Minister: We Won’t Ramp Up Oil Production Soon

April 24, 2019

Saudi Oil Minister: We Won’t Ramp Up Oil Production Soon

Saudi Arabia plans to stay within the limits of its ceiling under the OPEC+ production cut deal in May and will certainly not rush to ramp up production, although it would respond to customer needs if they want more oil, Saudi Energy Minister Khalid al-Falih said on Wednesday.

As the U.S. announced on Monday that it would be ending sanction waivers for all Iranian oil customers, the Trump Administration said that it “had extensive and productive discussions with Saudi Arabia, the United Arab Emirates, and other major producers to ease this transition and ensure sufficient supply.”

While the U.S. and President Trump appear certain that Saudi Arabia would compensate for Iranian losses, the Kingdom seems reluctant to start swiftly raising production before seeing actual figures for how much Iranian oil will actually be lost and how tight the market will be.

Saudi Arabia’s oil production in May is pretty much set and will differ “very little” from previous months, Reuters quoted al-Falih as saying in Riyadh today.

Last month, OPEC’s de facto leader and largest producer Saudi Arabia followed through its commitment from February to cut deeper and pump well below 10 million bpd in March. Saudi Arabia’s crude oil production dropped by a massive 324,000 bpd from February to stand at 9.794 million bpd in March—just as al-Falih had said the Kingdom would do. Saudi Arabia pumped around 9.8 million bpd in March, some 500,000 bpd below the 10.311-million-bpdcommitment in the OPEC+ deal.

Speaking today, al-Falih said, as carried by Reuters:

“Inventories are actually continuing to rise despite what is happening in Venezuela and despite the tightening of sanctions on Iran. I don’t see the need to do anything immediately.”

…click on the above link to read the rest of the article…

Platts Survey: OPEC Oil Production Down To More Than 4-Year Low

April 6, 2019

Platts Survey: OPEC Oil Production Down To More Than 4-Year Low

Over-delivering Saudi Arabia and blackouts in Venezuela helped push OPEC’s crude oil production down by 570,000 bpd from February to 30.23 million bpd in March—the lowest production from the cartel in more than four years, according to the monthly S&P Global Platts survey published on Friday.

OPEC’s de facto leader and biggest producer, Saudi Arabia, saw its production drop in March to the lowest level since February 2017. The Saudis delivered on their promise to cut more than pledged in the pact and slashed output by another 280,000 bpd last month, with March production at 9.87 million bpd, according to the S&P Global Platts survey.

Venezuela, for its part, saw its production drop to a 16-year-low, at 740,000 bpd, due to the massive blackouts that crippled oil production and exports in March, the Platts survey found.

OPEC’s second-biggest producer Iraq cut its production by 100,000 bpd from February to 4.57 million bpd in March, according to the survey. This, however, was still slightly above Iraq’s 4.512 million bpd production cap under the deal.

After an initial plunge following the U.S. sanctions on its industry, Iran’s production has been holding relatively steady over the past couple of months, and the Islamic Republic pumped 2.69 million bpd in March, the Platts survey showed.

The resumption of operations at Libya’s biggest oil field, Sharara, pushed Libya’s production up to 1.06 million bpd in March, according to the survey.

Earlier this week, the monthly Reuters survey showed that OPEC’s oil production in March 2019 fell to its lowest level since February 2015, as Saudi Arabia cut more than it had pledged and Venezuela continued to struggle amid U.S. sanctions and a major blackout.

…click on the above link to read the rest of the article…

Reuters: OPEC’s Oil Production Drops To Lowest Since 2015

April 1, 2019

Reuters: OPEC’s Oil Production Drops To Lowest Since 2015

OPEC’s oil production in March 2019 fell to its lowest level since February 2015, as Saudi Arabia cut more than it had pledged under the output cut deal and Venezuela continued to struggle amid U.S. sanctions and a major blackout, the monthly Reuters survey showed on Monday.

The combined production of all 14 OPEC members stood at 30.4 million bpd last month, down by 280,000 bpd compared to February and the lowest level of OPEC production since February four years ago, according to the survey.

Production in March beat the previous four-year-low record of the cartel’s oil production from February 2019. As per Reuters survey last month, OPEC’s oil production fell by 300,000 bpd in February compared to January to stand at 30.68 million bpd.

The figures in the survey for March suggest that Saudi Arabia continues to over-deliver in its share of the cuts, as it has promised multiple times since the new OPEC+ deal began in January 2019.

Under the OPEC/non-OPEC agreement for a total of 1.2 million bpd cuts between January and June, Saudi Arabia’s share is a cut of 322,000 bpd from the October level of 10.633 million, to reduce output to 10.311 million bpd.

The rate of compliance from the eleven OPEC members bound by the pact—with Iran, Venezuela, and Libya exempted—also suggests that the Saudis and their Arab Gulf partners are deepening the cuts.

The eleven OPEC members with quotas had a combined compliance of 135 percent in March, surging from 101 percent in February, according to the Reuters survey tracking supply to the market and based on shipping data and information provided by sources at oil companies, consulting firms, and OPEC.

The survey did not provide figures for the Saudi production, but estimated that exempt Venezuela—under U.S. sanctions and suffering from a major power blackout in March—saw its oil production plummet by 150,000 bpd in March compared to February.

The Easy Money In European Natural Gas Is Gone

March 14, 2019

The Easy Money In European Natural Gas Is Gone

At the end of last winter’s heating season, it was an unusually cold spell that upended European natural gas markets, with storage levels falling below average and prices firming up as demand shot up.

At the end of this winter’s heating season, it is the unusually mild weather in most of Western Europe for most of the winter that has driven natural gas prices down and left supplies higher than the seasonal average.

The summer gas futures at the Dutch TTF hub have declined by 16 percent so far this year and have been trading lately around the lowest in 10 months. The winter gas futures contract, however, has dropped by just one third of the decline in the summer contract, according to data from ICE Endex compiled by Bloomberg.

So the discount of the Dutch summer natural gas futures to the winter contract widened to the biggest since 2011 as of early March. Typically, such a wide spread would mean that one of the most common European gas trades—buying cheaper gas futures in the summer to sell in the winter—would be the most profitable in eight years.

However, traders are unable to take full advantage of the wide winter-summer spread because several factors have combined this winter season to create a perfect storm in the European natural gas markets. These factors are higher stockpiles than usual, limited available storage capacity as most of it is booked out amid declining overall capacity, and increased liquefied natural gas (LNG) shipments to Europe as Asian LNG spot prices continue to tumble.

First, unlike last year’s winter, this winter has been unusually mild in many parts in Western Europe. This has led to lower natural gas demand and lower withdrawal from storage—a stark contrast compared to the 2018 winter.

…click on the above link to read the rest of the article…

Kashmir Conflict Has Riyadh On Edge

March 8, 2019

Kashmir Conflict Has Riyadh On Edge

Just days after Saudi Arabia’s Crown Prince Mohammed bin Salman finished his charm-offensive Asian trip to Pakistan, India, and China, the ever-simmering tensions between Pakistan and India flared up again over Kashmir—the territory the two countries have been disputing since 1947 when Britain partitioned its colonies and India and Pakistan became independent countries.

Commodity, currency, and equity markets were on edge last week while nuclear arsenal owners India and Pakistan were saying they carried out air strikes over the so-called Line of Control—the boundary between Indian and Pakistani areas of control over Kashmir.

The two countries have dialed down hostilities since last week and Pakistan said last Thursday that it would release an Indian pilot it had been holding “as a gesture of peace.”

One of the first countries to send a high-profile official to seek de-escalation of the tension was Saudi Arabia, which had just pledged US$20 billion in investments into Pakistan and another US$100 billion in India, with a large part of these billions of dollars to be invested in the oil industries in both countries.

The world’s top crude oil exporter Saudi Arabia cannot easily ignore a potential new conflict between India and Pakistan, as it has strategic interests in both countries, (apart from the obvious worst-case scenario—a nuclear war in its backyard), Andrew Critchlow, head of news in EMEA for S&P Global Platts, writes in a blog post. Related: Is This The End Of Alaska’s LNG Ambitions?

Saudi Arabia’s Crown Prince Mohammed bin Salman sent last week the Minister of State for Foreign Affairs, Adel al-Jubeir, to Pakistan with a letter to the Pakistani leadership in an attempt to defuse the latest tension.

…click on the above link to read the rest of the article…

Saudi Arabia: We’ll Pump The World’s Very Last Barrel Of Oil

January 24, 2019

Saudi Arabia: We’ll Pump The World’s Very Last Barrel Of Oil

Saudi Arabia isn’t buying the peak oil demand narrative.

OPEC’s largest producer continues to expect global oil demand to keep rising at least by 2040 and sees itself as the oil producer best equipped to continue meeting that demand, thanks to its very low production costs.

Saudi Arabia will be the one to pump the last barrel of oil in the world, but it doesn’t see the ‘last barrel of oil’ being pumped for decades and decades to come.

“I don’t see peak [oil] demand happening in 10 years or even by 2040,” Amin Nasser, president and chief executive officer of Saudi oil giant Saudi Aramco told CNN Business’ Emerging Markets Editor John Defterios on the sidelines of the World Economic Forum in Davos this week.

“There will continue to be growth in oil demand … We are the lowest cost producer and the last barrel will come from the region,” Nasser told CNN.

For several years, Nasser has been saying that peak oil demand is nowhere in sight, that petrochemicals will drive oil demand growth through 2050, and that all the ‘peak oil demand’ and ‘stranded resources’ talk is threatening an orderly energy transition and energy security.

Saudi Arabia—which has just announced that its huge oil reserves are slightly higher than previously estimated—looks to diversify its economy away from heavy dependence on crude oil, but one of the goals of its Vision 2030 diversification plan is to use less oil in domestic power generation to free up more barrels for exports. Related: IEA Chief: EVs Are Not The End Of The Oil Era

As the world’s top crude oil exporter, Saudi Arabia will not be giving away easily its crown and the geopolitical clout that comes with it.

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Canada’s Natural Gas Crisis Is Being Ignored

January 6, 2019

Canada’s Natural Gas Crisis Is Being Ignored

“Alberta and its natural gas producers face a daunting crisis,” Alberta’s Natural Gas Advisory Panel said in a report in December, highlighting the challenges that natural gas producers in Alberta face in market access and pricing for their commodity.

Industry officials and analysts say that the situation with the steep natural gas discounts in Canada to the U.S. Henry Hub benchmark is similar to the huge discounts of Canada’s heavy oil benchmark—the Western Canadian Select—to the U.S. benchmark West Texas Intermediate (WTI).

The record-low oil prices in Canada have attracted a lot of media attention in the past few months, but the steep discounts and volatile prices of Alberta’s natural gas have received less attention, although the pricing and problems are similar.

“It’s absolutely a similar situation,” Advantage Oil and Gas president and chief executive Andy Mah told the Financial Post.

Like oil, natural gas prices have also been suffering from the steep discounts, but the attention has been on oil “because of the slower decline in natural gas prices,” Mah told Geoffrey Morgan of the Financial Post.

According to Samir Kayande, director at RS Energy, the natural gas prices discounts have been plaguing the industry for longer and the problem has been “far worse than it is for oil.”

“Gas is such a forgotten commodity now,” Kayande told the Financial Post.

Alberta’s government has recently taken drastic measures to prop up the price of heavy oil in Canada, but it has yet to address the distressed natural gas pricing.

Natural gas “is just as important (as oil), it’s just not getting the same kind of attention as oil” but that could soon change, a government official told the Financial Post.

…click on the above link to read the rest of the article…

Falling Oil Prices May Spark New Debt Crisis

December 27, 2018

Falling Oil Prices May Spark New Debt Crisis

U.S. oil prices at below $50 and now even below $45 a barrel could cause concerns about the debt levels of some energy companies, Nasdaq energy analyst Tamar Essner told CNBC on Wednesday.

“Credit markets have held up a lot better than the energy equity markets right now, so that tells you that credit investors out there believe in the oil story much more so than energy equity investors do right now,” Essner said.

Consumers in the U.S. like the low gasoline prices that come with lower oil prices, but a slide in the price of oil has a broader impact on the economy, Essner said.

Some of the newer U.S. shale producers are probably deep into cash-flow negative at the current oil prices of $43 a barrel WTI Crude, although the energy industry as a whole is “in a lot stronger position” today than it was in the price crash of 2014, according to the energy analyst.

“A lot of the debt has been put in a much more consolidated position. We’ve just had a round of credit redetermination in the fall when prices were higher, so that should buy us some time in the market as well,” Essner said, referring to the banks’ twice-yearly borrowing base redetermination of energy companies.

Over the past few weeks, when oil prices were falling due to fears that the OPEC+ production cuts won’t be enough to rebalance the oil market, some companies announced their 2019 capital budget plans.

Many of those companies said they would be cutting spending and the number of rigs, Essner said, noting that lower spending levels will ultimately result in a lower pace of oil production growth, but it will take time.

…click on the above link to read the rest of the article…

IEA Chief: U.S. Oil Output To Near Saudi+Russian Production By 2025

December 23, 2018

IEA Chief: U.S. Oil Output To Near Saudi+Russian Production By 2025

Total U.S. oil production around 2025 will almost equal the combined production of Russia and Saudi Arabia, Fatih Birol, the Executive Director of the International Energy Agency (IEA), told Turkish state-run Anadolu Agency on Friday.

The huge growth in U.S. shale production will completely change the balance of oil markets, Birol told the news agency.

The IEA’s Oil 2018 report from earlier this year sees the United States dominating the global oil supply growth over the next five years.

OPEC capacity will grow only modestly by 2023, while most of the growth will come from non-OPEC countries, led by the United States, “which is becoming ever more dominant in the global oil market,” the IEA said.

Driven by light tight oil, U.S. production is seen growing by 3.7 million bpd by 2023, more than half of the total global production capacity growth of 6.4 million bpd expected by then. Total liquids production in the United States—including conventional oil, shale, and natural gas liquids—will reach nearly 17 million bpd by 2023, “easily making it the top global producer, and nearly matching the level of its domestic products demand,” the IEA said in March this year.

“The United States is set to put its stamp on global oil markets for the next five years,” Birol said back then.

The U.S. is currently pumping oil at record levels of more than 11 million bpd, while Russia and Saudi Arabia—which also hit record highs in October and November, respectively—will curtail 230,000 bpd and 322,000 bpd of their production in the first six months of 2019, respectively.

…click on the above link to read the rest of the article…

Oil Price Slide Puts The Brakes On U.S. Shale Growth

December 7, 2018

Oil Price Slide Puts The Brakes On U.S. Shale Growth

While U.S. President Donald Trump continues to call on OPEC to keep oil prices low, because “The World does not want to see, or need, higher oil prices!”, one corner of the world may need WTI prices higher than the current low $50s to keep pumping crude at the record pace it has been doing so far this year—the U.S. shale patch.

The recent price slide, by around 30 percent from four-year highs in early October, has brought down WTI Crude prices dangerously close to the wellhead breakeven prices in many U.S. shale areas.

The lower prices may lead to a slowdown in drilling activity and lower investments in the shale patch, U.S. oil industry executives and analysts say.

U.S. shale drilling may soon start to show slowdown in activity, Gary Heminger, Chairman and CEO at Marathon Petroleum Corporation, told FOX Business on Wednesday.

“If you look at the Canadian producers, when you’re looking at the wide spreads of the Western Canadian Select versus WTI, you look at some of the real cost to get some of the crude out of the Bakken because the pipelines are full – I think we are going to start seeing a slowdown in drilling if they don’t see some prices turn around,” Heminger warned, but noted that he doesn’t expect the slowdown to be “dramatic”.

The U.S. shale patch has managed to significantly cut wellhead breakeven prices since the oil price crash of 2014. Yet, its capital expenditure plans for 2019 may be derailed by $50 oil—a reality few had conceived of just two months ago, when the market was spooked by Iranian oil supply plunging to zero, or at least to much lower than the currently some 1.2 million bpd still being exported out of Iran.

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Iran: Oil To Fall To $40 If OPEC Fails To Reach Deal

December 5, 2018

Iran: Oil To Fall To $40 If OPEC Fails To Reach Deal

A fractured OPEC is meeting later this week to discuss a deal to cut oil production—yet again—to rebalance the market and lift oil prices that have recently slipped to below most of the cartel members’ budget-balance points.

OPEC needs a unanimous vote to pass decisions such as curtailing production. Yet, Iran—one of OPEC’s biggest producers but also one of the most sidelined members in recent months—warns that the group is unlikely to reach an agreement on a sizeable cut of around 1.4 million bpd as some are suggesting. Such a failure to act decisively would send oil prices plunging to $40 a barrel, Iran’s OPEC Governor Hossein Kazempour Ardebili told Bloomberg in an interview.

The cartel and its Russia-led non-OPEC allies may not extend their cooperation pact either, according to Iran’s representative at OPEC—a position typically held by the second most powerful oilman in a cartel member after the oil minister.

Iran has repeatedly expressed frustration with the Saudi/Russia-led increase in oil production since June to offset what was expected to be a steep decline in Iranian oil supply with the U.S. sanctions on Tehran’s petroleum and shipping industries.

Iran’s oil exports indeed dropped by some 1 million bpd, but they are likely still holding onto above 1 million bpd, while U.S. waivers to eight Iranian customers allow buyers to continue purchasing oil at reduced volumes until the end of April next year.

Oil prices have plunged by around 30 percent from early October as the market started to fear an oversupply is building up again, due to record high production in Saudi Arabia and Russia, and an all-time high oil output in the United States, coupled with fears of slowing economic and oil demand growth.

…click on the above link to read the rest of the article…

Oil Prices Set To Book Worst Month In A Decade

December 1, 2018

Oil Prices Set To Book Worst Month In A Decade

Oil prices dropped early on Friday, on course to finish their worst month since 2008, as fears of oversupply and slowing demand growth dragged oil down into a bear market in November with prices off by some 30 percent from four-year highs in early October.

At 07:10 a.m. EDT on Friday, WTI Crude was down 1.81 percent at $50.52, and Brent Crudetraded down 1.47 percent at $59.03.

On Thursday, oil prices jumped on reports that Russia had conceded that it needs to reduce oil production and join a new Saudi-led OPEC cut to balance the market.

The rise didn’t last long—prices headed down again on Friday, pressured by rising U.S. oil production and comments by Russia’s Energy Minister Alexander Novak, who said in an interview with the TASS news agency that “To me, the current price range is comfortable for producers and consumers.”

Earlier this week, Russian President Vladimir Putin also signaled that Moscow is okay with oil prices at their current levels.

Russia is comfortable with oil at around $60, Putin said, a week ahead of the OPEC+ meeting in Vienna and just two days before the G-20 summit in Buenos Aires.

In his interview with TASS published on Friday, Novak, as usual, was elusive about Russia’s position about a new production cut, and said that Moscow will have its stance ready by the December 6-7 meeting.

Before the OPEC/non-OPEC meeting, the oil market will be looking for clues about global economy and trade at this weekend’s G-20 summit. U.S. President Donald Trump and Chinese President Xi Jinping are expected to meet on the sidelines of the event to discuss the trade war. Putin, for his part, is expected to meet with Saudi Crown Prince Mohammed bin Salman and the two may discuss the OPEC-Russia oil cooperation, days ahead of the OPEC+ meeting.

The next few days could provide some major catalyst for oil prices.

IEA Chief Urges Oil Producers Not To Cut Output

November 20, 2018

IEA Chief Urges Oil Producers Not To Cut Output

While OPEC is considering cutting oil production again, the executive director of the International Energy Agency (IEA), Fatih Birol, called on Monday for ‘common sense’ because fresh cuts could have negative effects on the oil market.

“Currently markets are very well supplied but we should not forget that spare capacity in Saudi Arabia is very thin, therefore cutting the production significantly today by key oil producers may have some negative implications for the markets and further tightening the markets,” Reuters quoted Birol as saying at a news conference in Bratislava.

“My appeal to all producers and consumers across the world is to have common sense in these difficult days,” the IEA’s executive director said.

In its Oil Market Report for November published last week, the IEA said that surging production from the world’s biggest oil producers have more than offset Iranian and Venezuelan supply losses, while demand growth in some developing markets is slowing, pointing to a global oil oversupply next year.

Despite the implied surplus in oil supply next year, the IEA doesn’t see the oversupply as a threat to the markets.

“Although the oil market appears to be more relaxed than it was a few weeks ago, and there might be a sense of ‘mission accomplished’ that producers have met the challenge of replacing lost barrels, such is the volatility of events that rising stocks should be welcomed as a form of insurance, rather than a threat,” the IEA said in its report.

After the latest plunge in oil prices in recent weeks and after supply-demand analysis started to suggest that an oversupply may be building, OPEC and its de facto leader Saudi Arabia have started to hint at new production cuts, with speculation ranging from cuts of 1 million bpd to as much as 1.4 million bpd.

OPEC and allies meet in early December in Vienna, where they are set to discuss the state of the oil market and potential new oil production policies.

Saudis Cut Oil Exports To U.S. To Boost Crude Prices

November 17, 2018

Saudis Cut Oil Exports To U.S. To Boost Crude Prices

Saudi Arabia has been slashing oil exports to the United States over the past two months, in what looks like a move to force a reduction in the world’s most transparently reported inventories that could put the Saudis on a collision course with U.S. President Donald Trump, who has repeatedly said that oil prices should be much lower.

The Saudis started to reduce shipments to the United States in September, and this month they are loading around 600,000 bpd on cargoes en route to the United States, down from more than 1 million bpd in July and August for example, CNBC reports, quoting figures from ClipperData.

According to ClipperData estimates, Saudi oil exports to the United States could soon reach their lowest levels on record.

The Saudi tactic to send reduced volumes to the States—which regularly reports every week crude oil inventories—succeeded last year.

Reduced Saudi oil imports tend to reflect in lower weekly U.S. inventories, while in the past weeks, crude builds have been weighing on oil prices, together with fears of an oversupplied global market and signs of slowing economic and oil demand growth.

“It worked so well in 2017 for [the Saudis] to cut flows to the U.S. because people could see the inventories dropping because U.S. data is so timely and transparent,” Matt Smith, head of commodities research at ClipperData, told CNBC.

Due to seasonally lower demand, Saudi Arabia will reduce its supply to the global markets by 500,000 bpd in December compared to November, Energy Minister Khalid al-Falih said this weekend. On Monday, al-Falih affirmed that OPEC will do ‘whatever it takes’ to balance the market, admitting that the cartel’s analysis shows that another cut of 1 million bpd may be required.

…click on the above link to read the rest of the article…

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