Posts belonging to Category Oil



Trump Is Fracturing OPEC

Trump tweets

Trump’s tweet over the weekend that Saudi Arabia agreed to add 2 million barrels per day (mb/d) of supply confused the oil markets, pushing prices down a bit on Monday. Most analysts dismissed the statement, concluding that Trump was confused when the Saudis told him they have 2 mb/d of spare capacity, and not that they had planned to bring that capacity online.

A few days on from that episode, however, it actually doesn’t look that black and white.

Indeed, Trump’s tweet suggests that he very much believes that 2 mb/d of Saudi supply is coming online, and despite the attempt by the Saudis to clarify, by stating that they have surplus capacity waiting to be used in the event of a pinch, the statement was interpreted in different ways by the oil market.

https://www.oilprice.com/

Morgan Stanley hikes oil price forecast to $85

Trump targets Iranian barrels

Oil prices will rise more than previously expected in the second half of 2018, as the Trump administration aims to wipe out Iranian crude exports by November, Morgan Stanley forecasts.

The tougher-than-anticipated U.S. policy means Iran’s production could fall by 1.1 million barrels per day (bpd) at a time of high oil demand. The bank also sees output declining more than it previously forecast in Libya and Angola, leaving the oil market undersupplied by about 600,000 bpd in the second half.

As a result, Morgan Stanley said it now believes international benchmark Brent crude will average $85 a barrel over the next six months. That’s $7.50 higher than its previous estimate.

https://www.cnbc.com/

The shipping industry is back

Indicator of the health of the global economy

90 percent of today’s global trade is carried by ship. The importance of shipping is why it’s one of the most useful indicators of the health of the global economy… And, more recently, the state of China’s economy – the largest consumer of a range of commodities, including iron ore, coal, copper, and zinc, and the largest importer of oil.

The Baltic Dry Index (BDI) tracks the price of shipping raw materials such as metals, grains and fossil fuels by sea. It takes into account the day-to-day changes in shipping rates for the three major carrier sizes: Capesize, Panamax and Supramax.

Shipping companies committed a classic boom/bust cycle mistake back in 2011. At the height of the commodity boom, they ordered a huge number of cargo ships. Global shipping capacity continued to expand by approximately a net 2.5 percent rate each and every year. Meanwhile, according to the World Bank, global trade of goods and services has declined by 7 percent from 2011 to 2016, as commodity prices collapsed.

https://www.businessinsider.com/

U.S. record oil exports bite into Russia, OPEC market share in Asia

U.S. crude production hit all-time highs

Record crude oil volumes exported from the United States will be heading to Asia in the next couple of months to take another piece of the market away from Russia and producers in the Organization of the Petroleum Exporting Countries (OPEC). The United States is set to export 2.3 million barrels per day (bpd) in June, of which 1.3 million bpd will head to Asia, estimated a senior executive with a key U.S. oil exporters.

Data from the Energy Information Administration shows U.S. oil exports peaked at 2.6 million bpd two weeks ago. [EIA/S] The record outbound volumes come as U.S. crude production hit all-time highs, depressing U.S. prices to discounts of more than $9 a barrel below Brent crude futures on Monday, the widest in more than three years and opening an arbitrage for excess supplies to other markets. WTCLc1-LCOc1

https://www.reuters.com/

Oil price falls

Oil slumps as OPEC, Russia look to raise output amid U.S. surge

Oil prices slumped on Monday, extending steep declines from Friday, as Saudi Arabia and Russia said they may increase supplies and as U.S. production gains show no signs of abating. Brent crude futures were at $75.09 per barrel at 0452 GMT, down $1.35, or 1.8 percent, from their last close. U.S. West Texas Intermediate (WTI) crude futures were at $66.22 a barrel, down $1.66, or 2.5 percent. Brent and WTI have fallen by 6.4 percent and 9.1 percent respectively from peaks touched earlier in May.

In China, Shanghai crude oil futures tumbled by 4.8 percent to 457.7 yuan ($71.64) per barrel. The Organization of the Petroleum Exporting Countries (OPEC), as well as top producer but non-OPEC member Russia, started withholding supplies in 2017 to tighten the market and prop up prices, which in 2016 fell to their lowest in more than a decade at less than $30 per barrel.

https://www.cnbc.com/

Saudi Arabia is ready to increase its oil production

A war with Iran won’t affect global oil production

Saudi Arabia is ready to increase its oil production in response to the expected decline in Iranian crude oil for international markets following President Trump’s withdrawal from the Iran nuclear deal. That’s what an official from the Saudi energy ministry told local state news agency SPA.

Saudi Arabia supported Trump’s decision on the nuclear deal, unlike the United States’ allies in Western Europe: the heads of France, the UK, and Germany stated they are committed to upholding the Iran nuclear deal.

Russia and China—also signatories to the deal—have opposed Trump’s decision and are unlikely to make any changes to their economic relations with Iran following the U.S. withdrawal. While Russia is not a consumer of Iranian oil, China and India are—and they are unlikely to stop taking in Iranian crude despite the sanctions.

 https://www.oilprice.com/

Venezuela’s economy is collapsing

Venezuela’s inflation could soar 13,000 percent by year’s end

Venezuela’s president says he’s boosting the minimum wage by 155 percent to keep up with runaway inflation that’s making it difficult for people to afford daily goods.

President Nicolas Maduro issued an order that brings the monthly wage to 1 million bolivars, or $1.61 on the commonly used black market. It’s the third increase this year. Despite having the world’s largest proven oil reserves, Venezuela is in its fifth year of an economic crisis worse than the Great Depression.

The International Monetary Fund has said it estimates that Venezuela’s inflation could soar 13,000 percent by year’s end.

Maduro will seek a second six-year term on May 20.

https://abcnews.go.com/

OPEC Deal In Jeopardy

Iran And Saudi Arabia Square Off

Iran and Saudi Arabia are at odds over what to do next with the OPEC agreement, a conflict that could sow the seeds of the agreement’s demise over the course of the next year. As the WSJ notes, the dispute centers around exactly what price the cartel should be targeting. Iran’s oil minister has said that the group should not push prices too high because it would likely spark an even greater production response from shale drillers. “If the price jumps [to] around $70…it will motivate more production in shale oil in the United States,” Iranian oil minister Bijan Zanganeh told the WSJ. Zanganeh has suggested $60 is about the right price for now.

Meanwhile, Saudi Arabia, which has much higher budgetary requirements and a desperate need to lift oil prices in order to bolster the valuation of the Saudi Aramco IPO, is unofficially aiming for $70 per barrel. Saudi oil minister Khalid al-Falih has repeatedly dismissed concerns about a shale wave. Instead, the Saudis are hoping to keep the limits in place regardless of what U.S. shale does, at least for the next year or so. In the meantime, Saudi Arabia is trying to stitch together a more permanent framework with Russia for 2019 and beyond.

Huge Chinese Demand for Natural Gas

United States is well-positioned

China’s push for cleaner air and fuel is driving an unprecedented demand for natural gas, and the United States is well-positioned to seize this opportunity and export even more of its growing gas production to the thirsty nation.

U.S. companies have plans for even more liquefied natural gas (LNG) export trains and facilities to come online in the coming years, and this winter’s surge in Chinese LNG demand and imports underpins a second wave of LNG investment in the United States, analysts and company executives believe.

http://www.oilprice.com…  March 13, 2018

America’s oil exports are booming

Prices are climbing

The resurgence of the oil industry can be traced back to what happened in Congress one day in December 2015. That’s when lawmakers ended the 40-year ban on U.S. oil exports. Crude pumped in Texas, Oklahoma and North Dakota could suddenly be shipped overseas.

At the time, a glut of supply was wreaking havoc on the energy industry. Crude eventually crashed to $26 a barrel. But that glut is disappearing, thanks in part to booming oil exports from the United States. Crude that was once trapped inside the country is now going to Europe, Latin America and even China.

The United States exported a record 1.7 million barrels of oil per day in October 2017, according to the most recent stats from the Energy Information Administration. That’s four times as much as in 2015, when federal law prohibited shipping oil to most places except Canada.

http://www.cnn.com…  January 29, 2018