• Tag Archives OPEC
  • Saudi Reshuffle Could Completely Shake Up Oil Markets

    Authored by Nick Cunningham via OilPrice.com,
    The power restructuring in Saudi Arabia this week led to the elevation of 31-year-old Mohammed bin Salman to crown prince, essentially ensuring that he will become the youngest king of Saudi Arabia in the not-too-distant future. The heir apparent has already been effectively running the country for the past few years, so the move was not entirely a shock. Nevertheless, the effects on the oil market could be profound.
    The new crown prince is known to be a bit unpredictable. In the early phase of the oil price meltdown, he said that prices did not matter. But the plunge below $30 per barrel in early 2016 seemed to have changed the calculus. Last year Saudi Arabia became the principle driver behind a return to ‘market management,’ that is restraining output to stabilize prices.
    With the OPEC production cuts – which have had to be extended from six to 15 months – still proving to be insufficient at balancing the market, it is not entirely impossible that the crown prince might reverse course yet again at some point and return to a ‘market share’ strategy. Or he could decide to deepen the cuts, an idea floated a few days ago by the Iranian oil minister. For now though, higher prices are surely to be the goal, particularly with the IPO of Saudi Aramco not far off. Either way, after Mohammed bin Salman and King Salman ousted former oil minister Ali al-Naimi last year, they have tighter control over the kingdom’s oil policy.

    This post was published at Zero Hedge on Jun 23, 2017.


  • Gartman Turns Bullish On Oil

    There has been a distinct shift in sentiment when it comes to oil this morning: after plunging 22% from its February highs, many commentators are suggesting that the bottom is finally in and that it is time to turn “contrarian.”
    One among them is GS Banque’s Loic Schmid, who posits three ideas on why oil is weaker:
    Is it the hedge funds? They have massively cut back their net exposure. Is it supply? There is currently too much output. Is it demand? Recent US macroeconomic figures have been rather disappointing. Which prompts him to ask if this is the time for a logical bounce, as oil at $42.50 is a problem for the industry and OPEC, and shows that we are currently close to the bottom of the range and technical indicators suggest that oil is oversold, noting that “we would not be surprised if OPEC trims output in the next few days…”

    This post was published at Zero Hedge on Jun 22, 2017.


  • Oil Prices Fall to 10-Month Low as OPEC Mulls an Increase in Production Cuts

    This is a syndicated repost courtesy of Money Morning. To view original, click here. Reposted with permission.
    In Dow Jones news today, oil prices are on track for their worst six-month performance to start a year since 1988. The ongoing to downturn in crude pulled energy stocks and the Dow Jones down on the day. The S&P 500 and Nasdaq remained resilient thanks to another strong performance from technology stocks.
    Here are the numbers from Wednesday for the Dow, S&P 500, and Nasdaq:
    Index Closing Point Change Percentage Change Dow Jones 21,410.03 -57.11 -0.27% S&P 500 2,435.61 -1.42 -0.06% Nasdaq 6,233.95 +45.92 +0.74% Now here’s a closer look at today’s most important market events and stocks, plus Thursday’s economic calendar.

    This post was published at Wall Street Examiner by Garrett Baldwin ‘ June 21, 2017.


  • WTI/RBOB Pump’n’Dump After Gasoline Build, Production Surge

    Following API’s reported build in gasoline (and distillates), oil prices have chopped around amid Saudi headlines and OPEC jawboning, as all eyes are focused on gasoline inventories in the DOE report. An unexpedted draw in Gasoline (and Crude draw) sent prices higher initially, but another surge in production capped some of the gains and prices fell back.
    API
    Crude -2.72mm (-1.2mm exp) Cushing -1.269mm Gasoline +346k (+500k exp) Distillates +1.837mm DOE
    Crude -2.45mm (-1.2mm exp) Cushing (-579k exp) Gasoline -578k (+500k exp) Distillates +1.08mm (+500k exp)

    This post was published at Zero Hedge on Jun 21, 2017.


  • Stock Prices Fall as Senate Passes Russia Sanctions Bill

    In Dow Jones news today, stock prices fell as the Senate passed a bill that would place new sanctions on Russia.
    Here are the numbers from Thursday for the Dow, S&P 500, and Nasdaq:
    Now here’s a closer look at today’s most important market events and stocks, plus Friday’s economic calendar.
    The Five Top Stock Market Stories for Thursday
    European finance ministers debated another round of debt relief for the embattled Greek economy and decided to offer a bailout of 8.5 billion euros ($9.5 billion). Greece’s current bailout program is the third effort by international finance leaders since the nation fell into economic calamity in 2010. Crude oil prices cratered and hit a seven-month low on news of a huge spike in U. S. gasoline inventory levels and expectations that OPEC will not be able to balance supply and demand. Crude oil prices are now off more than 12% since May 25. The WTI crude oil price today fell 0.7%. Brent crude dipped 0.2%.

    This post was published at Wall Street Examiner on June 15, 2017.


  • Dramatic Images From 3 Months Of Deadly Anti-Government Protests In Venezuela

    Violence in Venezuela, South America’s crumbling socialists paradise, is intensifying as street clashes between anti-government protesters and government forces enter their third month. At least 67 people have died since the demonstrations began, including 18-year-old Armando Canizales, who the New York Times described as a ‘success story of Venezuela’s state-run music program for the poor.’
    As the country’s economic and humanitarian crises worsen, President Nicolas Maduro is taking steps to consolidate power within the presidency. Maduro is now calling for the formation of a new ‘constituent assembly’ that the country’s pro-government electoral council will vote on in July that will allow him to rewrite the country’s constitution before he faces an election in the fall. These decisions effectively guarantee that the violence will continue, as the opposition cries for his ouster.
    The economic troubles – exacerbated by (but not initiated by) the drop in oil prices that began during the summer of 2014 – have caused inflation to soar above 10,000% as Venezuela’s currency, the bolivar, trades at a black-market rate of nearly 8,000 to the dollar, according to dolartoday.com. Meanwhile, the central bank’s foreign currency reserves have dwindled to $10.6 billion.
    Venezuela, a member of OPEC, has the largest oil reserves of any nation on Earth. But OPEC’s fragile production cuts have failed to push the price of crude above $50 a barrel. On Tuesday, it announced that an unexpected surge in production by Iraq raised the bloc’s total production in May, validating the market’s doubts about an agreement between the bloc and a handful of other oil-exporting countries to extend a production cut that began in December. With global oil supplies near record highs, the hoped-for recovery in oil prices – key to alleviating Venezuela’s acute financial stress – is a long way off.

    This post was published at Zero Hedge on Jun 13, 2017.


  • OPEC Oil Prodcution Rises Most In 6 Months, Hits Highest Since December

    Well, so much for OPEC’s production cut.
    In OPEC’s latest Monthly Oil Market Report, the oil producing cartel reported that in May – the same month OPEC met to extend its production cuts – crude output climbed the most in six month, since November 2016, rising by 336.1kb/d to 31.139 mmb/d, the highest monthly production of 2017, as members exempt from the original Vienna deal restored lost supply.
    From the report:
    Preliminary data indicates that global oil supply increased by 0.13 mb/d in May to average 95.74 mb/d, m-o-m. It also showed an increase of 1.48 mb/d, y-o-y. A decrease in non-OPEC supply, including OPEC NGLs represents a contraction of 0.21 mb/d m-o-m but an increase of 0.34 mb/d in OPEC crude oil production, not only offset the decline of non-OPEC supply but also increased overall global oil output in May. The share of OPEC crude oil in total global production stood at 33.6% in May, an increase of 0.3% from the month before. Estimates are based on preliminary data for non-OPEC supply, direct communication for OPEC NGLs and non-conventional liquids, and secondary sources for OPEC crude oil production

    This post was published at Zero Hedge on Jun 13, 2017.


  • US Oil Production Makes Waves

    There’s no end in sight to slumping oil prices – good news for consumers but a dire development for major oil producers like Saudi Arabia and Russia. And now, rising US oil production and exports are contributing to the slump.
    Last week, oil prices reached new lows for 2017, with Brent crude dipping below $48 per barrel and West Texas Intermediate dipping below $46. The drop has been attributed to an unexpected increase in US crude inventories, which rose by 3.3 million barrels last week (according to the US Energy Information Administration), despite expectations that it would drop by 3.5 million barrels.
    The rise in production is compounded by rising US oil exports, since the US lifted a 40-year ban on these exports in 2015. This led to modest increases in oil exports in 2016 but substantial increases so far in 2017. This is a key reason prices will remain low in the long term.
    Ebbs and Flows in US Exports
    It is worth remembering why the United States banned oil exports in 1975 (exceptions were allowed at the discretion of the president). 1970 set a record for the highest crude oil production in the US, though this record will likely be broken in the next two years. The US was producing a lot, but it was also consuming a lot, forcing it to import more from OPEC states, which produced about 55% of the world’s oil in 1973.

    This post was published at Mauldin Economics on JUNE 12, 2017.


  • Is $50 Oil Still Realistic?

    With crude (and gasoline) prices doing nothing but tumble since OPEC announced its ‘extension’ deal, erasing all the hope-fuelled bounce off cycle lows, the question once again becomes, is $50 oil still realistic?
    Oil prices have plunged back to levels not seen since OPEC announced its original production cut deal last November. Prices have been falling since the group extended their cuts for another nine months, a two-week slide that puts WTI back in the mid-$40s.
    The underlying factors for the price drop are the same as before: U. S. shale production continues to rise; inventories remain elevated; and the markets are concerned that the OPEC cuts are not doing enough to drain the surplus.
    But, in fact, the outlook has grown a bit darker more recently, as downside risks to the market have grown.
    The immediate spark to the sharp percent selloff in crude oil prices on Wednesday came from the unexpectedly bearish EIA inventory report, which surprised market analysts. The report was especially bad news because both crude oil and gasoline inventories increased by 3.3 million barrels each at a time when stocks typically decline heading into the driving season. The increase ended several consecutive weeks of drawdowns and poured cold water on any hopes of swift rebound in prices – WTI and Brent dropped roughly 5 percent.

    This post was published at Zero Hedge on Jun 9, 2017.


  • Saudi America – How New Tech Is Creating Another Oil Boom

    Just when you thought there couldn’t be any more oil in Texas … new technology is about to unlock an extremely shallow field that is brimming with heavy oil that has been impossible to recover–until now.
    Many oil companies have spent many millions of dollars trying to unlock this gem, but expensive steam injections weren’t efficient enough to make it competitive or economic, even if they had succeeded.
    While steam injections cost $50 per barrel, the new technology lifts the oil at under $10 per barrel – an astounding savings, even if oil prices crashed to lows not seen since the late 90s.
    This dramatically reduced cost of extraction should send the Saudis back to the OPEC negotiating table in a panic.
    But this is the story of Petroteq Energy – a small company with huge ambitions to become a driving force of a brand new chapter in the American oil revolution …
    The Field of Dreams
    The Texas Permian Basin has been producing oil for almost 100 years, but geological assessments show that even though billions of barrels have already come out of this sleeping giant, billions more are still waiting to be pumped.

    This post was published at Zero Hedge on Jun 7, 2017.


  • Qatarstrophe Sends Gold Near Post-Election Highs As Crude Tests 2017 Lows

    With Treasury yields at their lowest since the election, it appears a shift towards safe-havens (or Trumpflation unwinds) is well underway. Gold is nearing $1300 this morning – its highest since the election. WTI Crude has sunk back to a $47 handle, ignoring dollar weakness as the Qatarstrophe raises more doubts about OPEC coordination.
    A weaker dollar is helping precious metals (and Bitcoin) but not crude – a break in the relationship regime we have seen this year.

    This post was published at Zero Hedge on Jun 6, 2017.


  • RBC Warns Equity Markets Have Entered The ‘FOMO’ Stage

    It’s risk-parity heaven right now, notes RBC’s head of cross-asset strategy Charlie McElligott, with global equities (developed and EM) AND fixed-income all continuing their torrid rallies, but McElligott warns this is a classic “from worst to first” PM-grabbing into a new “Fear Of Missing Out” stage of the equities-rally.
    Bonds remain well-bid on account of the ongoing ‘slowing into tightening’ narrative, with commodities being the only asset class (outside of volatility, of course) that is lower overnight as a ‘signal’ for the lower bond yields. This continues to be ‘falling inflation expectations’ story for rates / bonds: industrial metals continue their struggles (Chinese / PBoC deleveraging efforts, while recent efforts at STRENGTHENING yuan to stem FX outflows will FURTHER FEED global disinflation in coming months) in conjunction with Crude’s inability to get off the mat post disappointing OPEC (market still focusing on US shale supply–especially now, with the thinking post Trump’s Paris Accord drop-out that we’ll see even MORE US oil supply via increased drilling / deregulation).
    #FOMOROTATION: But today is largely an equities-centric story, as stocks can of course view the world in a ‘mutually-exclusive’ fashion from the aforementioned fixed-income ‘slowing growth’ concerns. A goldilocks interpretation of ‘easier financial conditions’ (weaker USD and lower US rates / flatter curves are a POSITIVE for large cap US corporates) against still-expansive data (yesterday’s US ADP print portending + for NFP) keeps stocks in a very ‘sweet spot,’ especially as the world is still awash in liquidity despite the ‘coming’ pivot tighter. To this point, EPFR data last night showed us that cash continues to be deployed in both equities (+$13.7B inflow in global Eq funds, a five week high absolute $ number) and bonds (+$6B inflow) as well. It seems like investors are appropriately taking their cues from very recent CB messaging: cautiously ‘slow and steady’ tightening in light of recently ‘softer’ inflation data.

    This post was published at Zero Hedge on Jun 2, 2017.


  • Russia’s Economy Minister: “We Can Live Forever At $40 Oil”

    Authored by Tsvetana Paraskova via OilPrice.com,
    The OPEC/non-OPEC deal is working, and the current underlying key assumption of Russia’s economic policies – oil prices at US$40 – can allow it to live forever at that price or below, Russia’s Economy Minister Maxim Oreshkin told Bloomberg in an interview on the sidelines of the St. Petersburg International Economic Forum on Thursday.
    OPEC and Russia are already achieving what they intended to achieve with the deal – a decline in crude oil inventory levels around the globe, the minister said.
    Arguing that OPEC ‘has not failed at all’ in its attempt to drive oil prices up, Oreshkin said that the price of oil is now much higher than it was this time last year, before the cartel and 11 non-OPEC producers led by Russia struck the initial output cut deal.

    This post was published at Zero Hedge on Jun 2, 2017.


  • WTI Crude Tumbles To $47 Handle As OPEC-Compliance Drops

    Crude oil prices have retraced 50% of their pre-OPEC-deal hope rally and dropped back below $48 as JBC Energy reports OPEC compliance dropping to 92% in May from 96% in April.
    Additionally, Bloomberg notes: OPEC-14 OUTPUT ROSE 370K B/D TO 32.5M B/D IN MAY: JBC ENERGY

    This post was published at Zero Hedge on May 31, 2017.


  • Is This Saudi Arabia’s Newest Strategy To Boost Oil Prices?

    OPEC’s new strategy to balance the oil market is to cut oil exports to the U. S., a move intended to drain near-record-high crude oil inventories.
    OPEC originally thought that six months of combined production cuts would be sufficient to balance the oil market, but the market still looks oversupplied. Not everyone agrees on this. The IEA has argued that we probably have already reached ‘balance,’ which is to say, demand has caught up with supply. The energy agency says that the market is moving into a supply deficit situation in the second half of this year, if it hasn’t already.
    But the problem is that the one metric that OPEC officials themselves have held up as the key barometer to watch is the level of global crude oil inventories, rather than the immediate supply/demand balance. And on that front, they sort of shot themselves in the foot by ramping up exports just ahead of the implementation of the cuts late last year.
    Elevated exports in November and December meant that huge volumes of oil started reaching U. S. shores in January. It is no wonder that U. S. inventories surged in the first quarter. The flood of oil set back OPEC’s efforts right off the bat, and even close-to-100-percent compliance on the production cuts was not enough to drain inventories at the speed needed to declare victory by June.

    This post was published at Zero Hedge on May 30, 2017.


  • Ignore OPEC, It’s China That Dictates Oil Prices

    The OPEC deal will lead to an ongoing tightening of the crude oil market, putting a floor beneath crude prices in the $50s per barrel in the second half of 2017, according to Helima Croft of RBC Capital Markets. She said that prices should ultimately ‘grind higher into the $60s’ by the fourth quarter, with an average price for WTI expected at $61. Political and economic pressure surrounding Saudi Aramco’s IPO and Russian elections – both of which are slated for 2018 – will ensure that OPEC and non-OPEC does ‘whatever it takes’ to keep oil prices stable and on the rise.
    But there are a lot of factors outside of OPEC’s control. High up on that list is the role of China, a country that has received little attention in the oil world as of late amid all the furor over the OPEC vs. U. S. shale debate. But China could make or break the oil market this year and next, depending on what happens with its economy. “If you wanted to know where the downside risk is, it is not in OPEC’s decision or in U. S. driving demand or in global inventories rebalancing. I think China is the big source of concern,” Prestige Economics President Jason Schenker told CNBC.

    This post was published at Zero Hedge on May 29, 2017.


  • US to Sell Off its Strategic Emergency Oil Reserves

    The US government plans to sell half of the Strategic Emergency Oil Reserves and gasoline. The days of OPEC embargoes of the 1970s are now long past. The government plans to increase its budget for the financial year by $500 million. Therefore, over the next decade, the government wants to increase financial leeway by as much as $16.6 billion. With the US at a net exporter level and the shift toward electric cars, it becomes questionable if we need the Strategic Emergency Oil Reserves any more.

    This post was published at Armstrong Economics on May 28, 2017.


  • Saudi Arabia To Trim Oil Exports To US To Force Inventories Lower

    Authored by Zainab Calcuttawala via OilPrice.com,
    Riyadh plans to purposely reduce exports to the United States to force a reduction in the latter’s sizeable inventories, which are preventing a greater rise in global oil prices, according to Saudi Oil Minister Khalid Al-Falih.
    Just one day after OPEC announced a nine-month extension to its November production cut deal, the top oil official told reporters on Friday that ‘exports to the U. S. will drop measurably.’
    Two sources close to the matter told Bloomberg that starting next month, Saudi crude supplies to American importers will be reduced to below one million barrels a day next month – a 15 percent decrease from the monthly average so far in 2017.

    This post was published at Zero Hedge on May 27, 2017.


  • Why OPEC Couldn’t Move Oil Prices Higher

    Authored by Nick Cunningham via OilPrice.com,
    The latest OPEC meeting was uncharacteristically tranquil, with little of the eleventh hour infighting and arm-twisting that has been so prevalent in previous meetings. The cooperative spirit has allowed OPEC to roll over its production cuts for another nine months, as expected, a move that has to be described as a successful outcome. “Nine months with the same level of production that our member countries have been producing at is a very safe and almost certain option to do the trick,’ Saudi energy minister Khalid al-Falih told reporters.
    Yet the oil markets are unimpressed. Crude prices dropped on Thursday as it became apparent that a much more aggressive move – a lengthier extension or deeper supply cuts – was off the table. For OPEC, the price reaction is surely frustrating. Keeping so many oil producers on board with a plan that requires significant sacrifice has always been a monumental task, not least because many of the countries involved seriously distrust one another. More importantly, they are extending the cuts for another nine months, longer than anyone expected up until just a few weeks ago.

    This post was published at Zero Hedge on May 26, 2017.


  • Global Rally Fizzles After “OPEC Shock” In “Slow Risk-Off Session”

    S&P futures were fractionally lower from yesterday’s record high as European stocks declined and Asian stocks were mixed, pressured by yesterday’s 5% plunge in crude after OPEC unexpectedly “failed to surprise” markets, and announced the bare minimum supply cut extension that was expected by oil traders, who in turn puked long positions.
    It wasn’t just oil: it has been a slow risk-off session as Bloomberg phrased it, ahead of the long weekend for U. S. and U. K. markets, with the key carry pair, USD/JPY breaking below 111.00 as the USD continues to weakens, while the GBP tumbled 0.5%, after the latest poll shows Tory lead narrowing. As futures declined, fixed income markets ground higher as the 2s10s hits flattest level YTD. European equity markets open lower led by oil related stocks after yesterday’s heavy sell-off in oil. Automakers also weaker after possible Trump comments on German car exports. Gold well supported amid general risk-off.
    Most of the early attention, however, was on the market’s reaction to yesterday’s oil selloff. ‘To say that yesterday’s performance was disappointing for bulls is an understatement,’ Tamas Varga, analyst at PVM Oil Associates wrote in an emailed report quoted by Bloomberg. ‘It is, however, not a foregone conclusion that the trend is definitely turning. The question now is whether yesterday’s sharp drop in oil prices was a panic long-liquidation or the technical picture is now firmly turning bearish.’

    This post was published at Zero Hedge on May 26, 2017.