AuthorTopic: Oil Price Crash: Who Cooda Node?  (Read 147475 times)

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🛢️ Oil Price Correction Triggers Shale Meltdown
« Reply #870 on: August 08, 2019, 12:11:47 AM »
https://markets.businessinsider.com/commodities/news/oil-price-slides-into-bear-market-global-slowdown-recession-concerns-2019-8-1028428222

Oil tumbles into a bear market as recession fears rage (WTI)
Carmen Reinicke
Aug. 7, 2019, 04:36 PM


Reuters

    A surprise increase in American oil stockpiles added fuel to fears of a global recession.
    Futures fell as much as 5.8% to a seven-month low on Wednesday, pushing the resource into bear market territory.
    US-China trade tensions have overtaken threats of supply disruption in the Persian Gulf as the biggest headwind to oil.
    Watch oil trade live on Markets Insider.

Trade tensions and fear of a global recession has been a drag on oil prices, even during peak season for demand.

Futures fell as much as 5.8% Wednesday to seven-month lows after American crude stockpiles posted a surprise increase. The loss sent the resource tumbling into bear market territory. Having extra supply dilutes prices, while fears of a global recession added to worries that demand may slow. 

Global recession fears were sparked Wednesday when New Zealand, India, and Thailand all cut rates following the US's own rate cut in July. Global stocks and commodities slid in early trading while bonds and other safe-haven assets such as gold rallied. Even bitcoin rose over $12,000 briefly Wednesday, breaching the level for a second time in three days.

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US domestic crude inventories grew by 2.39 million barrels last week, ending a seven-week long stretch of declines, Bloomberg reported. Gasoline stockpiles also grew by 4.4 million barrels, which surprised the industry as it is currently peak demand season — which usually means there isn't extra gasoline to stockpile.

Brent crude October futures lost as much as 5.2% to $55.88 a barrel, and prices have decreased more than 20% since their year-to-date peak in April. Meanwhile, US West Texas Intermediate crude futures also slid as much as 5.8% to $50.52 a barrel.

Oil has plunged this month as trade tensions between the US and China escalated, overshadowing fears that disruptions in the Persian Gulf would be the biggest negative impact. There's increased speculation that China will start avoiding American oil as trade tension escalates, according to Bloomberg.
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🛢️ Natural Gas Prices: Will the $2 Wall Collapse?
« Reply #871 on: August 10, 2019, 12:22:58 AM »
https://marketrealist.com/2019/08/natural-gas-prices-will-the-2-wall-collapse/

Natural Gas Prices: Will the $2 Wall Collapse?
WRITTEN BY Rabindra Samanta


On August 8, natural gas prices rose 2.2% and settled at $2.13 per MMBtu (million British thermal units). The United States Natural Gas Fund LP (UNG), which follows natural gas prices, rose 1.7%. That day, the EIA (US Energy Information Administration) reported an increase of 55 Bcf (billion cubic feet) in natural gas inventories for the week ended August 2.

A Reuters poll estimated an increase of 59 Bcf for the same week. The smaller-than-expected increase in inventories pushed natural gas higher, but for how long?

Natural Gas Prices: Will the $2 Wall Collapse?

The negative inventories spread contracted by 50 basis points. The inventories spread indicates the difference between natural gas inventories and their five-year average. A contraction in the negative spread could drag prices going forward. Usually, the inventories spread and natural gas prices move inversely. According to Reuters, inventories are expected to rise 57 Bcf this week, which is higher than the five-year average rise of 42 Bcf.

If next week’s EIA data aligns with Reuters’ estimates, then the negative inventories spread could further contract by 30 basis points. Since August 2, Henry Hub natural gas active futures have fallen 0.2% through 9:30 AM EDT today. We expect prices to report a fifth consecutive weekly decline.
Natural gas price forecast

Based on the implied volatility of 39.1%, natural gas prices are expected to close between $2.03 and $2.23 per MMBtu between August 9 and August 15. The probability for this price range is 68%, and this price forecast is based on the normal distribution of prices. Given the circumstances, natural gas prices could inch toward the psychologically important level of $2.

If the $2 wall collapses next week, it could cast a shadow on energy stocks. Natural gas-weighted stocks Cabot Oil & Gas (COG) and EQT Corp. (EQT) could see further declines. On a year-to-date basis, COG and EQT have fallen 20.9% and 33.2%, respectively. Both these stocks operate with a production mix of over 90% in natural gas.

Range Resources (RRC) has dropped the most among natural gas-weighted stocks. Analysts reduced the target price on RRC just before its July 25 earnings results.

On August 8, natural gas prices were 5.4%, 8.6%, 14.7%, and 28.9%, respectively, below their 20-, 50-, 100-, and 200-day moving averages. Moreover, the negative difference between the 50-day and 200-day moving average is at its highest level since late January. Prices below the key moving averages and the expansion in the negative difference between 50- and 200-day moving averages suggest a bearish trend.
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🛢️ Oil Markets Face Nightmare Scenario
« Reply #872 on: August 15, 2019, 01:00:59 AM »
https://oilprice.com/Energy/Oil-Prices/Oil-Markets-Face-Nightmare-Scenario.html

Oil Markets Face Nightmare Scenario
By Nick Cunningham - Aug 14, 2019, 6:00 PM CDT


Oil prices rose sharply on Tuesday after President Trump decided to delay tariffs, recognizing the negative impact tariffs would have on the U.S. economy. But by Wednesday, oil prices crashed again, as financial markets see the risk of economic recession rising in spite of the tariff delay.

The closely-watched spread between two-year and 10-year treasury yields finally flipped, the first time that has occurred since 2007. Yields on two-year notes are trading higher than 10-year treasuries, a phenomenon that has reliably preceded past economic recessions. Financial markets took note, and sold off stocks and commodities of all types.

This problem has been brewing for a while, with the early signs of an inverted yield curve showing up last year. Economists and analysts have been watching this for months, but the spread received a jolt after the recent announcement from President Trump regarding a new round of tariffs. He now seems to have regretted that decision, but market traders are not assuaged. The tariff delay “doesn’t really change the outlook on the trade tensions,” Louis Kuijs, chief Asia economist at Oxford Economics in Hong Kong, told Bloomberg. “We expect further policy easing in the coming months to help stabilize growth amid the above headwinds.”

The negative sentiment might be here to stay because reams of other data point to an economic slowdown.

For instance, China’s latest industrial data for July was the weakest since 2002. Germany’s economy contracted in the second quarter and is nearing recession. The same is true of the UK, which also saw GDP fall in the second quarter.

Car sales in China have declined for 13 of the last 14 months. Car sales in India and Germany also fell sharply in July. Global manufacturing activity and trade volumes are down.
Related: A Booming Niche In Energy’s Hottest Market

The ECB is expected to cut interest rates again, and the U.S. Federal Reserve might be compelled to do so again, after only recently cutting rates for the first time in a decade.

Some economists think bond yields could go to zero or even into negative territory if recession hits. “This is the ultimate indicator that something is fundamentally wrong with the world economy,” Adam Posen, president of the Peterson Institute for International Economics, told the Washington Post. “The escalation of the trade war is making it worse.”

Notably, yields on 30-year treasuries plunged in recent days as well, a sign that capital is flowing into safe haven assets as fears of recession take hold.

After routinely boasting that the trade war was hurting China more than the U.S., and that China was forced to pay billions of dollars to the U.S. government because of tariffs, President Trump essentially admitted that U.S. consumers were bearing the brunt of the impact when he called off some of his proposed tariffs on Tuesday.

On the one hand, stepping back from the brink could put both sides on the path to a negotiated settlement – Chinese and American negotiators are scheduled for face-to-face talks in September – but it could also signal vulnerability.

Viewed from the perspective of Beijing, the flip-flopping from the U.S. is an admission from Trump that he can’t survive politically if the U.S. economy slows down too much. For Xi Jingping, there is little incentive to offer concessions of any significance. If that is the lesson then the trade war could drag on indefinitely.
Related: Oil Prices Crash On Recession Fears

Notably, the delay of U.S. tariffs saw oil prices soar on Tuesday as it seemed to take away a major economic headwind. But the bump was temporary, with prices falling back just as sharply on Wednesday after the raft of poor economic data and the inverted yield curve pointed to an oncoming economic recession.

Some analysts don’t say any major pitfalls to oil prices. “Oil demand in China and the US is unlikely to weaken noticeably as a result of the trade conflict, though if this were to happen Saudi Arabia would further reduce its output,” Commerzbank said in a note. “Thanks to the OPEC+ production cuts, the oil market will be undersupplied in any case in the second half of the year.”

Perhaps. But on the current trajectory, a supply glut is looming in 2020. On that much, most agree. But the problem is that recent price downturns were largely the result of U.S. shale growing faster than demand. This time around, the danger is much larger. A global economic recession would bring the expected supply glut forward, and make it much worse.

By Nick Cunningham of Oilprice.com
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🛢️ Saudi Arabia Makes a Promise That It Just Can’t Keep
« Reply #873 on: August 18, 2019, 02:38:13 PM »
https://www.bloomberg.com/opinion/articles/2019-08-18/saudi-arabia-s-promise-to-boost-the-oil-price-just-doesn-t-add-up

Saudi Arabia Makes a Promise That It Just Can’t Keep

If you’re waiting for a big production cut from the kingdom to rescue the crude market – don’t.

By Julian Lee
August 17, 2019, 10:00 PM AKDT


Empty promises. Photographer: Bloomberg/Bloomberg

Julian Lee is an oil strategist for Bloomberg First Word. Previously he worked as a senior analyst at the Centre for Global Energy Studies.


Saudi Arabia isn’t as willing to do whatever it takes to support oil prices as it would have us believe. That’s the only conclusion one can draw from what we’ve learnt since a government official said the kingdom wouldn’t tolerate a continued price slide.

After crude fell to a seven-month low earlier this month, Saudi Arabia got on the phone to other members of the OPEC+ group of nations to discuss possible policy responses. It doesn’t appear to have got very far.

Russia – the key non-OPEC member of the extended producer group – made all the right noises. An emailed statement from its energy ministry said it was “utterly important to act responsibly” by giving the market only as much oil as was needed. You might think that would mean Russia sticking to the production target it agreed with OPEC in December. You’d be wrong.

The Russians pumped 11.32 million barrels a day in the first half of August, according to Interfax. That’s up by 180,000 barrels from July and above its pledged daily level of 11.19 million barrels. While the country did produce less than required for three months in a row through to July, that was mainly the result of the Druzhba pipeline contamination crisis.
Not Making The Cut

Russia only met its output target during the pipeline contamination crisis, which is now all but resolved

Source: Bloomberg

Note: August data is for the first half of the month

Indeed, Moscow may be better able to weather lower prices than Riyadh. U.S. President Donald Trump’s sanctions on exports from Iran and Venezuela have boosted Russia’s oil income by about $1 billion dollars since November. Russian Urals grade is a pretty good substitute for Iranian crude for European refiners and its value has risen relative to that of the benchmark Brent.

So what about Saudi Arabia’s OPEC partners? The biggest of those, Iraq, doesn’t seem to be helping much either. Tanker-tracking data compiled by Bloomberg suggest that its crude exports in the first half of August were the highest in three months. Flows out of West Africa also appear to have been robust in August.

Will the kingdom go it alone? Perhaps not.

Having already cut more than twice as much oil output as it promised in December, Riyadh has signaled its unwillingness to keep shouldering the burden alone. Its energy minister Khalid Al-Falih insisted at OPEC’s last meeting in July that the Saudis had already cut “deep enough.”

They did manage to generate a brief bump in prices by that suggestion of doing whatever it takes. But the market recovery is already running out of steam. And the promise was never quite as meaningful as some thought.

As part of the pledge, Saudi officials said the kingdom would keep oil exports below 7 million barrels a day in September and supply customers with 700,000 barrels a day less than they’d asked for. That looks like a big number, but it rather depends on what potential buyers asked for. Dig a bit deeper and the commitment starts to look less bullish.
Making The Cuts

Saudi Arabia has been cutting its oil production well below the 10.3 million barrels a day it pledged in December

Source: Bloomberg, OPEC

Saudi Arabia didn’t actually say it would cut exports by 700,000 barrels a day next month. Instead, the officials pointed to the 10.3 million barrels a day that they could theoretically produce in September to meet demand, and that the reduction would come from that figure. (It’s worth noting that this 10.3 million figure is more than the Saudis have produced in any other month this year, according to data from the kingdom). So the upshot is that Saudi Arabia’s actual production next month may be about 9.6 million barrels a day. It says it produced 9.58 million last month, so this doesn’t look like a cut at all.

And then there’s the issue of where the cuts will come from. Saudi Aramco, the national oil company, has allocated full volumes of contractual crude supply for September sales to at least six buyers in Asia. So the U.S. and Europe will have to bear the brunt of reductions. Supplies to U.S. buyers will be about 300,000 barrels a day less than they’d asked for, according to the officials, while cuts to European buyers will need to be bigger still to hit the 700,000 target.
Lion's Share

Almost 90% of Saudi Arabia's crude exports have gone to Asia this year, Europe took just 3%

Source: Bloomberg

Note: Destination of Saudi Arabia's crude oil exports in first seven months of 2019 from tanker tracking

That’s going to be a stretch. The kingdom has only shipped about 530,00 barrels a day to North America so far this year, while deliveries to Europe have averaged just 210,000 barrels, according to Bloomberg tanker tracking. So to be in a position to make the sort of cuts being talked about, buyers must have been asking for a lot more oil than they’ve bought from Saudi Arabia in the recent past.

The numbers just don’t stack up. If you’re waiting for a big output cut from Saudi Arabia to rescue oil prices – don’t.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

To contact the author of this story:
Julian Lee at jlee1627@bloomberg.net
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🛢️ Extreme Supply Outages Prevent Oil Prices From Crashing
« Reply #874 on: August 23, 2019, 01:46:05 AM »
https://oilprice.com/Energy/Energy-General/Extreme-Supply-Outages-Prevent-Oil-Prices-From-Crashing.html

Extreme Supply Outages Prevent Oil Prices From Crashing
By Nick Cunningham - Aug 22, 2019, 6:00 PM CDT


The oil market is facing a near-term supply deficit, despite the growing cracks in the global economy and stagnant oil demand. At the same time, the market is poised for a major surplus next year.

The combination of the OPEC+ cuts, the worsening supply disruptions in Iran and Venezuela, and a slowdown in U.S. shale have all helped to tighten up balances. The second half of 2019 could see a rather significant pace of inventory drawdowns, erasing some of the glut.

In fact, the degree of uncertainty and risk to global oil supplies is staggering, and the sheer number and volume of production outages around the world would have historically sent oil prices skyrocketing. OPEC is keeping 1.2 million barrels per day (mb/d) offline, Venezuela has lost around 1 mb/d relative to 2017 levels, and Iran’s exports have fallen by more than 2 mb/d since the re-introduction of sanctions last year. Meanwhile, tanker attacks and high tensions in the Persian Gulf put even more supply at risk.

Iran’s oil exports have fallen as low as 450,000 bpd, according to July figures. However, U.S. State Department’s special representative for Iran, Brian Hook, said that the export figure is likely down to about 100,000 bpd, close to the “zero” level that he has been targeting. “We have effectively zeroed out Iran's export of oil,” Hook said during a press briefing in New York. “I can't overstate the significance of this accomplishment.” Harsh U.S. sanctions have effectively blocked Iranian oil exports, but they have also exacted a major human toll on the Iranian population, as the economy suffers and hospitals struggle to find adequate supplies.

The precise oil export numbers offered by Hook differ from other sources, but either way, exports are significantly down from the roughly 2.5 mb/d of exports from early 2018.

Iranian President Hassan Rouhani warned that international waterways “can’t have the same security as before” if Iran’s oil exports were completely forced to zero. “So unilateral pressure against Iran can’t be to their advantage and won’t guarantee their security in the region and the world,” Rouhani added.
Related: Hong Kong Billionaire Loses $20 Billion In Canadian Oil Sands

“In the meantime, the short term market balance has been tightened slightly by the reduction in

supply from OPEC countries,” the IEA said in its August Oil Market Report. “If the July level of OPEC crude oil production at 29.7 mb/d is maintained through 2019, the implied stock draw in 2H19 is 0.7 mb/d, helped also by a slower rate of non-OPEC production growth.”

In short, the market is in a situation where supply is already in a state of deficit, and geopolitical risks put even more barrels at risk. And yet, oil prices languish.

That is because even as many analysts see a supply deficit, weak demand seems to keep catching forecasters by surprise. In the first half of 2019, demand only grew by 0.6 mb/d, which was largely the result of the 0.5 mb/d increase in China. In other words, outside of China, oil demand barely grew at all.

U.S. oil inventories fell in the latest EIA release, which seemed to offer some small evidence backing up the notion that the market is in a deficit and will continue to draw down inventories. However, the bullish impact was offset by an increase in gasoline stocks. “The inventory report was tarnished by unexpected increases in oil product stocks: gasoline stocks rose by 312,000 barrels while distillate stocks even grew by 2.6 million barrels,” Commerzbank said in a note. “Gasoline stocks normally fall at this time of year due to high seasonal demand.”

“Just a few weeks before the end of the summer driving season, gasoline stocks are a good 4% up on the long-term average – i.e. at a comfortable level,” Commerzbank added. That has resulted in weaker-than-expected refining margins, which in fact, are at their worst since February.

“Refineries are likely to respond by reducing their processing rate, which had risen again last week. A significant decline can be expected here in the coming weeks. The resulting lower demand from refineries could cause US crude oil stocks to rise again,” Commerzbank said.
Related: U.S. To “Drown The World” In Oil

Meanwhile, the slowdown in U.S. shale can be interpreted in different ways. Lower oil prices, financial stress and investor skepticism have forced spending cuts. That has begun to translate into slower growth, contributing to a tighter oil market – or, at least, tighter than things might have been otherwise. In Texas, well completions fell by 12 percent in the first seven months of 2019 compared to the same period a year earlier. Year-on-year production growth slowed to 1.65 mb/d in May, down from a peak of 2.1 mb/d in August 2018.

But production is still growing by quite a lot. “We expect non-OEPC production growth (YOY) of 1.8mb/d for 2019e and 1.9mb/d for 2020. These are very high non-OPEC growth rates in an historical

context, but significantly below the record-high 2.8mb/d growth (YOY) in 2018,” DNB Bank said in a report.

The 1.8 mb/d supply growth from non-OPEC this year stands in sharp contrast to the expected increase in demand of just 0.8 mb/d, according to DNB. OPEC+ cuts have been required to keep the oil market from an utter meltdown, including deeper-than-required cuts from Saudi Arabia, and harsh U.S. sanctions on Venezuela and Iran.

The market may see temporary drawdowns in inventories in the coming months due to extraordinary supply outages, but non-OPEC supply growth and demand grinding to a halt means that the surplus is still set to return in 2020.

By Nick Cunningham of Oilprice.com
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🛢️ Oil Markets Hit Hard By Trade War Escalation
« Reply #875 on: August 26, 2019, 12:00:03 AM »
https://oilprice.com/Energy/Energy-General/Oil-Markets-Hit-Hard-By-Trade-War-Escalation.html

Oil Markets Hit Hard By Trade War Escalation
By Nick Cunningham - Aug 25, 2019, 6:00 PM CDT


Oil prices plunged on Friday after China unveiled new tariffs on $75 billion worth of American goods, a move that reignited fears about a global economic slowdown.

China’s higher tariffs hit American soybeans, pork, beef, and interestingly, crude oil as well. China had become a major buyer of U.S. shale oil in recent years and has refrained from hitting crude with tariffs up until now. Beijing will put a 5 percent levy on American oil, which could depress the U.S. benchmark relative to Brent.

Some of the measures will take effect on September 1, while others, such as the 25 percent levy on American automobiles, will go into effect in December. The timeframe mirrors that of the U.S. – President Trump recently decided to delay some of the tariffs until December to avoid the impact on American consumers during the holidays.

Beijing’s tariff announcement sunk global stocks and commodities. In Chicago, soybean prices sank by 1 percent. Copper fell in London. WTI was down more than 3 percent.

On the same day, U.S. Federal Reserve Chairman Jerome Powell gave a highly-anticipated speech in Jackson Hole on Friday, where he addressed market concerns. He said that “fitting trade policy uncertainty” into the Fed’s framework is “a new challenge,” and that setting trade policy is “the business of Congress and the Administration, not that of the Fed.”

However, he said, trade policy uncertainty obviously affects how the Fed responds. “Trade policy uncertainty seems to be playing a role in the global slowdown and in weak manufacturing and capital spending in the United States,” Powell said. He has come under withering pressure from President Trump to cut interest rates.

“The three weeks since our July FOMC meeting have been eventful, beginning with the announcement of new tariffs on imports from China,” Powell said. He also pointed to unrest in Hong Kong, the dissolution of the Italian government, and the economic slowdown in both Germany and China. “Financial markets have reacted strongly to this complex, turbulent picture. Equity markets have been volatile.” The U.S. economy has held up better though, at least to date.
Related: Is Renewable Hydrogen A Threat To Natural Gas?

And then Powell go to the part that financial markets had been holding their breath for. “Based on our assessment of the implications of these developments, we will act as appropriate to sustain the expansion,” Powell said. It may sound a bit mundane, but traders took the statement as a sign that the Fed may cut interest rates again if things get worse. Stocks regained some lost ground after the speech.

The global economy continues to show growing cracks. India’s auto sales have declined for nine straight months, and automakers there are laying off more workers and idling production, according to Reuters. Global trade fell for the eighth consecutive month in June, according to new data.

But higher tariffs present yet another threat. President Trump’s top trade advisor Peter Navarro downplayed the impact of China’s new tariffs on Friday. “This was a move that was well-signaled,” he told CNN’s Jim Sciutto in an interview. “It's breaking news I guess, but it was well anticipated.” Instead, he blamed the Federal Reserve for the slowing economy.

He may publicly shrug off the impact of the trade war, but the Trump administration seems increasingly appreciative of the domestic political threat that the standoff is causing. Indeed, the decision to delay some tariffs until December is a recognition of the economic fallout stemming from the U.S.’ own tariffs on Chinese goods, let alone the retaliation from Beijing.

But while financial markets rebounded after the Fed’s comments, encouraged by a seemingly flexible and somewhat accommodating posture, their hopes were quickly dashed after Trump took to twitter to denounce China. Financial markets sank all over again on expectations that the trade war will only get worse from here.
Related: Oil Prices Plunge As China Retaliates With Tariffs On U.S. Goods

Meanwhile, on a separate but relevant issue, the Trump administration has infuriated American farmers, and not just because of the trade war. The EPA’s waivers for oil refiners, allowing them to get out of ethanol blending requirements, have devastated the market for ethanol and biofuels credits. “They screwed us...when they issued 31 waivers,” Republican Senator Chuck Grassley (IA) told Iowa Public Television. “Compared to less than 10 waivers during all the Obama years...What’s really bad isn’t a waiver, it’s that it’s been granted to people who aren’t in hardship,” he said, referring it oil refiners.

The issue has become such a political threat that President Trump reportedly held two lengthy meetings with cabinet members in the past week to find ways to assuage concerns from corn and ethanol groups.

The vulnerability hampers President Trump’s campaign to confront China. He has now boxed himself into a political corner. He can press on with the trade war, further alienating American farmers (and consumers more broadly), while also increasing the odds of a recession. Or, facing mounting political and economic threats, he can back down and try to cut a deal with Beijing. Surely, China recognizes his predicament and will try to wait him out.

By Nick Cunningham of Oilprice.com
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🛢️ OPEC+ Supply Cuts Fail to Ignite Oil Prices
« Reply #876 on: August 27, 2019, 12:15:00 AM »
<a href="http://www.youtube.com/v/MGBw5kDv8sc" target="_blank" class="new_win">http://www.youtube.com/v/MGBw5kDv8sc</a>
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🛢️ WTI prices plummet over 4% in Friday following OPEC output cut noise
« Reply #877 on: August 30, 2019, 07:23:03 PM »
https://www.fxstreet.com/news/wti-prices-plummet-over-4-in-friday-following-opec-output-cut-noise-dxy-above-9900-201908301943

WTI prices plummet over 4% in Friday following OPEC output cut noise / DXY above 99.00
NEWS | Aug 30, 19:43 GMT | By Ross J Burland


    The DXY broke highest levels since May 2017 and WTI extends to a 4% decline.
    Russia's oil output cuts in August will be slightly below those agreed.

West Texas Intermediate oil prices have taken a knock, coincidently into month-end and as the US Dollar perks up nicely through the to test the 99 handle for the highest level printed at 99.02 since May 2017.

Output cuts not to be taken for granted

WTI spot prices are currently trading at $54.94 having travelled from a high of $56.70 to a low of $54.57. On strictly oil-related news, oil output cuts were thrown into question when Reuters reported that Russian Energy Minister Alexander Novak said Russia's oil output cuts in August will be slightly below those agreed to under the deal between OPEC and non-OPEC producers. When the only major supportive factor for oil is put into doubt, your going to see lower prices which came into fruition today - a 4% drop was marked up since yesterday's highs towards the 57 handle.  As for futures, October West Texas Intermediate oil lost $1.61, or 2.8%, to settle at $55.10 a barrel on the New York Mercantile Exchange.
Prices firmly in whipsaw territory

However, analysts at TD Securities argued that the supply-side fundamentals remain positive for the energy market, with the latest DOE data pointing to tighter supply which had seen CTAs turn buyers across WTI, Brent, gasoline and heating oil. However, they also noted that buying remains on thin ice. "Momentum signals across the complex are pointing to weak buying, with prices all firmly in whipsaw territory which could see the algos return to sellers again next week as prices remain range-bound for the most part."
WTI levels

Bulls capitulated on Friday and the price action has left the 60 handle back in the rearview mirror. When trading below the 200-day moving average, the bears are back in control and the 52 handle and the 61.8% Fibo at 51.70 come into focus again.
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🛢️ Oil Plunges As Trade War Rages
« Reply #878 on: September 04, 2019, 02:20:05 AM »
https://oilprice.com/Energy/Energy-General/Oil-Plunges-As-Trade-War-Rages.html

Oil Plunges As Trade War Rages
By Tsvetana Paraskova - Sep 03, 2019, 10:30 AM CDT


Oil prices tanked to multi-week lows early on Tuesday, the first full trading day after the new U.S. and Chinese tariffs and counter-tariffs entered into force and as signs emerged that both OPEC and its key partner in the production cut deal, Russia, boosted oil production in August. 

As of 11:06 a.m. EDT on Tuesday, WTI Crude was down 3.23 percent at $53.23 and Brent Crude had fallen below $58 a barrel—to $57.59, down by 1.82 percent on the day.

Market participants were again concerned about the repercussions of the U.S.-China trade war on global economies and oil demand growth. On Sunday, September 1, the U.S. imposed tariffs on Chinese goods, and China imposed tariffs on some U.S. goods, although Beijing left most of the tariffs for the December round of new tariffs.

On the demand side, the market is worried about slowing economies and, by extension, slowing oil demand growth. On the supply side, too, bearish factors abound.

According to a Reuters survey, OPEC’s crude oil production increased in August, thanks to Iraq and Nigeria. OPEC’s August production has been estimated at 29.61 million barrels per day, which is 80,000 barrels per day over July’s production level. Even though Saudi Arabia is still over-complying with its share of the cuts, it lifted production in August to produce 9.63 million barrels per day.

In Russia, OPEC’s key partner in the OPEC+ coalition curbing output to support oil prices, oil production increased to 11.29 million bpd in August, up from 11.15 million bpd in July, and exceeding Russia’s cap under the deal. Rosneft boosted its oil production by 5 percent last month compared to the previous month, according to Russia’s energy ministry data cited by Reuters.

Yet, Russian Energy Minister Alexander Novak affirmed that Russia was still looking to comply in full with its share of the cuts.

By Tsvetana Paraskova for Oilprice.com
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🛢️ Big Oil circles Permian riches as shale stocks collapse
« Reply #879 on: September 06, 2019, 04:14:54 AM »
Moriarty gets to eat shit.  :icon_sunny:  EOG is going down.

 :multiplespotting:

RE

https://www.chron.com/business/energy/article/Big-Oil-Circles-Permian-Riches-as-Shale-Stocks-14415479.php

Big Oil circles Permian riches as shale stocks collapse

Kevin Crowley, Bloomberg 7:11 am CDT, Thursday, September 5, 2019


    FILE - In this June 11, 2019, file photo a pump jack operates in an oil field in the Permian Basin in Texas. As smaller companies withdraw from shale drilling, oil majors are looking for deals. NEXT: See photos from drilling in the Permian.  Photo: Jacob Ford, Associated Press

Photo: Jacob Ford, Associated Press
Image 1 of 18
FILE - In this June 11, 2019, file photo a pump jack operates in an oil field in the Permian Basin in Texas. As smaller companies withdraw from shale drilling, oil majors are looking for deals.

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A bloodbath in energy stocks is creating a rich opportunity for Big Oil to dominate America’s hottest shale play.

Independent producers in the Permian Basin of Texas and New Mexico are trading much lower than when Chevron Corp. bid for Anadarko Petroleum Corp. in April. Royal Dutch Shell Plc and ConocoPhillips have expressed interest in bulking up in shale at the right price. Exxon Mobil Corp.’s chief said Wednesday his company is keeping a “watchful eye” on the Permian for potential deals.

Oil’s drop to near $55 a barrel, from $75 in October, is putting pressure on shale producers at a time when investors are losing faith in an industry that has burned about $200 billion of cash in a decade. Despite record U.S. output, the S&P index of independent exploration and production companies is trading near its troughs of 2008 and 2015, when crude prices sank south of $35 a barrel. The producers are now worth just 4.5 times their earnings before certain items, compared with 9 times about a year ago.

“It’s clear there are many E&Ps trading well below the Chevron valuation watermark from April,” said Michael Roomberg, who helps manage $4.4 billion at Miller/Howard Investments Inc. He expects “several additional deals over the next several quarters, and wouldn’t be surprised if the majors are involved.”

ASSETS SOLD: Concho sells Permian assets to Houston's Spur Energy for $925M

Pioneer Natural Resources Co. or Concho Resources Inc., which have both struggled this year, would be a good fit for Exxon, while Shell may look at smaller players like WPX Energy Inc. and Cimarex Energy Co., according to Tudor, Pickering, Holt & Co.

The collapse in valuations has been so severe that the biggest shale producers may also come into play. EOG Resources Inc. and Occidental Petroleum Corp. could also be targeted, Ben Cook, a portfolio manager at BP Capital in Dallas, said earlier this year. Activist investor Carl Icahn is pushing for a shakeup of the board at Occidental.

After a slow start in shale, Exxon and Chevron have expanded in the Permian at prodigious rates over the past two years and now see onshore exploration in the U.S. as a key part of their global growth plans. They expect to more than double output to roughly 1 million barrels a day each by the early 2020s.

The two heavyweights are betting their ability to fund enormous drilling programs and build associated infrastructure like pipelines and gas terminals means they won’t encounter the growing pains the independents are currently experiencing.

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“If there is the opportunity to acquire something that brings unique value to Exxon Mobil, we’ll be in a position to transact on that,” Exxon CEO Darren Woods said at a Barclays Plc conference Wednesday.

But he’s willing to let potential targets struggle for some time to get a better price.

“Time’s on our side to let that play itself out,” Woods said. “I think people need to recalibrate what they’re experiencing in that unconventional space, and that will have an impact on how people value companies.”

Chevron will be “opportunistic” in making acquisitions, the company’s North America head Jeff Gustavson said at the same conference. Any deal would have to be a strategic fit and be good value, he said.

BP Plc entered the fray a year ago, acquiring BHP Group Ltd.’s onshore oil and gas assets for $10.5 billion. In hindsight, the timing looks bad given the slump in shale valuations since then.

Waiting for too long could be risky as well. On the day Chevron bid for Anadarko (which it ended up losing to Occidental Petroleum Corp.), major shale producers surged as much as 12% as investors bet on a buyout frenzy.

So far, Exxon, Chevron and Shell are looking smart.

Some shale producers are struggling to pay creditors, with Sanchez Energy Corp. and Halcon Resources Corp. recently filing for bankruptcy protection.

The majors “are going to go out there and run these guys into bankruptcy,” Mark Rossano, CEO of C6 Capital Holdings, said on Bloomberg TV. “They’re going to look to pick up acreage at significant discounts.”
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🛢️ The World’s Oil Glut Is Much Worse Than It Looks
« Reply #880 on: September 09, 2019, 08:54:32 AM »
https://www.bloomberg.com/opinion/articles/2019-09-08/the-world-s-oil-glut-is-much-worse-than-it-looks

The World’s Oil Glut Is Much Worse Than It Looks

OPEC and its allies have been using the wrong target for draining excess stockpiles. As a result, they may have to consider longer and deeper cuts.
By Julian Lee

September 7, 2019, 10:00 PM AKDT


Turning off the taps. Photographer: HAIDAR MOHAMMED ALI/AFP

Julian Lee is an oil strategist for Bloomberg First Word. Previously he worked as a senior analyst at the Centre for Global Energy Studies.
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A meeting of ministers from OPEC states and their oil-producing allies will take place in Abu Dhabi this week. It will probably be a subdued affair. Oil prices remain stubbornly low despite big output cuts by the so-called OPEC+ group and geopolitical factors such as the U.S. sanctions on Iran.

The meeting of the Joint Ministerial Monitoring Committee, a body set up by OPEC+ to oversee its production-cutting strategy, won’t reset the group’s approach but it might provide some clearer guidance on its goals. The ministers insist that they don’t have a target for how far they want the price of crude to rise, and say instead that their aim is to reduce excess stockpiles.

But for market-watchers it’s tough to even get a sense of how big that stockpile is, and hence when the output-cutting exercise may be seen to have done its job.

The original target of the output cuts back in November 2016 was to get stockpiles back to their five-year average level. That was never going to be enough, though. The problem is that this average has been inflated by the very excess stockpile that OPEC+ is trying to drain (as the chart below shows).
Inflated Average

Five-year average stockpiles are nearly 200 million barrels higher than they were four years ago

Sources: Bloomberg, International Energy Agency

As such, it’s been relatively easy to cut the inventory to close to this inflated figure but that has still left a huge amount of unwanted crude sloshing around. Not a very useful outcome when you’re trying to boost prices.

Khalid Al-Falih, the departing Saudi oil minister, has acknowledged that the group needs a new target. The OPEC+ ministerial group concluded at its last meeting in July that the moving five-year average wasn’t working and it has been considering using a new benchmark from the more “normal” period (in global oil inventory terms) of 2010-2014.
Are We There Yet?

A new, lower target leaves OPEC+ with a long way to go to get inventories back to a 'normal' level

Sources: Bloomberg, International Energy Agency

That leaves the producers with a lot more excess crude to drain. OPEC assessed that commercial oil stockpiles in the industrialized countries of the OECD totaled 2.955 billion barrels at the end of June. That’s 258 million barrels more than the 2010-2014 average for the same month.

Using this figure would certainly be a step in the right direction in terms of truly managing the market’s excess inventory. Better still would be having a target that takes into account the growth in oil demand every year, by measuring stockpiles in terms of the number of days’ worth of demand they represent rather than in simple volumes.

Measuring the number of barrels held in storage is all well and good, but with demand rising year after year (even if the rate of increase is slowing) the world now needs a bigger stockpile to provide the same amount of forward cover.
Covering Demand

OECD oil stockpiles are enough to meet more than 61 days of demand, that's 3 days more than in the 'normal' 2010-2014 period

Sources: Bloomberg, International Energy Agency

Still, whether you measure them as simple volumes or in terms of cover for future demand, OECD stockpiles are rising. Admittedly, much of the recent increase comes from natural gas liquids (light oils produced in large quantities from U.S. shale) which are used widely as petrochemical feedstocks. When you strip these out of the numbers, OECD inventories of crude oil plus the major fuel products – gasoline, middle distillates (diesel, heating oil and jet fuel) and fuel oil – are below their five-year average level.

Yet the stockpiles calculated on this basis are well above their 2010-2014 average and that’s the real problem for OPEC+ ministers when they meet in Abu Dhabi.
Core Oil Stockpiles

Crude and core products stockpiles have remained flat this year, but are well above 2010-2014 average levels

Sources: Bloomberg, International Energy Agency

Note: Core products are gasoline, middle distillates and residual fuel oil

Saudi Arabia can’t rescue oil prices on its own. With demand growth weakening and non-OPEC supply rising, the producing nations may to have to consider both longer and deeper cuts.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

To contact the author of this story:
Julian Lee at jlee1627@bloomberg.net
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🛢️ Opec Slides Closer To Collapse As An Oil Glut Overpowers The Oil Price
« Reply #881 on: September 14, 2019, 12:00:03 AM »
https://www.forbes.com/sites/timtreadgold/2019/09/13/opec-slides-closer-to-collapse-as-an-oil-glut-overpowers-the-oil-price/#4f0a385f4ecb

Sep 13, 2019, 02:08am
Opec Slides Closer To Collapse As An Oil Glut Overpowers The Oil Price

Tim Treadgold
Contributor  Asia


McKinsey Sees LNG Surge

McKinsey & Company, a management consulting firm, explained the growing importance of LNG in the energy market earlier this week in its Global Gas And LNG Outlook To 2035.

The key findings were that gas would be the only fossil fuel to grow continuously to 2035 and that the major contributor to that growth would be the U.S.

McKinsey said the U.S. “is poised to"become the largest LNG exporter globally by 2022, overtaking Australia and Qatar”.

The rush into gas is largely explained by the fuel being significantly less polluting than oil or coal but the liquefaction and transport technologies which have unleashed gas have only just started to influence the global energy market and while many Opec members are LNG producers it is non-members such as Australia and the U.S. which are driving the industry.

McKinsey’s view of the LNG sector could be underestimating the impact of the fuel because there are many more potential projects on the sidelines with the capacity to create a gas glut which would bear down on prices for both gas and oil.

LNG Glut Looms

One paragraph in the McKinsey report demonstrates the emerging power of LNG in the global energy market. It reads:

    “Over 100 LNG projects totally 1100 million tons a year of capacity are competing to fill the 125 million tons a year supply gap by 2035; many of the marginal projects are from the U.S.”

With potential supply close to 9-times bigger than the forecast in demand growth it is likely that many of the proposed LNG projects will not proceed, but its also possible that too many will be developed, crowding the market and killing the LNG price.

In other words, not only is there an oil glut today but there’s the possibility of a gas glut tomorrow, which is very much not something Opec members want to hear about.
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🛢️ US Cuts Oil Price Forecasts Again
« Reply #882 on: September 14, 2019, 12:31:15 AM »
I wonder how Moriarty is doing? lol.

RE

https://www.rigzone.com/news/us_cuts_oil_price_forecasts_again-12-sep-2019-159782-article/

US Cuts Oil Price Forecasts Again
by  Andreas Exarheas
|
Rigzone Staff
|
Thursday, September 12, 2019


US Cuts Oil Price Forecasts Again
The U.S. Energy Information Administration has cut its Brent oil price forecasts again.

The U.S. Energy Information Administration (EIA) has cut its Brent oil price forecasts again, the organization’s latest short-term energy outlook (STEO) report has revealed.

Brent spot prices are now expected to average $60 per barrel in the fourth quarter of this year and $63.39 per barrel for the whole of 2019. In 2020, Brent is forecasted to average $62 per barrel.

In the EIA’s previous STEO, Brent was projected to average $65 per barrel in 4Q, $65.15 per barrel in 2019 as a whole and $65 per barrel in 2020. Back in July, the EIA forecasted that Brent would average $67 per barrel in 4Q, $66.51 per barrel in 2019 and $67 per barrel in 2020.

Last week, analysts at Fitch Solutions Macro Research (FSMR) further cut their Brent oil price forecasts. The analysts now expect Brent to average $64 per barrel this year, before dropping to an average of $62 per barrel in 2020.

In August, FSMR analysts expected prices to average $67 per barrel this year and $65 per barrel in 2020. In July the analysts forecasted an average of $70 per barrel in 2019, and $76 per barrel in 2020.
Demand, U.S. Production Growth

In its latest STEO, the EIA forecasts that global liquid fuels consumption will increase by 0.9 million barrels per day (MMbpd) this year.

This is down from year-over-year growth of 1.3 MMbpd in 2018, the outlook noted. The slowing liquid fuels demand growth reflects EIA’s assumption of decelerating growth in global oil-weighted gross domestic product (GDP).

The EIA anticipates that global liquid fuels demand will increase by 1.4 MMbpd in 2020 “as a result of an expected increase in global GDP growth”, the STEO revealed.

U.S. crude oil production is projected to average 12.2 MMbpd in 2019, up by 1.2 million from the 2018 level, according to the STEO. U.S. oil production is expected to rise by 1 MMbpd in 2020 to average 13.2 MMbpd.

“The slowing rate of crude oil production growth reflects relatively flat crude oil price levels and slowing growth in well-level productivity,” the STEO stated.

The EIA is the statistical and analytical agency within the U.S. Department of Energy. The EIA collects, analyzes, and disseminates independent and impartial energy information to promote sound policymaking, efficient markets and public understanding of energy and its interaction with the economy and the environment, according to the EIA’s website.
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Re: Oil Price Crash: Who Cooda Node?
« Reply #883 on: September 14, 2019, 03:15:01 AM »
Maybe if those folks in Yemen take out a Saudi field or so the price of crude could go up to the level every producer needs to be profitable? But then who could afford it? Such a conundrum?
AJ
Nullis in Verba

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Re: Oil Price Crash: Who Cooda Node?
« Reply #884 on: September 14, 2019, 06:59:42 AM »
Maybe if those folks in Yemen take out a Saudi field or so the price of crude could go up to the level every producer needs to be profitable? But then who could afford it? Such a conundrum?
AJ

It can't be profitable at any price.  EROEI is too low.

RE
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