AuthorTopic: Oil Price Crash: Who Cooda Node?  (Read 123019 times)

Offline RE

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🛢️ Is The Oil Market Ready For Sanctions On Iran?
« Reply #750 on: April 21, 2018, 09:14:13 PM »
https://oilprice.com/Geopolitics/International/Is-The-Oil-Market-Ready-For-Sanctions-On-Iran.html

Is The Oil Market Ready For Sanctions On Iran?
By Tsvetana Paraskova - Apr 21, 2018, 6:00 PM CDT Iran


Oil market participants and analysts will be intently watching the Trump Administration over the next month. May 12 is the deadline for the U.S. President to decide to waive sanctions on Iran as part of the nuclear deal that global powers reached with Iran in 2015, allowing Tehran to resume oil exports and regain part of its market share.

The re-imposition of sanctions on Iran’s oil is not 100-percent certain, although the probability is high, various analysts say. The potential loss of Iran’s oil exports varies from zero to 1 million bpd, according to investment banks and analysts.

Iranian sanctions could add between $2 and $10 to oil prices this year, analysts polled by Bloomberg say.

The oil market—now at its tightest state in years—would feel an Iranian oil supply disruption much more than it would have felt it just a year or so ago when the global oil glut was more than 340 million barrels.

With the oil overhang in developed economies now virtually eliminated, the possible threat to supply from Iran is one of many geopolitical factors analysts are watching — Venezuela’s oil production and the possible escalation of the situations in Syria and Yemen are other high profile examples.

Without all those geopolitical concerns, market fundamentals alone hardly justify such high oil prices, some analysts say.

But here we are— the geopolitical risk premium is back in the oil market, and fears of supply disruptions, especially in the Middle East, are driving oil prices up.

Analysts have their reasons to believe that President Trump won’t waive Iran sanctions this time around.

President Trump warned in January when he waived the sanctions that it was the last such waiver, “but only in order to secure our European allies’ agreement to fix the terrible flaws of the Iran nuclear deal.”

Related: IMF: Expect Oil To Fall Below $60

Since that waiver, President Trump has appointed a new National Security Advisor, John Bolton, who is extremely hawkish when it comes to Iran.

“The fact that there’s been a change of personnel in both the White House and the State Department pushes the probability up. It would have some impact on price, in the third and fourth quarters, on a couple-of-dollar basis. It’s a good even bet that it will or will not happen in May,” according to Ed Morse, global head of commodities research at Citigroup.

Earlier this week, Citigroup raised its 2018 and 2019 oil price forecasts by $5 to $6 per barrel for Brent, on the back of potential loss of supply from Iran and further Venezuela production losses. Citigroup now expects Brent to average $65 a barrel this year and $55 per barrel next year.

It’s uncertain how much Iranian oil could be removed from the market in case of no-waiver in May. According to Citigroup, it could be anywhere from 200,000 bpd to 1 million bpd if the Iran nuclear deal collapses.

Mike Wittner, head of oil market research at Societe Generale, tells Bloomberg that there is a 70-percent chance of Iran oil sanctions returning, which would have a $10 a barrel impact on oil prices, of which $5 is already priced in. SocGen’s base-case scenario is sanctions implemented in two to three months after May 12, and removing 500,000 bpd of Iranian oil, “much less than in 2012.”

According to Fereidun Fesharaki, chairman of energy consultancy Facts Global Energy (FGE) and a former energy adviser to the prime minister of Iran in the 1970s, there is a 90-percent chance of the Trump Administration walking out of the nuclear deal. This could lead to “sanctions within 180 days, but markets have not priced it in.”

Saxo Bank said in its Q2 quarterly outlook that the appointment of Bolton increases the risk of the U.S. slapping fresh sanctions on Iran, and those restrictions “would likely reduce the country’s ability to produce and export crude oil at the current rate.”

“We expect to see Brent crude remain mostly stuck within the established $10 range with tough U.S.-Russia tensions and U.S. sanctions against Iran potentially giving it a temporary boost towards $75/b. Geopolitical risk spikes can be vicious but tend to lack longevity. Unless supply is threatened, such spikes could add extra non-OPEC barrels while potentially raising growth and demand risk,” Saxo Bank said.

Related: The Bullish And Bearish Case For Oil

Iran is bracing for sanctions, and moved this week to begin using the euro instead of the U.S. dollar for its foreign currency data references. Sara Vakshouri, head of consultancy SVB Energy International, told Platts that this move could be an attempt to curb the impact of fresh sanctions by taking the dollar out of transactions, but it is unlikely to completely protect Iran from sanctions.

“With regard to the oil purchases, as part of its market share policy under sanctions, Iran might agree to receive its oil payments in the local currency of the importers or to received goods and/or services in return for its oil,” Vakshouri told Platts, but noted that Iran’s economy as a whole would be affected even if Tehran is able to continue selling oil internationally.

“Unilateral and multilateral restrictions and sanctions will have their own negative impacts on Iran’s economy, even if it is still able to continue oil exports”, Vakshouri noted.

One thing is certain about possible Iranian sanctions—at present their impact on Iran’s oil exports and the global oil markets is highly uncertain and will keep the market on edge at least until May 12.

By Tsvetana Paraskova for Oilprice.com
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Offline RE

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How high will Oil go bevore the next crash?  ???  :icon_scratch:

RE

http://fortune.com/2018/04/30/gas-prices-summer-2018/

Gas Prices Could Make This the Most Expensive Summer for Driving in 4 Years
By Emily Price April 30, 2018


When you head to the pump this summer you might get hit with a little bit of sticker shock. Rising oil prices are projected to translate into higher gas prices come this summer.

The projections were made by private analysts and the U.S. Energy Information Administration (EIA).

Currently, the average gas price in the United States is $2.81 per gallon, up from $2.39 a gallon last year, according to the Oil Price Information Service. While gas prices last summer averaged $2.41 a gallon, the EIA projects that this summer gas prices will average around $2.74 a gallon, up from $2.41 a gallon earlier this year, the Associated Press reports.

While the numbers are higher, Tom Kloza, global head of energy analysis for Oil Price Information Service told the AP he doesn’t think we’re going to see “apocalyptic numbers” at the pump, but that”this will be the most expensive driving season since 2014.”

Those numbers will likely hold true after the summer as well. The EIA projects that the national retail price for gas in 2018 will average $2.76 a gallon.
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Offline RE

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🛢️ OPEC Sends Oil Prices Crashing
« Reply #752 on: May 26, 2018, 06:45:13 AM »
https://oilprice.com/Energy/Energy-General/OPEC-Sends-Oil-Prices-Crashing.html

OPEC Sends Oil Prices Crashing

Crash

Oil prices fell drastically on Friday on the back of news that Russia and Saudi Arabia are considering an increase in their oil production, bringing an end to the production cut deal in its current form.

Friday, May 25, 2018

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Offline RE

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🛢️ OPEC set for a collision course over production policy
« Reply #753 on: June 21, 2018, 05:33:24 AM »
$100 Oil?  POOF, there goes the economy!  ::)

RE

Oil
OPEC set for a collision course over production policy ahead of landmark meeting

    The gathering of OPEC and other exporters in Vienna, Austria, is already shaping up to be one of the most contentious meetings in years.
    Saudi Arabia and Russia — the largest non-OPEC crude producer — are both pushing for members to loosen supply controls.
    "If OPEC doesn't do something I think we will see $100 oil price," Scott Sheffield, executive chairman at Pioneer Natural Resources Company, said Wednesday.

Sam Meredith   | Patti Domm   
Published 7:59 AM ET Wed, 20 June 2018 CNBC.com
      
      
Iranian oil minister: Trump has created difficulty for the oil market 
4:28 AM ET Wed, 20 June 2018 | 02:35

OPEC kingpin Saudi Arabia is struggling to convince some of the world's largest oil producers over the need to increase oil output ahead of a key meeting on Friday.

The Middle-East-dominated oil cartel is not scheduled to make a decision over production policy until later this week, although the gathering of OPEC and other exporters in Vienna, Austria, is already shaping up to be one of the most contentious meetings in years.

Saudi Arabia and Russia — the largest non-OPEC crude producer — are both pushing for members to loosen supply controls. This comes at time of heightened pressure from President Donald Trump, who has publicly complained the group is to blame for crude prices recently soaring to multi-year highs.

Nonetheless, Iranian Oil Minister Bijan Zanganeh told reporters Tuesday that OPEC members are likely to leave the Austrian capital this week without agreeing on a path forward for their 18-month policy of limiting oil output.

Instead, Zanganeh accused Trump of using oil as a political "weapon" and said the U.S. president had created difficulty for the energy market by imposing sanctions against Iran and Venezuela.
Missing in action

Speaking in Vienna on Wednesday morning, deputy energy ministers from both Saudi Arabia and Russia — who appeared to step in for Khalid Al-Falih and Alexander Novak respectively — called for OPEC and other exporters to continue to work together.

"The opening remarks seem to clearly signal intention of the key sovereign players to respond to concerns of consumers and put some additional barrels on the market. Key question is what the MIA (missing in action) panel ministers are doing today to bridge the gap with the holdouts," Helima Croft, RBC's global head of commodity strategy, said Wednesday.
BP CEO: Lot of uncertainty in the world
BP CEO: Lot of uncertainty in the world 
7:44 AM ET Wed, 20 June 2018 | 01:41

Russia has proposed OPEC and non-OPEC producers increase output by 1.5 million barrels per day (bpd). If implemented, that would effectively eradicate existing supply cuts of 1.8 million bpd that have helped to rebalance the energy market and prop up crude prices.

Meanwhile, Saudi Arabia appears interested in a hike of only 500,000-600,000 bpd. To be sure, it is not unusual for oil producers to stake out maximalist positions ahead of a high-stakes meeting.
'Oil prices will hit $100' without OPEC action

The prospect of an agreement between OPEC and its allied partners this week would seem to rest among those members who are currently firmly opposed to a relaxation of supply cuts.

Alongside Iran — which is seen as the main barrier to any agreement — Iraq, Venezuela and Algeria are all against Saudi Arabia and Russia's calls for rising production levels, fearing a slump in prices.

"If OPEC doesn't do something I think we will see $100 oil price," Scott Sheffield, executive chairman at Pioneer Natural Resources Company, said Wednesday.
Barkindo: Always a challenge to keep OPEC insulated from politics
Barkindo: Always a challenge to keep OPEC insulated from politics 
7:44 AM ET Wed, 20 June 2018 | 01:17

International benchmark Brent crude stood at around $75 a barrel Wednesday, recovering from lows of $27 a barrel in 2016.

"We appreciate our work never stops. It's still a work in progress. We are fully committed to sustaining balance and stability," OPEC Secretary General Mohammed Barkindo said Wednesday.
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Offline RE

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🛢️ OPEC’s Agreement Sends Oil Prices Soaring
« Reply #754 on: June 23, 2018, 08:30:19 AM »
https://oilprice.com/Energy/Energy-General/OPECs-Agreement-Sends-Oil-Prices-Soaring.html

OPEC’s Agreement Sends Oil Prices Soaring

OPEC’s Agreement Sends Oil Prices Soaring

OPEC

OPEC has finally met, and as most expected, the cartel agreed that any country within the group that has space capacity will be able to boost oil production, with Saudi Arabia and Russia arguably standing to gain the most. 

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OPEC issued a communique on Friday that called on a return to 100 percent compliance for the group, down from 152 percent in May. The announcement deferred country-specific allocations, likely because they could not agree on the details. The decision likely means that any country with spare capacity will be able to boost production. In practice, Saudi Arabia and Russia will carry the lion’s share. How individual countries make decisions about how much to produce, while still trying to stay below a collective cap, opens up a lot of uncertainty.

Oil up on vague outcome. Oil prices moved up on Friday morning, on expectations that the result from the OPEC+ meeting won’t lead to a supply glut. In recent days, there seemed to be a bit of convergence on a plan to boost production, perhaps by around 600,000 bpd. That amount would merely offset the declines from Venezuela over the past year, and would not plug the entire supply deficit facing the market. “The market caught up a little in terms of realizing that the rumored increase was less than what is necessary to balance the market,” Emily Ashford, director of energy research at Standard Chartered, told the WSJ. “Any increase in production will come at the expense of spare capacity so that leaves the market much more vulnerable to future supply shocks,” she added.

OPEC eyed 1 mb/d increase, but couldn’t agree. OPEC’s technical committee recommended a supply increase of about 1 million barrels per day, although press reports widely noted that such an increase would likely only be nominal, and actual barrels put onto the market would reach only about 600,000 bpd because several countries have no ability to boost output. The recommendation came even as Iranian oil minister Bijan Zanganeh walked out of a meeting on Thursday night, although he met with his Saudi counterpart Friday morning. The discord likely led to the vague decision on 100 percent compliance, rather than on country-specific increases. Related: OPEC Edges Closer To Production Agreement

Oil and gas methane emissions higher than expected. A new study finds that the oil and gas industry might be leaking more methane from operations than is commonly thought. The study puts the methane leakage rate at about 2.3 percent of total production, or 60 percent higher than the EPA estimates. The difference is the equivalent of heating 10 million homes, and it also cancels out some of the net climate benefit that comes from switching from coal to gas for electricity.

EPA to put biofuels obligations onto large refiners. In a sign of retreat after outrage from the biofuels and corn ethanol industries, the EPA is reportedly set to propose putting biofuels obligations onto large refiners. The agency had issued a series of waivers to smaller refiners, allowing them to get out of buying and blending biofuels, to the anger of the ethanol industry. After the political fallout, the EPA seems to be reversing course, but will shift those requirements onto large refiners. The move is a sign of the political power of the corn lobby, as well as Midwestern Republicans in Congress.

Kimmeridge exits Carrizo, after activist campaign. Activist private equity group Kimmeridge Energy Management sold its position in Carrizo Oil & Gas (NASDAQ: CRZO) this week after a campaign to try to change the company’s strategy. Kimmeridge tried to get Carrizo to sell its oil fields in the Eagle Ford and to shift the company’s focus to the Permian. However, Carrizo resisted and Kimmeridge ultimately decided to sell its 8.1 percent stake. Maintaining Eagle Ford assets turned out to be a winner, now that Permian prices have plunged because of pipeline constraints.

U.S. natural gas output to soar 60 percent. A new report from IHS finds that U.S. natural gas production could jump 60 percent over the next 20 years, a finding that suggests the shale gas revolution has decades of running room. Dry gas production could hit 81 billion cubic feet per day this year, but rise to 118 bcf/d by 2037. Natural gas is expected to capture about 50 percent of the electricity market by 2040, up from about a third today.

Libyan forces retake oil terminal. Libya briefly saw the outage of about 450,000 bpd of supply because of attacks from militants, combined with the destruction of several oil storage tanks. Reuters reports that East Libyan forces have retaken the shuttered oil ports of Es Sider and Ras Lanuf, the two largest in the country. The three storage tanks that were destroyed will take years to repair. “Libyan production is very low but we are going to resume very soon,” Mustafa Sanalla, chairman of Libya’s National Oil Corp., told reporters in Vienna. “After a couple of days we will resume, we start our operations hopefully.”

Related: Permian Bottlenecks Begin To Bite

Permian DUCs to rise. Pipeline bottlenecks are forcing Permian drillers to leave more and more wells uncompleted. The drilled but uncompleted wells (DUCs) has more than doubled from the start of 2017, and should continue to rise as Permian pipelines fill up. “Some companies will have to shut in production, some companies will move rigs away, and some companies will be able to continue growing because they have firm transportation,” Pioneer Natural Resources (NYSE: PXD) CEO Scott Sheffield said.

Corpus Christi port receives funding for upgrade. The Port of Corpus Christi approved $217 million for upgrades to equip the facility to handle large oil tankers. The 1-million-barrel Suezmax and the 2-million-barrel VLCCs can only partially load at the facility right now. The upgrade will expand the port’s – and the country’s – export capacity.

By Tom Kool for Oilprice.com

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Offline Surly1

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Re: 🛢️ OPEC’s Agreement Sends Oil Prices Soaring
« Reply #755 on: June 23, 2018, 10:48:25 AM »
https://oilprice.com/Energy/Energy-General/OPECs-Agreement-Sends-Oil-Prices-Soaring.html

OPEC’s Agreement Sends Oil Prices Soaring

OPEC issued a communique on Friday that called on a return to 100 percent compliance for the group, down from 152 percent in May. The announcement deferred country-specific allocations, likely because they could not agree on the details. The decision likely means that any country with spare capacity will be able to boost production. In practice, Saudi Arabia and Russia will carry the lion’s share. How individual countries make decisions about how much to produce, while still trying to stay below a collective cap, opens up a lot of uncertainty.


Two  questions:

1) What fucking good is a "cartel" if they can't control their prices?
2) If every producer is going to pump their asses off, in creasing supply, why will prices move down?
"It is difficult to write a paradiso when all the superficial indications are that you ought to write an apocalypse." -Ezra Pound

Offline K-Dog

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Re: Oil Price Crash: Who Cooda Node?
« Reply #756 on: June 23, 2018, 11:12:16 AM »
Quote
Two  questions:

1) What fucking good is a "cartel" if they can't control their prices?
2) If every producer is going to pump their asses off, increasing supply, why will prices move down?

Number two seems like basic supply and demand.

About number one.  The members of the cartel have different quantities of reserves and some might want to try and stretch profits out instead of selling what remains off quick for a fast buck but less overall money and masses of pitchfork wielding peasants sooner.  These members know their fields are going dry.  The Saudis and the Russians have enough so they are not worried about the end game yet so much.  They still must worry but they can kick-the-can for a while.

Just a guess but we also know the Saudis go through a lot of money and they have been feeling a pinch.  Locking up the princes in the hotel tells us that.
« Last Edit: June 23, 2018, 11:14:38 AM by K-Dog »
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Offline RE

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🛢️ Game Over - Oil Prices Are Going Higher
« Reply #757 on: June 26, 2018, 12:11:38 AM »
https://seekingalpha.com/article/4183852-game-oil-prices-going-higher

Game Over - Oil Prices Are Going Higher
Jun. 25, 2018 4:47 PM ET


Includes: BNO, DBO, DBRT, DNO, DTO, DWT, OIL, OILD, OILK, OILU, OILX, OLEM, OLO, SCO, SZO, UBRT, UCO, USAI, USL, USO, USOD, USOI, USOU, UWT, WTID, WTIU

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Summary

The jig is up - even if OPEC increases production now, the production lost from Iran and Venezuela will overwhelm the market.

In a scenario where Saudi and its GCC allies ramp to max capacity, OPEC's total oil production will still fall.

Global oil market balance indicates that the oil deficit will only increase from here on out.

Once OECD oil storage levels fall to a critical level, only will oil demand destruction rebalance the oil markets.

This idea was discussed in more depth with members of my private investing community, HFI Research.

One of our favorite movie scenes comes from the movie "Rounders." It's very rare to have an investing situation line up almost perfectly with your forecast because there are so many elements of the unknown. For example, "What will the future be?" is a good starting point. But in the case of the oil markets, there are two things that will never change: 1) the laws of physics, and 2) the laws of supply and demand. If the oil market is undersupplied, prices will go up. If the oil market is oversupplied, prices will go down.

The goal then is to just figure out where supply and demand are going. Because once you can handicap the variables in the outlook, then it's just a matter of figuring out how certain you are of those odds.

We titled this article "Game Over - Oil Prices Are Going Higher" because we will break down the OPEC variable for you. Even if the Gulf Countries (Saudi and friends) increase oil production in 2019, the world will still be undersupplied because the declines from Venezuela and Iran will offset all the increases and more.
Recap of our bullish oil thesis so far

Global oil markets continue to rebalance nicely, with the latest IEA oil market report showing OECD oil storage officially below the five-year average by 1 million bbls.
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Offline Palloy2

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Re: Oil Price Crash: Who Cooda Node?
« Reply #758 on: June 30, 2018, 04:20:48 PM »
Following a large drawdown of stockpiles held in the US, and Trump's attempts to crush Venezuelan and Iranian oil production, he now turns to Saudi Arabia and says "produce more".  Why doesn't he say to US frackers "produce more", that would be the obvious thing to do? - because they CAN'T produce more, making this close to the Peak Oil 'moment of realisation'.

If you assume the Hubbert Curve is a Standard Normal curve (it isn't because price swings have knock-on effects on demand), the peak of the curve is fairly flat, it takes about 17 years to go from 99%-100%-99%, so price adjustments make it look like a 'bumpy plateau' even when it is really following the Hubbert Curve.  Production adjustments also have knock-on effects on demand and Saudi-Russia have just agreed an increase believed to be 600,000 bpd (their real production is a closely guarded secret, only ESTIMATED by BP, EIA and IEA).  There is some flexibility in Saudi production, it is believed they could go to 12 Mbpd, but they know this damages the long-term field production and are not going to do that, and price rises makes them smile, whereas for US/EU/Japan business/happy motoring it causes bankruptcies, so Trump is on a sticky wicket here, and Saudi-Russia are not, and they have a bit of revenge against US imperialism yet to act out.

Hubbert drew his curve in 1957 with the miraculous new nuclear power as the new fuel:



but we all know how that turned out.  After a spectacular start (the easy bit), once the safety angle was realised, and regulations written and "enforced", the whole business turned out to have too low an ERoEI of about 6, so it languished.  PV will go the same way.

A nuclear-electricity-to-liquid-fuel process has never been worked out, let alone actually built. And there are a billion cars/trucks on the road that are fine-tuned to using gasoline/distillates as well as millions of refineries that would need replacing.

https://www.rt.com/business/431352-trump-saudi-oil-increase/
Trump claims Saudi Arabia agreed to oil production hike, Riyadh doesn’t confirm
30 Jun, 2018

Donald Trump has asked Saudi Arabia to drastically increase its oil production, citing “turmoil and dysfunction” in Iran and Venezuela. The US president says King Salman agreed, although that claim remains unconfirmed by Riyadh.

“Just spoke to King Salman of Saudi Arabia and explained to him that, because of the turmoil & disfunction (sic) in Iran and Venezuela, I am asking that Saudi Arabia increase oil production, maybe up to 2,000,000 barrels, to make up the difference... Prices to (sic) high! He has agreed!” Trump tweeted early on Saturday.

Trump was vague about whether the two-million-barrel increase would be per day. If so, such a boost would be significant for the country's oil production, which hit 10.03 million barrels per day (bpd) in May. It would far surpass the previous high of 10.72 bpd from November 2016.

Saudi Arabia – the world's largest oil exporter – confirmed on Saturday that Trump spoke with King Salman by phone, and that the two discussed the need to preserve “stability” in the oil market and efforts of oil-producing countries to compensate for any potential shortage.

However, Riyadh did not reference anything related to a two-million-barrel increase, leading to questions about whether Trump’s tweet was an exaggeration, wishful thinking, a business strategy, or yet another “Trumpism.”

The president's citation of high prices and “turmoil and dysfunction” in Iran and Venezuela has raised eyebrows among critics who have pointed to his own actions as causes.

Oil prices have indeed been affected by Trump’s decision to withdraw from the Iran nuclear deal and to impose sanctions blocking American and most European countries from doing business with Iran. Trump is urging US allies to end all purchases of Iranian oil by November 4.

In Venezuela, Trump’s sanctions have accelerated the sharp decline in its oil production.

Earlier this month, however, the US president pointed the finger elsewhere, blaming the Organization of the Petroleum Exporting Countries (OPEC) for high oil prices.

Trump’s tweet follows a Bloomberg report earlier this week, which said that state oil company Saudi Aramco is aiming to boost production next month to about 10.8 million barrels per day, citing unnamed sources. Saudi Energy Minister Khalid Al-Falih also said earlier in June that Riyadh would “do whatever is necessary to keep the market in balance.”
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Offline RE

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🛢️ This Oil Price Crash Was Just A Correction
« Reply #759 on: July 13, 2018, 01:02:04 PM »
...and the check is in the mail...

RE

https://oilprice.com/Energy/Energy-General/This-Oil-Price-Crash-Was-Just-A-Correction.html

This Oil Price Crash Was Just A Correction
By Nick Cunningham - Jul 12, 2018, 6:00 PM CDT Refinery


The oil market is “stretched to the limit” despite the fact that OPEC+ agreed to ramp up production following their meeting last month, according to the International Energy Agency.

The IEA said that the increased supply from Saudi Arabia, its Gulf allies and Russia is “very welcome,” given the series of outages reported around the world.

Oil prices plunged by around 6 percent on Wednesday on news that Libya’s oil export terminals were set to come back online. The IEA said that while the situation was improving “we cannot know if stability will return.”

Indeed, the sudden and unexpected outage from the North African country over the past few weeks illustrates the degree of risk facing the oil market, which is to say, if oil prices can swing by 6 percent on a given day because of the specific events in one rather unstable country, the market is pretty tight and pretty vulnerable.

A few other outages are adding to the tightness. Syncrude Canada suffered a 360,000-bpd outage in June, which was thought to last through July but could stretch into September or even October. A lesser-known 360,000-bpd decline from the North Sea was reported in May, a drop off that could last through the summer due to field maintenance. Also, Brazil’s production growth has been disappointing this year, and because Brazil is one of the most important non-OPEC countries after the U.S. in terms of expected output growth, less-than-stellar growth numbers leaves the market tighter than expected.

Related: OPEC Won’t Take Additional Action As Oil Prices Rise

Saudi Arabia and Russia ramped up supply in June, adding roughly 500,000 bpd together. But the outages in Libya, Canada, the North Sea, Brazil, Angola and Kazakhstan offset the gains from the two largest producers in the OPEC+ coalition.

The U.S. campaign to isolate Iranian oil exports is already starting to have an effect, even though the deadline for countries to cut their purchases of oil from Iran is in November. Iran’s oil exports fell by 230,000 bpd in June from a month earlier, and European refiners cut their purchases by 50 percent. The real danger to the oil market is if a large portion of Iranian supply is shut in this year.

“This vulnerability currently underpins oil prices and seems likely to continue doing so,” the IEA said.

“Some of these supply issues are likely to be resolved, but the large number of disruptions reminds us of the pressure on global oil supply,” the IEA wrote in its report. “This will become an even bigger issue as rising production from Middle East Gulf countries and Russia, welcome though it is, comes at the expense of the world’s spare capacity cushion, which might be stretched to the limit.”
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The IEA says there are only three countries from OPEC that really hold spare capacity that is readily available. Saudi Arabia, Kuwait and the UAE had 2.1 mb/d of spare capacity in June. But because those countries are increasing output – a “very welcome” event – it will trim spare capacity down to just 1.6 mb/d in July.

“In 4Q18, US sanctions on Iran are expected to hit hard and Venezuelan capacity may spiral lower. To help compensate for the further unplanned declines and limit stock draws, Saudi Arabia could ramp up even more which would cut its spare capacity to an unprecedented level below 1 mb/d,” the IEA said.

“We see no sign of higher production from elsewhere that might ease fears of market tightness.”

On the demand side of the equation, higher prices are starting to be felt. Oil demand started the year at a blistering pace, growing at a 2-million-barrel-per-day rate in the first quarter, year-on-year. That has slowed dramatically. The IEA acknowledged the threat to the demand forecast from high prices, but did not alter its forecast for the full year. “[A]lthough there are emerging signs of reduced economic confidence, and consumers are unhappy at higher prices, we retain our view that growth in 2018 will be 1.4 mb/d, and about the same next year.”

Related: The Downside Risk For Oil

Still, the IEA noted several risk factors to this forecast. Demand growth at that level is predicated on strong economic growth, and the agency is assuming global GDP growth at 3.9 percent. The global trade war pursued by the Trump administration could upend that rate of expansion. “ncreasing trade tensions could have a direct negative impact on economic growth, bunker fuel demand and diesel used by trucks for the transportation of traded goods,” the IEA said. “Tariffs could also affect the trade of oil and petrochemical feedstocks and products. Several countries are also feeling the pain of higher oil prices, particularly so when combined with currency depreciation versus the US dollar.” The agency expects Brent to average $73.50 per barrel this year and $73.60 in 2019.

With that said, supply risks are dominating market psychology right now. Oil prices crashed on Wednesday on news that Libya supply was coming back. But on Thursday, oil rebounded a bit after the IEA warned of market tightness and low spare capacity.

“The market’s move lower yesterday seemed quite extreme. It ignored the biggest U.S. crude drawdown since September 2016, and it’s recovering on that,” Warren Patterson, a commodities strategist at ING, told the Wall Street Journal.

By Nick Cunningham of Oilprice.com
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🛢️ Why oil prices are suddenly tanking
« Reply #760 on: July 17, 2018, 12:46:36 AM »
https://money.cnn.com/2018/07/16/investing/oil-prices-plunge/index.html

Why oil prices are suddenly tanking

by Matt Egan   @MattEganCNN July 16, 2018: 3:59 PM ET


Current Time 1:51
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Duration Time 3:00
 
Russian company had access to Facebook user data
Once red-hot, oil prices are suddenly tanking.

Rumors about emergency action from the Trump administration helped send US crude plunging 5% on Monday, sinking to as low as $67.58 a barrel.
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The reversal has wiped out 9% from oil price in less than a week. US oil closed at $74.11 a barrel on July 10.

"It's a great reminder of how quickly sentiment can swing -- and how volatile these markets are," said Michael Wittner, global head of oil research at Société Générale.

Analysts blamed Monday's sell-off on reports suggesting Saudi Arabia and the United States are racing to prevent an oil shortage caused by President Donald Trump's sanctions on Iran.

Late Friday, The Wall Street Journal reported that the Trump administration is considering a rare step: teaming up with other Western countries to simultaneously release oil stockpiled for emergencies. Such a move isn't imminent and would only come if efforts to get OPEC to pump more fail to cool off prices, the paper reported.

The Energy Department, which released oil from the Strategic Petroleum Reserve last year after Hurricane Harvey, declined to comment on the news. The White House also declined to comment.

Related: The oil market's shock absorbers are nearly gone

Trump has repeatedly blasted OPEC for lofty oil prices and complained that prices are "too high." That's despite the fact that Trump's own tough stance on Iran, the world's fifth-largest oil producer, contributed to the price spike.

"Trump is attempting to jawbone the price of crude down. This goes back to the midterm elections," said Ben Cook, portfolio manager at BP Capital Fund Advisors.

Michael Tran, director of global energy strategy at RBC Capital Markets, doubts that tapping emergency oil stockpiles is necessary or would even work. He noted that refineries in the United States are already operating at "extremely high levels," leaving little room to turn more oil into gasoline.

"It would be relatively ineffective," said Tran.

Saudi Arabia-led OPEC and Russia agreed last month to pump more oil, but their move failed to cool off prices. In fact, oil bulls argued that unleashing more oil now will leave Saudi Arabia with little firepower to respond to future shortages.

Related: Trade war threatens America's booming oil exports

Another factor behind Monday's drop is a Bloomberg News report that Saudi Arabia is offering extra crude oil on top of its contractual supplies to some buyers in Asia. That suggests that Saudi Arabia is taking aggressive steps to keep oil prices from getting too high.

"They're letting buyers know: If you want more crude from us, we have it," said Wittner.

Meanwhile, there are signs that at least one of OPEC's hobbled members is on the rebound. Last week, oil prices plunged after Libya's national oil company announced it had regained control of multiple ports, enabling it to resume exports. Disruptions in Libya and Venezuela have been instrumental in lifting prices to their highest levels in nearly four years.

"We're getting hints here that barrels are available and aren't in the short supply that we thought," said BP Capital's Cook.
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🛢️ Crude Oil Price Forecast: Oil Prime for Breakdown
« Reply #761 on: August 13, 2018, 12:01:31 AM »
https://www.investopedia.com/investing/crude-oil-price-forecast-oil-prime-breakdown/

Crude Oil Price Forecast: Oil Prime for Breakdown
Gary Ashton
August 12, 2018 — 3:52 PM EDT

The tension in the energy space resulted in oil prices remaining range bound last week. The most significant news was China's announcement of 25% tariffs on $16 billion worth of U.S. goods, including autos and some oil products, like fuel. The story put pressure on oil Wednesday, but prices recovered slightly later in the week.

Interestingly, China chose not to put tariffs directly on U.S. crude oil imports. The decision, analysts say, reflects China's substantial import needs, particularly with oil supplies from Venezuela in decline and supplies from Iran potentially disrupted by U.S. sanctions. China's latest tariff move was in response to the U.S. putting 25% tariffs on $16 billion worth of Chinese goods previously. The most recent U.S. list brings the total value of Chinese products facing a 25% import tariff to $50 billion.

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U.S. Oil Projects Under Threat

In addition to tariffs on Chinese goods, the Trump administration announced late Friday that the U.S. would double tariffs on steel and aluminum imports from Turkey. The announcement comes as a diplomatic dispute between the two countries escalates. Oil industry executives are concerned that this latest tariff decision could further increase costs for domestic oil and gas pipeline projects that are already facing huge bottlenecks.
OPEC Monthly Oil Market Report

On Monday, OPEC will publish its latest monthly oil market report. Traders and analysts will be closely watching for changes in OPEC's supply and demand expectations. Last month, OPEC said that it expects world oil demand in 2019 to grow by 1.45 million barrels per day (mb/d) year over year, a slowdown from 1.65 mb/d growth in 2018. The cartel also said that it believes non-OPEC oil supply for 2019 will grow by 2.1 mb/d, broadly unchanged from 2018.

Late last Friday, the IEA released its monthly oil market report in which it said that higher output from Saudi Arabia and Russia had reduced concerns about a global supply shortage. The IEA revised up its forecast for world oil demand in 2019 by 100,000 barrels per day from last month to 1.5 mb/d.

Global oil demand growth

The most significant data in these latest forecasts is the expected decline in demand growth from the U.S. in 1Q19 and the absence of any demand growth from Europe. The drop does not seem to be a seasonal factor, because demand growth was strong in 1Q18. If the IEA's demand forecast eventually proves to be correct, then it does not paint a very bullish picture for oil in an environment of rising supplies from some producers that are adequately meeting falling output from others.
Crude Oil Still Range Bound

Oil spent another week struggling for direction, trading in a range between $70 and $66 per barrel. It started off last week testing $70 per barrel on both Monday and Tuesday but failed to make gains at that level. By Wednesday, the bears were entirely in control following news of a more significant increase in U.S. crude oil product inventory like gasoline, driving prices sharply lower on the day. Thursday was a classic doji candlestick as the market floundered for direction. Friday was a bit of a relief rally, but most importantly, oil again failed to reach the previous week's closing price.

Examining the daily price chart, we see that the 21-day exponential moving average is about to cross down through the 55-day moving average, which is itself starting to point lower. This moving average cross is a significant bearish technical indicator and indicates that oil could be about to break down.


Another bearish sign is the fast line of the moving average convergence divergence (MACD) remaining below the neutral zero level. MACD below zero is a bearish signal indicating that prices are trending lower. MACD is also a momentum indicator, so a downward trending fast line – in black – tends to mean an acceleration of any downward price move.

Other technical indicators also remain bearish for oil. On a daily price chart, for example, there are currently no buy signals and seven sell signals. Technical indicators on a longer-term weekly price chart are presently neutral, with three buy, three sell and four neutral indicators. If the technical indicators on the higher timeframe weekly price chart move to bearish signals in the coming weeks, this would be particularly problematic for the bulls.

Disclaimer: Gary Ashton is an oil and gas financial consultant who writes for Investopedia. The observations he makes are his own and are not intended as investment or trading advice. Oil price chart courtesy StockCharts.com.

Read more: Crude Oil Price Forecast: Oil Prime for Breakdown | Investopedia https://www.investopedia.com/investing/crude-oil-price-forecast-oil-prime-breakdown/#ixzz5O2SYiU2X
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🛢️ Oil Slumps After API Reports Surprise Crude Build
« Reply #762 on: August 15, 2018, 01:02:37 AM »
https://oilprice.com/Latest-Energy-News/World-News/Oil-Slumps-After-API-Reports-Surprise-Crude-Build.html

Oil Slumps After API Reports Surprise Crude Build
By Julianne Geiger - Aug 14, 2018, 3:50 PM CDT crude


The American Petroleum Institute (API) reported a surprise crude oil inventory build of 3.66 million barrels of United States crude oil inventories for the week ending August 11, compared to analyst expectations that this week would see a draw in crude oil inventories of 2.499 million barrels.

Last week, the American Petroleum Institute (API) reported a draw of 6 million barrels of crude oil.

The API reported a draw in gasoline inventories for week ending August 11 in the amount of 1.56 million barrels. Analysts predicted a smaller draw of 583,000 barrels.

Oil prices were trading down earlier on Tuesday, but had rallied in the afternoon prior to the release of the API data on inventories. At 2:18pm EDT, WTI was trading up 0.18% (+$0.12) at $67.32 per barrel, with Brent crude trading up 0.23% (+$0.17) at $72.78 per barrel. The price fluctuations of the day were likely caused by early Saudi Arabia reports that it had curbed output instead of increasing it as was expected, increased tensions between Turkey and the United States, and reports of multiple unsold crude oil cargoes around the Atlantic Basin, with producers including Russia and Nigeria cutting oil prices for certain grades. OPEC’s MOMR published yesterday also painted a picture of diminishing oil demand growth rates, muddying the waters still, as traders work to interpret the multiple catalysts.

US crude oil production—yet another catalyst—as estimated by the Energy Information Administration dipped to 10.8 million bpd for the week ending August 3, coming off the psychologically important high of 11 million bpd from a few weeks ago.

Distillate inventories were also up this week—by 1.94 million barrels, compared to an expected build of 964,000 barrels. Inventories at the Cushing, Oklahoma site increased this week by 1.64 million barrels.

The U.S. Energy Information Administration report on crude oil inventories is due to be released on Wednesday at 10:30a.m. EDT.

By 4:39pm EDT, WTI was trading at $67.18 and Brent was trading at $72.57.

By Julianne Geiger for Oilprice.com
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🛢️ Oil Rallies, But This Country Can’t Sell Its Crude
« Reply #763 on: August 23, 2018, 12:19:22 AM »
https://oilprice.com/Energy/Crude-Oil/Oil-Rallies-But-This-Country-Cant-Sell-Its-Crude.html

Oil Rallies, But This Country Can’t Sell Its Crude
By Irina Slav - Aug 22, 2018, 12:00 PM CDT oil terminal


Thirty crude oil cargoes are sitting in Nigeria and waiting for buyers, Reuters reports, citing trading sources who added that the cargoes were part of the country’s loading schedule for August and September, and there is still chance to sell them by the end of next month.

The news comes amid a slowdown in oil demand from the biggest consumers of the commodity: Asian economies, whose growth has been faltering recently.

Yet Angola is raising its shipments abroad, Reuters also reported. The country sold 47 cargoes for loading in September and now plans to sell another 49 for loading in October.

The news might suggest there is plenty of oil supply, or at least plenty of Nigerian oil supply: another Reuters report from this week said that Nigerian oil supply might hit a three-month high in October, with daily loadings at 1.12 million barrels, to a total of at least 38 cargoes.
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Nigerian supply may be plentiful, but its effect on benchmark prices is limited: despite the reports, which clearly suggest ample supply of West African crude, prices inched up yesterday as concern about the supply squeeze due to follow the reimposition of U.S. sanctions against Iran deepened. The sentiment was helped by the American petroleum Institute’s report of an estimated 5.2-million-barrel draw in crude oil inventories for the week to August 17.

Although official figures from the Energy Information Administration will be released today, the market regularly reacts to API’s estimates. It also reacted favorably to an announcement from the White House that 11 million barrels of crude from the Strategic Petroleum Reserve will be sold soon. This reserves sale is part of a previously announced drawdown for fiscal year 2019 but it will be done now, ahead of the last round of Iranian sanctions, due to come into effect on November 4.

By Irina Slav for Oilprice.com
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🛢️ Is Oil On Its Way To $80?
« Reply #764 on: September 23, 2018, 12:19:19 AM »
If it makes it to $80, the economy is back in the toilet zone.

RE

https://oilprice.com/Energy/Energy-General/Is-Oil-On-Its-Way-To-80.html

Is Oil On Its Way To $80?
By Tom Kool - Sep 21, 2018, 2:00 PM CDT rig


Bullish news on both the supply and demand side sent oil prices up again on Friday morning, with Brent falling back after flirting with $80.














Oil prices gained this week on outages in Iran and data showing demand from the United States in August was the highest since 2007. “Exports are already down quite a bit and will probably continue to fall,” from both Iran and Venezuela, UBS Group AG analyst Giovanni Staunovo told Bloomberg. Meanwhile, strong U.S. demand is “helping the market to stay in a deficit.” In early trading on Friday, Brent was flirting with $80 per barrel.

OPEC+ meets in Algiers. OPEC+ is set to meet in Algiers this weekend to discuss some of the details stemming from the June decision to increase collective output by 1 million barrels per day. Iran’s oil minister has vowed not to attend in protest of what Iran views as a Saudi attempt to take over market share from Iran, in collusion with the United States. Ultimately, the meeting might not amount to much, and Saudi Arabia could increase production anyway, offsetting declines in Iran. “It’s likely to be a meeting high on politics and low on decisions,” said Ole Sloth Hansen, head of commodity strategy at Saxo Bank A/S, according to Bloomberg. “The producers that count are producing at will.”

India to hedge oil to avoid rupee volatility. India’s government may ask its state-owned oil companies to lock in oil at hedged prices, both to avoid the possibility of a price spike as Iran sanctions bite, but also because of the uncertain value of the rupee. India imports about 80 percent of its oil, and the sharp depreciation of the rupee this year has magnified the cost of imports. Meanwhile, India will use rupees to pay for oil from Iran beginning in November after U.S. sanctions take effect.

Russian oil producers rise to all-time high. Russia’s oil companies are enjoying a bonanza due to higher oil prices but also a weaker ruble. With costs in rubles but earnings in U.S. dollars, the cash is pouring in, pushing an index of Russian oil companies to a record high. The danger is that American sanctions related to the chemical poisoning attack in the UK or election interference in the U.S. could target Russian companies. "All investors are asking themselves -- OK, the Russian companies look attractive right now, but what about the next six months, what about the next 12 months?" Alexandre Dimitrov, head of Emerging Europe EQ Funds at Erste Sparinvest Kap Mbh, told Bloomberg.

Iraq oil exports breaking new records. Iraq’s oil exports through its southern port at the Persian Gulf could once again break a new record. Exports for the first three weeks of September average 3.6 million barrels per day, up 20,000 bpd from the 3.58 mb/d posted in August, which is the current record high. The progress comes even as protests have rocked the oil-rich but deeply unequal southern city of Basra. “There were fears that the protests would get to the terminal,” an Iraqi source told Reuters. “But so far, there is no impact.”

Related: Saudi Oil Inventories Continue To Plummet

Chevron pursues “factory model” for shale drilling. The Wall Street Journal reported on the new large-scale drilling techniques pursued by Chevron (NYSE: CVX). The “factory model” for drilling consists of “master planning an entire region of small shale wells by locking up labor, building infrastructure and securing sand and other needed materials, all at once,” the WSJ says. Economies of scale for large companies like Chevron give them an advantage over smaller drillers. “They can transfer technology and skilled people across assets and parts of their portfolio from North America to Argentina,” Andrew Slaughter, executive director of the Center for Energy Solutions at Deloitte LLP, told the WSJ. “These bigger companies have the scale to build or finance infrastructure and secure the best equipment and supplies. They have come to shale in quite a material way.”

New data on EPA biofuels waivers. In a nod to the outraged biofuels industry, the EPA published data detailing its expanded use of waivers for oil refiners, freeing them of biofuels blending requirements. Biofuels and refiners have been in a fierce war during the Trump era, as the EPA has made decisions favorable to the refining industry. The new data shows that the EPA granted 29 waivers to small refineries in 2017, up from 19 in 2016 and 7 in 2015. The waivers have been a boon to refiners but have undercut the market for biofuels and biofuel credits.

Bakken drillers move to periphery. Bakken drilling has increased significantly this year, but higher activity levels means that drillers are being forced into less desirable locations. As a result, the majority of wells in the Bakken could shift from having a peak monthly production of 1,000 bpd to a majority of wells with just 500 bpd of peak performance, according to a study from the North Dakota Pipeline Authority. In other words, drilling activity may need to double to keep output levels consistent in the years ahead.

Bullish outlook affects hedging. As the oil market outlook takes on an increasingly bullish tone, oil companies have pared back their use of hedging, hoping to gain exposure to higher prices. Meanwhile, major consumers, such as airlines, have boosted their hedging to protect themselves from the risk of higher prices. The reshuffling of the hedging mix is affecting the oil futures curve. “The major story for oil right now is not $80 a barrel, but what’s happening at the back end of the forward curve,” Thibaut Remoundos, co-founder of Commodities Trading Corporation, told the FT. “Hedging by oil producers in Brent-linked contracts is dropping off in expectation of higher prices in the future, while major consumers like airlines have been rushing to buy for the same reason. You would need to go back to 2007 to see this level of hedging from consumers.”

By Tom Kool for Oilprice.com
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