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Commodities Briefing - Category | Oil more

China likely to lower oil price

Posted on 08 June 2015 by VRS  |  Email |Print

China will probably cut domestic guide prices for gasoline and diesel due to drops in global crude prices. Retail prices will be reduced by over 100 yuan (around 16 U.S. dollars) per tonne, according to Xinhua’s oil price system. If confirmed, it would be the first cut since the end of March and the fourth this year.
An announcement from the National Development and Reform Commission, China’s top economic regulator, is expected Monday. According to China’s oil pricing mechanism, the price can be changed every 10 working days should there be a substantial change in the global market price………………………………………..Full Article: Source

OPEC unlikely to lose oil market influence to US shale producers

Posted on 08 June 2015 by VRS  |  Email |Print

The Organization of Petroleum Exporting Countries (OPEC), which announced at its recent meeting that it would not change output levels, remains the dominant force in the global oil market, analysts said, despite the growing influence of US shale producers.
The 12-nation OPEC switched its production strategy in November to push down prices and hurt high-cost US shale producers, who need elevated prices to stay profitable. OPEC ditched its traditional role of supporting higher prices to boost revenues, and instead left its output ceiling unchanged at 30 million barrels per day - despite a collapse in prices and a stubborn global supply glut that is fueled partly by US shale………………………………………..Full Article: Source

OPEC agrees to keep pumping as oil glut fears persist

Posted on 08 June 2015 by VRS  |  Email |Print

The decision defers discussion of several tricky questions set to arise as members such as Iran and Libya prepare to reopen the taps after years of diminished production. Oil group OPEC agreed to stick by its policy of unconstrained output for another six months on Friday, setting aside warnings of a second lurch lower in prices as some members such as Iran look to ramp up exports.
Concluding a meeting with no apparent dissent, Saudi Arabian oil minister Ali al-Naimi said OPEC had rolled over its current output ceiling, renewing support for the shock market treatment it doled out late last year when the world’s top supplier said it would no longer cut output to keep prices high………………………………………..Full Article: Source

Saudi oil minister ‘100 per cent comfortable’ with market: al-Hayat newspaper

Posted on 08 June 2015 by VRS  |  Email |Print

Saudi Arabian Oil Minister Ali al-Naimi said he was “100 per cent comfortable” with the oil market, in terms of supply and demand, the Saudi-owned al-Hayat newspaper reported on Friday. Naimi’s remarks come ahead of an OPEC meeting on Friday in which the organisation is widely expected to stick by its policy of unconstrained oil output for another six months.
He told the newspaper the market was witnessing an increase in demand for oil and a slight improvement in global growth and that supply from outside of OPEC member countries had declined. “I am 100 per cent comfortable with the market situation, but prices are a different issue,” he said………………………………………..Full Article: Source

Iran won’t seek any permission to reenter world oil market: minister

Posted on 08 June 2015 by VRS  |  Email |Print

Iranian Oil Minister Bijan Namdar Zanganeh has said that the country will not seek any permission to reenter the world oil market. “Before the [OPEC] 167th meeting, we submitted letters to all ministers of the member states, announcing our readiness to reenter the oil market once the sanctions on the country are lifted,” the Shana news agency quoted Zanganeh as saying on Saturday.
“To boost production to the pre-sanction level, we do not need any permission and we will not transfer our share to others,” he stressed. “In my opinion, OPEC will promptly adapt itself to the issue and will make room for us.”……………………………………….Full Article: Source

Oil: OPEC’s Lengthy Suicide Note

Posted on 08 June 2015 by VRS  |  Email |Print

A market flooding production strategy many saw as intending to kill the US-centric shale revolution, has, if anything, only made it stronger. In essence the OPEC cartel is signing its own death warrant.
As always the communique suggests harmony and continuity but behind the scenes this was apparently a more fraught OPEC meeting than most. The ‘swing producer’ Saudi Arabia managed to keep things going the way it wants, albeit by continuing to flood the market with oil below even its own cost of production………………………………………..Full Article: Source

OPEC Ministers Find Key to Happy Union as Iran Met With Silence

Posted on 08 June 2015 by VRS  |  Email |Print

About the only surprise to come from OPEC’s decision on June 5 to leave oil output unchanged was that everyone got along. “I have been in OPEC for some many years, and it is the first time I had seen this,” OPEC Secretary-General Abdalla El-Badri said after the meeting. “Very, very positive.”
Last November, when the Organization of Petroleum Exporting Countries introduced its strategy of maintaining production to take market share from higher-cost producers, the group’s weaker members like Venezuela argued for a cut to boost prices. This time, even they were supportive amid signs the strategy is working………………………………………..Full Article: Source

OPEC not losing market control to US shale oil: Analysts

Posted on 08 June 2015 by VRS  |  Email |Print

Oil industry analysts say despite fears among member states of the Organization of the Petroleum Exporting Countries (OPEC) about losing market control, the organization is still the dominant player in global oil market. During its latest ministerial meeting in the Austrian capital, Vienna, OPEC decided to keep its output unchanged, with observers believing that the decision reflects fears inside OPEC about the growing influence of booming US shale oil industry, AFP reported.
“OPEC members continue to play a key role in the current conditions of the oil market,” said senior energy analyst, Myrto Sokou, at the Sucden brokerage in London………………………………………..Full Article: Source

No action at OPEC, but what about shale?

Posted on 05 June 2015 by VRS  |  Email |Print

Volatile oil prices are expected to finish the year near current levels, even though crude may make another plunge in the second half of 2015, according to a new CNBC Oil Survey. The respondents were uniform in their view that OPEC will take no action at its meeting this week. But the upstart U.S. shale industry has proven trickier to predict, and answers were nearly equally split on whether it would increase, decrease or keep production steady this year.
Seventy-seven percent of the participants in the survey say they believe oil prices have already hit their lows for the year. Nine percent expect even lower prices, while 14 percent say they are not sure………………………………………..Full Article: Source

Opec’s nervy quota kept competition at bay – but is it still calling the shots?

Posted on 05 June 2015 by VRS  |  Email |Print

By cutting back to 30m barrels a day this past November, Opec was said to have launched a price war for global market share. But the US oil boom still presents a heretofore unknown foe: another player capable of ramping up production.
The last time the Organization of Petroleum Exporting Countries (Opec) met, it wanted to send a message to oil producers that weren’t cartel members: cut it out. The members of the world’s most powerful energy club are likely to allow themselves a congratulatory smile when they meet again on Friday. The message was received………………………………………..Full Article: Source

Fund Managers Cut Oil Bets Ahead of OPEC Meeting

Posted on 05 June 2015 by VRS  |  Email |Print

Money managers have been cutting back their bets on oil in the run up to the crucial meeting of the Organization of the Petroleum Exporting Countries in Vienna this week. The number of bets taken by hedge funds and other big investors on the global oil benchmark Brent—comprising bets on both rising and falling prices—has fallen to just over 320,000, the equivalent of 320 million barrels of oil, its lowest level in nine months.
The number of bets on West Texas Intermediate, the U.S. gauge, is at its lowest since the beginning of January. The $2.5 billion United States Oil Fund USO -2.53 % LP, the largest U.S. exchange-traded fund investing in U.S. oil futures, has also drawn back, registering outflows of close to $1 billion in the past two months, according to investment research company Morningstar. In April, the fund lost $550 million, the biggest withdrawal since 2011. It lost another $390 million in May, the data shows………………………………………..Full Article: Source

Nigeria: falling oil price, crumbling legitimacy?

Posted on 05 June 2015 by VRS  |  Email |Print

Depressed oil prices mean that government revenue in Nigeria is sliding but raising revenue without alienating Nigeria’s most vulnerable will be a difficult feat. Euromoney has already pointed out that Nigeria’s transition into legitimate democracy – masterfully illustrated by the peaceful election in March where the incumbent Goodluck Jonathan graciously accepted defeat to his rival Muhammadu Buhari – could soon come under pressure.
And just a couple of months after the election, cracks are starting to show. The depressed oil price, felt the world over, is beginning to take its toll in Nigeria, Africa’s largest crude oil producer. Nigeria’s oil revenues are due to decline by 23% year-on-year in 2015, and will account for around 49% of the government’s total revenue. This marks a substantial drop, from around 58% in 2014 and 66% in 2013………………………………………..Full Article: Source

Goldman Says Options Traders Too Relaxed Before OPEC Meeting

Posted on 05 June 2015 by VRS  |  Email |Print

Tranquility reigns in exchange-traded funds tracking oil and its producers. Too much, says Goldman Sachs Group Inc. Decreasing levels of implied volatility on the United States Oil Fund LP and the Energy Select Sector SPDR Fund show options speculators see little prospect of turmoil in the commodity even as the Organization of Petroleum Exporting Countries meets in Vienna, according to Goldman Sachs derivatives strategists Katherine Fogertey and John Marshall. The lack of concern could backfire with a rush to purchase hedges after OPEC’s decision, they said.
While the consensus is that OPEC won’t announce any changes to production, there could still be swings as traders focus on other details released in the decision, according to BMO Capital Markets Corp.’s Max Breier………………………………………..Full Article: Source

OPEC moots $80 as new ‘fair’ oil price - but will it stick?

Posted on 04 June 2015 by VRS  |  Email |Print

Nearly a year after oil markets entered a deep downward spiral, unmoored from the $100-a-barrel mark that had anchored them for years, some OPEC members are publicly talking for the first time about a new “fair” price for their crude.
Oil ministers from Iraq, Venezuela and Angola said in Vienna this week that a price of $75 or $80 a barrel - barely $10 above the going rate - could be just fine. Iraq’s Adel Abdel Mahdi said it would be “equitable”. Privately, one Gulf OPEC delegate also told Reuters he reckons crude may be trading around this level next year, once markets rebalance………………………………………..Full Article: Source

What will Opec do about the oil supply?

Posted on 04 June 2015 by VRS  |  Email |Print

With oil prices down some 40% in a year, the oil ministers of the Organization of the Petroleum Exporting Countries (Opec) are once again getting together in Vienna this week to decide whether to cut output or keep pumping crude oil into a market that is already oversupplied.
Six months ago, Opec’s lack of consensus on a similar decision cost them almost $6 a barrel. Some may argue that in a changing world, Opec is no longer as relevant to global oil markets, but Opec summits still command attention in both the industry and the global media and this week’s meeting is no exception………………………………………..Full Article: Source

BP CEO sees oil price “softness” in second half of 2015

Posted on 04 June 2015 by VRS  |  Email |Print

BP Chief Executive Bob Dudley said on Wednesday he sees “some softness” in oil prices in the second half of the year as global supplies continue to grow. “Supply growth continues to go up. We are at a balance with the supply and demand right now,” he said on the sidelines of the Organization of the Petroleum Exporting Countries ( OPEC) seminar.
“I think we can see some softness in price continuing and as a result as an industry we must readjust cost structures, tax structures around the world,” Dudley said………………………………………..Full Article: Source

OPEC’s Problem: There Is No Minister of Shale

Posted on 04 June 2015 by VRS  |  Email |Print

When Saudi Arabia launched a global oil-price war last year, most market players assumed America’s high-cost, financially fragile shale producers would be first to retreat. Some retreat. American companies have been quick to idle rigs and lay off workers, but U.S. onshore oil production has gone up since last fall, not down.
As oil ministers from member countries of the Organization of Petroleum Exporting Countries meet this week, they are grappling with the fact that the world’s new swing producer is a very different animal from their traditional competitors………………………………………..Full Article: Source

OPEC hopes for further oil price recovery despite glut

Posted on 03 June 2015 by VRS  |  Email |Print

Angola’s oil minister said on Tuesday that $80 per barrel may be right for crude, joining a chorus of OPEC officials and delegates hoping for a further price recovery in months to come despite a global glut. “I would like the price (to) go up, but it is not easy,” Jose Botelho de Vasconcelos told reporters.
OPEC meets on Friday and is widely expected to maintain its production policy. Last November, OPEC refused to cut output and chose instead to defend market share, adding to the supply surplus arising from booming U.S. oil output. The decision prompted a crash in oil prices to as low as $46 per barrel in January, although crude has recovered to $65 in recent weeks on hopes of a slowdown in U.S. output growth………………………………………..Full Article: Source

US oil price jumps to 2015 peak

Posted on 03 June 2015 by VRS  |  Email |Print

A sharp fall in the US dollar on improved eurozone economic data has sent New York oil prices to fresh 2015 highs, even as officials at OPEC defended their generous output strategy. US benchmark West Texas Intermediate for July delivery added $US1.06, or 1.7 per cent, to $US61.26 per barrel in New York trading.
In London, Brent crude for July rose US61c to $US65.49. The US dollar lost more than 2 per cent against the euro, and 0.5 per cent on the yen, after European inflation came in at 0.3 per cent in May, better than expected and diminishing fears of deflation………………………………………..Full Article: Source

IMF: Oil price decline has limited effect on Saudi Arabian economy

Posted on 03 June 2015 by VRS  |  Email |Print

The decline in oil prices has had limited impact on the economy of Saudi Arabia so far, despite lower exports and fiscal revenues, according to the International Monetary Fund (IMF). The international financing agency, which completed its 2015 Article IV mission to Saudi Arabia, said the economy will grow at a healthy 3.5% rate in 2015, unchanged from 2014, with an increase in oil production and continued government spending expected to support the economy.
“The decline in oil prices is resulting in substantially lower export and fiscal revenues, but the effect on the rest of the economy has so far been limited,” said Tim Callen, who led the IMF mission to Saudi Arabia………………………………………..Full Article: Source

Russia Met OPEC In Secret, Won’t Cut Oil Production?

Posted on 03 June 2015 by VRS  |  Email |Print

Russia is feeling the bite of lower oil prices exemplified by a secret meeting with OPEC leaders last month. This week, ahead of Friday’s Vienna meeting of the Organization of the Petroleum Exporting Countries, Kuwait, Saudi Arabia and the United Arab Emirates reportedly say they won’t meet with Russian officials because of “past broken promises,” The Wall Street Journal reports. In the Energy Journal’s email today, Christopher Harder writes:
“The secret meeting last month underscores the distance between OPEC and Russia, the world’s largest oil producer. During those discussions, which were at a staff level and didn’t include officials who could make policy, the attendees argued about a joint statement and the talks went no further. ……………………………………….Full Article: Source

Opec meets big oil in an altered landscape

Posted on 03 June 2015 by VRS  |  Email |Print

When the oil industry descends on Vienna this week it will survey a market transformed by Opec’s historic decision six months ago not to lower output to prop up falling prices. But the main event may not be Friday’s ministerial meeting, at which the 12-member cartel is widely expected to stick with the policy it launched in November.
Instead, many will be focused on a summit that will bring the world’s most powerful big oil executives face to face with the architects of Opec’s strategy that has forced them to slash costs and cut investment in new projects………………………………………..Full Article: Source

Core Gulf OPEC members in ‘consensus’ on oil ceiling -delegate

Posted on 03 June 2015 by VRS  |  Email |Print

Core Gulf OPEC members and others have a consensus to keep the organization’s oil production ceiling intact at its meeting this week, a senior Gulf OPEC delegate told Reuters on Tuesday, reinforcing a view among a growing chorus of members.
“There is consensus among Gulf OPEC countries, and others, to keep the ceiling unchanged,” the source said after an informal meeting of the four core Gulf Arab OPEC members earlier in the day. “Nobody wants to rock the boat. The meeting is expected to be smooth sailing.” The source said the outlook for the oil market is positive, especially in the second half, echoing comments from other members even as the market remains in surplus………………………………………..Full Article: Source

U.S. shale and OPEC, the altered balance of power

Posted on 02 June 2015 by VRS  |  Email |Print

Two landmark events this month will underscore the extent to which the oil market’s balance of power has been transformed by the shale revolution. In Washington, Congress will begin considering legislation to permit the export of crude oil from the United States, reversing a four decade ban put in place after the first oil crisis in 1973/74.
In Vienna, the Organization of the Petroleum Exporting Countries (OPEC) is expected to roll over its crude production target of 30 million barrels per day (bpd) even though prices have fallen more than 40 percent over the last 12 months. Rather than reduce production to boost prices, Saudi Arabia and the other OPEC members are prepared to continue pumping to defend market share and maximise revenue………………………………..Full Article: Source

How Long Can OPEC Maintain Its Current Strategy?

Posted on 02 June 2015 by VRS  |  Email |Print

If prices don’t recover, and U.S. is not making big cut backs on shale production, the grumbling within OPEC could grow louder. The six-month clock is up. OPEC is convening this week in Vienna, as it does every six months, to discuss and decide on how the group will coordinate.
The November 2014 meeting was one of the most widely covered in years. After leaving its collective output quota unchanged for several consecutive meetings in a row, much of the world watched for a major policy change. The glut of oil had led to a crash in prices, falling from well over $100 per barrel, down to the $70 range. As it had in the past, surely the cartel would pull the production lever downwards, switching off a million barrels per day or so in order to stop the bleeding?……………………………….Full Article: Source

Opec: We were right not to cut oil supply, despite price slump

Posted on 02 June 2015 by VRS  |  Email |Print

‘You can see that I am not stressed, that I am happy,’ says Saudi Arabia’s oil minister. Opec’s strategy of not cutting production in order to maintain market share is working, Saudi Arabia’s oil minister said as he arrived for a meeting of the cartel to decide on output levels.
Asked if the strategy pushed by Opec kingpin Saudi Arabia was working, Ali al-Naimi told reporters in Vienna: “The answer is yes… Demand is picking up. Supply is slowing. This is a fact. The market is stabilising. “You can see that I am not stressed, that I am happy.” The 12-nation Opec cartel, pumping some 30pc of the world’s oil, is expected on Friday to maintain its official production target of 30m barrels per day (bpd)………………………………..Full Article: Source

Oil price surges ahead of OPEC meeting in Vienna

Posted on 02 June 2015 by VRS  |  Email |Print

The price of Brent oil fell almost 1 per cent on Monday to about $US65 a barrel, tempering a rally that saw oil prices climb ahead of the Organisation of Petroleum Exporting Countries meeting on Friday. The price has steadily climbed from a six-year low of $US46 a barrel in January, when a global supply glut meant that Australian consumers briefly enjoyed petrol prices as low as $1 a litre.
Since then, the commodity has experienced a “relief rally”, due to increasing expectation of a slowdown in supply from the United States, ANZ head of commodities, Mark Pervan said. “There seems to be growing expectation that the lower prices are having the effect [OPEC] is looking for, and that’s supply discipline in the US,” he said………………………………..Full Article: Source

Why $65 per barrel oil looks like a ceiling, not a floor

Posted on 02 June 2015 by VRS  |  Email |Print

Big Oil is too confident about crude prices. After a 40 percent rally from January’s six-year low, the momentum has been on the upside. But the current prices – $65 a barrel for Brent and $60 for WTI – look more like a ceiling than a floor. That is not what many insiders seem to think. Some oil service companies expect mid-$70s Brent by the end of this year.
Anglo-Dutch Shell assumed oil will rebound to $90 by 2018 in its $70 billion takeover of the UK’s BG Group. Some believe that the steep cut in capex costs will affect supply, including shale, and boost prices again. But such predictions may underestimate shale’s potential. Lower drilling and pumping costs, among other efficiencies, have pushed the breakeven cost of shale down to about $60, Goldman Sachs estimates. Lower oil prices have also helped cut costs, since shale drilling is energy-intensive………………………………..Full Article: Source

Easy Access to Money Keeps U.S. Oil Pumping

Posted on 01 June 2015 by VRS  |  Email |Print

Wall Street’s generous supply of funds to U.S. oil drillers helped create the American energy boom. Now that same access to easy money is keeping them going, despite oil prices that are languishing around $60 a barrel.
The flow of money into oil has allowed U.S. companies to avoid liquidity problems and kept American crude production from falling sharply. Even though more than half of the rigs that were drilling new wells in September have been banished to storage yards, in mid-May nearly 9.6 million barrels of oil a day were pumped across the country, the highest level since 1970, according to the most recent federal data………………………………….Full Article: Source

Oil Investment Opportunites for the Long Term

Posted on 01 June 2015 by VRS  |  Email |Print

The commodity cycle is a major distraction for investors in the oil market. New energy technologies such as solar and wind will command a larger and larger share of the energy pie, but our thirst for energy continues to grow — and oil will remain a pivotal component of the overall mix for many years to come.
With this in mind, let’s look at some of the longer term opportunities that will shape the way oil will be produced in the future, and how investors will be able to make a decent profit in the process. As a single entity, OPEC oversees the between 70% and 80% of the world’s proven oil reserves, and more than 40% of total production. At its current rate, production could be sustained for approximately 90 years. As long as the member countries all have oil in the ground, they have a common interest in sticking together to maintain certain production levels………………………………….Full Article: Source

OPEC oil output in May reaches highest since 2012 - survey

Posted on 01 June 2015 by VRS  |  Email |Print

OPEC oil supply in May climbed further to its highest in more than two years as increasing Angolan exports and record or near-record output from Saudi Arabia and Iraq outweighed outages in smaller producers, a Reuters survey showed. The boost from the Organization of the Petroleum Exporting Countries puts output further above its target of 30 million barrels per day (bpd), underlining the focus of top exporter Saudi Arabia and other key members on market share.
OPEC supply rose in May to 31.22 million bpd from a revised 31.16 million bpd in April, according to the survey, based on shipping data and information from sources at oil companies, OPEC and consultants………………………………….Full Article: Source

Speculators Temper Crude-Oil Wagers Before OPEC Meets on Output

Posted on 01 June 2015 by VRS  |  Email |Print

Speculators retreated from both bullish and bearish wagers on crude-oil prices before OPEC ministers meet to determine their output for the next six months. With bearish bets on West Texas Intermediate falling at a faster pace than bullish holdings, the net-long position rose for the first time in three weeks, U.S. Commodity Futures Trading Commission data for the seven days ended May 26 show.
OPEC will keep favoring market share over prices when it meets in Vienna on June 5, according to all but one of 34 analysts and traders surveyed by Bloomberg. Saudi Arabia and other members of the Organization of Petroleum Exporting Countries have been pumping above the group’s output target for months, seeking to drive out higher-cost producers………………………………….Full Article: Source

OPEC’s Front Lines in the Shale Fields and Wall Street

Posted on 01 June 2015 by VRS  |  Email |Print

Oil bulls pinning their hopes on tumbleweeds in East Texas may now be peering further south. The argument for oil rebounding after last year’s crash rests largely on cash flow-constrained shale drillers in Texas and other states downing tools. The roughly 30% rally since mid-March in front-month oil futures, to almost $60 a barrel, has mirrored a falling rig count.
To date, though, actual U.S. oil output doesn’t appear to have dropped markedly. Indeed, the latest Energy Department estimates indicate production hitting its highest in decades. Those data are far from perfect. But alongside rig counts that have suddenly stopped falling, they suggest U.S. output is proving resilient so far………………………………….Full Article: Source

Oil price: Why further falls may be on the way

Posted on 29 May 2015 by VRS  |  Email |Print

Those hoping for a bit of oil price stability after the past few months’ volatility may be disappointed. Next week’s Organisation of Petroleum Exporting Countries (OPEC) meeting is widely expected to be another case of the cartel sitting on its hands, and maintaining levels of oil production despite historically low oil prices.
This shouldn’t be any surprise to markets – yet there are other warning signs ahead. After the last meeting in January, crude prices (WTI crude) fell to a six-year low of less than $45 a barrel, then recovered to around $65 a barrel, as the growth in U.S. supply – the main reason why OPEC has been so stubborn about cutting output — slowed in response to lower prices…………………………………Full Article: Source

OPEC says global oil glut to persist till 2017

Posted on 29 May 2015 by VRS  |  Email |Print

Crude supply from non-OPEC producers will continue growing for another two years, according to an OPEC draft report seen by Reuters. Increased production, mainly shale in North America, is a ‘turning point’ in the restructuring of global markets, it said.
“Since June 2014, oil prices have experienced a significant reduction, reaching levels even lower than the crisis experienced in 2008, yet non-OPEC supply is still showing some growth,” OPEC’s long-term strategy report says, Reuters reported on Thursday. Supply from rival non-OPEC producers will grow at least till 2017, the document said. The OPEC report comes ahead of the group’s landmark meeting in Vienna on June 5 where it’s expected to make a decision on production quotas…………………………………Full Article: Source

OPEC sees rivals boosting oil output despite weak prices

Posted on 29 May 2015 by VRS  |  Email |Print

The North American oil boom is proving resilient despite low oil prices, producer group OPEC said in its biggest and most detailed report this year, suggesting the global oil glut could persist for another two years. A draft report of OPEC’s long-term strategy, seen by Reuters ahead of the cartel’s policy meeting in Vienna next week, forecast crude supply from rival non-OPEC producers would grow at least until 2017.
Sluggish global demand for oil means the call on OPEC’s crude will fall from 30 million barrels per day (bpd) in 2014 to 28.2 million in 2017, effectively leaving the group with two options - cut output from current levels of 31 million bpd or be prepared to tolerate depressed oil prices for much longer…………………………………Full Article: Source

Oil price slump will not stem flow of US oil, says Opec

Posted on 29 May 2015 by VRS  |  Email |Print

Despite almost a year of low oil prices, the world’s biggest producers say that the North American oil boom shows no signs of abating, leading analysts to suggest that the global oversupply of oil could continue for at least another two years.
The Organisation of Petroleum Exporting Countries (Opec) will meet in Vienna next week to discuss its long-term strategy. A draft report seen by Reuters predicts that rather than contracting, oil production will continue to increase over the next two years as rival non-Opec producers – especially those in the US – expand their operations…………………………………Full Article: Source

US oil production at 43-year high as OPEC prepares to meet

Posted on 29 May 2015 by VRS  |  Email |Print

U.S. oil production surged to a 43-year high, despite a price war that resulted in a more than 50 percent reduction in active U.S. oil wells. Oil prices saw downward pressure in volatile trade Thursday morning, after the Department of Energy reported a draw down in crude inventories of 2.8 million barrels for the week ended May 22.
The DOE also reported that U.S. production rose to 9.566 million barrels per day, surpassing the previous peak of 9.422 million set in March. While no weekly data is available beyond 1983, the production number is the highest, if translated to a monthly basis, since May 1972…………………………………Full Article: Source

Where next for the oil industry?

Posted on 28 May 2015 by VRS  |  Email |Print

Oil companies have had to make dramatic changes to their view of the future following the collapse in the oil price at the end of last year. The surge in US shale oil production and Saudi Arabia’s reluctance to step aside and make room for the extra oil have forced the industry to reassess the viability of their exploration and development efforts.
Cuts to capital expenditure have been made and then redoubled. Even so, profits have fallen sharply for the big oil companies in the first months of 2015, whilst some exploration and production companies have been forced to reclassify their higher cost reserves as uneconomic at current prices…………………………………….Full Article: Source

Opec backing Saudi Arabia’s plan to keep supplies elevated

Posted on 28 May 2015 by VRS  |  Email |Print

When Saudi Arabia argues next week that Organisation of Petroleum Exporting Countries (Opec) should keep up production to fight the rise in US shale oil levels, prices will be on its side.
Crude plunged for eight of nine weeks prior to group’s November gathering, when the kingdom faced down opposition from the majority of fellow members, who advocated output reductions to tackle a global glut. With oil companies around the world cutting investment, US output peaking and prices up, Saudi Arabia’s strategy will be extended at Opec’s semiannual meeting on June 5, say Societe Generale and Bank of America…………………………………….Full Article: Source

OPEC not finished securing market share yet

Posted on 28 May 2015 by VRS  |  Email |Print

Analysts are making their predictions for what OPEC members will do at their semi-annual meeting on June 5 and none of it looks good for U.S. oil companies. OPEC is not exactly a transparent institution and members engage in all kinds of psychological warfare before they meet behind closed doors. But the one thing everyone seems to agree on is that the 12-nation cartel is not going to reduce output.
Cutting back on oil production now would eliminate all the gains the cartel has made in the past year. Maintaining output of about 30 million barrels a day in light of new supply coming from higher-cost producers has sent price dramatically lower…………………………………….Full Article: Source

Oil Price Hurt by Dollar Strength

Posted on 27 May 2015 by VRS  |  Email |Print

Oil prices slipped Tuesday on a stronger dollar and concerns that the recent rally in oil prices could spark an increase in production. Oil prices have climbed sharply since hitting six-year lows in March on expectations that cutbacks in oil drilling would lead to a decline in U.S. production, shrinking the global glut of oil. However, the market remains oversupplied, and some analysts warn that at these price levels, U.S. producers can profitably keep drilling.
Many market watchers were caught off guard by the recent price rally, and analysts and investors remain split on where oil prices are headed. A continuation of the strong rally could hurt consumers, who have benefited from unusually cheap gasoline, while another drop in oil prices could destabilize oil-producing nations and roil global markets…………………………………..Full Article: Source

Iraq About to Flood Oil Market in New Front of OPEC Price War

Posted on 27 May 2015 by VRS  |  Email |Print

Iraq is taking OPEC’s strategy to defend its share of the global oil market to a new level. The nation plans to boost crude exports by about 26 percent to a record 3.75 million barrels a day next month, according to shipping programs, signaling an escalation of OPEC strategy to undercut U.S. shale drillers in the current market rout.
The additional Iraqi oil is equal to about 800,000 barrels a day, or more than comes from OPEC member Qatar. The rest of the Organization of Petroleum Exporting Countries is expected to rubber stamp its policy to maintain output levels at a meeting on June 5. While shipping schedules aren’t a promise of future production, they are indicative of what may come. The following chart graphs planned tanker loadings (in red) against exports…………………………………..Full Article: Source

Saudi Arabia rewrites its oil game with refining might

Posted on 27 May 2015 by VRS  |  Email |Print

Saudi Arabia’s rapid transition into one of the world’s largest oil refiners adds an extra dimension to the oil exporter’s role as the driver of OPEC policy. When it attends OPEC’s next meeting in two weeks, it does so with major new state-of-the-art oil refineries that can profit from cheaper crude and reviving world fuel demand - exactly as international oil firms have over the past six months.
The kingdom now has stakes in more than 5 million barrels per day (bpd) of refining capacity, at home and abroard, landing it a place among the global leaders in making oil products. Its own target of 8-10 million bpd of refining firepower would eclipse even ExxonMobil…………………………………..Full Article: Source

Non-OPEC production growth reduced by over 2 MMbopd towards 2020

Posted on 27 May 2015 by VRS  |  Email |Print

Non-OPEC liquids growth potential of 5.5 MMbopd over the next five years has been reduced by over 2 MMbopd to 3.3 MMbopd, according to Rystad Energy’s most recent forecasts. Latest oil field research shows investments in oil and gas production are estimated to drop 20% in 2015 compared to 2014. Outside OPEC, $200 billion in yearly capex is considered to be axed over a two-year period.
Ultimately, for every billion dollars being cut in development capex on marginal projects, the production shortfall would amount to 10 Mbopd. Only U.S. production has been visibly impacted with the trend turning from 20% annual growth during the first quarter of the year to a flat trend in the second quarter. The shortfall of global offshore production may be steeper if oil prices stay low throughout the year…………………………………..Full Article: Source

Oil prices hit struggling oil companies

Posted on 26 May 2015 by VRS  |  Email |Print

Low oil prices are endangering an increasing number of exploration and production companies. According to a new report from Moody’s Investors Service, the oil and gas industry could see the rate of defaults rise over the next year. The companies in danger of going belly up, not surprisingly, are the ones that already have low credit ratings.
Moody’s finds that the default rate for oil drillers with a credit rating of B2 or lower could jump from 2.7% to 7.4% by March 2016. Moreover, distressed oil companies make up a rising share of overall firms with a poor credit rating – roughly 14.8% of the companies with a B3 credit rating or worse covered by Moody’s are in oil and gas. That is up sharply from the 8% share that oil firms accounted for in 2014………………………………………..Full Article: Source

No Reason For OPEC To Relent in Oil Market Tussle

Posted on 26 May 2015 by VRS  |  Email |Print

As the next OPEC summit draws closer, another round of commentary centered on the cartel not “relenting” in the ongoing oil market tussle has flooded media outlets. Such chatter risks regurgitating the obvious.
That OPEC is not going to give ground became quite clear back in November at its last meeting, where the oil producers’ collective decided not to cut the 30 million barrels per day (bpd) production quota it has officially kept in place since December 2011………………………………………..Full Article: Source

OPEC producers to defend market share in face of mounting competition and domestic needs

Posted on 26 May 2015 by VRS  |  Email |Print

Gulf oil producers, led by Saudi Arabia, will resist attempts to cut output at a Organisation of Petroleum Exporting Countries (OPEC) meeting next month as preserving market share remains their top priority, industry analysts said.
A decision by the 12-member OPEC not to cut production in November sent prices crashing 60 per cent before a partial recovery in recent weeks. Gulf and other OPEC members said they wanted to safeguard their share of a market that has faced a supply glut as a result of sharp increases in the production of shale and sand crudes………………………………………..Full Article: Source

OPEC oil supply is expected to rise

Posted on 26 May 2015 by VRS  |  Email |Print

OPEC supply is expected to increase by 0.2-0.3 million barrels per day (bpd) between now and end-3Q2015, analysts of the US JP Morgan bank said in a report, obtained by Trend. OPEC supply growth has slowed from end- 1Q2015 level of 1.4 million bpd year-over-year, analysts said.
At the same time they expect non-OPEC supply to contract by 0.5 million bpd between now and end-3Q2015. Analysts mentioned that Brent futures prices last week stayed in a $64-$68 per barrel range………………………………………..Full Article: Source

Oil moves further below $60 as dollar firms up

Posted on 26 May 2015 by VRS  |  Email |Print

Crude-oil futures fell in early European trade on Monday as a rising dollar put pressure on the commodity as holidays across some major markets, including the U.S., were expected to keep trading thin. On the New York Mercantile Exchange, light, sweet crude futures for delivery in July traded at $59.31 a barrel, down $0.67 in the Globex electronic session. July Brent crude on London’s ICE Futures exchange fell $0.20 to $65.17 a barrel.
The weaker trend for oil prices came as the dollar gained ground across major currencies. Worries about Greece were a part of that action. A strengthening dollar weakens the appeal of crude, which is denominated in dollars, for holders of other currencies………………………………………..Full Article: Source

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