Listado de la etiqueta: OIL PRICES

Oil prices slip on Chinese demand concerns, weak Saudi exports

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Oil prices fell on Monday on concerns about the pace of economic growth in China, the world’s largest energy consumer, and signs that global oversupply is curbing Saudi crude exports.

China’s economy grew at the slowest pace in six years in the third quarter, according to official data released on Monday, making it more and more likely Beijing will cut interest rates to stoke activity.

Brent for December delivery LCOc1 was down 38 cents at $50.08 a barrel at 0807 GMT. U.S. crude for November delivery CLc1 traded down 35 cents at $46.91 a barrel, extending last week’s steepest losses in eight weeks.

“Chinese GDP data and the rise in the Saudi stockpile due to falling crude oil exports are weighing on prices,” said Tamas Varga, oil analyst at London brokerage PVM Oil Associates.

Saudi Arabia, the world’s biggest crude exporter, shipped 278,000 barrels a day less crude oil in August, trade data showed, suggesting demand for Saudi oil is sliding as the global supply glut persists.

Meanwhile Austrian oil producer OMV lowered its oil price forecasts on Monday, seeing 2016 prices at $55 a barrel and rising to $70 a barrel in 2017, $80 a barrel in 2018 and $85 a barrel from 2019 onwards.

As a result the company also said it would take a 1 billion-euro impairment charge on asset values in its upstream business.

Investors were also eyeing progress in the removal of western sanctions on Iran that will allow the oil-rich nation to revamp oil production and resume exports to western consumers.

The United States and the European Union on Sunday took formal legal steps to lift sanctions on Iran once Tehran meets the conditions tied to a landmark nuclear agreement with major world powers. 

Copyright: Reuters

Gas pipeline in Wyoming

Gas pipeline in Wyoming

OPEC decision to keep output high pulls oil prices close to 2015 lows

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Crude prices fell on Monday in the first trading session after OPEC-members failed to agree on output targets to reduce a bulging glut that has resulted in oil prices falling by more than 60 percent since June 2014.

The Organization of the Petroleum Exporting Countries failed to agree on an oil production ceiling on Friday at a meeting that ended in acrimony after Iran said it would not consider any production curbs until it restores output scaled back for years under Western sanctions.

This compounded an oil glut that sees production exceed demand between 0.5-2 million barrels per day and that has resulted in a more than 60 percent price drop since 2014.

U.S. crude was trading at $39.58 a barrel at 0038 GMT, down 39 cents. Internationally traded Brent futures were down 16 cents at $42.84 per barrel. This left both benchmarks near 2015 lows and not far off levels seen during the peak of the global financial crisis of 2008/2009.

Analysts said that OPEC would likely maintain its production around current levels of 31.5 million barrel per day and that a decision on how to handle new volumes expected to come to the market once western sanctions against Iran are dropped would be delayed until the group’s next meeting in June 2016.

“Past communiques have at least included statements to adhere… or maintain output in line with the production target (of 30 million barrels per day). This one glaringly did not,” Barclays bank said.

Not only did OPEC decide to keep its output target high, but analysts said that it would likely continue to exceed its quota as individual members offer discounts to customers in defense of market share.

Barclays said that OPEC faced an “impossible trinity of achieving higher market share, higher prices and higher demand through a nominal target which members continue to breach.”

As a result of ongoing oversupply, analysts said that prices would fall further, with Goldman Sachs seeing a possibility of $20 per barrel.

“The effective removal of the OPEC quota leaves the market in a more vulnerable position. Prices are likely to weaken this week as the market turns its attention back on U.S. supply,” ANZ bank said, referring to near record U.S. crude inventories of almost 490 million barrels.

“The formal production target was not even discussed, essentially signalling to the market that members would continue production at individual requirements. With Iran exports likely to start increasing next year, this increases the likelihood of further weakness in crude oil markets,” it added.

OIL PRICES OPEC

Copyright: Bakken

Oil Price Will Increase in Next ‘Few Months’

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Oil prices will only stay at current levels for the next few months, according to Stuart Amor, the ex-head of oil and gas research at financial advisory firm RFC Ambrian. Amor, who made the statement in a presentation at the Finding African Oil event in London Monday, which was attended by Rigzone, said that around 10 percent of non-OPEC supply is cash-flow negative at the operating level in the low oil price environment affecting the industry today. “At $30 per barrel, which is where we are today, about ten percent of non-OPEC supply is cash flow negative at the operating level, so I don’t think the oil prices can stay down here for more than a few months. If they do, then some of that supply is going to get shut-in,” Amor said, addressing oil and gas delegates at Finding Petroleum’s conference. In spite of the decreasing oil price, Amor suggested in his presentation that the oil and gas industry wouldn’t see an increase in M&A (merger and acquisition) transactions until the volatility of crude prices subsided: “The biggest determinant in the number of M&A transactions is the commodity’s volatility. Highly volatile prices, particularly at the long end of the curve, and we’ve seen a lot of that over the last couple of weeks, make it much harder for buyers and sellers to agree prices. So we live in an uncertain world and it’s got a whole more uncertain in the last two weeks. Indeed the recent spike in crude volatility hasn’t been seen since the height of the global financial crisis in 2008. That will need to change for a lot of M&A transactions now to occur.” Amor held the position of head of oil and gas research at RFC Ambrian for almost four years, covering several Africa-focused mid-cap and junior oil companies including Tullow Oil, Ophir Energy, Seplat and African Oil Corp. He was previously the head of global equity research at ING.

oil price 2016

Copyright: RIGZONE

Saudi Arabia, Venezuela talk of co-operation to stabilize oil market

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Saudi Arabia’s oil minister Ali al-Naimi discussed cooperation between OPEC members and other oil producers to stabilize the global oil market with his Venezuelan counterpart on Sunday, state news agency SPA reported.

Venezuela’s Oil Minister Eulogio Del Pino, who is on a tour of oil producers to lobby for action to prop up prices, said his meeting with Naimi was «productive», his ministry reported.

Cash-strapped OPEC member Venezuela has been calling for an emergency meeting of producers to discuss steps to prop up prices, which are close to their lowest since 2003.

The prospect of supply restraint by the Organization of the Petroleum Exporting Countries and rivals helped oil prices LCOc1 rise above $34 a barrel on Friday from a 12-year low close to $27 last month, despite widespread scepticism that a deal will happen.

«It was a successful meeting and (conducted) in a positive atmosphere,» SPA cited Naimi as saying.

Both ministers discussed Del Pino’s visits to other oil producers and the outcome of his «meetings that aim towards the cooperation of those countries to stabilize the international oil market», Naimi said.

«During the meeting, there were discussions about the cooperation of the producing countries within OPEC and outside (OPEC)… and the importance of the continuation of such consultations,» SPA added.

However, the comments by Saudi Arabia, the world’s largest oil exporter, show no indication of a shift in the country’s policy of refusing to cut supplies to prop up crude prices, some OPEC delegates said.

«They seem like just general talk about cooperation, but nothing about cutting production,» said one OPEC source.

«It’s always good to say discussions were positive and productive. Never say they were negative. The issue is not with Venezuela, it is with Iran,» said another OPEC source.

Sources familiar with the matter say Iran is reluctant to restrain crude supply as it wants to recover the market share it lost during sanctions that were imposed in 2012 because of its nuclear program. International sanctions were lifted in January.

OPEC oil production jumped to its highest in recent history in January as Iran increased sales and its rivals Saudi Arabia and Iraq also boosted supply, a Reuters survey showed.

Last Wednesday, the Iranian news agency Shana quoted Del Pino as saying six producing countries, including OPEC members Iran and Iraq and non-members Russia and Oman, supported a producer meeting.

But so far, none of OPEC’s Gulf members, including OPEC heavyweight Saudi Arabia, has publicly backed a meeting.

Saudi Arabia stabilize oil market

Copyright: Reuters

Russia says better Iran-Saudi Arabia ties would help oil prices: RIA

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Russia wants to see improved relations between Iran and Saudi Arabia at a time when joint action is needed to influence global oil prices, the RIA news agency on Monday quoted Zamir Kabulov, a senior official at Russia’s Foreign Ministry, as saying.

Russia, one of the world’s top oil producers, has repeatedly refused to cooperate with the Organization of the Petroleum Exporting Countries in recent years despite the falling price of oil, the lifeblood of its economy.

Any hope of sealing a global output deal has so far foundered on Iran’s position. Tehran is boosting production to try to regain market share after sanctions were lifted, paving the way for it to re-enter the market after a long absence.

The prospect of cooperation between Iran and leading producer Saudi Arabia is further complicated by the fact that the two countries are geopolitical foes who support different sides in conflicts in both Syria and Yemen.

«We all need stability on the oil market and a return to normal (crude) prices,» RIA quoted Kabulov as saying.

«And these are the key nations, especially Saudi Arabia and Iran, which is striving to return to the oil market, anticipating the removal of sanctions.»

Some OPEC countries are trying to achieve a consensus among the group, while some non-members back an oil production freeze, sources familiar with the discussions said last week, a possible attempt to tackle the global glut without cutting supply.

Top exporter Saudi Arabia might be warming to the idea, though it was too early to say whether it would give its blessing because any deal would mainly depend on a commitment by Iran‎ to curb its plan to boost exports, the sources said.

Even as officials on both sides discussed the possibility, Russia and OPEC continued to pump oil at some of the highest levels in recent times last month, suggesting both were locked in a fierce struggle for market share.

Benchmark Brent crude LCOc1 has fallen around 70 percent since mid-2014

OIL PRICES ARABIA

Copyright: Reuters

Credit Suisse: The Death of Oil Demand has been Greatly Exaggerated

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Even as U.S. oil production started to slide in the second half of 2015, the downside risks to oil prices continued to dominate.

In the third quarter, broad-based manufacturing softness and financial market turmoil threatened to derail growth in developed markets, bringing some focus back to the demand side of the ledger. Annual oil demand growth proceeded to drop off in the fourth quarter from above 2 percent to 1.2 percent with acute cracks in China and advanced economies, seemingly confirming analysts’ worst fears.

But Credit Suisse Group AG Global Energy Economist Jan Stuart concludes that oil demand «growth appears to be re-accelerating» in 2016, with the recent bout of softness attributable to a warm winter, subdued activity in resource-extracting industries, and persistent weakness in select sputtering emerging markets like Russia and Brazil.

«Oil demand growth is alive and well,» he writes in a recent note. «We think that with hindsight this winter will look like a dip in an otherwise still unfolding fairly strong growth trend that is partly fueled by the ongoing economic recovery of in North America and Europe and longer standing trends across key emerging market economies.»

While concerns about global growth linger, demand for crude doesn’t match the narrative that a worldwide recession is imminent. In particular, for the world’s two largest economies, the U.S. and China, Stuart notes that oil demand growth has rebounded following a sluggish fourth quarter.

«While on balance oil demand growth appears relatively sluggish still in the first quarter; February data either improved on January (e.g. Brazil, the U.S.); or extended strong growth (e.g. India, South Korea), while in China demand appeared to have rebounded as well,» he writes.

Demand for oil has been increasingly attributable to passenger vehicles rather than its use as an input in the production process, as the middle classes in emerging markets swell.

In light of this, Credit Suisse anticipates that crude demand will keep running hotter than industrial production:

«We forecast modestly re-accelerating demand growth over the course of this year, so long as a recession continues to be avoided,» asserts Stuart. «We project in fact that oil demand should continue to outperform historic correlations with industrial production.»

This outlook for demand bolsters the analyst’s confidence that oil prices could hit $50 per barrel in May.

Copyright: Bloomberg

Oil Ends Steady Near $50; Best Monthly Gain in Brent in 7 years

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Oil prices ended steady on Friday after hitting 2016 highs but finished April trading about 20 percent higher, with Brent crude having its best monthly gain in seven years. A weaker dollar and optimism that a global oil glut will ease have lifted crude futures by more than $20 a barrel since they plumbed 12-year lows below $30 in the first quarter. Brent futures settled just a penny lower at $48.13 a barrel, after reaching a 2016 peak at $48.50. It rose 21.5 percent in April, its largest monthly advance since May 2009. U.S. crude futures closed 11 cents lower at $45.92 a barrel, after hitting a year-to-date high at $46.78. It gained 20 percent in April, the biggest monthly gain in a year.

With prices less than $5 away from $50 a barrel, investment bank Jefferies said the market «is coming into better balance» and would flip into undersupply in the second half of the year. But others warned that the rally was driven by investors holding large speculative positions, while oil stockpiles were still high, with a Reuters survey showing OPEC output in April rising to its most in recent history. «The issue is that we haven’t seen price rallies … correlate with fundamentals,» said Hamza Khan, senior commodity strategist at ING. «The fundamentals – high stocks, high production – haven’t changed.» Technical analysts said crude could cruise to $50 a barrel but stiffer resistance before $55 could spark profit-taking on the market’s biggest rebound in two years. Analysts polled by Reuters raised their average forecast for Brent in 2016 to $42.30 per barrel, the second consecutive month of increases.

Bank of America Merrill Lynch said in a note that «non-OPEC oil supply is indeed hanging off a cliff», and estimated that global output would contract year-on-year in April or May for the first time since 2013. The OPEC survey aside, Saudi oil output was expected to edge up by 350,000 barrels per day to around 10.5 million bpd, sources told Reuters, as tankers filled with unsold oil floated at sea seeking buyers. The discount in spot U.S. crude to the next trading month meanwhile whittled to its smallest since January, reducing the advantages of storing oil in the United States for later delivery. (Additional reporting by Libby George and Karolin Schaps in LONDON and Henning Gloystein in SINGAPORE; editing by David Gregorio and Marguerita Choy)

Copyright: Rig Zone

Success through more efficient use of technology – DEA at EAGE 2016 in Vienna

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From 30 May to 02 June, DEA is presenting recent projects and technology highlights at Europe’s most important technology event of the oil and gas industry, the 78th EAGE Conference and Exhibition.

“In exploration and production of oil and gas, sustained quest for technical solutions and the constant search for efficiency-enhancing concepts are daily business”, says Manfred Böckmann, Senior Vice President Exploration DEA Deutsche Erdoel AG.

These measures are a prerequisite for a continuing assurance of our high safety and environmental standards on the one hand and the economic viability of the projects on the other. In times of low oil prices, this is becoming increasingly important and the EAGE offers an ideal platform for the essential exchange of ideas and the discussion of new approaches, together with the experts of other E&P companies, the service industry and the representatives of science”, Böckmann adds.

At DEA’s booth (Stand No. 2230, Hall B), the visitors can experience live presentations of case studies from international DEA projects and are invited to discuss current industry topics with the DEA experts during the coming days.

DEA Deutsche Erdoel AG is an international operator in the field of exploration and production of crude oil and natural gas based in Hamburg. Its focus is on safe, sustainable and environmental conscious exploitation of oil and gas. DEA has 117 years of experience working along the whole upstream value chain as operator or project partner. With a staff force of 1,400 employees DEA has shares in production facilities and concessions in, among others, Germany, Norway, Denmark, Egypt and Algeria. Moreover, in Germany, DEA also operates large subsurface storage facilities for natural gas.

Copyright: Your Oil and Gas News

Raymond James: Get Ready for $80 Oil

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Rebounding after a two-year collapse, it’s only this month that oil prices have pushed up past $50 a barrel, but Raymond James & Associates says this is just the beginning for higher prices.

In a note to clients, analysts led by J. Marshall Adkins say West Texas Intermediate will average $80 per barrel by the end of next year — that’s higher than all but one of the 31 analysts surveyed by Bloomberg. 

«Over the past few months, we’ve gained even more confidence that tightening global oil supply/demand dynamics will support a much higher level of oil prices in 2017,» the team says. «We continue to believe that 2017 WTI oil prices will average about $30/barrel higher than current futures strip prices would indicate.»

The team went on to lay out three reasons for their bullish call, all of which are tied to global supply — the primary factor that precipitated crude’s massive decline.

Here’s how the rebalancing of the global oil market will be expedited from the supply side, according to the analysts:

First, the analysts see production outside the U.S. being curbed by more than they had previously anticipated, which constitutes 400,000 fewer barrels of oil per day being produced in 2017 relative to their January estimate. In particular, they cite organic declines in China, Columbia, Angola, and Mexico as prompting this downward revision.

«When oil drilling activity collapses, oil supply goes down too!,» writes Raymond James. «Amazing, huh?»

Adkins and his fellow analysts also note that the unusually large slew of unplanned supply outages will, in some cases, persist throughout 2017, taking a further 300,000 barrels per day out of global supply.

Finally, U.S. shale producers won’t be able to get their DUCs in a row to respond to higher prices by ramping up output, the team reasons, citing bottlenecks that include a limited available pool of labor and equipment.

Combine this supply curtailment with firmer than expected global demand tied to gasoline consumption, and Adkins has a recipe for $80 crude in relatively short order.

«These newer oil supply/demand estimates are meaningfully more bullish than at the beginning of the year,» he writes. «Our previous price forecast was considerably more bullish than current Street consensus, and our new forecast is even more so.»

The only analyst with a higher price forecast for 2017, among those surveyed by Bloomberg, is Incrementum AG Partner Ronald Stoeferle. He sees West Texas Intermediate at $82 per barrel next year. The consensus estimate is for this grade of crude to average $54 per barrel in 2017.

Over the long haul, however, Raymond James’ team sees WTI prices moderating to about $70 per barrel.

Copyright: Rig Zone

‘Well-Timed’ OPEC Talk Forces Oil Bears Into Record Reversal

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OPEC has done it again.

Talk of a potential deal to freeze output helped push oil close to $50 a barrel and prompted money managers to cut bets on falling prices by the most ever. West Texas Intermediate, the U.S. benchmark, went from a bear to a bull market in less than three weeks.

OPEC is on course to agree to a production freeze because its biggest members are pumping flat-out, said Chakib Khelil, the group’s former president. Saudi Energy Minister  Khalid Al-Falih said that the talks may lead to action to stabilize the market.

«This is all courtesy of some very well-timed comments from the Saudi oil minister,» said John Kilduff, partner at Again Capital LLC, a New York hedge fund focused on energy. «They’ve been successful over the last year in jawboning the market, and this is the latest example.»

Hedge funds trimmed their short position in WTI by 56,907 futures and options during the week ended Aug. 16, the most in data going back to 2006, according to the Commodity Futures Trading Commission. Futures rose 8.9 percent to $46.58 a barrel in the report week and closed at $48.52 a barrel on Aug. 19. WTI is up more than 20 percent from its Aug. 2 low, meeting the common definition of a bull market.

«This was a very short market so we were bound to get some covering,» said Stephen Schork, president of the Schork Group Inc., a consulting company in Villanova, Pennsylvania. «You probably won’t hear a lot from OPEC with prices up here, but if we get down to where we were a few weeks ago we can expect to hear more.»

Informal Talks

The Organization of Petroleum Exporting Countries plans to hold informal talks to discuss the market at the International Energy Forum next month in Algiers. Russian Energy Minister Alexander Novak said that the nation was open to discussing a freeze.

Talks to implement a production freeze collapsed in April when Saudi Arabia said it wouldn’t take part without Iranian participation. Iran was restoring exports after sanctions over its nuclear program were lifted in January.  

Saudi Arabia, Iran, Iraq and non-member Russia are producing at, or close to, maximum capacity, Khelil said in a Bloomberg Television interview on Aug. 17. Saudi Arabia told OPEC that its production rose to an all-time high of 10.67 million barrels a day in July, according to a report from the group.

Ample Stockpiles

Declining crude and gasoline stockpiles in the U.S. also bolstered the market last week. Crude supplies dropped by 2.51 million barrels as of Aug. 12, Energy Information Administration data show. Gasoline inventories slipped 2.72 million barrels during the period. Stockpiles of both crude and gasoline remain at the highest seasonal levels in decades even after the declines.

«There’s a high level of uncertainty right now, so fairly small news can move the market a lot,» said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. «It still remains the case that we have a huge surplus of supply and aren’t going to see it disappear anytime soon.»

Money managers’ short position in WTI dropped to 163,232 futures and options. Longs, or bets on rising prices, increased 0.1 percent, while net longs advanced 56 percent, the most since July 2010.

In other markets, net-bearish bets on gasoline climbed 54 percent to 1,970 contracts. Gasoline futures rose 5.7 percent in the report week. Net-long wagers on U.S. ultra low sulfur diesel increased more than fivefold to 10,835 contracts. Futures advanced 9.8 percent. 

Copyright: Rig Zone