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Tag: oil prices

  • ‘Strong demand, OPEC cuts will boost oil prices’

    ‘Strong demand, OPEC cuts will boost oil prices’

    Crude oil prices are expected to continue to rise in early 2018 as global oil demand remains strong and members of the Organisation of Petroleum Exporting Countries (OPEC) look set to extend their current production cuts throughout the year.

    The latest report by Deloitte’s Resource Evaluation and Advisory (REA) group noted, however, that concerns over transportation bottlenecks to the United States (US) market have increased the historic price differential between Western Canadian Select (WCS) and West Texas Intermediate (WTI) oil.

    Infrastructure issues in Canada have also created extreme volatility in natural gas prices between AECO and Henry Hub, with similar volatility predicted as more maintenance projects are planned for the summer of 2018.

    “Canadian oil prices lagged behind those in the United States during 2017 largely due to increased US production and possible transportation difficulties getting Canadian oil into that market,” said Andrew Botterill, Deloitte’s National Oil & Gas Leader and Partner, REA group.

    “But if Canada can take advantage of declining Venezuelan and Mexican exports to the US and access some of its heavy oil refining capacity, the price differential between WCS and WTI should at least be moderate compared to the historical differential.”

    Botterill said the US is increasing its light oil production after rig counts rose throughout 2017. More importantly, the US is boosting its oil exports to large consumer markets such as Asia, which now accounts for one-third of its crude oil export volumes.

    Meanwhile, import volumes in the U.S. during 2017 remained similar to those during the previous year, giving Canadian producers an opportunity to pick up some of the market previously supplied by Mexico and Venezuela. Taking into account increased crude oil prices over the final two quarters of 2017 and the increased heavy oil price differential, Botterill said Deloitte is forecasting a price of US$55 per barrel for WTI in 2018 and C$46.40 per barrel for WCS.

    Canadian natural gas prices, which fluctuated considerably in 2017, recovered somewhat in the final quarter of the year as transportation systems resumed operating at full capacity after several maintenance projects during the year. Botterill said more price fluctuations could occur in the summer of 2018 when new maintenance projects are expected to take place. He notes that, while increased natural gas production has allowed the U.S. to grow its gas export market by 31 per cent in 2017, Canada’s limited ability to access new markets has resulted in low AECO pricing. As a result, the Deloitte forecast is for AECO to be C$2/million cubic feet (Mcf) in 2018 while Henry Hub is forecast to be US$2.80/Mcf.

    The latest REA forecast also identifies several trends to watch in 2018, including drilling and completion costs expected to rise in 2018 as competition for rigs increases; uncertainty about AECO pricing in a volatile environment could hinder development plans of Canadian dry gas producers, light oil development should continue as a consistent pace, particularly in Saskatchewan and southeast Alberta; while total bitumen production may for the first time exceed three million barrels per day and producers will continue to target liquid-rich gas plays in the Deep Basin.

  • Oil prices end gain streak, drop to $61

    Oil prices end gain streak, drop to $61

    The recent gains recorded by global oil prices have slipped as the commodity has lost more than $2 in seven days.

    Early yesterday, Brent crude, the international benchmark dropped to $61 from the $64 recorded on November 7.

    US West Texas Intermediate (WTI) traded at $55.18, at against its trading price of $57.30 on November 7.

    In a report released two days ago, the International Energy Agency (IEA) had projected that the US will be the world’s leading producer of oil and gas by 2025.

    IEA reduced its oil demand growth forecast by 100,000 barrels per day (bpd) for 2017 and forecast 1.3 million bpd oil demand for 2018.

    “The oil market faces a difficult challenge in 1Q18 with supply expected to exceed demand by 600,000 bpd followed by another, smaller, surplus of 200,000 bpd in 2018.”

    While speaking at the Abu Dhabi International Petroleum Exhibition Conference (ADIPEC), the Secretary-General, Organisation of Petroleum Exporting Countries (OPEC),  Mohammed Barkindo said countries did not have to worry about oil reaching its peak demand until 2040.

    Barkindo had said an increase in global population might result in more people living without access to electricity, cooking gas or heating and thus require more oil.

    In its monthly report, OPEC had reviewed its oil demand forecast saying oil demand will increase by 360,000bpd to stand at 33.42 million barrels per day.

  • Oil prices poised to rise above $60 on tightening supply

    Oil prices poised to rise above $60 on tightening supply

    Oil prices rose on Monday over supply concerns in the Middle East and as the U.S. market showed further signs of tightening while demand in Asia keeps rising.

    Brent crude futures, the international benchmark for oil prices, were at 57.84 dollars.

    U.S. West Texas Intermediate (WTI) crude futures were at 52.03 dollars per barrel..

    The amount of U.S. oil rigs drilling for new production fell by seven to 736 in the week to Oct. 20, the lowest level since June, General Electric Co’s Baker Hughes energy services firm said on Friday.

    Much will depend on demand to guide prices, with the U.S. market tightening, flows from Iraq reduced due to fighting between government forces and Kurdish militant groups.

    Again, production is still being withheld as part of a pact between the Organisation of the Petroleum Exporting Countries (OPEC) and non-OPEC producers to tighten the market.

    In the main growth areas of Asia, consumption remains strong especially in China and India, the world’s number one and three importers.

    India imported a record 4.83 million barrels per day (bpd) of oil in September as several refiners resumed operations after extensive maintenance to meet rising local fuel demand.

    The country’s September imports stood 4.2 per cent above this time last year and about 19 per cent more than in August, ship-tracking data from industry sources and Media Analytics showed.

    Given the tightening oil market conditions, many analysts expect prices to rise further.

  • Oil prices move close to $56

    Oil prices move close to $56

    Oil prices moved close to $56 yesterday, remaining near multi-month highs reached late last week.

    The number of United States (U.S.) rigs drilling for new production fell and refineries continued to start up after getting knocked out by Hurricane Harvey.

    Analysts say this is good for Nigeria economy that has just exited recession as the 2017 crude oil budget benchmark for this year’s budget is $44.5.

    US West Texas Intermediate (WTI) crude futures rose to $50.0 per barrel, and close to the more than three-month high of $50.50 reached last Thursday.

    Brent crude futures, benchmark for oil prices outside the U.S. were at $55.71 a barrel, up nine cents and not far from the almost five-month high of $55.99 touched on Thursday. Brent was $56  on Wednesday.

    “Demand forecasts from OPEC (Organisation of Petroleum Exporting Countries) and IEA (International Energy Agency)… continued to improve sentiment in the market. Refineries are also reporting a much better recovery from the recent hurricanes,” ANZ bank said on Monday.

    Royal Dutch Shell’s Deer Park refinery in Texas was among the latest, beginning its restart on Sunday. The plant can process 325,700 barrels per day.

    The refinery restarts are occurring “as signs emerge of stalling growth in the US shale industry. The number of rigs drilling for oil in the U.S. fell sharply last week,” ANZ said.

    U.S. energy firms cut seven oil rigs in the week to September 15, bringing the total count down to 749, the fewest since June, energy services company Baker Hughes said on Friday.

     

  • Oil prices up 2% on weaker dollar, others

    Oil prices up 2% on weaker dollar, others

    Oil prices rose about two  per cent yesterday and hit a one-week high, boosted by a weaker dollar, short covering and expectations that crude inventories in the United States (U.S.) may decline for the third consecutive week.

    Brent crude futures, the international benchmark for oil prices, gained $1.01 or 2.2 per cent to $46.84 per barrel.

    U.S. crude futures were up 92 cents, or about 2 percent, at $44.30 per barrel.

    Brent touched a one week high at a session high of $47.06. U.S. crude hit its highest since June 19 at $44.44.

    It was the fourth straight session of gains for oil, which also got some support after the chief executive of U.S. shale oil producer Pioneer Natural Resources Co said Saudi Arabia likely will move to boost oil prices to prop its own national finances.

    With the end of the quarter approaching, brokers said investors were covering short positions.

    Tim Evans, Citi Futures’ energy futures specialist, said in a note that oil’s upswing was “a technical correction after the declines of the past five weeks” helped along by boosts from a weaker dollar and forecasts for a weekly draw in U.S. crude inventories.

    Industry group American Petroleum Institute (API) was due to issue its inventory data yesterday afternoon. On Wednesday morning, the U.S. Energy Information Administration (EIA) will report official inventory data. Analysts estimated that crude stocks fell 2.3 million barrels in the week to June 23.

    The dollar fell ahead of a speech by U.S. Federal Reserve Chair Janet Yellen in London.

    Commerzbank said in a research note that long positions in Brent on ICE are “at their lowest level in a year and a half,” while short positions “have soared to a new record high, having increased more than four-fold since the beginning of the year.”

    The Organisation of the Petroleum Exporting Countries (OPEC) and other producing nations have sought to reduce a global crude glut with production cuts of 1.8 million barrels per day (bpd).

    The cuts began in January and were later extended through March. Yet global crude inventories have not fallen as expected, as U.S. producers and others outside the OPEC-led regime have boosted output.

  • Oil prices dip on rising production

    Oil prices dip on rising production

    • Saudi Arabia: oil market to balance in Q4

    Oil prices were flat yesterday after diving 13 per cent since late May as rising production in the United States (U.S.) , Libya and Nigeria have foiled an Organisation of Petroleum Exporting Countries (OPEC)-led effort to support the market by cutting production.

    Brent futures for August were down 4 cents, or 0.1 per cent, at $47.33 a barrel, while U.S. crude for July was down 9 cents, or 0.2 per cent at $44.65 per barrel the day before the July contract expires.

    The premium of the Brent front-month over the same month for WTI WTCLc1-LCOc1 is now at its highest since late May, when producers led by the OPEC extended by nine months its pledge to cut output by 1.8 million barrels per day.

    “Lack of major upside price response to the OPEC output cuts upping the odds of reduced compliance to the agreement in our opinion,” Jim Ritterbusch, president of Chicago-based energy advisory firm Ritterbusch& Associates, said in a note.

    In spite of all these, Saudi Energy Minister Khalid Al-Falih said the oil market is expected to balance in the fourth quarter of this year.

    “The forecasts that the oil market will rebalance in the fourth quarter have taken into consideration the rise in shale oil production,” he said.

  • OPEC’s production cut may not raise oil prices, say experts

    OPEC’s production cut may not raise oil prices, say experts

    EFFORTS by the Or-ganisation of Petroleum Exporting Countries (OPEC) and non-OPEC members to cut output in order to induce inrease in oil prices may not yield the desired results, experts have said.
    Brent crude price suffered a relapse at the weekend, moving downward to $52, from $56 recorded some weeks ago.
    OPEC and 11 other producers, including Russia, agreed in December to cut their combined output by almost 1.8 million barrels per day (bpd) in the first half of the year to eradicate excess supply and boost prices.
    That agreement, which provided initial boost to crude prices, could be extended for six months, but experts do not believe prices would receive any significant boost.
    The experts, who include the Society of Petroleum Engineers (SPE-Nigeria) Chairman, Dr Saka Matemilola and an Energy Economist with the University of Ibadan, Prof AdeolaAkinnisiju, said the hope of a further rise in the price of crude may be dimmed by the realities that would unfold in the market as time goes on.
    Matemilola said the industry has its burst and boom period, adding that the boom in the price of crude oil will not come sharply, a development, which has cast a doubt on the Federal Government’s fiscal strategies of deriving enough earnings from crude oil exports to finance its 2017 budget.
    He said the rise in the price of crude oil is predicated on some factors such as market forces, and politics in the global oil market, adding that no organisation or individual can control or regulate these factors.
    ‘’Often times, these factors are controlled by the forces of demand and supply. This means that when supply exceeds the demands, the price of crude will rise to between $120 per barrel to $130 per barrel in the foreseeable future. I can say yes, it is achievable. But the sharp rise in the price of crude would not be as rapid as that, in view of some factors in the market. These are swing in the demand and supply of crude oil and others,” he said.
    Also, Akinnisiju said it had never happened before that the price of crude would move up in one fell swoop.
    He said the market is highly sensitive, as it reacts to issues, policies and directions, in which production and price of crude oil move to in the industry.
    He said there was a tremendous amount of stock in the markets and to expect a major increase in the price is not very realistic.
    He said some producers might increase their production of oil, if they had suitable conditions or situations, adding that when this happens, there would be increase in supply of crude and its reduction in the price of the product.

  • Oil prices rise to $57.01 on weaker dollar

    Oil prices rise to $57.01 on weaker dollar

    Oil prices rose yesterday with traders shifting money into crude futures as the dollar weakened and on concerns that new U.S. sanctions against Iran could be extended to affect crude supplies.

    But markets were held back by more signs of growing U.S. production and by worries that import demand in China could slow.

    International Brent crude futures were trading at $57.01 per barrel at 0620 GMT, up 20 cents from their last close.

    U.S West Texas Intermediate (WTI) futures were up 19 cents at $54.02 a barrel.

  • Oil prices soar to $58 on global output cut deal

    Oil prices soar to $58 on global output cut deal

    Oil prices shot up over four per cent to their highest level since 2015 early yesterday after the Organisation of Petroleum Exporting Countries (OPEC) and other producers at the weekend in Vienna reached first output cut deal since 2001.
    They jointly reduced output in order to rein in oversupply and prop up the market.
    Brent sweet crude futures, the international benchmark for oil prices, soared to 57.89 dollars per barrel in overnight trading between Sunday and Monday, its highest level since July 2015.
    United States (U.S.) West Texas Intermediate (WTI) crude futures also hit a July 2015 high of 54.51 dollars a barrel.
    With the deal finally signed after a year, the market’s focus will now switch to compliance with the agreement.
    ANZ bank said that Saudi Aramco, Saudi Arabia’s state-controlled oil company, had informed customers that their allocations would be reduced in January 2017, in line with the recent OPEC production cut agreement.”
    OPEC has said it will slash output by 1.2 million barrels per day from Jan. 1, with top exporter Saudi Arabia cutting around 486,000 bpd in a bid to end overproduction .
    Oversupply has dogged markets for over two years and pushed the economies of many oil exporting countries into crisis.
    On Saturday, producers from outside the 13- country OPEC group agreed to reduce output by 558,000 bpd, short of the initial target of 600,000 bpd .

  • Oil prices hit $50 as OPEC deal nears reality

    Oil prices hit $50 as OPEC deal nears reality

    Oil prices rose to the highest since August and traded above $50 a barrel yesterday, following optimism surrounding the new oil production deal by the Organisation of Petroleum Exporting Countries (OPEC).

    The body agreed in Algeria, in September, to cap production at not more than 33 million barrels per day.

    According to Reuters, December Brent crude futures were last up 40 cents at $50.59 a barrel, off a session low of $49.74, while U.S. crude futures rose 42 cents to $48.66 a barrel, above the day’s low at $47.78.

    OPEC basket of 14 crude stood at $44.63 per barrel, according to the cartel’s secretariat.

    At its meeting in Algiers, OPEC set up a committee to work out the oil production level of every member country.

    “The Conference opted for an OPEC-14 production target ranging between 32.5 and 33.0 mb/d, in order to accelerate the ongoing drawdown of the stock overhang and bring the rebalancing forward,” OPEC said in a statement.

    “The Conference decided to establish a High Level Committee, comprising representatives of Member Countries, supported by the OPEC Secretariat, to study and recommend the implementation of the production level of the Member Countries.

    “Furthermore, the Committee shall develop a framework of high-level consultations between OPEC and non-OPEC oil-producing countries, including identifying risks and taking pro-active measures that would ensure a balanced oil market on a sustainable basis, to be considered at the November OPEC Conference.”

    Once the OPEC deal is implemented, oil prices are expected to rally at prices higher than $50 per barrel.