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Tag: OPEC

  • Oil rises above $44 on OPEC cap

    Oil rises above $44 on OPEC cap

    Oil prices hovered above $44 a barrel as the market weighed the likelihood and potential effectiveness of Libya and Nigeria production capping.

    Investors’ skepticism over whether Libya and Nigeria will agree to limit supplies kept futures trading in a $1.19-range in New York.

    Kuwait’s Oil Minister IssamAlmarzooq said in Istanbul that the two African producers, who have boosted output since being exempt from the Organisation of Petroleum Exporting Countries (OPEC) cuts, have been invited to a July 24 meeting in Russia to discuss the stability of their production,  BNP Paribas SA reduced its price forecasts for this year and next because supply growth elsewhere is diluting the impact of the OPEC-led curbs.

    The possibility of Libya and Nigeria agreeing to production caps is giving investors more hope that prices may rise, though the uncertainty is causing “a see-saw effect,” Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts, said by telephone.

    “People are worried that it could turn out to be a prolonged affair getting them to the table to sign off on something.”

    Oil has traded below $50 a barrel since May in New York amid concerns that elevated global oil inventories and rising output from the U.S. and other producers will offset cuts by OPEC members and its partners. U.S. shale production can expand with prices in the mid-$40s, according to JPMorgan Chase & Co. Libya and Nigeria together added 440,000 barrels a day of production in May and June as fields restarted, according to data compiled by Bloomberg.

    West Texas Intermediate for August delivery rose 38 cents to $44.61 a barrel on the New York Mercantile Exchange. Total volume traded was about 15 per cent above the 100-day average.

    Prices had fallen $1.29, or 2.8 per cent, to $44.23 on Friday.

    Brent for September settlement increased 40 cents to $47.11 a barrel on the London-based ICE Futures Europe exchange. Prices slid 2.5 per cent last week. The global benchmark crude traded at a premium of $2.31 to September WTI.

    If Libya and Nigeria are able to stabilise their output at current levels, they will be asked to cap supply as soon as possible, Almarzooq said. However, deepening production cuts already agreed to by OPEC and partners is not on the agenda for the July 24 meeting in St. Petersburg, he said. It’s premature to talk about that option, OPEC Secretary-General Mohammad Barkindo said in Istanbul.

    “The output from Libya and Nigeria have actually had more of an impact in undermining the efficacy of OPEC’s cuts than even U.S. shale,” Tamar Essner, an energy analyst at Nasdaq Inc. in New York, said by telephone. “If they can put a freeze, that remains to be seen, but that will be an important driver in terms of really reducing OPEC’s exports.”

    BNP Paribas cut its 2017 Brent forecast by $9 to $51 a barrel and for 2018 by $15 to $48, while making similar reductions for WTI. “OPEC’s objective to reduce oil inventories to their five-year average is elusive in the short-term,” the bank’s head of commodity markets strategy Harry Tchilinguirian said in an emailed report.

  • It’s a shame we are still importing petroleum products – Kachikwu

    It’s a shame we are still importing petroleum products – Kachikwu

    Minister of State for Petroleum Resources, Ibe Kachukwu has said that Nigeria remain the only oil producing country that is still struggling with the importation of refined petroleum products, describing the situation as a complete embarrassment.

    The Minister said Nigeria was the only member country of the Organisation of Petroleum Exporting Countries (OPEC) still grappling with the importation of refined petroleum products. 

    Kachukwu who spoke at the 5th Triennial National Delegates Conference of the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) in Abuja also said it was a shame that despite its huge resources, Nigeria has continued to grapple with epileptic power supply.

    He said Nigeria should be able to produce enough petroleum products to meet domestic needs, pointing out that changing times in the industry suggest that Nigeria must look for ways of ensuring efficient management of the refineries and make them productive or lose them and the job opportunities it offers.

    He said the nation’s future lies in the area of gas, saying at best, the nation’s oil reserve will last for another 25 to 39 years, while the nation’s gas reserve will last for over 60 years.

    He said: “For me, the while idea of continuing importation of petroleum products in this country is a shame. We are the only once, when we go for OPEC meetings that are still struggling how to import petroleum products when we should be able to produce even if it is only the petroleum products that we need in this country. 

    “We need to find anything that will help us to do that and I encourage you to collaboratively work with us as we get into this. Once that happen, it is going to open a whole vista of opportunities in marketing, midstream performances, opportunities in infrastructure along pipeline. 

    “I urge you to take the solidarity that you have and you sing so passionately about away from just fighting issues of staff welfare and move into issues of staff investments. I need to see you participate in the value chain. Some of you are some of the best brains there are in the industry and you know where the issues are and where to create new investments.”

    On epileptic power in the country, he said: “It is a shame that a country with such massive resources will continue to be epileptic in power supply. I go to Ghana sometimes and I am ashamed that we supply some of the gas. At least in Accra, and most of the major cities, power is 24 hours. In Ivory Coast, despite the problems they have in terms of power costing, there is 24 hours supply. 

    “There is no absolute reason why this country cannot move from this decadent practice of explaining inefficiency to a new horizon where visibility are grandiose. I am committed to working with the power ministry and every Nigeria to move the transformative journey from one point to another, from the point excuses to the point of absolute final delivery.”

    The Minister said further that “the reality is that the oil industry is changing almost transformatively. Prices have tumbled and have continued to struggle despite all the works we have done in OPEC to the and boast it. The reality is that investments are declining at an alarming rate and suddenly, there are new entrants into the industry. 

    “Also, CEOs are struggling as to where to put very scarce resources and suddenly, it is now how well you can market your country, reposition your policies in such a way that there are benefits. All is a sudden, investment return in some of these exploration activities are beginning to get challenges. Only those who are able to look at their technology and new ways of doing business are going to survive the oil industry of tomorrow. 

    “If you take the annual return of most of the major oil companies, you will see the sort of disequilibrium that’s happening there and those who are beginning to jump in and out of leadership, you realize that expectations are changing. As it concerns Nigeria, we must work inclusively hard to deal with some of the difficulties that we will continue to see in our production platforms. 

    “Whether it is the militants which is a key component or the slow speed of approvals or whether the fact that  our policies are not even as fast as they should to catch up with changing Times.

    “Those of us who have the opportunity to seat in ministerial zones where we have to influence policies have got to work extremely hard to help drive the sea of change that is imperative is the sector is to survive. Infrastructural deficit is a key component. We lack infrastructure in the sector, whether it is down stream or up stream or oil and gas. 

    “The absence of infrastructure has made it impossible to have a holistic private sector participation. We have got to find policies that will encourage private sector participants to play a key role. Coupled with that is the fact that countries are moving away from oil. Our oil estimate as per reserve is at best about 25 to 30 years, while gas estimate is over 60 years. 

    “Clear enough, Nigeria is more of a gas country than an oil country. But what are we doing to ensure that our dramatic movement into the gas production. I am just coming from the FEC where we presented a memo on gas which has been approved today. 

    “Major movement is in terms of what we need to do in the gas environment because it is so key that unless we can put the two energy together, we are not likely to see an improvement in our economy or see opportunities that most of you are beginning to miss in terms of job creation and employment in the oil sector.

    “Gas is the new horizon of opportunity. There is so much happening that needs to happen, that should have happened yesterday. Gas is the future for this country and the place to be and we need to start looking at that. Increasingly, we are seeing very strong local players.”

    The Minister dispel insinuations that the government has concluded plans to either concession or sell off the refineries, saying “let me say that there has been attempt and there is no approval to concession refineries or sell refineries. I keep hearing discussions all over the place especially from people who should know better. 

    “What we have approval for is to bring in a financing mechanism that will enable us to finance and develop and upgrade the refineries as they are. The reality is that once private sector players begin to build their own refineries, whatever we it that we are afraid of will disappear and unless we begin to move very rapidly and quickly to position these refineries in such a way that they can compete, we will lose the refineries completely together with the job scale that exist there right now.

    “My drive is to see that those investments goes through a transparent process and the announcement that you hear about selection has not happened. They all be pacesetters in the whole process, but it will go through a transparent process. 

    “Nothing that we are trying to do has taken away thE management from the NNPC. However, we need to bring in fund and best practices and elevate these institutions to the level where they should work for this country because we are losing money.”

    In his address, National President of PENGASSAN, Francis Olabode Johnson said the union was in full support of government initiatives to bring in investors to revamp the refineries especially in the area of funding and expertise.

    Johnson said however that the union want to have access to the memorandum of understanding to be signed between the  federal government and the investors for the three refineries in Kaduna, Warri and Port Harcourt.

    In addition, he said the two unions in the oil and gas sector, PENGASSAN and NUPENG should be carried along at all stages of the process to ensure that Labour related issues and job security is guaranteed, saying, “while we await the direction of the investors in the three refineries, we call on the government to ensure immediate rehabilitation of obsolete equipment in the plants”

    Johnson also frown what he described as fragrant disobedience to tripartite agreement reached by International Oil Companies operating in the country on job security, saying “we take this as an affront on the constituted authorities in the country. We call on the management of the Oil and Gas companies in Nigeria to respect the laws of the land as well as constituted authorities in Nigeria.”

  • OPEC oil output rises in May as cut-exempt Nigeria, Libya pump more

    OPEC oil output rises in May as cut-exempt Nigeria, Libya pump more

    OPEC oil output rose in May, the first monthly increase this year, a Reuters survey found on Wednesday, as higher supply from two OPEC states exempt from a production-cutting deal, Nigeria and Libya, offset improved compliance with the accord by others.

    According to Reuters surveys, a drop in output in Angola and Iraq and continued high compliance from Gulf producers Saudi Arabia and Kuwait helped lift OPEC’s adherence with the supply cut deal to 95 per cent from 90 per cent in April.

    OPEC pledged to reduce output by about 1.2 million barrels per day (bpd) for six months from Jan. 1, 2018 as part of a deal with Russia and other non-members.

    Oil prices has gained some ground but an inventory glut and rising supply by outside producers has kept prices below the 60 dollars a barrel that Saudi Arabia wants.

    A sustained output rise from Libya and Nigeria poses further challenges.

    To provide additional support for prices, the producers decided at a meeting last week to prolong the deal until March 2018.

    They discussed whether to include Nigeria in the output cap but decided against for now, OPEC delegates said.

    Nigeria and Libya were exempted because their output has been curbed by conflict.

    However, supplies from both nations staged a partial recovery in May, lifting overall OPEC output by 250,000 bpd to 32.22 million bpd.

    The biggest increase came from Nigeria, where the Forcados production stream began loading cargoes for export.

    The Forcados pipeline had been mostly shut since it was bombed by militants in February 2016.

    In Libya, the state oil firm said output had reached 827,000 bpd on Wednesday, around levels last seen in 2014. But production is still half the 1.60 million bpd Libya pumped before the 2011 civil war.

    While the exempt nations pumped more, those bound by output targets boosted compliance.

    Adherence by OPEC with the deal has been higher than in the past, reaching a record according to the International Energy Agency and other analysts.

    Angolan supply showed the largest decline due to fewer scheduled exports after a jump in April. Iraq exported slightly less crude from its southern terminals, the survey found.

    Saudi Arabia pumped more although its compliance was the second-highest in OPEC. Even with May’s increase, the total curb achieved by OPEC’s top producer Saudi Arabia is 564,000 bpd, well above the target cut of 486,000 bpd.

    Output in Iran and the United Arab Emirates was steady. Iran was allowed a small increase in the OPEC agreement and, having sold the oil it had held in floating storage, appears to have reached a short-term peak.

    The UAE, with lower compliance than other Gulf producers, has said suggestions that it is failing to comply fully can be explained by the gap between its own figures and those estimated by the secondary sources that OPEC uses to track compliance.

    OPEC announced a production target of 32.50 million bpd at its Nov. 30 meeting, which was based on low figures for Libya and Nigeria and included Indonesia, which has since left.

    No new target was announced last week to reflect this change or the addition of Equatorial Guinea, which OPEC said on May 25 joined the group with “immediate effect.” The country will be added to the Reuters survey from June.

    The Libyan and Nigerian increases mean OPEC output in May averaged 32.22 million bpd, about 470,000 bpd above its supply target, adjusted to remove Indonesia and not including Equatorial Guinea.

    The Reuters survey is based on shipping data provided by external sources, Thomson Reuters flows data, and information provided by sources at oil companies, OPEC and consulting firms.

  • OPEC members support output cut extension

    OPEC members support output cut extension

    Ecuador Oil Minister José Icaza Romero has said the Organisation of Petroleum Exporting Countries (OPEC) and other oil-producing countries would discuss a six or nine months extension to output cuts when the Organisation meets today.

    According to Reuters’ report, Icaza Romero told reporters that “Six and nine months are both proposals on the table. We will support the majority, probably the nine months.”

    Asked whether deeper cuts would be discussed, he said: “Not at this point, I don’t think so.”

    OPEC member countries meet today in Vienna, Austria to consider whether to prolong the deal reached in December in which OPEC and 11 non-members, including Russia, agreed to cut output by about 1.8 million barrels per day in the first half of 2017.

    Also the United Arab Emirates supports extending oil output cuts for another term, the Energy Minister Suhail bin Mohammed al-Mazroui said, saying ahead of an OPEC meeting he was optimistic about meetings held between Saudi Arabia and Russia.

    “We are optimistic about the statements and the meetings held between the Saudi-Russian sides,” he stated, adding that the previous extension had helped to balance the market and maintain average prices.

    The UAE supports “the extension of the agreement for another term,” he said.

    Mexico also threw its weight behind extension of production cut. According to the Mexican deputy secretary for hydrocarbons, Aldo Flores-Quiroga, Mexico supports an extension of OPEC’s supply cuts as a way to stabilise oil markets and bring fresh investment into the country’s growing energy sector.

    Aldo Flores-Quiroga said he believed members of OPEC should and would continue plans to coordinate oil production cuts into at least 2018. He did not say whether he preferred a six- or nine-month extension, which OPEC members are debating.

    “Stable markets help provide a stable framework for investment, and that helps Mexico,” said Flores-Quiroga, who assumed his post last summer.

    Mexico, which is not in OPEC, has seen its oil industry atrophy in the past 50 years due to underinvestment and hostile regulation of foreign partners.

    Constitutional changes in 2013 have slowly begun to attract capital to the second-largest Latin American economy, but low oil prices have hindered Mexico City’s efforts.

  • OPEC, non-OPEC members hold informal talks on new oil cuts

    OPEC, non-OPEC members hold informal talks on new oil cuts

    OPEC and non-OPEC ministers would meet on Wednesday for informal consultations in Vienna in a last-ditch bid to agree the duration of oil output cuts.

    The ministers would also seek to clear a global stocks overhang that has pulled down the price of crude.

    Top OPEC oil producer, Saudi Arabia, favours extending the output curbs by nine months rather than the initially planned six months, to speed up market rebalancing and prevent crude prices from sliding back below 50 dollars per barrel.

    OPEC members Iraq and Algeria as well as top non-OPEC producer Russia also supported a nine-month extension but some Gulf OPEC members, including Kuwait and the United Arab Emirates have pointed to a need for further analysis.

    OPEC would meet formally in Vienna on Thursday to consider whether to prolong the deal reached in December in which OPEC and 11 non-members agreeded to cut output by about 1.8 million barrels per day in the first half of 2017.

    A ministerial monitoring committee consisting of OPEC members Kuwait, Venezuela, Algeria and non-OPEC Russia and Oman meets in the Austrian capital to discuss the progress of cuts and their impact on global oil supply.

    Saudi Arabia, which holds the current OPEC presidency, will also attend.

    Several OPEC delegates said they expected the meetings on Wednesday and Thursday to be relatively painless, resulting in an output cut extension by nine months.

    “I think the meeting will go smoothly,” an OPEC delegate said, referring to signs of consensus in the group, including Iran, which has fought Saudi Arabia in many recent OPEC meetings.

    However, several delegates and ministers said they did not believe cuts could be extended to a full year.

    Possible surprises could include a deepening of the cuts, but this would likely be minor because the non-OPEC producers that are expected to join the accord for the first time on Thursday, such as Turkmenistan and Egypt, are fairly small.

    OPEC’s cuts have helped push oil back above 50 dollars a barrel, giving a fiscal boost to producers.

    By 0750 GMT on Wednesday, Brent crude was up 0.5 per cent at around 54.50 dollars a barrel.

    However, the price rise has spurred growth in the U.S. shale industry, which is not participating in the output deal, thus slowing the market’s rebalancing with global stocks still near record highs.

    “This is a bit tricky as production cuts cause higher prices which will incentivise more production for the U.S. shale oil and reduce the impact of the production cuts.

    “So it’s a bit cyclical,’’ Sushant Gupta, research director for consultancy Wood Mackenzie, said.

  • ‘Consensus emerging for OPEC, non-OPEC to extend output pact’

    Saudi Arabia’s OPEC governor said on Friday there is an emerging consensus among OPEC and non-OPEC countries who took part in a global pact to cut crude output on the need to extend the agreement beyond June to help clear a supply glut.

    OPEC, Russia and other producers have agreed to curb production by 1.8 million barrels per day (bpd) until June 30.

    “There’s an emerging consensus among participating countries on the need to extend the production agreement reached last year” Adeeb Al-Aama told Reuters.

    “Based on today’s data, there’s a growing conviction that a six-month extension may be needed to rebalance the market, but the length of the extension is not firm yet,” he said.

    A formal decision will be taken when the OPEC ministers meet on May 25.

    NAN reports that on April 19, OPEC Secretary-General Mohammad Barkindo said that all oil producers taking part in a supply-cut pact are committed to bringing global inventories down to the industry’s five year average and restoring stability to the market.

    Barkindo, speaking in the United Arab Emirates, said compliance data in March is showing better conformity by the oil producers with the agreement than in February.

    OPEC and non-OPEC producers agreed in December to cut supplies for six months, helping lift oil prices to about 55 dollars a barrel after a two-year slump.

    OPEC will review policy for the second half of this year at a May 25 meeting.

    Barkindo would not say whether the agreement will be extended for another six months, but that any decision taken would be in the interest of all producing and consuming countries.

    NAN reports that on Dec. 10, 2016, OPEC won the backing of countries outside the oil cartel to join supply cuts for the first time since 2001, overcoming the final major obstacle for a global agreement to curb output.

    The agreement in Vienna was designed to speed the end of the worst oil downturn in a generation by mopping up excess supplies and boost prices, providing some relief to resource-rich nations whose economies have taken a big hit.

    Prices rallied by 15 per cent since Nov. 30, 2016 when Opec’s 13 members led by the group’s largest producer Saudi Arabia, agreed to curb output by more than one million barrels a day.

  • Weekly Oil Update

    April looked very promising. The price of the black gold was advancing higher and we broke few major resistances. On Wednesday something snapped. The price fell sharply and in one day erased almost whole April upswing! What was the trigger and what was the general reason of that panic selling?

    First let us start with the trigger. For that we do have two factors, one major and one minor. Minor factor is that the USD is a bit stronger yesterday and the second one – major was the data about Crude Oil Inventories. This came as expected but looking a bit deeper, on US Gasoline Inventories, we could see a huge beat there. We were expecting approx 2mln decline and we got over 1.5mln rise. And again, that was just a trigger. The real sentiment behind this movement is in my opinion different.

    I think that the recent upswing was largely based on the false faith in the OPEC and the possible extension of their agreement. Even if that will happen, the lower supply from those countries will be covered by non OPEC producers! Simple is that. What is more, the global demand is still low.  No rocket science here, combination of those two means lower prices.

    Technically, the buy signal that was present not so long ago is erased. Bears are back on the market and are hitting with a large power. As long as we stay below the 52 USD/bbl, the sentiment stays negative. But that is the mid-term. Next few days most probably we will be able to experience a small bullish correction here but it should not distract the traders from their main mission – going short on the Oil.

     

    Tomasz Wisniewski

    Chief Analyst – Alpari Research & Analysis Limited

     

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  • World oil demand to rise in 2017 – OPEC

    The Organisation of Petroleum Exporting Countries (OPEC) has said demand for oil around the world is expected to rise this year.

    OPEC said this in the April edition of its Monthly Oil Market Report.

    World oil demand growth in 2016 was kept broadly unchanged at 1.38 million barrels per day (mb/d), averaging 95.05 mb/d.

    “For 2017, oil demand growth is anticipated to be around 1.27 mb/d, following an upward revision of 10 trillion barrels daily to average 96.32 mb/d,’’ the report stated.

    It also said the Asia group, includeing India, was anticipated to lead oil demand growth this year followed by China and the Organisation for Economic Co-operation and Development (OECD) Americas.

    “OECD Asia Pacific is the only region anticipated to see a decline in oil demand in 2017. Demand for OPEC crude in 2016 now stands at 31.7 mb/d, which is 1.9 mb/d higher than the 2015 level.

    “In 2017, demand for OPEC crude is projected at 32.2 mb/d, around 0.6 mb/d higher than the 2016 level,” the report concluded.

    NAN

  • OPEC, non-OPEC members will restore market stability – Barkindo

    The Secretary-General of the Organization of Petroleum Exporting Countries (OPEC), Mohammad Barkindo, said on Wednesday that all oil producers taking part in a supply-cut pact are committed to bringing global inventories down to the industry’s five-year average and restoring stability to the market.

    Barkindo, who spoke in United Arab Emirates, said compliance data in March showed better conformity with the agreement by oil producers.

    OPEC and non-OPEC producers agreed in December to cut supplies for six months, helping to lift oil prices to about $55 a barrel after a two- year slump.

    OPEC will review policy for the second half of this year at a May 25 meeting.

    Barkindo would not disclose whether the agreement would be extended for another six months, saying any decision taken would be in the interest of all producing and consuming countries.

    NAN

  • UAE boosts OPEC production cut compliance

    UAE boosts OPEC production cut compliance

    ORGANISATION of Petroleum Exporting Countries (OPEC) oil output may fall for a third straight month as the United Arab Emirates (UAE) made progress in trimming supplies while maintenance and unrest cut production in exempted nations – Nigeria and Libya, a Reuters survey showed yesterday.

    The production cut by the UAE has boosted OPEC compliance this month with its production-cutting deal to 95 per cent, up from an initial February estimate of 94 per cent and a record high, according to the survey.

    The UAE will comply fully with its OPEC commitment to reduce oil production by more than 139,000 barrels per day (bpd) in this month and next, Energy Minister Suhail Al Mazroui said.

    “UAE production cut for March and April will be more than 139,000 bpd due to the maintenance activities, which means more than 100 per cent compliance,” Al Mazroui said.

    The OPEC pledged to reduce output by about 1.2 million bpd from January 1 – the first accord on supply curbs since 2008. Non-OPEC countries pledged to cut about half as much.

    OPEC wants to end a glut that is keeping oil below $52 a barrel, half the level of mid-2014. But stocks are still high despite strong OPEC compliance, boosting expectations that the group will seek to prolong the agreement.

    “OPEC is now facing the prospect of falling short of its objective,” said Stephen Brennock of oil broker PVM. “Bulging global oil stockpiles will not draw down to the five-year average unless OPEC-led cuts are extended.”

    Compliance of 95 per cent is higher than OPEC achieved in its last cut in 2009, Reuters surveys showed. Analysts, including those at the International Energy Agency (IEA) have put adherence in 2017 even higher, with the IEA calling it a record.