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Tag: OPEC

  • Oil prices stable after U.S. drilling cut

    Oil markets were fairly stable in early Asian trading on Monday with U.S. crude contracts receiving support from reduced American drilling.

    U.S. crude futures were trading at 44.86 dollars per barrel, up 23 cents from their last settlement, pushed by a slight fall in drilling activity.

    “Baker Hughes reported U.S. oil rig count fell 10 to 652 last week.

    “The consecutive second decline suggests a low price environment coupled with low oil price hedge is starting to impact U.S. supply,” ANZ bank said.

    The International Energy Agency said on Friday that a cut in production from non-OPEC suppliers, especially the United States, would lead to rebalancing of the market by next year.

    The global crude benchmark Brent was trading at 48.16 dollars a barrel.

    ANZ said strong supply from the Middle East remained a concern on the supply side, while Macquarie Bank noted that falling auto sales in August were acting as a drag on demand.

    “Sales were 1.0 per cent lower year-on-year, slightly more than the 0.8 per cent fall seen in July 2015,” the bank said.

    “It added that sales could pick up towards the end of the year.

  • OPEC crude price drops 10% in July

    OPEC crude price drops 10% in July

    The Organisation of Petroleum Exporting Countries (OPEC) has said the price of crude oil supplied by its members known as (OPEC Reference Basket) averaged $54.19 per barrel in July, representing a decline of more than 10 per cent from the previous month.

    The group in its August Monthly Oil Market Report said crude oil futures were also driven lower by various bearish factors, noting that global oil demand is expected to grow by 1.38 million barrels per day (mb/d) this year, which is about 90,000 barrels per day higher than last month’s projections with total oil demand anticipated to reach 92.70 mb/d. In 2016, world oil demand growth is expected at 1.34 mb/d with total world consumption hitting a record level of 94.04 mb/d.

    The report said after falling to multi-year lows earlier in the year, crude oil prices stabilised in April, remaining at around the $60 per barrel range until June. However, in July, a set of bearish factors pushed crude oil prices to their lowest levels in months, with Nymex WTI nearing $45 per barrel and Brent around $50 per barrel.

    This decline in oil prices came amid a sell-off in crude futures, triggered largely by continued oversupply at a time when incremental global demand has not followed suit. Financial concerns in Greece and China, as well as the outcome of the world powers’ talks on Iran’s nuclear programme, have all contributed to the current bearish market conditions, OPEC said.

    On the physical side, crude oil values for light sweet West African grades including Nigeria’s sweet crude have been pressured by several months of overhang cargoes. This is despite the recent easing of the oversupply as refiners increase utilisation to capitalise on lower crude oil prices amid a rebound in gasoline demand and better arbitrage economics to Asia. In the Middle East, spot crude cargoes are being squeezed by an inflow of Atlantic Basin crudes into the Asia-Pacific market on the back of relatively low light sweet crude prices compared with sour Middle East grades, the report added.

    On refining, the organisation said refining margins have been healthy in most regions. While margins have seen a slight weakening in Asia, they remain on the rise in the Atlantic Basin due to lower crude prices along with the excellent performance of the top of the barrel.

    During the driving season, US gasoline demand has reached as high as 9.5 mb/d over the last two months, a level not seen in years, supported primarily by lower gasoline prices.

  • Oil price won’t rise even with reduced quote – OPEC

    Oil price won’t rise even with reduced quote – OPEC

    Organisation for Petroleum Exporting Countries (OPEC) has said that prices for oil would not significantly rise even if the cartel’s daily production quota is reduced by 2 million barrels from the current 30 million.

    OPEC Secretary-General, Abdallah el-Badri, said the organisation did not plan to reduce the quota.

    He made the comments after meeting with Russia’s energy minister in Moscow to discuss the influence of Iran increasing sales of oil following the removal of Western sanctions against that country.

    El-Badri called the removal of such sanctions a great achievement.

    Iran reached an agreement with the international community this month to remove sanctions imposed over concerns that its nuclear programme could be used for military purposes.

    Russia’s economy has drastically suffered from relatively low prices for oil, which have roughly halved since mid-2014.

    Russia’s Energy Minister, Alexander Novak, expressed optimism that oil prices would stabilise in 2016, with demand increasing by 7 to 10 per cent annually until about 2020 and then 15 to 20 per cent until about 2040

  • Niger, Algeria predict persistent low oil prices

    Niger, Algeria predict persistent low oil prices

    Oil prices are likely to stay low for a long time after falling more than 40 per cent in the past year, said officials from two OPEC nations.

    Nigeria and Algeria both warned that oil prices, currently at around $60 a barrel, probably won’t recover to the 2011-2013 level of more than $100 a barrel.

    “You forecast at your own risk, but it seems to me that we should be regarding this as a permanent shock,” Ngozi Okonjo-Iweala, the Nigerian finance minister, said on a panel discussion yesterday  in Washington near the end of the International Monetary Fund’s spring meetings. “We should prepare our economies for that eventuality.”

    The comments highlight a growing worry among oil-producing nations ahead of an important meeting of the Organisation of Petroleum Exporting Countries in June in Vienna. Brent crude has fallen about 42 per cent over the past year, though it has increased 11 per cent so far this year.

    The OPEC meeting is likely to be tense after Saudi Arabia, the world’s largest oil exporter, boosted production to the highest in three decades in March, with a surge equal to half the daily output of the Bakken formation in North Dakota.

    OPEC nations such as Nigeria and Algeria are suffering more than Saudi Arabia and other Gulf countries the drop in oil prices because they built smaller foreign-exchange reserves.

    Nigeria has responded to the oil rout by cutting expenditures and with revenue-raising measures including a tax on luxury items such as yachts. Longer term, the government seeks to diversify the economy “beyond oil,” Okonjo-Iweala said.

    Asked where she expected prices to be in 12 months, Okonjo-Iweala said $60 to $70 a barrel.

    Bank of Algeria Governor Mohammed Laksaci said the “drastic” oil slump has eroded the country’s foreign reserves and budget position. Algeria’s hard currency reserves dropped in January by $11.6 billion, the biggest monthly drop in more than 30 years, according to a data from the IMF.

    “Given that oil prices are generally expected to remain low for a prolonged period, the degree of resilience of our economy may rapidly erode,” he said during the panel, declining to estimate where prices will be a year from now.

    Mauricio Cardenas, the Finance Minister of Colombia, which over the past five years has become a big producer, agreed on the longer-term outlook, though he said the price of Brent crude may rise to $70 a barrel in the next few years.

    “We think of this in the framework of a permanent reduction in oil prices,” said Cardenas, who estimated prices in a year will be $65 a barrel.

    While the IMF projected last week that low oil prices should boost global growth, it warned that the combination of a strong U.S. dollar and depressed crude market could bite hard in emerging economies that rely heavily on oil exports.

    David Lipton, the second-in-Command at the Washington-based lender, said during the discussion that oil futures imply a modest increase in prices over the next five years.

    “From the standpoint of policy makers, I think the smart thing to do is presume this will be durable because we’ve seen that it’s come from the supply side.

    “It’s not something that’s going to go away just with the economic recovery.”

  • OPEC’s oil output hits highest since October

    OPEC’s oil output hits highest since October

    The Organisation of Petroleum Exporting Countries (OPEC) yesterday said its oil supply has jumped in March to its highest since October as Iraq’s exports rebounded after bad weather and Saudi Arabia pumped at close to record rates.

    Nigeria is a member of OPEC, pumping about 2.2million barrels per day to the cartel’s basket. The increase from the group adds to excess supply in the market, despite some signs that the halving of crude prices since June last year is encouraging higher oil demand.

    OPEC supply has risen in March to 30.63 million barrels per day (bpd) from a revised 30.07 million bpd in February, according to Reuters survey based on shipping data and information from sources at oil companies, OPEC and consultants.

    An analyst at Commerzbank in Frankfurt, Carsten Fritsch, said: “Demand might be a bit stronger than expected at the beginning of the year, but I don’t think it is strong enough to absorb the entire oversupply. There’s still oversupply in the market, which is reflected in the inventory builds.”

    Besides Saudi Arabia, the main reasons for the rise are the resolution of involuntary outages – Iraq lifted exports due to improved weather and Libya managed to nudge production higher despite unrest.

    If the total remains unrevised at 30.63 million bpd, March’s supply would be OPEC’s highest since 30.64 million bpd in October 2014, based on Reuters surveys.

    Saudi Arabia was the driving force behind OPEC’s refusal last year to prop up prices by cutting its output target of 30 million bpd, in a bid to discourage more costly rival supplies. The group holds its next meeting in June, and comments from OPEC officials suggest it will not alter the policy.

    In March, the largest increase has come from Iraq, whose southern oil exports recovered following bad weather that delayed tanker loadings, according to shipping data and industry sources. Northern exports were slightly lower.

    Based on this survey, Iraq’s exports have come close to December’s record high of 2.94 million bpd, depending on whether tankers at the southern ports on earlier on Tuesday actually depart in March. Iraq was hoping to reach 3 million bpd of exports this month.

    Saudi Arabia has increased output to within a whisker of 10 million bpd on average in March, sources in the survey said, due to higher demand from export customers and an increased local requirement in new oil refineries.

    “The Saudis say they are responding to higher demand and I tend to believe that, looking at the strong refining margins in Singapore,” said an oil consultant. Margins are well above the annual average in Asia, which buys the bulk of Saudi Arabia’s exports.

  • Oil: Nigeria, others push for extraordinary OPEC meeting

    Oil: Nigeria, others push for extraordinary OPEC meeting

    As oil inches back to $60 per barrel Nigerian, Venezuelan and Ecuadorian officials are leading the calls for an extraordinary meeting of the Organisation of Petroleum Exporting Countries (OPEC) ministers to haggle over the cartel’s production quota to the wider oil market.

    According to Forbes’ report, which quoted a recent article in the Financial Times, Nigeria’s Minister of Petroleum Resources and OPEC President Diezani Alison-Madueke, expressed open frustration at the attitude of the OPEC kingmakers –Saudis to the current oil market situation. “Almost all OPEC countries, except perhaps the Arab bloc, are very uncomfortable….We are very cognisant of the Saudi position,” she said.

    Forbes analysis maintained that the Saudis, and by extension most of the Arab bloc comprising of Kuwait, Qatar and the United Arab Emirates, won’t not give ground in the current almighty tussle for market share.

    OPEC ministers are next scheduled to meet on 5 June, 2015 at their Viennese secretariat following the organisation’s international seminar for 2015. Forbes stated that anecdotal evidence I have from reliable contacts suggests that is not changing and for one reason alone – the Saudis won’t have it, and by extension neither would the Qataris, Kuwaitis and Emiratis. So what is the intention of non-Arab members in calling for it?

    According to Forbes, first motive is to get a reaction out of the market. For example, after the FT published Alison-Madueke’s quotes, Brent rose albeit for a precious few moments but not nearly as meaningfully as she would have wanted. Given the supply glut, these things no longer have the impact they used to. Second motive is to put out their blindingly obvious unease to the Saudis, hoping against all hope for a shift in position.

  • Oil price drop: Nigeria to call emergency OPEC meeting if…

    Oil price drop: Nigeria to call emergency OPEC meeting if…

    Nigeria will call an extraordinary meeting of the Organisation of Petroleum Exporting Countries (OPEC) if crude oil prices slip any further, Minister of Petroleum Resources Mrs Diezani Alison Madueke has said.

    Speaking in an interview with the Financial Times, she said: “We’re already talking with member countries. If the price slips any further, it is highly likely that I will have to call an extraordinary meeting of OPEC in the next six weeks or so,” she said.

    Mrs Alison-Madueke as OPEC president is responsible for liaising with member countries and the producer group’s secretary-general in the event of an emergency meeting.

    Almost all OPEC countries, except the Arab bloc, are “very uncomfortable,” she said.

    The comments are the first public sign of the deepening unease about the oil crisis since Venezuela and Iran last month pushed for the cartel to cut output in a bid to reverse the more than 50-per-cent drop in prices since June last year.

    In November, the 12-member group chose to hold production at 30 million barrels a day. The next official meeting is scheduled for June.

    Brent oil prices briefly rose by more than $1  a barrel on the comments, reversing earlier losses, but quickly sank again as dealers doubted whether there was any scope for rapid action given core Gulf OPEC members led-by Saudi Arabia have given no sign they are ready to curb production.

    Nigeria “obviously needs more money for its oil, but if the Saudis, who control one-third of OPEC production, do not go along, what can it do?” said James L. Williams, energy economist at WTRG Economics in London, Ark.

  • Oil rallies raises OPEC demand forecast

    Oil rose for a third straight session on Monday as OPEC forecast greater demand for crude this year.

    Data from last week showed that  the United States (U.S.) oil rig counted  at a three-year low.

    U.S. crude futures, or WTI, rose $1.41, or almost 3 per cent, to $53.05 after rising to $53.40 earlier.

    WTI’s front-month contract,in  March 2014  was at its narrowest discount in a week to the second month. April recorded strong gains in oil for prompt delivery reduced some of “contango” that made it profitable to store crude for future delivery.Both WTI and Brent have gained nearly 20 per cent since a January 29, 2015  rebound inspired by better confidence in the supply outlook for crude following a seven-month-long selloff that took prices down by more than 50 per cent.

    “The harder you fall, the stronger you often rebound, from a statistical point of view,” said Phil Flynn, analyst at the Price Futures Group in Chicago.

    “But I think there is still a lot of denial that the market has hit bottom, and you’ll continue seeing people standing in front of the rally for a selling opportunity.”

    While Monday’s sentiment in oil was predominantly bullish, some traders sounded caution over rising tensions surrounding Greek debt negotiations, and how that could affect the broader European macroeconomic picture and demand for energy.

    The Organisation of the Petroleum Exporting Countries (OPEC), forecast demand for the cartel’s oil will average 29.21 million barrels per day (bpd) in 2015, up 430,000 bpd from its previous forecast.

    In its monthly report, the group also slashed its outlook for crude supply growth in non-OPEC countries, citing a slowdown in the U.S. shale boom and lower capital investment by energy firms.

    Meanwhile, data from U.S. oil services firm Baker Hughes on Friday showed that the number of rigs drilling for oil in the United States fell to 1,140 last week, the lowest since December 2011.

  • How OPEC weaponised price of oil against U.S. drillers

    How OPEC weaponised price of oil against U.S. drillers

    If there ever was doubt about the strategy of the  Organisation of Petroleum Exporting Countries (OPEC), its wealthiest members are putting that issue to rest.

    Representatives of Saudi Arabia, the United Arab Emirates (UAE) and Kuwait stressed a dozen times in the past six weeks that the group won’t curb output to halt the biggest drop in crude since 2008. Qatar’s estimate for the global oversupply is among the biggest of any producing country. These countries actually want — and are achieving — further price declines as part of an attempt to hasten cutbacks by U.S. shale drillers, according to Barclays Plc and Commerzbank AG.

    Crude fell 48 per cent last year and has declined 37 per cent since OPEC affirmed its output target on November 27. That decision, while squeezing revenues for OPEC members this year, aims at preserving their market share for years to come.

    An analyst at consultants IHS Inc. in Washington, Jamie Webster, said: “The faster you bring the price down, the quicker you will have a response from U.S. production — that is the expectation and the hope. I cannot recall a time when several members were actively pushing the price down in both word and deed.”

    U.S. crude production totaled 9.13 million barrels a day last week, up about 1 million barrels from a year ago and 49,000 from the OPEC meeting in November. Horizontal drilling and hydraulic fracturing in underground shale rock have boosted output by 66 per cent over the past five years. Exports, still limited by law, reached a record 502,000 barrels a day in November, according to the Energy Information Administration.

  • Oil price fall: ‘OPEC won’t cut output’

    Oil price fall: ‘OPEC won’t cut output’

    Crude oil dropped to the lowest level in more than five years after the United Arab Emirates said the Organisation of Petroleum Exporting Countries (OPEC) won’t rein in production in response to the slump.

    OPEC will refrain from curbing output even if prices fall as low as $40 a barrel, U.A.E. Energy Minister Suhail Al-Mazrouei said. Prices have slipped about 20 per cent since OPEC decided against cutting production to tackle the glut at a Nov. 27 meeting. The group has pumped more than its output target of 30 million barrels a day for the last six months.

    Futures are poised to fall below half where they were six months ago, according to a Bloomberg survey. Oil slid into a bear market this year amid the highest U.S. production in three decades and slowing growth in global consumption.

    “The elements that brought us down this far haven’t changed,” John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy, said by phone. “The move lower should extend downward. The bottom of this move isn’t in sight yet.”

    Brent for January settlement slipped 79 cents, or 1.3 percent, to end the session at $61.06 a barrel on the London-based ICE Futures Europe exchange. It was the lowest close since July 2009. The grade has fallen 45 per cent in 2014. Volume was four per cent above the 100-day average. The North Sea oil closed at a $5.15 a barrel premium to WTI, the most in six weeks.

    The European benchmark will slide to as low as $50 a barrel in 2015, according to the median in a Bloomberg survey of 17 analysts, down from the $115.71 a barrel high for the year on June 19. The grade has already collapsed 47 per cent since then and needs to fall further before producers clear the current glut, said five out of six respondents who gave a reason.

    OPEC will stand by its decision not to cut output, the U.A.E.’s Al-Mazrouei told Bloomberg at a conference in Dubai. The group will wait at least three months before considering an emergency meeting to discuss output again, he said.  

    “We are not going to change our minds because the prices went to $60 or to $40,” Mazrouei said. “The market will stabilise itself.”

    OPEC pumped 30.05 million barrels a day in November, according to data from analysts and media organisations compiled by the group in a report Dec. 10. That’s 1.73 million barrels a day more crude than the world needs from the exporters in the first quarter, according to its own estimates.

    “We have a global supply glut and economic conditions in Europe and China continue to worsen so prices will remain under pressure,” Gene McGillian, a senior analyst at Tradition Energy in Stamford, Connecticut, said by phone. “I don’t know where the bottom will be.”

    The group decided last month to keep output unchanged to protect OPEC’s market share, even if it has a negative effect on crude prices, the official Kuwait News Agency reported yesterday, citing Oil Minister Ali al-Omair.

    “We’ve got an epic battle of the wills,” Stephen Schork, president of Schork Group Inc., a consulting group in Villanova, Pennsylvania, said by phone. “The Saudis, Kuwaitis and the rest of that bloc are showing no sign of backing down.”

    An increase of about six million barrels a day in non-OPEC supply, from countries including the U.S. and Russia, together with speculation in oil markets, triggered the recent drop in prices, OPEC Secretary-General Abdalla El-Badri said yesterday at the Dubai conference.

    “It’s not logical nor fair to ask OPEC to reduce their production and not ask the other producers to stop their expected growth in supply,” Mazrouei said yesterday on Twitter.

    The U.S. pumped 9.12 million barrels a day in the period week Dec. 5, the most in weekly Energy Information Administration started in 1983.

    The gain came as horizontal drilling and hydraulic fracturing unlocked supplies from shale formations including the Eagle Ford in Texas and the Bakken in North Dakota.

    “It appears at least that OPEC is willing to let things sink until the other side bails,” Michael Lynch, president of Strategic Energy and Economic Research in Winchester, Massachusetts, said by phone.

    Futures gained earlier on signs that Libyan and Nigerian output will decline.

    Libya declared force majeure, which excuses a supplier from meeting its delivery commitments because of events beyond its control, at the ports of Es Sider and Ras Lanuf, NOC said in a statement on its website Dec. 13. Output will be halted at some oil fields because of armed clashes nearby, it said.

    Nigerian oil workers’ unions Pengassan and Nupeng, who are demanding changes to the country’s oil industry, instructed members to stop all work at facilities including oil platforms and export terminals.

    Libya and Nigeria together produced 2.76 million barrels a day of crude oil last month, according to Bloomberg estimates.

    The African countries were among eight OPEC members who supported an output cut on Nov. 27, according to five people briefed on the meeting.