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Tag: OPEC

  • OPEC seeks early resolution to tensions in oil industry

    The Organisation of Petroleum Exporting Countries (OPEC) is seeking an early resolution between the United States (U.S.) and Iran and Venezuela.

    The oil cartel said easing the tension will help stabilise the volatile oil industry.

    “For us we will welcome a resolution of the issues that are at stake between these countries and the U.S. sanctions distort markets and further complicate our efforts with non-OPEC members to maintain stability,” OPEC’s Secretary-General Mohammad Sanusi Barkindo said.

    Both Iran’s and Venezuela’s production woes have contributed significantly to the cartel’s over-compliance to the group’s production cut quota, with Iran’s crude production falling from an average of 3.813 million barrels per day in 2017 to 2.370 million barrels per day in May 2019, and Venezuela’s crude production falling from 1.911 million bpd on average in 2017, to an abysmal 741,000 bpd in May, this year.

    But while the two countries combined seemingly did OPEC a favour by taking more than 2.6 million barrels of crude oil per day out of the market within that time frame, the tensions in the Persian Gulf and the dire situation in Venezuela are creating a market that OPEC is finding it difficult to both predict and manage.

    Though OPEC is hoping—but not holding out for—a swift resolution to two of its founding members’ production problems, the issue is not OPEC’s main concern. OPEC called out last climate activists as “perhaps the greatest threat to our industry going forward,” Barkindo said, taking specific aim at the “school strike movement” as well as climate campaigners.

  • Oil market stability remains our focus, says OPEC

    Despite the fluctuations in the market, the Organi-sation of Petroleum Exporting Countries (OPEC) will continue to ensure its stability.

    This was the decision of participants at the14th meeting of OPEC’s Joint Ministerial Monitoring Committee (JMMC) in Jeddah, Saudi Arabia.

    The JMMC expressed its satisfaction with the role the Declaration of Cooperation played in the oil market recovery in the first quarter of the year compared to the fourth quarter of last year.

    OPEC noted that last month’s conformity rate was 168 per cent, and that the figure was a record, adding that it has had positive effect on global economic growth in the first four months of the year. Average conformity has reached 120 per cent since January, it said.

    The committee noted that a flexible approach had been critical to the success of the Declaration. Since the Declaration was signed on December 10, 2016, the partners have adapted the course depending on market conditions.

    “When the market appeared skewed to oversupply, voluntary production adjustments were adopted and implemented, as was the case in December 2016 and December 2018. Equally, when concerns regarding demand outpacing supply surfaced as the market tightened, as was the case in June 2018, partners in the Declaration of Cooperation took appropriate action,” the committee said.

    Oil market conditions and macroeconomic developments also recognised that critical uncertainties remain, including trade negotiations, monetary policy developments and geopolitical challenges.

    The JMMC requested that the OPEC Joint Technical Committee and the OPEC Secretariat continue to monitor and analyse oil market developments, particularly, oil inventory projections in the coming weeks to the next JMMC meeting making a recommendation to the OPEC Conference and OPEC and non-OPEC Ministerial Meeting, for next month, on appropriate actions on the part of participating countries for the second half of the year.

    The 15th JMMC meeting will hold next month at the OPEC Secretariat in Vienna, Austria.

  • OPEC: Dangote Refinery will boost world crude refining, output stability

    The Organisation of Petroleum Exporting Countries (OPEC) has expressed confidence that the Dangote Oil Refinery has prospects of driving world crude oil refining capacity increase, especially in Africa by 2020 and stabilising world oil production.

    In the current edition of its World Oil Outlook (WOO), OPEC said Dangote Refinery, which is the first privately owned and operated refinery in Nigeria, will refine as much as 650,000 barrels of crude oil per day at installed capacity.

    According to the oil cartel, the current total world oil production in 2019 averaged 80,622,000 barrels per day, and approximately 68 per cent, is coming from the top 10 countries, and an overlapping 44 per cent comes from the 14 current OPEC members.

    OPEC said the world is expecting some capacity expansion from Nigeria by 2020, either through the rehabilitation of existing refineries – in part to raise their utilisation rates, or through grassroots projects, like the Dangote Oil Refinery.

    It said: “Last year’s World Oil Outlook hinted that, in Africa, ‘new projects could improve the situation somewhat toward the end of the period’. This year, increasing confidence that the Dangote project in Nigeria will go ahead is indeed changing the picture.

    “Allowing for some uncertainty in the project’s start-up timetable, incremental potential in Africa is expected to continue to lag incremental demand-based requirements through 2020, after which the potential is for a balance or excess requirements.

    “A deficit of around 0.2 million barrels per day (mb/d) in 2019 to 2020 is estimated to swing to an excess of around 0.3 mb/d by 2022 to 2023. It must be borne in mind that this regional outlook is unusual in that it hinges largely on a single project.”

    OPEC said the completion of the project would reduce the importation of petroleum products in West Africa.

    “Since the project is in West Africa, its implementation does not necessarily alter the situations in North and East/South Africa. What should happen, especially in West Africa, is a reduction in the need and opportunity for product imports,” it added.

    According to OPEC, in Africa, there are some 50 listed refining projects, which, if all built, would add nearly 5mb/d of new refining capacity to the continent.

    The organisation noted that in recent WOOs, the proportion of projects considered firm has generally been low. For example, 0.4 mb/d for the 2017 to 2022 period in WOO 2017.

    “This year, the outlook represents a significant reversal from recent history. For the first time in many years, projected firm additions at 1.1 mb/d exceed regional demand growth for 2018 to 2023 at 0.7 mb/d.

    “This change relates primarily to one project in Nigeria now under construction. Recognising that this one major project is in West Africa, the prospects for North and East/South Africa continues to be for further increases in regional net product imports.

    “It must be borne in mind that this regional outlook is unusual in that it hinges largely on a single project. Moreover, since the project is in West Africa, its implementation does not necessarily alter the situations in North and East/South Africa. What should happen, especially in West Africa, is a reduction in the need and opportunity for product imports,” it said.

    Reacting to the OPEC position, the Group Executive Director, Strategy, Portfolio Development and Capital Projects, Dangote Industries Limited, Mr. Devakumar Edwin, said the global oil cartel was correct in its estimation and that all hands were on deck to deliver the refinery on time.

    The director noted that Dangote Group’s current refining and petrochemicals project could meet 100 per cent of the domestic requirement of all liquid petroleum products (gasoline, diesel, kerosene and aviation jet), leaving the surplus for export in line with the OPEC expectation.

    He said this high volume of premium motor spirit (petrol) output from Dangote Refinery would transform Nigeria from a petrol import-dependent country to an exporter of refined petroleum products.

    Edwin said Dangote was also building the largest fertiliser plant in West Africa with capacity to produce 3.0 million tonnes of urea per year as part of the gigantic economic transformation project.

    He added that the Dangote Fertiliser complex consists of ammonia and urea plants with associated facilities and infrastructure.

  • Oil prices dip over production cut deal fear

    Despite signs of continued tightness in supply, oil prices dropped early yesterday on some profit taking and a Russian minister suggesting that Russia and Organisation of Petroleum Exporting Countries (OPEC) could abandon the production cut deal.

    Early yesterday,  WTI Crude was down 0.77 percent at $63.40 while Brent Crude was trading down 0.61 per cent at $71.11.

    Read also: ‘No deal on supply cuts extension with OPEC, allies’

    Last week was the sixth straight week of gains amid tightening supplies due to OPEC and Russia’s production cuts, the collapse of Venezuelan production, and fighting in Libya which could disrupt the African nation’s oil industry again.

    Libya’s oil production is still under threat from renewed fighting between warring armed groups, and the situation could become as bad as it was during the 2011 civil war, the National Oil Corporation’s chairman, Mustafa Sanalla, told the Financial Times in an interview last week.

  • Oil prices dip nearly 2 per cent

    Oil prices fell yesterday, after rising to five-month highs earlier this week on the Organisation of Petroleum Exporting Countries (OPEC)-led production cuts and free-falling Venezuelan output.

    International benchmark Brent futures were down $1, or 1.4 per cent, at $70.73 a barrel. Brent hit a more than five-month high at $71.78 on Wednesday.

    United States (U.S.) West Texas Intermediate crude oil futures fell $1.11, or 1.7 per cent, to $63.50 per barrel. WTI whit a high of $64.79 going back to Nov. 1 earlier this week.

    Selling accelerated yesterday morning as U.S. crude dropped below $63.71 a barrel, a technically-significant level at which some funds had stops in place, triggering automatic sales, said Bob Yawger, director of energy futures at Mizuho in New York.

    Read also: Oil rises above $71 on tight supply

    U.S. crude inventories surged by 7 million barrels to a 17-month high of 456.6 million barrels last week, the Energy Information Administration said on Wednesday. However, U.S. gasoline stocks fell by a whopping 7.7 million barrels, sending U.S. gasoline futures higher by 3.5 per cent on their close on Wednesday.

    U.S. crude oil production remained at a record 12.2 million bpd, making the United States the world’s biggest oil producer ahead of Russia and Saudi Arabia.

    The surging production and regional refinery outages have depressed prices of cash grades, putting more pressure on U.S. crude, said Yawger.

    U.S. West Texas Intermediate crude at Midland yesterday traded at the biggest discount to futures in almost four months after Phillips 66 closed a unit for maintenance at its Borger, Texas refinery, adding to a backlog of barrels as production climbs.

    Oil markets are tightening amid the increasing effectiveness of U.S. sanctions on Iran and Venezuela, the International Energy Agency said yesterday.

    U.S. sanctions and power outages pushed OPEC member Venezuela’s crude output to a long-term low of 870,000 bpd, IEA says. Two days ago, OPEC reported Venezuela’s March output sank to 732,000 bpd, citing independent sources, while figures provided by the country put production at 960,000 bpd.

    Iranian supply could fall further after May if, as many expect, Washington tightens its sanctions against Tehran.

    OPEC and its allies led by Russia are due to meet in Vienna on June 25-26 to set their policy.

     

     

  • Oil hits five-month high above $71 on Libyan supply threat

    Oil hit a five-month high above 71 dollars a barrel on Tuesday, supported by concern that violence in Libya could further tighten supply already squeezed by OPEC cuts and U.S. sanctions on Iran and Venezuela.

    International benchmark Brent futures hit their strongest level since last November at 71.34 dollars per barrel, before easing to 70.99 dollars per barrel by 0700 GMT.

    U.S. West Texas Intermediate (WTI) crude oil futures also hit a November 2018 high, at 64.77 dollars per barrel, before easing to 64.42 dollars per barrel.

    Oil markets have tightened this year as the United States imposed sanctions on oil exporters Iran and Venezuela while the producer club of the Organisation of the Petroleum Exporting Countries (OPEC) has been withholding supply to prop up prices.

    Brent and WTI futures have risen by 40 per cent and 30 per cent respectively since the start of the year.

    Goldman Sachs, an American multinational investment bank and financial services company, said an oil supply deficit had opened up early this year.

    “We expect the drivers of this deficit to persist through 2Q19” due to a shock and awe implementation of the OPEC cuts,” the U.S. bank said in a note.

    Goldman said it expected Brent to average 72.50 dollars per barrel during the second quarter, up from a previous forecast of 65 dollars per barrel.

    Prices have been further lifted this week by escalating violence in Libya, a significant supplier of oil to Europe, which produced around 1.1 million barrels per day (bpd) of crude in March.

    Eastern forces on Monday were advancing on the Libyan capital Tripoli in the latest of a cycle of warfare since Muammar Gaddafi’s fall in 2011, with a warplane attacking the city’s functioning airport.

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    Yet despite generally bullish oil markets, concerns that an economic slowdown this year will hit fuel consumption have been preventing crude prices from rising even higher, traders said.

    And while fears of a global recession ebbed following strong U.S. jobs figures and improved Chinese manufacturing data late last week, Bank of America Merrill Lynch said there was still a “significant slowing in growth globally” in 2019.

    The bank said it expected Brent and WTI to average 70 dollars per barrel and 59 dollars per barrel respectively in 2019, and 65 dollars per barrel and 60 dollars per barrel in 2020.

    Goldman Sachs also said oil prices “will decline gradually from this summer as shale and OPEC production increases.”

    Russia, not an OPEC-member but a reluctant participant in the supply cuts, signaled on Monday it wanted to raise output when it would meet with OPEC in June because of falling stockpiles.

    In the United States, crude oil production has risen by more than 2 million bpd since early 2018, to a record 12.2 million bpd, with many analysts expecting output to exceed 13 million bpd soon.

  • ‘No deal on supply cuts extension with OPEC, allies’

    Major oil producer, Saudi Arabia, yesterday said it was premature to say whether a consensus existed among Organisation of Petroleum Exporting Countries (OPEC) and its allies to extend oil supply cuts but a meeting next month would be key.

    A joint OPEC and non-OPEC ministerial committee known as the JMMC is due to meet in May. Saudi Arabia and Russia are members of the panel, which includes other major oil producers that took part in a global supply-cutting agreement last year, such as Iraq, the United Arab Emirates, Kuwait, Nigeria and Kazakhstan.

    “JMMC will be a key decision point because we will certainly by then know where the consensus view is and, more importantly, before we ask for consensus, we will know where the fundamentals are pointing. I think May is going to be key,” Saudi Energy Minister Khalid al-Falih, said.

  • Kachikwu: deal for OPEC+ cut extension coming

    Members and non-members of the Organisation of Petroleum Exporting Countries  (OPEC+) deal to curb oil production will possibly be extended, “hopefully for another six months” beyond the end of June, Minister of State, Petroleum Resources, Emmanuel Kachikwu, said yesterday.

    The deal has stabilised the oil market and easing the curbs could bring back excess supply, he told reporters at a conference in Malabo, Equatorial Guinea. However, Nigeria, which has pumped more crude than it pledged under the deal, will find it challenging to implement its share of the cuts because of output from a new project called Egina, Kachikwu said.

    The OPEC+ agreement has “been able to get prices to a point where both consumers and producers are at least a bit comfortable. I would like to see that go on.” The deal to reduce oil output by 1.2 million barrels a day, which helped crude rise by the most in a decade last quarter, expires at the end of June. While there’s general backing within OPEC and its allies for an extension, Russia is said to remain undecided.

    Nigeria actually boosted crude production by 90,000 bpd to 1.92 million last month, according to a Bloomberg survey. Kachikwu said the country is currently pumping about 1.7 million bpd. The country agreed to reduce output to 1.685 million bpd under the OPEC+ deal. The Egina project, which started this year, will pump 150,000 barrels bpd at a peak rate but supply is “right now probably not there yet,” Kachikwu said.

    The OPEC+ group’s compliance with the cuts will improve from about 90 per cent in the months ahead, OPEC’s Secretary-General Mohammad Barkindo said. He said Kachikwu has assured him the country is doing everything possible to meet its obligations. A full meeting of ministers from OPEC and its allies is scheduled in June in Vienna.

  • Oil price hits 2019 high on OPEC cuts, concerns over demand ease

    Oil price hit a 2019 high above 69 dollars a barrel on Tuesday on the prospect that more sanctions against Iran and further Venezuelan disruptions could deepen an OPEC-led supply cut, and as the market became less worried that demand may reduce.

    The United States is considering more sanctions against Iran, whose oil exports have been halved by existing measures, an official said.

    A key crude terminal in Venezuela, also under U.S. sanctions, has halted operations again.

    Brent crude rose 10 cents to 69.11 dollars a barrel by 0826 GMT, having touched 69.50 dollars, the highest since mid-November. U.S. crude was up 11 cents at 61.70 dollars after rising above 62 dollars for the first time since early November.

    “The supply cuts have been there for a while but Venezuela is not improving,” said Olivier Jakob, analyst at Petromatrix. “That is taking a lot of oil away from the market.”

    Further supply losses from Iran and Venezuela could widen an OPEC-led production cut that took effect in January, designed to prevent a price-sapping rise in inventories.

    Supply from the Organization of the Petroleum Exporting Countries hit a four-year low in March, a Reuters’ survey found, because top exporter Saudi Arabia cut more than it had agreed to and due to the involuntary declines.

    This week’s reports on U.S. supplies are expected to show crude inventories fell, a sign that the OPEC curbs are having the impact producers intended.

    Six analysts polled by Reuters estimated, on average, that crude stocks fell by 1.2 million barrels in the week to March 29. The first of this week’s supply reports, from the American Petroleum Institute, is due at 2030 GMT.

    Oil’s pattern on the price charts could lead to further gains. Brent is trading just below the 200-day moving average and a move above this mark would provide additional technical support, Jakob said.

    Healthy data on the world’s biggest economies, the United States and China, also bolstered prices.

    Figures showing a rebound in U.S. factory activity in March and a return to growth in Chinese manufacturing eased concern that an economic slowdown could weaken oil demand.

    “China’s PMI number was the most significant monthly increase since 2012, which should ease concerns around a potential threat to oil demand,” said

    Stephen Innes, head of trading and market strategy at SPI Asset Management.

  • Oil slips on supply disruptions, sanctions

    Brent crude oil futures yesterday slipped to $66.73 per barrel, down 30 cents, or 0.5 per cent over supply disruptions from the Organisation of Petroleum Exporting Countries (OPEC) production cutbacks and United States (U.S.) sanctions on Iran and Venezuela.

    U.S. West Texas Intermediate (WTI) futures were at $58.69 per barrel, down 35 cents, or 0.6 per cent.

    Both crude oil price benchmarks have slumped by almost three per cent since last week, hitting their highest since November last year.

    Concerns about a potential U.S. recession emerged Friday after cautious remarks by the U.S. Federal Reserve caused 10-year treasury yields to slip below the three-month rate for the first time since 2007.

    Historically, an inverted yield curve – where long-term rates fall below short-term – has signalled an upcoming recession.

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    Adding to concerns of a widespread global downturn, manufacturing output data from Germany, Europe’s biggest economy, shrunk for the third straight month.

    “Estimates for growth and earnings have been revised down materially across all major regions,’’ said U.S. bank, Morgan Stanley.

    ANZ bank said the darkening economic outlook “overshadowed the supply-side issues’’ the oil market was facing amid supply cuts, led by producer club OPEC as well as the U.S. sanctions on Venezuela and Iran.