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OPEC Is About to Crush the U.S. Oil Boom

After a year suffering the economic consequences of the oil price slump, OPEC is finally on the cusp of choking off growth in U.S. crude output. The nation’s production is almost back down to the level pumped in November, when the Organization of Petroleum Exporting Countries switched its strategy to focus on battering competitors and reclaiming market share. As the U.S. wilts, demand for OPEC’s crude will grow in 2015, ending two years of retreat, the International Energy Agency estimates. While cratering prices and historic cutbacks in drilling have taken their toll on the U.S., OPEC members have also paid a heavy price. A year of plunging government revenues, growing budget deficits and slumping currencies has left several members grappling with severe economic problems . The fact that the U.S. oil boom kept going for about six months after the group’s November decision also means OPEC has so far […]

Posted On : Published By : Tom Whipple
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OPEC, non-OPEC experts to talk, but unlikely to cooperate on cuts

The logo of the Organization of the Petroleum Exporting Countries (OPEC) is pictured at its headquarters in Vienna, Austria, August 21, 2015. A meeting of OPEC and non-OPEC oil market experts this week is unlikely to increase the prospect of joint co-operation on supply curbs or show much support for Venezuela’s proposed price band, OPEC delegates and analysts said. The Organization of the Petroleum Exporting Countries has invited eight non-member countries including Russia for talks on the market at its Vienna headquarters on Wednesday. OPEC’s own meeting to set policy is not until Dec. 4. Non-OPEC producers have refused to work with OPEC in cutting supply to reduce a surplus that has prompted prices to sink to below $50 a barrel from $115 in June 2014. In turn, OPEC has refused to limit supply alone and many members have raised output. Cash-strapped member Venezuela is nonetheless pushing for OPEC […]

Posted On : Published By : Tom Whipple
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OPEC Brings Oil Price War Home in Pursuit of Asia’s Cash

When it comes to deciding how much to charge Asian oil buyers, OPEC members are showing little regard for tradition. Suppliers from the Organization of Petroleum Exporting Countries have long moved in lockstep, raising or lowering prices in tandem. Now, Kuwait is undercutting Saudi Arabia by the most on record and Iraq is also selling its oil more cheaply than the group’s biggest member. Qatar is pricing cargoes at the biggest discount in 27 months to competing crude from the U.A.E.’s Abu Dhabi. While the group that accounts for about 40 percent of global oil supplies maintains a collective strategy of flooding the market with crude, the semblance of unity has vanished when setting monthly selling prices. With Asia forecast to account for most of the growth in global oil demand this year, competition for the region’s buyers is trumping historical allegiances. “It’s a full-on fight for market share […]

Posted On : Published By : Tom Whipple
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OPEC accepts Indonesia’s request to reactivate membership

The Organization of Petroleum Exporting Countries has accepted Indonesia’s request to reactivate the country’s membership. Indonesia formally asked for reinstatement at the cartel’s June ministerial meeting in Vienna (OGJ Online, June 5, 2015) . The Southeast Asian country withdrew from OPEC in 2009 citing growing internal demand for energy, declining crude oil and condensate production in mature fields, and limited investment to increase production capacity. Indonesia had become a net importer of petroleum and other liquids by 2004 after domestic demand exceeded production. Indonesian government officials said that rejoining OPEC will strengthen its cooperation with oil-producing countries, provide greater access to crude oil supplies, and allow the country to be a link between energy producers and consumers. Indonesia currently buys crude oil and petroleum products through third parties or traders and seeks direct access to long-term crude supply contracts through negotiations between OPEC-member national oil companies. Indonesia produced about […]

Posted On : Published By : Tom Whipple
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Platts: No change from OPEC expected

Platts survey of oil landscape finds few signs OPEC will reverse market course when its members meet in December. Photo by Pattie Steib/Shutterstock LONDON, Oct. 14 (UPI) — A survey from energy reporting group Platts finds few indications the Organization of Petroleum Exporting Countries will cut production for 2016. OPEC said in its latest monthly market report output from member states in September increased by 109,000 barrels per day for an average 31.6 million bpd. Declines elsewhere, however, meant the global oil supply fell by 340,000 bpd to average 94.2 million bpd. According to an emailed report from Platts, however, output from OPEC fell 60,000 bpd because of declines from Saudi Arabia. By OPEC’s own accounting, production from Saudi Arabia showed the largest drop of the 12 member states with 48,000 bpd, according to secondary sources. Platts found a similar drop in Saudi output by referencing information from oil […]

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A $70 oil floor? Fat chance, but OPEC price plan may be first step

An oil pump is seen in Lagunillas, Ciudad Ojeda, in the state of Zulia, Venezuela, March 18, 2015. The safe money for oil traders is betting that Venezuela’s plan to resurrect OPEC’s old price band mechanism, attempting to set a $70 floor for the battered market, will be doomed from the start. Saudi Arabia, the group’s de facto leader, has shown zero interest in returning to a strategy of supporting prices; big producers outside the Organization of Petroleum Exporting Countries, namely Russia, have essentially ruled out cuts. And most analysts say attempting to set a price range is futile, or that the $70 price is unsustainably high, or both. Yet a handful of experts and observers say the proposal – articulated by former oil minister Rafael Ramirez in an interview with Reuters – may be a catalyst for moving away from OPEC’s laissez faire approach to collapsing oil prices, […]

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Oil Surplus to Persist in 2016 as IEA Sees Demand Growth Slowing

Global oil markets will remain oversupplied next year as demand growth slows and Iranian exports are poised to recover with the lifting of sanctions, the International Energy Agency said. While supplies outside OPEC will decline in 2016 in response to lower prices, demand growth will ease from this year’s five-year high amid a weaker outlook for the world economy, allowing the crude surplus to endure, the IEA predicted. Iran could swell the glut if restrictions on its sales are removed with the completion of a nuclear accord, while Iraq has replaced the U.S. as the biggest source of new supplies as its output reaches record levels. “The market may be off balance for a while longer,” the Paris-based adviser to 29 nations said in its monthly report. “A projected marked slowdown in demand growth next year and the anticipated arrival of additional Iranian barrels — should international sanctions be […]

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Oil glut to persist as global growth demand slows: IEA

A pump jack is seen at sunrise near Bakersfield, California October 14, 2014. A global oil supply glut will persist through 2016 as demand growth slows from a five-year high and key OPEC producers maintain near-record output, the International Energy Agency said on Tuesday, even as low prices curb supply outside OPEC. The IEA, which advises industrialized countries on energy policy, said in a monthly report that world oil demand will rise by 1.21 million barrels per day (bpd) in 2016, down 150,000 bpd from last month’s forecast. "A projected marked slowdown in demand growth next year and the anticipated arrival of additional Iranian barrels – should international sanctions be eased – are likely to keep the market oversupplied through 2016," the Paris-based IEA said. A drop in oil prices because of abundant supply to just over $50 a barrel – half the level of June 2014 – has […]

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IEA Sees Oil Market Remaining Oversupplied Next Year

A top energy watchdog Tuesday warned that oil markets would likely remain oversupplied next year, as oil demand growth slows down amid an expected return of Iranian oil. The assessment by the International Energy Agency–which represents some of the world’s largest oil consumers–is somewhat less upbeat than the Organization of the Petroleum Exporting Countries which Monday said oil markets would start to rebalance themselves next year amid declining U.S. production. In its closely watched monthly oil market report, the IEA cut its forecast for oil demand growth for next year by about 200,000 barrels a day compared with its previous assessment in September. It now sees world oil consumption rising by 1.2 million barrels a day in 2016, compared with a five-year-high growth of 1.8 million barrels a day in 2015. “A projected marked slowdown in demand growth next year and the anticipated arrival of additional Iranian barrels-–should international […]

Posted On : Published By : Tom Whipple