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Citigroup Sees U.S. Oil Output Losing 500,000 Barrels a Day

Photographer: Martin Divisek/Bloomberg A funding squeeze threatens to cut U.S. oil output by as much as half a million barrels a day by the end of the year, with shale producers among the worst affected, Citigroup Inc. said. “Capital markets thus far have plugged shale’s funding gap but are showing signs of tightening, with impacts for drilling, oil supply and global prices,” Richard Morse and Ed Morse, analysts at Citigroup in New York, said in a note. Access to high-yield credit markets for debt-strapped producers is “sharply contracting,” they said. High-cost oil producers in the U.S. have been forced to scale back in the past year after members of the Organization of Petroleum Exporting Countries decided to maintain output to defend their market position. U.S. crude prices have dropped almost 40 percent since OPEC announced its policy change in November to trade at about $45 a barrel Wednesday. “The […]

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U.S. Oil Production to Fall, EIA Says

Government forecasters on Wednesday said U.S. oil production fell to a nearly one-year low and that low crude prices are likely to keep U.S. production falling through 2016. The U.S. Energy Information Administration, in its monthly short-term energy outlook, said that production fell by 140,000 barrels a day in August from the prior month. Production averaged 9.6 million barrels a day at its peak in April, the highest level since 1971, and has steadily declined since then to 9.1 million, the lowest since September. Oil traders have been closely focused on U.S. production in recent months, after a global glut of crude oil sent prices plunging in 2014. With the Organization of the Petroleum Exporting Countries producing above its target of 30 million barrels a day, investors say U.S. production needs to fall to make the market less oversupplied. The agency has pushed back its expectations for a U.S. […]

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US Cuts Crude Output Forecast as Rout Weakens Shale Boom

(Bloomberg) — The collapse of oil prices will have a slightly bigger impact on U.S. crude production this year and the next than previously estimated, the Energy Information Administration said. The agency reduced its output forecast for this year by 1.5 percent to 9.22 million barrels a day, according to its monthly Short-Term Energy Outlook. It cut the 2016 forecast to 8.82 million from 8.96 million last month. “U.S. monthly crude oil production is expected to decline through the middle of next year in response to low oil prices,” EIA Administrator Adam Sieminski said in an e-mailed statement. “Current low oil prices are making some U.S. oil production less profitable.” America’s shale drillers have sidelined more than half their rigs since October as they confront tumbling prices. The number of active oil rigs in the U.S. fell by 13 to 662 last week, according to data compiled by Baker […]

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U.S. crude output to fall 1 million barrels in 2016 from 2015 peak: EIA

Stacked rigs are seen along with other idled oil drilling equipment at a depot in Dickinson, North Dakota June 26, 2015. U.S. oil production is set to fall slightly farther than expected a month ago, the U.S. government said on Wednesday, in a sign the year-long slump in global prices is weighing more heavily and for longer than expected on the country’s shale boom. 2016 U.S. crude oil production is expected to fall by 400,000 barrels per day to 8.96 million bpd, according to data from the U.S. Energy Information Administration. Last month, the energy agency also forecasted a decline of 400,000 bpd, but at an output of 9.32 million bpd. While much of the decrease is likely a result of recently revised government forecasts showing downward supply revisions for the first five months of the year, data from the EIA’s short term energy outlook showed that U.S. oil […]

Posted On : Published By : Tom Whipple
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U.S. Oil Production to Fall, EIA Says

Government forecasters on Wednesday said U.S. oil production fell to a nearly one-year low and that low crude prices are likely to keep U.S. production falling through 2016. The U.S. Energy Information Administration, in its monthly short-term energy outlook, said that production fell by 140,000 barrels a day in August from the prior month. Production averaged 9.6 million barrels a day at its peak in April, the highest level since 1971, and has steadily declined since then to 9.1 million, the lowest since September. Oil traders have been closely focused on U.S. production in recent months, after a global glut of crude oil sent prices plunging in 2014. With the Organization of the Petroleum Exporting Countries producing above its target of 30 million barrels a day, investors say U.S. production needs to fall to make the market less oversupplied. The agency has pushed back its expectations for a U.S. […]

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Short-Term Energy Outlook

Highlights North Sea Brent crude oil prices averaged $47/barrel (b) in August, a $10/b decrease from July. This third consecutive monthly decrease in prices likely reflects concerns about lower economic growth in emerging markets, expectations of higher oil exports from Iran, and continuing growth in global inventories. Crude oil price volatility increased significantly, with Brent prices showing daily changes of more than 5% for four consecutive trading days from August 27 to September 1, the longest such stretch since December 2008. EIA forecasts that Brent crude oil prices will average $54/b in 2015 and $59/b in 2016, unchanged from last month’s STEO. Forecast West Texas Intermediate (WTI) crude oil prices in 2015 and 2016 average $5/b lower than the Brent price. The current values of futures and options contracts for December 2015 delivery ( Market Prices and Uncertainty Report ) suggest the market expects WTI prices to range from […]

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Withering Reserve Buffer Forces Russia to Waive Key Budget Rule

Russia is overhauling its approach to crafting the budget next year to safeguard reserves, highlighting the challenges it faces in steering the recession-hit economy through a downturn in oil prices. Russia used 900 billion rubles ($13 billion) in the first eight months from the Reserve Fund, one of its two sovereign wealth funds, to cover the deficit, Finance Minister Anton Siluanov said Wednesday at a government meeting in Moscow. The non-oil shortfall, the gap excluding revenue from the energy industry, was 11 percent of economic output in the first half, the widest in 10 years, according to Siluanov. To temper the effects of the unfolding crisis on public finances, the government is suspending the so-called budget rule in 2016, a week after announcing plans to drop three-year fiscal plans in favor of a one-year program. The rule, which went into effect in 2013 and sought to cap public spending […]

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Humbled by cheap oil, Continental Resources trims budget

Storage tanks stand on a Continental Resources oil production site near Williston, North Dakota January 23, 2015. Continental Resources Inc cut its 2015 budget for at least the third time on Tuesday, as it grapples with the reality of cheap crude, but North Dakota’s second-largest oil producer said it still expects double-digit production growth this year. Founder and Chief Executive Harold Hamm canceled all of Continental’s oil hedges last fall after calling OPEC leader Saudi Arabia a "toothless tiger" in a bet that a price rebound would soon materialize. But no such sustained rebound has yet occurred, forcing thousands of layoffs across the oil industry and leading many of Continental’s peers to curb their own spending. Globally, oil companies have cut their budgets by about 20 percent this year, analysts at Barclays, the investment bank, said on Tuesday. But U.S. output has stayed quite resilient thanks to a rise […]

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U.S. crude inventories might be tighter than they look: Kemp

Stacked rigs are seen along with other idled oil drilling equipment at a depot in Dickinson, North Dakota June 26, 2015. U.S. oil markets have been transformed over the last decade by the emergence of oil trading and storage as a major business in its own right, separate from production and refinery operations. At the end of 2014, there were more than 390 million barrels of crude stored at refineries and tank farms as well as in transit in pipelines and barges and in storage tanks at oilfields. Commercial crude stockpiles had climbed by more than 100 million barrels since the end of 2004, almost 38 percent, according to annual data published by the U.S. Energy Information Administration (EIA). By the end of April 2015, commercial stocks had climbed by another 105 million barrels to a record 491 million as the oversupply in the global oil market ended up […]

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Baker Hughes: North America adds more rigs

Baker Hughes data show an increase in the number of rigs deployed across the North American energy sector. Photo by Calin Tatu/Shutterstock HOUSTON, Sept. 8 (UPI) — The number of rigs actively exploring for or producing oil and natural gas in North America increased by nearly 4 percent, Baker Hughes said Tuesday. Baker Hughes published its rig count report for August , finding a net increase in the upstream sector in North America. Energy companies in the first half of 2015 unveiled cost-savings strategies as crude oil traded at a 50 percent discount from June 2014. Low crude oil prices means less capital for exploration and production, a trend data from Baker Hughes suggests may be reversing. "The average U.S. rig count for August 2015 was 883, up 17 from the 866 counted in July 2015, and down 1,021 from the 1,904 counted in August 2014," it said. "The […]

Posted On : Published By : Tom Whipple