IEA sees U.S. oil output collapsing next year on low prices
Lower oil prices will force non-OPEC producers including the United States to cut output by the steepest rate in more than two decades next year, rebalancing an oversupplied oil market, the International Energy Agency said on Friday. The IEA, which advises the world’s biggest economies on energy policy, said global oil demand was poised to climb to a five-year high this year thanks to lower prices. It steeply revised its outlook for demand for oil from the Organization of the Petroleum Exporting Countries. The report is one of the most bullish for OPEC since the group shocked markets last year by deciding against cutting production, choosing to fight for market share and depress the output of higher-cost producers such as the United States. "The big story this month is one of tightening supply, with the spotlight firmly fixed on non-OPEC," the IEA said in its monthly report. "Oil’s price […]
IEA Sees U.S. Shale Oil Output Shrinking in 2016 on Price Slump
U.S. shale oil production will drop 9 percent next year as a crude price below $50 a barrel “slams brakes” on years of supply growth, the International Energy Agency said. “Oil’s downward spiral to fresh six-year lows below $50 a barrel has dimmed the prospects for a recovery in U.S. drilling activity,” the Paris-based IEA said in its monthly market report Friday. “Unless oil prices bounce back in coming months, supply is forecast to fall by 385,000 barrels a day next year to 3.9 million barrels a day.” The forecast is a turnaround for the IEA, which only two months ago predicted U.S. shale oil output would increase by 60,000 barrels a day in 2016. Oil supply from producers outside OPEC will make the biggest contraction next year since 1992 as Saudi Arabia’s strategy to defend market share by pressuring rivals with lower prices takes effect, according to the […]
Oil Supply Outside OPEC to Fall Most Since 1992, IEA Forecasts
Oil supplies outside OPEC will decline next year by the most in more than two decades as the price rout curbs U.S. shale output, according to the International Energy Agency. Production outside the Organization of Petroleum Exporting Countries will fall by 500,000 barrels a day to 57.7 million in 2016, the Paris-based adviser said Friday in its monthly report. While fuel demand this year will be the strongest since 2010, record-high oil inventories in developed nations won’t start to diminish until the second half of next year, and the revival of Iranian exports with the removal of sanctions may swell supplies further, it said. Shrinking supplies outside OPEC show that Saudi Arabia’s strategy to defend the group’s market share by pressuring rivals with lower prices “appears to be having the intended effect,” the IEA said. Brent crude futures, a benchmark used around the world, slumped to a six-year low […]
Non-Opec production faces biggest decline in more than 20 years
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US oil producers thirsty for cash eye wastewater unit spin-offs
Some U.S. oil producers are trying to sell parts of their lucrative saltwater disposal businesses in a sign that cheap crude is already forcing cash-starved companies to sell assets so oil can keep flowing. Many oil companies rely on outside contractors, which tend to be small, privately-held companies, to inject the briny byproduct of crude production hundreds or thousands feet deep into the earth, well below the water table. But for producers which own such facilities, the high-margin business has served as a source of cost savings and steady revenue, factors that also make them appealing to yield-seeking investors in master limited partnerships (MLPs) and private equity funds. SandRidge Energy Inc and Oasis Petroleum Inc are two publicly traded oil producers openly marketing their saltwater divisions. SandRidge is planning to raise cash by listing it as an MLP and Oasis is seeking at least a partial sale. "The psychology […]
Russia: Global Shale Output Decline Will Stabilize Oil Market
MOSCOW, Sept 10 (Reuters) – Russia’s energy minister expects that cuts in global shale oil production, which has been hard hit by lower oil prices, will help stabilize the fragile oil market. Alexander Novak also reaffirmed that Russia, one of the world’s top oil producers, would not cut its own production as it would lead only to a short-term recovery with risks of subsequent slumps in prices. The Organization of the Petroleum Exporting Countries, which accounts for around a third of global oil output, changed its policy in 2014 to defend market share and discourage competing supply sources, rather than cut its own output in the face of lower prices. "Shale oil has been leaving the market bit by bit. This is a good and positive signal, which allows one to say that the market will stabilize in mid-term," Novak told Rossiya-24 TV in an interview aired on Thursday. […]
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 […]
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 […]
How Fracking Changed the Economics of Oil Production Around the World
New technology, high oil prices, and plentiful cheap credit have encouraged the boom. Some $200bn has been borrowed to invest in fracking in the last few years, accounting for 15 percent of the entire $1.3tr US junk bond market . Investors were, in effect, betting on continuing high oil prices making their investments profitable for years to come. Price Slump Last year’s slump in prices trashed that calculation. From a mid-year high of $115 per barrel, by the end of 2014 the price per barrel had fallen by more than 40 percent. More than half of US shale rigs have been laid up since October. The driver, last year, was the behaviour of OPEC – the Organization of Petroleum Exporting Countries. OPEC is a cartel agreement among major oil producers that seeks to manage the international market for oil. With oil prices already plunging over the summer, OPEC could […]