The Players Have Changed
US oil production is rapidly growing and has reached 11.2 million barrels per day in Nov 2018, is expected to reach 12.05 m/bpd next April and 12.29 m/bpd by year end 2019. The pipelines bottleneck Continue reading “The Oil Game Has Changed”
As the US second and tougher sanctions on Iran approach (Nov 4th), many countries have begun to reduce their purchases of Iranian oil and its exports have already dropped one million barrels a day (from a high of 2.7 Million bpd to 1.7 Mill bpd in August 2018). Continue reading “OPEC’s Current Dilemma”
COMMENTS: The many years of external and internal conflict in Iraq has resulted in impoverishment of the masses. Now, Basrah, the center of southern oil production is in turmoil as riots are spreading demanding jobs in the oil producing sector. So far one demonstrator has been shot by Continue reading “Iraq Demonstrations Impact Oil Production”
Oil prices have risen rapidly this year and are expected, by some, to head higher – possibly towards US$ 100 per barrel. This is alarming to many, who consider such a rise as devastating to the economic growth prospects of many countries. Hence, the panic and scramble to do something, regardless of how effective it would be. Continue reading “OIL PRODUCERS AND CONSUMERS ARE THE FINAL LOSERS”
DAILY BASKET – NEWS COMMENTARY
HAVE OIL PRICES TURNED DOWN?
MARSAL COMMENTS: Last week was horrible for oil. Prices fell approx. 8% with WTI breaking below US$ 50 and Brent below US$ 53. Speculators seem to have become pessimistic and liquidated their long positions. Will they now turn bearish and short oil? Continue reading “HAVE OIL PRICES TURNED DOWN?”
The Oil Drama
Heaps of oil analysis, bigger heaps of opinions and a flood of conclusions ranging from the possible to the impossible. It is beginning to seem as though everyone is blind, or running in a pitch-dark tunnel with no idea where the exit is. Continue reading “The Oil Drama”
The Oil Wolves are at the Gates
Before the ink was dry on the OPEC production accord, the Shale oil producers pounced on the futures market, selling forward all or a big part of their 2017 and 2018 production. The prices they sold at were above US 55 per barrel, and possibly near $ 60. (Actually, they had started selling Continue reading “The Oil Wolves are at the Gates”
OIL PRICE – WHERETO?
OPEC announced on Nov 30, 2016 an agreement to cut its total oil production by 1.2 Million barrels per day to bring it to 32.5 mill b/d, as off Jan 2017. Overnight, Brent oil price spiked by 9% to around US$ 52. The next step is for OPEC to obtain and extra reduction of 600,000 b/d from Non-OPEC producers. Continue reading “OIL PRICE – WHERETO?”
An Oil Freeze? So What?
The oil business was abuzz last week with the rumors of a possible agreement between Russia and Saudi on freezing their production at their present levels. Consequently, prices began to creep upwards, especially after both the Saudi and Russian oil ministers made optimistic noises during the recent G20 meeting. They said that a semi-permanent committee would be established to seek ways of cooperation on oil and indicated indirectly that some sort of freeze would be “good”, and “maybe” likely. That was sufficient to trigger oil traders and turn them bullish – for a while at least before they came back to their senses. Continue reading “An Oil Freeze? So What?”
DAILY BASKET OF COMMENTARIES
OPEC not very optimistic for 2017?
OPEC doesn’t seem overly optimistic on oil prices in 2017. While it sees demand rising slightly, but to a record of 95.41 million barrels per day (MBPD), it is worried that this Summer’s expected demand didn’t materialize and that refineries are overstocked and may not increase their demand for the rest of 2016.
Oil Refineries: theoretically, they can continue to get cheap crude and sell refined products at relatively much higher prices.
General Consumers: They will not see rise in driving cost or utilities costs, at least for some time.
Oil Importing Countries: Such as China, India, Europe and other countries dependent of imported oil.
Oil Producers: Especially to whom oil export is their bread & Butter. The oil companies in general as well as countries such as Venezuela, Mexico, Nigeria and Iraq would be biggest losers. To a lesser extent, Iran and Russia would be hurt. As for the Gulf oil countries, they are still flush with cash and need a longer period of low oil prices to really feel the pain.
Announcing a semi pessimistic forecast would not normally have been expected from OPEC. One would have expected them to try and talk-up the price through bullish forecasts. But, if they really wanted to raise prices, they would have cut back a little on their production, or announced that they intend to do so.
So what is a possible reason for such an announcement?
Around now is the time when the oil hedging for future 2017 prices takes place. Such announcements could have a dampening effect on the hedged prices, which would be negative to such countries, as Mexico, that rely substantially on hedging a big chunk of their annual oil production. Also, it would have a dampening effect on the Shale Oil producers who have used hedging to stay alive during the past two years.