Oil rises 1% on settlement amid fears of supply shortages

[Pitcher]

Could Oil Prices Rise By $25 Per Barrel In 2019?

- Jan 13, 2019, 10:00 AM CST

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As we begin 2019, the energy markets and the stock markets are experiencing incredible volatility. Both underwent steep declines during the latter part of last year, but both are off to a fast start in the new year.

How might this all play out in 2019?

Below are my predictions for some of the significant energy trends I expect this year. As I often point out, the discussion behind the predictions is more important than the predictions themselves. That’s why I provide extensive background and reasoning behind the predictions.

I also provide predictions that are specific and measurable. At year’s end, there are specific metrics that will indicate whether a prediction was right or wrong.

1. Oil prices will rise at least $25/bbl in 2019

Six months ago, when oil prices were pushing above $70/bbl, I was preparing to make a more conservative oil price prediction for 2019. I thought the price rise would slow heading into 2019, but what I didn’t foresee was the collapse in prices that took place in the second half of 2018.

That collapse in oil prices makes this prediction a lot easier. The price of West Texas Intermediate (WTI) closed the last day of 2018 at $45.15/bbl, after falling $30/bbl in the last three months of the year. Oil closed $15/bbl lower than it opened the year. Meanwhile, U.S. crude oil inventories are almost exactly where they were a year ago.

The difference is in the perception of where the oil market is going. Market bears foresee electric vehicles taking a larger bite out of oil consumption, and they see continued growth of U.S. oil production contributing to an oversupply of crude oil globally. They are also concerned about an economic slowdown.

OPEC is the wild card here. A big reason oil prices collapsed is that President Trump convinced Saudi Arabia to increase production to make up for oil that would be lost as a result of Iranian sanctions. But at the last minute, the Trump Administration granted generous exemptions to allow countries to continue importing Iranian oil. These exemptions are supposed to be for 180 days, but they suddenly created too much oil in the market.

Saudi Arabia was furious, and they immediately cut oil production. At the next OPEC meeting, the cartel agreed to cut production to balance the market. I expect they will have success with this strategy in 2019, the same way they did the last time they went down this path. OPEC hasn’t lost its pricing power yet, as long as they maintain discipline. I expect their previous success will be repeated this year. The U.S. Energy Information Administration projects that WTI will average $54/bbl in 2019. I think that’s too conservative.

It’s hard to project an average price, because I don’t know how long it will be before sentiment shifts. And there are still going to be those who think electric vehicles are soon going to put oil out of business. Those sentiments will impact prices. But I expect that by the end of the year, OPEC’s strategy will be working, and you will see oil prices get back to the $70/bbl level.

2. U.S. oil production growth will slow in 2019 versus 2018

Except for an OPEC-induced dip in production in 2016, U.S. oil production has risen like a rocket since 2011. None of those years was bigger than 2018, when domestic oil production rose by 1.5 million barrels per day (BPD). In the six of seven years since 2011 when production did increase, it rose by an average of one million BPD. While I do expect U.S. oil production to grow again in 2019, I think the combination of lower oil prices to begin the year and a potential economic slowdown stemming from trade tensions will result in a slowing of production growth for 2019. Related: The Natural Gas Crash Isn’t Over

However, average production for all of 2018 was 10.9 million BPD. By the end of the year this level had reached 11.7 million BPD. Thus, it won’t take much of a rise to add another average of one million BPD to 2018 levels. I believe this will happen, but I don’t believe we will add a million BPD from the year-end level of 11.7 million BPD (as we did in 2018). All we need to do is sustain another 300,000 BPD in 2019 to year-end 2018 levels to average a million BPD over 2018. I can see that happening, but I don’t see a repeat of 2018’s huge growth.

3. Despite President Trump’s best efforts, gasoline prices will end the year at least $0.30/gallon higher than they began the year.

I typically make a natural gas prediction, but the fundamental picture is mixed. Inventories are still extremely low, which should call for higher prices. But natural gas prices are quite low to start the year. If the inventory picture improves, they will stay low. If not, we will see a lot of volatility. It’s a coin flip, so I am going to forego a natural gas price prediction this year.

 

But here’s one where I think the picture is clearer. On New Year’s Day, President Trump tweeted:

(Click to enlarge)

President Trump’s tweet on gasoline prices.

Gasoline prices have fallen sharply because oil prices have collapsed. President Trump did influence that by conning Saudi Arabia into increasing production and then letting Iran continue to export oil. This prediction is related to my oil price prediction, but I expect that gasoline prices are going to end the year significantly higher than they began the year. Further, December gasoline prices are usually low, because seasonal demand is low (and it’s cheaper to produce winter gasoline).

The price of WTI averaged $65.23/bbl in 2018. Given that we are starting the year nearly $20/bbl below that price, I think it’s unlikely that the 2019 average will top that. In turn, I don’t think the national average 2019 retail gasoline price will top the 2018 average price of $2.81/gallon. But I do think gasoline prices are going to rise well above the year-end price of $2.36/gallon.

On the flip side, U.S. gasoline inventories are currently pretty high, and that will provide headwinds for a while with respect to gasoline prices. They only reached $3.00/gallon during two weeks in 2018, and I think there is a good chance they don’t reach that level at all in 2019. It hinges on how quickly oil prices make a move higher.

I think we will see a gasoline price spike this year, albeit it not as high as in previous years. However, we don’t normally see year-end gasoline prices rise by at least $0.30/gallon higher than the previous year. It has only happened once since 2010, but I predict it happens again this year.

4. The diesel premium over gasoline will at least double in 2019.

One issue that hasn’t gotten nearly enough attention in my view is the impact of a pending deadline that will impact the fuel markets. On January 1, 2020, the International Maritime Organization (IMO) will require the sulfur content in marine fuel to drop from a maximum of 3.5% down to 0.5%. The result is likely to be a spike in the price of low-sulfur marine fuels, which will likely impact several types of fuel. Prices for low-sulfur crude oils will likely expand their premium over high-sulfur crudes, and diesel will likely get more expensive compared to gasoline.

As I pointed out in a previous article, the U.S. began to phase in ultra-low-sulfur diesel (ULSD) in 2006. In the decade prior to the implementation of ULSD, retail gasoline traded on average at a $0.04/gallon premium to retail diesel. In 2005, the year before the phase-in of ULSD began, diesel traded at an average of $0.09/gallon over the price of gasoline. And in the decade following implementation, diesel averaged $0.23/gallon over the price of gasoline. Related: OPEC’s No.2 Boosted Production, Exports Just Before Cuts Began

In 2018, retail diesel prices averaged $3.18/gallon, a $0.37/gallon premium over gasoline. I expect that premium to reach $0.75/gallon in 2019, as suppliers scramble to comply with the new guidelines. However, one wildcard may impact this prediction, and that is that the new rules are postponed to allow more time for compliance. I don’t think that’s likely, but it is possible.

5. Solar sector equities recover by at least 20%

There are some significant disconnects in the energy markets as we begin the year. Master limited partnerships, for instance, are trading far out of sync with the underlying fundamentals, and as a result I expect them to outperform in 2019.

But the largest disconnect is in the solar sector. Concerns about the impact of trade wars and tariffs have negatively impacted sentiment in the solar sector. This resulted in a significant decline in solar stocks in 2018. The MAC Global Solar Energy Index Total Return Index (SUNIDX) is a diversified exchange-traded fund (ETF) that is traded on the New York Stock Exchange. The index covers all major solar technologies and includes companies from around the world. In 2018, it saw its value decline by nearly 30%.

Meanwhile, China’s solar panel exports soared by 66% in the 3rd quarter year-over-year, and numerous countries continued to install record levels of solar power. Costs for solar photovoltaics continue to decline, mitigating part of the tariffs that the Trump Administration imposed in 2018.

I expect that investors will again conclude that the future is very much about solar power, and the long-term growth rates there will continue to be phenomenal despite the negative perceptions of 2018. I predict that solar equities — as represented by the SUNIDX — will rise by at least 20% in 2019.

Conclusions

There you have my 2019 energy predictions. The themes are that U.S. oil production will start to slow, that oil prices will begin to recover because of actions taken by OPEC, that gasoline prices will move higher — but not nearly as quickly as diesel prices — and that solar equities will experience robust returns.

 

https://oilprice.com/Energy/Energy-General/Could-Oil-Prices-Rise-By-25-Per-Barrel-In-2019.html

[WheresmyRV?]

Kinda hope not, I enjoy paying 2.04 per gallon.

[10 YEARS LATER]

The Oil Market will continue to be manipulated 24/7 long after we're dead . . . I don't condone it . . . The World is what it is.

 

Source: Wall Street

Speaker: Gordon Gekko

"Greed is good."

 

The point is, ladies and gentleman, that greed, for lack of a better word, is good. Greed is right, greed works. Greed clarifies, cuts through, and captures the essence of the evolutionary spirit. Greed, in all of its forms; greed for life, for money, for love, knowledge has marked the upward surge of mankind. And greed, you mark my words, will not only save Teldar Paper, but that other malfunctioning corporation called the USA. Thank you very much.

 

[Pitcher]

Couldn’t agree with you more about the manipulation of the price of oil!!!  

[yota691]

Oil prices fell, and Brent fell below $ 60

 

Arab and international BAGHDAD (Reuters) -  Oil prices fell about 1.5 percent in Monday's trading, dropping Brent crude below $ 60 a barrel after disappointing economic data on the world's second-largest economy. China's exports in December fell 4.4 percent year-on-year in the biggest monthly drop in two years, official data showed on Tuesday. These numbers are a new sign of the weak performance of the world's largest economy after the United States. For US crude exploration, US companies closed four oil drilling platforms in the past week, according to Baker Hughes data. By 0656 GMT, the price of Brent crude for March delivery fell 1.4% to $ 59.62 a barrel, losing $ 60 a barrel last week. US Nymex crude futures for February delivery fell 1.6% to $ 50.78 a barrel. Nymex crude was the first drop in 10 sessions last Friday but managed to gain weekly gains of 7.6%. Views 25   Date Added 14/01/2019

[yota691]

Oil surges 1% as supply cuts but slowing economy slows demand expectations

 

Arab and international Economy News _ Baghdad Oil prices rose more than 1 percent on Tuesday amid supply cuts led by OPEC and Russia, but a worsening economic outlook could soon bring fuel demand growth. Brent crude <CLc1> was $ 59.80 a barrel at 0628 GMT, up 81 cents, or 1.4 percent, from the last close. West Texas Intermediate crude was $ 51.21 a barrel, up 70 cents, or 1.4 percent. "Opec-led cuts and a decline in the number of American excavators has boosted market sentiment in the new year," brokerage firm Philip Futures said. OPEC and a number of independent producers, including Russia, agreed late last year to cut output to curb global supply glut. In the United States, the number of rigs looking for new oil production from the 2018 peak of 888 dredgers dropped to 873 earlier this year, which could result in a production increase of more than 2 million barrels per day last year, bringing US crude production to a record 11.7 million barrels per day . Views 15   Date Added 15/01/2019

[yota691]

Kuwait National: $ 65 Brent crude average during 2019 and 2020

Archived oil

 14 January 2019 10:18 PM

Mubasher National Bank of Kuwait (NBK) said that the outlook for oil prices has changed dramatically over the last six months, with multiple potential risks for 2019-2020.

Kuwait's national average forecast for Brent crude to reach $ 65 a barrel in 2019 and 2020, down from the average of $ 71.6 per barrel in 2018.

Kuwait's National Oil Company pointed to the increasing production of US oil and the lifting of the Organization of Petroleum Exporting Countries OPEC and its allies to production rates, through the decision of President Trump to provide temporary exemptions for six months for the largest Iranian customers and to the decline of global economic growth, the decline of the price of Brent crude (global benchmark) Up 38 per cent in the last three months of 2018, to $ 54 a barrel by the end of the year, although Brent crude hit $ 86 a barrel in early October.

He explained that the decline in oil prices prompted the OPEC to meet again in December and agreed to reduce production quotas by at least 1.2 million barrels per day in 2019, in order to balance oil prices .

[yota691]

Oil expert: The last barrel of oil in the world is Saudi .. And this is the evidence

11:34 - 15/01/2019

 

 

 

A 
Saudi specialist confirmed that the last barrel of oil in the world will be extracted from Saudi Arabia, stressing that oil will retain its position for more than 20 years to come, and will become a source of industry when it ends its role as a source of energy. 
The Saudi oil expert, Majid Al-Muneef, said that the demand for Saudi oil until 2040 will increase by 11 to 12 million barrels per year, pointing out that 90% of this total will be directed to the petrochemical industries and cut commercial, air and sea transport, because there are no alternatives. 
And on the impact of the presence of electric cars, the Saudi expert said that the proportion of this type of cars are only about 1% of the nearly one billion cars in the world. 
He stressed in a television interview that oil will not lose its place in a large part of the twenty-first century, and if he ended his role in the field of energy, will continue to be a source of industrial production.
The Saudi oil expert said that since 1965 it has become the world's largest oil reserves with 60 billion barrels, and the Kingdom has produced since that year more than 150 billion barrels, while its oil reserves now 266 billion barrels. 
Al-Munif, Saudi Energy Minister Khalid al-Faleh, shared the opinion that the last barrel of oil in the world will be extracted from Saudi Arabia, because the Kingdom is the largest oil producer, and it is the only one that can increase its production capacity.

[Pitcher]

Oil Markets Could See Deficit In 2019

 Jan 15, 2019, 6:00 PM CSTJoin Our Community

The oil supply surplus is “starting to reverse,” according to a new report from Bank of America Merrill Lynch.

The investment bank noted that oil prices had collapsed in late 2018 not only because of an oversupply problem, but also because of other “non-fundamental factors,” including the selloff of long positions by hedge funds and other market managers, as well as by fear and uncertainty in broader financial markets. Still, the bottom line was that the oil market saw a glut once again emerge in the fourth quarter.

However, “now the 1.3mn b/d surplus in 4Q18 is starting to reverse,” Bank of America Merrill Lynch analysts wrote in a January 10 note. In fact, the bank says that the OPEC+ cuts could translate into a “slight deficit” for 2019. “With investor positioning reflecting a bearish set-up, Brent prices have already bounced back above $60/bbl, and we retain our $70/bbl average forecast for 2019,” BofAML wrote.

Oil price forecasts vary quite a bit, but a dozen or so investment banks largely agree that the selloff in late December, which pushed Brent down to $50 per barrel, had gone too far. BofAML is betting that Brent rises back to $70 per barrel.

However, the investment bank issued a rather significant caveat. This assessment is based on the assumption that the global economy does not take a turn for the worse. BofAML analysts said that Brent could plunge as low as $35 per barrel if global GDP growth slows from 3.5 percent to 2 percent.

At this point, it is anybody’s guess if the global economy slows by that much, but there is a growing number of indicators that at least suggests such a deceleration is possible. The recent data from China showing a shocking slowdown in both imports and exports is discouraging. Exports fell 4.4 percent in December from a year earlier, while imports crashed by 7.6 percent, suggesting that the world’s second largest economy is starting to weaken a bit. Related: There’s No Sugarcoating Canada’s Oil Crisis

Nevertheless, the oil market fundamentals, as they stand, do not look overly bearish. Bank of America Merrill Lynch estimates that supply from OPEC+ will fall by a whopping 2.6 million barrels per day (mb/d) in the fourth quarter of this year compared to the fourth quarter of 2018. That figure includes the 1.2 mb/d of agreed upon cuts, plus substantial losses from Iran and Venezuela. Those significant declines, combined with slower U.S. shale growth and a steady increase in demand, should be enough to tip the oil supply balance into deficit territory, BofAML concludes.

 

“On a net basis, we see aggregate [year-on-year] global oil supply growth of just 400 thousand b/d in 2019 and a deficit building into the summer months,” the bank said.

Moreover, the supply surplus that did emerge in late 2018 was much smaller than the one that occurred between 2014 and 2016. The most recent surplus totaled perhaps 200 million barrels, compared to around 1-billion-barrel surplus in the 2014-2016 period, according to Scotiabank. In that context, erasing the glut should be easier to achieve. Related: Norway’s Oil Production To Fall To 30-Year Low

As such, top OPEC+ officials do not seem overly concerned. “Market sentiment today is being shaped by undue concerns about demand, underestimation of the impact of agreed supply cuts, and a misreading of the supply-demand trends which causes counterfactual actions by financial players,” Saudi oil minister Khalid al-Falih said at the Atlantic Council’s 2019 Global Energy Forum in Abu Dhabi.

“In other words, if we look beyond the noise of weekly data and vibrations in the market, and the speculators’ herd-like behavior, I remain convinced that we are on the right track and that the oil market will quickly return to balance,” he said.

One of the key variables to watch is Iran’s oil exports levels. Waivers granted to countries importing oil from Iran expire in May. The top U.S. official dealing with Iran sanctions, Brian Hook, hinted at the same conference in Abu Dhabi that the American government wouldn’t be as lenient this time around. “All I can say is that certainly when we have a better supplied oil market, then that will put us in a better path to [reducing Iranian crude exports] to zero,” Hook said.

By Nick Cunningham of Oilprice.com

 

https://oilprice.com/Energy/Crude-Oil/Oil-Markets-Could-See-Deficit-In-2019.html

[Pitcher]

Heavy Crude: From Glut To Shortage

- Jan 15, 2019, 5:00 PM CST

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Just a few months ago Canadian heavy crude oil producers were sending their product to storage amid a painfully deep price discount to West Texas Intermediate that ate into their margins. Chinese refiners took advantage of the cheap Canadian crude and stocked up as well while it was cheap. Now, some are worrying about a shortage of heavy crude that would interfere with the operations of Gulf Coast refineries that process more than 50 percent of the world’s heavy crude oil.

Bloomberg reports some heavy crude grades such as Heavy Louisiana Sweet are already trading at a premium to lighter and typically more expensive grades because of this concern, which seems like it has further to grow. Others are shrinking their discount to Brent and WTI.

In December, Alberta’s Premier Rachel Notley ordered a crude oil production cut in the province of 325,000 bpd to clear up stockpiles and prop up the price of the local benchmark. This worked even before the cuts entered into effect, which was at the beginning of this month, but it also coincided with OPEC’s latest production cut agreement. More notably, it coincided with Saudi Arabia’s early production cut start.

“Historically, when the Saudis have cut output, it’s heavy and medium crude,” a senior analyst from consultancy Turner Mason & Co. told Bloomberg’s Robert Tuttle and Sheela Toben. This means lower heavy crude production in Canada has combined with the consistent decline in Venezuelan oil output, unlikely to be reversed in the observable future, and now with expected lower heavy and medium crude production from Saudi Arabia. No wonder prices are spiking. Related: Fears Of U.S. Shale Demise May Be Overblown

 

Heavy crude, according to Bloomberg, accounts for a tenth of the feedstock of refineries around the world. Asian refiners will suffer from the shortage just as much as their U.S. counterparts if it materializes, if not more. But it will also present an opportunity for alternative suppliers of heavy crude, such as Mexican producers if the premium of the usual supplies goes high enough to make these alternative sources of crude competitive. Russia is also a large producer of heavy crude and well positioned to up its deliveries to Asian markets.

While analysts expect the rally to be temporary as the refining industry gears up for the new, low-sulfur bunkering rules of the International Maritime Organization, it has certainly highlighted Canada’s pipeline conundrum. There is robust demand for Canadian heavy crude from U.S. refiners, but not enough capacity to transport it across North America to the Gulf Coast cheaply. The good news for Canadian producers is that cheap or not, if the refineries need it, the refiners will buy it.

The news is good for Saudi Arabia as well, as whatever heavy crude it produces will fetch more per barrel than before. Venezuela, however, is in no position to enjoy higher revenues as most of the oil it exports heads for China and Russia under cash-for-oil agreements signed in the past. Mexico would also reap some benefits despite plans by the new government to refine more crude locally than export it: these are long-term plans that need refining capacity. In short, stakeholders set to benefit from the price rise in heavy crude will likely try to make the best of it while it lasts.

 

https://oilprice.com/Energy/Crude-Oil/Heavy-Crude-From-Glut-To-Shortage.html

[Pitcher]

First U.S. Crude Oil In Months Heads To China

- Jan 15, 2019, 2:00 PM CST

Three U.S. crude oil cargoes are currently headed to China in what could be the first Chinese purchase of American crude since the trade war escalated last summer and since the ‘trade-war truce’ of three months began in December, Reuters reported on Tuesday, quoting ship brokers and tanker-tracking data.

Although crude oil is not on China’s tariff list, Chinese buyers have been staying away from U.S. crude oil purchases since the summer of 2018, when the trade war escalated.

According to EIA data, the United States didn’t export any crude oil to China in August, September, and October, compared to 384,000 bpd in July and a record-high 510,000 bpd in June.

 

After the United States and China called a trade-war truce in early December and pledged to immediately begin trade negotiations in view of possible deal within 90 days, Chinese refiners are said to have started to look for opportunities to buy U.S. crude oil until March 1, when the negotiating period expires.

According to ship brokers who spoke to Reuters and to Refinitiv Eikon vessel tracking data, three cargoes left Galveston, Texas, in December and are currently heading to China. One tanker is expected to arrive in China late in January and two others are planned to arrive in late February or early March, although the final destinations could change.  

Related: Oil Rises After Choppy Start To The Week

As of mid-December, cargo loading plans of Chinese refiners showed that appetite for U.S. crude in China continued to be weak, despite the trade-war truce. Rising freight costs for U.S. crude and the uncertainty over how the U.S.-China trade negations would unfold were the top considerations of the buyers, a Chinese analyst told Reuters last month.

Unipec, the trading arm of Chinese state oil major Sinopec and China’s largest buyer of U.S. crude oil until recently, is set to resume purchases from the United States “very soon,” and volumes are likely to be significant, a senior Unipec executive told S&P Global Platts in mid-December.

China may have shunned U.S. crude oil since the summer, but the U.S. boosted shipments to other destinations. EIA data shows that American crude oil exports in October—the latest available monthly data—set a record high of 2.326 million bpd.

 

https://oilprice.com/Latest-Energy-News/World-News/First-US-Crude-Oil-In-Months-Heads-To-China.html

[yota691]

Oil rises with hopes of a better market under OPEC-led cuts

 

Arab and international Economy News _ Baghdad Oil prices rose on Wednesday after jumping nearly 3 percent in the previous session as expectations that OPEC-led production cuts had improved market fundamentals had eased the impact of the global economic slowdown. US crude futures for July delivery reached $ 60.83 a barrel, up 19 cents, or 0.3 percent, from the previous close. US West Texas Intermediate crude futures rose 10 cents, or 0.2 percent, from the previous settlement price of $ 52.21 a barrel. "The oil market seems to be looking at Saudi Arabia's strong cuts in China's active supply and stimulus," said Jonathan Barath, investment manager at Propys Securities in Sydney. But signs of a growing economic slowdown elsewhere in the world prevented oil prices from rising on Wednesday. The outlook for the global economy grew bleak when British lawmakers on Tuesday rejected British Prime Minister Teresa Mae's agreement to leave the European Union. Oil markets are supported by production cuts, which began late last year under the leadership of the Organization of the Petroleum Exporting Countries (OPEC) and Russia, a major non-OPEC producer. Views 48   Date Added 16/01/2019

[yota691]

Oil rose 0.3 percent on hopes of an improved market under Opec-led cuts

11:30 - 16/01/2019

 

 

 

Follow - up - the balance of News 
Oil prices rose on Wednesday after it jumped by about three percent in the previous session , while deflated expectations that production cuts led OPEC has improved fundamentals impact of the global economic slowdown of the market. 
By 0748 GMT, global Brent crude futures were up $ 60.83 a barrel, up 19 cents or 0.3 percent from the previous close.

[Pitcher]

Trump Takes Aim At Maduro, Threatens Oil Embargo

 Jan 16, 2019, 5:00 PM CST

A week after Venezuelan President Nicolas Maduro was sworn in for a second term in office, the option of a complete oil embargo against Venezuela has been put back on the table, according to two unnamed sources who spoke to CNN.

The sources also said President Trump was mulling over a declaration that recognizes the President of the Venezuelan National Assembly, opposition politician Juan Guaido, as the legitimate president of the country.

While officials from the U.S. administration did not directly confirm the information, CNN quoted the spokesman of the National Security Council, Garrett Marquis, as saying “The United States is currently considering all diplomatic, political, and economic tools in its arsenal in response to the usurpation of power by the illegitimate Maduro regime.”

The last time more sanctions against Venezuela’s government were discussed actively in Washington, a source from the administration said a full oil embargo was not among the options discussed.

“The fact is that the greatest sanction on Venezuelan oil and oil production is called Nicolas Maduro, and PDVSA’s inefficiencies,” the official said, speaking to Reuters. “At the end of the day, Nicolas Maduro has taken care of really running PDVSA to the ground, and essentially more and more making it a non-factor.”

 

Interestingly enough, however, despite the steady decline in Venezuela’s oil production, daily exports of crude to United States refineries have remained relatively stable. According to the latest data from the Energy Information Administration, between May and October 2018, Venezuelan crude exports to the U.S. hovered around half a million barrels daily. While this is substantially lowerthan the export rate from the late 1990s, it’s not as low as it was a decade earlier, between 1980 and 1985. And U.S. refiners might need more. Related: U.S.-Qatar Energy Partnership Has Russia On Edge

Late last year, Alberta’s Premier Rachel Notley ordered a cut of over 300,000 bpd in local crude oil production to prop up prices. It worked so well, now some analysts are worrying there may be a shortage of heavy crude on the way as Saudi Arabia is also cutting production and when it cuts, these analysts said, it cuts mostly its heavy crude production.

However, most refineries on the Gulf Coast, where more than half of the world’s crude is processed, need heavy crude and there are but a few competitive sources they can tap if the supply of heavy crude becomes too tight for comfort, which may well happen if Trump goes ahead with an export embargo.

The idea of an oil embargo, CNN notes, has been previously rejected by the U.S. President because it would lead to a jump in prices at the pump of as much as 15 percent. This is not something Trump seems to be fine with, as evidenced by his reactions to rising prices in the spring and early summer of last year and his urging OPEC to stop cutting production and let prices go lower. Based on this, chances are the U.S. president will stop short of imposing a full oil embargo on Venezuela, especially amid a tightening heavy crude market.

 

https://oilprice.com/Energy/Crude-Oil/Trump-Takes-Aim-At-Maduro-Threatens-Oil-Embargo.html

[Pitcher]

EIA: OPEC Production To Fall By 1 Million Bpd This Year

By Irina Slav - Jan 16, 2019, 9:00 AM CST

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The Energy Information Administration expects OPEC’s combined crude oil production this year to be 1 million barrels per day lower than in 2018, when the cartel produced an average 31.92 million bpd, the authority said in its latest Short-Term Energy Outlook.

This, however, won’t be enough to push prices higher if the EIA turns out correct about the trend in non-OPEC production, led by the United States, which the EIA sees rising by 2.4 million bpd this year from last. In 2020, OPEC’s production is likely to remain flat on 2019, with all the growth in global supply coming from the United States, Brazil, Canada, and Russia, the EIA also said. This is the authority’s first STEO that covers 24 months.

Among OPEC members, the EIA sees Iraq as one major driver of production growth but it also assumes U.S. sanctions against Iran will remain in place until the end of 2020, which, coupled with expectations that Venezuela’s oil production will continue to fall, means production growth in Iraq will not be enough to offset the negative supply effect of developments in Iran and Venezuela.

 

 

Saudi Arabia, OPEC’s de facto leader and also biggest producer, interestingly, would not be able—or willing—to contribute to growth in production, according to the EIA. The agency said this year Saudi Arabia will produce an average of less than the 10.4 million bpd average rate of production it booked for 2018.

Angola and Nigeria, on the other hand, will pump more oil this year, the EIA also said in its projections for OPEC. Angola started up production at two new fields last year: Kaombo, which it will this year expand it with a second phase of development, and Vandumbu, which began production ahead of schedule in late 2018.

In Nigeria, the offshore Egina field, operated by Total, began production at the start of this year. At peak production, Egina will have the capacity to pump 200,000 bpd, which is equal to about 10 percent of Nigeria’s current rate of production.

 

https://oilprice.com/Energy/Crude-Oil/EIA-OPEC-Production-To-Fall-By-1-Million-Bpd-This-Year.html

[haymon]

This is the only time in  my life I have liked high gas prices......

Edited January 17, 2019 by haymon

[Donziman]

The US is now in the driver's seat. We are virtually oil independent.. The oil we import

is now a financial tool to get these Bozo countries to bend to US vision of the way

things should be.   GO USA.

[yota691]

Oil prices fall ahead of OPEC report

 

 17 January 2019 10:37 p
Mubasher : Oil prices fell during Thursday's trading, as US production rose to a record level, ahead of the announcement of OPEC's monthly report.

By 7:25 am GMT, the price of Brent crude for March delivery fell 0.4% to $ 61.05 a barrel.

US crude futures for February delivery fell 0.6% to $ 52 a barrel.

The US Energy Information Administration announced yesterday the rise of US production by 200,000 barrels per day in the week ended January 11 to 11.900 million barrels, the highest level ever.

On the other hand, US oil inventories fell by 2.7 million barrels to 437.1 million barrels in the same period.

OPEC is due to announce later this month its monthly production data for December, amid expectations of the biggest monthly drop since January 2017.

OPEC and Russia have begun to cut production by 1.2 million barrels a day in an attempt to rebalance the market after falling prices by the end of last year.

[yota691]

Oil falls as US crude production nears 12 million bpd

12:27 - 17/01/2019

 

 

 

Follow - up - the balance of News 
Oil prices fell on Thursday , with the approach of US crude production of an unprecedented rate of 12 million barrels per day, while fears of weak demand began to emerge. 
By 0752 GMT, US WTI crude futures were $ 51.92 a barrel, down 39 cents, or 0.8 percent, from the previous close. 
London Brent crude futures fell 37 cents, or 0.6 percent, to $ 60.95 a barrel. 
Crude oil production in the United States rose in the week ending Jan. 11 to a record 11.9 million barrels per day, compared with 11.7 million barrels a day in the previous week, which was already the highest production rate between Countries of the world.
US production has risen by 2.4 million bpd since January 2018, fueling fears of a supply gap. 
US gasoline stocks also rose more-than-expected. 
The increase in crude production in the United States coincided with a rise in exports, which also reached a record level of 3.2 million barrels per day by the end of last year. 
The surge in US supplies comes amid concerns that demand growth is faltering because of a slowdown in the global economy that some analysts believe will turn into a recession. 
To curb oil prices, OPEC and Russia are leading efforts to cut supplies, preventing crude prices from falling sharply despite weak demand and rising US production.

[MyLadiesDaddy]

I can just hear president Trump saying to Iraq," come on Iraq you could stop this anytime you'd like. Just put your big boy panties on. You can do it,"

[yota691]

OPEC's monthly report tops the scene on global markets today

 

 18 January 2019 12:52 p
From: Ahmed Shawky

Mubasher: The monthly report of the Organization of Petroleum Exporting Countries (OPEC), the scene in world markets by the end of Thursday.

After US President Donald Trump's apology and speculation about not attending his French counterpart Emmanuel Macaron, the British Prime Minister Teresa May forced the British Prime Minister to miss the Davos Economic Forum next week.

OPEC Report

The Organization of Petroleum Exporting Countries (OPEC) announced its monthly production decline by 751 thousand barrels per day to reach 31.578 million barrels per day led by Saudi Arabia.

While OPEC raised its estimate of overseas supply growth last year, but lowered expectations for this year.

While the average price of OPEC basket fell  by 12.8% in December, as a result of the decline in crude prices at the end of last year.

The Organization of Petroleum Exporting Countries (OPEC) also confirmed that monetary policy decisions in major central banks are overshadowing oil markets.

At the settlement, oil prices fell with the US jump in production, but eventually reduced their losses, which exceeded 2% during trading.

For its part, the US Energy Information Administration announced a decline in natural gas inventories more than analysts' expectations last week.

The price of gold was not better off, falling from the lowest level in two weeks at the settlement of trading today after economic data in the United States.

Global Stock Indices

US stocks rose at the end of the day , and the Dow Jones gained more than 160 points after a report that US officials were considering removing tariffs on China.

Morgan Stanley's profits rose 138 percent in the fourth quarter but failed to meet analysts' estimates

While Netflix's profits declined  in the fourth quarter of last year, but added about 8.8 million subscribers more than estimates.

Economic data showed today, US jobless claims fell to a five-week low, while industrial activity in Philadelphia saw a sharp jump this month.

The decline in European shares ended at the end of trading today led by the banking sector with political uncertainty.

Following the rejection of the Brix deal, the British parliament decided to hold discussions and vote on the alternative plan for the UK to leave the EU on Jan. 29.

For its part, the International Monetary Fund (IMF) warned that the lack of a Bricast deal is the biggest threat to the British economy.

Economic data released today showed that euro zone inflation slowed last month.

As financial stocks fell and the yen rose , Japanese equity indexes fell for the second straight session.

[yota691]

OPEC: Monetary policy decisions leave their mark on the oil market

 

 17 January 2019 07:17 PM
From: Sally Ismail

Direct: Organization of Petroleum Exporting Countries ( OPEC ) confirmed that the monetary policy in the major central banks ' decisions to cast a shadow on the oil markets.

According to the monthly report of the Organization of the Petroleum Exporting Countries (OPEC) on Thursday, although the economic risk remains bearish, the possibility of adjusting the pace of tightening monetary policy is expected to slow the pace of decline in GDP growth in 2019.

He added that this situation has recently been reflected in the global financial markets as asset prices recovered somewhat from the low levels witnessed in late 2018.

OPEC believes that this positive impact on the sentiment of the market also moved to the oil market.

The Organization of the Petroleum Exporting Countries (OPEC) stressed that continued cooperation between OPEC members and producers of crude from outside the "Declaration of Cooperation" remains a necessary issue to help maintain a balance in the oil market.

He said the Fed had increased its benchmark interest rate by 100 basis points last year, 25 basis points higher than a year ago.

However, concerns have emerged that the pace of tightening monetary policy could lead to a slowdown in the US economy at a faster pace than expected this year.

US policy makers have acknowledged that the downside risk to the economic outlook has reduced expectations of an interest rate hike of 2019 to 50 basis points from 75 basis points.

The ECB halted the euro-zone asset purchase program by the end of December, as well as uncertainty about the BRICT and budget disputes.

While the Bank of England raised interest rates by 25 basis points last year, the Bank of Japan indicated in 2018 that it expected to keep the monetary stimulus program as inflation remained below target.

The report highlighted that the differences between the monetary policies of central banks have increasingly increased the value of the US dollar, especially against the currencies of emerging economies facing a deficit in its current account.

[yota691]

International Energy: America's oil gains and global economic slowdown are challenging the oil market in 2019

03:04 - 18/01/2019

 

 

 

Follow - up - the balance of News 
said the International Energy Agency on Friday that the growth of the US oil production as well as a slowing global economy would put downward pressure on crude prices in 2019, which represents a challenge to OPEC 's insistence on supporting the market by reducing supply. 
The agency, which coordinates energy policies with industrialized nations, said it kept its forecast for world oil demand growth this year unchanged at 1.4 million bpd. 
"The impact of rising oil prices is fading, which will help offset the decline in economic growth," the Paris-based agency said in its monthly report. 
Oil prices rose above $ 85 a barrel in the second half of 2018 on concerns about a drop in oil supplies from Iran over new US sanctions.
Brent crude fell to $ 50 a barrel by the end of 2018 due to the economic slowdown and increased US supplies, prompting the Organization of the Petroleum Exporting Countries (OPEC) to cut output in an effort to keep prices above $ 60 a barrel. 
International oil supplies fell by 950,000 bpd in December, or about 1 percent, led by OPEC's output decline, even before the new production cut-off agreement came into effect in January, the agency said. 
Production growth outside the organization is slipping to 1.6 million bpd in 2019 after a record annual growth of 2.6 million bpd in 2018. 
But she said the United States would continue to increase production.
"The United States, already leading the list of liquid producers, will strengthen its leadership as the world's largest crude producer. By the middle of the year. US crude production is likely to be higher than that of Saudi Arabia or Russia. " 
She noted that Russia increased its oil production in December to a record level near 11.5 million barrels per day and it is unclear when production will fall.

[Pitcher]

Oil Prices Jump As China Seeks To End Trade War

Oil prices were relatively quiet this week, bouncing around, but closed out the week on a positive note.

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Friday, January 18th, 2019

IEA: Balancing oil market will be a “marathon.” The IEA said in its latest Oil Market Report that “the journey to a balanced market will take time, and is more likely to be a marathon than a sprint.” The agency noted that while Saudi Arabia seems determined to follow through, there is “less clarity” on Russia. The agency left its demand growth forecast unchanged, arguing that while the global economy is starting to show some worrying signs, lower oil prices will also help keep demand aloft.

OPEC’s December production down 751,000 bpd. OPEC released its monthly Oil Market Report on Thursday, revealing a roughly 751,000 bpd decline, according to secondary sources. Saudi Arabia slashed output by 468,000 bpd, Iran lost 159,000 bpd, and Libya lost 172,000 bpd. Smaller cuts came from the UAE (-65,000 bpd) and involuntary losses from Venezuela (-33,000 bpd). The largest gain come from Iraq, which added 88,000 bpd. The monthly totals occurred before implementation of the OPEC+ agreement, which calls for cuts of 1.2 mb/d from October’s baseline.

EIA: Brent to average $61. The EIA forecasts a $61-per-barrel price for Brent for 2019, with WTI averaging $8 below Brent in the first quarter, a discount that will narrow to a smaller $4-per-barrel markdown by the fourth quarter. The agency maintained a forecast for U.S. oil production at 12.1 mb/d this year, unchanged from prior estimates even though it has lowered its pricing forecast.

No progress on U.S.-China trade talks. U.S. Trade Representative Robert Lighthizer did not see any progress on the structural trade issues during negotiations earlier this month. The two sides will resume negotiations at the end of January. Related: Low Oil Prices Are Not The Only Problem For The Permian

OPEC considers influence campaign in U.S. OPEC is considering a PR campaign in the U.S. to head off punitive measures in Congress, according to the Wall Street Journal. The influence campaign would be the cartel’s first, and it would consist of funneling money through “industry organizations, think tanks, academics and other opinion makers,” according to WSJ. OPEC is concerned mostly about anti-trust regulation that has been gaining support on Congress.

Gasoline glut in Asia. Global refineries are churning out ever-increasing volumes of gasoline as refiners chase higher margins for diesel. Meanwhile, a startup of new refineries in Asia with a focus on producing naptha for petrochemicals could also exacerbate the gasoline glut.

U.S. natural gas supply and demand breaking records. U.S. natural gas supply is expected to soar to an all-time record high of 90 billion cubic feet per day in 2019, according to the EIA. That’s up sharply from a record high in 2018 at 83.31 bcf/d. Demand will also hit a record high this year at 82.65 bcf/d.

Offshore spending to outgrow onshore in 2019. Offshore spending will outpace onshore shale spending this year. This will benefit oilfield services companies that are “exposed to the offshore subsea market and the maintenance, modifications and operations (MMO) sector,” according to Rystad Energy. “Many would expect offshore spending to be cut as drastically as shale, but offshore budgets were at a 10-year low last year, after four years of intense cost focus, and from that level you don’t need much additional activity or inflation to drive up the market,” Rystad Energy head of oilfield services research Audun Martinsen said.

Libyan National Army launches assault for Sharara field. The Libyan National Army (LNA), led by General Khalifa Haftar, launched an assault on January 15 to secure the El Sharara oil field, the country’s largest, which has a capacity of 300,000 bpd. The field has been offline since December. “Should the LNA succeed in taking over the El Sharara facilities, Haftar’s control over Libya’s strategically vital oil and gas resources would be hugely strengthened,” Verisk Maplecroft wrote in a note. “This, in turn, would shore up Haftar’s bargaining position in ongoing negotiations with the Government of National Accord.” Moreover, if the LNA does succeed, it also increases the odds of a rerun of the standoff with the internationally-recognized government in Tripoli, just as last year. In 2018, a significant portion of Libya’s oil went offline when the two sides fought over control of the nations’ oil export terminals. Related: Oil May Never Return To The Triple-Digits

Hedge funds closed after booking losses trading oil and gas. Nearly 100 energy-focused hedge funds closed from 2016 through September 2018, taking the total number down to 738, according to Reuters and Eurekahedge. That is the lowest number of active hedge funds focused on energy since 2010. “There is a massive decline in the number of funds, and no replacements,” David Mooney, founder of Casement Capital, told Reuters. “There has been a near ‘extinction event’ in commodities hedge funds.”

Tesla to lay off 7 percent of workforce. Tesla (NASDAQ: TSLA)said it would lay off 7 percent of its workforce in order to cut costs. That would allow the company to sell its Model 3 at a lower price as subsidies phase out.

China looks to expand oil deal in Iran. Despite the looming expiration of sanctions waivers on Iran in the coming months, China hopes to expand its operations in Iran, according to the Wall Street Journal. Sinopec is reportedly making stiff demands to Iran, knowing the country has few other options. Sinopec believes its operations fall under an existing contract, which would allow it to continue even if U.S. sanctions waivers expire.

 

https://oilprice.com/Energy/Energy-General/Oil-Prices-Jump-As-China-Seeks-To-End-Trade-War.html

[Pitcher]

CNOOC Eyes Doubling Of Reserves By 2025

By Irina Slav - Jan 18, 2019, 1:00 PM CST

China’s CNOOC will seek to boost its crude oil reserve base and increase the number of new exploration projects it is involved in twofold over the next seven years, Reuters reports, citing a statement by the company on Chinese network Wechat.

CNOOC focuses on offshore oil and gas, and is the largest operator in this area in China and has recently been very active in its international expansion to offset production declines at mature Chinese fields. The announcement of the reserve and production boost plan comes in response to an urging from President Xi Jinping to enhance China’s national security.

“We faced adverse geological conditions as offshore oil and gas fields age. More exploration projects are being moved to deep water area, but these are both risky and costly,” CNOOC’s head of geology, Xie Yuhong, said.

 

According to the chairman of the company, the reserve boost plan will require record-high investments in the next seven years. CNOOC is announcing its budget and production target for 2019 later this month.

Earlier this month, CNOOC announced, along with its partner Total, the start of production at the Egina deepwater field off the Nigerian coast, which is seen to reach its peak production as early as this year, at 200,000 bpd. The field went into production ahead of schedule, which suggests CNOOC is successfully pursuing its reserve boost plans already.

At end-2017, the company had a net reserve base of 2.613 billion barrels of oil equivalent. According to Reuters, this was the highest reserve base level for CNOOC since 2008. Last year, CNOOC saidit will boost its capital spending to US$10.3-US$11.8 billion (70-80 billion yuan), of which 51 percent would be spent domestically and the rest on international projects.

Also in 2018, CNOOC said it planned to expand oil production from a planned 470-480 million barrels of oil equivalent in 2018 to 485 million barrels of oil equivalent this year, and 500 million barrels of oil equivalent in 2020.

 

https://oilprice.com/Latest-Energy-News/World-News/CNOOC-Eyes-Doubling-Of-Reserves-By-2025.html