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Oil rises 1% on settlement amid fears of supply shortages

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Saudi Energy Minister: OPEC will not change its production policy by the April meeting

Saudi Energy Minister: OPEC will not change its production policy by the April meeting
Saudi Energy Minister Khalid Al - Faleh
 10 March 2019 08:33 p

Riyadh - China and the United States will lead strong global demand for oil this year, but it will be premature to change OPEC production policy and its allies at the next meeting in April, Saudi Energy Minister Khalid al-Falih said .

Al-Faleh, according to Reuters, said that global oil demand is expected to increase by about 15 million barrels per day .

He continued : If you look at Venezuela alone , and you will feel dismayed if you look at the United States will say the world is awash with oil, you look at the market as a whole, we believe that demand in the strong 2019 quite effectively . "

Al-Falih said China's demand to break records month after month and estimated that China will exceed 11 million barrels per day in 2019 .

For Saudi Arabia, oil production is expected to remain at 9.8 million bpd this month .

"Aramco is finalizing its provisions for April," he said. "We expect the April levels to be very much like March ."

The Organization of the Petroleum Exporting Countries (OPEC) and its allies will meet in Vienna on April 17 and 18, and another meeting is scheduled for June 25-26 .

"It is unlikely that the group will change its production policy in April and, if necessary, make adjustments in June," Faleh said .

"We'll see what happens by April if there's an unexpected crash somewhere else, but otherwise I think we'll just keep going ."

"We will see the situation of the market by June and make a corresponding adjustment, " he said.

On January 1, OPEC, along with Russia and other countries, began a new cut in production to avoid a speculative supply of crude that could cause prices to fall . "

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Washington threatens Riyadh's throne as the world's largest oil exporter

Washington threatens Riyadh's throne as the world's largest oil exporter

 11 March 2019 01:59 PM
Direct: The International Energy Agency expects that the United States will begin the export of oil greater than Russia, as threatening the overthrow of Saudi Arabia as the largest oil exporter in the world by the year 2024.

The United States will lead the growth of the world supply of crude over the next five years with the support of the oil shale, the annual oil outlook over the next five years, the International Atomic Energy Agency (IAEA) said on Monday.

The report notes that US oil production will exceed Russia's output by the end of 2024, and is close to producing Saudi Arabia during the same period.

The United States exported 3.6 million barrels per day of oil and exported about 5 million barrels per day of petroleum products, including refined fuels such as gasoline.

According to the report, these shipments are expected to increase in the coming years as the country's oil production continues.

According to the Paris-based agency, US production of crude oil will increase by about 4 million barrels per day (bpd) by 2024 to account for about 70% of the total increase in global capacity.

The US oil production has stabilized at its highest level ever last week's 12.1 million barrels per day.

US oil production increased by 2.2 million bpd last year.

According to the IAEA report, most of OPEC's oil production will come from Iraq over the next five years, making it the world's third-largest source of new crude supplies, helping to offset supply shortfalls from Iran and Venezuela.

The Energy Agency believes that countries such as Brazil, Norway and Guinea will meet the growing demand for oil, along with the United States and Iraq.

The IAEA expects global oil demand to grow by 1.2 million barrels per day over the next five years, but sees no signs of peaking during that period.

 
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Saudi Arabia plans to cut crude exports in April

Saudi Arabia plans to cut crude exports in April
Oil drums produced by Saudi Arabia
 11 March 2019 02:35 PM

Saudi Arabia plans to cut its crude oil exports in April to less than 7 million barrels a day and keep production at less than 10 million barrels a day as Saudi Arabia seeks to deflate supply and boost oil prices, a Saudi official said.

The official said on Monday that the allocation of crude oil from the state-owned Aramco for April is 635 thousand barrels per day from the quantities requested by customers such as refineries .

"Despite the very strong demand of more than 7.6 million barrels per day of international customers who are transporting them by sea, it was decided to allocate less than 7 million barrels per day to customers," he said .

He added that oil exports in March will also be below 7 million barrels per day .

"Aramco's April provisions show a significant drop of 635,000 barrels per day from customers' demand for crude oil," he said .

"This will keep production at less than 10 million bpd in April," he said, adding that it was also less than 10.311 million bpd agreed by the kingdom as a target for production under OPEC-led cut-off arrangements .

OPEC and other producers such as Russia, under the so-called OPEC + alliance, agreed in December to cut supply by 1.2 million bpd from January 1 to six months .

"Saudi Arabia is showing an extraordinary commitment to accelerating the rebalancing of the market," the official said, adding that the kingdom expected other OPEC countries to show similar levels of contribution and greater commitment .

Saudi Oil Minister Khalid al-Faleh said on Sunday that oil production in March was 9.8 million barrels per day and that the kingdom, OPEC's biggest producer, plans to keep April production at the same level .

Saudi oil production fell to 10.136 million barrels per day in February, down from January's 10.24 million bpd, an industry source told Reuters on Friday.

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Oil logs March’s highest finish as Saudi signals near-term crude export reductions

By Myra P. Saefong, Mark DeCambre
Published: Mar 11, 2019 3:15 pm ET

IEA: A ‘second U.S. shale revolution is coming’

Oil ends higher Monday
Oil ends higher Monday

Oil futures on Monday marked their highest settlement so far in March, finding support from reports that Saudi Arabia planned to extend efforts to reduce crude exports.

April West Texas Intermediate crude CLJ9  rose 72 cents, or 1.3%, to settle at $56.79 a barrel on the New York Mercantile Exchange, after prices rose 0.5% last week, according to Dow Jones Market Data.

 

 

 

Global benchmark May Brent crude UK:LCOK9 gained 84 cents, or 1.3%, to $66.58 a barrel on ICE Futures Europe, after the contract registered a weekly rise of 1% on Friday.

Both front-month crude benchmarks ended the session at their highest levels this month so far.

Reuters cited Riyadh’s oil minister in reporting that Saudi Arabia plans to cut its oil exports to below 7 million barrels a day, while keeping its output “well below” 10 million barrels a day, in an attempt to alleviate a glut of supply.

Saudi Energy Minister Khalid al-Falih told Reuters on Sunday that it would be too early to change a production curb pact agreed by OPEC and its allies, which includes Russia, another major producer, before June.

The Joint Ministerial Monitoring Committee, or JMMC, which monitors compliance with output reductions, is scheduled to meet in Azerbaijan on March 18. OPEC’s next scheduled meeting will be held on April 17-18. Reports also say the group will again meet in late June to discuss production levels.

 

 

 

“We will see what happens by April, if there is any unforeseen disruption somewhere else, but barring this I think we will just be kicking the can forward,” Falih said.

So far, Saudi Arabia, OPEC’s de facto leader, has shouldered most of the burden of trimming output to boost crude prices.

Contributing further support to oil prices Monday, OPEC member Venezuela’s main oil export terminal and crude processing complex have been shut down as a result of power outages in the country that began on Thursday, energy news provider Argus reported Monday.

Venezuela is home to the world’s largest proved oil reserves, but according to an annual output report released Monday from International Energy Agency, the country’s crude output is expected to fall from 1.3 million barrels a day in 2018 to 750,000 barrels a day in 2019 as U.S. sanctions on Venezuela remain in place.

The news comes after active U.S. rigs drilling for oil fell by nine to 83 last week, according to data from Baker Hughes BHGE reported Friday. The data imply a slowdown in domestic production activity.

 

 

 

Meanwhile, the IEA’s annual oil outlook indicated that OPEC members, including Russia, have been effective in reducing global output.

A survey last week from S&P Global Platts showed OPEC output in February fell to a nearly four-year low.

However, the IEA report predicted a “second U.S. shale revolution is coming,” potentially bringing unprecedented growth in the U.S. oil-and-gas industry in the coming years, which could weigh on crude prices.

Oil prices settled lower on Friday, following weaker-than-expected monthly U.S. jobs data.

“WTI futures came for sale in a big way as demand expectations fell due to sharply rising growth concerns,” said Tyler Richey, co-editor at the Sevens Report.

 

 

 

“Looking ahead, the path of least resistance for WTI is down towards support in the low $50s, but if volatility continues to flare and growth concerns persist (the two go hand in hand), then it will be hard for WTI prices to hold on to a $50 handle.”

Oil products climbed on Nymex Monday, with April gasoline RBJ9 up 1.4% at $1.826 a gallon—the highest since October of last year. April heating oil HOJ9  edged down by 0.3% to $1.994 a gallon, marking the lowest finish since Feb. 25. April natural gas NGJ19 however, lost 3.3% to settle at $2.772 per million British thermal units, the lowest since late February.

Monthly oil reports are due out this week, from the Energy Information Administration on Tuesday, OPEC on Thursday and the IEA Friday.

Christopher Alessi contributed to this article

 

https://www.marketwatch.com/amp/story/guid/CF9E05AC-43E8-11E9-941F-9DD58265ED8A

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Adam is right to say we are on course, oil will keep rising as the supply is drained since output won’t be changed until after their next meeting in late June 

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Oil Minister for "morning": start preparations for the convening of the (OPEC) in Baghdad

 
Baghdad / Tareq al-Araji
 
 
The Ministry of Oil has begun special preparations for the convening of the OPEC Conference in Baghdad next year on the occasion of the 60th anniversary of the founding of the organization, at a time when Iraq for the first time to become a member of the Ministerial Committee to control production, which will be held in April next year with the participation of members of the Organization and the countries that are with them. 
In the meantime, the ministry confirmed that the role of Iraq in the Organization (OPEC) is positive to maintain the unity of the Organization and its ability to defend the interests of producers and the stability of global markets to ensure that there is no fluctuation in crude prices.
"Iraq and the Organization of the Petroleum Exporting Countries (OPEC) are committed to maintaining production levels to stop the collapse of world oil prices and to ensure that what happened last year is not repeated when the price of a barrel of oil fell within 20 days," said Deputy Minister of Energy Affairs Thamer Al Ghadhban. From $ 86 to $ 54 (Brent), as well as a drop in US crude below $ 50.
He added that Iraq posed a question during its participation in the recent conference of the Organization of Petroleum Exporting Countries (OPEC), which has a large research department, to what will happen if the production is not reduced, the answer is that the price of a barrel will range between 40 and 45 dollars, and this is the marginal level of oil production rock , And therefore this is not acceptable to all, especially Iraq because the federal budget has approved the price of $ 56 a barrel export card of 3 million and 880 thousand barrels, so it has a deficit of 20 percent, so Iraq has committed with the (OPEC) to reduce production.
He pointed out that the ministry did not stop developing the production capacity, but it is committed to the OPEC countries for the benefit of Iraq and the Organization and the countries outside it. Therefore, the 140,000 barrel reduction was committed to keep prices from sliding into the abyss. Now far better than the former.
Al-Ghadhban revealed that the next few years will witness the establishment of three conferences, the first of which will be held on the 18th of this month, where will witness the accession of Iraq for the first time in the ministerial committee to control the production of the members of the Organization (OPEC) and the countries that are with them from outside it, which is positive for Iraq as a productive state Second in this organization.
He pointed out that next April will also see a meeting between oil ministers to assess compliance with the agreement to reduce production and will see the declaration of a non-binding and voluntary cooperation pact between OPEC and outside countries to agree on mechanisms for cooperation between these countries, such as information exchange and coordination of roles and common points and exchange of experiences, The usual ministerial meeting usually held in June. 
The Deputy Prime Minister for Energy reiterated the position of Iraq supporting the Organization of Petroleum Exporting Countries (OPEC), especially as the founder of it, revealing preparations and coordination with the Secretariat of the Organization to hold a major conference in Baghdad next year on the occasion of the 60 years of its founding.
Conference.
He stressed that the role of Iraq in the organization is active, positive and cooperative and does not intersect or adopt at all the axes. On the contrary, it is going to bring together the parties and to preserve the unity of the organization and its ability to defend the interests of producers and the stability of world markets and the non-fluctuation of prices because this is the worst thing For the producer and consumer, especially as Iraq depends on 90 percent of its oil resources to support the budget, so we are concerned about the stability of markets and supply required for the world, indicating that the reduction agreement continues to 1/7 this year. 
He said that the meeting will be held in April, during which the organization will assess the reduction agreement and decide what to do with the June recommendation on whether or not to extend the reduction. He stressed that last year OPEC had requested a reduction of one year. Countries outside the Organization considered that the reduction should be applied for a period of six months renewable.
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Monday 11 March
 
 
Search Bigger
 
 

Al-Sumerian News / Baghdad
Oil prices rose globally with the start of trading, Monday, as a result of the trade agreement and OPEC cuts. 

Tensions between China and the United States over the bitter tariff dispute, which has curbed world economic growth, have emerged as signs of a trade deal emerged. 

Brent crude rose 12 cents to $ 66.37 a barrel, up $ 0.63, or 0.96 percent.



While US crude prices rose $ 56.63, up $ 0.57 or 1.02%. 

Prices are supported by efforts led by the Organization of the Petroleum Exporting Countries (OPEC) and other countries under the alliance known as OPEC to block about 1.2 million barrels per day of oil, in a strategy aimed at reducing supply to markets.

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UPDATE 1-Oil rises at settlement, excluding OPEC deal ending

UPDATE 1-Oil rises at settlement, excluding OPEC deal ending

11 March 2019 10:03 PM
Mubasher:  Oil prices rose more than 1% at the settlement of Monday, with support comments that exclude the termination of the OPEC agreement to reduce supplies before June.

The crude has been supported by the continued implementation of the agreement to cut oil production by OPEC and its allies Russia, which aims to reduce 1.2 million barrels per day to tighten markets and strengthen prices.

Saudi Energy Minister Khalid al-Fateh said yesterday that it was too early to amend the OPEC agreement and producers of crude from outside the organization in April, quoting Reuters.

The Organization of the Petroleum Exporting Countries (OPEC) is scheduled to meet on 17 and 18 April in Vienna with another meeting on June 25 and 26 to discuss production levels policy.

The data Baker Hughes showed the US companies shut down 9 rigs to drill for crude in the past week.

On the settlement, US crude futures for April delivery rose 1.3% to $ 56.79 a barrel.

By 6:55 pm GMT, the price of Brent crude for May delivery rose more than 1.2% to $ 66.58 a barrel.

 
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Analysts: Permian Oil Output Set To Double By 2023

Mar 11, 2019, 1:00 PM CDT

Permian rig

Less than a year ago, IHS Markit predicted that “stunning” growth in the Permian would result in the basin doubling its oil production to 5.4 million bpd between 2017 and 2023. That 5.4-million-bpd output would be more daily production than in any member of OPEC except for Saudi Arabia, the business information provider said in June 2018.

Nine months later, the Permian production is set to break the 4-million-bpd mark as early as in this month, as per EIA estimates. The Permian production is now roughly one third of the total U.S. crude oil output of 12 million bpd.

Analysts expect the Permian production could double from the current levels through 2023, and the basin to pump as many as 8 million bpd in four years.

That’s roughly the total current oil production from the seven key shale regions in the United States, as per EIA’s Drilling Productivity Report.

The growth in the Permian oil production is also set to boost U.S. crude oil exports, analysts have told CNBC.

American crude exports hit a record 3.607 million bpd in one week in February, and have been above 2 million bpd in most of the weeks in recent months.

Permian oil production— currently just shy of 4 million bpd—jumped by around 1 million bpd from a year ago and is set to jump by another 1 million bpd, to 5 million bpd, by early 2020, Eric Lee, energy analyst at Citigroup, told CNBC.

“We’re happy to look out to 2023, when it gets to 8 million. ... They figured out how to access it at very low break-evens, like $30/$40,” according to the analyst.

Not enough pipelines to transport the Permian crude to the U.S. Gulf Coast has led to takeaway constraints in the fastest-growing oil producing region in recent months. But midstream operators and oil majors have laid out plans to significantly raise pipeline capacity over the next two years. Several new crude oil pipelines expected to come on line at the end of this year and in 2020 and 2021 are set to alleviate bottlenecks and reduce the price discounts of the oil in the Permian to the oil priced at Cushing or the U.S. Gulf Coast. Related: Is This A Precursor For Peak Oil Demand?

“We’re going to triple pipelines going into the market from 3 to 9 million in three years, from last year to late 2021,” Francisco Blanch, head of commodities and derivatives at Bank of America Merrill Lynch, told CNBC.

In a sign that new pipeline capacity has started to somewhat ease the bottlenecks, crude oil inventories in West Texas dropped to a four-month-low in February, according to data from market intelligence provider Genscape cited by Reuters.

 

 

Analysts have singled out pipeline capacity and the profitability of Permian drilling, especially for smaller players, as the key factors that would determine the pace of growth in the basin. While pipeline constraints are expected to significantly ease in 2020 and 2021, the price of oil and the breakevens of wells in the Permian are the bigger unknowns.

According to an analysis of wells economics in the Permian Delaware basin, Rystad Energy has concluded that large-scale drilling and large players will be the key beneficiaries in the basin.

“Size matters, even more so when drilling for shale oil in the Permian Basin,” Rystad Energy senior partner Per Magnus Nysveen said last month, noting that large operators with vast acreage positions would get handsome returns, even if WTI Midland oil price is at $45 a barrel, while smaller operators might struggle to make profits.

U.S. supermajors Exxon and Chevron both announced last week increased targets for their Permian production. Chevron now seesits Permian unconventional net oil-equivalent production rising to 600,000 bpd by the end of 2020, and to 900,000 bpd by the end of 2023. Exxon revised up its Permian growth plans to produce more than 1 million oil-equivalent barrels per day by as early as 2024, which would be an increase of almost 80 percent. Related: Two Largest Oil Price Benchmarks Are Set To Diverge

The shale game is now a ‘scale game’, as Chevron Chairman and CEO Michael Wirth put it.

“The big thing that I think has changed is the shale game has become a scale game, and so people that can do things at large scale and bring the capabilities to bear that a company like Chevron has are the ones that really can take this to the next level,” Wirth told CNBC last week after the company announced its latest Permian growth targets.  

As for oil prices, currently OPEC looks set to continue supporting prices with the ongoing production cuts, instead of fighting for market share, despite the fact that the higher the price, the more incentive U.S. oil producers have to continue setting production records.

As pipeline constraints start to clear in the second half of 2019, U.S. exports will also rise, John Driscoll, chief strategist at JTD Energy Services, told CNBC at the end of February.

“The U.S. is spoiling the OPEC party. They are now the wild card and they don’t have a seat at the table in Vienna,” Driscoll said.  

 

 

https://oilprice.com/Energy/Energy-General/Analysts-Permian-Oil-Output-Set-To-Double-By-2023.html

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OPEC holds its 60th anniversary in Baghdad

 
 
 

March 12, 2019

 
 
 

Economy and business

 

OPEC to hold ........Alsumaria News / Baghdad 
Oil Ministry announced on Tuesday its intention to host a meeting of OPEC in Baghdad, noting that the meeting comes amid the celebration of the sixtieth anniversary of the founding of the organization, explained that while Iraq is the second oil exporter in theOrganization. 

"The ministry is in contact with all parties in the Organization of Petroleum Exporting Countries to hold a meeting in Baghdad," ministry spokesman Assem Jihad said in an interview with Alsumaria News. "The invitation is also to celebrate the 60th anniversary of the founding of OPEC." 

"Iraq is a leading member of the Organization of the Petroleum Exporting Countries (OPEC) as one of its founders and is the second largest crude oil exporter in the Organization," Jihad said. He also managed to play a major role in all meetings of the Organization, which led to an agreement to reduce production and reflect the increase in prices to more than 65 dollars, .

 

The Organization of Petroleum Exporting Countries (OPEC), which was established in Baghdad in 1960 by agreement between five countries, namely Saudi Arabia, Iran, Iraq, Kuwait and Venezuela, is headquartered in Vienna, one of the largest international organizations overseeing the organization of oil export and price fixing, An oil exporter, with a total of between two-thirds and three-quarters of the world's oil reserves

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Baghdad starts preparations for the OPEC 2020 conference

01:27 - 12/03/2019

 
image
 
 

BAGHDAD - The 
Ministry of Oil began preparations for the convening of the (OPEC) in Baghdad next year on the occasion of the 60th anniversary of the founding of the organization. 
The ministry began preparations for the OPEC conference in Baghdad next year on the occasion of the 60th anniversary of the founding of the organization, at a time when Iraq for the first time to become a member of the ministerial committee to control production, which will be held in April next year with the participation of members of the Organization and its countries. 
The ministry stressed that Iraq's role in OPEC is positive to maintain the unity of the Organization and its ability to defend the interests of producers and the stability of world markets to ensure that there is no fluctuation in crude prices.

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Iraq is preparing to host the OPEC conference and enter the membership of "control production" for the first time

09:38 - 12/03/2019
 
  
%D8%A7%D9%88%D8%A8%D9%8322-696x435.jpg

Information / Baghdad ..

Deputy Prime Minister for Energy Affairs and Minister of Oil Thamer Ghadhban on Tuesday announced preparations for the convening of the OPEC conference in Baghdad next year on the occasion of the 60th anniversary of the founding of the Organization. He also stressed that Iraq will enter for the first time the membership of the ministerial committee to monitor production, During the coming April with the participation of members of the Organization and the States that are with them.

"Iraq and the Organization of the Petroleum Exporting Countries (OPEC) are committed to maintaining production levels to stop the collapse of world oil prices and to ensure that what happened last year is not repeated," Ghadhban said in an interview with the official newspaper Al-Sabah.

"Iraq has asked a question during its participation in the recent conference of the Organization of Petroleum Exporting Countries (OPEC) to determine what will happen if production is not reduced. The answer is that the price of a barrel will range from $ 40 to $ 45. This is the marginal level of oil production. It is unacceptable to everyone. "

"The next few days will witness the establishment of three conferences to be held on the 18th of this month, where will see Iraq's accession for the first time to the Ministerial Committee to control the production of members of the Organization (OPEC)."

He pointed out that "next April will also see a meeting between oil ministers to assess compliance with the agreement to reduce production and will see the declaration of a pact of non-binding and voluntary cooperation between the Organization (OPEC) and outside countries to agree on mechanisms for cooperation." Ending / 25

https://www.almaalomah.com/2019/03/12/393165/

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 Arab and international


Economy News _ Baghdad

Oil prices rose on Wednesday, driven by current production cuts by the Organization of the Petroleum Exporting Countries (OPEC) and US sanctions on Iran and Venezuela.

By 0751 GMT, the benchmark Brent crude for $ 66.95 a barrel was up 28 cents, or 0.4 percent, from the previous close.

US West Texas Intermediate crude futures were $ 57.23 a barrel, up 36 cents, or 0.6 percent, from the previous settlement price.

Oil prices have been rising since the beginning of this year thanks to OPEC-led supply cuts.

Market shortages have been exacerbated by US sanctions on oil exports from OPEC members Iran and Venezuela.

National Bank of Australia said the outlook for the oil market was mixed as there were downside risks to prices stemming from concerns about economic growth and strong US supply growth, while OPEC supply cuts and US sanctions on Iran and Venezuela were driving prices.

The US Energy Information Administration said on Tuesday that US crude oil production is expected to reach 12.30 million bpd in 2019, up from an average of about 11 million bpd in 2018.


Views 21   Date Added 13/03/2019

 
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What’s Holding Oil Prices Back?

 Mar 13, 2019, 11:30 AM CDT

rig

Oil market participants had started to worry in advance about how the U.S. sanctions on Iran in November would impact global supply, causing oil prices to shoot up to four-year-highs in early October.

Just a month later, the U.S. re-imposed sanctions on Iran’s oil industry and granted waivers to the eight key Iranian oil buyers to continue importing oil at reduced rates. Oil prices then started to dive, dragged further down by fears of slowing economic and oil demand growth.

When at end of January the U.S. slapped sanctions on Venezuela’s oil industry and state oil firm PDVSA in order to deprive Nicolas Maduro’s regime of pretty much its only hard-currency income, oil prices barely budged.

Venezuela’s oil production had already been collapsing for more than two years, at a rate of around 50,000 bpd each month, due to the economic collapse and years of mismanagement and underinvestment in the oil industry. The oil market had already braced itself for continued steep declines in Venezuelan oil supply in coming months.

Ten years ago, U.S. sanctions on oil from Iran and Venezuela would have significantly shaken up the market. The reason for the relatively muted reaction this time around, as analysts told CNBC, was soaring U.S. oil production.

While U.S. crude oil production growth is mostly light crude grades, as opposed to the heavy crudes of Venezuela and Iran, gushing American output has still been capping oil prices. Despite the different crude grades of U.S. production, surging supply has given more flexibility to the U.S. Administration to impose sanctions on Venezuela and on Iran, according to analysts who spoke to CNBC. Related: Is This A Precursor For Peak Oil Demand?

OPEC and its allies’ production management policy in place since the start of 2017 has been supporting oil prices and giving U.S. producers incentives—in the form of higher oil prices—to boost shale drilling and production.

OPEC and its Russia-led non-OPEC partners have been influencing the state of the oil market with cuts or production increases, such as those just ahead of the U.S. sanctions on Iran to proactively respond to what the U.S. was promising to be “zero” Iranian oil exports.

The U.S. sanctions policies toward oil exporting nations such as Iran and Venezuela in recent months have been another major influencer on the oil market. And according to Daniel Yergin, vice chairman at IHS Markit, the record-setting U.S. oil production has given flexibility to the Administration in the sanctions.  

“The extraordinary thing is it’s caused some tightness in heavy oil, and that’s been reflected but it’s not been a market moving event,” Yergin told CNBC, referring to the U.S. sanctions on Venezuela.

 

 

In an oil market already tighter on heavy crude grades due to OPEC’s production cuts and U.S. sanctions on Iran’s oil, refiners now face an even tighter supply of heavy crude with the sweeping U.S. sanctions on Venezuela’s oil sector.

Although the U.S. sanctions on Venezuela are creating a heavy crude crunch on the oil market, the EIA says that the sanctions are unlikely to have a significant impact on the refinery runs of the U.S. refiners.

The tight heavy crude market, however, has been raising the prices of sour grades, cutting into refining margins.

For example, the discount of the Mars US sour grade to the Louisiana Light grade is now at its narrowest since 2011, according to Bloomberg data.

Although U.S. President Donald Trump has been criticizing OPECfor the cuts and for driving oil prices higher, the Trump Administration’s sanctions on two of OPEC’s members have curtailed a total of 1.6 million bpd of supply, according to Helima Croft, head of global commodities strategy at RBC. Related: Oil Prices Rise As Saudis Curb Exports

“Trump is yelling at OPEC, but Trump’s been the most effective cutter” in world oil supply, Croft told CNBC.

Yet, experts say that sanctions on Iran and Venezuela would have driven oil prices much higher if it weren’t for the soaring U.S. oil production that has been capping price gains.

Thanks to the remarkable strength in shale production, the United States will account for 70 percent of the growth in global oil production through 2024, transforming the global oil markets and trade, the International Energy Agency (IEA) said in its annual oil market forecast this week.

“This will shake up international oil and gas trade flows, with profound implications for the geopolitics of energy,” said Fatih Birol, the IEA’s Executive Director. Birol also noted: “Everywhere we look, new actors are emerging and past certainties are fading. This is the case in both the upstream and the downstream sector. And it’s particularly true for the United States, by far the stand-out champion of global supply growth.”

 

https://oilprice.com/Energy/Energy-General/Whats-Holding-Oil-Prices-Back.html

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U.S. Supermajors Could Form A New Oil Cartel

- Mar 12, 2019, 7:00 PM CDT

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The ambitious shale growth plans of the U.S. supermajors could in the future allow them to control so much of U.S. shale oil production that they could also control the price of the U.S. light tight oil going to foreign markets in an ‘OPEC of their own kind,’ Investing.com quoted John Kilduff, founding partner at Again Capital, as saying.

If the U.S. supermajors, such as Exxon and Chevron, end up controlling a lot of the U.S. shale production with their plans to significantly boost Permian production, and if smaller shale players bleed cash and decide to sell acreage and operations to Big Oil, then supermajors could be the ones determining the price of light crude oil, according to Kilduff.

Exxon and Chevron both announced increased targets for their Permian production last week. Chevron now sees its Permian unconventional net oil-equivalent production rising to 600,000 bpd by the end of 2020, and to 900,000 bpd by the end of 2023. Exxon revised up its Permian growth plans to produce more than 1 million oil-equivalent barrels per day by as early as 2024, which would be an increase of almost 80 percent.

The shale game is now a ‘scale game’, as Chevron Chairman and CEO Michael Wirth told CNBC last week after the company announced its latest Permian growth targets.

“With the majors going into the Permian to do roll-outs, the independents there are getting squeezed by the banks, which want them to cough out more money or get out,” Investing.com’s Barani Krishnan quoted Kilduff as saying.

 

 

Related: Two Largest Oil Price Benchmarks Are Set To Diverge

According to Rystad Energy, the players with large-scale operations and acreage positions could get average returns of 20 percent in three years in the Wolfcamp A in the Permian Delaware, for example, even if WTI Midland oil price is at $45 a barrel. But smaller operators could struggle because of higher drilling, completion, operation, and transportation costs.

“These operators might struggle in the current price environment, and their best opportunity to monetize their investment could be to sell their acreage to larger operators with more efficient logistics, better infrastructure and more negotiating power through the value chain,” Rystad Energy senior partner Per Magnus Nysveen said last month. “Size matters, even more so when drilling for shale oil in the Permian Basin,” Nysveen added.

According to Kilduff, as carried by Investing.com, “The stars are aligning for the super majors to take control of shale and determine pricing for light crude in Asia, if not the world. They’ll be OPEC by a different name.”

 

https://oilprice.com/Energy/Energy-General/US-Supermajors-Could-Form-A-New-Oil-Cartel.html

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U.S. Oil Production Is Headed For A Quick Decline

Mar 11, 2019, 7:00 PM CDT

Fracking

The most recent forecasts published by the US Energy Information Administration show US oil production increasing steadily. The February Short-Term Energy Outlook sees the output from US wells rising from 11.9 million barrels per day at the end of 2018 to 13.5 million barrels per day by the end of 2020. Most other forecasters agree.

Thus, it may come as a surprise to learn that production at the end of 2020 may have actually decreased from December’s 11.9 million barrels per day level to between 11.3 and 11.5 million barrels per day. This lower figure represents the production level that should be expected given the financial activity of the independent firms behind the shale output surge.

The coming decline will occur mostly in the areas that have produced the most growth over the last five years: the Bakken, Eagle Ford, Haynesville, Julesburg, and Permian basins. The production drop will occur because the firms operating there have been forced by monetary constraints to cut back on drilling. The recent reduction in debt and equity issuance by these firms assure the output decline.

Drawing an analogy between farming and drilling by the frackers will help explain the coming decrease. Every year farmers borrow heavily to purchase seed, fuel, and fertilizer for the summer growing season. They hope to pay their loans off when they sell their harvest in the fall. To make sure they can perform on their loans, they will sell some portion of or all their production forward. They will also purchase insurance to protect against crop failure.

Data on bank lending and statistics issued by futures authorities provide some advance indication of the planning decisions of farmers. The amount of bank loans issued to them gives an indication of crop size. Increases in open interest for futures such as corn during the spring also provide a signal as to future production.

Many frackers behave like farmers, except that the “crop cycle” appears to be longer, perhaps two years. These firms will borrow or sell equity one year and then drill for sixteen to twenty-four months. Production will surge two years later and then, as many authorities have noted, fall off rapidly. Related: Analysts: Permian Oil Output Set To Double By 2023

These firms will also enter into hedges as soon as the size of their new discoveries is delineated. The futures sales will likely occur when wells are completed and before they are fracked to ensure the company can cover costs and perhaps profit, even if prices fall.

Data on the issuance of debt and equity by shale firms and their positions in futures markets thus provide an indicator of their future production. These data today point to a large decline in output.

A February 24 Wall Street Journal article by Bradley Olson and Rebecca Elliott should warn everyone of the impending slowdown. A key graph presented there shows that debt and equity issued by US shale producers declined to $22 billion in 2018, which is less than half the amount raised in 2016 and one-third the amount raised in 2012.

When one compares the total debt and equity issuance to Lower-48 onshore production lagged two years, one finds a close relationship. Lower-48 onshore output rose from three million barrels per day to 8.5 million barrels per day in 2018. However, the drop in the issuance of equity and borrowing suggests this production could fall by a third to six million barrels per day by the end of 2020 if the relationship holds.

 

 

The activity in the futures markets points in the same direction. Figure 1 compares the rise in US oil production in the five major fracking areas (the Permian Basin, the Bakken, Eagle Ford, Haynesville, and the Julesburg Basin) to open interest in WTI futures. Note that open interest began to decline in late 2013. The production decline began eighteen months later. Related: Blackout Shuts Down Venezuela’s Oil Exports

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(Click to enlarge)

The decrease in open interest anticipated the future drop in production. In our view, drilling firms that were forced to curtail activity also curtailed sales of future production, understanding that they would produce less.

These declines were mirrored by a drop in the short position of swap dealers—the financial institutions that write bespoke hedging instruments to producers. The reduction in hedging in 2014 and 2015 led to the later decrease in production.

The same phenomenon is occurring today. Total open interest has fallen by twenty percent, as can be seen from the figure. Swap dealer short positions have also contracted. The message is clear: producers are hedging less, and they are hedging less because they expect to produce less.

The statistics point to a one to two-million-barrel decline in production from the frackers. Some but not all this loss may be made up by the increased activity of firms such as Exxon. In short, the growth in US oil output is about to be reversed.

 

https://oilprice.com/Energy/Crude-Oil/US-Oil-Production-Is-Headed-For-A-Quick-Decline.html

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This last story is very interesting to me as the major drillers in the Balkan’s, and the Permian Basin shift from drill baby drill ( borrow that money baby, borrow MORE) to a strategy of paying off or down their loans and try to keep their investors happy.  This might lead to a little spike in oil prices later this year.  Mmmm

 

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 Arab and international


Economy News - Baghdad

LONDON (Reuters) - Brent crude rose on Thursday on Opec cuts and the threat of tougher sanctions on Iran, and a drop in US inventories last week also weighed on price hikes.

Brent crude futures were $ 67.83 a barrel, up $ 0.26 or 0.41 percent.

US WTI crude futures were $ 58.41 a barrel, up 0.15 cents, or 0.26 percent, from the previous settlement price, also close to the highest since November 2018.

The Organization of Petroleum Exporting Countries (OPEC) and some outside producers, including Russia, have been holding back oil supplies since the beginning of the year to narrow the gap between supply and demand in world markets and support crude prices.

Meanwhile, a weekly report by the US Energy Information Administration said US crude oil inventories in the United States fell last week as refinery production increased.

The United States is seeking to tighten sanctions on Iran by cutting Iran's crude exports by about 20 percent to less than 1 million barrels per day (bpd) starting in May by ordering importers to cut purchases to avoid US sanctions.


Views 11   Date Added 14/03/2019

 
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Iraq cuts oil exports to 3.5 million barrels per day

Economy | 02:11 - 14/03/2019

 
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BAGHDAD (Reuters) - 
Iraq has cut its average crude exports to 3.5 million barrels per day (bpd) in line with an agreement to cut production, Ruther 
said in an interview with Mawazine News. In April will consider the extent to which Member States are committed to agreed production reductions and whether the reductions should be extended to the end of the year. " 
He added that "Iraq is committed to the agreement and works to stabilize markets."

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Brent rises to 4-month high on OPEC cuts

Economy | 01:35 - 14/03/2019

 
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Follow - up to the balance of News 
Brent crude on Thursday to its highest level since mid - November of last year, driven by production cuts by OPEC and US - led sanctions imposed on Venezuela and Iran. 
An unexpected drop in US crude inventories also lifted prices, traders said. 
Brent crude futures for the year were $ 201.69 at $ 67.84 a barrel in Asian trading on Thursday, and $ 67.76 a barrel by 0660 GMT, up 21 cents, or 0.3 percent, from the previous close. 
Announcement 
reached futures contracts for WTI US median 58.40 dollars a barrel , 14 cents higher , or 0.2 percent from the previous settlement price, also approaching the highest level since November 2018 , which noted in the previous session.
"The scarcity of global stocks is growing due to OPEC-led supply cuts and ... US sanctions on Venezuelan oil products boost oil prices," said Benjamin Lo of Philip Futures brokerage in Singapore. 
The Organization of Petroleum Exporting Countries (OPEC) and some outside producers, including Russia, have been holding back oil supplies since the beginning of the year to narrow the gap between supply and demand in world markets and support crude prices. 
In Venezuela, oil production and exports have been hampered by a political and economic crisis that has caused major power cuts and shortages, while Washington has banned US companies from dealing with the Venezuelan government, including the state-owned PDSA.
In the Middle East, two sources familiar with Reuters said the United States was seeking to cut Iranian crude oil exports by about 20 percent to less than 1 million bpd from May, by requiring importing countries to cut purchases to avoid US sanctions. 
Meanwhile, a weekly report by the US Energy Information Administration said US crude oil inventories fell last week as refinery production increased.

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Iraq cuts crude exports in compliance with OPEC deal

An hour ago
 

http://www.kurdistan24.net/en/news/ae797da4-79c3-4c44-b8a4-31659cc8d26f

 

Iraq cuts crude exports in compliance with OPEC deal
An Iraqi national flag flies as excess gas is being burnt off near the Zubair oil refinery, southwest of Basra in southern Iraq. (Photo: AFP/Getty Images/Haidar Mohammed Ali)
 

ERBIL (Kurdistan 24) – Iraq has cut its average crude exports to 3.5 million barrels per day (bpd), in line with an agreement to reduce its output, Iraq's oil minister announced on Thursday.

In early January, Baghdad agreed to cut annual oil production in compliance with an agreement between OPEC and additional non-member states such as Russia, known together as OPEC+, to curtail global supply in order to bolster prices. 

Iraq is the OPEC' second-largest producer and currently has an output below its maximum capacity of nearly 5 million bpd.

In early March, the oil ministry revealed that Iraq had exported 3.649 million bpd of crude in January while it exported close to 100 thousand bpd less, 3.54, in February.

On Thursday, Oil Minister Thamir Ghadhban told reporters that the OPEC meeting planned for April in Vienna would assess the extent to which member states are in compliance to the agreed production cuts and whether the reductions should be extended to the end of the year, Reuters reported.

Ghadban affirmed that Iraq is committed to the agreement and work to stabilize the markets. He also added that the country produces just over 4.5 million bpd.

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Iraq says that it is seeking higher price for crude oil than current market prices

 Thu 14 Mar 2019 09:55:34 GMT

Comments by Iraq's oil minister

  • Says oil prices of $60 to $65 per barrel are 'relatively comfortable'
  • OPEC meeting in April will decide whether to extend output cuts until year-end
  • Says that Iraq is committed to OPEC deal
Well, he's certainly got his wish as oil prices are performing well today with WTI now looking like it's going to break away towards the $60 handle. Brent is also performing well holding near $68 currently and that's above than the "comfort" level stated by Al-Luaibi above.
 
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