3 Possible Outcomes From The OPEC Meeting

The OPEC meeting is a week away and based on the signals from the group’s top producers, the market is assuming that the group will increase oil production. However, the exact amount is still unknown, and the fallout from the lack of consensus could pl…

The Bullish And Bearish Case For Oil

Oil prices are in a holding pattern as we await the outcome of the OPEC+ meeting in a few days, and while the result of that meeting will almost completely control the direction of oil prices in the near-term, there is a bit of disagreement among analy…

Is This The Most Contentious OPEC Meeting Yet?

Both Saudi Arabia and Russia recently increased their oil production levels, an indication that they are getting a head start on higher output even as possible changes to the OPEC/non-OPEC agreement remain up in the air. There is growing discord from w…

Iranian Oil Production Could Be About To Plunge

The European Union has vowed to maintain the Iran nuclear deal despite the U.S. decision to exit, and Brussels has pushed back against Washington’s attempts to penalize European companies from doing business with Iran. However, the early evidence sugge…

Venezuela’s Oil Meltdown Defies Belief

Venezuela might have to declare force majeure on its oil exports as production plunges and its ports are unable to ship enough crude. The ongoing meltdown in Venezuela’s oil sector could tighten the oil market more than expected. Reuters reported Tuesd…

Why Oil Markets Should Fear Trump’s Trade War

“We’re putting the trade war on hold,” U.S. Secretary of Treasury Steven Mnuchin said on “Fox News Sunday,” nearly two weeks ago. That didn’t go down well with President Trump who promptly restarted the trade war. Not only did Trump step up trade penal…

Explaining The Double Digit WTI Discount

Global oil benchmarks are suddenly heading in different directions, upending what have consistently been close linkages between prices in various parts of the world. To be sure, oil prices have declined everywhere over the past week on news that OPEC a…

The Oil Giant That Outsmarted Trudeau

In a desperate bid to keep its last remaining proposed oil pipeline alive, Canada has decided to buy Kinder Morgan’s Trans Mountain Pipeline system for an estimated C$4.5 billion. Canada will pay Kinder Morgan for the money that the company has already…

EV Sales To Triple By 2020

Electric vehicle sales are finally starting to take off in larger numbers, surpassing 1 million in 2017 after growing 56 percent from a year before. By 2020, sales are expected to rise to about 4 million and before jumping to 21.5 million in EV sales b…

Goldman: The Oil Price Rally Isn’t Over Yet

Oil prices declined by more than 6 percent in the last few trading days, following reports that OPEC and Russia could boost production in the second half of 2018. However, the outlook is still bullish, at least according to Goldman Sachs. As of now, it…

The OPEC Deal Isn’t Dead Yet

Oil prices plunged on Friday after news broke that OPEC and its partners, including Russia, are considering allowing higher levels of oil production, which could mark the beginning of the end for the OPEC deal. With inventories back at average levels, …

Have Oil Prices Peaked

Brent recently hit $80 per barrel, which ushered in a flood of predictions for when we might hit $100 per barrel. But Saudi Arabia and Russia just crushed those dreams, with reports suggesting that the two top oil producers could move to allow higher l…

Mexico’s Oil Sector Set For A Jolt

Several years on from the semi-privatization of its oil sector, Mexico has lined up tens of billions of dollars of potential investment in offshore drilling. But just as the fruits of the energy reforms are becoming visible, the entire effort is at ris…

OPEC Could “Relax” Production Cuts

It was only a few weeks ago that top officials from OPEC nations were issuing statements assuring the market that the group’s production cuts would remain in effect through the end of 2018, with the possibility of even extending them into next year. Bu…

Will The U.S. Push Venezuela Into The Abyss?

Venezuela’s President Nicolas Maduro claimed victory in a low-turnout election that is widely viewed as rigged, raising the threat of more painful sanctions from the United States. But, in a bit of irony, Venezuela’s economy is in such terrible shape, …

EVs Could Erase 7 Million Bpd In Demand

Electric vehicles will become cheaper than the internal combustion engine in a half decade, while electric buses will completely “dominate” its sector by the late-2020s, according to Bloomberg New Energy Finance (BNEF), which just published its Electri…

Oil Majors Double Down On Refining

The oil majors are increasingly betting their futures on a mix of downstream enterprises. Refineries, processing, petrochemical facilities and retail gasoline stations are gaining in importance, while upstream spending stalls. The WSJ reports that BP h…

Goldman: Don’t Bet Against Oil

On Thursday, Brent topped $80 per barrel for the first time since November 2014, breaching a psychological threshold amid tightening inventories and widening geopolitical risk. Yet, even as oil prices have rallied to their highest point in three and a …

U.S. Oil Exports Continue To Break Records

U.S. crude oil exports broke yet another record, spiking to 2.566 million barrels per day for the week ending on May 11. With U.S. shale surging and export terminals retooling on the Gulf Coast, the export surge is likely set to continue. The export fi…

Will $100 Oil Kill The U.S. Economy?

Brent is nearing $80 per barrel and some analyst see $100 not far off. That raises the question about how much of a dent high oil prices will make in the U.S. economy. $100 oil is not as painful as it once was. There are a few reasons for that. The U.S…

These Two Shale Plays Are Making A Comeback

The Permian basin has garnered much of the media attention when it comes to U.S. shale growth, but higher oil prices are putting more shale regions into profitable territory. In years past, shale companies trumpeted their diversified holdings, noting t…

OPEC: The Oil Glut Is Gone

OPEC said that the global oil supply surplus has nearly been eliminated, although the group is shifting its sights on lack of investment in upstream supply. In OPEC’s May Oil Market Report, the group noted that non-OPEC supply continues to grow at a rapid rate, adding 0.87 million barrels per day (mb/d) in 2017, with expectations of another 1.7 mb/d in 2018, 89 percent of which will come from the U.S. In fact, non-OPEC supply is expected to outpace demand growth, even though demand will expand by a robust 1.65 mb/d this year. But OPEC also…

How Much Iranian Oil Can Trump Disrupt?

Oil prices surged following President Trump’s withdrawal from the Iran nuclear deal. So, what happens next? Trump did not offer any new justification for how Iran was violating the nuclear accord – the IAEA confirmed on May 9 that Iran is in compliance with its nuclear commitments – and offered no Plan B or even a coherent strategy on what comes next. For now, Washington is pursuing confrontation with Iran, and hoping that “maximum pressure” will force Iran to not only abandon any hint of a nuclear weapons program,…

The Oil Major Accelerating Venezuela’s Decline

While the oil market is understandably on edge about the potential supply outages in Iran, there are real outages going on in Venezuela, losses that could grow significantly worse in the near future. ConocoPhillips’ decision to go after some assets owned by PDVSA could spell deeper trouble for the oil company and for Venezuela. In April, Conoco was awarded $2 billion in compensation by international arbitration related to the 2007 expropriation of oil projects by the Venezuelan government. Wasting no time, Conoco moved to take over a string…

India Is The Best Bet For National Oil Companies

The prospect of peak oil demand is a threat to oil companies around the world, but a much more serious threat to national oil companies, who are responsible for keeping their countries afloat. With the future uncertain, state-owned companies that move into downstream assets overseas could insulate themselves from market upheaval, according to a report from Wood Mackenzie. National oil companies (NOCs) are not immune to the whims of the oil market, even if they have low production costs relative to their private competitors in shale or offshore.…

U.S. Shale’s Refining Crisis

U.S. shale is growing so quickly that it is presenting new challenges for refiners. The quality and type of the oil mix, particularly in the U.S., is changing because of the gusher of oil coming from West Texas. For years prior to the shale revolution, refiners made large investments into downstream assets that were equipped to handle medium and heavier types of oil. A lot of expected supply growth was coming from Canada’s oil sands, a type of oil that is particularly heavy. Integrated oil companies and refiners poured money into refineries,…

The Future Of U.S. Oil Relies On A Single Play

U.S. oil production recently broke another record, jumping to 10.619 million barrels per day (mb/d) in the last week in April, and the sky seems to be the limit for U.S. shale drillers. However, the fate of U.S. oil, and ultimately a large slice of total additional output for the entire world, is all predicated on aggressive forecasts from one place: the Permian Basin. Total global oil production is expected to rise by 6.4 mb/d by 2023, according to the International Energy Agency. Offshore Mexico and Brazil are set to see higher levels of spending…

Why Oil Prices Are Likely To Go Higher

WTI just hit $70 per barrel for the first time since late 2014. Prices continue to edge higher, pushed along by strong demand and falling inventories. But it is the geopolitical narrative that has really taken hold as of late, with the danger of supply outages looming in the next few weeks. This is the fateful week in which the Trump administration has to decide on what to do with the Iran nuclear deal. All signs point to him attempting to terminate the agreement. The return of sanctions could knock off as much as 400,000 to 500,000 bpd from Iranian…

The Next Big Trend In Offshore Oil & Gas

The offshore sector will increasingly focus on natural gas instead of oil over the next few decades, while policy support and technology improvements could also see offshore investment shift in favor of wind power. However, in the short run, offshore drilling is set for a resurgence. The oil market downturn in 2014 hit offshore drilling hard. Developing an oil field offshore is a huge, complex, expensive and long-term undertaking, a proposition that fell out of favor when oil prices crashed. By comparison, shale drilling is relatively cheap and…

Expert Analysis: Creditors Are Cracking Down On Venezuela

Venezuela skipped payments on around $50 billion in debt beginning last year. With little cash left, and a mountain of debt, combined with an economic crisis and oil production in a downward spiral, the situation is dire. Creditors could begin swarming over the country, hoping to claim compensation one way or another on defaulted debt obligations. The process is complicated and uncertain. Oilprice decided to check in with Jay Auslander, an attorney and partner at Wilk Auslander, on what we can expect over the debt crisis. Jay is recognized for…

Will Higher Oil Prices Destroy Demand?

Oil prices have dipped a bit this week, but still remain at their highest levels in nearly three and a half years. The reasons are by now familiar to most readers who pay attention to the daily whims of the oil market: OPEC cuts, falling inventories, geopolitical unrest and strong demand growth, to name a few. But at what point do higher prices start to destroy some of that demand, erasing one of the most significant bullish factors influencing the market right now? As John Kemp over at Reuters points out, there isn’t a magical threshold…

Higher Oil Prices Are OPEC’s Only Concern

OPEC could achieve its goal of eliminating the oil inventory surplus this month. But the goal posts will now move to another metric in order to justify keeping the production limits in place in order to drive prices higher. As of February, the OECD commercial stocks stood at 2,841 million barrels, just 30 million barrels above the five-year average. That data came from the IEA’s April Oil Market Report, which publishes the inventory data on a two-month lag. Because we are largely looking through the rearview mirror at the inventory data,…

Saudi Arabia Needs $88 Oil

Higher oil prices have provided a boost to the economies of oil-exporting nations such as Saudi Arabia. But the economic risks going forward are “skewed to the downside,” the International Monetary Fund said in a new report, in which it urged Saudi Arabia and other oil exporters to press on with reforms. Oil price volatility, trade tensions, geopolitical risk and a “sharp tightening of global financial conditions” are just a few of the potential pitfalls that lie ahead. But the IMF paid extra attention to the debt levels…

Oil Majors See Profits Spike, Exxon Lags Behind

The first quarter of 2018 was the best one in years for the oil majors. Still, despite huge profits, the largest oil companies are moving forward cautiously, keeping spending in check, just in case prices fall again. The first three months of the year saw a substantial run up in oil prices, hitting multi-year highs. At the same time, the oil majors have succeeded in cutting costs, and in many cases, continuing to grow production. Here is a quick rundown of some key figures: • BP’s profits jumped by 71 percent to $2.4 billion, compared…

Expert Analysis: Is This The End Of The Iran Deal?

The deadline for President Trump to re-certify the Iran nuclear deal and issue a waiver for sanctions is less than two weeks away. All signs point to President Trump declining to grant that waiver, which could kick off a period of heightened tension between the U.S. and Iran. But what comes next? And what does confrontation mean for the oil market? Oilprice.com decided to put some of these questions to Richard Nephew, who was the Principal Deputy Coordinator for Sanctions Policy at the Department of State for the Obama administration from 2013-2015.…

Oil Prices Spike As OPEC Compliance Hits New Record

OPEC’s oil production continues to decline, hitting a one-year low in April. Compliance with the OPEC/non-OPEC deal hit yet another record high because of a 70,000-bpd dip in April, putting collective production levels at 32.12 million barrels per day (mb/d). The losses are largely the result of ongoing declines in Venezuela, plus deteriorating production from aging oil fields in Angola. The strong cohesion among OPEC’s other members helped push the group’s compliance rate in April jumped to 162 percent, according to a Reuters…

China’s Oil Futures Are Gaining Momentum

China’s new oil futures contract is gaining some momentum as a fixture on the global oil market, although hurdles remain before it can become a key benchmark for Asia. China launched its yuan-denominated oil benchmark in March to much fanfare, after years of planning and delays. The logic of starting up an oil futures contract in China is obvious. China is the largest crude oil importer in the world, and its growing appetite for crude has increased the urgency to establish a contract based on local supply and demand conditions. Importing…

U.S. Oil Exports Are Only Heading Higher

U.S. oil exports just hit a record high, a sign that the shale boom will continue to lead to higher shipments abroad, despite some infrastructure bottlenecks. Last week, the U.S. averaged 2.3 million barrels per day in crude oil exports, the highest average for any week on record. The surge in exports is being driven by several factors. The most obvious is the rapid growth in U.S. shale production, with shale drillers adding new supply at a blistering rate. Record production is leading to record exports. (Click to enlarge)But also, all of the oil…

Wall Street Wants More From Big Oil

Royal Dutch Shell saw its profits jump by 42 percent in the first quarter, leading to the best quarterly results in years. Yet Wall Street is still skeptical of Shell and many of the other oil majors. The jump in oil prices to a three-year high was a boon to the earnings of the Anglo-Dutch oil company. On a current cost of supply basis – similar to net income – Shell earned $5.3 billion, slightly beating expectations. That compared favorably to the $3.75 billion Shell earned in the first quarter of 2017. Profits of this size have not…

A Geopolitical Red Herring For Oil Markets

A Trump-Macron bromance briefly brought the oil price rally to a halt on Tuesday. The two leaders hugged and kissed quite a bit during the French President’s visit to Washington, and the oil market took notice when President Trump voiced some “flexibility” regarding a “new deal” with Iran, which took everyone by surprise. French President Emmanuel Macron is pulling out all the stops to convince Trump not to abandon the Iran nuclear deal, including veering from the official EU script by proposing some sort of “new…

Oil Majors Are Abandoning Venezuela

The crisis in Venezuela could enter a new phase, with the private companies operating in the country starting to panic. Chevron said on Wednesday that it evacuated executives from Venezuela following the imprisonment of two of its workers last week. The assets of Chevron are increasingly in peril, and the company is showing signs that it might pull the plug. In mid-April, Venezuelan authorities arrested two Chevron employees over refusing to sign contracts with PDVSA. The workers said that PDVSA was offering equipment at inflated prices, so they…

OPEC’s Biggest Problem

OPEC’s spare capacity is not what it once was, a development that opens up a larger upside risk to oil prices. A constant feature of the oil market is the prospect of unforeseen supply outages, whether from war, industrial accidents, sabotage, natural disasters or more mundane operational problems. These outages range from a mere nuisance to a major disruptive event, depending on size, scope and duration of the interruption. OPEC has often stepped in with extra supplies when these events occur, offsetting the lost barrels. IEA member countries…

$100 Oil Is Back On The Table

Oil prices will rise to $100 per barrel if Saudi Arabia gets its way. Only a week ago, news surfaced that Saudi officials were quietly hoping to push oil prices up to $80 per barrel, which would help boost the valuation of Saudi Aramco IPO. But why not $100 per barrel? Reuters reports that Riyadh would be fine with prices rising that far, which lends weight to the notion that OPEC will keep the production cuts in place even as its mission to drain surplus oil inventories around the world appears to be largely “accomplished.” OPEC and…

Are Oil Markets Tightening Too Fast?

OPEC’s oil production fell yet again last month, helping to further tighten the oil market. The group’s collective output fell by a whopping 201,400 barrels per day in March, compared to a month earlier. It was the largest single-month decline since November and it took OPEC’s combined production down to 31.958 million barrels per day (mb/d), which is the lowest level in a year. To be expected, Venezuela lost a significant chunk of output, falling by 55,300 bpd, taking production down to 1.488 mb/d, according to OPEC’s latest…

U.S. Considers Economic Warfare Against Iran

Iran’s currency recently hit an all-time low, and economic uncertainty looks likely to test the country’s political establishment. Iranian President Hassan Rouhani has already been dealing with a restless population, after years of disappointing economic performance following incredibly high expectations of rewards from the 2015 nuclear deal. The sudden loss of value to the rial threatens to undermine him even further. Iran’s currency, the rial, traded at 40,000 to the dollar last year, but this week plunged to 60,000 rials per…

Strong Demand, Not OPEC, Is Pushing Oil Prices Higher

The rally in oil prices over the past year likely had more to do with higher demand rather than merely the supply taken off of the market by the OPEC/non-OPEC cuts. That suggests that as OPEC tries to formulate a strategy going forward, perhaps targeting a certain price level, much of the success of that campaign will depend on the global economy and the pace of oil demand growth. That conclusion comes from a new report published by the Oxford Institute for Energy Studies (OIES). The report parses out some of the variables determining prices in…

Is The Cushing Oil Hub Still Relevant?

Crude oil inventories at Cushing ticked up slightly to 36 million barrels for the week ending on April 6, but still hovered near lows not seen in several years. Throughout the oil market downturn that began in 2014 and lasted through much of 2017, inventories at Cushing bounced around roughly between 50 and 65 million barrels. Cushing’s inventory levels have now been slashed by nearly half, a sign that the oil market continues to tighten. But there is more to the story. As Reuters points out, Cushing’s importance as an oil hub is rapidly…

Oil Prices Likely To Soar On Geopolitical Risk

Brent crude prices rebounded to $70 per barrel during midday trading on Tuesday as fears of a trade war eased on conciliatory comments from both the U.S. and China. That allowed the prospect of geopolitical uncertainty to reemerge as a driver of oil prices. Even as President Trump mulls $100 billion in additional tariffs on China, as reported last week, U.S. officials took to the airwaves over the weekend to downplay the significance of the trade dispute. Trump’s trade adviser Peter Navarro, considered one of the main voices pushing for stiff…

Why Is U.S. Oil So Cheap?

The price differential between the two most important crude oil benchmarks is widening again, a reflection of a divergence in the supply fundamentals between the U.S. and the rest of the world. At the beginning of 2017, WTI and Brent traded closely, with just a slim price differential. The spread blew out in late summer after Hurricane Harvey, which devastated the U.S. Gulf Coast and put refineries and ports out of business for several weeks. That led to a buildup of crude oil along the Gulf Coast because it had nowhere to go, resulting in a temporary…

Venezuela’s Oil Sector May Soon Have New Owners

Venezuela’s oil production fell by another 100,000 barrels per day (bpd) in March, a devastating blow that will only make the country’s economic crisis worse. Output is expected to continue its downward spiral; the only uncertainty is over the pace of decline. As Venezuela comes apart at the seams, it will hand over more and more control of its natural resources, and even power over its institutions, to China, according to a new report from the Washington-based Center for Strategic & International Studies. The report argues that…

Farmers Hit Hard As Trump Backs Big Oil

The Trump administration seems to be leaning towards allying with the oil refining industry in its fight against Big Corn and federal rules requiring the use of corn ethanol. Reuters reports that the U.S. EPA apparently granted an exemption to Andeavor, a large oil refiner, from having to comply with blending requirements as part of the Renewable Fuels Standard (RFS) last month. The RFS requires refiners to blend biofuels, such as corn ethanol, into their refined fuels. If they can’t or find it too costly, they are required to purchase credits.…

Trade War Looms Over Oil Markets

Oil prices, along with equities across the board, were dragged down on Monday over fears of a brewing trade war. China announced $3 billion of tariffs on U.S. goods, including pork and recycled aluminum. The move came as a retaliation to the Trump administration’s 25 percent tariff on steel and aluminum imports. China’s tariff announcement on Monday sent global financial equities careening downwards, and the losses were likely magnified by President Trump’s Twitter attacks on Amazon, which sparked a selloff in tech stocks. Fears…

Renewables Are Closing In On Fossil Fuels

Coal has been getting the squeeze for years now, but the plunging cost of renewable energy is already starting to give natural gas a run for its money. The implications for the incumbent fossil fuel industry are dire. “Coal and gas are facing a mounting threat to their position in the world’s electricity generation mix, as a result of the spectacular reductions in cost not just for wind and solar technologies, but also for batteries,” according to a report from Bloomberg New Energy Finance (BNEF). The surprising finding from the…

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