Oil Price - Dec 7
Oil Price - Dec 7
VIENNA (Reuters) - Iran gave OPEC the green light on Friday to cut oil output by around 0.8 million barrels per day from 2019, an OPEC source said. OPEC will later ask non-OPEC producers to contribute an additional 0.4 million bpd to the cuts, the source said.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Oil Price - Dec 7
I think you mean Saudi.
Re: Oil Price - Dec 7
No, Saudi and the other members wanted Iran to approve the production cuts. Most of the cuts will be made my Saudi.
What I posted was copied directly from Reuters.
HOUSTON, Dec 7 (Reuters) - U.S. shale producers cheered OPEC's decision to trim output, a move that sent crude prices higher on Friday, closing at levels that oil executives said would keep their profits flowing.
The Organization of the Petroleum Exporting Countries and Russia-led allies agreed to trim output by 1.2 million barrels per day (bpd) beginning in January. The reduction was larger than the 1 million bpd cut that analysts had expected.
U.S. oil futures settled up nearly 2 percent at $52.61 on Friday after trading as much as 4.5 percent higher during the day. Prices peaked at above $76 in early October but had plummeted to about $50 ahead of this week's OPEC meeting.
"As long as a little producer like me can expect $50 or better, we can do fine; $50 works for me," said Harvey Howell, president of H.H. Howell Inc, a San Antonio, Texas, producer.
Halting the steady decline toward $40s a barrel range provides confidence that U.S. companies can profitably expand drilling next year. On Thursday, oil major Chevron Corp set a 2019 capital spending budget that includes a 21 percent increase in spending on shale.
Without OPEC's decision to pull back, "we were going to see oil in the $40s," said Steven Pruett, chief executive of shale producer Elevation Resources LLC. He called the move a "relief" that OPEC and allies were able to agree to the coordinated cuts.
"It's good for us. It keeps the capital flowing," said George Wommack, CEO of Petro Waste Environmental LP, the largest oil and gas landfill operator in the Permian Basin of West Texas and New Mexico. He said service companies "have all been on the edge of our seat watching OPEC."
Shale investors have been pushing companies to generate higher profits instead of increasing production, and a further drop in oil prices would have slashed cash flow needed to cover production costs and deliver shareholder payouts.
"What investors want to see is discipline in a low commodity price environment," said Sameer Panjwani, an exploration and production analyst at Houston investment firm Tudor, Pickering, Holt & Co.
Energy stocks have suffered this year. A fund that tracks energy firms, the SPDR S&P Oil & Gas Exploration & Production ETF, is down 14.5 percent year to date and was flat on Friday.
Oil prices between $55 to $65 per barrel are a "sweet spot for the U.S. producer and the U.S. consumer," said Rob Thummel, portfolio manager at energy investment manager Tortoise Capital.
"We think stable oil prices are the key to bringing investors back to the energy sector," Thummel said. (Reporting by Jennifer Hiller and Collin Eaton; Editing by Sandra Maler)
What I posted was copied directly from Reuters.
HOUSTON, Dec 7 (Reuters) - U.S. shale producers cheered OPEC's decision to trim output, a move that sent crude prices higher on Friday, closing at levels that oil executives said would keep their profits flowing.
The Organization of the Petroleum Exporting Countries and Russia-led allies agreed to trim output by 1.2 million barrels per day (bpd) beginning in January. The reduction was larger than the 1 million bpd cut that analysts had expected.
U.S. oil futures settled up nearly 2 percent at $52.61 on Friday after trading as much as 4.5 percent higher during the day. Prices peaked at above $76 in early October but had plummeted to about $50 ahead of this week's OPEC meeting.
"As long as a little producer like me can expect $50 or better, we can do fine; $50 works for me," said Harvey Howell, president of H.H. Howell Inc, a San Antonio, Texas, producer.
Halting the steady decline toward $40s a barrel range provides confidence that U.S. companies can profitably expand drilling next year. On Thursday, oil major Chevron Corp set a 2019 capital spending budget that includes a 21 percent increase in spending on shale.
Without OPEC's decision to pull back, "we were going to see oil in the $40s," said Steven Pruett, chief executive of shale producer Elevation Resources LLC. He called the move a "relief" that OPEC and allies were able to agree to the coordinated cuts.
"It's good for us. It keeps the capital flowing," said George Wommack, CEO of Petro Waste Environmental LP, the largest oil and gas landfill operator in the Permian Basin of West Texas and New Mexico. He said service companies "have all been on the edge of our seat watching OPEC."
Shale investors have been pushing companies to generate higher profits instead of increasing production, and a further drop in oil prices would have slashed cash flow needed to cover production costs and deliver shareholder payouts.
"What investors want to see is discipline in a low commodity price environment," said Sameer Panjwani, an exploration and production analyst at Houston investment firm Tudor, Pickering, Holt & Co.
Energy stocks have suffered this year. A fund that tracks energy firms, the SPDR S&P Oil & Gas Exploration & Production ETF, is down 14.5 percent year to date and was flat on Friday.
Oil prices between $55 to $65 per barrel are a "sweet spot for the U.S. producer and the U.S. consumer," said Rob Thummel, portfolio manager at energy investment manager Tortoise Capital.
"We think stable oil prices are the key to bringing investors back to the energy sector," Thummel said. (Reporting by Jennifer Hiller and Collin Eaton; Editing by Sandra Maler)
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Oil Price - Dec 7
OPEC+ succeeds, agrees to cut 1.2 mb/d. The obvious major news of the day comes from Vienna. OPEC+ agreed, despite a lot of jockeying, to cut 1.2 mb/d of supply beginning in January. OPEC will contribute 800,000 bpd and non-OPEC will cut by 400,000 bpd. The group met on Thursday but cancelled a press conference, raising doubts about the ability to reach an agreement. Iran held up the talks early Friday because it refused to accept limits on its production, although, to be sure, any limit would be symbolic anyway since its output is declining due to sanctions. Iran was exempted from the deal. Oil sank on Thursday and in early trading on Friday, but prices spiked by more than 4 percent when an agreement was announced.
U.S. considers sanctions on Venezuela. The U.S. has on multiple occasions considered slapping painful sanctions on Venezuela, and the downturn in oil prices has opened up another opportunity to do so. S&P Global Platts reports that “hawkish White House officials are urging” Trump to target Venezuela’s PDVSA over human rights violations. “If the White House were to pressure Caracas to block a new constitution, we would not expect [Trump] to pull many punches,” ClearView Energy Partners said in a recent note to clients.
U.S. considers sanctions on Venezuela. The U.S. has on multiple occasions considered slapping painful sanctions on Venezuela, and the downturn in oil prices has opened up another opportunity to do so. S&P Global Platts reports that “hawkish White House officials are urging” Trump to target Venezuela’s PDVSA over human rights violations. “If the White House were to pressure Caracas to block a new constitution, we would not expect [Trump] to pull many punches,” ClearView Energy Partners said in a recent note to clients.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group