Oil was up over 1% Thursday morning on reports Saudi Arabia has cut output by more than agreed.
Bloomberg quoted Saudi Energy Minister Energy Minister Khalid Al-Falih as saying the kingdom's output is now below 10 million barrels a day.
Saudi Arabia agreed to cut output by 486,000 barrels a day to 10.058 million.
That was part of a six-month accord on output cuts of 1.8 million barrels a day by OPEC and non-OPEC producers from the start of this year.
Al-Falih was also reportedly as saying Saudi Arabia would consider renewing that agreement beyond the six-month time frame.
"We’re going the extra mile to lead our colleagues within and outside of OPEC," Al-Falih reportedly said.
Kuwait also has reportedly reduced production by more than it agreed.
OPEC
Re: OPEC
Phil Flynn thinks we have seen the low oil price for the year already.
Record refining runs at 17.1 million barrels a day and proof of OPEC production cuts drove oil higher even as U.S. oil production jumped to 8.9 million barrels a day, the most since April as crude oil and product supplies all spiked higher. [My take: Keep in mind that EIA's weekly reports during the holidays are even more suspect than usual. - Dan]
The reversal of fortunes in the market after the Energy Information Administration (EIA) report was released was the first real test of the $50 floor and it held up well, even with crude oil inventories up 4.10 million barrels, distillate inventories up 8.36 million barrels and gasoline up 5.02 million barrels. That is raising the odds that we may have already seen the lows for oil put in for the year. While a lot can happen in a year, it all could change based on the increasing bullish fundamentals in the market, along with evidence of OPEC cuts, along with a better demand outlook, the lows are most likely in.
The World Bank predicts 2.7% Global Economic Growth in 2017 partly due to higher energy prices. In fact OPEC Secretary General Mohammed Barkindo is now crediting OPEC production cuts for raising the economic forecast. So, I guess they can also take credit for putting the global economy in a tailspin when they started the production war. What great guys. OPEC and non-OPEC customers are already reporting reduced production and reduced deliveries as the OPEC/non-OPEC cuts take place, much to the shock of skeptics. As I said before, I expect compliance to this latest deal to be at an an all-time high and so far the evidence is proving me right.
[Saudi Arabia said that they are going to cut production by MORE than what they agreed to, just to kick start the oil price recovery. - Dan]
Strong Chinese demand is expected this year. Reuters reports that record Chinese car sales, which grew by 13.7 percent between 2015 and 2016 to 28 million sold vehicles, increased oil demand expectations. Reflecting China's growing fuel consumption, its net crude imports will rise 5.3 percent to 396 million tonnes (around 8 million bpd) in 2017, state-owned China National Petroleum Corp (CNPC) said on Thursday. Its crude demand will hit a record 594 million tons this year (around 12 million bpd), CNPC said. That comes a day after India reported record demand last year even as the world bank lowers their outlook this year.
Oil imports is OPEC's last hurrah but those imports, which rose to their highest level since 2012, may have been due to weather and delayed counting due to year-end tax considerations.
The EIA sees U.S. production rising by 110,000 barrels a day, not enough to make up for the OPEC production cut of 93.6% of capacity. We see a potential $60.00 the target!
Record refining runs at 17.1 million barrels a day and proof of OPEC production cuts drove oil higher even as U.S. oil production jumped to 8.9 million barrels a day, the most since April as crude oil and product supplies all spiked higher. [My take: Keep in mind that EIA's weekly reports during the holidays are even more suspect than usual. - Dan]
The reversal of fortunes in the market after the Energy Information Administration (EIA) report was released was the first real test of the $50 floor and it held up well, even with crude oil inventories up 4.10 million barrels, distillate inventories up 8.36 million barrels and gasoline up 5.02 million barrels. That is raising the odds that we may have already seen the lows for oil put in for the year. While a lot can happen in a year, it all could change based on the increasing bullish fundamentals in the market, along with evidence of OPEC cuts, along with a better demand outlook, the lows are most likely in.
The World Bank predicts 2.7% Global Economic Growth in 2017 partly due to higher energy prices. In fact OPEC Secretary General Mohammed Barkindo is now crediting OPEC production cuts for raising the economic forecast. So, I guess they can also take credit for putting the global economy in a tailspin when they started the production war. What great guys. OPEC and non-OPEC customers are already reporting reduced production and reduced deliveries as the OPEC/non-OPEC cuts take place, much to the shock of skeptics. As I said before, I expect compliance to this latest deal to be at an an all-time high and so far the evidence is proving me right.
[Saudi Arabia said that they are going to cut production by MORE than what they agreed to, just to kick start the oil price recovery. - Dan]
Strong Chinese demand is expected this year. Reuters reports that record Chinese car sales, which grew by 13.7 percent between 2015 and 2016 to 28 million sold vehicles, increased oil demand expectations. Reflecting China's growing fuel consumption, its net crude imports will rise 5.3 percent to 396 million tonnes (around 8 million bpd) in 2017, state-owned China National Petroleum Corp (CNPC) said on Thursday. Its crude demand will hit a record 594 million tons this year (around 12 million bpd), CNPC said. That comes a day after India reported record demand last year even as the world bank lowers their outlook this year.
Oil imports is OPEC's last hurrah but those imports, which rose to their highest level since 2012, may have been due to weather and delayed counting due to year-end tax considerations.
The EIA sees U.S. production rising by 110,000 barrels a day, not enough to make up for the OPEC production cut of 93.6% of capacity. We see a potential $60.00 the target!
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group