wti price
Re: wti price
As I said in the last podcast: WTI will flop around in the $65 range ($63-$67) until after the OPEC meeting/announcement on June 22. Regardless of what OPEC does, the global market is tight today and it is going to get a lot tighter this summer.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: wti price
Friday, June 15, 2018 from OilPrice.com
Oil prices bounced around over the past few days as the markets await OPEC’s decision in a week’s time. While the meeting is shaping up to be a contentious one, the hype also demonstrates OPEC’s clout years after the group’s obituary was written. “With unplanned outages escalating, geopolitical risks rising, and U.S. shale production facing infrastructure bottlenecks, Saudi Arabia is once again back in the driver's seat exerting significant influence over the oil market in 2018,” Helima Croft, the global head of commodity strategy at RBC Capital Markets, said Thursday. “All eyes are on what course of action it will call for at the June 22 OPEC meeting in Vienna.”
IEA: Venezuela and Iran could leave supply deficit. The IEA said in its latest Oil Market Report that robust U.S. shale growth will underpin 2.0 million barrels per day (mb/d) of non-OPEC supply growth this year, plus 1.7 mb/d of non-OPEC output gains in 2019. That should more than meet demand growth…in theory, at least. The agency warned that significant losses in Venezuela and Iran could leave a supply gap. “Even if the Iran-Venezuela supply gap is plugged, the market will be finely balanced next year, and vulnerable to prices rising higher in the event of further disruption,” the IEA said. “It is possible that the very small number of countries with spare capacity beyond what can be activated quickly will have to go the extra mile.”
Libyan export terminals knocked offline. Libya’s two largest oil export terminals suffered disruptions this week due to clashes between rival groups. The outages at the Es Sider and Ras Lanuf terminals disrupted some 240,000 bpd of supply, Libya’s National Oil Corp. said on Thursday. The two facilities account for 40 percent of Libya’s oil exports. If the losses are sustained for any lengthy period of time, it will put more pressure on the OPEC+ group to increase output at its meeting on June 22.
OPEC+ production increases to cut into spare capacity. Any increase in the volume of output from OPEC and Russia will necessarily cut into spare capacity levels, which analysts say could drop to the lowest level in decades. “You would essentially be taking 3.2 million barrels per day (bpd) of spare capacity down to approximately 2 million bpd,” Jefferies analyst Jason Gammel told Reuters, assuming around 1 mb/d increase in output. Periods of low spare capacity have historically been associated with times of high and volatile prices.
Floating storage rising in European waters. More crude oil is being stored on ships at sea in European waters than at any time in the past 18 months, according to Reuters. A quarter of global floating storage is now located in European waters, compared to just 10 percent in March and April. The sudden increase in oil stashed at sea is the result of Asian buyers scooping up cargoes from the U.S., rather than from Nigeria, Angola and the Middle East. The premium for Brent relative to WTI has made U.S. oil cheap compared to oil linked to Brent. “It is possible that U.S. crude is displacing some lighter end North Sea (and non-North Sea) grades that have traditionally managed to find a home in Northern European refineries,” Kpler economic analyst Reid I’Anson told Reuters.
Oil prices bounced around over the past few days as the markets await OPEC’s decision in a week’s time. While the meeting is shaping up to be a contentious one, the hype also demonstrates OPEC’s clout years after the group’s obituary was written. “With unplanned outages escalating, geopolitical risks rising, and U.S. shale production facing infrastructure bottlenecks, Saudi Arabia is once again back in the driver's seat exerting significant influence over the oil market in 2018,” Helima Croft, the global head of commodity strategy at RBC Capital Markets, said Thursday. “All eyes are on what course of action it will call for at the June 22 OPEC meeting in Vienna.”
IEA: Venezuela and Iran could leave supply deficit. The IEA said in its latest Oil Market Report that robust U.S. shale growth will underpin 2.0 million barrels per day (mb/d) of non-OPEC supply growth this year, plus 1.7 mb/d of non-OPEC output gains in 2019. That should more than meet demand growth…in theory, at least. The agency warned that significant losses in Venezuela and Iran could leave a supply gap. “Even if the Iran-Venezuela supply gap is plugged, the market will be finely balanced next year, and vulnerable to prices rising higher in the event of further disruption,” the IEA said. “It is possible that the very small number of countries with spare capacity beyond what can be activated quickly will have to go the extra mile.”
Libyan export terminals knocked offline. Libya’s two largest oil export terminals suffered disruptions this week due to clashes between rival groups. The outages at the Es Sider and Ras Lanuf terminals disrupted some 240,000 bpd of supply, Libya’s National Oil Corp. said on Thursday. The two facilities account for 40 percent of Libya’s oil exports. If the losses are sustained for any lengthy period of time, it will put more pressure on the OPEC+ group to increase output at its meeting on June 22.
OPEC+ production increases to cut into spare capacity. Any increase in the volume of output from OPEC and Russia will necessarily cut into spare capacity levels, which analysts say could drop to the lowest level in decades. “You would essentially be taking 3.2 million barrels per day (bpd) of spare capacity down to approximately 2 million bpd,” Jefferies analyst Jason Gammel told Reuters, assuming around 1 mb/d increase in output. Periods of low spare capacity have historically been associated with times of high and volatile prices.
Floating storage rising in European waters. More crude oil is being stored on ships at sea in European waters than at any time in the past 18 months, according to Reuters. A quarter of global floating storage is now located in European waters, compared to just 10 percent in March and April. The sudden increase in oil stashed at sea is the result of Asian buyers scooping up cargoes from the U.S., rather than from Nigeria, Angola and the Middle East. The premium for Brent relative to WTI has made U.S. oil cheap compared to oil linked to Brent. “It is possible that U.S. crude is displacing some lighter end North Sea (and non-North Sea) grades that have traditionally managed to find a home in Northern European refineries,” Kpler economic analyst Reid I’Anson told Reuters.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group