Oil is up slightly in early trading on Monday, but I think WTI will flop around $65/bbl until traders have time to digest the OPEC announcement to increase production quotas on Friday. My WAG is that OPEC will raise their quotas by just 500,000 BOPD. Quotas are just numbers; OPEC has not been producing at the old quotas all year and only a few of the cartel members have the ability to raise production. Saudi Arabia is the only OPEC country with remaining production capacity of a meaningful amount. Even SA may have trouble keeping up with the Venezuelan declines. They are all sucking wind for money and definitely don't want lower oil prices. - Dan
By Phil Flynn at 8:45 AM ET: Tariffs, OPEC and Oil Getting Personal
Oil prices got hit hard as the trade war for oil traders got personal. In a tit for tat, the Chinese government announced tariffs on US oil imports as well as other energy products, in a sector that President Donald Trump promised to make great again. This along with the fact that most people believe that OPEC and Russia will decide to increase oil output even after reports that Bloomberg says Iran, Iraq and Venezuela will veto the increase.
This comes after Russia floated the idea of a 1.5 million barrel a day increase in crude supply that was more than the one million barrel a day increase that was floated around Memorial Day. Yet, the Russia trial balloon of the 1.5-million-barrel increase will only allow for more bargaining room to allow Iran and Venezuela to save face because Saudi Arabia and Russia are already gearing up to put more oil on the market no matter what Iran and Venezuelan want.
The China trade war fears is scaring oil traders into believing that we could see this trade spat lower economic growth and reduce oil demand. Some have raised some concerns about European demand. Yet, a low rate environment and a more dovish Mario Draghi should renew those oil demand spirits.
China is a different story as the trade war threats and refinery maintenance slowed their demand from what was recently all-time highs. Now with China targeting US Energy their cost to import oil will go higher. US crude exports to China were roughly 380,000 barrels per day in March, a large amount but not enough to shatter the global oil supply and demand balance.
In fact, the White House's announcement of $50 billion in planned tariffs against Chinese goods and an equal retaliation by the Chinese will not really slow the global economy by that much, and so the weakness in the market is being overstated. Oil had a similar sell-off on trade war fears only to set the stage for a monster oil rally. Besides the trade tariffs won’t start until early July. Plenty of time to cut another deal.
Bloomberg News reports that Iran says Venezuela and Iraq will join in blocking a proposal to increase oil production that’s backed by Saudi Arabia and Russia when OPEC and its allies meet in Vienna this week. “Three OPEC founders are going to stop it,” Iran’s representative to the bloc Hossein Kazempour Ardebili said in comments to Bloomberg on Sunday. “If the Kingdom of Saudi Arabia and Russia want to increase production, this requires unanimity. If the two want to act alone, that’s a breach of the cooperation agreement.”
Oil Price - June 18
Oil Price - June 18
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Oil Price - June 18
Investing.com - Oil prices bounced off two-month lows hit earlier on Monday after reports that the contemplated increase in output by Saudi Arabia and Russia may be less than originally feared.
New York-traded West Texas Intermediate crude futures rose 23 cents, or about 0.3%, to $65.08 a barrel by 10:33AM ET (14:33GMT).
Meanwhile, Brent crude futures, the benchmark for oil prices outside the U.S., was last up $1.09, or 1.5%, to $74.53.
Prices hit intraday lows of $63.41 and $72.46, respectively earlier in the session.
Oil ministers from OPEC, Russia and other major producing countries will meet in Vienna on Thursday and Friday to review their current production agreement that has held back 1.8 million barrels per day (bpd) from the market for the past 18 months.
Russia has pushed for returning a million barrels per day back into the market relatively quickly in order to offset supply shortfalls from Venezuela and Iran. However, Saudi Arabia would like to try a lower amount to prevent the price from dropping too much, experts said.
However, Iran, Venezuela and Iraq have all said the current production agreement should stay in place and Tehran’s OPEC representative Hossein Kazempour Ardebili told Bloomberg that the three would block the deal.
In an effort to reach a compromise, the latest developments point to a discussion between OPEC members to deliver just 300,000 to 600,000 barrels a day of additional oil supply to global markets over the next few months, Bloomberg reported, citing people briefed on the talks.
The report was sufficient to send a wave of relief through oil markets that had declined to two-month lows in overnight trade as both the West Texas Intermediate and Brent turned positive.
Weighing on prices, U.S. output continued its unrelenting escalation. U.S. drillers added one oil rig last week, bringing the total count to 863, the highest number since March 2015, according to Baker Hughes data released on Friday.
Meanwhile, China on Friday said it would slap duties on American export products, including crude oil, as the Asian nation planned retaliatory tariffs against the U.S.
That could mean that the world's biggest importer of oil could eschew U.S. products at a time when exports of crude to Asia have been rising.
New York-traded West Texas Intermediate crude futures rose 23 cents, or about 0.3%, to $65.08 a barrel by 10:33AM ET (14:33GMT).
Meanwhile, Brent crude futures, the benchmark for oil prices outside the U.S., was last up $1.09, or 1.5%, to $74.53.
Prices hit intraday lows of $63.41 and $72.46, respectively earlier in the session.
Oil ministers from OPEC, Russia and other major producing countries will meet in Vienna on Thursday and Friday to review their current production agreement that has held back 1.8 million barrels per day (bpd) from the market for the past 18 months.
Russia has pushed for returning a million barrels per day back into the market relatively quickly in order to offset supply shortfalls from Venezuela and Iran. However, Saudi Arabia would like to try a lower amount to prevent the price from dropping too much, experts said.
However, Iran, Venezuela and Iraq have all said the current production agreement should stay in place and Tehran’s OPEC representative Hossein Kazempour Ardebili told Bloomberg that the three would block the deal.
In an effort to reach a compromise, the latest developments point to a discussion between OPEC members to deliver just 300,000 to 600,000 barrels a day of additional oil supply to global markets over the next few months, Bloomberg reported, citing people briefed on the talks.
The report was sufficient to send a wave of relief through oil markets that had declined to two-month lows in overnight trade as both the West Texas Intermediate and Brent turned positive.
Weighing on prices, U.S. output continued its unrelenting escalation. U.S. drillers added one oil rig last week, bringing the total count to 863, the highest number since March 2015, according to Baker Hughes data released on Friday.
Meanwhile, China on Friday said it would slap duties on American export products, including crude oil, as the Asian nation planned retaliatory tariffs against the U.S.
That could mean that the world's biggest importer of oil could eschew U.S. products at a time when exports of crude to Asia have been rising.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Oil Price - June 18
VIENNA, June 18 (Reuters) - Harold Hamm, founder and chief executive officer of Continental Resources Inc, has canceled a scheduled appearance at an OPEC event this week in Vienna, a company spokeswoman said.
Hamm is the third of five U.S. shale executives to withdraw from a scheduled speaking slot at the OPEC meeting in Vienna. His withdrawal comes days after a trade skirmish between China and the United States intensified, with China imposing $50 billion in tariffs on U.S. crude oil and other goods, a retaliatory measure on Washington's tariffs of Chinese products.
Continental, the largest oil producer in North Dakota's Bakken shale formation, has been a key supplier of crude oil to China, shipping more than 1 million barrels to the country since a U.S. crude export ban was lifted in 2015.
It was unclear how China will replace that source of crude, but several OPEC countries produce crude grades similar to Continental's Bakken wells.
Continental spokeswoman Kristin Thomas confirmed Hamm's withdrawal, saying the event did not fit with his schedule. The company did not immediately respond to requests for further comment on the China tariffs.
Hamm, who was an informal campaign adviser to U.S. President Donald Trump in 2016 and was considered for a U.S. Cabinet post, had been listed since at least March on the OPEC International Seminar's website as a speaker https://www.opecseminar.org/programme-o ... eminar.htm. His attendance had been widely anticipated as he had derided OPEC as a "toothless tiger" in 2014.
Trump also chided OPEC last week, blaming the group for rising oil prices and saying its 14 members were "at it again."
Yet, Hamm has appeared in recent months to be trying to reach a more conciliatory tone with OPEC producers. Last month he attended a board meeting of Saudi Aramco, the oil producer controlled by OPEC's largest member, Saudi Arabia.
He has also begun asking fellow shale producers to focus more on profitability and less on profligate production.
Hamm's withdrawal leaves only two U.S. shale executives confirmed to speak at the event, out of an original five.
Centennial Resource Development Inc CEO Mark Papa and ConocoPhillips Ryan Lance also withdrew from the OPEC event.
Lance himself pulled out because of concerns his participation would seem as if he were the designate U.S. representative at such a forum, according to a source familiar with the company's thinking.
Pioneer Natural Resources Co Executive Chairman Scott Sheffield and Hess Corp Chief Executive John Hess are still slated to attend. (Reporting by Ernest Scheyder; Editing by David Gregorio)
Hamm is the third of five U.S. shale executives to withdraw from a scheduled speaking slot at the OPEC meeting in Vienna. His withdrawal comes days after a trade skirmish between China and the United States intensified, with China imposing $50 billion in tariffs on U.S. crude oil and other goods, a retaliatory measure on Washington's tariffs of Chinese products.
Continental, the largest oil producer in North Dakota's Bakken shale formation, has been a key supplier of crude oil to China, shipping more than 1 million barrels to the country since a U.S. crude export ban was lifted in 2015.
It was unclear how China will replace that source of crude, but several OPEC countries produce crude grades similar to Continental's Bakken wells.
Continental spokeswoman Kristin Thomas confirmed Hamm's withdrawal, saying the event did not fit with his schedule. The company did not immediately respond to requests for further comment on the China tariffs.
Hamm, who was an informal campaign adviser to U.S. President Donald Trump in 2016 and was considered for a U.S. Cabinet post, had been listed since at least March on the OPEC International Seminar's website as a speaker https://www.opecseminar.org/programme-o ... eminar.htm. His attendance had been widely anticipated as he had derided OPEC as a "toothless tiger" in 2014.
Trump also chided OPEC last week, blaming the group for rising oil prices and saying its 14 members were "at it again."
Yet, Hamm has appeared in recent months to be trying to reach a more conciliatory tone with OPEC producers. Last month he attended a board meeting of Saudi Aramco, the oil producer controlled by OPEC's largest member, Saudi Arabia.
He has also begun asking fellow shale producers to focus more on profitability and less on profligate production.
Hamm's withdrawal leaves only two U.S. shale executives confirmed to speak at the event, out of an original five.
Centennial Resource Development Inc CEO Mark Papa and ConocoPhillips Ryan Lance also withdrew from the OPEC event.
Lance himself pulled out because of concerns his participation would seem as if he were the designate U.S. representative at such a forum, according to a source familiar with the company's thinking.
Pioneer Natural Resources Co Executive Chairman Scott Sheffield and Hess Corp Chief Executive John Hess are still slated to attend. (Reporting by Ernest Scheyder; Editing by David Gregorio)
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group