Closing Prices:
> WTI prompt month (OCT 19) was down $0.66 on the day, to settle at $55.09/Bbl.
> In contrast, NG prompt month (OCT 19) was up $0.022 on the day, to settle at $2.574/MMBtu.
-----------------------------------------------------
Investing.com - Oil prices slumped on Thursday in Europe after OPEC agreed to cut its oil output and ask Iraq and Nigeria to bring production down in an attempt to prevent a glut as U.S. production soars. < Europeans still think U.S. production is growing because EIA keeps over-stating oil production in their weekly reports and EIA keeps forecasting oil production growth in each STEO report. EIA must not read the Baker Hughes weekly active drilling rig report or look at their own 941 report that shows that U.S. oil production peaked in April and declined in both May and June.
• The Organization of the Petroleum Exporting Countries and its allies met on Thursday ahead of policy discussions in Vienna in December.
• Iraq, OPEC's second-largest oil producer, pledged to reduce output by 175,000 barrels per day (bpd) by October, while Nigeria agreed to cut 57,000 bpd.
• Crude Oil WTI Futures fell 1.6% to $54.83 a barrel as of 8:45 AM ET (12:45 GMT).
•Brent Oil Futures, the benchmark for oil prices outside the U.S., slumped 1.9% to $59.66.
• Meanwhile, Gold Futures surged 1.8% to $1,529.25 after the European Central Bank lowered its interest rates on deposits and announced it is restarting its bond-purchasing program. < BTW crude oil and gold prices tend to move up and down together over time.
Oil Price - Sept 12
Oil Price - Sept 12
Last edited by dan_s on Thu Sep 12, 2019 3:00 pm, edited 1 time in total.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Oil Price - Sept 12
Energy Report: Iran Trumps Inventory
By Phil Flynn (Sep 12, 2019 08:31AM ET)
Oil prices reversed course even after a very bullish oil inventory number as the market is now adjusting to the potential return of Iran to the global oil market. This comes as the U.S. is back in the number 1 spot as the world's largest oil exporter, according to data from the International Energy Agency. OPEC plus Russia meets today at the World Energy meeting in Abu Dhabi for a ministerial monitoring committee meeting. The challenges for OPEC are now more daunting as the cartel and its playing hard to get counter partner Russia is now having to face the reality that stored Iranian oil could flood the market. In fact oil had a major reversal after it became clear that the real reason national security advisor John Bolton left was because President Trump considered the lifting of sanctions on Iran to get them to come back to the nuclear negation table. Oil sold off even harder after it was reported that a phone call between Iranian President Hassan Rouhani and French President Emmanuel Macron to discuss the Iranian nuclear deal happened. President Macron has been acting as a go-between with Iran and the U.S. and while President Rouhani reportedly said that Iran would not negotiate as long as there were sanctions in place, it appears that President Trump is willing to risk that.
That presents bigger challenges for Saudi Arabia and its new oil minister and member of the royal family Prince Abdulaziz bin Salman. Bin Salman knows his main job is to get oil prices much higher so the Saudis can get a big chunk of change for its IPO. Neither President Trump’s softening on Iran, record U.S. exports nor Russia is making that easier. Prince Abdulaziz bin Salman ahead of the meeting said that, “it's important we sustain a high level of negotiation." Good Luck with that. In other words to cheaters Iraq and Nigeria, and sometimes Russia, comply or die of low oil prices.
Russia may test the seasoned energy minster in his new role, basically because they can. Russia does not need oil prices much higher and to play along, the Russians may want to watch the new Saudi Energy Minister squirm. Russia for their part, put out a report about the possibility of $25.00 a barrel oil which would be an IPO killer for Saudi Aramco. Russia has the upper hand though. Russian Energy Minister Alexander Novak stressed it was “extremely important” for all members to reach full compliance. Yet hopes for additional cuts at this point are harder because of the news that the U.S. is the number 1 exporter in the world. All of this drama makes the U.S. inventory numbers seem old news. Despite doom and gloom predictions about global demand and record U.S. production, U.S. crude supplies are below average.
There is no oil glut in the U.S. as the Energy Information Administration reported that, "Crude oil supplies fell by 6.9 million barrels from the previous week. At 416.1 million barrels, U.S. crude oil inventories are about 2% below the five-year average for this time of year. Total motor gasoline inventories decreased by 0.7 million barrels last week and are about 3% above the five-year average for this time of year. Finished gasoline inventories increased while blending components inventories decreased last week. Distillate fuel inventories increased by 2.7 million barrels last week and are about 6% below the five-year average for this time of year." Oil demand rocked as well. The EIA reported that demand based on total products supplied over the last four-week period averaged 21.6 million barrels per day, up by 0.4% from the same period last year. Over the past four weeks, motor gasoline product supplied averaged 9.7 million barrels per day, up by 0.2% from the same period last year. Distillate fuel product supplied averaged 3.9 million barrels per day over the past four weeks, down by 2.1% from the same period last year.
Yet the International Energy Agency (IEA) Is warning of a global oil glut. The EIA says that, “The oil market focus recently has been on demand as growth weakens amidst uncertainty around the global economy, and particularly trade. In this month's OMR, we maintain our growth estimate for 2019 at 1.1 mb/d, even though June data show that demand increased year-on-year by less than 0.2 mb/d. For the second half of 2019 we retain the view that with oil prices currently about 20% lower than a year ago there will be support for consumers. Early data for July suggests that global demand grew by 1.3 mb/d year on year.”
The IEA reported, “In recent weeks, tensions in the Middle East Gulf have eased and oil industry operations appear to be normal. The major political event that has taken place is a personnel change in Saudi Arabia with the appointment as energy minister of Prince Abdulaziz bin Salman, who is a well-known and experienced figure. An early event for him is a meeting of the OPEC+ agreement monitoring committee that takes place in Abu Dhabi as we publish this Report. To date, support for the agreement rate has been high, but ahead of the meeting data for August show the compliance rate slipping to 116 per cent. In August, three major countries Russia, Nigeria and Iraq, produced 0.6 mb/d more than their allocations. Saudi Arabia, on the other hand, produced 0.6 mb/d less than allowed, and it is clearly the lynchpin of the whole deal. A reminder to the producers that competition for market share is getting tougher comes from preliminary data showing that in June the US momentarily overtook Saudi Arabia and Russia as the world’s number one gross oil exporter.”
Our balances for 2H19 imply a stock draw of 0.8 mb/d, based on the assumption of flat OPEC production, stronger demand growth and weaker non-OPEC supply growth. However, this is only really a breather: the 2H19 non-OPEC growth, although modest by recent standards at “only” 1.3 mb/d, is measured against the high base set by the enormous production surge seen this time last year. So far in 2019, US crude oil production growth has stalled with June output only 45 kb/d higher than in December. Even so, output is still growing strongly on an annual basis, rising this year by 1.25 mb/d, with 1 mb/d of growth to come in 2020. In Norway, long-awaited projects are coming on stream earlier than expected and may ramp up to peak production ahead of schedule. Oil production in Brazil is growing fast, reaching 3 mb/d in August, 0.4 mb/d higher than just two months earlier."
While the relentless stock builds as we have seen since early 2018 have halted, this is temporary. Soon, the OPEC+ producers will once again see surging non-OPEC oil production with the implied market balance returning to a significant surplus and placing pressure on prices. The challenge of market management remains a daunting one well into 2020.
Finally, in January the International Maritime Organization’s new marine fuel regulations are being introduced. For oil in 2019, published in March, we concluded that markets will be generally prepared for the shift, assuming a certain initial level of non-compliance. In this report, we have looked at the latest developments in demand and refining and we reaffirm our view of a relatively smooth start for the new rules. In line with this view, markets are not currently signaling significant increases in diesel prices, but this is an issue that will be monitored closely.
By Phil Flynn (Sep 12, 2019 08:31AM ET)
Oil prices reversed course even after a very bullish oil inventory number as the market is now adjusting to the potential return of Iran to the global oil market. This comes as the U.S. is back in the number 1 spot as the world's largest oil exporter, according to data from the International Energy Agency. OPEC plus Russia meets today at the World Energy meeting in Abu Dhabi for a ministerial monitoring committee meeting. The challenges for OPEC are now more daunting as the cartel and its playing hard to get counter partner Russia is now having to face the reality that stored Iranian oil could flood the market. In fact oil had a major reversal after it became clear that the real reason national security advisor John Bolton left was because President Trump considered the lifting of sanctions on Iran to get them to come back to the nuclear negation table. Oil sold off even harder after it was reported that a phone call between Iranian President Hassan Rouhani and French President Emmanuel Macron to discuss the Iranian nuclear deal happened. President Macron has been acting as a go-between with Iran and the U.S. and while President Rouhani reportedly said that Iran would not negotiate as long as there were sanctions in place, it appears that President Trump is willing to risk that.
That presents bigger challenges for Saudi Arabia and its new oil minister and member of the royal family Prince Abdulaziz bin Salman. Bin Salman knows his main job is to get oil prices much higher so the Saudis can get a big chunk of change for its IPO. Neither President Trump’s softening on Iran, record U.S. exports nor Russia is making that easier. Prince Abdulaziz bin Salman ahead of the meeting said that, “it's important we sustain a high level of negotiation." Good Luck with that. In other words to cheaters Iraq and Nigeria, and sometimes Russia, comply or die of low oil prices.
Russia may test the seasoned energy minster in his new role, basically because they can. Russia does not need oil prices much higher and to play along, the Russians may want to watch the new Saudi Energy Minister squirm. Russia for their part, put out a report about the possibility of $25.00 a barrel oil which would be an IPO killer for Saudi Aramco. Russia has the upper hand though. Russian Energy Minister Alexander Novak stressed it was “extremely important” for all members to reach full compliance. Yet hopes for additional cuts at this point are harder because of the news that the U.S. is the number 1 exporter in the world. All of this drama makes the U.S. inventory numbers seem old news. Despite doom and gloom predictions about global demand and record U.S. production, U.S. crude supplies are below average.
There is no oil glut in the U.S. as the Energy Information Administration reported that, "Crude oil supplies fell by 6.9 million barrels from the previous week. At 416.1 million barrels, U.S. crude oil inventories are about 2% below the five-year average for this time of year. Total motor gasoline inventories decreased by 0.7 million barrels last week and are about 3% above the five-year average for this time of year. Finished gasoline inventories increased while blending components inventories decreased last week. Distillate fuel inventories increased by 2.7 million barrels last week and are about 6% below the five-year average for this time of year." Oil demand rocked as well. The EIA reported that demand based on total products supplied over the last four-week period averaged 21.6 million barrels per day, up by 0.4% from the same period last year. Over the past four weeks, motor gasoline product supplied averaged 9.7 million barrels per day, up by 0.2% from the same period last year. Distillate fuel product supplied averaged 3.9 million barrels per day over the past four weeks, down by 2.1% from the same period last year.
Yet the International Energy Agency (IEA) Is warning of a global oil glut. The EIA says that, “The oil market focus recently has been on demand as growth weakens amidst uncertainty around the global economy, and particularly trade. In this month's OMR, we maintain our growth estimate for 2019 at 1.1 mb/d, even though June data show that demand increased year-on-year by less than 0.2 mb/d. For the second half of 2019 we retain the view that with oil prices currently about 20% lower than a year ago there will be support for consumers. Early data for July suggests that global demand grew by 1.3 mb/d year on year.”
The IEA reported, “In recent weeks, tensions in the Middle East Gulf have eased and oil industry operations appear to be normal. The major political event that has taken place is a personnel change in Saudi Arabia with the appointment as energy minister of Prince Abdulaziz bin Salman, who is a well-known and experienced figure. An early event for him is a meeting of the OPEC+ agreement monitoring committee that takes place in Abu Dhabi as we publish this Report. To date, support for the agreement rate has been high, but ahead of the meeting data for August show the compliance rate slipping to 116 per cent. In August, three major countries Russia, Nigeria and Iraq, produced 0.6 mb/d more than their allocations. Saudi Arabia, on the other hand, produced 0.6 mb/d less than allowed, and it is clearly the lynchpin of the whole deal. A reminder to the producers that competition for market share is getting tougher comes from preliminary data showing that in June the US momentarily overtook Saudi Arabia and Russia as the world’s number one gross oil exporter.”
Our balances for 2H19 imply a stock draw of 0.8 mb/d, based on the assumption of flat OPEC production, stronger demand growth and weaker non-OPEC supply growth. However, this is only really a breather: the 2H19 non-OPEC growth, although modest by recent standards at “only” 1.3 mb/d, is measured against the high base set by the enormous production surge seen this time last year. So far in 2019, US crude oil production growth has stalled with June output only 45 kb/d higher than in December. Even so, output is still growing strongly on an annual basis, rising this year by 1.25 mb/d, with 1 mb/d of growth to come in 2020. In Norway, long-awaited projects are coming on stream earlier than expected and may ramp up to peak production ahead of schedule. Oil production in Brazil is growing fast, reaching 3 mb/d in August, 0.4 mb/d higher than just two months earlier."
While the relentless stock builds as we have seen since early 2018 have halted, this is temporary. Soon, the OPEC+ producers will once again see surging non-OPEC oil production with the implied market balance returning to a significant surplus and placing pressure on prices. The challenge of market management remains a daunting one well into 2020.
Finally, in January the International Maritime Organization’s new marine fuel regulations are being introduced. For oil in 2019, published in March, we concluded that markets will be generally prepared for the shift, assuming a certain initial level of non-compliance. In this report, we have looked at the latest developments in demand and refining and we reaffirm our view of a relatively smooth start for the new rules. In line with this view, markets are not currently signaling significant increases in diesel prices, but this is an issue that will be monitored closely.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Oil Price - Sept 12
For the record: Per yesterday's EIA weekly petroleum report.
During the week ending September 6 the U.S.:
Imported 8,541,000 barrels of petroleum based liquids, including 6,725,000 barrels of crude oil
Exported 7,921,000 barrels of petroleum based liquids, including 3,295,000 barrels of crude oil
>>> We have to import heavy crude oil and export light crude oil because U.S. refineries were built to process much heavier oil than what is now coming from the shale plays.
How does this make the U.S. a larger exporter of oil than Saudi Arabia and Russia? < This is what IEA said in their Oil Market Report that came out today.
MY TAKE: I have been reading IEA and EIA reports for decades. IEA's data for the U.S. comes directly from EIA. I believe IEA thinks it is their job to slant their monthly report to keep fuel prices low in Europe. Obviously, the people that sign the paychecks at both agencies prefer lower fuel prices. Soaring fuel prices would be very bad news for the European economy these days.
During the week ending September 6 the U.S.:
Imported 8,541,000 barrels of petroleum based liquids, including 6,725,000 barrels of crude oil
Exported 7,921,000 barrels of petroleum based liquids, including 3,295,000 barrels of crude oil
>>> We have to import heavy crude oil and export light crude oil because U.S. refineries were built to process much heavier oil than what is now coming from the shale plays.
How does this make the U.S. a larger exporter of oil than Saudi Arabia and Russia? < This is what IEA said in their Oil Market Report that came out today.
MY TAKE: I have been reading IEA and EIA reports for decades. IEA's data for the U.S. comes directly from EIA. I believe IEA thinks it is their job to slant their monthly report to keep fuel prices low in Europe. Obviously, the people that sign the paychecks at both agencies prefer lower fuel prices. Soaring fuel prices would be very bad news for the European economy these days.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Oil Price - Sept 12
EIA weekly details: https://www.eia.gov/dnav/pet/pet_sum_sn ... _nus_w.htm
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group