Note this quote below: "Markets could weaken further next year, when forecasters including the International Energy Agency anticipate a sharp slowdown in demand growth." Dan, where is the data to support this hysteria?
OPEC+ Talks on Oil Supply Cuts Drag Into Eve of Meeting
Grant Smith, Salma El Wardany and Fiona MacDonald
Wed, November 29, 2023 at 1:48 PM CST
In this article:
(Bloomberg) -- OPEC+ continued talks to resolve a deadlock on oil quotas — and potentially take further steps to shore up flagging crude prices — on the eve of its ministerial meeting.
Group leader Saudi Arabia is pressing fellow alliance members to join it in restraining supplies, in order to stave off a renewed oil surplus next year. A deeper collective cutback of 1 million barrels a day or more may be considered when the Organization of Petroleum Exporting Countries gathers on Thursday, delegates said.
Yet obstacles to an accord remain — most notably, a dispute over whether African members Angola and Nigeria should accept reduced output targets to reflect their diminished capabilities. The spat has meant that Thursday’s gathering is being held four days later than originally planned.
OPEC+ faces pressure to intervene in crude markets, following a 13% drop in prices over the past two months amid plentiful supplies and a darkening economic backdrop. Markets could weaken further next year, when forecasters including the International Energy Agency anticipate a sharp slowdown in demand growth.
“The market wants to know whether or not the policy of OPEC+ to be preemptive and proactive with supply management remains in place,” said Clay Seigle, an analyst at Rapidan Energy Group LLC. “Without real production cuts, many traders will find the market to be oversupplied, casting a bearish pall over the near-term price outlook.”
Oil futures are trading near $83 a barrel in London following their recent pullback. While the retreat offers relief for consumers after years of rampant inflation, it spells discomfort for exporters like the Saudis and fellow OPEC+ leader Russia.
In the absence of a deal for group-wide cuts, Riyadh could simply maintain its own unilateral 1 million-barrel curb into early 2024, though crude traders warn though that this wouldn’t be enough to avert a price sell-off. If the kingdom opts instead to reverse that curb, the sell-off could be profound.
“When you look ahead to the next months, we see a significant global oil supply surplus — and that assumes that the cuts currently in place are prolonged into next year,” said Jim Burkhard, head of global crude oil markets team at S&P Global Commodity Insights. “If the cuts are not maintained or deepened, the reaction of the market could be quite severe.”
A lingering barrier to agreement is the rift over output limits for the West African duo.
When OPEC+ last convened in June, Angola and Nigeria were assigned lower allocations for 2024 that reflected an erosion in their capacity from under-investment and operational disruptions. They were granted a review by external consultants, but have pushed back against its results.
Read: How Midnight OPEC Dealmaking Won Gulf Unity at Africa’s Expense
“Before they can turn to the deeper reduction discussion, OPEC will have to resolve the unfinished business from the June meeting,” said Helima Croft, chief commodities strategist at RBC Capital Markets. “Getting Angola to sign on the dotted line still seems to be subject of intense diplomatic negotiations.”
The cartel is due to begin a series of online meetings on Thursday, beginning at 10am London time, with the main policy-setting session scheduled for 2pm.
OPEC Meeting and IEA Happy Talk on Demand Destruction
Re: OPEC Meeting and IEA Happy Talk on Demand Destruction
Oil demand ALWAYS declines a bit in September & October.
Oil demand is seasonal. Now, with winter approaching demand for heating oil will pick up and supplies are low.
If you take the time to look at the EIA's more detailed report that came out this afternoon you will see that all of our petroleum inventories are lower than 30 Days of Supply and some refined products are way below normal.
This country and all of the OECD countries run on oil. Our standard of living is impossible without abundant and affordable oil & gas.
30 Days of Supply is considered "normal". Here is where inventories are today in the U.S. per EIA:
Crude Oil at 28.9 Days of Supply.
Gasoline 24.8 Days of Supply
Distillates 28.5 Days of Supply (but demand is now going up for heating oil)
Jet Fuel just 21.6 Days of Supply
Sure doesn't look like a "Glut" to me.
OPEC will announce an extension of their production quotas. Nigeria and Angola know they need to go along with Saudi Arabia.
Oil price volatility is CRAZY. No wonder so many investors are staying are on the sidelines, afraid to invest in the oil companies despite the fact that they are generating massive amounts of free cash flow. Free cash flow per share is higher for the upstream oil & gas subsector than any other sector.
Our Sweet 16 won't report full year results as good as 2022, but they are still very profitable; even the gassers are profitable this year.
We have companies like InPlay Oil trading below the PV10 Net Asset Value of their PDP reserves. That is insane.
My plan is to keep my portfolio heavily weighted to companies that pay good dividends. Eventually, the Wall Street Gang will figure this out and we will see "Multiple Expansion". Until then, collecting nice dividends keeps the portfolio drifting higher.
Oil demand is seasonal. Now, with winter approaching demand for heating oil will pick up and supplies are low.
If you take the time to look at the EIA's more detailed report that came out this afternoon you will see that all of our petroleum inventories are lower than 30 Days of Supply and some refined products are way below normal.
This country and all of the OECD countries run on oil. Our standard of living is impossible without abundant and affordable oil & gas.
30 Days of Supply is considered "normal". Here is where inventories are today in the U.S. per EIA:
Crude Oil at 28.9 Days of Supply.
Gasoline 24.8 Days of Supply
Distillates 28.5 Days of Supply (but demand is now going up for heating oil)
Jet Fuel just 21.6 Days of Supply
Sure doesn't look like a "Glut" to me.
OPEC will announce an extension of their production quotas. Nigeria and Angola know they need to go along with Saudi Arabia.
Oil price volatility is CRAZY. No wonder so many investors are staying are on the sidelines, afraid to invest in the oil companies despite the fact that they are generating massive amounts of free cash flow. Free cash flow per share is higher for the upstream oil & gas subsector than any other sector.
Our Sweet 16 won't report full year results as good as 2022, but they are still very profitable; even the gassers are profitable this year.
We have companies like InPlay Oil trading below the PV10 Net Asset Value of their PDP reserves. That is insane.
My plan is to keep my portfolio heavily weighted to companies that pay good dividends. Eventually, the Wall Street Gang will figure this out and we will see "Multiple Expansion". Until then, collecting nice dividends keeps the portfolio drifting higher.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: OPEC Meeting and IEA Happy Talk on Demand Destruction
Re: PV10 Net Asset Value of their PDP reserves.
The number will be lower when they are recalculated @ 12/31/2023 as prices have declined significantly from last year.
The number will be lower when they are recalculated @ 12/31/2023 as prices have declined significantly from last year.