https://youtu.be/VXEMDojvwzQ?si=udhCS3gnKghkA4K0
Recorded pre Friday massacre.
Nuttall’s report on OPEC
Re: Nuttall’s report on OPEC
Good stuff:
> Bullish week for Canadian producers: No tariffs on oil & gas exported to the U.S. AND the differential to WTI declined sharply from $15 to $9 per barrel. Super good news for Hemisphere Energy which is 99% heavy oil. I confirmed today that Hemisphere will announce Q4 results on April 17.
> I agree with Eric that $70 WTI oil price is still a good base case, based on the fundamentals and $4.50US for Henry Hub natural gas is also a good base case for 2025 and 2026. Natural gas prices in Western Canada will continue to lag U.S. gas prices but they should drift higher.
> OPEC+ announced increase in oil supply of 137,000 bpd in April and then tripling to ~500,000 bpd in May is justified based on the cartel's demand growth forecast, which may or may not decline due to the tariff wars. U.S. oil production has flatlined and IEA will need to reduce the non-OPEC supply growth estimates + IEA has a long history of under-estimating demand growth.
> OPEC+ 500,000 bpd increase is just adjusting for all the cheating by some member nations, so it is not that large of an actual increase.
> I agree with Eric that WTI staying in the low $60's/bbl is unsustainable because Non-OPEC production cannot grow at that price. The upstream companies are all free cash flow positive at the $60 oil price, but they will not increase their drilling budgets beyond just what it takes to maintain production. Plus, the gas-to-oil ratio continues to increase in the Permian Basin. U.S. oil production is likely to peak this year, no matter what the oil price does.
> If Non-OPEC production growth stops, the global oil market will need every barrel of OPEC+ production capacity by the end of 2027.
> Not mentioned is the likelihood of the U.S. blocking Iran's oil exports. I believe that will start by the end of May.
> Bullish week for Canadian producers: No tariffs on oil & gas exported to the U.S. AND the differential to WTI declined sharply from $15 to $9 per barrel. Super good news for Hemisphere Energy which is 99% heavy oil. I confirmed today that Hemisphere will announce Q4 results on April 17.
> I agree with Eric that $70 WTI oil price is still a good base case, based on the fundamentals and $4.50US for Henry Hub natural gas is also a good base case for 2025 and 2026. Natural gas prices in Western Canada will continue to lag U.S. gas prices but they should drift higher.
> OPEC+ announced increase in oil supply of 137,000 bpd in April and then tripling to ~500,000 bpd in May is justified based on the cartel's demand growth forecast, which may or may not decline due to the tariff wars. U.S. oil production has flatlined and IEA will need to reduce the non-OPEC supply growth estimates + IEA has a long history of under-estimating demand growth.
> OPEC+ 500,000 bpd increase is just adjusting for all the cheating by some member nations, so it is not that large of an actual increase.
> I agree with Eric that WTI staying in the low $60's/bbl is unsustainable because Non-OPEC production cannot grow at that price. The upstream companies are all free cash flow positive at the $60 oil price, but they will not increase their drilling budgets beyond just what it takes to maintain production. Plus, the gas-to-oil ratio continues to increase in the Permian Basin. U.S. oil production is likely to peak this year, no matter what the oil price does.
> If Non-OPEC production growth stops, the global oil market will need every barrel of OPEC+ production capacity by the end of 2027.
> Not mentioned is the likelihood of the U.S. blocking Iran's oil exports. I believe that will start by the end of May.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group