Energy Prospectus

As I pointed out in the weekend podcast, there is no technical resistance for WTI between $56 and $60. If WTI closes over $57 today and we get a bullish storage report on Wednesday, I think there is a good chance we see WTI trading over $60 very soon. If so, the Sweet 16 stocks will move rapidly higher as they are all trading at valuations as if oil is under $50. Natural gas and NGL prices are also getting a boost from the winter weather that will be moving across the Great Lakes this week. - Dan

LONDON (Reuters) - Oil prices hit their highest since July 2015 on Monday as Saudi Arabia's crown prince cemented his power over the weekend through an anti-corruption crackdown, while markets continued to tighten.

Brent crude futures (LCOc1) were trading 26 cents higher at $62.33 a barrel by 1012 GMT, after hitting a session peak of $62.90, a 28-month high.

U.S. West Texas Intermediate (WTI) crude (CLc1) rose 25 cents to $55.89 a barrel, breaking above $56 for the first time since July 2015.

Saudi Crown Prince Mohammed bin Salman tightened his grip with the arrest of royals, ministers and investors including prominent billionaire Alwaleed bin Talal and the powerful head of the National Guard, Prince Miteb bin Abdullah. < This is an interesting development

Analysts for now do not see Saudi Arabia, the world's largest oil exporter, changing its policy of boosting crude prices.

Prince Mohammed's reforms include a plan to list parts of state-owned oil company Saudi Aramco next year, and a higher oil price is seen as beneficial for its market capitalization.

"We believe the kingdom will stick to the OPEC+ deal and continue to focus on reducing global oil inventories," UBS oil analyst Giovanni Staunovo said.

Saudi Energy Minister Khalid al-Falih said that while there is "satisfaction" with a production-cutting deal between the Organization of the Petroleum Exporting Countries and other producers led by Russia, the "job is not done yet".

OPEC is expected to extend a cut of around 1.8 million barrels per day throughout the whole of 2018.

Also boosting oil prices, U.S. energy companies cut eight oil rigs last week, to 729, in the biggest reduction since May 2016.

While supplies are tightening, analysts say demand remains strong.

"Synchronous global economic growth and new supply disruptions are creating the most constructive oil price environment since ... 2014," Barclays (LON:BARC) bank said.

The bank raised its forecast for the average Brent price in the fourth quarter of this year by $6 to $60 a barrel, and its full-year 2018 forecast by $3 to $55 a barrel.

Speculators have also increased to a record high their bets on gains in the price of Brent.

ICE commitment-of-traders data showed money managers had increased their net long holdings of Brent crude futures and options by 23,500 contracts to 530,237. [O/ICE]

Money managers raised their net long commitments on WTI by 63,072 contracts to 343,705 over the same period, a more than six-month high.
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Wall Street firms are going to raise the oil price that they use to value companies. That means all of our Sweet 16 s/b be getting upgrades. - Dan

On 11/2/2017, Reuters reported that Libya's National Oil Corporation (NOC) said on Thursday that production at the northeastern As-Sarah oilfield had dropped by 50,000 b/d due to protests that it linked to a contract dispute with German operator Wintershall (WINT-NC). Protesters in Jakhira said on Wednesday that they had blockaded production, accusing the NOC of failing to respond to local demands for development and jobs. Wintershall confirmed earlier that protesters had demanded a closure of some of the production from oilfields in its concession areas.

On 11/2/2017, Reuters reported that Iraq wants the Kurdistan region to stop independent crude exports and to hand over sales operations to the Iraqi state-oil marketer SOMO, the company's director said on Thursday. Iraq is talking to Turkey to allow SOMO to sell the Kurdish crude that arrives by pipeline in Ceyhan, the Turkish terminal on the Mediterranean, acting SOMO director general Alaa al-Yasiri told reporters in Baghdad. About 530,000 barrels per day (bpd) used to arrive in Ceyhan via the pipeline until mid-October, of which about half came from the Kurdistan Regional Government's oilfields and the rest from Kirkuk, a disputed province claimed by both the Kurdish region and Iraqi authorities in Baghdad. Output from Kirkuk fell in mid-October, when Iraqi forces took back control of the northern region's oilfields from Kurdish fighters who had been there since 2014.

On 11/5/2017, Reuters reported Saudi Arabia's future king has tightened his grip on power through an anti-corruption purge by arresting royals, ministers and investors including billionaire Alwaleed bin Talal who is one of the kingdom's most prominent businessmen. He was among 11 princes, four ministers and tens of former ministers detained, three senior officials told Reuters on Sunday. The purge against the kingdom's political and business elite also targeted the head of the National Guard, Prince Miteb bin Abdullah, who was detained and replaced as minister of the powerful National Guard by Prince Khaled bin Ayyaf. The allegations against Prince Alwaleed include money laundering, bribery and extorting officials, one official told Reuters, while Prince Miteb is accused of embezzlement, hiring ghost employees and awarding contracts to his own companies including a $10 billion deal for walkie talkies and bulletproof military gear worth billions of Saudi riyals.

Trump urges Saudi Aramco to list in New York. Financial Times.
US president Donald Trump has urged Saudi Arabia’s state energy giant to list on the New York Stock Exchange, just as questions mount about the status of the international component of what has been billed as the biggest initial public offering in history. Mr Trump tweeted on Saturday that he “would very much appreciate Saudi Arabia doing their IPO of Aramco with the New York Stock Exchange.” It is “important to the United States!” he added. “I know they’re looking at London, I know they’re looking at others, they’re probably looking at themselves, they have a much smaller stock market. So I would like them to consider the New York Stock Exchange or Nasdaq,” Mr Trump told reporters traveling with him to Japan on Air Force One on Sunday. "I just spoke to the King a little while ago, and they will consider it." The kingdom plans to float around 5 per cent of Saudi Aramco in a stock market flotation next year as part of an economic reform programme driven by Mohammed bin Salman, the kingdom’s powerful Crown Prince, who believes the company could be worth $2tn.