OPEC and September U.S. Oil Production

[dan_s]

Susan and I are on a ship sailing back to Galveston. I will back at my desk on Monday morning.
Checking the news I see that OPEC and Russia did expend their production agreements. That should stabilize the global oil markets.
September oil production data makes no sense since we know that Hurricane Harvey caused lots of shut-ins that month.
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OPEC followed through on its promise, extending the production cuts through the end of 2018, bringing relief to an oil market that had grown jittery in recent days. Oil prices traded in a relatively narrow range after the meeting and appeared muted. But once concerns over a selloff calmed, oil prices rallied once again on Friday morning.

OPEC deal extended through 2018. The deal will run from January through to December, and the exact volumes of the production cuts will be the same as this year. The OPEC/non-OPEC coalition said that they would monitor market conditions and would remain “agile,” ready to respond if the fundamentals deviate significantly from expectations. They will revisit the agreement at the next official meeting in June 2018, but they assume the cuts will last through the end of the year. Russian officials pressed for details on an exit strategy heading into the meeting, but the group offered no information – Saudi oil minister Khalid al-Falih said it would be “premature” to do so. One notable change is that Libya and Nigeria agreed to cap their production levels at their 2017 average, which doesn’t necessarily curtail supply but will prevent any “surprise,” as witnessed this year. The Russian and Saudi oil ministers played up their unity and boasted about their strong relationship. All smiles from Vienna.

Goldman: Oil market volatility doesn’t make sense. Long-dated oil futures are more volatile than is justified, according to a research note from Goldman Sachs. The investment bank said that assurances from OPEC that the group will respond to market conditions should assuage concerns in the market about an unexpected rush of supply or, conversely, excessive tightening. The responsiveness of OPEC “leads us to reiterate our view that long-dated implied volatility remains too rich,” Goldman analysts wrote in the note published on Thursday.

EIA: U.S. oil production surged in September. While OPEC was meeting behind closed doors, the EIA published data for September, showing a dramatic jump in output. The U.S. produced 9.48 million barrels per day in September, an increase of 290,000 bpd from a month earlier. Aside from the size of the increase, the data was significant because it seemed to put to rest the notion that the agency was overestimating supply. For several months, the weekly data diverged from the monthly data, raising questions about how accurate the EIA’s estimates were. Yesterday’s data suggests that U.S. shale production is indeed growing robustly. < Is it possible that EIA is "adjusting" the monthly data to agree with their weekly estimates? Hard to trust anything out of Washington theses days.