From Bloomberg at 8AM ET on 2-20-2018 -- The latest discussions between OPEC and its oil-producer allies concluded that the supply glut is dissipating at a faster pace than previously anticipated, say people familiar with the matter.
After about four years of surplus, the global market will finally rebalance in the second or third quarter, earlier than previously estimated, said people familiar with the group’s deliberations. This conclusion follows multiple signals of tighter supply, including Brent crude briefly surging above $70 a barrel and oil stockpiles in developed nations falling by the most in six years.
“We have seen a remarkable year in 2017 -- the market of crude has been restored and went to healthy numbers,” United Arab Emirates Energy Minister Suhail Al Mazrouei said at the International Petroleum Week conference in London on Tuesday. “Ahead of us this year is the balance of supply and demand.”
The Organization of Petroleum Exporting Countries and allies including Russia are going even further than their pledged 1.8 million barrels a day of production cuts, giving “massive momentum” to the market, according to the cartel’s Secretary-General Mohammad Barkindo. By some estimates, bloated oil stockpiles have already shrunk back to average levels, but the group shows no signing of easing off as Saudi Arabia seeks higher prices to buttress the historic initial public offering of its state energy producer.
The Deepest Cut
The Joint Technical Committee, which includes officials from both OPEC nations and allies from outside the group, based its rebalancing scenario on the assumption that Libya and Nigeria keep output at January levels and other participants in the deal maintain compliance with cuts, the people said, asking not to be identified because the discussions were private.
The group of 24 nations implemented 133 percent of their pledged cuts in January, according to Barkindo.
Oil inventories in developed economies are about 74 million barrels above the five-year average, the JTC concluded. Stockpiles are already back in line with that average using a method that considers how quickly they’re likely to be consumed, known as forward demand cover, the people said.
While OPEC has maintained its five-year-average inventory target since the cuts began in January 2016, it’s now considering other measures that could change its view on whether the market is balanced. The group is also drafting a charter that would allow continued cooperation with other producers beyond the expiry of the cuts at the end of 2018, Mazrouei said.
Global Oil Market - Feb 20
Global Oil Market - Feb 20
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Global Oil Market - Feb 20
U.S. oil exports go up a gear as supertanker sets sail for China. Bloomberg.
The flood of U.S. oil exports stepped up a gear on Monday after the first fully laden supertanker sailed from an American port, alleviating a bottleneck that’s limited overseas shipments. The Louisiana Offshore Oil Port, or LOOP, the only deep water port in the U.S. able to handle the industry’s biggest tankers, said in a statement it had successfully completed the first loading of a very large crude carrier. Shipping data compiled by Bloomberg show the tanker is the Saudi Arabian-owned Shaden, now heading to the Chinese port of Rizhao. "There could not be a better time to offer this service as domestic production surpasses 10 million barrels per day in the ever-dynamic global crude oil market," said LOOP LLC President Tom Shaw.
The flood of U.S. oil exports stepped up a gear on Monday after the first fully laden supertanker sailed from an American port, alleviating a bottleneck that’s limited overseas shipments. The Louisiana Offshore Oil Port, or LOOP, the only deep water port in the U.S. able to handle the industry’s biggest tankers, said in a statement it had successfully completed the first loading of a very large crude carrier. Shipping data compiled by Bloomberg show the tanker is the Saudi Arabian-owned Shaden, now heading to the Chinese port of Rizhao. "There could not be a better time to offer this service as domestic production surpasses 10 million barrels per day in the ever-dynamic global crude oil market," said LOOP LLC President Tom Shaw.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Global Oil Market - Feb 20
From OilPrice.com: Tuesday February 20, 2018
WTI received a boost at the start of the week as Cushing inventories have dwindled amid greater pipeline connections and reduced flows from Canada. Exports are also up. Meanwhile, Brent dipped as European refiners enter maintenance season.
Hedge funds slash bullish bets. Hedge funds and other money managers reduced their bullish bets on crude oil in the second week of February, which coincided with a dip in oil prices. After building up a near record bullish position, investors “cut their combined net long position in the six most important petroleum futures and options contracts by the equivalent of 152 million barrels in the week to Feb. 13.,” according to Reuters. It was the largest reduction in nine months. With the retreat in prices and the liquidation of some of the long bets, there is now a more balanced positioning from hedge funds and other money managers, reducing the risk of a further price correction.
U.S. exports rise…so does WTI. WTI is receiving a boost relative to other benchmarks because of a spike in U.S. exports over the past year. New pipelines have better connected oil from Texas shale fields to the Gulf Coast, allowing more cargo to be shipped overseas. That, in turn, has helped drain stockpiles in Cushing, OK, helping to push up WTI. The American benchmark recently traded at a premium to the Dubai benchmark for the first time in over a year. Exports are likely to pick up after the start of operations at the LOOP export facility in Louisiana, which can handle very large crude carriers (VLCCs).
WTI received a boost at the start of the week as Cushing inventories have dwindled amid greater pipeline connections and reduced flows from Canada. Exports are also up. Meanwhile, Brent dipped as European refiners enter maintenance season.
Hedge funds slash bullish bets. Hedge funds and other money managers reduced their bullish bets on crude oil in the second week of February, which coincided with a dip in oil prices. After building up a near record bullish position, investors “cut their combined net long position in the six most important petroleum futures and options contracts by the equivalent of 152 million barrels in the week to Feb. 13.,” according to Reuters. It was the largest reduction in nine months. With the retreat in prices and the liquidation of some of the long bets, there is now a more balanced positioning from hedge funds and other money managers, reducing the risk of a further price correction.
U.S. exports rise…so does WTI. WTI is receiving a boost relative to other benchmarks because of a spike in U.S. exports over the past year. New pipelines have better connected oil from Texas shale fields to the Gulf Coast, allowing more cargo to be shipped overseas. That, in turn, has helped drain stockpiles in Cushing, OK, helping to push up WTI. The American benchmark recently traded at a premium to the Dubai benchmark for the first time in over a year. Exports are likely to pick up after the start of operations at the LOOP export facility in Louisiana, which can handle very large crude carriers (VLCCs).
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group