Global Oil Market - Sept 9
Posted: Mon Sep 09, 2019 7:17 am
News that impacts the global oil market from John White at Roth Capital
On September 8 Reuters reported Saudi Arabia's king appointed his son, Prince Abdulaziz bin Salman, as energy minister on Sunday, replacing Khalid al-Falih and for the first time handing the portfolio in the world's top oil exporter to a member of the royal family. Prince Abdulaziz, a longstanding member of the Saudi delegation to OPEC with decades of experience in the oil sector, is not expected to change the kingdom's oil and OPEC policies, Saudi officials and analysts say. He helped negotiate the current agreement between OPEC and non-OPEC countries, a group known as OPEC+, to cut global crude supply to support prices and balance the market. "Saudi oil policy will be enhanced by the appointment of Prince Abdulaziz, through strengthening cooperation among OPEC and with non-OPEC," a Saudi official told Reuters.
On September 6 Reuters reported China's central bank said on Friday it was cutting the amount of cash that banks must hold as reserves for the third time this year, releasing 900 billion yuan ($126.35 billion) in liquidity to shore up the flagging economy.
On September 5 Reuters reported weaker demand from abroad drove a bigger than expected drop in German industrial orders in July, suggesting that struggling manufacturers could tip Europe's biggest economy into a recession in the third quarter. Germany's export reliant economy is suffering from slower global growth and business uncertainty caused by U.S. President Donald Trump's “America First" trade policies and Britain's planned, but delayed, exit from the European Union. Contracts for "Made in Germany" goods fell 2.7% from the previous month in July, data showed on Thursday, driven by a big drop in bookings from non-euro zone countries, the economy ministry said. That undershot a Reuters consensus forecast for a 1.5% drop.
On September 5 Bloomberg reported Shale pioneer Mark Papa sees U.S. oil production growth well below current forecasts as companies spend less capital on drilling and exhaust prime shale areas. Output will grow by about 700,000 b/d next year, compared with a “consensus expectation” of 1.2 million b/d Papa said Wednesday at an industry conference. The EIA sees U.S. production 1 million b/d in 2020 at 13.3 million b/d. “We’re seeing a lot of difficulties in growing U.S. oil production,” Papa said. Lower oil prices and investor demands for financial discipline are causing companies to reduce drilling but the bigger issue, according to Papa, is that many are running out of sweet spots in the Permian and Eagle Ford areas, forcing them into less efficient zones. “You need to pay attention to this,” Papa said. “In a timeframe of six months to three years it’s going to have a profound effect on oil prices.”
On September 4 Reuters reported the U.S. blacklisted an "oil for terror" network of firms, ships and individuals allegedly directed by Iran's Islamic Revolutionary Guard Corps (IRGC) for supplying Syria with oil worth hundreds of millions of dollars in breach of U.S. sanctions. Washington also issued a new international shipping advisory about IRGC's use of "deceptive practices" to violate U.S. sanctions on Iranian oil sales and warned that those doing business with blacklisted entities "are now exposed to U.S. sanctions," said State Department official Brian Hook, who oversees Iran policy.
On September 8 Reuters reported Saudi Arabia's king appointed his son, Prince Abdulaziz bin Salman, as energy minister on Sunday, replacing Khalid al-Falih and for the first time handing the portfolio in the world's top oil exporter to a member of the royal family. Prince Abdulaziz, a longstanding member of the Saudi delegation to OPEC with decades of experience in the oil sector, is not expected to change the kingdom's oil and OPEC policies, Saudi officials and analysts say. He helped negotiate the current agreement between OPEC and non-OPEC countries, a group known as OPEC+, to cut global crude supply to support prices and balance the market. "Saudi oil policy will be enhanced by the appointment of Prince Abdulaziz, through strengthening cooperation among OPEC and with non-OPEC," a Saudi official told Reuters.
On September 6 Reuters reported China's central bank said on Friday it was cutting the amount of cash that banks must hold as reserves for the third time this year, releasing 900 billion yuan ($126.35 billion) in liquidity to shore up the flagging economy.
On September 5 Reuters reported weaker demand from abroad drove a bigger than expected drop in German industrial orders in July, suggesting that struggling manufacturers could tip Europe's biggest economy into a recession in the third quarter. Germany's export reliant economy is suffering from slower global growth and business uncertainty caused by U.S. President Donald Trump's “America First" trade policies and Britain's planned, but delayed, exit from the European Union. Contracts for "Made in Germany" goods fell 2.7% from the previous month in July, data showed on Thursday, driven by a big drop in bookings from non-euro zone countries, the economy ministry said. That undershot a Reuters consensus forecast for a 1.5% drop.
On September 5 Bloomberg reported Shale pioneer Mark Papa sees U.S. oil production growth well below current forecasts as companies spend less capital on drilling and exhaust prime shale areas. Output will grow by about 700,000 b/d next year, compared with a “consensus expectation” of 1.2 million b/d Papa said Wednesday at an industry conference. The EIA sees U.S. production 1 million b/d in 2020 at 13.3 million b/d. “We’re seeing a lot of difficulties in growing U.S. oil production,” Papa said. Lower oil prices and investor demands for financial discipline are causing companies to reduce drilling but the bigger issue, according to Papa, is that many are running out of sweet spots in the Permian and Eagle Ford areas, forcing them into less efficient zones. “You need to pay attention to this,” Papa said. “In a timeframe of six months to three years it’s going to have a profound effect on oil prices.”
On September 4 Reuters reported the U.S. blacklisted an "oil for terror" network of firms, ships and individuals allegedly directed by Iran's Islamic Revolutionary Guard Corps (IRGC) for supplying Syria with oil worth hundreds of millions of dollars in breach of U.S. sanctions. Washington also issued a new international shipping advisory about IRGC's use of "deceptive practices" to violate U.S. sanctions on Iranian oil sales and warned that those doing business with blacklisted entities "are now exposed to U.S. sanctions," said State Department official Brian Hook, who oversees Iran policy.