Energy Prospectus

Opening prices:
WTI is down 60c to $56.64/Bbl, and Brent is down 51c to $62.00/Bbl.
Natural gas is down 12.2c to $2.667/MMBtu.

The oil market outlook for next year may have upside potential, OPEC Secretary-General Mohammad Barkindo said last week, suggesting there is no need to cut output further. < My take is that OPEC is finally lowering their forecast of U.S. oil production growth. IEA and OPEC use the over-stated production forecasts put out by EIA.

The Organization of the Petroleum Exporting Countries and its allies led by Russia meet in early December. The so-called OPEC+ alliance has since January cut output by 1.2 million barrels per day under a deal set to last until March 2020. < They really don't need more cuts. They just need to get the countries that are producing above their quotas to get in line.

Daily oil prices are determined by rumors on the U.S. vs China trade war despite the fact that China's oil imports hit a record high in October.

Oil prices fell on Monday, amid renewed doubts over the prospect of tariff rollbacks in the protracted U.S.-China trade war, while concerns about oversupply also weighed on sentiment.

U.S. crude was down by 60 cents, or 1% at $56.61 a barrel by 08:32 AM ET (01:32 GMT), having risen 1.9% last week.

Global benchmark Brent crude was down 46 cents, or 0.7%, at $62.05 a barrel. The contract rose 1.3% last week.

Optimism over a possible trade deal has faded since U.S. President Donald Trump said on Friday that he has not agreed to rolling back the U.S. tariffs sought by China.

Trump said there had been incorrect reporting about U.S. willingness to lift tariffs as part of a "phase one" agreement, news of which had boosted markets.

Adding to uncertainty, Trump over the weekend said talks with China were moving along "very nicely", but the U.S. would only make a deal if it was the right deal for America.

The 16-month trade war between the world's two largest economies has acted as a drag on global growth and prompted analysts to lower forecasts for oil demand, raising concerns that a supply glut could develop in 2020.

Figures over the weekend showed that China's producer prices fell the most in more than three years in October, as the manufacturing sector weakened, underlining worries over the economic fallout from the conflict.

Last week's new that impacted oil prices.

On November 8 Reuters reported China's crude oil imports in October rose 11.5% from a year earlier to a record high, customs data showed on Friday, as new refineries bolstered demand and small independent plants maintained throughput amid steady refining margins. However, natural gas imports last month fell 10.6% from a year earlier, its first decline since November 2016, according to Reuters' records of customs data.

On November 8 Reuters reported Iranian forces shot down a drone belonging to a foreign country on Friday, state news agency IRNA reported, quoting an Iranian official. "The downed drone definitely belonged to a foreign country. Its wreckage has been recovered and is being investigated," the governor of Iran's southern Khuzestan province, Gholamreza Shariati, said, according to IRNA. Iranian media earlier reported that the army had shot down a drone over the Gulf port city of Mahshahr in Khuzestan province, without providing further details. The official and Iranian news outlets did not say whether it was a military or civilian drone, or from which country it came.

On November 7 the Houston Chronicle reported that, according to a new report from the IHS Markit research firm, U.S. shale oil growth is slowing quickly and will effectively plateau in 2021 after years of accelerated activity. Shale oil growth will fall from a record high of 2 million barrels per day added in 2018 down to less than 500,000 barrels of daily growth in 2020 and then level out in 2021, the report said. Some modest growth could continue after 2021, but only at more muted levels unless oil prices rise considerably.

On November 7 Reuters reported Brazil held a second underwhelming oil auction in as many days on Thursday, as major global oil firms passed again on offshore blocks billed as among the world's most promising. The only block awarded in Thursday's auction went to state-run Petroleo Brasileiro SA or Petrobras, and Chinese state firm CNODC, a unit of China National Petroleum Corp, who offered the minimum bid. Four other blocks received no bids. The flop, following a similar lack of foreign interest in an even bigger round on Wednesday, was a wake-up call to officials who expected this week to crown Brazil as uncontested champion of the Latin American oil industry.

On November 7 Reuters reported Iraqi security forces shot dead at least four protesters in central Baghdad on Thursday, police and medical sources said, as weeks of deadly unrest showed no signs of abating. Another 35 people were wounded in the clashes near Shuhada Bridge, they said, as mass demonstrations continued for a 13th straight day with thousands thronging central areas of the capital. In southern Iraq, dozens of anti-government protesters burned tires and blocked the entrance to the port of Umm Qasr, preventing lorries from transporting vital food imports, just hours after operations had resumed, port officials said.