Oil Prices - March 7
Posted: Mon Mar 07, 2016 4:36 pm
In addition to good news from Gary Ross at PIRA, the head of IEA was interviewed by Bloomberg last week and he said that Iran will have great difficulty returning their production to pre-sanction levels. IEA, in their February 9th Oil Market Report, forecast that Iranian production would only increase production by 300,000 barrel per day this year. That is a drop in the bucket for a world that will soon be consuming over 96,000,000 barrels per day of refined hydrocarbon based liquid fuels. - Dan
From Roth Capital's John White:
Strength in crude oil prices led to a fierce rally in E&P equities, with the XOP up 17% for the week ending 3/4/2016. Crude oil moved sharply higher, driven, in our view, by a combination of a change to positive sentiment by investors and crude oil production outages.
The change in sentiment was reflected in the report that investors now hold more crude oil futures and options contracts on rising prices than at any time since the InterContinental Exchange's records began in 2011, as Reuters reported.
In our opinion, sentiment will be further strengthened by a report this morning that Gary Ross, the founder, executive chairman and chief oil soothsayer at New York-based consultancy PIRA, told clients that he reckoned the "lows are in" for crude. In an interview with Reuters, Mr. Ross, one of the industry's most respected forecasters for his bold price predictions and decades-long history of consulting with OPEC members, said, "They [OPEC] want $50 oil, this is going to become the new anchor for global oil prices. While it may not be an official target price, you’ll hear them saying it. They’re trying to give the market an anchor."
On the geopolitical front, on March 4 Reuters reported a sophisticated attack on a sub-sea pipeline in Nigeria's Delta might herald a return to the kind of widespread militant violence that crippled the oil industry in Africa's top producer less than a decade ago. Reuters reported that attacks on oil facilities have been on the rise in the swamps since President Muhammadu Buhari vowed to shake up a fraud-ridden amnesty program for rebels who stopped blowing up pipelines in 2009 in exchange for cash and generous contracts. This attack hit a Royal Dutch Shell (RDS-NC) underwater pipeline, forcing the company to shut down its 250,000 b/d Forcados export terminal for several weeks.
Also reported by Reuters, on March 7 oil exports from northern Iraq fell by almost half, from an approximate 600,000 b/d to an average of 350,067 b/d in February due to an outage of the pipeline to Turkey. The pipeline, which carries crude from fields in the Kurdish region and Kirkuk to the Mediterranean port of Ceyhan has been idle since Feb. 17 as a result of "circumstances" inside Turkey. Turkey's energy ministry said on Feb. 27 it had begun work to repair the pipeline, and an industry source based in the Kurdistan region told Reuters on Sunday the work would be completed "in a day or two."
From Roth Capital's John White:
Strength in crude oil prices led to a fierce rally in E&P equities, with the XOP up 17% for the week ending 3/4/2016. Crude oil moved sharply higher, driven, in our view, by a combination of a change to positive sentiment by investors and crude oil production outages.
The change in sentiment was reflected in the report that investors now hold more crude oil futures and options contracts on rising prices than at any time since the InterContinental Exchange's records began in 2011, as Reuters reported.
In our opinion, sentiment will be further strengthened by a report this morning that Gary Ross, the founder, executive chairman and chief oil soothsayer at New York-based consultancy PIRA, told clients that he reckoned the "lows are in" for crude. In an interview with Reuters, Mr. Ross, one of the industry's most respected forecasters for his bold price predictions and decades-long history of consulting with OPEC members, said, "They [OPEC] want $50 oil, this is going to become the new anchor for global oil prices. While it may not be an official target price, you’ll hear them saying it. They’re trying to give the market an anchor."
On the geopolitical front, on March 4 Reuters reported a sophisticated attack on a sub-sea pipeline in Nigeria's Delta might herald a return to the kind of widespread militant violence that crippled the oil industry in Africa's top producer less than a decade ago. Reuters reported that attacks on oil facilities have been on the rise in the swamps since President Muhammadu Buhari vowed to shake up a fraud-ridden amnesty program for rebels who stopped blowing up pipelines in 2009 in exchange for cash and generous contracts. This attack hit a Royal Dutch Shell (RDS-NC) underwater pipeline, forcing the company to shut down its 250,000 b/d Forcados export terminal for several weeks.
Also reported by Reuters, on March 7 oil exports from northern Iraq fell by almost half, from an approximate 600,000 b/d to an average of 350,067 b/d in February due to an outage of the pipeline to Turkey. The pipeline, which carries crude from fields in the Kurdish region and Kirkuk to the Mediterranean port of Ceyhan has been idle since Feb. 17 as a result of "circumstances" inside Turkey. Turkey's energy ministry said on Feb. 27 it had begun work to repair the pipeline, and an industry source based in the Kurdistan region told Reuters on Sunday the work would be completed "in a day or two."