The extreme volatility that struck the oil markets in late August and early September have calmed a bit – but just a bit. Oil fell on September 11, following the latest data from the EIA and IEA (more on that below). WTI was down on the market opening, The EIA’s weekly data showed a surprise uptick in oil inventories, the second consecutive week of gains. Crude stocks jumped by 2.6 million barrels. After around three months of slow but steady drawdowns in inventories since the beginning of May, crude stocks have been largely unchanged (despite week-to-week movements) since the beginning…
We’ve long framed collapsing crude prices as a battle between the Saudis and the Fed. When Saudi Arabia killed the petrodollar late last year in a bid to bankrupt the US shale space and secure a bit of leverage over the Russians, the kingdom may or may not have fully understood the power of ZIRP and the implications that power had for struggling US producers. Thanks to the fact that ultra-accommodative Fed policy has left capital markets wide open, the US shale space has managed to stay in business far longer than would otherwise have been possible in the face…
The crude complex is charging lower into the weekend despite some bullish signals from the monthly IEA Oil Market Report (some might say today’s drop is in relation to a certain research piece, but we’ll side-step that).Yesterday we took a look at some of the key themes in the latest EIA Short Term Energy Outlook, one of which was its expectation that non-OPEC production would be flat next year, as falling US production offset growth from elsewhere (EIA projects that production will drop from averaging 9.2 million barrels per day this year to 8.8 mn bpd in 2016). Related: With China…
The Saudis are on track to sacrifice ~$100 billion in crude export revenues in 2015, or 45 percent of 2014’s ~$219 billion in crude export revenues, in pursuit of market share, the measure of success Saudi Oil Minister Ali bin Ibrahim Al-Naimi announced at the November 27, 2014 OPEC meeting. What do the Saudis plan as their encore in 2016? Will they continue pursuing market share over other goals (e.g., total revenue, economic diversification, OPEC conciliation), or will they alter course, and if so, is there a superior alternative? Publicly, Saudi officials appear unwavering in support of market share. The…
New EIA data once again points to a deeper contraction than previously expected. The revelation was initially revealed in late August, when the EIA reported that the United States produced much less oil than expected in the first half of 2015. On the whole, the country produced 40,000 to 100,000 fewer barrels than previously reported between January and May. The August report also showed that U.S. oil production peaked in April at 9.6 million barrels per day (mb/d), before falling to just 9.3 mb/d in June. The declines suggested that the contraction in the U.S. shale industry was deeper than…
By now, the whole world knows that Russia has been trying to pivot towards China in the wake of the U.S. and EU sanctions that specifically targeted the Russian oil and gas industry. On September 3, 2015, during a meeting of Russian President Putin and Chinese President Xi Jinping in Beijing, China’s CNPC and Russia’s Gazprom signed a Memorandum of Understanding for a third project that will be developed in the next five years. Although this seems to be a win- win situation for both nations, one has to consider the fact that there have been several delays in most…
A landmark energy bill in California was watered down after facing significant opposition from the oil and gas industry. The California legislature was considering a bill that would have slashed the state’s petroleum use by 50 percent by 2030, but the Democrats decided to drop the provision in order to keep the larger bill alive. After seeing the bill pass the State Senate earlier this year, the legislation ran up against a deadline this week for the end of session. However, with strong opposition from the oil and gas industry, the State Assembly could not gather enough votes. “We could…
Not only is today a glorious day for Arnold Palmer as he celebrates his 86th birthday, but it is also a red letter day for us here in Energyland™ – for September 10th marks the peak of the Atlantic hurricane season. As the ‘flame’ graphic illustrates below, we are pretty much assured of having a named storm in the Atlantic on this day based on history:Accordingly, Tropical Storm Henri has appeared in the Atlantic to ensure we have our named storm. (As an aside, there be treasure, me hearties, in Sierre Leone, with ‘X’ marking the spot): Related: More Iranian Oil…
A lot of people, including several OPEC members, thought the oil slump would be easing by now. Instead, as oil prices languish near multi-year lows and experience unprecedented volatility, it’s now unclear how long it will take oil prices to recover. Indeed, OPEC now appears poised to wait out the period of low prices even if that takes months or even a couple of years. The fact of the matter is that despite the calls of Venezuela and Algeria, Saudi Arabia and other major OPEC members don’t seem too concerned about the current low prices. Venezuela in particular has been calling…
This year has been particularly harsh for oil field services companies as they continue to battle the effects of low oil prices on their business. Most of the major oil field services companies including Schlumberger, Halliburton and Weatherford have already slashed more than 20,000 jobs during this year and the numbers are still growing. However, at a time when most companies are slashing their upstream budgets, India’s upstream companies are actually increasing their investments in a substantial manner. Oil and Natural Gas Corporation Limited, India’s state owned and largest upstream company, is set to invest close to $3.7 billion in…
