• 9 hours U.S. Oil Production To Increase in November As Rig Count Falls
  • 11 hours Gazprom Neft Unhappy With OPEC-Russia Production Cut Deal
  • 13 hours Disputed Venezuelan Vote Could Lead To More Sanctions, Clashes
  • 14 hours EU Urges U.S. Congress To Protect Iran Nuclear Deal
  • 16 hours Oil Rig Explosion In Louisiana Leaves 7 Injured, 1 Still Missing
  • 17 hours Aramco Says No Plans To Shelve IPO
  • 3 days Trump Passes Iran Nuclear Deal Back to Congress
  • 3 days Texas Shutters More Coal-Fired Plants
  • 4 days Oil Trading Firm Expects Unprecedented U.S. Crude Exports
  • 4 days UK’s FCA Met With Aramco Prior To Proposing Listing Rule Change
  • 4 days Chevron Quits Australian Deepwater Oil Exploration
  • 4 days Europe Braces For End Of Iran Nuclear Deal
  • 4 days Renewable Energy Startup Powering Native American Protest Camp
  • 4 days Husky Energy Set To Restart Pipeline
  • 4 days Russia, Morocco Sign String Of Energy And Military Deals
  • 4 days Norway Looks To Cut Some Of Its Generous Tax Breaks For EVs
  • 5 days China Set To Continue Crude Oil Buying Spree, IEA Says
  • 5 days India Needs Help To Boost Oil Production
  • 5 days Shell Buys One Of Europe’s Largest EV Charging Networks
  • 5 days Oil Throwback: BP Is Bringing Back The Amoco Brand
  • 5 days Libyan Oil Output Covers 25% Of 2017 Budget Needs
  • 5 days District Judge Rules Dakota Access Can Continue Operating
  • 5 days Surprise Oil Inventory Build Shocks Markets
  • 6 days France’s Biggest Listed Bank To Stop Funding Shale, Oil Sands Projects
  • 6 days Syria’s Kurds Aim To Control Oil-Rich Areas
  • 6 days Chinese Teapots Create $5B JV To Compete With State Firms
  • 6 days Oil M&A Deals Set To Rise
  • 6 days South Sudan Tightens Oil Industry Security
  • 6 days Over 1 Million Bpd Remain Offline In Gulf Of Mexico
  • 6 days Turkmenistan To Spend $93-Billion On Oil And Gas Sector
  • 6 days Indian Hydrocarbon Projects Get $300 Billion Boost Over 10 Years
  • 7 days Record U.S. Crude Exports Squeeze North Sea Oil
  • 7 days Iraq Aims To Reopen Kirkuk-Turkey Oil Pipeline Bypassing Kurdistan
  • 7 days Supply Crunch To Lead To Oil Price Spike By 2020s, Expert Says
  • 7 days Saudi Arabia Ups November Oil Exports To 7-Million Bpd
  • 7 days Niger Delta State Looks To Break Free From Oil
  • 7 days Brazilian Conglomerate To Expand Into Renewables
  • 7 days Kurdish Independence Could Spark Civil War
  • 7 days Chevron, Total Waiting In The Wings As Shell Mulls Majnoon Exit
  • 7 days The Capital Of Coal Is Looking For Other Options
Alt Text

Record U.S. Oil Exports Weigh On Oil Prices

West Texas Intermediate briefly slumped…

Alt Text

China Takes Aim At The Petrodollar

In a potentially disrupting move…

Matt Smith

Matt Smith

Taking a voyage across the world of energy with ClipperData’s Director of Commodity Research. Follow on Twitter @ClipperData, @mattvsmith01

More Info

Oil Prices Edge Lower As Output Freeze Hopes Fizzle Again

OPEC oil

After yesterday's accord between Saudi Arabia and Russia ignited an effervescent oil rally, we have now seen these hopes fizzle out once more. As the 'task force' agreement references no crimping of production levels, prices are now heading lower from Friday's close. Hark, here are five things to consider in energy markets today:

1) While we are seemingly on a perpetual treadmill of production freeze talk, it is refreshing to hear that new OPEC member Indonesia is comfortable with crude prices between $40 - $50. Its economy remains in fairly rude health, with the IMF projecting its economy will grow at just shy of 5 percent this year, and just above that next year.

It is the only cartel member in Asia-Pacific, exporting $6.4 billion of petroleum last year, and is the largest economy in South East Asia. The leading recipients of its oil this year are China, Japan, U.S., Australia and Thailand:

(Click to enlarge)

2) Last week we discussed how oil imports into northern China have been slowing due to lesser demand from China's independent refiners, or 'teapots'. The chart below helps to illustrate this point: the run rates for these teapots have been dropping in recent months, and are now running at their slowest pace in more than seven months.

While part of this slowing is due to congestion and a lack of storage capacity, lower profits and higher fuel-quality standards may also crimp activity going forward. An immediate threat comes in the form of a tax crackdown, as authorities look to crack down on teapot refiners evading taxes or falsifying documents. As regulations are set to increase, processing is expected to slow further.

(Click to enlarge)

3) The oil market is perpetually fascinating, given there are so many different ways it can be interpreted. This is illustrated brilliantly today through these two contrasting headlines: 'no sign oil market is rebalancing' and 'oil market is already rebalanced'. We believe it is neither...it is somewhere in between.

4) Coal is seeing both a resurgence in trading volume and price across the globe, giving us tentative signs of rising commodity demand going forward. While trading volumes have surged in Europe, up nearly 50 percent in the first half of the year to 3.5 billion tonnes, the price of Australia's coking coal has rallied more than 45 percent in the last three weeks, boosted by rising Chinese demand.

A drop in domestic Chinese coal production has also ignited the recent rally; a limit on the number of days that miners can work, in combination with heavy rains and flooding, has helped crimp output. According to customs data, Chinese coal imports are up 12 percent through the first seven months of the year. As the chart below illustrates, Chinese crude-steel output has consistently been above year-ago levels in 2016. It is estimated that 770 kilograms of coal is needed to producer one ton of steel.

(Click to enlarge)

5) Finally, I made a last-minute Labor Day appearance on CNBC Asia yesterday evening to react to the latest developments betwixt Saudi and Russia. You can catch a snippet of part of the interview here.

By Matt Smith

More Top Reads From Oilprice.com:




Back to homepage


Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News