• 3 hours Norway Grants Record 75 New Offshore Exploration Leases
  • 7 hours China’s Growing Appetite For Renewables
  • 10 hours Chevron To Resume Drilling In Kurdistan
  • 13 hours India Boosts Oil, Gas Resource Estimate Ahead Of Bidding Round
  • 14 hours India’s Reliance Boosts Export Refinery Capacity By 30%
  • 16 hours Nigeria Among Worst Performers In Electricity Supply
  • 22 hours ELN Attacks Another Colombian Pipeline As Ceasefire Ceases
  • 1 day Shell Buys 43.8% Stake In Silicon Ranch Solar
  • 1 day Saudis To Award Nuclear Power Contracts In December
  • 1 day Shell Approves Its First North Sea Oil Project In Six Years
  • 1 day China Unlikely To Maintain Record Oil Product Exports
  • 2 days Australia Solar Power Additions Hit Record In 2017
  • 2 days Morocco Prepares $4.6B Gas Project Tender
  • 2 days Iranian Oil Tanker Sinks After Second Explosion
  • 4 days Russia To Discuss Possible Exit From OPEC Deal
  • 4 days Iranian Oil Tanker Drifts Into Japanese Waters As Fires Rage On
  • 4 days Kenya Cuts Share Of Oil Revenues To Local Communities
  • 4 days IEA: $65-70 Oil Could Cause Surge In U.S. Shale Production
  • 5 days Russia’s Lukoil May Sell 20% In Oil Trader Litasco
  • 5 days Falling Chinese Oil Imports Weigh On Prices
  • 5 days Shell Considers Buying Dutch Green Energy Supplier
  • 5 days Wind And Solar Prices Continue To Fall
  • 5 days Residents Flee After Nigeria Gas Company Pipeline Explodes
  • 5 days Venezuela To Pre-Mine Petro For Release In 6-Weeks
  • 5 days Trump Says U.S. “Could Conceivably” Rejoin Paris Climate Accord
  • 6 days Saudis Shortlist New York, London, Hong Kong For Aramco IPO
  • 6 days Rigid EU Rules Makes ICE Move 245 Oil Futures Contracts To U.S.
  • 6 days Norway Reports Record Gas Sales To Europe In 2017
  • 6 days Trump’s Plan Makes 65 Billion BOE Available For Drilling
  • 6 days PetroChina’s Biggest Refinery Doubles Russian Pipeline Oil Intake
  • 6 days NYC Sues Five Oil Majors For Contributing To Climate Change
  • 6 days Saudi Aramco Looks To Secure $6B In Cheap Loans Before IPO
  • 7 days Shell Sells Stake In Iraqi Oil Field To Japan’s Itochu
  • 7 days Iranian Oil Tanker Explodes, Could Continue To Burn For A Month
  • 7 days Florida Gets An Oil Drilling Pass
  • 7 days Oil Prices Rise After API Reports Staggering Crude Oil Draw
  • 7 days Tesla Begins Mass Production Of Solar Shingles
  • 7 days EIA Boosts World Oil Demand Forecast For 2018 By 100,000 Bpd
  • 7 days Businessman Seeks Sale Of $5.2B Stake In Kazakhstan Oil Field
  • 7 days Exxon Accuses California Of Climate Change Hypocrisy
Alt Text

Should Big Oil Pay For Climate Change?

New York City has become…

Alt Text

Is The Rig Count Still Relevant?

As the U.S. shale patch…

Tom Kool

Tom Kool

Tom majored in International Business at Amsterdam’s Higher School of Economics, he is now working as news editor for Oilprice.com.

More Info

Are Oil Markets Immune To U.S. Shale?

Oil

Oil prices pulled back slightly following the release of the Baker Hughes rig count report, but geopolitical risk still remains, and with the assumption that OPEC will extend its production cut deal, oil bulls are very much alive and well.

(Click to enlarge)

(Click to enlarge)

(Click to enlarge)

(Click to enlarge)

(Click to enlarge)

(Click to enlarge)

(Click to enlarge)

Friday, November 10, 2017

Oil prices showed some weakness mid-week on news that U.S. oil production jumped, but benchmark prices firmed up on Thursday, putting WTI and Brent on track for their fifth consecutive weekly advance. Oil prices are closing in on the longest streak of weekly gains in more than a year.

OPEC revises up expectations of U.S. shale supply. OPEC released its annual World Oil Outlook this week, in which the group dramatically upgraded its expectations for U.S. shale. OPEC sees U.S. shale output ballooning from 5.1 million barrels per day (mb/d) this year to 7.5 mb/d by 2021. That is an upward revision of more than 50 percent – last year OPEC predicted U.S. shale output would erode under the weight of low oil prices, dipping to just 4.8 mb/d by 2021. In other words, OPEC has essentially acknowledged that it won’t be able to kill off U.S. shale by flooding the market.

OPEC shrugs off peak oil demand. In OPEC’s World Oil Outlook, it estimated that oil demand will rise by more than 15 mb/d through 2040, dismissing the growing number of predictions regarding peak demand in the next decade or two.

Saudi Arabia adds bullishness to market. The political upheaval in Riyadh has given a jolt to oil prices this week, with crown prince Mohammed bin Salman purging his rivals and consolidating power. Oil analysts see this as increasing the odds of an extension of OPEC’s production cuts. “While the likelihood of a disruption to supply remains low, we believe the events raise the probability of Saudi Arabia taking a more aggressive stance on production curbs. The risks now lie towards curbs remaining in place longer than expected,” Daniel Hynes, an analyst at Australia & New Zealand Banking Group, told Bloomberg. Saudi Arabia also said that it would slash oil exports from November to December by 120,000 bpd. Related: Kingdom Of Fear: Saudi Arabia On Lockdown

China agrees to invest $83 billion in West Virginia shale gas. As part of U.S. President Trump’s visit to China, he secured a commitment from China Energy Investment Corp. to invest an estimated $83.7 billion in shale gas development and chemical manufacturing projects in West Virginia, an amount that would be spread out over two decades. The deal is a non-binding memorandum of understanding, but it details investments in power generation, chemical manufacturing and underground storage of natural gas liquids.

Satellite data offers clues into oil market. The FT reported two different stories that offer a window into the health of the oil market. First, satellite data suggests that one of the largest oil tankers in the world, an ultra-large crude carrier (ULCC), has unloaded its cargo after storing oil for more than two years. The rare tanker has been closely watched for a while. Since 2015 the ULCC had been parked off the coast of Oman by Vitol, the private oil trader, a move intended to capitalize on the market downturn by storing cheap oil to be sold at a later date. Satellite data indicates that Vitol finally began selling off its cargo in recent weeks, an indication that the largest oil traders believe that the market is tightening. A second FT story tells a different narrative. Satellite imagery suggests that Saudi Arabia is holding more oil in storage than everyone thinks. Saudi officials say that the Kingdom has seen its oil stocks fall by 70 million barrels since the beginning of 2016, but satellite data suggests inventories have actually climbed a bit over that timeframe.

Did Venezuela default on its debt? There is confusion over whether or not Venezuela has already defaulted on its debt. The WSJ reports that holders of Venezuelan-bond default insurance are trying to collect, arguing that Venezuela has, in fact, missed credit payments that do not have a grace period. Venezuelan President Nicolas Maduro promised to meet a $1.1 billion payment for PDVSA due on November 2, but there are disputes over whether or not that payment was actually made. In total, Venezuela has about $142 billion in outstanding debt, but well under $10 billion in cash reserves.

Pemex onshore discovery could spark more interest. Pemex said last week that it found its largest onshore oil deposit in at least 15 years, a field that could hold as much as 1.5 billion barrels of oil. Even better, the oil is light crude and of high quality. The company says production could begin as soon as 2019. Mexico hopes the success will spark even more interest from international oil companies.

Chevron moving forward with its first Canadian shale investment. Chevron (NYSE: CVX) gave the go ahead to an investment in Canada’s Duvernay shale, an emerging shale play in central Alberta. The move comes after three years of appraising the Kaybob area of the Duvernay, and marks a major step forward for the shale region’s prospects. Chevron declined to reveal how much it will spend or how much it expects to produce. Related: Russia Unfazed by U.S. Oil Sanctions

2020 marine emissions rules will upend global refining industry. The WSJ reports that maritime emissions rules that take effect in 2020 will have serious ramifications for refiners, benefitting those that produce low-sulfur fuels while seriously impacting refiners of lesser quality. The International Maritime Organization’s regulations call for a reduction in sulfur content in marine fuels by 85 percent by 2020. The shipping industry consumes about 4 mb/d of bunker fuel, or dirtier high-sulfur residual fuel. The 2020 rules could cut demand in half. Some of the oil majors, such as ExxonMobil (NYSE: XOM), Chevron (NYSE: CVX), Marathon Petroleum (NYSE: MPC) and Total (NYSE: TOT), have made significant investments to update refineries, and they will fare well under the new rules. Smaller refiners will be hit hard.

Alaska signs gas pipeline deal with China. Alaska inked a deal with China’s Sinopec to explore a major natural gas pipeline project that would traverse the entire state, bringing natural gas from the North Slope to Alaska’s southern coast for export. The agreement is non-binding, but Alaska’s governor hopes to sign a more formal agreement by the end of next year.

Total SA spends $2 billion to take over LNG unit. Total SA (NYSE: TOT) agreed to purchase the LNG unit of French utility Engie SA (EPA: ENGI) for $2 billion, a large bet on the long-term prospects of natural gas. The acquisition would make Total the second largest LNG exporter among western firms, behind only Royal Dutch Shell (NYSE: RDS.A). The move is the latest in Total’s effort to diversify away from crude oil – Total has made several gas deals and has stepped up spending on gas exploration, while also increasing investment in renewable energy. 

By Tom Kool for Oilprice.com

More Top Reads From Oilprice.com:




Back to homepage


Leave a comment
  • Brandon on November 11 2017 said:
    US shale is part of oil markets so oil markets are immune to US shale as much as US shale is immune to itself. US oil producers should have learnt their lesson well, if they keep on increasing production their margins will get thinner. Not to forget shale has negative marginal productivity and it's one of the most expensive and environmental-unfriendly ways to extract oil.

Leave a comment




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