• 4 minutes Oil Price Editorial: Beware Of Saudi Oil Tanker Sabotage Stories
  • 6 minutes UAE says four vessels subjected to 'sabotage' near Fujairah port
  • 13 minutes Mueller Report Brings Into Focus Obama's Attempted Coup Against Trump
  • 15 minutes Magic of Shale: EXPORTS!! Crude Exporters Navigate Gulf Coast Terminal Constraints
  • 6 mins Wonders of Shale- Gas,bringing investments and jobs to the US
  • 5 mins Trump bogged down in Mideast quagmire. US spent $Trillions, lost Thousands of lives, and lost goodwill. FOR WHAT? US interests ? WHAT INTEREST ? To get Jared (Frisch School 2.8 GPA) a Mideast win with peace deal ? China greatest threat next 50 years.
  • 6 hours Rural and Conservative: Polish Towns Go 'LGBT free' Ahead Of Bitter European Election Campaign
  • 4 hours IMO2020 To scrub or not to scrub
  • 5 hours Compensation For A Trade War: Argentina’s Financial Crisis Creates An Opportunity For China
  • 1 min Why is Strait of Hormuz the World's Most Important Oil Artery
  • 1 min Knock-Knock: Aircraft Carrier Seen As Barometer Of Tensions With Iran
  • 3 hours California's Oil Industry Collapses Despite Shale Boom
  • 5 hours China Downplays Chances For Trade Talks While U.S. Plays ‘Little Tricks’
  • 7 hours Greenpeace Blocks BP HQ
  • 5 hours Shale to be profitable in 2019!!!
  • 35 mins Misunderstanding between USA and Iran the cause of current stand off, I call BS
  • 2 hours Global Warming Making The Rich Richer
Alt Text

OPEC+ Top Priority: Don’t Crash Oil Prices

OPEC+ is reportedly considering increasing…

Alt Text

The 2 Energy Giants Reshaping The Middle East

Typical crude oil producers such…

Evan Kelly

Evan Kelly

More Info

Trending Discussions

OPEC Circus Sees Oil Volatility Spike

Oil prices fell steeply on Tuesday afternoon on contradiciting news from the OPEC meeting in Algiers.

(Click to enlarge)

(Click to enlarge)

Chart of the Week

(Click to enlarge)

• So much attention is paid to shale basins such as the Bakken or Permian, but the lesser-known Utica Basin has seen production grow steadily over the past several years.

• The Utica is mainly a source of natural gas production, with more lucrative spots producing natural gas liquids. Monthly production has increased from 0.1 billion cubic feet per day (Bcf/d) in December 2012 to more than 3.5 Bcf/d in June 2016.

• The Utica only produces about 76,000 barrels of oil, however. Natural gas production has leveled off as well.

Market Movers

• The Brazilian state-owned Petrobras could spend $6 billion on new oil platforms, and could solicit offers beginning next year. The company announced a five-year spending plant last week, lowering spending by 25 percent to $74 billion for 2017-2021.

Noble Energy (NYSE: NBL) says it has secured a deal with Jordan’s state-owned electric utility to export natural gas from the giant Leviathan gas field in the Mediterranean. The agreement could see Israel export 300 mcf/d of gas over 15 years to Jordan.

TransCanada (NYSE: TRP) announced its intention to purchase Columbia Pipeline Partners (NYSE: CPPL), a deal worth roughly $848 million. The acquisition will give TransCanada stakes in three regulated natural gas pipelines in the U.S., plus an array of processing assets.

Tuesday September 27, 2016

All eyes are on Algeria this week where the International Energy Forum is being held. But instead of the conference itself, the global oil markets are anxiously awaiting the developments of an informal meeting to be held on the sidelines of the Forum between OPEC and non-OPEC officials. At the time of this writing, no deal had been announced, although there are some unconfirmed reports that Iran and Saudi Arabia are considering some sort of limit on production. The proposal would call for Saudi Arabia cutting output by several hundred thousand barrels per day if Iran froze production at 3.7 million barrels per day. Oil prices surged on Monday on hopes of a deal, jumping more than 2 percent. However, in early trading on Tuesday, WTI and Brent were back down by more than 2 percent as expectations of an agreement began to fade. The result may not be known until Wednesday, but comments from Iran’s oil minister, saying that the talks were simply “consultative,” seemed to dash hopes of any specific agreement. For now, it appears that if anything is agreed to, it would only be the outlines of a deal, which would make the official Nov. 30 summit in Vienna much more important for finalizing the specifics.

Saudi Arabia appears more desperate than Iran. For years, Iran wanted higher oil prices while Saudi Arabia was satisfied letting other producers sweat. But after two years of low oil prices, Saudi Arabia is under serious fiscal pressure, an unfamiliar predicament in Riyadh. Saudi Arabia just announced that it would cut its ministers’ salaries by 20 percent and slash benefits for government employees as the country pursues deeper belt tightening. Meanwhile, Iran is seeing a resurgence in its economy after the lifting of international sanctions and the return of supply. Saudi Arabia has a massive budget hole equivalent to 13.5 percent of GDP, while Iran’s deficit will only reach 2.5 percent of GDP. In other words, Saudi Arabia seems to be more desperate than Iran for higher oil prices.

IEA reiterates bearish forecast. On the sidelines of the energy conference in Algiers, IEA’s executive director Fatih Birol said that the global surplus in crude oil will persist until late 2017. Unless there is “major intervention,” Birol said, referring to OPEC production cuts, "We don’t see the oil market re-balancing until late 2017.” He sounded especially bearish on the demand side of the equation, “demand is weak, weaker than many of us thought…about 0.8 million barrels per day…less than 1 million barrels per day.” He went on to add that “supply is coming strongly, especially from Middle East countries. And the stocks are huge. As a result of that, we have lower oil prices with huge implications for the next few years.” Related: Is The Next Shale Boom About To Unfold In Mexico?

China SPR a “wildcard.” S&P Global says that the oil markets are facing a “wildcard” with the potential slowdown of China’s oil imports as the country’s strategic petroleum reserve system is filling up. OPEC could act to boost prices by limiting output, but China could respond to the higher prices by cutting imports, leaving the oil market no better off. Even if OPEC does nothing to restrain oil exports, China may soon ratchet down imports because it no longer needs to fill its SPR, at least with the same urgency as the past two years. This presents a downside risk to the oil markets.

Goldman Sachs lowers oil price forecast. Citing a larger supply surplus than previously expected, Goldman Sachs lowered its fourth quarter oil price forecast from $50 to $43 per barrel.

Russia ramps up unconventional drilling. Reuters reports that Russia’s Rosneft and Gazprom Neft are ratcheting up their efforts to increase oil and gas production from unconventional sources. By 2020, Russia hopes to source 11 percent of its output from unconventional sources, up from 7 percent in 2016. The potential is enormous – government officials estimate Russia has 88 billion barrels of unconventional oil reserves, or about two-thirds of its total reserves. With much of Russia’s current output coming from large but aging oilfields, there is increasing pressure to expand into shale and other hard-to-reach oil reserves. The U.S. and its western allies slapped sanctions on Russia back in 2014, focusing on blocking the spread of shale drilling technology. But Russia is moving forward anyway, or at least trying to.

Niger Delta Avengers strike again. The fragile and short-lived ceasefire between the Niger Delta Avengers and the Nigerian government seemed to come to an end this weekend. The Avengers announced on their website that they struck the Bonny crude export line on September 23. The militant group said that the “so-called dialogue and negotiation process on the side of President Muhammadu Buhari and his government” has been an “over dramatization.” The Avengers still favor negotiation, but said there has been “no progress and no breakthrough.” Nigerian government officials recently said that they brought back several hundred thousand barrels per day of lost output to the market, with plans to ramp up production with repaired infrastructure. A renewed bout of violence threatens that objective.

Venezuela sweetens pot on debt swap proposal. Venezuela’s PDVSA is hoping to push off debt payments that soon fall due, but after the state-owned oil company approached creditors with a proposal to spread out $7 billion worth of near-term payments for payments over the course of several years, investors balked. PDVSA increased its offer for payments made on bonds due in 2020 in exchange for payments maturing in 2017. Wall Street analysts, according to Reuters, say the new offer could earn a better reception from investors. If PDVSA succeeds in bringing investors on board, it could help prevent a default.

Rice Energy to purchase Vantage for $2.7 billion. Rice Energy (NYSE: RICE) announced its decision to purchase the private company Vantage for $2.7 billion, making Rice one of the largest shale gas drillers in the Marcellus in Pennsylvania and Ohio.

By Evan Kelly of Oilprice.com

More Top Reads From Oilprice.com:

Download The Free Oilprice App Today

Back to homepage

Trending Discussions

Leave a comment

Leave a comment

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