• 1 day Shell Oil Trading Head Steps Down After 29 Years
  • 2 days Higher Oil Prices Reduce North American Oil Bankruptcies
  • 2 days Statoil To Boost Exploration Drilling Offshore Norway In 2018
  • 2 days $1.6 Billion Canadian-US Hydropower Project Approved
  • 2 days Venezuela Officially In Default
  • 2 days Iran Prepares To Export LNG To Boost Trade Relations
  • 2 days Keystone Pipeline Leaks 5,000 Barrels Into Farmland
  • 2 days Saudi Oil Minister: Markets Will Not Rebalance By March
  • 2 days Obscure Dutch Firm Wins Venezuelan Oil Block As Debt Tensions Mount
  • 3 days Rosneft Announces Completion Of World’s Longest Well
  • 3 days Ecuador Won’t Ask Exemption From OPEC Oil Production Cuts
  • 3 days Norway’s $1 Trillion Wealth Fund Proposes To Ditch Oil Stocks
  • 3 days Ecuador Seeks To Clear Schlumberger Debt By End-November
  • 3 days Santos Admits It Rejected $7.2B Takeover Bid
  • 3 days U.S. Senate Panel Votes To Open Alaskan Refuge To Drilling
  • 3 days Africa’s Richest Woman Fired From Sonangol
  • 4 days Oil And Gas M&A Deal Appetite Highest Since 2013
  • 4 days Russian Hackers Target British Energy Industry
  • 4 days Venezuela Signs $3.15B Debt Restructuring Deal With Russia
  • 4 days DOJ: Protestors Interfering With Pipeline Construction Will Be Prosecuted
  • 4 days Lower Oil Prices Benefit European Refiners
  • 4 days World’s Biggest Private Equity Firm Raises $1 Billion To Invest In Oil
  • 5 days Oil Prices Tank After API Reports Strong Build In Crude Inventories
  • 5 days Iraq Oil Revenue Not Enough For Sustainable Development
  • 5 days Sudan In Talks With Foreign Oil Firms To Boost Crude Production
  • 5 days Shell: Four Oil Platforms Shut In Gulf Of Mexico After Fire
  • 5 days OPEC To Recruit New Members To Fight Market Imbalance
  • 5 days Green Groups Want Norway’s Arctic Oil Drilling Licenses Canceled
  • 5 days Venezuelan Oil Output Drops To Lowest In 28 Years
  • 5 days Shale Production Rises By 80,000 BPD In Latest EIA Forecasts
  • 6 days GE Considers Selling Baker Hughes Assets
  • 6 days Eni To Address Barents Sea Regulatory Breaches By Dec 11
  • 6 days Saudi Aramco To Invest $300 Billion In Upstream Projects
  • 6 days Aramco To List Shares In Hong Kong ‘For Sure’
  • 6 days BP CEO Sees Venezuela As Oil’s Wildcard
  • 6 days Iran Denies Involvement In Bahrain Oil Pipeline Blast
  • 8 days The Oil Rig Drilling 10 Miles Under The Sea
  • 9 days Baghdad Agrees To Ship Kirkuk Oil To Iran
  • 9 days Another Group Joins Niger Delta Avengers’ Ceasefire Boycott
  • 9 days Italy Looks To Phase Out Coal-Fired Electricity By 2025
Alt Text

Are Electric Cars As Clean As They Seem?

Electric cars are set to…

Alt Text

GE Looks To Divest Energy Assets As Turmoil Continues

General Electric’s turmoil continues as…

Alt Text

EU Aims To Reform World’s Biggest Carbon Market

The European Union is divided…

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 Marching On As Sentiment Improves

Oil Rig

Once again, broader markets are maintaining a risk-on stance, with a falling dollar helping to usher crude prices higher. With weekly inventories bringing focus back to U.S. fundamentals as we charge toward a holiday weekend (stay strong, my friends), here are five things to consider relating to oil and energy today.

1) A. Gary Shilling has again reiterated his call for $10 oil, predicated on an expectation for excess production, dollar strength, and a potential global slowdown. He also lays the blame with Saudi Arabia and its neighbors as they ‘continue to play a desperate game of chicken with other major oil producers’.

This game of chicken is no more starkly illustrated than in the combined oil exports of Saudi Arabia, Iran and Iraq. While crude loadings for the three were actually down in 2014, we saw them rise through 2015 to average 725,000 bpd higher than the previous year.

2016 is the year, however, where we are really seeing the triumvirate turning the screws, especially with the return of Iranian barrels after the lifting of sanctions. Exports for the three nations are averaging more than 2.3 million barrels per day higher through May year-to-date compared to the same period last year. I repeat, 2.3mn bpd:

On this basis, we’re likely to see production from total OPEC members rising above 33 million bpd in the coming months, as Saudi increases output to meet summer power generation demand.

Related: Can The Natural Gas Rally Continue?

2) As weather outlooks flip to fiery red, natural gas prices are closing in on three-dollardom for the first time in a year. As temperatures are set to be above normal across the entire U.S. in the coming weeks, cooling demand is set to kick higher, while we’re seeing various supply disruptions popping up – from an explosion at a gas plant in Mississippi closing platforms in the U.S. Gulf, to flooding in West Virginia.

3) Saudi Arabia’s foreign exchange reserves last month have risen for the first time in 16 months – albeit by the smallest of margins. Net foreign assets sit at $577 billion, down $99 billion from year-ago levels, but up 0.1 percent on the prior month. The stemming of the tide has been less to do with rising oil prices and belt-tightening, and more to do with the securing of a $10 billion loan last month.

4) Stripper wells, which are classified as oil wells which are producing 15 barrels per day or less over a one-year period, accounted for 10 percent of U.S. production last year. While this seems a sizable chunk, their share was much higher in 2008, at 19 percent, when total production was considerably lower. Related: Gulf Countries React To Brexit, Impact Of EU Departure On ME Oil

Stripper wells, named because they strip the remaining oil from a well, see low, but fairly consistent, production levels. There are 380,000 stripper wells in the U.S., compared to 90,000 non-stripper wells.

5) Finally, the chart below shows how Brexit has impacted the price of U.K. natural gas (aka NBP). As the pound has been dealt a solid dose of the WBWs (whoop-bam-wallops), it has swiftly devalued by as much as 13 percent versus the U.S. dollar. This has meant NBP has become much cheaper in foreign-denominated currencies.

As @kwok_w_kwan points out in this post today, U.K. natural gas prices help dictate global LNG prices, because the U.K. is the home of last resort for LNG cargoes. Before India and Japanese importers buy spot LNG cargoes, they look to NBP to set the floor for prices.

The result of the weaker pound is that the U.K. will have to pay more to import LNG, and that U.S. LNG export facilities will likely be hurt, with it less cost effective to ship LNG to the U.K.

By Matt Smith

More Top Reads From Oilprice.com:

Back to homepage

Leave a comment
  • LiesLiesLies on June 29 2016 said:
    OPEC is not increasing capacity, to say so is very misleading.

    Iran has simply reactivated existing capacity after Obama lifted sanctions. Iran, Saudi Arabia and Iraq have not and have no plans to increase capacity through 2020. This has been stated multiple times both by them and anyone who looks at their expansion projects in process (or lack of new projects). KSA has 300kbpd due in 2018 but that is just to offset existing declines elsewhere.

    And if you look at the rest of OPEC (Venezuela, Nigeria, etc) there are serious decreases in production coming soon. OPEC production is going down not up over the next few years. If demand is to be met the US is going to have to increase supply quite a bit.

Leave a comment

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