• 15 hours Oil Prices Rise After API Reports Major Crude Draw
  • 16 hours Citgo President And 5 VPs Arrested On Embezzlement Charges
  • 16 hours Gazprom Speaks Out Against OPEC Production Cut Extension
  • 16 hours Statoil Looks To Lighter Oil To Boost Profitability
  • 18 hours Oil Billionaire Becomes Wind Energy’s Top Influencer
  • 19 hours Transneft Warns Urals Oil Quality Reaching Critical Levels
  • 20 hours Whitefish Energy Suspends Work In Puerto Rico
  • 21 hours U.S. Authorities Arrest Two On Major Energy Corruption Scheme
  • 1 day Thanksgiving Gas Prices At 3-Year High
  • 2 days Iraq’s Giant Majnoon Oilfield Attracts Attention Of Supermajors
  • 2 days South Iraq Oil Exports Close To Record High To Offset Kirkuk Drop
  • 2 days Iraqi Forces Find Mass Graves In Oil Wells Near Kirkuk
  • 2 days Chevron Joint Venture Signs $1.7B Oil, Gas Deal In Nigeria
  • 2 days Iraq Steps In To Offset Falling Venezuela Oil Production
  • 2 days ConocoPhillips Sets Price Ceiling For New Projects
  • 4 days Shell Oil Trading Head Steps Down After 29 Years
  • 5 days Higher Oil Prices Reduce North American Oil Bankruptcies
  • 5 days Statoil To Boost Exploration Drilling Offshore Norway In 2018
  • 5 days $1.6 Billion Canadian-US Hydropower Project Approved
  • 5 days Venezuela Officially In Default
  • 5 days Iran Prepares To Export LNG To Boost Trade Relations
  • 5 days Keystone Pipeline Leaks 5,000 Barrels Into Farmland
  • 5 days Saudi Oil Minister: Markets Will Not Rebalance By March
  • 5 days Obscure Dutch Firm Wins Venezuelan Oil Block As Debt Tensions Mount
  • 6 days Rosneft Announces Completion Of World’s Longest Well
  • 6 days Ecuador Won’t Ask Exemption From OPEC Oil Production Cuts
  • 6 days Norway’s $1 Trillion Wealth Fund Proposes To Ditch Oil Stocks
  • 6 days Ecuador Seeks To Clear Schlumberger Debt By End-November
  • 6 days Santos Admits It Rejected $7.2B Takeover Bid
  • 6 days U.S. Senate Panel Votes To Open Alaskan Refuge To Drilling
  • 6 days Africa’s Richest Woman Fired From Sonangol
  • 7 days Oil And Gas M&A Deal Appetite Highest Since 2013
  • 7 days Russian Hackers Target British Energy Industry
  • 7 days Venezuela Signs $3.15B Debt Restructuring Deal With Russia
  • 7 days DOJ: Protestors Interfering With Pipeline Construction Will Be Prosecuted
  • 7 days Lower Oil Prices Benefit European Refiners
  • 7 days World’s Biggest Private Equity Firm Raises $1 Billion To Invest In Oil
  • 8 days Oil Prices Tank After API Reports Strong Build In Crude Inventories
  • 8 days Iraq Oil Revenue Not Enough For Sustainable Development
  • 8 days Sudan In Talks With Foreign Oil Firms To Boost Crude Production
Alt Text

The Kurdish Oil Gamble Has Backfired

Kurdistan’s failure to hold the…

Alt Text

GE Looks To Divest Energy Assets As Turmoil Continues

General Electric’s turmoil continues as…

Alt Text

The Surprise Winners Of The Oil Price Rally

The recent rally in oil…

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

Soaring OPEC Exports Can’t Keep Oil From Rallying

Offshore platform Brazil

Oil is carrying on where it left off last week, rallying higher on the low likelihood event of a production freeze by key global producers. As rumors and murmurs lifted prices last week by the most since April, there appears little incentive for producers to back away from jawboning. Hark, here are five things to consider in oil markets today:

1) As rhetoric swirls of an OPEC oil production freeze, it seems prudent to point out the contrast betwixt actions versus words. As our ClipperData illustrates in the chart below, crude oil loadings from OPEC members in the Middle East (USE, Saudi Arabia, Qatar, Kuwait, Iran and Iraq) have risen by over 20 percent since the beginning of last year. OPEC oil exports from these six cartel members is now well above 18.5 million barrels per day, 3.3 million bpd higher than early last year.

(Click to enlarge)

2) In response to the return of production freeze chatter from OPEC members, hedge funds have bolstered their long positions in the latest CFTC / ICE data (through to last Tuesday). After dropping into thirty dollardom, jawboning has laid down a bullish wildcard, and bullish bets have risen the most since January in the latest data. Short positions have barely budged, meaning the net long position has risen strongly.

(Click to enlarge)

3) After we highlighted last week that Qua Iboe is likely to be gone 'til November, this has been swiftly followed by Shell declaring another force majeure on Bonny Light exports. The force majeure is due to a pipeline leak, although it is not clear whether it is a result of sabotage.

Force majeure was only lifted on Bonny Light last month after a leak on a different pipeline; according to our ClipperData, Bonny light loadings so far this month are at their lowest since 2013. Related: Morgan Stanley: ‘’The Oil Rally Might End On Wednesday’’

4) Just as winter natural gas prices need to take heed of the woolly worm, hedging activity by Mexico needs to be acknowledged and respected, given their prudent past. Although it has missed the target some years, in others it has made a considerable amount by hedging over 200 million barrels of its domestic production.

Last year it received $6 billion by hedging its exposure, locking in prices at $76/bbl, while this year it has hedged at $49/bbl - considerably higher than the average price so far this year. Hence, as it is apparently starting its hedging program for next year (at a similar price level to last year), it could be a harbinger for future price action.

5) Finally, the chart below from EIA shows its production forecast over the coming years. While long-term forecasts have to be considered with a pinch of salt (or ten), they are still useful for highlighting potential future broader trends.

Shale gas is projected to contribute the biggest increase to global natural gas production over the coming decades. The U.S., Canada, China, and Argentina are expected to continue to lead the charge in shale production, while they will be joined by Mexico and Algeria; these six countries are projected to account for 70 percent of global shale production by 2040.

By Matt Smith

More Top Reads From Oilprice.com:




Back to homepage


Leave a comment
  • Kr55 on August 15 2016 said:
    Shorts not budging last week is pretty bullish IMO. Especially when they are sitting at record levels, not much dry powder left to borrow more barrels to sell the market down. When you have that many shorters crowding the trade, if something starts to trigger some weak hands to cover, craziness can ensue.
  • John Brown on August 16 2016 said:
    The world remains awash in oil with no reason why a barrel of oil should be higher than $30. Yet as prices began to fall as the reality of supply and demand set in suddenly countries start talking about talking about freezes and the price starts going up. Its called market manipulation, and where oil is concern everybody is in on the conspiracy/collusion.
    There is a glut of oil in the world, and even if some producers decide to freeze production there is plenty of supply out there to replace it for the foreseeable future. As supply tightens in one place more will come online in another place, and the entire industry knows it.
    Of course, managing to manipulate the market to keep the price $5 to $10 higher than supply and demand would call for means billions of dollars for the big producers and entire industry. So I suppose it will continue, but anybody with 2 neurons knows what is going on.

Leave a comment




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