• 4 hours British Utility Companies Brace For Major Reforms
  • 8 hours Montenegro A ‘Sweet Spot’ Of Untapped Oil, Gas In The Adriatic
  • 10 hours Rosneft CEO: Rising U.S. Shale A Downside Risk To Oil Prices
  • 11 hours Brazil Could Invite More Bids For Unsold Pre-Salt Oil Blocks
  • 12 hours OPEC/Non-OPEC Seek Consensus On Deal Before Nov Summit
  • 13 hours London Stock Exchange Boss Defends Push To Win Aramco IPO
  • 14 hours Rosneft Signs $400M Deal With Kurdistan
  • 16 hours Kinder Morgan Warns About Trans Mountain Delays
  • 23 hours India, China, U.S., Complain Of Venezuelan Crude Oil Quality Issues
  • 1 day Kurdish Kirkuk-Ceyhan Crude Oil Flows Plunge To 225,000 Bpd
  • 1 day Russia, Saudis Team Up To Boost Fracking Tech
  • 2 days Conflicting News Spurs Doubt On Aramco IPO
  • 2 days Exxon Starts Production At New Refinery In Texas
  • 2 days Iraq Asks BP To Redevelop Kirkuk Oil Fields
  • 2 days Oil Prices Rise After U.S. API Reports Strong Crude Inventory Draw
  • 2 days Oil Gains Spur Growth In Canada’s Oil Cities
  • 2 days China To Take 5% Of Rosneft’s Output In New Deal
  • 2 days UAE Oil Giant Seeks Partnership For Possible IPO
  • 3 days Planting Trees Could Cut Emissions As Much As Quitting Oil
  • 3 days VW Fails To Secure Critical Commodity For EVs
  • 3 days Enbridge Pipeline Expansion Finally Approved
  • 3 days Iraqi Forces Seize Control Of North Oil Co Fields In Kirkuk
  • 3 days OPEC Oil Deal Compliance Falls To 86%
  • 3 days U.S. Oil Production To Increase in November As Rig Count Falls
  • 3 days Gazprom Neft Unhappy With OPEC-Russia Production Cut Deal
  • 3 days Disputed Venezuelan Vote Could Lead To More Sanctions, Clashes
  • 4 days EU Urges U.S. Congress To Protect Iran Nuclear Deal
  • 4 days Oil Rig Explosion In Louisiana Leaves 7 Injured, 1 Still Missing
  • 4 days Aramco Says No Plans To Shelve IPO
  • 6 days Trump Passes Iran Nuclear Deal Back to Congress
  • 6 days Texas Shutters More Coal-Fired Plants
  • 6 days Oil Trading Firm Expects Unprecedented U.S. Crude Exports
  • 7 days UK’s FCA Met With Aramco Prior To Proposing Listing Rule Change
  • 7 days Chevron Quits Australian Deepwater Oil Exploration
  • 7 days Europe Braces For End Of Iran Nuclear Deal
  • 7 days Renewable Energy Startup Powering Native American Protest Camp
  • 7 days Husky Energy Set To Restart Pipeline
  • 7 days Russia, Morocco Sign String Of Energy And Military Deals
  • 7 days Norway Looks To Cut Some Of Its Generous Tax Breaks For EVs
  • 7 days China Set To Continue Crude Oil Buying Spree, IEA Says
Alt Text

Footloose Iraq Cannibalizes Saudi Market Share

OPEC’s de-facto leader Saudi Arabia…

Alt Text

India’s Urban Explosion Boosts Oil Demand

As India sees incredible growth…

Stability Is Returning To Oil Markets

Oil

The last couple of years have been turbulent for the international oil market and all of its players. But there are signs that the waters are beginning to calm, as traders and investors wait and see how OPEC’s cuts work.

Benchmark prices have stabilized in the last few days, and they might even start rising as the market gets used to growing production from Libya and Nigeria and the decline in compliance rates among OPEC members taking part in the cuts.

Reuters yesterday quoted a few energy analysts as saying that further production increases in Nigeria and Libya will not make a big splash, as the market already expects them and has factored them in. Granted, this means that prices are unlikely to rise above US$50 anytime soon unless OPEC decides to deepen the cuts, which is not at all likely, but it also means that the market is moving towards stability.

U.S. output is also rising but—and this is the key—the rate at which it is rising has slowed. New rig additions in the last couple weeks have been fewer than in previous weeks—as Oilprice’s Nick Cunningham noted in a recent analysis—and the Energy Information Administration reported two consecutive weekly draws in inventories of a combined 13.8 million barrels. This may be temporary, thanks to driving season, but it’s still good news for the more bullish market participants.

In further good news for oil bulls, China’s refiners processed a near-record amount of crude oil last month, at 11.21 million bpd. Refinery runs will likely decline in the current quarter, but the increase, coupled with a rise in crude imports over the first half of the year, suggests that things on the demand side are not as bad as they appear. The International Energy Agency reinforced this sentiment in its latest Oil Market Report, where it revised up its oil demand forecast for 2017 by 100,000 bpd, to 98 million bpd.

Related: Russian Energy Minister: No Additional Output Cuts Are Needed

Meanwhile, big oil traders have found a way to take advantage of the glut. Bloomberg’s Serene Cheong reported last week that Vitol, Glencore, Trafigura, and Gunvor have taken to selling customized oil cargoes from a fleet of tankers off the coast of Singapore and Malaysia.

The vessels store all sorts of crude, from European, African, Middle Eastern, and U.S. fields, so the sellers have the opportunity to mix and blend the crude to their clients’ specific requirements and sell it directly from the tankers to buyers in Asia.

At the moment, there are 15 Very Large Crude Carriers, capable of carrying up to 2 million barrels of crude, in the Straits of Malacca, Cheong writes. These cargos are being divided into smaller ones, some blends mixed with others for a customized cargo, and then sent on their way to the buyers. Custom-made oil cargoes seem like the smartest choice in the context of a record-high floating storage, as per information from French energy data provider Kpler.

The world seems to be still awash in oil, and every stakeholder in the market seems to be coping, from producers to traders. And yet everyone is keeping an eye on OPEC and the upcoming meeting of the ministerial committee that was set up to monitor the cuts. The meeting will take place in Moscow next week, and even if it doesn’t feature an announcement of deeper cuts, prices may not drop as sharply as they would have a few months ago, when knee-jerk selloffs were the standard reaction to the slightest suggestion that the cut wasn’t working.

By Irina Slav for Oilprice.com

More Top Reads From Oilprice.com:




Back to homepage


Leave a comment

Leave a comment




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