Worrying Data For OPEC

Market Movers

- Data in OPEC's latest edition of the Monthly Oil Market Report suggests that deeper production cuts will be needed to balance the oil market. Production for the cartel was up in October from September, as Saudi Arabia regained its footing after the attacks on Aramco oil infrastructure and as Venezuela managed to pull a rabbit out of its hat, increasing production to 687,000 bpd in October from 644,000 bpd in September. Still, October production for the cartel was below August production. But the real kicker is that OPEC oil supply stood at 29.650 million bpd in October, while the average demand for OPEC oil in 2020 is … 29.6 million bpd - with no hope of drawing down any OPEC inventories at their current rate of production.

- U.S. natural gas production is set to hit a record 92.13 billion cubic feet per day this year, up nearly 1 billion cubic feet per day the previous year. U.S natural gas consumption is also set to hit a record this year of 85.10 bcfd, on the back of increased use in the power sector as coal gives way. At the same time, China's natural gas imports for October shed 10.3 percent year-on-year. That's a dramatic shift from natural gas import growth rates of nearly 30 percent in years prior. Most of this is attributed to an economic slowdown.

- The first batch of Libyan crude oil has been unloaded at Ukraine's Odessa seaport, as the country is seeking cheaper alternatives as values of some light sweet crudes soar. The Ukrainian port authority received 81,282 mt of oil from Libya's Zawiya terminal.

Discovery & Development

- Australian energy giant BHP has announced a 3.5-tril¬lion cu¬bic foot dis¬cov¬ery in the north¬ern deep¬wa¬ter area of Trinidad and To¬ba¬go, with further upside potential. The licenses include the Tuk-1, Bele-1, Boom-1, Hi-Hat-1 and Bongos-2 wells. BHP is eyeing a final investment decision on the project as early as 2022.

- Last weekend, Iranian President Hassan Rouhani announced a giant new oil discovery in the country's southwest Khuzestan province. Rouhani said the new oilfield contains 53 billion barrels of crude, describing it as a "small gift" of the government to the people of Iran. Less than a day later, media was all over this, issuing what amounted to corrections and retractions after Iranian Oil Minister Bijan Zanganeh noted that while the field contained 53 billion barrels, only 2.2 billion barrels are technically recoverable with existing Iranian technology. In other words, Iran would be adding 2.2 billion to its existing oil reserves. This field, the Namavaran oilfield, spans 2,400 square kilometers, and exploration was launched in 2016. Since then, 53 billion barrels of oil have been discovered - 31 billion barrels that had been announced earlier, and another 22 billion barrels now added through new estimates. Rouhani needs a victory himself, so he's spinning 53 billion barrels as a new discovery. It makes for fabulous headlines. But there's still no reason to discount the size of the potential here. Yes, only 2.2 billion barrels are technically recoverable - but that's by Iranian state oil. They don't have the technology to make the most of this. However, 2.2 billion barrels could end up becoming a lot more with advanced technology capable of greater extractive recovery in an oil play that is nearly two miles deep.

Legislation & Regulations

- Algeria has adopted controversial oil industry reforms aimed at boosting foreign investment, despite criticism that multinational companies would plunder the country's wealth. The new law allows foreign investors to take majority stakes in non-strategic sectors and enable the government to seek loans overseas. Oil and gas production steadily declined after the previous law was adopted in 2005, as has foreign interest in Algerian resources. Foreign oil companies stayed away due to unattractive terms. Still, the country is Africa's third-largest oil producer and a top 10 global gas producer. Oil and gas sales account for 60% of the state budget and 94% of all exports.

Companies

- Icahn is still relentlessly pursuing war with Oxy over its Anadarko acquisition. Icahn has dumped $400 million in Oxy shares, sending the stock price temporarily up before it began a multi-day slide. The stock dump is noteworthy since Oxy stock has lost big-time over the last year - Icahn's loss on the transaction is unknown, but likely to be significant. Now, Icahn is calling for Oxy to hold a fire sale for assets to meet its divestment targets and promises a war on the Oxy board next year to oust members who Icahn considers to be acting not in Oxy shareholder best interests.

Politics, Geopolitics, & Conflict

- Mexico's state-owned oil company Pemex has suffered a DoppelPaymer ransomware attack demanding $6 million in bitcoin in order to decrypt their files. The company said that a ransomware attack affected less than 5% of their computers, but employees suggest that the actual impact is much more significant than the official company line. Some payment operations have allegedly been affected, but Pemex says fuel output, storage and inventories are operating normally. Pemex has refused to pay the ransom.