• 3 minutes China has *Already* Lost the Trade War. Meantime, the U.S. Might Sanction China’s Largest Oil Company
  • 7 minutes Saudi and UAE pressure to get US support for Oil quotas is reportedly on..
  • 11 minutes China devalues currency to lower prices to address new tariffs. But doesn't help. Here is why. . . .
  • 15 minutes What is your current outlook as a day trader for WTI
  • 2 hours Domino Effect: Rashida Tlaib Rejects Israel's Offer For 'Humanitarian' Visit To West Bank
  • 4 hours In The Bright Of New Administration Rules: Immigrants as Economic Contributors
  • 4 hours Will Uncle Sam Step Up and Cut Production
  • 2 hours Gretta Thunbergs zero carbon voyage carbon foot print of carbon fibre manufacture
  • 3 hours Continental Resource's Hamm wants shale to cut production. . . He can't compete with peers.
  • 1 day US Petroleum Demand Strongest Since 2007
  • 8 hours NATGAS, LNG, Technology, benefits etc , cleaner global energy fuel
  • 6 hours Trump vs. Xi Trade Battle, Running Commentary from Conservative Tree House
  • 1 day Movie Script: Epstein Guards Suspected Of Falsifying Logs
  • 16 hours Significant: Boeing Delays Delivery Of Ultra-Long-Range Version Of 777X
  • 15 hours Why Oil is Falling (including conspiracy theories and other fun stuff)
  • 22 hours Strait Of Hormuz As a Breakpoint: Germany Not Taking Part In U.S. Naval Mission
Alt Text

The Bakken Oil Boom Is Facing A New Bottleneck

North Dakota oil drillers might…

Alt Text

Texas Crude Is Fetching Better Prices

New midstream capacity allows more…

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

Premium Content

EIA And OPEC Send Oil Prices Tumbling

The double whammy of yesterday's EIA drilling productivity report - showing rampantly rising shale production next month - combined with a bearish OPEC monthly oil market report, has sent oil prices scampering lower, testing key support levels on both Brent and WTI. With more twists and turns in the coming days than the Monaco Grand Prix, hark, here are five things to consider in oil markets today:

1) The latest OPEC oil market report has ruffled feathers, put the cat among the pigeons, and got the bears a' growlin'. We discussed yesterday how the rise in U.S. crude inventories this year (hark, 800,000 bpd) was offsetting that of last quarter's OECD stock draw (hark, 800,000 bpd).

Today's report shows that OECD stocks rose in January to a smidge over 3 billion barrels - some 278mn bbls above their five-year average. OPEC's goal is to get inventories closer in line with the five-year average; their production cut deal would need to be extended a good many times at this rate.

2) The real conjecture from today's report, however, has been from Saudi Arabian production volumes. Secondary sources indicate that production continues to drop, falling by 68,000 bpd to 9.86mn bpd. Primary sources, however, indicate that Saudi has increased production back above 10mn bpd. This appears to be a shot across the bow from Saudi Arabia at its fellow OPEC members, that it too can choose to avoid compliance. According to direct communication from the Saudis, it has reversed a third of its production cuts.

(Click to enlarge)  Related: An OPEC Deal Extension Won’t Affect Oil Prices

3) The OPEC report projects that Chinese oil demand growth was 310,000 bpd last year, dropping to 280,000 bpd in 2017. Oil demand growth was strong into the end of the year, boosted by LPG growth in the petrochemical sector, while robust car sales supported gasoline demand.

OPEC suggests there are both positive and negative risks ahead, with the petrochemical sector and refinery expansion projects set to boost demand, while environmental policy changes could weigh on transportation fuel consumption.

(Click to enlarge) 

4) According to Iraq's preliminary loading program for April, it is set to export 70 million barrels (2.33 million barrels per day) of Basrah Light, and 25mn bbls (833,000 bpd) of Basrah Heavy. This is a downward adjustment to its loadings of light crude, and an upward adjustment to its heavy - which doesn't make a huge amount of sense.

February Basrah Light export loadings are close to 2.5mn bpd, the highest level since mid-2015, while Basrah Heavy exports are at their lowest level since late 2015. It makes sense that Iraq would lean in favor of exporting Basrah Light, given it is higher quality - maximizing revenue for the Persian Gulf state. Related: Why Last Week’s Oil Price Crash Was Inevitable

(Click to enlarge)

5) Finally, the graphic below is from a study by the Federal Reserve Bank of Kansas. It shows that a number of U.S. states experienced a recession last year, such as New Mexico, Oklahoma and Wyoming. The connection between these states? They are all key oil producers.

This is a theme echoed by S&P Global Ratings, who state that six out of eight major U.S. oil-producing states fell into recession in 2015 and 2016 amid low oil prices. It also states that North Dakota - where the Bakken shale play is located - went from the fastest growing state in 2014 to the worst performer in 2015.

(Click to enlarge) 

By Matt Smith

More Top Reads From Oilprice.com: 




Download The Free Oilprice App Today

Back to homepage


Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News
Download on the App Store Get it on Google Play