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

Is OPEC Deal Compliance About To Crash?

OPEC’s victory lap to celebrate…

Fresh Sell Off For Oil. Bear Market Here To Stay?

Fresh Sell Off For Oil. Bear Market Here To Stay?

New EIA data sparked yet another sell off for crude oil, with WTI declining by more than 4 percent on August 19, and Brent down by 3.8 percent. The last time oil was this low, the global economy was digging out of a massive financial meltdown.

This time oil is low because of the largest supply bust in a generation, and the latest EIA data underscored that the worst may not be over yet. EIA released data showing a surprise uptick in oil inventories, which jumped by 2.6 million barrels over the past week to 456.2 million barrels. The build was not extraordinary, but following private sector estimates that predicted a drop, the increase sparked bearish sentiment about the state of crude oil markets. Related: A Key Tool For Energy Investors

The excess in storage could grow worse if the outage of BP’s Whiting refinery – estimated to be about 120,000 to 140,000 barrels per day in refinery capacity – leads to more crude oil diverted to Cushing for storage.

With oil supply still outpacing demand, prices may not move up in the short-term. The EIA expects WTI to average just $49 per barrel for 2015, and only $54 per barrel next year, a sharply lower prediction than last month’s estimate of $55 for 2015, and $62 for 2016. Related: U.S.-Mexico Energy Partnership Could Expand Into Renewables

“Balances point to further oversupply throughout 2015 begging the question how low can oil go,” analysts from Citigroup said in a new report. Citigroup said that breaking through the lows of $32.40 witnessed during the financial crisis in 2008 “is a conceivable reality.”

On the other hand EIA also estimates that weekly production declined in the U.S. by almost 50,000 barrels per day last week, which is further evidence that low oil prices are forcing a cutback in production, although a little too slowly for oil prices to adjust upwards. Related: How Much Pressure Will Iran Put On Oil Prices?

And as Citigroup noted in its report, the “capital markets are getting nervy.” That means that if oil prices stay depressed, markets could begin to abandon weak drillers, and the ability of these companies to fund operations through debt and equity could deteriorate. That could lead to more bankruptcies and a sharper cutback in production. At that point, oil prices could start to come back up.

But the big question is: when and how quickly will that adjustment take place?

By Charles Kennedy of 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