• 3 minutes Oil Price Could Fall To $30 If Global Deal Not Extended
  • 8 minutes Why Is America (Texas) Burning Millions of Dollars Per Day Of Natural Gas?
  • 11 minutes Is $60/Bbl WTI still considered a break even for Shale Oil
  • 15 minutes CNN:America's oil boom will break more records this year. OPEC is stuck in retreat
  • 21 mins The Pope: "Climate change ... doomsday predictions can no longer be met with irony or disdain."
  • 9 hours Hormuz and surrounding waters: Energy Threats to the World: Oil, LNG, shipping markets digest new risks after Strait of Hormuz attack
  • 13 hours As Iran Nuclear Deal Flounders, France Turns To Saudi For Oil
  • 8 hours The Magic and Wonders of US Shale Supply: Keeping energy price shock minimised: US oil supply keeping lid on prices despite global risks: IEA chief
  • 18 hours Middle East on brink: Oil tankers attacked off Oman
  • 12 hours Never Knew Gasoline Prices were this important!
  • 9 hours Russia removes special military forces from Venezuela . . . . Maduro gone by September ? . . . Oil starts to flow ? Think so . .
  • 10 hours (Un)expectedly: UK Court Sets Assange U.S. Extradition Hearing For February 2020
  • 6 hours We Are Better Than This
  • 20 mins Plants are Dying
  • 1 day Britain makes it almost 12 days with NO COAL
  • 1 day Emmissions up, renewables nowhere
  • 10 hours The Latest: Iranian FM Says US Cannot Expect To ‘Stay Safe’
Alt Text

OPEC’s Struggle To Avoid $40 Oil

Saudi Arabia cannot afford to…

Alt Text

Middle East Torpedo Attacks Send Oil Prices Soaring

Oil prices jumped on Thursday…

Alt Text

Oil Resilient Despite Trade Talk Failure

Oil prices fell and quickly…

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

Trending Discussions

Oil Prices Tank As OPEC Exports Surge

Six months after the implementation of the OPEC production cut deal to reduce output by 1.2 million barrels per day, and we should be well on our way towards rebalancing - yet prices have recently reached a new low for the year.

OPEC actually exported more crude in June than it did in October (the production cut deal reference level), while total global crude exports are over 10 percent higher than year-ago levels. While hope springs eternal, reality bites.

OPEC exports in June outpaced year-ago levels by over 2 million barrels per day, with every country exporting more crude, with the exception of Algeria and Qatar. This stat alone goes some way to explaining why we are mired in mid-forty dollardom.

But things could have been so different - as exemplified by April's export volumes. Not only did Saudi Arabia slash its exports in April, but it was joined by other members of core OPEC, Kuwait and UAE. The result was the first year-on-year deficit since early 2015. May played out in a similar fashion, as only a minor year-on-year surplus was seen as Saudi continued to crimp its exports. Come June, the wheels have fallen off the cart (el's compliance):

(Click to enlarge)

While 'OPEC versus US shale' is pitched like some heavyweight boxing match, too much emphasis is being placed on rising US production. That said, shale production is contributing to the excess of light crude that is available in the global market.

The Wall Street Journal highlighted yesterday how China has been pulling in an increasing amount of U.S. crude, given the favorable movement in the spread betwixt WTI and the Dubai-Oman benchmark this year. A similarly advantageous move in the Brent / Dubai-Oman spread has prompted an even more prominent response in U.K. North Sea arrivals to China - climbing above 400,000 bpd last month for the first time.

According to Occidental Petroleum, the owner of the most prolific crude-exporting terminal in the U.S. at Corpus Christi, U.S. exports could reach 3 million barrels per day in the coming years. Welp!

(Click to enlarge)

This excess of light crude available in the global market is being joined by West African barrels, and specifically from Nigeria. It is estimated this week that there are at least 40 Nigerian cargoes to be loaded in August looking for buyers. (Let's save the topic of rocketing Libyan exports for another time).

The return of the Forcados stream in May - after a near complete absence of loadings in 2016 - is diminishing the favorability of other Nigerian grades, leaving them to go unsold. Forcados loadings reached nearly 190,000 bpd last month:

(Click to enlarge)

While light crude continues to hit the global market, U.S. inventories are being watched with a surgical focus, given their potential to be the canary in the coalmine to signal market rebalancing, ergo doubling up as a proxy for OPEC progress.

Progress is being made on this front; U.S. crude inventories are showing a much lesser build year-to-date versus last year, even when aided by the injection of additional barrels from the SPR. Nonetheless, waterborne imports have still been stronger in the first half of this year compared to year-ago levels, with OPEC sending over 300,000 bpd more crude through the first six months of 2017.

After deliveries ramped up from Saudi Arabia in January and February, they have been comparative to year-ago levels since. Iraq, however, has sent more crude each month versus year-ago levels for the last year and a half.

Total OPEC deliveries to the U.S. have shown a solid dip in June versus the prior month, but have still managed to come in above year-ago levels. If the cartel wants to slash OECD inventories, they need to get serious about cutting flows to the U.S. in the second half of the year; they didn't in the first.

(Click to enlarge)

By Matt Smith

More Top Reads From Oilprice.com:




Download The Free Oilprice App Today

Back to homepage

Trending Discussions


Leave a comment
  • Scott Leach on July 07 2017 said:
    I have issue with the American inventories being the driver. Mainly because they can be manipulated now that the US can export. So, while they drive down the inventories in the US it is becoming apparent that the glut is happening in Asia.

    Definitely the thing is to watch where the oil goes...it is easy to ship it to a dark hole and hope no one notices.
  • amra on July 07 2017 said:
    OPEC been screwing Americans long enough.
  • Hector on July 07 2017 said:
    Americans are so dumb. Keep drilling and fracking to produce more oil to refine and export when the commodity is selling at a cyclical low. 5 to 10 years from now when fracking reserves are depleted China and OPEC will be laughing all the way to the bank with money pocketed from dumb Americans.

Leave a comment





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