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D just hit 82.39!
WTI 45.41 +0.07 +0.15%
WTI 45.21 -1.46 -3.13%
WTI 45.93 -0.74 -1.59%
WTI 46.86 0.00 0.00%
WTI 46.93 +0.07 +0.15%
Confident Saudis To Lift Oil Prices To Asia For December
By Tsvetana Paraskova - Oct 31, 2016, 2:21 PM CDT
Saudi Arabia will likely raise the official selling price (OSP) differentials for Asia for December, to reflect an October premium in the spread between two Dubai benchmarks that it is using to calculate selling prices for its crudes, traders surveyed by S&P Global Platts said on Monday.
According to five traders polled by Platts, Saudi Aramco will probably lift the price differentials for the Arab Light, Medium and Heavy crude grades by between US$0.70 and US$1.20 per barrel.
The spread between the cash Dubai crude and Dubai crude swaps has been a premium of US$0.06 per barrel so far this month, versus a discount of US$0.87 per barrel last month.
Earlier this month, the Saudis had lowered the official selling prices for November for their various grades to various geographies, including to Asia and to Europe.
According to traders surveyed by Platts, other Middle East exporters, including the Abu Dhabi National Oil Co (ADNOC), would also increase prices for December for Asia.
However, several arbitrage cargoes of light sweet European crude are expected to dock in Asia in December, the traders noted.
“The big Middle East producers must make moderate price hikes only. I am sure Aramco and ADNOC are aware of the rival grades coming here,” Platts quoted a trader with a Japanese refiner as saying.
The market may also see additional supply of Saudi crude oil as the country has scheduled maintenance at two of its largest refineries later this year. The 550,000-bpd Ras Tanura refinery is expected to shut for scheduled maintenance between early December and the middle of January next year, traders say.
In addition, Asian crude consumers are currently negotiating new deals for next year, and some end users in North Asia hope that Middle East exporters would offer sweet deals after the prices have recovered from the lows of the first quarter this year, market sources told Platts.
By Tsvetana Paraskova for Oilprice.com
http://oilprice.com/Energy/Oil-Prices/Confident-Saudis-To-Lift-Oil-Prices-To-Asia-For-December.html
Experts Remain Bearish On Brent – See $45 Oil Throughout 2016
By Tsvetana Paraskova - Oct 31, 2016, 1:10 PM CDT
Economists and analysts have kept their average Brent price outlook for 2016 almost unchanged at US$44.78 per barrel, as growing hurdles to a global deal on production limits put downside pressure on crude oil prices, according to a Reuters poll out on Monday.
A total of 35 economists and analysts surveyed by Reuters reckon that the Brent prices would average US$57.08 next year. U.S. light crude CLc1 is expected to average US$43.46 this year and US$55.22 next year.
So far this year, Brent has averaged US$43.93 and WTI has averaged US$42.31.
At the time of writing, WTI Crude traded down 0.53 percent at US$48.44, while the Brent Crude was down 0.49 percent at US$50.43.
In the previous Reuters poll - when OPEC producers had just agreed to work toward a deal to cut their total crude production at between 32.5 million bpd and 33 million bpd – analysts had their doubts that the cartel would pull off a real deal.
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Back then the experts cut their estimates for the Brent LCOc1 price to US$44.74 from the US$45.44 price outlook in August—the second outlook reduction in a row following five consecutive upward revisions. The 2017 forecast for the Brent price was then reduced to US$57.28 from US$57.90.
In today’s Reuters poll, a possible failure of an OPEC deal is not the only downside risk to higher oil prices. Economists also see a possible Fed rate hike, a slowdown in Chinese growth, and less tension in Nigeria and Libya as potential hurdles in seeing substantial oil price increases.
If OPEC fails to reach a deal, a sell-off could result in oil prices plunging to US$40, and the supply glut could linger until at least the second half next year, analysts polled by Reuters say.
This weekend’s OPEC-only and OPEC-non-OPEC meetings in Vienna did not result in any substantial preliminary decision ahead of the November 30 OPEC summit, at which production limits are expected to be discussed in detail.
Heading into the weekend meeting, OPEC members were divided, with two of the heavyweights, Iran and Iraq, disputing OPEC data on output. A week before that Iraq put further pressure on the chances of a possible deal, saying that it should be exempt from production cuts because of the war it is fighting against ISIS.
By Tsvetana Paraskova for Oilprice.com
http://oilprice.com/Energy/Oil-Prices/Experts-Remain-Bearish-On-Brent-See-45-Oil-Throughout-2016.html
D just hit 71.90!
WTI 46.84 -1.86 -3.82%
Crooked Hillary will not win the election. She is going to prison soon for 20+ years. Trump is +4 in today's poll.
WTI 47.77 -0.93 -1.91%
D is at 67.02 right now.
WTI 48.01 -0.69 -1.42%
WTI 48.38 -0.32 -0.66%
OPEC And The Upcoming Oil Crash: U.S. Producers Are Ready
By ZeroHedge - Oct 28, 2016, 10:54 AM CDT
As warned one month ago after the farcical OPEC meeting in Algiers, the cartel's latest jawboning ploy to keep prices artificially higher - if only for one more month - is fast falling apart. Just a few hours ago, Bloomberg reporter Daniel Kruger penned the following assessment of the situation:
Production-Cut Talk Is as Good as It Gets for Oil. Some OPEC members are talking about cutting production again, and so prices are rising. Saudi Arabia and other producers both in and out of the cartel have done a good job fostering the storyline that there are terms under which parties can agree to pump less crude. Continuing signs of concord among producer nations have boosted oil prices to an average of $50 a barrel this month in New York. Yet several obstacles make it difficult for countries to commit to signing on to a deal. One obstacle is that sacrifices are needed for the agreements to succeed. Another is that those sacrifices aren’t shared equally.
Having successfully raised $18 billion in the bond market, Saudi Arabia is better positioned to withstand the loss of some revenue. Iraq, OPEC’s second-biggest producer, was the latest to plead for an exemption from a cut, citing its fight against Islamic State as a cause of hardship. Ultimately, no one wants to pump less because the upside is so limited. Saudi Arabia’s 2014 decision to double down on production in a drive for market share succeeded in making it more difficult for higher-cost producers to thrive as they once had. But having committed to that goal, they also locked themselves into a fight to keep what they’d won.
And while ConocoPhillips’ announcement this week that it plans to cut spending on major projects demonstrates the partial success of the Saudi plan to drive out rivals, it also shows producers see diminishing chances for crude to climb much above $60, said Wells Fargo Fund Management’s James Kochan. The big reason, of course, is latent U.S. supply. Baker Hughes data shows the most rigs at work in the Permian Basin since January. Sanford C. Bernstein analyst Bob Brackett suggests the per-acre price of drilling lease land will rise to $100,000 from about $60,000 now.
The one agreement players seem to have reached is that oil isn’t able to go much higher.
That oil's upside is capped at this point is clear; in fact, as both Goldman and Citi have warned, unless OPEC can come to a definitive and auditable agreement - no just another verbal can kicking - in which the member states, by which we mean almost entirely Saudi Arabia as most of the marginal producers are exempt or want to be, immediately curtail production, oil will promptly crash to $40 or below.
But an even more amusing twist is that a plunge in oil prices may be just what U.S. shale producers are waiting for. The reason for that is that while OPEC has been busy desperately jawboning oil higher, U.S. producers have been thinking of the inevitable next step, oil's upcoming reacquaintance with gravity. As a result, as the EIA reports, the amount of WTI short positions held by producers and merchants is just shy of a decade high.
According to a recent EIA report, short positions in West Texas Intermediate (WTI) crude oil futures contracts held by producers or merchants totaled more than 540,000 contracts as of October 11, 2016, the most since 2007, according to data from the U.S. Commodity Futures Trading Commission (CFTC). Banks have tightened lending standards for some energy companies as crude oil prices declined throughout 2014 and 2015, and some banks require producers to hedge against future price risk as a condition for lending.
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Short positions of WTI futures increased at a faster pace than futures contracts of Brent (an international crude oil benchmark) since summer 2016, suggesting U.S. producers are able to drill for oil profitably in the $50 per barrel range. In the Crude Oil Markets Review section of the October Short-Term Energy Outlook (STEO), the U.S. Energy Information Administration (EIA) discusses an increase in U.S. onshore producers’ capital expenditures that is contributing to rising drilling activity, which EIA projects will lead to an increase in U.S. onshore production by the second quarter of 2017.
Related: Venezuelan Minister Reveals Non-OPEC Lineup For Output Cut Discussion
Which closes the circle of irony: almost exactly two years ago, Saudi Arabia set off a sequence of events with which it hoped to crush U.S. shale producers and its high cost OPEC competitors. It succeeded partially and briefly, however now the remaining U.S. shale companies are more efficient, restructured, have less debt, a far lower all-in cost of production; and - best of all - they will all make a killing the next time oil plunges, as it will once OPEC's hollow gambit is exposed.
Meanwhile, the last shred of OPEC credibility will be crushed, the truly high cost oil exporters within OPEC will suffer sovereign defaults and social unrest, as will Saudi Arabia. The good news for Riyadh is that at least it got a $17.5 billion in fresh cash from a bunch of idiots who will never get repaid. We are curious just how long that cash will last the country which burned through $98 billion just last year, before the threat of social unrest and financial system collapse returns? Two months? Three?
By Zerohedge
http://oilprice.com/Energy/Crude-Oil/OPEC-And-The-Upcoming-Oil-Crash-US-Producers-Are-Ready.html
WTI 49.16 -0.56 -1.13%
Bankruptcies In Oilfield Services Are Accelerating
By Irina Slav - Oct 26, 2016, 3:59 PM CDT
Clouds have been clearing for oil producers in the U.S. oil patch, but it looks like things are a bit different in oil field services. In fact, they’re quite a bit different: according to a recent Haynes & Boone analysis, bankruptcies in the oil field services sector have boomed from about 20 last September to as much as 100 as of last month. In October, eight oil field service providers filed for Chapter 11 restructuring.
Also, according to Haynes & Boone, the total cumulative debt of U.S. oil field service providers reached US$14 billion as of this September.
In absolute terms, the number of bankruptcies among E&Ps and their combined debt is higher than the figures for oil field service providers. The bankruptcy filings in the two sectors are almost equal, but in production, the rate of new filings has slowed down considerably in the last few months, while in oil field services it has accelerated.
Debt levels for E&Ps are also higher, considerably, at a total of around US$68 billion. This, however, doesn’t seem to bother many of them as they bask in higher international oil prices and continue to add new drilling rigs. Two weeks ago, the active rig count marked its eight week of increases in a row, with as many as 11 new additions.
This should be wonderful news for oil field services, but it looks like the news is coming too late.
Like E&Ps, oil field service companies had been borrowing heavily while the going was good; when prices crashed, the debt burden started to get unmanageable, and fast. What proved to be the main problem for players in this sector were the discounts to their services they were forced to make to stay in business, and the shorter contracts they had to agree to with E&Ps.
This has benefited producers, allowing them to save quite a lot of money on drilling and maintenance services, and allowed them to boast “efficiency improvements”, but it has been deadly for many service providers. What’s more, according to a Wood Mackenzie analysis reported by the Wall Street Journal, many of the E&Ps that filed for bankruptcy over the last year and a half have continued to pump crude at the same rates they did before their Chapter 11 filing. In other words, it has been business as usual for them, apart from the debt restructuring that’s provided them with some much-needed breathing room.
Related: Oil Jumps After EIA Reports Draw To U.S. Crude Stocks
This magic trick is much harder for oil field service providers to pull off, which may be a big part of the reason they have fared poorer than their upstream business partners.
The last oil field service company to file for bankruptcy was Basic Energy Services, a Texas-based company with debt of US$1.2 billion and assets worth US$1.1 billion. The company had issued a prior warning that it would be unable to survive if it could not find a way to restructure its debt and reduce its load.
The leaders of the pack—Baker Hughes, Halliburton, and Schlumberger—have been doing better, but only with massive cost cutting, major discounts for their services, and thousands of layoffs. If the rate of bankruptcies continues in oil field services, it’s likely that only the bigger players will remain, and this may come back to haunt E&Ps when prices improve more, which is bound to happen¬—eventually. E&Ps will then likely have to pay through the nose for what they now get from service providers for the industry equivalent of small change.
By Irina Slav for Oilprice.com
http://oilprice.com/Energy/Energy-General/Bankruptcies-In-Oilfield-Services-Are-Accelerating.html
WTI 49.17 -0.01 -0.02%
WTI 49.26 -0.70 -1.40%
WTI 49.75 -0.21 -0.42%
WTI 48.98 -0.98 -1.96%
WTI 49.05 -0.91 -1.82%
WTI 49.06 -0.90 -1.80%
WTI 49.27 -0.69 -1.38%
Oil Prices Plunge After API Reports Significant Build To U.S. Crude Stocks
By Zainab Calcuttawala - Oct 25, 2016, 4:24 PM CDT
American crude oil supplies surged upwards by 4.8 million barrels this week, almost completely offsetting last week’s 5.2-million-barrel draw, according to the American Petroleum Institute (API) report released on Tuesday.
This week’s inventory build will likely press further down on oil prices, which were already trading down on the market’s increasing uneasiness over the OPEC drama, including Iraq’s OPEC rebellion, Russia’s vague and vacillating comments as to whether they’ll join in a freeze or a cut, and Venezuela’s pleas to get non-OPEC members to cut in proportion to the bloc’s to-be-determined limits.
The West Texas Intermediate (WTI) price settled to three-week lows once the report went public Tuesday afternoon. At the time of the report’s writing, WTI stood at $49.30 – down 2.41 percent from the day’s start, while Brent fell to $50.29, or 2.27 percent from the open.
Experts had predicted an inventory build of two million barrels of crude, according to Zero Hedge.
Gasoline inventories rose by 1.7 million barrels, against an anticipated draw of one million barrels.
Tomorrow’s official inventory report from the Energy Information Administration (EIA) will add to the volatility, particularly if the numbers stray far from API’s data.
Supplies at the Cushing storage facility in Oklahoma decreased by 2.3 million barrels, instead of the modest 500,000-barrel draw that analysts expected, the report said.
Six of the past seven weeks have seen notable crude supply draws, with the current build breaking the streak.
“You’ve gone from a very optimistic sentiment immediately following the Algiers announcement to a sentiment that’s more skeptical of the ability of OPEC to pull off a meaningful cut,” Paul Crovo of the Philadelphia-based consulting company by PNC Capital, told Zero Hedge.
By Zainab Calcuttawala for Oilprice.com
http://oilprice.com/Latest-Energy-News/World-News/Oil-Prices-Plunge-After-API-Reports-Significant-Build-To-US-Crude-Stocks.html
WTI 49.44 -1.08 -2.14%
WTI 49.77 -0.75 -1.48%
WTI 49.94 -0.58 -1.15%
Someone's Knockin' At The Door.
Somebody's Ringin' The Bell.
Someone's Knockin' At The Door.
Somebody's Ringin' The Bell.
Do Me A Favor,
Open The Door And Let 'Em In.
PAUL MCCARTNEY LYRICS
"Let 'Em In"
D is at 60.25 right now.
5 Negative Factors For Oil Prices
By Salman Ghouri & Andreas de Vries - Oct 21, 2016, 5:30 PM CDT
It has been a rough 2 years for forecasters of crude oil prices. Essentially no one saw the 2014 crash coming, and everyone looked on in surprise as a barrel of crude oil tanked, from over $100 to less than $30. After the crash, many forecasters expected a speedy recovery driven by bankruptcies in U.S. Shale, only to be left surprised again by the slow pace of the structural adjustment of supply to demand, causing the crude oil price to remain in the $30 to $50 per barrel range much longer than anticipated. And now, just as everyone has begun forecasting “lower for longer”, crude oil seems to be breaking through the $50 per barrel range in response to the announcement that OPEC and Russia intend to cut production.
All these surprises did not happen because crude oil price forecasters are “quacks” and “charlatans” who don’t really know what they are doing. Rather, the issue is the large number of real world factors that impact the crude oil price – economic growth; interest and exchange rates; demographics; global, regional and local politics; weather conditions; et cetera – and the general unpredictability of these factors. On top of this, the global economy’s financial markets have made it possible for the crude oil price to move disconnected from these factors. Speculator sentiment can make the crude oil price move in anticipation of an event, that is before something has actually happened, and by more than is justified by the event (“overshoot”).
Clearly, this makes crude oil price forecasting exceptionally difficult. That does not mean, however, there is no value in doing it.
If it hadn’t been for crude oil price forecasts the world wouldn’t have known about many of the factors impacting the crude oil price. The reconciliation of the forecast and the actual price of crude oil often results in learning about new things with implications for the crude oil price, new factors which had not been considered before. U.S. shale’s ability to innovate is a recent example. In other words, while crude oil price forecasts might not always be accurate, if done well they do always support development of critical insights into the crude oil market.
That this enhanced understanding of how the world of crude oil works has not resulted in increased accuracy of crude oil price forecasting, is because the world continues to increase in complexity. New factors continue to be added to the pool of factors of affecting the crude oil price, often times upsetting the effect of established factors. In a business with a long term horizon such as the crude oil industry, where exploration, development and production can all take years, added complexity substantially adds to uncertainty. The oil industry has developed management techniques to deal with this uncertainty, such as scenario planning and strategic risk management. Crude oil price forecasts are a critical input for these tools to function, which means that crude oil price forecasting is an impactful value creation and preservation tool.
With the value of crude oil price forecasting firmly established, we will continue to monitor the global crude oil market to assess how events and trends will be impacting the crude oil price. At present we are bearish for crude oil, as we believe the following factors will be driving the oil prices in the short to medium term.
Downside Risks
OPEC
The countries united in OPEC at present account for approximately one third of global crude oil production, giving the OPEC cartel significant ability to influence crude oil supply and market sentiment. The recent announcement of an agreement to cut production sometime in November 2016 effectively signaled a change in course. Since 2014 OPEC’s strategy had been to “protect market share”. Now it seems to be returning to a price management strategy.
OPEC’s ability to deliver on this strategy remains doubtful. The allocation of the announced production cut amongst the OPEC members still needs to be agreed, for example. Since essentially all are struggling under the low oil price, this will not be easy to achieve. The reported disagreement amongst OPEC members on production statistics signals a behind-the-scenes disagreement about next steps.
If an agreement is established, the cartel’s history of members cheating on formal agreements, leading to actual production coming in higher than formally agreed, will need to be managed. Amongst the tools historically used by OPEC member states to avoid being impacted by an agreed cut is increasing production before the cut becomes effective. As OPEC reported record production of 33.6 million barrels per day during the month of September 2016, at least some of the OPEC countries appear to have resorted to this tactic this time round as well.
There is also the question of how much exactly an agreed production cut will impact the number of barrels supplied to the international markets. For example, during summer Saudi Arabia uses over 1.0 million barrels of crude oil for power generation, in order to deal with peak power demand associated with air-conditioning. Now that summer is over it can easily afford to lower production by 0.5 to 0.75 million barrels per day since that would not affect the number of barrels of crude oil it offers for sale to international buyers.
The crude oil price seems to have already factored in an effective implementation of OPEC’s stated intent to reduce supplies. Consequently, we don’t expect “OPEC success” in November to raise the crude oil price much higher. On the other hand, if OPEC fails to deliver a real reduction in the number of barrels it supplies to the global markets, this could push the price back down to the $45 level.
Global Economic Growth
The two-way relationship between economic growth and energy demand, and by extension crude oil demand, is well established. As economies grow they tend use more energy. Conversely, the availability of (cheap) energy enables economies to grow. For this reason global economic growth forecasts feature prominently in crude oil demand forecasts.
The fact that global economic growth has consistently been overestimated the last few years therefore substantially contributed to current supply glut. In essence, the crude oil industry invested billions in anticipation of demand that never materialized.
A consensus seems building amongst economists that in the short to medium term, global economic growth will be less than what the world got used to in the post WWII period. The IMF, for example, has warned for a coming period of mediocre growth, under the influence of factors that according to some are not easily resolved and according to others can not be resolved at all.
But even mediocre growth is under threat, and thus also even the least optimistic of crude oil demand growth forecasts.
Many of the globe’s key economies are struggling. In Japan Abenomics are by now considered a failure. In Europe, where the euro debt crisis remains lingering, Brexit has raised additional concerns about the future of an economic growth that already was “sluggish” at best. Regarding China concerns remain that the real growth slowdown is much worse than the official statistics indicate.
Hanging over all of this like a thick dark cloud is a global debt which has reached record levels. As long as interest rates globally remain at their current record low levels, this will not cause any issues for economic growth. But in today’s a low growth environment an increase in rates obviously would, which would have a knock-on effect on global crude oil demand. In China the debt issue seems to be a particular concern at the moment.
As energy efficiency is becoming more and more a focus area of governments around the world, reducing the impact of economic growth on crude oil demand growth, there is a high probability that crude oil demand growth will continue to disappoint, which would keep the price locked at around $50 per barrel, the price of the marginal barrel at the moment.
Chinese Oil Demand
China was instrumental in the crude oil supercycle that lasted from 1999 to 2014, as during that period China’s crude oil demand grew by an amount equivalent to the total oil consumption of Japan and the United Kingdom. The country is now the world’s largest crude oil importer.
Although growth of the Chinese economy has slowed down over recent years, Chinese crude oil demand has continued to grow at the previous pace. This is because China has been using the low oil price environment to fill up strategic and commercial storage. According to some, China has been buying 0.5 million barrels per day on average in 2015 and 0.9 million barrels per day on average in 2016.
Obviously, this demand can not last forever as at some point China’s storage capacity will be full. It is not known exactly how large this capacity is, or how full it is at present, but as the buying associated with strategic storage is slowly phased out, China’s crude oil imports will stop growing or even decrease, taking the crude oil price down with it.
Technological Innovation & Process Optimization
At the beginning of 2015, most crude oil price forecasts assumed US shale to respond quickly and lower production, since the typical shale production cost at that time was substantially higher than the crude oil price. This expectation never materialized, however. Total US crude production dropped by just 0.8 million barrels per day between April 2015 and May 2016, because the US shale players were able to drastically lower their cost of operation. In part through renegotiating contracts with suppliers and service providers, but also through innovating and optimizing their processes.
While some of the savings from contract renegotiations will be undone during the upcoming period, shale innovation should be expected to continue to lower the production cost. In more conventional areas a similar trend to drive operating costs down through innovation and process optimization can be witnessed, with some success stories already. Effectively, this will result in increased crude oil supply at every possible price range (ceteris paribus), and thus put downward pressure on the crude oil price.
Automotive Revolution
Crude oil has been a remarkably stable industry for most of its existence. While the technologies applied to finding, developing and processing crude oil have indeed changed substantially, the products itself was never seriously challenged by outsiders, i.e. by new solutions for humanity’s energy need. Until recently, that is.
Related: Oil Heavyweights Worry About Future Oil Supply
Under the influence of factors such as emission control regulation, changes in consumer preferences, digitalization and urbanization, the auto industry is presently going through transformation change. One of the changes is a move away from the internal combustion engine towards electric and fuel cell vehicles.
As some two thirds of crude oil demand is linked to transportation, this could have far reaching consequences for the crude oil industry, deflating global crude oil demand by millions of barrels per day as soon as early as 2030.
Upside Potential
Opposite these substantial downside risks for the crude oil price we see just two factors that bring an upside potential, namely Upstream underspending and geopolitical risks.
Upstream Underspending
Major cutbacks in exploration spending following the 2014 crude oil price collapse have resulted in new crude oil discoveries dropping to a 60 year low in 2015. On top of this, spending on production maintenance for mature fields has also been greatly reduced, the first effects of which are beginning to show in the production numbers.
The global average for natural decline rate for mature fields has been assessed at around 6 percent annually. Therefore, unless spending on exploration and mature field production maintenance recovers during 2016 and 2017, there is a substantial chance that 2 to 3 years from now the crude oil market will return to a state of shortage, which for an intermediate period at least could push the crude oil price up to $80 per barrel, the price needed to spur on investment in long-cycle projects such as deepwater, or possibly even higher.
Geopolitics
The war in Yemen is a geopolitical conflict with the potential to impact the crude oil price in the short to medium term, for two reasons.
Firstly, Yemen itself borders a key transport route for crude oil. Some 5 million barrels of crude oil pass through its Bab Al Mandab every day. Recently, the area has been drawn into the conflict. A worst case scenario for the conflict is a further escalation which closes the Bab Al Mandab for commercial shipping entirely, forcing crude oil transports from the Middle East to Europe and the Americas to take the much longer route around the Cape of Good Hope instead of through the Suez Canal.
Secondly, behind the war in Yemen is a conflict between Saudi Arabia and Iran. It is not impossible for the war in Yemen to spill over into other areas of the Middle East, which, at 31 million barrels per day, is home to around 35 percent of global crude oil production.
Other geopolitical events with a more remote likelihood of impacting the global oil markets are Iraq, in particular the battle for Mosul which is of course a key oil producing area, and the battle against ISIS, in particular in Libya where the group has been threatening the major oilfields in the eastern desert of the country.
By Andreas de Vries & Salman Ghouri for Oilprice.com
http://oilprice.com/Energy/Oil-Prices/5-Negative-Factors-For-Oil-Prices.html
WTI 50.31 -0.54 -1.06%
50.24 -0.39 -0.77%
Note: the Crude Oil contract rolled over on Oct 20, 2016 to the Dec 16 contract.
WTI 51.04 -0.78 -1.51%
I added more D's at 52.67 a few minutes ago.
WTI 49.95 +0.01 +0.02%
WTI 49.84 -0.51 -1.01%
Oil prices slip after active rigs increase in the U.S.
By Jenny W. Hsu
Published: Oct 17, 2016 1:07 a.m. ET
Crude futures fell in early Asian trade Monday, dragged lower by the increase in active oil rigs in the U.S. and a stronger greenback.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in November CLX6, -0.20% traded at $50.25 a barrel, down $0.10 in the Globex electronic session. December Brent crude LCOZ6, -0.08% on London’s ICE Futures exchange fell $0.03 to $51.92 a barrel.
As oil is traded in dollars, a stronger dollar makes oil more expensive for traders holding a different currency. The greenback has been trading at a multimonth high and was last up 7 cents at 88.53, according to the Wall Street Journal Dollar Index BUXX, -0.01% .
Oil prices slipped over the weekend after data by industry group Baker Hughes BHI, -1.43% showed the number of active oil rigs in the U.S. last week increased by another four to 432, climbing for the 16th week.
The U.S. oil-rig count is typically viewed as a proxy for activity in the sector. After peaking at 1,609 in October 2014, low oil prices put downward pressure on production and the rig count fell sharply. But the oil rig count has generally been rising since the beginning of the summer.
“This indicates more oil is coming online, but without actual production levels it remains hard to gauge the real impact of these numbers,” said Stuart Ive, a client manager at OM Financial.
The increased U.S. production comes at a time when the world is grappling with a glut and the Organization of the Petroleum Exporting Countries is pumping at record levels. Output by Russia, a non-OPEC player, is also breaking records. In September, Russia’s daily production surged to 11.1 million, the highest in decades.
Even though OPEC members reached a preliminary pact to slash output to 33 million barrels a day from the current 33.4 million barrels a day last month, market watchers have reacted with skepticism as OPEC members have a spotty record of not disclosing their true production level.
“Some producers, especially those whose production were hurt in the past few years, probably would report a higher production level, so if and when a cut is imposed, their production level remains at a comfortable level,” said Gao Jian, an energy analyst at the Shandong-based SCI International.
BMI Research notes a major hurdle would be deciding whose estimates to use when it comes to determining the individual production quotas.
“Negotiating individual country quotas will likely reignite tensions in the group and the growing discrepancies between official and third party production estimates are a cause for concern,” the firm added.
Ahead this week, the market will watch for the weekly U.S. crude inventories and production data to be released on Wednesday. China will also release its monthly crude production and throughput data on the same day. On Friday, the Chinese customs is expected to release a detailed breakdown of China’s September crude imports and oil exports. Preliminary data showed China’s crude imports rose 18% on-year to 33.06 million tons, or 8.08 million barrels a day in September, while exports of oil products rose 21% on-year to 4.3 million tons.
Nymex reformulated gasoline blendstock for November RBX6, +0.28% — the benchmark gasoline contract — fell 3 points to $1.4933 a gallon, while November diesel traded at $1.5633, 40 points lower.
ICE gasoil for November changed hands at $463.50 a metric ton, up $2.25 from Friday’s settlement.
— George Stahl contributed to this article.
http://www.marketwatch.com/story/oil-prices-slip-after-active-rigs-increase-in-the-us-2016-10-17
WTI 50.18 -0.17 -0.34%