OPEC, for some quiet moments..

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Saudi Arabia will consider renewing its pledge to cut crude output in six months and has already reduced production by more than its targeted level, Energy Minister Khalid Al-Falih said. The world’s biggest oil exporter agreed to cut 486,000 bpd from Jan. 1 for six months as part of a global deal to reduce output to curb a supply glut. The caps on production, together with rising demand and natural decreases in output in some countries, will help balance the market and support prices, he said. Kuwait has also exceeded its targeted cut, according to that country’s oil minister.

Saudi oil cuts exceeds target and Kingdom may cut for longer

Exxon Mobil has reported positive results from its Payara-1 well offshore Guyana. Payara is the company’s second oil discovery on the Stabroek Block and was drilled in a new reservoir. The Payara-1 well targeted similar aged reservoirs that were proven successful at the company’s Liza discovery. “This important discovery further establishes the area as a significant exploration province,” said Steve Greenlee, president of Exxon Mobil Exploration Company. “We look forward to working with the government and our co-venturers to continue evaluating broader exploration potential on the block and the greater Liza area.”

Exxon Mobil announces new oil discoveries offshore Guyana

Crude oil at $50/bbl is too low for most producing countries, according to United Arab Emirates Energy Minister Suhail Al Mazrouei. Prices have climbed almost 20% to above $50/bbl since the Nov. 30 agreement by the Organization of Petroleum Exporting Countries to cut production for the first time in eight years to curb a global glut. OPEC is reducing output along with 11 other producing nations including Russia after a slump in oil prices the past two years eroded revenue.

U.A.E. says $50 oil ‘isn’t going to cut it’ for producers

Driven by the success of Eni’s major Zohr field gas discovery offshore Egypt in 2015, companies are rethinking the Eastern Mediterranean region’s gas potential, according to new analysis from IHS Markit. Total’s announcement that it will drill a 2017 exploration well in its deepwater Block 11 located offshore Cyprus indicates the growing interest in the wider region.

Total’s Cyprus Block 11 could rival Egypt’s Zohr discovery, IHS Markit says

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OPEC is unlikely to deliver fully on its target to cut production despite Saudi Arabia saying it had trimmed more than it had committed to, OPEC delegates say, but compliance of 80 percent would be good and as low as 50 percent acceptable. The Organization of the Petroleum Exporting Countries is planning to cut its output by 1.2 million barrels per day to 32.50 million bpd from Jan. 1. Russia and other non-members are planning to cut about half as much.

Despite Saudi signals, OPEC unlikely to deliver all promised oil cuts | Reuters

Oil headed for its first weekly decline since December as traders waited for proof that OPEC and other producers would follow through on promises to cut production. Futures slipped 1.2% in New York and were headed for a weekly drop of 3%. Saudi Arabia reduced output to less than 10 MMbopd and will consider renewing its pledge to trim supply in six months, according to Energy Minister Khalid Al-Falih. Still, until monthly production data is released, “these claims cannot be verified,” according to Commerzbank AG.

Crude oil halts four-week gain as OPEC cuts yet to be verified

Major oil companies could venture back into the ocean depths this year. Energy research firm Wood Mackenzie believes drillers will double the number of final investment decisions this year compared to last year, meaning the industry may pull the trigger on 20 large multiyear projects in 2017.

Drillers could double project investment decisions in 2017, Wood Mac says | Fuel Fix

The appetite for raw materials in the world’s biggest consumer keeps getting bigger. China’s imports of crude oil and iron ore rose to records in 2016, while coal buying expanded for the first time in three years, according to government data released Friday. Growing domestic demand sent steel and aluminum exports down, while outbound shipments of oil products soared as the country sought to reform its refining industry and fuel specifications.

China Commodities Juggernaut Rolls Into 2017 as Records Tumble - Bloomberg

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Liquefied natural gas prices falling to the lowest in a decade last year spurred fresh demand while suppressing investment in new production, potentially leading to shortages and price spikes next decade, according to a new Bloomberg New Energy Finance (BNEF) report. Global annual LNG consumption is seen rising to 422 million tons by 2030, almost two-thirds higher than last year and almost 13% above BNEF’s previous forecast in June. China, India and a swarm of smaller countries sped up buying after prices fell and as they sought to shift to the cleaner-burning fuel amid air pollution from burning coal, BNEF analysts including Maggie Kuang said in the report published Monday.

LNG use surging while idled spending may trigger next spike

U.S. shale is getting in the way of a New Year’s resolution by OPEC to cut production and boost the market. Producers and merchants increased their bets on lower West Texas Intermediate crude prices to the highest level since 2007 as futures held above $50/bbl. The increase in hedging against a price drop signals a comeback in U.S. shale output, just as OPEC members and other producers seek to reduce supply.

As OPEC acts on New Year’s resolution, U.S. shale pumps away

ConocoPhillips Alaska has made a new oil discovery in the Greater Mooses Tooth (GMT) Unit located in the northeastern portion of the National Petroleum Reserve–Alaska (NPRA). The Willow discovery wells, Tiŋmiaq 2 and 6, were drilled in early 2016 and encountered 72 ft and 42 ft of net pay, respectively, in the Brookian Nanushuk formation. ConocoPhillips has a 78% working interest in the discovery and Anadarko Petroleum holds the remaining 22%.

ConocoPhillips reports major discovery in Alaska

Cost cuts are painful, but for Norway’s oil industry, making every penny count has also yielded a surprising production windfall. Thanks to improvements from cheaper, faster drilling to greater regularity in the operation of production platforms, producers pumped 85,000 bpd more crude than expected during the past two years, or 6% above forecast, according to industry regulator, the Norwegian Petroleum Directorate. And it gets better: this week the NPD raised its output forecast for the 2017 to 2020 period by 8%, an average of 110,000 bpd.

Oil’s painful cost-squeeze generates output dividend for Norway

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Saudi Arabia says OPEC is on track to wrap up its production curbs by the middle of the year. That would leave its aim of clearing a global oil glut unfinished. OPEC and Russia won’t need to prolong output cuts beyond June because the agreed reductions will have already ended the oversupply in world crude markets, Saudi Minister of Energy and Industry Khalid Al-Falih said in Abu Dhabi on Monday. However, ending the deal by mid-year and restoring production would mean the surplus just starts building again, thwarting OPEC’s ambition of whittling down bloated oil inventories.

Saudi Plans for Early End to OPEC Pact May Leave Job Undone - Bloomberg

The oil market got a stark reminder Tuesday that rising oil production in the U.S. could upend efforts by major producers to bring global supply and demand for crude back in to balance. Just ahead of the settlement for oil futures prices CLG7, +0.08%  on the New York Mercantile Exchange on Tuesday, the Energy Information Administration released a report on drilling productivity—forecasting a monthly rise of 41,000 barrels a day in February oil production to 4.748 million barrels a day. “That is bearish for oil and a concern for [the Organization of the Petroleum Exporting Countries,” said James Williams, energy economist at WTRG Economics, pointing out that the volume of new oil per rig has climbed because of gains in efficiency.

Rising U.S. shale-oil output threatens OPEC’s production pact - MarketWatch

Oil production in Asia-Pacific is declining at a rate not seen elsewhere in the world, with around half of losses coming from China alone, Wood Mackenzie has warned. "We estimate 2016 production of 7.5 million barrels per day will fall by over a million barrels per day by 2020," said Angus Rodger, the energy consultancy's Asia-Pacific upstream research director.

Oil production in Asia declining at record levels: Wood Mackenzie

Exxon Mobil Corporation will more than double its Permian basin resource to 6 Bboe through the acquisition of companies owned by the Bass family of Fort Worth, Texas, with an estimated resource of 3.4 Bboe in New Mexico’s Delaware basin, a highly prolific, oil-prone section of the Permian basin. Exxon Mobil will make an upfront payment of $5.6 billion in Exxon Mobil shares, and a series of additional contingent cash payments totaling up to $1 billion, to be paid beginning in 2020 and ending no later than 2032 commensurate with the development of the resource.

Exxon Mobil goes big in the Permian with multi-billion-dollar deal

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Top oil industry officials in Davos aren’t turning completely bullish just yet. Capping their enthusiasm is U.S. shale oil, which is likely to limit price increases and usher in a period of greater volatility. U.S. supply is already returning at $50/bbl, Saudi Arabia Energy Minister Khalid Al-Falih and BP Plc CEO Bob Dudley said in Davos, Switzerland, on Tuesday. Higher prices will accelerate that process, according to International Energy Agency Executive Director Fatih Birol.

Oil bosses see shale rebound capping 2017 price surge

Libya’s oil production rebounded to about 700,000 bpd after dipping temporarily due to power outages that disrupted operations at some of the OPEC member’s fields. Electricity is returning gradually to fields in western Libya following a blackout on Jan. 14, according to a person familiar with the matter, who asked not to be identified for lack of authorization to speak to news media. Oil output dropped to 655,000 bpd this week as a result of the outages, and production should increase further as electricity is restored at more fields, the person said.

Libya oil output said to rebound with power returning at fields

Oil-price gains will trigger a “significant” increase in U.S. shale output as OPEC and other producers rein in supply, according to the head of the International Energy Agency. “U.S. shale-oil production will definitely react strongly,” Executive Director Fatih Birol said Wednesday in a Bloomberg Television interview in Davos, Switzerland. At $56 to $57/bbl, “a lot of shale plays in the United States would make perfect sense to produce.”

IEA sees significant gains in U.S. shale oil as prices rise

The surprising strength of the oil market is the main reason why OPEC could end output cuts by the middle of the year, Saudi Arabia’s energy minister said. OPEC and Russia may not need to extend the curbs when they expire in June, Khalid Al-Falih said in an interview at the World Economic Forum in Davos, characterizing his view as a “bullish sign.” The market is re-balancing as demand proves unexpectedly robust and OPEC’s Gulf members and Russia cut supply by more than they promised, he said.

Oil’s surprise strength is speeding OPEC goal, Saudi Arabia says

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The number of active oil and gas rigs in the United States increased on Friday by 35 for a total of 694 active rigs, according to oilfield services provider Baker Hughes, which is 57 rigs above the rig count a year ago. Not surprisingly, most of this week’s gains were in the form of oil rigs, which were up 29, from 522 last week to 551 this week. The number of active oil rigs in the United States is now 41 more than the same week last year.

Oil Slides After Massive Rig Count Gain | OilPrice.com

Benchmark crude oil prices will likely average $54 a barrel in the first quarter, but the rally may stall if producers don't deliver on pledged supply cuts, a CNBC survey of strategists and forecasters showed. OPEC agreed in November to cut production for the first time since 2008, defying sceptics. The cuts totaling about 1.2 million barrels a day aim to accelerate the global oil market re-balancing process.

Oil’s rebound above $50 in Q1 based on ‘faith than fact’

IEA: shale coming back, will lead to oil price downturn. The IEA upgraded its estimate for rising U.S. shale production this year, projecting output will increase by 500,000 bpd by the end of 2017, which will translate to an increase of 170,000 bpd averaged over the year. In addition, Brazil and Canada will chip in another 415,000 bpd, mainly from large projects planned years ago. The Paris-based energy agency says that OPEC cuts could lead to significant inventory drawdowns of about 0.7 mb/d, tightening the market in the first half of the year and leading to increases in crude prices. But beyond that, rising non-OPEC production could cause oil prices to fall back again towards the second half of the year.

Has OPEC Seriously Underestimated U.S. Shale Dynamics? | OilPrice.com

U.S. spending to rise. An array of oil companies large and small are stepping up spending this year now that oil prices have seemingly stabilized. According to Barclays, U.S. E&Ps could increase capex by more than 50 percent in 2017, which could surprise OPEC with a strong rebound in production.

Has OPEC Seriously Underestimated U.S. Shale Dynamics? | OilPrice.com

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When OPEC and Russia meet this weekend to gauge progress on their oil-supply deal, they’ll be trying to dispel the shadow of previous unfulfilled promises. Oil prices rose 20% in the month after OPEC agreed to cut output, reaching $54.06/bbl in New York on Dec. 28. Since then, they’ve slipped almost 5% as traders, with one eye on rising U.S. shale production, await proof that OPEC and other producers will live up to their deal. They recall how Russia broke its pledge during cutbacks in 2008, while some members of the producers group failed to fully implement the agreement.

OPEC seeks to quiet doubts on supply cuts as rally falters

Demand from some of the most coveted oil buyers may slow this year because they didn’t purchase all that they could in 2016. While China’s private refiners have received their first batch of quotas to buy foreign crude in 2017 and may get approval to purchase more later, the amount probably won’t exceed 2016 volumes, according to JPMorgan Chase & Co. That’s because the government is cutting allocations for those who bought less last year. What the processors have been allowed to directly import in the latest tranche is 62% of 2016’s total levels, the bank said in a report.

Oil demand at risk as China reins in buyers that bought less

And the U.S. producers are already doing it, recent figures and deals show. They survived thirty-dollar oil, and are emerging leaner, more efficient, and able to respond more quickly to oil price fluctuations. They proved they were and are “more resilient to low oil prices than many analysts had anticipated,” as the EIA said as early as in August last year. Meanwhile, Saudi Arabia seems unfazed from this possible rebound in U.S. shale, judging from one of the latest comments by its Oil Minister Khalid al-Falih. The Saudis still believe (or at least al-Falih says so) that current oil prices at around $50 are still not enough to herald a significant rebound of US shale production.

Saudi Oil Minister Shrugs At U.S. Shale Recovery | OilPrice.com

The basic laws of supply and demand can easily cause the OPEC production cuts to not work, but there are other factors to also consider. These factors include U.S. shale production, political stability returning to Libya and Nigeria, the amount of oil sitting in storage and rising role of renewable energy.

The Math Doesn’t Add Up For The OPEC Deal To Work | OilPrice.com

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OPEC and other oil producers agreed on a way to monitor their compliance with last month’s historic supply deal, putting global markets on track to re-balance after more than two years of oversupply. The countries have already cut oil supply by 1.5 MMbpd, more than 80% of their collective target, since the deal took effect on Jan. 1, Saudi Arabia’s Minister of Energy and Industry Khalid Al-Falih told reporters in Vienna.

OPEC, non-OPEC nations agree on way to monitor oil cut to end glut

Russia overtook Saudi Arabia as China’s top oil supplier last year for the first time ever amid the ongoing battle for market share in the world’s biggest energy market. Russia boosted crude supply to the Asian nation by 24% from 2015 to 52.5 million metric tons, or 1.05 MMbpd, according to data released Monday by the General Administration of Customs. The Middle Eastern kingdom became the second-biggest supplier, shipping 51 million tons, or 1.02 MMbpd, little changed from a year earlier.

Russia wrests crown of top China oil supplier from Saudi Arabia

Brace yourself for some serious swings in commodity prices in 2017, as a bevy of “black swans” could blindside investors, according to a Barclays research note published last week. “Commodity market black swan events come in many forms, and the market may take years or an instant to price them in,” the analysts wrote. “Indices are already pricing in record levels of volatility as 2017 begins, and investors are specifically concerned about geopolitical developments.”

13 ‘black swans’ that could hit oil investors in 2017 (including Elon Musk) - MarketWatch

Almost 1 Bbbl of oil held in inventories must be used up before global supply and demand are closer to balance, Dana Gas PJSJ CEO Patrick Allman-Ward said. “We still have a significant global storage of oil, close to a billion barrels,” Allman-Ward said Tuesday in a Bloomberg TV interview with Francine Lacqua at the World Economic Forum in Davos, Switzerland. Dana Gas, based in the United Arab Emirates, explores for and produces natural gas in the Middle East.

Dana Gas says 1 billion barrels of oil in way of ending glut

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Oil prices eased on Monday as signs of a strong recovery in U.S. drilling largely overshadowed news that OPEC and non-OPEC producers were on track to meet output reduction goals. Ministers representing members of the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC producers said at a meeting on Sunday that they had taken 1.5 million barrels per day out of the market. The producers have agreed to reduce supplies by almost 1.8 million barrels per day in the first half of this year.

Oil slips on signs of rising US output overshadow OPEC-led cuts

The impact of the OPEC production cuts could be much more muted than many had hoped for as non-OPEC output comes roaring back in 2017. And it isn’t just from U.S. shale. The IEA predicts that non-OPEC countries on the whole will add 380,000 bpd of net capacity this year, and crucially, that figure includes the promised 558,000 bpd reductions that 11 countries promised in conjunction with the OPEC cuts.

Despite OPEC Deal Oil Prices Could Fall Sharply From Here | OilPrice.com

Natural gas prices averaged a little more than $2.50 per mmBtu (million British Thermal Units) in 2016. Those days are over. Prices will average at least $3.50 to $4.00 in 2017. Prices have more than doubled since March 2016 but gas is still under-valued. Supply is tight because demand and exports have grown and shale gas production has declined.

Why Cheap Natural Gas Is History | OilPrice.com

In the short term, Riyadh will continue to feel the pain of lower-than-normal oil prices. The growth outlook for Saudi Arabia has been slashed, as the International Monetary Fund (IMF) announced on January 16 that the world’s largest oil producer would see its GDP grow by only 0.4 percent in 2017. The estimate comes on the basis of the continued low price of oil, but more importantly on the country’s slashed oil production: as a result of the recent OPEC production deal, Saudi Arabia has agreed to keep its production level at or below 10 million bpd. This has resulted in a cut in its growth outlook, down from 2 percent in October, according to Bloomberg.

Can Saudi Arabia Survive With Oil Below $60? | OilPrice.com

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The Permian basin land rush is spreading to oil and gas pipelines. Plains All American Pipeline said it will expand its crude oil gathering system in America’s hottest play through a $1.2-billion purchase from Concho Resources and Frontier Midstream Solutions. The Alpha Crude Connector System is located in the oil-rich northern portion of the Permian’s Delaware basin and will serve to expand the volume that the company is able to move from West Texas to Corpus Christi and other delivery points, Plains said Tuesday.

No stopping Texas as Permian fever spreads to pipes

Oil demand growth will slow and supplies will remain abundant in the coming decades, meaning producers in the Middle East, Russia and U.S. will continue to gain market share at the expense of higher-cost rivals, said BP. Demand for oil will expand at an average of 0.7% a year over the next two decades, little more than half the rate in the preceding 20 years, BP said on Wednesday in its Energy Outlook 2035 report. By the early 2030s transport will cease to be the main driver of growth, a significant departure from the historical trend.

BP sees a future of slowing oil demand growth, abundant supplies

PetroChina, the country’s biggest listed oil and gas producer, said full-year net income in 2016 fell by as much as 80%, putting it on pace to report a record-low profit. The slump is due to lower international oil prices and domestic natural gas prices dropping “drastically” compared with the previous year, it said in a filing with the Hong Kong stock exchange on Wednesday. The company reported net income of 35.5 billion yuan ($5.16 billion) in 2015, which means profit last year may have fallen to as low as about 7.1 billion yuan, down for a third year to the least in data going back to 1996.

PetroChina warns profit may drop to record low on oil’s plunge

Aubrey McClendon, CEO of American Energy Partners, LP (AELP), and Miguel Galuccio, president and CEO of YPF, have signed initial agreements for the exploration and development of the Vaca Muerta formation in Argentina’s Neuquén basin. The CEOs jointly visited Juan José Aranguren, Argentina's Minister of Energy, to present details of the shale oil and gas projects that both companies plan to execute, which entail investments of more than $500 million over the next three years, and to introduce AELP.

McClendon, YPF in $500-million Vaca Muerta venture