OPEC, for some quiet moments..

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The oil guru who predicted the market rout in 2014 said OPEC and its allies should have gone much further when they extended their supply deal last month. “They should have cut another million barrels a day for ninety days in order to drain the system,” said Gary Ross, global head of oil at PIRA Energy, a forecasting and analytics unit of S&P Global Platts.

Oil guru who foresaw crash says OPEC should have cut deeper

Oil traded near the lowest closing level in seven months as U.S. gasoline supplies unexpectedly rose for a second week. Futures were little changed in New York after slumping 3.7% Wednesday, the first drop in four sessions. Motor-fuel stockpiles expanded by 2.1 MMbbl last week, the EIA reported. Most analysts surveyed by Bloomberg had forecast a decline. Crude output climbed while nationwide inventories fell less than predicted.

Oil trades near seven-month low after U.S. gasoline supplies surge

BP Plc and Reliance Industries Ltd. will invest as much as $6 billion to restart work in Indian oil and gas blocks after eight years, in an area off the South Asian country’s east coast, where both companies have faced trouble boosting production. The companies aim to develop about 3 Tcf of resources that will result in production of an additional 30 MMcmgd to 35 MMcmgd from the D6 block in the Krishna Godavari basin between 2020 and 2022, Bob Dudley, CEO of BP, said in New Delhi Thursday.

BP, Reliance to revive India investments after eight years

Germany and Austria condemned a proposed expansion of U.S. sanctions on Russia, saying the measures sought to bolster U.S. economic interests and included an unacceptable intervention in the region’s energy sector. “Europe’s energy supply is a matter for Europe, not the United States of America,’’ German Foreign Minister Sigmar Gabriel and Austrian Chancellor Christian Kern said in a joint statement. “Instruments for political sanctions should not be tied to economic interests.”

Germany, Austria tell U.S. not to interfere in EU energy sector

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Iraq is gaining the edge over Saudi Arabia in the world’s fastest-growing oil consumer amid an intensifying race among producers to retain their most-prized markets. Iraq was the top crude supplier to India for a third month in May, shipping 1 MMbpd, according to shipping data compiled by Bloomberg. Iraqi supplies accounted for 23% of India’s purchases last month, up from an average 19% in the previous four months, while Saudi Arabia’s share fell by 1% to 17%, the data showed.

Iraq is new oil king, beats Saudis in fastest growing market

New oil supplies from OPEC’s rivals will be more than enough to meet growth in demand next year, the International Energy Agency said in its first forecast for 2018, an indication the cartel may need to extend production cuts further. The U.S., Brazil, Canada and other producers outside OPEC will increase output next year by the most in four years, the IEA said. So while the cutbacks should reduce the world’s bloated oil inventories to average levels by the time they’re scheduled to end next spring, demand for OPEC crude won’t be high enough for the group to reverse the curbs without seeing stockpiles rise again.

Oil from OPEC's rivals to exceed demand growth in 2018

U.S. shale is coming perilously close to puncturing its own rally. Just months after predicting double-digit production increases, largely based on crude prices sitting between $55 and $60/bbl, drillers are suddenly contemplating the possibility of retrenchment as a stubborn global supply glut is keeping prices near $46.

Shale drillers may be digging own hole as oil flirts with $40

U.S. crude production will average more than 10 MMbopd for the first time in 2018, breaking a record almost five decades old and keeping prices from rising as much as previously estimated, government forecasts showed Tuesday. Output will average 10.01 MMbopd next year, topping the previous high of 9.6 million in 1970, according to the Energy Information Administration’s monthly Short-Term Energy Outlook. That’s up from 9.96 MMbbl projected in May. The agency cut its 2018 forecast for West Texas Intermediate crude, the U.S. benchmark, by 2.7% from May.

U.S. sees crude output breaking 48-year-old record in 2018

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Inventory draws expected in the second and third quarters of 2017 suggest the possibility of some increases in crude oil prices over the coming months. However, because U.S. tight oil production is relatively responsive to changes in oil prices compared with offshore production, and even given an estimated six-month lag between a change in oil prices and realized production, higher crude oil prices in mid-2017 have the potential to raise U.S. supply in 2018. The largest global inventory increase in the forecast occurs in the second quarter of 2018, when Brazilian and OPEC production are expected to increase by 570,000 b/d and 220,000 b/d, respectively.

Global oil markets expected to tighten in third quarter 2017, then loosen through 2018 - Today in Energy - U.S. Energy Information Administration (EIA)

Traders are increasingly storing oil in aging supertankers in Southeast Asia as they grapple with a supply overhang that has left the system clogged with unneeded fuel despite an OPEC-led drive to cut production to prop up prices. Around 10 very large crude carriers (VLCCs), all between 16 and 20 years old, have been chartered since the end of May to store crude for periods ranging from 30 days to around six months, brokers told Reuters. Each VLCC can carry 2 million barrels of oil.

In latest sign of crude glut, aging supertankers used to store unsold oil | Reuters

The two biggest shale gas deposits in the U.S. are producing a record amount of the power-plant fuel, signaling that a fight for market share will intensify as supply outstrips demand. As natural gas prices rebound from last year’s historic lows, output from the Marcellus shale basin in the U.S. East and the Permian reservoir in Texas is driving a rebound in America’s production of the fuel. Low-cost supply from the Marcellus is surging as new pipelines are built to shuttle gas to markets across the U.S. and Canada. Meanwhile, Permian output is rising as a recovery in oil prices boosts the production of gas that’s extracted alongside crude.

Shale gas giants battle for dominance as U.S. supplies surge

“Renewable energy sources are set to represent almost three quarters of the $10.2 trillion the world will invest in new power generating technology until 2040, thanks to rapidly falling costs for solar and wind power, and a growing role for batteries, including electric vehicle batteries, in balancing supply and demand.”

New Energy Outlook 2017 | Bloomberg New Energy Finance | Bloomberg Finance LP

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Early last year, Jean-Guy Desjardins correctly predicted that Canadian equities were due for a rebound. He’s now saying oil prices will double, taking energy stocks along for the ride. "The fundamentals of the global supply-demand relationship are favoring higher oil prices," Desjardins, CEO of Fiera Capital Corp., said in an interview in Toronto on Thursday. "When it goes up it’s going to go up for an extended period of time. I think it can go back to $90, not in six months but over a couple of years."

CEO who called Canada's stock bottom sees $90 oil by 2020

As if a mini-collapse in oil prices wasn’t bad enough for OPEC, the pattern in which futures contracts are trading years from now has flipped into the worst possible structure for the exporter group. Brent and West Texas Intermediate crudes, down almost 15% since late May, are both trading in contango, where forward prices get higher all the way into the next decade. While it’s a structure that normally denotes weak demand for spot cargoes, the price pattern could also be bad news for the Organization of Petroleum Exporting Countries as it can sometimes tempt producers outside the group to lock in output for future years.

The forward curve for oil prices suddenly looks awful for OPEC

UK gas prices for immediate delivery posted the the biggest weekly decline in five years as works on a pipeline to mainland Europe damp demand for the fuel. Prices fell as much as 40% from last week’s levels as maintenance on the Interconnector link with Belgium restricted exports, undermining demand already hurt by the prolonged shutdown of Britain’s biggest gas storage facility. On top of that, above-normal temperatures across Europe eased the need for heating. Prices in the Netherlands, a rival trading hub to the UK, also fell.

UK natural gas has worst week since 2012 as demand collapses

The 2017 edition of the BP Statistical Review of World Energy, published today, shows global energy markets continuing to undergo long-term changes as they also adapt to nearer-term price challenges. Data published in the Review – the 66th annual edition – clearly demonstrate the long-term transitions now underway in the markets, with a shift to slower growth in global energy demand, demand moving strongly towards the fast-growing developing economies of Asia, and a marked shift towards lower carbon fuels as renewable energy continues to grow strongly and coal use falls.

BP Statistical Review shows long-term energy market shifts underway

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Iran and France’s Total SA expect to sign a contract to develop part of the world’s biggest natural gas field in the next few weeks in what would be the Persian Gulf country’s first investment by an international energy company since sanctions were eased last year.  Total and China National Petroleum Corp. signed a “heads of agreement” with National Iranian Oil Co. in November to develop phase 11 of the South Pars gas field, a deal that was valued then at $4.8 billion. Total Chief Executive Patrick Pouyanne told Euronews television on Tuesday that the company will sign a contract for the offshore gas project in the next few weeks.

Iran, Total expect to sign biggest gas deal soon

Oil dropped to the lowest in seven months amid a revival in output from Libya and rising volumes of fuel held in floating storage. Futures lost as much as 2.9% in New York after falling 1.2% Monday. Libya is pumping the most crude in four years after a deal with Wintershall AG enabled at least two fields to resume production. The amount of oil stored in tankers reached a 2017 high of 111.9 MMbbl earlier this month, according to Paris-based cargo tracking company Kpler SAS.

Oil drops to seven-month low as Libya adds to persistent surplus

Deals in the shale patch aren’t so hot anymore with oil in the doldrums. Mergers and acquisitions among U.S. exploration and production companies fell to less than $15 billion in the second quarter from about $23 billion in the first, according to estimates from Bloomberg Intelligence. The number of deals plunged to the lowest since early 2015. In the previous two years deals had increased, not fallen, in the second quarter from the first.

Shale patch M&A frenzy cools as oil price seen stuck below $45

There’s yet another concern growing as oil prices continue to erode: A record U.S. fraclog. There were 5,946 DUC wells in the nation’s oilfields at the end of May, the most in at least three years, according to estimates by the U.S. Energy Information Administration. In the last month alone, explorers drilled 125 more wells in the Permian basin than they would open. That represents about 96,000 bpd of output hovering over the market.

Shale's record fraclog could force oil prices lower

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The past month’s plunge in oil prices has turned the market for hedging upside down.  Oil producers have scaled back locking in future prices “considerably” since February, Societe Generale SA said in a report, citing a shift in options pricing driven by consumer companies like shippers and airlines. Late last year, sellers including U.S. shale drillers locked in prices in droves when benchmarks rose after OPEC announced plans to cut production. “This is a significant shift in the relative producer-consumer hedging behavior,” wrote David Schenck, a cross-commodity strategist at Societe Generale. “While consumers may try to lock in low prices, most producers will simply refuse to lock-in loss-making prices.”

Oil Producers Stop Hedging as Low Prices Lure Ships, Planes - Bloomberg

Saudi Energy Minister Khalid al-Falih said the oil market is heading in the right direction but still needs time to rebalance, the London-based newspaper Asharq al-Awsat reported on Monday. "In my opinion, market fundamentals are going in the right direction, but in light of the large surplus in stockpiles over the past years, the cut needs time to take effect," he told the newspaper, referring to a global deal to curb oil production.

Oil market fundamentals heading in right direction: Saudi's Falih | Reuters

Total will go ahead with development of a giant Iranian gas field this summer, its CEO told Reuters, in the first major western energy investment in the country since Tehran signed an international nuclear deal. Chief Executive Patrick Pouyanne said the French group would make an initial $1 billion investment after the United States extended sanctions relief for Iran under the 2015 agreement.

France's Total to go ahead with major Iran gas project: CEO | Reuters

The lead editorial in Friday’s Wall Street Journal was pure energy nonsense.’ “Lessons of the Energy Export Boom” proclaimed that the United States is becoming the oil and gas superpower of the world. This despite the uncomfortable fact that it is also the world’s biggest importer of crude oil. The Journal uses statistical sleight-of-hand to argue that the U.S. only imports 25% of its oil but the average is 47% for 2017. Saudi Arabia and Russia–the real oil superpowers–import no oil. The piece includes the standard claptrap about how the fracking revolution has pushed break-even prices to absurdly low levels. But another article in the same newspaper on the same day described how producers are losing $0.33 on every dollar in the red hot Permian basin shale plays. Oops.

What’s Wrong With The U.S. Oil Export Boom | OilPrice.com

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After Mohammed bin Salman’s appointment as crown prince, energy markets need to brace for an even more assertive Saudi Arabian foreign policy that could threaten regional stability in the heart of the global oil industry. The 31-year-old has already supported the kingdom’s involvement in a war in Yemen and broken diplomatic ties with fellow OPEC member Qatar. Both moves were driven by a confrontational stance toward Iran, and MbS, as the prince is known, has already let the intensifying regional rivalry spill into oil policy -- last year, he intervened to sink a deal to freeze production because Iran refused to participate.

Oil market sees heightened conflict risk in Saudi power shift

Oil companies risk wasting $2.3 trillion of investments should demand peak in the next decade as the world works toward its goal of limiting global warming, according to a report from Carbon Tracker. Exxon Mobil Corp. is the most exposed oil major with as much as 50% of potential spending to 2025 on projects that wouldn’t be needed as the world changes its energy mix to meet climate targets, according to the report published on Wednesday in collaboration with the Principles for Responsible Investment. Royal Dutch Shell Plc, Chevron Corp., Total SA and Eni SpA risk wasting as much as 40% of expenditure and BP Plc up to 30%.

Oil majors risk wasting $2.3 trillion if peak demand looms

Venezuela, home to the largest oil reserves in the world, is seeking to import 13 MMbbl of fuel this year as the country’s refineries are now operating at less than half of their capacity.

Venezuela looks abroad for fuel as domestic production wanes

Reports of deepwater drilling’s demise in a world of sub-$100 oil may have been greatly exaggerated, much to OPEC’s dismay. Pumping crude from seabeds thousands of feet below water is turning cheaper as producers streamline operations and prioritize drilling in core wells, according to Wood Mackenzie Ltd. That means  oil at $50/bbl could sustain some of these projects by next year, down from an average break-even price of about $62 in the first quarter and $75 in 2014, the energy consultancy estimates.

Trouble brewing for OPEC as once costly deepwater drilling turns cheap

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Oil prices recovered after falling into a bear market amid speculation rising U.S. output will blunt OPEC-led efforts to trim a global glut. Futures climbed 0.5% in New York, but still traded below $43/bbl. U.S. oil production increased to the highest since August 2015, according to a report from the EIA. Crude and gasoline stockpiles declined last week. Brent in London closed Wednesday more than 20% below its January peak, also entering a bear market.

Oil posts slight gain after falling into bear market

Oil’s back in a bear market and investors remain unmoved by last month’s agreement to prolong supply cuts, leaving OPEC and its allies with few remaining tools to boost prices. As Saudi Arabia, Russia and their allies reduce output, supply that’s beyond their control keeps rising. Libya and Nigeria -- OPEC members exempt from the curbs -- and U.S. shale producers are resurgent, undermining efforts to tame a global glut. Prices are back below where they were when the Organization of Petroleum Exporting Countries first struck its historic deal last year. Cutting even deeper -- an idea rejected just a month ago -- still looks unlikely. For now at least, the Saudi pledge to do “whatever it takes” to stabilize prices looks like not much at all.

OPEC Has Few Escape Routes From Another Bear Market in Oil - Bloomberg

Oil production is loss-making when prices drop below $40 a barrel, says Mathew Kaleel of Janus Henderson. [video]

Why sub-$40 oil is 'problematic'

Nigerian oil output has recovered to its highest level in more than a year as militant attacks have declined substantially, along with the return of key export grade Forcados. Including crude and condensate, output from OPEC's biggest African producer plummeted to near 30-year lows of around 1.2 million b/d in 2016, from 2.2 million b/d previously, as attacks on oil facilities in the Niger Delta rose at an alarming pace due to resurgent militancy. But Nigerian crude oil production in May jumped to 1.73 million b/d, up 80,000 b/d from April, its highest level since March 2016, according to the most recent S&P Global Platts OPEC survey.

Nigeria's cut exemption at risk from oil revival - Oil | Platts News Article & Story

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Nigerian oil output has recovered to its highest level in more than a year as militant attacks have declined substantially, along with the return of key export grade Forcados. Including crude and condensate, output from OPEC's biggest African producer plummeted to near 30-year lows of around 1.2 million b/d in 2016, from 2.2 million b/d previously, as attacks on oil facilities in the Niger Delta rose at an alarming pace due to resurgent militancy. But Nigerian crude oil production in May jumped to 1.73 million b/d, up 80,000 b/d from April, its highest level since March 2016, according to the most recent S&P Global Platts OPEC survey.

Nigeria's cut exemption at risk from oil revival - Oil | Platts News Article & Story

A supply glut that’s weighed on the U.S. natural gas market for most of the past two years may vanish before the winter, even if a sweltering summer fails to materialize. Inventories of the power-plant fuel may reach 3.4 trillion cubic feet by the end of October, the lowest since 2008 for the time of year, according to report from Bloomberg New Energy Finance. That’s about 10 percent below the five-year average for the period.

It Won't Take a Red-Hot Summer to Wipe Out the U.S. Gas Glut - Bloomberg

After helping give birth to the U.S. shale boom a decade ago, Mark Papa is starting over at age 70 with a new $3.6-billion oil explorer he built from scrap amid the worst market crash in a generation. Papa forged a reputation by building the Enron Corp. castoff  EOG Resources Inc. into the fourth-biggest U.S. driller. Now, starting with a $500-million private-equity stake, he’s boosted the value of Centennial Resource Development Inc. more than sixfold in under two years. The company has no debt, unheard of in the industry, and is flush with assets in one of the world’s busiest oil patches.

Shale tycoon who turned Enron reject into gold builds again

The oil market is running out of time for crude inventories to show a significant drop in 2017, according to Statoil ASA’s chief economist. When it comes, though, the correction "will be relatively rapid," said Eirik Waerness in an interview at Bloomberg headquarters in New York.

Running out of time to reduce stockpiles in 2017, Statoil says

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When Royal Dutch Shell decided to pull out of the Canadian oil sands, the local producers doubled down with more investment.  Crude’s bear market is testing their resolve. Trailing only Saudi Arabia and Venezuela in proved reserves, the sticky deposits of sand, water, clay and hydrocarbons in the remote boreal forests of Canada are some of the hardest and most expensive to extract. But producers like  Cenovus Energy Inc. have vowed to deliver profits at lower prices after spending billions of dollars to buy assets from foreign majors. Now they get a chance to prove it.

World's no. 3 oil reserves tested by rout as Shell decamps

Oil prices crept higher on Monday in quiet trade that featured bargain hunting after prices slid last week and hit seven-month lows, but gains were limited by rising crude supply in the United States and other countries. Brent crude futures were up 25 cents, or half a percent, at $45.79/bbl by 1:13 p.m. (1713 GMT), still set for a near 20% drop in the first half of the year.

Oil edges higher, growing U.S. supply limits gains

Add South Korea to the growing list of regulars buying America’s shale gas. Cheniere Energy Inc., the sole exporter of liquefied natural gas from U.S. shale basins, commenced a 20-year supply agreement with  Korea Gas Corp. at a ceremony in Louisiana on Sunday. Under the deal originally signed in 2012, Cheniere will make available for delivery about 3.5 million tons of the supercooled fuel annually to South Korea, the world’s second-biggest buyer last year, representing at least $548 million of revenue per year.

Cheniere's LNG market share expands as Korea contract begins

Brazil’s most crippling recession on record is complicating life for OPEC. The nation’s growing oil production combined with slumping domestic demand has unleashed record exports, undermining OPEC’s efforts to reverse falling prices through output cuts. Brazil hit a daily production record of 1.5 MMbbl earlier this year, 26% more than the previous record set in 2010. Average exports surged 39% in the first four months of 2017 from the previous year. State-controlled Petroleo Brasileiro SA, the country’s dominant producer and the source of half its crude exports, expects to end 2017 with 30% growth in international sales.

OPEC gets another supply headache from surging Brazilian exports