OPEC, for some quiet moments..

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The French oil company Total released a downward revision to its production forecast, lowering its target from 2.8 million barrels per day (mb/d) in 2017, to 2.6 mb/d, a sign that low oil prices continue to cut into long-term oil production for even the largest companies. Total’s CEO said part of the reason for the more modest target was spending cuts, amid falling oil prices. Lower investment will lead to lower output in the future. The other part of the problem is delays to projects that the company already has in the works.

Oil Majors Sacrifice Production To Protect Dividends | OilPrice.com

Just as gas export-terminals are preparing to start up along America’s Gulf Coast, the oil-price crash has made it unprofitable to send the U.S. fuel abroad, according to the North America head of power and natural gas supplier Engie. It costs about $2 to liquefy gas and another $3 to take it from the U.S. to Asia, said Zin Smati, president and CEO of Engie’s GDF Suez Energy North America. Engie changed its name from GDF Suez SA in April. Those costs used to leave plenty of profit margin when the gap between LNG prices in Asia and natural gas in the U.S. was more than $14 per million British thermal units. Now, the spread is less than $5, according to data compiled by Bloomberg.

Nobody is making money off U.S. natural gas exports, Engie says

There is a growing sense that oil prices could be turning a corner, but so far the price gains have been sparse. The EIA says that persistently low oil prices could lead to a long-term decline in investment in the upstream oil and gas sector. Dollars spent on exploration and development are highly sensitive to the price of crude, and the EIA argues that it is becoming increasingly likely that the period between 2015-2020 will see “substantially lower annual oil and natural gas investment” than the “annual average of $122 billion spent during the 2005-2014 investment cycle crest period.” Of course, with long lead times for most oil and gas fields, the current bust is planting the seeds for a tighter market in the years ahead.

This Week In Energy: “A Real Wake-Up Call” For The Oil Markets | OilPrice.com

Royal Dutch Shell (RDSa.L) has abandoned its Arctic search for oil after failing to find enough crude in a move that will appease environmental campaigners and shareholders who said its project was too expensive and risky. Shell has spent about $7 billion on exploration in the waters off Alaska so far and said it could take a hit of up to $4.1 billion for pulling out of the Chukchi Sea for the "foreseeable future".

Shell pulls the plug on Arctic exploration | Reuters

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Yu's team has grown more than a little sick of reports linking weakness in crude oil prices to softening economic data in China. There's one big problem with this narrative, according to the analysts: Chinese oil demand is actually quite robust, up 9.2 percent year-over-year as of August.

Jefferies: China's Demand for Oil is Totally Misunderstood by the Market - Bloomberg Business

Saudi Arabia has withdrawn tens of billions of dollars from global asset managers as the oil-rich kingdom seeks to cut its widening deficit and reduce exposure to volatile equities markets amid the sustained slump in oil prices. The Saudi Arabian Monetary Agency’s foreign reserves have slumped by nearly $73bn since oil prices started to decline last year as the kingdom keeps spending to sustain the economy and fund its military campaign in Yemen.

Saudi Arabia withdraws overseas funds - FT.com

The Gladstone LNG (GLNG) project has started producing its first liquefied natural gas on Curtis Island, Queensland, on schedule and within budget, Adelaide, Australia-based Santos announced Thursday. LNG is currently being produced from Train 1 ahead of the first cargo, which is expected to be shipped to Asian markets in the coming weeks. Work on the second train is continuing to progress well, with Train 2 expected to be ready for start-up by the end of the year.

Gladstone LNG starts production on schedule, Santos says

Something important, and valuable, has been quietly hidden along America’s Gulf Coast. Across four secure sites in unassuming locations lies nearly 700 million barrels of oil – buried underground. A total of 60 subterranean caverns, carved into rock salt beneath the surface, constitute the United States’ massive “Strategic Petroleum Reserve” (SPR). The facility was set up 40 years ago and there are now many other huge oil stockpiles dotted around the world. In fact, a whole host of countries have poured billions of dollars into developing such facilities and more are on the way. But what are these reserves – and why would anyone want to bury oil back into the ground in the first place?

BBC - Future - Why the US hides 700 million barrels of oil underground

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Iraq’s oil production is at risk for winter when “loading problems” have historically reduced output by 300,000 bopd to 500,000 bopd, Barclays Plc said. Loading facilities and the nation’s single-point mooring systems are “insufficient for the winter season,” Michael Cohen, a Barclays analyst in New York, said in a Sept. 25 report. It wasn’t clear from the report what causes the disruptions during winter.

Iraq’s oil production seen at risk by Barclays as winter nears

Ukraine, a dominant gas transit hub, reached a supply agreement Friday with Russia, the European Union’s largest outside supplier of the fuel. The decision ends a disagreement between the two that threatened to disrupt flows into Europe this winter, just as homeowners and businesses start firing up natural gas-powered boilers and other heating units.

Russia, Ukraine gas agreement warms Europe amid widening glut

The momentum behind wagers on rising oil prices picked up steam as U.S. drilling slows and producers face potential credit line cuts. Money managers’ long position in West Texas Intermediate crude climbed by 6.1% in the week ended Sept. 22, the most since January, according to data from the Commodity Futures Trading Commission. The jump in longs and a decline in shorts boosted their net-long position by 15%.

Hedge funds primed for oil rebound with increase in bullish bets

Despite the presence of international companies and the few hundred wells drilled to date, it is still early days. Production has ticked up, but the shale region has barely been picked over. Chevron and YPF are producing around 43,000 barrels per day of oil equivalent from the Vaca Muerta. Low oil prices, however, are dampening activity in the country. YPF’s Miguel Galuccio said in April that, with oil prices so low, some wells are not profitable. “It is not profitable with an $11 million well and prices at $50 per barrel. We drilled our vertical wells with the expectation that they would be profitable at $84 per barrel and with wells that cost between $6.5 or $7 million,” he said. YPF has succeeded in bringing down the cost of drilling, but it is still shy of its target of $4 to $5 million per well, which would be much closer to the drilling costs in North America.

Trouble Ahead for the World's Next Shale Boom? | RealClearEnergy

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Plummeting natural gas production from Europe’s biggest natural gas field hasn’t stopped prices sliding to a six-year low at the start of the winter heating season. Output in The Netherlands, the European Union’s biggest gas producer, slipped 58% from a year earlier in May to the lowest level since at least 1982 as extraction was capped at its Groningen field to prevent earthquakes, data from the nation’s statistics office show. Gas in the UK, the region’s biggest market, is trading at a six-year low and may fall another 8% this winter amid near-record storage and more imports, Bloomberg New Energy Finance said.

Plummeting Dutch gas output can't stop European price slump

Oil climbed from a two-week low amid expectations a government report will show a slowdown in drilling has trimmed U.S. crude supplies -- a sign that the oil glut might finally be shrinking. U.S. stockpiles probably slipped 250,000 barrels last week, according to a Bloomberg survey before the release of Energy Information Administration data on Wednesday. Crude production in the U.S. has declined in six of the past seven weeks after low prices forced drillers to idle rigs. Financial markets showed signs of stabilizing after a rout Monday wiped $800 billion off global equities.

Oil rises from two-week low as U.S. output, supply seen falling

Decreases in the cost to drill shale gas wells and continued investment into domestic production have allowed China to increase its development of shale gas. Although reliance on natural gas imports has increased in the Chinese energy market, future shale gas production in China would help to meet natural gas demand as the country faces difficulties in developing other natural gas resources, including coalbed methane (CBM).

Shale gas development in China aided by government investment and decreasing well cost

Global total liquids production was 96.29 Mbpd in August, down 630,000 bpd from the June peak. But with oversupply running at over 3 Mbpd during the second quarter, there is still a long way to go to rebalance the system. Production in OPEC, Europe, Russia and East Asia is stable with no sign of turning down. In fact, Norway and the UK appear to be skipping annual maintenance this summer and European production is up 420,000 bpd compared with a year ago. The only region showing a marginal production decline is North America where production has fallen 580,000 bpd from the April peak.

Will The Oil Market Stalemate Be Broken Next Month? | OilPrice.com

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After growing evidence that U.S. supply was contracting, the EIA reported that U.S. oil production rose in July (the latest month for which data is available) by 94,000 barrels per day, compared to June. The monthly figures are much more reliable than the weekly estimates, so the increase can be considered more of a solid barometer of where the U.S. supply picture has been heading, although only in retrospect. However, the uptick needs some context. The increases came exclusively from the Gulf of Mexico where output jumped by 147,000 barrels per day.

This Week In Energy: Don’t Be Fooled By Latest U.S. Production Data | OilPrice.com

Some of this is just a cost phenomenon. In the wake of crude’s selloff, the sand market collapsed too, driving down the price 30% and making it cheaper to shovel more grit in. The initiative, though, began years earlier, the result of engineers tinkering with inputs and discovering one of the many little technological breakthroughs that have helped the shale industry weather the downturn better than its legions of skeptics predicted. For proof of greater productivity, look no further than total U.S. output: It remains within 3% of a 40-year high even though drillers have idled more than half of their rigs.

America’s oil output refuses to collapse. Here’s one reason why

Over the last decade, the United States has firmly established itself as the world’s largest natural gas producer. This significance of this is difficult to overstate, as less than a decade ago growing natural gas demand and declining production was putting the US on course to import significant amounts of gas from abroad.

US continues to distance itself as the world leader of natural gas « The Barrel Blog

According to Dr. Kent Moors of the Oil & Energy Investor, "Most American exportation and production (E&P) companies have been cash poor over the past decade, regardless of the price of oil . . . this means it has cost them more to fund ongoing operations than they have realized in revenues. When prices for oil have been $75 or higher, this spread has made little difference."

How Energy’s Debt Bubble Affects Your Portfolio

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Oil extended gains above $45/bbl after data showed a reduction in the number of rigs drilling for crude in the U.S., signaling output cuts in the world’s biggest consumer. Futures climbed as much as 1% in New York, adding to Friday’s 1.8% advance. The number of active oil rigs fell by 26 to 614 last week, a five-year low, according to data from Baker Hughes Inc., an oil-field services company. Saudi Arabia cut pricing for November supplies to Asia and the U.S. as the world’s largest crude exporter seeks to keep its cargoes competitive with rival suppliers amid sluggish demand.

Oil extends gains above $45 as rig fall signals U.S. output cuts

And yet, remarkably, even as most of the region began to burn, oil prices collapsed. In the past, geopolitical instability in the region triggered three global recessions. The 1973 Yom Kippur War between Israel and the Arab states caused an oil embargo that tripled prices and led to the stagflation (high unemployment plus inflation) of 1974-1975. The Iranian revolution of 1979 led to another embargo and price shock that triggered the global stagflation of 1980-1982. And the Iraq invasion of Kuwait in 1990 led to another spike in oil prices that triggered the US and global recession of 1990-1991.

The Middle East Meltdown and Global Risk by Nouriel Roubini - Project Syndicate

The chart shows that compared with the first half of 2014, the first six months of 2015 have seen the company fail to generate enough cash flow via asset disposals and cash flow to pay for its dividend and capex. Despite cutting share buybacks and inorganic capex dramatically, BP still finds itself in need of more cash. That result is largely a byproduct of the collapse in oil prices which BP of course has no control over.

BP Spells Out What’s Wrong With Big Oil In One Chart | OilPrice.com

Saudi Arabia announced price cuts to its oil that it is exporting to Asia, in a bid to hold onto market share. Saudi Arabia’s competitors from the Gulf cut their prices last month, forcing the largest OPEC producer to follow suit. Saudi Arabia slashed prices by $1.70 per barrel, opening up a discount of $1.60 per barrel below the Dubai benchmark. Although there was little expectation of a shift in strategy, the price cut highlights Saudi Arabia’s determination to continue to pursue market share by keeping production volumes elevated.

This Month Could Make Or Break The Oil Markets | OilPrice.com

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More than a year after oil began to tumble, Europe’s largest oil company said the first signs of a recovery are only now starting to show. While Royal Dutch Shell Plc is still planning for a prolonged slump, the industry’s sweeping investment cuts and declining U.S. output point to higher prices in the future, CEO Ben Van Beurden said Tuesday.

Shell sees signs of oil recovery though ‘rebalance’ to take time

OPEC is assuming the oil price will rise gradually to $80/bbl in 2020 as supply growth outside the group weakens, a slower recovery than several member nations have said they need. The average selling price of the Organization of Petroleum Exporting Countries’ crude will increase by about $5 annually to 2020 from $55 this year, according to an internal research report from the group seen by Bloomberg News. Iran and Venezuela said they would like to see a price of at least $70 this month and most member countries cannot balance their budgets at current prices.

OPEC assumes oil price will recover gradually to $80 in 2020

President Putin’s recent moves in the Middle East—to shore up Bashar al-Assad’s regime in Syria through deployment of combat aircraft, equipment, and manpower and build-out of air-, naval-, and ground-force bases, and the agreement in the last week with Iran, Iraq, and Syria on intelligence and security cooperation—could contribute to Russian efforts to combat the myriad negative pressures on Russia’s vital energy industry.

Is Russia Plotting To Bring Down OPEC? | OilPrice.com

Iraq’s Kurdish region ramped up crude exports by 27 percent in September as the semi-autonomous enclave seeks greater financial independence amid a budget dispute with the federal government in Baghdad. The Kurdistan Regional Government exported 18.6 million barrels, or an average of 600,463 barrels a day, through the pipeline network to the Turkish port of Ceyhan, according to a statement on the KRG’s Ministry of Natural Resources website. In August, the KRG exported 14.7 million barrels of crude oil to the Mediterranean port.

Iraqi Kurds Boost Oil Sales in Drive for Financial Independence - Bloomberg Business

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Encana Corp. wants to ensure the shale-oil boom keeps booming. The Canadian producer is among a growing number of companies that are restricting initial output—a process known as choking back—in basins from North Dakota to Texas. They’re conceding huge up-front gushers of crude in exchange for smaller production declines over time so that the wells ultimately generate more oil.

Oil drillers bet choking wells will keep shale from going bust

The biggest Arab economy is showing signs of strain after oil prices tumbled about 50 percent over the past 12 months, pushing authorities to search for savings and sell bonds for the first time since 2007. The government, so far, has been short on specifics on how it will reduce spending, though planners are said to be considering measures long viewed as off-limits or unnecessary, including phasing out fuel subsidies and investing in renewable energy.

Saudi Cash Burn Drives Foreign Reserves to Lowest Since 2013 - Bloomberg Business

A Louisiana-based company says it plans to build a massive facility along the Calcasieu River ship channel to export liquefied natural gas. Baton Rouge-based G2 LNG LLC. announced on Monday that it plans to construct an $11 billion liquefied natural gas export facility on the ship channel in Cameron Parish. If built, it would be one of the largest capital investments in Louisiana’s history, according to the company.

Company announces plans for major LNG facility in Cameron - Fuel Fix

Decreases in the cost to drill shale gas wells and continued investment into domestic production have allowed China to increase its development of shale gas. Although reliance on natural gas imports has increased in the Chinese energy market, future shale gas production in China would help to meet natural gas demand as the country faces difficulties in developing other natural gas resources, including coalbed methane (CBM).

Shale gas development in China aided by government investment and decreasing well cost

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Oil extended gains on Friday and was set for its biggest weekly rise in over six years after U.S. Federal Reserve minutes suggested it was in no hurry to raise interest rates and an influential forecaster predicted a price rally.

Oil extends gains, set for biggest weekly rise since 2009 - Yahoo Finance

The White House has come under fire following the publication of a policy announcement saying that the administration “strongly opposes” legislation to remove restrictions on U.S. crude oil exports. According to the policy statement, such legislation “is not needed at this time” and Congress should focus “its efforts on supporting our transition to a low-carbon economy.”

White House criticized over oil export veto threat

The United States' natural gas demand is currently growing at the fastest pace since the early 1970s, and demand growth has now supplanted supply growth as the cornerstone for the outlook of the U.S. natural gas industry over the next five years, according to a new CoBank research report.  The newly issued report, U.S. Natural Gas Outlook through 2020: Demand Is the New Captain of the Ship, points out that the promise of low-cost, reliable natural gas supplies has spurred major investments by all end-users. As a result, the demand for U.S. natural gas will grow 25% over the next five years, with gas exports accounting for over half the growth.

U.S. will be net exporter of natural gas by 2017, report says

Somewhere amid the maze of wells that Murphy Oil Corp. has scattered across Texas’s sprawling Eagle Ford shale formation, Brett Pennington is carrying out a little experiment. What will happen, the exploration chief wants to know, when he jams huge quantities of sand down the narrow mouth of one of these wells. Will more crude seep out? Or, rather, will he smother the opening and choke off the flow?

America’s oil output refuses to collapse. Here’s one reason why.

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WSJ Updated Oct. 12, 2015 7:26 a.m. ET
1 COMMENTS
U.S. oil output will decline in 2016 for the first time in eight years as producers slash spending, the Organization of the Petroleum Exporting Countries said Monday, boosting demand for the cartel’s own crude and vindicating its strategy of defending market share over price.

In its closely watched monthly oil market report, OPEC slashed its U.S. oil production forecast by 280,000 barrels a day next year, leading to a decline of 60,000 barrels a day in 2016 instead of a previously predicted increase. The group said a fast depletion and expenditure cuts in tight oil, due to lower prices, were now driving down production faster than expected.

The news comes after industry group Baker Hughes Inc. last week reported a decline in the active U.S. oil rig count for the fifth straight week, dropping by nine to 605, the lowest since June 2010.

“This should reduce the excess supply in the market…resulting in more balanced oil market fundamentals,” OPEC said.

The American oil decline will also reduce overall supplies from producers outside the cartel, which will be down by 720,000 barrels a day next year, largely on reductions in the former Soviet Union, according to the report.

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Last week, OPEC said global oil production would be impacted by a reduction of $130 billion—or 22%—in project investments this year.

But retreating rival producers will boost OPEC, which sees demand for its crude rising by 1.2 million barrels a day—an upgrade in forecast of half a million barrels a day—to 30.8 million barrels daily. That level is much lower, however, than its output level of 31.57 million barrels a day in September, an increase of about 109,000 barrels.

Lower prices are also expected to lift appetite for oil. OPEC said its oil-demand growth forecast was upgraded by an annual 40,000 barrels a day for 2015 to 1.5 million barrels a day. World consumption is also expected to rise by 1.25 million barrels a day next y