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RE: OPEC, for some quiet moments.. - Putncalls - 02-11-2015

EIA prediction is 60$ versus 100$ last year. Increase in consumption predicted to be 900MBBL/day versus RJ's 1MMBBL/day. RJ estimates assumes increased driving in the US.
https://www.dropbox.com/s/2chczgoev6bplfi/Energy%202.10.15-1.pdf?dl=0


RE: OPEC, for some quiet moments.. - admin - 02-11-2015

And the funny thing is, even those academics whose work has shown a link between financialisation and oil prices, don’t like the BIS analysis. For example, FT Alphaville spoke to David Bicchetti, co-author with Nicolas Maystre of a UNCTAD paper which argued last year that banks moving out of commodities was responsible for the breakdown in correlation which we had come to take for granted since the crisis.

The BIS has a very different take on oil financialisation effects | FT Alphaville

Demand for oil from the Organization of the Petroleum Exporting Countries is set to rise this year, while growth in US oil production will slow as American energy firms cut back on drilling.

It looks like OPEC is winning the oil price war - Business Insider

But even OPEC admits that dropping rig counts won’t lead to a drop in US oil production anytime soon. It cites two reasons for continued (albeit slower) growth: “The first is an increase in the share of horizontal well drilling compared with vertical and directional well drilling employed in most plays’ sweet spots in the current circumstances, while the second is the time lag between drilling and well completion, which is at least a three-month period.”

It looks like OPEC is winning the oil price war - Business Insider

China's implied oil demand will grow 3 percent this year versus last year, the country's top energy group forecast, little changed from the pace of growth in 2014 as calculated by Reuters.

China's oil demand to grow three percent in 2015 - CNPC research - Yahoo Finance




RE: OPEC, for some quiet moments.. - admin - 02-12-2015

The U.S. will remain the biggest contributor to global growth in oil supplies to 2020 as OPEC’s attempts to defend its market share will hurt other suppliers including Russia more, according to the International Energy Agency. U.S. production of oil from hard-to-penetrate rock formations, while slower than previously forecast, will expand to 5.2 MMbopd by the end of the decade from about 3.6 MMbopd last year, the Paris-based adviser to consuming nations said in a report Tuesday. Russia’s output will contract by 560,000 bopd in the period, a bigger drop than any other nation, as sanctions compound the impact of lower prices.

IEA sees U.S. adding most oil to global supply through 2020

The combination of price falls and sanctions have had a "crushing impact", the IEA warn, as the lack of access to international markets has meant firms have been unable to plug the financing gap caused by cheaper oil.

Low oil prices and sanctions threaten Russia oil production - Business Insider

On February 10, the International Energy Agency cut its forecast for non-OPEC supply growth in 2015, taking account of companies slashing spending in reaction to the much lower oil price, and revised down its expectations for US production this year. It said reductions in capital expenditures had cut projected 2015 non-OPEC supply growth to 800,000 b/d for 2015 compared with a forecast of 950,000 b/d in the previous month’s report. The IEA had already reduced its forecast for non-OPEC supply growth this year by 350,000 b/d in its January report. It is in the United States in particular where the IEA sees lower production because of the spending cuts — it now sees total US output in 2015 at 12.4 million b/d, a reduction of 200,000 b/d on its previous estimate.

IEA makes cuts in US production forecasts – is OPEC’s strategy working? « The Barrel Blog

Recent well performance in the Eagle Ford Shale play has declined among key operators. This is due in part to especially poor well performance by a few operators. Excluding those operators, well performance for 2013 and 2014 was still poorer than in 2012 but improved in 2014 compared with 2013. When I wrote that Eagle Ford well performance was declining in a recent post, some readers were indignant as if a shale play somehow deserves a pass on the laws of physics and eternally gets better instead of eventually declining as all plays do.

Inefficiencies Abound In U.S. Shale




RE: OPEC, for some quiet moments.. - jft310 - 02-12-2015

NEW YORK (Bloomberg) -- Oil producers outside OPEC and U.S. shale fields are getting caught in the confrontation over market supremacy that has brought crude prices to near six-year lows.

High-cost regions from aging North Sea fields to untapped resources in East Siberia and deep-water projects off Latin America will suffer the most from the clash, say Standard Chartered Plc, Citigroup Inc. and BNP Paribas SA.

The Organization of Petroleum Exporting Countries refused to cut output in November to eliminate a surplus caused in large part by U.S. production at a three-decade high, leaving more expensive operators to reduce supply. International oil companies including Royal Dutch Shell Plc and Chevron Corp. have announced more than $40 billion in spending cuts since early November.

“What’s going to tighten the market for next year and the year after will be the longer-lasting damage done to the rest of non-OPEC,” Paul Horsnell, an analyst at Standard Chartered in London, said by phone.

Oil production from non-OPEC nations grew by 2 MMbpd last year, with about 75% of the new supply coming from the U.S., according to the International Energy Agency, a Paris-based adviser to 29 nations.

Surplus Supply

A supply surplus of about 1.5 MMbopd is pumped into the market daily, OPEC Secretary-General Abdalla El- Badri said Jan. 26. Brent crude, the global benchmark, fell for seven straight months, the longest slump on record, to the lowest level since March 2009. Futures for March settlement traded at $55.09/bbl at 5:16 p.m. local time on Feb. 11, down 52% since June, on the London-based ICE Futures Europe exchange.

U.S. shale drillers have been among the first to respond to lower prices. They cut rigs targeting U.S. oil by a record 435 to 1,140 in the nine weeks to Feb. 6, according to Baker Hughes Inc. That’s the lowest total since December 2011 as explorers slow efforts in the Permian Basin in Texas and North Dakota’s Bakken formation.

Yet the U.S. will still contribute the most of any country to the expansion of global oil supplies this decade, with the current slowdown marking a pause, not an end to the boom, the IEA said in a report Tuesday. Drilling from hard-to-penetrate rock formations including shale will still add about 1.6 MMbpd to global markets by 2020, it said.

‘Biggest Impact’

“Everyone is looking at the U.S., at when the lower U.S. rig count is going to feed through into lower production,” said Seth Kleinman, head of European energy research at Citigroup Inc. in London. “But probably the biggest impact on supply is going to come from” maintenance reductions in other parts of the world, he said.



Chevron lowered its 2015 capital-spending target, the majority of which is dedicated to supporting existing production, by 13 percent to $35 billion on Jan. 31. BP expects to cut spending to $20 billion this year, compared with previous guidance of $24 billion to $26 billion.

Lower spending on maintenance of existing oil fields can accelerate the decline in production by 1 or 2%, Kleinman said. Add this up across all the affected regions and “you’re talking about losing a million barrels of oil in 12 months.” That’s roughly equal to the global supply surplus, he said.

‘Top Loser’

“Russia, facing a perfect storm of collapsing prices, international sanctions and currency depreciation, will likely emerge as the industry’s top loser,” the IEA said in the report Tuesday. Its production will fall by 500,000 bpd to 10.4 million in 2020, the biggest drop of any nation, the agency said.

Projects in the North Sea, Latin America and Canadian oil sands require oil prices above $60/bbl, according to Energy Aspects Ltd., a consulting company based in London.

The North Sea is under a lot of stress, with current prices potentially shortening the economic lifespan of oil fields and affecting how soon they will be decommissioned, BP Chief Executive Officer Bob Dudley said in an interview with Bloomberg Television Feb. 3.

Brazil’s oil supply growth will dwindle to below 100,000 bpd this year, less than half the rate of 2014, Energy Aspects estimates. The country’s deep-water offshore projects require an oil price of more than $80/bbl to cover costs, according to BNP Paribas.

When oil prices eventually recover, shale producers will bounce back first because they need to spend less money upfront and can move more quickly from starting drilling to receiving production, said Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas. Offshore fields or oil sands projects, which have high upfront capital costs and can’t scale up so rapidly, will suffer more, he said.

“Unlike U.S. shale, conventional production elsewhere has high upfront capital costs, is slow to start up and will be the main victim of OPEC’s decision to keep output steady,” he said.


RE: OPEC, for some quiet moments.. - admin - 02-12-2015

Beset by falling prices, the oil industry is looking at about 50,000 existing wells in the U.S. that may be candidates for a second wave of fracking, using techniques that didn’t exist when they were first drilled. New wells can cost as much as $8 million, while re-fracking costs about $2 million, significant savings when the price of crude is hovering close to $50 a barrel, according to Halliburton Co., the world’s biggest provider of hydraulic fracturing services.

Drillers Take Second Crack at Fracking Old Wells to Cut Cost - Bloomberg Business

Job cuts are inevitable as oil and gas companies watch commodity prices tumble, but layoffs today could have significant ramifications for the sector tomorrow. For a variety of reasons specific to the industry, energy companies could find themselves in a situation later where skilled workers are hard to replace.

Energy layoffs could come back to haunt oil firms

The thing about the oil and gas markets is that traders are typically looking further down the road. It is widely expected that the supply/demand balance will tighten up in the 2nd half of 2015, so I reasoned that traders would start to position themselves well before that time. I explained the underlying basis of my prediction in that initial article, and then elaborated in the article preceding this one — Why $50 Oil Won’t Last. In a nutshell, I don’t believe the situation in 2008 — when oil prices fell into the $30s — applies today for two reasons.

Why Oil Won’t Go Below $40

Tom Kloza, chief oil analyst at Oil Price Information Service, predicted that oil prices would bottom during the second quarter of the year "simultaneously to one of the expirations of the WTI contracts." He warned that the price of West Texas Intermediate crude (New York Mercantile Exchange: @CL.1) could be in the $30s at some point in the second quarter.

Top oil analyst: The worst is yet to come - Yahoo Finance

Rather than wait for their price insurance to run out, many companies are racing to revamp their policies, cashing in well-placed hedges to increase the number of future barrels hedged, according to industry consultants, bankers and analysts familiar with the deals.

Revamped U.S. oil hedges may test OPEC's patience | Reuters




RE: OPEC, for some quiet moments.. - admin - 02-13-2015

US shale oil producers are scaling back, according to a report in The Wall Street Journal. Amid a slump in oil prices, some of America's largest oil companies drilled 28% fewer oil wells in January than they did last June.

The shale boom is slowing - Business Insider

Oil prices have gotten crushed for the last six months. The extent to which that was caused by an excess of supply or by a slowdown in demand has big implications for where prices will head next. People wishing for a big rebound may not want to read farther.

Goldman: Here's Why Oil Crashed—and Why Lower Prices Are Here to Stay - Bloomberg Business

Oil producers outside OPEC and U.S. shale fields are getting caught in the confrontation over market supremacy that has brought crude prices to near six-year lows. High-cost regions from aging North Sea fields to untapped resources in East Siberia and deep-water projects off Latin America will suffer the most from the clash, say Standard Chartered Plc, Citigroup Inc. and BNP Paribas SA.

Oil producers outside OPEC stuck in crossfire with shale

The vast majority of natural gas collection and processing facilities have methane leak rates of less than 1%, according to a major field study led by Colorado State University that examined 114 gathering facilities and 16 processing plants across 13 states. “The industry has every incentive to reduce emissions and sell more natural gas to consumers,” said API Senior Director of Regulatory and Scientific Affairs Howard Feldman. “We’re making remarkable progress reducing emissions, and this progress will continue as operators detect and seal leaks—including leaks from the few high emitting sites identified in the study. Burdensome new regulations would only interfere with our progress reducing emissions and jeopardize production of the clean-burning natural gas that has helped drive U.S. carbon emissions to near 20-year lows.”

Study finds low methane emissions from natural gas collection, processing facilities




RE: OPEC, for some quiet moments.. - admin - 02-14-2015

Only three out of the top four international oil companies generate enough free cash flow to cover spending, including shareholder distributions, in a $60/barrel environment, Wood Mackenzie noted. As a result, spending would need to be cut by $170 billion, or 37 percent year-on-year, at $60/barrel to keep net debt flat.

RIGZONE - Report: Only Three out of Four IOCs Generating Enough Free Cash at $60/bbl

A dynamic pricing model for NG is presented, based on the Hotelling (1934) approach for an exhaustible resource. The model uses available US consumption, production, storage and proved reserves data published by the EIA. NG Henry Hub monthly price moves are correlated well for 2013-2014. Our ad-hoc conclusion: NG prices are set to increase in the near term, quite appreciably.

Natural Gas: Predicting, Especially The Future | Seeking Alpha

U.S. producers battling OPEC for market share may increase output further from the highest rate in more than three decades as costs decline almost as fast as oil prices, according to Goldman Sachs Group Inc. The slump in benchmark U.S. crude futures, which are down more than 40% this year, is driving producers to move rigs to lower-cost fields, the bank said in an emailed report on Dec. 15. While there’s evidence of some rebalancing starting to occur in the market, that isn’t sufficient, it said.

Goldman sees U.S. oil production steady as costs sink with price

Almost $1tn of spending on future oil projects is at risk after a brutal plunge in crude prices to nearly $60 a barrel, Goldman Sachs has warned.

Oil price fall threatens $1tn of projects - FT.com

Oil prices are again under $50, after a brief but violent rally that topped out above $55. Several reports from the major trade houses have emerged in the last few days trying to put margins on the next move for crude oil -- but so few of them agree. What is really going to happen with oil prices?

Dicker and Cramer: Which Analyst's Wild Oil Price Prediction Is Right? - TheStreet




RE: OPEC, for some quiet moments.. - admin - 02-14-2015

The sharp drop in U.S. oil rig counts has helped lift crude prices off their lows, but it won't slow production or alleviate oversupply, Goldman Sachs said. "The decline in the U.S. rig count likely remains well short of the level required to slow U.S. shale oil production to levels consistent with a balanced global market," Goldman said in a note Tuesday. "Lower oil prices will be required over the coming quarters to see the U.S. production growth slowdown materialize."

Why oil rig cuts won’t boost prices: Goldman

The promise of plentiful jobs and salaries as high as a quarter-million dollars a year lured Colombia native Clara Correa Zappa and her British husband to Perth, Australia, at the height of the continent’s oil and gas frenzy.

Oil layoffs top 100,000 as job pilgrims’ dreams shatter

Queensland -- Australia Pacific LNG announced Wednesday that it had reached a significant milestone with the arrival of first gas from its coal seam gas fields in the Surat basin to its LNG facility on Curtis Island, near Gladstone, Queensland.

Australia Pacific LNG’s first gas reaches Curtis Island

Total SA will reduce spending, increase job cuts and curtail exploration this year after the crash in crude prices cut fourth-quarter profit 17%.

Total to curb spending, exploration as profit sinks on oil drop

Crude demand is improving amid signs prices are stabilizing, the state-run Saudi Press Agency reported, citing Saudi Arabia’s Oil Minister Ali al-Naimi. Al-Naimi discussed a “relative improvement in the market” with Algeria’s Minister of Justice Al-Tayeb Louh at a meeting in Riyadh on Wednesday, the Saudi Press Agency reported. Increased demand, stability of prices and the importance of cooperation among oil producers were mentioned, according to the report. Algeria and Saudi Arabia are members of the Organization of Petroleum Exporting Countries.

Oil demand seen by Saudis improving with prices stabilizing

Despite the so-called U.S. shale revolution and American aspirations for energy independence, the CEO of major oil giant Total told CNBC he was not convinced it would happen any time soon.

US will not become energy independent: Total CEO




RE: OPEC, for some quiet moments.. - admin - 02-16-2015

From the trough in May 2009 to its peak in October 2014, rigs drilling for oil soared from 180 to 1,609: multiplied by a factor of 9 in five years! And oil production soared, to reach 9.2 million barrels a day in January.

Fracking has collapsed - Business Insider

The US Energy Information Administration reported that crude oil inventories (excluding the Strategic Petroleum Reserve) rose by another 4.9 million barrels last week to 419.9 million barrels – the highest level in the weekly data going back to 1982. These weekly storage reports have been relentlessly terrible for months.

Oil price debacle continues - Business Insider

OPEC is supposedly out to beat, or at least curtail the growth of American shale oil production. For a host of reasons, especially the much shorter capex cycle for shale, they will not succeed unless they are willing to accept permanent low oil prices. But, permanent low oil prices will do too much damage to OPEC economies for this to be a credible threat.

OPEC Can't Kill American Shale | Seeking Alpha

Oil closed up for a second straight week on Friday after another drop in the US rig count, and Brent crude hit a 2015 high above $60 a barrel, but market skeptics cautioned the rally could fade because supplies keep coming. Many traders and analysts believe there is a global oversupply of nearly two million barrels per day of crude oil.

Oil tops $60 for first time in 2015 -Upstreamonline.com

The simplest argument for the oil price decline is for once correct. A wave of new U.S. fracking oil could be seen to be overtaking the modestly growing global oil demand. It became clear that OPEC, mainly Saudi Arabia, must cut back production if the price were to stay around $100 a barrel, which many, including me, believe is necessary to justify continued heavy spending to find traditional oil.

Jeremy Grantham Divines Oil Industry’s Future - Barron's




RE: OPEC, for some quiet moments.. - jft310 - 02-16-2015

(Bloomberg) -- Oil traded at an almost two-month high in London amid speculation that a slowdown in U.S. drilling may curb production.
Brent crude futures climbed 1.1 percent in London, extending a third weekly gain. U.S. drillers cut the number of rigs in service by 84 to 1,056, the lowest since August 2011, data from Baker Hughes Inc. show. Still, the decline isn’t steep enough to sufficiently curb production and address the current excess, according to Goldman Sachs Group Inc.
The U.S. is pumping oil at the fastest pace in three decades as a combination of horizontal drilling and hydraulic fracturing unlocks supplies from shale formations including the Permian and Eagle Ford in Texas and the Bakken in North Dakota. Oil prices are recovering faster and the supply surplus is smaller than previously expected, Kuwait Oil Minister Ali Al-Omair said.
“The reduction in drilling rigs was relatively strong,” Olivier Jakob, managing director at Petromatrix GmbH, said by e-mail from Zug, Switzerland. “We know that the drop in production is going to come later this year.”
U.S. Holiday
Brent for April settlement rose as much as $1.05 to $62.57 a barrel on the London-based ICE Futures Europe exchange, the highest since Dec. 22, and traded for $62.23 as of 11:40 a.m. local time. It climbed 6.4 percent last week. The European benchmark crude traded at a premium of as much as $8.50 to WTI for the same month, the widest since August.
West Texas Intermediate for March delivery rose as much as 91 cents, or 1.7 percent, to $53.69 a barrel in electronic trading on the New York Mercantile Exchange. The contract increased $1.57 to $52.78 on Friday. Floor trading on Monday will be suspended for a public holiday and transactions will be booked the following day for settlement purposes. The volume of all futures traded was in line with the 100-day average for the time of day.
Drillers in the U.S., the world’s largest oil consumer, have idled 519 rigs in the past 10 weeks, a 33 percent reduction, according to Baker Hughes, a Houston-based oil-field services company.
“The rig count decline is still not sufficient, in our view, to achieve the slowdown in US production growth required to balance the oil market,” Damien Courvalin, a New York-based analyst at Goldman Sachs, said in a report. “Oil prices need to remain lower in the coming quarters.”
The nation pumped 9.23 million barrels a day through Feb. 6, the fastest pace in weekly Energy Information Administration records dating back to January 1983.
Libya Output
Libya’s National Oil Corp. said it would stop pumping crude at all fields if the authorities fail to contain attacks on facilities that has reduced output to the lowest in a year.
A fire at a pipeline carrying crude to the eastern port of Hariga has been extinguished and National Oil plans to re-open it in a week, according to Mohamed Elharari, a spokesman in Tripoli. Production has been cut by 180,000 barrels a day after the bombing of a pipeline that carries crude to Hariga, he said earlier.
Price Recovery
Libya’s daily output, which averaged 1.6 million barrels before the 2011 rebellion that ended Muammar Qaddafi’s 42-year rule, was estimated at 300,000 barrels in January, a Bloomberg survey of oil companies, producers and analysts showed.
Brent gained about 38 percent since Jan. 13 when it fell to $45.19 a barrel. Oil prices will continue to recover in the second half of this year and the global crude surplus is less than the 1.8 million barrels a day the country previously estimated, according to Kuwait’s Al-Omair.
“We were expecting oil prices to recover in the second half, but they recovered faster than what we expected,” Al-Omair said at an industry conference in Kuwait City. “I expect oil prices to keep improving.”