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RE: OPEC, for some quiet moments.. - admin - 12-04-2015

Short positions on US crude and Brent have reached 294m barrels, the sort of clustering effect that can go wildly wrong if events throw a sudden surprise. The world is undoubtedly awash with oil and the last storage sites are filling relentlessly, but speculators need to be careful. They are at the mercy of opaque palace politics in Riyadh that few understand. Helima Croft, a former analyst for the US Central Intelligence Agency and now at RBC Capital Markets, says the only man who now matters is the deputy crown prince, Mohammed bin Salman.

Oil speculators risk 'short squeeze' if impulsive Saudi Prince throws Opec surprise - Telegraph

The risk of a systemic sovereign failure is clearly rising. Four of our ‘fragile- five’ Opec countries (Iraq, Libya, Nigeria and Algeria) are front-line states in the war against Isil and these countries will be hard passed to continue funding their security services and government apparatuses in a sub-$50 environment.

Oil speculators risk 'short squeeze' if impulsive Saudi Prince throws Opec surprise - Telegraph

Some $200bn of projects have already been cancelled, mostly in ultra-deep waters, the Arctic and the Canadian tar sands. A new report by IHS says investment from 2015 to 2019 will be $1.5 trillion less than it would have been, and spare capacity is down to a wafer-thin 2m b/d.

Oil speculators risk 'short squeeze' if impulsive Saudi Prince throws Opec surprise - Telegraph

Saudi Arabia, the world’s largest crude exporter, may propose an eventual OPEC production cut of 1 MMbopd that may take effect in 2016, Energy Intelligence reported Thursday, citing a group delegate it didn’t identify. Saudi Arabia would consider the cut only if a number of conditions are met, and the output reduction would not be agreed at the meeting Friday of the Organization of Petroleum Exporting Countries, according to the report, in EI’s International Oil Daily publication.

Saudis to propose conditional OPEC cuts in 2016, EI reports

RE: OPEC, for some quiet moments.. - admin - 12-05-2015

Per Magnus Nysveen, from Rystad Energy, said it will take a very long time to force the capitulation of America’s shale industry. While the rig count in the US has collapsed by 60pc over the past year, the number of wells being “fracked” has risen in recent weeks. “There is still an inventory of 3,500 wells. Theoretically they could continue fracking at this pace for another six months without any new drilling. We don’t think there is going to be a significant fall in US output next year. It could be flat,” he said.

Paralysed Opec pleads for allies as oil price crumbles - Telegraph

Mr Nysveen said the damage will be in other parts of the world, chiefly the mature offshore fields in the Gulf of Mexico, North Sea, Brazil and Africa. The decline rate of old fields will double to 10pc a year, subtracting 750,000 b/d from world supply within 12 months.

Paralysed Opec pleads for allies as oil price crumbles - Telegraph

The European Union’s biggest natural gas producer has joined most of the rest of the 28-nation bloc and become reliant on others as it posted its first quarter of imports. The Netherlands, which has spent almost all the 265 billion euros ($280 billion) it earned from gas between 1960 and 2013, brought in more fuel than it exported in the third quarter, with imports rising to a record in September, Statistics Netherlands said Wednesday.

European Union’s largest gas producer is now its latest importer

Anadarko Petroleum Corporation has announced that, along with the concessionaires of Offshore Area 1 (operated by Anadarko Mozambique Area 1 Ltd. (AMA1) and Offshore Area 4 (operated by Eni East Africa (EEA)), it has signed a Unitization and Unit Operating Agreement (UUOA) for the development of the massive natural gas resources that straddle the two blocks.

Anadarko achieves new Mozambique LNG milestones

RE: OPEC, for some quiet moments.. - admin - 12-06-2015

An internal OPEC document written to prepare a crucial meeting Friday warns oil prices will remain under pressure in the near future while markets would remain oversupplied even if the cartel cut its production.

OPEC Internal Report Warns Oil Prices to Remain Depressed - WSJ

Cash-strapped OPEC nations from Venezuela to Iran are piling pressure on Saudi Arabia to reduce oil output, yet the group’s biggest producer insists it will only do so if countries outside the organization join the effort. A year after Saudi Arabia spearheaded OPEC’s policy decision to maintain production amid slumping oil prices; the group is grappling with crude near a six-year low as supply overwhelms demand. Venezuela and Ecuador want OPEC to agree to output curbs on Friday when members meet in Vienna, officials said this week. Iran has called on the group to trim production to accommodate its own output increase next year.

OPEC states push for oil curbs as Saudis insist on global effort

China's renewing of its oil purchase deals with Iran not only provides a boost to the Islamic Republic's hopes of re-establishing itself in global markets, it also underscores why this week's OPEC meeting is largely irrelevant. The market consensus is that Friday's gathering of the Organization of the Petroleum Exporting Countries (OPEC) won't produce any significant change in the group's output policy. This is notwithstanding some apparent tentative signals from top producer Saudi Arabia that it may consider cutting output, as long as the rest of OPEC and major non-OPEC countries such as Russia also trim output. While this idea appears stillborn, given Russian opposition, the renewing of an oil purchase agreement between Iran and China is more significant, as it shows why any moves to curtail global output are doomed to fail in the current environment.

COLUMN-China's Iran deal shows OPEC members are cutthroat competitors: Russell | Reuters

The House passed the Energy and Commerce Committee's broad energy legislation this morning, sending the Senate a bill aimed at modernizing the electric grid and speeding natural gas exports.

ENERGY POLICY: Sweeping package passes House, faces turbulent road -- Thursday, December 3, 2015 --

RE: OPEC, for some quiet moments.. - admin - 12-07-2015

Drillers in the U.S. idled ten more oil-directed rigs this week, according to the latest data from Baker Hughes. The Houston-based service company reported 737 active rigs, of which 545 were seeking oil, on Friday, seven fewer than the week prior. The number of rigs seeking oil is now at the lowest level since June 4, 2010, when Baker Hughes also reported 545 active oil rigs.

U.S. drillers idle 10 oil-directed rigs: Baker Hughes

For the first time in seven years, OPEC’s newest member will increase crude production. It will likely be just a blip. The start of Indonesia’s Banyu Urip oil field in Java will be the single biggest addition to global supply this year, helping the returning member of the Organization of Petroleum Exporting Countries inch up output by about 1% this year and 5% the next to approximately 830,000 bopd. The decline will resume from 2017, according to BMI Research.

Indonesia returns to OPEC as an oil consuming nation

Australia’s $170-billion LNG construction boom is winding down, and the hunt for new work is picking up. As plants owned by companies including ConocoPhillips and Chevron Corp. prepare to start production, workers and engineering firms that helped build them, including San Francisco-based Bechtel Corp., are looking for new contracts. That’s proving tough at a time when commodity prices are putting future energy and mining developments in doubt.

LNG builders plan life after $170-billion boom in Australia

The U.S. House of Representatives passed a bipartisan energy package Thursday, which included an amendment offered by Rep. Joe Barton (R-TX) to lift the ban on U.S. crude oil exports. The crude oil exports amendment was approved by a bipartisan vote of 255-168. Lifting trade restrictions on U.S. crude oil exports would further enhance the nation's economic and national energy security, strengthen America’s geopolitical standing around the world, and provide meaningful benefits to American families and consumers.

IPAA cheers House passage of legislation to lift oil export ban

RE: OPEC, for some quiet moments.. - admin - 12-09-2015

we expect Exxon to generate operating cash flow of $34.8B this year and $34.3B next year, which will partially fund CAPEX of $29.7B and $29.4B and dividend of $12.1B and $12.7B, for a cash flow deficit of $7.0B and $7.9B, to be funded from divestiture proceeds and additional debt… Given its large scale, we believe production growth will be both anemic and unsustainable and return on invested capital will fall short of historical levels even at much higher, but more realistic oil prices. We believe Exxon needs another Mobil to create long-term shareholder value through synergy benefits from cost savings and efficiency gains. We think such a move by Exxon could accelerate industry consolidation and create companies that are more resilient to low and volatile oil prices.

Why Exxon Needs Another Mobil - Stocks to Watch -

Crude oil's plunge intensified on Tuesday morning, as the commodity broke dramatically below $37 per barrel to hit a seven-year low. And at this point, technically minded traders appear to be eyeing $32 as the next substantial level of support.

Here are the critical levels for crude oil now

In summary, EOG is well placed, relative to peers, to get through this extended period of weaker oil prices. Despite this strong relative position, EOG is cutting capex by 40% in 2015 (on average versus 2014), and expects 2015 production to be broadly flat on 2014 levels. If EOG holds the ‘best of the best’ acreage in the US best shale plays, what does it say about the outlook for other shale oil companies out there, and the larger companies that do not give specific guidance?

How is the US shale industry adjusting to the rapid decrease in oil prices?

OPEC’s new free-for-all production stance could lift the lid on millions of barrels of additional crude supply next year. “Everyone does whatever they want” now that the Organization of Petroleum Exporting Countries has effectively abandoned its formal production target, Iranian Oil Minister Bijan Namdar Zanganeh said after the group met on Friday. What Iran wants is to revive exports by about 1 million barrels a day when sanctions are removed next year. It’s not the only member with potential to swell the global oil surplus, with millions of barrels of capacity lying unused under the sands of Saudi Arabia and Libya.

OPEC Unshackled From Quota Could Add Millions of Barrels - Bloomberg Business

RE: OPEC, for some quiet moments.. - admin - 12-10-2015

While the global market is currently oversupplied with crude, Rystad Energy believes this could be turned upside down over the next few years. Rystad Energy research shows that while the oil industry needs to replace 34 Bbbl of crude every year—equal to current consumption, investment decisions for only 8 Bbbl were made in 2015. This amount is less than 25% of what the market requires long-term.

Future supply security at risk as oil service capacity continues to be cut: Rystad

Just when it seemed things couldn’t get worse for debt-laden energy companies, a renewed rout in oil prices is deepening their distress. As crude plunged to the lowest in more than six years, the average yield on the debt of speculative-grade oil and gas borrowers climbed to 13.4%, the highest since the waning days of the global financial crisis in 2009 and the widest divergence ever relative to the broader U.S. junk bond market, Bank of America Merrill Lynch index data show. That’s likely to push more companies to ask their bondholders to restructure debt to avoid bankruptcy, according to corporate-turnaround adviser Stroock & Stroock & Lavan LLP.

Year of distress for debt-burdened oil firms just got even worse

Wood Group has secured its second front-end engineering design (FEED) contract for the proposed Browse floating liquefied natural gas (FLNG) Development offshore Western Australia. Under the new contract with Woodside, effective immediately, Wood Group Kenny (WGK) will progress the configuration design of the flexible risers and umbilicals for the asset’s offshore gas-condensate fields—Brecknock, Calliance and Torosa.

Wood Group wins second Browse FLNG contract

China is on track to miss its shale gas production target for this year as its biggest producers throttle back output amid weakening demand growth and a collapse in energy prices. PetroChina Co., the country’s largest oil and gas company, may produce about 1.6 Bcm of the unconventional gas this year, lagging behind its stated target of 2.6 Bcm, according to people with direct knowledge of the matter.

PetroChina, Sinopec shale gas output said to be below China’s goal

RE: OPEC, for some quiet moments.. - admin - 12-11-2015

Chevron Corporation has announced a $26.6-billion capital and exploratory investment program for 2016. The 2016 budget, which includes $4.5 billion of planned expenditures by affiliates, is 24% lower than total expected investments for 2015. Chevron has set its total upstream spend at $24 billion, with $5.4 billion earmarked for the U.S. and $18.6 billion set for international operations.

Chevron cuts 2016 budget by a quarter to $26.6 billion

ConocoPhillips unveiled a significantly reduced budget for 2016 on Thursday. The company has set its 2016 capital budget at $7.7 billion, which represents a 55% reduction from 2014 and a 25% reduction as compared with expected 2015 capital spending.

ConocoPhillips cuts 2016 budget 25% to $7.7 billion

The next two quarters will be tough on crude prices, but 2016 will be a year of transition for oil markets, IHS Vice Chairman Dan Yergin said Friday. Yergin told CNBC's "Squawk Box" he expects oil markets to begin to balance next year or in 2017. "The oil market "can't stay low like this because you're not going to have the investment you need," he said." "By 2020, the world oil market is going to need another 7 million barrels a day of production." "Right now, the whole mantra is slow down, postpone, cancel projects," he added.

Yergin: Why oil prices cannot stay this low

And that's pretty grim news for about half of the cartel's members, who are already struggling with low prices amid a supply glut. "[The] OPEC meeting ended without a decision, putting on full display the vast divide between OPEC members," wrote RBC Capital Markets global head of commodity strategy Helima Croft. "We believe that the current OPEC strategy — or non-strategy — leaves a significant portion of the cartel at risk for a significant crisis in 2016."

OPEC strategy leaves many at risk for a significant crisis - Business Insider

RE: OPEC, for some quiet moments.. - Thylacine-2 - 12-12-2015

'Thylacine-2' pid='56427' datel Wrote: This statement doesn't account for the time lag for increased prices to draw more production to the market. The current collapse in oil prices could very well lead to a lack of supply in 2016-17 and a price substantially higher than $100/bbl. Perhaps a price high enough to damage the world economy.

And the oil price collapse keeps on keeping on......

And it becomes ever more likely, IMO, that the conditions are being put in place for an oil price spike high enough to damage the world economy.  The capacity worldwide to respond quickly to high oil prices to increase production is being destroyed.

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

And the oil price collapse keeps on keeping on......

And it becomes ever more likely, IMO, that the conditions are being put in place for an oil price spike high enough to damage the world economy.  The capacity worldwide to respond quickly to high oil prices to increase production is being destroyed.

Yes, the longer this goes on, the more future supply is challenged.

And there are other scenarios which are pretty likely:

  • A supply squeeze as a result of a crisis in the Middle East
  • A revolt within OPEC (even Saudi Arabia is bleeding heavily economically, let alone many of the others)
  • An economic collapse of an oil producing country

What I don't see is US shale being knocked out:

  • Yes, much of it is way overleveraged, but these assets will be taken over for pennies to the dollar when assets get really distressed and bankruptcies start rolling in
  • It's much easier to recover production when prices start rising
  • It has been forced to increase productivity and reduce cost.

So the Saudi's strategy still doesn't make much sense to me. They're knocking out tar sands, deep sea, arctic, yes, but not US shale, and I think the cost (to themselves and other OPEC members, and to OPEC itself) far outweigh the benefits, IMHO.

RE: OPEC, for some quiet moments.. - jft310 - 12-13-2015

Several experts articles posted on these boards think this over production could cause permanent damage to some of these fields . Or at what price comes the extra production . ???One thing for sure is that in the US our clever engineers have found ways in many cases to dramatically cut costs by large percentages thus lowering US production costs forever. That impacts OPEC .