OPEC, for some quiet moments..

[admin]

Commercial production at Lukoil's Vladimir Filanovsky field in the Caspian Sea was launched Monday by Russian President Vladimir Putin. The field, which was found in 2005, is Russia’s largest oil discovery for the past twenty-five years and the second field commissioned by Lukoil in the Russian offshore sector of the Caspian Sea.

Lukoil starts pumping crude at Russia’s largest discovery in 25 years

An OPEC deal to cut oil output at a meeting this month is looking increasingly unlikely, with failure warranting prices in the low-$40s, according to Goldman Sachs Group Inc. “The lack of progress on implementing production quotas and the growing discord between OPEC producers suggests a declining probability of reaching a deal on November 30,” Goldman analysts including Damien Courvalin wrote in a note dated Oct. 31.

Oil's Heading to $40 If OPEC Fails, Says Goldman - Bloomberg

Oil prices have been under pressure this week as investors raised doubts over whether an agreement on a production cut between OPEC and non-OPEC members would soon materialize. However, even if a deal over an output cut doesn't emerge soon; one analyst believes prices are still going to climb. "We think even without an OPEC deal, prices are headed higher and that's purely because of fundamentals," Miswin Mahesh, oil analyst at Barclays, told CNBC on Friday. "Demand, supply — when we do the numbers, we're getting a deficit as early as Q1 to Q2."

Expect oil to head higher even without an OPEC deal: Analyst

OPEC’s most senior official said the organization and other major oil producers are “on course” to deliver a deal next month that will temper the global oversupply. All of OPEC’s 14 members as well as erstwhile rivals such as Russia are committed to finalizing the agreement, to be completed when the group meets Nov. 30, Secretary-General Mohammed Barkindo said Monday in a Bloomberg Television interview. Even Iraq, which has demanded an exemption from supply caps and vowed to increase production, is willing to play its part, he said.

OPEC head says oil producers on course to clinch supply deal

[admin]

Royal Dutch Shell reported third-quarter profit that beat analyst estimates after its acquisition of BG Group boosted oil production, helping to counter a slump in prices. The shares rose. Profit adjusted for one-time items and inventory changes advanced 17% from a year earlier to $2.79 billion, The Hague-based Shell said Tuesday. That exceeded the $1.79-billion average estimate of 14 analysts surveyed by Bloomberg, and the earnings of U.S. giant Exxon Mobil Corp.

Shell smashes estimates as BG acquisition drives up output

The OPEC countries claiming exemption from a deal to limit oil production increased output by almost half a million barrels last month, potentially jeopardizing the group’s agreement unless other members deepen their own cuts. Libya, Nigeria and Iran -- granted special status after OPEC members reached a supply deal Sept. 28 in Algiers -- pumped an extra 400,000 barrels a day in October while Iraq, also demanding an exemption, added 50,000 barrels a day, according to a Bloomberg News survey of analysts, oil companies and ship-tracking data.

OPEC Special-Case Nations Add 450,000 Barrels in Threat to Deal - Bloomberg

Global offshore oil production (including lease condensate and hydrocarbon gas liquids) from deepwater projects reached 9.3 million barrels per day (b/d) in 2015. Deepwater production, or production in water of depths greater than 125 meters, has increased 25% from nearly 7 million b/d a decade ago.

Offshore oil production in deepwater and ultra deepwater is increasing - Today in Energy - U.S. Energy Information Administration (EIA)

OPEC officials approved on Monday a document outlining the exporter group's long-term strategy, in a sign its members are making progress in ironing out differences over how and when to manage production levels and, ultimately, oil prices. The approval of the document has been repeatedly postponed with OPEC price hawks such as Algeria and Iran saying the Organization of the Petroleum Exporting Countries should be prepared to defend oil prices by cutting production.

OPEC officials approve group's delayed long-term strategy: sources | Reuters

[admin]

When the Organization of Petroleum Exporting Countries started its price war, the U.S. shale boom looked doomed. Two years and one OPEC policy u-turn later, executives at the annual Oil & Money conference in London painted an upbeat outlook for shale, with giants like Exxon Mobil Corp. and ConocoPhillips saying the industry hasn’t just survived the bust, but will continue to have a global influence.

OPEC price war offers meager rewards as U.S. shale survives

The era of the monster frac has arrived in North America, and Chesapeake Energy Corp. is singing its praises. Chesapeake said Thursday at an analyst conference that it set a new record for fracing by pumping more than 25,000 tons of sand down one Louisiana natural gas well, a process the shale driller christened "propageddon.” The super-sized dose of sand is able to prop open bigger and more numerous cracks in the rock for oil and gas to flow. Output from the well increased 70% over traditional fracing techniques, Jason Pigott, V.P. of operations, said during a presentation.

Chesapeake declares ‘propageddon’ with record frac job

Royal Dutch Shell, through its affiliate Shell Canada Energy, has agreed to sell approximately 206,000 net acres of non-core oil and gas properties in Western Canada to Tourmaline Oil Corp. for a total consideration of approximately $1,037 million (C$1,369 million). The consideration is comprised of $758 million in cash and Tourmaline shares valued at $279 million.

Shell divests shale acreage in Western Canada for $1 billion

OPEC’s power to help lift oil prices by curbing output will be tested by the ability of shale-oil producers and other unconventional suppliers to ramp up production, the World Bank said. Crude prices have surged more than 7% since Sept. 28, when the Organization of Petroleum Exporting Countries agreed to limit production for the first time in eight years. The group includes 14 major oil producers, from Saudi Arabia to Iran and Nigeria. A global supply glut has caused oil prices to slump over the past two years.

OPEC deal unlikely to lift oil prices for long, World Bank says

[admin]

International oil companies will probably cut investment spending about $370 billion this year and next, according to Wood MacKenzie, just as the United Arab Emirates warned that the “massive” number of projects being delayed because of the drop in crude prices could create a future shortage. Further investment cuts will mean a 3% reduction this year in oil and natural gas production, equivalent to 5 million barrels of oil, and another 4%, or 6 million barrels, in 2017, Jessica Brewer, a Middle East analyst for WoodMac, said in an interview at the company’s Dubai office Thursday. The global oil industry has postponed a number of projects, raising the risk of a slump in output and a potential shortfall in supply, U.A.E. Energy Minister Suhail Al Mazrouei told reporters in Abu Dhabi Thursday.

More spending cuts loom as U.A.E. warns about oil supplies

Energy investors have long hoped that falling prices would solve themselves by driving producers into bankruptcy and stanching the flood of excess supply, but it hasn’t worked out that way Their owners may be bankrupt, but the sprawling mines of Wyoming’s Powder River Basin are still churning out coal. It is the same story in oil fields along the Gulf Coast and with shale-gas wells in the Rocky Mountains.

Bankruptcy Bust: How Zombie Companies Are Killing the Oil Rally - WSJ

International Energy Agency Executive Director Fatih Birol said he doesn’t buy the argument that electric cars will cause oil demand to peak. “The oil demand growth is not coming from cars, it’s from trucks, aviation and the petrochemical industry, and we don’t have major alternatives to oil products there,” Birol said at a conference on Thursday in Paris. “I don’t buy the argument that electric cars alone will cause a peak in oil demand, at least in the short and medium term.”

IEA’s Birol ‘doesn’t buy’ that electric cars will displace oil

The global glut of natural gas still hasn’t reached one corner of the U.S. The heating fuel may surge to $20 to $25 per million British thermal units in New England this winter, the highest in the world, as pipeline bottlenecks limit supplies during frigid weather, traders including Consolidated Edison Inc.’s ConEdison Energy said. Prices have collapsed across the rest of the globe amid tepid demand growth, rising exports and a plunge in crude oil prices earlier this year.

World’s priciest gas is bound for one U.S. region this winter

[admin]

OPEC can’t cut oil production alone to stabilize the market, according to the former Saudi Arabian energy minister who masterminded the pump-at-will policy the group adopted two years ago.

Saudi Former Oil Minister Says OPEC Can’t Cut Output by Itself - Bloomberg

U.S. crude oil in storage rose by the largest amount on record on Wednesday, and analysts are looking overseas for answers. The stunning 14.4 million barrel weekly increase was underscored by a rise in crude imports of 2 million barrels a day. Traders scrutinize the weekly data from the world's biggest oil consumer, because falling stockpiles will play a big part in balancing the market and boosting depressed crude prices following a prolonged supply glut.

Why crude oil stockpiles surged this week — and why they may keep rising

There are some common themes throughout these earnings reports. First, obviously, earnings continue to suffer. Not only are oil prices still low, albeit up slightly from the lows earlier this year, but the oil majors are struggling to grow production. Severe cutbacks in spending, along with large asset sales over the past two years, are making it difficult to stop production from falling. Exxon saw output decline 3 percent over the past 12 months; Chevron’s was down 1 percent; a few others were flat or slightly up. A second trend that emerged was declining earnings from refining

Will Oil Majors Ever Recover? | OilPrice.com

Some shale producers in the U.S. realized they needed to curb costs in order to survive the low priced oil environment, and so they did just that. Fast forward to 2016, and the cost of producing one barrel of U.S. shale oil is now as low as $23.35 a barrel. The U.S. shale industries resilience—which came ironically at the hands of the Saudi’s—has ensured that it will stay in the competition longer than most expectations.

Saudi Arabia’s Oil War Gained It 1% Market Share – Which It Is About To Lose | OilPrice.com

[admin]

As the Canadian oilpatch slowly emerges from a two-year price collapse, one investor suggests the industry would have gone belly up if the downturn dragged on for another year. Energy financier Rick Grafton is confident the worst is over. "The last two years has been among the most challenging in the history of the Canadian oil and gas industry. The energy business was close to bankruptcy," said Grafton, the CEO of Grafton Asset Management and co-founder of FirstEnergy.

Oil industry teetered 'close to bankruptcy,' but experts see signs of hope - Business - CBC News

In fact, the chances of a deal might deteriorate even further in the remaining days before the official meeting at the end of November. OPEC likely increased oil production in October, which would require even steeper cuts than they previously laid out. That could put a deal of any significance entirely out of reach.

Can Oil Markets Survive An OPEC Implosion? | OilPrice.com

ExxonMobil is investigating building a full-scale trading division for the first time in its history, as the world’s largest listed energy company searches for new ways to boost profits during the oil price slump. The move would be a huge departure for a company that has deliberately shunned trading other producers’ oil, and instead focused on exploration for crude, production and refining.

ExxonMobil eyes setting up large-scale trading division

Saudi Arabia embarked on a strategy to scuttle the rapid growth in U.S. shale oil production. Though two years down the line, Saudi Arabia has managed to reduce U.S. production and gain 1 percent of the market share, it has lost considerable market power that it once wielded. So does the size of reserves really matter, or is there another factor at play in determining who will be king of the oil hill?

Saudi Arabia’s Oil War Gained It 1% Market Share – Which It Is About To Lose | OilPrice.com

[admin]

Saudi Arabia didn’t threaten to increase its oil production if other members wouldn’t agree to make cuts at the OPEC meeting last week in Vienna, said the group’s top official. “Their contributions as usual were constructive” at talks with other members of the Organization of Petroleum Exporting Countries in Vienna last week, Mohammed Barkindo said Friday.

OPEC’s top official says Saudis didn’t make oil output threat

Oil capped the biggest weekly loss in almost 10 months as hopes faded that OPEC will be able to implement a promised deal to cut production and ease global oversupplies. Futures dropped 1.3% in New York, bringing the six-session decline to 11%. Prices closed Thursday at the lowest level since OPEC reached a preliminary accord in Algiers for the cuts, and extended losses Friday after Reuters reported that Saudi Arabia threatened to raise output if other members didn’t agree to cuts. Losses eased after OPEC Secretary-General Mohammed Barkindo said the kingdom didn’t make the threat.

Oil caps biggest weekly decline since January

Wall Street’s oil analysts are getting harder to impress. After two straight quarters when the U.S. shale industry posted outsized oil production figures that clobbered expectations, explorers are finding it more difficult to be overachievers. Once-innovative engineering tricks such as drilling two-mi long sideways wells and cracking the rocks with mountains of sand are becoming routine, depriving oil companies of methods to deliver shockingly big output numbers.

It’s getting tougher for shale drillers to impress investors

OPEC and Russia will probably be able to reach an accord to reduce crude production and boost prices, according to Ed Morse, head of commodity research at Citigroup Inc. Saudi Arabia and Russia are “hungry for an agreement,’’ Morse said by telephone. "We’re expecting the parties that need to do something to boost prices to be serious about deciding something."

OPEC Output Deal ‘More Likely Than Not,’ Citigroup’s Morse Says - Bloomberg

[admin]

More than 60% of U.S. fuel pipelines were built before 1970, according to federal figures. Recent disruptions on Colonial Pipeline Co.’s fuel artery running up the East Coast show why some energy observers worry that this is a problem. The pipeline, which began operating fully in 1964, was partially shut down for nearly two weeks in September. Fuel prices spiked throughout the Southeast, rising more than 20 cents a gallon in places...

More Than Half of U.S. Pipelines Are at Least 46 Years Old - WSJ

With oil prices trading near multiweek lows, analysts believe next year won’t be much better. A survey of 14 investment banks by The Wall Street Journal predicts that oil prices will stay below $60 a barrel in 2017. Last summer, many of the same banks were predicting oil prices would rise to more than $70 a barrel this year—a level that has now been deferred to 2018.

No Oil Price Rebound on Horizon - WSJ

Oil producers in the North Sea, home to one of the world’s key crude-price benchmarks, are poised to ship the most crude in more than four years. The surge takes place just as OPEC tries to contain a global surplus with coordinated output cuts.

Prepare for the North Sea Oil Flood - Bloomberg

From Eni to BP, the biggest international oil companies are reining in capital spending for 2017 and possibly longer as they try to squeeze profits from a crude market battered by a global glut. Eni, which posted a greater-than-expected third-quarter loss, is reducing capital expenditure at least through next year, CEO Claudio Descalzi said Monday in a Bloomberg TV interview from Abu Dhabi, where energy companies are meeting to discuss the industry’s future.

BP, Eni to limit 2017 spending to cope with oil glut

[admin]

OPEC was already struggling to finalize a deal on production cuts this month. And then Donald Trump was elected President of the U.S. The Organization of Petroleum Exporting Countries faces increasing urgency to take measures that will support oil prices as Trump’s surprise victory threatens to deepen a market sell-off, said UBS Group AG. Yet the uncertainty arising from the President-Elect’s policies—from climate change to the U.S. shale industry and sanctions on Iran—will make resolving differences between producers even harder.

Trump’s victory makes OPEC deal more urgent, harder

Ask any oil-company accountant, “what’s the difference between income and cash flow?” and they’re likely to say income makes the headlines, cash pays the bills. It may be glib, but there’s a nub of truth there. Cash generation is the yardstick used to judge a company’s ability to invest and pay dividends, and it’s been growing at the biggest oil producers for three quarters in a row.

Big Oil looks past profit crunch as cash flow shows recovery

Just as OPEC ditches the policy of pumping without limits, its forecasts show the strategy is paying off. The Organization of Petroleum Exporting Countries said its share of world oil markets last year was 40%, up from a forecast of 38% two years ago, and will keep climbing to 41% in 2020, according to a report released Tuesday. That’s an extra 4.6 MMbpd of sales—equivalent to another Iraq—by the start of the next decade, a significant payoff for the Saudi-led policy even as short-term financial pressure forces a reversal.

As OPEC reverses course, data show old policy is paying off

Some of the world’s biggest oil companies will invest $1 billion over the next 10 years to develop technologies to capture and store emissions of greenhouse gases and improve energy efficiency. The investment, announced in a joint statement on Friday from 10 companies including Saudi Arabian Oil Co., Royal Dutch Shell, Total, BP, Eni, Statoil and Repsol, aims to deploy low-carbon technologies on a large scale. Those energy producers, which together plan more than $90 billion of capital expenditure this year, are part of the Oil and Gas Climate Initiative, which is seeking ways the industry can support a global deal to tackle climate change while continuing to produce their hydrocarbon reserves.

Big Oil to invest $1 billion in carbon-capture technology

[admin]

The cost of failing to reach a deal this month is rising for OPEC as rival producers are set to revive production in 2017, the International Energy Agency predicted. Crude prices may retreat again amid “relentless global supply growth” unless the Organization of Petroleum Exporting Countries enacts “significant” output cuts, the IEA said in its monthly report on Thursday. Non-members such as Brazil, Canada, Kazakhstan and Russia will raise output by 500,000 bpd in 2017, after enduring their biggest slump in more than two decades, the agency said.

Oil output surge piles pressure on OPEC as IEA warns on price

Ophir Energy and OneLNGSM, a joint venture between subsidiaries of Golar LNG and Schlumberger, have signed a binding agreement to establish a joint operating company (JOC) to develop the Fortuna project, in Block R, offshore Equatorial Guinea.

Schlumberger, Ophir, Golar to develop $2-billion Fortuna FLNG project

U.S. natural gas stockpiles climbed to a record last week as warm weather curtailed demand for the heating fuel, according to a U.S. government report. Natural gas inventories rose by 54 Bcf in the week ended Nov. 4 to 4.017 Tcf, U.S. Energy Information Administration data showed Thursday. That topples the high reached last November and breaks a seven-month streak of below-average storage gains.

America’s natural gas supply rises to a record amid muted demand

Advanced batteries could “tip the oil market from growth to contraction earlier than anticipated,” concludes the credit rating agency Fitch in a new study. Bloomberg New Energy Finance (BNEF) has already told investors to expect the ‘big crash’ in oil by 2028 — and as early as 2023. Fitch Ratings agency warns that if recent technology trends continue, we may see an “investor death spiral” as first the smart money — and then everyone else’s — sell off oil company assets (bonds and stocks). That would in turn increase the industry’s costs for both debt and equity — while oil prices would be stuck at low levels as the world hits peak demand. This would affect industries whose stocks and bonds are cumulatively valued in the trillions of dollars. In particular, Fitch notes, “an acceleration of the electrification of transport infrastructure would be resoundingly negative for the oil sector’s credit profile.”

Electric car revolution may drive oil ‘investor death spiral’