OPEC Appeases Russia To Stick With Deals

Robert Boslego - INO.com Contributor - Energies


The 173rd OPEC Meeting and 3rd non-OPEC Ministerial Meeting concluded with an agreement to extend the production cuts all the way through 2018. Saudi minister Khalid Al-Falih also implied that production in 2018 by Nigeria and Libya would not increase, based on information from those countries. In 2017, large increases by the pair undermined cuts made by others.

The official OPEC press release included two caveats, though not unusual but were obviously a concession to Russia, that the deals could be modified, depending on market conditions:

"In view of the uncertainties associated mainly with supply and, to some extent, demand growth it is intended that in June 2018, the opportunity of further adjustment actions will be considered based on prevailing market conditions and the progress achieved towards re-balancing of the oil market at that time."

"To support the extension of the mandate of the Joint Ministerial Monitoring Committee (JMMC) composed of Algeria, Kuwait, Venezuela, Saudi Arabia and two participating non-OPEC countries of the Russian Federation and Oman, chaired by Saudi Arabia, co-chaired by the Russian Federation, and assisted by the Joint Technical Committee at the OPEC Secretariat, to closely review the status of and conformity with the Declaration of Cooperation and report to the OPEC – non OPEC Conference."

Saudi minister Khalid Al-Falih

Initially, at the meeting a year ago, the oil ministers predicted that the glut would disappear within six months. Then at the May meeting, the Saudi minister predicted that the extension would "do the trick" of draining the glut "within six months."
Continue reading "OPEC Appeases Russia To Stick With Deals"

Here Comes U.S. Shale Oil, Saudi Arabia

Robert Boslego - INO.com Contributor - Energies


In a press conference following OPEC's meeting with non-OPEC producers earlier in the month, Saudi Minister Khalid A. Al-Falih said he did not expect an American shale production response in 2017 because there are significant lags in restarting production. But I thought that shale oil 'Zombies' might get a new life sooner than he expected.

Data from the Energy Information Administration (EIA) confirmed that production in North Dakota rebounded 7% in October. And EIA projects shale oil production will gain another 74,000 b/d in January.

North Dakota Crude Production

Petroleum Supply Monthly (PSM)

The EIA reported that actual crude production for October averaged 8.807 million barrels per day (mmbd). This was an increase of 232,000 b/d from September, which had been the lowest level (8.575 mmbd) from the peak in April 2015 of 9.627 mmbd. Continue reading "Here Comes U.S. Shale Oil, Saudi Arabia"

U.S. Crude Oil Production Did Not Increase 170,000 B/D Last Week

Robert Boslego - INO.com Contributor - Energies


Contrary to popular belief, although the Energy Information Administration (EIA) reported that U.S. crude inventories rose 170,000 b/d last week, that almost certainly did not happen. The EIA’s weekly production number comes from its production model, which is highly flawed. Its monthly numbers come from a survey, which is a much more reliable source of data.

Not including production data from the early 1970s, crude production in the U.S. peaked in April 2015 at 9.6 million barrels per day (mmbd). Crude production appears to have bottomed in July 2016 at 8.6 mmbd, making the peak-to-trough 900,000 b/d.

In August, the EIA reported that crude production increased by 51,000 b/d as the result of increased production in the Gulf of Mexico. But EIA’s forecast in its Short-Term Energy Outlook (STEO) published in July for August turned out to be 524,000 b/d lower than the actual monthly figure, a huge forecasting error. Continue reading "U.S. Crude Oil Production Did Not Increase 170,000 B/D Last Week"