Iraq Only Pays Lip Service To OPEC Agreements

Iraq is OPEC’s second-largest producer, and its production in August was 4.88 million barrels per day, according to Platts, and 4.76 according to Reuters. Its production target is 4.512, and so it is producing around 220,000 b/d more than it had pledged.

OPEC
Source: Reuters

By contrast, Iran’s production has fallen by 1.6 million per day since the October 2016 base period, and Saudi Arabia cut its output by 920,000 b/d. Moreover, according to Majid Jafar, CEO of Crescent Petroleum, the largest private oil company in the region, it is “doubling down” on its investment in Iraq and intends to increase its production there. Continue reading "Iraq Only Pays Lip Service To OPEC Agreements"

OPEC's Unplanned Outages Supported Oil Prices

In early July, OPEC+ rolled-over its December 2018 agreement for another nine months ending March 2020. To get an idea of compliance with that agreement to-date, I compared changes in production from October 2018 (the base period) and June 2019, except for Russia, May 2019 due to a lack of data for June.

I found that OPEC delivered a cut of 2.46 million barrels per day, of 8%. That is more than three times its pledge of 800,000 b/d. The primary reason for such a large cut was sanctions on Iran and Venezuela.

Iran reduced its reported output by 1.3 million barrels per day or 38%. Venezuela reduced its output by 600,000 b/d, or 46%. It’s important to understand that both of those cuts were involuntary.

The largest voluntary cut was by Saudi Arabia, 620,000 b/d, or 8%. Saudi Aramco (ARMCO) lifted its production by 200,000 b/d in June from May to 10.1 million barrels per day.

OPEC

Note: Russia’s change is until May 2019. Continue reading "OPEC's Unplanned Outages Supported Oil Prices"

U.S. Crude Production Growth Stalled In April

The Energy Information Administration reported that April crude oil production averaged 10.467 million barrels per day (mmbd), off 2,000 b/d from March’s all-time record high for the U.S. The small but unexpected decline was due to unplanned maintenance in the Gulf of Mexico (GOM), which reduced production there by 98,000 b/d. Otherwise, healthy increases were recorded in North Dakota (61,000 b/d) and Texas + New Mexico (55,000 b/d).

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The EIA-914 Petroleum Supply Monthly (PSM) figure was 115,000 b/d lower than the weekly data reported by EIA in the Weekly Petroleum Supply Report (WPSR), averaged over the month, of 10.582 mmbd. EIA’s most recent weekly estimate for the week ending June 22nd was 10.900 mmbd. Continue reading "U.S. Crude Production Growth Stalled In April"

Crude Oil Could Crash Again

Aibek Burabayev - INO.com Contributor - Metals - Oil Could Crash Again


It is interesting how often exaggerated expectations prove to be wrong in the market. Crude oil is the dominant fossil fuel energy source, and therefore it draws a lot of attention as well as speculation.

Looking back, I remember a conversation with my boss earlier in the year who had talked to a large oil producing company and they said that it is highly improbable for crude oil to get over $55 per barrel amid the supply glut. WTI crude almost hit the $73 level this month to break similar pessimistic forecasts that had persisted in the market last year. OPEC’s deal together with Middle East tensions has driven the oil price to a 3-year high benefiting oil producing countries.

But these days I have started to hear different highly optimistic forecasts calling for $80-100 per barrel. When these voices began to grow into a full choir, I began to expect the thunder as this “sweet unison” is the leading contrarian indicator. Continue reading "Crude Oil Could Crash Again"

U.S. Crude Production Eased In December

Robert Boslego - INO.com Contributor - Energies - U.S. Crude Production


The Energy Information Administration (EIA) reported that December U.S. crude production averaged 9.949 million barrels per day (mmbd) in December, off 108,000 b/d from November. The primary cause of the decline was unexpected seasonal factors, which caused production in the Gulf of Mexico (GOM) to drop by 131,000 b/d and output in North Dakota to dip by 15,000 b/d. The EIA had expected a 30,000 b/d dip in GOM production. Meanwhile, production in Texas and New Mexico reached new historically-high levels of 3.933 mmbd and 556,000 b/d, rising 36,000 b/d and 26,000 b/d, respectively.

It is worth noting that EIA also revised its November estimate up by 19,000 b/d to 10.057 mmbd. As a result, November 2017 broke the November 1970 production record of 10.044 mmbd.

Even with December’s seasonal drop, the EIA-914 Petroleum Supply Monthly (PSM) figure was still 193,000 b/d higher than the week data reported by EIA in the Weekly Petroleum Supply Report (WPSR), averaged for the month, of 9.756 mmbd. EIA’s model failed to forecast the surge in production which began in August and totaled 846,000 b/d through November. Continue reading "U.S. Crude Production Eased In December"