The Energy Information Administration reported that July crude oil production averaged 10.964 million barrels per day (mmbd), up 269,000 b/d from June. The surge was partly on the back of a rebound of 189,000 b/d in the Gulf of Mexico to a new record high of 1.849 mmbd. In addition, new record-high output was reached in four states: Texas (4.469), North Dakota (1.260), New Mexico (669,000) and Oklahoma (543,000).
OPEC’s market monitoring committee met on September 23rd to assess conditions just about six weeks before new U.S. Iran sanctions go into effect, targeting Iran’s oil sector. Buyers and sellers are in the process of finalizing their loading programs for November, and so this assessment is of particular importance as to the question of whether oil supplies will be adequate once those sanctions go into effect.
The market focused on the lack of public discussion of President Trump’s demand on Twitter last Thursday for OPEC to increase supplies to get prices down:
"We protect the countries of the Middle East, they would not be safe for very long without us, and yet they continue to push for higher and higher oil prices! We will remember. The OPEC monopoly must get prices down now!"
However, Saudi Energy Minister Khalid al-Falih was quoted as saying, "Our plan is to respond to demand. If demand [for Saudi crude] is 10.9 million b/d you can certainly take it to the bank that we will meet it. But the demand is 10.5 million b/d or 10.6 million b/d. I think October will be more than this."
In a more recent news story, it was reported that Saudi Arabia and its allies discussed adding 500,000 b/d to supply. Saudi Aramco plans to add 550,000 b/d of new capacity in the Khurais and Manifa oilfields in the fourth quarter of 2018. Continue reading "Moment of Truth Approaching on Iran Sanctions"
The Energy Information Administration released its Short-Term Energy Outlook for September, and it shows that OECD oil inventories likely bottomed in July at 2.804 billion barrels. It shows inventories rising in the third quarter, contrary to the usual seasonal trend. However, it forecasts that stocks will drop in December to 2.798 billion after the Iranian sanctions are expected to go into effect.
Throughout 2019, OECD inventories are generally expected to rise, ending the year with 72 million barrels more than at the end of 2017. The anticipated drop in Iranian production, due to the U.S. sanctions, is forecast to be offset by increases from other producers, such as the U.S., Canada and the Gulf states of Saudi Arabia, Kuwait and the UAE.
Saudi Arabia has recently stated that it can produce at least 12 million barrels per day. If it does increase output to that level, this would be a major “surprise” to world markets since its production has never exceeded 11 million. Continue reading "World Oil Supply, Demand And Price Outlook, September 2018"
The Energy Information Administration reported that June crude oil production averaged 10.674 million barrels per day (mmbd), up 231,000 b/d from May. The surge was partly on the back of a rebound of 154,000 b/d in the Gulf of Mexico (GOM) which had fallen due to unplanned maintenance. In addition, there was a surge of 165,000 b/d in Texas and a loss of 45,000 b/d in Alaska due to normal summer maintenance.
The EIA-914 Petroleum Supply Monthly (PSM) figure was 223,000 b/d lower than the weekly data reported by EIA in the Weekly Petroleum Supply Report (WPSR), averaged over the month, of 10.897 mmbd.
EIA has since kept weekly production estimates essentially flat, as it apparently waits for the monthly survey numbers to catch-up. Continue reading "U.S. Crude Production Growth Rebounds In June"
Oil-directed drilling rigs in the Permian Basin continue to rise and are at 485 for the week ending August 24th. This figure is 29 percent higher than a year ago.
The growth of crude production in the Permian Basin has been very impressive over the past year. Estimated output in September 2018 is expected to be 3.421 million barrels per day (mmbd), an increase of 850,000 b/d, or 33 percent, year-over-year. Continue reading "Permian Takeaway Capacity: From Constrained To Over-Supply by 2020"