Markets
Is Oil Price Volatility A Thing Of The Past?
Is Oil Price Volatility A Thing Of The Past? A provocative question that Micahel Lynch, a contributor and analyst posed in a recent article on Forbes. Mr. Lynch goes into several details on why oil price visibility may be gone, or just temporarily dampened. This is surly to be one of many articles written on the subject, due to the soaring reassurance of the US shale oil production and the new equilibrium seen between supply and demand. The greater question that’s being alluded is can supply and demand stay in somewhat stable? With OPEC continuing to reduce their production, and the US shale market increasing theirs will we see an oversupply in the near future that outpaces demand causing a crash? Or will global demand surprise the industry with a recession or economic slow down in China, ...
Chevron Says Climate Change Fallout No Quick Threat to Oil
As reported by Bloomberg, Chevron Corp.’s oil and gas business will be minimal effected by climate change for decades to come, according to a company report. Among their findings, Chevron said oil and gas will comprise 48 percent of the world’s energy mix by 2040, even under the International Energy Agency’s most unfavorable scenario for the industry. Now it’s 54 percent. While they admit that climate change is critical to future energy markets, the change has “very slim” chance of stranded assets. “Multiple scenarios” each throw up the same result: Demand for oil and gas will remain strong for decades, said Mark Nelson , Chevron’s vice president for midstream, strategy and policy said in an interview to Bloomberg. World energy demand will grow strongly under all scenarios, Che...
Really!?! – IEA Says U.S. to overtake Russia as top oil producer by 2019 at latest: IEA
The United States will overtake Russia as the world’s biggest oil producer by 2019 at the latest, the International Energy Agency (IEA) said on Tuesday, as the country’s shale oil boom continues to upend global markets. This all seems to be an unbelievable turn of events. A few years ago, the rise of U.S. fracking flooded the market, and was blamed in part for the collapse and downturn. I recall reading a lot on how the Saudi’s and OPEC were going to let the downturn happen to kill off the U.S. shale industry, as it was claiming market share. Now, at $60-$65 per barrel, the industry can be profitable while the same nations that were trying to let the downturn crush the shale industry need oil closer to $100 to balance their government budgets. While this sounds great for Americans, are we ...
Oil Prices Are At A Crossroads – Is Art Berman Sounding The Alarm?
Art Berman was highlighted in a shared article a few weeks back here on Oilconvo, and he’s contributed articles from Forbes and other publications. In his most recent article Art is highlighting the recent swings in WTI – from a 3 year high at $66, then dropping to $59.19 in a matter of days, only to see it recover 70%. I won’t try and summarize his entire article as it’s worth a read, links provided below. What I like most about the article is a simple truth. Through all of the data there is a warning or caution, one that I agree with. The IEA and EIA have indeed promoted a widespread belief that U.S. tight oil production will surge in 2018 and 2019. Some estimates have put the US as the potential largest oil producer in the world in the near future. Producers and analysts claim...
Saudi oil minister hopes OPEC, allies can ease output curbs in 2019
Saudi Arabia hopes OPEC and its allies will be able to relax production curbs next year and create a permanent framework to stabilize oil markets after the current supply cut deal ends this year, its oil minister said on Saturday. The Organization of the Petroleum Exporting Countries is reducing output by about 1.2 million barrels per day (bpd) as part of a deal with Russia and other non-OPEC producers. The pact, aimed at propping oil prices, began in January 2017 and will run until the end of 2018. Read Full Article Here: https://www.cnbc.com/2018/02/24/saudi-oil-minister-hopes-opec-allies-can-ease-output-curbs-in-2019.html
Peak U.S. Shale Could Be 4 Years Away
As reported by Oilprice.com, The United States Energy Information Administration is predicting that shale oil is set to peak in the next four years U.S. shale production growth has outperformed even the most bullish forecasts, forcing OPEC and the International Energy Agency (IEA) to revise up American supply growth projections month after month. The U.S. Energy Information Administration (EIA) also expects shale/tight oil to continue to grow in all possible modeled scenarios for the next four years, according to its Annual Energy Outlook 2018 published this month. The article shares many of the EIA statistics from their report, but there is a warning on the horizon, that shale growth will widely be determined by investor confidence and market conditions. The drive to profitability and cas...
BP Eyes Future – Self-Driving Electric Cars Impact Oil Demand by 2040
BP is keeping one eye on the future, and planning for something that the oil and gas industry has traditionally been slow to implement – change. The emergence of self-driving electric cars and travel sharing are set to dent oil consumption by 2040, oil and gas giant BP said, forecasting a peak in demand for the first time. For the first time an oil major, BP, put forth an estimate for when oil demand will peak, Reuters reports. The oil and gas global giant believes that oil consumption will finally hit a bump in the road in 2040. In its benchmark annual Energy Outlook, BP forecast a 100-fold growth in electric vehicles by 2040, with its chief economist Spencer Dale painting a world in which we travel much more but instead of using private cars, we increasingly share trips in autonom...
Oil Producers Buying Back Shares After Years of Selling New Stock
The Wall Street Journal reported that energy companies are turning their focus to shareholder returns amid higher oil prices and asset sales. This is triggering a stock buy back wave from some of the largest producers. As WSJ framed the story, many North American energy producers survived the recent oil bust in large part by selling more than $60 billion of new stock and now they’re beginning to buy it back. Some companies mentioned Pioneer Natural Resources Co. and Anadarko Petroleum Corp., have started the year by initiating or enlarging share-repurchase programs, with others joining this trend. The buyback is another sign that the recovery is stable and in full force. Oil prices have climbed high enough for these producers to drill profitably and shareholders are urging and demanding th...
Ahead of Saudi Aramco IPO, Nasdaq CEO says massive companies could benefit from dual-listing
Nasdaq CEO Adena Friedman said Monday that there is a case for companies on course to deliver a significant amount of liquidity to consider a dual-listing. State oil giant Saudi Aramco is expected to launch its initial public offering (IPO) in the second half of 2018. The planned floatation has left a flurry of global stock exchanges competing to host the world’s largest oil producer — with the listing poised to become the largest in history. Speaking to CNBC at the World Government Summit in Dubai, Friedman said a company looking at the prospect of dual-listing across different time zones would usually be able to benefit from “liquidity pools” as people wake up in different parts of the world. And when asked whether investors could expect to see Saudi Aramco list on the Nas...
The Oil And Gas Situation: Volatility Returns, As The Market Overreacts
After a 7-month period of remarkably low volatility in the global crude oil markets, the last two weeks have seen a return of turbulence. The sudden correction that has hit stock markets around the world has in turn diminished stability where crude is concerned. A 10 percent drop in the Dow Jones Industrial average was met by a 10 percent drop in the price for WTI, as a strengthening dollar, a jump in the U.S. rig count and the preliminary announcement by the U.S. Energy Information Administration (EIA) that domestic production set a new record of 10.25 million barrels of oil per day during the final week in January led to a predictable reaction in the trader and investor communities. Suddenly, those $55 hedge contracts some U.S. producers entered into during Q4 2017 aren...
Surge in global oil supply may overtake demand in 2018: IEA
LONDON (Reuters) – The rise in global oil production, led by the United States, is likely to outpace growth in demand this year, the International Energy Agency said on Tuesday.The Paris-based IEA raised its forecast for oil demand growth in 2018 to 1.4 million barrels per day, from a previous projection of 1.3 million bpd, after the International Monetary Fund upped its estimate of global economic growth for this year and next.Oil demand grew at a rate of 1.6 million bpd in 2017, the IEA said in its monthly market report.However, the rapid rise in output, particularly in the United States, could well outweigh any pick-up in demand and begin to push up global oil inventories, which are now within sight of their five-year average.“Today, having cut costs dramatically, U.S. producers a...
China Oil Imports Hit Another Record In January
Crude oil imports to China hit another record last month, reaching 9.57 million barrels daily, for a total of 40.64 million tons, customs data showed. This is 400,000 bpd more than the previous record from March last year. Natural gas imports also continued to rise, hitting 7.7 million tons – the second-highest monthly import rate on record. The increase in oil imports was driven by independent refiners, the so-called teapots, who rushed to utilize their higher crude oil quotas that Beijing issued late last year. Also, a Rosneft pipeline began operating at an expanded capacity on January 1, which increased the flows of crude into the country. China’s demand for both oil and gas is higher ahead of the Spring Festival, which starts next week, Reuters notes. The increase in gas...