OPEC Shows It Still Matters, and Right Now It’s Bearish for Oil

The last time OPEC met, its decision to leave output unchanged cast doubt on the group’s relevance.

That was a little premature.

From the ministers’ market-moving comments to the array of oil executives gathered in Vienna to court new ventures, the Organization of Petroleum Exporting Countries showed no loss of stature in the run-up to Friday’s meeting, at which it again decided to maintain its current output target. While OPEC has ceded the role of adjusting supply to balance the market, its strategy of keeping up production is still driving prices lower now -- and possibly higher later on.

OPEC Not Likely To Back Down On Maintaining Current Production

When Saudi Arabia argues next week that OPEC should keep up production to fight the rise in U.S. shale oil, prices will be on its side.

Crude plunged for eight of nine weeks prior to the group’s November gathering, when the kingdom faced down opposition from the majority of fellow members, who advocated output reductions to tackle a global glut. With oil companies around the world cutting investment, U.S. output peaking and prices up, Saudi Arabia’s strategy will be extended at OPEC’s semiannual meeting on June 5, say Societe Generale SA and Bank of America Corp.

Oil prices have recovered more than 40 percent from a six-year low in January as U.S. production eases from the highest in more than four decades. The rebound will help vindicate the approach taken by Saudi Arabia as it steers the Organization of Petroleum Exporting Countries to favor market share over prices in a bid to drive out high-cost producers.

Seplat Records Drop In 1Q Profits, Pins It On Lower Oil Price

Seplat Petroleum on Tuesday posted a 47 percent drop in first quarter pretax profit, blaming lower crude prices and pipeline shutdowns in Africa's biggest oil producer. The oil and gas exploration firm said its oil price during the first three months to end-March averaged $52.8 per barrel, booking a premium of $1.52 per a litre, compared with $112.9 bbl a year earlier.

Saudi’s Solution to Global Oil Glut: Pump Even More Crude

Saudi Arabia has a response to the global surplus of oil: Raise output to near-record levels and then pump even more.

The world’s biggest oil exporter, having abandoned last year its role of keeping global markets in balance, now has incentive to maximize output and undermine rival producers by using its reserve capacity, according to Citigroup Inc. and UBS AG. Just meeting its own domestic demand this summer will require a lot more fuel, others estimate.

Half of U.S. Fracking Companies Will Be Dead or Sold This Year

Half of the 41 fracking companies operating in the U.S. will be dead or sold by year-end because of slashed spending by oil companies, an executive with Weatherford International Plc said.

There could be about 20 companies left that provide hydraulic fracturing services, Rob Fulks, pressure pumping marketing director at Weatherford, said in an interview Wednesday at the IHS CERAWeek conference in Houston. Demand for fracking, a production method that along with horizontal drilling spurred a boom in U.S. oil and natural gas output, has declined as customers leave wells uncompleted because of low prices.

Oil Prices to Stay Low - Nigeria

Oil prices are likely to stay low for a long time after falling more than 40 percent in the past year, said officials from two OPEC nations.

Nigeria warned that oil prices, currently at around $60 a barrel, probably won’t recover to the 2011-2013 level of more than $100 a barrel.

“You forecast at your own risk, but it seems to me that we should be regarding this as a permanent shock,” Ngozi Okonjo-Iweala, the Nigerian finance minister, said on a panel discussion Sunday in Washington near the end of the International Monetary Fund’s spring meetings. “We should prepare our economies for that eventuality.”

Today's Oil Industry: Sack the Bottom to Feed The Top

We all know that this year has been one of steadfastness as a worker in the oil and gas industry (exception being in the case of the executives of course). Job cuts to minimise cost has been the anthem on the lips of many following the slash in the oil prices coming into this year, with another eye keen on the creation of more efficient methods. As technology transition and innovation is never an immediate solution the industry has been pulled into what can be described as a massive scale downsizing of employees in other to stay afloat. Contracts are being scrutinized and re-scrutinized to ensure effective cost savings implementation strategies and only the best of hands are being "greased". 

More Balanced Oil Market Expected in 2nd Half

Professional commodity traders watch spreads (differences between the prices for adjacent futures contracts) rather than spot prices as the best indicator of the balance between supply and demand.

In crude, the narrowing spreads for both Brent and West Texas Intermediate (WTI) indicate a closer balance between supply and demand in the second half of the year than in the first.

Nigerian States Look to Sell Bonds as Oil Income Dwindles - FBN

FBN Holdings Plc, owner of First Bank Nigeria, said it expects to benefit from a surge in sales of bonds by state governments to replace dwindling oil revenue and after peaceful elections bolstered investor confidence.

“We expect a lot of the state governments to go to the market to issue bonds to be able to fund their projects,” Chief Executive Officer Bello Maccido said in an interview. “It presents an opportunity for the investment-banking business.”

Oil Rises a Third Day as Iran Export Recovery Remains in Doubt

Oil advanced a third day as skepticism among U.S. lawmakers over a nuclear deal with Iran undermined prospects that the OPEC producer will bolster crude exports.

Futures climbed 1.3 percent in New York. President Barack Obama is dispatching three cabinet members to brief lawmakers as a Senate committee prepares to take up a bill that will give Congress 60 days to review any final agreement with Iran. Drillers in the U.S. reduced the number of active rigs seeking oil to the fewest since December 2010, according to Baker Hughes Inc.

Fracklog Gains More Acceptance In U.S Oil Production Deferment Strategies

Companies delaying the completion of wells that have been drilled are keeping 373,000 barrels a day of oil out of the market, energy intelligence firm Genscape Inc. said.

Six companies announced plans to defer completing a total of 845 drilled wells this year, Genscape said in a report Wednesday.

Some oil producers have responded to the 50 percent drop in crude prices since June by delaying the hydraulic fracturing of wells. This backlog of unfracked wells, known as a fracklog, can then be completed and brought online when prices have rebounded.

The Shell-BG Deal: Traces to Oil Market Low Positions

Oil companies have a knack for picking the bottom in crude prices, and history may be about to repeat itself.

Traders and analysts are speculating that Royal Dutch Shell Plc’s takeover of BG Group Plc for $70 billion announced Wednesday may be the first in a wave of acquisitions as Big Oil seeks to drive out costs following the rout in oil.

Here's How $20 Oil Could Become a Reality If Storage Runs Out

Though I find this piece kind of shabby I decided to post it because its a well written angle.

(source: bloomberg.com)

There's the makings of a crisis swirling in America's oil-storage tanks, and the next few months will determine whether it's a minor annoyance, or a major blow, to U.S. oil.

The basic problem is that too much oil is being pumped, and not enough is being used up. America is running out of places to store all of the excess crude. That’s a problem, and it could send prices plummeting -- some say to $20 a barrel or even lower. (For context: Last summer it was more than $100, and today it's less than $50.)

Saudi Looking Beyond Oil Price Slump as Rig Count Spikes

As the global energy industry stares transfixed at a spectacular drop in U.S. rigs, Saudi Arabia is ramping up the number of machines drilling for oil and gas despite a sharp fall in the price of crude.

Industry sources and analysts say the OPEC kingpin is looking beyond the halving of global oil prices since June 2014 to a time when crude could again be in short supply.

Riyadh is therefore keen to preserve what is known as its spare capacity - the kingdom's unique ability to raise oil output quickly at any given moment.

But to achieve that, Saudi Arabia has to drill much more than in the past, after boosting output to record levels to compensate for global supply outages in the past four years.

"The Saudis are probably worried about everyone else reducing capex as a result of low oil prices and about non-OPEC output falling off a cliff at some point. We all know that supply disruptions are unpredictable but they are certain," said Gary Ross, executive chairman of New York oil consultancy PIRA.

"The increase in Saudi rig numbers is like a signal to the industry – let's be rational. We will need supply growth in the future."

Brent Oil Falls Towards $54 on OPEC Output, Iran

Brent crude oil fell towards $54 a barrel on Friday and was on track for its third straight weekly loss, hurt by oversupply worries after Kuwait said OPEC had no choice but to maintain output levels.

Brent for May delivery had fallen 33 cents to $54.10 by 0931 GMT. The contract is set to decline by more than 1 percent this week.

U.S. crude for April delivery slipped 21 cents to $43.75 a barrel, headed for its fifth weekly loss. The contract expires on Friday.

Minister: Low Prices Will Hamper Nigeria's Bid To Boost Output

Consistently low oil prices will hamper Nigeria's bid to boost output to 4 million barrels per day (bpd), Oil Minister Diezani Alison-Madueke was quoted as saying on Tuesday at an oil and gas conference in the capital Abuja. "Flexibility in capex and funding in general will be further constrained in the year 2015," the minister said in a speech read out by Joseph Dawha, group managing director of the Nigerian National Petroleum Corp. 

Africa's biggest oil producer has been hit hard by global oil prices that have around halved since June, because it accounts for up to 80 percent of government revenues and about 95 percent of foreign reserves. "Consistently depressed oil prices will limit the industry's scope to manoeuvre, start-up key projects and revitalise marginal field production thus hampering the set target of 4 million bpd," the minister said. "The industry must challenge itself to raise funding in order to meet these targets." 

The U.S. Has Too Much Oil and Nowhere to Put It

Seven months ago the giant tanks in Cushing, Okla., the largest crude oil storage hub in North America, were three-quarters empty. After spending the last few years brimming with light, sweet crude unlocked by the shale drilling revolution, the tanks held just less than 18 million barrels by late July, down from a high of 52 million in early 2013. New pipelines to refineries along the Gulf Coast had drained Cushing of more than 30 million barrels in less than a year.

As quickly as it emptied out, Cushing has filled back up again. Since October, the amount of oil stored there has almost tripled, to more than 51 million barrels. As oil prices have crashed, from more than $100 a barrel last summer to below $50 now, big trading companies are storing their crude in hopes of selling it for higher prices down the road. With U.S. production continuing to expand, that’s led to the fastest increase in U.S. oil inventories on record. For most of this year, the U.S. has added almost 1 million barrels a day to its stash of crude supplies. As of March 11, nationwide stocks were at 449 million barrels, by far the most ever.

Oil Drops Toward $59 on Dollar, Stock Builds

Brent crude oil fell toward $59 a barrel on Monday as the dollar strengthened and a supply glut pushed global oil inventories to record highs.

The dollar hit a more than 11-year high against a basket of currencies after data showed the U.S. unemployment rate in February fell to its lowest level since May 2008, making commodities priced in the greenback more expensive for holders of other currencies.

Oil inventories are rising across the world as production outstrips demand, offsetting geopolitical tensions in the Middle East and the risk of output cuts in Libya and Iraq.

Welcome to Fracklog, the New-Fangled Oil Storage System

Oil drillers expecting prices to rebound after the biggest drop in six years have come up with an alternative to storing their crude in tanks: They’re keeping it in the ground.

It’s a new twist on an old oil-trading technique, known as a contango storage play, in which a trader buys cheap crude in an oversupplied market and saves it to lock in profits at higher future prices. Drillers who have spent millions boring holes through petroleum-rich shale rock are just waiting for prices to go up before turning on the spigot.

Oil down on dollar, rate hike fear; little impact from rig count drop

(source: Reuters)

Crude prices fell on Friday as a rallying dollar and fears of a rate hike due to strong U.S. jobs growth suppressed the market, diverting attention from a near four-year low in the number of rigs drilling for oil in the United States.

Worries about the security of Libyan and Iraq crude supplies, which had put a floor beneath the market in the earlier hours of trade, also took a backseat.