Crude Oil....

[waltky]

Sounds like gas prices gonna go up - better gas up now...

OPEC closer to deal to cut oil output, sparking price rally
Nov 30,`16 -- In an all-out effort to restore OPEC's faded clout, the 14-nation cartel moved Wednesday to end infighting and agree to cut output for the first time in eight years. Crude prices surged as a result.

The international benchmark for oil soared $3.56, or 7.7 percent, to $49.97 a barrel amid signs that oil ministers were now focusing less on whether there would be a cut and more on how it would be shared among members. "There will be a cut, yeah, definitely," Iraqi oil minister Jabbar Ali Hussein Al-Luiebi, told reporters. A cut could have a lasting impact on consumers as oil price increases feed into the cost of car fuel, heating and electricity. It could also restore some authority to OPEC as an arbiter of prices and supplies after years of inconclusive meetings undermined by infighting.

Underlining the significance of the meeting, Saudi oil minister Khalid Al-Falih spoke of a "critical day for us in OPEC." An agreement appeared distant as late as the eve of the cartel's meeting due to a rivalry between Saudi Arabia, OPEC's top producer, and Iran, whose struggle for dominance in the Mideast is also playing out in the Organization of the Petroleum Exporting Countries. The Saudis have long been hesitant to shoulder the lion's share of a cut, while Iran has resisted reducing its own production. It argues it has yet to recover its output levels hit by years of sanctions.

Khalid Al-Falih Minister of Energy, Industry and Mineral Resources of Saudi Arabia speaks to journalists prior to the start of a meeting of the Organization of the Petroleum Exporting Countries, OPEC, at their headquarters in Vienna, Austria​

But as ministers headed into their closed decision-making session, comments from both sides suggested a compromise could be reached. "We have agreed to a waiver from a cut to Iran in recognition of the impact of the sanctions on their economy and their industry," said Khalid Al-Falih, the Saudi oil minister. Iran's oil minister, Bijan Zanganeh, confirmed that "for Iran, no reduction, no freeze."

OPEC in September laid out the contours of a cutback the ministers needed to sign off on Wednesday. That agreement aims to pare over 1 million barrels a day off total OPEC production, which is now over 33 million barrels a day. If implemented, it would send a signal that the cartel, which accounts for about a third of the world crude output, is once again focused on regulating supplies and prices after years of inaction that dented its image. Any lasting effect on oil prices is unclear, even if cuts are agreed on. Russia, a major non-OPEC oil producer also must join in, and with the world economy feeble and oversupplied with oil, a bounce may be only temporary.

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S&P, Dow hit record highs as oil, bank stocks gain
November 30, 2016 - The Dow and the S&P 500 hit record intraday highs on Wednesday, fueled by gains in energy and bank stocks.

Oil prices soared 7.4 percent as some of the world's largest producers agreed to curb oil output for the first time since 2008. Shares of oil majors Exxon and Chevron rose more than 2 percent and were the top stocks on the S&P and the Dow. The S&P 500 energy index rose 3.65 percent as oil prices were on track for their best day since February. November is set to be Wall Street's best month since March, with the markets rallying on Donald Trump's victory in the U.S. presidential election. Investors expect the market to benefit from Trump's policies, including higher spending on infrastructure and simpler regulations in the healthcare and banking industries.

U.S. private employers stepped up hiring in November and consumer spending increased last month, the latest signs of economic strength that could further cement the case for an interest rate hike. Traders have currently priced in an 89 percent chance of the Fed raising rates at its meeting next month, according to Thomson Reuters data. A crucial monthly hiring report on Friday is likely to play a big role in the central bank's deliberations. The financial index rose 1.42 percent, while seven of the 11 major S&P sectors fell.

A specialist trader works at his post on the floor of the NYSE​

At 9:43 a.m. ET the Dow Jones industrial average was up 94.4 points, or 0.49 percent, at 19,216, after hitting an all-time high of 19,225.29. The S&P 500 was up 9.08 points, or 0.41 percent, at 2,213.74. The index hit a high of 2,214.10. The Nasdaq Composite was up 11.68 points, or 0.22 percent, at 5,391.60. Fed Board Governor Jerome Powell and Cleveland Fed president Loretta Mester are due to speak at separate events later in the day.

Splunk rose 7 percent to $61.40 after the data analytics provider forecast full-year revenue above analysts' expectations. GoPro rose 3.3 percent after the wearable camera maker said it would cut 15 percent of its workforce and shut its entertainment business. Teen apparel retailer American Eagle Outfitters dropped 10.6 percent to $16.88 after providing a disappointing profit forecast for the crucial holiday quarter. [L4N1DV3YU] Advancing issues outnumbered decliners on the NYSE by 1,592 to 1,152. On the Nasdaq, 1,443 issues rose and 913 fell. The S&P 500 index showed 41 new 52-week highs and no new lows, while the Nasdaq recorded 82 new highs and 12 new lows.

S&P, Dow hit record highs as oil, bank stocks gain

See also:

GoPro to cut 15 percent of workforce amid sales slump
November 30, 2016 - Wearable action-camera maker GoPro Inc said on Wednesday it would cut about 15 percent of its workforce and shutter its entertainment business, as the one-time Wall Street favorite cuts costs to help it return to profitability.

Shares of the company, which had about 1,500 employees at the end of 2015, rose 4.7 percent in early trading. The company has been struggling with slowing sales of its helmet- and body-mounted cameras as cheaper rivals emerge and smartphones feature increasingly advanced cameras. A recall of about 2,500 of its recently launched Karma drones could also hit revenue.

The company said on Wednesday it would cut about 200 full-time positions, cancel open positions and close its entertainment division, which makes original content. GoPro said the cost-cutting would help it achieve its goal of returning to profitability on an adjusted basis next year. The latest job cuts are in addition to a 7 percent workforce reduction announced at the beginning of the year.

GoPro went public in 2014 amid investor enthusiasm that the California company's focus on social media would make it stand out among other makers of consumer electronics. The company's shares, which closed at $9.83 on Tuesday, have fallen about 60 percent since its market debut, including a 45 percent drop this year. GoPro's sales have been in decline for the last four quarters, but it has said it expects to return to double-digit revenue growth in the coming year.

Earlier this month, the company forecast revenue for the holiday shopping quarter below market expectations, citing production issues with its Hero 5 camera. GoPro also said on Wednesday that President Tony Bates would step down at the end of the year. The company said it expected to take a charge of $24 million to $33 million, related to the cost-cutting, mostly in the quarter ending December. However, GoPro said sales of its cameras in the week of Black Friday increased more than 35 percent from a year earlier at major U.S. retailers.

GoPro to cut 15 percent of workforce amid sales slump

 

[dannyboys]

A discovery of crude oil in Texas recently is one of the largest deposits in the world.
Wonder what that will do to the price of KSA oil?

 

[waltky]

Is all Trump's fault...

Oil jumps over 10 percent as OPEC finalizes output cut deal
November 30, 2016 - Oil soared more than 10 percent on Wednesday to over $50 a barrel and its highest in a month as some of the world's largest producers agreed to curb production for the first time since 2008 in a bid to support prices.

Crude prices rose nearly 5 percent for the month. However, they are unlikely to skyrocket further in reaction to the deal and the rally may even be short-lived, traders and analysts said. The Organization of the Petroleum Exporting Countries, which accounts for a third of global oil supply, agreed to cut production from January by around 1.2 million barrels per day (bpd), or over 3 percent, to 32.5 million bpd. The cut will put production at the low end of a preliminary agreement struck in Algiers in September, and will reduce output from a current 33.64 million bpd. The group's de facto leader Saudi Arabia said it would take the lion's share of cuts - reducing output by almost 500,000 bpd to 10.06 million bpd - to get the deal done.

Iraq, OPEC's second largest producer which had previously resisted cuts, providing a hurdle to a deal, agreed to reduce output by 200,000 bpd to 4.351 million bpd. Iran was allowed to boost production slightly from its October level. This was a major victory for Tehran, which has long argued it needs to regain market share lost under Western sanctions. Non-OPEC member Russia, which had long resisted cutting output and pushed its production to new record highs in recent months, agreed to cut output by 300,000 bpd. OPEC will meet with non-OPEC producers on Dec. 9. U.S. West Texas Intermediate crude futures for January delivery settled up $4.21 to $49.44 a barrel, a 9.6 percent gain. They earlier rose 10 percent, the largest one-day move since February.

Brent crude futures for January delivery settled up $4.09 a barrel or 8.82 percent at $50.47 a barrel. The contract expires Wednesday, and the February contract rose 8.9 percent to $51.51 Oil prices will continue to strengthen on the deal, but sharp gains will be limited as market skepticism lingers about how effective the cuts will be. "It's going to take time to see who's going to abide by those rules," said Oliver Sloup, director of managed futures at IITrader.com. In the past, not all producers have complied with agreements on supply cuts, Sloup said. As a result, there is skepticism about how closely the production caps will be adhered to. Kuwait, Venezuela and Algeria have agreed to monitor compliance with the OPEC agreement.

U.S. production capabilities may also mute the price reaction, according to Viktor Nossek, director of research at Wisdomtree. "While prices may climb further in the very near term, we expect any gains will be short-lived, with U.S. production likely to ramp up to exploit higher prices." The market will grow in a measured way because traders with short positions have already exited crude futures, according to Dominic Chirichella, senior partner at the Energy Management Institute. "There's going to be an air of cautiousness and rightfully so," he said. "I think the market is going to move to the upside, but in a metered, cautious manner over a period of time."

MORE

 

[waltky]

Cuts not to have much of effect on glut...

OPEC cuts will have a muted effect on consumers
Dec 1,`16 -- OPEC's decision to cut production gave an immediate boost to oil prices, but the impact on consumers and the U.S. economy is likely to be more modest and gradual.

The cartel agreed Wednesday to cut output by 1.2 million barrels a day, reversing a strategy that produced lower oil prices and pain for U.S. drillers but saved money for consumers. Even if OPEC members carry through on their promises, global oil production would only fall by about 1 percent. There is still more supply than demand - the reason oil prices collapsed beginning in mid-2014.

The price of oil shot up 9 percent to near $50 a barrel. If the price keeps rising, some of the slack from OPEC cuts will be picked up by producers in the United States - good news for drillers and oilfield workers in Texas and North Dakota. President-elect Donald Trump has vowed to increase drilling in the U.S., the world's third-largest producer after Saudi Arabia and Russia, which would help ensure there is plenty of oil. In short, analysts say, consumers and businesses are not likely to see the return of $100-a-barrel oil - and the high energy costs that came with it - anytime soon.

Leon Balagula changes the price for the gasoline at his Sunoco station in the early morning, in Fort Lee, N.J. OPEC’s decision on Wednesday, Nov. 30, 2016, to cut production gave an immediate boost to oil prices, but the impact on consumers is likely to be more modest and gradual​

Still, there could be some short-term shocks even before OPEC's cuts take effect in January. "The average Joe filling up his tank may notice in the next week or two that gas prices move higher by 5 to 15 cents a gallon just on the psyche of the deal," said Patrick DeHaan, an analyst for GasBuddy, a site used to comparison-shop for gasoline. The U.S. Energy Department predicts that heating oil costs will rise about one-third this winter, but that prediction was issued more than a month ago and was based heavily on forecasts of much colder temperatures in the Northeast. If the weather forecast proves wrong, prices could sink because heating-oil inventories are running above their 5-year average and grew again last week.

A small increase in gasoline or even a bigger jump in heating oil, which is used in only 5 percent of American homes, won't affect shoppers if the economy does well, in the view of Michael Niemira, chief economist at The Retail Economist LLC, which does a weekly retail-sales report with Goldman Sachs. "The consumer isn't really focused on gasoline since prices remain low. A better economy, a better labor market - those matter much more," Niemira said. But if gasoline spikes to $4, "that could be bad. " Crude has traded between $40 and $50 a barrel the last several months. The national average for gasoline on Wednesday stood at $2.15 a gallon, according to the AAA auto club.

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Oil price rally likely short-lived as OPEC deal not enough to reduce glut
Thu Dec 1, 2016 | The oil price rally sparked by an OPEC-Russia deal to cut output is likely to be short-lived, say traders in Asia, because the agreement may only draw more supplies from storage tanks and more crude shipments from the United States.

And even without increased supplies from elsewhere, if the Organization of the Petroleum Exporting Countries (OPEC) and Russia do reduce production by 1.5 million barrels per day (bpd) as pledged, the cuts would not be deep enough to shrink a glut that began to build in mid-2014, traders said. "The cut by OPEC will be largely offset by increases in U.S. production where the rig count has already increased," said India Oil Corp's Director of Finance A K Sharma. "So surplus (oil) will stay in the market. If there is any impact, it will be short term."

Higher oil prices and lower production costs are encouraging U.S. shale operators to increase output, while Kazakhstan started production at the Kashagan field in October. Traders said the extent of the impact of the output deal will also depend on how it affects exports from Saudi Arabia and other OPEC members. Cuts in export supply from producers could come from changes in operational tolerance, a contractual clause that allows either the buyer or seller to increase or reduce volumes by up to 10 percent, trade sources said.

An employee of Cosmo Energy Holdings' Cosmo Oil service station checks its nozzles at a branch in Tokyo, Japan​

The OPEC deal "will provide some price momentum but it cannot be compared with the cut seen back in 2008," a Singapore-based trader said, referring to the last OPEC production cut at 4.2 million bpd. Production cuts early in the year are also a normal response to a low-demand season in February and March when Asian refiners typically shut for maintenance, he said.

Stronger prompt prices have also narrowed oil contango market structures, potentially prompting the release of oil from storage that could add to supplies, traders said. Oil is more expensive in future months in a contango market, encouraging traders to store the commodity, but supplies are backed out when spreads start to weaken. Strength in Middle East crude benchmark Dubai may also further narrow its price gap against Brent, leading Asia refiners to buy more oil from the Atlantic Basin and the Americas, traders said.

IMPACT ON OIL DEMAND, MARGINS

 

[jon_berzerk]

good when opec cranks up the price

the bakken oil fields go into over time

 

[there4eyeM]

Sanity could break out, so there is (some) hope.

 

[RoshawnMarkwees]

The hope is trump stays true to his word and we apply the drilling that obama prevented. The motto should be Make OPEC Moot.

 

[waltky]

Oil hits $55/bbl. for first time in 16 months...

Oil tops $55 for first time in 16 months as OPEC deal fuels buying
Mon Dec 5, 2016 | Brent crude oil prices rose above $55 a barrel on Monday, trading at a fresh 16-month high, on rising prospects of a tightening market after OPEC members agreed on a landmark deal to cut production last week.

Monday's gains take the rally since the agreement was struck on Wednesday to 19 percent for Brent, the biggest jump in almost eight years, and 16 percent for U.S. crude. Brent crude oil futures LCOc1, the global benchmark used to trade oil, soared to their highest since July 2015 to $55.33 a barrel. It last traded at $55.01 a barrel, up 55 cents, or 1 percent, at 1320 GMT. WTI crude oil CLc1 traded up 50 cents, also 1 percent, at $52.18 a barrel. "OPEC sentiment continues to support oil markets. Speculative short positions are still at elevated levels and as more traders unwind these positions they could trigger more support for oil prices," said Hans van Cleef, senior energy economist at ABN Amro in Amsterdam.

Rigging equipment is pictured in a field outside of Sweetwater, Texas​

The OPEC deal has given speculators impetus to increase bets on higher oil prices. Weekly data from the InterContinental Exchange on Monday showed investors had raised net long positions on Brent to the highest level in four weeks. After members of the Organization of the Petroleum Exporting Countries last week agreed to curb production by a combined 1.2 million barrels per day (bpd) from January, all eyes have now turned to a meeting this weekend between OPEC and non-OPEC producers to expand the deal. Non-OPEC producers are expected to agree to add an output cut of 600,000 barrels per day (bpd) at a meeting in Vienna on Dec. 10.

Iran, which was granted an output rise as part of the OPEC deal as it recovers production curbed by sanctions, will also attend the meeting, SHANA news agency said on Monday. However, one large uncertainty in the global supply balance is output from the United States, whose shale oil drillers proved more resilient than expected to weak oil prices. U.S. energy firms extended their recovery in oil drilling into a seventh month last week, data from energy services firm Baker Hughes showed on Friday. <RIG/U> Overall, accounting for the recent rise in oil drilling, but also for cutbacks earlier this year on low prices, Goldman Sachs said "year-on-year production will decline by 620,000 barrels per day (bpd) in 2016 and increase by 55,000 bpd in 2017".

Oil tops $55 for first time in 16 months as OPEC deal fuels buying

 

[RoshawnMarkwees]

Oil hits $55/bbl. for first time in 16 months...

Oil tops $55 for first time in 16 months as OPEC deal fuels buying
Mon Dec 5, 2016 | Brent crude oil prices rose above $55 a barrel on Monday, trading at a fresh 16-month high, on rising prospects of a tightening market after OPEC members agreed on a landmark deal to cut production last week.

Monday's gains take the rally since the agreement was struck on Wednesday to 19 percent for Brent, the biggest jump in almost eight years, and 16 percent for U.S. crude. Brent crude oil futures LCOc1, the global benchmark used to trade oil, soared to their highest since July 2015 to $55.33 a barrel. It last traded at $55.01 a barrel, up 55 cents, or 1 percent, at 1320 GMT. WTI crude oil CLc1 traded up 50 cents, also 1 percent, at $52.18 a barrel. "OPEC sentiment continues to support oil markets. Speculative short positions are still at elevated levels and as more traders unwind these positions they could trigger more support for oil prices," said Hans van Cleef, senior energy economist at ABN Amro in Amsterdam.

Rigging equipment is pictured in a field outside of Sweetwater, Texas​

The OPEC deal has given speculators impetus to increase bets on higher oil prices. Weekly data from the InterContinental Exchange on Monday showed investors had raised net long positions on Brent to the highest level in four weeks. After members of the Organization of the Petroleum Exporting Countries last week agreed to curb production by a combined 1.2 million barrels per day (bpd) from January, all eyes have now turned to a meeting this weekend between OPEC and non-OPEC producers to expand the deal. Non-OPEC producers are expected to agree to add an output cut of 600,000 barrels per day (bpd) at a meeting in Vienna on Dec. 10.

Iran, which was granted an output rise as part of the OPEC deal as it recovers production curbed by sanctions, will also attend the meeting, SHANA news agency said on Monday. However, one large uncertainty in the global supply balance is output from the United States, whose shale oil drillers proved more resilient than expected to weak oil prices. U.S. energy firms extended their recovery in oil drilling into a seventh month last week, data from energy services firm Baker Hughes showed on Friday. <RIG/U> Overall, accounting for the recent rise in oil drilling, but also for cutbacks earlier this year on low prices, Goldman Sachs said "year-on-year production will decline by 620,000 barrels per day (bpd) in 2016 and increase by 55,000 bpd in 2017".

Oil tops $55 for first time in 16 months as OPEC deal fuels buying

Now let's see if Trump sticks to his word about re-opening extraction here and diminishing OPEC leverage. I don't get why media portrays these supply cuts by OPEC as good news unless so many have so much invested in the oil market that those gains would offset their consumer goods cost increases.

 

[waltky]

OPEC will be pleased, oil & gas prices will rise...

Non-OPEC oil producers to cut output 558,000 barrels a day
Dec 10,`16 -- OPEC has persuaded 11 non-members to cut oil production, a move aimed at draining a worldwide oil glut and boosting low prices that have squeezed government finances in Russia and Saudi Arabia.

Officials said Saturday that non-members agreed to cut 558,000 barrels per day for six months starting Jan. 1, and that the deal was renewable for another six months after that. The figure was less than the 600,000 barrels a day that OPEC had hoped for. Those non-member cuts come on top of an OPEC decision Nov. 30 to reduce member output by 1.2 million barrels a day. Saudi oil minister Khalid Al-Falih called Saturday's deal "historic" and said it would stabilize the market through next year and encourage industry investment. The announcement came after OPEC member states met with Russia and other non-OPEC countries in Vienna for talks. Al-Falih said the deal "is meant to accelerate the natural process of rebalancing" the oil market.

Persons stand outside the headquarters of the Organization of the Petroleum Exporting Countries, OPEC, in Vienna, Austria, Saturday, Dec. 10, 2016. OPEC member states are meeting with Russia and other non-OPEC countries in Vienna for talks about a reduction in oil production. Secretary General Mohammed Barkindo said the discussions began Saturday in a "positive atmosphere" at the headquarters of the oil producers' cartel​

The 11 non-OPEC countries taking part in the agreement are: Azerbaijan, Bahrain, Brunei, Equatorial Guinea, Kazakhstan, Malaysia, Mexico, Oman, Russia, Sudan and South Sudan. OPEC Secretary General Mohammed Barkindo said much of the production cuts were expected to come from Russia, which co-chaired Saturday's meeting. Major oil producers such as non-member Russia and cartel leader Saudi Arabia have seen a worldwide oversupply send prices lower and reduce revenues to government budgets. It remains to be seen whether the cutbacks will do much to raise prices, given OPEC members' track record of exceeding agreed-upon production quotas, and due to weak uptake from a sluggish global economy.

Some non-OPEC countries such as Mexico were already seeing production wane due to weak demand. Al-Falih said "the intent by all those who participated is to contribute to drawing down oil inventories that are excessive." "And whether the reduction in that over-supply comes from deliberate intervention - like it is the case in Saudi Arabia - or by simply managing the decline in a way that makes them meet this agreement is left to the countries themselves," he said. Oil fell from over $90 per barrel in early 2014 to as low as $40 earlier this year, briefly sending the average price of regular gasoline at the pump to under $2 for motorists in the United States. Oil closed at $51.58 on Friday, up 6 percent since the OPEC production cut was announced.

News from The Associated Press

 

[JimBowie1958]

Oil will be with us for hundreds of years to come, Although to what extent is difficult to say. For example, NASA still relies on whale oil for lubrication needs. That seems a little weird

Depends on the specs they need.

Sounds like it could be a violation of the law, so they must have some kind of government exemption on that.

Whale oil - Wikipedia

 

[RoshawnMarkwees]

OPEC will be pleased, oil & gas prices will rise...

Non-OPEC oil producers to cut output 558,000 barrels a day
Dec 10,`16 -- OPEC has persuaded 11 non-members to cut oil production, a move aimed at draining a worldwide oil glut and boosting low prices that have squeezed government finances in Russia and Saudi Arabia.

Officials said Saturday that non-members agreed to cut 558,000 barrels per day for six months starting Jan. 1, and that the deal was renewable for another six months after that. The figure was less than the 600,000 barrels a day that OPEC had hoped for. Those non-member cuts come on top of an OPEC decision Nov. 30 to reduce member output by 1.2 million barrels a day. Saudi oil minister Khalid Al-Falih called Saturday's deal "historic" and said it would stabilize the market through next year and encourage industry investment. The announcement came after OPEC member states met with Russia and other non-OPEC countries in Vienna for talks. Al-Falih said the deal "is meant to accelerate the natural process of rebalancing" the oil market.

Persons stand outside the headquarters of the Organization of the Petroleum Exporting Countries, OPEC, in Vienna, Austria, Saturday, Dec. 10, 2016. OPEC member states are meeting with Russia and other non-OPEC countries in Vienna for talks about a reduction in oil production. Secretary General Mohammed Barkindo said the discussions began Saturday in a "positive atmosphere" at the headquarters of the oil producers' cartel​

The 11 non-OPEC countries taking part in the agreement are: Azerbaijan, Bahrain, Brunei, Equatorial Guinea, Kazakhstan, Malaysia, Mexico, Oman, Russia, Sudan and South Sudan. OPEC Secretary General Mohammed Barkindo said much of the production cuts were expected to come from Russia, which co-chaired Saturday's meeting. Major oil producers such as non-member Russia and cartel leader Saudi Arabia have seen a worldwide oversupply send prices lower and reduce revenues to government budgets. It remains to be seen whether the cutbacks will do much to raise prices, given OPEC members' track record of exceeding agreed-upon production quotas, and due to weak uptake from a sluggish global economy.

Some non-OPEC countries such as Mexico were already seeing production wane due to weak demand. Al-Falih said "the intent by all those who participated is to contribute to drawing down oil inventories that are excessive." "And whether the reduction in that over-supply comes from deliberate intervention - like it is the case in Saudi Arabia - or by simply managing the decline in a way that makes them meet this agreement is left to the countries themselves," he said. Oil fell from over $90 per barrel in early 2014 to as low as $40 earlier this year, briefly sending the average price of regular gasoline at the pump to under $2 for motorists in the United States. Oil closed at $51.58 on Friday, up 6 percent since the OPEC production cut was announced.

News from The Associated Press

If Trump would only pronounce that he will lift drilling restrictions upon entering office the OPEC leverage would be immediately reduced significantly.

 

[waltky]

Granny says, "Dat's right - dey in cahoots together against us again...

AP Analysis: Will oil producers' cut have lasting impact?
Dec 12,`16 -- It seems like a big deal. But the joint production cut from OPEC and non-OPEC countries - the first in 15 years - might push up the price of oil less than the nations involved are banking on.

At over $50 a barrel, oil prices remained buoyant and well above recent norms on Monday, reflecting the cutbacks to production agreed to this weekend - and with reason. Less than two weeks after members of the Organization of the Petroleum Exporting countries agreed to pare 1.2 million barrels a day of their production, they were joined by nearly a dozen outsiders Saturday who pledged an addition daily 558,000-barrel cut. On Monday, the price of U.S. benchmark crude rose $1.33, or 2.6 percent, to settle at $52.83 per barrel in New York. The price of Brent crude, the international standard, rose $1.36, or 2.5 percent, to finish at $55.69 a barrel in London.

The OPEC cutback alone would have been noteworthy as the first time in eight years the cartel was able to agree on such a move. That, the additional reduction by other 11 nations, and Saudi Arabia's pledge to cut its production even further if needed, is leaving even hardnosed analysts impressed. Jason Schenker of Prestige Economics calls Saturday's decision "a historic deal," and there is little doubt that in the short term the combined cut will result in somewhat more pricey oil - and, by extension, car fuel, heating and electricity. But the upward trend might soon peter out, leaving prices well short of the highs of around $100 a barrel last seen two years ago.

President-elect Donald Trump has promised to free up more oil drilling in the U.S., which would increase global supply. More U.S. shale oil, which was unprofitable to produce at the price lows around $35 a barrel touched earlier this year, could become viable again, further increasing supply. And demand is not expected to rise strongly, as the world economy struggles. China's economy, with its massive, energy-hungry manufacturing sector, is slowing. And Europe's economy, a net importer of oil and gas, is stagnant. Compliance is also an issue.

Past OPEC attempts to reduce output and push prices upward have failed due to members pumping above their quotas. That contributed to the worldwide glut that combined with feeble economies of consuming countries to bring down prices to as low as $35 early this year. And outside OPEC, some of the cutbacks will be difficult to verify, leaving no choice but to take the word of the country involved that it is fulfilling its pledge.

Noting such big ifs, analysts at German bank Commerzbank, in a research note said "we remain skeptical ... despite talk of this being a 'historic demonstration of unity.'" "This is because we are convinced that the expectations relating to voluntary production cuts, which have been driven to excessively high levels in recent weeks by oil producers, cannot be fulfilled." The pacing of the cuts also could dent producers' hopes that enough crude will be withdrawn in real time to push prices significantly higher in the long run.

Russia has said it will cut daily output by 300,000 barrels. But it plans to dribble out its share of the reduction over the coming months and JBC Energy said in a research note that the strategy will translate into a drop of only 80,000 Russian barrels for the first half of next year. So, while prices are up, hopes may soon be down for the 22 nations involved that their deal will result in a return to sustained high prices - and some analysts are hedging their bets."Historic agreement or historic bluff?" asked Commerzbank in its note Monday.

News from The Associated Press

See also:

Oil hits highest since mid-2015 on non-OPEC cut agreement
December 12, 2016 - Oil rose to an 18-month high on Monday after OPEC and some of its rivals reached their first deal since 2001 to jointly reduce output to tackle global oversupply, though prices slipped late in the day.

On Saturday, producers from outside the Organization of the Petroleum Exporting Countries, led by Russia, agreed to reduce output by 558,000 barrels per day, short of the target of 600,000 bpd but still the largest non-OPEC contribution ever. That followed OPEC's Nov. 30 deal to cut output by 1.2 million bpd for six months from Jan. 1. Top exporter Saudi Arabia will cut around 486,000 bpd to reduce the supply glut that has dogged markets for two years.

Crude futures have rallied sharply, with U.S. oil futures gaining 23 percent since the middle of November as optimism that an agreement would be reached started to grow. There is some concern amongst analysts that the big move in crude is not sustainable, and that the market may have overshot given the expectation that various producers would not comply with the cuts they agreed upon. "Right now the market is kind of feeding on itself," said Gene McGillian, manager of market research at Tradition Energy in Stamford, Connecticut. "The market could push another $1 to $2 up to $55, and Brent could go to about $60, but at that point there are some concerns that are going to start to cap the rally."

On Monday, U.S. crude futures settled up $1.33 at $52.83 a barrel, a 2.6 percent gain, though that was sharply off the day's highs. Prices continued to fall following settlement, with crude up just 98 cents to $52.48 at 3:22 p.m. ET. Brent crude futures settled up $1.36 at $55.69 per barrel, a 2.5 percent rise, after hitting a session peak of $57.89, highest since July 2015. "Overnight we had a knee-jerk rally to the highs, but the market is going to try to analyse" the non-OPEC agreement going forward, said Andrew Lebow, managing partner at Commodity Research Group.

For the deal to be effective, all parties must stick to their word. Higher prices also raise the chances of other producers boosting output, particularly U.S. shale operators, where rig counts have grown steadily in recent months. U.S. production remains about 1 million bpd below its peak of 9.6 million reached in 2015, according to U.S. Energy Department data. Further, several of the non-OPEC countries are still increasing their production. Russia, for instance, does not expect to reach its target until April or May, and several other countries are expected to experience only natural declines, which will not necessarily affect the supply situation.

Oil hits highest since mid-2015 on non-OPEC cut agreement

 

[waltky]

Granny says, "Dat's right - how's dat end to the oil export ban lookin' now?...

Oil gains post-Christmas ahead of OPEC, non-OPEC cuts
December 26, 2016 - U.S. oil prices extended gains on Tuesday in post-Christmas trading, as OPEC and non-OPEC members are set to start curbing output in less than a week to support oil prices.

NYMEX crude for February delivery was up 16 cents at $53.18 a barrel by 0002 GMT, after closing up 7 cents at a 17-month high on Friday. London Brent crude for February delivery was yet to trade after settling up 11 cents at $55.16 a barrel on Friday. Oil markets were closed on Monday after Christmas holiday. Oil has been supported in the past several weeks as the Organization of Petroleum Exporting Countries and non-OPEC members have agreed to lower output by almost 1.8 million barrels per day (bpd) from Jan. 1.

A gas station attendant pumps fuel into a customer's car at PetroChina's petrol station in Beijing, China​

Libya's oil production rose slightly to 622,000 barrels a day (bpd) on Monday, as an armed faction agreed to lift a two-year blockade on major western pipelines, the National Oil Corporation said. It said it could add 270,000 bpd within three months. The U.S. Department of Energy expects to begin sales of roughly 8 million barrels of sweet crude from the country's emergency oil reserve in early to mid-January, according to a notice sent to potential bidders and seen by Reuters on Friday. Russia's oil exports would rise by almost 5 percent this year to 253.5 million tonnes and a "slight" increase was expected next year, Deputy Energy Minister Kirill Molodtsov said on Monday.

China's end-November crude oil stocks fell 1.55 percent from the previous month to 29.89 million tonnes as domestic output shrank and winter demand grew, data from the official Xinhua news agency showed. Diesel inventories slid to a record low. Algeria's Sonatrach will drill 290 wells in 2017 in comparison with 265 in 2016, the head of the oil and gas giant's drilling division told Reuters late on Friday. Hedge funds boosted bullish bets on U.S. crude oil for a third week in a row to a near 2-1/2 year high, data showed on Friday, on signs that OPEC and other producers will stick to a deal to cut output.

Oil gains post-Christmas ahead of OPEC, non-OPEC cuts

 

[waltky]

Granny says, "Dat's right - dey gonna gouge us atta gas pumps again...

Ministers laud strong start to OPEC, non-OPEC oil output cuts
January 22, 2017 - OPEC and non-OPEC countries have made a strong start to lowering their oil output under the first such pact in more than a decade, energy ministers said on Sunday as producers look to reduce oversupply and support prices.

"The deal is a success ...All the countries are sticking to the deal ...(the) results are above expectations," Russian Energy Minister Alexander Novak said after the first meeting of a committee set up to monitor the deal. Ministers said 1.5 million of almost 1.8 million barrels per day (bpd) had been taken out of the market already. Countries involved in the deal could reduce their output by 1.7 million bpd by the end of the month, Interfax news agency quoted Novak as saying. Eleven of OPEC's 13 members along with 11 non-OPEC countries have agreed to make cuts for the first half of the year.

A flag with the Organization of the Petroleum Exporting Countries (OPEC) logo is seen before a news conference at OPEC's headquarters in Vienna, Austria​

OPEC members Nigeria and Libya, both suffering setbacks in production, were given exemptions. "The Kingdom [of Saudi Arabia] has taken the initiative and other countries took part in very significant actions," Saudi Energy Minister Khalid al-Falih told reporters following the meeting. "Despite demand usually being lower in the first quarter in winter, the actions taken by the Kingdom and many other countries has impacted the market in a tangible way and we have seen the impact in spot prices," al-Falih said. Brent oil prices <LCOc1> that fell to $27.10 a barrel a year ago have held above $50 per barrel since OPEC producers agreed on Dec. 10 to lower output in the first half of 2017.

The cuts are aimed at reducing a global glut in oil that has weighed on oil prices for more than two years. Falih said implementation of agreed cuts had been "fantastic" and he hoped for 100 percent compliance in February. "We will not accept anything less than 100 percent compliance," Kuwaiti oil minister Essam Al-Marzouq, who chairs the five-member ministerial compliance committee, told a news conference. The other members of the committee represent Algeria, Venezuela, Russia and Oman. Venezuela has achieved more than half of its planned 95,000 bpd cut, Oil Minister Nelson Martinez told reporters.

SHRINKING INVENTORIES

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Protesters take control of Mexican border crossing with US
Jan 22,`17 -- Protesters took control of vehicle lanes at one of the busiest crossings on the U.S. border Sunday to oppose Mexican gasoline price hikes, waving through motorists into Mexico after Mexican authorities abandoned their posts.

Motorists headed to Mexico zipped by about 50 demonstrators at the Otay Mesa port of entry connecting San Diego and Tijuana, many of them honking to show support. The demonstrators waved signs to protest gas hikes and air other grievances against the government of Mexican President Enrique Pena Nieto.

Other protests closed southbound traffic for hours at the San Diego-Tijuana San Ysidro port of entry, the busiest crossing along the 2,000-mile border, and halted southbound traffic at one of two crossings in Nogales, Arizona. U.S. Customs and Border Protection and California Highway Patrol officers closed southbound Interstate 5 to block access to the San Ysidro crossing, diverting traffic several miles east to the Otay Mesa port of entry. Inspections were normal for all travelers entering the U.S. from Mexico. CBP officials didn't immediately respond to a request seeking more information about the impact of the protests.

The demonstrations, which are unrelated to the election of U.S. President Donald Trump, have disrupted Mexican border crossings for weeks. Earlier this month, police in the Mexican state of Sonora fought a pitched three-hour battle to free a border rail crossing at Nogales that had been blocked by people protesting the 20 percent nationwide hike in gasoline prices that took effect on New Year's Day. Only a small percentage of motorists entering Mexico from the U.S. are stopped for inspection under normal circumstances, but Sunday's demonstration gave them an open invitation. Guns and cash from drug sales in the U.S. are often introduced to Mexico by car.

Protesters said Mexican customs officials retreated within minutes after they arrived at the Otay Mesa crossing. About two hours later, a Mexican soldier stood by, but there were few other signs of government presence. "We're exercising our right to free speech," said Brenda Cortez, a 22-year-old college student from Tijuana. "It's to make sure we are noticed."

News from The Associated Press

 

[waltky]

Oil prices decline slightly...

Oil touches three-month lows, as U.S. supply swells
Mon Mar 13, 2017 | Oil hovered around three-month lows on Monday, as rising U.S. inventories and drilling activity offset optimism over OPEC's efforts to restrict crude output.

Brent crude LCOc1 was down 7 cents on the day, at $51.30 a barrel by 1202 GMT, having hit a session trough of $50.85, its lowest level since Nov. 30. U.S. West Texas Intermediate crude (WTI) CLc1 fell 15 cents to $48.34 a barrel. The price has fallen by more than 8 percent since last Monday, its biggest week-on-week drop in four months, and analysts said the slide may not have much further to run. "The market is bearish because sentiment has turned. The risk is still towards the downside, but we are nowhere near the precipice," PVM Oil Associates Tamas Varga said.

Goldman Sachs said in a note it remained "very confident" about commodity prices and maintained its price forecast of $57.50 a barrel for WTI in the second quarter. U.S. drillers added oil rigs for an eighth consecutive week, Baker Hughes said on Friday, lifting spending to benefit from an earlier recovery in crude prices since the Organization of the Petroleum Exporting Countries (OPEC) agreed to cut output. [RIG/U] OPEC and other major oil producers including Russia reached an agreement late last year to rein in production by almost 1.8 million barrels per day (bpd) in the first half of 2017.

Fuel pump nozzles are pictured at a Helios petrol station in Almaty, Kazakhstan​

Although OPEC states have been complying with supply curbs, led by Saudi Arabia, it has not been enough to overshadow a rise in U.S. inventories to a new high. [EIA/S] "It will be interesting to see how OPEC rhetoric will evolve with this price correction. Is price the only consideration when it comes to the decision of extending cuts?" BNP Paribas global head of commodity strategy Harry Tchilinguirian told the Reuters Global Oil Forum. He added that OPEC's task was more difficult as it aimed to cut inventory levels rather than simply target a specific price.

Money managers cut their net long positions in U.S. crude futures and options in the week to March 7. For the broader financial markets, the focus will be on the Federal Reserve's policy meeting later this week at which it could likely raise U.S. interest rates. "The week ahead is packed with potentially market defining releases," Michael McCarthy, chief market strategist at Sydney's CMC Markets, said. "However, the key to market performance this week is the response to the U.S. lift in rates."

Oil touches three-month lows, as U.S. supply swells

 

[Picaro]

A discovery of crude oil in Texas recently is one of the largest deposits in the world.
Wonder what that will do to the price of KSA oil?

At current prices only a couple of shallow fields are making a profit, all of them in Texas; I forget the name of the three counties. The West Texas fields are farily deep, and the startup costs are high, but they are extensive enough to affect prices, sure.

 

[waltky]

One excuse is as good as another to jack up oil prices...

Oil hits highest levels since 2015 amid tightening markets, Saudi purge
November 5, 2017 - Oil prices hit their highest levels since July 2015 early on Monday as markets tightened, while Saudi Arabia’s crown prince cemented his power over the weekend through an anti-corruption crackdown that included high profile arrests.

Brent futures LCOc1, the international benchmark for oil prices, hit $62.44 per barrel early on Monday, their highest level since July 2015. Brent was at $62.27 per barrel at 0051 GMT, up 20 cents, or 0.3 percent from the last close and 40 percent above June’s 2017 lows. U.S. West Texas Intermediate (WTI) crude CLc1 hit $56.00 per barrel in early trading, also the highest since July 2015, and was at $55.83, up 19 cents, or 0.3 percent from the last settlement. WTI is a third above its 2017 lows.

Crown Prince Mohammed bin Salman, Saudi Arabia’s designated future king, has tightened his grip on power through an anti-corruption purge by arresting royals, ministers and investors including prominent business billionaire Alwaleed bin Talal and the head of the National Guard, Prince Miteb bin Abdullah. “This consolidates the reforming process underway, part of which is a desire to drive the price of oil higher,” said Greg McKenna, chief market strategist at futures brokerage AxiTrader, said that the purge.

Bin Salman’s reforms include a plan to list parts of giant state-owned oil company Saudi Aramco next year, and a higher oil prices is seen as beneficial for the market capitalization of the future listed company. In oil fundamentals, traders said that there were ongoing signs of tightening market conditions. U.S. energy companies cut eight oil rigs last week, to 729, in the biggest reduction since May 2016. The decline in U.S. drilling activity comes as the Organization of the Petroleum Exporting Countries (OPEC) and a non-OPEC group lead by Russia have pledged to hold back about 1.8 million barrels per day (bpd) in oil production to tighten markets.

The pact to withhold supplies runs to March 2018, but there is growing consensus to extend the deal. While supplies are tightening, analysts say demand remains strong. “Synchronous global economic growth and new supply disruptions are creating the most constructive oil price environment since ... 2014,” Barclays bank said. The British bank said it was raising its average Q4 Brent price forecast by $6 per barrel to $60 per barrel. ”The surprisingly strong macro backdrop and the accelerated inventory drawdown mean that these slightly higher price levels are likely to be sustained through Q1 of next year. Barclays said it raised its full-year 2018 forecast by $3 per barrel to $55 per barrel.

Oil hits highest levels since 2015 amid tightening markets, Saudi purge

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Saudi Arabia's crown prince is acting like Putin
November 5,`17 - Jamal Khashoggi is a Saudi journalist and author.

Saturday night’s high-profile arrests in Saudi Arabia have sent shock waves through the global political Richter scale. The arrests, including that of such well-known figures as my former boss Prince Alwaleed bin Talal, came within hours of changes in the leadership of a number of important ministries, as well as to the leadership and structure of the much-respected Saudi national guard. Saudi royals view themselves as The Party, sharing power and ruling by consent, in an arrangement that is largely opaque. What is absolutely clear after Saturday’s “Night of the Long Knives” is that Crown Prince Muhammad bin Salman is upending this arrangement and centralizing all power within his position as crown prince.

This purge comes on the heels of complete intolerance for even mild criticism of Mohammed bin Salman’s reforms, resulting in at least 70 arrests that have, unfortunately, garnered far less attention. Many of us living outside Saudi Arabia will not return home for fear of the same fate. Our families have been targeted instead. All of this leaves me in a difficult quandary. I champion a real campaign to tackle the rampant corruption that is draining Saudi resources, both financial and human. Our unemployment rate would drop rather significantly if the billions we squandered on kickbacks and lavish personal enrichment schemes dressed up as public-works projects were spent instead on the development of small to medium enterprises, vocational training and 21st-century education reforms.

Corruption in Saudi Arabia is quite different from corruption in most other countries, as it is not limited to a “bribe” in return for a contract, or expensive gift for the family member of a government official or prince, or use of a private jet that is charged to the government so a family can go on vacation. Instead, in Saudi Arabia, senior officials and princes become billionaires as contracts are either enormously inflated or, at worst, a complete mirage. In 2004, Lawrence Wright wrote in the New Yorker about “The Kingdom of Silence” where a massive sewer project in Jeddah was really a series of manhole covers across the city with no actual pipes underneath. I, as the editor of a major paper at the time, can say that we all knew, and we never reported on it.

Another example is building an airport in the wrong location simply to benefit the princes who own the land. They received the land for free from the government and then got extravagant compensation for the property. Last year, during an interview with Bloomberg, Mohammed bin Salman revealed that “there was roughly between 80 to 100 billion dollars of inefficient spending every year, about a quarter of the entire Saudi budget” during the oil boom from 2010 to 2014. “Inefficient spending” is a far too gentle description for corruption in Saudi Arabia. So yes, I, as a Saudi citizen, am eager to see this scourge end.

MORE

 

[waltky]

Granny says, "Dat's right - dey figgerin' on stickin' it to us again...

OPEC and allies likely to extend production cuts at meeting
29 Nov.`17 — With bills rising for gasoline or heating oil, consumers around the world are paying the price for a decision by OPEC and Russia last year to cut production. The strategy is working for those oil-producing nations and will likely be extended at a meeting Thursday.

Benchmark crude prices are now close to $60 a barrel, depending on the grades, up almost 20 percent since a year ago. The bets are that the Organization of the Petroleum Exporting Countries will try to keep supply tight by prolonging output reductions agreed to a year ago. For experts expecting such a scenario, the only question is for how long, with some predicting that production quotas agreed on in November 2016 will be stretched into all of 2018. “The price surge since early October is clearly attributable to the expectation that OPEC will extend its production cuts again at its meeting this Thursday and that the oil market will tighten further as a result,” analysts from Commerzbank Commodity Research wrote in a note to investors. “Anything other than an extension of the agreement would come as a big surprise and would trigger a massive price slide.”

The ability of the 14-nation cartel to regulate prices and supply made it a sometimes feared factor for consuming nations in past decades. Most extreme was the 1973 OPEC oil embargo on Western consumers that led to widespread economic crises. But its role as a key regulator started fading in recent years, as U.S. shale producers started pumping up their output. That led to oversupply and a steep fall in prices from over $100 to below $40 a barrel by last year. OPEC members in the past have regularly ignored production quotas in their drive for maximum profits. But the cartel’s strategy to flood the market — and drive U.S. shale producers out of business — did not work. So it reversed course last year, joining forces with oil powerhouse Russia and other oil producing allies to crimp supplies. And with member states this time generally keeping to their production limits, OPEC Secretary General Mohammad Sanusi Barkindo says the alliance has attained its goal. “We have accomplished what naysayers thought would be impossible,” he told a 24-nation meeting of OPEC and non-OPEC allies this week. “The decisions we made were historic.”

Even so, the strategy of continued cuts to drive up prices does not seem sustainable over the longer run. With prices now at two-year highs, U.S. producers who mothballed operations when oil was cheap are coming back into the market in force. U .S. crude oil production already has grown by 15 percent since last year to nearly 10 million barrels per day, just behind Russia and Saudi Arabia. The International Energy Agency expects the U.S. to become the biggest net exporter by the end of the 2020s. The extra crude is welcome for now, with the global economy booming. But at some point the balance could again tip from relatively tight supplies to an oversupply, and a drop in prices. “An extension of the production cut agreement is still needed,” to prevent oversupply, said the JBC Energy Market Report. “However, what the producers should not want is to starve the market too much going forward as U.S. shale in particular has proven again and again that it can surprise.”

Geopolitics could yet strain OPEC unity on Thursday. Traditional tensions between OPEC kingpin Saudi Arabia and Iran have spiked in recent month as they vie for Middle East dominance, exacerbating potentially different positions on oil. The Saudis favor continued cuts, but Iran is interested in greater market share as it claws back from the effect of more than a decade or sanctions that were lifted as part of its 2015 nuclear deal with six world powers. Now pumping below 4 million barrels a day, Iran has said it wants to add another 1 million barrels within three years.

OPEC and allies likely to extend production cuts at meeting

 

[waltky]

Look for gas prices to go up...

Oil exporters agree to extend output curbs
30 November 2017 - The world's leading oil exporting nations have agreed to extend production curbs, aimed at boosting the oil price, by nine months.

The Organisation of Petroleum Exporting Countries (Opec) and non-members, led by Russia, agreed the output limits would continue until the end of 2018. The limits were first agreed a year ago, and helped to push up the price of crude oil by about 30%. The oil price fell slightly after the latest deal, which had been expected. Brent Crude was down 0.3% at $62.35 a barrel.

A worker checks the valve of an oil pipe​

The oil exporting countries have suffered in the face of a falling oil price brought about by global oversupply. The new deal means 1.8 million barrels a day will continue to be cut from the market in an effort to reduce the oversupply and push up prices. The 14-member Opec, whose biggest member is Saudi Arabia, has often limited output to boost prices.

However, last December they were joined by 10 non-members others, including the biggest exporter outside the group, Russia. That agreement had already been extended once until the end of March. A major factor behind global oversupply of oil is growing shale oil production in the US. Russia has previously voiced concerns that continuing the output curbs could lead to more shale oil production.

Oil exporters agree to extend output curbs