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Fri, 24th February 2017

Anirudh Sethi Report

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Archives of “Crude” Category

IEA says OPEC/non-OPEC deal to cut output still in “probation period”

International Energy Agency out with their latest report 19 Jan

  • too early to judge compliance
  • keeps 2017 global oil demand growth f/cast broadly unchanged at +1.3m bpd
  • raises 2016 global demand growth by 110k bpd to +1.5m bpd
  • OPEC crude production fell 320k bpd to 33.09m bpd in Dec
  • raises estimate of 2017 non-Opec supply growth by 175k to 385k bpd
  • keeps estimate of 2017 Opec crude demand unch at 32.9m bpd

Full report here

Oil prices down a tad WTI $52.44 Brent $54.48

USDCAD continues to have a bid under it too at 1.3250

OPEC raises 2017 world oil demand to 1.16mbpd vs 1.15m prior

Latest OPEC monthly report

  • Global oil market will see 985kbpd average surplus in 2017 vs 1.24mbpd prior
  • Says initial reports show positive signs of non-OPEC compliance with pledged production cuts
  • Secondary sources says OPEC output (excl Indonesia) falls 221kbpd in Dec to 33.085mbpd
  • Non-OPEC supply growth forecast lowered to 120kbpd vs 300kbpd gain prior
  • Hikes US 2017 output forecast to 230kbpd on drilling rebound and shale growth
  • OPEC says a continued normalisation of monetary policy and oil output cuts should help to bring stability to the market in 2017

Brent had fallen around $1.30 in the run up to the report.

OPEC Sec Gen Barkindo forecast stability to return to oil markets this year

Of course he does!

Mind you, with OPEC’s price fixing going on its hardly surprising (barring a cheater-induced collapse of the agreement)
Anyway, where was I … ?
OPEC Secretary-General Mohammed Barkindo speaking on Monday; Barkindo was in Caracas for a second meeting in two months with (Venezuelan) President Nicolas Maduro:
  • Forecast that stability would return to oil markets this yea
  • “And stability to the oil market that has eluded us for nearly three years will be restored on a sustainable basis in the interest of producers, consumers and the global economy.”
via Reuters (more at that link)

Oil supply cuts may not be extended after June – Saudi Arabia’s oil minister

Saudi Arabia’s oil minister said that the supply cuts agreed by Opec and non-Opec countries at the end of last year may not need to be extended beyond June, as rising demand and strong compliance should have pushed the market towards balance by then.

Khalid al Falih, speaking at an industry event in Abu Dhabi, struck a bullish pose saying the cuts, which began on January 1, would have their “full impact by the first half” of 2017.

“We don’t think it’s necessary given the level of compliance…and given the expectations of demand,” Reuters reported.

He added, however, that the group could still extend the six-month deal “if there was a need”.

Brent crude, the international oil benchmark, was up 38 cents at $55.83 a barrel by 10am London time while US benchmark West Texas Intermediate gained 32 cents to $52.69 a barrel.

No one cuts oil production more than promised voluntarily

Algeria said it’s lowered production more than promised

The only reason to lower production below the quota is if you can’t meet the quota.

Many of the promised OPEC cuts are seasonal slowdowns that were going to happen anyway. OPEC thinks it can bluff the market into believing it’s all voluntary and that they’re prepared to do more if necessary. So far, it’s working.

Meanwhile, Russia says its production will depend on the weather but it’s starting to lower output inline with what they promised to OPEC. Along the same lines, natural declines in Russian production are being touted as cuts.

Saudi Arabia has exceeded production cut target – oil minister

Saudi Arabia has already made more than its agreed share of output cuts and is confident that Opec’s deal with non-Opec members to trim production would hold, its oil minister said.

Khalid al-Falih said “we have already exceeded it” when asked about the kingdom’s participation in the recently implemented deal among 25 nations to trim output to support prices.

Addressing the Atlantic Council Global Energy Forum in Abu Dhabi, Mr Falih said he was confident that the deal would return the market to balance more quickly.

“I believe the agreement between Opec and non-Opec will hold,” he said, rejecting speculation that compliance would be weak.