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Tue, 17th January 2017

Anirudh Sethi Report

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Archives of “Crude” Category

Oil climbs above $57 after non-Opec producers agree cut

The price of Brent Crude, the international oil benchmark, has risen above $57 for the first time since July 2015 after Opec won the support of countries outside its cartel for its planned supply cuts.

Russia, alongside 10 other countries including Mexico, Oman and Azerbaijan agreed to reduce their production by 558,000 barrels a day on Saturday.

The agreement, coming on top of Opec’s earlier promise to curb output by more than 1m barrels a day, has helped Brent to climb a further 5 per cent on Monday morning, to $57.06 per barrel.

WTI, the US benchmark, is also up 5.2 per cent this morning to $54.21 per barrel, its highest level since October 2015.

Russia’s Energy Minister: Saudi Arabia May Cut Oil Output Below OPEC Deal Level

Oil-rich OPEC and non-OPEC countries struck a historic deal on Saturday for the latter to reduce oil output by around 600,000 barrels per day in the wake of the November 30 OPEC Vienna agreement to cut production by 1.2 million barrels per day. The summary cut amounts to some 1.8 million barrels per day in the first half of 2017. The deal finalized a preliminary agreement reached in Algeria in September.

“I want to state with full certainty that we will significantly reduce output, starting in January, in order to ensure an output level below what we agreed to on November 30,” Al-Falih said after the deal was closed. The minister added that Saudi Arabia had already informed its clients of the plans to cut output.

OIL – OPEC, non-OPEC deal signed – focus will now switch to compliance

OPEC and non-OPEC formally signed the output cut deal on Saturday

  • Nigeria and Libya exempt from the deal
  • Its expected Saudi Arabia will make the biggest production cuts
  • Russia, too, has agreed cuts (but oil minister Novak said he is relying on voluntary cuts from Russian companies … yeah, right)
The fun never stops with OPEC & other oil producers. Reuters for more, AFP also 

 

Non-OPEC producers agree to lower output by 562,000 barrels

First OPEC and non-OPEC agreement since 2001

A group of 13 countries from outside OPEC agreed to cut output by 562,000 barrels per day. That’s just shy of the rumoured 600K barrels from earlier on Saturday but still represents a major win for OPEC and oil bulls; at least if the promises are kept.

Mexico, Kazakhstan, Oman and Russia were all part of the group. The cut adds to the pledged 1.2 mbpd reduction in OPEC quotas announced last week.

Skeptics say that many in the group were facing natural productions declines as fields dry up. Compliance will be critical and there are tremendous levels of distrust in the group.

The other countries who have joined in are:

  • Azerbaijan, Bahrain, Bolivia, Brunei, Equatorial Guinea, Malaysia, Sudan and South Sudan.

OPEC’s Barkindo thinks non-OPEC production cuts could be more than 600,000 bpd

OPEC sec gen speaking from the OPEC/non-OPEC meeting in Vienna today

The meeting started at 09.30 GMT

Comment coming in the wake of those already from:

Saudi Arabia:

  • target for non-OPEC cuts still 600k bpd
  • we have a deal already and are just putting together the final touches

Russia:

  • no risks that deal will fail

Iraq:

  • non-OPEC deal almost done
  • deal is seen as enough to stabilise markets

Venezuela:

  • we have a deal
  • Mexico will contribute 150k bpd of cuts
  • proposing summit of OPEC ,non-OPEC to discuss pricing formula

Iran:

  • strong commitments from non-OPEC countries
  • historical time for OPEC/non-OPEC
  • non-OPEC will start cutting from 1 Jan
  • no figures agreed yet

UAE:

US EIA weekly oil inventories -2389k vs -1500k exp (PANIC Continues…..)

US EIA weekly oil inventory data report week ending 2 December 2016

  • Prior -884k
  • Cushing 3783k vs 256k exp. Prior 2419k
  • Gasoline 3425k vs 1600k exp. Prior 2097k
  • Distillates 2501k vs 2000k exp. Prior 4957k
  • Refinery utilisation 0.6% vs 1.0% exp. Prior -1.0%
  • Production 8.697m vs 8.699m prior

A bigger draw than expected here but not as unexpected after the ‘Oil report that shall not be named’ also showed a bigger draw. Production was pretty flat. There’s still the whiff of the OPEC deal floating around but once that’s all done and dusted, we’ll likely get back to seeing the market move more in this report.

WTI managed a 50.20/55 range on the news.

OPEC’s plan to cut output is a mixed bag for Asia

OPEC’s first production cuts in eight years will be a mixed bag for Asia, with the region’s few oil exporters celebrating and just about everyone else fretting.

The planned cuts are particularly worrying for Southeast Asian economies losing steam as China’s growth slows. India also has cause for concern. The country saw its gross domestic product rise 7.4% on the year in July-September, faster than the 7.1% in the previous quarter, but the government’s surprise demonetization of 500- and 1,000-rupee banknotes is expected to affect the economy well into next year.

 

OIL – private inventory data shows bigger than expected draw in stocks

Official oil stock data comes out from the US on Wednesday morning. This is a private survey.

Wires reporting a larger than expected draw in crude oil stocks for the week just gone.
more to come. Oil price up a few cents after the data.
Oh, and as a ps. This is from S&P Global Platts Oil Futures Editor Geoffrey Craig and might be interesting. You may have seen it already, but if not (in brief):
  • Crude oil stocks expected to draw 1.7 million barrels
  • U.S. crude oil inventories top 488 million barrels (37 million barrels greater than levels at the beginning of 2016)
  • The return of refiners from autumn maintenance will likely help eat away at this surplus, as inventories tend to decline at this time of year with crude demand picking up.
  • Analysts see plenty of upside still for crude demand until the next round of seasonal repairs begins (typically in January)
  • A key question facing the market is whether the winter turnaround will coincide with a rebound in U.S. crude oil production, a scenario that would fly in the face of the OPEC production cut and put upward pressure on U.S. inventories.