Wed, 24th May 2017

Anirudh Sethi Report


Archives of “Crude” Category

Weekend oil output cut compliance meeting – smiles all ’round!

OPEC’s  monitoring committee met over the weekend

The happy theme is more widely spread, for example from Saudi Energy Minister Khalid al-Falih speaking with the media following the meeting:
  • Implementation of agreed cuts had been “fantastic”
  • He hoped for 100% compliance in February
Oversight of compliance will continue:
  • A technical joint committee (JTC) would be created comprising a representative for each of the five members of the monitoring committee and as well as the OPEC presidency (currently held by Saudi Arabia)
  • The JTC will cooperate with the OPEC Secretariat in compiling production data
  • Data to be presented to the ministerial monitoring committee by the 17th of every month
  • There will be two meetings of the JTC ahead of the next ordinary OPEC meeting in Vienna on May 25
  • The next JTC meeting will be in March in Kuwait


OPEC/non-OPEC monitoring committee say markets are on their way to rebalancing

the OPEC/non-OPEC deal monitoring committee met in Vienna today 22 Jan

Saudi energy minister Khalid al-Falih said earlier today after the first meeting:

“I am satisfied, I am optimistic and, as I said, the markets are on their way to rebalance and it’s happening,”

adding that compliance with the agreement, which calls for cuts to begin this month, had been “fantastic“.

“Usually non-OPEC would raise their production to compensate for voluntary cuts by OPEC. Now, we are seeing voluntary cuts by both sides,”

Some 1.5 million bpd in crude production had already been taken out of the market last week he said.

“The other 300,000 bpd, for all I know, is still happening,” saying that he hoped for 100% compliance in February.

The next meeting was scheduled for after 17 March they also announced today.

More from Reuters here

I’m heading back out now. Enjoy the rest your week-end one and all. Thanks again, as always, for your fantastic support and input.

I wish you good trading this coming week and hopefully we can help make/save you a few pips along the way.

El-Falih Oil rebalancing on its way he says


Saudi minister says 1.5 mbpd of oil already removed from market

OPEC and Russia tout progress

Producers have already cut output by 1.5 mbpd, according to Saudi minister of energy Khalid Al-Falih. He said his country along with Kuwait and Algeria have already taken more off the market than required.

Meanwhile, Russian oil minister Novak said progress in cutting Russian production was “ahead of schedule”.

The monitoring committee of OPEC are meeting today and tomorrow. The topic won’t yet be compliance because we’re not yet at the end of the first month of the agreement. Instead, they will talk about how to monitor and measure.

The total amount of oil expected to be removed from the market for six months is 1.8 mbpd. Skeptics argue that much of the ‘cut’ is optics and that countries were producing beyond capacity in the lead-up to the agreement or had scheduled natural/seasonal depletions.

Influential Algerian oil minister Boutarfa repeated a comment from his Saudi counterpart, who said last week that quotas beyond June may not be necessary.

“If we really comply by 80-90%, it may not be necessary to continue,” he said.

WTI crude finished $1.10 higher on Friday to $53.22 but failed in a test of downtrend resistance after a large jump in oil drilling rigs.

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.