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Tue, 25th April 2017

Anirudh Sethi Report

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Archives of “Crude” Category

US weekly oil inventories -2563K vs -1500K expected

Weekly oil supply data from the US Department of Energy

  • Prior was -2389K
  • Gasoline +1223K
  • Distillates -762K
  • Production +1.1% w/w
  • Production -4.1% y/y

Here are the expectations:

  • Oil -1500K
  • Gasoline +1000K
  • Distillates +2000K
  • Cushing +1000K

API (released late yesterday)

  • Crude +4680K
  • Gasoline +3910K
  • Distillates +233K

This is a big surprise. After the huge build in the API numbers, the market priced in a build and is not caught on the wrong foot.

The kneejerk reaction was a 70-cent rise in WTI but that was quickly halved. That might be partly due to the rise in production.

OIL – price drops after private inventory data

We get official oil stock data Wednesday morning (US time) – ahead of that though is the private survey

  • Oil prices off a little since these were out (published to subscribers to their report at 4.30pm ET … 2130GMT)
  • ‘Unexpected build’ (in headline crude oil inventory) cited … also a bug build in gasoline stocks

Oil demand to outstrip supply next year on Opec cuts – IEA

The global oil market will move into deficit as soon as the first half of 2017 if Opec and countries outside the cartel successfully execute the global supply pact agreed in recent days.

The International Energy Agency, the Paris-based global energy advisory body, said in its monthly report that the planned output cuts could lead to demand outstripping supply by as much as 600,000 barrels a day.

“If Opec promptly and fully sticks to its production target, assessed at 32.7m b/d, and non-OPEC producers deliver the agreed cuts of 558,000 b/d outlined on 10 December, then the market is likely to move into deficit in the first half of 2017 by an estimated 0.6 mb/d.”

The IEA’s closely watched monthly report is the first major assessment of the oil market’s supply demand balance since Opec first agreed to reduce production on November 30.

Previously the agency had forecast the oil market would not move into deficit until the second half of 2017 at the earliest, with the prospect of the market remaining in surplus for a fourth straight year.

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: