US oil production has turned a corner after a long period of weak petroleum prices, the government said, with volumes rising for the first time since early 2015.
The Energy Information Administration forecast that oil output from the US will increase 1.3 per cent to 9m barrels per day in 2017, abandoning an earlier prediction of a 0.9 per cent fall.
In the first forecast for 2018 in its monthly Short-Term Energy Outlook, the statistical agency said US crude production will rise another 3.3 per cent, or 300,000 b/d, to 9.3m b/d. Production hit bottom last September, EIA said.
“The general decline in US crude oil production that began almost two years ago is likely over, as higher average oil prices and improvements in drilling efficiency are giving a boost to output,” said Adam Sieminski, the EIA’s administrator.
U.S. stocks jumped Monday as all four major U.S. indexes closed at new record highs.
Stocks got a lift from energy stocks as the price of oil jumped. Investors are hoping that OPEC countries will soon finalize a deal that would cut oil production and help support prices. The start of the week once again brought several corporate deals, with companies in the energy and technology industry making moves.
The Standard & Poor’s 500 index rose 16.28, or 0.8%, to close at a record 2198.18. The Dow Jones industrial average gained 88.76, or 0.5%, to a record close of 18,956.69. The Nasdaq composite index gained 47.35, or 0.9%, to close at an all-time high of 5368.86. The Russell 2000, an index of smaller companies, rose 6.59, or 0.5%, to 1322.23.
For the past couple of weeks, the main driver in markets has been the election of Donald Trump as the next U.S. president and bullishness about possible pro-growth fiscal policies. In general, his victory has helped stocks and the dollar but weighed on bonds. But slowly attention is shifting onto other matters, including next month’s widely anticipated interest rate hike from the Federal Reserve.
Also generating attention is the next meeting of oil ministers from the OPEC oil cartel on Nov. 30 in Vienna, Austria. Expectations are growing that the ministers will push through a production cut following an indication recently that one was on the cards. That’s helped buoy oil prices in markets.
Benchmark U.S. crude oil rose to its highest price this month. It gained $1.80, or 3.9%, to $47.49 a barrel while Brent crude, the international standard, rose $2.04, or 4.4%, to $48.90 a barrel in London.
A deal is better than no deal, but just how good is Opec’s first agreement to limit production since the financial crisis?
To recap: In Algiers on Wednesday, the world’s major producer nations agreed on their first co-ordinated effort to control supply since 2008 and sent oil prices duly soaring by 6 per cent.
Details, including country-specific targets, will be released on November 30 but analysts and Opec-watchers have already raised concerns about how the burden to cut production will be spread and the prospect of backsliding among Opec’s members.
Here’s a round-up of what they make of it all.
The Algiers meeting is something of a “false dawn” says Hamza Khan, head of commodities strategy at ING who says the cut is still a shadow of the 1.5m b/d cut agreed in 2008. It will also pose problems for some Opec’s dissenters – including Iran, Nigeria and Libya, he added:
Saudi Arabia could have shouldered the bulk of cuts, likely reducing output of heavier blends from the Wafra oil field.
But the kingdom’s new crown prince and oil minister have been vocal about the prospects of a Saudi Aramco IPO in 2017/18, and such discretionary cuts would hurt investor confidence in such a listing.
Russia at the moment does not appear to be part of the agreement and continues to pump at record levels.
Analysts at Morgan Stanley have also doused a good deal of cold water on the deal, claiming the intervention is “not as good as it sounds” with execution still posing a major problem.
India will be hit by an economic crisis if crude oil price crosses $60 per barrel, BJPMP Subramaniam Swamy said today.
“Given the state of our economy, if crude oil price per barrel rises above $60 then we will be hit by an economic crisis,” he tweeted today.
US benchmark West Texas Intermediate is trading around $47 per barrel while Brent is at $49 currently.
The slump in oil prices last year is one of the factors that helped Indian economy notch up big gains by cutting its import bill and reining in inflation.
India, which depends on imports to meet 80 per cent of its oil needs, will have to spend Rs 9,126 crore ($1.36 billion) more every year for one dollar per barrel increase in crude oil. Besides, the rising crude oil trajectory impacts inflation and growth.
U.S. stocks ended slightly higher after wavering on news that OPEC failed to seal a deal on oil production.
Markets also reacted to the European Central Bankleaving interest rates at current levels and private employers in the U.S. creating slightly more jobs than expected in May.
The Dow Jones industrial average ended up 49 points, or 0.3%. The broader Standard & Poor’s 500 stock index also gained 0.3%, while the Nasdaq composite climbed 0.4%.
All three indexes started the day in negative territory and passed above the break-even point around two hours before the 4 p.m. ET closing bell.
Most of the news investors watched came in as expected, offering little, if any, surprise factor to markets. The ECB was expected to stand pat and the 173,000 jobs created last month by private employers, according to payroll processor ADP, were basically right in line with the 170,000 estimate.
Wall Street also digested news that the Organization of Petroleum Exporting Countries (OPEC) could not strike a deal on capping or freezing daily oil production. The OPEC news, while not totally unexpected, initially hit oil prices as a lack of a supply cut or cap does little to help end the global oil glut. But oil pared its losses after the U.S. Energy Information Administration reported that U.S. crude oil inventories fell by 1.4 million barrels in the week ending May 27.
U.S.-produced crude was up 0.4% to $49.20 a barrel after being down as low as $47.97 earlier. Last week crude prices topped $50 per barrel for the first time since October.
Next up for Wall Street is the all-important May jobs report set for release Friday at 8:30 a.m. ET. Analysts are looking for 160,000 new jobs in May. The jobs report, of course, has key implications for the Federal Reserve, which has hinted to financial markets that the first quarter-point rate hike of 2016 is likely in coming months if data on jobs and the economy keep rolling in steady.
The international crude oil price of Indian Basket as computed/published today by Petroleum Planning and Analysis Cell (PPAC) under the Ministry of Petroleum and Natural Gas was US$ 31.01 per barrel (bbl) on 25.02.2016. This was higher than the price of US$ 30.06 per bbl on previous publishing day of 24.02.2016.
In rupee terms, the price of Indian Basket increased to Rs 2127.01 per bbl on 25.02.2016 as compared to Rs 2061.21 per bbl on 24.02.2016. Rupee closed weaker at Rs 68.60 per US$ on 25.02.2016 as against Rs 68.57 per US$ on 24.02.2016. The table below gives details in this regard:
Price on February 25, 2016 (Previous trading day i.e. 24.02.2016)
The international crude oil price of Indian Basket as computed/published today by Petroleum Planning and Analysis Cell (PPAC) under the Ministry of Petroleum and Natural Gas was US$ 28.34 per barrel (bbl) on 12.02.2016. This was higher than the price of US$ 26.95 per bbl on previous publishing day of 11.02.2016.
In rupee terms, the price of Indian Basket increased to Rs 1939.52 per bbl on 12.02.2016 as compared to Rs 1833.30 per bbl on 11.02.2016. Rupee closed weaker at Rs68.44 per US$ on 12.02.2016 as against Rs 68.02 per US$ on 11.02.2016. The table below gives details in this regard:
Price on February 12, 2016 (Previous trading day i.e. 11.02.2016)
Falling oil prices have reduced Mexico’s oil revenues by more than 70 percent, the secretary of the nation’s Energy Ministry said Sunday.
“Pemex has posted a loss of more than 70 percent due to a drop in oil prices,” Mexican Energy Secretary Pedro Joaquin Coldwell said.
Coldwell added that, on the bright side, the state-run oil producer was able to raise $5 billion in well-placed bonds. The money will be invested in projects that have been suspended until recently, he explained.
Mexico is the world’s tenth largest oil producer. It relies on oil for only 10 percent of its total exports, which account for some 18 percent of its budget.
The short answer is ‘yes.’ We believe that crude oil prices could fall further unless global oil production is reduced. As shown in Table 2, we estimate that the global oil market could be oversupplied by roughly 920,000 bpd in 2016. The key assumptions are year-over-year growth in global demand of 1.2 million bpd, Saudi Arabia, Iraq and Libya hold production at current levels, Iran ramps up production at moderate pace over the course of the year and the U.S. rig count remains at current levels.
This would translate to a build in global crude oil inventories of roughly 231 million barrels over the course of the year and potentially result in OECD crude oil inventories reaching capacity by the end of the year, as shown in Chart 14. Another risk is that Libya increases production. The countries two warring factions recently signed a UN-brokered agreement to form a national government. This could lead to higher levels of production, potentially adding another 1 million bpd to the already over-supplied market. Under this scenario, we believe that crude oil prices could plunge to $20/bbl to ensure that enough crude oil is taken off the market to prevent inventories from breaching capacity.