The main takeaway in the IEA report was that global oil markets are balancing, although slowly. Demand is accelerating as consumers around the world take advantage of low oil prices. The IEA estimates that demand will rise by 1.6 million barrels per day (mb/d) in 2015, the fastest pace in five years and a sharp jump from the 1.4 mb/d estimate last month.
On the supply side, global oil production fell by 0.6 mb/d in July, as non-OPEC producers cut back. The IEA thinks that non-OPEC production will rise by only 1.1 mb/d this year, which pales in comparison to the 2.4 mb/d expansion in 2014. Furthermore, non-OPEC supply will fall by 200,000 barrels per day next year as cuts in spending and drilling take their toll.
hmm and they maybe will fly them into some more of our buildings, we would be wise to choose carefully with whom we make deals, dance with the devil at your own risk
In addition we learned Iranian general Soleimani visited Russia, in violation of UN sanctions banning his travel, even after Secretary of State Kerry reassured Congress the ban would not be lifted. This would put further pressure on Congress to act and undermines trust in Iran’s willingness to hold up its end of the bargain. Furthermore there have been reports of Iran “sanitizing” sites that are on the UN inspection list
Both the oil export ban and the possibility of the Iranian nuclear deal falling through appear very significant but have yet to be recognized by the markets.
To review, as reported months ago, U.S. refineries have been short capacity to process light sweet crude via U.S. shale producers for quite some time, despite adding several hundred thousand barrels of capacity per day recently, with more to come by year’s end.
Thus, the implications of this development on balancing the market are very significant, especially on top of Saudi output cuts in the 200,000 to 300,000 barrel-per-day range at summer’s end. There could also be more OPEC cuts in December as pressure mounts on the failed Saudi market share strategy. I should note that Continental Resources’ CEO believes several rounds of OPEC cuts are coming too.
the Iran agreement is not a done deal, and any faltering on could push up oil prices. Senator Chuck Schumer and Congressman Engle, the top Democrat on the House Foreign Relations committee, have publically come out to oppose the Iran deal, raising the possibility of a vote against in both houses of Congress.
According to the CEOs of both Continental Resources (CLR) and Pioneer Resources (PXD), the ban on U.S. oil exports will most likely be lifted in September. And with House Speaker Boehner pledging his support, there is real momentum behind this legislative push.
media till playing the hedge funds game all negative stories until suddenly they're all positive the dy iscoming
he is nowhere and never will be anywhere ignore it and focus on what is about to take place in the oil patch
Iran floating storage will flood market. FALSE. As initially reported in the media, it was Iranian oil floating in storage but it now turns out to be low grade condensate as stated by PIRA on Bloomberg a few weeks back and then supported by tankers attempting to move inventory to Asia. Later media reports corrected earlier ones that the storage is in fact condensate while failing to report on its grade.
Iran Agreement to flood market. FALSE. OPEC has even stated that the natural 1.0 to 1.5 million barrels per day (MB/D) rise in demand in 2016 will more than offset any production rises in Iran which, contrary to earlier reports, won’t come on line until early 2016. In addition, China will open up refining to third party, non-state-owned refineries which will reportedly add another 600,000 B/D in demand in 2016.
OPEC supply will continue. The Saudis, as OPEC’s largest producer and largest contributor to growth in 2015, have already stated that they will reduce output by 200,000-300,000 by summers end. Yes true, OPEC as an entity won’t formally announce a cut but isn’t it misleading to report this?
U.S. Inventory resilient. FALSE. EIA data would have fallen last week by some 4MB as it did this week ex import surges and continues to be overstated by “adjustments” made to production that amount to millions of barrels in daily production
U.S. production resilient. FALSE. The latest EIA data refutes this as does data via EPS calls at Whiting Petroleum (WLL) & Hess Corporation (HES). Yes, some are increasing production such as Concho resources (CXO), but in the Bakken both companies confirm that 2H15 production will decline due to lower rigs and depletion. HES raised production for the year as a result of 1H15 production being higher than expected by some 5 percent. All in all, next week should see further production drops.