Tag: Oil

Why U.S. Crude Imports Might Not Drop Despite OPEC's Cuts

Posted on by Robert Boslego

Robert Boslego - INO.com Contributor - Energies


U.S. oil inventories have increased by 20 million barrels since OPEC’s cut went into effect. Preliminary estimates of imports from OPEC members reveal an increase in the four-week trend of 77,000 b/d thus far in January from end-December. The largest increase, 148,000 b/d, was from Saudi Arabia.

U.S. Crude and Petroleum Product Stocks

I also observed that Saudi Arabia and Russia have masqueraded seasonal declines as their cuts. The Saudi cut of 486,000 b/d is a typical decline from production in the summer, when its domestic demand peaks. This year, instead of reducing its production after the summer, as it normally does, it waited until the OPEC meeting. (The graph below shows the seasonal decline in production from summer peak to the autumn in each year.) Continue reading "Why U.S. Crude Imports Might Not Drop Despite OPEC's Cuts" →

OPEC's Claim To Eliminate The Oil Glut By June Unsupported By Data

Posted on by Robert Boslego

Robert Boslego - INO.com Contributor - Energies


OPEC reported in its January Monthly Oil Market Report (MOMR) that OECD commercial stocks fell to 2.993 billion barrels, around 271 million barrels above the latest five-year average. Saudi Arabia's energy minister, Khalid Al-Falih, stated last week that production cuts by OPEC and non-OPEC countries may reduce global oil inventories to the five-year average by June thereby rendering a continuation of the cuts unnecessary.

But three closely-watched sources of energy data do not support such a drop in global oil inventories. The Energy Information Administration (EIA), the International Energy Agency (IEA) and OPEC itself published their monthly reports in January, attempting to include impacts of the production cuts. Two of the sources, EIA and OPEC, provide data that show (or imply) stock builds over the first half, and the IEA data show a drawdown but not of the magnitude suggested by Mr. Al-Fahil. Continue reading "OPEC's Claim To Eliminate The Oil Glut By June Unsupported By Data" →

Non-OPEC Deal Delivers "Voluntary" Oil Production Cuts

Posted on by Robert Boslego

Robert Boslego - INO.com Contributor - Energies


Ministers from eleven Non-OPEC oil producing countries, led by the Russian Federation, met at OPEC’s headquarters in Vienna on December 11th. It had been reported for weeks that they would agree to cut their oil production by 600,000 b/d.

What they actually agreed to was a watered-down version of that. It turned out that they did not get to 600,000, that much of the “cut” was due to a natural decline in certain countries, such as Mexico, that Russia’s 300,000 b/d cut would be gradual over the first six months of 2017, and that it was all voluntary.

The key portion of the press release reads as follows: Continue reading "Non-OPEC Deal Delivers "Voluntary" Oil Production Cuts" →

U.S. Crude Oil Production Did Not Increase 170,000 B/D Last Week

Posted on by Robert Boslego

Robert Boslego - INO.com Contributor - Energies


Contrary to popular belief, although the Energy Information Administration (EIA) reported that U.S. crude inventories rose 170,000 b/d last week, that almost certainly did not happen. The EIA’s weekly production number comes from its production model, which is highly flawed. Its monthly numbers come from a survey, which is a much more reliable source of data.

Not including production data from the early 1970s, crude production in the U.S. peaked in April 2015 at 9.6 million barrels per day (mmbd). Crude production appears to have bottomed in July 2016 at 8.6 mmbd, making the peak-to-trough 900,000 b/d.

In August, the EIA reported that crude production increased by 51,000 b/d as the result of increased production in the Gulf of Mexico. But EIA’s forecast in its Short-Term Energy Outlook (STEO) published in July for August turned out to be 524,000 b/d lower than the actual monthly figure, a huge forecasting error. Continue reading "U.S. Crude Oil Production Did Not Increase 170,000 B/D Last Week" →

OPEC and Crude Futures Price Prospects

Posted on by Robert Boslego

Robert Boslego - INO.com Contributor - Energies


OPEC will hold its 169th Meeting in Vienna on June 2nd. Its tentative program calls for a press conference to be held at 1600 hours. Don’t expect the fireworks that followed its conference 18 months ago when Saudi oil minister al-Naimi declared a market share battle against North American shale producers. In fact, don’t expect much of anything.

A lot has happened since the last OPEC meeting in December. A strong El Niño resulted in record high temperatures in North America during the first half of the winter, undercutting prices. Poorer members, such as Venezuela and Nigeria, implored the group’s richer Gulf state producers to cut back to stop the hemorrhaging. Saudi Arabia refused to budge.

The sanctions against Iran were lifted in early January. Iran proclaimed it would restore lost production of 500,000 to one million barrels per day. Crude prices tumbled further and by mid-January had dropped to the mid-$20s. The market panic was in full-force. Continue reading "OPEC and Crude Futures Price Prospects" →