Tag Archives: OPEC

OPEC leaders agree to cut oil production

The Oilprice has declined along with the stock market but Opec leaders agreed to cut production of 1,5 bpd with Russia support as Coronavirus hits demand. At the same time we have 2 and 10 year treasury yield below 1 percent. Investors are not shure how to react to the Coronavirus. A virus that usually has mild or no symptoms at all, according to experts.

Opec members will cut 1,0 mil bpd and its non-Opec allies (led by Russia) will cut by 0,5 mil bpd instead. This is interesting as we look towards OPEC talks on Friday. OPEC will hold a press conference on Friday after the OPEC meeting.

To contact the author of this story: Ket Garden at post@shinybull.com

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The World`s biggest oil producer

The United States has surpassed Saudi Arabia as the world`s biggest oil producer in 2014. The oil shale revolution has started to change the economy as the U.S produced 90% of the energy it consumed last year.

India has recorded the highest growth in energy consumption among major economies.

BP said the U.S shale revolution helped it overtake Saudi Arabia as the world`s biggest oil producer and surpass Russia as the world`s largest producer of oil and gas.

 

crude-oil

 

On the other hand, Chinese growth in consumption slowed to its lowest level since 1998 as the economy rebalance away from energy intensive sectors, though China remained the world`s largest growth market for energy.
The United States produced 15,9 percent more oil in 2014 at 11,6 million barrels of oil per day to topple Saudi Arabia`s 11,5 million bpd production, according to BP Plc`s Statistical Review of World Energy released today.
Russia was placed third with 10,8 million bpd oil production.
The United States surpassed Russia as the world`s largest producer of oil and gas, and they produced 1,250,4 million tons of oil and oil equivalent natural gas last year. This compared with Russia`s 1,062 million tons of oil equivalent. According to BP, world primary energy consumption slowed markedly, with growth of just 0,9 percent last year, a lower rate than at any time since the late 1990`s.
BP Group Chief Executive Bob Dudley said: “The eerie calm that had characterised energy markets in the few years prior to 2014 came to an abrupt end last year. However, we should not be surprised or alarmed.”
“These events may well come to be viewed as symptomatic of a broader shifting of the tectonic plates that make up the energy landscape, with significant developments in both the supply of energy and its demand. Our task as an industry is to meet today’s challenges while continuing to invest to meet tomorrow`s demand, safely and sustainably,» he added.

 

It seems like Saudi Arabia has a new strategy. They are pumping more oil despite weak oil prices, and their acute pressure to cut production is off. The heavyweight of OPEC is less concerned about the price of crude oil, and more concerned about delivering fuel to its growing economy.

Kuwait and the United Arab Emirates are also drilling at record rates, while Iraq is shrugging off widespread civil conflict to increase production. Even Iran is preparing plans to develop more oil fields. The surging output has taken much of the mystery out of what the delegates of the 12 OPEC countries will do when they assemble in Vienna this week to set production levels for the next six months.

The oil prices is stable at around $60 a barrel, and OPEC has already pushed the cartel`s output 3 percent above the current target, and production appears to be heading even higher. Saudi Arabia was the primary force that made OPEC the swing producer in global markets, for decades.

«Is Saudi Arabia still willing to play the swing producer and juggle the whole domestic economy, refineries, power plants, desalination, petrochemicals, just to meet the expectations of either OPEC or no-OPEC producers? The answer is no, obviously not,» said Sadad Ibrahim al-Husseini, a former executive vice president for Saudi Aramco, the state oil company.

After Saudi Arabia`s production peaked in 1980, it cut supplies later in the decade and again in the 90`s to top up prices. The Saudis followed the same playbook when oil prices briefly sank during the 2008 global financial crisis and the economy slump the next year.
When political turmoil rocked Libya, another producer, during the Arab Spring, Saudi Arabia increased production to keep markets and its own revenue stable.

Energy consumption in Saudi Arabi is growing and its growing at an average of 6 percent over the last decade, while any shift to nuclear power or renewable sources like solar has been slow.

«No cut is coming,» said Rene G. Ortiz of Ecuador, a former secretary-general of OPEC. «Each and every country, and particularly the Saudis and the other monarchies of the gulf, will protect their market share and increase their market share as much as possible,» he said.

Chesapeake Energy Corp and Exxon Mobil Corp are both shale drillers. They both spent about $120 billion last year in the U.S, and the surge in output and a slowdown in the demand have pushed crude oil prices down.
The number of rigs drilling in shale fields are down by half from an October peak, BP Chief Executive Officer Bob Dudley said.

«The shale revolution hasn`t run out of steam in the U.S,» Dudley said.

 

 


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Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication. UA-63539824-1.

 

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OPEC meeting in Vienna on thursday

OPEC is having a very important meeting on thursday and that can move the oil markets. The 12-member group is bickering over who should cut oil output, and by how much in order to pump up the prices. The meeting in Vienna is the groups most watched session in many years.

gspen

The U.S oil shale revolution is a game changer. (Read my article titled; American shale revolution – from January 27, 2014). The oil supply have increased and the oil prices is declining, and that have opened up the market. Countries that once had to submit to OPEC`s prices can now look for other suppliers. The oil king is about to lose.

China has for a long time been at the mercy of OPEC for twenty years, and the economic giant imports about 7 million barrels of oil per day, while the U.S imports about 8 million barrels of oil per day.

China`s demand for oil will continue to increase as its population is growing and so are the demand for oil-related items such as cars, plane traffic and motorcycles. As the U.S oil shale production makes the country more self-reliant, China has become more important to OPEC.

OPEC has a monopoly on the market and China pay about 10% more for the oil than the market price. As the oil prices plunge, many other suppliers in other countries will vie to undercut that monopoly. OPEC is slowly losing its second biggest customer as China now can pursue oil from countries outside of OPEC such as Brazil, Venezuela, Colombia and some countries in Africa.

This is just the beginning. China bought a lot of oil from Colombia this year, and China Petroleum and Chemical Corp (SNP) processed oil from Brazil`s Ostra field for the first time earlier this year. OPEC`s shipment to China fell 11% and the average cost per barrel was 10% lower.

China`s oil production and oil refining companies will benefit from the changing import sources. They`re already bumping up their refining capacity and shooting for a 20% increase in the next 5 years, and there`s a little doubt that China will purchase more crude oil from Russia as the West deepens their economic sanctions. The sanctions on Russia have led to increase China`s purchases from its communist brethren by about 60% in September.

WTIC

The energy sector is the worst performing sector in the S&P 500 this year, but the shift started years ago, so what we see today should not be a surprise for some one. It started in 2008 when Crude oil peaked at $147 a barrel, but the oil price have plummeted to about $73 a barrel now.

The energy sector has been the leading sector since 2000, but today its the worst performing sector beaten by the health care sector. I talked about the health care sector at the beginning of this year and I said I expected that sector to be a great investment opportunity.

Read my article from January 8, 2014, titled; Health-care bull. I told you to keep an eye on the health-care sector. I also said that the oil price is a risky bet, and that the oil price can plunge and Opec can face huge problems.

 

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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Crimea vote

It`s all up and green in Europe today. We see a cautious rally after Crimea vote. The opening in U.S today will be mixed, but it can change later on today. Obama spoke to Putin after the vote, and Putin pointed that the vote is legal.

Moscow city

(picture: Mosow city)

The U.S and EU warn Russia against moving to annex Crimea, and today mull sanctions. Gold is declining to $1378,60. I think this is some profit-taking pressure from recent gains that saw prices hit a six-month high overnight.

 

The vote in Crimea should not be a big surprise. The Russian parliament said it would move fast to annex the Crimean region. Any escalation of tensions in Ukraine would quickly put risk-aversion back into the markets.

 

Now, we should look for the possible sanctions against Russia. If the U.S and EU slap Russia`s hands with diplomatic and economic sanctions, we will see the Russian stock market in a big drop. We saw the stock market in Russia plummeted earlier with a drop of -20% in on single day.

 

That was more expensive than the Olympic Games in Sotsji. Not good for a company that went bankrupt in 1998. The economy is the eight largest economy in the world. They have an abundance of natural resources, including timber, precious metals, and particularly fossil fuels (oil, natural gas and coal) that can be developed without the constraint of OPEC production quotas and other rules.

 

Russia in not a OPEC member. Russia`s oil and gas production have been not only a primary source of Russia`s economic growth but also a geostrategic lever in the country`s relationship with Europe and Asia.

 

Russia has undergone significant changes since their collapse in 1998. They have moved from a centrally planned economy to a more market-based and globally integrated economy. The economy is more privatized in many sectors now.

 

Russia`s capital, Moscow, had the highest number of billionaires of any city in the world, and the Russian government predicts growth rates for future years at 2,5% of GDP. Putin and his friends are often criticized for their «loan-for-shares» scheme that turned over major state-owned firms to politically connected «oligarchs» has left equity ownership highly concentrated.

 

It`s a big country and it all collapsed and went bankrupt in 1998. As we all know, U.S is also a big country, with a lot of problems. Do people around the world really know how serious the problems in the U.S is? I hope so, because everyone should be prepared and protect themselves.

 

Reports today:

 

08:30 AM ET Empire State Manufacturing Index
09:15 AM ET Capacity Utilization Rate
09:15 AM ET Industrial Production m/m
10:00 AM ET NAHB Housing Market Index

 

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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