How High Can Oil Prices Rise? (Part 2 of my previous thread)

[ceo_energemsier + 1,818]

Oil Climbs as Storm Halts Output

by  Bloomberg

|

Tuesday, October 09, 2018

-- Crude traded near $75 a barrel as storm Michael in the U.S. strengthened and shut some oil output, while American inventories were predicted to have risen for a third week.

Futures in New York rose 0.7 percent after slipping 0.1 percent on Monday. Nationwide crude stockpiles as well as those at the key storage hub of Cushing, Oklahoma, gained last week, according to a survey of analysts and a Bloomberg forecast. Meanwhile, Michael -- currently a category 1 storm on the Saffir-Simpson scale -- is poised to head toward Florida after shutting about 19 percent of oil production in the Gulf of Mexico.

Crude has gained more than 20 percent this year as volatility surged on uncertainty over a potential supply crunch. U.S. sanctions on Iranian oil exports are set to be implemented next month, while other producing nations such as Venezuela and Libya saw disruptions to output and America struggled with a pipeline bottleneck. Meanwhile, tensions flared between the world’s top two economies as U.S. Secretary of State Michael Pompeo cited “fundamental disagreement” with his Chinese counterpart in a testy exchange in Beijing.

Disruptions to oil supply as well as “the hurricane will provide a near-term fillip to crude prices, but the other and more worrying thing is the American inventory build-up, especially in Cushing,” said Stephen Innes, Singapore-based head of Asia Pacific trading at Oanda Corp. “While the market wasn’t overly sensitive to the increase last week, this week could be different given the supply concerns back in the fore.”

Prices Steady

West Texas Intermediate for November delivery was 54 cents higher at $74.83 a barrel on the New York Mercantile Exchange at 2:45 p.m. in Singapore. The contract lost 5 cents to $74.29 a barrel on Monday. Total volume traded was about 15 percent above the 100-day average.

Brent for December settlement added 63 cents at $84.54 on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a $9.83 premium to WTI for the same month.

Fast-moving storm Michael is poised to slam the Florida panhandle as a hurricane, the second to make landfall in the U.S. in a month. The impact is already being seen in the energy sector, after operators evacuated 10 platforms, moved five rigs out of the storm’s path and shut in 19 percent of oil and 11 percent of natural gas production in the Gulf of Mexico, according to the Interior Department.

Meanwhile, American crude inventories probably rose by 2.8 million barrels last week, according to a Bloomberg survey of analysts. If confirmed by government data Thursday, that would be the third consecutive weekly gain. Stockpiles in Cushing, Oklahoma, also increased by 800,000 barrels in the same period, according to a forecast compiled by Bloomberg.

To contact the reporter on this story: Sharon Cho in Singapore at ccho28@bloomberg.net To contact the editors responsible for this story: Pratish Narayanan at pnarayanan9@bloomberg.net Anna Kitanaka

____________________________________________________

 

Hope some of the folks on this site stand to make some $$$$$ on this

[ceo_energemsier + 1,818]

https://www.chron.com/business/article/Fears-over-crude-oil-exports-being-next-13289863.php

[ceo_energemsier + 1,818]

https://www.chron.com/business/energy/article/EPIC-Midstream-to-convert-NGL-pipeline-to-crude-13283904.php

[ceo_energemsier + 1,818]

https://www.nytimes.com/2018/10/09/business/for-bps-bob-dudley-technology-and-the-environment-matter-most.html

Its a good interview

[Osama + 248]

This came as a surprise:

 

Saudi Arabia is set to deliver extra 4 million barrels of its oil to India in November, Reuters reported on Wednesday, citing several sources familiar with the plans, in what could be a Saudi move to replace the loss of Iranian barrels due to the U.S. sanctions on Tehran returning early next month.

 

Link: https://oilprice.com/Energy/Crude-Oil/Saudis-To-Boost-Oil-Supply-To-India-As-Iran-Sanctions-Kick-In.html

 

@Dan Warnick.....4 million bpd! -- @ATK.

 

[Guillaume Albasini + 851]

26 minutes ago, Osama said:

This came as a surprise:

 

Saudi Arabia is set to deliver extra 4 million barrels of its oil to India in November, Reuters reported on Wednesday, citing several sources familiar with the plans, in what could be a Saudi move to replace the loss of Iranian barrels due to the U.S. sanctions on Tehran returning early next month.

 

Link: https://oilprice.com/Energy/Crude-Oil/Saudis-To-Boost-Oil-Supply-To-India-As-Iran-Sanctions-Kick-In.html

 

@Dan Warnick.....4 million bpd! -- @ATK.

 

 

Some days ago Bolton said :  "One of the things I think that's important, whether it's for Iraq or India or anyone else -- particularly that's been a purchaser of Iranian oil -- we've gone to really extra lengths to try and find substitute sellers of oil so that there would be alternative supplies at market rates," 

Now we know the "extra lengths" means calling MBS.

[Dan Warnick + 6,100]

36 minutes ago, Osama said:

This came as a surprise:

 

Saudi Arabia is set to deliver extra 4 million barrels of its oil to India in November, Reuters reported on Wednesday, citing several sources familiar with the plans, in what could be a Saudi move to replace the loss of Iranian barrels due to the U.S. sanctions on Tehran returning early next month.

 

Link: https://oilprice.com/Energy/Crude-Oil/Saudis-To-Boost-Oil-Supply-To-India-As-Iran-Sanctions-Kick-In.html

 

@Dan Warnick.....4 million bpd! -- @ATK.

 

Wish I had seen that earlier.

[Osama + 248]

2 minutes ago, Dan Warnick said:

Wish I had seen that earlier.

All the main indexes of Stock markets are down as well...tech stocks and propects of fast rising interest rates did this....so is oil. I think oil will go a bit down....as I expect a build up in inventories. And then it will once again go up

[ceo_energemsier + 1,818]

45 minutes ago, Osama said:

This came as a surprise:

 

Saudi Arabia is set to deliver extra 4 million barrels of its oil to India in November, Reuters reported on Wednesday, citing several sources familiar with the plans, in what could be a Saudi move to replace the loss of Iranian barrels due to the U.S. sanctions on Tehran returning early next month.

 

Link: https://oilprice.com/Energy/Crude-Oil/Saudis-To-Boost-Oil-Supply-To-India-As-Iran-Sanctions-Kick-In.html

 

@Dan Warnick.....4 million bpd! -- @ATK.

 

No its not 4 million BPD

it is a set of cargoes adding upto 4 million barrels of crude, they could do  500k bbls cargoes each or VLCC's or 1 ULCC

[Dan Warnick + 6,100]

1 minute ago, ceo_energemsier said:

No its not 4 million BPD

it is a set of cargoes adding upto 4 million barrels of crude, they could do  500k bbls cargoes each or VLCC's or 1 ULCC

Still, wasn't the shortfall without Iranian crude only like 190k/day in India?  How much was it?

[ceo_energemsier + 1,818]

Relating to the US exports and crude production capabilities:

____

S&P: U.S. oil exports expected to hit nearly 4 million barrels a day by 2020

10/10/2018

 

The export volumes are expected to rise to 2.2 million barrels a day in 2019 and hit 3.9 million barrels a day by 2020, according to a new report by research firm S&P Global Platts.

The increasing crude oil exports will be linked to continued oil production growth in U.S. shale oil fields, particularly the Permian Basin in West Texas, which is currently producing around 3.4 million barrels of oil a day.

The report estimates that the Permian — which stretches from West Texas into New Mexico — accounted for more than a quarter of U.S. oil production in 2017.

The S&P report said current ship borne export capacity out of the U.S. is around 4.8 million barrels per day, with Texas accounting for the vast majority of the total, 3.9 million barrels a day. Houston is said to have the lions share of export capacity — more than 2 million barrels a day — while the Corpus Christi and Brownsville region has more than 1.1 million barrels a day of oil export capacity.

[ceo_energemsier + 1,818]

The United States continues to increase production of lighter crude oil

 10/10/2018

 

As domestic production continues to increase, the average density of crude oil produced in the United States continues to become lighter. The average API gravity—a measure of a crude oil’s density where higher numbers mean lower density—of U.S. crude oil increased in 2017 and through the first six months of 2018. Crude oil production with an API gravity greater than 40 degrees grew by 310,000 barrels per day (b/d) to more than 4.6 million b/d in 2017. This increase represents 53% of total Lower 48 production in 2017, an increase from 50% in 2015, the earliest year for which EIA has oil production data by API gravity.

Source: U.S. Energy Information Administration, Monthly Crude Oil and Natural Gas Production

API gravity is measured as the inverse of the density of a petroleum liquid relative to water. The higher the API gravity, the lower the density of the petroleum liquid, meaning lighter oils have higher API gravities. The increase in light crude oil production is the result of the growth in crude oil production from tight formations enabled by improvements in horizontal drilling and hydraulic fracturing.

Along with sulfur content, API gravity determines the type of processing needed to refine crude oil into fuel and other petroleum products, all of which factor into refineries’ profits. Overall U.S. refining capacity is geared toward a diverse range of crude oil inputs, so it can be uneconomic to run some refineries solely on light crude oil. Conversely, it is impossible to run some refineries on heavy crude oil without producing significant quantities of low-valued heavy products such as residual fuel.

Source: U.S. Energy Information Administration, Monthly Crude Oil and Natural Gas Production

API gravity can differ greatly by production area. For example, oil produced in Texas—the largest crude oil-producing state—has a relatively broad distribution of API gravities with most production ranging from 30 to 50 degrees API. However, crude oil with API gravity of 40 to 50 degrees accounted for the largest share of Texas production, at 55%, in 2017. This category was also the fastest growing, reaching 1.9 million b/d, driven by increasing production in the tight oil plays of the Permian and Eagle Ford.

Oil produced in North Dakota’s Bakken formation also tends to be less dense and lighter. About 90% of North Dakota’s 2017 crude oil production had an API gravity of 40 to 50 degrees. The oil coming from the Federal Gulf of Mexico (GOM) tends to be more dense and heavier. More than 34% of the crude oil produced in the GOM in 2017 had an API gravity of lower than 30 degrees and 65% had an API gravity of 30 to 40 degrees.

Source: U.S. Energy Information Administration, Monthly Crude Oil and Natural Gas Production and Monthly Imports Report

In contrast to the increasing production of light crude oil in the United States, imported crude oil continues to be heavier. In 2017, 7.6 million b/d (96%) of imported crude oil had an API gravity of 40 or below, compared with 4.2 million b/d (48%) of domestic production.

EIA collects API gravity production data by state in the monthly crude oil and natural gas production report as well as crude oil quality by company level imports to better inform analysis of refinery inputs and utilization, crude oil trade, and regional crude oil pricing. API gravity is also projected to continue changing: EIA’s Annual Energy Outlook 2018 Reference case projects that U.S. oil production from tight formations will continue to increase in the coming decades.
Source: EIA

[ceo_energemsier + 1,818]

6 minutes ago, Dan Warnick said:

Still, wasn't the shortfall without Iranian crude only like 190k/day in India?  How much was it?

Meanwhile, India has promised to increase its crude oil imports from Iran from 205,000 barrels per day in 2017-18 to 396,000 barrels per day (bpd) in 2018-19. Presently, India consumes around 4.7 million bpd. Indian refiners are currently importing crude from Iran at 90 cents per barrel less than Arabian and Saudi crude.

https://sputniknews.com/business/201809251068325352-indian-refiners-not-dependent-iranian-crude/

[ceo_energemsier + 1,818]

https://www.reuters.com/article/iran-nuclear-india/indian-oil-to-turn-to-traditional-suppliers-to-meet-iran-oil-shortfall-idUSL3N1ST43L

 

The Indian refiners have stated in the past that they can and will replace Iranian barrels if push comes to shove

[ceo_energemsier + 1,818]

1 hour ago, Osama said:

This came as a surprise:

 

Saudi Arabia is set to deliver extra 4 million barrels of its oil to India in November, Reuters reported on Wednesday, citing several sources familiar with the plans, in what could be a Saudi move to replace the loss of Iranian barrels due to the U.S. sanctions on Tehran returning early next month.

 

Link: https://oilprice.com/Energy/Crude-Oil/Saudis-To-Boost-Oil-Supply-To-India-As-Iran-Sanctions-Kick-In.html

 

@Dan Warnick.....4 million bpd! -- @ATK.

 

And not a surprise to me, I have said this many times over on this topic and others that Saudi will step up and produce and supply more barrels to stabilize the prices, market and increase their market share for however long the sanctions last

[ceo_energemsier + 1,818]

A model that has “correctly predicted the oil price increase seen over the last months” now shows that the oil price will be “highly volatile” going forward, according to Rystad Energy.

The independent energy research and business intelligence company said it developed the model over the last year “to give a more realistic simulation of the cyclical behavior of the oil price”. Rystad Energy also stated that the model shows that a swing producer can stabilize the market “if the right heuristics are applied”.

The company says the model is based on system dynamics, which is a mathematical approach to model the nonlinear behavior of complex systems based on feedback loops and time delays. 

“I’m very happy to see that our model is able to capture the price behavior we actually see in the market,” Rystad Energy CEO, Jarand Rystad, said in a company statement. 

“Traditionally, oil market predictions have been based on linear forecasting of supply and demand. The dynamic element generating the cyclicality of the business has been very difficult to capture in a mathematical model,” Rystad added.

“Thus, I think this has been a real achievement. Instead of being surprised by the roller-coaster nature of the oil market, we can now understand such behavior and even model how the most volatile price cycles could be mitigated,” he continued.

Jo Husebye, a partner in Rystad Energy, said the company has seen that only if a swing producer can react fast enough, and with sufficient spare capacity and willingness to alter its production levels significantly, potential oil price spikes and downturns could be dampened and corresponding volatility be reduced.

Brent Crude Oil has increased from around $70 per barrel in August to highs of over $86 per barrel in October. WTI Crude Oil has risen from around $65 per barrel in August to highs of over $76 per barrel this month.

Earlier in October, Rystad Energy stated on its website that it sees increased likelihood of a larger cut in Iranian exports than its 900,000 barrel per day (bpd) loss estimate.

“Rystad Energy observes that the Iranian crude exports dropped materially for the second month in a row in Sep-18. At 1.7 million bpd for Sep-18, Iranian crude exports are 450,000 bpd below pre-sanctions (average between May 2017 and February 2018) levels of 2.15 million bpd,” Rystad Energy said in a statement posted on its website on October 5.

Headquartered in Oslo, Norway, Rystad Energy has locations in Houston, Singapore, London, New York, Sydney, Moscow, Stavanger, Rio de Janeiro, Tokyo, Dubai and Bangalore.

[Osama + 248]

8 hours ago, ceo_energemsier said:

No its not 4 million BPD

it is a set of cargoes adding upto 4 million barrels of crude, they could do  500k bbls cargoes each or VLCC's or 1 ULCC

I see.

 

the news however is having a prominent effect on the markets!

[Dan Warnick + 6,100]

1 minute ago, Osama said:

I see.

 

the news however is having a prominent effect on the markets!

Sure is.  The thing is, this is shown as hard evidence that the Saudis can do it.  That's quite a bit different from speculation.  Now we have to see if they can maintain the output.  I don't see why it would be hard to believe they can for the next few years, while they increase their capabilities along the way.  Dropping oil prices has made sense for many months; what we experienced in recent weeks was nothing more than trader manipulation and we had to see that reverse at some point.  Maybe we are there and dropping prices will take over.

[ceo_energemsier + 1,818]

1 hour ago, Osama said:

I see.

 

the news however is having a prominent effect on the markets!

NEWS these days is pushed on all of us as facts!! but its not.. that is how we as folks in business of  any kind have to get down to the bare bones. facts and truth...........

but i think that article didnt say bpd?

but I could be wrong

 

[Osama + 248]

5 hours ago, ceo_energemsier said:

but i think that article didnt say bpd?

Yes...apologies...you are right the amount was not in bpd's.

[Osama + 248]

API's report, while one of the most bearish ones, can also become a cause of bullishness. If EIA doesn't report a similar or more build-up...we can see oil rally upward once again---- @Dan Warnick (I booked a loss, and closed my position). I am now with you!!

[Dan Warnick + 6,100]

1 hour ago, Osama said:

API's report, while one of the most bearish ones, can also become a cause of bullishness. If EIA doesn't report a similar or more build-up...we can see oil rally upward once again---- @Dan Warnick (I booked a loss, and closed my position). I am now with you!!

Sorry to hear that.  Next time, right?

[Osama + 248]

Just now, Dan Warnick said:

Sorry to hear that.  Next time, right?

Indeed! 

All set for EIA..now...what are your thoughts?

[Dan Warnick + 6,100]

Well sir, I'm still going to watch.  But for now I'm shorting the financial market index Russell 1000.  Banks (crooks!) are reporting earnings in the next 2 weeks and I believe insurance companies do as well.  I'll do this with options on selected bear x3 ETFs.  I believe yesterday, based on what I am advised elsewhere, was the first part of a market correction of about 10% overall.  So yesterday was the first 1/3 of that correction, if my adviser is right, of course.

[Dan Warnick + 6,100]

3 hours ago, Osama said:

Indeed! 

All set for EIA..now...what are your thoughts?

Well sir, I'm still going to watch.  But for now I'm shorting the financial market index Russell 1000.  Banks (crooks!) are reporting earnings in the next 2 weeks and I believe insurance companies do as well.  I'll do this with options on selected bear x3 ETFs.  I believe yesterday, based on what I am advised elsewhere, was the first part of a market correction of about 10% overall.  So yesterday was the first 1/3 of that correction, if my adviser is right, of course.