OPEC Will Likely Balance The Oil Market By Next Month

OPEC as well as its allies will probably achieve their goal of draining oversupply coming from the oil market as well as boosting prices by next month, says Jeff Currie, global head of commodities research at Goldman Sachs. According to Currie, OPEC needs to lay out its plans to lift the output curbs by May or June in order to prevent another price-crushing oil glut.
 

https://www.cnbc.com/2019/03/04/opec-will-likely-balance-the-oil-market-by-next-month-goldman-sachs.html 

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6 hours ago, AdrianC said:

OPEC as well as its allies will probably achieve their goal of draining oversupply coming from the oil market as well as boosting prices by next month, says Jeff Currie, global head of commodities research at Goldman Sachs. According to Currie, OPEC needs to lay out its plans to lift the output curbs by May or June in order to prevent another price-crushing oil glut.
 

https://www.cnbc.com/2019/03/04/opec-will-likely-balance-th e-oil-market-by-next-month-goldman-sachs.html 

  OPEC is having to pull double duty since US production (and more importantly, US inventory) is still going gangbusters.  US crude oil inventory, before last week, was down just 4 million barrels net for the year.  But today's massive oil inventory build just wiped that away and then some.  Not to mention Libya's restarting Sharara.  

They've got their work cut out for them. 

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Oversupply?  May be better to say too much to sell at higher prices.  Nobody is taking much more than they can consume in the near future.  All OPEC needs to do is SAY they are not producing as much as they were before now and that magically means they have curbed "oversupply".  OPEC pumps as much as they sell, nothing more, nothing less.  Perception vs reality, and the speculators set the prices.

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On 3/6/2019 at 5:54 AM, Dan Warnick said:

Oversupply?  May be better to say too much to sell at higher prices.  Nobody is taking much more than they can consume in the near future.  All OPEC needs to do is SAY they are not producing as much as they were before now and that magically means they have curbed "oversupply".  OPEC pumps as much as they sell, nothing more, nothing less.  Perception vs reality, and the speculators set the prices.

In other words... they lie......

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Its funny how US exports are reported. No mention that were a net importer. Like rig counts are reported but not well completions. A lot of oil news is click bait fake news. The pipeline constraint along with a plethora of other constraints started about 600,000 bpd to early. Lol

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4 hours ago, Illurion said:

In other words... they lie......

If their mouths are moving......

Or, if a news story comes out about them and their actions.....

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On 3/6/2019 at 5:54 AM, Dan Warnick said:

Oversupply?  May be better to say too much to sell at higher prices.  Nobody is taking much more than they can consume in the near future.  All OPEC needs to do is SAY they are not producing as much as they were before now and that magically means they have curbed "oversupply".  OPEC pumps as much as they sell, nothing more, nothing less.  Perception vs reality, and the speculators set the prices.

What OPEC needs to do is curb oil exports to the US, and they are doing that. No one is watching global oil inventory figures (elusive).  They are watching US inventory figures.  You want to move spot prices? Artificially draw down US crude oil inventory. 

Rigs and well completions are a piece of the puzzle, but there is a HUGE lag in time between prices and active rig movements --6 months minimum (rigs lag price).

what people are watching closely:

Saudi oil production

Saudi oil exports to US

US crude oil inventory (EIA, API)

Russia oil production/compliamce to cut agreement

US oil production

Libya turmoil

PDVSA production/US sanctions on

Iranian sanction waivers 

and not in that order. 

Many would intelligently argue that none of the above change the market longterm, but the fact remains that these things move trading prices.  @William Edwards

has an intelligent thing or two to say about that .  I would argue that the most powerful metric to watch now is US crude inventory as reported by EIA. Of course that could change tomorrow.  

 

 

 

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3 minutes ago, Rodent said:

What OPEC needs to do is curb oil exports to the US, and they are doing that. No one is watching global oil inventory figures (elusive).  They are watching US inventory figures.  You want to move spot prices? Artificially draw down US crude oil inventory. 

Rigs and well completions are a piece of the puzzle, but there is a HUGE lag in time between prices and active rig movements --6 months minimum (rigs lag price).

what people are watching closely:

Saudi oil production

Saudi oil exports to US

US crude oil inventory (EIA, API)

Russia oil production/compliamce to cut agreement

US oil production

Libya turmoil

PDVSA production/US sanctions on

Iranian sanction waivers 

and not in that order. 

Many would intelligently argue that none of the above change the market longterm, but the fact remains that these things move trading prices.  @William Edwards

has an intelligent thing or two to say about that .  I would argue that the most powerful metric to watch now is US crude inventory as reported by EIA. Of course that could change tomorrow.  

 

 

 

What evidence is there that OPEC is curbing oil exports to the U.S.?  I question this because that would entail a scenario where a U.S. concern wishes to purchase OPEC oil and OPEC refuses to sell some or all of what the concern wishes to purchase.  Another scenario would be where a U.S. concern's PO is sent and a tanker shows up at the OPEC port for delivery and the OPEC supplier turns the tanker away empty.  Are either of these scenarios happening?  Or is it being reported that less OPEC oil is being received in U.S. ports?  If there was no order, or less orders, that would result in less oil being received in U.S. ports.  You see, this isn't as straight forward as it would seem.  And I think William would agree.

I would argue that OPEC saying they are going to curb oil exports to the U.S. results in speculators taking advantage of such announcements and buying or selling futures contracts to their own (hopefully, it IS speculating) advantage.  Don't forget, speculative futures contracts actually get filled and delivered, or not made and therefore not delivered, as the case may be.

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7 minutes ago, Dan Warnick said:

What evidence is there that OPEC is curbing oil exports to the U.S.?  I question this because that would entail a scenario where a U.S. concern wishes to purchase OPEC oil and OPEC refuses to sell some or all of what the concern wishes to purchase.  Another scenario would be where a U.S. concern's PO is sent and a tanker shows up at the OPEC port for delivery and the OPEC supplier turns the tanker away empty.  Are either of these scenarios happening?  Or is it being reported that less OPEC oil is being received in U.S. ports?  If there was no order, or less orders, that would result in less oil being received in U.S. ports.  You see, this isn't as straight forward as it would seem.  And I think William would agree.

I would argue that OPEC saying they are going to curb oil exports to the U.S. results in speculators taking advantage of such announcements and buying or selling futures contracts to their own (hopefully, it IS speculating) advantage.  Don't forget, speculative futures contracts actually get filled and delivered, or not made and therefore not delivered, as the case may be.

Saudi exports to US are published by EIA.  largest Saudi oil customer in US is I believe Saudi-owned Motiva, so essentially they are selling less oil to themselves.... 

https://www.google.com/amp/s/oilprice.com/Energy/Crude-Oil/Saudi-Arabia-Oil-Exports-To-US-Nosedive.amp.html

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3 hours ago, Rodent said:

Saudi exports to US are published by EIA.  largest Saudi oil customer in US is I believe Saudi-owned Motiva, so essentially they are selling less oil to themselves.... 

https://www.google.com/amp/s/oilprice.com/Energy/Crude-Oil/Saudi-Arabia-Oil-Exports-To-US-Nosedive.amp.html

With respect, nothing in that article says that any orders that the Saudis are receiving are not being filled.  The tone of the article makes one want to believe that the Saudis are not shipping oil to fill orders, but it does not say outright that the Saudis are not filling orders.  In fact, if one reads between the lines, it appears that the U.S. customers are putting the squeeze on the Saudis and not ordering as much.  I stand by my position.

Yet refiners from the U.S. West Coast have a limited choice of suppliers, so some Saudi oil will continue going there, at least.

Last year, Saudi shipments of crude to China averaged 1 million bpd but this year this may rise to 1.5 million bpd by the end of the first quarter as the Saudis aggressively seek a larger market share in the world’s second-largest oil consumer, which, unlike the United States, has not got abundant local production and has to rely on imports to satisfy demand.

 

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https://www.eia.gov/dnav/pet/pet_move_wimpc_s1_w.htm

 

This chart is US imports by country by week. Along with a weekly US production report you could track where the oil is coming from to see if the hyped reporting matches what going in or out of storage.

If you experiment with keyword searches on the EIA website you can find a plethora   of information that doesn't always jive with MSM.

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My take on part of why storage stock is up forcing the Saudi to slow imports. Canada is by far the largest net importer. 3+ mbpd. The EIA import export chart shows the US needing less than 1 mbpd. That leaves 2 mbpd. Canadian oil is in a glut for not only overproduction but lack of oil takeway has killed their priced. The Saudi and other importers just cant compete with those prices

Canada even cut its production 360,000 bpd? But that is not enough to drop the levels oil in stock.

US refiners like that heavy cheap oil so I assume its lighter/medium grades that are taking the import hit.

 

 

 

 

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The Sauds are/have cutting back production, to the tune of 1.3mbd. Less VLLT coming to USA so they are playing a game in hopes to drive up oil. @Rodent is correct. Start a draw down of our inventories and watch the prices go back up. Dangerous game but I think Trump slighted them twice and prices have been low. Now I believe they are going to try to get pricing back north of 70 as THEIR economy is 95% oil dependent. Live by the sword...….I actually think they believe they are the KINGS of the oil world. At current rate the US will be pumping 15mbd in 18 months. Banks are still handing out cash, there are 9000 DUC wells, the Delaware play west Permian is ramped up. Colorado is about to start...…. So it's a game the Sauds wont win in the end. 

Or, maybe we will all be electric in a year or two hehhehe.

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5 hours ago, Dan Warnick said:

With respect, nothing in that article says that any orders that the Saudis are receiving are not being filled.  The tone of the article makes one want to believe that the Saudis are not shipping oil to fill orders, but it does not say outright that the Saudis are not filling orders.  In fact, if one reads between the lines, it appears that the U.S. customers are putting the squeeze on the Saudis and not ordering as much.  I stand by my position.

Yet refiners from the U.S. West Coast have a limited choice of suppliers, so some Saudi oil will continue going there, at least.

Last year, Saudi shipments of crude to China averaged 1 million bpd but this year this may rise to 1.5 million bpd by the end of the first quarter as the Saudis aggressively seek a larger market share in the world’s second-largest oil consumer, which, unlike the United States, has not got abundant local production and has to rely on imports to satisfy demand.

 

Im not sure I'm arguing with you. . I am not questioning the hows or the whys. Merely stating the fact that Saudi Arabia is cutting oil exports to the United States (your argument may be this is not by design but by market default) and that Motiva happens to be the United States biggest purchaser of Saudi Arabia oil. which is convenient.  how they are doing that, I don't know.  Yes, they are increasing their oil shipments to China. that too is convenient because no one in the world knows how much oil China happens to have at the moment. (although there appears to be some fairly interesting technology that tracks the shadows cast by the storage tanks). That's one too many convenients for me. 

 US inventory figures, whether they mean anything or not in the real world, mean a lot to traders, and inventory swings up and down move the prices that are watched every day.  for this reason Saudi Arabia is wise to curtail exports to the US. US based but Saudi run Motiva gives them quite a bit of flexibility here. 

As for the EIA data, production figures are just an extrapolation of an estimate, but it's all we've got. Tanker Trackers have made some headway too.

I read an interesting article once detailing how the eia comes up with the data, and I was ... a bit surprised.

 

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And I should add, humbly, that I don't know everything (I mean, I know almost everything). It's always interesting to hear other info and perspectives from people with other experience.

Rodent 2020

 

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9 hours ago, Dan Warnick said:

What evidence is there that OPEC is curbing oil exports to the U.S.?  I question this because that would entail a scenario where a U.S. concern wishes to purchase OPEC oil and OPEC refuses to sell some or all of what the concern wishes to purchase.  Another scenario would be where a U.S. concern's PO is sent and a tanker shows up at the OPEC port for delivery and the OPEC supplier turns the tanker away empty.  Are either of these scenarios happening?  Or is it being reported that less OPEC oil is being received in U.S. ports?  If there was no order, or less orders, that would result in less oil being received in U.S. ports.  You see, this isn't as straight forward as it would seem.  And I think William would agree.

I would argue that OPEC saying they are going to curb oil exports to the U.S. results in speculators taking advantage of such announcements and buying or selling futures contracts to their own (hopefully, it IS speculating) advantage.  Don't forget, speculative futures contracts actually get filled and delivered, or not made and therefore not delivered, as the case may be.

It is true that OPEC constantly lies about what cuts they have made...

There was an article out last month,  that we all talked about here,  where the Saudi's sent 12 tankers back to the USA "EMPTY"......

Are you saying that story was false ?

Was that story some kind of "fake news" to fool us into thinking the Saudi's were reducing there exports to the USA,  when they actually weren't...?

That would not surprise me,  as OPEC constantly lies.........

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58 minutes ago, Illurion said:

It is true that OPEC constantly lies about what cuts they have made...

There was an article out last month,  that we all talked about here,  where the Saudi's sent 12 tankers back to the USA "EMPTY"......

Are you saying that story was false ?

Was that story some kind of "fake news" to fool us into thinking the Saudi's were reducing there exports to the USA,  when they actually weren't...?

That would not surprise me,  as OPEC constantly lies.........

Possibly full of oil, but I do doubt it. I think Opec has in fact slowed down production. I believe this is an impact statement too show who's boss. Trump manipulated them twice and to save face they are going to try and hurt our wallets as we are Bad Americans. At current rate of production here, Canada, and even got some Russian oil coming. So let the Chinese and India take what they want. Pretty soon Opec will be insignificant. The times are out pacing them. Even if we gotta print mo' bux huh @Tom Kirkman?

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In the medium term tug of war between OPEC trying to boost prices and U.S. Shale oil trying to ramp up production, the economics might get crazy.

OPEC and Saudi Arabia in particular can simply wait out the U.S. in this tug of war.

Shale oil decline rates are crazy steep.

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On 3/7/2019 at 10:55 PM, Boat said:

Its funny how US exports are reported. No mention that were a net importer. Like rig counts are reported but not well completions. A lot of oil news is click bait fake news. The pipeline constraint along with a plethora of other constraints started about 600,000 bpd to early. Lol

Uh, we are a net importer because we have the largest refinery complex on earth and export a gigantic chunk of it.  If oil was cut off tomorrow, everyone in the USA would not know the difference. WTI would not change in price.  A few refineries would be having large problems as their oil got cut off.  Even that would be temporary until the NG got ramped up offloading even more of the plastics etc from oil feed stock which is already happening in a massive way. 

But yes, any headline you read is almost 100% a lie, a massive lie, or an outright massive lie. 

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5 hours ago, Illurion said:

It is true that OPEC constantly lies about what cuts they have made...

There was an article out last month,  that we all talked about here,  where the Saudi's sent 12 tankers back to the USA "EMPTY"......

Are you saying that story was false ?

Was that story some kind of "fake news" to fool us into thinking the Saudi's were reducing there exports to the USA,  when they actually weren't...?

That would not surprise me,  as OPEC constantly lies.........

>> That would not surprise me,  as OPEC constantly lies...

Opinions/News is penny's worth - data is worth the dollars. Who do you believe - EIA/OPEC/IEA??

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16 hours ago, Rodent said:

What OPEC needs to do is curb oil exports to the US, and they are doing that. No one is watching global oil inventory figures (elusive).  They are watching US inventory figures.  You want to move spot prices? Artificially draw down US crude oil inventory. 

Rigs and well completions are a piece of the puzzle, but there is a HUGE lag in time between prices and active rig movements --6 months minimum (rigs lag price).

what people are watching closely:

Saudi oil production

Saudi oil exports to US

US crude oil inventory (EIA, API)

Russia oil production/compliamce to cut agreement

US oil production

Libya turmoil

PDVSA production/US sanctions on

Iranian sanction waivers 

and not in that order. 

Many would intelligently argue that none of the above change the market longterm, but the fact remains that these things move trading prices.  @William Edwards

has an intelligent thing or two to say about that .  I would argue that the most powerful metric to watch now is US crude inventory as reported by EIA. Of course that could change tomorrow.  

 

 

 

>> What OPEC needs to do is curb oil exports to the US, and they are doing that. No one is watching global oil inventory figures (elusive).  They are watching US inventory figures.  You want to move spot prices? Artificially draw down US crude oil inventory. 

Yes but IEA also publishes OECD inventory monthly - Eurozone being the major contributor after US. And SA has limited contribution here - a lot of EZ oil comes from Russia. Unless you are saying Russia has the same incentives. If so, it is really surprising Russia has been so slow to cut production and support OPEC+ - they seem happy with US$65 brent and not (as) willing to cede share as SA.

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2 hours ago, Wastral said:

But yes, any headline you read is almost 100% a lie, a massive lie, or an outright massive lie. 

Absolutely agree.

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6 hours ago, Illurion said:

It is true that OPEC constantly lies about what cuts they have made...

There was an article out last month,  that we all talked about here,  where the Saudi's sent 12 tankers back to the USA "EMPTY"......

Are you saying that story was false ?

Was that story some kind of "fake news" to fool us into thinking the Saudi's were reducing there exports to the USA,  when they actually weren't...?

That would not surprise me,  as OPEC constantly lies.........

I must have been travelling then and missed the article and the discussion.  Please re-post it if you can.

However, I'll bet the article had A LOT of room for reading between the lies, er, lines.  If in fact 12 tankers were "sent back empty", who sent them, what company?  Who's name was on the PO?  Was there a PO?  All of these details and many others are constantly if not always left out of these articles.  Like Rodent points out, Saudi has their own refineries in the U.S. and if they sent the tankers to pick up their own product for supply to their own refineries, they have a lot of room to play (or simply screw up and forget to slow down the supply ships when they know the end users are not ordering as much refined product).

Fake news?  Could be.  Again, it is not how much Saudi oil is coming to the U.S.; it is how much oil is ordered by end users in the U.S. not necessarily the Saudi refineries (thanks @Rodent).

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(edited)

The developing world is fast shifting its reliance on crude derivative based commercial vehicle engines to electric motor driven vehicles & this transformation has already started to show up on streets. 

Nothing can now stop a Fossil Fuel bear market. I see Brent below $30 in months to follow as inventory pileups will flush the gulf with crude!

Edited by Anuj Gupta
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50 minutes ago, Anuj Gupta said:

The developing world is fast shifting its reliance on crude derivative based commercial vehicle engines to electric motor driven vehicles & this transformation has already started to show up on streets. 

Nothing can now stop a Fossil Fuel bear market. I see Brent below $30 in months to follow as inventory pileups will flush the gulf with crude!

... Looks at world... Uh... Most of world can't even dream of affording an electric vehicle as they are 1) expensive and 2) people do not have the electrical hookup/grid $$$ for it.  Simple reason why world is INCREASING its reliance on oil.  Not decreasing.  Post this in 2 decades, then you may be onto something.  I would lay every penny I own on increased oil output in 2040 compared to today(not to mention the climate change epic hoax will have run its course by then).  Even if electric vehicles double their reliability and halve their cost, oil output would still increase

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