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OPEC Reaches Preliminary Accord To Curb Oil Production

September 30, 2016 Webmaster

Outside view of International Conference Center in Algiers, Algeria, where energy ministers from OPEC and other oil-producing countries are gathered to attend the opening session of the 15th International Energy Forum Ministerial meeting in Algiers, Algeria.

OPEC nations reached a preliminary agreement on Wednesday to curb oil production for the first time since the global financial crisis eight years ago, pushing up prices that had sunken over the past two years and weakened the economies of oil-producing nations.

Mohammed Bin Saleh Al-Sada, Qatar’s energy minister and current president of OPEC, announced the deal after several hours of talks in the Algerian capital. The levels must still be finalised at an OPEC meeting in Vienna in November.

The preliminary deal will limit output from the Organisation of the Petroleum Exporting Countries to between 32.5 million and 33 million barrels per day, he said. Current output is estimated at 33.2 million barrels per day.

Benchmark United States crude jumped US$2.38, or 5.3 per cent, to US$47.05 a barrel in New York. Brent crude, the international standard, was up US$2.72, or 5.9 per cent, to US$48.69 a barrel in London.

Long-running disagreements between regional rivals Saudi Arabia and Iran had dimmed hopes for a deal at Wednesday’s talks.

Iran had been resistant to cutting production, as it is trying to restore its oil industry since emerging from international sanctions over its nuclear program earlier this year. According to Wednesday’s deal, Iran exceptionally will be allowed to increase production to 3.7 million barrels a day, according to Algerian participants at the meeting. It is currently estimated to be pumping around 3.6 million.

The OPEC officials met informally on the sidelines of an energy conference in Algiers to try to find common ground on how to support oil markets.

POSITIVE DEAL

“We reached a very positive deal,” said Nigerian Oil Minister Emmanuel Ibe Kachikwu. He said all countries will reduce output but the specific quotas will be set in Vienna in November.

Earlier, Iranian Petroleum Minister Bijan Namdar Zanganeh had played down the OPEC gathering, calling it “just a consultation meeting”.

The price of crude oil has fallen sharply since mid-2014, when it was over US$100 a barrel, dropping below US$30 at the start of this year.

Saudi Arabia, the world’s biggest oil producer and Iran’s rival for power in the Middle East, appeared to be more amenable to some sort of production limit, certainly more so than in April when OPEC failed to agree on measures to curb supplies.

Saudi Energy Minister Khalid Al-Falih this week promised to “support any decision aimed at stabilising the market”.

Over the past couple of years, OPEC countries, led by Saudi Arabia, had been willing to let the oil price drop as a means of driving some US shale oil and gas producers out of business. Shale oil and gas requires a higher price to break even.

Those lower prices have hurt many oil-producing nations hard, particularly OPEC members Venezuela and Nigeria, but also Russia and Brazil.

Gleaner

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Four Oil Producers Offer To Freeze Oil Output

February 17, 2016 Webmaster

Oil powerhouses Russia and Saudi Arabia joined Qatar and Venezuela in pledging Tuesday to cap their crude output if other producers do the same, aiming to halt a slide that has pushed oil prices to their lowest point in more than a decade.

The decision followed an unexpected closed-door meeting involving the four countries in the Qatari capital, Doha, and reflects growing concern among big producers about the effects the slump poses to their domestic economies.

Russian Energy Minister Alexander Novak said in a statement issued after the meeting that the four countries would be ready to cap production based on last month’s output levels if others join.

“We are ready to maintain, on average in 2016, the level of oil production of January 2016 and not exceed it,” he said in a subsequent statement.

Whether the plan is enough to put a floor under prices is uncertain. The proposal depends on cooperation from a range of producers with differing budget priorities all scrambling for market share since prices began falling in summer 2014.

Among the hardest to bring on board will likely be Iran. It was noticeably absent from Tuesday’s gathering even though it shares control of a major underwater natural gasfield with fellow OPEC member Qatar.

Iran is eager to ramp up its exports now that sanctions related to its nuclear programme have been lifted, saying recently it aims to put another 500,000 barrels a day on the market. Figures from the International Energy Agency show that it pumped 2.9 million barrels daily in December, before sanctions were lifted.

Iran’s petroleum minister, Bijar Namdar Zangeneh, signalLed the Islamic Republic has no intention of giving up its share of the market. He acknowledged that global markets are “oversupplied,” but said Iran “will not overlook its quota,” according to comments carried by his ministry’s Shana news service.

Venezuelan Oil Minister Eulogio Del Pino heads to Tehran next for talks with his Iranian and Iraqi counterparts today, Wednesday.

“The key OPEC members that need to take part are Iran and Iraq, where the big increases are likely this year, but there are big doubts over whether this can be achieved,” Barclays analysts Miswin Mahesh and Kevin Norrish said in a research note.

Efforts to make the plan work are complicated by deep levels of distrust between regional rivals Saudi Arabia and Iran, which has built close ties to Iraq’s government in the years since the 2003 US-led invasion.

The two countries are in opposing camps in regional disputes from Yemen to Syria. Last month, Sunni-ruled Saudi Arabia cut diplomatic ties with Shiite powerhouse Iran after the Saudi embassy and a consulate were torched by Iranian protesters angry over the kingdom’s execution of a prominent Shiite cleric.

Speaking to reporters after the meeting, Saudi Oil Minister Ali Naimi said producers would continue to assess the state of the market in the months ahead. He described freezing output at January levels as an “adequate” step for now.

All of the countries at Tuesday’s meeting, except Russia, are part of OPEC. Saudi Arabia dominates policymaking within the 13-member bloc of oil-producing countries, which has refused to cut its official production targets. Doing so could bolster faltering prices.

The aim of OPEC’s keep-pumping strategy has been to attempt to ride out the 12-year lows in prices and force higher-cost producers, including shale drillers in the US, out of the market.

The bloc collectively pumped 39 million barrels of crude and natural gas liquids a day in December, or about two out of every five barrels globally. Russia pumps around 11 million barrels a day.

After rising soon after the meeting, a barrel of benchmark New York crude was trading down 35 cents at US$29.09 by midmorning in New York. A barrel of Brent, the international standard, fell 59 cents to US$33.42.

The Gleaner

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Oil Drops Below US$92

September 25, 2012 Webmaster

Worries about weaker economic growth dragged down oil prices Monday.

Oil has now fallen five of the last six trading days. It fell more than six per cent last week.

Benchmark crude fell 96 cents, or one per cent, to finish at US$91.93 a barrel on the New York Mercantile Exchange. Prices for other petroleum products dropped, too.

In London, Brent crude dropped US$1.61 at US$109.81 a barrel on the ICE Futures exchange.

Germany delivered the latest dose of gloomy economic news, with its index of business confidence falling for the fifth month in a row. Germany is an economic powerhouse, but 43 per cent of its exports go to its euro partners. And growth is stalling across the other 16 countries in the Eurozone.

Slower economies mean less demand for oil, pushing prices down.

Phil Flynn, a senior market analyst for Price Futures Group, said he’s surprised prices haven’t fallen further. He said one reason could be that commodity funds have not been bailing out of oil.

demand destruction

Still, oil prices have been under pressure from worries about Europe. The dollar has been stronger, which makes oil cheaper for holders of other currencies.

“You’re seeing demand destruction around the globe,” he said. “You’ve got Saudi Arabia saying they’re going to pump oil until the cows come home.” All of that drives down oil prices, he said.

Heating oil dropped 2.2 cents to US$3.0987 per gallon, wholesale gasolene decreased 2.49 cents to US$2.9176 per gallon and natural gas ended down 4.8 cents to US$2.837 per 1,000 cubic feet.

– AP

Oil Drops Below US$92

September 25, 2012 jrobinson

Worries about weaker economic growth dragged down oil prices Monday.

Oil has now fallen five of the last six trading days. It fell more than six per cent last week.

Benchmark crude fell 96 cents, or one per cent, to finish at US$91.93 a barrel on the New York Mercantile Exchange. Prices for other petroleum products dropped, too.

In London, Brent crude dropped US$1.61 at US$109.81 a barrel on the ICE Futures exchange.

Germany delivered the latest dose of gloomy economic news, with its index of business confidence falling for the fifth month in a row. Germany is an economic powerhouse, but 43 per cent of its exports go to its euro partners. And growth is stalling across the other 16 countries in the Eurozone.

Slower economies mean less demand for oil, pushing prices down.

Phil Flynn, a senior market analyst for Price Futures Group, said he’s surprised prices haven’t fallen further. He said one reason could be that commodity funds have not been bailing out of oil.

demand destruction

Still, oil prices have been under pressure from worries about Europe. The dollar has been stronger, which makes oil cheaper for holders of other currencies.

“You’re seeing demand destruction around the globe,” he said. “You’ve got Saudi Arabia saying they’re going to pump oil until the cows come home.” All of that drives down oil prices, he said.

Heating oil dropped 2.2 cents to US$3.0987 per gallon, wholesale gasolene decreased 2.49 cents to US$2.9176 per gallon and natural gas ended down 4.8 cents to US$2.837 per 1,000 cubic feet.

– AP

Oil’s Slide Continues, Hits 6-Week Low Below $92

September 20, 2012 jrobinson

Oil prices fell on Wednesday for the third day in a row as traders realised that a recent run-up to $100 may have been overdone.

Oil ended at $91.98 on Wednesday, dropping $3.31, or 3.5 per cent. That was its lowest close since August 3. Oil has fallen 7 per cent this week.

Several things have been pushing prices down. Analysts said traders are taking profits after oil got above $100 per barrel on Friday for the first time since May. And there have more signs this week that the global economy is slowing down, which tends to push oil prices lower because people and businesses use less energy.

Also, crude inventories rose three times more than analysts had expected last week. Crude supplies grew by 8.5 million barrels to 367.6 million barrels. That’s 8.4 per cent higher than at the same time last year, according to the Energy Information Administration‘s weekly report.

Analysts expected a rise of 2.5 million barrels, according to Platts, the energy information arm of McGraw-Hill Cos.

There were also reports that Saudi Arabia is keeping production high to drive oil prices lower.

Oil’s decline came despite some news that might have pushed prices higher. The Bank of Japan said on Wednesday that it would buy more government bonds, which is intended to boost Japan’s economy. And ongoing tensions in the Middle East have tended to drive prices higher.

“Yet we continue to fall,” said Addison Armstrong, senior director for market research at Tradition Energy. “I think that has accelerated some profit-taking. After all, crude did have a pretty good run from $86 up to $100.”

Brent crude traded on the ICE Futures exchange in London fell $3.84, or 3.4 per cent, to $108.19 per barrel.

Traders were also keeping their eyes on oil supplies as US Gulf Coast refineries returned to production after shutting down due to Hurricane Isaac.

“We’re getting back a few more refineries post (Hurricane Isaac), but on the flip side a few refineries had some restart issues and a few are headed into maintenance,” said Carl Larry of Oil Outlooks and Opinions in a newsletter.

Regular gasolene at the pump fell a half a penny to an average of $3.854 per gallon.

– AP

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Oil’s Slide Continues, Hits 6-Week Low Below $92

September 20, 2012 Webmaster