OIL PRICE INTELLIGENCE REPORT
In today’s newsletter, we will take a quick look at some of the critical figures and data in the energy markets this week.
We will then look at some of the key market movers early this week before providing you with the latest analysis of the top news events taking place in the global energy complex over the past few days. We hope you enjoy.
Chart of the Week
• The EIA released its latest Short-Term Energy Outlook, which contained some bearish predictions for oil prices.
• The agency projects WTI to average $51 per barrel and Brent to average $52 per barrel over the course of 2017, figures that are only slightly up from the previous month. The small upward revision is surprising given that the latest estimate incorporates the OPEC deal.
• But the EIA remains unimpressed by the OPEC agreement. The agency kept its price projections relatively flat, citing the possibility of OPEC cheating, as well as a possible strong response of U.S. shale.
• It should be noted, however, that the EIA figures do not reflect the non-OPEC agreement this past weekend (more on that below).
Market Movers
• Eni (NYSE: E) is set to sell 30 percent of its giant Zohr gas field off the coast of Egypt to Rosneft for an estimated $1.575 billion. Zohr is the largest gas field ever found in the Mediterranean and the first gas flows could come online by the end of 2017.
• Kinder Morgan (NYSE: KMI) could sell $10 billion worth of Permian oil and gas assets. Potential buyers include Occidental Petroleum (NYSE: OXY), Windy Cove Energy, and Fleur de Lis Energy.
• TransCanada’s (NYSE: TRP) Keystone XL Pipeline is slated for revival if the Trump administration has anything to do with it. The President-elect said in an interview this past weekend that he would make a decision on Keystone XL “fairly quickly.”
Tuesday December 13, 2016
Oil prices skyrocketed yet again at the start of this week on news that non-OPEC countries agreed to cut production. Russia agreed to cut 300,000 barrels per day as expected, and a handful of other non-OPEC countries all chipped in an additional 258,000 bpd in reductions:
• Mexico -100,000 bpd
• Azerbaijan -35,000 bpd
• Oman -40,000 bpd
• Kazakhstan -20,000 bpd
• Malaysia -20,000 bpd
• And the remainder will come from Bahrain, Brunei, Equatorial Guinea, Sudan and South Sudan.
Oil prices jump. WTI and Brent surged more than 3 percent on Monday, taking prices up to $53 and $56 per barrel, respectively. Those prices are the highest in a year and a half.
Saudi Arabia could cut deeper. Saudi energy minister Khalid al-Falih said over the weekend that his country would be prepared to take production below its promised 10 million barrels per day in an effort to cut into global supplies and ensure that the deal works. "I can tell you with absolute certainty that effective Jan. 1 we’re going to cut and cut substantially to be below the level that we have committed to on Nov. 30," he told reporters after meeting with non-OPEC countries. The comments indicate a level of seriousness on behalf of Saudi Arabia not seen in more than two years – for Saudi Arabia to go beyond what it promised in Vienna is hugely positive for crude oil prices. It also suggests that despite fears over non-compliance and cheating, OPEC might actually deliver.
Hedge funds build up bullish position on oil. The liquidation of short bets following the OPEC deal continues. Reuters reports that hedge funds and other money managers have established the most bullish position on record, adding 94 million barrels of long positions and cutting WTI and Brent futures and options short positions by 134 million barrels. The net-long position stood at 728 million barrels, according to the most recent data, the most bullish on record. It is not a coincidence that this has occurred at a time when oil prices have rallied more than 20 percent.
We will then look at some of the key market movers early this week before providing you with the latest analysis of the top news events taking place in the global energy complex over the past few days. We hope you enjoy.
Chart of the Week
• The EIA released its latest Short-Term Energy Outlook, which contained some bearish predictions for oil prices.
• The agency projects WTI to average $51 per barrel and Brent to average $52 per barrel over the course of 2017, figures that are only slightly up from the previous month. The small upward revision is surprising given that the latest estimate incorporates the OPEC deal.
• But the EIA remains unimpressed by the OPEC agreement. The agency kept its price projections relatively flat, citing the possibility of OPEC cheating, as well as a possible strong response of U.S. shale.
• It should be noted, however, that the EIA figures do not reflect the non-OPEC agreement this past weekend (more on that below).
Market Movers
• Eni (NYSE: E) is set to sell 30 percent of its giant Zohr gas field off the coast of Egypt to Rosneft for an estimated $1.575 billion. Zohr is the largest gas field ever found in the Mediterranean and the first gas flows could come online by the end of 2017.
• Kinder Morgan (NYSE: KMI) could sell $10 billion worth of Permian oil and gas assets. Potential buyers include Occidental Petroleum (NYSE: OXY), Windy Cove Energy, and Fleur de Lis Energy.
• TransCanada’s (NYSE: TRP) Keystone XL Pipeline is slated for revival if the Trump administration has anything to do with it. The President-elect said in an interview this past weekend that he would make a decision on Keystone XL “fairly quickly.”
Tuesday December 13, 2016
Oil prices skyrocketed yet again at the start of this week on news that non-OPEC countries agreed to cut production. Russia agreed to cut 300,000 barrels per day as expected, and a handful of other non-OPEC countries all chipped in an additional 258,000 bpd in reductions:
• Mexico -100,000 bpd
• Azerbaijan -35,000 bpd
• Oman -40,000 bpd
• Kazakhstan -20,000 bpd
• Malaysia -20,000 bpd
• And the remainder will come from Bahrain, Brunei, Equatorial Guinea, Sudan and South Sudan.
Oil prices jump. WTI and Brent surged more than 3 percent on Monday, taking prices up to $53 and $56 per barrel, respectively. Those prices are the highest in a year and a half.
Saudi Arabia could cut deeper. Saudi energy minister Khalid al-Falih said over the weekend that his country would be prepared to take production below its promised 10 million barrels per day in an effort to cut into global supplies and ensure that the deal works. "I can tell you with absolute certainty that effective Jan. 1 we’re going to cut and cut substantially to be below the level that we have committed to on Nov. 30," he told reporters after meeting with non-OPEC countries. The comments indicate a level of seriousness on behalf of Saudi Arabia not seen in more than two years – for Saudi Arabia to go beyond what it promised in Vienna is hugely positive for crude oil prices. It also suggests that despite fears over non-compliance and cheating, OPEC might actually deliver.
Hedge funds build up bullish position on oil. The liquidation of short bets following the OPEC deal continues. Reuters reports that hedge funds and other money managers have established the most bullish position on record, adding 94 million barrels of long positions and cutting WTI and Brent futures and options short positions by 134 million barrels. The net-long position stood at 728 million barrels, according to the most recent data, the most bullish on record. It is not a coincidence that this has occurred at a time when oil prices have rallied more than 20 percent.
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