Saudi Arabia and OPEC are doomed.

[Swordsmyth]

The final OPEC monthly report for this year focused on the 2017 highlights and expectations for 2018. In both overviews, the predominant theme was the U.S. shale supply growth that was higher than any initial expectations.
“Non-OPEC oil supply growth 2017 performed well above initial market expectations to now stand at 0.81 mb/d. Higher-than-expected supply growth in the US, Canada and Kazakhstan have been the key contributors to the upward revisions, particularly US tight oil. As a result, US oil output is now expected to grow at 0.61 mb/d this year,” OPEC said.
The expected non-OPEC oil supply growth for 2017 is an upward revision of 150,000 barrels per day from the previous report.
Improved well efficiency and increased investment in U.S. tight oil prompted OPEC to expect the momentum to continue in 2018. Higher production from sanctioned oil sands projects in Canada will also add to increased non-OPEC supply next year.

“As a result, non-OPEC supply is expected to grow by 0.99 mb/d in 2018. The forecast is associated with considerable uncertainties, particularly regarding US tight oil developments,” OPEC said.
For 2018, OPEC revised up its forecast for non-OPEC supply growth by 120,000 barrels per day.
In its World Oil Outlook 2017 published in November, OPEC admitted that higher oil prices, robust oil demand growth, and higher upstream activity will lead to faster-than-previously-expected growth in U.S. shale production until 2022.

https://oilprice.com/Energy/Energy-G...Month-Low.html

[Swordsmyth]

Huge WTI-Brent Spread Boosts U.S. Crude Exports

https://oilprice.com/Energy/Energy-General/Huge-WTI-Brent-Spread-Boosts-US-Crude-Exports.html

[goldenequity]

and the first arctic tanker load goes to.... (wait for it)



Desperate Britain Forced To Import Russian Gas From Sanction-Targeted Project
http://www.zerohedge.com/news/2017-1...rgeted-project

We said two days ago that it’s been a tough week for anybody who needs to heat their home or put gasoline in their cars in Britain. The litany of negative events and mishaps includes extremely low temperatures, the shutdown of the Forties pipeline due to a hairline crack and an explosion at one of the Europe’s biggest gas hubs in Austria, which further tightened UK supplies.

As we noted, the price of gas futures surged by the most in 8 years. The timing of the gas hub explosion, as we head into Winter, couldn’t have been worse either.

It takes about two weeks to bring LNG from Qatar, the U.K.’s biggest supplier of the super-chilled fuel. Only one tanker, the Bu Samra, is confirmed as arriving in the U.K. this month. The first tanker from Russia’s Arctic plant Yamal LNG may also head to Britain and would arrive in about five days, according to shipping website sea-distances.

The destination of the LNG carrier was expected to be Asia, but will actually be Britain, even though the British government backed US sanctions against the project.


snicker..

[goldenequity]

TurkStream Pipeline: Greece Out - Bulgaria In (then to Romania/Hungry/Austria)

Victor Kuhnovets-
The route of the Turkish Stream gas pipeline will be changed -
from Turkey the pipeline will not go to Greece, as stated earlier,
but to Bulgaria and further to Romania, Hungary, Austria.
This was reported on December 14 by the Turkish newspaper Habertürk.

[Swordsmyth]

Saudi Economy Contracts For First Time In 8 Years, Unveils Record Spending Spree To Boost Growth

http://www.zerohedge.com/news/2017-12-19/saudi-economy-contracts-first-time-8-years-unveils-record-spending-spree-boost-growt

[Swordsmyth]

Saudi Arabia on Thursday made the first payment totaling US$533 million (2 billion riyals) as part of its new household allowance program that reaches 10.6 million beneficiaries, before it starts raising food and gasoline prices.
Known as the Citizens Account, the allowance scheme is a national cash transfer program that was first announced by the Government in December 2016 and opened for registrations in February 2017, according to the official Saudi Press Agency (SPA).
The allowance is aimed at easing the direct and indirect impact of the gasoline and electricity price hikes, and the VAT increase on food and beverages.
Saudi Arabia made bank transfers on Thursday to around 3 million households, for a total of 10.6 million beneficiaries, according to Saudi Minister of Labor and Social Development, Ali al-Ghafees. Some 20 percent of the applicants did not qualify to get allowances.
Last week, officials at the Saudi labor ministry said that around 3.7 million households signed up for the program, representing about 13 million total beneficiaries, but that not all would be qualified to receive allowances.

More at: https://oilprice.com/Geopolitics/Mid...rice-Hike.html

[goldenequity]

and the first arctic tanker load goes to.... (wait for it)



Desperate Britain Forced To Import Russian Gas From Sanction-Targeted Project
http://www.zerohedge.com/news/2017-1...rgeted-project

We said two days ago that it’s been a tough week for anybody who needs to heat their home or put gasoline in their cars in Britain. The litany of negative events and mishaps includes extremely low temperatures, the shutdown of the Forties pipeline due to a hairline crack and an explosion at one of the Europe’s biggest gas hubs in Austria, which further tightened UK supplies.

As we noted, the price of gas futures surged by the most in 8 years. The timing of the gas hub explosion, as we head into Winter, couldn’t have been worse either.

It takes about two weeks to bring LNG from Qatar, the U.K.’s biggest supplier of the super-chilled fuel. Only one tanker, the Bu Samra, is confirmed as arriving in the U.K. this month. The first tanker from Russia’s Arctic plant Yamal LNG may also head to Britain and would arrive in about five days, according to shipping website sea-distances.

The destination of the LNG carrier was expected to be Asia, but will actually be Britain, even though the British government backed US sanctions against the project.


snicker..

Russian embassy trolls UK...

[Swordsmyth]

Saudi Oil Exports To China Hit One-Year Low

https://oilprice.com/Energy/Crude-Oil/Saudi-Oil-Exports-To-China-Hit-One-Year-Low.html

[Swordsmyth]

Russia Boosts 2017 Crude Oil Production To 30-Year High

https://www.zerohedge.com/news/2018-01-03/russia-boosts-2017-crude-oil-production-30-year-high

[Swordsmyth]

Saudis Slash Oil Price To Save U.S. Market Share

https://oilprice.com/Energy/Oil-Prices/Saudis-Slash-Oil-Price-To-Save-US-Market-Share.html

[Swordsmyth]

FGE said in a note quoted by Bloomberg that Russia will start moving more Urals eastward right after the launch of the pipeline extension, at a rate of 160,000 bpd. The overall increase of Russian crude shipments to China, according to the consultancy, could be around 200,000 bpd.
This means less oil for Europe, which is Russia’s number-one oil client. This only highlights the significance of Moscow’s Asian pivot amid lingering European sanctions following the 2014 annexation of Crimea and Russia’s involvement in separatist conflicts in the Ukraine.
In 2016, Russia exported an average 3.7 million barrels daily to European countries, compared with less than a million bpd to China, according to figures from the Energy Information Administration (EIA). In percentage figures, Europe accounted for 70 percent of Russia’s 2016 crude oil exports, while the share of China was just 18 percent. Yet this is changing fast, as this chart from the EIA shows:

(Click to enlarge)
The rise in Chinese exports has been quite steep since 2014: as of November last year, Russia shipped 1.3 million barrels of oil daily to China. All the latest signs point to further growth. However, exactly how much this would hurt European buyers is unclear.
The Urals is currently trading at a discount of about $4 to Brent crude but WTI’s discount to the international benchmark is $6 a barrel. In other words, Russia’s diverting of crude oil from Europe to China could be an opportunity for U.S. exporters as long as they can keep their transport costs low enough. Europe will probably be grateful for the diversification.

More at: https://www.zerohedge.com/news/2018-...t-oil-strategy

[Swordsmyth]

China’s crude oil imports from Russia rose by 11 percent on the year in November, to 1.26 million bpd, while second-placed Saudi Arabia saw its crude oil sales down 7.8 percent annually to 1.056 million bpd.
Russia was also the biggest oil supplier to China between January and November, with sales rising 15.5 percent on the year to 1.2 million bpd, and overtaking Saudi Arabia by 159,000 bpd.

More at: https://oilprice.com/Latest-Energy-N...il-Intake.html

[Swordsmyth]

OPEC’s oil production and supply cuts—now in their second year—have claimed a victim. It’s an industry that’s vital for the crude oil exports of oil-producing countries: supertanker shipping.
The supertankers, or very large crude carriers (VLCCs), are vessels capable of carrying around two million barrels of oil. As OPEC and its non-OPEC allies work to remove a combined 1.8 million bpd off the market to draw down the global glut, the number of supertankers voyaging from the Middle East to Asia, for example, has dropped.
This decreased demand coincides with a period of new-build vessels being delivered and adding to the global supertanker fleet, thus creating an excess supply of supertankers at a time when crude oil trade out of the Middle East is down. Moreover, the oil futures market is currently in backwardation (the situation in which front-month prices are higher than those for months further in the future), which makes hoarding oil in supertankers at sea uneconomical and frees more vessels, adding to the overcapacity of the global fleet.
All these factors led to a slump in supertanker average daily earnings in 2017, to their lowest since 2009 and to below initial analyst expectations.
According to Clarkson Research, the average VLCCs earnings dropped to $17,794 per day in 2017, from $41,888 in 2016, a 57.5-percent slump. The average 2017 earnings were the lowest since at least 2009, according to Clarkson data cited by Bloomberg.
Just before the OPEC/non-OPEC production cuts began in January 2017, analysts had revised down in December 2016 their forecasts for tanker earnings by 12 percent for 2017, expecting the worst year since 2013.
As it turned out, 2017 was the worst year for VLCC earnings since at least 2009.


Prospects for the supertanker market in 2018 are also grim, especially if OPEC and allies decide at their June meeting to stick to the production cuts until the end of this year. The cartel and its friends will be reviewing mid-year the state of the oil market, and might choose to revisit the cuts if they see the market has balanced.
On top of that, newly built tankers will continue to add to the global fleet in 2018, albeit at a slower pace than in the past two years. Clarkson Research has estimated that the world’s supertanker fleet will grow by 4 percent in 2018, following 5.3-percent growth in 2017 and a 7.4-percent increase in 2016.

More at: https://oilprice.com/Energy/Crude-Oi...OPEC-Deal.html

[Swordsmyth]

Rig Count Shoots Up As Oil Nears $70

https://oilprice.com/Energy/Energy-General/Rig-Count-Shoots-Up-As-Oil-Nears-70.html


Falling Chinese Oil Imports Weigh On Prices

https://oilprice.com/Latest-Energy-News/World-News/Falling-Chinese-Oil-Imports-Weigh-On-Prices.html

[Swordsmyth]

Russia's Novak says to discuss possible exit from OPEC+ deal in Oman

https://uk.reuters.com/article/uk-oil-opec-russia-novak/russias-novak-says-to-discuss-possible-exit-from-opec-deal-in-oman-idUKKBN1F126R?rpc=401&

[Swordsmyth]

Shale Oil Output To Rise By 1.8 Million Bpd Through Q1 2019

https://oilprice.com/Latest-Energy-News/World-News/EIA-Shale-Oil-Output-To-Rise-By-18-Million-Bpd-Through-Q1-2019.html

[Swordsmyth]

OPEC Revises Up Non-OPEC Production Estimates For 2018

https://oilprice.com/Latest-Energy-N...-For-2018.html






European refineries are struggling to pay their crude bills as margins decline and demand weakens for some of their products, Bloomberg reports.

The profit curve for fuel oil, used by shippers and power stations, has fallen the most dramatically. High inflows of diesel in the Middle East are making that fuel difficult to bank on as well.
As a result of the capital crunch, refinery runs could become shorter, KBC Advanced Technologies, a research firm in the sector, says, though part of these fluctuations are owed to normal seasonal tendencies.

https://oilprice.com/Energy/Crude-Oi...-Refiners.html

[Swordsmyth]

OPEC Oil Production Rose In December Despite Plunge In Venezuela Output

https://www.zerohedge.com/news/2018-01-18/opec-oil-production-rose-december-despite-plunge-venezuela-output

[Swordsmyth]

Russia's sovereign wealth reserves, once bloated by years of abundant petroleum revenue, are today just shadows of their former selves. And on Feb. 1, the country's Reserve Fund, designed to help the government balance its budget, will officially disappear as it is legally recombined with the National Wealth Fund, a separate pot of money that backs up Russia's pensions. But the merger is a move in name only. It will come after the country's Finance Ministry appears already to have drained the Reserve Fund's remaining $17 billion in cash to plug a looming budget hole. With Russia's financial security blanket wearing thin, the question as national elections approach will become whether its people will continue to trust the current administration to manage the country's increasingly shaky finances.



The Russian economy officially pulled out of recession in 2017, and it was expected to settle into a period of stagnation for the foreseeable future. But there are danger signs on the horizon and some indications that the country may have slipped back into recession at the end of last year, despite an oil price rebound brought on by the OPEC production cut and increasing global demand. While the Finance Ministry says the country's gross domestic product (GDP) grew by 1.7 percent last year — an increase over 2016 — statistics for the economic fourth quarter have not been made public yet. A report issued Jan. 11 by JPMorgan Chase, however, says that the economy contracted during each of the last two quarters of the year, technically putting the country back in recession.
Several additional developments will add strain to the Russian financial picture. It does not appear that the sanctions imposed by the West will be lifted this year, and in fact, the United States will likely expand its sanctions regime, cutting off lending to Russia's major economic sectors and the government, and stripping the country's oligarchs of their assets abroad. Furthermore, Russia's regional governments are drowning in debt and will need $50 billion to $150 billion over the next three years to stay afloat. Russia's banking sector is also in crisis. With one-third of its institutions forced to close over the past three years and a further third likely to fail, merge or need bailouts in the coming years, the banking industry will require $50 billion to $100 billion to cover bailouts and restructuring. Meanwhile, a manufacturing slowdown in Russia's defense industry, a major contributor to its economy, will require another bailout this year. Last week, oligarch-owned Alfa Bank (Russia's seventh-largest) said it would steer away from funding orders by the defense sector, because it expects sanctions to further hamper the industries' finances. This will leave the state to foot most of the bill. Russia also is continuing to expand its footprint throughout the world and fund operations in Syria, Ukraine and North Korea — a strategy that does not come cheap.

If the price of oil, which topped $70 per barrel in January, levels out or continues to rise, it would give the government some breathing room. The national budget was set with the assumption that oil would remain near $40 per barrel, and any revenue beyond that could flow into its currency reserves and National Wealth Fund. This could flush a relatively large amount of cash into the Kremlin's hands. The country's large energy firms — in particular, oil giant Rosneft — are pushing back on the Kremlin's grab for revenue, because they would prefer to increase their own revenues instead. Rosneft could keep its expanded oil profits abroad to circumvent the Kremlin, but that maneuver would intensify the political struggle between Putin and Rosneft's chief, Igor Sechin — arguably Russia's second-most powerful man. The Kremlin is also looking to international markets in a bid to raise about $18 billion in sovereign debt, but the United States is seeking to limit Russia's ability to do so. However, Moscow has been reaching out to alternative markets in the Middle East and the Asia-Pacific in its search for possible lenders.




Russia also holds a relatively large reserve of foreign currency, worth about $356 billion at the end of December. Those foreign exchange reserves are intended to be used for external trade, not to bolster the domestic economy. Putin reiterated those intentions in a recent interview. However, the Kremlin has bent that rule during past crises, such as during the 2009 recession when its reserves fell by a total of $210 billion, partially due to ruble volatility but also as a result of Kremlin spending. So despite Russia's bleak financial picture this year, the Kremlin has some tools at its disposal to prevent the destabilization that would translate into an even tougher election year.

More at: https://worldview.stratfor.com/artic...t-hangs-thread

[Swordsmyth]

New forecasts from the International Energy Agency say the United States is on track to overtake Saudi Arabia as the second-largest oil producer in the world, just behind Russia, according to the organization’s report on Friday.

More at: https://oilprice.com/Latest-Energy-N...the-World.html

[Swordsmyth]

Oil And Gas Industry Plans Capex Hike

Confidence is returning to the oil and gas industry, with a majority of respondents in a DNV GL survey saying that they plan to increase capital expenditure this year. The Norway-based energy industry advisory firm noted that while last year confidence in the growth prospects for oil and gas firms had stood at 32 percent of respondents, now it has gone up to 63 percent.
DNV polled 813 senior oil and gas executives, of which 36 percent said their companies would spend more on R&D and innovation this year. That’s the highest portion in the last four years, the consultancy noted.


https://oilprice.com/Energy/Energy-G...apex-Hike.html

[Swordsmyth]

“Leave us alone and leave all these issues. We had enough of shale oil and talks of shale. Please talk about anything else,” Saudi oil minister Khalid al-Falih said in Davos, snapping at reporters.
Al-Falih has clearly become annoyed at all the pestering from reporters and market analysts about the prospect of U.S. shale spoiling OPEC’s plans this year. He put on a brave face and dismissed questions about OPEC losing market share as U.S. drillers continue to ramp up. “The market is in an excellent condition, the demand and supply are good, the inventories are good,” he said, according to the WSJ. “I told you I was relaxed, and I’m still relaxed about the meeting.”
His testy response won’t kill rumors about discord growing from within OPEC. In fact, the WSJ reported that a delegate from an unnamed OPEC country said that falling shipments to the U.S. are a concern. The delegate said that OPEC’s leadership “needs to make some progress on addressing shale.”
But al-Falih didn’t want to hear any of it, and he blamed reporters for stirring up controversy where he says there wasn’t any to begin with. “Why are you all excited all of a sudden on shale? You know why, because you like to chit chat … you are an agent of disturbance,” he said, pointing to a reporter.

https://oilprice.com/Energy/Energy-G...hale-Hype.html

[Swordsmyth]

US Rig Count Soars Most In 10 Months As Production Hits Record High

https://www.zerohedge.com/news/2018-01-26/us-rig-count-soars-most-10-months-production-hits-record-high

[Swordsmyth]

The Fort Hills oil sands project in Alberta, Canada, has achieved first oil, with production expected to ramp up over the coming months to 180,000 bpd, France’s Total—which holds 26 percent in the project—said on Monday.
Canada’s Suncor is operator of the project with a 53.06-percent interest, and Teck Resources Limited holds the remaining 20.89 percent.
Fort Hills, located some 90 kilometers (56 miles) north of Fort McMurray, has a capacity to produce 194,000 bpd, of which some 103,000 bpd net to Suncor, the Canadian company said in its press release.

Production will continue to ramp up through the first quarter of 2018, Suncor said, adding that Fort Hills remains on track to reach 90 percent capacity by the end of this year.

More at: https://oilprice.com/Latest-Energy-N...First-Oil.html

[Swordsmyth]

Four New Oil Refineries In Iraq Will Add 700,000-bpd Capacity

https://oilprice.com/Latest-Energy-News/World-News/Four-New-Oil-Refineries-In-Iraq-Will-Add-700000-bpd-Capacity.html

[Swordsmyth]

Iraq has relaxed its crude oil exporting rules in a bid to pocket better prices for its most precious commodity despite the continuing rally. Baghdad now allows buyers to withhold the destination of the cargo when they buy it until two weeks after the issuance of the cargo’s bill of lading.
Not having to set a destination for the cargo at the time of buying provides oil traders with greater flexibility in reselling it, Bloomberg notes, depending on a price comparison and possible shortages that would produce better prices for the cargo.
Iraq has already sold two cargoes under the laxer rule, for a total of 4 million barrels. The cargoes sold at a premium to the official selling price at an auction in Dubai. An earlier lot that sold on the spot market under the old, more stringent rules, fetched a lower price that the official selling figure, Bloomberg noted.

More at: https://oilprice.com/Latest-Energy-N...er-Prices.html

[Swordsmyth]

Canadian producers and global oil majors are increasingly exploring the Duvernay and Montney formations, which they say could rival the most prolific U.S. shale fields.
Canada is the first country outside the United States to see large-scale development of shale resources, which already account for 8 percent of total Canadian oil output. China, Russia and Argentina also have ample shale reserves but have yet to overcome the obstacles to full commercial development.
Canada, by contrast, offers many of the same advantages that allowed oil firms to launch the shale revolution in the United States: numerous private energy firms with appetite for risk; deep capital markets; infrastructure to transport oil; low population in regions that contain shale reserves; and plentiful water to pump into shale wells.
Together, the Duvernay and Montney formations in Canada hold marketable resources estimated at 500 trillion cubic feet of natural gas, 20 billion barrels of natural gas liquids and 4.5 billion barrels of oil, according to the National Energy Board, a Canadian regulator.

https://www.reuters.com/article/us-c...-idUSKBN1FI0G7

[Swordsmyth]

WTI/RBOB prices sank for the second day ahead of tonight's API as anxiety over a "slack demand period" builds and US production surges. While expectations were for a modest crude build, inventories jump over 3mm bbl - ending the 10-week draw-streak and sending WTI lower..
“The crude market is looking at the weakness in stock market. That’s making the oil traders a little nervous,” Phil Flynn, senior market analyst at Price Futures Group Inc. in Chicago, said by telephone.
At the same time, “there is an expectation that we will see the first increase in supply in a long time.”
API

• Crude +3.229mm (+900k exp) - biggest build since Sept.
• Cushing -2.383mm
• Gasoline +2.692mm (+2mm exp)
• Distillates -4.096mm

Party's Over - after 10 weeks of crude draws, API reported a big build and a 12th week of gasoline builds...


More at: https://www.zerohedge.com/news/2018-...se-crude-build

[Swordsmyth]

The U.S. tax overhaul signed into law by President Donald Trump last month will boost the oil industry by $190.4 billion, according to estimates by Wood Mackenzie released on Tuesday.

More at: https://oilprice.com/Latest-Energy-N...-Billions.html

[Swordsmyth]

Chevron Makes Major Oil Discovery In Deepwater Gulf Of Mexico

https://oilprice.com/Latest-Energy-News/World-News/Chevron-Makes-Major-Oil-Discovery-In-Deepwater-Gulf-Of-Mexico.html