- Oil Prices Drop to One Year Low on Rising Global Supply
Global oil prices plunged to their lowest levels in a year after Saudi Energy Minister Khalid al Falih said the Kingdom’s production in November would surpass October’s output.
The fall in prices has increased the possibility of OPEC going ahead with production cut in its Vienna meeting scheduled for December 6. The cartel is expected to announce oil production next month.
In the last seven weeks, oil prices have dropped over 30 per cent in value due to Iranian waivers and slowing global growth.
“I have to say that the speed in which the oil market has declined has surprised me even as OPEC and non-OPEC members discuss a production cut,” said Andrew Lipow, president of Lipow Oil Associates. “The market does not think it will be enough.”
Price of Brent, against which Nigerian Crude is measured, dropped 5.9 per cent to $58.9 on Friday. The lowest since October 2017.
While U.S. West Texas Intermediate crude oil declined by 7.7 per cent to $50.42 a barrel. Also, the weakest price level since mid-October 2017.
Falih on Thursday said Saudi Production level would hit 11 million barrels per day in November, more than the 10.6 million pumped in October. Currently, the Kingdom is pumping a record 10.8 million to 10.9 million bpd.
Despite projected slow in demand in the first quarter of 2019, crude oil production continued to rise.
In the U.S, crude oil production rose to 11.7 million barrel per day, according to preliminary weekly report.
While Russia has maintained post-Soviet-era highs above 11 million barrel per day in recent months.
Therefore, rising global supply amid slowing global growth is weighing on oil outlook as investors look to cut their long positions.
Tamas Varga, a senior analyst at PVM Oil Associates, said in a note: “The question is … How much longer (are) bears are able to keep firing?.” Suggesting until OPEC reached a solid production agreement, oil is likely to average $60 – $65 a barrel in the next quarter.
A Loud Blast Heard in Dhahran, Saudi Arabia’s Largest Crude Oil Production Site
Loud Blast Heard in Dhahran, Saudi Arabia’s Largest Crude Oil Production Site
Two residents from the eastern city of Dhahran, Saudi Arabia, on Sunday said they heard a loud blast, but they are yet to know the cause, according to a Reuters report.
Saudi’s Eastern province is home to the kingdom’s largest crude oil production and export facilities of Saudi Aramco.
A blast in any of the facilities in that region could hurt global oil supplies and bolster oil prices above $70 per barrel in the first half of the year.
One of the residents said the explosion took place around 8:30 pm Saudi time while the other resident claimed the time was around 8:00 pm.
However, Saudi authorities are yet to confirm or respond to the story.
Brent Crude Oil Approaches $70 Per Barrel on Friday
Nigerian Oil Approaches $70 Per Barrel Following OPEC+ Production Cuts Extension
Brent crude oil, against which Nigerian oil is priced, rose to $69 on Friday at 3:55 pm Nigerian time.
Oil price jumped after OPEC and allies, known as OPEC plus, agreed to role-over crude oil production cuts to further reduce global oil supplies and artificially sustain oil price in a move experts said could stoke inflationary pressure.
Brent crude oil rose from $63.86 per barrel on Wednesday to $69 per barrel on Friday as energy investors became more optimistic about the oil outlook.
While certain experts are worried that U.S crude oil production will eventually hurt OPEC strategy once the economy fully opens, few experts are saying production in the world’s largest economy won’t hit pre-pandemic highs.
According to Vicki Hollub, the CEO of Occidental, U.S oil production may not return to pre-pandemic levels given a shift in corporates’ value.
“I do believe that most companies have committed to value growth, rather than production growth,” she said during a CNBC Evolve conversation with Brian Sullivan. “And so I do believe that that’s going to be part of the reason that oil production in the United States does not get back to 13 million barrels a day.”
Hollub believes corporate organisations will focus on optimizing present operations and facilities, rather than seeking growth at all costs. She, however, noted that oil prices rebounded faster than expected, largely due to China, India and United States’ growing consumption.
“The recovery looks more V-shaped than we had originally thought it would be,” she said. Occidental previous projection had oil production recovering to pre-pandemic levels by the middle of 2022. The CEO Now believes demand will return by the end of this year or the first few months of 2022.
“I do believe we’re headed for a much healthier supply and demand environment” she said.
Oil Jumps to $67.70 as OPEC+ Extends Production Cuts
Oil Jumps to $67.70 as OPEC+ Extends Production Cuts
Brent crude oil, against which Nigerian oil is priced, rose to $67.70 per barrel on Thursday following the decision of OPEC and allies, known as OPEC+, to extend production cuts.
OPEC and allies are presently debating whether to restore as much as 1.5 million barrels per day of crude oil in April, according to people with the knowledge of the meeting.
Experts have said OPEC+ continuous production cuts could increase global inflationary pressure with the rising price of could oil. However, Saudi Energy Minister Prince Abdulaziz bin Salman said “I don’t think it will overheat.”
Last year “we suffered alone, we as OPEC+” and now “it’s about being vigilant and being careful,” he said.
Saudi minister added that the additional 1 million barrel-a-day voluntary production cut the kingdom introduced in February was now open-ended. Meaning, OPEC+ will be withholding 7 million barrels a day or 7 percent of global demand from the market– even as fuel consumption recovers in many nations.
Experts have started predicting $75 a barrel by April.
“We expect oil prices to rise toward $70 to $75 a barrel during April,” said Ann-Louise Hittle, vice president of macro oils at consultant Wood Mackenzie Ltd. “The risk is these higher prices will dampen the tentative global recovery. But the Saudi energy minister is adamant OPEC+ must watch for concrete signs of a demand rise before he moves on production.”
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