U.S. oil output to surpass Saudi and Russia combined by 2025

Anadarko Petroleum Corp. photo

 

Driven by a continued shale boom, the United States is on track to produce more crude oil and liquids than Russia and Saudi Arabia combined by 2025, an energy consultancy said. Continue reading

What Would The End Of OPEC Mean?

OPEC

 

The Organization of the Petroleum Exporting Countries – the oil market institution that has exerted an unyielding power over the price of crude for nearly 60 years – is now in deep crisis. The latest OPEC meeting in Vienna offered new insights into the cartel’s raging civil war that is tearing it apart and threatens to ultimately make the cartel irrelevant.

In a two-year period since the group of 15 major oil producers formed an alliance with Russia, OPEC’s smaller members have been marginalized, their voices have been diminished and Saudi Arabia seems to prioritize its partnership with Moscow above all else. An unlikely partnership between Saudi Arabia and Russia is causing dissension within OPEC, with one of the oldest members announcing it would withdraw from the organization in January just days prior to the talks. With Russia tightening its grip over OPEC’s decisions and the United States officially reaching net oil exporting status in late November for the first time in decades, even if only briefly, the new world oil order is now dependent on three energy superpowers: Saudi Arabia, Russia and the United States. Continue reading

The Strategic Petroleum Reserve Is Slowly Dying

 

Forty years ago, in the wake of the Arab oil embargo that made the United States acutely aware of just how dependent its economy was on imported crude, the government set up the Strategic Petroleum Reserve in a bid to make sure there were no repeats of the painful shortages the embargo caused.

Now, there are about 700 million barrels in the SPR. The U.S. is producing 9.42 million barrels daily, as of the week ending August 4th, a figure that is set to continue rising as shale producers keep on pumping more. Imports as of last week averaged 7.8 million barrels daily, with the four-week average at 8 million bpd. This means that the SPR holds crude oil equal to 40 days of local production plus imports. Continue reading

The Next Big U.S. Shale Play

Oil Rigs

 

Media coverage of the U.S. shale oil and gas industry makes it sound like the Permian is the only place where things are happening. Everybody is buying acreage in the Permian, selling acreage in other shale plays, and production costs are falling the fastest in that same Permian.

True as this may be, this shale play is by no means the only one where production is growing. In fact, oil and gas output across the shale patch has been growing, as the Energy Information Administration’s latest drilling productivity report shows. And that’s not all because there is a new actor on stage: Powder River Basin in Wyoming. Continue reading

“There’s No Growth”: World’s Largest Oil Trader Has A Stunning Warning For OPEC

 

When it comes to the oil market, the narrative over the past year, ever since OPEC’s first aborted meeting last April, has been just one: limit crude supply in hopes of rebelancing the oil market, reducing excess inventories, in the process sending the price of oil higher. However, echoing what we have warned for many months, overnight the world’s biggest independent oil trader said OPEC’s efforts could be in vain because the oil producing cartel is seeking to control the wrong thing: it’s not a matter of supply, but global demand which is simply not there.

According to Vitol Group, the world’s biggest independent oil trader demand isn’t expanding as much as expected, and U.S. shale output is growing faster than forecast, Bloomberg reports. As a logical outcome, that’s increasing the burden on the world’s biggest producers, who need to stick to their pledges to cut supply just to keep prices from falling, said Kho Hui Meng, the head of the company’s Asian arm. Meanwhile, shale continues to capture OPEC, and mostly Saudi, market share as do countries such as Iran and Libya which are not bound by the Vienna agreement production quotas. Continue reading

Time Bomb In Oil Markets: Goldman Sachs Issues Warning

 

While energy traders remain focused on weekly changes in crude supply and demand, manifesting in shifts in inventory of which yesterday’s API data and today’s EIA data was a breathtaking example, a much more troubling data point was revealed by the Energy Information Administration last week when it reported implied gasoline demand.

To be sure, surging gasoline supply and inventories are hardly surprising or new: they remain a byproduct of the unprecedented global crude inventories leftover from two years of failed OPEC policy which resulted in a historic glut. Last January, overall crude runs were up 500,000 bpd as refiners shifted away from diesel and other products to gasoline to chase more attractive margins amid a mild winter and sluggish diesel demand. The move led to an overbuild of gasoline stocks that lingered into the summer, punishing margins when they should have been at their strongest. This January, crude runs are at historic levels, up by roughly 300,000 bpd over last year. Continue reading

Gas Passes Coal As Top U.S. Power Source

Thanks to increased production of North American gas and new regulations limiting the use of coal, electric power generation in the United States now relies more on gas than on coal for the first time ever.

A recent report by the research firm SNL Energy, based on information from the Energy Information Administration, says gas generated about 31 percent of electric power in April, a small but historic one percent more than was generated by coal. Nuclear power accounted for only about 20 percent, the report says. Continue reading