U.S. Supermajors Could Form A New Oil Cartel

 

The ambitious shale growth plans of the U.S. supermajors could in the future allow them to control so much of U.S. shale oil production that they could also control the price of the U.S. light tight oil going to foreign markets in an ‘OPEC of their own kind,’ Investing.com quoted John Kilduff, founding partner at Again Capital, as saying.

Forget OPEC, China Controls Oil Prices

 

U.S. shale has taken a lot of headline space recently as the biggest headwind for oil prices and the highest stumbling block for OPEC’s efforts to prop them up by cutting production. Yet, there may be another factor that could bring down oil prices as soon as next year…

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China has been building a strategic crude oil reserve for the last decade, but the size of that reserve remains undisclosed, with analysts making estimates based on China-bound cargoes and satellite imaging.

U.S. Is A Net Exporter Of Natural Gas For First Time In 59 Years

Source: EIA

 

Exports outweigh imports in February, April, May: EIA

The U.S. has been a net exporter of natural gas for three of the first five months of 2017, according to a note released by the EIA. This is historically significant, as February, April and May are so far, the only months in which the U.S has been a net exporter of natural gas since 1958.

Germany, Austria vs. US Senate: America and Europe on Collision Course

 

Germany and Austria have lashed out against US Senate for approving a legislation tightening sanctions on Russia. The bill has a provision that enables the United States to impose sanctions on European firms involved in financing Russian energy export pipelines to Europe. European companies could be fined for breaching US law. In a joint statement, German Foreign Minister Sigmar Gabriel and Austrian Chancellor Christian Kern accused the US of threatening European economic interests, describing it as an illegal attempt to boost US gas exports. The United States recently started shipping liquefied natural gas to Poland and has ambitions to cultivate other European customers.

The bill says the US government «should prioritize the export of United States energy resources in order to create American jobs, help United States allies and partners, and strengthen United States foreign policy». But the European foreign chiefs believe that «Europe’s energy supply is Europe’s business, not that of the United States of America». Gabriel and Kern said they «can’t accept» proposed US sanctions targeting European energy companies as part of measures against Russia.

The Next Big U.S. Shale Play

 

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.

Saudi Arabia plan to hike oil prices will BACKFIRE & boost US shale producers, say experts

Saudi Arabi’s OPEC plan to raise oil prices could fail say experts [GETTY]

 

SAUDI Arabia’s waning grip on oil prices could loosen further if it sticks to a plan to limit supply in a desperate bid to drive up demand, according to experts.

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Naeem Aslam, chief market analyst at ThinkMarkets, said: “In our eyes, OPEC is not the superpower it used to be and it is the US shale oil producers who changed the game.

Saudis May Enter The Shale Game

 

Flooding the market has quickly emptied the kingdom’s checkbook

In case you missed the past three years, on Thanksgiving Day 2014, OPEC announced it would not cut oil production in the name of gaining customers and growing market share for its members (widely interpreted as Saudi Arabia).

That announcement set off a two + year global commodities price downturn that sent oil from triple digits all the way down to $26 and fostered two years of pain and indigestion in the shale beds of North America that companies are just now getting past.

“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.

The End Of OPEC Is Near

 

OPEC, which has far exceeded the average life of cartels, is on the brink of failure. Though cracks have been developing in the cartel since the start of the current oil crisis, the group has managed to stay together so far. Nevertheless, the success of the current OPEC deal for production cuts will decide its future as a cartel.

What is a cartel?

A cartel is a group of like-minded producers, who act in concert—or collusion—to achieve a shared goal of increasing their profits by means of restricting supply, fixing prices, or destroying their competition by illegal means. The average life of the 20th Century cartels has been 3.7 to 7.5 years, according to various studies by Margaret Levenstein and Valerie Suslow. In the past two centuries, cartels have been able to influence prices by an average of 25 percent.

With OPEC deal to cut output, Saudi signals surrender to U.S. shale

Saudi Arabia’s strategy to drive U.S. shale out of the energy market has failed.

“The new OPEC deal to cut oil output – the cartel’s first since 2008 – amounts to nothing less than Saudi Arabia’s surrender to the power of American shale,” John Hulsman wrote for UK business daily City AM on Dec. 5.

OPEC as a whole agreed to cut production by 1.2 million barrels per day (bpd), with Saudi agreeing to cut 500,000 bpd. With the cut, OPEC now accounts for less than half of all energy output in the world.

U.S. now has larger oil reserves than Saudi Arabia, Russia

The United States has for the first time surpassed Saudi Arabia and Russia in oil reserves.

A study by Rystad Energy estimates that recoverable oil in the U.S. from existing fields, discoveries and yet undiscovered areas amounts to 264 billion barrels. Saudi Arabia has 212 billion and Russia 256 billion in reserves.

Saudis end their war against U.S. frackers

Saudi Energy Minister Khalid Al-Falih said that since the worldwide oil glut has vanished, Saudi’s strategy of flooding the global market to try to put American drillers out of business is no longer necessary.

“We are out of it,” Falih told the Houston Chronicle. “The oversupply has disappeared. We just have to carry the overhang of inventory for a while until the system works it out.”

Why Did Saudi Arabia Kill OPEC?

The OPEC meeting is only a week away, but the chances of a positive result are as remote as ever. Rising oil prices, the heightened rivalry between Saudi Arabia and Iran, and Saudi Arabia’s willingness to go it alone will make a deal all but impossible.

First of all, Iran is not in a cooperative mood. According to the IEA, Iran has managed to boost oil production to 3.56 million barrels per day in April, its highest level since November 2011. Oil exports also jumped 600,000 barrels per day to 2 million barrels per day. Importantly, Iran’s output now stands at pre-sanctions levels, a key threshold that the Iranian government says it needs to reach before it would consider any cooperation on production limits with OPEC. However, Iran thus far does not see it that way, insisting that it still has more ground to make up.

Analyst: Impossible for Saudis to destroy U.S. shale industry

Because of its mid-cost nature, compared to the high cost of conventional drilling, shale will rebound quickly, according to Daniel Yergin, founder of IHS Cambridge Energy Research Associates, who said groups are already in place to grab the assets of bankrupt U.S. shale drillers.

“The management may change and the companies may change but the resources will still be there,” Yergin told the Daily Telegraph.

Saudis’ war on the oil markets targets U.S. frackers, Iran, Venezuela

Saudi Arabia is going all out in its war on U.S. shale oil and to preempt the return of Iran’s oil production after sanctions are lifted.

Even as the price of crude sunk below $40 per barrel, the Saudis and OPEC decided on Dec. 4 to increase production by 31.5 million barrels per day.

Analysts say the Saudis may be willing to let the price of crude slide near the $20 per barrel mark in order to drown out competition from United States shale producers.