The undisputed king of oil and gas is making some moves that could change the face of the global refining sector. In June 2015, Saudi Arabia pumped a record 10.564 million barrels a day, a record level. As if being the world's biggest exporter of oil was not enough, the desert kingdom is now looking to conquer the refining sector as it has quickly become the fourth largest refiner in the world. "Saudis have moved into the product business in a big way," said Fereidun Fesharaki of FGE [Read more]
The Multi-Trillion Dollar Oil Market Swindle
In the past, I documented the overstatements by both the IEA and EIA in 2014 & 2015 in terms of supply, inventory and understatements of demand. Others also noticed these distortions and, whether intentional or not, they exist and they are very large in dollar terms. These distortions, which are affecting price through media hype and/or direct/indirect price manipulation, are quite possibly the largest in financial history. Putting numbers behind it, with worldwide production running some 95 [Read more]
OPEC, Get Ready For The Second U.S. Oil Boom
What OPEC countries fear most is a follow-up technological revolution that will lead to a second oil boom in the U.S., and that fear is now being realized. A technological revolution spurred the U.S. oil boom that resulted in the greatest increase in domestic oil production in a century, and while that has stuttered in the face of a major oil price slump and an OPEC campaign to maintain a grip on market share, the American response could be another technological revolution that demonstrates [Read more]
Don’t Panic, Nothing Has Really Changed In The Oil Markets
Monday's 8% WTI crude decline is setting up a big opportunity for buyers. And there could be more to come. But this is driven by momentum, not by the fundamental conditions in the physical market. To the point: Demand is heading towards record levels both internationally and in the U.S. The Greek issue is not new and it has not changed. It is just popular now as deadlines are pushed. It will fade and its drag on oil prices will ease. The Chinese stock market is either correcting [Read more]
U.S. Oil Glut An EIA Invention?
In the latest weekly production data from the EIA, on the back of recent March revisions, the U.S. managed to post a 76,000 barrel per day increase in the lower 48. Production from Alaska fell by 61,000 barrels per day, putting overall U.S. output 15,000 barrels per day higher for the week ending June 12 compared to the previous week. This comes at a time when multimillion barrel draws have become the norm. It is important to note that lower 48 production is estimated based on an EIA black [Read more]
Expect A Wave Of Consolidation In The Oil Industry
As stated previously, asset monetization by small E&P operators will start in earnest in the second half of this year out of cash flow necessity. Most, if not all, smaller market capitalization companies, public or private, are still free cash flow negative (operating cash flow less capital expenditure) and only a few of the larger ones are now, or will be, based on guidance. The point is, with volumes languishing (and probably poised to decline) tied to a flat oil futures price curve and [Read more]
The Dark Side Of The Shale Bust
The fallout of the collapse in oil prices has a lot of side effects apart from the decline of rig counts and oil flows. Oil production in North Dakota has exploded over the last five years, from negligible levels before 2010 to well over a million barrels per day, making North Dakota the second largest oil producing state in the country. But the bust is leaving towns like Williston, North Dakota stretched extremely thin as it tries to deal with the aftermath. Williston is coping with $300 [Read more]
The Evolution Of The Oil Weapon
In the age of derivatives, swaps, and electronic money transfers, a new form of warfare has emerged: financial warfare. Recently, the US has passed sanctions on countries such as Syria, Venezuela, and North Korea , but the majority of energy related sanctions passed have been targeted at Iran and Russia. An estimated 68 percent of Russia’s government revenue is derived from oil and gas exports, while 80 percent of Iran’s revenue comes from oil exports. That presents a very large target for [Read more]
Are US Drillers Actually Making A Comeback?
Is US shale about to make a comeback? Oil prices have rebounded strongly since March. The benchmark WTI prices soared by more than 36 percent in two months, and Brent has jumped by more than 25 percent. There is a newfound bullishness in the oil markets – net long positions on Brent crude have hit multi-year highs in recent weeks on a belief that US supply is on its way down. That was backed up by recent EIA data that predicts an 86,000 barrel-per-day contraction for June. The Eagle Ford [Read more]
Saudi Arabia Continues To Turn Screws On U.S. Shale
Saudi Arabia continues to ratchet up production, taking market share away from U.S. shale producers. According to OPEC's latest monthly oil report, Saudi Arabia boosted its oil output to 10.31 million barrels per day in April, a slight increase over the previous month's total of 10.29 million barrels. That was enough for the de facto OPEC leader to claim its highest oil production level in more than three decades. Saudi Arabia has increased production by 700,000 barrels per day since the [Read more]