|Day's Range||54.26 - 55.67|
(Bloomberg Opinion) -- Saudi Arabia isn’t as willing to do whatever it takes to support oil prices as it would have us believe. That’s the only conclusion one can draw from what we’ve learnt since a government official said the kingdom wouldn’t tolerate a continued price slide.After crude fell to a seven-month low earlier this month, Saudi Arabia got on the phone to other members of the OPEC+ group of nations to discuss possible policy responses. It doesn’t appear to have got very far.Russia – the key non-OPEC member of the extended producer group – made all the right noises. An emailed statement from its energy ministry said it was “utterly important to act responsibly” by giving the market only as much oil as was needed. You might think that would mean Russia sticking to the production target it agreed with OPEC in December. You’d be wrong.The Russians pumped 11.32 million barrels a day in the first half of August, according to Interfax. That’s up by 180,000 barrels from July and above its pledged daily level of 11.19 million barrels. While the country did produce less than required for three months in a row through to July, that was mainly the result of the Druzhba pipeline contamination crisis.Indeed, Moscow may be better able to weather lower prices than Riyadh. U.S. President Donald Trump’s sanctions on exports from Iran and Venezuela have boosted Russia’s oil income by about $1 billion dollars since November. Russian Urals grade is a pretty good substitute for Iranian crude for European refiners and its value has risen relative to that of the benchmark Brent.So what about Saudi Arabia’s OPEC partners? The biggest of those, Iraq, doesn’t seem to be helping much either. Tanker-tracking data compiled by Bloomberg suggest that its crude exports in the first half of August were the highest in three months. Flows out of West Africa also appear to have been robust in August.Will the kingdom go it alone? Perhaps not.Having already cut more than twice as much oil output as it promised in December, Riyadh has signaled its unwillingness to keep shouldering the burden alone. Its energy minister Khalid Al-Falih insisted at OPEC’s last meeting in July that the Saudis had already cut “deep enough.”They did manage to generate a brief bump in prices by that suggestion of doing whatever it takes. But the market recovery is already running out of steam. And the promise was never quite as meaningful as some thought.As part of the pledge, Saudi officials said the kingdom would keep oil exports below 7 million barrels a day in September and supply customers with 700,000 barrels a day less than they’d asked for. That looks like a big number, but it rather depends on what potential buyers asked for. Dig a bit deeper and the commitment starts to look less bullish.Saudi Arabia didn’t actually say it would cut exports by 700,000 barrels a day next month. Instead, the officials pointed to the 10.3 million barrels a day that they could theoretically produce in September to meet demand, and that the reduction would come from that figure. (It’s worth noting that this 10.3 million figure is more than the Saudis have produced in any other month this year, according to data from the kingdom). So the upshot is that Saudi Arabia’s actual production next month may be about 9.6 million barrels a day. It says it produced 9.58 million last month, so this doesn’t look like a cut at all. And then there’s the issue of where the cuts will come from. Saudi Aramco, the national oil company, has allocated full volumes of contractual crude supply for September sales to at least six buyers in Asia. So the U.S. and Europe will have to bear the brunt of reductions. Supplies to U.S. buyers will be about 300,000 barrels a day less than they’d asked for, according to the officials, while cuts to European buyers will need to be bigger still to hit the 700,000 target.That’s going to be a stretch. The kingdom has only shipped about 530,00 barrels a day to North America so far this year, while deliveries to Europe have averaged just 210,000 barrels, according to Bloomberg tanker tracking. So to be in a position to make the sort of cuts being talked about, buyers must have been asking for a lot more oil than they’ve bought from Saudi Arabia in the recent past.The numbers just don’t stack up. If you’re waiting for a big output cut from Saudi Arabia to rescue oil prices – don’t.To contact the author of this story: Julian Lee at firstname.lastname@example.orgTo contact the editor responsible for this story: James Boxell at email@example.comThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Julian Lee is an oil strategist for Bloomberg. Previously he worked as a senior analyst at the Centre for Global Energy Studies.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
Based on Friday’s price action and the momentum into the close, the direction of the September E-mini S&P; 500 Index on Monday is likely to be determined by trader reaction to the main 50% level at 2881.00.
Based on Friday’s price action and the close at 25907, the direction of the September E-mini Dow Jones Industrial Average on Monday is likely to be determined by trader reaction to the main 50% level at 26012.
Iraq is very close to using its oil export infrastructure at full capacity and is busy expanding its pipeline network in order to sell more crude abroad
Based on Friday’s price action and the close at 1.1090, the direction of the EUR/USD on Monday is likely to be determined by trader reaction to the short-term Fibonacci level at 1.1112.
U.S. sanctions against Venezuela and Iran have had an unplanned side effect: they have increased exports of heavy, sour crude from Russia
Based on last week’s price action and the close at $57.67, the direction of the December Brent crude oil market on Monday is likely to be determined by trader reaction to the minor pivot at $57.97.
Oil prices rebounded on Friday morning on the back of some positive U.S. crude data, but the rebound doesn’t look likely to last as the world economy struggles
Based on the early price action and the current price at 1.1100, the direction of the EUR/USD into the close is likely to be determined by the short-term Fibonacci level at 1.1112.
Companies added six oil rigs in the week to Aug. 16, the biggest increase since April, bringing the total count to 770, General Electric Co's Baker Hughes energy services firm said in its closely followed report on Friday. Production has continued to rise despite the decline in the rig count because productivity has increased in most basins this year, meaning drillers are getting more oil and gas out of each new well even though they are operating fewer rigs. The U.S. Energy Information Administration (EIA) this week projected U.S. crude output from seven major shale formations would rise by 85,000 barrels per day (bpd) in September to a record 8.77 million bpd.
The United States threatened to slap sanctions on any ports or banks or virtually anyone trying to make deals with Iranian oil tanker Grace 1
A U.S. government report reveals that crude inventories rose by 1.6 million barrels for the week ending Aug 9, very different to the 2.7 million barrels drawdown that energy analysts had expected.
Oil futures trimmed gains Friday after the Organization of the Petroleum Exporting Countries, in its monthly report, slightly lowered its outlook for global oil-demand growth this year. OPEC said it now expects oil demand to grow by 1.1 million barrels a day in 2019, down 40,000 barrels a day from its July forecast. OPEC left its 2020 demand forecast unchanged at 1.14 million barrels a day. OPEC also cut its supply-growth forecast, calling for non-OPEC supplies to grow 1.97 million barrels a day this year, down 72,000 barrels a day from its July forecast. For 2020, non-OPEC supply is forecast to grow 2.39 million barrels a day, down 50,000 barrels from the July outlook. West Texas Intermediate crude for September delivery on the New York Mercantile Exchange was up 35 cents, or 0.6%, at $54.83 a barrel, while October Brent crude was 50 cents higher at $58.73 a barrel, up 0.9%.
OPEC delivered a downbeat oil market outlook for the rest of 2019 on Friday as economic growth slows and highlighted challenges in 2020 as rivals pump more, building a case to keep up an OPEC-led pact to curb supply. In a monthly report, the Organization of the Petroleum Exporting Countries cut its forecast for global oil demand growth in 2019 by 40,000 barrels per day (bpd) to 1.10 million bpd and indicated the market will be in slight surplus in 2020. The bearish outlook due to slowing economies amid the U.S.-China trade dispute and Brexit could press the case for OPEC and allies including Russia to maintain a policy of cutting output to support prices.
(Bloomberg) -- Global oil markets face a “somewhat bearish” outlook for the rest of the year amid slowing economic growth and the long-running trade war, even though supplies will be tighter than previously thought, OPEC said.The Organization of Petroleum Exporting Countries, which pumps about a third of the world’s oil, increased estimates for world demand this year and next, and lowered forecasts for production from its rivals. Nonetheless, its monthly report -- which doesn’t typically give a view on prices -- warned that the market may weaken.That increases pressure on Saudi Arabia, the cartel’s de facto leader, which has shouldered most of the burden in production cuts aimed at bolstering oil prices amid faltering demand and a relentless flood of new shale supplies from the U.S.Crude prices have fluctuated this week, following twists and turns in the clash between Washington and Beijing as President Donald Trump imposed steeper tariffs on Chinese goods and then touted further negotiations to resolve the impasse. At just under $60 a barrel in London, crude is below the levels most OPEC nations need to cover government spending.A coalition of oil producers composed of OPEC members and allies such as Russia has curtailed supply this year to try and keep global markets in balance. Riyadh has reduced output by far more than it initially promised, reporting to the OPEC secretariat that it cut production again in July to 9.58 million barrels a day.The report released by OPEC’s Vienna-based research department on Friday indicated that -- in theory -- the cartel’s efforts should be sufficient to prevent any surplus this year.The global balance of supply and demand is tighter than it appeared a month ago. OPEC raised its assessment of consumption for this year and next by 50,000 barrels a day, and trimmed projections for non-OPEC supplies by 40,000 barrels a day for 2019 and by 90,000 a day for 2020.As a result, even though oil inventories in developed nations have risen above average levels, global stockpiles should decline this quarter by an average of 2.1 million barrels a day. OPEC is pumping about 29.6 million a day, compared with a daily requirement of 30.28 million.Nevertheless, the focus in crude futures markets remains squarely on the outlook for demand, which is being soured by the growing risk of recession and the protracted dispute between the U.S. and China.A Saudi official speaking anonymously said last week that the kingdom had sounded out its partners on potentially stepping up their efforts and is open to all options. The Saudis, Russia and other key members of the coalition will meet to review their strategy in Abu Dhabi on Sept. 12.“The outlook for market fundamentals seems somewhat bearish for the rest of the year, given softening economic growth, ongoing global trade issues and slowing oil-demand growth,” OPEC said in the report. “It remains critical to closely monitor the supply-demand balance and assist market stability in the months ahead.”To contact the reporter on this story: Grant Smith in London at firstname.lastname@example.orgTo contact the editors responsible for this story: James Herron at email@example.com, Amanda JordanFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Investing.com - Crude prices pared earlier gains on Friday after OPEC issued a bearish outlook for the oil market this year and forecast a surplus in 2020.
(Bloomberg Opinion) -- If India is such a bright hope for global coal demand, why can’t investors see it?The country will experience the largest increase in coal burning through 2023, according to the International Energy Agency, with a 3.9% annual pace of growth that should be enough to offset falling consumption in developed countries. BloombergNEF, whose forecasts tend to be less bullish than the IEA’s on fossil fuel demand, is not far behind: Coal-fired generation will increase about 48% by 2030 to hit 1,512 terawatt-hours, more than all of Europe, Africa, the Middle East and Latin America.The curious thing is that when you look at the Indian power sector, there are few signs it’s on the brink of a boom. Quite the opposite: As many as 65 gigawatts of the 90GW of private-sector generators connected in India are under financial stress, according to a parliamentary report last year. As my colleague Andy Mukherjee has written, the resulting 1.8 trillion rupees ($26 billion) in bad loans is contributing to a nonperforming asset crisis that risks undermining the Indian financial system.Furthermore, activity to increase coal-fired generation is overwhelmingly dependent on state support. Out of 48GW of coal generators planned to be built by 2027 under the country’s current electricity plan, just 14% is being developed by the private sector; a matching 48GW of generation is already slated for retirement by the same date. Even that modest level of private investment appears to be retreating now, according to a report published Friday by the Centre for Financial Accountability, a Delhi-based group pushing for better standards of development finance. Lending to coal-fired power fell 90% in 2018, to 60 billion rupees from 608 billion rupees the previous year, the CFA said. The vast majority of that total was refinancing of existing plants: Just 12 billion rupees was dedicated to new generation, all of it to just one state-backed plant in Uttar Pradesh. If you still think wind and solar are the energy sectors most dependent on state support, you’ve not been paying attention to how the landscape has changed. In India, 65% of funding to coal-fired projects in 2018 came from government-controlled institutions, whereas three-quarters of loans to renewables came from the private sector, according to the CFA. Even a sixfold increase in renewables subsidies to 150 billion rupees in 2018 left that sector shy of the 160 billion rupees directly supporting the coal mining and generation sector, according to a separate report last year.There are several reasons that India’s coal sector is struggling. The vast expansion of generation over the past decade has left the country oversupplied with electricity capacity. Making matters worse, the slump in the price of renewables means that even existing coal plants struggle to compete on cost, let alone newly built ones. The average power tariff for state-owned NTPC Ltd. in the June quarter was 3.63 rupees per kilowatt-hour, or around $51 per megawatt-hour. New wind can currently be built for around $43/MWh in India and solar comes in at $37/MWh, according to BloombergNEF.On top of that, generators are struggling to be paid because of the finances of the electricity distribution companies owned by India’s states, while shortages of water and coal itself mean plants often have to switch off even at times when they can make money. State-owned mining giant Coal India Ltd. may miss full-year production targets if output doesn't pick up from rates seen in the June quarter, Bloomberg Intelligence analyst Michelle Leung wrote Friday.The bullish argument for Indian coal over the next decade is that the government bails out the distribution companies who will in turn bail out the generators; and that the grid simply won’t be able to integrate the 175GW of wind and solar that the government is targeting to be built by 2022, let alone the 500GW envisioned by 2030. As a result, state support will continue to prop up expensive, polluting soot as the only technology capable of keeping up with growing electricity demand.An alternative scenario is that India meets most of its renewables expansion targets and lifts the efficiency of wind and solar plants closer to those seen elsewhere in the world. In that future, coal-fired electricity may already be within a few percentage points of its peak. With renewable power growing, fossil-fired plants would gradually be reduced to back-up generation to supply electricity after the sun has set, rather than providing the bulk of power through the day. In truth, there’s not enough investment in either form of generation at the moment to make a sure-fire bet. Still, as we’ve argued, the collapse of financing for fossil fuels should give pause to anyone making bullish predictions for the future of carbon-intensive electricity, including the governments that are increasingly its main backers. Coal-fired power has long failed in terms of human health and climate impacts, but its raw economics are now collapsing, too. Even the might of the state can’t keep flogging this dead horse much longer.(Adds Coal India production targets in the eighth paragraph. An earlier version of this column was corrected to fix figures for wind and solar costs in the seventh paragraph. )To contact the author of this story: David Fickling at firstname.lastname@example.orgTo contact the editor responsible for this story: Matthew Brooker at email@example.comThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.David Fickling is a Bloomberg Opinion columnist covering commodities, as well as industrial and consumer companies. He has been a reporter for Bloomberg News, Dow Jones, the Wall Street Journal, the Financial Times and the Guardian.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.