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THE OPEC Thread pt 9

General discussions of the systemic, societal and civilisational effects of depletion.

Re: OPEC MOMR, monthly reports

Unread postby Tanada » Mon 13 Nov 2017, 15:42:08

It all comes down to two things, what do they believe is in their best interest, and will the Middle East stay stable enough for their production to remain controlled as it currently is, or will someone break ranks trying for a quick profit?

Because in general terms their lifting costs are so small compared to the Shale producers in the USA the OPEC countries can easily set a target price and use the quarterly agreements on production to convince contract traders they are serious about that price whatever it is. If they set $60 or even $65/bbl as the price I think they can easily get it without overheating a new shale boom in the USA, and without much impact on crude demand. After all in the real world people were pumping nearly as much oil in 2014 and buying it all at $100/bbl for some time. It isn't as if a moderately higher price than the current level would be a shock to the system like it was back in 2006-07. Economically the OPEC countries want to get as much as they can for their crude without stifling demand growth or causing another USA fracking bubble like we got in 2014-15.

In truth another two or three years of world demand growth at recent rates and they will desire increased USA production because they will be able to pump flat out and still see prices going too high and set off another recession. Like any business they want to sell and recessions make that harder and less profitable. Since KSA declared they would defend market share in 2014 the OPEC nations have missed out on hundreds of billions of dollars they would have earned by reducing production and maintaining higher prices, but they could not see the future any better than I did in 2014. In 2014 I was thoroughly convinced of the red Queen problem for fracking and that the wells would be effectively dead after just five years. However it has turned out they have a very much longer tail after the initial three year production period than I believed, or that any of the doomsayers predicted they would have.

The debate now is to me the same as it was in 2013, how long until the USA runs out of places where fracking is worth doing? The second debatable item is, are there other new techniques ready to deploy after fracking peaks out that will get us another 15-20 years of growth the same way Fracking has done since 2009?
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OPEC October Production Data

Unread postby AdamB » Thu 16 Nov 2017, 18:24:36


All data below is based on the latest OPEC Monthly Oil Market Report. All data is through October 2017 and is in thousand barrels per day. I have now included Equatorial Guneia although I only have data from January 2015 from OPEC’s secondary sources. The January 2015 E. Guneia data was extended back to January 2005. I know this is inaccurate but production from E. Guneia is so small it will make little difference. OPEC crude oil production dropped by 151,000 barrels per day in October. Algeria took a hit in October, down 38,400 bpd. Angola was up almost 70,000 bpd in October. Not much is happening in Ecuador. They were up 7,100 bpd in October. I do not have historical data for Equatorial Guinea. The OPEC MOMR gives average annual production data for 2015 and 2016 and quarterly data for the first two quarters of 2017. But now


OPEC October Production Data
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Re: THE OPEC Thread pt 9

Unread postby Tanada » Fri 17 Nov 2017, 10:36:35

LONDON and NEW YORK (Bloomberg) -- Saudi Arabia’s Energy Minister said OPEC and its allies should announce an extension of their output curbs when they gather at the end of this month.

The Organization of Petroleum Exporting Countries is unlikely to reduce excess oil inventories to average levels by the time the current deal expires in late March, said Minister Khalid Al-Falih, speaking at the United Nations climate talks in Bonn, Germany. Russia, allied with OPEC in the deal, isn’t convinced it’s necessary to make a decision when the producers meet on Nov. 30, people familiar with the matter said this week.

“We need to recognize that at the end of March we’re not going to be at the level we wanted to be, which is at the five-year average,” al-Falih said in a Bloomberg television interview Thursday. “That means an extension of some sort is needed. My preference is to give clarity to the market, and announce on Nov. 30 what we are going to do.”

The kingdom has had “extensive” consultations with Russia, he said, and feels “fully convinced” that country will be “fully onboard” when a resolution is made.

Al-Falih also said that foreign investment in Saudi Arabia, including the planned sale of shares in its state oil company, will be unaffected by a series of arrests of officials. The arrests are “a very limited domestic affair, that the government is simply cleaning house for something that is way overdue,” he said.

OPEC will ensure that its “exit strategy” from the current accord will be a “gradual adjustment” that prevents the return of any glut, al-Falih said. The kingdom has particularly cut back exports to the U.S. during the accord as that market is especially oversupplied, and those cuts will be reversed once the agreement ends, he said.


KSA Wants Extended Cuts
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OPEC Agrees To Extend Oil Supply Cuts Until End Of 2018

Unread postby AdamB » Thu 30 Nov 2017, 22:58:32


Update : maybe not so fast on the champagne, because according to Reuters, the Bloomberg leaker may have jumped the gun: OPEC YET TO DECIDE ON OUTPUT CUT EXTENSION, TALKS CONTINUING - DELEGATE: RTRS. * * * With OPEC delegates sequestered in a Vienna conference room, as they negotiate the proposed 6-9 month production cut extension, at least one appears to be leaking the decision process to media outlets, because moments ago Bloomberg reported that OPEC ministers have agreed to extend their production cuts until the end of 2018 - agreeing with the Saudi-proposed 9 month extension - and discussions have now moved on to the mechanism that will be used to review the agreement in the middle of the year. OPEC AGREES TO EXTEND OIL SUPPLY CUTS TO END OF 2018: DELEGATE OPEC TALKS MOVED ON TO DETAILS OF MID-YEAR REVIEW:


OPEC Agrees To Extend Oil Supply Cuts Until End Of 2018
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Saudi Arabia and Russia reach compromise on oil

Unread postby AdamB » Sat 02 Dec 2017, 12:36:37


Ministers from OPEC and their allies have agreed to extend their production pact all the way to the end of 2018 but with a review in June that will take into account market conditions and progress toward rebalancing. The outcome represents a successful compromise between de facto OPEC leader Saudi Arabia (which wanted to announce an extension throughout 2018) and non-OPEC heavyweight Russia (which wanted to avoid giving such a long commitment). The decision was in line with traders’ expectations and there has been little change in either outright crude prices or calendar spreads since the decision was announced on Thursday. As a practical matter, it makes little difference whether the decision is described as a nine-month extension from the end of March, when the current cuts were scheduled to expire; or a three-month extension from March to June with the option of


Saudi Arabia and Russia reach compromise on oil
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Re: Saudi Arabia and Russia reach compromise on oil

Unread postby Cog » Sat 02 Dec 2017, 18:02:58

pstarr wrote:Have they also entered into an agreement to undermine our democracy?


Mewler fanbois now?
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Oil producers will cooperate beyond 2018, says Saudi Arabia

Unread postby AdamB » Sun 21 Jan 2018, 20:32:33

Global oil producers are in agreement that they should continue cooperating on production after their deal on supply cuts expires at the end of this year, Saudi Arabia’s energy minister Khalid al-Falih said on Sunday. FILE PHOTO: Saudi Arabia's Oil Minister Khalid al-Falih addresses a news conference after an OPEC meeting in Vienna, Austria, November 30, 2017. REUTERS/Heinz-Peter Bader It was the first time Saudi Arabia, the world’s top oil exporter, had publicly stated OPEC and non-OPEC producers would keep cooperating after 2018. The exact mechanism for cooperation next year has not yet been decided, Falih said, but if oil inventories increase in 2018 as some in the market expect, producers might have to consider rolling the supply cut deal into next year. “There is a readiness to continue cooperation beyond 2018... The mechanism hasn’t been determined yet, but there is a consensus


Oil producers will cooperate beyond 2018, says Saudi Arabia
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OPEC Supply Cut Compliance Hits Record, Oil Glut Going Fast

Unread postby AdamB » Mon 26 Mar 2018, 13:45:14


Compliance with a global deal to cut oil supply hit a new high in February and an inventory glut is shrinking fast, a joint OPEC and non-OPEC committee said, bringing producers close to the pact's original aim. OPEC and its allies achieved 138 percent of pledged output reductions last month, OPEC said, up from 133 percent in January and the highest since the deal aimed at clearing a glut began in January 2017. The Organization of the Petroleum Exporting Countries, Russia and other non-OPEC producers have extended the pact until the end of 2018, even though OPEC sources say the market is now expected to balance between the second and third quarters. A rapidly shrinking glut will fuel debate over how long the curbs need to be in place, although top exporter Saudi Arabia has said it is too early to discuss an


OPEC Supply Cut Compliance Hits Record, Oil Glut Going Fast
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A Break Up Of OPEC

Unread postby onlooker » Fri 09 Nov 2018, 07:10:13

https://www.zerohedge.com/news/2018-11- ... break-opec

Saudi Arabia Is Evaluating A Break Up Of OPEC
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Re: THE OPEC Thread pt 9

Unread postby Tanada » Fri 09 Nov 2018, 08:13:11

onlooker wrote:https://www.zerohedge.com/news/2018-11-08/saudi-arabia-evaluating-break-opec

Saudi Arabia Is Evaluating A Break Up Of OPEC


If the source were anyone other than zerohedge it would have some credibility.

For now at least it looks to me like OPEC still has ample benefits to its members to keep things together. Once we are past world peak and demand exceeds capacity of supply that may change because in that environment its every producer for themselves selling every barrel they can pump at their max rate.

But right now we have falling prices at least temporarily and ample supply to meet world demand. This is the situation OPEC was created to manipulate for its members benefit.
I should be able to change a diaper, plan an invasion, butcher a hog, design a building, write, balance accounts, build a wall, comfort the dying, take orders, give orders, cooperate, act alone, solve equations, pitch manure, program a computer, cook, fight efficiently, die gallantly. Specialization is for insects.
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Re: THE OPEC Thread pt 9

Unread postby Tanada » Tue 11 Dec 2018, 14:31:36

The kingdom persuaded two dozen oil producers to cut output and announced a steep drop in Saudi production over the next two months.

"Saudi Arabia today had a 'Saudi first' policy," Helima Croft, global head of commodity strategy at RBC Capital Markets, said on Friday. Hours earlier, OPEC, Russia and several other producers agreed to take 1.2 million barrels per day off the market beginning in January.

CNBC
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Re: THE OPEC Thread pt 9

Unread postby Outcast_Searcher » Tue 11 Dec 2018, 14:46:50

Tanada wrote:
The kingdom persuaded two dozen oil producers to cut output and announced a steep drop in Saudi production over the next two months.

"Saudi Arabia today had a 'Saudi first' policy," Helima Croft, global head of commodity strategy at RBC Capital Markets, said on Friday. Hours earlier, OPEC, Russia and several other producers agreed to take 1.2 million barrels per day off the market beginning in January.

CNBC

To me, this makes complete sense, and is what is expected. (Despite any short term rhetoric, countries are going to act in their own interests. Why wouldn't they. And of course, their interests might include the interests of organizations they belong to, like OPEC.)

And I'm also not surprised they went ahead and did this despite Trump's jawboning, to try and get oil prices down. If he doesn't like high oil prices, then policies to help conservation, a high mpg fleet, enhancing EV technology, etc. would make sense. Of course, those are the opposite of his administration's stated and demonstrated policies overall.

Despite some whining about "high" oil prices below $100, I think oil prices in that area, helping ensure more production and exploration over time to get supplies in line to meet demand during the coming decades while EV's mature is necessary for a prosperous global economy.

Whether we can then meet the AGW challenges that result is a huge question (technology AND huge costs, if it can be done). But aside from nearly-empty gestures like the Paris Climate Accords, it's not like governments are doing much about AGW mitigation anyway.
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.
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Re: THE OPEC Thread pt 9

Unread postby rockdoc123 » Tue 11 Dec 2018, 22:07:37

And I'm also not surprised they went ahead and did this despite Trump's jawboning


especially since the main cause of higher prices was Iranian sanctions (his idea) and increased production from the US (which if he wanted to he could regulate and OPEC has no control over). I don't think he really has a supportable argument here.
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