US oil and gas rig counts dropped to their lowest level in over four years, falling by an additional 74 units for the week ending on January 16.
The lower count provides fresh evidence that low oil prices are forcing drillers to pare back operations and slash spending.
While that may soon begin to cut into actual production figures, a new Wood Mackenzie report finds a lot of nuance in the oil patch, painting a complex picture of what to expect in 2015.
Oil held losses below $50 a barrel as China’s economic growth failed to spur confidence demand will be enough to eliminate a global supply glut.
Futures were little changed in London after falling 2.7% on January 19, the most in a week. China’s gross domestic product expanded by 7.4% in 2014, the slowest rate since 1990, official data show.
In the US, where oil production has surged amid a shale boom, the government will let the market “decide what happens” with supply and demand, according to Amos Hochstein, the State Department’s energy envoy.
Saudi Arabia’s oil exports rose to a seven-month high in November when it led OPEC to keep production unchanged as the largest crude shipper fought to keep market share with output rising from the US to Russia.
Saudi Arabia’s oil exports rose to 7.3 million barrels a day from 6.9 million barrels in October, according to data yesterday on the website of the Joint Organisations Data Initiative.
Crude stockpiles at the end of the month stood at 305.8 million barrels, the highest level since at least January 2002, figures on the group’s website showed.
Oil traded near $50 after capping its first weekly gain in two months as investors weigh rising OPEC output against speculation supply from outside the group will slow.
Futures were little changed in London and New York.
Iraq is pumping at a record pace of 4 million barrels a day, Oil Minister Adel Abdul Mahdi said. Non-OPEC nations will boost output this year at a weaker rate than previously forecast, according to the International Energy Agency.
Oil advanced, capping the first weekly gain since November, after the International Energy Agency lowered forecasts for supplies from outside OPEC and an industry report showed US companies reduced drilling activity.
Crude rose 5.3% in New York. Non-OPEC oil producers will boost output this year at a slower rate than previously forecast, aiding a recovery in crude prices, the IEA said in its monthly market report.
Rigs targeting oil in the US fell for the eighth time in nine weeks, by 55 to 1,366 this week, Baker Hughes Inc. said. They are at the lowest level since October 2013.
West Texas Intermediate oil fell for the fourth time in five days as OPEC said it expects weaker demand for its crude and US output climbed to the highest in records dating to January 1983.
Demand for oil from the Organization of Petroleum Exporting Countries will average 28.8 million barrels a day, about 100,000 barrels less than forecast last month, the Vienna-based organization said in a monthly report.
US output surged to 9.19 million barrels a day last week, the Energy Information Administration reported yesterday.
Oil resumed its decline after the biggest gain since June 2012 as US crude production increased, bolstering speculation a global supply glut that spurred last year’s price collapse may persist.
Futures dropped as much as 1.8% in New York. US output surged to 9.19 million barrels a day last week, the fastest pace in weekly records dating back to January 1983, the Energy Information Administration reported.
Crude may fall below a six-month forecast of $39 a barrel and rallies could be thwarted by the speed at which lost shale production can recover, according to Goldman Sachs Group Inc.
China’s crude imports surged to a record in December after a buying spree in Singapore by a state-owned trader and as the government in Beijing accelerated stockpiling amid the collapse in global oil prices.
Overseas purchases increased to 30.4 million metric tons last month, according to preliminary data released by the General Administration of Customs.
Oil extended losses to trade below $45 a barrel amid speculation that US crude stockpiles will increase, exacerbating a global supply glut that’s driven prices to the lowest in more than 5 1/2 years.
Futures fell as much as 2.6% in New York, declining for a third day. Crude inventories probably gained by 1.75 million barrels lasweek, a survey shows.
The United Arab Emirates, a member of the Organization of Petroleum Exporting Countries, will stand by its plan to expand output capacity even with “unstable oil prices,” according to Energy Minister Suhail Al Mazrouei.
Iraq, OPEC’s second-largest producer, raised the selling price for February shipments to Asia of its main Basrah Light crude by 30 cents a barrel, after Saudi Arabia boosted its pricing to the region.
Iraq set Basrah Light at a discount of $3.70 a barrel to the average of Middle Eastern benchmark Oman and Dubai grades, the country’s Oil Marketing Co. said yesterday in an statement.
Goldman Sachs said US oil prices need to trade near $40 a barrel in the first half of this year to curb shale investments as it gave up on OPEC cutting output to balance the market.
The bank cut its forecasts for global benchmark crude prices, predicting inventories will increase over the first half of this year, according to a report.
Excess storage and tanker capacity suggests the market can run a surplus far longer than it has in the past, said Goldman analysts including Jeffrey Currie in New York.
If there ever was doubt about the strategy of the Organization of Petroleum Exporting Countries, its wealthiest members are putting that issue to rest.
Representatives of Saudi Arabia, the United Arab Emirates and Kuwait stressed a dozen times in the past six weeks that the group won’t curb output to halt the biggest drop in crude since 2008.
Qatar’s estimate for the global oversupply is among the biggest of any producing country. These countries actually want -- and are achieving -- further price declines as part of an attempt to hasten cutbacks by US shale drillers, according to Barclays Plc and Commerzbank AG.
Oil extended its rally amid speculation that the US shale boom is slowing and will reduce a global glut that’s driven prices to the lowest in 5 1/2 years.
Futures rose as much as 1.7% in New York, trimming a seventh weekly decline. US producers are bailing out of long-term contracts for drilling rigs as prices slide below $50 a barrel.
The United Arab Emirates has no plans to reduce output no matter how low prices drop, according to Yousef Al Otaiba, the nation’s ambassador to the US.
Oversupply in crude markets could take months or even years to fix depending on when producers outside OPEC cut their output, Abu Dhabi-based The National reported, citing comments by UAE Energy Minister Suhail Al Mazrouei.
“We are experiencing an obvious oversupply in the market that needs time to be absorbed,” the newspaper reported Mazrouei as saying.
The United Arab Emirates supported the November decision by the Organization of Petroleum Exporting Countries to maintain production, The National reported Mazrouei as saying.
Saudi Arabia, the world’s largest oil exporter, will keep a “solid will” and maintain the nation’s stability even with falling crude prices, King Abdullah said in a speech read by his crown prince.
Saudi Arabia will enjoy “safety and stability,” according to a copy of the king’s speech read by Crown Prince Salman Bin Abdulaziz with Abdullah in the hospital for pneumonia.
The oil market is set for “more problems” this year as increasing supplies from countries including Russia and Iraq add to the global glut that drove prices almost 50% lower in 2014, according to Morgan Stanley.
Output may increase from fields in West Africa, Latin America, the US and Canada in addition to more exports from Russia and Iraq, offsetting concerns of reduced production in Libya, analysts including New York-based Adam Longson sai.
Iran may raise overseas shipments by about 500,000 barrels a day if western sanctions against the country are lifted, according to the report.
Oil’s biggest bust since the global recession was good for a few cases of whiplash.
Just two months ago, Continental Resources Inc. (CLR), the shale driller founded by billionaire Harold Hamm, budgeted for $80-a-barrel oil and planned to spend $4.6billion in 2015.
Six weeks later, with crude down 29% in the interim, Continental cut its 2015 budget to $2.7billion.
Oil headed for the biggest annual decline since the 2008 global financial crisis as US producers and the Organization of Petroleum Exporting Countries ceded no ground in their battle for market share amid a supply glut.
Futures slid as much as 1.4% in New York, bringing losses for 2014 to 46 percent.
US guidelines allowing overseas sales of ultralight oil without government approval may boost the country’s export capacity and “throw a monkey wrench” into Saudi Arabia’s plan to curb American output, according to Citigroup I
Having reached 2014 highs in June, crude oil prices started to free fall and in the search for reasons some people have pointed towards the International Energy Agency's (IEA) changing demand and supply expectations.
Since June, when its 2014 global oil demand growth forecast hit a peak of 1.4million barrels per day (bpd), IEA’s projections have fallen by half.
By contrast, supply expectations have been much more stable – since June, the IEA's forecasts of non-Opec (Organisation of the Petroleum Exporting Countries) oil supply growth have expanded by a modest 300,000bpd and the IEA's non-Opec supply forecast is currently only 100,000bpd above the level at which it started 2014.
Fighting in Libya that’s pushed oil production below consumption in the holder of Africa’s largest reserves is a reminder that not all OPEC members are in a position to defend market share by maintaining output.
As Iraq plans to boost supplies next year amid repeated pledges by Saudi Arabia and the United Arab Emirates to keep pumping the same amount of crude, Libya’s National Oil Corp. said output has dropped to a “very low point.”
Conflict between the government and Islamist militias has spread to the region of Mellitah, where the country’s fourth-largest oil port is located, after disrupting two other export terminals, according to the state-run company.
Crude prices surged from the lowest closing levels since May 2009 as comments from Saudi Arabia’s oil minister yesterday added to the most volatile market in three years.
West Texas Intermediate climbed 4.5% in New York, the biggest gain since August 2012. Both WTI and Brent rose more than 5 percent during the session.
A measure of expected WTI futures movements and a gauge of options value was at the highest level since October 2011, data shows.
Oil and gas expert Alex Kemp said he did not agree with comments made which claimed the North Sea was “close to collapse”.
Robin Allan, chairman of the independent explorers association Brindex, said it is “almost impossible to make money” with the oil price below $60 a barrel.
However Mr Kemp said the current investment in new fields had been predicted to lessen when oil prices were at $90 a barrel.
Oil extended losses below $60 a barrel amid speculation that OPEC’s biggest members will defend market share against US shale producers.
Brent also slid after closing at the lowest price since July 2009.
West Texas Intermediate futures fell as much as 1.9% in New York and are down 10% this week.
Iraq said its decision to deepen the discount for January sales of its main crude to Asia provides no support for claims that producers are waging a price war.
Pricing for next month’s shipments of the Basrah Light grade to Asia is “based on the market structure for both oil products and crude oil,” Iraq’s Oil Marketing Co. said.
“The widened contango in crude oil prices in Asia was the major reason behind the cut.”
Iran’s president has said the sharp fall in oil prices is the result of “treachery”, in an apparent reference to regional rival Saudi Arabia, which opposed production cuts to lift prices.
Hassan Rouhani told a cabinet meeting the fall in prices is “politically motivated” and a “conspiracy against the interests of the region, the Muslim people and the Muslim world”.
“The people of the region will not forget such conspiracies, or in other words, treachery against the Muslim world.”