Posts tagged 'Opec'

Welcome to Saudi America

Izabella Kaminska joined FT Alphaville in October 2008. Before that she worked as a producer at CNBC, a natural gas reporter at Platts and an associate editor of BP's internal magazine.

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| May 09 18:17 | Comment |

WTI crude prices are on the rise, but only at the expense of Brent’s premium. The spread between the two crude grades shrank below $8 this week, its lowest since January 2011.

But what’s really striking is the rise in US crude output, which has risen 57,000 barrels a day to 7.37m — its highest level since February 1992.

If one chart speaks a thousand words in this regard, it’s the following one from the American Enterprise Institute’s Carpe Diem’s blog, charting data from the US Department of Energy:

 Read more

Is the end of the oil era nigh?

Izabella Kaminska joined FT Alphaville in October 2008. Before that she worked as a producer at CNBC, a natural gas reporter at Platts and an associate editor of BP's internal magazine.

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| Mar 27 11:05 | Comment |

Okay. This is weird.

Perhaps the analysts in Citi’s commodities team headed by Seth Kleinman (which includes the inimitable Ed Morse) didn’t get the memo? You know, the one about needing to talk up the old carbon complex as much as possible?

After all, how else do you account for the disruptive tone of the following summary points: Read more

Opec’s strategic foothold in Asia

Izabella Kaminska joined FT Alphaville in October 2008. Before that she worked as a producer at CNBC, a natural gas reporter at Platts and an associate editor of BP's internal magazine.

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| Nov 23 2012 10:08 | Comment |

First there was plain old commodity inventory.

Then “in-the-ground” inventory — funded by pre-pay deals — started to make an appearance. Most recently, there’s even been the tendency towards “just-in-time” inventory in energy markets. Read more

The personalised pricing revolution

Izabella Kaminska joined FT Alphaville in October 2008. Before that she worked as a producer at CNBC, a natural gas reporter at Platts and an associate editor of BP's internal magazine.

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| Nov 21 2012 10:32 | Comment |

In Marrakesh, there is no such thing as a fixed vendor price.

The price you pay is determined by who you are, how well you barter, and the supply and demand fundamentals of the product you’re trying to buy on that on that specific day. Read more

Opec compromised; Saudi Arabia becomes lone player

Izabella Kaminska joined FT Alphaville in October 2008. Before that she worked as a producer at CNBC, a natural gas reporter at Platts and an associate editor of BP's internal magazine.

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| Jun 15 2012 10:50 | Comment |

JBC Energy sums up the thrust of Thursday’s Opec meeting in one handy paragraph:

As expected, OPEC members decided to keep the current overall production ceiling of 30 million b/d unchanged during yesterday’s meeting. Lowering the ceiling was not an option as the group is currently producing at around 1.6 million b/d above the target. On the other hand, an increase would not have been accepted by the price hawks. Saudi Arabia was allegedly asked by other members to cut production and adhere to the overall ceiling. Due to the lower prices and the massive global stockbuild, we forecast that Saudi Arabia will decrease production in H2 to 9.5 million b/d, bringing the 2012 annual average down to 9.7 million b/d. Read more

Why Saudi Arabia wants to bathe the world in affordable oil

Kate is FT AV’s Asia Correspondent. She joined FT Alphaville in mid-2011 after carrying out various roles in the FT’s London office since 2005: interactive editor, companies reporter, and founding editor of the FT’s Energy Source blog.

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| Jun 13 2012 09:40 | Comment |

Thursday’s Opec meeting is expected to be a cracker. Supply is relatively abundant right now, but Saudi Arabia wants the quota raised. Iran, Venezuela, and a bunch of other Opec members fearful for their export receipts definitely do not want that.

The FT’s Guy Chazan writes that it’s expected to be a tussle that Saudi and its Gulf state allies will lose, despite their considerable power within the cartel. The point, some industry watchers maintain, is just to send a message that Saudi’s got this: that is, it won’t let high oil prices worsen the risk of a global slowdown. A message it probably sees as very necessary as the Iranian sanction deadline draws nearer, and the world economy looks more fragile. Read more

Marginal oil production costs are heading towards $100/barrel

Kate is FT AV’s Asia Correspondent. She joined FT Alphaville in mid-2011 after carrying out various roles in the FT’s London office since 2005: interactive editor, companies reporter, and founding editor of the FT’s Energy Source blog.

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| May 02 2012 12:01 | Comment |

Bernstein’s energy analysts have looked at the upstream costs for the 50 biggest listed oil producers and found that — surprise, surprise — “the era of cheap oil is over”:

Tracking data from the 50 largest listed oil and gas producing companies globally (ex FSU) indicates that cash, production and unit costs in 2011 grew at a rate significantly faster than the 10 year average. Last year production costs increased 26% y-o-y, while the unit cost of production increased by 21% y-o-y to US$35.88/bbl. This is significantly higher than the longer term cost growth rates, highlighting continued cost pressures faced by the E&P industry as the incremental barrel continues to become more expensive to produce. The marginal cost of the 50 largest oil and gas producers globally increased to US$92/bbl in 2011, an increase of 11% y-o-y and in-line with historical average CAGR growth. Assuming another double digit increase this year, marginal costs for the 50 largest oil and gas producers could reach close to US$100/bbl. Read more

How will the world live with $100 oil?

Kate is FT AV’s Asia Correspondent. She joined FT Alphaville in mid-2011 after carrying out various roles in the FT’s London office since 2005: interactive editor, companies reporter, and founding editor of the FT’s Energy Source blog.

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| Jan 17 2012 11:48 | Comment |

For the long haul, that is.

So, Saudi Arabia is now effectively targeting $100/barrel crude oil, instead of the $70 – $80 price range of the past several years. This is significant because Saudi Arabia is the only country that can (in theory at least) ramp up its oil production quickly if prices spike (say, in the event of an Iran-related affair). Read more

Iran warns Opec over output rise

Kate is FT AV’s Asia Correspondent. She joined FT Alphaville in mid-2011 after carrying out various roles in the FT’s London office since 2005: interactive editor, companies reporter, and founding editor of the FT’s Energy Source blog.

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| Jan 16 2012 03:49 | Comment |

Iran has warned Saudi Arabia and other members of the Opec cartel not to boost their oil production to make up for any shortfall created by western sanctions against Tehran, reports the FT. The warning comes after senior policymakers from the UK to Japan flocked to Riyadh to ask Saudi Arabia for guarantees it would boost its oil production to offset the impact of the US and the EU sanctions against Iran. Mohammad Ali Khatibi, Iran’s Opec representative, said Tehran would consider any output increase as “unfriendly”, further inflaming the tensions in the oil-rich Middle East that have pushed the cost of Brent, the global oil benchmark, above $110 a barrel. Also in the FT, China has hit back at the US over Washington’s sanctions against Zhuhai Zhenrong, a state-owned Chinese oil trading company, doing business in Iran. The Chinese foreign ministry called the move “unreasonable” and said it was not in line with the spirit and content of UN Security Council resolutions regarding Iran’s nuclear programme. Read more

Opec agrees to maintain output levels

| Dec 14 2011 21:19 | Comment |

Opec has pulled off a show of unity after its last meeting ended in disarray, agreeing to keep its members’ oil output at current levels of about 30m barrels a day for the first half of next year, the FT reports. The deal on Wednesday will go some way to allaying the concerns of oil consuming countries, who have urged the producers’ cartel to maintain supplies rather than cut them in the face of slower economic activity. Even so, analysts said oil prices were unlikely to fall significantly from the current level of about $110 a barrel. The balance of supply and demand remains tight. Brent crude, the benchmark, tumbled $4.88 a barrel to $104.62 amid a wider sell-off in commodities ater Opec announced the deal. Brent prices hit a two-year high of $127.02 in February. Read more

The Saudi production puzzle

Izabella Kaminska joined FT Alphaville in October 2008. Before that she worked as a producer at CNBC, a natural gas reporter at Platts and an associate editor of BP's internal magazine.

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| Dec 14 2011 11:55 | Comment |

Last week it transpired that Saudi Arabian oil production had hit its highest level in three years.

As Bloomberg reported at the time: Read more

Opec nears agreement on oil output

Kate is FT AV’s Asia Correspondent. She joined FT Alphaville in mid-2011 after carrying out various roles in the FT’s London office since 2005: interactive editor, companies reporter, and founding editor of the FT’s Energy Source blog.

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| Dec 14 2011 04:25 | Comment |

Opec ministers were edging towards a decision to keep oil output broadly steady at their meeting on Wednesday, the FT reports, moving to heal the profound differences between Saudi Arabia and Iran that led to the collapse of the previous meeting in June. The oil cartel painted a sanguine picture for the energy market heading into 2012, with Riyadh and Tehran largely agreeing on the outlook. The two countries, the two biggest producers in Opec, had clashed over levels at the group’s previous meeting in June which ended with no formal agreement on output targets. Saudi Arabia, Kuwait and the United Arab Emirates unilaterally increased production to make up for the loss of output from Libya. Read more

China and the commodities bears

Kate is FT AV’s Asia Correspondent. She joined FT Alphaville in mid-2011 after carrying out various roles in the FT’s London office since 2005: interactive editor, companies reporter, and founding editor of the FT’s Energy Source blog.

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| Aug 23 2011 12:28 | Comment |

The China Flash PMI for August of 49.8 was met with relief today, even though it’s the second negative month in a row.

It’s that kind of scene now, however, when equity markets seem to be hoping for some kind of QE3 announcement at Jackson Hole on Friday even though a) it’s not an FOMC meeting, so Ben Bernanke can’t make a policy announcement, and b) things will need to get worse before purchasing Treasuries is back on the table. Read more

IEA says global oil demand growth slows

Izabella Kaminska joined FT Alphaville in October 2008. Before that she worked as a producer at CNBC, a natural gas reporter at Platts and an associate editor of BP's internal magazine.

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| Aug 10 2011 10:34 | Comment |

High oil prices and weaker economic growth have “dramatically” curtailed the expansion of global oil demand, with the world registering a zero increase in June, according to the International Energy Agency, the FT reports. The monthly oil market report, released on Wednesday, discloses a significant cooling of demand and a modest increase in supply. Total consumption of oil products in Asia fell in absolute terms by 500,000 barrels per day between May and June, declining from 20.6m b/d to 20.1m b/d. This was led by China, where total oil product demand fell by 1.5 per cent between May and June. Overall, the IEA has trimmed its forecast of global oil demand this year by 100,000 b/d, predicting it will average 89.5m b/d. “Concerns over debt levels in Europe and the US, and signs of slowing economic growth in China and India have spooked the market and raised fears in some quarters of a double-dip recession,” says the report. Read more

What modern oil market intervention looks like

Izabella Kaminska joined FT Alphaville in October 2008. Before that she worked as a producer at CNBC, a natural gas reporter at Platts and an associate editor of BP's internal magazine.

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| Jun 15 2011 10:32 | Comment |

Is this the reason why the rest of Opec were miffed at Saudi Arabia last week?

Reuters reports on Wednesday (H/T John Kemp): Read more

Re-inventing Opec

Izabella Kaminska joined FT Alphaville in October 2008. Before that she worked as a producer at CNBC, a natural gas reporter at Platts and an associate editor of BP's internal magazine.

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| Jun 09 2011 11:54 | Comment |

Wednesday’s Opec meeting may have resulted in a no-change decision on production targets, but as more and more people are noticing, its importance lay elsewhere — in signalling some significant turmoil within the organisation itself.

Indeed, if ever proof was needed that Opec may be turning into an outdated institution for today’s commodity markets, Wednesday’s meeting could very possibly have been it. Read more

Opec picks up pieces after failed deal

Joseph joined FT Alphaville way back in March 2010. He likes all the politically and legally fiddly bits of finance. He also likes credit, rates, global macro, tail risk, and all that stuff. (You should email him story ideas. He’ll take anything.)

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| Jun 09 2011 10:33 | Comment |

Opec’s failure to agree increased targets on production has exposed the political divisions afflicting a once technocratic oil cartel, the FT says. Saudi Arabia, whose oil minister declared Opec’s disagreement ‘one of the worst meetings we have ever had’, had pushed for Opec increasing production quotas to 30.3m barrels a day, a third of world supplies, but encountered resistance from countries led by Iran. The White House is considering tapping the Strategic Petroleum Reserve following the cartel’s lack of guidance on supply, the WSJ reports. Read more

Oil leaps as Opec descends into acrimony

| Jun 08 2011 19:37 | Comment |

Saudi Arabia has been publicly humiliated by its greatest rival after Iran rallied five Opec countries to block the kingdom’s bid to increase the oil cartel’s output quotas, reports the FT. The unexpected development sent Brent crude up more than $2 to a one-month high of $118.59 a barrel. West Texas Intermediate, the US benchmark, moved back above $100 a barrel. Read more

Opec divided over output increase

Joseph joined FT Alphaville way back in March 2010. He likes all the politically and legally fiddly bits of finance. He also likes credit, rates, global macro, tail risk, and all that stuff. (You should email him story ideas. He’ll take anything.)

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| Jun 08 2011 10:47 | Comment |

Saudi Arabia has been left isolated at Opec over its call to lift the oil cartel’s production target by 1.5 million barrels a day, the first such increase to supplies in four years, says Reuters. Whereas Gulf countries have offered support for the Saudi position, countries including Iran, Angola, Iraq and Venezuela are pressing for prices to remain above $100 a barrel, with key producers Nigeria and Algeria remaining on the sidelines. As Opec’s largest producer, Saudi Arabia still stands a good chance of getting its way as geopolitical problems continue to rock supply, especially in Libya, according to Bloomberg. Read more

Saudis raise oil production to curb prices

| Jun 06 2011 21:27 | Comment |

Saudi Arabia has been quietly increasing its crude oil production ahead of Wednesday’s meeting of the Opec oil cartel, in a sign that Riyadh is trying to bring oil prices down to more comfortable levels for consumers in the US, Europe and China. The kingdom boosted production in May by about 200,000 barrels a day and it is on course to increase it by another 200,000-300,000 b/d this month, taking its output above the critical 9m b/d level for the first time since mid-2008, says the FT. Read more

Opec eyes increase in output

| Jun 03 2011 04:26 | Comment |

Opec’s oil ministers will discuss raising production when they meet next week, the first increase in almost four years and a sign the oil cartel is responding to fears about the economic damage caused by prices above $100 per barrel, reports the FT. The International Energy Agency, the west’s oil watchdog, last month urged Opec to boost output, saying there was a “clear, urgent need for additional supplies” to cool down oil prices and avoid derailing economic recovery. An Opec delegate confirmed that a formal change in the cartel’s production policy would be discussed at the June 8 gathering. Read more

Opec considers increase in oil output

Cardiff writes mostly about US macroeconomic issues, with daily excursions into other topics about which he claim no expertise. Before Alphaville, Cardiff spent a little more than two years as a reporter at Dow Jones Financial News covering investment banking, asset management, and private equity. Along the way he has written freelance pieces on a variety of other topics from behavioural psychology to Muay Thai, the latter also being a personal interest that involves frequently getting kicked in the shins (and torso, and head).

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| Jun 02 2011 22:28 | Comment |

Opec’s oil ministers will discuss raising production when they meet next week, the first increase in almost four years and a sign the oil cartel is responding to fears about the economic damage caused by prices above $100 per barrel, reports the FT. The International Energy Agency, the west’s oil watchdog, last month urged Opec to boost output, saying that there was a “clear, urgent need for additional supplies” to cool down oil prices and avoid derailing economic recovery. With the maintenance season for refineries ending across the globe this month, heralding a steep rise in demand for crude, an Opec delegate confirmed that a formal change in the cartel’s production policy would be discussed at the June 8 gathering. Read more

And now Goldman says the commodities correction is over [updated]

Izabella Kaminska joined FT Alphaville in October 2008. Before that she worked as a producer at CNBC, a natural gas reporter at Platts and an associate editor of BP's internal magazine.

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| May 24 2011 09:50 | Comment |

Having been proven right about their prediction of a rather substantial correction in commodities  earlier this month, Goldman Sachs is now out with a new view.

A bullish view. Read more

Iran sets stage for tense Opec meeting

| May 18 2011 21:30 | Comment |

Iran’s president, who has declared himself “acting” oil minister, might chair next month’s meeting of Opec, according to a senior aide, setting the stage for a highly politicised gathering of the cartel, writes the FT. Mahmoud Ahmadi-Nejad, who is locked in a power struggle with rivals in Iran’s conservative establishment, has put himself in temporary charge of the oil ministry at a time when Iran holds the rotating presidency of Opec. As such, he could become the first head of state to chair a gathering of the world’s biggest oil producers if he goes to Vienna for the June 8 meeting.

  Read more

Oil supplies sufficient, says Opec

Joseph joined FT Alphaville way back in March 2010. He likes all the politically and legally fiddly bits of finance. He also likes credit, rates, global macro, tail risk, and all that stuff. (You should email him story ideas. He’ll take anything.)

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| Apr 18 2011 10:26 | Comment |

Opec countries do not need to increase oil output, with markets currently well-supplied, the organisation’s secretary-general has announced, according to the WSJ. Saudi offerings of blended crude designed to replace high-quality Libyan grades had not received buyers, Abdalla Salem El Badri added. Brent crude fell below $123 and US crude fell $1 to $108 on Monday, Reuters reports, with reports of Saudi cuts to production and forecasts of oil demand destruction continuing to sway the market from different directions. Read more

Opec’s 2011 revenues set to reach trillion dollars

Joseph joined FT Alphaville way back in March 2010. He likes all the politically and legally fiddly bits of finance. He also likes credit, rates, global macro, tail risk, and all that stuff. (You should email him story ideas. He’ll take anything.)

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| Mar 30 2011 09:24 | Comment |

Opec will reap $1,000bn in export revenues this year so long as crude prices remain above $100 a barrel, the FT reports. Fatih Birol, chief economist at the IEA, said a new assessment by the rich nations’ oil watchdog showed that the total number of barrels exported by Opec in 2011 would be slightly lower than in 2008, when cartel oil revenues reached $990bn. But if average prices remain around $100 a barrel, Opec’s oil revenues will still reach a record of $1,000bn this year. The estimate is not adjusted for inflation, but nevertheless underlines some Opec members’ reliance on high prices to finance anti-unrest measures. Saudi Arabia is busy printing extra anti-protest religious edicts, reports Reuters. Read more

The Saudi capacity puzzle

Izabella Kaminska joined FT Alphaville in October 2008. Before that she worked as a producer at CNBC, a natural gas reporter at Platts and an associate editor of BP's internal magazine.

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| Mar 08 2011 11:10 | Comment |

Could Saudi Arabia be telling porkies when it comes to its spare capacity capabilities?

It’s something Goldman Sachs analysts are wondering on Tuesday. Read more

Opec members rush to raise oil output

Cardiff writes mostly about US macroeconomic issues, with daily excursions into other topics about which he claim no expertise. Before Alphaville, Cardiff spent a little more than two years as a reporter at Dow Jones Financial News covering investment banking, asset management, and private equity. Along the way he has written freelance pieces on a variety of other topics from behavioural psychology to Muay Thai, the latter also being a personal interest that involves frequently getting kicked in the shins (and torso, and head).

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| Mar 08 2011 05:45 | Comment |

Influential members of Opec, the oil cartel, are joining Saudi Arabia in raising output to cool soaring prices and allay fears of a supply crunch in the west, writes the FT. The behind-the-scenes move by Kuwait, the United Arab Emirates and Nigeria reflects growing unease among Opec members over the threat to the global economic recovery from crude’s runaway rise amid the worsening crisis in Libya. US oil prices increased to their highest levels since September 2008 on Monday, trading at an intraday high of $106.95 a barrel, as Brent, the European benchmark, hit a session high of $118.50. Gold jumped to a fresh record of $1,444 an ounce. Industry officials said the production increase, expected by early April, would – together with an earlier rise by Saudi Arabia – almost make up the shortfall in supply from falling Libyan crude exports. Read more

Opec members rush to raise oil output

| Mar 07 2011 21:33 | Comment |

Influential members of Opec, the oil cartel, are joining Saudi Arabia in raising output to cool soaring prices and allay fears of a supply crunch in the west, reports the FT. The behind-the-scenes move by Kuwait, the United Arab Emirates and Nigeria reflects growing unease among Opec members over the threat to the global economic recovery from crude’s runaway rise amid the worsening crisis in Libya. US oil prices increased to their highest levels since September 2008 on Monday, trading at an intraday high of $106.95 a barrel, as Brent, the European benchmark, hit a session high of $118.50. Read more

Saudi Arabia seeks to calm oil panic

Tracy Alloway used to be deputy editor of FT Alphaville. Here she learned the details of derivatives, the absurdities of accounting and the various structures of ... erm ... structured finance. She now covers big US banks for the FT paper, including Goldman Sachs and Morgan Stanley. She pops up on FT Alphaville every once in a while.

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| Feb 25 2011 09:57 | Comment |

Saudi Arabia moved to calm mounting global fears of an oil supply crisis after panic buying sent crude prices to a 2½-year peak of almost $120 a barrel, the FT reports. Indicating that Opec’s biggest producer is prepared to increase supplies, the kingdom entered “active talks” with European oil companies on how to meet the shortfall caused by the turmoil in Libya. FT Alphaville adds that the feasibility of a straight Libyan-Saudi swap has been an issue. Read more

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