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Tot hoever zakt de olie prijs?

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Kuwait light crude output expected to rise to 250,000 bpd in 3 years - Mr Al-Kandari

Reuters cited Mr Ali Hussain Al-Kandari, manager of production and projects at Kuwait Oil Company as saying that Kuwait's production of light crude is expected to rise to 250,000 barrels per day in 3 years' time and to 300,000 bpd by 2023.

Light crude output is currently 180,000 bpd, with natural gas at 0.5 billion cubic feet.

Source : Reuters
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Malaysia's oil prices higher in 2019 - Report

Star Malaysia reported that crude oil prices have gone on a freefall, down by over 37% in less than three months. However, analysts foresee the bearish trend to be temporary, with higher oil prices in the offing next year. The positive outlook comes as good news for the federal government’s coffers as well as the Malaysian oil and gas sector, which had witnessed a disappointing earnings performance in the Q3 of 2018. Looking into 2019, pundits believe the O&G sector stands to benefit from the projected recovery in crude oil prices and the expected increase in both upstream and downstream activities.

CIMB Research chose the O&G sector as one of its four top picks in 2019.

Maybank IB Research and PublicInvest Research have maintained their “positive” and “overweight” views on the sector, respectively.

By mid-day yesterday, the international benchmark Brent crude price has fallen by 37% since its year-to-date peak in early October and hit USD 54.33 per barrel. The current price level is Brent’s lowest in 14 months.

The West Texas Intermediate crude took a worse beating, with a 39% drop in price since its year-to-date peak in early October. The US benchmark stood at USD 46 per barrel at 12pm yesterday.

Globally, the ongoing oil price volatility is attributable to the unwinding of net long positions by traders, following concerns over a possible glut in global oil supplies relative to slowing global demand. Crude oil prices have also remained depressed, given that the supply from major oil producers such as the United States, Russia and Saudi Arabia have reached or nearing all-time highs.

According to Socio-Economic Research Centre executive director Mr Lee Heng Guie, the depressed oil price environment is unlikely to be sustained, with global oil demand expected to remain healthy amid slowing global growth.

Mr Lee said that “The decision by the Organisation of the Petroleum Exporting Countries (Opec) and its allies to start cutting global oil supply by 1.2 million barrel per day from January will help the market re-balance in the first half of 2019. Along with the cartel’s decision, Russia also indicated its willingness to reduce output along with Canada’s production, which could start to decline due to a lack of pipelines.”

Lee estimates Brent crude prices to average at US$60 to US$65 per barrel in 2019.

Describing the recent market dynamics as “completely overblown,” a more optimistic Stephen Innes, Oanda Corp head of trading for Asia-Pacific, expects an average Brent price of US$70 per barrel in 2019.

He said, however, there will be high oil price volatility in early 2019 as Opec undertakes supply tweaks amid gloomier macroeconomic prospects that weigh on sentiment.

Source : Star Malaysia
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NOVATEK launches crude oil production at the Yaro-Yakhinskoye field

PAO NOVATEK has launched of commercial production of crude oil at the Yaro-Yakhinskoye field developed by Arcticgas, a joint venture between NOVATEK and Gazprom Neft. The field’s crude oil production capacity is estimated at 1.2 million tons per annum. To start crude oil production, oil and gas gathering systems, central oil treatment facility, as well as an external crude oil pipeline 57 km long with oil delivery point have been constructed. Twenty-two production wells have been currently drilled at the crude oil part of the field, and production drilling is underway.

The Yaro-Yakhinskoye field is located in the Purovsky district of the Yamalo-Nenets Autonomous Region. Arcticgas, a joint venture between NOVATEK (50%) and Gazprom Neft (50%), holds the field’s license for the exploration and production. Gas and gas condensate commercial production at the field began in April 2015. As of 31 December 2017, Yaro-Yakhinskoye field reserves under the Russian reserves classification totalled 206 billion cubic meters of natural gas and 32 million tons of liquids.

Source : Strategic Research institute
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Iraq's Kirkuk oil exports to stay restricted - Mr Ghadhban

Reuters cited Iraq oil minister Mr Thamer Ghadhban, as saying that exports from Iraq's northern Kirkuk oilfields to the Turkish port of Ceyhan will stay at between 80-90,000 barrels per day as most of the crude produced is being diverted to feed refineries in the north. Current production at the Kirkuk oilfields stands at around 370,000 bpd, the head of Iraq's North Oil Company, Mr Farid al-Jadir, told the same news conference. Mr Jadir said a BP technical team was now operating in Kirkuk and would prepare a study reviewing plans for increasing production by the end of 2019.

He said that "BP is currently working with the North Oil Company on preparing a technical study that will completely reevaluate Kirkuk production capacity and how to increase it. They are currently on the ground and we expect to present the final study before the end of next year before reaching an agreement with the company."

Mr Ghadhban said Iraq was in the final stages of talks with Exxon and CNPC over a mega energy project in the south and expected to sign the agreements soon. He said he was optimistic about reaching an initial deal soon but that he could not predict an exact date.

Source : Reuters
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OPEC, non-OPEC nations must stabilise oil prices in Q1 2019 - Mr Bozumbayev

Reuters cited Energy Minister Mr Kanat Bozumbayev as saying that Kazakhstan expects the participants in a global oil output curbing pact to stabilise oil prices in the Q1 2019 and make a joint statement next month "in order to support the market." The Organization of the Petroleum Exporting Countries led by Saudi Arabia along with non-OPEC members such as Russia, agreed this month to begin curbing production in January to reduce a supply glut.

Mr Bozumbayev said that llanned shutdowns at large oil fields - Kashagan, Karachaganak and Tengiz - next year will help Kazakhstan meet its output reduction target agreed under the deal.

Source : Reuters
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Private buyers of Iran crude had no problems exporting it – Mr Zanganeh

Private buyers of Iranian crude have had "no problems" exporting it, Iran's oil minister was quoted as saying by state news agency IRNA, despite US sanctions targeting Iran's oil exports. Iran began selling crude oil to private companies for export in late October, just ahead of US sanctions on sectors including oil which came into effect on November 5.

IRNA quoted Oil Minister Mr Bijan Zanganeh as saying that "Those who bought oil on the bourse have been able to export and there have been no problems in this regard."

Source : Reuters
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Plunging oil prices show the market is worried about a recession in 2019 - Croft

According to Helima Croft, global head of commodity strategy at RBC Capital Markets, the continuing collapse in oil prices signals that investors are worried about a 2019 recession. Oil prices have now plunged by about 40 percent from their 52-week highs at the start of October. Last week alone, US West Texas Intermediate crude tumbled 11 percent, posting its worst weekly performance in nearly three years. WTI fell below USD 45 a barrel for the first time since July 2017.

Croft told CNBC’s “Closing Bell” “I think what we’re seeing in oil is a big, big concern for 2019 about a recession. I think that is really weighing heavily on this market.”

Croft’s commentary reflects an emerging view on Wall Street that slowing economic growth and weaker-than-anticipated demand are pushing the oil market deeper into bear market territory. The rout has continued despite a pledge earlier this month by OPEC, Russia and several other oil producers to remove 1.2 million barrels per day from the market beginning in January.

Surging oil production from the United States, Saudi Arabia and Russia is one factor behind the selling. But Croft says the depth of the pullback indicates that expectations for slower economic growth and darkening demand forecasts are what’s truly driving the rout.

Croft said that “I think it’s a broad-based fear about where is demand going to be for oil next year, concerns about Chinese demand in particular.”

To be sure, Croft is not necessarily forecasting a recession, and there are few clear signs that a period of economic contraction is on the horizon. Still, surveys indicate that executives are growing more worried about the prospect.

Nearly half of chief financial officers see a chance that a recession will hit by the end of 2019, according to a CNBC survey. Meanwhile, US-Chinese trade tensions are causing finance executives to lose faith in China’s economic growth, a Deloitte survey shows.

Source : CNBC
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Oil prices to stabilise in H1 of 2019 - Mr Novak

Reuters cited Russian energy minister Mr Alexander Novak as saying that oil prices, which fell by more than a third this quarter, would become more stable in the first half of 2019. The Organization of the Petroleum Exporting Countries and other large oil producers led by Russia agreed earlier this month to cut their combined crude output by 1.2 million barrels per day from January in order to stem the fall in oil prices.

Mr Novak said in an interview "I think that during the first half, due to joint efforts, which were confirmed by the Opec and non-Opec countries this December, the situation will be more stable, more balanced."

Source : Reuters
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Oil prices drop as US stock markets retreat

Oil prices fell on Thursday, retreating from an 8 percent rally in the previous session as Wall Street stocks also fell and the oil market focused on signs of faltering global economic growth and record production of crude. Prices surged on Wednesday, tracking a spike on Wall Street after President Donald Trump’s administration attempted to shore up investor confidence. US stocks retreated on Thursday, dragging oil prices. Brent and WTI have lost more than a third of their value since the beginning of October and are heading for declines of more than 20 percent in 2018. Concerns about slowing global economic growth have dampened investor demand for riskier asset classes and pressured crude futures.

Market participants are worried about a glut of crude. Three months ago it looked as if the global oil market would be undersupplied through the northern hemisphere winter as US sanctions removed large volumes of Iranian crude. But other oil exporters have compensated for any shortfall, depressing prices.

The Organisation of the Petroleum Exporting Countries, along with Russia and other producers, agreed this month to reduce output by 1.2 million barrels per day (bpd), equivalent to more than 1 percent of global consumption. But the cuts will not take effect until January and oil production has been at or near record highs in Russia, Saudi Arabia and the United States, now the world’s top crude producer pumping 11.6 million bpd.

Source : Strategic Research Institute
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Mexicaanse president zet leger in om diefstal bij staatsoliebedrijf Pemex aan te pakken

De Mexicaanse president Andrés Manuel López Obrador wil de grootschalige diefstal bij staatsoliebedrijf Pemex een halt toeroepen.Foto: Reuters/Daniel Becerril

Leger en marine in Mexico krijgen een grotere rol bij de bestrijding van oliediefstal. Zo'n vierduizend militairen en medewerkers van de marine worden ingezet bij de bewaking van zo'n vijftig strategische installaties van staatsoliemaatschappij Pemex.

De Mexicaanse president Andrés Manuel López Obrador presenteerde de maatregelen donderdag op een persconferentie. Pemex wordt al decennialang geconfronteerd met oliediefstal op grote schaal, zowel door medewerkers van het bedrijf als door mensen buiten de staatsoliemaatschappij.

Criminele bendes
Pemex-topman Octavio Romero zei op de persconferentie dat sinds 2016 bij de staatsoliemaatschappij voor circa $7,4 mrd, omgerekend bijna €6.5 mrd, (ruwe) olie is gestolen. 'Dit is diefstal van nationaal bezit, van publieke fondsen, van geld dat alle Mexicanen toebehoort', aldus de linkse president, die nog maar kort aan de macht is. Criminele bendes in Mexico hebben het al jarenlang voorzien op Pemex.

fd.nl/economie-politiek/1283780/mexic...
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Amerikaanse olievoorraden stabiel gebleven

(ABM FN-Dow Jones) De voorraden ruwe olie in de Verenigde Staten zijn vorige week stabiel gebleven. Dit bleek vrijdag uit cijfers van het Amerikaanse energieministerie.

In de week eindigend op 21 december bleven de voorraden ruwe olie onveranderd op 441,4 miljoen vaten. Economen rekenden vooraf op een daling met 2,6 miljoen vaten.

De benzinevoorraden stegen met 3,0 miljoen tot 233,1 miljoen vaten. De voorraden stookolie en diesel bleven stabiel op 119,9 miljoen vaten.

De capaciteitsbenutting van de raffinaderijen nam af van 95,4 procent naar 95,1 procent.

Door: ABM Financial News.
info@abmfn.nl
Redactie: +31(0)20 26 28 999

© Copyright ABM Financial News B.V. All rights reserved.
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New Mexico oil producers brace for tighter regulation as output jumps - Report

Reuters reported that crude oil output has more than doubled in New Mexico over the last four years, making it the No 3 producer among US states, but a January change in state leadership to Democratic control has industry executives fearing tougher regulations are coming. Incoming New Mexico Governor Michelle Lujan Grisham and state land commissioner Stephanie Garcia Richard plan to limit new leasing on state lands where drillers planned to tap freshwater aquifers. The incoming administration also has pledged to crack down on methane, a potent greenhouse gas that is often flared during oil production or can leak into the atmosphere from faulty equipment.

Mr Phil Buch, a Texas oil executive with personal energy holdings in New Mexico, said that "They could make it much harder for operators to make a good profit in New Mexico. There's definitely an added risk there."

Advancements in drilling technology over the last decade or so have boosted US oil production dramatically. The country's crude output surged to a record 11.5 million barrels per day (bpd) as of September.

However, opposition to drilling has also grown as activists around the world have pressured governments to limit emissions of carbon dioxide and other greenhouse gases blamed for global warming. In North America, there have been growing protests against pipeline construction and measures to curb fossil fuels have made their way to the ballot box in many western states.

Nevada voters last month approved a measure to increase the amount of renewable energy used by 2030, though voters rejected curbs on fossil fuels in state elections in Arizona, Colorado, and Washington state. Incoming New Mexico officials say they are focused on increasing tax revenue while cutting emissions of the greenhouse gas methane.

Governor-elect Lujan Grisham plans to put "an emphasis on methane" in her initial legislative objectives, said aide Dominic Gabello. She wants producers to capture methane gas that has leaked from equipment or is vented or flared, in hopes that limiting lost output will boost state tax revenue.

Tarin Nix, an aide to Garcia Richard, the incoming land commissioner who was unavailable to comment "No one is trying to kick oil and gas out. That wouldn't be done. The most you can do is make the most money from oil and gas."

Mr Garcia Richard, whose office oversees 9 million acres of state land, wants to increase the production royalty by at least a third, which would match Texas' royalty rate and boost revenues for funding schools and hospitals.

New Mexico's oil output has more than doubled to 712,000 bpd in the last four years. The state accounts for about one-fifth of the production of the giant Permian Basin, the country's largest oilfield, which produces more than 3.7 million bpd, according to US Energy Department figures. An auction of federal land in New Mexico recently raised a record $972 million with bidders paying as much as USD 82,000 an acre, more than twice the state's previous high.

Source : Reuters
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Rosneft to acquire at least 6 million tonne of oil for USD 2 billion in 2019

Reuters reported that Russia's largest oil producer Rosneft will buy around 6 million tonnes of oil worth over USD 2 billion from domestic producers next year, according to an announcement on a state-owned website for purchases of companies' needs. According to the website, Rosneft will buy 5.14 million tonnes of oil worth RUB 132.5 billion from Gazprom Neft. The price works out at around USD 46 per barrel compared to a current price of Russian Urals crude blend of $51 per barrel.

Rosneft's total oil production is seen at 241 million tonnes of oil (4.82 million barrels per day) next year. Rosneft has not disclosed its oil purchases for the whole 2018.

Rosneft said, in an emailed response to a request for a comment, that the purchases will allow it to cut transportation costs and are "usual practice in the oil industry".

Source : Reuters
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Gazprom Neft plans are resistant to low oil prices – CEO

Reuters cited Mr Alexander Dyukov, chief executive officer, Russian oil producer Gazprom Neft's, as saying that the company's strategic plans are sustainable even at low oil prices.

In an interview with Rossiya-24 TV, Mr Dyukov said that Gazprom Neft's has used an oil price of USD 50 per barrel in its plans for 2019 and company's new strategy sees production rising faster than the market average.

Source : Reuters
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Russia plays down idea of forming joint organisation with OPEC given US sanctions risk – Mr Novak

Reuters cited Russian Energy Minister Mr Alexander Novak as saying that it is highly unlikely that OPEC and other oil producers would set up a joint structure due to the additional red tape it would create as well as the risk of US monopoly-related sanctions. The Organization of the Petroleum Exporting Countries and other top oil producers led by Russia have since the end of 2016 made an unprecedented joint effort to curb output and support prices. OPEC and Russia jointly produce more than 40 percent of the world’s oil.

Russia’s energy ministry said that Moscow and OPEC lynchpin Saudi Arabia had reached a general agreement that the OPEC+ format should be “institutionalised” and extended until 2019 and beyond to monitor the market and take joint action if needed.

However, Mr Novak said such an idea has been ditched. He said that “There is a consensus that there will be no such organisation. That’s because it requires additional bureaucratic brouhaha in relation to financing, cartel, with the US side. I think, non-OPEC (countries) will not agree as they don’t want to be hit by sanctions.”

Source : Reuters
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Global oil output cuts seen helping prices recover in 2019

Gulf News reported that analysts expect oil prices to recover next year due to an output cut agreement between the Organisation of Petroleum Exporting Countries and non-Opec members and declining production from Venezuela and Iran. Oil demand is also forecast to be higher in 2019, something expected to support oil prices. Mr Giovanni Staunovo, commodity analyst at UBS Wealth Management in a statement said that “There is pervasive market worry that the planned cuts by Opec+ [the alliance between Opec and non-Opec oil producers] will not suffice, amid economic growth concerns, to offset the relentless increase in US shale supply and stabilise the market. We consider these fears overdone and see the Opec+ production cuts, along with ongoing supply declines in Iran and Venezuela amid healthy oil demand, supporting higher prices.”

Mr Staunovo said that the oil demand by China, the second-largest consumer after the US, is still strong, with crude imports exceeding 10 million barrels per day in November and expected to remain above that mark this month as well.

He said that “Taking supply and demand dynamics into account for next year, we retain our view that Brent prices will recover into a $USD 70-USD 80 per barrel range next year.”

Mr Mustafa Ansari, senior economist for energy research at the Dammam-based Arab Petroleum Investments Corporation (Apicorp), also expects higher oil prices next year. He said that “Based purely only on fundamentals, an Opec cut of 1.2 mbpd [million barrels per day], high chances of supply losses from Iran, Venezuela, Libya and Canada, and global oil demand growth of 1.4 mbpd, the market will achieve balance in 2019, but this will take time.”

Mr Ansari said that oil will trade in the USD 60-USD 70 per barrel range towards the second half of the year, barring a sharp slowdown in the global economy. When asked whether Brent oil could touch $50 per barrel in the short term, Ansari said this remains very uncertain, adding that anything can cause prices to spike up or down in the short term.

He said that “While there is always the likelihood of it hitting $50 [per barrel], more important will be whether it stays there, drop further or recover.”

Brent, the global benchmark, was down by almost 1 per cent at $53.82 per barrel when markets closed on Friday. West Texas Intermediate (WTI), the US benchmark, was down 0.63 per cent to $45.59 per barrel.

Menwhile, oil prices fell 11 per cent last week, posting their worst performance in nearly three years due to concerns that weakening economic growth and surging US supply will lead to a surplus in 2019.

Source : Gulf News
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Stevige opleving olieprijzen

Gepubliceerd op 2 jan 2019 om 17:12 | Views: 13

LONDEN (AFN/BLOOMBERG) - De olieprijzen lieten woensdag een opmerkelijke opleving zien van de verliezen eerder op de dag. De prijzen veerden op na berichten dat Saudi-Arabië zijn export van olie heeft verlaagd.

De prijs van een vat Amerikaanse olie (van 159 liter) klom tegen 17.00 uur 3,3 procent tot 46,90 dollar en Brentolie won 3,4 procent tot 55,63 dollar per vat. Eerder op de dag waren hier nog duidelijke minnen te zien vanwege tegenvallende cijfers over de Chinese industrie.

Naar verluidt heeft Saudi-Arabië in december de export van ruwe olie met een half miljoen vaten verlaagd tot ruim 7,2 miljoen vaten per dag, door een lagere uitvoer naar de Verenigde Staten en China.
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Olieprijs flink in de lift

(ABM FN-Dow Jones) Na een volatiele sessie is olie woensdag beduidend duurder geworden, hoewel tijdens de handel de winsten nog hoger lagen.

Een februari-future voor een vat ruwe WTI-olie werd woensdag 2,5 procent, ofwel 1,13 dollar, duurder op 46,54 dollar op de New York Mercantile Exchange.

"Aanvankelijk daalde de prijs flink, maar wist vervolgens te herstellen", aldus marktanalist David Madden van CMC Markets.

Die daling was het gevolg van een tegenvallend macro-economisch cijfer uit China en olieproductiecijfers uit Rusland.

De inkoopmanagersindex voor de Chinese industrie daalde tot onder een stand van 50, wat duidt op krimp. "Voor het eerst komt het handelsdispuut hiermee tot uiting in de cijfers", vond marktanalist Teeuwe Mevissen van Rabobank.

De sprong omhoog kwam nadat een rapport van persbureau Bloomberg wees op een daling van de olie-export door Saoedi-Arabië in december. Volgens dit rapport daalde de productie van 7,72 miljoen naar 7,25 miljoen vaten per dag.

"Wie denkt dat de Saoedi's niet serieus zijn in hun poging om het beeld van een olie-overaanbod weg te nemen, kan hier beter nog maar eens over nadenken", zei analist Phil Flynn van Price Futures Group.

Sinds dit jaar verlagen oliekartel OPEC en diverse partners hun dagproductie met 1,2 miljoen vaten. Daartoe werd in december besloten. De productieverlaging geldt in principe voor een periode van 6 maanden.

Door: ABM Financial News.
info@abmfn.nl
Redactie: +31(0)20 26 28 999

© Copyright ABM Financial News B.V. All rights reserved.
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Five factors fueling the oil market in 2018

Arab News reported that it was a rollercoaster-ride of a year for the oil markets, with Brent prices soaring to a high of USD 86 in October, before a dramatic crash to as low as USD 50 earlier this month. With a few blips along the way, the first three quarters saw prices move upward, with strong trading activity in the physical markets, healthy demand and refining margins. The bearish horizon that clearly weighed on market sentiment in 2016 and the uncertainties of 2017 all but vanished in the first nine months of this year, when stability returned to the market.

Yet all that was undone in the final quarter, when the massive equities selloff in the US, as well as interest rate rises, coincided with oil prices nosediving.

Here are some of the key factors that fueled the oil market this year:

1. Stock, oil markets moving together
The global equities collapse in the forth quarter — exacerbated by the US Federal Reserve’s signals that it plans to keep increasing interest rates — coincided with a steep drop in oil prices. That followed a similar scenario in early February, when oil prices and US stocks fell sharply in parallel. Analysts see this link persisting in the immediate future. “For the time being, the stock market and the oil market will echo each other,” Ahn Yea-Ha of Kiwoom Securities in Seoul told Reuters. “Global economic slowdown worries have been weighing on stock market movements, and oil prices are not free from those concerns.”

2. OPEC+ success in stabilizing markets
This year proved that the historic OPEC+ agreement — in which the producer group and several others, led by Russia, agreed to slash oil output — could have success in helping to balance the market. Oil price movements have taken a gradual upward trend since the beginning of 2017, when OPEC+ began its output cut of 1.8 million barrels per day (bpd). While prices retreated in the last quarter of this year, compliance with a new agreement to cut by 1.2 million bpd, which starts in January, will be of vital importance to the market in 2019. Yet it is premature to judge how effective the output-cuts strategy will be before it kicks in.

3. IEA injects dose of pessimism
Throughout much of 2018, the Paris-based International Energy Agency (IEA) neglected the largely bullish sentiment in the physical oil market — and instead put out pessimistic forecasts. For example, the IEA started to insinuate that the global oil market is firmly in the shale era, and that output growth from the US will offset OPEC+ cuts in 2019. Yet all the evidence shows that the IEA’s goal is to push down oil prices. On top of that, contradictions emerge when the IEA’s oil market reports and one-off announcements are scrutinized, leading to questions about the IEA’s reading of market fundamentals.

4. Higher demand means there’s room for shale
Global oil demand recently passed the 100 million bpd mark. And as demand grows, there will be room in the market for shale from the US. The growing oil demand welcomes any new supplies that help the oil market fulfil its need, be it shale or conventional oil outputs.

5. US’ sudden waivers on Iran sanctions
Earlier this year, OPEC producers readied themselves to offset any supply shortages caused by US sanctions on Iranian oil exports, but the US surprised the market with waivers to eight of the major importers. That saw oil prices nosedive amid concerns over a surge in supplies. Yet OPEC+ reacted effectively to this sudden change in US sanctions, through its deal to cut outputs by 1.2 million bpd.

Source : Arab News
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The oil key risks and uncertainties of 2019 - Wood Mackenzie

Brent over USD 80 a barrel always seemed too good to last, defying the fundamentals. The sharp retreat in price may turn out to be a good thing, injecting a healthy dose of reality to the industry at just the right time. We expect Brent to average USD 66 a barrel in 2019. That’s a tad down on 2018 though still a price that allows companies to generate free cash flow and continue to strengthen finances. It may sound benign, but numerous identifiable risks and uncertainties lurk in the shadows. I picked out ones Wood Mackenzie’s analysts worry could threaten our base case.

Economic slowdown and oil demand:
Alarm bells are starting to ring. Demand growth has been a pillar of strength for the oil market since prices fell and demand growth has exceeded 1 million barrels per pay (b/d) every year since 2012. We forecast demand growth of 1.1 million b/d in 2019, but the trend is at risk. China-US trade conflict and political tensions are dragging the global economy down. An inversion of the US yield curve, where short-term borrowing costs exceed long-term, is imminent. Inversion has proved a reliable indicator of recession in previous cycles. A modest slowdown in the global economy would push oil demand growth down by 0.8 million b/d in 2020 compared with our base case. A severe recession could wipe out oil demand growth altogether by 2020.

Tight oil upside:
Can US lower 48 production outperform again? Tight oil stunned the oil market in 2018, not for the first time. Volumes increased by 1.5 million b/d, delivering 0.5 million b/d more by the end of the year than we had forecast at the start, mostly from the Permian. Operators completed more wells and were able to get the oil to market despite pipeline constraints. We forecast 1.1 million b/d of growth in 2019, and again there could be upside risk. Big M&A deals in 2018 – such as Concho Resources/RSP Permian and Diamond/Energen – are all about creating value from scale. Operators that doubled down on the Permian will want to justify their acquisitions with guidance-beating production growth in 2019.

OPEC and Iran:
Iran’s exports plunged from 2.8 million b/d in April to 1.1 million b/d by year-end as buyers withdrew to comply with US sanctions imposed in November. Exports could increase by 0.3 million b/d under the terms of the 120-day waivers granted to China, India, Italy, Greece, Japan, South Korea, Taiwan and Turkey. When the waivers end in May, the outcome is potentially binary. Renewal may force OPEC, at its June meeting, to cut production again for H2 2019. No renewal takes more Iranian crude off the market, opening the door for OPEC to lift its self-imposed production constraints.

Compounding effect of underspend:
Oil supply may be the least of the market’s problems at present. But are we in danger of sleepwalking towards a supply squeeze? A fifth year of low global conventional spend and cherry picking the best projects leaves hoppers increasingly depleted. The retreat in oil price likely nips in the bud any urge to relax capital discipline. Good for near-term returns, but not for the sustainability of the business in the longer term. A return to organic growth must come at some stage to deliver the new volumes to meet a looming supply gap beyond the mid-2020s. Full-cycle exploration returns, back in double digits, are attractive again. Given lead times from discovery to production, the industry may come to rue its present lack of investment in exploration.

Downstream and the IMO:
The entire refining value chain needs to adjust in the next 12 months for the 2020 regulation on marine fuels. Sulphur content must be cut from 3.5% (high sulphur fuel oil, or HSFO) to 0.5% (very low sulphur fuel oil, VSLFO). This is a big deal for refiners, affecting 3.5 million b/d of HSFO volumes. It will impact crude prices, differentials, product prices and refining margins. There are huge uncertainties. What will be the level of global compliance? How many ships will install scrubbers to allow them to burn HSFO? How much VLSFO can refiners produce and what will be its price?

Source : Strategic Research Institute
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Basic-Fit -3,43%
Pharming -3,19%
TomTom -3,01%