Showing posts with label Brent front month contract. Show all posts
Showing posts with label Brent front month contract. Show all posts

Wednesday, February 14, 2024

On modest crude price gains and more

In what's coming up to mid-February, oil benchmarks are largely holding on to geopolitical risk gains made since the start of the month. That's after the U.S. response to an attack on its military base in Jordan allegedly by Iranian-backed militia and Israel's rejection of a ceasefire in Gaza.

Of late, Brent futures have found support around $80 per barrel mark but it remains to be seen whether the level will hold. For what its worth, the global proxy benchmark still remains in technical backwardation. It was though bemusing to read a recent Financial Times editorial declaring "The days of $100 oil prices are over" in a rapidly decarbonising world where "demand will continue but potential world supply is likely to peg back the cost." Indeed. 

In fact, it's something yours truly agreed with former BP boss Bob Dudley back in 2017 at the World Petroleum Congress in Istanbul, who if the Oilholic recollects well, was positioning his company to even weather a $30 per barrel oil price. Speaking of CEOs, Occidental's boss Vicki Hollub told Business Insider that oil oversupply may well be keeping prices low, but the situation is about to flip! 

And of course, Goldman Sachs analysts reckon we may be about to enter a commodities supercycle with a potential for driving oil prices as high as - yup you guessed it - $100 per barrel. Well we shall see, but for now $70-$80 will do, and the Oilholic seriously doubts we'll hit $100 imminently! Elsewhere, oil giant BP hiked its dividend by 10% and accelerated the pace of share buybacks in a bid - by its new CEO Murray Auchincloss - to woo investors

And finally, here is one's take via Forbes on US President Joe Biden's arguably barmy plan to pause the approvals of new LNG export projects for a review. All at a time when his country has become the world's largest LNG exporter! Clever eh? Well that's all for now folks. More market thoughts to follow later in the month. Keep reading, keep it here, keep it 'crude'! 

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© Gaurav Sharma 2024. Photo © Terry McGraw from Pixabay.

Friday, June 28, 2019

Giving OPEC 176 a miss, but not Vienna

As far as OPEC meetings go, the Oilholic hasn't missed a single one since 2008. Alas, the run had to come to an end at some point and the 176th OPEC Ministers Meeting on July 1-2 will be that point. 

However, it is not for lack of trying. In farcical circumstances, OPEC postponed the meeting twice, from April to June to finally the stated July date. Other business, family and personal commitments, as well as business meetings already penned in Vienna around OPEC's June dates (of June 25-26) could not be rearranged for a second time running. 

Hence, the Oilholic found himself in the Austrian capital the week before with the rare luxury of not having to spend most of his time camped at OPEC's hub of Helferstorferstrasse 17. Instead, a stroll past Katholische Kirche St. Peter (St. Peter's Catholic Church) nearby admiring its entrance in 35 C sunshine was a nice short distraction from 'crude' matters this week. 

Nevertheless, and not to digress, this blogger does not believe he will be missing anything too dramatic. A rollover of OPEC's ongoing 1.2 million barrels per day (bpd) cuts along with 10 Russia-led non-OPEC producers is more or less guaranteed. Not least because the organization lacks a clear exit strategy for the cuts, as one opined on Rigzone

If OPEC ditches the cuts, the result would be bearish for the oil market. If it expands the cuts, the result would be bullish over the short-term, only to boost further non-OPEC production accompanied by a subsequent bearish drag further down the line. 

Fellow industry analysts, academics and researchers the Oilholic interacted with here in Vienna are of a similar mindset; and inventory rebalancing – the official line for instituting the cuts – remains as rocky as ever while OPEC continues to bleed market share as it produces fewer barrels.

Data aggregators say OPEC production is at its lowest since in quite a while. According to a Reuters survey, OPEC pumped 30.17 million bpd in May, down 60,000 bpd from April and the lowest output total on record since 2015. 

The Oilholic expects at least a six-month rollover at the stated cuts level of 1.2 million bpd with Saudi Arabia, as usual, carrying most of the burden. At some point, something has got to give. However, the July 1-2 summit will not be that point.

Away from OPEC chatter, the Oilholic also visited Austrian giant OMV's imposing headquarters in Vienna to discuss market permutations, the evolving global fuel mix and the company's take on the energy landscape.

More on that to follow shortly but in the meantime, here is a conversation on Forbes’ behalf with David Gilmour, boss of BP Ventures, the oil giant's venture capital funding arm that's looking to future proof the FTSE 100 company.

That's all from Vienna folks. Some post-OPEC analysis to follow from London next week! Keep reading, keep it 'crude'!

Addendum I (30.06.19): Upon his arrival in Vienna, well before the OPEC meeting has even begun Saudi Oil Minister Khalid Al-Falih has already said he is in favour of a “6 to 9 month” rollover of the output cut, and preferably "9 months."

Addendum II (30.06.19): Remember that bit about risking market share, well here’s some analysis by Bloomberg, ahead of the ministers’ meeting suggesting that OPEC’s output is on track to slide below 30% of the global market share for the first time in three decades. Q.E.D. 

Addendum III (30.06.19): OPEC members’ compliance rate with oil production cuts stood at 163% in May, according to S&P Global Platts. 

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© Gaurav Sharma 2019. Photo 1: Katholische Kirche St. Peter. Photo 2: Headquarters of OMV, Vienna, Austria © Gaurav Sharma, June 2019.