A calmer view on oil market volatility

The Oilholic is just about to end his latest visit to Oslo, Norway following a two-day energy technology event but decided to stop en route to the airport to admire the calm waterfront off the Fornebu business district. Here's a view of the Fornebukta. Its serenity is as far removed from the ongoing kerfuffle in oil market as can be.

Both Brent and WTI ended the month of May some 11% lower, with the market just not buying the geopolitical risk angle following attacks on tankers off the Port Of Fujairah. 

Now it seems two more tankers have been attacked in the region, but apart from a brief uptick, the bears are still in control. The WTI is well below $60 per barrel, and Brent is struggling to hold the floor at $60. That's because regardless of the market discourse over geopolitical risks in the Middle East and US-Iran tensions; what's actually weighing on the market is the trade tension between US and China. 

Were that to be resolved, it would in the Oilholic's opinion be a much bigger bullish factor than skirmishes in the Middle East. Another factor is what is OPEC going to, or rather isn't going to, do next? Its ministers' meeting for April was postponed to June 25-26, and now it seems that going to postponed again to July. All of that at a time when the market remains cognisant of the fact that the cartel does not have an exit strategy for the cuts drive. 

Here is this blogger's latest take on the subject for Rigzone published overnight. OPEC is doing a balancing act of compromising its market share in a bid to support the price; but its a temporary stance that can be prolonged, but one that cannot become a default position give US production is tipped to rise over the short-term.

Additionally, should the Russians call off participation in the ongoing OPEC and non-OPEC cuts of 1.2 million barrels per day (bpd); the desired effect of any standalone cuts made by the cartel of the sort it made in the past, would not be quite the same given the ongoing cooperation in itself is extraordinary in nature, and has held firm since December 2016, for the market to price it in as such. 

Many fellow analysts here in Oslo share the same viewpoint. OPEC's production came in at a record low of 30.9 million bpd in May, according to the latest S&P Global Platts survey. That's the lowest level since February 2015, before Gabon, Equatorial Guinea and Congo joined, and when Qatar was still a member.

How the cartel reasserts its credibility is anyone's guess but all things considered, it remains difficult to see crude oil benchmarks escape the $50 to $70 price bracket anytime soon. That's all from Oslo folks! But before this blogger take your leave here's another view of the scenic, albeit rain-soaked Oslofjord (above right). It was a pleasure visiting Norway again, reconnecting with old friends and contacts and making yet newer ones. Keep reading, keep it 'crude'!

To follow The Oilholic on Twitter click here.

To email: gaurav.sharma@oilholicssynonymous.com

© Gaurav Sharma 2019. Photo 1: Fornebukta, Fornebu, Norway. Photo 2: Oslofjord, Oslo Norway © Gaurav Sharma June, 2019.

Two tech-heavy 'crude' days at Ignite 2019

The Oilholic has spent the last two days in Oslo, Norway attending energy software firm Cognite's annual Ignite 2019 conference at the City's H3 Arena. 

Founded by entrepreneur John Markus Lervik, this energy software start-up majority-owned by Norwegian investment firm Aker, has been making waves in the oil and gas industry as a provider of advanced data and digitization services. 

The firm's industry solutions and analytics bank on operations and equipment sensors that help boost efficiency, throughput and reduce costs by several multiples – something oil and gas players can easily relate to especially in the current volatile oil price climate and pressure for lower breakevens. 

Within just over three years (and counting) of its founding, Cognite has bagged nearly 30 customers including big names such as OMV, Aker BP and Lundin Petroleum. Ignite 2019 was the company's attempt at showcasing what it can offer and trigger debates and dialogues about process efficiencies and optimisation.

Inevitably, in the age of advanced analytics and artificial intelligence, much of the discourse centred on 'Big Data for 'Big Oil'. The conference was supported by companies such as Cognizant, Google, Framo, Siemens, National Instruments and Aker BP to name a few. Nikolai Astrup, Minister of Digitalization of Norway, started proceedings declaring "data is gold."

The minister went on to note: "If we refine, manage and share data appropriately it will lay the foundation for better and more effective public services, new industry successes and create jobs. 

"The Norwegian government has just launched an ambitious digitalization strategy, making us a pioneer in creating good public services for citizens, businesses and the voluntary sector."

A packed agenda saw several speakers outline the kind of efficiencies their digitisation efforts are bringing about and the results they have yielded. For instance, here is the Oilholic's report for Forbes on how Austria's OMV has managed to lower its production costs from $15 per barrel down to $7 per barrel.

While the job of impressing the sector and bagging clients is well underway, and Cognite's product suite is helping the company to grow profitably, further capital for expansion will be needed. To that end, this blogger sat down with Lervik to discuss his future plans, including those for a possible initial public offering. Here's this blogger's full interview for Forbes in which Lervik also discusses Cognite’s expansion to Asia and North America. 

Following an evening of networking over some fun music and drinks on day one, day two brought more efficiencies discussions to the fore, not necessarily digressing from the oil and gas industry theme but including renewables and low carbon as vital topics.

As were the subjects of advanced data analytics and cloud computing, with Darryl Willis, VP Oil, Gas & Energy at Google Cloud, telling Ignite 2019 delegates that every industry, including energy, will be grappling with data as the new common denominator. "Data science to real time monitoring aided by cloud computing and data analytics would only be to the industry advantage."

Plenty more articles coming up from the deliberations for Forbes, Rigzone and Energy Post over the next few weeks, but that's all from Ignite 2019 on that note. After a few more meetings in Oslo, it'll be time for the big bus home. Keep reading, keep it 'crude'!

To follow The Oilholic on Twitter click here.

To follow The Oilholic on Forbes click here.

To email: gaurav.sharma@oilholicssynonymous.com

© Gaurav Sharma 2019. Photo 1: Oslofjord Ferry Pier, Oslo, Norway. Photo 2: Nikolai Astrup, Minister of Digitalization of Norway speaks at Ignite 2019 at the H3 Arena in Oslo, Norway. Photos 3&4: Glimpses of networking floor at Ignite 2019 © Gaurav Sharma, June 2019.