Back in Houston town for CERAWeek

The Oilholic is back in Houston, Texas for the 2017 instalment of IHS CERAWeek; one of the world’s largest gatherings of oil and gas policymakers, executives, movers and shakers alike.

An early start to an empty lobby (see left) and a late finish (as yet to follow) are all but guaranteed, and it’s only day one! 

The morning began with the International Energy Agency’s Executive Director Fatih Birol telling us another supply glut courtesy of rising US shale production was around the corner (report here). 

Then Indian Petroleum Minister Dharmendra Pradhan told scribes it was an oil buyers’ market as far as he was concerned, and that he is not averse to the idea of India buying crude from the US, now that Washington permit unrefined exports. Take that Opec! (More here).

By the way, a rather large Russian delegation appears to be in town, led by none other than energy minister Alexander Novak himself. When put on the spot by IHS CERA Vice Chairman Daniel Yergin, the Kremlin’s top man at CERAWeek said Russia will achieve a 300,000 barrels per day (bpd) production cut by the end of April. 

However, Novak said Russia will not decide on extending its production cut deal with Opec and 10 other non-Opec producers until the middle of 2017.

Late afternoon, ExxonMobil’s relatively new boss Darren Woods put in a refined performance unveiling a $20 billion downstream investment plan, which is sure to delight President Donald Trump. (More here)

That’s all from CERAWeek for the moment folks. Keep reading, keep it ‘crude’! 

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© Gaurav Sharma 2017. Photo: Entrance to IHS CERAWeek 2017 in Houston, Texas, USA © Gaurav Sharma.

IPWeek & a crude 'will they, won't they'

The Oilholic joined the great and good of the oil and gas business at the 2017 International Petroleum Week being held in London, with the question on everyone's mind - will OPEC and its new found 11 non-OPEC pals extend their agreed production cuts - in place until the summer - beyond June?

Opec Secretary General Mohammed Sanusi Barkindo promised a "high" level of compliance with the cuts, and dismissed the sceptics. 

Later in the week, Qatari Energy Minister Mohammed Bin Saleh Al Sada, in town to collect his gong as the 'International Energy Diplomat of the Year', hinted that OPEC could indeed extend the cuts beyond the summer by suggesting the oil market might not rebalance before the third quarter of the year. 

Although, the minister did attach a caveat, claiming it was "premature" to indulge in chatter about what may or may not happen in the summer. Who knows for now, but as the oil price is stuck in the $50s and is going nowhere fast, many of the long bets are indeed predicated on OPEC extending its cuts for another three months beyond June. 

Away from the 'will they, won't they' of producers, yours truly was also delighted debate the level of transformation Arab National Oil Companies are likely to undergo over the coming years at an IPWeek debate, organised by our old friends at Gulf Intelligence. With the industry on the cusp of profound change, it is worth watching this space. However, it will take time. 

That's all for the moment folks. Next major event on the horizon - IHS CERAWeek in Houston, Texas. Keep reading, keep it 'crude'!

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© Gaurav Sharma 2017. Photo: Gaurav Sharma (left) with Paul Young of the Dubai Mercantile Exchange at the International Petroleum Week 2017, GI debate on transformation of Arab NOCs, February 22, 2017 © Gulf Intelligence.

This week, that crude year!

With the oil price barely moving from its current $50 per barrel circa, it’s worth looking back at how the market panned out in 2016.

In fact this week, that year we grappling with sub $30 prices and threatening to go lower. That's when OPEC initiated chatter of a production cut around February, before eventually executing it much later in the year on November 30, and bringing 11 other non-OPEC producers, especially the Russians, along for the ride. (Click to enlarge chart)

The uptick in the wake of the ‘historic’ agreement saw crude prices bounce to where they currently are and no further. So taking the 12 months of 2016 as whole, Brent began the year at around $37.28, flirted briefly with sub-$30 prices and ended the year at $56.82; a gain of 52.4% between the first and last full trading Fridays of 2016.

Concurrently, the West Texas Intermediate rose from $37.04 to $53.72; a gain of 45% between the first and last full trading Fridays of 2016. The Oilholic acknowledges that percentages are relative, but would be astonished if 2017 ends in similar gains. That’s all for the moment folks! Keep reading, keep it ‘crude’!

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© Gaurav Sharma 2017. Graph: Oil benchmarks - Friday closes for 2016 © Gaurav Sharma.

‘Crude’ recollections of a former OPEC bigwig

For over two decades, every word Ali Al-Naimi uttered was lapped up by the oil market. It wouldn’t be otherwise, if you were the oil minister, as he once was, of OPEC heavyweight Saudi Arabia between August 1995 and May 2016.

So when Al-Naimi’s memoir – Out of the Desert: My Journey from Nomadic Bedouin to the Heart of Global Oil – appeared on the horizon barely a few months into his retirement, global headlines were all but guaranteed, especially at a time of extreme volatility and a once in a generation market dynamic shift in the global crude world.

Yet, before the world got to know Al-Naimi as the oil market heavyweight, there was the nomadic shepherd boy born of humble beginnings in Eastern Arabia who dreamt of making it big.

In a memoir of over 300 pages, split by 19 chapters, Al-Naimi recounts his extraordinary journey, from an office boy in 1947 at oil company Aramco, to the CEO’s chair in 1988 of the then state-owned Saudi Aramco.

Al-Naimi’s recollections send the reader alternating from human interest sentiment to hard core global geopolitics, inner workings of the oil industry to the deals in the corridors of power, corporate decisions to political manipulation. There’s a bit of everything, and more of what you would come to expect of a global political figure. Afterall, power, politics and that precious natural resource called oil go hand in glove.

Having interacted in a journalistic capacity with Al-Naimi at several OPEC meets prior to his retirement, I often heard the industry veteran quip that in his career he had seen the oil price drop to as low as $2 and climb as high as $140 a per barrel. This book will help you get some perspective.

Even before it hit the shelves, media outlets as diverse Forbes, Bloomberg and the International Business Times, were writing news stories based on excerpts from it in a bid to take Al-Naimi’s thoughts and help them decode, how for instance talks between OPEC and non-OPEC oil producers would pan out.

From OPEC’s traditional mistrust of Russia, to everyone in the oil business looking at the Saudis to cut, Arab oil embargo to the collapse of Lehman Brothers, Al-Naimi has catalogued implications of such events for the oil market. For instance, Al-Naimi claims that in a situation akin to the crisis of demand seen in 2008-09, when the 2014 supply glut crisis hit, everyone expected the Saudis to act but offered no help with sharing the burden.

An already brilliant narrative is enhanced by a peppering of market anecdotes previous unheard of which the Oilholic enjoyed reading. The book’s appeal is universal. That said students of history, oil industry observers, industry analysts and geopolitics enthusiasts ought to regard it as a must read.

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© Gaurav Sharma 2017. Photo: Front Cover – Out of the Desert: My Journey from Nomadic Bedouin to the Heart of Global Oil By Ali Al-Naimi © Penguin Publishers, 2016.

Merry Christmas & a few crude notes!

Yes! Its that time of the year to wish you the dear readers of this blog the joys of the season and a very Merry Christmas, as another eventful year comes to a close. The Oilholic has been busy these past few weeks scribbling one's crude notes on oil market affairs for the International Business Times UK and Forbes. 

For starters, here is this blogger's take on US President-elect Donald Trump's nomination of ExxonMobil CEO Rex Tillerson as his Secretary of State. 

When the news emerged, as usual there were oversimplifications in the media, saying the nomination had much to do with Tillerson being close to Russian President Vladimir Putin. However, the Oilholic believes there's much more to the appointment; Tillerson for intents and purposes would be a formidable top US diplomat, not just Putin's mate. 

Additionally, here is one's commodities market year-ender, and some predictions on gold, silver and of course crude oil for 2017. Finally, here are some reasons - as outlined on Forbes - for why methinks the oil price might not rise further beyond $60 per barrel in 2017, as there is limited upside to such an an occurrence over the next 12 months. 

That's all on Christmas day folks! Keep reading, keep it Christmasy and 'crude'!

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© Gaurav Sharma 2016. Photo: Christmas tree at Rotterdam Station, The Netherlands © Gaurav Sharma.