Month: April 2020

Non-OPEC Oil Production Punches New High

Ovi 172 Comments

A post by Ovi at peakoilbarrel

As I wrote in my previous post, preparing these last two has been a surrealistic exercise. The oil market environment for this post has been even more surrealistic than the previous one and the associated futures contract prices have been extremely volatile this week. The May WTI front month contract went negative on April 20 for the first time ever and closed at negative $37.63/bbl while the June contract closed at $20.43. Today’s settled price, April 24, for the June contract is $16.94.

On April 7th, OPEC + finalized a record oil production cut of 9.7 Mb/d after days of discussion. The 9.7 million bpd cut will begin on May 1 and will extend through the end of June.  The cuts will then taper to 7.7 million bpd from July through the end of 2020, and 5.8 million bpd from January 2021 through April 2022. The 23-nation group will meet again on June 10 to determine if further action is needed.

The lone hold out to the deal was Mexico which was expected to cut 400 kb/d but would only agree to 100 kb/d. This was a real Mexican standoff and Mexico won because they had hedged their oil output and the more the price dropped, the more they made on their hedges. According to this report, they hedged their oil at $49/bbl in January. It was unclear how many barrels were hedged or how much was spent.

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OPEC March 2020 Production Data

Ron Patterson 398 Comments

All OPEC data reflected in the charts below are from the April edition of the OPEC Monthly Oil Market Report. https://momr.opec.org/pdf-download/ The data in in thousand barrels per day and all data is through March 2020.

Though OPEC 13 was up 821,000 barrels per day in March it was still the fourth lowest month in 9 years.

Iran, Libya, and Venezuela are exempt from the agreed on cuts. These three were down a combined 206,000 barrels per day. Those subject to cuts, were up a combined 1,026,000 barrels per day.

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US January Production Drops Again

Ovi 377 Comments

A post by Ovi at peakoilbarrel

Preparing this March post has been a surrealistic exercise. Here I am providing a January US production update when at a time, January, the world had no clue that it was going to be hit with a double Black Swan event in early March . There was a hint in January on the coming pandemic for those who were listening. However, there was no clue of the Shock and Awe attack that would be launched by SA after Putin and his Oily Oligarch friend Sechin made the wrong move in the world’s Oil Chess Game. Russia thought that they had SA in Check, instead Russia and the rest of world were End Played. Now, a way must be found out of this mess. Reports are circulating that Trump and Putin have been talking and that an OPEC + meeting will be convened shortly. Let’s hope adult’s come to the table.

The silver lining, if there is one, is that the world will need lower oil prices to come out of the current economic slowdown. The question is, if an agreement can be brokered between US, Russia and OPEC, “What will be the right price for oil for both the producers and the economy?

The irony here is that Trump will be holding meetings with oil company executives shortly to see how the US can help. In the meantime the NOPEC (No Oil Producing and Exporting Cartels Act) bill keeps circulating within Congress. Interesting how the world, US positions and thinking, can be flipped upside down over night.

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