Oil Field News

OPEC Sees ‘Healthy’ Oil Demand Growth to 2022

Oil demand will grow at a “healthy pace” over the next five years as renewables show the fastest expansion of any type of energy, the head of the Organization of Petroleum Exporting Countries said.

 Crude demand will climb an average 1.2 million barrels a day through 2022 and slow to 300,000 barrels a day in 2035 to 2040, OPEC Secretary General Mohammad Barkindo said Sunday in Kuwait, giving a preview of OPEC’s 2017 World Oil Outlook set to be released Nov. 7. The share of fossil fuels in the global energy mix will slip below 80 percent by 2020 and fall to 75.4 percent by 2040, he said.

Wind, solar, geothermal and photovoltaic sources will be the fastest-growing energy, increasing by an average of 6.8 percent a year from 2015 to 2040, though still accounting for less than 5.5 percent of the world’s total energy mix by 2040, he said.

Barkindo discussed his outlook for oil demand as OPEC and allied producers wrestle with a global oversupply that has dragged crude prices to half the level of their 2014 peak. OPEC, Russia and other suppliers are debating whether to extend output cuts that are set to expire in March, in an effort to drain the glut -- fed partly by U.S. shale -- and shore up prices. Benchmark Brent crude, which ended Friday trading at $57.17 a barrel, is up 0.6 percent this year as the cuts, which began in January, have taken effect. OPEC plans to meet next month in Vienna to weigh its options.
 
“The medium-term outlook for oil demand is for a significant increase to 2022 with a healthy average annual increase,” Barkindo said. “In the global energy mix, we see fossil fuels retaining a dominant role albeit with a declining overall share through 2040.” 

‘Rapidly Improving’

With the global economy growing and oil demand expected to grow by 1.45 million barrels a day this year, oil market indicators are “rapidly improving,” Barkindo said. Inventories in developed nations stood at the beginning of the year at 338 million barrels above the five-year average, OPEC’s main criteria for assessing the re-balancing of the market. In August, they were at 159 million barrels, he said.

The amount of crude in floating storage has also declined, down an estimated 40 million barrels since the start of the year, he said. Backwardation in the Brent market is one more sign of improving market conditions, Barkindo said.

“Retaining sustainability in market stability beyond 2018 is an absolute prerequisite for investments to be able to cover future oil demand.,” Barkindo said. “Beyond our forecasts and the positive momentum we are seeing now, there is still the fundamental need to ensure sustainable stability, so that the market does not stall once the necessary stocks are withdrawn.”

SOURCE: BLOOMBERG

CANADA FX DEBT-C$ nudges lower as investors weigh NAFTA uncertainty

(Adds analyst quotes, details, updates prices) * Canadian dollar at C$1.2467, or 80.21 U.S. cents * U.S. crude prices slide 1.4 percent * Loonie touches its strongest intraday since Sept. 29 * Bond prices higher across the yield curve By Fergal Smith TORONTO, Oct 12 (Reuters) - The Canadian dollar was marginally weaker against its U.S. counterpart on Thursday, pulling back from an earlier near two-week high as oil prices fell and investors weighed an uncertain outlook for the North American Free Trade Agreement. Prospects of the United States introducing a sunset clause into the NAFTA agreement, which would kill it unless it was renegotiated every five years, had only a brief negative impact on the currency. "Most of these proposals that are being exchanged are viewed by the market as just noise," said Andrew Kelvin, senior rates strategist at TD Securities. "The market won't react until it becomes apparent what if any the final agreement will be." Prices of oil, one of Canada's major exports, slipped. The market was pressured by a bearish outlook by the International Energy Agency, which lowered its forecast for oil demand for 2018. U.S. crude prices were down 1.4 percent at $50.60 a barrel. At 4 p.m. (2000 GMT), the Canadian dollar was trading at C$1.2467 to the greenback, or 80.21 U.S. cents, down 0.1 percent. The currency's weakest level of the session was C$1.2491, while it touched its strongest since Sept. 29 at C$1.2434. Canadian home resale prices in September had their biggest fall in seven years, while new home prices were flat in August in the once red-hot markets of Toronto and Vancouver, adding to evidence that the country's housing boom continued to cool, data showed. Canadian government bond prices were higher across the yield curve, with the two-year up 2.1 Canadian cents to yield 1.568 percent and the 10-year rising 23 Canadian cents to yield 2.084 percent. (Reporting by Fergal Smith; Additional reporting by Solarina Ho; Editing by Susan Thomas and Peter Cooney)

SOURCE: REUTERS

CANADA STOCKS-TSX retreats as energy stocks pressured by oil prices

(Updates closing figures and adds analyst comment)

* TSX down 58.20 points, or 0.37 percent, to 15,742.20

* Seven of the TSX’s 10 main industry groups fell

 By Solarina Ho

TORONTO, Oct 12 (Reuters) - Canada’s main stock index pulled back from a 7-1/2-month high on Thursday with broad declines led by energy stocks under pressure from weaker oil prices.

Suncor Energy Inc was the biggest drag on the index, falling 2.2 percent to C$42.06. It was followed by Canadian Natural Resources Ltd, which declined 2 percent to C$40.66.

The overall sector retreated 1.7 percent, as oil prices fell. A bearish 2018 outlook for oil demand by the International Energy Agency weighed on the market. U.S. crude prices settled down 1.4 percent at $50.60 a barrel.

Other influential decliners included Shaw Communications Inc , which slid 3.7 percent to C$27.49 and Kirkland Lake Gold Ltd, which tumbled 8.9 percent to C$16.85.

Desjardins cut its rating on Kirkland Lake to “hold” from “buy” after the company released quarterly and production results.

The overall materials sector, home to mining firms and other resource companies, lost 0.2 percent.

The Toronto Stock Exchange’s S&P/TSX composite index fell 58.20 points, or 0.37 percent, to end at 15,742.20.

Of the index’s 10 main groups, seven were in negative territory.

The retreat comes amid a backdrop of uncertainty surrounding the North American Free trade Agreement, with negotiations on the pact turning increasingly sour and talks of a “sunset clause” that would automatically terminate NAFTA every five years unless there were fresh negotiations.

“The market doesn’t like change, so I think it would be perceived initially as negative,” said Michael Sprung, president at Sprung Investment Management about the potential impact of such a clause.

“But we do a lot of cross border trade. I can’t see how in the long-term that’s going to change very much ... I really think things would adjust.”

 Financial services stocks fell 0.4 percent, with Bank of Nova Scotia down 0.8 percent at C$80.21.

On the positive side, Alimentation Couche Tard Inc rose 3.9 percent to C$61.24. The company is buying back 4.4 million of its shares that were held by Metro Inc and Eight Capital upgraded the company to a “buy” from “neutral,” citing positive trends. The overall consumer staples sector added 0.7 percent.

Declining issues outnumbered advancing ones on the TSX by 151 to 93, for a 1.62-to-1 ratio on the downside. (Reporting by Solarina Ho; Editing by Bernadette Baum and Lisa Shumaker)

SOURCE: REUTERS

CANADA FX DEBT-C$ retreats from near 2-week high as oil falls

* Canadian dollar at C$1.2477, or 80.15 U.S. cents * U.S. crude prices slide 1.85 percent * Loonie touches its strongest intraday since Sept. 29 * Bond prices higher across the yield curve TORONTO, Oct 12 (Reuters) - The Canadian dollar edged lower against its U.S. counterpart on Thursday, pulling back from an earlier near two-week high, as oil fell and the greenback rose against a basket of major currencies. Prices of oil, one of Canada's major exports, slipped as U.S. fuel inventories rose despite efforts by the Organization of the Petroleum Exporting Countries to cut production. U.S. crude prices were down 1.85 percent at $50.35 a barrel. The U.S. dollar got a boost from data showing a rise in producer prices. On Wednesday, the greenback had retreated after minutes from the latest Federal Reserve meeting showed that some officials worried about persistent low inflation. At 9:41 a.m. ET (1341 GMT), the Canadian dollar was trading at C$1.2477 to the greenback, or 80.15 U.S. cents, down 0.1 percent. The currency's weakest level of the session was C$1.2490, while it touched its strongest since Sept. 29 C$1.2434. In domestic data, new home prices rose less than expected in August as prices were unchanged in a number of markets, including the cities of Toronto and Vancouver, which have been the country's hottest regions, Statistics Canada said. Separate data showed that prices for repeat sales of single-family homes declined 0.8 percent in September from the month before. It was the first monthly decline since January 2016 and the biggest since September 2010. Canadian government bond prices were higher across the yield curve, with the two-year up 2.1 Canadian cents to yield 1.568 percent and the 10-year rising 9 Canadian cents to yield 2.101 percent. Bank of Canada Senior Deputy Governor Carolyn Wilkins will participate at 3:15 p.m. ET (1915 GMT) on a panel discussing the future of paper currency at the annual meeting of the Institute of International Finance. (Reporting by Fergal Smith; Editing by Susan Thomas)

SOURCE: REUTERS

CANADA FX DEBT-C$ firms against weaker U.S. dollar as oil prices rally

(Updates throughout with closing price, analyst comments) * Canadian dollar at C$1.2511, or 79.93 U.S. cents * Loonie touches its strongest since Thursday * U.S. crude prices climb 2.7 percent * Bond prices higher across the yield curve By Solarina Ho TORONTO, Oct 10 (Reuters) - The Canadian dollar strengthened against a softer greenback on Tuesday as oil prices rallied, while domestic housing data also provided support. Planned export cuts by Saudi Arabia and other signs of market rebalancing drove oil prices higher, with U.S. crude futures jumping 2.7 percent to settle at C$50.92 a barrel. The typically tight correlation between prices of oil, a major Canadian export, and the loonie had broken down in recent months as central bank monetary policy decisions steered investor direction. "We find this reversal in the Canadian dollar a little bit more commodities driven than rates driven," said Don Mikolich, executive director, foreign exchange sales at CIBC Capital Markets. "That has provided the momentum that has been absent for a while." At 4:00 p.m. ET (2000 GMT), the Canadian dollar was trading at C$1.2511 to the greenback, or 79.93 U.S. cents, up 0.3 percent. The loonie, which has weakened some 4 percent since early September after the Bank of Canada dampened further rate hike expectations and said it was monitoring the currency's movements, traded between C$1.2484 and C$1.2555 on Tuesday. Canada's bond and stock markets were closed on Monday, the Canadian Thanksgiving Day holiday. Earlier in the session, separate data showed that Canadian housing starts dipped in September, but did not fall as much as expected, capping another quarter of strong home building growth, though a drop in August building permits suggested the long boom is cooling. "I think the housing starts number this morning was certainly a positive plug for the Canadian dollar. People had been looking for some signs of softening," said Mikolich. Domestic data on Friday showed a pickup in wages and reduced worries that the economy will slow in the second half of the year. Speculators have raised bullish bets on the loonie to the highest since November 2012, data from the U.S. Commodity Futures Trading Commission and Reuters calculations showed on Friday. Canadian government bond prices inched higher across the yield curve, with the two-year up half a Canadian cent to yield 1.548 percent and the 10-year up 6 Canadian cents to yield 2.12 percent. Canadian Prime Minister Justin Trudeau will meet President Donald Trump on Wednesday. He will try to persuade the U.S. leader to focus on Mexico as a source of potential problems at talks to update the North American Free Trade Agreement. (Reporting by Solarina Ho and Fergal Smith; editing by Susan Thomas and Grant McCool)

SOURCE: REUTERS

Canadian Oil's High-Priced Run Set to End as Supply Surges

Cnadian oil-sands producers enjoying the strongest market for heavy crude since 2008 will soon face a renewed glut.Suncor Energy Inc. expects its Fort Hills oil-sands mine to begin producing by year end, reaching as much as 175,000 barrels a day within a year. The startup will roughly coincide with the completion of planned maintenance at Imperial Oil Ltd.’s Kearl mine.

The additions will fill pipelines, such as Enbridge Inc’s Mainline, that move barrels to refining centers and force more crude-by-rail shipments, pressuring prices, said Carl Evans, an oil analyst at Genscape Inc. in Boulder, Colorado, by phone on Tuesday.

“If the mainlines can’t do any more, you are going to have to see prices to encourage movement by rail,” he said.

 Western Canadian Select will probably trade at a $12-to-$15 a barrel discount to West Texas Intermediate futures by the first quarter versus a differential of less than $10 for part of this year, Evans said. The crude was at $11.15 below WTI on Tuesday.

Shipping by rail is more expensive than by pipeline, generally requiring a bigger discount in the price. As pipelines fill up, crude exports by rail could rise to 400,000 barrels a day early next year, Evans said. That’s up from 92,000 barrels a day in July, National Energy Board data show. 

Western Canadian Select has averaged an $11.44 a barrel discount to WTI so far this year as the Organization of Petroleum Exporting countries cut production of their highest-sulfur and heaviest crudes, which are also the least expensive. At the same time, heavy oil exports from Venezuela to the U.S. have has been undermined by political and economic strife in the Latin American country.

The bigger discounts will be a “structural change” for heavy Canadian crude until new export pipelines such as Enbridge’s expanded Line 3 and Kinder Morgan Inc.’s Trans Mountain expansion are completed as early as 2019, Evans said.

Fuller pipelines contrast with the excess capacity in October and September that Enbridge told shippers was available on its heavy lines 4 and 67 running from Alberta to Superior, Wisconsin.

Light Canadian oils such as synthetic crude that’s produced by running oil sands bitumen through an upgrader may also weaken, though not as much as the heavy crude because more pipeline space will be available, Evans said.

SOURCE: BLOOMBERG

OPEC Secretary General urges U.S. shale oil producers to help cap global supply

NEW DELHI (Reuters) - OPEC’s Secretary General Mohammed Barkindo on Tuesday called on U.S. shale oil producers to help curtail global oil supply, warning extraordinary measures might be needed next year to sustain the rebalanced market in the medium to long term. 

“We urge our friends, in the shale basins of North America to take this shared responsibility with all seriousness it deserves, as one of the key lessons learnt from the current unique supply-driven cycle,” said Barkindo.

 The comments by the Organization of the Petroleum Exporting Countries official came during a speech delivered at the India Energy Forum organized by CERAWeek in New Delhi.

“At the moment we (OPEC and independent U.S. producers) both agreed that we have a shared responsibility in maintaining stability because they are also not insulated from the impact of this downturn,” Barkindo said, referring to a slide in oil prices that spurred OPEC to agree production cuts late last year.

“The call by independents themselves (is) that we need to continue this interaction,” he said.

While OPEC and some other producers, including Russia have cut supplies this year in order to prop up prices, U.S. production has soared by almost 10 percent this year, driven largely by shale drillers. Barkindo said he hoped that new producers, not just U.S. shale drillers, would join production cuts.

On Monday, Saudi Arabia cut crude oil allocations for November by 560,000 barrels per day (bpd), in line with the kingdom’s commitment to the supply reduction pact.

“Demand-supply is returning to rebalance through massive destocking that we have been witnessing of stocks in OECD across regions in a very massive way,” Barkindo said later, speaking to reporters on the sidelines of the conference.

“In the past four months alone, we have seen destocking to the tune of 130 million bpd,” he said.

The aim of the OPEC-led cut is to trim the level of oil in OECD industrialized countries compared with the five-year supply average. Barkindo said the stock overhang to the five-year average stood at 171 million barrels in August, against 338 million at the start of the year.  

“The speed and pace (of destocking) has accelerated as a result of anticipated and projected demand growth in the second half of 2017 to the tune of 2 million bpd. We are witnessing a fast return to a balanced market,” Barkindo said.

Still, on Sunday Barkindo said OPEC and other oil producers might need to take “some extraordinary measures” next year to rebalance the oil market.

World oil demand growth in 2017 is expected at 1.45 million barrels per day (BPD) and it should stay around 1.4 million bpd in 2018, Barkindo said. He said India’s share of global oil demand is expected to rise to over 9 percent by 2040, up from 4 percent now.

Reporting by Nidhi Verma, Promit Mukherjee and Neha Dasgupta; Editing by Kenneth Maxwell

 

SOURCE: REUTERS

OPEC Secretary General urges U.S. shale oil producers to help cap global supply

NEW DELHI (Reuters) - OPEC’s Secretary General Mohammed Barkindo on Tuesday called on U.S. shale oil producers to help curtail global oil supply, warning extraordinary measures might be needed next year to sustain the rebalanced market in the medium to long term. 

“We urge our friends, in the shale basins of North America to take this shared responsibility with all seriousness it deserves, as one of the key lessons learnt from the current unique supply-driven cycle,” said Barkindo.

 The comments by the Organization of the Petroleum Exporting Countries official came during a speech delivered at the India Energy Forum organized by CERAWeek in New Delhi.

“At the moment we (OPEC and independent U.S. producers) both agreed that we have a shared responsibility in maintaining stability because they are also not insulated from the impact of this downturn,” Barkindo said, referring to a slide in oil prices that spurred OPEC to agree production cuts late last year.

“The call by independents themselves (is) that we need to continue this interaction,” he said.

While OPEC and some other producers, including Russia have cut supplies this year in order to prop up prices, U.S. production has soared by almost 10 percent this year, driven largely by shale drillers. Barkindo said he hoped that new producers, not just U.S. shale drillers, would join production cuts.

On Monday, Saudi Arabia cut crude oil allocations for November by 560,000 barrels per day (bpd), in line with the kingdom’s commitment to the supply reduction pact.

“Demand-supply is returning to rebalance through massive destocking that we have been witnessing of stocks in OECD across regions in a very massive way,” Barkindo said later, speaking to reporters on the sidelines of the conference.

“In the past four months alone, we have seen destocking to the tune of 130 million bpd,” he said.

The aim of the OPEC-led cut is to trim the level of oil in OECD industrialized countries compared with the five-year supply average. Barkindo said the stock overhang to the five-year average stood at 171 million barrels in August, against 338 million at the start of the year.  

“The speed and pace (of destocking) has accelerated as a result of anticipated and projected demand growth in the second half of 2017 to the tune of 2 million bpd. We are witnessing a fast return to a balanced market,” Barkindo said.

Still, on Sunday Barkindo said OPEC and other oil producers might need to take “some extraordinary measures” next year to rebalance the oil market.

World oil demand growth in 2017 is expected at 1.45 million barrels per day (BPD) and it should stay around 1.4 million bpd in 2018, Barkindo said. He said India’s share of global oil demand is expected to rise to over 9 percent by 2040, up from 4 percent now.

Reporting by Nidhi Verma, Promit Mukherjee and Neha Dasgupta; Editing by Kenneth Maxwell

 

SOURCE: REUTERS

Petronas' Canadian unit says looking to sell oil and gas asset in Alberta

KUALA LUMPUR, Oct 5 (Reuters) - Progress Energy, the Canadian unit of Malaysian state energy firm Petroliam Nasional Berhad, said on Thursday it was looking to sell its Deep Basin oil and gas asset in the Canadian province of Alberta.

Reuters reported on Wednesday that Petroliam Nasional, or Petronas, had enlisted BMO Capital Markets to advise on the sale of the asset, citing documents on BMO’s website.

“Progress regularly reviews its assets to ensure alignment with the company’s strategy,” it said in an emailed statement to Reuters, adding that it decided to sell its Deep Basin asset following the most recent evaluation.

The sale would allow Progress to focus on future investments in its North Montney assets in Canada’s province of British Columbia, which represents “significant growth opportunity” for the company, it said. (Reporting by A. Ananthalakshmi; Editing by Christian Schmollinger)

SOURCE: REUTERS

Oil rises 2 percent, boosted by potential OPEC deal

NEW YORK (Reuters) - Oil prices rose about 2 percent on Thursday as signs Saudi Arabia and Russia would limit production through next year pushed the U.S. benchmark back above $50 a barrel.

The news outweighed Wednesday’s U.S. data showing record U.S. exports and the return of production at a major Libyan oilfield.

Brent futures LCOc1 settled at $57 a barrel, up 2.2 percent, or $1.20, while U.S. crude CLc1 rose 81 cents, or 1.6 percent, to end at $50.79.

 

Russian President Vladimir Putin said this week that a pledge by the Organization of the Petroleum Exporting Countries and other producers, including Russia, to cut oil output to boost prices could be extended to the end of 2018, instead of expiring in March 2018.

Russian Energy Minister Alexander Novak said on Thursday that Moscow would support new countries joining the agreement to restrict oil supply.

 The statement came as Saudi Arabia’s King Salman visited Moscow.

“Putin and Salman will most likely reach, but not announce, an agreement to extend the OPEC/non-OPEC production deal, though with a commitment to taper the cuts,” said Eurasia Group.

President Donald Trump was expected to announce soon that he will decertify the landmark international deal to curb Iran’s nuclear program, a senior administration official said on Thursday, in a step that could lead to renewed U.S. sanctions against Tehran and could limit Iranian sales of oil.

“It would make it difficult for barrels to be transacted through U.S. dollars,” said Bernadette Johnson, vice president of market intelligence at Drillinginfo.com in Denver. “A lot would continue to flow, but that’s probably a million barrels that is at risk.”

With the increase in prices to above $50, producers have started hedging more heavily, said Johnson.

That would buffer drillers against losses if the price were to decline, which may spur more U.S. production - partially offsetting the OPEC-led deal to cut supply by about 1.8 million barrels per day (bpd).

Other factors also weighed on oil prices, including the return to production of Libya’s Sharara oilfield on Wednesday after an armed brigade forced a two-day shutdown.

U.S. crude oil exports jumped to 1.98 million bpd last week, surpassing the 1.5 million bpd record set the previous week, the Energy Information Administration said.

The increase followed a widening of the discount for U.S. crude against Brent WTCLc1-LCOc1, making U.S. oil attractive on world markets.

SOURCE: REUTERS

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