Tag: The Organization of the Petroleum Exporting Countries (OPEC)

U.S. Crude Oil Exports Could Mean Stocks Are Dropping Elsewhere

Posted on by Robert Boslego

Robert Boslego - INO.com Contributor - Energies


Crude stocks built by 0.9 million barrels in the week ending March 24th to end at 534 million barrels, 30.2 million larger than a year ago, setting a new record high. But crude oil exports also surged to 1.010 million barrels per day.

The stated objective of the OPEC production cut is to reduce OECD global inventories back to their five-year average. The U.S. has the largest excess inventories of any OECD country, and also publishes the most transparent, timely data, and so I had expected OPEC to target reductions in its exports to the U.S.

But based on Energy Department statistics for the weeks ending March 24, 2017, U.S. crude imports from Saudi Arabia averaged about 1.240 million barrels per day in the year-to-date. Saudi Arabia is the second largest source of imports behind Canada. That figure was about 30% higher than in the same weeks last year, and about 17% higher than during December, before its production cuts went into effect.

Crude Imports From Saudi Arabia

The Saudi energy minister claimed in December that he was reducing tanker nominations effective January 1, 2017, Saudi exports to the U.S. are 178,000 b/d higher than a year ago. Based on the import numbers for the 12 weeks off 2017, there is no evidence of any Saudi production cut. Continue reading "U.S. Crude Oil Exports Could Mean Stocks Are Dropping Elsewhere" →

Saudi Arabia's Regime Change Risk

Posted on by Robert Boslego

Robert Boslego - INO.com Contributor - Energies


Risks of Saudi Arabia requiring a regime change are increasing, despite the OPEC production and non-OPEC production agreements. Fitch Ratings reduced Saudi Arabia’s rating to A+, the fifth-highest investment grade, and changed the outlook to stable from negative. The downgrade “reflects the continued deterioration of public and external balance sheets, the significantly wider than expected fiscal deficit in 2016 and continued doubts about the extent to which the government’s ambitious reform program can be implemented," Fitch said.

Saudi foreign currency reserves peaked at about $745 billion in 2014. They have dropped to about $525 billion, down $222 billion, or 30%. And despite higher oil prices in January, the reserves fell by $12.5 billion. The IMF has projected that the reserves may be entirely expended by 2020 if world oil prices do not recover sufficiently.

Saudi Arabia Foreign Exchange Reserves
Note: The chart above provides reserves in SAR million

The government had budgeted crude prices in 2017 to average around $53 per barrel. I deduced that from the 2017 Budget of the Kingdom of Saudi Arabia (Page 21): Continue reading "Saudi Arabia's Regime Change Risk" →

OPEC February Compliance 42%

Posted on by Robert Boslego

Robert Boslego - INO.com Contributor - Energies


According to the Kuwait News Agency, Kuwait Oil Minister Essam Abdul Mohsen Al-Marzouq, chairman of the Joint OPEC-Non-OPEC Ministerial Monitoring Committee (JMMC), has stated that February compliance by OPEC was 140%. But according to the figures that OPEC members submitted to the organization, compliance was just 42 percent, relative to the total OPEC ceiling (32.5) in the November 30th Agreement. If those figures are correct, this Agreement is in serious trouble.

Indonesia had been an OPEC member, and its volume (about 750,000 b/d) was included in the ceiling. But it dropped out, and so the new effective ceiling became 31.750 million barrels per day.

In the Agreement, the members chose to use “secondary sources” of their crude production to assess compliance. The idea was to have a more objective measure so individual members could not cheat by submitting low figures to make it seem as if they are complying. Continue reading "OPEC February Compliance 42%" →

Where Will OPEC's Cuts Affect Imports, Inventories?

Posted on by Robert Boslego

Robert Boslego - INO.com Contributor - Energies


OPEC agreed to cut oil production by 1.164 million barrels per day beginning in January. Non-OPEC producers agreed to cut production around 560,000 b/d. The agreements were silent on exports.

Thus far, U.S. crude oil imports have been rising, despite the OPEC-non-OPEC cuts. In the year-to-date, net crude imports averaged 7.583 million barrels per day, up 2.7% v. the same period last year.

U.S. Net Crude Imports

U.S. crude imports from OPEC, in total, and Saudi Arabia, in particular, remain at high levels seven weeks into the cut. Crude imports from OPEC countries averaged 3.248 mmbd over the past 4 weeks, 14% higher than the same weeks last year. Continue reading "Where Will OPEC's Cuts Affect Imports, Inventories?" →

The Gasoline Price Risk Factor

Posted on by Robert Boslego

Robert Boslego - INO.com Contributor - Energies


While the oil market has focused on news about production cuts from OPEC and non-OPEC countries, a new oil price risk has been developing. U.S. gasoline inventories have risen to their highest level.

U.S. Gasoline Inventory

What’s even more unusual is that they have set a record high at the same time as U.S. crude oil inventories. Usually, crude oil stocks rise as product stocks drop, and vice-versa, reflecting swings in refinery utilization, which simultaneously increase the demand for crude and output of petroleum products, and vice-versa. Continue reading "The Gasoline Price Risk Factor" →