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

Non-OPEC Deal Delivers "Voluntary" Oil Production Cuts

Posted on by Robert Boslego

Robert Boslego - INO.com Contributor - Energies


Ministers from eleven Non-OPEC oil producing countries, led by the Russian Federation, met at OPEC’s headquarters in Vienna on December 11th. It had been reported for weeks that they would agree to cut their oil production by 600,000 b/d.

What they actually agreed to was a watered-down version of that. It turned out that they did not get to 600,000, that much of the “cut” was due to a natural decline in certain countries, such as Mexico, that Russia’s 300,000 b/d cut would be gradual over the first six months of 2017, and that it was all voluntary.

The key portion of the press release reads as follows: Continue reading "Non-OPEC Deal Delivers "Voluntary" Oil Production Cuts" →

OPEC's Cut Could Lead To American Oil Independence

Posted on by Robert Boslego

Robert Boslego - INO.com Contributor - Energies


OPEC

In line with the ‘Algiers Accord,' OPEC reported an agreement to limit its production to a new OPEC-14 production target of 32.5mb/d, “in order to accelerate the ongoing drawdown of the stock overhang and bring the oil market rebalancing forward. The Agreement will be effective from January 1, 2017.“ It will last six months but is “extendable” for another six months.

It did so by announcing “adjustments” to a “reference” case as follows. Three countries were not assigned cuts: Indonesia, which suspended its membership, and Libya and Nigeria, which are in the process of restoring their output from disruptions. Continue reading "OPEC's Cut Could Lead To American Oil Independence" →

How The OPEC Deal Impacts The FX Arena

Posted on by Lior Alkalay

Lior Alkalay - INO.com Contributor - Forex


The much-anticipated OPEC deal to cut oil production has finally been reached. Brent and WTI Oil futures were not too late to react and jumped more than 7% with Brent Oil futures surpassing the $50 mark. And if momentum continues we could very well be looking at $60, perhaps rather soon. If that is the case, this can change the picture, not only for Oil futures and Oil companies but for currencies of Oil exporting countries, many of which were hit hard when Oil prices took a nose dive and could benefit now that oil prices are taking off.

The question is how exactly would an Oil rally play in petro-currencies in the current macro environment? Is it a good opportunity to buy into the battered Ruble? Or maybe a Norwegian Krona rally against the Euro? The options are numerous, but once we delve into the economic dynamics of each currency, the options narrow fast. Continue reading "How The OPEC Deal Impacts The FX Arena" →

What OPEC Cut Is Priced-Into The Crude Oil Market?

Posted on by Robert Boslego

Robert Boslego - INO.com Contributor - Energies


As all seasoned traders know, oil futures contracts reflect the market’s probability-weighted price expectations. In addition, I believe that the market provides a risk premium to the long side which underprices oil to some extent.

One important question now is how much of a potential OPEC/Non-OPEC cut is already priced into futures contracts? The answer determines the risk-reward to being long or short, depending on the outcome of the 171st OPEC Meeting on November 30th.

Before going further, there is no definitive financial theory or procedure of telling specifically. So I have to make some informed guesses based on possible outcomes and past market reactions. Continue reading "What OPEC Cut Is Priced-Into The Crude Oil Market?" →

GE's Timely Baker-Hughes Deal: Rigs And Oil Production Set To Rise

Posted on by Robert Boslego

Robert Boslego - INO.com Contributor - Energies


General Electric Co. (NYSE:GE) announced a deal to combine its oil-and-gas business with Baker-Hughes, creating one of the world's largest providers of equipment, technology, and services to the oil and gas industry. Worldwide drilling activity had peaked in November 2014, the same month that Saudi Arabia had started the war for market share, which eventually caused oil prices to collapse.

As oil prices plummeted, so did the rig count. Active rigs worldwide fell from 3,670 to 1,405 in May 2016, a 62% drop. In the U.S., rigs fell from 1,930 t0 408, a 79% drop.

But as oil prices rebounded to $50/b in late May, the rout ended. Since May, active rigs rose by 25% in the U.S. and by 13% worldwide. Continue reading "GE's Timely Baker-Hughes Deal: Rigs And Oil Production Set To Rise" →