'e-OPEC' agrees 9.7mbpd cut extension by a month

We here again, albeit via webcam! As widely anticipated, oil producers' group OPEC has agreed to recommend a roll over its existing 9.7 million barrels per day (bpd) production cut at its latest meeting. Here's a glimpse of the new e-OPEC (click to enlarge). 

Two sources said all members were onboard, with one respondent emphatically declaring there "will be a 9.7 million bpd not ifs or buts." However, the was precious little word on the so-called cheaters. Within OPEC that would be Iraq and Nigeria, and beyond it Kazakhstan. There's plenty of doubt over what to do with Mexico's insistence that it cannot reduce its production level. 

However, Russia and Saudi Arabia, who want non-OPEC and OPEC cheaters brought to heel are so far said to be in agreement with a move to extend the cuts - instituted in April in the wake of the coronavirus pandemic - by a month. Non-OPEC countries are only just joining the meeting, so the market will have further word on that at time of stunted demand and expectations of a dire 2020. 

Monitoring is expected to be stepped up with OPEC's monitoring committee or the Joint Ministerial Monitoring Committee (JMMC) opting to meet every month from June 18 onwards. The next OPEC meeting has been scheduled for Nov 30, followed by an OPEC+ meeting on Dec 1. Ultimately, an exit strategy remains missing and that problem will resurface soon rather than later. 

Ahead of the weekend's OPEC+ meeting, oil futures jumped significantly, with the Brent August contract rising well above $40 per barrel, and WTI July contract coming within tantalizing distance of the said level. There's something incredibly premature about this and the said levels - at least in this blogger's opinion - have arrived at least a month early as one noted in recent opinion column. 

Away from the goings-on at OPEC, here are few of the Oilholic's recent Forbes missives on the world of oil and gas equities:

• 3 Oil Stocks That Might Go Bankrupt In 2020, May 15, 2020
• 5 Top Canadian Oil Stocks To Buy In 2020
• How To Interpret Saudi Wealth Fund’s $2 Billion Splurge On Big Oil Stocks

And that's all for the moment folks! Keep reading, keep it 'crude'!

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To email: gaurav.sharma@oilholicssynonymous.com

On OPEC discipline & deepening cuts

The Oilholic is back in Vienna, Austria for the 177th OPEC Ministers' meeting and their (now) regular haggling with 10 Russian led non-OPEC producers who've signed up to a collective cut of 1.2 million barrels per day (bpd).

With the cuts set to expire in March and the oil price nowhere near $70 per barrel using Brent as a benchmark, there is chatter here of deepening the cuts.

Ironically, these are being flogged to the media and analysts by Iraq; the one OPEC member that has hardly complied with its share of the cuts. However something is definitely afoot at Helferstorferstrasse 17. The reasons being a paucity of leaks, few unscheduled remarks, Iranians keeping mum despite being tetchy, and the media / analysts not being allowed "access to ministers" before their opening remarks to the conference, i.e. no "gang bang", only a "speech listening" at more than an arm's length. 

Most unusual level of discipline being shown by #OPEC ministers, sources, no leaks, 2 of my oldest sources keeping mum. Additionally, media/analysts will not have "direct access" to ministers at opening session. Is a deeper #oil production cut coming? #OOTT #oilandgas pic.twitter.com/zSrG3moK3E

— Gaurav Sharma (@The_Oilholic) December 5, 2019

From that has emerged the "deepening of cuts" figure of 500,000 bpd. Of course, no details have been provided, especially on the level of Russian compliance. Apparently the likes of Nigeria and Iraq would be squeezed to fall in line too, according to the rumour mill.

What's more is this 500,000 bpd cut a "paper adjustment" with compliance current over 140% or is the cut being upped to 1.7 million bpd? Not too sure, not convinced as convincing answers are not forthcoming.

And will that even work? The Oilholic seriously doubts it; simply because 2-2.5 million bpd of non-OPEC supply growth is expected next year, and there are deep rooted concerns over demand, as noted on Forbes. Still the OPEC show goes on, and we'll probably have some finality after the OPEC+ meeting concludes tomorrow (Dec 6). 

That's all for the moment from Vienna folks, but there's more to follow. Keep reading, keep it 'crude'!

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To email: gaurav.sharma@oilholicssynonymous.com

© Gaurav Sharma 2019. Photo: Media briefing room at OPEC's 177th Ministers' Meeting in Vienna, Austria on December 5, 2019 © Gaurav Sharma, 2019