Time for Istanbul and WPC 22

The Oilholic has arrived in Istanbul, Turkey for 22^nd World Petroleum Congress, with the 2017 edition being this blogger’s third. 

Oh how time flies! Many in the industry must be wondering the same – from Doha (2011) to Moscow (2014) to Istanbul in 2017, the price of crude, using Brent as a benchmark, has fallen considerably, even if it was not a steady downward trajectory.

In 2011, the industry was looking at three-figure prices following a recovery from the global financial crisis. In 2014, the signs of an oil price slump were visible and in here in Istanbul we see it crudely languishing in the $40s despite an OPEC production cut - of 1.8 million barrels per day - in concert with 10 non-OPEC players, at least on paper, and in place until March 2018.

With customary aplomb over 6,000 delegates are expected at the industry’s premier jamboree with 500 chief executive officers, 50 ministers and around 25,000 visitors for the World Petroleum Exhibition; one of the largest strategic oil and gas expos in the world.

Over coming days we can expect to hear from the bosses of Shell, BP, Total, ExxonMobil, Chevron and many more, and ministerial soundbites from India to Iran, Kuwait to Russia and then some. Watch this space, but that’s all from Istanbul for the moment folks! Keep reading, keep it ‘crude’!

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© Gaurav Sharma 2017. Photo: Istanbul Congress Center, venue of the 22nd World Petroleum Congress © Gaurav Sharma 2017.

A bearish view from New York

Its great to be back in New York on a part business, part pleasure adventure.

Of course, on visits like these, yours truly almost, always catches up with known crude traders and analysts to get a sense of how they are feeling about the direction of the market.

More so as market mood is a fickle thing,  and we are currently staring at an oil price jump predicated on the first single-digit decline in US rig counts for over 22 weeks. But seriously is that enough to go long? 

Not quite according to majority of traders yours truly has met in Manhattan; some 8 out of 10 remain net short and say the rally won't last. Almost all believe that US production would cap 10 million barrels per day (bpd) in 2018, and that we should not read much into the price uptick of the past week. Consensus here is that while the market is showing nominal signs of rebalancing, a short-term bounce of appreciable magnitude is not on the horizon. 

Furthermore, OPEC faces a damned if you do and damned if you don't dilemma. Much of its cuts are coming at the expense of market share based on raw data. Whenever that has happened in recent history, the oil price has slipped too in most cases, in step with OPEC's lower market share, as the Oilholic noted in a recent Forbes piece authored last week from here. 

The other problem is - should OPEC decide to pump more, or move to protect its market share, that would mean more barrels on the market and a subsequent bearish impact. 

And on that note, and armed with some bearish feedback from the Big Apple, its time for the Olympics of the oil and gas business; yup that would be the 22nd World Petroleum Congress in Istanbul, Turkey. Goodbye from NYC folks, and more from Istanbul soon! Keep reading, keep it crude!

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© Gaurav Sharma 2017. Photo: Skyline of New York, USA photographed from the city's Empire State Building © Gaurav Sharma 2017. 

To boldly go where no US oil patch has gone before!

The NASA inspired car showroom photographed by the Oilholic some months ago in Houston, Texas could sum up the US oil patch's inspirational streak. Its going where, quite possibly, no US oil patch has gone before. 

Sentiment is rapidly rising in favour of US production capping an all time high in 2018 of (well in excess of) 10 million barrels per day (bpd). 

If achieved, that would be the highest US production on record, well above 1980s Texan boom and more recently, when both Dakotas put the word ‘revolution’ and in the shale revolution we’ve now become so accustomed to. 

The other leveller of course, is innovation. With extraction costs having declined dramatically and oilfield services firms' offerings to exploration and production companies getting ever more competitive, some with viable shale plays can keep going even at a $30 per barrel oil price. 

Here’s the Oilholic’s assessment in a recent Forbes post. Inventories may not have quite rebalanced, while more oil is on the way. That's all for the moment folks! Keep reading, keep it crude!

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© Gaurav Sharma 2017. Photo: Exterior of NASA-themed car dealership in Houston, Texas, USA © Gaurav Sharma 2017. 

No surprises! OPEC & non-OPEC cuts rolled over for 9 months

If you were secretly hoping for a surprise at the 172nd OPEC ministers' meeting, consider your hopes dashed, as things went perfectly according to script.

Except of course Equatorial Guinea became the 14th member of OPEC out of the blue, and with little prior intimation to half of the world's press. 

That meant 24 oil producers - including 10 non-OPEC nations led by Russia, and 14 OPEC participants headed by kingpin Saudi Arabia - rolled over their 1.8 million barrels per day (bpd) output cut to March 2018. 

Libya and Nigeria were exempt, Iran will be given some leeway, and Russia reaffirmed it was sticking to its 300,000 bpd pledge; the largest non-OPEC output cut of its kind on paper. (Here's the full IBTimes UK report). 

Big question is where from here? If Saudi Oil Minister Khalid Al-Falih is to be believed, this is all about rebalancing the market back to its five-year average. Problem here is that a buffer producer in the shape of the US keeps plugging away with some predicting its output to touch 10 million bpd in 2018. 

Were that to be the case, is OPEC not in effect subsidising shale players? Thrice yours truly asked Al-Falih whether that was the case, and thrice the question was ignored. The Oilholic is not convinced the extension of this cut would provide short-term support to the oil price that some are hoping for. 

In fact the initial response of the market has been something of a mini selloff, as many were hoping the cuts would either be deepened or be extended by 12 months. Nether happened, but the market got plenty of food for thought. That's all from Vienna in this instance folks. More when the Oilholic can make a more considered assessment and has gathered his thoughts. Till then, keep reading, keep it crude!

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© Gaurav Sharma 2017. Exterior of OPEC Secretariat, Vienna, Austria © Gaurav Sharma 2017. 

Two summits, one 'crude' venue

Holy mackerel! Was there an almighty crush, or was there an almighty crush getting into Helferstorferstrasse 17 this morning. 

So many scribes and analysts, or in the case of yours truly, those who wear both hats, trying to get in before the whole jamboree began. 

Not bad for a place struggling to get this crude world's attention, according to some, to attract so many people. Of course, it’s not a regular occurrence that non-OPEC Russia’s Energy Minister and the Saudi Energy Minister hold a joint press conference after an OPEC ministers’ meeting ends; that's exactly what is on the agenda today. In the morning we’ll have the OPEC ministers’ meeting and then in the afternoon, we will have the OPEC and non-OPEC ministers’ meeting.

So here's to more than 150 of us all trying to get that elusive crude exclusive, including, if the Oilholic may add, quite a few Russian journalists here to cover the 2nd OPEC and non-OPEC ministers meeting after the 172nd OPEC meeting ends. 

And if you were in any doubt whether or not, its a done deal here, Saudi Oil Minister Khalid Al-Falih has said Opec's plan was to "stay steady" and go through the next nine months of oil production cuts. (Here's the full report). 

"The drawdown of inventories has clearly begun. OPEC and non-OPEC producers will work to bring inventories down to 5-year averages," Al-Falih added, saying he looks forward to working with non-OPEC colleagues.

That's all from Vienna, for the moment folks! More shortly! Keep reading, keep it 'crude'!

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© Gaurav Sharma 2017. Photo: Media Scrums at OPEC Secretariat, Vienna, Austria © Gaurav Sharma 2017.