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Norwegian oil and gas production up for the year

UPI

Preliminary data show a decline, however, from levels reported in November.
By Daniel J. Graeber Follow @dan_graeber Contact the Author   |   Jan. 17, 2017
Production from offshore Norway slumps in December, though full-year output recorded another consecutive year of gains, government data show. File Photo by A.J. Sisco/UPI
| License Photo

STAVANGER, Norway, Jan. 17 (UPI) — Total production of oil and gas in Norway dipped in December, though full-year output increased for the third year in a row, the government reported.

The government reported total preliminary production of oil, natural gas liquids and an ultra-light form of product called condensate at close to 2.1 million barrels per day on average for December, a 3 percent decline from November’s levels.

Norway is among the leading oil and natural gas suppliers to the European economy apart from Russia. Preliminary data for November showed a 2 percent increase from October.

Despite the dip of about 60,000 barrels per day in December, the Norwegian Petroleum Directorate said full-year 2016 production was higher than the previous year, even as lower crude oil prices put negative pressure on the industry as a whole.

“The oil production increased for the third consecutive year in 2016, and gas production was at the same level as the previous year, which was a record year for production,” the national regulator stated in its monthly report. “The high level is in part due to good regularity on the fields, and the fact that various efficiency measures have led to substantial reductions in operating and exploration costs.”

The full-year production figures follow confirmation from the NPD of a new discovery made by Norwegian energy company Statoil in the northern waters of the Norwegian Sea. Preliminary estimates put the size of the discovery at around 17 million barrels of oil equivalents at the low end.

NPD Director General Bente Nyland said last week that oil and gas production remained high and companies have adjusted well to a sea change in the energy sector brought on by lower crude oil prices. Cost reductions for some developments of as much as 50 percent, meanwhile, mean companies will remain profitable provided the industry shows a degree of patience.

The figures add to a lingering market scenario of oversupply. Members of the Organization of Petroleum Exporting Countries agreed to a short-term 2017 production ceiling of around 32.5 million bpd in an effort to pull the market back into balance.

Crude Oil Prices Turn Lower

Daily FX

Crude Oil Prices Turn Lower to Close the Week

Crude oil prices have turned modestly lower for Friday’s trading, narrowing any gains seen for the commodity earlier in the week. Prices have specifically stalled as traders are beginning to call into question the production cuts previously promised by OPEC nations. Oil prices have initially strengthened into 2017 on expectations of these productions cuts, so any data to the contrary may cause crude oil to decline further off of the standing yearly high at $55.21.

Technically crude oil remains in a long term uptrend, as the commodity continues to trade above its 200 day SMA (Simple Moving Average). This average now stands at $47.24, which continues to stand as long term support for the commodity. Traders should be mindful however, that crude prices are now trading back below the displayed 10 day EMA (exponential moving average) at $52.61. Typically this is a sign of short term weakness, and if crude stays below this point it may suggest a further slide in price starting next week.

Crude Oil Prices Turn Lower to Close the WeekIt should also be noted that today’s intraday price action has crude oil set to end the trading week with the creation of an inside bar. If the commodity closes at present values, crude oil would have failed to create a new high or low for today’s session. This means breakout traders may use Thursday’s high and low as values of support and resistance to plan for the markets next breakout.

Bullish breakouts may begin for crude oil above Thursday’s high of $53.47. A breakout above this point would place crude back above the previously mentioned 10 day EMA, and open up the market to retest the standing yearly high. Alternatively, Thursday’s low of $52.10 remains a key value of price support. A bearish breakout here would suggest that crude is retracing more of its previous gains, and open up a test of the standing 2017 at $50.69.

Crude Oil Prices Turn Lower to Close the Week(Created Using TradingView Charts)

— Written by Walker, Analyst for DailyFX.com

Saudis Cut More than Commitment


Crude Oil: Saudis Cut More than Commitment – BBH

Analysts at BBH shared his views on the crude oil market and its recent developments, “Oil prices rallied yesterday following the EIA weekly data and are up further today. Despite the rise in US inventories (4.1 mln barrels) more than four times greater than expected, participants focused on other details. In particular, the stocks in Cushing fell by almost 580k barrels, while the market had been looking for an increase of around the same magnitude. Also, the 17.4 mln barrel demand by refineries was the most in nearly 30 years.”

Key Quotes
“The bullish case for oil was predicated on rising demand, OPEC cuts and a natural decline in output in some countries, like Mexico. China’s economy appears to be stabilizing (with a continued robust increase in credit expansion. Europe growth appears to have accelerated in Q4. Earlier today, EMU reported industrial output jumped 1.5% in November, more than twice what was expected. Even if the output was flat in December, the industrial output is set to expand in Q4 by the most since Q4 2010. Japan’s November industrial output rose 1.5%, the most in five months. India’s output surged 5.7% year-over-year in November after contracting 1.8% year-over-year in October.”

“What has captured the attention of the markets today are the reports indicating that Saudi Arabia (and Kuwait) have cut output more than they were committed to delivering. The Saudi oil minister announced that output has fallen below 10 mln barrels for the first time in almost two years. Kuwait also reports that its output is a little less than it committed to as well.”

WTI regains $53.00 and beyond

“At least for the moment, this addresses a nagging concern of many market participants that OPEC’s adherence to their agreements is often questionable. Of course, the risk of defections from the agreement increase as the price of oil increases. Also, the participation of non-OPEC countries, especially Russia, has yet to be seen.  At the same time, US output is increasing.  At 8.95 mln barrels a day, US output is the highest since last April. US producers have added about 100 new rigs since the end of Q3. Recall too that in 2015 and early 2016 some well were drilled, but then capped as if the producer was storing the oil in the ground.”

“The February light sweet oil futures contract set a low set on Tuesday and Wednesday (~$50.70) that met a 50% retracement objective of the rally since the OPEC agreement. It also matches the low from December 8. Prices have bounced smartly. However, the $53.50 area, which is being tested, needs to be overcome to suggest another run at $55.”

oil

Dollar Gets Whacked In Asia Again!

US crude settles at $50.82, striking one-month low on strong dollar, OPEC cut doubts

CNBC

Oil prices fell about 2 percent on Tuesday, extending the previous session’s sharp sell-off, as the U.S. dollar strengthened and doubts over implementation of a global deal to cut output loomed.

Members of the Organization of the Petroleum Exporting Countries (OPEC), such as Saudi Arabia, appear to be reducing production under a global deal to rein in oversupply but it is unclear whether other big producers like Iraq will follow suit.

Iraq, OPEC’s second-largest producer, said it would raise crude exports from its main Basra port to an all-time high in February. The country’s southern oil exports in the first nine days of January held steady near a record high, despite the agreed start of OPEC cuts on Jan. 1, according to a source and loading data.

“The petroleum markets are consolidating at the lower levels reached in Monday trade after doubts emerged over the degree of compliance with OPEC production cuts as Iraqi exports remain high, as well as the more general pace of market rebalancing,” Tim Evans, energy futures specialist at Citigroup said in a note.

“Fresh reports that non-OPEC producers Russia and Kazakhstan have reduced output have produced little price reaction, with the failure to rally on bullish news suggesting that the market is overbought and vulnerable to a further downward correction.”

Oil markets to continue tightening: Expert

Oil markets to continue tightening: Expert   

U.S. light crude oil settled down $1.14, or 2.2 percent, at $50.82. That was its weakest daily closing level since Dec. 7.

Brent crude was last down $1.26 a barrel, or 2.3 percent, to $53.68.

Both crude contracts fell more than $2 a barrel, or around 4 percent, on Monday on doubts that the Organization of the Petroleum Exporting Countries (OPEC) and other key oil producers would cut output as promised to try to reduce a global oversupply.

The dollar rose on Tuesday, retracing early losses against a basket of currencies, and pressuring greenback-denominated oil as a stronger dollar tends to discourages buying by consumers holding other currencies.

Higher oil future prices through December encouraged investors to buy large volumes of crude contracts and many of these “long” positions are likely to be unwound unless the market stays strong, analysts and brokers said.

Supplies are also increasing in North America.

The U.S. Energy Information Administration revised its forecast for 2017 U.S. crude output, expecting growth of 110,000 barrels per day compared with last month’s forecast of a 80,000 bpd year-over-year decline.

 

JP Morgan: Remain constructive on EU oil

JPMorgan: Remain constructive on EU oil   

In the United States, energy companies last week added rigs for a 10th week in a row, extending the drilling recovery into an eighth month as crude prices remained at levels at which many U.S. drillers can operate profitably.

The average Canadian rig count for December 2016 was 209, up 36 from the 173 counted in November 2016, and up 49 from the 160 counted in December 2015, said Matt Stanley, a fuel broker at Freight Services International in Dubai.

“A 30 percent increase in Canadian rigs in a year … The bear in me is well and truly back,” Stanley said.

Weekly inventory data from industry group the American Petroleum Institute (API) is scheduled at 4:30 p.m. EST, with analysts forecasting a 1.2 million-barrel build in U.S. crude stocks in the week to Jan. 6.

Adding one-off supplies, the U.S. Department of Energy on Monday announced a sale for crude from its Strategic Petroleum Reserve (SPR), with bids for 8 million barrels of light, sweet oil due by Jan. 17.

— CNBC’s Tom DiChristopher contributed to this report.

Crude Oil Prices under Pressure amid Increasing Production

Alexander Gorodezky

Economic Calendar

After generating positive results last week amid traders’ optimism over the production cut from major producers, including Saudi Arabia and Kuwait, crude oil prices came back under pressure in Monday’s trade, thanks to the threat of increasing Iran’s exports and rising U.S. supplies. Iran started increasing its exports over the last couple of months from oil held in tankers at sea.

Iran sold almost 13 million barrels of crude oil held in tankers at sea, indicating a smart move of enhancing its market share, when fellow producers are slashing their supplies. While Iran’s biggest rivals, including Saudi Arabia and Kuwait, announced production cuts of 485,000 and 131,000 barrels per day respectively for the first quarter this year.

Iran’s strategy of selling oil held at sea could have negative repercussion over the production cut agreements between 24 countries. Brent crude oil prices were trading almost 13 cents lower in Asian trade on Monday from the recent settlement, while U.S. West Texas Intermediate oil prices were trading 20 cents lower from earlier close.

The threat of rising of U.S. production is also weighing on crude oil prices, as traders are realizing that North American producers are making a stronger than expected comeback.

U.S. oil rig counts have increased since summer of the last year. Last week, Baker Hughes reported a 10th straight week of growth in U.S. oil rig counts to the highest level in the last 13 months. U.S. oil production increased mostly at a mid-single digit rate in the last six months, thanks to improving prices and declining break-even points.

U.S. producers have slashed their break-even levels to below $50 a barrel, settling strong footholds to expand volumes at current oil prices. Therefore, U.S. producers are ready to make a strong rebound in the coming days, which could stun the market participants. Several U.S. producers have announced increased spending plans for FY2017 after significant cuts in the last three years.

Crude Oil Prices Brace for OPEC News

DAILY FX

Crude Oil Prices Brace for OPEC News, Gold Prices May Bounce

Monday, Jan 9, 2017 6:36 am +02:00

Fundamental analysis, economic and market themes


Talking Points:

  • Crude oil prices mark time, bracing for OPEC commentary
  • Gold prices snap 3-day win streak on US wage growth data
  • Cautious Fed-speak may cool bets on steep rate hike cycle

Crude oil prices are marking time in familiar territory as the spotlight turns back to OPEC and the implementation of its output reduction scheme. Cartel members will gather in Abu Dhabi for a variety of conferences throughout the week. Meanwhile, the group’s Secretary General Mohammad Barkindo is embarking on a three-day trip to Kuwait, which chairs the OPEC’s committee monitoring production cuts. This makes for significant headline risk and investors may be leery of taking big directional bets in the interim.

Gold prices snapped a three-day winning streak as after the December’s US employment data showed that on- wage growth jumped to a cyclical high of 2.9 percent. This suggested that the economy is running hotter than expected even before a would-be inflation boost form fiscal policies advocated by President-elect Trump. Not surprisingly, this reenergized bets on a steeper Fed rate cycle, sending US yields upward alongside the US Dollar and undermining the appeal of anti-fiat and non-interest-bearing assets.

 

FOMC policy speculation remains in focus from here as the markets parse scheduled comments from Eric Rosengren and Dennis Lockhart, Presidents of the Fed’s Boston and Atlanta branches respectively. A repeat of the cautious tone on offer in minutes from December’s meeting of the rate-setting committee may pour a bit of cold water on tightening bets, offering the yellow metal a bit of a lifeline.

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GOLD TECHNICAL ANALYSISGold prices paused to consolidate gains but maintained their foothold above 1166.51, the 23.6% Fibonacci retracement. From here, a daily close above resistance in the 1193.55-99.80 area (38.2% level, May 30 low) exposes the 50% Fib at 1215.40. Alternatively, a break back below 1166.51 targets the 14.6% Fib at 1149.85.

Crude Oil Prices Brace for OPEC News, Gold Prices May Bounce

CRUDE OIL TECHNICAL ANALYSISCrude oil prices continue to consolidate in familiar territory. A daily close above the 14% Fibonacci expansionat 54.03 targets the 44.19-21 area (23.6% level, January 3 high). Alternatively, a reversal back below resistance-turned-support at 51.64 opens the door for a test of the 38.2% Fib retracementat 50.25.

Crude Oil Prices Brace for OPEC News, Gold Prices May Bounce

— Written by Ilya Spivak, Currency Strategist for DailyFX.com

US crude settles at $53.99

US crude settles at $53.99, up slightly this week as traders parse signs OPEC is cutting output

CNBC

Oil traded higher on Friday as investors bought futures ahead of the weekend, but a strong U.S. dollar limited gains, as did lingering doubts about whether all OPEC producers would cut output in line with an agreement.

Trading was choppy, and market players cited end-of-week position-squaring and relatively low volumes during the first trading week of the year.

Brent crude futures, the benchmark for international oil prices, were up 11 cents at $57 per barrel at 2:35 p.m. ET (1935 GMT), having swung from a high of $57.47 to a low of $56.28.

In the United States, West Texas Intermediate (WTI) crude futures settled up 23 cents at $53.99 a barrel, recovering from a session low of $53.32 and off a high of $54.32.

The contract rose about 0.5 percent on the week, marking the fourth straight weekly gain.

US shale to kick in in second half of 2017: JPMorgan

US shale to kick in in second half of 2017: JPMorgan   

“There’s a lot of volatility, or at least changes in direction,” ABN Amro senior energy economist Hans van Cleef said. “People think the long-term trend is up, but after a gain of a few dollars, they take profit.”

The dollar gained broadly against major currencies after the U.S. non-farm payrolls report showed a slowing in hiring in December but an increase in wages, setting the economy up for further interest rate increases from the Federal Reserve this year.

A stronger greenback makes oil more expensive for holders of other currencies.

Top crude exporter Saudi Arabia and fellow Gulf members Abu Dhabi and Kuwait showed signs they were cutting production in line with an agreement by OPEC and other producers, yet market watchers have doubts about overall compliance.

Saudi Arabia’s state oil producer Saudi Aramco has started talks with customers globally on possible cuts of 3 percent to 7 percent in February crude loadings.

A Kuwaiti oil official said that country had also reduced production in line with the deal, and there are also reports of supply cuts from Abu Dhabi.

Energy CEO: We're in initial stages of a recovery

Energy CEO: We’re in initial stages of a recovery   

But there are still doubts about other producers’ compliance.

“There will be some countries who will cheat…we expect zero compliance from Baghdad… And we definitely do not expect the Kurds to join in, given that they are autonomous from the federal government,” Energy Aspects said in its 2017 oil market outlook, published this week.

Iraq Prime Minister Haider al-Abadi said this week the autonomous Kurdish region wasexporting more than its allocated share of oil. Iraq is the Organization of the Petroleum Exporting Countries’ second-largest producer.

Iran has sold more than 13 million barrels of oil that it had long held on tankers at sea, capitalizing on an OPEC output cut deal from which it is exempted to regain market share and court new buyers, according to industry sources and data.

In the past three months, Tehran has sold almost half the oil it had held in floating storage, which had tied up many of its tankers as it struggled to offload stocks in an oversupplied global market.

Oil markets to continue tightening: Expert

Oil markets to continue tightening: Expert   

National Iranian Oil Company (NIOC) is also negotiating with the Philippines over exporting four million barrels of crude per month to the country, Iran’s English-language Press TV quoted a statement published on Friday by the NIOC as saying.

Iran, OPEC’s third-largest oil producer, won special terms from the group’s production cuts agreed on Nov. 30 and may raise output slightly.

Overall supply from OPEC in December fell only slightly to 34.18 million barrels per day (bpd) from a revised 34.38 million bpd in November, according to a Reuters survey this week based on shipping data and information from industry sources.

U.S. energy companies this week added oil rigs for a 10th week in a row, bringing the total count up to 529, the most since December 2015, energy services firm Baker Hughes said on Friday.

Crude Oil Forecast

WTI Crude Oil and Natural Gas Forecast

By: DailyForex.com

WTI Crude Oil

The WTI Crude Oil market fell during the day on Friday, as we continue to run out of steam. However, it’s the end of the year so it’s difficult to imagine that there would’ve been a lot of buying pressure on such and illiquid day, and I believe that the $55 level above will be resistive going forward. I think that pullbacks will be buying opportunities, and a break above the $55 level since this market looking for $60. However, inventory numbers in the United States are on the rise, and of course the rig count keeps climbing as well, almost ensuring that the oversupply will continue going forward. With this, I’m waiting for an exhaustive candle to start selling but in the meantime, I recognize the short-term traders will probably favor the upside.

Crude oil

Natural Gas

The natural gas markets initially tried to rally and Friday but then turned around to crash through the $3.75 level. With the lack of liquidity for the session on Friday, I find it very difficult to read too much into this trade. A break down below the $3.65 level should send this market to the $3.50 level going forward. Colder temperatures coming in the month of January will probably drive up the price in the short-term, but I think that there is a lot of noise between here and the $4.00 level, so given enough time the sellers will return. I think this will be a very volatile back-and-forth type of market over the next several weeks, but I have to believe that there is still more than enough bullish pressure underneath the keep this market going higher in the short-term.

Ultimately, I think that we turned back around and crash much lower, as the oversupply will continue to haunt the market, but currently traders seem to be focusing on the next few weeks more than anything else.

Natural gas

Crude Oil Price Falls

Crude Oil Price Falls on Shock Inventory Increase

Shutterstock photo

The U.S. Energy Department’s inventory release showed that crude stockpiles recorded an unexpected build. This weighed on oil prices , sending West Texas Intermediate (WTI) crude futures down 1.5% (or 81 cents) to $41.71 per barrel Wednesday.

On a bullish note, the report revealed that refined product inventories – gasoline and distillate – both decreased handsomely from their previous week levels.

Analysis of the EIA Data

Crude Oil: The federal government’s EIA report revealed that crude inventories increased by 2.26 million barrels for the week ending Dec 16, 2016, following a decline of 2.56 million barrels in the previous week.

The analysts and traders surveyed by The Wall Street Journal had expected crude stocks to go down some 2.3 million barrels. A jump in imports led to the surprise stockpile build with the world’s biggest oil consumer.

The latest inventory increase adds to the supply of excess oil in the U.S., though the year-over-year storage surplus has narrowed down considerably in recent months after a run of drawdowns.

At 485.45 million barrels, current crude supplies are up 7% from the year-ago period and are at upper limit of the average range for this time of year.

However, stocks at the Cushing terminal in Oklahoma – the key delivery hub for U.S. crude futures traded on the New York Mercantile Exchange – was down 245,000 barrels from previous week’s level to 66.26 million barrels.

The crude supply cover – at 29.5 days – remained flat from previous week. In the year-ago period, the supply cover was 29.1 days.

Sector 5YR % Return

Sector 5YR % Return

Gasoline: Supplies of gasoline were down for the first time in 6 weeks on falling imports and strengthening demand. The 1.31 million barrels draw – contrary to the analysts’ polled number of 1.1 million barrels increase in supply level – took gasoline stockpiles down to 228.74 million barrels. Despite last week’s decrease, the existing stock of the most widely used petroleum product is 4% higher than the year-earlier level and is well above the upper half of the average range.

Distillate: Distillate fuel supplies (including diesel and heating oil) went down by 2.42 million barrels last week, dwarfing analysts’ expectations for a 900,000-barrels fall. The second successive weekly decrease in distillate fuel stocks could be attributed to higher demand and lower imports. At 153.52 million barrels, distillate supplies are 1.5% higher than the year-ago level and are sitting over the upper half of the average range for this time of the year.

Refinery Rates: Refinery utilization was 91.5% for the week.

About the Weekly Petroleum Status Report

The Energy Information Administration (EIA) Petroleum Status Report, containing data of the previous week ending Friday, outlines information regarding the weekly change in petroleum inventories held and produced by the U.S., both locally and abroad.

The report provides an overview of the level of reserves and their movements, thereby helping investors understand the demand/supply dynamics of petroleum products. It is an indicator of current oil prices and volatility that affect the businesses of the companies engaged in the oil and refining industry.

The data from EIA generally acts as a catalyst for crude prices and affect producers, such as ExxonMobil Corp. XOM , Chevron Corp. CVX and ConocoPhillips COP , and refiners such as Tesoro Corp. TSO , Phillips 66 PSX and HollyFrontier Corp. HFC .

However, each of these firms has a Zacks Rank #3 (Hold), which does not make them screaming buys. In case you are looking for energy names for your portfolio, one could opt for Newfield Exploration Co. NFX . It has a Zacks Rank #1 (Strong Buy).

Weekly Outlook of Crude Oil Futures

Crude Oil Futures – Weekly Outlook: December 19 – 23

© Reuters.  Oil posts weekly gain on signs producers will comply with output cuts© Reuters. Oil posts weekly gain on signs producers will comply with output cuts

Investing.com – Oil futures finished higher on Friday, turning positive for the week amid indications that major crude producers are adhering to their promise to pull back on output.

On the ICE Futures Exchange in London, Brent oil for February delivery jumped $1.19, or 2.2%, to settle at $55.21 a barrel by close of trade Friday, not far from a 17-month high of $57.89 touched earlier in the week.

London-traded Brent futures logged a gain of 88 cents, or 1.6%, on the week.

Elsewhere, on the New York Mercantile Exchange, crude oil for delivery in February tacked on 98 cents, or 1.9%, to end the week at $52.95 a barrel, within sight of a one-and-a-half-year peak of $54.51 logged on December 12.

For the week, New York-traded oil futures rose 40 cents, or 0.8%.

Russian Energy Minister Alexander Novak said on Friday that all Russian oil companies have agreed to cut crude output under Moscow’s agreements with members of the Organization of the Petroleum Exporting Countries.

In addition, Kuwait reportedly notified customers that it would cut supplies from January as part of an effort by OPEC to stabilize the oil market.

OPEC members have agreed to reduce output by a combined 1.2 million barrels per day starting from January 1, their first such deal since 2008.

However, there are some worries in the market about production increases in the U.S. and Libya.

Oilfield services provider Baker Hughes said late Friday that the number of rigs drilling for oil in the U.S. last week rose by 12 to 510, a level not seen in almost a year.

Meanwhile, Libya, which is allowed to ramp up production as part of the OPEC deal, restarted operations at two key oilfields. Libyan officials said the restarting of the oilfields and a connected pipeline could bring back more than 200,000 barrels a day of oil within days.

In the week ahead, market participants will eye fresh weekly information on U.S. stockpiles of crude and refined products on Tuesday and Wednesday to gauge the strength of demand in the world’s largest oil consumer.

Oil traders will also continue to pay close attention to comments from global oil producers for further evidence that producers will stick to their agreement to cut production next year.

Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.

Tuesday, December 20

The American Petroleum Institute, an industry group, is to publish its weekly report on U.S. oil supplies.

Wednesday, December 21

The U.S. Energy Information Administration is to release weekly data on oil and gasoline stockpiles.

Friday, December 23

Baker Hughes will release weekly data on the U.S. oil rig count.