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oil-offshore Goldman Sachs Forecast

Goldman Sachs Forecast | Sees $75 Oil In Q3 2021

Goldman Sachs had a forecast and is now even more bullish on oil. It is expecting Brent Crude prices to hit $75 a barrel in the third quarter this year. On the back of faster market rebalancing, the lower expectation on inventories and traders is still hedging against inflation.

The investment bank’s analysts forecast Brent Crude prices reaching the $70 a barrel mark. This is during the second quarter of this year. Moreoever, it is now and hitting $75 in the third quarter. With that, Goldman Sachs is thus lifting its previous Q2 and Q3 forecasts by $10 per barrel.

“Faster re-balancing during the dark days of winter will be followed by a widening deficit this spring as the ramp-up in OPEC+ production lags our above-consensus demand recovery forecast,” said Goldman Sachs.

“We further believe that this additional rally receives full support by the current repositioning for a reflationary environment with investors turning to oil, buying a lagging real asset that benefits from a stimulus-driven recovery and has demonstrated an unmatched ability to hedge against inflation shocks,” the analysts noted.

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Source: Oil Price

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offshore-drilling

Saudi Arabia Raises Oil Prices To U.S. And Europe

The world’s top oil exporter, Saudi Arabia, raised on Thursday the prices of all its crude oil that will go to the United States and Europe in March while leaving unchanged the official selling prices of its crude to its key market in Asia.

The Saudi state oil giant Aramco raised the prices of all its crude grades to the U.S. by $0.10 per barrel, while the Saudi oil prices to Europe were lifted by between $1.30 and $1.40 a barrel, according to Bloomberg.

The price of the Saudi flagship Arab Light crude grade to Northwest Europe was raised by $1.40 a barrel for March compared to February and set at a discount of $0.50 a barrel against ICE Brent, Reuters reported, citing a pricing document it had seen.

Last month, a day after surprising the market with a 1-million-bpd additional production cut for February and March, the Saudis raised the official selling prices (OSPs) of their oil for Asia for February. Saudi Aramco lifted the price of the flagship Arab Light grade by $0.70 a barrel to a premium of $1 per barrel against the Middle East benchmark, the Oman/Dubai average.

This month, however, the Saudis are leaving the prices to Asia unchanged for March compared to February, after the extra production cut created a rush among refiners in Asia in January, with buyers scrambling to secure crude oil supplies from Europe.

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Source: Oil Price

drilling-rig-oil-supercylce

$100 Oil: Big Banks Believe A New Oil Supercycle Is Beginning

A New Oil Supercycle Is Beginning? The world’s biggest names in oil trading and analyzing can’t seem to get on the same page when it comes to predicting what will happen next for the volatile commodity.

Some, like Jeffrey Currie of Goldman Sachs and Christyan Malek of JPMorgan, according to the Financial Times, are confident that oil is ready for the next supercycle—a prolonged rise in the price of oil.

And when they refer to this rise, they’re talking $80, or even $100 per barrel.

What Do Others Say?

Others, like oil analyst Arjun Murti who correctly predicted the last $100+ per barrel achievement seen between 2008 and 2014, say that talk of this next supercycle may be a bit hasty.

For Malek, he sees a situation where demand outstrips supply, before “we don’t need it in the years to come.”

The reason for supercycle predictions is simple: stimulus packages. Most notably the stimulus package that the U.S. government is expected to roll out, are expected to boost consumption.

And according to Currie, this stimulus will create a “significant, commodity-intensive consumption”. This is as the stimulus package is mostly targeting lower and middle-income households.

“These people don’t drive Teslas,” Currie explained. “They drive SUVs”.

Murti, on the other hand, thinks that if oil demand were to increase by half a million barrels per day. That is over the next year. This means it wouldn’t be enough to outstrip supply.

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Source: Oil Price

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Shale Boom

Chile Could Save Argentina’s Shale Boom

Latin America just seems to be unable to synchronize its long-mooted upswing with global energy trends. Venezuela boasts the largest reserves on earth. However, it starts to recover from the havoc US sanctions cripple its entire oil and gas industry. Argentina is assuming to be the next non-US shale boom oil sensation.

Just as international majors started drilling in earnest and exports started to flow out of the country COVID-19 has upended everything. Now Venezuela might be quite a challenge to save under the current circumstances, Argentina, however, is far from being a lost cause despite all the political infighting that surrounds YPF’s activities.

A recent infrastructure deal between Argentina and Chile might provide another ray of hope for Buenos Aires. The embattled Argentinian government concluded on January 26. It is a hope-revamping policy move that has officially signed up for refurbishment and recommissioning.

of the Trans-Andean crude pipeline (TAP). The 115kbpd capacity crude conduit running some 425km from the Neuquen Basin to the Chilean city of Concepcion was commissioned in 1992 and was specifically designed to withstand the hardships of transporting via the Andean Mountains. Its utilization, however, lasted for a bit less than 15 years, shutting down in 2006 after the Argentine government saw off the Chevron supply contract and decided not to continue with Argentinian crude exports towards Chile.

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Source: Oil Price

Image Credit: Max Phillip/Beyond Coal @ Flickr

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off-shore-oil-rig

Oil Hits $60 For The First Time Since Pandemic Started

Brent Crude oil hits $60 a barrel early on Monday, rising above that threshold for the first time since the start of the COVID-19 pandemic early last year.

As of 8:54 a.m. ET on Monday, Brent Crude was trading at $60.10, up by 1.28 percent, and WTI Crude was up 1.25 percent at $57.56.

Continued production restraint from the OPEC+ group and the extra cut from the alliance’s key member and world’s top oil exporter, Saudi Arabia, supported oil prices at the start of this week, after oil posted last week its third consecutive weekly gain.

The tightening of the oil market, combined with prospects of a rise in demand later this year with COVID-19 cases now falling and vaccination rates increasing, have been boosting oil prices since the start of February.

The Brent futures curve is also strengthening in backwardation, the state of the market signaling tighter supplies with the prices of the nearer futures contracts higher than those further out in time.

Prompt oil prices are now at more than a one-year high—the last time Brent was above $60 a barrel was in late January 2020.

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Source: Oil Price

Image: Off shore oil rig about twenty minutes past sunset. Credit: arbyreed/Flickr

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us-oil-producers

Will U.S. Shale Finally Reward Shareholders?

U.S. oil prices above $50 a barrel are helping the shale patch to generate more cash flow, especially after the massive capital spending cuts last year. But higher prices are also reviving the good old dilemma of U.S. shale producers—raise production or raise payouts to shareholders, who have grown increasingly frustrated in recent years with the lack of meaningful returns while drillers were sinking cash flows, and even spending beyond cash flow generation into breaking production records.

Most analysts believe that this time around, there won’t be much of a dilemma as shale producers will have to show investors they can be more profitable, return more of those profits to shareholders, and “not drill themselves into oblivion,” as Harold Hamm warned the industry back in 2017.

As oil prices are steadying above $50 per barrel, producers are vowing, once again, capital and drilling restraint, while distributing more cash to shareholders now that the shale patch is set to generate higher cash flows.’

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Source: Oil Price

Natural Gas Prices Exploded

Natural Gas Prices Exploded On Cold Weather Reports

Natural gas prices exploded on Monday, with spot prices soaring more than 10% as cold weather threatens the Northeastern part of the United States.

At 1:30 p.m. EST, the spot price for natural gas was $2.833 per MMBtu, a 10.49% increase on the day or an increase of $0.269.

That price is about 50% higher than this time last year when it was trading at around $1.80 per MMBtu.

Front-month natural gas futures (NG1) were $2.84 at that time, as traders anticipate increased demand for the commodity as a massive storm heads toward the northeastern United States.

Monday’s outlook adds 18 heating degree days compared to Friday’s outlook, according to Wood Mackenzie.

“The unseasonably cold weather is expected to arrive this weekend and stock around through next week… The polar blast could mark some of the coldest temperatures seen this winter in much of the U.S.” Wood Mac analyst Mark Spangler said in a note to clients today.

And the price of natural gas may climb higher still, with more cold weather in store toward the middle of this month.

Some areas of the United States like Kansas, Alaska, Massachusetts,  and Wisconsin, could see this week—or are already seeing–the coldest temperatures so far this winter. The increased demand could help to draw down stubborn inventories.

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Source: Oil Price

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oil-drilling-offshore

The New Use for Abandoned Oil Rigs

The grey steel girders of Platform Holly rise 235ft (72m) above the waters of the Pacific Ocean, just a couple of miles off the Santa Barbara coast. Above the water, this decommissioned oil rig is dull and lifeless, but the view below the surface is very different. Beneath the waves, colourful fish, crabs, starfish and mussels congregate on the huge steel pylons, which stretch for more than 400ft (120m) to the ocean floor.

There are more than 12,000 offshore oil and gas platforms worldwide. As they drain their reservoirs of fossil fuels below the sea, they eventually become defunct when they produce too little fuel for extraction to be profitable to their operators.

The big question is what to do with these enormous structures when the fossil fuels stop flowing. With curbing climate change rising up the international agenda, and with some questioning whether we have already passed peak oil, hastened by the coronavirus pandemic, the number of defunct rigs in the ocean is set to get bigger. Removing them from the water is incredibly expensive and labour-intensive. Allowing them to rust and fall into disrepair is an environmental risk that could seriously damage marine ecosystems.

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Source: BBC

oil boom

An Oil Boom Hidden Within One Of America’s Biggest Cities

When you think of giant oil fields you probably conjure up an image of vast areas of land or sea suitable for digging. However, Los Angeles demonstrates that oil extraction can take place right under our feet, producing as much as 100 million barrels every year. Compared to other major oil sites across the world, L.A. disguises oil diggers, sprawled across the city, as towers and buildings, so as not to look out of place. Six-story buildings and painted towers have been constructed across the city as facades to big oil diggers, extracting the black gold out of sight of daily commuters and tourists. Let’s talk more about oil boom.

With approximately 5,000 urban oil wells and 70 functioning oil fields, L.A. is a giant producer that no one talks about. There are a few other locations where extraction projects are taking place right in the center of the city, next to schools, businesses, and hospitals. Except for long-standing residents who have learned of the digging, few know about the urban oil production happening right on their doorstep.

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Source: Oil Price

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How long do mineral rights last?

U.S. Oil Output Is Set to Rise Next Year on Higher Prices, Drilling

The U.S. government is forecasting oil production to rise about 3.5% next year spurred by higher crude prices and a rebound in shale drilling.

Oil output will average 11.49 million barrels a day in 2022, according to the Energy Information Administration. The agency, which left its production estimate for this year unchanged at 11.1 million, said that recent crude price increases and rig additions will help production in the Lower 48 states begin to rise in the second quarter of this year.

U.S. crude production is hovering at about 11 million barrels a day, after climbing above 13 million early last year before the pandemic crushed demand.

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Source: Bloomberg