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Total OPEC production up slightly in December
 by Daniel J. Graeber
 Washington (UPI) Jan 8, 2018


Oil prices inch higher on U.S. rig count decline
Washington (UPI) Jan 8, 2018 - Crude oil prices started Monday in positive territory, continuing from last week's rally as shale producers in the United States showed a bit of a pullback.

The bulls were running out of the gates to start 2018, prodded by political unrest in Iran, one of the leading producers in the Organization of Petroleum Exporting Countries. While production hasn't been impacted by protests, it will be if U.S. President Donald Trump decides later this week to not issue a sanctions waiver for Iran under the terms of a U.N.-backed deal he's vowed to unravel.

Last week saw severe weather across much of the eastern half of the United States, with snow falling on parts of Florida for the first time in years. The severe cold that's lingered for a few weeks may help explain a dip in exploration and production activity. Reported as rig counts, drilling service company Baker Hughes saw activity in the shale-rich United States drop as the rest of the world, Canada included, saw an uptick.

Investment confidence in a new U.S. tax code, meanwhile, spilled deep into markets in general, with the S&P 500 and Dow Jones Industrial Average charting new positive territory.

"The feel-good factor across stock markets trickled through into the energy sphere," Stephen Brennock, an analyst at London oil broker PVM, said in a report emailed to UPI.

The price for Brent crude oil inched barely into positive territory early Friday, up just 0.07 percent to $67.67 per barrel at 9:08 a.m. EST. West Texas Intermediate, the U.S. benchmark for the price of oil, was up 0.23 percent to $61.58 per barrel.

The spread, or difference, between Brent and WTI was supporting U.S. crude oil exports as the gap widened. The spread, however, has been narrowing so far this year and could lead to tighter markets if data show less U.S. oil on the global market.

The price for crude oil is up almost 2 percent so far this year. With U.S. shale still resilient, and questions over the duration of the geopolitical risk premium, Vandana Hari, a market analyst and founder of Vanda Insights, said in a weekend report emailed to UPI that "a correction now appears overdue."

Brennock, meanwhile, added there's a general sense that total U.S. crude oil production will reach record-setting territory. As much as 10 million barrels per day on average is expected from the United States this year, which could unsettle the OPEC effort to balance the market with production cuts.

"It is clear to see that the U.S. shale patch has a number of chinks in its armor," he said. "Nevertheless, it takes a brave man to bet against the U.S. shale engine -- it has surprised to the upside in the past and will continue to do so in 2018."

Though Venezuelan oil production is lower than it's been in more than a decade, its fellow OPEC members picked up the slack, a market survey found.

A survey of production from the 14 members of the Organization of Petroleum Exporting Countries from commodity pricing group S&P Global Platts found total output in December at 32.4 million barrels per day, up 50,000 barrels per day from November.

OPEC members are now in their second year of a coordinated effort to balance an oversupplied market with production cuts. De facto OPEC leader Saudi Arabia, its largest producer, is leading by example, Platts reported, with production of around 9.9 million barrels per day last month, below its official quota by about 15,600 barrels per day.

Iraq, the second largest producer in OPEC, produced 4.41 million barrels per day last month, its highest level in three months. Exports from the southern port city of Basra also surged, in part in response to problems getting oil out of the north of the country. Federal pipelines north to Turkey were heavily damaged by war and the semiofficial Kurdistan Regional Government sends its own oil north, mostly by trucks.

Iran in November started new production from its South Yaran field, which Platts reported put the total December production to 3.82 million barrels per day, a slight increase from November. Iranian exports, meanwhile, may face headwinds later this week if U.S. President Donald Trump decides not to issue a waiver on sanctions tied to the U.N.-backed nuclear deal.

Paul Hickin, the oil director at Platts, told UPI last week that Trump, not political unrest, is the main threat to Iranian output.

Under the multilateral nuclear deal, formally the Joint Comprehensive Plan of Action, the president decides whether to go against the principles of the agreement and reinstate sanctions, or issue another waiver, as he did last year. The lack of Iranian barrels on the market would likely drive the price of crude oil closer to $70 per barrel. Brent crude oil, the global benchmark, was priced near $68 per barrel early Monday.

The situation is different for Venezuela, however. Platts reported the 1.7 million barrels per day from the Latin American country is its lowest since the early 2000s. Venezuela is in the grips of a wide-reaching crisis that's left the state oil company, known as PDVSA, short of funds and equipment to produce. Platts described the situation, and chance for a production rebound, as "grim."

The OPEC balancing effort has been credited with holding the price of crude oil above $50 per barrel through the fourth quarter and into 2018.

"Many OPEC watchers have said the production cut deal could unravel if prices rise too high and members seek to capitalize on the greater earning potential and battle for market share with U.S. shale supplies," the Platts report read.

A committee monitoring compliance with the OPEC agreement, which includes non-member state producers like Russia, meets Jan. 21 to review market conditions.

OIL AND GAS
Energy sector analysis sees deepwater attraction
 Washington (UPI) Jan 4, 2018
 It will be the deep waters like offshore Guyana that look commercial in the current market and make big and national oil companies turn a head, analysis found. Consultant group Wood Mackenzie expects a competitive field this year in exploration and production, with likely only the majors like BP and Exxon Mobil, along with national oil companies, investing heavily. Global investment in ... read more
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