Heroes of Ukraine

«Market Leader» - news and previews making you rich.

Wednesday, 1 April 09:35 (GMT -05:00)



Stock and commodities markets

American Shale Oil Producers Enjoy OPEC+ Deal Extension


On the last day of November, the OPEC and several non-OPEC oil exporters met in Vienna to discuss the future of the global oil market during the OPEC summit. The summit ended with extending the OPEC+ deal until the end of 2018. Experts say this decision means the OPEC+ participants have lost the long-term oil war with American shale oil companies.

 

 

 

 
Most of the 20 countries participating in the OPEC+ deal can barely make both ends meet. Now they have to keep on capping their oil production while crude oil makes up for the lion’s share of their national budgets. For those of you who don’t know, the OPEC+ deal has been active for 11 months already. So far, the deal hasn’t still reached the goal – to eliminate the excessive oil inventories worldwide and restore the oil market balance. At first, the participants thought they could make it in 6 months or so. Later on, they decided to extend the OPEC+ deal for 9 more months until March 2018. However, now they understand that they won’t make it by March 2018, and that’s why they decided to extend the deal for the rest of the year during the recent summit.
 
Today’s commercial oil inventories are well above the 5-year average by 150 million barrels, and the demand for crude oil in winter is going to decrease. That’s why there won’t be any improvement by March 2018, and the OPEC is perfectly aware of that. Even the most optimistic prediction say that they won’t be able to balance the market until Q3 2018. And even if they make it, the oil production growth will be gradual, and in 2019 it will still be below the level seen in October 2016 – right in advance of the OPEC+ deal.

The OPEC+ deal participants say this is a big victory. However, Blackwell Global Investments analyst Steven Knight thinks this is a defeat, and the real winners are American shale oil companies. The shale oil production in the United States has doubled since early 2017 – from 1 million b/d to 2 million b/d.

The OPEC+ deal is a true gift for American shale oil companies since as long as oil prices stay above $50/b, they are definitely going to expand their production up until 2020, Per Magnus from Rystad Energy assumes. They will be able to satisfy the new demand for crude oil in 2018 almost entirely. The IEA expects it to by around 1,3 million b/d.

 


By 2025, American shale oil companies are expected to be producing almost 17 million barrels a day. At least, this is what is stated in the IEA’s World Energy Outlook 2017. This means that there is almost no space left for OPEC producers. The thing is that the OPEC will only be able to increase their production by 200K b/d (0,5%). Bank of America experts think that both the OPEC and Russia will have to put up with $40/b if they want to resist the American shale oil expansion. However, 60% of their foreign currency earnings comes from oil exports, which is why this resistance won’t probably last long anyway. 

 

That’s a vicious circle for the OPEC. In order to beat American rivals, they keep on capping their oil production. As they push oil prices higher, this becomes favorable for the Americans. So, the OPEC keeps on yielding their market share to American shale oil companies. On the other hand, if they abandon the OPEC+ deal and increase their production, the market will crash in an instance. That’s why American shale oil companies are likely to win this game. 

 

You are free to discuss this article here:   forum for traders and investors

 

Add to blog
Got a question? – Ask it here »
 

Remember the Key Rules of Investing in Stocks

Without further ado, let's consider a bunch of principles of investing in stock, which will put the odds of succeeding in this business in your favor:

Publication date: 11 March 01:14 AM

Apple Patents iPhone Without Ports And Holes, Device Expected In 2021

It seems that the release of the long-awaited iPhone without any ports or holes is getting more and more portable. Apple has always favored minimalistic designs, especially over the last 5 years. In 2015, almost all of the classic ports were deprecated in MacBooks in favor of a single one - USB-C Thunderbolt 3. In 2017, iPhone 7 got rid of the 3.5mm audio jack.

Publication date: 05 March 08:20 AM

Gold Sets New Records

The gold market is insane. The gold futures price set a new major high in New York. In particular, the dollar price of the precious metal set a new 7- year high. With that being said, maybe you should add gold to your investment portfolio along with BTC? Well,lat's ponder upon this question.

Publication date: 14 January 01:23 AM

Brent Prices Drop Down To $61/b

The concerns over the global demand for crude oil are getting back to the market again. The current trading week has been a week of discounts. Earlier today, Brent oil saw its price drop down to 61 dollars per barrel. The WTI price dropped all the way down to 56 dollars per barrel. The supply side has got an upper hand.
Publication date: 27 September 04:52 AM

Gold Prices Are Getting Stable After Monday's Rally

Last week was rich in the information about various financial markets, which could exert downward pressure on gold prices. Strange as it may seem, the situation in the ore market was relatively calm. Eventually, the week closed in the green zone. Those gains mainly had to do with Friday's gold rally. International traders and investors reacted to the information about another global economic slowdown coupled with the trade war between the United States and China as well as the current situation in the Middle East, and started loading up on gold as a safe-haven asset, which eventually pushed the prices higher. 

Publication date: 24 September 05:15 AM

Oil Prices Have Made The Biggest Rally In History

Gold, yen, and oil currencies are getting more expensive. The strike came for an unexpected direction. Saudi Arabia's oil facilities were attacked, which increased geopolitical risks in the region and simultaneously undermined the global oil supplies. That was basically the reason why crude oil prices made the biggest rally in history but then moved back a bit and are still trading over 10% higher relative to the start of the trading session. 
 
Publication date: 16 September 03:26 AM

iOS13 Outshines iPhone

For Apple fans, September has been a special month from many years. This is the time when Apple introduces the biggest innovations and the latest products destined to be best sellers for the next 12 months. This time, everything is likely going to be the same. In just a couple of days, on September 10th, we are to witness another Apple event.
 
Publication date: 05 September 03:28 AM

US-China Trade War Makes Oil Prices Drop

The previous trading week wasn't an exiting one. The oil prices grew in the first part of the week while trying to make up for the losses of the previous week. Still, the second half of the week turned out to be a bearish one. WTI oil prices dropped below 55 dollars per barrel while brent oil dropped down to 61 dollars per barrel. Yet, the bearish momentum is still there.

Publication date: 04 August 08:33 AM

Gold Prices At Highest Levels Since 2013

The recent statements made by the governors and presidents of the world's leading central banks, including the Fed and the ECB, eventually resulted ingold prices making it over 1400 dollars per troy ounce. This means that the current price of gold is the highest one over the last 6 years. So, the bull market of gold is underway.
Publication date: 03 August 04:17 AM

Middle East Tensions Support Oil Prices

The currenty trading week has been controversial for the international market of crude oil. Chances are, the market is going to be relatively neutral throughout the rest of the week. Brent oil is trading around 63,50 dollars per barrel while WTI costs 56 dollars per barrel.
Publication date: 30 July 11:07 AM