Oil prices fell on Tuesday after Venezuela said that global supplies needed to fall by 10 percent in order to bring production down to consumption levels, and technical indicators also pointed to cheaper crude futures. Global oil supply of 94 million barrels per day needs to fall by about a tenth if it is to match consumption, Venezuela’s Oil Minister Eulogio Del Pino said on Monday.International benchmark Brent crude oil futures (LCOc1) were trading at $45.81 per barrel at 0139 GMT (09:39 p.m. EDT), down 17 cents from their last close.U.S. West Texas Intermediate (WTI) crude futures (CLc1) were down 22 cents at $43.08 a barrel.”Global production is at 94 million barrels per day, of which we need to go down 9 million barrels per day to sustain the level of consumption,” Del Pino said in an interview with state oil company PDVSA’s internal TV station.Del Pino is also president of PDVSA.The statements came the same day as credit ratings agency Standard & Poor’s said that a proposed bond swap by PDVSA was a “distressed exchange” that would be “tantamount to default” if completed, a blow to the cash-strapped firm’s effort to seek a financial lifeline.Technical market indicators were also weak, with WTI likely to test support at $42.78 per barrel soon, after which a fall toward $42 would be likely, according to Reuters analyst Wang Tao.
Source: Oil slips as Venezuela says market is 10 percent oversupplied By Reuters
The figure exceeded the 942,000-barrel build reported by the American Petroleum Institute yesterday, which rattled markets yet again.Refineries last week processed an average of 16.6 million barrels daily, down by 64,000 barrels on the week. Gasoline production averaged 10 million barrels, basically flat on the week. The stockpiles of the most popular fuel went down by 700,000 barrels, still remaining considerably above the average for the season.xGasoline prices have been climbing up over the last three weeks, according to the EIA. This, however, may very well change next week, as Labor Day marks the end of the driving season and higher demand. This year’s driving season saw the lowest gasoline prices for the last 12 years, reflecting the glut in crude and fuels.
Source: Oil Slammed After EIA Reports Significant Crude Build | OilPrice.com
Krishna Memani, chief investment officer at OppenheimerFunds, examines the drivers of oil as prices trade near a four-month low and explains how the market impact will be less than in 2015.
Source: Why This Oil Price Drop Is Different From 2015 – Bloomberg
July was the worst month for crude oil in a year. The usual seasonal boost in demand that could be helping prices is lackluster right now, Barclays’ Michael Cohen and his team wrote in a note on Monday. This postpones any chances for the market to balance out, he said.Summer is usually the best season of the year for excess inventories in both crude and refined products like gasoline to drop. After a few busy months of road trips, the oil market enters a so-called shoulder season, and refineries wind down to prepare for higher heating-oil demand.US stockpiles are at the highest level for this time of year in at least two decades, according to Bloomberg. And inventories could build up even more during this period.
Source: Oil demand growth remains lackluster – Business Insider
The doomsday crude market is a blessing for India’s Oil Minister Dharmendra Pradhan.The nation of 1.3 billion people is guzzling ever more oil as the fastest economic expansion among major economies spurs increased use of trucks, cars and motorbikes. The slump in crude is giving Pradhan, 47, the chance to drive hard bargains for stakes in foreign fields as well as prod India’s state-run energy companies to step up exploration while industry costs are low. The $2 trillion economy gets about 80 percent of its oil and gas from overseas. Local production has been declining as some fields mature. Pradhan took office just over two years ago, when Prime Minister Narendra Modi swept to power in a landslide. Brent crude has tumbled roughly 60 percent since then.“This is the best ever window available to India,” said Swagat Bam, an adviser at the New Delhi-based Observer Research Foundation. “Valuations of global assets are low and exploration costs have crashed. India must do all it takes to reverse its fortunes in the next few years.”
Source: Doomsday Luck for Man at Center of Global Oil Demand Growth – Bloomberg
Global oil prices fell below $40 a barrel on Monday, after Reuters’ new survey tallying oil output from OPEC countries showed outputs for the 13-member bloc at record highs when compared to figures in recent history.The overall increase in global crude output has dragged oil prices down 20 percent since they broke above $50 in June.Friday’s survey found that Iraq increased oil output in July, as the national army made gains against the Islamic State’s (ISIS) oil production and supply network.The former Gulf country’s oil officials confirmed on Monday an increase in crude production from 3.175 million barrels in June to 3.2 million barrels in July.Nigeria – a country that has been inundated by separatist attacks on oil facilities by the Niger Delta Avengers and related groups – upped outputs despite militant efforts.To meet an uptick in seasonal demand for oil, Saudi Arabia – OPEC’s de facto leader and top exporter – kept production levels close to record highs in order to limit Iran while it attempts to regain lost market share.The Wall Street Journal reported that Saudi Aramco had also cut its price per barrel to Asia by sizable margins over the weekend.The Iranian oil minister confirmed the oil glut in a statement to Iranian state television on Monday, but insisted that the balance between supply and demand would be restored in due time.American oil drillers added 44 oil rigs last month – the highest amount in any month since April 2014 – according to Baker Hughes latest rig count.OPEC’s key rival, Russia, has been increasing supplies for three straight months as well.
Source: Oil Prices Fall Below $40 As OPEC Ramps Up Output | OilPrice.com
If Big Oil was a two-engine airplane, you could say it’s been flying on a single engine since energy prices crashed in 2014. Now, the second motor is sputtering.
The major integrated oil companies, including Exxon Mobil Corp., Total SA and BP Plc, have relied on their so-called downstream businesses, which include refining crude into gasoline, oil trading and gas stations, to cushion the losses on their upstream units, which pump crude and natural gas.
“The crash in oil prices in late 2014 brought refineries worldwide a pleasant surprise: booming margins,” said Amrita Sen, chief oil analyst at consulting firm Energy Aspects Ltd. in London. “But now, the market is changing.”
BP, the first major to report second-quarter results, showed the impact on Tuesday. The British company said its downstream earnings fell to $1.51 billion from $1.81 billion in the first quarter and $1.87 billion a year ago. Refining margins were the weakest for the April-to-June period in six years, BP said.
Source: Oil Majors Lost One Engine; Now the Second One Is Sputtering
Even as oil rallies, analysts have barely nudged up their price forecasts as they worry that crude’s recent gains might not be sustainable.The price of oil has jumped 76% from the decade-low it hit earlier this year. That is mainly on hopes that dwindling U.S. oil production will help take crude out of an oversupplied market.But many analysts aren’t buying the rally. They question whether the glut is indeed on the wane given current stockpiles and the potential for increased supply from Iran and elsewhere. They point out that last year, the oil price also rallied in the spring on a belief supply was falling, only to collapse in the year’s second half.A survey of 13 investment banks by The Wall Street Journal sees Brent crude, the international oil-price benchmark, averaging $41 a barrel this year, up $1 from the same survey conducted in March. The banks see West Texas Intermediate, the U.S. oil gauge, averaging $39 a barrel this year, broadly unchanged from the prior survey.Oil settled higher Thursday for the third consecutive session. Front-month Brent crude for June delivery rose 96 cents, or 2%, to $48.14 a barrel. U.S. futures rose 70 cents, or 1.5%, to $46.03.
Source: Analysts Just Aren’t Buying the Oil Rally – WSJ
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