Oil glut is almost drained, but OPEC still cutting more than outlined in pact.
- The global oil glut has dwindled down to historical averages due the OPEC led supply cut that began in January of 2017. The goal was to curb supplies due to raising global production. The most recent report stated that inventories in OECD (Organization for Economic Co-operation and Development) industrialized nations in March, plunged to 9 million barrels above the five-year average down from 340 million barrels above the average in January 2017. The purpose of the pact by OPEC was to reduce the excess oil stockpiles back to the five-year average, while also accounting for other metrics such as industry investment, geopolitical tensions, etc.. "OPEC output rose by just 12,000 barrels per day (bpd) to 31.93 million bpd in April, according to figures OPEC collects from secondary sources. That is roughly 800,000 bpd less than the amount OPEC says the world needs from the group this year." Reuters
Saudi Aramco ATC sells First U.S. Oil to United Arab Emirates
- Aramco Trading Company (ATC) has executed its first U.S crude spot trade using Aramco’s Motiva Enterprises unit in the U.S. as a supply point for two shipments to the UAE (United Arab Emirates). The shipments consist of 1 million barrels of condensate transported on tankers from the United States Gulf Coast to Ruwais, UAE 240 kilometers west of Abu Dhabi. ATC has also been delivering to ADNOC (Abu Dhabi National Oil Company) supplied primarily from the U.S. purchasing 6.5 million barrels of condensate. This decision came from ADNOC as they are attempting to diversify their supply and to successfully take advantage of arbitrage opportunities. In other words, they are able to cover their increased freight economics due to discounted value of crude in U.S. Gulf coast versus more regionally based crude products.
Exxon Beaumont Refinery Maintenance
- Exxon will begin maintenance work at its 362,300 bpd (barrel per day) refinery in Beaumont, Texas May through June this summer, while they overhaul a hydrotreater in the facility. Hydrotreaters remove hydrogen sulfide from motor fuels which meets compliance with U.S. environmental regulations.
Oil Steadies Near Multi-Year Highs
- Brent Crude ($77.98) and WTI ($71.02) both rose 20 cents and 10 cents last week respectively due to the breaking news regarding President Trump’s decision to withdraw from the Iran Nuclear Deal, leading to impending sanctions against Tehran, the capital of Iran. These sanctions will impact Iran’s oil market, but it is not apparent how this will specifically impact the Iranian Oil industry. We await November till these sanctions are effective to get a clearer picture of the impact. Some experts think exports will decline drastically, but this will depend on how much countries still in the Nuclear Accord will want to protect their investments and companies operating in Iran. Domestically, drilling operations have also increased in the United States adding 10 rigs last week bringing the total to 844, the highest levels since March 2015, reported by Baker Hughes.