Oil prices inched lower on Friday afternoon as skepticism about OPEC’s compliance with the output cut deal continues to impact oil markets.
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Friday, January 13, 2017
Oil prices are set to close out the week slightly down. Speculators have taken a breather on bullish bets, which is taking the momentum out of the rally. Meanwhile, U.S. oil data is also putting downward pressure on crude (see below).
OPEC admits compliance with cuts won’t be 100%. "Compliance won't be 100 percent, it never is," an OPEC source told
U.S. oil data bearish. OPEC is doing its best to tighten the market but the U.S. is not cooperating. Crude stockpiles in the U.S. rose last week by 4.1 million barrels, leaving inventories stubbornly high. Gasoline stocks also saw a strong jump. And there are early signs of an uptick in production. EIA weekly data showed an increase in output by about 176,000 bpd last week, a shocking increase in production. It should be noted that weekly data is not as accurate as the monthly data that EIA publishes on a lag. However, the data suggests that production could be on the rise in the U.S., offsetting some of the cuts from OPEC.
Pipeline bottleneck in U.S. Northeast aiding revival of Haynesville Shale. A dearth of pipeline capacity in the U.S. northeast is leading to a shortage of supply, which is allowing the Haynesville Shale to receive
Trans Mountain Expansion receives green light from BC. A major pipeline that could connect Alberta oil sands to the international market received an
Industry to approve new large oil projects, discoveries to follow. Wood Mackenzie issued some interesting projections for 2017,
Smog has delayed cargos in China. Horrific
China’s 2016 oil imports strongest in six years. China’s import
Anadarko to sell $2.3 billion in Texas oil assets. Anadarko Petroleum (NYSE: APC)
Hess announces charge and will increase spending. Hess (NYSE: HES) made some news this week, announcing an increase in capex spending this year, but less than what the markets
Small modular reactors inch forward. Oregon-based NuScale Power LLC submitted documents to the Nuclear Regulatory Commission, looking for the nuclear watchdog to certify its small modular reactor (SMR) design. Typical nuclear reactors have a capacity of as much as 1,000 megawatts; the NuScale design would only have a 50 MW capacity. The SMR concept is been heralded as a cheaper and faster way to build nuclear power. Still, any certification of the design would be years away.
Trump nomination hearings begin. There was no shortage of political news coming out of Washington this week. Energy was certainly not the focus, but there will be a lot of moving parts on the policy front in the next few weeks as the Trump administration takes over. Former ExxonMobil CEO Rex Tillerson had his nomination hearing on Wednesday, in which he impressed many, but not all U.S. Senators, with his fluency on global affairs. He still could run into some obstacles with a few Russia hawks in the Senate, however. Next week, nomination hearings continue, with Rep. Ryan Zinke’s (R-MT) nomination hearing for the Department of Interior scheduled for Tuesday, and EPA nominee Scott Pruitt scheduled to appear on Wednesday. Former Texas Governor Rick Perry will testify on Thursday. All have strong ties to the oil and gas industry, having accepted large donations from drillers.
By Evan Kelly of Oilprice.com
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