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A meeting of the world's leading oil exporters to discuss capping production has ended without agreement. After hours of talks in Qatar, the country's energy minister Mohammed bin Saleh al-Sada said that the oil producers needed "more time". Most members of the Opec producers' group, plus other oil exporters including Russia, attended the talks. They wanted a deal that would freeze output and help stem the plunge in crude prices over the past 18 months. "The general conclusion was that we need more time to consult among ourselves in Opec and non-Opec producers," Mr Sada said.
Talks hit difficulties earlier on Sunday as reports emerged of tensions between Iran and Saudi Arabia. Iran did not attend the meeting. Saudi Arabia, the world's largest oil exporter, appeared willing to only freeze output if all Opec members agreed, including Iran. But Iran maintained it would continue the increase in oil production it has followed since economic sanctions were lifted earlier this year. "As we're not going to sign anything, and as we're not part of the decision to freeze output, we ultimately decided it was not necessary to send a representative," the Iranian government said.
Analysis: Andrew Walker, BBC World Service economics correspondent
The failure to agree a freeze is not going to help oil exporters desperate to see the price of crude oil rise. They are hurting. Even Saudi Arabia - despite having significant financial buffers - is overhauling its public finances and trying to diversify its economy away from oil. Other major oil producers are finding life even harder. One OPEC member, Angola, has even gone to the International Monetary Fund seeking to negotiate financial assistance. There is, perhaps, some compensation for the countries at the Doha meeting in that their failure to agree to curtail supply increases is likely to renew the pressure on shale oil producers in the US, who were not and never would be represented at a gathering such as this.
The rise of the American shale industry in the last decade or so is one of the main reasons why global supplies are so plentiful and why prices are now less than half what they were in mid-2014. Mr Sada told reporters after the meeting: "We of course respect [Iran's] position... The freeze could be more effective definitely if major producers, be it from Opec members like Iran and others, as well as non-Opec members, are included in the freeze." Russia's oil minister Alexander Novak said Moscow had not closed the door on a global deal to freeze output. However, the Reuters news agency reported, Mr Novak said he was disappointed at the failure to reach a decision as he had travelled to Qatar expecting to sign a deal, not debate one.
'Mother of all meetings'
The development will revive oil industry fears that major producers are embarking again on a battle for market share, especially after Riyadh threatened to raise output steeply if no freeze deal were reached. Iran is also pledging to ramp up production following the lifting of Western sanctions in January, making a compromise with Riyadh almost impossible as the two fight proxy wars in Yemen and Syria. Some 18 oil nations, including non-OPEC Russia, gathered in the Qatari capital of Doha for what was expected to be the rubber-stamping of a deal - in the making since February - to stabilize output at January levels until October 2016.
But OPEC's de facto leader Saudi Arabia told participants it wanted all members of the Organization of the Petroleum Exporting Countries to take part in the freeze, including Iran, which was absent from the talks. Tehran had refused to stabilize production, seeking to regain market share post-sanctions. After five hours of fierce debate about the wording of a communique - including between Saudi Arabia and Russia - delegates and ministers announced no deal had been reached. "We concluded we all need time to consult further," Qatar's energy minister Mohammed al-Sada told reporters. Several OPEC sources said if Iran agreed to join the freeze at the next OPEC meeting on June 2, talks with non-OPEC producers could resume.
Russian oil minister Alexander Novak called the Saudi demand "unreasonable" and said he was disappointed as he had come to Doha under the impression that all sides would sign the deal instead of debating it. Novak said Russia was not shutting the door on a deal but the government would not restrain output for now. Russia is a key ally of Iran and has been defending Tehran's right to raise output post-sanctions while also supporting the Islamic Republic in many of its conflicts with Riyadh.
TOUGH SAUDI STANCE
Brent crude fell 7% at one point before recovering some ground. In afternoon trade it fell 3.4% to $41.70 a barrel. The meeting in Qatar was attended by most members of oil producers' group Opec, including Saudi Arabia, but not Iran. Saudi Arabia, the world's biggest exporter, had been prepared to freeze output if all Opec members had agreed. But Iran is continuing to increase output following the lifting of sanctions against it. "As we're not going to sign anything, and as we're not part of the decision to freeze output, we ultimately decided it was not necessary to send a representative," the Iranian government said.
After hours of talks in Qatar, the country's energy minister Mohammed bin Saleh al-Sada said that the oil producers needed "more time". He said after the meeting: "We of course respect [Iran's] position... The freeze could be more effective definitely if major producers, be it from Opec members like Iran and others, as well as non-Opec members, are included in the freeze."
The price of US crude oil initially fell 6.8%, or $2.82, to $38.68 a barrel. It too clawed back some of those losses and in was trading down 3.6% in the afternoon at $38.90. The Russian rouble also fell sharply, dropping 2% against the US dollar to 67.79. In mid-afternoon trading it was up 0.57% at 66.65.
Analysis: Andrew Walker, BBC World Service economics correspondent
The fund had projected in October that oil exporting countries in the region would see revenue losses of $360 billion in 2015, but oil prices took a tumble by year's end and the drop in revenue amounted to $30 billion more. In a revised economic outlook report released Monday, the IMF said these countries will see revenues from oil exports drop even more in 2016, to between $490 billion to $540 billion compared to 2014, when oil prices were higher. Oil prices plunged to around $30 a barrel in January compared to $115 in mid-2014.
IMF Director for Middle East and Central Asia Masood Ahmed said these losses translate into budget deficits and slower economic growth, particularly for countries like Saudi Arabia that are still heavily dependent on oil to finance their spending. Though the kingdom has been working on plans to overhaul its economy, oil still accounted for 72 percent of total revenue last year and Saudi Arabia projects a budget deficit of nearly $90 billion this year. The report said that economic growth in the six Gulf Cooperation Council countries of Saudi Arabia, Kuwait, Qatar, Bahrain, Oman and the United Arab Emirates will slow from 3.3 percent in 2015 to 1.8 percent this year. Saudi Arabia, the region's biggest economy, will see growth at just above 2 percent.
The IMF has encouraged reforms that would limit public spending on welfare programs and handouts that citizens in the Gulf have become accustomed to, such as lifting subsidies and tightening public sector wage bills to offset the impact of declining revenues. Already, most GCC countries have raised fuel, water, and electricity prices. Outside the GCC, oil exporter Algeria recently hiked fuel, electricity, and natural gas prices, and Iran increased fuel prices. "Oil prices are likely to improve from where they are, but they're not going to go back to the figures that we saw in 2013 and 2014 for a long, long time, so this means that many of them have to cut back spending and they also have to try to raise revenue outside the oil sector," Ahmed told The Associated Press.
MORE
As Oil Rises, US Shale Companies Have Begun Increasing Oil Production
In spite of our “friends” the Saudis!
Actually we know "when" - it is right about now, as ConocoPhillips admitted just hours ago:
CONOCOPHILLIPS CEO SAYS WITH OIL PRICES AT $45 PER BARREL, COULD KEEP PRODUCTION FLAT WITH CASH FLOW FROM OPERATIONS
And with every incremental dollar, the supply will only increase.
Story @ As Oil Rises, US Shale Companies Have Begun Increasing Oil Production | Zero Hedge
The flurry of dealing kicked off when prices pierced $45 per barrel earlier in April. It picked up in recent weeks, allowing producers to continue to pump crude even if prices crash anew. While it was not clear if oil prices will remain at current levels, it may also be a sign producers are preparing to add rigs and ramp up output. This week, Pioneer Natural Resources Co (PXD.N), a major producer in the Permian shale basin of West Texas, said it would add rigs with oil prices above $50 per barrel. Selling into 2017 tightened the structure of the forward curve, with December 2017's premium to December 2016 CLZ6, known as a contango, narrowing to $1.30, its tightest since June 2015. That spread had been as wide as $2.15 a barrel just four days earlier.
Open interest in the December 2017 CLZ7 WTI contract was at a record high of 122,533 lots on Friday, up about 20,000 lots from the start of April. "U.S. producers have been quick to lock in price protection as the market rallies given that the vast number of companies remain significantly under hedged relative to historically normal levels," said Michael Tran, director of energy strategy at RBC Capital Markets in New York. It was not clear which companies embarked on the forward selling. In the past a handful of producers such as Anadarko Petroleum (APC.N) have sporadically hedged in large chunks. But trade sources pointed to increased activity among financial instruments for the balance of 2016, calendar year 2017 and even 2018.
Oil pump jacks are seen next to a strawberry field in Oxnard, California
The uptick in producer hedging activity came as benchmark West Texas Intermediate (WTI) futures finished April up 20 percent for the biggest monthly increase in a year. Prices have rebounded by as much as 80 percent on expectations of falling U.S. production after touching a 12-year low in February. On Friday, Baker Hughes reported oil drillers removed another 11 from operation the week to April 29, bringing the total oil rig count to 332, its lowest since November 2009. The calendar 2017 strip CLCALYZ7 week climbed to $49.44 on Thursday, its strongest since early December. In January, it had traded as low as $37.38 a barrel.
To outlast the downturn, many producers like Continental Resources (CLR.N), are deferring completions on already drilled wells, known as DUCs. "There are some companies that will hedge at $45 and $50, giving them more incentive to bring those DUCs on line," said Hakan Carapcioglu, an energy market analyst with Ponderosa Advisors, a Denver-based consultancy. To be sure, many have questioned the fundamentals backing the recent oil rally, particularly as U.S. crude inventories currently stand at a record 540.6 million barrels, according to the latest data from the Energy Information Administration.
As oil plows through $45 a barrel, U.S. producers rush to lock in prices
Any price rise above $50 per barrel could fuel a resurgence in the U.S. shale industry, which saw drilling and fracking of new wells put on hold over the past year as oil prices plumbed near $25 per barrel. But prices have steadily risen to around $44 per barrel, near levels where money could start flowing again. While myriad factors could push prices lower again and many companies are stuck in bankruptcy, prominent executives say there is a pending upswing in oilfield activity globally and that work will come back fastest in North America. "The outlook for commodity prices is improving," Al Walker, chief executive of oil producer Anadarko Petroleum Corp (APC.N), said on Tuesday after the company posted better-than-expected quarterly results. "It goes without saying that things look better today than they did 90 days ago."
Stacked rigs are seen along with other idled oil drilling equipment at a depot in Dickinson, North Dakota
Dave Lesar, chief executive of oilfield services provider Halliburton Co (HAL.N), said he believes the U.S. drilling rig count has hit a bottom and likely will rise later this year. U.S. oil drillers last week cut rigs for the sixth week in a row to the lowest level since November 2009. The industry has shed more than 250,000 jobs globally, nearly half in the United States. "Certainly with oil prices a little higher, people are more optimistic," Lesar said on Tuesday. "We do think that potentially we'll see an upswing in the rig count in the back half of the year." A rising rig count would translate into more wells being drilled that can be fracked.
On staffing, Halliburton noted it hired 21,000 people globally in 2014 - before laying many of them off in 2015 as oil prices crashed - and could quickly add staff back. Any rise in oil field activity would be a boon for Halliburton, which this week scrapped its planned buyout of rival Baker Hughes Inc (BHI.N). Both companies are now trying to anticipate needs from customers, such as Anadarko, which send ripples across vast supply chains when they lift spending. Last week, Pioneer Natural Resources (PXD.N) CEO Scott Sheffield said he would add rigs if oil stays near or rises from $50 a barrel. And Whiting Petroleum Corp (WLL.N), the largest oil producer in North Dakota, said it would soon frack 44 wells to bring them online - just weeks after saying it would freeze virtually all new work.
Baker Hughes expects oil at $50 or above would fuel the fracking of several hundred wells per month. "This represents a significant near-term opportunity," Martin Craighead, the chief executive of Baker Hughes, said on Tuesday. The services companies are telling analysts they are ready to capture new orders. "When this thing snaps back, it's going to snap back hard," said Lesar, the Halliburton CEO. "We believe that when this market recovers it will be North America that responds the fastest, offering the greatest upside."
U.S. energy CEOs ready for new drilling as oil prices plot upward path
Brent crude futures were trading at $48.83 per barrel at 1118 GMT, up $1 or 2.05 percent. U.S. crude futures were up 98 cents, or 2.08 percent, at $47.19 a barrel. Supply disruptions around the world of as much as 3.75 million barrels per day (bpd) have wiped out a glut that pulled down oil prices by as much as 70 percent between 2014 and early 2016. The disruptions triggered a U-turn in the outlook of Goldman Sachs, which had long warned of global storage hitting capacity and of yet another oil price crash to as low as $20 per barrel. "The oil market has gone from nearing storage saturation to being in deficit much earlier than we expected," Goldman said. "The market likely shifted into deficit in May ... driven by both sustained strong demand as well as sharply declining production," it said.
However, Goldman cautioned that the market would flip back into a surplus in the first half of 2017 as it said prices around $50 per barrel in the second half of 2016 would see exploration and production activity picking up. In Nigeria, output has fallen to its lowest in decades following several acts of sabotage. In the Americas, U.S. officials warned they were growing increasingly concerned by the possibility of an economic and political meltdown in Venezuela amid low oil prices. Venezuela's oil production has already fallen by at least 188,000 bpd this year.
In the United States, crude production has fallen to 8.8 million bpd, 8.4 percent below 2015 peaks as the sector suffers a wave of bankruptcies. And in China, output fell 5.6 percent to 4.04 million bpd in April, year-on-year. Countering this, supply rose from the Organization of the Petroleum Exporting Countries (OPEC) as its producers are engaged in a race for market share.
OPEC pumped 32.44 million bpd in April, up 188,000 bpd from March, the highest since at least 2008. Also preventing steeper price jumps was a recovery in output in Canada following closures due to a wildfire, as well as bloated global crude storages. "The inventory buffer may be preventing full price recovery and ... the market is rightly nervous about the sustainability of outages," said Morgan Stanley. Barclays said that "while the supply-side disruptions are supporting oil market balances, refinery margins are starting to weaken, especially in Asia," adding that weaker demand from those refiners could produce "downside risk to prices in Q3 16."
Oil prices rise on Nigeria outages, Goldman forecast
The state’s schools haven’t been so fortunate. In Newcastle, 23 miles from the capital of Oklahoma City, John Cerny recently learned that the school attended by his five-year-old granddaughter, Adelynn, will open just four days a week next year. The Bridge Creek school district will slash spending because of a projected $1.3 billion state budget shortfall next year. Beth Lawton teaches first grade at Broadmoore Elementary in Moore, a city of 59,000 bordering the capital. In April, she and several colleagues were told their contracts won’t be renewed because of funding cuts. Broadmoore’s class sizes are expected to rise next year as a result. “I think our lawmakers have failed us, and I don’t understand how little they value education,” Lawton said.
Oklahoma’s school-funding crisis is part of the pain inflicted by falling oil prices on energy-rich states across America that rely on natural-resources taxes to pay their governments’ bills. But the crisis in Oklahoma is especially dire, exacerbated by a legacy of large tax breaks bestowed upon oil companies. Before the recent 60 percent decline in oil prices, a drilling bonanza minted millionaires and billionaires in Oklahoma. The boom turned sleepy Oklahoma City into a thriving hub for drillers like Devon Energy (DVN.N), Chesapeake Energy (CHK.N) and Continental Resources (CLR.N) - the troika that lobbied hardest for the tax-break extension. The rebuilt downtown hosts top notch dining, hotels, arts venues, and a top NBA basketball team.
But as private oil wealth created these emblems of prosperity, public services have come under severe strain. In contrast to other energy states, Oklahoma didn’t fill state coffers during flush years. Oklahoma taxed new oil and gas production from its prolific horizontal wells - the big money-makers of the fracking industry - at rates as low as 1 percent throughout the shale boom. In North Dakota’s giant Bakken oilfield, the going rate was 11.5 percent.
MISSED OPPORTUNITY?
Schools get too much money, way too much, it is about time they did with less. They should fire the administrators, we don't need so many pencil pushers. And lets not forget that none of the old school books are good anymore, they do not include homosexuality and common core, so they all need to be thrown out and new school books need to be bought. And of course lets not forget that Computer Based Testing is now mandatory as well, you know the testing that is you must answer this question this way before you proceed to the next question, that way they can teach through testing.Oklahoma's way of dealing with the oil bust...
Special report: As oil boom goes bust, Oklahoma protects drillers and squeezes schools
May 17 2016 - After intense lobbying, Oklahoma’s oilmen scored a victory two years ago. State lawmakers voted to keep in place some of the lowest taxes on oil and gas production in the United States - a break worth $470 million in fiscal year 2015 alone.
The state’s schools haven’t been so fortunate. In Newcastle, 23 miles from the capital of Oklahoma City, John Cerny recently learned that the school attended by his five-year-old granddaughter, Adelynn, will open just four days a week next year. The Bridge Creek school district will slash spending because of a projected $1.3 billion state budget shortfall next year. Beth Lawton teaches first grade at Broadmoore Elementary in Moore, a city of 59,000 bordering the capital. In April, she and several colleagues were told their contracts won’t be renewed because of funding cuts. Broadmoore’s class sizes are expected to rise next year as a result. “I think our lawmakers have failed us, and I don’t understand how little they value education,” Lawton said.
Oklahoma’s school-funding crisis is part of the pain inflicted by falling oil prices on energy-rich states across America that rely on natural-resources taxes to pay their governments’ bills. But the crisis in Oklahoma is especially dire, exacerbated by a legacy of large tax breaks bestowed upon oil companies. Before the recent 60 percent decline in oil prices, a drilling bonanza minted millionaires and billionaires in Oklahoma. The boom turned sleepy Oklahoma City into a thriving hub for drillers like Devon Energy (DVN.N), Chesapeake Energy (CHK.N) and Continental Resources (CLR.N) - the troika that lobbied hardest for the tax-break extension. The rebuilt downtown hosts top notch dining, hotels, arts venues, and a top NBA basketball team.
But as private oil wealth created these emblems of prosperity, public services have come under severe strain. In contrast to other energy states, Oklahoma didn’t fill state coffers during flush years. Oklahoma taxed new oil and gas production from its prolific horizontal wells - the big money-makers of the fracking industry - at rates as low as 1 percent throughout the shale boom. In North Dakota’s giant Bakken oilfield, the going rate was 11.5 percent.
MISSED OPPORTUNITY?
