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EnerCom's Oil & Gas 360 Closing Bell

November 18, 2015

CRUDE OIL INVENTORY/’000 bbls (Week Ended 11/13/15)

Current: 487,286

Actual Build/(Withdrawal): 252
Economist Average Estimate: 2,268
Previous: 487,034

Click here for the chart with five year averages.

Stephens Investment Banking - Building Blocks of a Stronger Oil & Gas Industry

*The Next Decade’s Oil Demand Growth Story: U.S. and India Overtake China – Oil & Gas 360®

China’s economy has been a demand-growth powerhouse over the course of the last decade as the country’s industrial sector boomed, but China’s role in global demand growth will be on the decline moving forward, according to research from Raymond James. Stepping up to take China’s place at the center of global oil demand growth is the rest of Asia, led by India, and the United States. In 2015, global oil demand is up by approximately 2 million barrels per day (MMBOPD), or just over 2%. That is the fast growth in oil demand since 2010, when there was a “snapback” in demand growth following the global economic crisis. – Read More

*Oil boosted by smaller than forecast U.S. stockpile growth Reuters

Oil prices gained on Wednesday after U.S. data showed a smaller than forecast build in crude inventories, but analysts said a global supply glut would keep prices under pressure. Brent crude futures LCOc1 were up 35 at $43.92 per barrel by 1049 ET after settling 99 cents lower the day before. U.S. crude futures CLc1 were up 28 cents at $40.95 a barrel. U.S. crude stocks nudged higher last week even as imports fell and refiners ran even harder, while gasoline stocks increased and distillate inventories fell, data from the Energy Information Administration showed on Wednesday. – Read More

*Following in Shell’s footsteps, oil major Statoil will also exit the Alaskan Arctic – The Washington Post

Statoil, the major Norwegian oil company, announced Tuesday that just like Royal Dutch Shell, it too is abandoning plans of drilling in the Alaskan Arctic. The company said it is exiting 16 leases under its own operation and also shutting down its Anchorage, Alaska office. It is also exiting its stake in 50 leases that, it said, are under the operation of Conoco Phillips. The company cited “recent exploration results in neighbouring leases,” and added that “leases in the Chukchi Sea are no longer considered competitive within Statoil’s global portfolio.” One major factor that has dampened prospects for Arctic drilling is low oil prices. Earlier this year, Statoil also signaled that it would not explore in the Barents Sea this year. – Read More

*45% of U.S. Crude Oil Imports Come from Canada – Oil & Gas 360®

Even without the 800 MBOPD capacity of TransCanada’s Keystone XL pipeline, crude oil imports from Canada make up 45% of crude shipped into the United States. As of August, imports from Canada were almost three times as much as imports from all of the countries in the Persian Gulf combined, according to the Energy Information Administration (EIA). The United States has been the primary destination for Canada’s crude oil exports since the early 2000s. Based on data through the first half of this year from Canada’s National Energy Board, 99% of Canada’s crude oil exports were sent to the United States. – Read More

*Oil Theft Soars as Downturn Casts U.S. Roughnecks Out of Work – Bloomberg

The moon was a waning crescent sliver Sept. 9 when a man emerged from an oil tanker, sidled up to a well outside Cotulla, Texas, and siphoned off almost 200 barrels. Then, he drove two hours to a town where he sold his load on the black market for $10 a barrel, about a quarter of what West Texas Intermediate currently fetches. “This is like a drug organization,” said Mike Peters, global security manager of San Antonio-based Lewis Energy Group, who recounted the heist at a Texas legislative hearing. “You’ve got your mules that go out to steal the oil in trucks, you’ve got the next level of organization that’s actually taking the oil in, and you’ve got a gathering site — it’s always a criminal organization that’s involved with this.” – Read More

*Pentagon targeting trucks, rigs in assault on Islamic State oil funding – Reuters

U.S.-led air strikes have hit at least 175 targets in the Islamic State’s main oil-producing region over the past month, as Washington intensifies efforts to disrupt a key revenue source estimated to provide more than $1 million a day to the militant group. Those strikes include 116 oil tanker trucks hit by coalition forces earlier this week as the United States targeted the vehicles for the first time in the wake of last Friday’s suicide and shooting attacks in Paris claimed by Islamic State. The stepped-up bombing campaign has also targeted oil rigs, pumps and storage tanks, according to a Reuters tally of air strikes provided by the Pentagon since Oct 22. – Read More

*OPEC Production Slips 265 MBOPD Ahead of December Meeting – Oil & Gas 360®

OPEC’s monthly Oil Market Report (OMR) released today showed the group’s production was down slightly to 31.38 million barrels of oil per day (MMBOPD), 256,000 barrels per day lower than in its previous OMR. The group is still producing in excess of its self-imposed 30 MMBOPD production mark as we approach the one-year anniversary of OPEC’s decision to maintain production instead of defending crude oil prices. The largest portion in the drop seen in OPEC’s production over the last month came from the group’s second largest producer, Iraq. Based on information from “secondary sources,” OPEC said production from Iran fell by 195.4 MBOPD to 4.1 MMBOPD. – Read More

*Future of US shale oil lies in Permian basin – Financial Times

The desert of west Texas was in the Palaeozoic era covered by an inland sea, teeming with life. That rich ecosystem is playing a crucial role in the world economy 250m years later. Over the course of millennia the abundant flora and fauna of that sea were transformed into the oil reserves of the Permian basin, which is both the most prolific and most resilient of the US regions that produce tight oil. US production peaked in April and has since been drifting lower, dropping 274,000 barrels a day to 9.324m b/d in August, as a result of the sharp slowdown in drilling that followed last year’s crash in oil prices. – Read More

*Iran Won’t Seek OPEC’s Permission Before Boosting Oil Exports – Bloomberg

Iran won’t negotiate with OPEC or seek the group’s permission before boosting oil exports by a planned 500,000 barrels a day once sanctions are removed from the nation’s economy. The Persian Gulf state is unconcerned about the impact this additional supply may have on crude prices, which already reflect the expected increase in Iranian shipments, Oil Minister Bijan Namdar Zanganeh said Tuesday at a news conference in Tehran. The fifth-largest producer in the Organization of Petroleum Exporting Countries will inform the group after it increases exports, he said. “The drop in prices won’t be a concern for us,” Zanganeh said. “It should be a concern for those who have replaced Iran.”– Read More

*Supermajors Spend $1.2 Billion to Secure Drilling Rights Offshore Canada – Oil & Gas 360®

Some of the industry’s largest players spent $1.2 billion in a Canada offshore lease sale on November 12, 2015, securing a foothold in an area estimated to hold as much as 12 billion barrels of oil and 113 trillion cubic feet of gas. Statoil (ticker: STO) was a consistent player in the action, landing interests in six of the seven blocks that were sold. The Norway-based producer is teaming up with some of the biggest names in the industry, including BG International (ticker: BG) BP Canada (ticker: BP) and ExxonMobil (ticker: XOM) in joint ventures. The highest bid for a block was about $423 million – paid exclusively by Statoil, who will own full working interest in the area. The only other company to win a block on its own was Nexen. Four of the blocks went unsold. – Read More

*Oil and Gas: The Costs of Going It Alone – The Wall Street Journal

Tough times may make resources companies less collegiate. BHP Billiton is reviewing its joint venture operations after the disaster at a Brazilian iron-ore mine operated by Samarco, a company owned 50/50 with Vale. The miner is considering moving to the type of structure more commonly used in oil and gas, where ownership is shared but operational control and responsibility falls to one of the partners. But oil and gas companies themselves may be looking at a reshuffling of their stakes in each other’s’ projects, according to some industry experts, albeit for different reasons. – Read More

*IEA Expects Demand Growth to Slow to 1.2 MMBOPD – Oil & Gas 360®

The International Energy Agency (IEA) released its monthly report today, saying it expects global demand growth for oil to slow to 1.2 million barrels of oil per day in 2016. Demand growth in 2015 reached a five-year high of 1.8 MMBOPD, but momentum will ease towards its long-term trend as lower oil prices, colder-than-year-earlier winter weather and post-recessionary bounces in some countries slow demand growth, according to the IEA. Even with demand at a five-year high, production continued to outpace the quantities of oil that the market could absorb. High global oil output has increased stockpiles of oil to a record three billion barrels, according to the agency. – Read More

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