December 9, 2015

CRUDE OIL INVENTORY/’000 bbls (Week Ended 12/4/15)

Current: 485,856

Actual Build/(Withdrawal): (3,568)
Economist Average Estimate: 730
Previous: 489,424

Click here for the chart with five year averages.

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

*Average Monthly WTI Price is the Lowest Since June 2004 – Oil & Gas 360®

“Production from the North Slope of Alaska and the North Sea of Europe, burgeoning oil regions 20 years ago, is in decline. Unrest in Venezuela and Nigeria threatens the flow of oil. The Middle East remains the mother lode of crude, but war and instability underscore the perils of depending on that region.” The points above came from an archived feature story by National Geographic called “The End of Cheap Oil.” That was the magazine’s cover story in June 2004. Amazingly, these statements hold the same meaning as if the feature were to be published today. – Read More

*Petrie: Oil output declines significant in 2016 – CNBC

One of the biggest factors in oil markets next year will be the impact of capital spending cuts on crude production, the chairman of energy-focused investment banking firm Petrie Partners said Wednesday. U.S. crude stockpiles have reached historic highs and inventories around the world are rising as oil production remains strong in the face of declining commodity prices. But drillers around the world — and particularly in the United States — have slashed capital spending in order to offset declining revenues, creating the expectation that new production will not keep pace with declining output in existing wells. –Read More

*Democrats steadfast in demands for axing U.S. oil export ban – Reuters

Senate Democrats on Tuesday laid out a list of demands they seek before making any deal to end the 40-year-old ban on crude oil exports in the wide-ranging government funding bill. With oil prices falling to nearly seven-year lows of less than $40 a barrel, producers are desperate to open crude sales to global markets. They say lifting the ban would give U.S. allies an alternative to Russia and OPEC countries for oil, breathe life into the drilling industry, and increase U.S. energy security. Opponents say it would hurt jobs at refineries, raise the amount of oil carried by trains, which have suffered a slew of recent accidents while carrying crude, and hurt the environment. – Read More

*OPEC Removes Production Limit Altogether: the End of the Cartel? – Oil & Gas 360®

Just over a year after deciding to change its focus to defending market share rather than oil prices, OPEC members left their semi-annual meeting in Vienna on December 4 grim-faced, according to reports. After out-producing its self-imposed ceiling for 18 months, according to data compiled by Bloomberg, OPEC decided to remove its production quota entirely. “Effectively, it’s ceilingless,” said Iranian Oil Minister Bijan Zanganeh. “Everyone does whatever they want.” – Read More

*What $37 per barrel oil means for the Eagle Ford – San Antonio Business Journal

Producers in the Eagle Ford Shale region just south of San Antonio are keeping an eye on the market after waking up to near seven-year-low crude oil prices on Monday morning. West Texas Intermediate was trading as low as $37.60 per barrel early Monday afternoon, dipping well below this year’s previous low of $38.22 per barrel, which was set less than four months ago on Aug. 24. Figures from the U.S. Energy Information Administration show that the previous record low for WTI crude oil prices was reported at $34.03 per barrel on Feb. 12, 2009. – Read More

*More producers boost their bets on oil play northeast of Denver – The Denver Post

Like a poker player faced with a dwindling pile of chips, several oil and gas producers are doubling down on what they consider one of their surest bets — the Wattenberg Field in the Denver-Julesburg Basin. “The D-J has some of the best returns of any of their acreage in the U.S.,” said Erika Coombs, senior energy analyst at BTU Analytics in Lakewood. The Wattenberg Field, a target of drilling since the early 1970s, doesn’t generate the same buzz among investors as well-endowed shale plays in North Dakota, Texas or Ohio-Pennsylvania. – Read More

*Bill Lifting Export Ban Passes House of Representatives 249-174 – Oil & Gas 360®

The Republican-controlled U.S. House of Representatives approved a bill set to boost U.S. energy production, lift the four-decade ban on crude oil exports and modernize the electric grid. The House passed the bill 249-174 despite threats from the White House to veto the bill. In addition to allowing U.S. companies to export their crude oil, the bill would speed up the approval of natural gas pipelines across public lands. The move would hopefully prevent any future projects from going through a multi-year review process like the one seen with TransCanada’s (ticker: TRP) Keystone XL pipeline. – Read More

*Russians Actually Think Oil Prices Will Hit $50 By Summer 2016 – Forbes

This may be wishful thinking. After approving a preliminary budget for 2016 that bases Russian fiscal accounts on $50 oil, Russian Economic Development Minister Alexei Ulyukayev said Monday that their target will be hit by next summer. “Beginning in the second half of next year, there is a high probability oil prices will return to positive dynamics with lower volatility,” Ulyukayev said in an interview with the Rossiya-24 broadcaster. “In general, I think the $50 forecast for the year is fully justified,” the minister said. – Read More

*Brent at $40 Leaves Oil Forecasters Playing Catchup Again – Bloomberg

Forecasters have spent more than a year playing catch-up with the oil price. After OPEC effectively abandoned crude-output limits last week, another round may be overdue. As Brent crude futures crashed through $40 a barrel Tuesday for the first time in almost seven years, analysts were still predicting average prices of $51 in the first quarter, according to data compiled by Bloomberg. With Iran planning to boost output by about 500,000 barrels a day, record oil stockpiles continuing to expand and El Nino damping demand for heating fuel in the Northern Hemisphere, there are several reasons to expect such a recovery isn’t imminent. – Read More

*Devon Energy, EnLink Midstream Team Up for $4 Billion Acquisition from Private Companies – Oil & Gas 360®

Devon Energy (ticker: DVN) has secured the strongest foothold in the Cana-Woodford, pro forma for its $1.9 billion acquisition of Felix Energy LLC on December 7, 2015. Rumors of the impending cash-and-stock exchange were first brought to light by Reuters on December 3, but today’s announcement carried additional acquisitions that were unforeseen in the preliminary report. In addition to Felix Energy, Devon purchased $600 million of acreage in the Powder River Basin from an undisclosed private seller. A third deal, in conjunction with EnLink Midstream Partners (ticker: ENLK), involved the purchase of privately held Tall Oak Midstream for $1.55 billion. – Read More

*Australia’s Woodside Abandons $8.4 Billion Bid to Take Over Oil Search – The Wall Street Journal

Woodside Petroleum Ltd. abandoned its attempt to create a regional oil-and-gas champion with the purchase of rival Oil Search Ltd., leaving the region’s energy industry with a moribund deal market even as oil prices approached seven-year lows. In a brief statement Tuesday, the Australian energy company said it had informed Oil Search’s board that it had withdrawn its proposal to acquire the company in an all-stock deal valued at the time at 11.6 billion Australian dollars (US$8.4 billion). The Papua New Guinea-based company had already rejected the offer, made in early September, as too low. – Read More

*Oil Drops Below $40 as OPEC Rolls Over Policy – Oil & Gas 360®

Oil prices fell lower today as OPEC showed no signs of changing its policy of defending market share, which the group started on Thanksgiving Day of last year. U.S. crude benchmark WTI fell below $40 per barrel early today, down more than 2% from its closing price of $41.08 yesterday. The price of WTI has been moving below $40 and back up throughout the morning. International crude oil benchmark Brent Crude was also down about 1.5% at $43.16 as of 12:45 EST. – Read More

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