The More Things Change, The More They Stay The Same -- June 2, 2017

Back on January 28, 2016, The Financial Times said OPEC was irrelevant. It seems things haven't changed, although now The Financial Times says the shale surge could make OPEC obsolete. Seems like that train has already left the station. But from today's linked article:

Ramped up US shale oil production could erase any gains in the oil price achieved by a landmark deal between Russia and Opec to cut production, the chief executive of Russian oil giant Rosneft said on Friday. 

The US could add up to 1.5m barrels per day to global oil production next year, nullifying the impacts from the deal, which was extended by nine months in May, according to Igor Sechin. 

The supply cut deal between global producers attempts to curb bloated stockpiles that have kept prices under pressure. Brent crude is languishing below $50 a barrel – half the level of its 2014 peak. Speaking at a conference in St Petersburg, Mr Sechin also cast doubt on the prospects for a large increase in electric car usage.

I talked about this just a few minutes ago.

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The Cut

The More Things Change, The More Things Stay The Same

From Reuters:

When OPEC struck its original supply deal in November last year, few had banked on such rapid increases in crude production elsewhere, such as U.S. shale oil, or on slowing demand growth in emerging powerhouses such as India or China.

Inventories across the most developed nations have barely budged. According to the International Energy Agency, oil stocks rose by 24.1 million barrels in the first three months of the year to 3.025 billion barrels and, five months into the deal, a number of investment banks have cut their oil price forecasts.

That's nice. My memory is not so bad. Some months ago I thought I had read that global crude oil inventories stood at 3 billion bbls but couldn't find the source (quickly) so I moved on. Glad to see  my memory wasn't so bad.

What surprised me was that global crude oil inventories have actually increased. I thought Saudi had pretty much drawn down their storage based on all their published comments. Oh me, oh my.