Oil Prices To Remain Flat -- Boston Energy -- September 26, 2017

Active rigs:

$52.20→	9/26/2017	09/26/2016	09/26/2015	09/26/2014	09/26/2013
Active Rigs	58	34	71	190	184

RBN Energy: recent developments in Russia crude and refined product exports.

Snagged: Bass Pro completes $4 billion acquisition of Cabela's.

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Prepare For Oil Shortage -- Citigroup

Link: https://www.bloomberg.com/news/articles/2017-09-25/citi-says-get-ready-for-an-oil-squeeze-than-an-opec-supply-surge.

Thesis:

• five countries in the OPEC group may be already pumping at maximum capacity: Libya, Nigeria, Venezuela, Iran, and Iraq
• rather than a surge in output, there's "a risk of a market squeeze" emerging as early as 2018

My comment: any shortfall less than 3 million bopd will easily be met by US. I lean with Boston Energy, see below.

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Oil Price Outlook Unchanged -- Boston Energy

Link: http://www.rigzone.com/news/article.asp?hpf=1&a_id=151853&utm_source=DailyNewsletter&utm_medium=email&utm_term=2017-09-26&utm_content=&utm_campaign=feature_2. 

Overall:

• outlook for oil prices has not changed
• oil prices likely to remain flat well into 2018
• surplus oil inventories ahve declined significantly but a large surplus to the five-eyar average will likely remain for the rest of the year
• a significant increase in inventories is even likely in 2018 with the seasonal decline in global demand
• but in 2020 and beyond, the risk of an oil shortage remains high
• forecast:
• near $50/bbl: into 2018
• average bout $51 in 2018 (vs average $50 in 2017)
• Brent/WTI spread:
• through August, $2.01
• spread dramatically in the aftermath of Hurricane Harvey
• inventory rebalancing is underway, but at a much slower pace than originally anticipated
• OPEC had forecast an increase in oil prices to $60-65/bbl with re-balancing

US production growth will keep surplus inventories high

• see link, lots of data
• US production remains robust; will meet all US demand well into 2018
• US producers have adjusted their 2017 capital budgets to a $51/bbl WTI oil price but left their 2017 production guidance intact
• increased drilling efficiencies, resulting in better breakeven prices:
• Permian Delaware and Midland sub basins: $33/bbl
• Williston Basin: $33/bbl
• Eagle Ford: $34/bbl
• then this:
• But in the long run, Pioneer Resources, a leading producer in the Midland basin, said in a recent presentation “$50 oil isn’t going to get it done” because it doesn’t generate enough cash flow and the industry has too much debt. “U.S. production may grow for 2-3 years and a few independents may grow, but we are in a $60 long term price environment.”

Non-OPEC production outlook flat outside the US

• see link

OPEC production is higher than it anticipated when it announced its cut

• see link
• Iraq is the biggest cheater, consistently exceeding its limits
• 4.45 million bopd vs quota of 4.35 million bopd
• plans to increase production to 5.0 million bopd

Adequate future world oil supply requires higher prices

• see link

My comment: fundamentals suggest that prices for crude oil will remain flat but the question is whether speculators will push the price of oil toward $60 over the next 12 months.