Blame Nigeria, Libya and Frackers for Low Oil price $47

Blame Nigeria, Libya and Frackers for Low Oil price $47
Goldman Sachs says to blame Nigeri, Libya and Frackers for Crude oil price that is stock at $47, they have also  has slashed its three-month price forecast for crude oil $47.50 a barrel from $55 following seeing output gains in Libya and Nigeria representing a $8.50 cut. Prices touched their lowest in 10 months last week reports Newburgh Gazette

Crude Oil Price at $50 Threatens $1,5 Trillion of Oil and Gas Projects

Analysts highlighted that global inventories were reducing and demand was high, nonetheless, it also noted a ramp-up in U.S. shale output as well as an unanticipated increase in production from Libya and Nigeria. “The approach adopted so far by OPEC, akin to a central bank, has ultimately proved self-defeating by cutting too little but reassuring too much”, it added. Goldman’s Damien Courvalin, Jeffrey Currie, Henry Tarr, Huan Wei and Callum Bruce write that the glut of supply will continue until the US horizontal oil rig count declines, there are sustained draws on oil storage or there are additional production cut from the Organization of Petroleum Exporting Countries. Goldman’s warning that rising supply would offset expected inventory declines and weigh on oil prices comes after Bank of America Merrill Lynch and oil and gas consultancy FGE said that oil prices are headed into the US$30s if OPEC doesn’t make steeper cuts. Still, crude oil is poised for its worst quarter since 2015, having dropped about 11% since March. West Texas Intermediary crude was in positive territory after rallying more than 1% earlier on, and at 10:00 am in NY the price was just above US$45 per barrel.
In September 2015 Crude Oil Price at $50 Threatened $1,5 Trillion of Oil and Gas Projects,Wood Mackenzie estimates  then that upstream operators where looking for cost reductions averaging up to 30% on projects in the low commodity world, but squeezing the oilfield services sector may only achieve a savings of 10-15%, which means investments took a back seat until prices rebound, Wood Mackenzie said despite efforts to cut costs, the petroleum industry can’t make money on $1.5 trillion in pending investments on conventional and North American shale drilling projects with $50 oil.
OPEC oil output has risen in June by 280,000 barrels per day (bpd) to a 2017 high, a Reuters survey found, as a further recovery in supply from the two member countries exempt from a production-cutting deal offset strong compliance by their peers.

Recently OPEC recorded 2017 highest oil output as Nigeria and Libya pump more

High compliance by Gulf producers Saudi Arabia and Kuwait helped keep OPEC’s adherence with its supply curbs at a historically high 92 percent in June, compared with 95 percent in May, the survey found reports Reuters.
But extra oil from Nigeria and Libya, exempted from the cut because conflict curbed their output, means supply by the 13 OPEC members originally part of the deal has risen far above their implied production target.
The recovery adds to the challenge the OPEC-led effort to support the market is facing from a persistent inventory glut. If the recovery lasts, calls could grow within OPEC for the exempt countries to be brought into the production deal.
“The rise in OPEC production will further delay the point at which balance is restored on the oil market,” said Carsten Fritsch, analyst at Commerzbank in Frankfurt.
As part of a deal with Russia and other non-members, the Organization of the Petroleum Exporting Countries originally pledged to reduce output by about 1.2 million bpd for six months from Jan. 1.
Oil prices have gained some ground but high stocks and rising U.S. output kept them in check. To provide additional support for prices, the producers decided in May to prolong the deal until March 2018.
June’s biggest rise came from Nigeria, where output extended a recovery after being curtailed by militant attacks on oil installations. The second-biggest was from Libya.
Nigerian output is expected to rise further in coming weeks. Planned exports in August are scheduled to reach at least 2 million bpd, a 17-month high.
In Libya, output was on average higher despite fluctuation and has now exceeded 1 million bpd, a four-year high. Production remains some way short of the 1.6 million bpd Libya pumped before the 2011 civil war.
Saudi Arabia pumped 40,000 bpd more, the survey found, although its compliance remained above 100 percent. Even with June’s increase, the curb achieved by OPEC’s top producer is 564,000 bpd, well above the target cut of 486,000 bpd.
Aside from a rise in Angolan exports, no other significant change in output occurred elsewhere in OPEC.
The Libyan and Nigerian increases mean OPEC output in June averaged 32.57 million bpd, about 820,000 bpd above its supply target, adjusted to remove Indonesia and not including Equatorial Guinea.
Equatorial Guinea, which became an OPEC member in late May, has now been added to the Reuters survey. The country’s crude production is estimated at 150,000 bpd, which brings total OPEC production in June to 32.72 million bpd.
The Reuters survey is based on shipping data provided by external sources, Thomson Reuters flows data, and information provided by sources at oil companies, OPEC and consulting firms.

Bridget Anyasor
Branch Business Manager
Epoxy Oilserv Limited

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