OPEC Numbers Look Bearish
August 19th, 2019
Baker Hughes reported that oil driller in the US increased the number of rigs drilling for oil by 6. Total rigs are at 770 compared to 869 last year at this time. Canadian oil producers added 7 rigs drilling for crude oil to bring the total number of rigs to 101 compared with 141 a year ago.
OPEC is a bearish report. OPEC released its monthly market report on Friday and it cut the forecast for oil demand growth in 2019 by another 40,000 bpd and continued to look for the market to be in a slight surplus in 2020. The report noted that the risk to the global economic growth remains skewed to the downside. Especially trade-related developments will need to be thoroughly reviewed in coming weeks with some likelihood of a further downward revision in September. OPEC said the group’s oil output in July fell by 246,000 bpd to 29.61 million bpd as Saudi Arabia cut production by 202,000 bpd to 9.58 million bpd. If OPEC is correct in their outlook then they will need to continue to production quotas to keep global crude inventory from building.
The Texas law firm Haynes and Boone LLP said this past week that year to date there has been 26 North American exploration and production companies that have filed for bankruptcy. This compared to the 28 fillings in all of 2018 and 24 fillings in 2017. The company noted that since 2018, 22 oilfield services companies also have filed for bankruptcy, down from 40 fillings recorded in 2017.
The number of oil and gas wells in Texas readied for production fell nearly 12% in the first 7 months of 2019 compared with the same time last year, according to data from the state energy regulator, as activity dropped on concerns of slowing demand and oversupply. Producers completed 5,749 wells in Texas from January to July versus 6,514 in the same period last year. Permits to drill new wells in the largest oil-producing state also declined this year, falling but about 14% to 7,166 in the first 7 months of the year from 8,330 last year.
From John Kemp of Reuters: US consumer confidence declined in the first half of August, as the trade war with China intensified and US equity prices fell. The University of Michigan consumer sentiment index fell to 92.1, down from 98.4 in July and ther lowest reading since January and before that October 2016.
China national Petroleum Corp, a leading buyer of Venezuelan oil, had halted August loadings following the latest set of US sanctions on the South American exporter, two Beijing-based senior sources with direct knowledge of the matter told Reuters on Monday. Per Reuters.
An Iranian tanker sailed through the Mediterranean toward Greece on Monday after it was released from detention off Gibraltar, and Tehran said that any US move to seize the vessel again would have “heavy consequences”.