OPEC and a Russia-led group of oil producers agreed to continue increasing production in measured steps, delegates said Monday, deciding against opening the taps more widely, and driving U.S. crude prices to their highest levels since 2014.

West Texas Intermediate, the main U.S. oil price, rose 2.3% to close at $77.62 a barrel. Brent, the international gauge, added 2.5% to end at $81.26, its highest settling price in three years. Climbing oil prices recently had analysts and economists expecting OPEC and its Russia-led allies to lift production more significantly.

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Source: THE WALL STREET JOURNAL

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Oil and Gas rigs

U.S. energy firms this week added oil and natural gas rigs for a fifth week in a row as oil prices soared to their highest since 2014 prompting some drillers to return to the wellpad.

The combined oil and gas rig count, an early indicator of future output, rose five to 533 in the week to Oct. 8, its highest since April 2020, energy services firm Baker Hughes Co said in its closely followed report on Friday.

The total rig count was up 264 rigs, or 98%, over this time last year.

U.S. oil rigs rose five to 433 this week, also their since April 2020, while gas rigs were steady at 99 for a third week in a row.

U.S. crude futures rose to their highest since 2014 in intraday trade this week and were currently trading above $79 a barrel on Friday, buoyed by a global energy crunch that has helped natural gas prices to record highs and prompted China to demand increased coal production.

Amazingly those higher natural gas prices have not yet prompted drillers to start looking for more gas. U.S. gas prices rose to their highest since 2008 earlier this week, up over 120% so far this year, but the gas rig count was still lower than it was in July.

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Source: REUTERS

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Oil Demand and Supply

What’s happening with the oil demand and supply? Oil prices jumped on Monday to the highest levels in years, fueled by rebounding global demand that has contributed to power and gas shortages in key economies like China.

Brent crude rose $1.26, or 1.5%, to settle at $83.65 a barrel. The session high was $84.60, its highest since October 2018.

U.S. West Texas Intermediate (WTI) crude gained $1.17, or 1.5%, to settle at $80.52, after touching its highest since late 2014 at $82.18.

The pace of economic recovery from the pandemic has supercharged energy demand at a time when oil output has slowed due to cutbacks from producing nations during the pandemic, focus on dividends by oil companies, and pressure on governments to transition to cleaner energy.

A U.S. administration official on Monday said the White House stands by its calls for oil-producing countries to “do more” and they are closely monitoring the cost of oil and gasoline.
The Organization of the Petroleum Exporting Countries and allies, together known as OPEC+, have held back from boosting supply even as prices have risen.

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Source: REUTERS

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oil play review

Namibia is currently witnessing what could become one of the most spectacular explorational oil plays in recent memory, and one Canadian driller is at the center of this brand-new, potential blue-sky opportunity. This is what this oil play review and update is all about.

Reconnaissance Energy Africa (TSXV:RECO, OTC:RECAF) is in the process of attempting to de-risk the potentially huge Kavango basin. Following the encouraging results of their first two test wells, the company is now analyzing the data to determine the size and commercial potential of the basin.

With the exploration efforts in Namibia advancing quickly, Oilprice.com founder James Stafford sat down with one of RECO’s leading geologists Dr. Jim Granath to find out more about the producibility and commercial potential of the encountered hydrocarbon system in RECO’s Kavango basin.

In This interview with Jim we look at the following:
– Why the stratigraphic wells were a huge success
– How the hydrocarbons are stacked in columns from 15 to over 110 meters in height
– The oil and gas they are seeing are far more than normal shows
– The type of oil they are seeing in the wells
– How the geology is similar to the Zagros belt in the Middle East
– Why this is a conventional play

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Source: Oil Price

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The benchmark of current US oil prices, WTI Crude, hit its highest level since November 2014 early on Tuesday. This is after OPEC+ on Monday called off its third attempt to reach an agreement. Discussed is over oil policy management for the coming months.

In Asian trade earlier in the day, WTI Crude touched $76.50 a barrel, narrowing the WTI/Brent Crude spread significantly.

There has been intense talks late last week and attempts at mediation during the weekend. The standoff between the United Arab Emirates (UAE) and Saudi Arabia over the Emirati baseline production level has no resolution.

Then, OPEC Secretary-General Mohammad Barkindo said in a concise statement on Monday that the OPEC+ meeting was called off. The date of the next meeting has not been decided yet.

The oil market immediately jumped on the news. As participants weighed the notion that no deal about how to proceed with oil supply management. It would mean no additional supply from the OPEC+ alliance for August. This is at a time when global oil demand is bouncing back with summer travel and re-opening of economies.

Insights of Analysts

Most analysts expect oil prices to continue rising until OPEC+ meets again, which, according to reports and analyst estimates, could come at some point over the next one to three weeks. There is already talk about whether this will lead to another break-up in the OPEC+ union, after the collapse in March last year. Currently, a complete collapse of the deal is more of a fringe scenario of extremes, rather than a distinct possibility.

“The fallout within OPEC+ means increased uncertainty in the months ahead if a quick resolution is not found, which suggests increased volatility in prices,” said Warren Patterson, Head of Commodities Strategy at ING.

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Source: Oil Price

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Canada-Oil

At a time when U.S. shale, OPEC+, and dozens of oil producers have laid out blueprints to limit production in a bid to return the global oil industry to its former glory, Canada’s Oil Patch appears to be merely paying lip service to the notion of keeping production subdued.

Like everybody else, Canada’s oil and gas producers have been preaching capital discipline and assuring investors they have no intention of boosting spending, preferring to return capital to investors mainly in the form of dividends and buybacks.

But behind the scenes, Canada’s Oil Patch has been giving a nod and a wink to supply chain partners, telling oilfield services companies to get ready for prime-time action—and soon.

A survey by investment bank Raymond James has revealed that the majority of Canada’s mid-and small-cap oil and gas producers plan to increase their capital expenditure (Capex) this year by a significant margin.

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Source: Oil Price

Oil production from the seven largest U.S. shale regions is set to decline by 46,000 barrels per day (bpd) in April, but output in the biggest and most prolific basin, the Permian, is expected to eke out a production gain next month, EIA data showed.

According to the EIA’s Drilling Productivity Report, shale production is set to drop by 46,000 bpd to 7.458 million bpd next month. All oil-producing regions except for the Permian are expected to see their production drop in April, but the Permian basin should see output rise by 11,000 bpd to 4.292 million bpd, EIA’s latest estimates show.

While the Permian is expected to increase its oil production, the Niobara and Eagle Ford regions are set for the biggest declines, by 15,000 bpd each, next month. Production in the Anadarko region is seen down 14,000 bpd from March to April, while production in the second most prolific region, the Bakken, is expected down by 12,000 bpd to 1.116 million bpd, the lowest level since July last year. Output in the Appalachia region is forecast slightly down by 1,000 bpd, and production in the Haynesville formation is set to remain flat.

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Source: Oil Price

After a year of non-existent liquefied natural gas (LNG) exports from one of the fastest-growing global suppliers, the United States, to the fastest-growing world importer, China, American LNG cargoes started to travel again to China in March this year. Now U.S. exports of LNG are set to grow in the coming years, thanks to the first commercial U.S.-Chinese agreement for term supplies since the trade war that started in 2018 decimated American LNG exports to China, after Beijing slapped tariffs on the super-chilled fuel in retaliation to U.S tariffs on billions of U.S. dollars worth of Chinese goods.

U.S. LNG producer and exporter Cheniere Energy has recently signed a framework agreement with China’s Foran Energy Group to sell 26 LNG cargoes to the Chinese company over the next five years to 2025, Bloomberg reported.

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Source: Oil Price

As predicted, a second wave of COVID-19 is wreaking havoc on the world economy with many European nations contemplating new shut downs. It looks like it will be a tough winter for the oil markets. In a recent article carried in Reuters, two energy trading firms, Vitol, and Trafigura offered dour forecasts for the next few months. Trafigura’s Executive Chairman, Jeremy Weir offered a demand forecast of a decline of a million BOPD in the U.S. and up to 1.5 mm in Europe as a result, with global demand through the winter at 92 mm BOPD. He made an additional general comment in assessing the bleak near term outlook.

“As we move now into what we consider the second wave, our anticipation is to see for further demand destruction… So it’s really not looking good for the foreseeable future.”

Another energy trader, Vitol was a little less pessimistic, pegging demand at 96 mm BOPD for the winter months.

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Source; Oil Price

According to Mohammad Sanusi Barkindo, secretary-general of OPEC, the enormous and unprecedented oil market imbalance facing the industry in April following the COVID-19 pandemic required an unparalleled response from producers

Underlining the importance of the two-year agreement signed in the Declaration of Cooperation (DoC) on 12 April by OPEC and non-OPEC oil producing countries and revalidated earlier this month on 6 June, Barkindo said he was confident that more stability would return to the oil markets in the second half of the year, but more work is needed to draw up existing oil inventories to help rebalance markets.

“As we see countries begin to open up, we will see demand start to come back,” Barkindo said. “I remain optimistic but cautious the worst is over and a recovery will be in full swing in the second half of this year, with stocks beginning to be withdrawn. However, what shape the recovery will take, whether a V shape, W or inverted hockey stick, is still uncertain.

“Nevertheless, I am hopeful by the end of this year we will begin to see some further semblance of stability restored to oil markets. Then we will be in a position to move into the next phase of sustaining that stability. Hence the importance of the two-year duration of the historic agreement signed by the OPEC Plus group of countries and non OPEC producers.”

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Source: OilReviewAfrica