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Cut extension agreed, OPEC/non-OPEC coalition now faces difficult path of compliance

With the world’s largest oil producers Saudi Arabia and Russia having already announced their support for a nine-month output cut extension last week, getting the 24-nation OPEC/non-OPEC coalition to fall in line Thursday at its closely watched summit was the relatively easy part. Now comes the heavy lifting of continued strong compliance and commitment to supply management through the length of the agreement, to convince a wary market that the producer group’s efforts to clear the glut of oil in storage are sincere. The deal, under which the producers will ...

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OPEC Leaves Market Guessing on Exit Strategy After Oil Pact

OPEC may be celebrating an historic deal to extend supply cuts, but after the party, the organization will face a trio of questions it left unanswered. Will the lucrative yet delicate relationship between Saudi Arabia and Russia survive the life of the agreement? Will surging U.S. shale output prove too much temptation for OPEC countries to stick to their own production promises? And, perhaps most perplexing: What does OPEC have planned long-term? The deal to maintain the cut another nine months, hammered out this week in Vienna, could expire in ...

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U.S. freight recovery spurs diesel demand

U.S. freight movements have started increasing again, which should help boost consumption of distillate fuel oil in 2017 and 2018. The tonnage of freight moved by road, rail, barge, pipeline and air cargo has been increasing year on year since October, after stagnating for much of 2015/16. Freight movements hit a new record in February, before slipping slightly in March, according to the U.S. Bureau of Transportation Statistics. Most freight is hauled by equipment that uses diesel engines, or jet turbines in the case of air cargo. Freight is therefore ...

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Goldman Warns OPEC Faces Test as Spectre of U.S. Shale Looms

As the oil market responds skeptically to OPEC’s output-cut deal, Goldman Sachs Group Inc. says the group has some challenges to tackle. The organization will face the test of defending market share and generating revenue growth as it transitions from the curbs, the bank said in a May 25 report. Additionally, backwardation — when near-term crude prices are higher than those for later months — will be needed for the cuts to achieve their goal of shrinking an oil inventory glut, and prevent an “unbridled” increase in U.S. shale production, ...

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Falling crude turns Singapore fuel oil margins positive as OPEC disappoints

Singapore refining margins of the 180-cst fuel oil to Dubai crude for June turned positive during Asia intra-day trading, Reuters data showed. This follows a sharp sell-off in crude in the previous session as the OPEC-led output cut extension disappointed investors. While falling crude prices and the ongoing cuts are bullish for fuel oil margins, traders expected the margins to widen their discounts in coming days as fuel oil producers take advantage of higher margins. Singapore’s June 180-cst margin to Dubai crude jumped $3.36 a barrel on Friday to plus ...

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W. Africa Crude-Overhang persists as Asian demand thins, tenders limit spot offers

Trade was limited on Friday, with traders bemoaning a lack of buying interest as the Atlantic basin remained awash with alternative light crude and waning Chinese demand was evident from a pile-up of tankers waiting to unload at Qingdao port. * As OPEC extends production cuts in an effort to tighten the oil market, China’s independent refiners — awash with crude and facing weak local demand — are poised to slow oil purchases for at least two months. * As many as 10 million barrels of oil, some of it ...

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Asia Distillates-Differentials jump on lower crude

Asian gasoil and jet fuel cash differentials jumped on Friday as underlying crude oil prices fell, trade sources said. Spot demand from India also boosted diesel premiums, they added. – INDIAN DIESEL DEMAND: Indian Oil Corp bought two 40ppm sulphur diesel cargoes of 38,000 to 40,000 tonnes each for delivery into India from Unipec at a premium of about $3 a barrel to Middle East quotes, traders said. Unipec has supplied diesel to India previously and could be trying to find outlets to sell its excess barrels into, traders added. ...

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Pertamina profit drops by 25% amid surge in crude oil price

State oil and gas firm Pertamina saw profit drop by 24.75 percent to US$760 million in the first quarter of this year from $1.01 billion in the same period last year due to a surge in prices for raw materials. The price of crude oil surged by 59.3 percent to $51 per barrel from $32 per barrel in the same period, Pertamina president director Elia Massa Manik said on Wednesday. Revenue, meanwhile, increased by 18.71 percent to $10.1 billion from $8.55 billion. “Revenue increased by only 19 percent mostly from ...

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Why oil is plunging even after OPEC extended its landmark output-cut deal

OPEC agreed to extend production cuts through the first quarter of next year, as many had expected, but in traders’ eyes that wasn’t enough. Members of the Organization of the Petroleum Exporting Countries agreed to keep their output-cut deal in place through March of next year, that generally matched market consensus, but still disappointed some who were looking for a longer time frame or larger cuts. Reports of the nine-month extension had come out hours ahead of the official announcement, with prices dropping in reaction to it. OPEC was “very ...

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Deep water production begins at newest FPSO in Brazil Santos Basin

Royal Dutch Shell plc, through its subsidiary BG E&P Brasil Ltda. (Shell) and consortium partners in Lula South, announce today that deep-water production has started at the FPSO P-66, which is located in the Brazilian pre-salt of the Santos Basin. Positioned in 2,150-metre water depth, the P-66 can process up to 150,000-barrels of oil and 6-million cubic meters of natural gas per day. The unit is the first in a series of standardized vessels operated by Petrobras to begin production within the BM-S-11 block consortium and the seventh to produce ...

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OPEC and non-OPEC countries to develop cooperation outside Vienna agreement

Cooperation between OPEC countries and the countries outside the cartel will continue beyond the agreement on reduction of oil production, Russia’s Energy Minister Alexander Novak said at a press conference following the meeting of the ministers of the oil producing countries. “Cooperation between OPEC countries and non-OPEC countries will continue, and we will cooperate not only as part of those goals for balancing the market, but also in a bilateral and multilateral formats,” he said. “We discussed this today at the ministerial committee,” he added. The minister said the next ...

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Iran sees breakthrough in oil deals following Rouhani re-election

Iran hopes to sign groundbreaking deals with oil majors such as Total and Lukoil this year as the re-election this month of reformist Hassan Rouhani to the presidency should boost investments. Iran’s veteran oil minister, Bijan Zanganeh, told Reuters in an interview he saw his country adding around a quarter to its production capacity in the next five years thanks to new projects with international companies. The development of new fields as well as improved oil recovery from mature reservoirs should allow Iran, OPEC’s No.3 oil producer, to have the ...

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Oil rebounds but ends week lower amid OPEC cuts disappointment

Oil prices rebounded to rise more than 1 percent on Friday, but ended the week nearly 3 percent lower after an OPEC-led decision to extend production curbs did not go as far as many investors had hoped. Trading, however, was light after Thursday’s heavy sell-off and ahead of the long weekend break in the United States and Britain. Brent futures LCOc1 settled up 69 cents to $52.15 a barrel, or 1.3 percent, after hitting a session low of $50.71. U.S. West Texas Intermediate (WTI) crude futures CLc1 settled at $49.80 ...

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Oil prices tumble after OPEC rollover: Kemp

Ministers from OPEC and non-OPEC oil-exporting countries agreed on Thursday to extend existing production cuts for a further nine months to the end of March 2018. Front-month Brent futures prices reacted by closing down $2.50 per barrel or more than 4 percent, reversing around half of their gain the run up to the meeting. The price decline was fairly predictable once OPEC decided to roll over existing production cuts rather than deepen them (“OPEC nears decision time: roll over or deepen cuts?” Reuters, May 19). The market reaction was consistent ...

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China’s April diesel stocks fall for second straight month -Xinhua

China’s diesel stocks fell 14 percent in April from the previous month, in a decline for a second straight month, on the back of growing industrial and mining activities, data from official Xinhua news agency showed on Friday. China’s commercial crude oil inventories at end-April rose 1.64 percent from the previous month, according to China OGP, a Xinhua-run newsletter, rebounding from a near four-year low. Refined fuel fell 7.9 percent over the month. Diesel led the draw in refined products, with a 14.4 percent fall over the month. Gasoline eased ...

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