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  • Oil Price Fundamental Daily Forecast – Unexpected EIA Build, COVID-Related Demand Worries Pressure Prices
    FX Empire

    Oil Price Fundamental Daily Forecast – Unexpected EIA Build, COVID-Related Demand Worries Pressure Prices

    Baker Hughes on Friday reported that the number of active U.S. rigs drilling for oil rose by 2 to 289 this week.

  • Iraq to Lower Oil Production to Compensate for OPEC Breach
    Bloomberg

    Iraq to Lower Oil Production to Compensate for OPEC Breach

    (Bloomberg) -- Iraq plans to cut oil output in January and February to make up for breaching its OPEC+ quota last year, according to the state company that markets the nation’s crude.OPEC’s second-biggest producer will pump around 3.6 million barrels daily for the two months, according to Ali Nizar, the deputy head of SOMO. That would be the lowest level since 2015 and compares with around 3.85 million in December, according to data compiled by Bloomberg.Exports, including those from the semi-autonomous northern region of Kurdistan, will be slightly more than 3 million barrels a day during the period, Nizar said in an interview in Baghdad, the capital. The figure for last month was almost 3.3 million.Baghdad’s ability to meet these targets depends on whether the Kurdistan Regional Government agrees to reduce supplies from fields under its control, Nizar said. The central government has complained in the past that it can’t control Kurdish production.The Organization of Petroleum Exporting Countries and partners such as Russia, an alliance known as OPEC+, agreed in April to slash output and bolster oil prices, which had been hammered by the spread of the coronavirus. Saudi Arabia criticized Iraq and other members including Nigeria for pumping above their caps on several occasions and called on them to make compensatory cuts.Iraq is still committed to the OPEC+ deal, which runs until next year, Nizar said.Following SaudiIts decision to pump less oil follows a similar move by Saudi Arabia earlier this month. With the virus still raging, the kingdom said it would reduce production in February and March by 1 million barrels daily, a surprise move that caused oil prices to rise.Tanker-tracking data suggest Iraq is already selling less crude. Exports slipped to just over 3 million barrels daily in the first 15 days of January, according to data compiled by Bloomberg.Benchmark Brent crude has almost tripled to around $55 a barrel since OPEC+ begun restricting supplies. But it’s still far short of what Iraq needs to balance its budget and bolster its economy. The International Monetary Fund forecast that Iraq’s gross domestic product would contract 12% in 2020, more than that of any other OPEC member under an output quota.Storage in AsiaIraq is mulling whether to build or use oil-storage facilities in Asia to reduce the risk of it not being able to send crude to its main customers, according to Nizar. Persian Gulf neighbors Saudi Arabia and the United Arab Emirates already stockpile some of their crude in Japan, South Korea and India.Most of Iraq’s oil has to pass through the Strait of Hormuz. Iranian forces have targeted tankers traversing the chokepoint several times since early 2019 and threatened in the past to block it.Iraq plans to export an average of 1.1 million barrels a day of its new Basrah Medium grade, Nizar said. The first cargo was shipped this month.Prime Minister Mustafa Al-Kadhimi’s cabinet is yet to sign off on a multibillion-dollar supply deal with China’s Zhenhua Oil Co., according to Nizar. Under the terms, SOMO will supply roughly 130,000 barrels a day of crude to for up to five years, with Zhenhua paying for the first year upfront.The pre-payment oil contract, a first for Baghdad, underscored the government’s need for cash.(Updates with production details in second paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.

  • Libya Guards to Halt Oil Shipments at Eastern Ports in Spat
    Bloomberg

    Libya Guards to Halt Oil Shipments at Eastern Ports in Spat

    (Bloomberg) -- Members of a Libyan paramilitary force responsible for safeguarding the OPEC nation’s oil ports ordered a halt in crude shipments at two eastern terminals while they press salary demands.Petroleum Facilities Guard members ordered the suspension of loading operations at Hariga and Ras Lanuf, according to people familiar with the situation, who asked not to be identified because they lack authorization to speak to media. The tanker Dubai Hope, currently loading crude at Ras Lanuf, would be the last to do so until the protesters’ demands are met, according to two of the people.The halt, and the possibility that it might spread to Libya’s biggest port at Es Sider, could threaten a recovery in the Arab nation’s oil exports and production. While it might be resolved quickly, the stoppage underscored the lingering political tensions in Libya following a truce in its civil war last year.The North African country’s output surged from almost zero to nearly 1.25 million barrels daily after a blockade of ports and fields by eastern-based forces ended in September. A tentative peace in the civil war led to the lifting of the blockade. However, the country is struggling to maintain the recovery due to the dilapidated condition of many pipelines and other facilities.Negotiations are under way to resolve the salary dispute, according to one of the people. The protesters have also threatened to halt exports at Es Sider port. Their ultimatum for the government to pay their delayed salaries ends on Sunday, according to a letter seen by Bloomberg.Earlier this month, the guards at Hariga temporarily refused entry to the tanker Olympic Fighter before allowing it to load. They delivered the government an ultimatum until later in January to pay what they said were overdue salaries.The Guard was originally formed as a neutral force to defend oil ports and fields. But its members contributed to a crash in Libyan crude output at the start of last year by blockading some installations on behalf of various groups and as they sought to press their own demands.In a separate but more positive example of the challenges it faces, Libya restarted a pipeline that carries crude to Es Sider, after a shutdown that caused the nation’s production to drop to the lowest level in two months.The 32-inch link has been repaired and pumping has resumed, Waha Oil Co., which operates the eastern port, said in a statement. That paves the way for the return of 200,000 barrels a day that stopped flowing after Waha shut the pipeline to fix leaks.Waha, a subsidiary of state energy firm National Oil Corp., was pumping 98,000 barrels a day on Saturday before the pipeline began operating again. It’s expected to be back to its normal daily level of 300,000 barrels within two days, according to a different person with knowledge of the situation.(Updates with details from third paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.