Venezuela supports oil cuts proposed by OPEC

Caracas, Feb 12 (Prensa Latina) The Ministry of Oil of Venezuela has announced its support of the recommendation to cut the production of crude oil presented by the Joint Technical Committee (JTC) of the Organization of Petroleum Exporting Countries (OPEC).

With its support to the production adjustment, Venezuela reaffirms its policy to achieve stability of the hydrocarbons international market, and help the just relation between the countries that produce, consume and invest in oil.

During the extraordinary meeting in Vienna, the JTC, presided by Saudi Arabia and Russia, recommended additional production cuts during the second trimester of the year, to face the drop in oil demand as a result of the Covid-19 epidemic.

The body recommended extending the voluntary production adjustments until the end of 2020, and proceed with and additional adjustment until the end of the second trimester, as per a communiqué, which does not specify, however, the extent of the initial cut.

The committee's recommendations are a result of the coronavirus epidemic having a negative impact on the oil demand and oil markets, says the text issued by the current OPEC president, Minister of Energy of Algeria, Mohammed Arkab.

The next meeting of the organization is to take place in March 5th and 6th, when it will be decided how many oil barrels will be retired from the market.

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In Major Shift, US Now Exports More Oil Than It Ships In

The United States last week exported more crude oil and fuel than it imported for the first time on record, according to data released on Thursday, the same day OPEC ended a meeting without a decision to curb global output to balance out the historic surge in U.S. supply.

When adding in all imports and exports of crude and refined products, the U.S. exported a net 211,000 barrels per day for the week through Nov. 30 - the first time that has happened, according to U.S. Energy Department figures dating to 1973. That was on the back of a jump in crude exports to a weekly record of more than 3.2 million bpd.

"So when does the U.S. send a delegate to OPEC meetings?" said Kyle Cooper, consultant at ION Energy in Houston. "It's really quite amazing. I do think that will occur more and more often in coming years."

The United States historically has been a heavy importer of crude oil in part due to a four-decade ban on crude exports that was lifted in late 2015 by then-President Barack Obama.

Petroleum exports until recently were dominated by products like gasoline and diesel, but that has changed since the U.S. shale revolution that has sped up drilling and extraction of oil, helping boost overall U.S. production to a record 11.7 million bpd.

The data comes on the same day that the Organisation of the Petroleum Exporting Countries adjourned a meeting without announcing a supply-cut agreement as it grapples with sinking prices due in part to the surge in U.S. output that has upended the global supply equation.

Crude inventories fell 7.3 million barrels last week, the first drawdown since September, as net crude imports hit a record low of 4 million bpd, the U.S. Energy Information Administration said on Thursday.

Graphic: U.S. turns into net exporter of oil (https://tmsnrt.rs/2Rz57Xn)

U.S. crude prices have sagged almost a third since hitting a four-year high near $76 a barrel in October. That was in part due to concerns about oversupply coming to the fore again as U.S. production rose in tandem with increased output from Saudi Arabia and Russia. The three countries are the world's largest producers of oil.

That has created a dilemma for Saudi-led OPEC, which wants to maintain higher prices but avoid ceding more market share to shale producers. On Thursday, OPEC adjourned its meeting in Vienna, aiming to reach an agreement with Russia on Friday.

"It seems EIA has a habit of sending bad news to OPEC during its Vienna meetings. In the past, it has been surging U.S. production numbers. But this time was truly remarkable and historic showing data for net crude imports as -211,000 bpd," said Joe McMonigle, analyst at Hedgeye in Washington.

U.S. crude production is expected to average more than 12 million bpd in 2019, according to the EIA, an increase of more than 3 million bpd in 2016. Shale production surged in the early part of the decade as companies started to use hydraulic fracturing, or fracking, to extract oil in basins in Texas, North Dakota and other states.

U.S. output rose to 9.7 million bpd in mid-2015, just shy of the nation's all-time high set in 1970, but fell off when OPEC flooded the world markets with supply to try to hinder the shale industry. But OPEC was forced to curb output in 2016 as oil-producing nations faced budget shortfalls, and as prices recovered, shale's output accelerated.

"Every single month, every single year, we're going to become more of a global pie and that's a part of the pie you can't control - it's completely different than the OPEC piece," said Bernadette Johnson, vice president in market intelligence at Drillinginfo in Denver.

For the week, the United States also posted net exports of 4.2 million bpd of products like gasoline and diesel.

The weekly figures are subject to wide fluctuations, however, so the sudden shift may be a temporary occurrence. Andrew Lipow, president of Lipow Oil Associates in Houston, said he was not surprised this happened in the winter, a seasonally slow period for domestic gasoline demand.

U.S. oil prices ended Thursday lower, due to concern that planned OPEC production cuts will be smaller than originally anticipated. U.S. crude futures lost 2.7 percent on the day, while Brent crude dropped by 2.4 percent.

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Angola Regains African Leadership in Oil Production

Angola has regained the African leadership in oil production, according to a report by the Organization of the Petroleum Exporting Countries (OPEC) the press highlights today.

According to OPEC's monthly production bulletin, Angola produced in January about 1,615,000 barrels, a daily decrease of 24,000, against 1,604,000 that Nigeria pumped, whose levels were reduced in 233,700 barrels a day.

Angola produced in 2016 about 1,708,000 barrels a day, a figure exceeding the level the country previously reached in the continent, which attracted 1,447,000 barrels a day, Jornal de Angola newspaper, with the largest distribution on the country, stated.

The decline in the oil production in Nigeria is linked to attacks to production facilities and pipelines by terrorist groups.

The Angolan sales to the Chinese market grew by 18 percent during the first seven months of 2016, to 923,200 barrels of oil a day, placing it third among suppliers, followed by Saudi Arabia and Russia.

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Saudis, Iran Dash Hopes for OPEC Oil Deal in Algeria

The Saudi and Iranian economies depend heavily on oil, but Iran is seeing the pressure easing as it emerges from years of sanctions.

Saudi Arabia and Iran on Tuesday dashed hopes that OPEC oil producers could clinch an output-limiting deal in Algeria this week as sources within the exporter group said the differences between the kingdom and Tehran remained too wide.

RELATED: Algeria Will Not Leave OPEC 'Empty Handed'

"This is a consultative meeting ... We will consult with everyone else, we will hear the views, we will hear the secretariat of OPEC and also hear from consumers," Saudi Energy Minister Khalid al-Falih told reporters.

Iranian Oil Minister Bijan Zanganeh said: "It is not the time for decision-making." Referring to the next formal OPEC meeting in Vienna on Nov. 30, he added: "We will try to reach agreement for November."

The Organization of the Petroleum Exporting Countries will hold informal talks at 2:00 p.m. GMT on Wednesday. Its members are also meeting non-OPEC producers such as Russia on the sidelines of the International Energy Forum, which groups producers and consumers.

Brent crude oil prices have more than halved from 2014 levels due to oversupply, prompting OPEC producers and rival Russia to seek a market rebalancing that would boost revenues from oil exports and help their crippled budgets.

The predominant idea since early 2016 among producers has been to agree to freeze output levels, although market watchers have said such a move would fail to reduce unwanted barrels.

Sources told Reuters last week that Saudi Arabia had offered to reduce its output if Iran agreed to freeze production, a shift in Riyadh's position as the kingdom had previously refused to discuss output cuts.

On Monday, Iranian Oil Minister Bijan Zanganeh said expectations should be modest and several OPEC delegates said the positions of Saudi Arabia and Iran remained too far apart. Oil prices were down more than 1 percent in Tuesday trade. [O/R]

Three OPEC sources said Iran, whose production has stagnated at 3.6 million barrels per day, insisted on having the right to ramp that up to around 4.1-4.2 million barrels per day, while OPEC Gulf members wanted its output to be frozen below 4 million.

"Don't expect anything unless Iran suddenly changes its mind and agrees to a freeze. But I don't think they will," an OPEC source familiar with discussions said.

What Iran Wants

Russian Energy Minister Alexander Novak was due to meet Zanganeh on Tuesday in what sources said was a new attempt to persuade Tehran to play ball.

RELATED: Latin America Oil Producers Push to Bolster Prices

Iranian oil sources said Tehran wanted OPEC to allow it to produce 12.7 percent of the group's output, equal to what it was extracting before 2012, when the European Union imposed additional sanctions on the country for its nuclear activities.

Sanctions were eased in January 2016.

Between 2012 and 2016, Saudi Arabia and other Gulf OPEC members have raised output to compete for market share with higher-cost producers such as the United States.

As a result, Iran believes its fair production share in OPEC should be higher than its current output, which it says should rise once Tehran agrees to new investments with international oil companies.

"Iran believes this is a just volume of production, which it had prior to the sanctions. This has been discussed more than once," Novak said on Tuesday.

The Saudi and Iranian economies depend heavily on oil, but Iran is seeing the pressure easing as it emerges from years of sanctions. Riyadh, on the other hand, faces a second year of record budget deficits and is being forced to cut the salaries of government employees.

Falih said he was, nevertheless, optimistic about the oil market although rebalancing was taking longer than expected.

"The market is trending in the right direction, slower than what we had hoped for a few months ago but the fundamentals are moving in the right direction," Falih told reporters.

"From that aspect we are feeling good about the market and I think the rebalancing is here but taking (longer) than what we had hoped."

He said record global stocks of oil had started to decline: "How fast will it take place, it also depends on the production agreement. If there is a consensus on one in the next few months, Saudi Arabia will be with the consensus view."

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