IEA, OPEC, EIA Send Mixed Signals to Oil Investors
It has been a dizzying few days of data for the oil market, and investors are still taking stock.
Oil prices fell on Thursday morning after the International Energy Agency released its closely watched monthly market report. Investors focused on the Paris-based group’s rising estimates for production from the Organization of the Petroleum Exporting Countries, the 14-nation cartel that is actually supposed to be cutting its output.
“OPEC crude output hit its highest level in 2017, at 32.6 million barrels a day, driven by Libya, Nigeria and Saudi Arabia,” Christopher Alessi reports in the Journal.
But the pessimism was tempered by another data point in the IEA report: Accelerating demand. Petroleum consumption growth jumped to 1.5 million barrels a day in the second quarter, after registering an anemic 1 million barrels a day in the first three months of 2017.
The IEA data was released a day after OPEC’s own monthly report came out and the U.S. Energy Information Administration’s weekly release of American crude-storage levels. The EIA data sent oil prices climbing on Wednesday before their fall on Thursday because inventory levels fell by 7.6 million barrels in the week ended Friday.
“That is more than double the draw estimated by analysts surveyed by The Wall Street Journal and nearly confirmed a drawdown of 8.1 million barrels that the American Petroleum Institute estimated Tuesday evening,” Timothy Puko writes in the Journal.
Iran Is Optimistic About Its Energy Industry. Big Oil, Not So Much
Iranian oil-industry officials have used the World Petroleum Congress in Istanbul as a sort of coming out party for their sector since French oil giant Total SA signed a $1 billion deal to develop a gas field.
Deputy Oil Minister Amir Hossein Zamaninia sat on a panel with BP PLC Bob Dudley and an American energy industry lobbyist, cracking jokes and touting his industry’s readiness for investment.
“We think that the situation is normal enough now for major international oil business to get engaged in Iran,” Mr. Zamaninia said.
But BP and other big oil companies are moving cautiously with Iran, despite the breakthrough by Total. Mr. Dudley told reporters that BP has other projects that have to come first before he would look at going into Iran. Royal Dutch Shell PLC has signed a preliminary agreement to explore work in Iran but a spokeswoman said “it is too early to discuss potential Shell investment in any project.”
A Gusher in the Gulf of Mexico
An early entrant into Mexico’s revamped oil industry “has struck it big with a significant oil discovery in Mexican waters,” write Robbie Whelan and Anthony Harrup from Mexico City.
Premier Oil PLC, of the U.K., Talos Energy of Houston and Sierra Oil & Gas of Mexico say they have discovered a “world-class” oil field with between 1.4 billion to 2 billion barrels of light crude.
“The discovery, along with strong interest from foreign investors in recent oil and gas auctions, is a boon for the Mexican government, which in 2014 opened up the country’s energy industry to private investment after 76 years of state ownership,” the Journal reports.