OPEC STUMBLES IN FACE OF OIL GLUT
The 14-nation oil cartel that controls about two-fifths of the global crude production has run into difficulties draining the world’s glut of oil, reports The Wall Street Journal.
Data released on Wednesday showed that oil storage tanks are still brimming, despite production cuts agreed to by the Organization of the Petroleum Exporting Countries and its big-producer allies like Russia. The high inventories are “fueling the idea that output caps withholding almost 2% of world crude supply were a miscalculation,” the Journal reports.
Official data show U.S. crude stocks fell last week by 1.7 million barrels, less than the 2.6 million drop forecast by a Journal survey, while gasoline inventories rose by 2.1 million barrels.
Moreover, oil inventories in “the Organization for Economic Cooperation and Development—a club of 35 countries with industrialized economies—rose by 18.6 million barrels in April and were higher than they were when OPEC agreed to its cut late last year,” the Journal reports.
Crude prices fell to their lowest levels Wednesday since November as the stock data fuels fears that OPEC may be powerless to curb the glut.
Crude futures edged down on Thursday, battered by data showing that the market remains awash in surplus oil.
Brent crude, the global oil benchmark, edged down 0.17% to $46.92 a barrel on London’s ICE Futures exchange. On the New York Mercantile Exchange, West Texas Intermediate futures were trading down 0.25% at $44.63 a barrel.
SAUDI ARAMCO IPO SLOWED OVER WHERE TO LIST
The plans for the initial public offering of the world’s biggest oil producer Saudi Arabian Oil Co. have been delayed because of a disagreement over where to list the firm, write Ben Dummett, Summer Said and Maureen Farrell.
Executives at the firm, also known as Saudi Aramco, are pushing to list a slice of the enterprise on the London Stock Exchange, while Saudi Arabia’s ruling family prefer the New York Stock Exchange, because of the kingdom’s longstanding political ties to the U.S. and because the American market represents the deepest pool of capital in the world.
Meanwhile, Saudi Aramco’s management is concerned that a New York listing would expose the company to greater legal risks, including from potential class-action shareholder lawsuits.
A decision on where to list Aramco, which could value the company as high as $2 trillion, was expected by some to come before the Islamic month of Ramadan, but is now not expected until the end of July or longer.
THE OIL OUTLOOK IS NOW SO BLEAK IT MAY BE AN OPPORTUNITY
Following a slew of depressing data, oil market prospects may look bleak but oil bulls nursing losses should take solace from the idea that bad news could take some steam off the U.S. shale boom, reports Spencer Jakab for Heard on Street.
Investors should take heart as the bad news may prove beneficial. The slump in oil prices and rising service costs may slow down the U.S. shale oil drilling machine.
The IEA expects U.S. output to grow by 480,000 barrels a day this year and 780,000 next year or a cumulative 1.26 million barrels a day.
The bearish tidings may also help to reduce the global oil glut, writes Mr. Jakab.
“Investment cutbacks in recent years for expensive, long-term conventional projects outside of OPEC are starting to nip supply. And, finally, political woes in Venezuela and a resurgence of problems in Libya or Nigeria, or even in OPEC’s Persian Gulf heartland, could unexpectedly reduce supply,” the Journal reports.