Saudi Arabia: Making U.S. Oil Great Again
Phil Flynn | Feb 01, 2017 11:48AM ET
It was just a little over a year a ago when Saudi Arabia declared open warfare on the U.S. energy producer, dumping cheap oil on U.S. shores to try to drive the U.S. oil producers out of business. Now the Saudi oil minister. Khalid al-Falih wants to invest in U.S. oil because he believes that President Trump is good for oil.
Khalid al-Falih said in an interview with the BBC that "President Trump has policies which are good for the oil industry and I think we have to acknowledge it.” In fact, the Saudi oil minister said he had no problem with Trump's plan for the U.S. to become energy independent as long as the U.S. grows in line with energy demand.
Obviously, that is a change in Saudi Oil policy and the days when the old regime took offense when then President George W. Bush said he wanted to break our addiction to oil. After that the Saudi’s threw a fit and said they might cancel their investments in expanding production if the U.S. dared to try to put them out of business. Now along with big oil and Donald Trump, the U.S. shale fields are a hot place that the Saudis want to be a part of.
Oil prices today are shaking off another crazy API report that showed U.S. oil inventories increased by over 5 million barrel (bbl) the biggest increase since October. Yet they also report about 906,000 barrels drop in Oklahoma Cushing. We also saw an increase in Gasoline +2.86m bbl and Distillates +2.27m bbl.
Oil may get some influence from the Fed today, While the Fed is expected to stand pat, any indication about a direction in interest rates can move the dollar and oil.
Bloomberg is reporting that Output at Forties crude-feeding field remains reduced after an unspecified issue at site last week, per 2 people with knowledge of the partial outage. Unclear when field will return to full production, Field was restricted by ~30k b/d last week. Operator Nexin declined to comment at that time. NOTE: Field produced ~160k b/d from Oct. 2015-Sept. 2016.
Is winter over? Natural gas traders think so even as the forecast turn much colder. But the structural issues continue / jones reports that U.S. natural gas production in November fell year-over-year for the ninth consecutive month, while total natural gas consumption was also slightly below the same period in 2015, as warmer weather reduced the need for residential heating and industrial demand, per the EIA. The drop-in consumption masks a 4.5% increase in gas usage by power plant operators, to 9,320 billion cubic feet in 2016 through November. Dry natural gas production last November was 2,155 billion cubic feet, or 71.8 Bcf/day, down 3.1% from the November 2015 level of 74.1 Bcf/day. January through November 2016 dry gas production was 24,255 Bcf, down 2% from the same period in 2015.
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We feel the lows on oil are in for the year. Nat gas should snap back
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