Latest news with #RystadEnergy
Business Recorder
6 hours ago
- Business
- Business Recorder
Oil gains as wildfires threaten Canada supply
NEW YORK: Oil prices rose by more than $2 on Monday, despite producer group OPEC+ sticking with output hike plans, as wildfires in central Canada threatened supply and President Donald Trump's new tariff threats weighed on the US dollar. Brent crude futures climbed by $2.29, or 3.65%, to $65.06 a barrel by 1:05 p.m. EDT (1705 GMT). US West Texas Intermediate crude was up $2.32, or 3.82%, at $63.11. In Canada, wildfires in the province of Alberta prompted the temporary shutdown of some oil and gas production, reducing supply. 'The wildfires in Alberta are now starting to seep in,' said John Kilduff, partner at Again Capital in New York. 'We are going to lose some barrels.' Also supporting prices, the US dollar slipped across the board on Monday on worries that President Donald Trump's fresh tariff threats might hurt growth and stoke inflation. A weaker US currency makes dollar-priced commodities like oil less expensive for buyers using other currencies. Prices were also supported by the increased geopolitical risk premium after Ukrainian drone strikes against Russia over the weekend, said Rystad Energy's Jorge Leon. The Organization of the Petroleum Exporting Countries and its allies, known collectively as OPEC+, decided on Saturday to raise output by 411,000 barrels per day (bpd) in July, the third consecutive monthly increase of that amount, as it looks to wrestle back market share and punish members that have produced more than their quotas. Sources familiar with OPEC+ talks said on Friday that the group could discuss an even larger increase.
Yahoo
7 hours ago
- Business
- Yahoo
Crude Below $65 Squeezes U.S. Shale, Even as Drivers Celebrate
In a market increasingly governed by geopolitical tremors and macroeconomic mismatches, crude oil dipping below $65 per barrel seems like a gift to global consumers. But behind that price tag lies a slow-moving crisis for U.S. shale producers, many of whom are being forced to pull back on production, delay capital projects, and recalculate what sustainability means in a low-margin world. Even after a brilliant spike on Monday, Brent is still languishing around $65 per barrel, with WTI trailing slightly lower. But while American drivers are beginning to enjoy sub-$3 gasoline at the pump in several states, producers from the Permian to the Bakken are facing rising pressure from investors and markets alike. Low prices are forcing tough decisions on everything from rig count to buybacks, and the broader U.S. energy sector is again confronting volatility. OPEC+'s weekend announcement that it will continue easing output restrictions with a fresh 411,000 bpd increase for July barely registered in the market, distracted as it was by Ukrainian drones and Russian military targets. But in the interim, American producers are stuck in a precarious position, squeezed between falling benchmarks and rising breakevens. A year ago, $65 oil would not have raised alarms. In fact, many U.S. producers and analysts viewed that price level as sustainable — if not ideal. Coming off the post-pandemic cost discipline and a period of investor-enforced capital restraint, shale operators had slimmed down enough to turn profits in the $60–$70 range. But the landscape in 2025 looks very different. Input costs for steel, labor, and frac materials have surged, pushing breakeven prices in major basins closer to $70. The average breakeven price for Permian producers is now edging back toward the mid-$60s, up from the mid-$50s just two years ago. New tariffs on imported equipment have further inflated expenses, as noted by the Financial energy analysts have been sounding the alarm that these prices are not sustainable for U.S. shale. Rystad Energy said in a May 30 briefing that the breakeven price for new horizontal wells in key shale plays is now closer to $68 per barrel, a sharp rise compared to 2023. 'There's an expectation of tight capital budgets and slower reinvestment — even if prices recover modestly,' said analyst Artem Abramov. Wood Mackenzie echoed the sentiment, noting that investor expectations for returns have hardened. 'This is not 2014. Investors want cash flow, not growth,' said Robert Clarke, VP of upstream research. 'If the price floor doesn't come back, the rig count absolutely will fall.' While investors continue to prioritize shareholder returns over growth, producers now face the challenge of delivering those returns with increasingly thin margins. What was a comfortable floor in 2024 has become a pressure point in 2025. Diamondback Energy, one of the top-tier Permian operators, recently flagged that U.S. shale output may have already peaked for 2025. Speaking during its May earnings call, CEO Travis Stice said, 'We're entering a period of discipline, not expansion. Prices like this don't support aggressive growth.' The company has reduced its production guidance slightly for the second half of the year and halted plans to add rigs. Share buybacks were modest in Q1 (just $150 million) and no new acceleration has been signaled. Diamondback is still profitable, but just barely, and analysts at Truist Securities have warned that 'continued sub-$65 oil could force a dividend reduction later in the year.' Liberty Energy, a major hydraulic fracturing services provider, is in deeper water. With fewer producers willing to fund new wells, the company has warned it may reduce its frac crew count by up to 15% by August. According to CEO Chris Wright, 'The environment is telling us to get lean again.' The stock has lost over 40% since January, despite earlier optimism about a robust drilling year. Liberty's challenges are particularly telling because the company operates across multiple basins and serves both large and mid-sized independents. As goes Liberty, so goes the rig count. Coterra Energy has begun trimming its exposure more aggressively. In its latest investor presentation, the company noted a planned reduction in Permian rig activity by 30% for H2 2025. Capital expenditures are being revised downward by 4%, and executives say they're 'focused on preserving shareholder returns in a tough environment.' Coterra's diversified asset base — spread across the Permian, Marcellus, and Anadarko basins — gives it a buffer. But as the New York Times recently reported, 'The economic playbook of pumping through the pain is losing favor fast' among shale CFOs. One less-discussed factor contributing to the squeeze: steel tariffs. reported last week that U.S. imports of OCTG (oil country tubular goods) have dropped sharply due to new rounds of tariffs on Chinese and Vietnamese pipe. As a result, costs for casing and tubing have risen over 20% YTD for many mid-cap producers. This further erodes margins at a time when shale players have little room for inefficiencies. Even firms with hedges in place for H1 2025 will see rolling exposure in Q3 and Q4. The pain is only just beginning. The bigger picture is industry retrenchment. While the U.S. consumer cheers falling gas prices, the supply chain that keeps those prices low is looking brittle. The rig count, already down 7% since January, is expected to fall further in June. If prices remain at or below $65, shale may contract by another 300,000 to 500,000 bpd by year-end, according to estimates from S&P Global. Unless there's a sudden reversal in global balances or a geopolitical shock that drives prices higher, U.S. shale producers may need to brace for a longer downturn than anyone expected. More Top Reads From this article on Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
CNA
9 hours ago
- Business
- CNA
Oil gains on supply concerns as wildfires disrupt Canada supply, OPEC+ keeps output plans unchanged
NEW YORK :Oil prices climbed nearly 3 per cent on Monday on supply concerns as producer group OPEC+ decided not to accelerate plans to hike output and wildfires in Canada's oil-producing province disrupted production. Brent crude futures settled $1.85, or 2.95 per cent, higher at $64.63 a barrel. U.S. West Texas Intermediate crude gained $1.73, or 2.85 per cent, to $62.52. Wildfires burning in Canada's oil-producing province of Alberta have affected about 7 per cent of the country's overall crude oil output as of Monday, according to Reuters calculations. At least two thermal oil sands operators south of the industry hub of Fort McMurray evacuated workers from their sites over the weekend and shut production as a precaution. "The wildfires in Alberta are now starting to seep in," said John Kilduff, partner at Again Capital in New York. Also supporting prices, the U.S. dollar slipped across the board on Monday on worries that Trump's fresh tariff threats might hurt growth and stoke inflation. A weaker U.S. currency makes dollar-priced commodities such as oil less expensive for buyers using other currencies. Prices were also supported by a perception of increased geopolitical risk after Ukrainian drone strikes against Russia over the weekend, said Rystad Energy's Jorge Leon. Meanwhile, mixed signals from Iran-U.S. talks kept market participants on edge. An Iranian diplomat said on Monday Iran was poised to reject a U.S. proposal to end a decades-old nuclear dispute. Delegations from the two countries made some progress after a fifth round of talks in Rome last month. The Organization of the Petroleum Exporting Countries and its allies, known collectively as OPEC+, decided on Saturday to raise output by 411,000 barrels per day in July, the third consecutive monthly increase of that amount, as it looks to wrestle back market share and punish members that have produced more than their quotas. Sources familiar with OPEC+ talks said on Friday that the group could discuss an even larger increase. Oil traders said the 411,000 bpd increase had already been priced into Brent and WTI futures. Phil Flynn, a senior analyst with Price Futures Group, said investors had expected the oil-producing group to increase production by more than it did. "I think they were caught the wrong way." Goldman Sachs analysts expect OPEC+ to implement a final 410,000 bpd production increase in August. "Relatively tight spot oil fundamentals, beats in hard global activity data and seasonal summer support to oil demand suggest that the expected demand slowdown is unlikely to be sharp enough to stop raising production when deciding on August production levels on July 6," the bank said in a note. Morgan Stanley analysts also said they expect 411,000 bpd to be added back each month up to a total of 2.2 million bpd by October.
CNA
14 hours ago
- Business
- CNA
Oil gains as wildfires threaten Canada supply, Trump tariffs weigh on US dollar
NEW YORK :Oil prices rose by more than $2 on Monday, despite producer group OPEC+ sticking with output hike plans, as wildfires in central Canada threatened supply and President Donald Trump's new tariff threats weighed on the U.S. dollar. Brent crude futures climbed by $2.29, or 3.65 per cent, to $65.06 a barrel by 1:05 p.m. EDT (1705 GMT). U.S. West Texas Intermediate crude was up $2.32, or 3.82 per cent, at $63.11. In Canada, wildfires in the province of Alberta prompted the temporary shutdown of some oil and gas production, reducing supply. "The wildfires in Alberta are now starting to seep in," said John Kilduff, partner at Again Capital in New York. "We are going to lose some barrels." Also supporting prices, the U.S. dollar slipped across the board on Monday on worries that President Donald Trump's fresh tariff threats might hurt growth and stoke inflation. A weaker U.S. currency makes dollar-priced commodities like oil less expensive for buyers using other currencies. Prices were also supported by the increased geopolitical risk premium after Ukrainian drone strikes against Russia over the weekend, said Rystad Energy's Jorge Leon. The Organization of the Petroleum Exporting Countries and its allies, known collectively as OPEC+, decided on Saturday to raise output by 411,000 barrels per day (bpd) in July, the third consecutive monthly increase of that amount, as it looks to wrestle back market share and punish members that have produced more than their quotas. Sources familiar with OPEC+ talks said on Friday that the group could discuss an even larger increase. Oil traders said the 411,000 bpd increase had already been priced in to Brent and WTI futures. "Had they gone through with a surprise larger amount, then Monday's price open would have been pretty ugly indeed," Onyx Capital Group analyst Harry Tchilinguirian wrote on LinkedIn. Goldman Sachs analysts expect OPEC+ to implement a final 410,000 bpd production increase in August. "Relatively tight spot oil fundamentals, beats in hard global activity data and seasonal summer support to oil demand suggest that the expected demand slowdown is unlikely to be sharp enough to stop raising production when deciding on August production levels on July 6," the bank said in a note. Morgan Stanley analysts also said they expect 411,000 bpd to be added back each month up to a total of 2.2 million bpd by October.
News.com.au
3 days ago
- Business
- News.com.au
OPEC+ announces sharp increase in July oil production
Saudi Arabia, Russia and six other key OPEC+ members announced on Saturday a huge increase in crude production for July. They will produce an additional 411,000 barrels a day -- the same target set for May and then June -- according to a statement, which is more than three times greater than the group had previously planned. In recent years the 22-nation group had agreed to daily reductions of 2.2 million barrels with the aim of boosting prices. But in early 2025, leading members of the group known as the "Voluntary Eight", or V8, decided on the gradual output increase and subsequently began to accelerate the pace. The moves have resulted in oil prices plummeting to around $60 per barrel, the lowest level in four years. - Trump pressure - OPEC+ "struck three times: (the output target for) May was a warning, June a confirmation and July a warning shot", Rystad Energy analyst Jorge Leon told AFP. "The scale of the production increase reflects more than just internal supply dynamics," he said. "This is a strategic adjustment with geopolitical aims: Saudi Arabia seems to be bowing to Donald Trump's requests." Shortly after taking office, the US president called on Riyadh to ramp up production in order to bring down oil prices, meaning cheaper prices at the pump for American consumers. Saturday's decision comes after a meeting of all OPEC ministers on Wednesday, where the alliance's collective production policy was reaffirmed. The decision is officially justified by "healthy market fundamentals" covering oil reserves and structural demand growth during coming months. - Riyadh 'angry' - But markets have met this view with scepticism amid concerns about demand and a trade war launched by the United States. Analysts see several possible motivations for the production hikes, one of them being Saudi Arabia and others penalising members for not keeping to their quotas under the cuts first agreed in 2022. The increase is all the more likely due to "the latest statements of Kazakh Energy Minister Yerlan Akkenzhenov, who has apparently already informed OPEC that his country will not reduce production," said Thu Lan Nguyen, an analyst at Commerzbank. "Saudi Arabia is angry with Kazakhstan", which is seen as one of the main laggards, and which "produced 300,000 barrels per day more than its quota," said Bjarne Schieldrop, an analyst at SEB. Analysts meanwhile do not foresee a plunge in oil prices when markets open Monday as the announcement was largely anticipated, instead resulting in a "moderate" reaction. On Friday, the benchmark Brent crude futures price had settled at $62.61 per barrel, while West Texas Intermediate was at $60.79.
