Oil could soon overtake its 2017 highs, strategist says

Oil could soon overtake its 2017 highs, strategist says

Crude oil is on pace to wrap up a strong September, having gained a little over 9% month to date.

Some see further gains ahead as much of the commodity’s losses have been recouped.

“Investors have really gained confidence in oil, after the OPEC cuts that were originally discussed earlier in the year are starting to take shape here, and oil production is being curbed,” Phil Streible, senior market strategist at RJO Futures, said Thursday on CNBC’s “Trading Nation.”

Further fueling the commodity’s recent upside is the International Energy Agency having upped its demand outlook for the end of this year and into 2018, Streible said.

Due to this combination of production cuts and growing demand, oil could head up to its 2017 high, just above $55, or even $60 per barrel by year-end. A global supply glut has plagued the market for several years, and OPEC member countries and non-member producers have vowed to implement cuts to curb such oversupply.

 

 

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Rising Demand Will Continue To Drive The Rally In Crude Oil Prices

Rising Demand Will Continue To Drive The Rally In Crude Oil Prices

As the rally in oil prices gathers steam, it’s important to place the quoted prices in context.  The price most frequently quoted for “crude oil” is the front-month West Texas Intermediate contract.  So, today’s oil price of “$52 per barrel” is the value of the contract for delivery at the hub in Cushing, OK by November 30th, a contract that settles on October 20th. The lag between the settlement date and the delivery date represents the necessity to transport the physical commodity.

So, there’s really no “spot” price for crude in the Western world, as it doesn’t settle on a day of/cash basis.  U.S. oil producers are compensated for their output based on the value of the futures contract for the month corresponding to the delivery of the oil.  Of course those producers use futures along the forward curve to hedge production in upcoming periods.

That type of market doesn’t necessarily exist around the world.  Saudi Arabia, for instance, sells its crude to China on a price that it sets monthly with an eye on oil futures, specifically for Brent crude. Other, less-developed oil nations sell at prices that more closely resemble a true spot market price.

 

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Oil Rallies Above $50 on Record OPEC Compliance: 4 Picks

Oil Rallies Above $50 on Record OPEC Compliance: 4 Picks

The energy market is again in the spotlight after OPEC and participating non-OPEC oil producers reached the highest ever compliance level with their output cut agreement.

Oil traders have turned bullish on the commodity amid hopes of more upside in the coming months Such is the optimism about oil that leading crude producers, at an OPEC-led committee meeting at Vienna on Sep 22, did not feel the immediate need to go for extension of the production cut deal beyond March 2018. Instead they will wait at least until January to make any further decisions. This showed confidence that the crude glut will likely be cleared within the first quarter of 2018.

Output Cut Maintained in Last OPEC Meeting

On Nov 30, 2016, OPEC signed a landmark deal to curb crude production by 1.2 million barrels per day. Following in the footsteps of the cartel, in early December last year, non-OPEC players headed by Russia also decided to lower oil output by 558,000 barrels per day. Hence, collectively they decided to curb crude production by 1.8 million barrels each day.

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Citi Says Get Ready for an Oil Squeeze

Citi Says Get Ready for an Oil Squeeze

Those in the oil market fearing a flood of OPEC supply next year will probably be better off preparing for a shortage, according to Citigroup Inc.

Five countries in the group — Libya, Nigeria, Venezuela, Iran and Iraq — may already be pumping at their maximum capacity this year, Ed Morse, the bank’s global head of commodities research, said in an interview. Rather than a surge in output, there’s a risk of a market squeeze emerging as early as 2018, driven by those nations because of weaker investment in exploration and development, he said.

“Fear in the market has been that OPEC production will rise dramatically,” said Morse. However, “there could be a supply gap emerging, which could point to a tighter market,” he said in Singapore on the sidelines of the S&P Global Platts APPEC Conference.

Crude is still trading more than 50 percent below mid-2014 levels amid concern over whether output curbs by the Organization of Petroleum Exporting Countries will be enough to eliminate a global glut. A gathering in Vienna last week between OPEC and its allies ended with no decision on an extension or deepening of the cuts beyond the first quarter of 2018, while the potential revival of U.S. shale production is also weighing on the outlook for prices.

If the output reductions are prolonged, that would only hasten the prospect of a tighter market, said Morse, adding that the source of the supply squeeze will probably be OPEC rather than producers outside the group. “There’s no room for them to do more,” he said, referring to the five nations.

“We’re seeing more and more evidence that it’s not the international oil companies, it’s not the independent oil companies that are lagging new investments, but it’s OPEC countries lagging, particularly those five,” he said.

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Trendsetter has ended its live well operations with its hydraulic intervention system

Trendsetter has ended its live well operations with its hydraulic intervention system

The Subsea hydraulic intervention system had previously been utilized for the subsea remediation work.
It has now completed seven subsea projects. The project was conducted in the water depths ranging
from 2500 ft. to 7200 ft. The project commenced on November 2016.

From February through March this year, the recent live well operation was conducted. The operation
consisted of acid stimulation on the three wells with water depths of up to 7200 ft. The pressures were
up to 12500 psi. The sustained pump rates were 10bbl per minute. This was the first campaign certified
by BSEE to be conducted with hydraulic well intervention system. It was approved by the independent
third party to be compliant fully with the new well control regulations.

 

Acid Stimulation

The stimulation of gas, oil and injecting wells with acid is an old technology employed by gas and oil
investment firms. The technology and the science of acidizing, however, has undergone striking changes
in recent years. Acid stimulation may include a concise review of the tremendous amount of information
that has been gathered for a long period. It also includes a summary of chemistry, methods of
measurement of reactive fluids and reaction kinetics.

To use this method, there has to be a deep understanding of the latest design of information and
philosophies for both sandstone acidizing and carbonate. There has to be coverage of diversion, acid
corrosion control and acid additives. Latest models and measurement techniques should be included to
predict acid fracture conductivity, worm holing, rock dissolution and acid transport. There also has to be
current practices in acid safety, protection of the environment for this method to be effective and
efficient

 

Word from the vice president

The vice president of rentals and services for trendsetter engineering said that the deployment of the
STIM system was another major step for the trendsetter as they continued with the evolution from a
subsea hardware provider to a large offshore gas and oil service company. He also added that the
successful operations of the 15000 psi hydraulic intervention system on a well signaled the official entry
of the trendsetter into the subsea well-servicing market. He also said that they would work with the
offshore service Alliance Partners innovations and Halliburton to explore the good things the future
holds for the company and their innovation team at large.

The offshore service alliance was formed to allow the trendsetter engineering, Halliburton, and the C
innovation to leverage the companies’; capabilities and strength to provide integrate and value added
solutions for the subsea well intervention and inspection, repair, and maintenance.

 

About Trendsetter Engineering

Trendsetter engineering is a provider of specialized solutions for gas and oil investment across the
globe. It specializes in the solving of unconventional problems with the conventional field proven
technology in a crisis environment.