As today is a public holiday in Australia, in which even the toilers who issue ASX announcements take a break, today’s blog will be a short (flash) one only.
As expected, the outcome of Friday’s OPEC meeting was “no change”. The KSA’s al-Naimi summarised it pithily as “same ceiling, 30 mmbopd” (conveniently not mentioning that OPEC is pumping ~31 mmbopd, with Saudi Arabia itself amongst the internal quota busters).
Crude prices rallied somewhat on the outcome (as it least it did not increase formal production quotas), with Brent closing at US$63.31 and WTI at US$59.13.
OPEC did not address what might happen to quotas if Iranian sanctions were lifted post any nuclear deal.
The next OPEC meeting is scheduled for 4th December.
The Baker Hughes rig count number issued on Friday continued to show an ongoing decline, with total numbers down seven to 868 rigs. Within North America this is somewhat counter-balanced by an increase in Canadian rig numbers. Over each year, the Canadian rig count saw-tooths significantly in response to weather conditions, so this is no surprise.
Meanwhile, US natural gas prices continued their fall in recent weeks, with Henry Hub closing at US$2.59. The market is currently short term data driven, with higher than normal weekly injections into storage providing fodder for the bears.
The US Environment Protection Agency released a report on fracking at the end of last week, which concluded that:
“no evidence that these mechanisms (fracturing) have led to widespread, systemic impacts on drinking water”
Supporters and opponents of fracking have both taken comfort from this, which I summarise as: if fracking is done properly then there will be no problems, but occasionally it might not be done properly, but if that is the case it is more likely to be surface water disposal issue than anything occurring in the sub-surface.
Quote of the day
From Iran’s Oil Minister:
“We didn’t discuss it,” Zanganeh said. “We don’t need to receive any agreement from any country for our return to the market. It is our right. We have been in the market and we are entitled to be. We dont need any agreements. We will return to the market [when] the sanctions will be lifted.”