OPEC in a ‘whatever it takes’ moment to prop up oil
OPEC hasn’t even started implementing its new six-month agreement to cut output, and already members responsible for most of the reductions have pledged to extend or even deepen it. Officials from Iraq, Kuwait and the United Arab Emirates agreed with Saudi Arabia’s expectation that the group, along with Russia and other oil producers, will extend the agreement for another six months. The UAE’s energy minister, while stressing that the 1.2-million barrel-a-day cut will clear an inventory buildup in the first half, hinted additional curbs could be discussed. “The planned cuts have been carefully studied, but if it doesn’t work, we always have the option to hold an extraordinary OPEC meeting and we have done so in the past,” Suhail Mohammed Al Mazrouei, who is also OPEC president, said in Kuwait. “If we are required to extend for another six months, we will, if it requires more, we always discuss and come up with the right balance.” Last week, oil capped its biggest weekly decline since 2016 on concerns that weakening economic growth and surging US supply will lead to a surplus next year, overwhelming OPEC’s efforts to stabilize the market. The slide continued even after the Organization of Petroleum Exporting Countries and its partners surprised traders with the size of the supply reduction announced on December 7. At a press briefing in Kuwait, Iraqi, the UAE and Algerian energy ministers took turns repeating the message that OPEC will deliver its 800,000 barrels per day cut and continue their cooperation with other producers to balance supply and demand. Iraq’s oil minister Thamir Abbas Ghadhban said his country’s new membership into the OPEC+ monitoring committee “indicates that we are serious about meeting our commitments that will exceed what we’ve complied with in the past.” OPEC cuts may end up being deeper than agreed because of planned maintenance and production snags in some member countries, Mazrouei said. Conflict, sanctions and aging oil fields have been factors that dragged on output in Libya, Nigeria, Iran and Venezuela in recent years. Saudi Arabia has volunteered to take the lead in trimming production by more than it has agreed. The world’s biggest oil exporter plans to pump 10.2 million barrels a day in January rather than the 10.3 million allotted to it in the OPEC+ agreement. “Over-conformity is not new to Saudi Arabia,” said the kingdom’s OPEC governor Adeeb Al-Aama. “Our conformity with the previous cuts was 120% between January 2017 and May 2018.”
China’s LNG imports hit record in November
China’s liquefied natural gas (LNG) imports hit record levels in November, customs data showed on Sunday, with traders rushing to buy the fuel as households and businesses crank up their heating over the freezing winter months. LNG imports totaled 5.99 million tonnes in November, up 48.5 percent from the same month last year, data from the General Administration of Customs showed. That surpassed the previous record of 5.18 million tonnes hit in January this year. China has been pushing to switch parts of the country to gas for heating, shifting away from coal as it pushes to clean up its environment. For the first 11 months of 2018, LNG imports were up 43.6 percent from a year earlier to 47.52 million tonnes, on track to beat 2017’s annual record of 38.13 million tonnes. Meanwhile, Chinese exports of gasoline and diesel fell in November from the year before, the data showed, with local refiners reducing production as profit-margins fall. China exported 1.23 million tonnes of diesel in November, down 37.5 percent year-on-year. Gasoline exports last month fell 39.2 percent year-on-year to 630,000 tonnes.