Daily Energy Report
OPEC+ cut decision, US shale costs, Record US oil production, Russia currency clash, Brazil’s big oil spend, Carbon offset reality, Russia refining rise, China import quota, and more.
Chart of the Day: Will OPEC+ crude exports continue to decline?
Summary
Figure (1) above shows OPEC+ weekly crude oil exports in 2023. Exports from several countries declined in the summer months as some oil is used in power generation to meet cooling demand. The exports recovered as the summer ended.
EOA’s Main Takeaway
While exports started declining recently, two weeks of decline are not enough to be identified as a trend. But details matter: we have seen a decline in the exports of Russia, Saudi Arabia, and Kuwait, but exports of Iraq have risen sharply. If OPEC+ decides to cut additional production in its meeting on Thursday, exports will continue to decline.
Story of the Day
Reuters: OPEC+ looking at deeper oil cuts ahead of Thursday meeting
Summary
OPEC+ is contemplating further oil production cuts ahead of its rescheduled meeting this Thursday, with the possibility of deepening current reductions to bolster oil prices, which have fallen from September highs. The decision-making process has been delayed due to a dispute over production quotas for African countries, although a compromise seems to be nearing.
EOA’s Main Takeaway
We would like to refer our readers to two reports we posted over the weekend. Both are available free after we removed the paywall:
Rumor Mills of another Oil Price War? No, it’s far simpler than that.
What to Expect from the OPEC+ Meeting? Will the Oil Futures Curve Shift into Backwardation?
News of the Day
WSJ: American Oil—Good to the Last Drop?
Summary
U.S. shale producers have been successful in boosting oil production due to better technology and drilling techniques. However, there's uncertainty about the sustainability of these gains due to physical and technical limitations of well lengths and drilling speed, which has plateaued.
In response, "cube development" is being promoted, drilling multiple wells simultaneously to increase total oil recovery. But this method is expensive, takes longer, and is riskier.
EOA’s Main Takeaway