Saudis plan new unilateral output cut: Opec+ delegates
Saudi Arabia is planning to commit to another "voluntary" cut to its crude production, this time a unilateral reduction, according to delegates at today's Opec+ meeting in Vienna.
The size and timing of the new Saudi cut are not clear. Riyadh is already producing below its formal quota, after joining seven other Opec+ countries in April in announcing a combined voluntary cut of 1.16mn b/d from May to the end of the year. Saudi Arabia's share of that cut is 500,000 b/d, matching an earlier commitment by Russia to lower its production by 500,000 b/d from March.
Formal output targets for all 19 Opec+ countries with quotas are expected to remain unchanged at the same level they have been since November last year, although discussions are taking place about whether to rejig baselines from next year. Opec+ ministers are also expected to agree at their meeting today to extend their output co-operation deal for another year until the end of 2024.
The fact that Saudi Arabia deems another reduction necessary highlights the uncertainty around oil demand for the rest of the year. There is a wide variation in predictions of demand growth from prominent forecasters. Most agree that the lion's share of this year's demand increase will take place in the second half of the year, although much rests on the scale of China's post-Covid rebound.
Beyond this year, the Opec+ group has been discussing whether to recalibrate output baselines in 2024, raising them for those with ample spare capacity but lowering them for those that have been struggling to reach their targets. Baselines are the production level on which Opec+ cuts are calculated under the group's output co-operation deal. These discussions on baselines have delayed both today's meeting of the Opec+ Joint Ministerial Monitoring Committee (JMMC) and the full ministerial meeting.
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Opec+ output falls in May
Opec+ output falls in May
London, 7 June (Argus) — Opec+ crude output by members subject to cuts fell by 110,000 b/d in May as Russia and Kazakhstan made further headway towards meeting their targets. This left output at its lowest in nearly three years, Argus estimates — at 34.03mn b/d still 110,000 b/d above the group's target for the month, but a marked improvement on the 170,000 b/d overproduction in April. The nine Opec members subject to cuts were 210,000 b/d above target in May, but this was partially offset by the nine non-Opec members, which produced 100,000 b/d below. The biggest fall came from Russia, which reduced output by 180,000 b/d to 9.11mn b/d as it continues to replace a pre-existing export cut pledge with an output cut. Still, it remained 60,000 b/d above its new target for that month. More output falls from Russia are expected, particularly given its pledge to compensate for recent overproduction. The story is similar for Kazakhstan, which reduced output by a notable 70,000 b/d to 1.51mn b/d in May — helped by maintenance at a key field — but it remained 40,000 b/d above target. Iraq's production rose by 20,000 b/d to 4.16mn b/d in May, despite its pledge to finally start shrinking output. This left it at 160,000 b/d above target, making its task of compensating for past production that much harder in the coming months. Gabon overshot its target by 80,000 b/d. All members that have overproduced were expected to submit new plans to Opec detailing how they plan to compensate for it in the first part of the year. The biggest output rise in May came from Nigeria, which boosted production by 80,000 b/d to 1.48mn b/d, just 20,000 b/d shy of its target. Most Mideast Gulf states were more or less in line with their targets in May, although UAE's output rose by 20,000 b/d to 2.95mn b/d, 40,000 b/d above its pledge. Opec+ crude production mn b/d May Apr* May target† ± target Opec 9 21.44 21.32 21.23 0.21 Non-Opec 9 12.59 12.82 12.70 -0.10 Total 34.03 34.14 33.92 0.11 *revised †includes extra cuts agreed in Apr 23 and Nov 23 Opec wellhead production mn b/d May Apr May target* ± target Saudi Arabia 8.96 8.97 8.98 -0.02 Iraq 4.16 4.14 4.00 0.16 Kuwait 2.42 2.41 2.41 0.01 UAE 2.95 2.93 2.91 0.04 Algeria 0.90 0.91 0.91 -0.01 Nigeria 1.48 1.40 1.50 -0.02 Congo (Brazzaville) 0.26 0.28 0.28 -0.02 Gabon 0.25 0.23 0.17 0.08 Equatorial Guinea 0.06 0.05 0.07 -0.01 Opec 9 21.44 21.32 21.23 0.21 Iran 3.29 3.30 na na Libya 1.18 1.22 na na Venezuela 0.84 0.82 na na Total Opec 12† 26.75 26.66 na na *includes extra cuts agreed in Apr 23 and Nov 23 †Iran, Libya and Venezuela are exempt from production targets Non-Opec crude production mn b/d May Apr* May target† ± target Russia 9.11 9.29 9.05 0.06 Oman 0.76 0.76 0.76 0.00 Azerbaijan 0.47 0.48 0.55 -0.08 Kazakhstan 1.51 1.58 1.47 0.04 Malaysia 0.38 0.37 0.40 -0.03 Bahrain 0.19 0.19 0.20 -0.01 Brunei 0.07 0.07 0.08 -0.01 Sudan 0.01 0.01 0.06 -0.05 South Sudan 0.10 0.07 0.12 -0.02 Total non-Opec 12.59 12.82 12.70 -0.10 *revised †includes extra cuts agreed in Apr 23 and Nov 23 Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
US adds 272,000 jobs in May, topping expectations
US adds 272,000 jobs in May, topping expectations
Houston, 7 June (Argus) — The US added 272,000 jobs in May, about a third more than forecast, reflecting a labor market that remains robust in the face of Federal Reserve efforts to tamp down inflation by slowing the economy. The job gains followed downwardly revised gains of 165,000 jobs in April and 310,000 in March, the Bureau of Labor Statistics reported today. Average gains in the 12 months prior to May were 232,000 jobs. Economists expected gains of about 185,000 jobs in May, according to a survey by Trading Economics. The jobless rate ticked up to 4pc, the highest in more than two years, from 3.9pc. Still, the unemployment rate remains near five-decade lows. Futures markets after the jobs report indicated a 46pc chance the Fed will hold its target rate unchanged at a 23-year high through September, up from 31pc on Thursday. The Fed has said it needs to see more evidence of inflation slowing towards its 2pc target before it can begin to lower rates after hiking them in 2022-23 at the fastest pace in four decades. Health care added 68,000 jobs in May, in line with gains over the prior 12 months. Government added 43,000 jobs, also near the 12-month rate, while leisure and hospitality gained 42,000 jobs. Professional, scientific and technical services took on 32,000 payrolls, a third more than usual. Retail added 12,000 jobs. Construction added 21,000 jobs and manufacturing added 8,000 jobs. Mining lost 4,000 jobs. Average hourly earnings rose by 4.1pc from a year earlier, up from a 4pc annual gain in the prior month. By Bob Willis Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Opec+ ministers defend new deal after oil price fall
Opec+ ministers defend new deal after oil price fall
Dubai, 6 June (Argus) — Three of the Opec+ group's largest members today defended the decisions taken at their recent ministerial meeting, arguing that although oil prices fell early this week the market will eventually recover and see that the group's policy was correct. The deal reached on 2 June extends all Opec+ crude production cuts into 2025 but with a caveat that the group could start to unwind, in stages, the 2.2mn b/d 'voluntary' cuts taken by some members over 12 months from October. Front-month Ice Brent crude prices have since the meeting fallen below $80/bl for the first time since February. Speaking at a panel at the St Petersburg International Economic Forum (SPIEF), Saudi energy minister Prince Abdulaziz bin Salman, Opec secretary general Haitham al Ghais, Russia's deputy prime minister Alexander Novak and UAE energy minister Suhail al-Mazrouei sought to present a unified front. But some frustration was apparent at the post-meeting reaction. Prince Abdulaziz said Opec+ has not shifted its policy from "being the price fixer, as they [market observers or speculators] claim, to a market-share fighter, fighting for their market share. You know this [is] interchangeable." The Saudi minister reiterated that the agreement struck on 2 June retains an option to pause or reverse changes if necessary, and he criticised some unnamed bank analysts and media outlets for their interpretations of the recent agreement. Secretary general al Ghais said he fails to understand why "certain people are bashing the agreement." "For a while… we've been hearing and seeing the requirement for a clear roadmap of how these production adjustments are going to be phased out or tapered out," he said. "When we deliver that then it's confusing and becomes negative. So sometimes it's really hard to understand." Al-Mazrouei reiterated the UAE's commitment to Opec+, "despite what you hear in the media." The UAE was the big winner from the most recent Opec+ meeting, securing another upgrade to its official production quota, this time by 300,000 b/d. A previous upwards adjustment of 200,000 b/d came into effect from January 2024. Novak said the 2 June decisions "are very adequate, leading us in the right direction". "They show us a certain promise and what we need to achieve within the energy markets, what is going to happen in third quarter and until the end of 2025," Novak said. "We're going to be able to respond to what is happening on the market and emerging uncertainties in a timely manner." By Bachar Halabi Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Energy spend set to surpass $3 trillion in 2024: IEA
Energy spend set to surpass $3 trillion in 2024: IEA
London, 6 June (Argus) — Global energy investment this year is on track to exceed $3 trillion, around $2 trillion of which will be "clean energy" financing, twice the amount being spent on fossil fuels, energy watchdog the IEA said today. The IEA defines clean energy as renewables, electric vehicles, nuclear power, electricity grids, storage, heat pumps and "efficiency improvements". It also includes "low-emissions fuels", which it names as bioenergy, low-emissions hydrogen and carbon capture, use and storage (CCUS) associated with fossil fuels. The remainder of energy investment, at just over $1 trillion, is set to go to coal, gas and oil, the IEA said. Investment in renewable power and grids overtook spending on fossil fuels in 2023, for the first time. The ratio of clean power to unabated fossil fuel power investments is set to reach 10:1 this year — in comparison to a ratio of 2:1 in 2015, the IEA said. "Clean energy investment is setting new records even in challenging economic conditions, highlighting the momentum behind the new global energy economy," IEA executive director Fatih Birol said. "The rise in clean energy spending is underpinned by strong economics, by continued cost reductions and by considerations of energy security. But there is a strong element of industrial policy, too, as major economies compete for advantage in new clean energy supply chains," he said. Investment in solar photovoltaic (PV) power "now surpasses all other [electricity] generation technologies combined", the IEA found. It forecasts spending on solar PV will hit $500bn this year, "as falling module prices spur new investments". Power sector investment rose by 15pc in the year to $1.3 trillion in 2023, but the IEA expects the growth rate to slow in 2024 owing to cost reductions for renewables. The watchdog noted that in 2023 "each dollar invested in wind and solar PV yielded 2.5 times more energy output than a dollar spent on the same technologies a decade prior". Oil, gas investment matches demand The IEA expects global upstream oil and gas investment to increase by 7pc to $570bn this year — following a similar year-on-year rise in 2023 of 9pc. The increase is driven mostly by Middle East and Asian national oil companies, it said. Oil and gas investment this year "is broadly aligned with the demand levels implied in 2030 by today's policy settings, but far higher than projected in scenarios that hit national or global climate goals", the report found. Reaching net zero emissions by 2050 would mean that annual investment in fossil fuels drops by more than half, from just over $1 trillion in 2024 to under $450bn in 2030, the IEA said. It would also mean spending on low-emissions fuels would increase tenfold, to around $200bn in 2030, it added. "Clean energy investment" by oil and gas companies stood at $28bn in 2023, "less than 4pc of overall capital spending", the report noted. More than 120 countries pledged at the UN Cop 28 climate summit to treble renewable energy capacity and double energy efficiency by 2030. In order to hit these goals, clean energy investment should double by 2030 globally — and quadruple in emerging and developing economies outside China over the same timescale, the IEA said. It noted that China, the EU and the US account for nearly 60pc of current global spending on clean energy. Europe and the US will account for clean energy spending of $370bn and $315bn this year, respectively, while "clean energy powerhouse" China is projected to spend $675bn on clean energy in 2024, the IEA said. But of the more than 50GW of unabated coal-fired power generation approved last year, almost all was in China, reflecting the country's security priorities, especially in the face of underperforming hydropower capacity. By Georgia Gratton Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
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